Superior of panies(US:SGC)2021-11-07 04:05Financial Data and Key Metrics Changes - Consolidated net sales for Q3 2021 were $123.3 million, a decrease of 3.5% compared to $127.7 million in Q3 2020, reflecting strong performance against high sales in the previous year [10] - Excluding PPE sales, consolidated net sales increased by 29.4% [11] - Net income was $8.2 million or $0.51 per diluted share, compared to $9.9 million or $0.63 per diluted share in Q3 last year [17] - Operating margin for Q3 2021 was 8.7%, down from 9.8% in Q3 2020 [16] Segment Results and Key Metrics Changes - Uniforms and related products net sales decreased by 15.1% to $61.6 million, but excluding PPE, the segment increased by 3.9% [12] - PPE sales normalized to $0.3 million compared to $13.9 million a year ago [13] - The Office Gurus reported net sales of $16.2 million, up 56.8% [14] - BAMKO's revenue for Q3 was $45.2 million, with a year-over-year increase of 2.4% [21] Market Data and Key Metrics Changes - BAMKO's backlog at September 30 was $56.2 million, a 30.6% increase from the same period in 2020 [24] - The healthcare apparel segment is expected to see increased demand in 2022 as stockpiles diminish [32] Company Strategy and Development Direction - The company is focused on leveraging technology to enhance customer service and expand its omnichannel presence [40] - International expansion is a key strategic element, with a new distribution center in Poland servicing an expanding customer base in Europe [41] - Price increases were instituted to offset rising costs due to supply chain disruptions [36] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment is challenging due to logistical capacity constraints and increased costs [35] - The company expects to see increased RFP activity in 2022 as businesses become more comfortable with the market [45] - Management is optimistic about future growth, particularly in the healthcare apparel and BPO segments [34][41] Other Important Information - The company paid a regular quarterly cash dividend of $0.12 during Q3 [20] - The debt-to-EBITDA ratio remains strong at 1.5x, well within covenant limits [19] Q&A Session Summary Question: What is driving the unexpected pickup in RFP activity? - Management indicated that companies are now more comfortable going out to RFP after being hesitant during COVID, leading to increased opportunities [45] Question: How has the company differentiated itself in the current market? - Management highlighted direct relationships with factories and a robust logistics department as key differentiators [46][48] Question: What is the current status of PPE sales? - BAMKO's backlog includes about $2.8 million in PPE, with expectations for similar levels in Q4 [57] Question: How is the company managing price increases? - Management noted minimal pushback on price increases as competitors are also raising prices [55] Question: What is the outlook for the healthcare apparel segment? - Management expects demand to increase in 2022 as stockpiles diminish and hospital stays rise [32][60] Question: What is the expected CapEx for 2022? - Management anticipates CapEx to be around 1% to 1.5% of revenue as major projects wind down [83]