Superior Group of Companies, Inc. Q1 FY2026 earnings call

Good start to the year with 3% revenue growth, improved gross margin, SG&A down as percent of sales, EBITDA up. Progress across business. Branded products revenue grew 5% for second quarter in a row, improved gross margin, held SG&A near 27% of sales. Welcomed Chris Hine as president of healthcare apparel segment. Healthcare apparel revenue grew 5% vs last year's first quarter. Contact centers revenue down 8% y-o-y but improved sequentially from fourth quarter, SG&A down more than 200 basis points as percent of sales, EBITDA down slightly but margin rate improved. Strong balance sheet allows flexibility to invest and repurchase shares.

First quarter revenue was up 3%. Branded products, the largest segment, grew 5% year-over-year to $91 million. Healthcare apparel, the second largest segment, also grew 5% to $29 million. Contact centers revenue declined 8% year-over-year to $22 million but saw sequential improvement from the fourth quarter. Gross margin rate improved 30 basis points on consolidated basis. Branded products had a growth margin of 34.1%, up 210 basis points from last year. Healthcare apparel gross margin rate was down 160 basis points to 35.6%. Contact center's gross margin was 52.2%, down 140 basis points. SG&A as a percent of sales improved to 35.8% in first quarter. EBITDA increased to $4.8 million from $3.5 million last year. EPS was 6 cents compared to a 5 cent loss in first quarter of 2025.

Maintaining full year guidance. Expect 2026 net sales of $572 million to $585 million and diluted EPS of 54 cents to 66 cents. Results weighted toward back half similar to previous years for revenue and EPS.

Environment still uncertain including Iran conflict. Logistic costs rising with impact on sourcing strategies though not materially changing full year outlook currently.

Q: Regarding branded products, impact of layoffs in restaurant industry and customer ordering behavior.

A: Diversified customer base, insulated to industry layoffs, strong RFP pipeline.

Q: On contact centers, sequential improvement and future outlook.

A: Pipeline strong, converting pipeline, expect sequential improvement in back half with easier comps.

Q: M&A environment for contact centers.

A: Rich M&A environment, looking at few opportunities in right geography and cost environment.

Q: Healthcare apparel strategy change with new leader.

A: Chris Hine early in learning business, strategy shift expected.

Q: EPS vs expectations and rest of year flow.

A: EPS came in higher due to timing of revenue and favorable expenses, expect progression with back half weighted.

Q: Impact of oil costs and freight surcharges.

A: Logistic costs rising, monitoring and working with vendors to mitigate, not materially changing outlook yet