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Superior Group of Companies, Inc. Reports Operating Results for the Fourth Quarter and Year Ended December 31, 2018

  • Annual Net Sales increased 30 percent
  • Annual Net Income increased 13 percent
  • 25th Consecutive Quarter with Sales Increase

SEMINOLE, Fla., Feb. 21, 2019 (GLOBE NEWSWIRE) -- Superior Group of Companies, Inc. (SGC), today announced its fourth quarter and year-end operating results for 2018.

The Company announced that for the year ended December 31, 2018, net sales increased 29.8 percent to $346.4 million, compared to 2017 net sales of $266.8 million. Income before taxes on income was $21.4 million compared to $24.8 million in 2017. Net income for the fiscal year 2018 increased 13.0% to $17.0 million, or $1.10 per diluted share, compared to $15.0 million, or $0.99 per diluted share, reported in 2017. Net income for 2018 was reduced by approximately $2.0 million ($0.13 per diluted share) of direct expenses associated with the May 2nd acquisition of CID Resources.

Net sales for the fourth quarter ended December 31, 2018 increased 31.1 percent to $95.0 million, compared to 2017 fourth quarter net sales of $72.4 million. Income before taxes on income was $5.7 million compared to $6.8 million in the 2017 fourth quarter. Net income for the fourth quarter ended December 31, 2018 was $4.6 million, or $0.30 per diluted share, compared to $1.9 million, or $0.12 per diluted share, reported for the fourth quarter 2017. Fourth quarter 2017 net income was reduced by approximately $4.0 million, or $0.26 per diluted share, associated with the enactment of the Tax Cuts and Jobs Act.

Michael Benstock, Chief Executive Officer, commented, “While the fourth quarter performance of our uniform segment was below our expectations, we’ve made tremendous progress on the integration of our uniform businesses within our Superior Group of Companies. We are aggressively developing avenues to leverage our expanded product assortment and service lines within the segment to meet and exceed our existing customers’ expectations and to gain market share. We are also on schedule with the integration of our ERP systems that, once completed, will allow us to maximize cost efficiencies throughout our operations. I’m quite satisfied with our progress in these areas and am confident in the overall trajectory of our uniform business as we enter 2019.

I’m particularly pleased with the performance of BAMKO and The Office Gurus.   During the fourth quarter, BAMKO, our Promotional Products segment, posted strong organic net sales growth of 32 percent, and total net sales within the segment grew 68 percent to $24 million. The Office Gurus, our Remote Staffing segment, continues to outperform our expectations with quarterly net sales growth to outside customers of 22 percent.”

On January 22, 2019, the Company restructured its Amended and Restated Credit Agreement (Term Loan) entered into on May 2, 2018 with our incumbent lender.  The restructuring reduced the principal amount of the Term Loan to $65 million, by using $20 million of proceeds under our revolving credit facility; extended the maturity from May 2020 to January 2026; and lowered the variable interest rate to LIBOR plus 85 basis points. Principal and interest payments are due monthly through its maturity. 

Michael Attinella, Chief Financial Officer of Superior Group of Companies, commented, “We are quite pleased with the restructuring of the Term Loan.  We were able to lower our interest rate and other costs of debt while maintaining repayment flexibility and extending its term.  We are confident that the combined cash flow from operations and liquidity provided from the revolving credit facility is more than ample to fund our strategic plan as we move into 2019 and beyond.”

CONFERENCE CALL
Superior Group of Companies will hold a conference call on Thursday, February 21, 2019 at 2:00 p.m. Eastern Time to discuss the Company’s results. Interested individuals may join the teleconference by dialing (844) 861-5505 for U.S. dialers and (412) 317-6586 for International dialers. The Canadian Toll Free number is (866) 605-3852. Please ask to be joined into the Superior Group of Companies call. The live webcast and archived replay can also be accessed in the investor information section of the Company’s website at www.superiorgroupofcompanies.com.

A telephone replay of the teleconference will be available one hour after the end of the call through 2:00 p.m. Eastern Time on February 28, 2019. To access the replay, dial (877) 344-7529 in the United States or (412) 317-0088 from international locations.  Canadian dialers can access the replay at (855) 669-9658.  Please reference conference number 10128748 for all replay access.

About Superior Group of Companies, Inc. (SGC):

Superior Group of Companies, formerly Superior Group of Companies, established in 1920, is a combination of companies that help customers unlock the power of their brands by creating extraordinary brand experiences for employees and customers. It provides customized support for each of its divisions through its shared services model.

Fashion Seal Healthcare®, HPI and CID Resources are signature uniform brands of Superior Group of Companies. Each is one of America’s leading providers of uniforms and image apparel in the markets it serves. They specialize in innovative uniform program design, global manufacturing, and state-of-the-art distribution. Every day, more than 6 million Americans go to work wearing a uniform from Superior Group of Companies.

BAMKO®, Tangerine Promotions® and Public Identity® are signature promotional products and branded merchandise brands of Superior Group of Companies. They provide unique custom branding, design, sourcing, and marketing solutions to some of the world’s most successful brands.

The Office Gurus® is a global provider of custom call and contact center support. As a true strategic partner, The Office Gurus implements customized solutions for its customers in order to accelerate their growth and improve their customers’ service experiences.

SGC’s commitment to service, technology, quality and value-added benefits, as well as its financial strength and resources, provides unparalleled support for its customers’ diverse needs while embracing a “Customer 1st, Every Time!” philosophy and culture in all of its business segments.

Visit www.superiorgroupofcompanies.com for more information.

Contact:         
Michael Attinella                                   
Chief Financial Officer & Treasurer  
(727) 803-7170                                  

-OR-

Hala Elsherbini
Halliburton Investor Relations
(972) 458-8000


Comparative figures are as follows:

 
 
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
(In thousands, except shares and per share data)
                     
        2018     2017     2016
Net sales  $   346,350   $   266,814   $   252,596
                     
Costs and expenses:                
    Cost of goods sold     224,653       170,462       165,614
    Selling and administrative expenses     96,710       70,592       65,124
    Other periodic pension costs     385       1,224       1,272
    Interest expense     3,207       802       688
          324,955       243,080       232,698
                     
Gain on sale of property, plant and equipment    -        1,048       -
                     
Income before taxes on income     21,395       24,782       19,898
Income tax expense     4,420       9,760       5,260
Net income $   16,975   $   15,022   $   14,638
                     
Weighted average number of shares outstanding during the period                
    (Basic)     14,937,786       14,510,156       14,082,243
    (Diluted)     15,472,133       15,118,768       14,897,489
Per Share Data:                
Basic                    
  Net earnings $   1.14   $   1.04   $   1.04
Diluted                  
  Net earnings $   1.10   $   0.99   $   0.98
                     
Cash dividends per common share $   0.390   $   0.365   $   0.340
                     

 

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
YEARS ENDED DECEMBER 31,
(In thousands, except share and par value data)
               
ASSETS
               
        2018     2017
CURRENT ASSETS:          
  Cash and cash equivalents $ 5,362   $ 8,130
  Accounts receivable, less allowance for doubtful accounts          
  of  $2,042 and $1,382, respectively   64,017     50,569
  Accounts receivable - other   1,744     1,848
  Inventories   67,301     64,979
  Contract asset   49,236       - 
  Prepaid expenses and other current assets     9,552       11,011
  TOTAL CURRENT ASSETS   197,212     136,537
               
PROPERTY, PLANT AND EQUIPMENT, NET   28,769     26,844
OTHER INTANGIBLE ASSETS, NET     66,312       29,061
GOODWILL
    33,961       16,032
DEFERRED INCOME TAXES     -        2,900
OTHER ASSETS   8,832     7,564
      $ 335,086   $ 218,938
               
LIABILITIES AND SHAREHOLDERS' EQUITY
               
CURRENT LIABILITIES:          
  Accounts payable $ 24,685   $ 19,752
  Other current liabilities   14,767     12,409
  Current portion of long-term debt   6,000     6,000
  Current portion of acquisition-related contingent liabilities   941     3,061
  TOTAL CURRENT LIABILITIES   46,393     41,222
               
LONG-TERM DEBT   111,522     32,933
LONG-TERM PENSION LIABILITY   8,705     8,319
LONG-TERM ACQUISITION-RELATED CONTINGENT LIABILITIES   5,422     7,283
DEFERRED INCOME TAXES   8,475       - 
OTHER LONG-TERM LIABILITIES   3,648     4,213
COMMITMENTS AND CONTINGENCIES (NOTE 11)          
SHAREHOLDERS' EQUITY:          
  Preferred stock, $.001 par value - authorized 300,000 shares (none issued)     -        - 
  Common stock, $.001 par value - authorized 50,000,000 shares, issued and          
    outstanding - 15,202,387 and 15,081,947, respectively.   15     15
  Additional paid-in capital   55,859     49,103
  Retained earnings   103,032     83,129
  Accumulated other comprehensive income (loss), net of tax:          
    Pensions     (7,673)       (7,282)
    Cash flow hedges     113       (90)
    Foreign currency translation adjustment     (425)       93
  TOTAL SHAREHOLDERS' EQUITY   150,921     124,968
        $ 335,086   $ 218,938
               

 

 SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
(In thousands)
                       
          2018     2017     2016
CASH FLOWS FROM OPERATING ACTIVITIES                
  Net income $ 16,975   $ 15,022   $ 14,638
  Adjustments to reconcile net income                
  to net cash provided from operating activities:                
    Depreciation and amortization     7,906       5,653       4,935
    Provision for bad debts - accounts receivable     867       1,002       512
    Share-based compensation expense     2,264       1,664       1,638
    Deferred income tax (benefit) provision     (665)       5,114       (1,940)
    Gain on foreign currency transactions    -       -        (264)
    Gain on disposals of property, plant and equipment    -        (1,048)      - 
    Change in fair value of acquisition-related contingent liabilities   (1,116)       (89)       (31)
    Changes in assets and liabilities, net of acquisition of businesses:              
      Accounts receivable - trade     (4,886)       (4,731)       (7,244)
      Accounts receivable - other     105       1,237       177
      Contract asset     (3,382)      -       - 
      Inventories     3,501       4,250       (5,427)
      Prepaid expenses and other current assets     1,550       (4,151)       2,203
      Other assets     (1,257)       (4,504)       (1,029)
      Accounts payable and other current liabilties   (1,344)       3,362       2,030
      Long-term pension liability     (128)       (2,577)       829
      Other long-term liabilities     (526)       2,523       962
  Net cash provided from operating activities     19,864       22,727       11,989
                     
CASH FLOWS FROM INVESTING ACTIVITIES                
    Additions to property, plant and equipment     (4,869)       (4,248)       (7,385)
    Proceeds from disposals of property, plant and equipment   -        2,858       - 
    Acquisition of businesses, net of acquired cash     (85,597)       (7,988)       (15,161)
  Net cash used in investing activities     (90,466)       (9,378)       (22,546)
                     
CASH FLOWS FROM FINANCING ACTIVITIES                
    Proceeds from long-term debt     206,025       74,387       125,067
    Repayment of long-term debt     (127,439)       (77,573)       (106,827)
    Payment of cash dividends     (5,836)       (5,269)       (4,707)
    Payment of acquisition-related contingent liabilities     (2,861)       (1,800)       (1,800)
    Proceeds received on exercise of stock options     727       1,872       1,504
    Tax benefit from vesting of acquisition                
    related restricted stock     445       650       990
    Tax withholdings on exercise of stock rights     (17)       (1,186)       (405)
    Common stock reacquired and retired     (2,906)      -        (714)
  Net cash provided from (used in) financing activities     68,138       (8,919)       13,108
                       
  Effect of exchange rates on cash     (304)       51       62
                       
  Net  (decrease) increase in cash and cash equivalents     (2,768)       4,481       2,613
                       
Cash and cash equivalents balance, beginning of year     8,130       3,649       1,036
                       
Cash and cash equivalents balance, end of year $ 5,362   $ 8,130   $ 3,649