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.

Core Insights - The company has been a disruptor in the health care apparel market for approximately 13 years, focusing on comfort, functionality, and design [1] - The business experienced over 100% annual growth, particularly during the pandemic when demand for scrubs surged [1] - Post-pandemic, the company is positioned as a leader in the industry, offering the best products and brand [1]

Financial Data and Key Metrics Changes - The company reported over $550 million in sales for the previous year, indicating significant growth despite having only two physical stores [5] - Approximately 70% of revenue is derived from repeat customers, highlighting strong customer loyalty and replenishment dynamics [26] Business Line Data and Key Metrics Changes - The company has transitioned from primarily a scrubs business to a broader range of products, including underscrubs, outerwear, and footwear, with a focus on building a complete wardrobe for healthcare professionals [25][42] - Non-scrub wear currently accounts for roughly 20% of the business, with expectations for continued growth in this segment [42] Market Data and Key Metrics Changes - The company has a brand awareness of about 20% unaided and over 50% aided among healthcare professionals, indicating significant room for growth in customer acquisition [27] - Internationally, the company has less than 1% market share, suggesting substantial opportunities for expansion [29] Company Strategy and Development Direction - The company aims to expand its presence both domestically and internationally, focusing on building out its B2B Teams business and increasing its number of community hubs [6][59] - The strategy includes leveraging partnerships with medical institutions and schools to enhance brand visibility and customer acquisition [61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the healthcare sector, noting that healthcare jobs are growing three times faster than the average job segment [9] - The company is focused on delivering exceptional products and experiences to healthcare professionals, emphasizing the non-seasonal nature of their business [11] Other Important Information - The company is navigating challenges related to tariffs, with expectations for increased impacts in 2026, but is actively working on mitigation strategies [71][73] - The company has been strategically pulling back on promotions to strengthen brand positioning, with plans for targeted promotions around specific healthcare events [82] Q&A Session Summary Question: What are the growth opportunities from here? - The company sees growth in both scrubs and non-scrubs, with a focus on expanding product offerings and increasing customer loyalty [21][22] Question: How is the Teams business contributing to international growth? - The Teams business is expected to be a significant growth lever internationally, especially as the B2B market is larger outside the U.S. [59][63] Question: What are the expectations for inventory growth? - The company anticipates inventory growth to slightly outpace sales growth, with a focus on product innovation [80] Question: What are the plans for Black Friday and holiday promotions? - The company will continue to participate in Black Friday and Cyber Monday promotions while pulling back on other promotional activities [84]

Core Insights - Figs reported strong Q2 2025 results, exceeding revenue and earnings expectations, with GAAP revenue at $152.6 million and GAAP EPS at $0.04, marking the highest quarterly revenue in the company's history [1][5] - The company experienced significant international growth, with revenue outside the U.S. increasing by 19.8% to $22.7 million, while U.S. market growth was at 3.7% [7][12] - Despite record sales and profitability, margins faced pressure from tariffs and inventory build, with gross margin slightly contracting to 67.0% [8][14] Financial Performance - GAAP revenue for Q2 2025 was $152.6 million, surpassing the estimate of $144.2 million, reflecting a year-over-year increase of 5.8% [2] - GAAP EPS reached $0.04, more than double the analyst estimate of $0.01881, representing a 300% increase year-over-year [2][5] - Adjusted EBITDA rose to $19.7 million, a 52.7% increase from $12.9 million in Q2 2024, with an adjusted EBITDA margin of 12.9%, up 3.9 percentage points from the previous year [2][5] Product and Market Strategy - Figs specializes in healthcare apparel, particularly scrubs, utilizing premium materials like proprietary FIONx fabric to differentiate from lower-quality competitors [3] - The company focuses on continuous product innovation, direct online engagement, and expanding international reach, with plans to enter Japan and South Korea later in 2025 [4][12] - Scrubwear sales were a key growth driver, totaling $127.4 million, up 7.7%, while non-scrubwear revenue declined by 2.5% to $25.2 million [6] Operational Developments - Active customers increased to 2.74 million, with an average order value of $117, indicating strong customer engagement [2][11] - International sales now account for a growing share of overall revenue, with management highlighting momentum in markets such as Mexico, Europe, and the Middle East [7][12] - Inventory levels rose to $135.5 million as the company made advance purchases to manage tariff risks, although management noted limited markdown risk due to the nature of the inventory [13] Outlook - Figs raised its full-year guidance, expecting net revenue growth in the low-single-digit percentage range and adjusted EBITDA margin guidance increased to between 8.5% and 9.0% [14] - Management acknowledged ongoing margin pressure from tariffs and challenges in non-scrubwear growth, which saw a year-over-year decline of 2.5% [14]

Summary of Superior Group of Companies (SGC) Conference Call - June 12, 2025 Company Overview - **Company**: Superior Group of Companies (SGC) - **CEO**: Michael Benstock - **CFO**: Mike Kempel - **Established**: Over 100 years ago, with Michael Benstock serving as CEO for 22 years [2][3] Industry Segments 1. **Health Care Apparel** - Largest and oldest provider of health care apparel in the U.S. - Serves approximately 12 million health care professionals [6][9] - Total Addressable Market (TAM) estimated at over $4 billion, with significant growth potential [10] - Strong brands include Wink and Fashion Seal Healthcare [8][9] 2. **Branded Products** - Provides promotional products and logo uniforms to major companies [12] - Industry size estimated at $26 billion with 25,000 competitors [15] - Notable clients include Taco Bell, Dunkin', and Tesla [13][14] 3. **Contact Center Services** - Operates as The Office Gurus, focusing on small to medium-sized businesses [19] - Fastest growing segment with a five-year sales CAGR of almost 22% [23] - Recognized for quality customer service and high customer retention [21][22] Financial Highlights - **Revenue Growth**: SGC has achieved an annualized growth rate of 11% across all segments [24] - **Cash Flow**: Positive free cash flow and reduced working capital and debt, with a net leverage ratio decreased by over 50% since 2022 [25] - **Dividend**: Consistent dividend payments since 1977, with discussions on future increases based on performance [26][54] Strategic Initiatives - **Market Share Expansion**: Focus on omnichannel strategies, including direct-to-consumer sales, to capture more market share in health care apparel [39][40] - **Capital Allocation**: Active share repurchase program with a recent authorization of up to $17.5 million [44] - **Acquisitions**: Plans for strategic acquisitions in branded products and contact center markets [46] Challenges and Opportunities - **Tariff Impact**: Health care apparel business is largely unaffected by tariffs, while branded products may see some pricing adjustments [30][31] - **Employee Retention**: Gifting remains a key strategy for customer loyalty despite budget constraints [35][36] - **Technological Investment**: Significant investment in AI technology to enhance service offerings in contact centers [47] Customer Relationships - Long-standing contracts with major brands like Walmart and CVS, indicating high customer retention and stickiness [50][53] Conclusion - SGC is well-positioned for growth across its diversified business segments, with strong financial health and strategic initiatives aimed at capturing market share and enhancing customer relationships [24][25][39]

Financial Data and Key Metrics Changes - The company reported a 2% increase in sales year-over-year, reaching $760 million, with organic constant currency sales consistent with the prior year [25][10] - Gross margin increased by 165 basis points to 41.6%, while operating margin expanded by 390 basis points to 10.7% [26][10] - Earnings per share (EPS) surged by 240% compared to the previous year, reaching $0.07, primarily driven by higher margins and lower interest expenses due to significant debt reduction [26][10] Business Line Data and Key Metrics Changes - The intimate apparel category experienced a mid-teens decline, while other segments showed growth: low single-digit growth in Basics, mid single-digit growth in Active, and a 60% increase in new businesses, including scrubs and loungewear [12][10] - Operating profit increased by 61%, reflecting the benefits of cost restructuring and assortment management initiatives [10] Market Data and Key Metrics Changes - International sales grew by 4% on an organic constant currency basis, driven by growth in Australia and Asia, while U.S. sales decreased by 1% [11][10] - Approximately 75% of sales and cost of goods are from the U.S., with 25% from international markets, which are less impacted by U.S. tariffs [14][29] Company Strategy and Development Direction - The company is focused on a transformation strategy that includes cost reductions, pricing actions, and leveraging strong retailer relationships to capture new revenue opportunities [6][7] - The company aims to fully mitigate tariff impacts through various levers, including cost savings and strategic pricing actions, while maintaining a diversified supply chain [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment, citing a proactive approach and a strong balance sheet after reducing over $1 billion in debt [9][17] - The outlook for the second quarter includes continued margin expansion and operating profit growth, with expected sales of approximately $970 million and EPS of approximately $0.18 [28][30] Other Important Information - The company has no exposure to sourcing from China, which historically accounted for a low single-digit percentage of U.S. cost of goods [16][10] - The company is not pursuing private label opportunities but is focused on expanding its branded offerings [51][52] Q&A Session Summary Question: Can you elaborate on the effective tariff rate and revenue opportunities? - Management stated they can fully mitigate tariff headwinds, with tariffs not expected to impact until Q4, and emphasized their proactive approach to managing costs and pricing [34][36] Question: What contributed to the upside in EPS? - The upside was attributed to better-than-expected sales, cost savings, and improved gross profit margins [44][46] Question: What are the current market conditions and competitor pricing? - Retailers are managing inventory tightly, and while there haven't been significant price moves yet, the company is prepared to implement strategic pricing as necessary [50][56] Question: What is the outlook for the women's business and market share? - The intimate apparel category is facing challenges, but the overall women's business is performing well, with plans to improve the Made and Form segment [60][64] Question: What is the capacity for new revenue opportunities? - The company has sufficient capacity for growth and flexibility in its supply chain to meet new demand, particularly from its Western Hemisphere manufacturing capabilities [78][76]