8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)      July 26, 2018

Superior Group of Companies, Inc.

(Exact name of registrant as specified in its charter)

Florida	001-05869	11-1385670
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
10055 Seminole Blvd., Seminole, Florida (Address of principal executive offices)		33772 (Zip Code)

Registrant's telephone number including area code: (727) 397-9611

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230 .425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition

The following information is being furnished under Item 2.02 of Form 8-K: Press release by Superior Group of Companies, Inc. (the “Company”) announcing its results of operations for the quarter ended June 30, 2018. A copy of this press release is attached as Exhibit 99.1 to this Form 8-K.

Item 9.0l. Financial Statements and Exhibits

(c) Exhibits

Exhibit Number	Description
99.1	Press Release, dated July 26, 2018

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized.

SUPERIOR GROUP OF COMPANIES, INC.
By:	/s/ Andrew D. Demott, Jr.
	Andrew D. Demott, Jr. Chief Operating Officer, Chief Financial Officer and Treasurer

Date: July 26, 2018

EX-99.1

EXHIBIT 99.1

NEWS RELEASE

Superior Group of Companies, Inc.

A NASDAQ Listed Company: SGC                    

10055 Seminole Boulevard

Seminole, Florida 33772-2539

Telephone (727) 397-9611

Fax (727) 803-2642

FOR IMMEDIATE RELEASE

SUPERIOR GROUP of COMPANIES, INC. REPORTS SECOND QUARTER

OPERATING RESULTS

● Net Sales Increase 25.6 Percent

● 23rd Consecutive Quarter with Sales Increase

SEMINOLE, Florida – July 26, 2018 - Superior Group of Companies, Inc. (NASDAQ: SGC), manufacturer of uniforms, career apparel and accessories, today announced that for the second quarter ended June 30, 2018, net sales increased 25.6 percent to $82.4 million compared with 2017 second quarter net sales of $65.6 million. Net income for the 2018 second quarter was $3.8 million, or $0.25 per diluted share, compared with $4.3 million, or $0.29 per diluted share, reported for the quarter ended June 30, 2017. Note that earnings in the second quarter of 2018 were reduced by a pre-tax charge of approximately $1.6 million or approximately $.08 per diluted share for expenses associated with the acquisition of CID Resources, Inc.

Additionally, the comparison of net sales and earnings results in the current quarter is significantly impacted by the adoption of ASC 606 relative to the timing of revenue recognition. The 2017 results are calculated under the previous revenue recognition guidance while 2018 is under the new standard. This resulted in a reduction in net sales for the second quarter of 2018 of approximately $2.9 million and a corresponding reduction in net income and earnings per diluted share of $0.6 million and $0.04, respectively. ASC 606 does not change the economic substance or timing of cash flows of our transactions with customers. After the initial year of adoption, ASC 606 should not have a major impact in our comparative results in the future.

Michael Benstock, Chief Executive Officer, commented, “Over the last year, we completed three acquisitions that have us positioned for significant improvement in our future growth prospects for both net sales and earnings. We are highly focused on successfully integrating these acquisitions to achieve the maximum long-term benefits for the Company and its shareholders. While our current operating results in our Uniform segment and our Promotional segment were lower than anticipated, we remain confident in our long-term outlook and believe our current investments in these segments will provide significant returns for the Company in the future.

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“The Office Gurus, our Remote Staffing segment, had another tremendous quarter with net sales to outside customers increasing by $2.3 million, or 50.6 percent, as they continue to land new customers and to grow with existing customers. We are also excited to announce that we have identified Jamaica as the next country for our continued expansion in this segment.”

CONFERENCE CALL

Superior Group of Companies will hold a conference call on Thursday, July 26, 2018 at 2:00 p.m. Eastern Time to discuss the Company’s results. Interested individuals may join the teleconference by dialing (844) 861-5505 for U.S. dialers and (412) 317-6586 for International dialers. The Canadian Toll Free number is (866) 605-3852. Please ask to be joined into the Superior Group of Companies call. The live webcast and archived replay can also be accessed in the investor information section of the Company’s website at www.superiorgroupofcompanies.com.

A telephone replay of the teleconference will be available one hour after the end of the call through 2:00 p.m. Eastern Time on August 2, 2018. To access the replay, dial (877) 344-7529 in the United States or (412) 317-0088 from international locations. Canadian dialers can access the replay at (855) 669-9658. Please reference conference number 10121858 for all replay access.

About Superior Group of Companies, Inc. (SGC):

Superior Group of Companies^™, formerly Superior Uniform Group, established in 1920, is a combination of companies that help customers unlock the power of their brands by creating extraordinary brand experiences for employees and customers. It provides customized support for each of its divisions through its shared services model.

Fashion Seal Healthcare^®, HPI^™ and CID Resources are signature uniform brands of Superior Group of Companies. Each is one of America’s leading providers of uniforms and image apparel in the markets it serves. They specialize in innovative uniform program design, global manufacturing, and state-of-the-art distribution. Every day, more than 6 million Americans go to work wearing a uniform from Superior Group of Companies.

BAMKO^®, Tangerine Promotions^® and Public Identity^® are signature promotional products and branded merchandise brands of Superior Group of Companies. They provide unique custom branding, design, sourcing, and marketing solutions to some of the world’s most successful brands.

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The Office Gurus^® is a global provider of custom call and contact center support. As a true strategic partner, The Office Gurus implements customized solutions for its customers in order to accelerate their growth and improve their customers’ service experiences.

SGC’s commitment to service, technology, quality and value-added benefits, as well as its financial strength and resources, provides unparalleled support for its customers’ diverse needs while embracing a “Customer 1st, Every Time!” philosophy and culture in all of its business segments.

Visit www.superiorgroupofcompanies.com for more information.

Contact:		Hala Elsherbini
Andrew D. Demott, Jr., COO, CFO & Treasurer  (727) 803-7135	OR	Halliburton Investor Relations (972) 458-8000

Comparative figures are as follows:

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SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

THREE MONTHS ENDED JUNE 30,

(Unaudited)

(In thousands, except shares and per share data)

	2018		2017
Net sales	$	82,392	$	65,604
Costs and expenses:
Cost of goods sold		53,114		42,230
Selling and administrative expenses		23,327		16,994
Other periodic pension costs		96		484
Interest expense		758		195
		77,295		59,903
Gain on sale of property, plant and equipment		-		-
Income before taxes on income		5,097		5,701
Income tax expense		1,280		1,360
Net income	$	3,817	$	4,341
Weighted average number of shares outstanding during the period
(Basic)		14,956,221		14,501,399
(Diluted)		15,559,404		15,040,431
Per Share Data:
Basic
Net income	$	0.26	$	0.30
Diluted
Net income	$	0.25	$	0.29
Cash dividends per common share	$	0.0950	$	0.0875

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SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

SIX MONTHS ENDED JUNE 30,

(Unaudited)

(In thousands, except shares and per share data)

	2018		2017
Net sales	$	155,479	$	126,591
Costs and expenses:
Cost of goods sold		101,326		81,003
Selling and administrative expenses		44,509		34,423
Other periodic pension costs		192		698
Interest expense		1,035		379
		147,062		116,503
Gain on sale of property, plant and equipment		-		1,018
Income before taxes on income		8,417		11,106
Income tax expense		2,150		2,930
Net income	$	6,267	$	8,176
Weighted average number of shares outstanding during the period
(Basic)		14,888,940		14,426,060
(Diluted)		15,508,517		14,985,063
Per Share Data:
Basic
Net income	$	0.42	$	0.57
Diluted
Net income	$	0.40	$	0.55
Cash dividends per common share	$	0.1900	$	0.1750

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SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value data)

	June 30,
	2018			December 31,
	(Unaudited)			2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4,164		$	8,130
Accounts receivable, less allowance for doubtful accounts of $1,722 and $1,382, respectively		63,269			50,569
Accounts receivable - other		2,522			1,848
Inventories		67,852			64,979
Contract assets		46,826			-
Prepaid expenses and other current assets		10,830			11,011
TOTAL CURRENT ASSETS		195,463			136,537
PROPERTY, PLANT AND EQUIPMENT, NET		28,564			26,844
OTHER INTANGIBLE ASSETS, NET		66,338			29,061
GOODWILL		35,327			16,032
DEFERRED INCOME TAXES		-			2,900
OTHER ASSETS		9,470			7,564
	$	335,162		$	218,938
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	22,337		$	19,752
Other current liabilities		11,327			12,409
Current portion of long-term debt		6,000			6,000
Current portion of acquisition-related contingent liabilities		1,410			3,061
TOTAL CURRENT LIABILITIES		41,074			41,222
LONG-TERM DEBT		122,801			32,933
LONG-TERM PENSION LIABILITY		7,947			8,319
LONG-TERM ACQUISITION-RELATED CONTINGENT LIABILITIES		5,056			7,283
DEFERRED INCOME TAXES		8,900			-
OTHER LONG-TERM LIABILITIES		3,800			4,213
COMMITMENTS AND CONTINGENCIES (NOTE 5)
SHAREHOLDERS' EQUITY:
Preferred stock, $.001 par value - authorized 300,000 shares (none issued)		-			-
Common stock, $.001 par value - authorized 50,000,000 shares, issued and outstanding - 15,311,541 and 15,081,947, respectively.		15			15
Additional paid-in capital		54,998			49,103
Retained earnings		97,664			83,129
Accumulated other comprehensive income (loss), net of tax:
Pensions		(6,851	)		(7,282	)
Cash flow hedges		122			(90	)
Foreign currency translation adjustment		(364	)		93
TOTAL SHAREHOLDERS' EQUITY		145,584			124,968
	$	335,162		$	218,938

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SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30,

(Unaudited)

(In thousands)

	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	6,267		$	8,176
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		3,646			2,715
Provision for bad debts - accounts receivable		323			575
Share-based compensation expense		1,490			1,108
Deferred income tax provision (benefit)		302			(509	)
Gain on sale of property, plant and equipment		-			(1,018	)
Change in fair value of acquisition-related contingent liabilities		(840	)		81
Changes in assets and liabilities, net of acquistion of business
Accounts receivable - trade		(3,492	)		552
Accounts receivable - other		(674	)		674
Contract assets		(972	)		-
Inventories		2,953			1,632
Prepaid expenses and other current assets		242			(1,353	)
Other assets		(1,827	)		(1,784	)
Accounts payable and other current liabilities		(7,368	)		(2,223	)
Long-term pension liability		195			(894	)
Other long-term liabilities		(497	)		829
Net cash (used in) provided by operating activities		(252	)		8,561
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		(2,414	)		(2,004	)
Acquistion of business, net of acquired cash		(85,597	)		-
Proceeds from disposals of property, plant and equipment		-			2,810
Net cash (used in) provided by investing activities		(88,011	)		806
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt		146,157			72,422
Repayment of long-term debt		(56,289	)		(74,088	)
Payment of cash dividends		(2,827	)		(2,490	)
Payment of acquisition-related contingent liabilities		(3,033	)		(1,800	)
Proceeds received on exercise of stock options		405			798
Tax benefit from vesting of acquisition-related restricted stock		105			70
Tax withholding on exercise of stock rights		(17	)		(421	)
Net cash provided by (used in) financing activities		84,501			(5,509	)
Effect of currency exchange rates on cash		(204	)		76
Net (decrease) increase in cash and cash equivalents		(3,966	)		3,934
Cash and cash equivalents balance, beginning of year		8,130			3,649
Cash and cash equivalents balance, end of period	$	4,164		$	7,583