Company Overview - FIGS, Inc. (NYSE: FIGS) specializes in producing and selling scrubs and scrubwear for healthcare professionals, utilizing both online and select retail channels for sales [1] Financial Performance - The company reported a net income of $2.7 million from approximately $550 million in revenue [1]

Financial Data and Key Metrics Changes - Net revenues increased by 6% year-over-year to $152.6 million, exceeding expectations of flat performance for the period [26][27] - Adjusted EBITDA margin improved by 390 basis points year-over-year to 12.9% [10][31] - Net income for the quarter was $7.1 million, or diluted EPS of $0.04, compared to net income of $1.1 million, or diluted EPS of $0.01, last year [31] Business Line Data and Key Metrics Changes - Scrub wear category grew by 8%, representing 83% of net revenues for the period [27][28] - Non-scrub wear decreased by 3%, representing 17% of net revenues, impacted by a pullback in promotional strategy [28] - Average Order Value (AOV) increased by 4% to $117, driven by higher average unit retail due to product mix and lower return rates [27][44] Market Data and Key Metrics Changes - U.S. sales increased by 4% to $129.9 million, marking the strongest performance in nearly two years [29] - International net revenues increased by 20%, with strong growth in new and existing customers [29] - Active customers increased by 4% year-over-year to 2.7 million [27] Company Strategy and Development Direction - The company is focusing on serving healthcare professionals and enhancing brand differentiation through impactful marketing and product innovation [12][19] - Strategic repositioning away from broader promotional periods aims to drive productivity and intentionality in business operations [6][11] - Expansion into international markets, including recent launches in Japan and planned entry into South Korea, is part of the growth strategy [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum despite macroeconomic uncertainties and tariff impacts [10][11] - The outlook for fiscal 2025 has been improved, with net revenues now expected to grow low single digits year-over-year [11][35] - Management emphasized the importance of strategic investments and cost mitigation efforts to navigate the dynamic trade environment [10][11] Other Important Information - The company has a strong balance sheet with net cash and short-term investments of $238.8 million [31] - Inventory increased by 14% year-over-year to $135.5 million, reflecting higher average unit pricing due to product mix and modest tariff impacts [31][32] - The company is prioritizing investments in business growth over share repurchases, with $52 million available for future repurchases [33][90] Q&A Session Summary Question: Impact of AOV and Product Innovation - Management noted that AOV increased due to product mix and returning customers, with product innovation being a key driver [43][44][47] Question: Engagement with Customers and Pricing Strategy - Management highlighted the importance of product and marketing execution, stating that pricing changes will be a last resort after exploring other cost mitigation strategies [52][56][57] Question: Tariff Impact Quantification - Management quantified the tariff impact for 2025 at approximately 150 basis points, with ongoing efforts to mitigate this through sourcing and supplier negotiations [63][64][66] Question: Active Customers and Revenue Guidance - Management indicated that while active customer engagement is strong, the second half of the year will see a larger impact from promotional pullbacks [70][71] Question: Non-Scrub Wear Performance - Management acknowledged softness in non-scrub wear but emphasized long-term growth potential and plans for new product launches [85][86][88] Question: Share Repurchase Strategy - Management confirmed a focus on business growth investments over share repurchases, maintaining a conservative approach given market uncertainties [89][90]

Financial Performance - Net revenues reached $152.6 million, a 6% year-over-year increase[18, 20] - Gross margin was 67.0%[18] - Adjusted EBITDA margin was 12.9%, exceeding expectations[18, 20] - The company maintained a strong financial position with $238.8 million in cash, cash equivalents, and short-term investments[20] Key Operating Metrics - Active customers increased by 4% year-over-year to 2.736 million[20, 24] - Average order value (AOV) increased by 4% year-over-year to $117[20, 30] - Net revenues per active customer saw a slight decrease of 1% year-over-year, landing at $208[27] Revenue Breakdown - Scrubwear revenues grew by 8%, while non-scrubwear revenues declined by 3%[20] - U S revenues grew by 4%, and international revenues experienced substantial growth of 20%[20] International Expansion - International net revenues accounted for 15% of total net revenues in FY 2024 and Q2 2025, with over 80% of global healthcare professionals located outside the U S [61] Updated Outlook for 2025 - Net revenues growth is projected to be up low-single-digits compared to 2024[107] - Adjusted EBITDA margin is expected to be between 8.5% and 9.0%[107]

Financial Data and Key Metrics Changes - Consolidated revenue grew more than 9% year over year, with net income per diluted share of $0.10, up from $0.04 in the same quarter last year [7][8][18] - Gross margin remained flat at 38.4% year over year but improved by 160 basis points sequentially [12] - SG&A as a percentage of sales improved to 36.3% from 36.9% in the prior year, despite recognizing $1.8 million in credit loss reserves [13][18] Business Segment Data and Key Metrics Changes - Branded Products segment grew by 14%, driven by order timing and organic expansion with existing accounts [7][12] - Healthcare Apparel segment grew by 6%, supported by volume increases in specific product lines [12][15] - Contact Center business saw a 3% decline in revenues due to macroeconomic headwinds and customer downsizing [12][17] Market Data and Key Metrics Changes - The company noted a full pipeline of contact center opportunities, indicating potential for future growth despite current challenges [5][11] - The Branded Products segment is positioned as one of the top 10 largest providers in a highly fragmented market, suggesting strong competitive positioning [9] Company Strategy and Development Direction - The company is focused on expense management and has launched initiatives to reduce budgeted expenses, which are expected to enhance profitability [6][7] - There is a strategic emphasis on leveraging diverse sourcing and vendor negotiations to mitigate tariff impacts and maintain competitive pricing [6][36] - The company remains open to acquisitions but will be selective, focusing on opportunities that are quickly accretive and do not distract from organic growth [71][72] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the second half of the year, citing mixed results across segments but a strong pipeline of opportunities [30][31] - The company anticipates continued growth in the Branded Products segment and expects the Healthcare Apparel segment to improve as institutional customers replenish inventory [56][60] - Management acknowledged ongoing uncertainties related to inflation, interest rates, and tariffs but emphasized the company's strong liquidity and cost management efforts [19][30] Other Important Information - The company actively repurchased approximately 390,000 shares for about $4 million during the quarter, indicating confidence in its stock value [18] - The company expects full-year revenues to be in the range of $550 million to $575 million, suggesting year-over-year growth at the high end of about 2% [19] Q&A Session Summary Question: Inquiry about SG&A costs - Management clarified that SG&A increased in dollar terms due to higher revenues but improved as a percentage of sales, with credit loss reserves impacting the overall rate [21][22] Question: Opportunities for AI in business - Management discussed the implementation of AI in contact centers for talent acquisition and customer interaction, enhancing efficiency and customer satisfaction [24][25] Question: Impact of tariffs on customer orders - Management noted some customers pulled orders forward due to tariff concerns, but the institutional side showed hesitance in spending [34][39] Question: Outlook for Healthcare Apparel - Management expects the institutional side to pick up as inventory needs arise, with the second half of the year generally being stronger due to seasonal factors [56][60] Question: Contact center pipeline and decision-making - Management indicated that while decision-making has been slow, there is a record pipeline of opportunities that could convert into revenue in the near future [61][64] Question: Mitigation efforts regarding tariffs - Management confirmed that price increases related to tariffs would mostly take effect in the third quarter, with proactive measures taken to protect margins [78][82]

Group 1 - Superior Group of Companies, Inc. will participate in the Inaugural D.A. Davidson Technology & Consumer Conference on June 10, 2025, in Nashville, TN, with investor meetings scheduled throughout the day [1] - The company operates in three business segments: Healthcare Apparel, Branded Products, and Contact Centers, which serve large, fragmented, and growing addressable markets [1] - Superior Group of Companies emphasizes its commitment to service, quality, advanced technology, and omnichannel commerce, providing competitive advantages [1] Group 2 - The company aims to enhance shareholder value through a combination of organic growth and strategic acquisitions [1]