Superior Group of Companies (SGC) Singular Research Autumn Equinox 2024 summary

Business overview and segment highlights

• Operates in three segments: healthcare apparel, branded products, and contact centers, each in large, fragmented, and growing markets with high customer retention and profitability.

• 2023 revenues reached $543 million, up from $346 million in 2017, with a 9% annual growth rate driven by organic growth and strategic acquisitions.

• Healthcare apparel segment serves both institutional and consumer markets, with strong brands like Wink and Carhartt, and recently launched a direct-to-consumer website.

• Branded products segment provides uniforms and promotional items for major brands, is the eighth largest in a $24 billion industry, and has high customer retention.

• Contact center segment, The Office Gurus, is the fastest-growing business with a 26% five-year sales CAGR, 13.6% EBITDA margin, and nearly 100% customer retention.

Financial performance and strategy

• Achieved a 14% annualized revenue growth rate over the past decade, with 2023 revenues at $543 million and 2024 guidance at $567 million.

• Net leverage ratio improved to 1.7x EBITDA by mid-2023, exceeding internal targets, due to positive free cash flow and debt reduction.

• Capital allocation priorities include maintaining a consistent dividend, investing 1–1.5% of revenues in capital expenditures, and pursuing strategic, accretive acquisitions.

• Dividend increases are considered based on business performance, alternative uses of cash, and market conditions; a $10 million share repurchase was authorized post-Q2.

• M&A focus is on branded products and contact center segments, with targets evaluated for capabilities, growth potential, and synergies.

Operational updates and outlook

• Q2 2023 saw sales delays due to supply chain issues in Asia, but operational adjustments were made to normalize business in Q3 and Q4.

• Full-year guidance was reiterated, expecting deferred Q2 sales to be realized in the second half of the year.

• The company is positioned to benefit from trends in remote work and outsourcing, especially in contact centers, and continues to expand its omni-channel and digital strategies.

• Maintains strong relationships with leading brands across all segments, supporting long-term growth and market share expansion.

• Corporate social responsibility remains a focus, with reporting available for stakeholders.