In This Article:
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Superior Group Of Companies Inc (NASDAQ:SGC) maintained a strong balance sheet and net leverage position, allowing for strategic long-term capital allocation.
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The company has a diversified business model with three segments, which helps mitigate risks associated with economic uncertainties.
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SGC's contact center business segment showed growth with a 3% increase in revenue and maintained strong margins.
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The company has a strong pipeline of business opportunities in branded products, setting new records and maintaining over 90% customer retention.
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SGC is actively repurchasing shares, considering it a compelling value, and completed $3.8 million worth of share buybacks during the first quarter.
Negative Points
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SGC reported a first-quarter net loss per share of $0.05 compared to earnings per diluted share of $0.24 in the prior year period.
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The company's revenue was nearly flat year over year, with a slight decline in branded products and healthcare apparel segments.
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SGC's gross margin decreased to 36.8% from 39.8% in the prior year, primarily due to changes in sales mix and fewer orders from higher margin customers.
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The company reduced its full-year revenue outlook due to heightened economic uncertainty and tariff impacts.
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SGC faces challenges with sourcing due to tariffs, particularly with products impacted by high tariffs on China-made goods.
Q & A Highlights
Q: Can you elaborate on the strong pipeline in branded products and contact centers despite the uncertain environment? A: Michael Benstock, CEO, explained that the branded products segment has been proactive in addressing tariff challenges by positioning themselves as experts, which has driven business their way. They have created a redundant strategy for manufacturing and sourcing, moving production to other countries. The contact centers have built a sales team that is bringing in more opportunities, and they expect to come out of the current situation better than most competitors.
Q: With the reduced revenue guidance, are you building conservatism into the second half of the year? A: Michael Benstock, CEO, confirmed that they are being conservative due to the current environment and uncertainty about future developments. They are managing costs on a conservative basis while still expecting a ramp-up in the second half of the year.
Q: How are you managing cost exposure to tariffs, and can you pass on price increases to customers? A: Michael Benstock, CEO, stated that they will pass on tariff-related cost increases to customers where possible, either by contract or on a purchase order basis. They are a replenishment business and have containers coming in at higher tariffs, but they are working to manage this with their customers.