Summary of Superior Group of Companies Conference Call Company Overview - **Company Name**: Superior Group of Companies (NasdaqGM: SGC) - **Date of Conference**: September 18, 2025 - **Key Speakers**: Mike Koempel (CFO), Michael Benstock (Chairman and CEO) - **Company History**: Founded over 100 years ago, with a focus on three diversified segments [2][3] Industry Segments 1. **Healthcare Apparel** - Largest provider of healthcare apparel in the U.S., serving over 12 million healthcare professionals [5][6] - Total Addressable Market (TAM) estimated at over $4 billion, with significant growth opportunities [9] - Key brands include Wink and Fashion Seal Healthcare, with a strong omnichannel distribution strategy [8][10] 2. **Branded Products** - This segment is the largest, providing promotional products and logoed uniforms to major U.S. companies [11] - The branded products industry is approximately $26 billion, with SGC ranking among the top 10 largest branded distributors [14] - Notable clients include Taco Bell, Dunkin', Tesla, Walmart, and CVS, focusing on high-quality merchandise rather than low-value items [12][13] 3. **Contact Centers (The Office Gurus)** - Operates nearshore contact centers in El Salvador, Belize, the Dominican Republic, and Florida [19][20] - Fastest growing segment with a cumulative adjusted growth of 22% through 2024 and an EBITDA margin of 12.6% [22] - Market share is minimal, focusing on small to medium-sized businesses, with a total market exceeding $100 billion in the U.S. [22] Financial Highlights - **Revenue**: Consolidated revenues were $566 million, with a CAGR of 8% since 2019 [4] - **2025 Guidance**: Projected sales range of $550 to $575 million, indicating continued growth across all segments [24] - **Balance Sheet**: Net leverage ratio improved to about 1.7 times EBITDA, with a target range of 2 to 2.5 times [37][38] - **Dividends**: Uninterrupted dividend payments since 1977, with a yield of 4% to 5% [41][42] Strategic Initiatives - **Cost-Savings Plan**: Announced a $13 million reduction in annualized budgeted expenses, with expected benefits to be fully realized by 2026 [45][46] - **AI Integration**: Implementing AI across contact center services to enhance efficiency and customer loyalty, with 35 customers already utilizing the AI stack [34][35] - **Share Repurchase Program**: Initiated in August 2024, with $15 million of stock repurchased, balancing investments and share buybacks [38] Market Dynamics - **Customer Sentiment**: Improvement noted in the second quarter of 2025, with a 14% increase in branded products sales compared to the first quarter [42] - **Tariff Impact**: Initial concerns over tariffs have subsided, leading to increased willingness among customers to proceed with purchasing decisions [42][43] - **Sales Team Expansion**: Plans to expand and upskill sales teams across all business segments in 2026 [47][48] Conclusion - Superior Group of Companies is positioned for growth across its diversified segments, with a strong focus on customer retention, strategic investments, and leveraging technology to enhance operational efficiency. The company maintains a solid financial foundation and is committed to returning value to shareholders through dividends and share repurchases.

Industry Overview - The call center industry can be divided into three segments: upstream equipment and system suppliers, midstream call center operators, and downstream demand sectors [1][3] - Upstream suppliers include telecom operators, cloud vendors, switch manufacturers, and database providers, while midstream consists of domestic and overseas call center operators [1][3] - Downstream demand industries include telecommunications, finance, e-commerce, government enterprises, and manufacturing, with an expected expansion in application sectors due to their growth [1] Regional Distribution - Call center enterprises are primarily located in regions such as Beijing, Jiangsu, Shanghai, Zhejiang, and Guangdong, with diverse downstream applications across finance, government, telecommunications, retail, and tourism [6] - Beijing benefits from policy resources and financial headquarters, leading to significant demand for government and banking customer service [6] - The Yangtze River Delta, with Shanghai as an international hub, Jiangsu for hardware manufacturing, and Zhejiang for e-commerce, has a rich variety of call center services [6] - Guangdong, leveraging Shenzhen's tech development and Dongguan's manufacturing, has a large foreign trade service market, making it a key area for communication data generation [6] Cost Structure - The cost structure of call center companies is heavily centered on labor, with personnel costs accounting for up to 60%, while some companies manage to keep it around 50% [9] - Costs include salaries and training for staff, with external software and services covering cloud platform rentals, AI modules, and system maintenance [9] - Depreciation accounts for about 5% of costs, primarily from hardware equipment, while intelligent companies can reduce labor costs to 50% but see software procurement rise to over 40% [9] Company Performance - In 2024, call center-related listed companies generally experienced a decline in performance, with notable growth from companies like Haoshanghao Electronics, which saw a 25.24% increase to 7.23 billion yuan [12] - Companies such as Beijing North and Caixun Co. achieved stable growth rates of 9.29% and 10.41% respectively, driven by intelligent customer service technology [12] - CITIC Guoan maintained a good growth rate with revenue of 3.4 billion yuan in 2024, while traditional firms like Deep Konka and Aerospace Information faced revenue drops exceeding 30% [12] - Some companies, such as Kaiyuan and Yilianzhong, which rely heavily on government contracts, saw significant revenue declines [12] - The industry is undergoing a transformation towards outsourcing and intelligent solutions, with technology-driven companies showing stronger resilience to risks [12]