Superior Group of Companies (NasdaqGM:SGC) Conference Transcript

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.