Superior of panies(SGC) - 2024 Q1 - Quarterly Results

Executive Summary & Business Highlights First Quarter 2024 Performance Overview Superior Group of Companies achieved significant Q1 2024 year-over-year growth in net sales, net income, and EBITDA | Metric | Q1 2024 | Q1 2023 | YoY Change | YoY Change (%) | | :-------------------- | :------ | :------ | :--------- | :------------- | | Total Net Sales | $138.8M | $130.8M | +$8.0M | +6.2% | | Net Income | $3.9M | $0.9M | +$3.0M | +333.3% | | EBITDA | $9.6M | $6.9M | +$2.7M | +39.1% | | Diluted EPS | $0.24 | $0.06 | +$0.18 | +300.0% | CEO Commentary and Strategic Focus The CEO highlighted strong Q1 revenue and EBITDA growth across all segments, driving positive cash flow and strategic investments - The year is off to a strong start, with year-over-year revenue and EBITDA growth for all three of our business segments driving positive cash flow and improved financial flexibility[2] - The team's focus is on strong customer service and retention, coupled with prudent investments in talent, processes, and systems to capture future market share and enhance long-term profitability[2] - The company is confident in its future outlook and is raising full-year expectations due to positive momentum across all business segments[2] 2024 Full-Year Outlook Superior Group of Companies raised its full-year 2024 sales and diluted EPS outlook, reflecting improved operating performance | Metric | New 2024 Outlook | Prior 2024 Outlook | 2023 Actual | | :-------------------- | :----------------- | :----------------- | :---------- | | Sales | $563M - $570M | $558M - $568M | $543M | | Diluted EPS | $0.73 - $0.79 | $0.61 - $0.68 | $0.54 | - The updated earnings per diluted share outlook reflects improved operating performance, partially offset by incremental stock compensation expense from the May issuance of performance-based stock awards[5] Quarterly Dividend Declaration The Board of Directors approved a quarterly dividend of $0.14 per share for the first quarter of 2024 | Metric | Q1 2024 | | :-------------------- | :------ | | Cash dividends per common share | $0.14 | - The dividend is payable June 3, 2024, to shareholders of record as of May 20, 2024[4] Company Information About Superior Group of Companies Superior Group of Companies, established in 1920, operates three segments: Healthcare Apparel, Branded Products, and Contact Centers - Superior Group of Companies, established in 1920, comprises three business segments: Healthcare Apparel, Branded Products, and Contact Centers, serving large, fragmented, and growing markets[10] - The company's competitive advantages stem from its commitment to service, quality, advanced technology, and omnichannel commerce[10] - SGC aims to enhance shareholder value through a combination of organic growth and strategic acquisitions[10] Webcast and Conference Call Information Details are provided for accessing the live webcast and conference call for Q1 2024 results, including replay information - The company hosted a webcast and conference call at 5:00 pm Eastern Time on May 7, 2024, with access available via the investor relations section of its website[7] - A telephone replay of the teleconference is available through May 21, 2024, with specific dial-in numbers for U.S., International, and Canadian callers[7] Forward-Looking Statements & Risk Factors This section outlines forward-looking statements and key risks, including competition, supply disruptions, and economic conditions - The press release contains 'forward-looking statements' that qualify for safe harbors under the Private Securities Litigation Reform Act of 1995, identifiable by words like 'may,' 'will,' 'expect,' and 'anticipate'[8] - These statements are subject to risks and uncertainties, including competition, supply disruptions, inflationary environment, employment levels, general economic and political conditions, and challenges in integrating acquired businesses[9] - Readers are cautioned not to place undue reliance on forward-looking statements and are directed to the 'Risk Factors' sections of the company's Form 10-K and 10-Q filings for further details[9] Financial Statements Condensed Consolidated Statements of Operations The statements show substantial Q1 2024 profitability improvement, driven by increased net sales and effective cost management | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | YoY Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Net sales | $138,842 | $130,773 | +$8,069 | | Cost of goods sold | $83,525 | $83,665 | -$140 | | Selling and administrative expenses | $48,749 | $43,379 | +$5,370 | | Income before income tax expense | $4,592 | $945 | +$3,647 | | Income tax expense | $680 | $57 | +$623 | | Net income | $3,912 | $888 | +$3,024 | | Diluted Net income per share | $0.24 | $0.06 | +$0.18 | - Net sales increased by 6.2% year-over-year, while cost of goods sold remained relatively flat, contributing to improved gross margins[13] - Income before income tax expense surged by 385.9%, and net income increased by 340.5% compared to the prior year's first quarter[13] Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2024, shows stable financial position with decreased assets/liabilities and increased equity | Metric (in thousands) | March 31, 2024 | December 31, 2023 | Change | | :-------------------- | :------------- | :---------------- | :----- | | Cash and cash equivalents | $22,040 | $19,896 | +$2,144 | | Total current assets | $267,529 | $279,360 | -$11,831 | | Total assets | $408,481 | $422,450 | -$13,969 | | Total current liabilities | $88,165 | $100,589 | -$12,424 | | Total liabilities | $207,660 | $224,812 | -$17,152 | | Total shareholders' equity | $200,821 | $197,638 | +$3,183 | - Accounts receivable decreased by approximately $9.7 million, and inventories decreased by $5.5 million from year-end 2023[15] - Long-term debt decreased from $88,789 thousand to $84,445 thousand, reflecting debt repayments[15] Condensed Consolidated Statements of Cash Flows Q1 2024 cash flow shows decreased operating cash, but reduced investing/financing outflows, leading to a net cash increase | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash provided by operating activities | $9,447 | $25,050 | -$15,603 | | Net cash used in investing activities | ($675) | ($2,114) | +$1,439 | | Net cash used in financing activities | ($6,375) | ($14,198) | +$7,823 | | Net increase in cash and cash equivalents | $2,144 | $8,878 | -$6,734 | | Cash and cash equivalents, end of period | $22,040 | $26,600 | -$4,560 | - The decrease in operating cash flow was primarily influenced by changes in working capital, despite a higher net income[17] - Cash used in financing activities significantly decreased due to lower debt repayments and higher proceeds from borrowings of debt compared to the prior year[17] Non-GAAP Financial Measures EBITDA Reconciliation and Definition This section reconciles net income to EBITDA for Q1 2024 and 2023, defining it as a key non-GAAP operating performance measure | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | YoY Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Net income | $3,912 | $888 | +$3,024 | | Interest expense | $1,787 | $2,570 | -$783 | | Income tax expense | $680 | $57 | +$623 | | Depreciation and amortization | $3,252 | $3,388 | -$136 | | EBITDA | $9,631 | $6,903 | +$2,728 | - EBITDA increased by 39.5% year-over-year, reflecting improved operating performance before the impact of capital structure, taxes, and asset base[19] - EBITDA is considered an important measure for evaluating core operating results but is not a GAAP measure and should not be used in isolation[19] Segment Performance Reportable Segments Financials Supplemental information details Q1 2024 and Q1 2023 financial performance for all three segments, showing growth in sales and EBITDA | Segment | Net Sales Q1 2024 (in thousands) | Net Sales Q1 2023 (in thousands) | YoY Change | | :---------------- | :------------------------------- | :------------------------------- | :--------- | | Branded Products | $87,068 | $81,851 | +$5,217 | | Healthcare Apparel | $29,237 | $28,154 | +$1,083 | | Contact Centers | $23,552 | $22,056 | +$1,496 | | Total Net Sales | $138,842 | $130,773 | +$8,069 | | Segment | Segment EBITDA Q1 2024 (in thousands) | Segment EBITDA Q1 2023 (in thousands) | YoY Change | | :---------------- | :------------------------------------ | :------------------------------------ | :--------- | | Branded Products | $9,947 | $7,510 | +$2,437 | | Healthcare Apparel | $2,635 | $1,572 | +$1,063 | | Contact Centers | $2,946 | $2,793 | +$153 | | Total Segment EBITDA | $9,631 | $6,903 | +$2,728 | - All three segments contributed to the overall year-over-year revenue and EBITDA growth, with Branded Products showing the largest absolute increase in both metrics[2][22]