Superior Group of Companies, Inc. (NASDAQ:SGC) Q3 2023 Earnings Call Transcript

We’ve never actually had a sales force. We’ve grown the business from zero to $80 million without a sales force. And what Jake has done and Phil had done prior to him and branded products was not sort of amazing to take a business that was doing $32 million 7 years ago that’s doing – if you just take the merchandise side of that over $250 million a year. So why should I not be equally as excited about all these three businesses. So I didn’t answer your question because I don’t want any of my children to be angry at me after this call. But I’m excited about it. I think we’re in three great businesses that we do not have enough market share in, and I don’t think it’s going to be that hard to take market share away from our competition in the coming years with all that we’re doing internally to make our business stronger.

Jim Sidoti: All right. Thank you.

Operator: And our next question will come from David Marsh with Singular Research. Please go ahead.

David Marsh: Thank you, guys for taking the questions. First, I wanted to touch on the GAAP income tax expense in the quarter, which was extremely low as a percentage of continuing income from continuing ops. Could you just touch on that and give us some idea of what you expect in the next quarter and in the coming year? Were there some – were there some tax loss carry-forwards that benefited you in the quarter and that will continue to benefit you as you roll forward?

Michael Benstock: Dave, it’s really in the quarter and so far this year, it’s really been the mix of our profit domestic versus international. And obviously, we have a large amount of profit through our contact center business in Central America. So that we benefit from that mix, which has driven a lower rate this year in the, I’ll call it, high single digits, and we would expect that to be the case through the balance of the year. And then obviously, next year, as we look to plan next year, we’ll relook obviously at the mix of where, again, our profit is from a foreign and domestic perspective. But that’s really been the driver of the rate this year. We haven’t had this year as many discrete items as we did last year, which drove the rate higher last year, again, due to the discrete nature of what we had. But at this point, it’s really a reflection of our foreign versus domestic profit.

David Marsh: Got it. Thank you. And then secondly, just with regard to the call center business, I know in the last quarterly call, you had talked about maybe some customers that had to refresh that quite as high levels, but obviously, some nice sequential growth this quarter. Just trying to kind of parse through the guidance for the year that you gave. I’m trying to figure out, are we — are you guys thinking sequentially kind of flat-ish for the fourth quarter? And could you just talk, I guess, more generally about how your renewals have been in the third quarter maybe versus the second quarter and maybe the beginning of the fourth quarter versus the second quarter? Have you seen improvement there and just kind of general overall tone of the segment?

Michael Benstock: We are seeing some improvement. I spoke about last quarter, the fact that to date, we have lost a few hundred through the end of June, we have lost a few hundred 300-and-some-odd of existing customers who were just scaled back because of the macro environment. And they have not since grown the number of seats that we have with them. But we have replaced all of those, and we spoke about that again last quarter. They had all been replaced by new seats. And we continue to put on new seats. We’re putting on new seats at a clip that we haven’t done before. But again, we’re still trying to — we’ve got the deficit of 300-some-odd seats that we’re fighting against all year in the comp. The good news is we’re working on more larger opportunities than we’ve ever worked on.