GlobeNewswire Inc | Jul 28, 2021 07:00AM EDT

July 28, 2021

Compared to the second quarter 2020:

-- Net Sales increased by 23.1% excluding PPE sales -- The Office Gurus net sales increased 72.6% -- BAMKO net sales increased 85.2% excluding PPE sales

SEMINOLE, Fla., July 28, 2021 (GLOBE NEWSWIRE) -- Superior Group of Companies, Inc. (NASDAQ: SGC), today announced its second quarter operating results for 2021.

The Company announced that for the secondquarter ended June 30, 2021, net sales decreased17.9%to $130.8million, compared to secondquarter 2020 net sales of $159.4million. Pretax Income was $5.5million compared to $18.9million in the second quarter of 2020. Net income was $4.6million or $0.28per diluted sharecompared to $15.2million, or $1.00 per diluted share for the secondquarter of 2020.In the second quarter of 2021, the Company terminated its two noncontributory qualified defined benefit pension plans, which were fully funded. Consequently, the Company recognized a pre-tax settlement charge of$6.9 million during the second quarter of 2021.Net of related tax benefits, this charge reduced net income per diluted share by $0.39. The pension plan terminations did not require a cash outlay by the Company. Absent the non-cash charge for the pension plan terminations, we would have reported $0.67 net income per diluted share for the quarter.

Michael Benstock, Chief Executive Officer, commented, We are extremely excited by the exceptional momentum of our core businesses which face the most attractive outlook in our Companys history. We are now at a stage where we believe that sales of any significant amount of crisis personal protective equipment (PPE) are behind us, and we are laser focused on our core products and services. Excluding the impact of PPE sales, we saw tremendous growth in our promotional products segment and our remote staffing solutions segment. This represented BAMKOs third consecutive quarter of record quarterly sales of core promotional products. BAMKO finished the quarter with the largest backlog of sales in the history of the segment, with the backlog comprised of 99.6% of core promotional products. Additionally, The Office Gurus added significantly more new seats in the second quarter than we had originally forecasted for the full year. Uniform segment net sales, excluding PPE sales, were down slightly due to the significant pandemic demand for our core healthcare products in the second quarter of 2020. We were able to replace the vast majority of these sales with increased demand from our non-essential markets and sales from additional channels in our healthcare business. We are well positioned with strong tailwinds in all of our core businesses and expect to continue to report strong sales and earnings for the balance of 2021. We now expect net sales for 2021 to approach $525 million. For perspective, the full year 2020 included total PPE sales of $131.1 million and full year 2021 sales of PPE are expected to be less than $45 million.

CONFERENCE CALL

Superior Group of Companies will hold a conference call on Wednesday, July28, 2021 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 Company's website at https://ir.superiorgroupofcompanies.com/Presentations.

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 August 11,2021. 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 10158424for all replay access.

Disclosure Regarding Forward Looking Statements

Certain matters discussed in this Form 10-Q 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 Quarterly Report on Form 10-Q may include, without limitation: (1) the projected impact of the COVID-19 pandemic 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 COVID-19 pandemic, including existing and possible future variants, on the United States of America (U.S. or United States) and global markets, our business, operations, customers, suppliers and employees, including without limitation the length and scope of restrictions imposed by various governments and organizations and the success of efforts to deliver effective vaccines on a timely basis to a number of people sufficient to prevent or substantially lower the severity of incidents of infection or variants, among other factors; our ability to navigate successfully the challenges posed by current global supply disruptions; general economic conditions, including employment levels, in the areas of the United States in which the Companys customers are located; changes in the healthcare, retail, hotels, food service, transportation and other 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 businesses during the diligence process; the price and availability of cotton 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 herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. 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 Form 10-Q 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 engagement 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 WonderWink are our core uniform brands. 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 7 million Americans go to work wearing a uniform from Superior Group of Companies.

BAMKO, Tangerine Promotions, Public Identity and Gifts By Design are our signature promotional product 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 ElsherbiniCOO, CFO & Treasurer -OR- Three Part Advisors727-803-7135 Senior Managing Director 214-442-0016

Comparative figures are as follows:

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except share and per sharedata)

Three Months Ended June 30, 2021 2020 Net sales $ 130,787 $ 159,359 Costs and expenses: Cost of goods sold 83,629 103,421 Selling and administrative expenses 33,906 36,298 Other periodic pension costs 440 333 Pension plan termination charge 6,945 - Interest expense 330 433 125,250 140,485 Income before taxes on income 5,537 18,874 Income tax expense 960 3,700 Net income $ 4,577 $ 15,174 Net income per share: Basic $ 0.30 $ 1.01 Diluted $ 0.28 $ 1.00 Weighted average shares outstanding during the period:Basic 15,433,412 15,016,062 Diluted 16,087,736 15,171,086 Cash dividends per common share $ 0.12 $ -

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except share and per sharedata)

Six Months Ended June 30, 2021 2020 Net sales $ 271,634 $ 253,604 Costs and expenses: Cost of goods sold 175,433 164,215 Selling and administrative expenses 69,017 63,787 Other periodic pension costs 869 618 Pension plan termination charge 6,945 - Interest expense 605 1,493 252,869 230,113 Income before taxes on income 18,765 23,491 Income tax expense 3,710 4,950 Net income $ 15,055 $ 18,541 Net income per share: Basic $ 0.98 $ 1.23 Diluted $ 0.94 $ 1.22 Weighted average shares outstanding during the periodBasic 15,327,374 15,020,457 Diluted 16,039,605 15,185,992 Cash dividends per common share $ 0.22 $ 0.10

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(In thousands, except share and par value data)

June 30, December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 7,530 $ 5,172 Accounts receivable, less allowance for doubtful 101,591 101,902 accounts of $5,466 and $7,667, respectivelyAccounts receivable - other 2,999 1,356 Inventories 98,572 89,766 Contract assets 41,151 39,231 Prepaid expenses and other current assets 13,805 11,030 Total current assets 265,648 248,457 Property, plant and equipment, net 45,070 36,644 Operating lease right-of-use assets 5,872 3,826 Intangible assets, net 60,476 58,746 Goodwill 38,618 36,116 Other assets 13,062 10,135 Total assets $ 428,746 $ 393,924 LIABILITIES AND SHAREHOLDERS? EQUITY Current liabilities: Accounts payable $ 38,039 $ 39,327 Other current liabilities 33,790 44,670 Current portion of long-term debt 15,286 15,286 Current portion of acquisition-related contingent 3,362 5,589 liabilitiesTotal current liabilities 90,477 104,872 Long-term debt 98,205 72,372 Long-term pension liability 14,443 14,574 Long-term acquisition-related contingent - 1,892 liabilitiesLong-term operating lease liabilities 1,952 1,599 Deferred tax liability 1,353 450 Other long-term liabilities 8,801 6,535 Commitments and contingencies (Note 6) 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 16 15 15,824,530 and 15,391,660 shares, respectively.Additional paid-in capital 65,578 61,844 Retained earnings 153,412 141,972 Accumulated other comprehensive income (loss), net of tax:Pensions (4,563 ) (10,898 )Cash flow hedges 58 69 Foreign currency translation adjustment (986 ) (1,372 )Total shareholders? equity 213,515 191,630 Total liabilities and shareholders? equity $ 428,746 $ 393,924

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In thousands)

Six Months Ended June 30, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 15,055 $ 18,541 Adjustments to reconcile net income to netcash provided by (used in) operating activities:Depreciation and amortization 4,373 3,959 Provision for bad debts - accounts 1,244 4,517 receivableShare-based compensation expense 1,669 1,061 Deferred income tax benefit (1,126 ) (2,417 )Change in fair value of acquisition-related 1,741 1,165 contingent liabilitiesPension plan termination charge 6,945 - Changes in assets and liabilities, net of acquisition of business:Accounts receivable (896 ) (12,261 )Accounts receivable - other (1,392 ) 264 Contract assets (1,868 ) 3,404 Inventories (8,738 ) 492 Prepaid expenses and other current assets (2,565 ) (1,479 )Other assets (1,401 ) 390 Accounts payable and other current (14,535 ) 21,023 liabilitiesPayment of acquisition-related contingent (4,220 ) - liabilitiesLong-term pension liability 384 639 Other long-term liabilities 2,320 464 Net cash provided by (used in) operating (3,010 ) 39,762 activities CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (11,326 ) (4,893 )Acquisition of business (6,026 ) - Net cash used in investing activities (17,352 ) (4,893 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings of debt 127,574 77,525 Repayment of debt (101,801 ) (111,838 )Payment of cash dividends (3,437 ) (1,521 )Payment of acquisition-related contingent (1,641 ) (1,966 )liabilityProceeds received on exercise of stock 2,122 33 optionsTax withholdings on exercise of performance (405 ) - based stockTax (provision) benefit from vesting of 171 (13 )acquisition-related restricted stockCommon stock reacquired and retired - (500 )Net cash provided by (used in) financing 22,583 (38,280 )activities Effect of currency exchange rates on cash 137 (525 )Net increase (decrease) in cash and cash 2,358 (3,936 )equivalentsCash and cash equivalents balance, 5,172 9,038 beginning of periodCash and cash equivalents balance, end of $ 7,530 $ 5,102 period

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESNON-GAAP FINANCIAL MEASURES(Unaudited)(In thousands, except share and par value data)

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net income $ 4,577 $ 15,174 $ 15,055 $ 18,541 Adjustment for items:Pensionplan 6,945 - 6,945 - terminationchargeTax impactof (610 ) - (610 ) - adjustmentAdjustednet income $ 10,912 $ 15,174 $ 21,390 $ 18,541 (1) Diluted netincome per $ 0.28 $ 1.00 $ 0.94 $ 1.22 shareAdjustmentfor items,after-tax, 0.39 - 0.39 - per dilutedshareDilutedadjustednet income $ 0.67 $ 1.00 $ 1.33 $ 1.22 per share(1) Weightedaverageshares outstandingduring theperiodDiluted 16,087,736 15,171,086 16,039,605 15,185,992

(1) Adjusted net income and diluted adjusted net income per share, which arenon-GAAP measures, are defined as net income and net income per share,excluding the impact of pension plan termination charges (net of tax).Management believes adjusted net income and diluted adjusted net income pershare provides useful information to investors because it allows management,investors and others to evaluate and compare our operating results from periodto period by removing the impact of pension plan termination charges notappropriately reflective of our core business.