Superior of panies(US:SGC)2025-11-03 22:06Financial Performance - Consolidated net sales decreased by 7.5%, or $11.2 million, for the three months ended September 30, 2025, compared to the same period in 2024[84]. - Net income for the three months ended September 30, 2025, was $2.7 million, a decrease of 49.2% from $5.4 million in the same period in 2024[82]. - EBITDA decreased to $7.5 million for the three months ended September 30, 2025, down 35.3% from $11.7 million in the prior year[83]. - Consolidated net sales decreased by 0.2% or $0.7 million to $419.6 million for the nine months ended September 30, 2025, compared to $420.3 million in 2024[102]. - Net income fell by 64.3% to $3.5 million for the nine months ended September 30, 2025, down from $9.9 million in 2024, primarily due to lower gross margins across all segments[100]. - EBITDA decreased by 36.1% to $17.1 million for the nine months ended September 30, 2025, compared to $26.8 million in 2024, driven by lower gross margins[101]. Segment Performance - Branded Products segment net sales fell by 8.1%, or $7.5 million, primarily due to timing of orders and lower sales volume[85]. - Healthcare Apparel segment net sales decreased by 4.6%, or $1.5 million, mainly due to volume decreases within existing customer accounts[86]. - Contact Centers segment net sales declined by 9.5%, or $2.4 million, attributed to macroeconomic headwinds affecting client retention[87]. - Branded Products net sales increased by 1.3% or $3.3 million, attributed to a $9.1 million revenue increase from the acquisition of 3 Point[103]. - Healthcare Apparel net sales decreased by 2.0% or $1.8 million, primarily due to volume decreases within existing customer accounts[104]. - Contact Centers net sales decreased by 3.5% or $2.6 million, reflecting macroeconomic headwinds leading to client downsizing[105]. Margins and Expenses - Consolidated gross margin rate was 38.3% for the three months ended September 30, 2025, down from 40.4% in the prior year[88]. - Gross margin rate declined to 37.9% for the nine months ended September 30, 2025, from 39.6% in 2024, with decreases noted in all reportable segments[106]. - Selling and administrative expenses as a percentage of net sales remained stable at 35.0% for both periods[91]. - Selling and administrative expenses as a percentage of net sales increased to 36.0% for the nine months ended September 30, 2025, from 35.7% in 2024[110]. Interest and Tax Expenses - Interest expense decreased to $1.4 million for the three months ended September 30, 2025, from $1.6 million in the same period in 2024, due to a lower average interest rate[96]. - Interest expense decreased by 20.9% to $3.9 million for the nine months ended September 30, 2025, down from $4.9 million in 2024, due to a lower average interest rate[114]. - Income tax expense decreased to $0.4 million for the three months ended September 30, 2025, with an effective tax rate of 13.9% compared to 17.8% in the prior year[97]. Cash Dividends - The Company paid cash dividends of $6.7 million during the nine months ended September 30, 2025, compared to $7.0 million in 2024[127]. Impairment Testing and Accounting Estimates - The Company performed its annual impairment test for indefinite-lived intangible assets as of August 31, 2025, which did not result in any impairment[134]. - Key assumptions for the impairment test included expected cash flows based on a detailed multi-year forecast, royalty rates of 0.75% - 3.0%, a tax rate of 27.0%, a long-term growth rate of 3.0%, and discount rates of 14.5% - 16.5%[134]. - The Company has not made any material changes to its critical accounting estimates since the last annual report, except for the timing of annual impairment tests, which has been moved to August 31[130][131]. Internal Controls and Risks - The Company’s internal controls over financial reporting were evaluated and deemed effective as of the end of the reporting period[142]. - There were no changes in the Company's internal control over financial reporting during the quarter ended September 30, 2025, that materially affected its effectiveness[143]. - The Company anticipates potential risks including competition, supply disruptions, and economic conditions that may impact future performance[140]. Forward-Looking Statements - Forward-looking statements include projections of revenue and income, as well as plans for cash management and business operations[139]. Non-GAAP Measures - The Company emphasizes that EBITDA is a non-GAAP financial measure and should not be considered in isolation from net income or cash flows from operating activities[136][137].