Superior Group of Companies, Inc. (NASDAQ:SGC) Q2 2023 Earnings Call Transcript

Michael Benstock: Yes, as we said in the past, we don’t expect it to have a big impact on this year. We did a soft launch in April, I believe it was the end of April. So we’ve had three and a half months added so far, every month is better than the prior month. We’re getting much better at keeping our customer acquisition costs in check and a return on ad spend, where we want it. We’re not disclosing what those metrics are because it’s not significant enough to really speak about. I would expect today until the latter part of 2024, you’re not going to hear us speak about actual numbers. And maybe even beyond that, from a competitive standpoint, we’re best off not to speak to that. But I can tell you it is exceeding our expectations.

We’re very happy with the gross margins, it’s bringing the business. We’re very happy with our ability to move clearance, merchandise through that, which we — we could at least said we have a lot of. And so, we’re excited about the channel and it is everything we hoped it would be. And I’m looking forward to sometime in the future being able to report, when it is a more significant part of our business, which it will be, just a question of time.

Kevin Steinke: Okay. Thank you for taking the questions. I’ll turn over for now. I’ll get back in the queue. Thanks.

Michael Benstock: Thank you.

Operator: The next question comes from Jim Sidoti with Sidoti and Company. Please go ahead.

Jim Sidoti: Hi, good afternoon and thanks for taking the question.

Michael Benstock: Hi, Jim.

Jim Sidoti: You’ve guided for — or you’re based on your guidance. It sounds like you’re looking for the top-line to turn around and grow low single digits in the second half of the year, after falling roughly 10% in the beginning of the year. Are you starting to see any evidence of that now in the third quarter? Do you think that’s primarily a fourth quarter there?

Michael Benstock: You go ahead, Mike.

Mike Koempel: Yeah. I’ll start. I think, Jim, I think Michael alluded to this a little bit in the previous question. I think we’re seeing signs in our businesses that there is an improvement in the trend from what we saw in Q1 and Q2 and the branded product space, we’ve seen a trend improvement in the backlog of orders that are coming into the business. We’re obviously encouraged with the positive comp in healthcare in the second quarter. Don’t want to get ahead of ourselves. There’s a lot of the year to go, but the business driving an increase over last year, placing an emphasis in digital, not to some extent the D2C, but overall in our digital business, which includes our wholesale business, I think, is helping to create a little bit of momentum in that business.

And then, lastly, when we talked about the contact center business, we are seeing the benefit of the new customers that were added in the first quarter and we’re seeing traction there in terms of added seats, which we think will provide an incremental lift to the back half of the year.

Jim Sidoti: So it sounds like you’re seeing some evidence in this quarter, but you expect it to continue to build in Q4. Is that accurate?

Mike Koempel: Yes, I think it would be a bill between Q3 and Q4.

Jim Sidoti: Alright. And despite the declining revenue, you have been — you really haven’t seen a huge drop in earnings and you’ve generated significant cash flow. What’s the plan to that cash right now? Is that all going to debt pay down?