Superior Group Of Companies, Inc. Reports Revised Operating Results For The Fourth Quarter And Year Ended December 31, 2021

Wednesday, 23. March 2022 14:36
  •  Excluding PPE sales, Fourth quarter net sales increased 28% and Annual net sales were up 26%
  • Excluding PPE sales, BAMKO Fourth quarter net sales increased 41% and Annual net sales were up 65%
  • The Office Gurus Fourth quarter net sales increased 45% and Annual net sales were up 54%

SEMINOLE, Fla., March 23, 2022 (GLOBE NEWSWIRE) -- On March 9, 2022, Superior Group of Companies, Inc. (the "Company") issued a press release announcing its financial results for the year ended December 31, 2021, and furnished the press release under Items 2.02 and 9.01 of Form 8-K on that day (the “Original Form 8-K”). Following the release, the Company discovered and corrected an income tax expense related to the non-cash pension termination charge recognized in 2021. More specifically, the Company determined that previously recorded deferred tax liabilities associated with the pension plans terminated in 2021 should have been eliminated to reduce tax expense. The correction resulted in a decrease of $2.2 million in tax expense for the year ended December 31, 2021, and an increase in prepaid and other current assets of $0.5 million and a decrease in deferred tax liabilities of $1.7 million, each as of December 31, 2021.  The correction of the error resulted in increasing net income for year ended December 31, 2021 by $2.2 million and net income per diluted share by $0.14 per share. The correction also resulted in the second quarter 2021 financial statements being restated reducing tax expense by $1.8 million and increasing net income by $1.8 million or $0.12 per diluted share, the third quarter 2021 financial statements being restated to reflect the impact of the second quarter restatement and the fourth quarter results being adjusted to reduce tax expense and to increase net income by $0.4 million or $0.02 per diluted share.

Our operating results and related statements for the fourth quarter and year ended December 31, 2021, revised as needed, follow:

The Company announced that for the year ended December 31, 2021, net sales increased $10.3 million or 2.0% to $537.0 million compared to $526.7 million in 2020. Pre-tax income was $33.1 million compared to $51.5 million in 2020. Net income for the fiscal year 2021 was $29.4 million, or $1.83 per diluted share, compared to $41.0 million, or $2.65 per diluted share in 2020.  2021 Pre-tax income was reduced by a noncash charge of $7.8 million related to the termination of the Company’s two defined benefit pension plans.  Net income for 2021 was reduced by $5.2 million or $0.32 per diluted share as a result of these charges.

Net sales for the fourth quarter ended December 31, 2021 were $142.0 million, a decrease of 2.3% compared to the 2020 fourth quarter of $145.4 million. Pre-tax income was $4.4 million compared to $15.9 million in the 2020 fourth quarter. Net income for the fourth quarter ended December 31, 2021 was $4.4 million, or $0.27 per diluted share, compared to $12.5 million, or $0.79 per diluted share, reported for the fourth quarter 2020.  Pre-tax income for the quarter was reduced by a noncash charge of $0.9 million as a result of final charges associated with the termination of the pension plans discussed above.  Net income for the fourth quarter was decreased by $0.7 million as a result of the net impact of the charge and related tax benefits.

Michael Benstock, Chief Executive Officer, commented, “We are very pleased to report that we exceeded our sales guidance for 2021, in spite of the impacts of the pandemic and supply chain difficulties.  It was quite an achievement to be able to exceed 2020 net sales in 2021 despite the fact that net sales of PPE in 2021 decreased to $38.6 million as compared to $131.2 million of PPE sales in 2020. From a bottom line perspective, inflationary and other cost pressures intensified during the year, negatively impacting our results.  Additionally, as the supply of PPE goods overwhelmed the market, we determined that it was necessary to take write downs against our remaining PPE inventory of $2.0 million in 2021 with $1.6 million of this amount being recorded in the fourth quarter.  While this was a negative impact for earnings in 2021, I would point out that we sold approximately $170.0 million in PPE product in 2020 and 2021 combined.  As we begin to move past the difficult comparisons with the tremendous sales of these PPE products, we believe we are well positioned to continue to show significant growth going forward and continuing improvements in our operating results.”
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) 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 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 deliver a vaccine on a timely basis, among other factors; general economic conditions, including employment levels, in the areas of the United States of America (“United States”)  in which the Company’s customers are located; changes in the healthcare, industrial, 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, polyester and other manufacturing materials; attracting and retaining senior management and key personnel; the effect of our material weakness in internal control over financial reporting and/or the restatement of our second quarter and third quarter 2021 financial statements, and other factors described in the Company’s 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, 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 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, 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.

Fashion Seal Healthcare®, HPI® and WonderWink® are our core uniform brands. Each is one of America’s 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®, Gifts By Design and Sutter’s Mill Specialties are our signature promotional product companies. We 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 our customers in order to accelerate their growth and improve our customers’ service experiences.

SGC’s 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 for more information.

Andrew D. Demott, Jr.                 
COO & CFO                                


Hala Elsherbini
Three Part Advisors
Senior Managing Director

Comparative figures are as follows:

(In thousands, except shares and per share data)

  Years Ended December 31, 
  2021  2020  2019 
Net sales $536,986  $526,697  $376,701 
Costs and expenses:            
Cost of goods sold  350,972   337,932   247,772 
Selling and administrative expenses  142,060   136,515   107,282 
Other periodic pension costs  1,786   955   1,962 
Pension plan termination charge  7,821   -   - 
Interest expense  1,220   2,003   4,399 
   503,859   477,405   361,415 
Gain on sale of property, plant and equipment  -   2,164   - 
Income before taxes on income  33,127   51,456   15,286 
Income tax expense  3,687   10,430   3,220 
Net income $29,440  $41,026  $12,066 
Net income per share:            
Basic $1.91  $2.72  $0.81 
Diluted $1.83  $2.65  $0.79 
Weighted average shares outstanding during the period            
Basic  15,438,849   15,075,134   14,945,165 
Diluted  16,091,070   15,508,420   15,266,408 
Cash dividends per common share $0.46  $0.40  $0.40 

(In thousands, except share and par value data)

  December 31, 
  2021  2020 
Current assets:        
Cash and cash equivalents $8,935  $5,172 
Accounts receivable, less allowance for doubtful accounts of $6,393 and $7,667, respectively  107,053   101,902 
Accounts receivable - other  5,546   1,356 
Inventories  120,555   89,766 
Contract assets  38,018   39,231 
Prepaid expenses and other current assets  19,162   11,030 
Total current assets  299,269   248,457 
Property, plant and equipment, net  49,690   36,644 
Operating lease right-of-use assets  8,246   3,826 
Intangible assets, net  60,420   58,746 
Goodwill  39,434   36,116 
Other assets  13,186   10,135 
Total assets $470,245  $393,924 
Current liabilities:        
Accounts payable $52,340  $39,327 
Other current liabilities  38,989   44,670 
Current portion of long-term debt  15,286   15,286 
Current portion of acquisition-related contingent liabilities  4,507   5,589 
Total current liabilities  111,122   104,872 
Long-term debt  100,845   72,372 
Long-term pension liability  15,420   14,574 
Long-term acquisition-related contingent liabilities  2,569   1,892 
Long-term operating lease liabilities  3,729   1,599 
Deferred tax liability  359   450 
Other long-term liabilities  9,211   6,535 
Commitments and contingencies        
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 - 16,127,505 and 15,391,660 shares, respectively  16   15 
Additional paid-in capital  69,351   61,844 
Retained earnings  163,836   141,972 
Accumulated other comprehensive income (loss), net of tax:        
Pensions  (4,577)  (10,898)
Cash flow hedges  47   69 
Foreign currency translation adjustment  (1,683)  (1,372)
Total shareholders’ equity  226,990   191,630 
Total liabilities and shareholders’ equity $470,245  $393,924 

(In thousands)

  Years Ended December 31, 
  2021  2020  2019 
Net income $29,440  $41,026  $12,066 
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation and amortization  9,291   8,132   8,272 
Provision for bad debts - accounts receivable  2,260   6,746   1,323 
Share-based compensation expense  4,010   2,530   1,484 
Deferred income tax benefit  (2,724)  (4,987)  (1,595)
Gain on sale of property, plant and equipment  -   (2,164)  (5)
Change in fair value of acquisition-related contingent liabilities  2,936   4,119   (74)
Pension plan termination charge  7,821   -   - 
Changes in assets and liabilities, net of acquisition of businesses:            
Accounts receivable  (2,575)  (29,251)  (17,104)
Accounts receivable - other  (4,189)  (273)  660 
Contract assets  1,212   (699)  10,703 
Inventories  (21,753)  (16,763)  (4,984)
Prepaid expenses and other current assets  (7,852)  (1,474)  (3,479)
Other assets  (2,325)  464   (1,717)
Accounts payable and other current liabilities  1,007   32,690   10,904 
Payment of acquisition-related contingent liabilities  (4,221)  -   - 
Long-term pension liability  1,951   (508)  2,138 
Other long-term liabilities  2,791   1,771   1,415 
Net cash provided by operating activities  17,080   41,359   20,007 
Additions to property, plant and equipment  (17,696)  (11,857)  (9,672)
Proceeds from disposals of property, plant and equipment  -   5,284   5 
Acquisition of businesses  (16,434)  -   - 
Net cash used in investing activities  (34,130)  (6,573)  (9,667)
Proceeds from borrowings of debt  250,608   202,349   165,314 
Repayment of debt  (223,025)  (234,063)  (163,645)
Payment of cash dividends  (7,237)  (6,111)  (6,046)
Payment of acquisition-related contingent liabilities  (1,641)  (1,966)  (961)
Proceeds received on exercise of stock options  2,703   1,927   283 
Tax withholdings on exercise of stock rights  (584)  (66)  - 
Tax (provision) benefit from vesting of acquisition-related restricted stock  171   (13)  30 
Common stock reacquired and retired  -   (500)  (1,685)
Net cash provided by (used in) financing activities  20,995   (38,443)  (6,710)
Effect of currency exchange rates on cash  (182)  (209)  46 
Net increase (decrease) in cash and cash equivalents  3,763   (3,866)  3,676 
Cash and cash equivalents balance, beginning of year  5,172   9,038   5,362 
Cash and cash equivalents balance, end of year $8,935  $5,172  $9,038 
Supplemental disclosure of cash flow information:            
Income taxes paid $14,632  $13,390  $7,146 
Interest paid $1,298  $1,490  $3,979 

(In thousands, except shares and per share data)

  Years Ended December 31, 
  2021  2020  2019 
Net income $29,440  $41,026  $12,066 
Adjustment for items:            
Pension plan termination charge  7,821   -   - 
Tax impact of adjustment  (2,636)  -   - 
Adjusted net income(1) $34,625  $41,026  $12,066 
Diluted net income per share $1.83  $2.65  $0.79 
Adjustment for items, after-tax, per diluted share  0.32   -   - 
Diluted adjusted net income per share(1) $2.15  $2.65  $0.79 
Weighted average shares outstanding during the period            
Diluted  16,091,070   15,508,420   15,266,408 

(1) Adjusted net income and diluted adjusted net income per share, which are non-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 per share provides useful information to investors because it allows management, investors and others to evaluate and compare our operating results from period to period by removing the impact of pension plan termination charges not appropriately reflective of our core business.

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