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

David Marsh : Okay. And then just turning to the inventory issue that you guys have talked about now for a little while, I mean, can you give us a sense of how close you feel like you are to kind of an equilibrium inventory level. I mean, is it still a long way to go or are you pretty close? I did appreciate the color provided there about being able to move some clearance through the website. That’s really helpful to understand, but how — are you pretty close to being at an equilibrium level where you can kind of get back to your normal purchasing?

Mike Koempel: We’re definitely making progress, Dave. And as Michael alluded to on the digital space within healthcare, I think our emphasis on digital both the DDC as well as our wholesale has helped us to liquidate some of the underperforming inventory and we’ll obviously continue to do that. As we talked about last year, when we were looking forward, we felt it was going to take the better part of the year for us to really reach what we will call our inventory equilibrium or our target. So, I think the next two quarters will be critical. Obviously, we’re expecting an improvement in the trend of the healthcare business, which will help us facilitate moving the inventory to reach our target. So the next two quarters will be important and our goal is to reach our inventory equilibrium around the year end period. And we’ll remain focused on liquidating those inventories over the next two quarters.

David Marsh : And from a supply perspective, you haven’t seen any meaningful disruptions, correct. You can still purchase at whatever level you would like to from your supply base. Is that a fair statement?

Michael Benstock: Yes.

Mike Koempel: Yes. It is.

David Marsh : And then I just kind of reading — I’m trying to read the [few notes] (ph) here. There was some kind of dancing around it, but I just wanted to get a definitive answer. As you sit here today with some performance metrics that you have, do you feel like you’ll remain in compliance with the covenants or is it still kind of — you still kind of feel like it’s maybe fifty-fifty that you might need to do another amendment?

Michael Benstock: We feel comfortable with, you know, with the amendment that we have in place and our current standing in the business. So at this point, I would not anticipate any additional amendments that would be necessary. Obviously, we looked at this hard at the beginning of the year. And so based on how we were viewing the cyclical nature of the business. We felt like it was appropriate to put an amendment in place that we felt would cover any potential increase in the ratio. Obviously, we’ve outperformed that. And so at this point, we feel comfortable as we move forward.

David Marsh : That’s really helpful. Appreciate it. Let me yield the floor to another caller.

Operator: We’re seeing no further questions in the queue. I would like to go ahead and turn the call back to Michael Benstock for closing remarks.

Michael Benstock: Great. Thank you, operator. Before we end this call, I would be remiss I did not mention, and we announced last month, the passing of our Chairman of Meredith to the board my father, Jerry Benstock, whose vision and long career with Superior spanned over 60 years, and led to many of the successes we have enjoyed over the last many decades. That truly loved his Superior family and every community that we operated in and did much to tangibly improve the lives of so many. He will be deeply missed by all who knew him, we mourn his loss. I want to thank all of you again today for joining our call. As you heard from us today, we continue to aim at profitably capturing share and creating long-term value for our shareholders even as we continue to navigate these uncertain times.