Superior Group of Companies, Inc. (NASDAQ:SGC) Q4 2022 Earnings Call Transcript

Mitra Ramgopal: And then finally, I think, in the past, and you’ve mentioned, especially in periods of where you have prolonged inflation, or even high interest rates, et cetera, you’ve been able to take share, especially in an economic downturn, or just wondering, based on the guidance the second half of the year. And I know you’re being a little conservative, but I’m assuming you still expect that trend to continue as it relates to continuing to take share from competitors?

Michael Benstock: I can say that is our goal. Surely that is the thing that will get us closer to where we want to be from a debt level standpoint. And where we need to be from a shareholder value standpoint, is growing the business profitably. And that is a correct assumption. Whether it’s conservative or not, I’ll let you be the judge of that. But we intend to deliver on the guidance that we’ve given you today.

Mitra Ramgopal: Okay. Thanks, again to taking questions.

Operator: The next question will come from BJ Cook with Singular Research.

BJ Cook: Thanks, guys. Just a couple of quick ones here. On the inventory side, or the since the write downs are non-cash, can we assume that that’s just promotional pricing to get inventory back on track? Or is there more of that? And as we get on track for the rest of the year, can we expect any more on the right downside?

Mike Koempel: The write downs, certainly we’re into Q4, based on our evaluation of future selling prices, so you’re writing that inventory down will, in essence, enable us to, in essence, liquidate some of the underperforming inventory more aggressively. And take some margin pressure off of the healthcare business. And 2023, which is, as I mentioned before is where we see their upside in the business for 2023 from a margin perspective. So, in essence, it does help with the markdowns and help the clearing through different channels, both through our digital channel as well as with our wholesale customers.

BJ Cook: Good to see optimistic 2023 guidance and you broke out revenue. Just kind of curious, given the dynamic environment we’re kind of in now, everybody’s in now. From a profit perspective, is the guidance going to shake out similar to it has in the past? Or we’re going to see some this year?

Mike Koempel: I’m sorry, you’re breaking up a little bit. But I think you’re asking about profit guys by segment?

BJ Cook: Yeah, that’s right.

Mike Koempel: Sure. Well, our guidance, obviously, is on a consolidated basis, from an earnings perspective, what I would say just as, as additional context is, given, again, the down trending that we’ve experienced in healthcare in 2022, combined with the significant write offs that we’ve taken within that segment, the guidance certainly assumes an improvement, and the healthcare apparel results pretty significant improvement, if you just in 2022 alone, we took about over $10 million of charges and health care apparel segment, which again, we would not anticipate to repeat in 2023. And as Michael touched on it from the other segments, we anticipate that our contact center business will continue to grow, be profitable as it has in the past, with EBITDA margin, approximately 20%. So still a strong EBITDA margin. And we would expect our branded product segment to hold its margin going forward as it moves through the year.

Operator: The next question will come from Kevin Steinke with Barrington Research. Please go ahead.

Kevin Steinke: As I said, a couple of follow ups. You mentioned the accelerated sales force hiring in BAMKO and that’s actually tracking ahead of your targets. Just how quickly can use sales people ramp up and start contributing and I guess that could be a factor in you taking share and potentially contributing to the growth in the second half that you discussed.