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 www.superiorgroupofcompanies.com for more information.
Contact: Andrew
D. Demott, Jr.
COO
&
CFO 727-803-7135
-OR-
Hala ElsherbiniThree Part AdvisorsSenior Managing
Director214-442-0016
Comparative figures are as follows:
SUPERIOR GROUP OF COMPANIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR GROUP OF COMPANIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except share and par value data)
|
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
SUPERIOR GROUP OF COMPANIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(In thousands)
|
|
Years Ended December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR GROUP OF COMPANIES, INC. AND
SUBSIDIARIESNON-GAAP FINANCIAL
MEASURES(Unaudited)(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.
Superior Group of Compan... (NASDAQ:SGC)
Historical Stock Chart
From Sep 2024 to Oct 2024
Superior Group of Compan... (NASDAQ:SGC)
Historical Stock Chart
From Oct 2023 to Oct 2024