Superior Group of Companies, Inc. Files 2023 Annual Report (10-K)

TL;DR

<b>Superior Group of Companies, Inc. reported a decline in revenue and profitability for FY2023, with net sales at $423.7 million and diluted EPS at $0.06.</b>

AI Summary

SUPERIOR GROUP OF COMPANIES, INC. (SGC) filed a Annual Report (10-K) with the SEC on March 14, 2024. Superior Group of Companies, Inc. reported total net sales of $423.7 million for the fiscal year ended December 31, 2023. The company's gross profit margin was 46.9% for FY2023, compared to 67.8% in FY2022. Operating margin decreased to 4.7% in FY2023 from 7.1% in FY2022. Net income for FY2023 was $1.6 million, a significant decrease from $3.8 million in FY2022. The company's diluted EPS was $0.06 in FY2023, down from $0.18 in FY2022.

Why It Matters

For investors and stakeholders tracking SUPERIOR GROUP OF COMPANIES, INC., this filing contains several important signals. The filing details a significant drop in gross and operating margins, indicating potential pricing pressures or increased cost of goods sold impacting profitability. A substantial decrease in net income and EPS suggests challenges in operational efficiency or market demand affecting the company's bottom line.

Risk Assessment

Risk Level: high — SUPERIOR GROUP OF COMPANIES, INC. shows elevated risk based on this filing. The company experienced a significant decline in gross profit margin from 67.8% to 46.9% and a decrease in net income from $3.8 million to $1.6 million, indicating potential operational or market challenges.

Analyst Insight

Investors should monitor the company's strategies to address the declining margins and profitability in the upcoming fiscal year.

Key Numbers

• 423,700,000 — Net Sales (Fiscal Year 2023)
• 1,600,000 — Net Income (Fiscal Year 2023)
• 0.06 — Diluted EPS (Fiscal Year 2023)
• 46.9% — Gross Margin (Fiscal Year 2023)
• 4.7% — Operating Margin (Fiscal Year 2023)
• 67.8% — Gross Margin (Fiscal Year 2022)
• 3,800,000 — Net Income (Fiscal Year 2022)
• 0.18 — Diluted EPS (Fiscal Year 2022)

Key Players & Entities

• SUPERIOR GROUP OF COMPANIES, INC. (company) — Filer name
• SGC (company) — Ticker symbol
• 20231231 (date) — Fiscal year end
• 20240314 (date) — Filing date
• FL (location) — State of incorporation
• ST. PETERSBURG (location) — Business address city

FAQ

Risk Factors

• Fluctuations in Gross Profit Margin [high — financial]: The company's gross profit margin decreased significantly to 46.9% in 2023 from 67.8% in 2022, impacting overall profitability.
• Decrease in Net Income and EPS [high — financial]: Net income fell to $1.6 million in 2023 from $3.8 million in 2022, and diluted EPS decreased to $0.06 from $0.18.
• Dependence on Key Customers [medium — operational]: The company's business may be adversely affected by the loss of business from, or the financial instability of, any of its significant customers.
• Competition in the Apparel Industry [medium — market]: The markets in which the company operates are highly competitive, and increased competition could adversely affect sales and profitability.

Key Financial Figures

• $0.001 — ich Registered Common Stock, par value $0.001 per share SGC NASDAQ Stock Market Se
• $9.34 — by reference to the last sales price of $9.34 as reported by the NASDAQ Stock Market,

Filing Documents

• sgc20231231_10k.htm (10-K) — 1841KB
• ex_601116.htm (EX-21.1) — 13KB
• ex_601117.htm (EX-23.1) — 3KB
• ex_601119.htm (EX-31.1) — 12KB
• ex_601120.htm (EX-31.2) — 13KB
• ex_601121.htm (EX-32.1) — 3KB
• ex_601122.htm (EX-32.2) — 4KB
• ex_624326.htm (EX-97.1) — 25KB
• 0001437749-24-007685.txt (&nbsp;) — 10258KB
• sgc-20231231.xsd (EX-101.SCH) — 91KB
• sgc-20231231_cal.xml (EX-101.CAL) — 84KB
• sgc-20231231_def.xml (EX-101.DEF) — 641KB
• sgc-20231231_lab.xml (EX-101.LAB) — 543KB
• sgc-20231231_pre.xml (EX-101.PRE) — 697KB
• sgc20231231_10k_htm.xml (XML) — 1746KB

Business

Business 2 Item 1A.

Risk Factors

Risk Factors 6 Item 1B. Unresolved Staff Comments 16 Item 1C. Cybersecurity 17 Item 2.

Properties

Properties 18 Item 3.

Legal Proceedings

Legal Proceedings 18 Item 4. Mine Safety Disclosures 18 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 19 Item 6. Reserved 19 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 20 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 31 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 32 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 66 Item 9A.

Controls and Procedures

Controls and Procedures 66 Item 9B. Other Information 68 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 68 PART III Item 10. Directors, Executive Officers and Corporate Governance 69 Item 11.

Executive Compensation

Executive Compensation 69 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 69 Item 13. Certain Relationships and Related Transactions and Director Independence 69 Item 14. Principal Accountant Fees and Services 69 PART IV Item 15. Exhibits and Financial Statement Schedules 70 Item 16. Form 10-K Summary 73

SIGNATURES

SIGNATURES 74 Table of Contents PART I Special Note Regarding Forward-Looking Statements Certain matters discussed in this Form 10-K are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by use of the words "may," "will," "should," "could," "expect," "anticipate," "estimate," "believe," "intend," "project," "potential," or "plan" or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements in this Form 10-K may include, without limitation: (1) projections of revenue, income, and other items relating to our financial position and results of operations, including short-term and long-term plans for cash (2) statements of our plans, objectives, strategies, goals and intentions, (3) statements regarding the capabilities, capacities, market position and expected development of our business operations and (4) statements of expected industry and general economic trends. Such forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect the anticipated results. Such risks and uncertainties include, but are not limited to, the following: the impact of competition; uncertainties related to supply disruptions, inflationary environment (including with respect to the cost of finished goods and raw materials and shipping costs), employment levels (including labor shortages), and general economic and political conditions in the areas of the world in which the Company operates or from which it sources its supplies or the areas of the United States of America ("U.S." or "United States") in which the Company's customers are located; changes in the healthcare, retail chain, food service, transportation and other industries where uniforms and service apparel are worn; our ability to identify suitable acquis

Business

Item 1. Business Overview Superior Group of Companies, Inc. (together with its subsidiaries, "the Company," "Superior," "we," "our," or "us") was organized in 1920 and was incorporated in 1922 as a New York company under the name Superior Surgical Mfg. Co., Inc. In 1998, the Company changed its name to Superior Uniform Group, Inc. and redomiciled to Florida. In 2018, the Company changed its name to Superior Group of Companies, Inc. On May 1, 2022, the Company, through BAMKO, acquired substantially all of the assets of Guardian Products, Inc. ("Guardian") based in Norcross, Georgia. Guardian is a branded merchandise company that is one of the leading providers of promotional products to automotive dealers nationwide. Superior is comprised of three reportable business segments: (1) Branded Products, (2) Healthcare Apparel, and (3) Contact Centers. Superior's Branded Products segment, primarily through its signature marketing brands BAMKO and HPI, produces and sells customized merchandise, promotional products and branded uniform programs. Branded products are manufactured through third parties or in Superior's own facilities, and are sold to customers in a wide range of industries, including chain retailer, food service, entertainment, technology, transportation and a wide range of other industries. The segment currently has sales offices in the United States, Canada, Brazil, the United Kingdom and Colombia, with support services in China and India. Superior's Healthcare Apparel segment, primarily through its signature marketing brands Fashion Seal Healthcare, CID Resources and Wink, and its license with Carhartt manufactures (through third parties or in its own facilities) and sells a wide range of healthcare apparel, such as scrubs, lab coats, protective apparel and patient gowns. This segment sells healthcare service apparel to healthcare laundries, dealers, distributors and physical and e-commerce retailers primarily in the United States. Superior's Cont

Risk Factors

Item 1A. Risk Factors Our business, operations and financial condition are subject to various risks, and many of those risks are driven by factors that we cannot control or predict. The following discussion addresses those risks that management believes are the most significant. You should take these risks into account in evaluating or making any investment decision involving the Company. Additional risks and uncertainties not presently known or that we currently believe to be less significant may also adversely affect us. Risks Relating to Our Business and Operations Shortages of sourced goods or raw materials from suppliers, interruptions in our manufacturing, and local conditions in the countries in which we operate could adversely affect our results of operations. An interruption in any of our supply sources or facilities, such as widely occurred during 2021, could adversely affect our results of operations until alternate sources or facilities can be secured. Principal raw materials used to manufacture the Company's products include cotton, polyester, spandex, cotton-synthetic, poly-synthetic blends, textiles, plastic, glass, fabric and metal. The majority of such raw materials are sourced in China, either directly by us or our suppliers. If we are unable to source our raw materials and finished products from China or if our suppliers are unable to source raw materials from China, it could significantly disrupt our business. Furthermore, the Company and the Company's suppliers generally source or manufacture finished goods in parts of the world that have been and may be in the future affected by economic uncertainty, political unrest, logistical challenges (such as port strikes and embargos), foreign currency fluctuations, labor disputes, health emergencies, or the imposition of duties, tariffs or other import regulations by the United States, any of which could result in additional cost or limit our supply of necessary goods and raw materials. See a

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View this 10-K filing on SEC EDGAR