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

July 29, 2020

-- Net sales increased 73 percent including $58.5 million in sales of PPE -- Earnings per share (diluted) increased 456 percent to $1.00 -- Reduced debt an additional $16.1 million -- Reinstates regular $0.10 per share dividend and declares $0.10 per share special dividend -- Celebrates 100-year anniversary since its founding in 1920

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

The Company reported that for the second quarter ended June 30, 2020, net sales increased 73 percent to $159.4 million, compared to second quarter 2019 net sales of $92.3 million. Pretax Income was $18.9 million compared to $3.7 million in 2019. Net income was $15.2 million, or $1.00 per diluted share, compared to $2.8 million, or $0.18 per diluted share, for the second quarter of 2019.

The Board of Directors today declared a regular quarterly dividend of $0.10 per share, payable August 25, 2020, to shareholders of record as of August 11, 2020 and a special dividend of $0.10 per share, payable August 25, 2020, to shareholders of record as of August 11, 2020.

Michael Benstock, Chief Executive Officer, commented, We are extremely proud to report record operating results for the second quarter and first half of 2020. It is particularly gratifying to see the hard work, flexibility and ingenuity of our team members pay off and to further demonstrate our ability to adapt and thrive in times like these. The intentional diversity of our business segments and our historical emphasis on essential businesses bodes well for the future of each of our segments. While some smaller portions of our business were significantly impacted negatively, we were able to more than offset these shortfalls with the successful pivot to selling personal protective equipment (PPE) in addition to our legacy healthcare products, both of which continue to be in high demand during the pandemic. Net sales of PPE were approximately $58.5 million in the second quarter, and we ended the quarter with a very strong backlog, including nearly $52 million of PPE products expected to ship primarily during the third and fourth quarters of this year. We continue to book additional PPE orders on a regular basis.

As a result of the tremendous cash flow generated from operating activities, we were able to further reduce our outstanding debt an additional $16.1 million in the second quarter and over $34 million in the first half of 2020. Our very strong balance sheet has positioned us very well to be able to capitalize on opportunities as they arise during these times.

While we dont 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.

We are also pleased to be able to reinstate the regular quarterly dividend and to provide a special dividend equal to the amount that was suspended during the second quarter.

CONFERENCE CALL

Superior Group of Companies will hold a conference call on Wednesday, July 29, 2020 at 10:00 a.m. Eastern Time to discuss the Companys results. A supplemental slide presentation will be available during the call via the live webcast streaming. 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, archived replay and supplemental slide presentation 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 10:00 a.m. Eastern Time on August 12, 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 10145740 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: Hala ElsherbiniAndrew D. Demott, Jr. -OR- Senior Managing DirectorCOO, CFO & Treasurer Three Part Advisors(727) 803-7135 (214) 442-0016

Comparative figures are as follows:

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except shares and per share data) ThreeMonthsEndedJune30, 2020 2019 Net sales $ 159,359 $ 92,270 Costs and expenses: Cost of goods sold 103,421 59,927 Selling and administrative expenses 36,298 26,885 Other periodic pension costs 333 547 Interest expense 433 1,259 140,485 88,618 Income before taxes on income 18,874 3,652 Income tax expense 3,700 871 Net income $ 15,174 $ 2,781 Net income per share: Basic $ 1.01 $ 0.19 Diluted $ 1.00 $ 0.18 Weighted average shares outstanding during the period:Basic 15,016,062 14,952,802 Diluted 15,171,086 15,287,357 Cash dividends per common share $ - $ 0.10

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Six Months Ended June30, 2020 2019 Net sales $ 253,604 $ 178,822 Costs and expenses: Cost of goods sold 164,215 116,211 Selling and administrative expenses 63,787 52,748 Other periodic pension costs 618 806 Interest expense 1,493 2,429 230,113 172,194 Income before taxes on income 23,491 6,628 Income tax expense 4,950 1,471 Net income $ 18,541 $ 5,157 Net income per share: Basic $ 1.23 $ 0.35 Diluted $ 1.22 $ 0.34 Weighted average shares outstanding during the periodBasic 15,020,457 14,940,072 Diluted 15,185,992 15,275,006 Cash dividends per common share $ 0.10 $ 0.20

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and par value data) June30, December31, 2020 2019 ASSETS Current assets: Cash and cash equivalents $ 5,102 $ 9,038 Accounts receivable, less allowance for doubtful 87,064 79,746 accounts of $6,693 and $2,964, respectivelyAccounts receivable - other 819 1,083 Inventories 72,462 73,379 Contract assets 35,129 38,533 Prepaid expenses and other current assets 11,046 9,934 Total current assets 211,622 211,713 Property, plant and equipment, net 35,656 32,825 Operating lease right-of-use assets 4,595 5,445 Intangible assets, net 60,634 62,536 Goodwill 36,071 36,292 Other assets 9,592 10,122 Total assets $ 358,170 $ 358,933 LIABILITIES AND SHAREHOLDERS? EQUITY Current liabilities: Accounts payable $ 33,275 $ 33,271 Other current liabilities 39,348 18,894 Current portion of long-term debt 15,286 15,286 Current portion of acquisition-related 2,786 1,905 contingent liabilitiesTotal current liabilities 90,695 69,356 Long-term debt 69,730 104,003 Long-term pension liability 9,932 10,253 Long-term acquisition-related contingent 1,742 3,423 liabilitiesLong-term operating lease liabilities 1,880 2,380 Deferred tax liability 4,405 7,042 Other long-term liabilities 5,311 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 15,231,781 and 15,227,604 shares, respectively.Additional paid-in capital 58,381 57,442 Retained earnings 124,243 107,581 Accumulated other comprehensive income (loss), net of tax:Pensions (6,492 ) (7,224 ) Cash flow hedges 80 91 Foreign currency translation adjustment (1,752 ) (351 ) Total shareholders? equity 174,475 157,554 Total liabilities and shareholders? equity $ 358,170 $ 358,933

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In thousands) Six Months Ended June30, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 18,541 $ 5,157 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 3,959 4,211 Provision for bad debts - accounts 4,517 361 receivableShare-based compensation expense 1,061 1,032 Deferred income tax benefit (2,417 ) (1,979 )Gain on sale of property, plant and - (3 )equipmentChange in fair value of acquisition-related 1,165 417 contingent liabilitiesChanges in assets and liabilities: Accounts receivable - trade (12,261 ) (7,230 )Accounts receivable - other 264 280 Contract assets 3,404 5,562 Inventories 492 2,113 Prepaid expenses and other current assets (1,479 ) (2,625 )Other assets 390 (2,102 )Accounts payable and other current 21,023 (14 )liabilitiesLong-term pension liability 639 812 Other long-term liabilities 464 759 Net cash provided by operating activities 39,762 6,751 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (4,893 ) (4,979 )Proceeds from disposals of property, plant - 3 and equipmentNet cash used in investing activities (4,893 ) (4,976 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings of debt 77,525 94,466 Repayment of debt (111,838 ) (88,667 )Payment of cash dividends (1,521 ) (3,023 )Payment of acquisition-related contingent (1,966 ) (961 )liabilityProceeds received on exercise of stock 33 280 optionsTax (provision) benefit from vesting of (13 ) 30 acquisition-related restricted stockCommon stock reacquired and retired (500 ) (1,036 )Net cash provided by (used in) financing (38,280 ) 1,089 activities Effect of currency exchange rates on cash (525 ) 41 Net increase (decrease) in cash and cash (3,936 ) 2,905 equivalentsCash and cash equivalents balance, beginning 9,038 5,362 of periodCash and cash equivalents balance, end of $ 5,102 $ 8,267 period