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CALL PARTICIPANTS
- Chief Executive Officer – Michael Benstock
- President and Chief Financial Officer – Michael Koempel
- President of the company’s Branded Products segment – Jake Himelstein
TAKEAWAYS
- Consolidated Revenue — $147.8 million, up 3% from $144.0 million last year, driven by volume growth in the Branded Products segment.
- Adjusted Diluted EPS — $0.21, more than doubling last year’s $0.10, reflecting improved earnings power across the diversified business segments.
- Adjusted EBITDA — $7.7 million, a 27% increase over the prior year, supported by segment-level growth and expense leverage.
- Branded Products Revenue — $98.4 million, representing 6% growth driven by volume increases with existing customers.
- Branded Products EBITDA — $11.2 million, up 25% year over year due to favorable customer mix and improved sourcing on large programs.
- Healthcare Apparel Revenue — $27.2 million, down 4% compared to last year, impacted by the timing of tariff refunds and a strategic transition to a more focused product offering.
- Healthcare Apparel EBITDA — A loss of $160,000, representing a $1 million decline from the prior year, primarily due to an inventory write-down.
- Contact Center Revenue — $23.1 million, a 4% year-over-year decline but improving sequentially for the second consecutive quarter.
- Gross Margin — 38%, a 40 basis point decrease compared to the second quarter of 2025.
- Branded Products Gross Margin — 36.5%, increasing by approximately one percentage point year over year due to customer mix.
- Healthcare Apparel Gross Margin — 32.9%, reflecting a $2.6 million incremental noncash inventory write-down, partially offset by a $1.8 million net tariff refund benefit.
- Contact Center Gross Margin — 50.9%, down 170 basis points year over year due to increased human capital costs to support anticipated growth.
- SG&A Expense — 34.7% of sales, improving 160 basis points from last year, driven by expense leverage in Branded Products and improved credit loss expense.
- Net Interest Expense — $981,000, improving from $1.3 million due to lower average debt and weighted average interest rates.
- H1 Operating Cash Flow — $17.7 million, up from $2.9 million in the first half of 2025.
- Tradename Impairment Charge — $2.6 million pretax, or $0.13 per diluted share, related to names within the Healthcare Apparel segment.
- Cash and Equivalents — $22.8 million at the end of the second quarter.
- Dividend Payments — $2.2 million paid in the second quarter, following a declared quarterly dividend of $0.14 per share.
- Share Repurchase Authorization — Approximately $9 million remaining for opportunistic buybacks.
- Full-Year Sales Guidance — $572 million to $585 million, maintaining previous forecasts for growth over 2025 sales of $566.2 million.
- Full-Year Adjusted EPS Guidance — $0.54 to $0.66, reflecting a back-half weighted cadence for both revenue and earnings.
- Inventory Balance — $90.5 million, a reduction from $97.5 million at year-end 2025, reflecting efforts to improve working capital efficiency.
- Long-Term Debt — $74.5 million, down from $87.1 million at the end of 2025.
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SUMMARY
Superior Group of Companies (SGC +0.35%) management reported consolidated revenue growth across a diversified portfolio, led by the Branded Products segment. The company completed a strategic product assortment transition in Healthcare Apparel and noted sequential improvement in Contact Center operations despite year-over-year revenue declines. Financial results included a noncash impairment charge and inventory write-downs associated with product shifts. The company confirmed its full-year 2026 outlook, expecting second-half performance to exceed the first half.
- CEO Benstock attributed the consolidated growth to the company’s “ability to support them [customers] with advanced technology, a flexible supply chain and stellar service” in a “choppy demand environment.”
- Regarding Contact Center growth, Koempel noted the segment saw a “net increase in agents year-to-date and stronger conversion from our significantly larger pipeline of new business than we had a year ago.”
- Himelstein stated that “decision-making is slower on RFPs,” but emphasized that the current pipeline results in “wins even with slower RFP decisions.”
- Benstock indicated an “urgency in our Contact Centers business” for expansion, stating the company will either complete an acquisition this year or launch a new facility in the Philippines.
- Management noted the institutional Healthcare Apparel market has “become very, very normalized” following a period where hospitals were aggressively conserving cash.
- Koempel noted that the inventory reduction was partially driven by a strategic move to be “more focused” in assortment, characterized as going “narrow and deeper.”
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RISKS
- Benstock stated, “The quarter was undeniably challenging,” noting that the Healthcare Apparel segment faced revenue declines and margin pressure during its leadership and assortment transition.
- Koempel noted, “We would expect some shorter-term margin pressure to continue through the balance of this year” as the company manages the shift to a more focused product architecture in healthcare.
- Benstock indicated that “a lot of the caregiver community doesn’t have as much to spend as they might have a couple of years ago” due to the rising costs of food, gas, and rent.
INDUSTRY GLOSSARY
- Branded Products: A segment focusing on custom promotional products and branded merchandise (BAMKO, Public Identity).
- Healthcare Apparel: A division manufacturing uniforms and scrubs for the medical field (Fashion Seal Healthcare, WonderWink).
- Contact Centers: A segment providing outsourced business process management and telemarketing (The Office Gurus).
- Tradename Impairment: A noncash charge taken when the fair value of a brand name falls below its carrying value on the balance sheet.
- RFP: Request for Proposal; a business process where a company invites suppliers to bid on a project or service.
- Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for non-recurring or non-cash items like impairment charges.
