SUPERIOR GROUP OF COMPANIES, INC. Q4 FY2024 earnings call

• Consolidated Performance: Full-year consolidated revenue up 4% and diluted EPS up 35% over prior year. Fourth-quarter revenue down 1%, diluted EPS $0.13 vs $0.22 last year. Positive operating cash flow, strong leverage ratio. - Branded products: Modest growth in promotional products channel driven by new and existing customers; investing in sales leadership to expand share of wallet and add new customers. - Healthcare apparel: Soft market conditions, but growing digital channels; investing in sales, branding, and marketing to drive brand awareness. - Contact centers: Highest margin segment, revenue growth potential with new sales team; implementing technology to enhance customer experience and optimize costs.

Branded products: Modest growth in promotional products channel; fourth-quarter gross margin was 33.9%, down a percentage point; EBITDA was $8.9 million, down from $11.7 million in the prior year. Healthcare apparel: Fourth-quarter gross margin was 33.7%, down three percentage points due to higher sourcing costs in Haiti; EBITDA was $1.1 million, down from $1.4 million in the prior year. Contact centers: Fourth-quarter gross margin was 54.7%, up more than two and a half percentage points; EBITDA was just over $3 million, up from $2.3 million in the prior year. Revenue contributions: Specific percentages not explicitly stated in detail but each segment's performance discussed.

• Full-year 2025 revenues expected in range of $585 million to $595 million, suggesting year-over-year growth at high end of 5%. - Full-year earnings per diluted share expected in range of $0.75 to $0.82, suggesting 12% year-over-year growth at high end. - Back-end weighted cadence for 2025. - Board authorized additional $17.5 million share repurchase plan with no program expiration.

• External factors: Customer hesitancy, geopolitical conflicts, new administration, general economic direction. - Healthcare apparel: Higher sourcing costs in Haiti. - Tariffs: Fluid situation, need to monitor impact on supply chain and costs.

Q: Jim Sidoti asked about a $4 million acquisition in the quarter, what it was and if costs are remaining at that level.

A: Mike Koempel said it was a small opportunistic acquisition of a branded products business; Mike also said healthcare costs in Haiti would continue into 2025.

Q: Jim Sidoti asked about pricing increases sticking and future pricing power.

A: Michael Benstock said they will continue to raise prices, are well positioned for tariffs, and have diversified supply chain.

Q: Keenan Cox asked about branded product segment customer rollouts and contact center labor costs.

A: Mike Koempel said no turnover in branded product customers, timing of uniform program rollouts differs; Michael Benstock said contact center labor costs haven't had significant increases beyond prior reporting.

Q: David Marsh asked about leverage, acquisitions, 2025 guidance, and healthcare online channel.

A: Mike Koempel said comfortable with leverage, looking for accretive acquisitions; Michael Benstock and Mike Koempel discussed 2025 guidance as more gradual build; Michael Benstock said healthcare online channel return on advertising spend is favorable but not reporting metrics yet.

Q: Kevin Steinke asked about customer tone, branded product margin, SG&A investments, and EPS guidance.

A: Michael Benstock discussed customer tone by segment; Mike Koempel said branded product margin should balance out annually, no significant SG&A investments anticipated, and interest expense expected to improve in 2025.