SUPERIOR GROUP OF COMPANIES INC
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
SGC$13.44+1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001437749-24-024943
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001437749-24-033690
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 93 previous paragraphs and 97 current paragraphs.
42 unchanged; 29 reworded; 25 added; 20 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
The financial position, results of operations, cash flows and other information included herein are not necessarily indicative of the financial position, results of operations and cash flows that may be expected in future periods. See "Cautionary Note Regarding Forward-Looking Statements" below for a discussion of uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements.
Current report
Results of Operations
Current report
Branded Products net sales increased 10.8%, or $9.0 million, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to expansion of business within existing accounts and new client wins.
Current report
Gross margin rate for the Company was 40.4% for the three months ended September 30, 2024 and 39.1% for the three months ended September 30, 2023. The gross margin rate increase was driven by the Branded Products and Healthcare Apparel segments.
Current report
Gross margin rate for our Branded Products segment was 36.2% for the three months ended September 30, 2024 and 34.6% for the three months ended September 30, 2023. The gross margin rate increased as compared to the prior year period primarily driven by sourcing mix resulting in lower product costs and pricing increases to existing customers.
Current report
Gross margin rate for our Healthcare Apparel segment was 41.8% for the three months ended September 30, 2024 and 38.7% for the three months ended September 30, 2023. The gross margin rate increased as compared to the prior year period primarily due to costs of goods favorability associated with our Haiti manufacturing facility during the current period.
Current report
As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 26.2% for the three months ended September 30, 2024 and 28.0% for the three months ended September 30, 2023. The rate decrease was primarily driven by expense leverage from an increase in net sales as compared to the prior period, partially offset by increases in sales commissions and employee related costs.
Current report
As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 34.0% for the three months ended September 30, 2024 and 32.0% for the three months ended September 30, 2023. The rate increased as compared to the prior year period as a result of increases in marketing and advertising activities along with employee related costs, which were partially offset by expense leverage from an increase in net sales.
Current report
As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 45.9% for the three months ended September 30, 2024 and 42.4% for the three months ended September 30, 2023. The rate increased as compared to the prior year period driven by an increase in the provision for bad debts and an increase in employee related costs.
Current report
Selling and administrative expenses for our Other segment, which represents unallocated Corporate costs, increased by $1.1 million, primarily driven by an increase in employee related costs and third party professional services.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
Net Income
Current report
The Company generated net income of $9.9 million and $5.2 million during the nine months ended September 30, 2024 and 2023, respectively. The increase in net income during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to increases in net sales and gross margins at our Branded Products and Healthcare Apparel segments, and a decrease in interest expense, partially offset by an increase in selling and administrative expenses across all of our reportable segments.
Current report
EBITDA
Current report
Branded Products net sales increased 6.5%, or $16.0 million, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily due to expansion of business within existing accounts and new client wins.
Current report
Gross margin rate for our Branded Products segment was 35.8% for the nine months ended September 30, 2024 and 32.8% for the nine months ended September 30, 2023. The gross margin rate increased as compared to the prior year period primarily driven by sourcing mix resulting in lower product costs and pricing increases to existing customers.
Current report
As a percentage of net sales, total selling and administrative expenses was 35.5% for the nine months ended September 30, 2024 and 33.8% for the nine months ended September 30, 2023. The rate increase was primarily driven by increased commissions, employee related costs, increased expenditures related to marketing, advertising activities and the expiration of our written put option.
Current report
Selling and administrative expenses for our Other segment, which represents unallocated Corporate costs, increased by $2.9 million, primarily driven by an increase in employee related costs, third party professional services and the fair value recognition of a written put option which expired in the second quarter of 2024.
Current report
Working Capital Needs
Current report
We utilize working capital to fund the operations of our business and have certain related contractual obligations, including commitments under site leases and other non-cancelable contracts.
Current report
Capital expenditures by reportable segment are as follows:
Current report
Debt Activity
Current report
For the nine months ended September 30, 2024, the Company had $9.3 million of net debt payments, consisting of $31.0 million in borrowings net of $40.3 million of payments. For the nine months ended September 30, 2023, the Company had $47.8 million of net debt payments, consisting of $4.0 million in borrowings net of $51.8 million of payments. Both the debt payments and borrowings during 2024 and 2023 primarily related to the utilization of our revolving credit facility in the normal course of business.
Current report
Please refer to Note 5 to our Condensed Consolidated Financial Statements located in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details on our outstanding long-term debt, which disclosure is incorporate herein by reference.
Current report
On August 9, 2024, the Company’s Board of Directors approved a new stock repurchase plan. Under the plan, the Company is authorized to repurchase up to $10 million of its common stock over a period of one year ending in August 2025. This plan replaces the May 2, 2019 plan, as amended, which authorized the repurchase of up to 750,000 shares. 92,549 shares had been repurchased under the May 2, 2019 plan as of August 9, 2024. No further shares will be repurchased under that plan. The new stock repurchase plan allows the Company to purchase common stock from time to time through, among other ways, open market purchases, privately negotiated transactions, block purchases, and/or pursuant to Rule 10b5-1 trading plans, subject to applicable securities laws and other legal requirements and relevant factors. The number of shares purchased and the timing of any purchases will depend upon a number of factors, including the price and availability of the Company’s stock and general market conditions. The stock repurchase plan may be modified, suspended or terminated at any time, without prior notice. Shares repurchased may be reissued later in connection with employee benefit plans and other general corporate purposes. Shares purchased under the common stock repurchase plan are constructively retired and returned to unissued status. See Part II-Other Information, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Removed paragraphs (20)
Previous report
Summary of Results
Previous report
Operations
Previous report
Branded Products net sales increased 2.1%, or $1.7 million, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was primarily due to higher order volume from larger customers driven by increased demand for our products, as well as increased pricing.
Previous report
Gross margin rate for our Branded Products segment was 34.6% for the three months ended June 30, 2024 and 32.2% for the three months ended June 30, 2023. The rate increase was primarily driven by an increase in sales volume from higher margin customers in the current year period.
Previous report
Gross margin rate for our Healthcare Apparel segment was 38.4% for the three months ended June 30, 2024 and 37.1% for the three months ended June 30, 2023. The rate increase was primarily driven by lower sourcing costs.
Previous report
As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 37.2% for the three months ended June 30, 2024 and 33.7% for the three months ended June 30, 2023. The rate increase was primarily driven by an increase in expenditures related to marketing and advertising activities.
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
Branded Products net sales increased 4.3%, or $6.9 million, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily due to higher order volume from larger customers, as well as increased pricing.
Previous report
Gross margin rate for our Branded Products segment was 35.6% for the six months ended June 30, 2024 and 31.9% for the six months ended June 30, 2023. The rate increase was primarily driven by a favorable shift in the mix of pricing and customers.
Previous report
As a percentage of net sales, total selling and administrative expenses was 35.9% for the six months ended June 30, 2024 and 33.4% for the six months ended June 30, 2023. The rate increase was primarily driven by increased employee related costs, an increase in expense relating to acquisition-related contingent liabilities from a gain of $0.7 million in 2023 to a loss of $0.3 million in 2024, unrealized losses of $0.7 million recognized in 2024 compared to unrealized gains of $0.1 million recognized in the prior year period on written put options and increased expenditures related to marketing and advertising activities.
Previous report
As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 27.5% for the six months ended June 30, 2024 and 25.0% for the six months ended June 30, 2023. The rate increase was primarily attributed to increased employee related costs, including sales commissions, and an increase in expense relating to acquisition-related contingent liabilities driven by fair market value adjustments in 2024 as compared to 2023.
Previous report
Working Capital
Previous report
Cash and cash equivalents was $13.4 million as of June 30, 2024 and $19.9 million as of December 31, 2023. Working capital was $169.3 million at June 30, 2024 compared to $178.8 million at December 31, 2023. The decrease in working capital was primarily due to decreases in accounts receivable, cash and cash equivalents, and inventories, partially offset by a decrease in current liabilities and an increase in prepaid expenses and other current assets. The decrease in accounts receivable was primarily related to lower sales in our Branded Products segment during the six months ended June 30, 2024 compared to the six months ended December 31, 2023 and the collection of aged customer receivables. The decrease in cash and cash equivalents was driven by the repayment of outstanding borrowings with excess cash generated from operating activities during the six months ended June 30, 2024. The reduction of inventories was driven by the sale of existing inventory stock and the targeted reduction in certain inventory products within our Branded Products segment. The decreases in current liabilities include a reduction in accounts payable primarily driven by the timing of payments for inventory purchases within our Branded Products segment and a decrease in other current liabilities which was primarily related to employee-related accruals as of December 31, 2023 that were paid in 2024, including accrued bonus compensation, and the expiration of written put options. The increase in prepaid expenses and other current assets was driven by increases in prepaid income taxes and insurance.
Previous report
Credit Facilities* (See Note 3 to the Financial Statements)*
Previous report
On August 23, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”) among the Company, the domestic subsidiaries of the Company, as guarantors, the lenders party thereto (the “Lenders”), and PNC Bank, National Association, as administrative agent for the Lenders (the “Administrative Agent”), pursuant to which the Lenders are providing the Company senior secured credit facilities maturing in August 2027 consisting of a revolving credit facility in the aggregate maximum principal amount of $125.0 million and a term loan in the original aggregate principal amount of $75.0 million (collectively, the “Credit Facilities”), and the ability to request incremental revolving credit or term loan facilities in an aggregate amount of up to an additional $75.0 million, subject to obtaining additional lender commitments and satisfying certain other conditions.
Previous report
As of June 30, 2024, the Company had $78.5 million in outstanding borrowings under its Credit Facilities, consisting of $11.0 million outstanding under the revolving credit facility and $67.5 million outstanding under a term loan. As of June 30, 2024, the Company had undrawn capacity of $114.0 million under the revolving credit facility.
Previous report
Obligations outstanding under the Credit Facilities accrue interest at a variable rate equal to the secured overnight financing rate (“SOFR”) plus an adjustment between 0.10% and 0.25% (depending on the applicable interest period) plus a margin between 1.0% and 2.0% (depending on the Company’s net leverage ratio). The weighted average interest rate on our outstanding borrowings under the Credit Facilities was 6.4% as of June 30, 2024. During the term of the revolving credit facility, the Company will pay a commitment fee on the unused portion of the revolving credit facility equal to between 0.125% and 0.250% (depending on the Company’s net leverage ratio). The available balance under the revolving credit facility is reduced by outstanding letters of credit. As of June 30, 2024, there were no outstanding letters of credit under the revolving credit facility.
Previous report
Contractual principal payments for the term loan are as follows: remainder of 2024 - $2.8 million; 2025 - $5.6 million; 2026 - $6.6 million and 2027 - $52.5 million. The term loan does not contain pre-payment penalties.
Previous report
The Credit Facilities are secured by substantially all of the operating assets of the Company, and the Company’s obligations under the Credit Facilities are guaranteed by all of its domestic subsidiaries. The Company’s obligations under the Credit Facilities are subject to acceleration upon the occurrence of an event of default as defined in the Credit Agreement. The Credit Agreement contains customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments (including dividends and related distributions), liquidations, mergers, consolidations or acquisitions, affiliate transactions and sales of assets or subsidiaries. The Credit Agreement also requires the Company to comply with a fixed charge coverage ratio of at least 1.25 to 1.0 and a net leverage ratio not to exceed 4.0 to 1.0. The Company’s net leverage ratio (as defined in the Credit Agreement) is generally calculated as the ratio of (a) indebtedness minus unrestricted cash to (b) consolidated EBITDA for the four most recently ended fiscal quarters. As of June 30, 2024, the Company was in compliance with these ratios.
Previous report
On May 2, 2019, the Company’s Board of Directors approved a stock repurchase program of up to 750,000 shares of the Company’s outstanding common stock. There is no expiration date or other restriction governing the period over which the Company can make share repurchases under the program. All purchases under this program will be open market transactions. At June 30, 2024, the Company’s remaining repurchase capacity under its common stock repurchase program was 657,451 shares. Shares purchased under the common stock repurchase program are constructively retired and returned to unissued status. The Company considers several factors in determining when to make share repurchases, including among other things, the cost of equity, the after-tax cost of borrowing, the debt to total capitalization targets and its expected future cash needs.
Reworded paragraphs (29)
Previous wording
Economic and political events over the past several years have altered the landscape in which we and other U.S. companies operate in a variety of ways. In response to inflationary pressures, the U.S. Federal Reserve has repeatedly raised interest rates, resulting in an increase in the cost of borrowing for us, our customers, our suppliers, and other companies relying on debt financing. World events, including the Russian invasion of Ukraine and the resulting economic sanctions have impacted the global economy, including by exacerbating inflationary and other pressures. In addition, the threat of a wider conflict in the Middle East could continue to affect oil prices and have other negative effects on the global economy. Civil unrest in countries where we manufacture products, such as Haiti, may result in our facilities incurring damage or destruction that interrupts our manufacturing processes and adversely affects our reputation and our relationships with our customers. The effects of the Israel-Hamas war or a wider conflict in the Middle East, prolonged inflationary conditions, high and/or increased interest rates, additional sanctions or retaliatory measures related to the Russia-Ukraine crisis, the Middle East crisis, the civil unrest in Haiti, or other situations, including deteriorating or prolonged diplomatic tension between the United States and China, could further negatively affect U.S. and international commerce and exacerbate or prolong the period of high energy prices.
Current wording
Economic and political events over the past several years have altered the landscape in which we and other U.S. companies operate in a variety of ways. World events, including the Russian invasion of Ukraine and the resulting economic sanctions have impacted the global economy, including by exacerbating inflationary and other pressures. The ongoing conflict in the Middle East could continue to affect oil prices and have other negative effects on the global economy. Civil unrest in countries where we manufacture products, such as Haiti, may result in our facilities incurring damage or destruction that interrupts our manufacturing processes and adversely affects our reputation and our relationships with our customers. While inflation and interest rates decreased in 2024, the effects of the ongoing conflict in the Middle East, further fluctuations in inflationary conditions and interest rates, additional sanctions or retaliatory measures related to the Russia-Ukraine crisis or other situations, including deteriorating or prolonged diplomatic tension between the United States and China, could further negatively affect U.S. and international commerce and exacerbate or prolong the period of high energy prices.
Previous wording
The Company generated net income of $0.6 million and $1.2 million during the three months ended June 30, 2024 and 2023, respectively. The decrease in net income during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to an increase in selling and administrative expenses, partially offset by an increase in gross margins in our Branded Products and Contact Centers segments and a decrease in interest expense. The Company generated net income of $4.5 million and $2.1 million during the six months ended June 30, 2024 and 2023, respectively. The increase in net income during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due to increases in net sales and gross margins, particularly in our Branded Products and Contact Centers segments, and a decrease in interest expense, partially offset by an increase in selling and administrative expenses.
Current wording
The Company generated net income of $5.4 million and $3.1 million during the three months ended September 30, 2024 and 2023, respectively. The increase in net income during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to an increase in net sales and gross margins at our Branded Products and Healthcare Apparel segments, a decrease in interest expense, partially offset by an increase in selling and administrative expenses across all three of our reportable segments.
Previous wording
EBITDA (a non-GAAP financial measure) was $5.6 million and $7.4 million during the three months ended June 30, 2024 and 2023, respectively. EBITDA during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 decreased primarily due to higher selling and administrative expenses, partially offset by an increase in gross margins in our Branded Products and Contact Centers segments. EBITDA was $15.2 million and $14.3 million during the six months ended June 30, 2024 and 2023, respectively. EBITDA during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 increased primarily due to increases in net sales and gross margins, particularly in our Branded Products and Contact Centers segments, partially offset by higher selling and administrative expenses. For a reconciliation of EBITDA to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Non-GAAP Financial Measure” below.
Current wording
EBITDA was $11.7 million and $9.3 million during the three months ended September 30, 2024 and 2023, respectively. EBITDA increase was primarily due to increased net sales and gross margins at our Branded Products and Healthcare Apparel segments, partially offset by an increase in selling, general and administrative expenses across all of our reportable segments. For a reconciliation of EBITDA to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Non-GAAP Financial Measure” below.
Previous wording
Net sales for the Company increased 2.0%, or $2.6 million, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was attributable to net sales increases in our Contact Centers and Branded Products segments, partially offset by a decrease in net sales in our Healthcare Apparel segment.
Current wording
Net sales for the Company increased 10.0%, or $13.6 million, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was attributable to net sales increases in all three of our reportable segments.
Previous wording
Healthcare Apparel net sales decreased 5.3%, or $1.5 million, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily due to lower volume from our store-based wholesale customers, partially offset by an increase in online sales volume from both our wholesale customers, as well as, from our direct-to-consumer website. The lower volume from our store-based wholesale customers was primarily driven by lower demand and timing of customer orders.
Current wording
Healthcare Apparel net sales increased 11.4%, or $3.4 million, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to higher online sales from both our wholesale customers and our direct-to-consumer website, as well as, the timing of wholesale orders as compared to last year.
Previous wording
Contact Centers net sales increased 9.1% or $2.1 million, before intersegment eliminations for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was primarily attributable to sales growth from expanding services to existing customers.
Current wording
Contact Centers net sales increased 3.8% or $0.9 million, before intersegment eliminations for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily attributable to new customers, partially offset by a decrease in existing customer volume.
Previous wording
Gross margin rate for our Contact Centers segment was 52.9% for the six months ended June 30, 2024 and 53.5% for the six months ended June 30, 2023. The rate decrease was primarily due to increased employee related costs of our agents, partially offset by sales growth from existing customers.
Current wording
Gross margin rate for our Contact Centers segment was 54.9% for the three months ended September 30, 2024 and 55.5% for the three months ended September 30, 2023. The rate decrease was primarily due to increased employee related costs of our agents.
Previous wording
As a percentage of net sales, total selling and administrative expenses was 36.7% for the three months ended June 30, 2024 and 33.6% for the three months ended June 30, 2023. The rate increase was primarily driven by increases in employee related costs, third-party professional services and expenditures related to marketing and advertising activities.
Current wording
As a percentage of net sales, total selling and administrative expenses was 34.9% for the three months ended September 30, 2024 and 34.7% for the three months ended September 30, 2023. The rate increase was primarily driven by increases in employee related costs, third-party professional services and expenditures related to marketing and advertising activities.
Previous wording
Interest expense decreased to $1.5 million for the three months ended June 30, 2024 from $2.6 million for three months ended June 30, 2023. This decrease was due to a $52.8 million decrease in our weighted average outstanding borrowings along with a decrease in the weighted average interest rate on those borrowings from 7.2% for the three months ended June 30, 2023 to 6.5% for the three months ended June 30, 2024.
Current wording
Interest expense decreased to $1.6 million for the three months ended September 30, 2024 from $2.5 million for three months ended September 30, 2023. This decrease was due to a $36.2 million decrease in our weighted average outstanding borrowings along with a decrease in the weighted average interest rate on those borrowings from 7.4% for the three months ended September 30, 2023 to 6.3% for the three months ended September 30, 2024.
Previous wording
Income tax expense decreased to $0.1 million for the three months ended June 30, 2024 from $0.2 million for the three months ended June 30, 2023. The effective tax rate was 7.7% and 11.8% for the three months ended June 30, 2024 and 2023, respectively. Income tax expense and the effective tax rate for the three months ended June 30, 2024 and June 30, 2023 was primarily impacted by the variability in the mix of earnings across the Company’s foreign and domestic operations, subject to various statutory tax rates in those jurisdictions. The tax rate was further favorably impacted by the windfall benefits associated with the stock option exercises during the three months ended June 30, 2024. The effective tax rate may vary from quarter to quarter due to discrete, unusual or non-recurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, or other items.
Current wording
Income tax expense increased to $1.2 million for the three months ended September 30, 2024 from $0.2 million for the three months ended September 30, 2023. The effective tax rate was 17.8% and 4.9% for the three months ended September 30, 2024 and 2023, respectively. Income tax expense and the effective tax rate for the three months ended September 30, 2024 and September 30, 2023 was primarily impacted by the variability in the mix of earnings across the Company’s foreign and domestic operations, subject to various statutory tax rates in those jurisdictions. The effective tax rate may vary from quarter to quarter due to discrete, unusual or non-recurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, or other items.
Previous wording
Net sales for the Company increased 4.1%, or $10.6 million, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was attributable to net sales increases in our Branded Products and Contact Centers segments, slightly offset by a decrease in net sales in our Healthcare Apparel segment.
Current wording
Net sales for the Company increased 6.1%, or $24.2 million, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was attributable to net sales increases in all three of our reportable segments.
Previous wording
Healthcare Apparel net sales decreased 0.7%, or $0.4 million, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily due to lower volume from our store-based wholesale customers, partially offset by an increase in online sales volume from both our wholesale customers, as well as, from our direct-to-consumer website.
Current wording
Healthcare Apparel net sales increased 3.5%, or $3.0 million, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily due to higher online sales from both our wholesale customers and our direct-to-consumer website, partially offset by lower volume from our store-based wholesale customers.
Previous wording
Contact Centers net sales increased 8.0% or $3.6 million, before intersegment eliminations for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase in net sales was primarily attributed to sales growth from existing customers.
Current wording
Contact Centers net sales increased 6.5% or $4.5 million, before intersegment eliminations for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in net sales was attributed to sales growth from both new and existing customers.
Previous wording
Gross margin rate for the Company was 39.2% for the six months ended June 30, 2024 and 36.4% for the six months ended June 30, 2023. The rate increase was due to an improvement in gross margin rates in our Branded Products and Healthcare Apparel segments.
Current wording
Gross margin rate for the Company was 39.6% for the nine months ended September 30, 2024 and 37.3% for the nine months ended September 30, 2023. The rate increase was due to an improvement in gross margin rates in our Branded Products and Healthcare Apparel segments.
Previous wording
Gross margin rate for our Healthcare Apparel segment was 38.9% for the six months ended June 30, 2024 and 36.5% for the six months ended June 30, 2023. The rate increase was primarily driven by lower supply chain costs, as well as, challenging market conditions experienced in the prior year period.
Current wording
Gross margin rate for our Healthcare Apparel segment was 40.0% for the nine months ended September 30, 2024 and 37.3% for the nine months ended September 30, 2023. The rate increase was primarily driven by lower supply chain costs.
Previous wording
Gross margin rate for our Contact Centers segment was 52.2% for the three months ended June 30, 2024 and 53.6% for the three months ended June 30, 2023. The rate decrease was primarily due to increased employee related costs of our agents including agent training resulting in an increase in non-billable hours during the current year period, partially offset by sales growth from existing customers.
Current wording
Gross margin rate for our Contact Centers segment was 53.6% for the nine months ended September 30, 2024 and 54.2% for the nine months ended September 30, 2023. The rate decrease was primarily due to increased employee related costs of our agents.
Previous wording
As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 28.3% for the three months ended June 30, 2024 and 25.6% for the three months ended June 30, 2023. The rate increase was primarily driven by increased employee related costs, including sales commissions, and an increase in expense relating to acquisition-related contingent liabilities driven by fair market value adjustments in 2024 as compared to 2023.
Current wording
As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 27.0% for the nine months ended September 30, 2024 and 26.1% for the nine months ended September 30, 2023. The rate increase was primarily due to increased employee related costs, including sales commissions, partially offset by an increase in net sales.
Previous wording
As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 35.3% for the six months ended June 30, 2024 and 33.7% for the six months ended June 30, 2023. The rate increase was primarily attributable to an increase in expenditures related to marketing and advertising activities.
Current wording
As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 34.8% for the nine months ended September 30, 2024 and 33.1% for the nine months ended September 30, 2023. The rate increase was primarily attributable to an increase in expenditures related to marketing and advertising activities along with employee related costs which were partially offset by an increase in net sales.
Previous wording
As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 42.4% for the three months ended June 30, 2024 and 42.2% for the three months ended June 30, 2023. The increase in selling and administrative expenses was primarily driven by increased employee related expenses, including both headcount and select pay rate increases to support sales growth.
Current wording
As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 44.2% for the nine months ended September 30, 2024 and 42.8% for the nine months ended September 30, 2023. The rate increase was primarily attributable to an increase in employee related expenses, including both headcount and select pay rate increases to support sales growth, as well as, an increase in the provision for bad debts.
Previous wording
Interest expense decreased to $3.3 million for the six months ended June 30, 2024 from $5.2 million for six months ended June 30, 2023. This decrease was due to a $55.1 million decrease in our weighted average outstanding borrowings along with a decrease in the weighted average interest rate on our outstanding borrowings from 6.9% for the six months ended June 30, 2023 to 6.6% for the six months ended June 30, 2024.
Current wording
Interest expense decreased to $4.9 million for the nine months ended September 30, 2024 from $7.7 million for nine months ended September 30, 2023. This decrease was due to a $42.4 million decrease in our weighted average outstanding borrowings along with a decrease in the weighted average interest rate on our outstanding borrowings from 7.0% for the nine months ended September 30, 2023 to 6.5% for the nine months ended September 30, 2024.
Previous wording
Income tax expense increased to $0.7 million for the six months ended June 30, 2024 from $0.2 million for the six months ended June 30, 2023. The effective tax rate was 13.9% and 9.5% for the six months ended June 30, 2024 and 2023, respectively. Income tax expense and the effective tax rate for the six months ended June 30, 2024 and June 30, 2023 was primarily impacted by the variability in the mix of earnings across the Company’s foreign and domestic operations, subject to various statutory tax rates in those jurisdictions. The tax rate was further favorably impacted by the windfall benefits associated with the stock option exercises during the six months ended June 30, 2024 The effective tax rate may vary from quarter to quarter due to discrete, unusual or non-recurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, or other items.
Current wording
Income tax expense increased to $1.9 million for the nine months ended September 30, 2024 from $0.4 million for the nine months ended September 30, 2023. The effective tax rate was 16.1% and 6.8% for the nine months ended September 30, 2024 and 2023, respectively. Income tax expense and the effective tax rate for the nine months ended September 30, 2024 and September 30, 2023 was primarily impacted by the variability in the mix of earnings across the Company’s foreign and domestic operations, subject to various statutory tax rates in those jurisdictions. The effective tax rate may vary from quarter to quarter due to discrete, unusual or non-recurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, or other items.
Previous wording
Superior carries inventories of both raw materials and finished products, the practice of which requires substantial working capital, which we believe to be common in the industry.
Current wording
One of our largest cash requirements is for the purchase of inventory. Superior carries inventories of both raw materials and finished products, the practice of which requires substantial working capital, which we believe to be common in the industry.
Previous wording
For the next twelve months, our primary capital requirements are to maintain our operations, meet contractual obligations, fund capital expenditures, pay dividends and for other general corporate purposes. We currently anticipate that we will spend more in capital expenditures in 2024 than we spent in 2023. Management currently believes that the combination of our current cash level, cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the above requirements for the next twelve months.
Current wording
For the next twelve months, our primary capital requirements are to maintain our operations, meet contractual obligations, fund capital expenditures, pay dividends and for other general corporate purposes. Management currently believes that the combination of our current cash level, cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the above requirements for the next twelve months.
Previous wording
Beyond the next twelve months, our principal demand for funds will be for maintenance of our core business, to satisfy long term contractual obligations and the continuation of the Company’s ongoing capital expenditure program designed to improve the effectiveness and capabilities of our facilities and technology. The Company at all times evaluates its capital expenditure program in light of prevailing economic conditions. The Company’s material contractual obligations include outstanding debt, operating leases, acquisition-related contingent liabilities, unfunded supplemental executive retirement plan liabilities and non-qualified deferred compensation plan liabilities. Management currently believes that the combination of our current cash level, cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the above requirements.
Current wording
Beyond the next twelve months, our principal demand for funds will be for maintenance of our core business, to satisfy long term contractual obligations and the continuation of the Company’s ongoing capital expenditure program designed to improve the effectiveness and capabilities of our facilities and technology. The Company at all times evaluates its capital expenditure program in light of prevailing economic conditions. The Company’s material contractual obligations include outstanding debt, operating leases, long-term pension liability and non-qualified deferred compensation plan liabilities in Other Liabilities. Management currently believes that the combination of our current cash level, cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the above requirements.
Previous wording
Operating Activities. The decrease in net cash provided by operating activities during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily attributable to increases in cash outflows for accounts payable and other current liabilities and inventories and a decrease in cash inflows from contract assets, partially offset by an increase in net income. Working capital cash changes during the six months ended June 30, 2024 primarily included decreases of $10.6 million in accounts receivable, $6.4 million in accounts payable and other current liabilities and $3.9 million in inventories, and increases of $4.5 million in contract assets. Working capital cash changes during the six months ended June 30, 2023 primarily included increases of $10.6 million in inventories, $8.9 million in accounts receivable and $5.4 million in contract assets.
Current wording
Operating Activities. The decrease in net cash provided by operating activities during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily attributable to cash outflows for inventories, contract assets, accounts payable and other current liabilities, accounts receivable and prepaid expenses and other current assets, partially offset by an increase in net income. Working capital cash changes during the nine months ended September 30, 2024 primarily included decreases of $16.0 million in inventories, $7.9 million in contract assets, $6.4 million in accounts payable and other current liabilities, $5.8 million in accounts receivable and $4.8 million in prepaid expenses and other current assets, partially offset by an increase of $4.7 million in net income.
Previous wording
Investing Activities. The decrease in net cash used in investing activities during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was attributable to a decrease of $1.7 million in capital expenditures.
Current wording
Investing Activities. The decrease in net cash used in investing activities during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was attributable to a decrease of $1.1 million in capital expenditures.
Previous wording
Financing Activities. The decrease in net cash used in financing activities during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily attributable to a decrease of $13.0 million in net repayments of debt.
Current wording
Financing Activities. The decrease in net cash used in financing activities during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily attributable to a decrease of $38.5 million in net repayments of debt and cash paid to acquire shares of the Company's common stock as part of the new repurchase program.
Previous wording
During the six months ended June 30, 2024 and 2023, the Company paid cash dividends of $4.7 million and $4.6 million, respectively. The Company anticipates that it will continue to pay dividends in the future as financial conditions permit.
Current wording
During the nine months ended September 30, 2024 and 2023, the Company paid cash dividends of $7.0 million and $6.9 million, respectively. The Company anticipates that it will continue to pay dividends in the future as financial conditions permit.
Previous wording
EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation or as an alternative to net income, cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate EBITDA are significant components in understanding and assessing the Company’s results of operations. The presentation of the Company’s EBITDA may change from time to time, including as a result of changed business conditions, new accounting pronouncements or otherwise. If the presentation changes, the Company undertakes to disclose any change between periods and the reasons underlying that change. The Company’s EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner.
Current wording
EBITDA is not a measure of financial performance under GAAP. EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate EBITDA are significant components in understanding and assessing the Company’s results of operations. The presentation of the Company’s EBITDA may change from time to time, including as a result of changed business conditions, new accounting pronouncements or otherwise. If the presentation changes, the Company undertakes to disclose any change between periods and the reasons underlying that change. The Company’s EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
EBITDA was $26.8 million and $23.6 million during the nine months ended September 30, 2024 and 2023, respectively. EBITDA increase was primarily due to increased net sales and gross margins at our Branded Products and Healthcare Apparel segments, partially offset by an increase in selling, general and administrative expenses across all of our reportable segments. For a reconciliation of EBITDA to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Non-GAAP Financial Measure” below.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Gross margin rate for the Company was 38.5% for the three months ended June 30, 2024 and 36.8% for the three months ended June 30, 2023. The rate increase was due to an improvement in gross margin rates in our Branded Products and Healthcare Apparel segments, partially offset by a decrease in gross margin rate in our Contact Centers segment.
Previous report — wording carried elsewhere
As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 43.3% for the six months ended June 30, 2024 and 43.0% for the six months ended June 30, 2023. The increase in selling and administrative expenses was primarily driven by increased employee related expenses, including both headcount and select pay rate increases to support sales growth.