GlobeNewswire Inc | Oct 29, 2020 07:00AM EDT

October 29, 2020

-- Net sales increased 43 percent -- Earnings per share (diluted) increased142 percent to $0.63 -- Debt reduced by $8.2 million

SEMINOLE, Fla., Oct. 29, 2020 (GLOBE NEWSWIRE) -- Superior Group of Companies, Inc. (NASDAQ: SGC), today announced its third quarter operating results for 2020.

The Company reported that for the third quarter ended September 30, 2020, net sales increased 43 percent to $127.8 million, compared to third quarter 2019 net sales of $89.5 million. Pretax Income was $12.1 million compared to $4.6 million for the third quarter of 2019. Net income was $10.0 million, or $0.63 per diluted share, compared to $3.9 million, or $0.26 per diluted share, for the third quarter of 2019.

Michael Benstock, Chief Executive Officer, commented, Our third quarter continued the robust momentum of the first half of the year. The dedication and relentlessness of our team members has again yielded positive results. Our pre-existing strategy of selling to a diverse range of customers remains in place and bodes well for our future, especially as we continue to provide products and services to many essential businesses in all of our SGC segments. Both our uniform and promotional products segments have strong opportunity pipelines and backlogs. The Office Gurus segment continues to grow, including by leveraging its work from home solution to increase capacity. While we have no certainty as to how the pandemic will impact our customers in the future, we are fully prepared to meet the challenges that might face us. We have made the proper investments in our people, technology and product development, and we continue to do so at an accelerated pace when needed. While we are living in the most uncertain of times, we have met challengesthroughout our 100 years with innovation and success. We will continue to do so going forward in a way that focuses on building long-term shareholder value.

As a result of the cash flow generated in the quarter from operating activities, we were able to further reduce our outstanding debt by an additional $8.2 million, resulting in more than a $42.5 million net debt repayment through the first three quarters of 2020. This additional reduction hasbolstered our ability to capitalize on opportunities as they arise.

While we do not generally provide guidance on individual quarters or years, we are confident that we will continue to see significant increases in our net sales and income in comparison with prior year periods for the balance of the year.

CONFERENCE CALL

Superior Group of Companies will hold a conference call on Thursday, October 29, 2020 at 2:00 p.m. Eastern Time to discuss the Companys 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 Companys 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 November 5, 2020. 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 10148875 for all replay access.

Disclosure Regarding Forward Looking Statements

Certain matters discussed in this press release are forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by use of the words may, will, should, could, expect, anticipate, estimate, believe, intend, project, potential, or plan or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements in this press release may include, without limitation: (1) the projected impact of the current coronavirus (COVID-19) on our, our customers, and our suppliers businesses, (2) projections of revenue, income, and other items relating to our financial position and results of operations, (3) statements of our plans, objectives, strategies, goals and intentions, (4) statements regarding the capabilities, capacities, market position and expected development of our business operations, and (5) statements of expected industry and general economic trends.

Such forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect the anticipated results. Such risks and uncertainties include, but are not limited to, the following: the impact of competition;the effect of uncertainties related to the current coronavirus (COVID-19) pandemic on the U.S. and global markets, our business, operations, customers, suppliers and employees, including without limitation the length and scope of the restrictions imposed by various governments and success of efforts to find a suitable vaccine, among other factors;general economic conditions, including employment levels, in the areas of the UnitedStates of America(United States) in which the Companys customers are located; changes in the healthcare, industrial, commercial and hospitality industries where uniforms and service apparel are worn; our ability to identify suitable acquisition targets, successfully integrate any acquired businesses, successfully manage our expanding operations, or discover liabilities associated with such business during the diligence process; the price and availability of cotton, polyester and other manufacturing materials; attracting and retaining senior management and key personnel and other factors described in the Companys filings with the Securities and Exchange Commission, including those described in the Risk Factors section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law.

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

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

Fashion Seal Healthcare, HPI and CID Resources are signature uniform brands of Superior Group of Companies. Each is one of Americas leading providers of uniforms and image apparel in the markets we serve. We specialize in innovative uniform program design, global manufacturing, and state-of-the-art distribution. Every workday, 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. We provide unique custom branding, design, sourcing, and marketing solutions to some of the worlds 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 our customers in order to accelerate their growth and improve our customers service experiences.

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

Visit www.superiorgroupofcompanies.com for more information.

Contact: Andrew D. Demott, Jr. Hala Elsherbini COO, CFO & Treasurer -OR- Senior Managing Director(727) 803-7135 Three Part Advisors (214) 442-0016

Comparative figures are as follows:

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

ThreeMonthsEndedSeptember30, 2020 2019 Net sales $ 127,737 $ 89,466 Costs and expenses: Cost of goods sold 80,285 58,015 Selling and administrative expenses 34,917 25,260 Other periodic pension costs 212 476 Interest expense 239 1,085 115,653 84,836 Income before taxes on income 12,084 4,630 Income tax expense 2,140 709 Net income $ 9,944 $ 3,921 Net income per share: Basic $ 0.66 $ 0.26 Diluted $ 0.63 $ 0.26 Weighted average shares outstanding during the period:Basic 15,084,300 14,947,552 Diluted 15,711,122 15,266,850 Cash dividends per common share $ 0.20 $ 0.10



SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except shares and per share data) Nine Months Ended September30, 2020 2019 Net sales $ 381,341 $ 268,288 Costs and expenses: Cost of goods sold 244,500 174,226 Selling and administrative expenses 98,704 78,008 Other periodic pension costs 830 1,282 Interest expense 1,732 3,514 345,766 257,030 Income before taxes on income 35,575 11,258 Income tax expense 7,090 2,180 Net income $ 28,485 $ 9,078 Net income per share: Basic $ 1.89 $ 0.61 Diluted $ 1.85 $ 0.59 Weighted average shares outstanding during the periodBasic 15,041,738 14,942,565 Diluted 15,361,035 15,272,287 Cash dividends per common share $ 0.30 $ 0.30



SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(In thousands, except share and par value data) September30, December31, 2020 2019 ASSETS Current assets: Cash and cash equivalents $ 5,651 $ 9,038 Accounts receivable, less allowance for doubtful 85,297 79,746 accounts of $7,922 and $2,964, respectivelyAccounts receivable - other 2,204 1,083 Inventories 80,221 73,379 Contract assets 35,484 38,533 Prepaid expenses and other current assets 13,094 9,934 Total current assets 221,951 211,713 Property, plant and equipment, net 35,421 32,825 Operating lease right-of-use assets 4,143 5,445 Intangible assets, net 59,696 62,536 Goodwill 36,055 36,292 Other assets 9,972 10,122 Total assets $ 367,238 $ 358,933 LIABILITIES AND SHAREHOLDERS? EQUITY Current liabilities: Accounts payable $ 30,512 $ 33,271 Other current liabilities 49,890 18,894 Current portion of long-term debt 15,286 15,286 Current portion of acquisition-related 4,307 1,905 contingent liabilitiesTotal current liabilities 99,995 69,356 Long-term debt 61,511 104,003 Long-term pension liability 9,771 10,253 Long-term acquisition-related contingent 1,815 3,423 liabilitiesLong-term operating lease liabilities 1,724 2,380 Deferred tax liability 3,260 7,042 Other long-term liabilities 5,581 4,922 Commitments and contingencies Shareholders? equity: Preferred stock, $.001 par value - authorized - - 300,000 shares (none issued)Common stock, $.001 par value - authorized50,000,000 shares, issued and outstanding 15 15 15,340,949 and 15,227,604 shares, respectively.Additional paid-in capital 60,618 57,442 Retained earnings 130,968 107,581 Accumulated other comprehensive income (loss), net of tax:Pensions (6,198 ) (7,224 )Cash flow hedges 75 91 Foreign currency translation adjustment (1,897 ) (351 )Total shareholders? equity 183,581 157,554 Total liabilities and shareholders? equity $ 367,238 $ 358,933



SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In thousands) Nine Months Ended September30, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 28,485 $ 9,078 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 5,972 6,339 Provision for bad debts - accounts 6,099 719 receivableShare-based compensation expense 1,790 997 Deferred income tax benefit (3,654 ) (2,136 )Gain on sale of property, plant and - (5 )equipmentChange in fair value of acquisition-related 2,759 (272 )contingent liabilitiesChanges in assets and liabilities: Accounts receivable - trade (12,225 ) (12,251 )Accounts receivable - other (1,121 ) 481 Contract assets 3,049 11,206 Inventories (7,306 ) (595 )Prepaid expenses and other current assets (3,592 ) (7,051 )Other assets 1 (2,233 )Accounts payable and other current 29,167 5,523 liabilitiesLong-term pension liability 864 1,292 Other long-term liabilities 779 750 Net cash provided by operating activities 51,067 11,842 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (5,711 ) (6,424 )Proceeds from disposals of property, plant - 5 and equipmentNet cash used in investing activities (5,711 ) (6,419 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings of debt 137,559 125,121 Repayment of debt (180,112 ) (123,600 )Payment of cash dividends (4,574 ) (4,533 )Payment of acquisition-related contingent (1,966 ) (961 )liabilityProceeds received on exercise of stock 1,407 283 optionsTax withholding on exercise of stock rights (32 ) - Tax (provision) benefit from vesting of (13 ) 30 acquisition-related restricted stockCommon stock reacquired and retired (500 ) (1,243 )Net cash used in financing activities (48,231 ) (4,903 ) Effect of currency exchange rates on cash (512 ) (430 )Net increase (decrease) in cash and cash (3,387 ) 90 equivalentsCash and cash equivalents balance, 9,038 5,362 beginning of periodCash and cash equivalents balance, end of $ 5,651 $ 5,452 period