Superior Group of Companies, In (SGC) research, news, and more from GeoInvesting

Company description

Tue, 29 Nov 2011 05:00:00 GMT

Superior Uniform Group, Inc. was organized in 1920 and was incorporated in 1922 as a New York company under the name Superior Surgical Mfg. Co., Inc. In 1998, the Company changed its name to Superior Uniform Group, Inc. and its state of incorporation to Florida.

Superior, through its Signature marketing brands – Fashion Seal®, Fashion Seal Healthcare®, Martin’s®, Worklon®, UniVogue® and Blade – manufactures and sells a wide range of uniforms, career apparel and accessories for the hospital and healthcare fields; hotels; fast food and other restaurants; and public safety, industrial, and commercial markets. There are no significant distinct segments or lines of business. In excess of 95% of Superior’s business consists of the sale of uniforms and service apparel, and miscellaneous products directly related thereto.

Research

Mon, 22 May 2023 11:59:22 GMT

Superior Group Of Companies, In (NASDAQ:SGC) CliffsNotes From MS Microcaps (Extended cliff note from our initial early April 2023 look)

SGC Segments include:

Branded products and uniforms (67%)
Healthcare apparel (20%)
Global/North America call centers. The call center business (13%) is the segment that is currently carrying the company, where sales are growing nicely (20% to 30%), due to the lack of job demand in the U.S. by consumers, which is being magnified by de-globalization trends that creates the need for more jobs.

Looking at the stock because it has been pummeled due to weak financials due to higher interest expense and weaker economy hitting the Branded segment and higher labor costs in the call center business. Also, the healthcare segment growth has stalled since the COVID lift in sales has gone away. We are monitoring the story for a bounce back, based on bullish 2023 EPS guidance of $0.92 to $0.97 vs. $0.62 in 2022.

On the positive side, the company:

Is managing cash better, resulting in cash flow from operations jumping to $25M from negative $9M in last year's Q1. Cash increased to $27M from $18M.
Increased prices to keep pace with inflation and wage increases. This will start going into effect in Q2.
Is anticipating that the supply guy in the healthcare segment is resolving.
Just rolled out a new website to sell its healthcare product consumers and its distributors.

Will be watching closely if the company can continue to reduce its debt level with its extra cash flow. They paid down $12M in Q1 to $139M. This is key, since interest expense has ballooned as rates have increased.

Caveats:

Branded division has exposure to recession
Healthcare division supply gut takes longer to resolve
High interest expanse which puts the company at risk of violating debt covenants (although they just amended covenants).
Since the company missed Q1 estimates by a wide margin and uncertainty about a recession, we are taking guidance with a grain of salt until the company reports Q2 results. However, upside is significant, if things go the right way.

Valuation:

A P/E of 10 on 2023 EPS guidance of $0.92 to $0.97 would translate into a price target of around $9.00. If business conditions improve across all divisions and debt continues to come down, we could see an expansion of the P/E to 15, or around $14.00.

Tasks:

Get a clearer picture on recession risk in the branded business. Is management reading this risk appropriately?
Management goals on timeline to pay down debt, if that is a goal at all. Will they have to increase borrowings?

Q1 CC comments:

“ I’ll wrap up with a reiteration of the outlook we provided for full-year 2023 on our last call. On a consolidated basis, we continue to look for full-year sales of $585 million to $595 million, up from $579 million last year, and earnings per diluted share of $0.92 to $0.97, up from adjusted earnings per diluted share of $0.62 last year.”

“More specifically, for Healthcare Apparel we continue to expect low-single-digit sales growth that gradually improves throughout the year, as inventory levels and customer demand return to normalized levels. For Branded Products, we now expect a flat, to mid-single-digit sales decline, again with meaningful improvement during the second half of the year. And for Contact Centers, we continue to expect strong double-digit sales growth, with the strong profitability of this segment enhancing our overall margins.”

Research

Mon, 03 Apr 2023 14:35:17 GMT

SGC CliffsNotes From MS Microcaps

Has gotten crushed on two really bad quarters (company protective apparel biz is coming back to earth from elevated COVID related sales). Yet, the company claims it will begin to see a recovery in the second half of 2023 and is very cheap on its guidance, which implies the stock could double. Pays a 7% dividend:

"Looking ahead to 2023, we are optimistic that business conditions should gradually improve throughout the year for Healthcare Apparel and momentum will build during the year for Branded Products. Contact Centers will continue producing double digit top line growth. The end result should be solid full-year financial performance for SGC, driven by significant growth in the back half of the year. Our proven strategy is to tap into the emerging opportunities across all three of our diversified businesses, while maintaining focus on driving free cash flow, improving our net leverage position and prudently investing in longer-term growth opportunities. Our Board’s latest quarterly dividend approval reflects our favorable growth prospects as our entire team strives to enhance long-term shareholder value.”

The Company is forecasting full year 2023 sales to be $585 million to $595 million versus 2022 sales of $579 million. For the full year 2023, the Company is forecasting earnings per share to be $0.92 to $0.97, compared to $0.62 adjusted earnings per share in 2022.

We will monitor progress closely.

Research

Mon, 01 Aug 2016 14:01:29 GMT

Closed Out Our Long Position In SGC ($16.06)

In our July 21, 2016 email we stated that due to Q2 2016 organic growth slowing that we may look to lighten or exit our position.

On Friday via premium tweet we stated we had closed out our long position in SGC and removed it from the GeoBargain list. We first coded SGC a GeoBargain on 12/31/2014 when the stock was trading at $14.75. The stock had a nice run reaching a high of $23.73 in April 2015. Since then the stock has vacillated between $16 and $20. The stock has taken a big hit over the last couple weeks due to concern that the company’s legacy career uniform business is plateauing.

While we still think SGC is a good long term play, we are moving on to other opportunities. Longer term investors may side with CEO Michael Benstock who added 7000 shares at open market prices on Friday at $16.00.

Research

Thu, 21 Jul 2016 17:26:24 GMT

SGC ($20.31) reported second quarter 2016 results:

Sales of $64.7 million vs $54.1 million in the prior year
EPS of $0.21 vs $0.25 in the prior year

Quotes from management:

“We are pleased to report a 19.5 percent increase in net sales in the second quarter. The increase in net sales for the second quarter came from net sales at BAMKO, which we acquired in March of this year, and from The Office Gurus, our remote staffing segment. Net sales in our uniforms segment leveled off in the second quarter following an exceptionally strong first quarter of 2016. Additionally, BAMKO has come out of the gate very strong, generating net sales of $9.8 million in the 2016 second quarter. This represents an increase of more than 88 percent versus the same period in 2015. We are very pleased with BAMKO and continue to work to achieve operational and sales synergies between the two organizations. The Office Gurus continues to grow at a very healthy rate with net sales to outside customers up 25.8 percent over the second quarter of 2015.

We will be on the conference call later this afternoon for more color on the quarter. Organic growth seems to have flattened. We have had a good run with SGC, which we first coded as a GeoBargain on 12/31/2014 when the stock was trading at $14.75. However, with organic growth slowing, we may look to lighten up or exit our long position. We will alert you if we decide to make a move.

Research

Mon, 09 May 2016 14:44:07 GMT

GeoBargain SGC ($18.55) is a uniform apparel company. Arecent acquisition and improving employment trends are fueling demand for its uniform products. SGC reported strongQ1 2016 results on April 28, 2016, reporting a 35% increase in EPS. We first Coded SGC a GeoBargain in December 2014 at $14.75. Shares reached a high of $20.45 on June 5, 2015. Thus far, we are impressed with the management team’s execution of its business strategy consisting of maintaining modest organic growth while searching for accretive acquisitions to accelerate growth . We wouldn’t be surprised if the Company consummates another accretive acquisition in 2016 to further fuel top and bottom line growth. We have reduced the size of our position, locking in some profits. See a summary of Q1 resultsgo here.

Research

Thu, 28 Apr 2016 17:02:51 GMT

SGC ($17.96) - GeoBargain SGC is one of America’s top providers of uniforms and image apparel. Its recentacquisition of BAMKO announced on March 8, 2016 help boostQ1 2016 results:

Sales of $58.0 million vs $46.3 million in the prior year
Non-GAAP EPS of $0.19 vs $0.14 in the prior year

Quotes from management:

“Exclusive of the acquisition of BAMKO, our Uniforms and Related Products segment continued its sales momentum with net sales increasing by 15.7 percent in the first quarter of 2016 in comparison with the same period in 2015.

The transition for BAMKO is proceeding very well at this point. They are experiencing positive sales momentum. Their net sales for the full first quarter, including the two months prior to the acquisition, were approximately $10.4 million in 2016 as compared to $7.1 million in the prior year first quarter.

We also continue to see significant growth in our Remote Staffing Solutions segment, with an increase in net sales to outside customers of approximately 36.2 percent in the first quarter of 2016 as compared to the same period of 2015.

Our strong financial position allows us to take advantage of opportunities like the BAMKO acquisition as they arise without constraining our ability to invest in the future of our other businesses. We will continue to seek accretive acquisitions in the future to supplement our continued growth.”

We are impressed with the Company’s organic growth of 15.7% which is much higher than the Company’s long term organic growth goal of 8%. We are interested to see if some of the segments of today’s employment report as well as the national employee turnover data are directly related to SGC growth opportunities. Generally speaking, higher employee turnover is good for the Company since it leads to a greater demand for uniform purchases.

Acquisition Activity

Wed, 09 Mar 2016 16:06:38 GMT

SGC ($17.25) announced the acquisition of BAMKO Inc., a full-service merchandise sourcing and promotional products company based in Los Angeles, CA. Details of transaction:

“The purchase price consists of approximately $15.8 million in cash, subject to adjustment, the issuance of approximately $5.5 million in shares of Superior Uniform Group’s common stock that will vest over a five year period, the potential future payment of up to $5.5 million in additional contingent consideration through 2021, and the assumption of certain liabilities of BAMKO.

BAMKO’s revenues for the year ended December 31, 2015, were approximately $31.5 million. We expect this acquisition to be accretive to our operating results in 2016 exclusive of acquisition related expenses.”

Assuming BAMKO’s net margins are similar to that of SGC’s ( 6%), we believe the acquisition would add roughly $0.13 in EPS.

Comments & Business Outlook

Thu, 25 Feb 2016 15:46:58 GMT

SGC ($17.51) reported Q4 2015 results

Sales of $53.2 million vs $49.7 million in the prior year
EPS of $0.23 vs $0.20 in the prior year

Quotes from management:

“We are reiterating our previous guidance relative to net sales. We expect that organic growth in our uniform segment will exceed 6 percent and our remote staffing vertical will continue to generate significant growth consistent with the levels experienced over the last several years. Overall, on a consolidated basis, we expect average organic growth in excess of 8 percent over the next three to five years. Additionally, we expect to supplement this growth by seeking acquisitions with high growth potential.”

Comments & Business Outlook

Thu, 22 Oct 2015 14:58:35 GMT

Third Quarter 2015 Results

$56.7 million vs $52.3 million in the prior year
EPS of $0.28 vs $0.24 in the prior year

Quotes from management:

“Operationally, we are meeting our growth milestones, and customer response to our product offerings remains strong in all areas of our business. Our solid financial position and healthy balance sheet allows us to respond more easily to changing market and economic conditions while continuing to deliver organic growth supplemented by accretive acquisitions."

Research

Thu, 08 Oct 2015 18:57:25 GMT

Superior Uniform Group Inc. (SGC): A Solid Q3 Should Give Shares a Boost

We anticipate that GeoBargain SGC will report solid operating results when the company files its Q3 Form 10Q later this month, with favorable comps vs. Q3 2014. We published a detailed analysis of SGC in January 2015 and nothing since then has dampened our enthusiasm for the story. In fact, the favorable economic tailwinds at the company’s back that were evident at the beginning of 2015 have only strengthened since then. Some of those tailwinds were noted in a recent interview of SGC’s CEO.

Consistent with the CEO’s comments, our current reasons for optimism include:

Voluntary turnover ratio: When lower leveled employees are feeling confident in the economy they tend to voluntarily change jobs for a better situation. Many of those employees wear uniforms for work and keep them when they leave. Replacement employees require new uniforms meaning more sales for SGC. In a strong economy, the turnover ratio can reach 150% - 200%. At the depths of the Great Recession, the turnover ratio was 30% - 50%. We understand the ratio was 70% - 75% in Q2 2015, indicating employees are more confident and the turnover ratio will gradually increase as the economy improves.

Affordable Care Act (ACA): The ACA is giving a boost to the entire healthcare space. It is reported that since the ACA was implemented in 2010, there are 16.4 million people who were previously uninsured who now have coverage. That means more demand on healthcare service providers and more employees (and uniforms) necessary to provide and support medical services.

Future acquisitions likely: Management is committed to making quality, accretive acquisitions but they are tough negotiators. That they will not overpay means greater value for shareholders in the long run but, also, that investors will have to be patient. We have no insight into when the next acquisition(s) will be done but are confident that when the terms are right, accretive transactions will be closed. In the meantime, the business enjoyed a robust organic growth rate of 15% in Q2 2015 and more of the same is expected in future quarters.

What to expect For Q3 2015

We believe that SGC’s Q3 2015 operating results will stand out with favorable comps vs. Q3 2014. In addition, the Q3 results will follow Q2 when the company barely eked out a 1.7% gain in revenues compared to Q2 2014. Some investors may have thought the upward trajectory of revenues was abating but those who look under the surface will quickly note that Q2 2014 was a monster quarter that included two unusually large orders, a new uniform program and a large promotional products order, that contributed $7.5 million to revenue. Although the company still does business with both customers, most of that revenue did not repeat in Q2 2015. Instead, 15% organic growth enabled SGC to more than replace the revenue from the large 2014 orders with revenue from new customers and increased business with existing accounts.

The following chart reflects revenue for SGC’s reported quarters compared to revenue in the comparable quarter in the previous year. If we assume Q3 2015 revenue grows by 4.5% sequentially over Q2, SGC would generate $56.6 million revenue representing a 8% increase over Q3 2014 revenue.

Using a back of the envelope calculation assuming a slight improvement in gross margins, eliminating pension settlement costs incurred in Q2, and the same effective tax rate as Q2, estimated GAAP EPS should be around $0.31 on a diluted basis vs. $0.24 (split adjusted) in Q2 2014, a 29% increase.

On a 12 month forward basis, assuming quarterly sequential revenue growth of 4.5% and steady margins and SG&A, revenues should reach $242 million and diluted GAAP EPS around $1.40. SGC currently trades at a trailing PE multiple of 21. If we assume a forward multiple of 17X, the stock could reasonably trade at $24.00, slightly above the high it reached in April 2015, or over 30% more than its recent trading price of $18.50.

We think that once the Q3 operating results are released and investors focus on the momentum of the business and the strongly favorable business environment it is operating in, that the shares will be marked up. If you throw in a material accretive acquisition, the upside potential would be more.

Research

Mon, 03 Aug 2015 13:55:04 GMT

Locked in gains on trade shares of SGC

On July 24, 2015 we stated we were adding SGC ($19.23) for a second time, short term trading shares around our core long position as we felt shares would gravitate back toward the $20 level and possibly higher. It was via premium tweet on July 23, 2015 that disclosed a small amount of trading shares as the stock dipped under $17.00 on Q2 2015 results. It was our argument that if you eliminated the unusually large order in Q2 2014, growth would have been healthy for Q2 2015. This marked the second time in roughly a month that shares of SGC dipped sharply. On June 15, 2015 we added shares as the stock sold off 20% with no news. On July 13, 2015, we locked in those trade shares as the stock was trading $20.00. On Friday (July 31, 2015) we alerted that we were once again locking in gains (13%) from our July 24 trade shares as the stock traded over $19.00. We are still long our core SGC position.

Research

Fri, 24 Jul 2015 17:40:07 GMT

Double dipping around our SGC ($16.65) core

Yesterday, we added a small amount of trading shares to our SGC position as the stock dipped under $17 (down over 11%) on Q2 2015 results that appear, on the surface, to be weak. We will be more aggressive in adding shares if the stock continues to fall. If you eliminate the unusually large order in Q2 2014, growth would have been healthy for Q2 2015. This marks the second time in roughly a month that shares of SGC have dipped sharply. On June 15, 2015 we stated we were adding shares as the stock sold off 20% with no news. On July 13, 2015, we stated we were locking in those trade shares as the stock was trading $20.00. We once again think shares will gravitate back toward the $20 level and possibly higher, but the company may need a positive news catalyst to move shares higher. We anticipate this news could be in the form of an announcement by the company about consummating an accretive acquisition, as hinted on the Q2 conference call. The three main takeaways from the conference call were:

“Looking ahead, our pipeline of opportunities remained strong and is getting stronger.”
“We expect all areas of our business will continue to improve throughout the year.”
“We are in active discussions with a number of acquisition candidates but will only continue to pursue those that meet our criteria.”

We once again think long term holders will be rewarded.

Research

Thu, 23 Jul 2015 15:42:52 GMT

SGC ($18.77) reported Q2 2015 results:

Q2 2015 net sales of $54.1 million vs $53.2 million in the prior year
Q2 2015 EPS of $0.25 vs $0.29 in the prior year

In our June 16, 2015 email we stated:

“One issue short-term investors should be aware of is that SGC faces tough sales and EPS comps for its Q2 ending June 30, 2015 due to some one-time orders that occurred in Q2 2014. We believe shares could therefore remain weak in the near term.”

Unfortunately we were right about our concerns about Q2. However, the long term thesis is still intact. We believe the company needs to complete an accretive acquisition to bring short-term/momentum investors back into the stock. An acquisition strategy is still a focal point for the company. Comments from the Q2 release:

“We continue to see positive results from our growth strategies, and market and economic trends remain favorable. Our financial position remains very strong, and we are committed to actively pursuing accretive acquisitions to supplement our strong organic growth and profitability."

Given that the stock is up 28% since we coded the stock a GeoBargain on 12/31/2014 at $14.75, our plan is to slightly lighten up our position if shares open flat to up. If shares sell off sharply we will look to add to our position.

Research

Tue, 16 Jun 2015 15:50:13 GMT

Added GeoBargain $SGC On The Dip

Yesterday, shares of GeoBargain SGC were down sharply. Shares fell from $18.29 at the open to a low of $15.06. After scanning the wires, checking SEC filings and reaching out to the company, we believe there was no operational cause for the drop. Via premium tweet, when shares were trading $15.90, we stated we would nibble a trade position around our core as we felt the drop was unwarranted. SGC operates through two segments, Uniforms and Related Products, and Remote Staffing Solutions. One issue short-term investors should be aware of is that SGC faces tough sales and EPS comps for its Q2 ending June 30, 2015 due to some one-time orders that occurred in Q2 2014. Shares could therefore remain weak in the near term.

Research

Thu, 26 Feb 2015 05:00:00 GMT

GeoBargain SGC Posts Strong Q4 2014 Results

$SGC ($18.04) SGC posted strong year over year growth for the year ended December 31, 2014:

2014 revenues grew by $45 million or 29.5% over 2013.
Net income surged to $11.3 million ($.82 per diluted share) or 90% more than the $5.9 million ($.46 per diluted share) posted in 2013.
Q4 2014 revenues of $49.7 million exceeded Q4 2013 by 9.2%.
Q4 2014 EPS of $.20 per diluted share was 70.6% more than the $.13 posted in Q4 2013.

Perhaps the most important takeaway from SGC’s operating performance is its organic growth (18.2%) that contributed around $28 million of the year over year revenue increase. The balance of the growth was from revenues generated by HPI Direct, Inc. HPI was acquired in July 2013. As discussed in our recently published article, Superior Uniform Group: An Old Dog That Has Learned New Tricks, HPI not only brought a robust and growing business to SGC but, perhaps more importantly, a superior selling and marketing machine that is not only driving continue growth for HPI, but for all of SGC’s other businesses. HPI was once one of SGC’s toughest competitors. Now the company brings its winning formula to SGC.

Investors should note that SGC does not give forward guidance but the company’s historic organic growth rate has averaged around 6%. Management now allows that an organic growth rate greater than 8% can be expected. We believe 8% organic growth is exceedingly conservative. That’s because two important factors will drive growth going forward:

The continued roll out of HPI’s selling and marketing strategies impacting all of SGC’s business lines.
Increasingly favorable employment trends, including the voluntary turnover ratio that measures the number of workers quitting for better jobs. When an employee leaves the replacement worker needs new uniforms. The voluntary turnover ratio will no doubt increase with Wal-Mart and now other retailers increasing minimum wages for their workers. Look for far more mobility in the workforce than we’ve seen since the Great Recession began in 2008.

Share Structure

Tue, 30 Dec 2014 05:00:00 GMT

SEMINOLE, Fla., Dec. 30, 2014 (GLOBE NEWSWIRE) -- Superior Uniform Group, Inc. (Nasdaq:SGC), manufacturer of uniforms, career apparel and accessories,today announced that its Board of Directors has authorized a two-for-one stock split of its outstanding common shares.

Each shareholder of record at the close of business on January 12, 2015, will receive one additional share of Common Stock for each share held on the record date, with a distribution date of February 4, 2015. This stock split will not change the proportionate interest that a shareholder maintains in the Company. As of December 29, 2014, there were approximately 6.8 million SGC diluted common shares outstanding. Following the stock split, Superior Uniform Group's outstanding common shares will increase to approximately 13.6 million shares.

Superior Uniform Group is undertaking the two-for-one stock split to make its common shares more readily accessible to the investment community, increase and broaden the Company's shareholder base, and improve liquidity of the market for SGC common shares. The company expects that its common stock will begin trading on a post-split basis on February 5, 2015.

Michael Benstock, Chief Executive Officer, commented: "We are pleased to announce the stock split as it reflects the Board's confidence in the long-term drivers for our business model and our ability to continue to achieve our strategic growth objectives."

Research

Tue, 16 Dec 2014 05:00:00 GMT

Added to our SGC long position

In a message board post from Friday, 12/12/2014 we stated:

We have added to our long position in Superior Uniform (NASDAQ:SGC). Recall we stated we were starting to establish our position in our 10/30/2014 email.

Our 10/30/2014 email note:

We have begun building a long position in SGC ($24.13)

In our 08/25/2014 email we stated we had a positive interview with management and would look to establish a position on any pullback. Shares never really pulled back enough for us. However, on 10/23/2014 SGC reported another quarter of strong financial results. For this reason, we actually decided to start a position despite our original intent to wait for a pullback. For its Q3 2014 SGC reported EPS of $0.48 vs $0.24 and offered bullish commentary:

"We have been able to leverage our operating structure as a result of the significant growth in net sales and as such have seen significant improvement in our operating margins. Our financial position remains very strong, and combined with what appears to be improving demand from our customers and target customers, leaves us feeling optimistic about our prospects for the foreseeable future. We look forward to reporting continued improvement in our operating results as we move forward."

Our initial near term aggressive price target is $41.75 based on a P/E of 25 on trailing non-GAAP EPS of $1.67.

Comments & Business Outlook

Tue, 29 Nov 2011 05:00:00 GMT

The current economic environment in the United States remains challenging. Our primary products are provided to workers employed by our customers and, as a result, our business prospects are dependent upon levels of employment among other factors. Our revenues are impacted by the opening and closing of locations by our customers and reductions and increases in headcount by our customers. Additionally, voluntary employee turnover has been reduced significantly as a result of fewer alternative jobs available to employees of our customers. Fewer available jobs coupled with less attrition results in decreased demand for our uniforms and service apparel. In an effort to mitigate these factors in the current economic environment, we have implemented the following strategies.

First, we are actively pursuing acquisitions to increase our market share in our image apparel business which consists of uniforms and service apparel.

Second, we diversified our business model by providing remote staffing solutions to other businesses. We entered this business sector to provide remote staffing solutions to the Company at a lower cost in order to improve our own operating results. Our remote staffing operations, located in El Salvador, Costa Rica and Seminole, FL. have enabled us to reduce our operating expenses and to more effectively service our customers’ needs. We began selling remote staffing services to third parties at the end of 2009. We have grown our remote staffing business to third party customers from approximately $120,000 in annual net sales in 2009 to approximately $1 million in net sales in 2010. We generated net sales of approximately $2,162,000 from our remote staffing business in the first nine months of 2011 as compared to $503,000 in the first nine months of 2010. We are aggressively marketing our remote staffing services to third parties and believe that this area will be a strong growth sector for the Company in 2011 and beyond.

Finally, we are pursuing new product lines to enhance our market position in the image apparel business. Toward this end, we entered into a licensing agreement in January of 2011 that provides us with access to patented technology which will allow us to market a new line of image apparel to our customers. Our new line of image apparel is designed to provide our customers with the ability to turn their employee uniforms into point of sale advertisements that will, in turn, give them the ability to generate advertising revenues for their businesses. We believe that this new product line will provide us with the opportunity for significant growth in our image apparel business in the future. We expect to begin generating revenues from this new product line in the fourth quarter of 2011.