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

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We put on as more customers than we’ve ever put on. And quite frankly, we’re working on more opportunities that when realized, will bring us greater degrees of revenue in future periods. We continue to put on seats in the month of November, and we’ll put on a few in the month of December. December is not traditionally a period where we put on a lot of seats. Everybody kind of holds back and says how they want to get going in January. But the quarter should turn out well in our guidance with respect to that quarter. I’ll let Mike speak to that with respect to the call centers, where we’re headed with that.

Mike Koempel: Sure. Yes. I mean we expect to continue to see growth in that segment in the fourth quarter. I think as we touched on, there’s been sequential growth throughout the year, certainly from an EBITDA perspective, given that we started at a pretty low point in the first quarter with some of the cost increases and being a little late in terms of increasing pricing. But the pipeline is strong as we’ve had before. We’re onboarding more new customers, and it’s looking strong for the first quarter. So we feel, again, like the contact center business is picking up momentum throughout the year and into 2024.

David Marsh: Great. That’s really very helpful. And then lastly for me, with regard to free cash flow, I mean, fantastic job on debt repayment year-to-date. Would we expect that there would be a little bit more sequential debt repayment in the fourth quarter? Or do you start to kind of fight against some working cap trends a little bit? I mean I guess just if you could just kind of give us a holistic picture of what fourth quarter free cash flow looks like and where it’s going?

Michael Benstock: Yes. As I mentioned, I think we’ve made a lot of progress, I think, through — for the first 9 months. So I would expect here in the fourth quarter, things to normalize a bit. And of course, as we look to the level of volumes in Q1, depending upon our inventory levels, we may need to start making some investments as we planned for Q1, depending upon what those revenue levels look like. So I would say, Dave, in Q4, we would still look where there’s opportunity with free cash flow still look to, again, continue to bring the debt levels down to get towards that targeted ratio we’re looking for, but certainly not at the level that we’ve been generating over the last 3 quarters. If you look at our – if you had a chance to look at our cash flow statement, we’ve already brought inventories down pretty significantly so far this year.

Receivables have been coming down. So I think we’ve made a lot of progress there. We’re – again, there’s still some opportunity there, but not to the extent that we’ve seen over the first three quarters.

David Marsh: Right, right. That makes a lot of sense. Thank you, guys very much for taking the questions and congrats on the quarter.

Michael Benstock: Thank you.

Operator: And that concludes our question-and-answer session. I’d like to turn the conference back over to Michael Benstock for any closing remarks.

Michael Benstock: Okay. Thank you, operator. I’ll jump the gun there a little bit. I want to thank everybody for joining our call. We’re looking forward to finishing the year strong. Our intention is to continually grow SGC’s market share across all of our three attractive markets and to do so profitably. The ultimate goal, obviously, is further enhancing shareholder value. We’re confident that we can do so even during uncertain times. We look forward to updating you on our full year results, and please don’t hesitate to reach out with any questions before then enjoy this evening, and thanks again.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.+

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