| UNITED STATES |
| SECURITIES AND EXCHANGE COMMISSION |
| WASHINGTON, D.C. 20549 |
| FORM |
| (Mark One) |
| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
| For the quarterly period ended | |||||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
| For the transition period from ________ to __________ |
| Commission file number: |
| Exact name of registrant as specified in its charter: |
| SUPERIOR GROUP OF COMPANIES, INC. |
| State or other jurisdiction of incorporation or organization: | I.R.S. Employer Identification No.: |
| | |
| Address of principal executive offices: | ||||||||
| | ||||||||
| |
| Registrant’s telephone number, including area code: | ||||||||
| |
| Former name, former address and former fiscal year, if changed since last report: ___________________ |
| Securities registered pursuant to Section 12(b) of the Act: |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | |
| |
| Non-accelerated filer ☐ |
| Smaller Reporting Company | |
|
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| 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares of common stock of the registrant outstanding as of April 27, 2022 was
TABLE OF CONTENTS
| SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
| (Unaudited) |
| (In thousands, except shares and per share data) |
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net sales | $ | $ | ||||||
| Costs and expenses: | ||||||||
| Cost of goods sold | ||||||||
| Selling and administrative expenses | ||||||||
| Other periodic pension costs | ||||||||
| Interest expense | ||||||||
| Income before taxes on income | ||||||||
| Income tax expense | ||||||||
| Net income | $ | $ | ||||||
| Net income per share: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| Weighted average shares outstanding during the period: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Other comprehensive income (loss), net of tax: | ||||||||
| Recognition of net losses included in net periodic pension costs | $ | $ | ||||||
| Loss on cash flow hedging activities | ( | ) | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Other comprehensive income | ||||||||
| Comprehensive income | $ | $ | ||||||
| Cash dividends per common share | $ | $ | ||||||
| See accompanying Notes to the Condensed Consolidated Financial Statements. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||||
| (In thousands, except share and par value data) |
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, less allowance for doubtful accounts of and , respectively | ||||||||
| Accounts receivable - other | ||||||||
| Inventories | ||||||||
| Contract assets | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Other current liabilities | ||||||||
| Current portion of long-term debt | ||||||||
| Current portion of acquisition-related contingent liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term debt | ||||||||
| Long-term pension liability | ||||||||
| Long-term acquisition-related contingent liabilities | ||||||||
| Long-term operating lease liabilities | ||||||||
| Deferred tax liability | ||||||||
| Other long-term liabilities | ||||||||
| Commitments and contingencies (Note 6) | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, par value - authorized shares ( issued) | ||||||||
| Common stock, par value - authorized shares, issued and outstanding and shares, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income (loss), net of tax: | ||||||||
| Pensions | ( | ) | ( | ) | ||||
| Cash flow hedges | ||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
| See accompanying Notes to the Condensed Consolidated Financial Statements. |
| CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY |
| THREE MONTHS ENDED March 31, 2022 AND 2021 |
| (Unaudited) |
| (In thousands, except shares and per share data) |
| Accumulated | ||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||
| Additional | Comprehensive | Total | ||||||||||||||||||||||
| Common | Common | Paid-In | Retained | (Loss) Income, | Shareholders’ | |||||||||||||||||||
| Shares | Stock | Capital | Earnings | net of tax | Equity | |||||||||||||||||||
| Balance, January 1, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Common shares issued upon exercise of options, net | ( | ) | ||||||||||||||||||||||
| Performance based shares issued | ||||||||||||||||||||||||
| Restricted shares issued | ||||||||||||||||||||||||
| Share-based compensation expense | ||||||||||||||||||||||||
| Tax withheld on vesting of performance based shares | ( | ) | ( | ) | ||||||||||||||||||||
| Tax benefit from vesting of acquisition-related restricted stock | ||||||||||||||||||||||||
| Cash dividends declared (per share) | ( | ) | ( | ) | ||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||
| Net earnings | ||||||||||||||||||||||||
| Cash flow hedges, net of taxes of | ( | ) | ( | ) | ||||||||||||||||||||
| Pensions, net of taxes of | ||||||||||||||||||||||||
| Change in currency translation adjustment, net of taxes of | ( | ) | ( | ) | ||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Balance, January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Cumulative-effect adjustment from adoption of ASU 2016-13 | ( | ) | ( | ) | ||||||||||||||||||||
| Common shares issued upon exercise of options and SARs, net | ( | ) | ||||||||||||||||||||||
| Performance based shares issued | ||||||||||||||||||||||||
| Restricted shares issued | ||||||||||||||||||||||||
| Share-based compensation expense | ||||||||||||||||||||||||
| Tax withheld on vesting of restricted shares and performance based shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Cash dividends declared ( per share) | ( | ) | ( | ) | ||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||
| Net earnings | ||||||||||||||||||||||||
| Cash flow hedges, net of taxes of | ( | ) | ( | ) | ||||||||||||||||||||
| Pensions, net of taxes of | ||||||||||||||||||||||||
| Change in currency translation adjustment, net of taxes of | ||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| See accompanying Notes to the Condensed Consolidated Financial Statements. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited) |
| (In thousands) |
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Provision for bad debts - accounts receivable | ||||||||
| Share-based compensation expense | ||||||||
| Deferred income tax provision (benefit) | ( | ) | ||||||
| Change in fair value of acquisition-related contingent liabilities | ||||||||
| Changes in assets and liabilities, net of acquisition of businesses: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Accounts receivable - other | ( | ) | ( | ) | ||||
| Contract assets | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable and other current liabilities | ( | ) | ( | ) | ||||
| Long-term pension liability | ||||||||
| Other long-term liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Additions to property, plant and equipment | ( | ) | ( | ) | ||||
| Acquisition of businesses | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from borrowings of debt | ||||||||
| Repayment of debt | ( | ) | ( | ) | ||||
| Payment of cash dividends | ( | ) | ( | ) | ||||
| Proceeds received on exercise of stock options | ||||||||
| Tax withholdings on vesting of restricted shares and performance based shares | ( | ) | ( | ) | ||||
| Tax benefit from vesting of acquisition-related restricted stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of currency exchange rates on cash | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents balance, beginning of period | ||||||||
| Cash and cash equivalents balance, end of period | $ | $ | ||||||
| See accompanying Notes to the Condensed Consolidated Financial Statements. |
Superior Group of Companies, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements (Unaudited)
NOTE 1 – Description of Business and Basis of Presentation:
Description of business
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 its state of incorporation to Florida. Effective on May 3, 2018, Superior Uniform Group, Inc. changed its name to Superior Group of Companies, Inc.
Superior’s Uniforms and Related Products segment, through its primary signature marketing brands Fashion Seal Healthcare®, HPI®, and WonderWink®, manufactures (through third parties or its own facilities) and sells a wide range of uniforms, corporate identity apparel, career apparel and accessories that are worn by employees in the hospital and healthcare fields; retail stores; hotels; fast food and other restaurants; transportation; and the private security, industrial and commercial markets.
Superior services its Remote Staffing Solutions segment through multiple The Office Gurus® entities, including its subsidiaries in El Salvador, Belize, Jamaica, Dominican Republic and the United States (collectively, “TOG”). TOG is primarily a near-shore premium provider of cost effective multilingual telemarketing and business process outsourced solutions.
The Promotional Products segment, through the BAMKO®, Public Identity®, Tangerine®, Gifts by Design™ and Sutter's Mill™ brands, services customers that purchase primarily promotional and related products. The segment currently has sales offices in the United States, Brazil and Canada with support services in China, Hong Kong and India.
Basis of presentation
The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Intercompany items have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and filed with the Securities and Exchange Commission. Management believes that the information furnished includes all adjustments of a normal recurring nature that are necessary to fairly present our consolidated financial position, results of operations and cash flows for the periods indicated. The results of operations for any interim period are not necessarily indicative of results to be expected for the full year.
The Company refers to the condensed consolidated financial statements collectively as “financial statements,” and individually as “statements of comprehensive income,” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein.
Recent Accounting Pronouncements
We consider the applicability and impact of all Accounting Standard Updates (“ASUs”). ASUs not listed below were assessed and determined to be not applicable.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326).” The update changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking expected loss model that will result in the earlier recognition of allowance for losses. The Company adopted the new standard on January 1, 2022 using a modified retrospective transition approach by recognizing a cumulative-effect adjustment of $
Recently Issued Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. This guidance includes practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This guidance may be applied through December 31, 2022. The Company will apply this guidance to transactions and modifications to contracts and hedging relationships that reference LIBOR.
NOTE 2 – Inventories:
Inventories consisted of the following amounts (in thousands):
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Finished goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Inventories | $ | $ | ||||||
Debt consisted of the following (in thousands):
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Credit Facilities: | ||||||||
| Revolving credit facility due February 2026 | $ | $ | ||||||
| Term loan due February 2024 (“2017 Term Loan”) | ||||||||
| Term loan due January 2026 (“2018 Term Loan”) | ||||||||
| Less: | ||||||||
| Payments due within one year included in current liabilities | ||||||||
| Debt issuance costs | ||||||||
| Long-term debt less current maturities | $ | $ | ||||||
The Company is party to a credit agreement with Truist Bank, consisting of a revolving credit facility, a term loan maturing in February 2024 (“2017 Term Loan”) and a term loan maturing in January 2026 (“2018 Term Loan”). The revolving credit facility, 2017 Term Loan and 2018 Term Loan are collectively referred to as the “Credit Facilities.”
On February 8, 2021, the Company entered into a Second Amended and Restated Credit Agreement with Truist Bank (the “Credit Agreement”), pursuant to which the maximum availability under the Company’s existing revolving credit facility was increased from $
Obligations outstanding under the 2018 Term Loan have a variable interest rate of LIBOR plus a margin of between
Contractual principal payments for the 2017 Term Loan are as follows: remainder of 2022 - $
The Credit Agreement contains customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments, and sales of assets. The Credit Agreement also requires the Company to maintain a fixed charge coverage ratio (as defined in the Credit Agreement) of at least and a funded debt to EBITDA ratio (as defined in the Credit Agreement) not to exceed As of March 31, 2022, the Company was in compliance with these ratios. The Credit Facilities are secured by substantially all of the operating assets of the Company as collateral, and the Company’s obligations under the Credit Facilities are guaranteed by all of its domestic subsidiaries. The Company’s obligations under the Credit Facilities are subject to acceleration upon the occurrence of an event of default as defined in the Credit Agreement.
The Company is a party to an interest rate swap with a total notional value of $
NOTE 4 – Periodic Pension Expense:
The Company is the sponsor of an unfunded supplemental executive retirement plan in which several employees participate.
The Company had previously sponsored
The following table details the net periodic pension expense under the Company’s plans for the periods presented (in thousands):
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Service cost - benefits earned during the period | $ | $ | ||||||
| Interest cost on projected benefit obligation | ||||||||
| Expected return on plan assets | ( | ) | ||||||
| Recognized actuarial loss | ||||||||
| Net periodic pension cost | $ | $ | ||||||
The service cost component is included in selling and administrative expenses in our statements of comprehensive income and the other components of net periodic pension cost are included in other periodic pension costs in our statements of comprehensive income.
NOTE 5 – Net Sales:
For our Uniforms and Related Products and Promotional Products segments, revenue is primarily generated from the sale of finished products to customers. Revenue for our Uniforms and Related Products and Promotional Products segments is recognized when the performance obligations under the contract terms are satisfied. For certain contracts with customers in which the Company has an enforceable right to payment for goods with no alternative use, revenue is recognized over time upon receipt of finished goods into inventory. Revenue for goods that do have an alternative use or that the customer is not obligated to purchase under the terms of a contract is generally recognized when the goods are transferred to the customer. Revenue from the sale of personal protective equipment, including face masks, isolation gowns, sanitizers, gloves and COVID-19 testing kits, is generally recognized at a point in time when the goods are transferred to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contract. The Company includes shipping and handling fees billable to customers in net sales. Shipping and handling activities that occur after the transfer of promised goods are accrued as control is transferred to the customer rather than being treated as a separate performance obligation.
For our Remote Staffing segment, revenue is generated from providing our customers with staffing solution services. Revenue for our Remote Staffing segment is recognized as services are delivered.
Revenue is measured at the amount of consideration we expect to receive in exchange for the goods or services. Variable consideration for estimated returns, allowances and other price variances is recorded based upon historical experience and current allowance programs. Contract termination terms may involve variable consideration clauses such as sales discounts and customer rebates, and revenue is adjusted accordingly for these provisions. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The promised amount of consideration in a contract is not adjusted for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised good or service to a customer and when the customer pays for that product or service will be one year or less. Sales taxes are excluded from the measurement of a performance obligation’s transaction price. Sales commissions are expensed as incurred when we expect that the amortization period of such costs will be one year or less.
The following table presents disaggregated revenue by operating segment for the periods presented (in thousands):
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Uniforms and Related Products Segment: | ||||||||
| Uniforms and related products | $ | $ | ||||||
| Personal protective equipment | ||||||||
| Total Uniforms and Related Products Segment | $ | $ | ||||||
| Remote Staffing Solutions Segment: | ||||||||
| Remote staffing solutions services | $ | $ | ||||||
| Net intersegment eliminations | ( | ) | ( | ) | ||||
| Total Remote Staffing Solutions Segment | $ | $ | ||||||
| Promotional Products Segment: | ||||||||
| Promotional products | $ | $ | ||||||
| Personal protective equipment | ||||||||
| Total Promotional Products Segment | $ | $ | ||||||
| Consolidated Net Sales | $ | $ | ||||||
Contract Assets and Contract Liabilities
The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers (in thousands):
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Accounts receivable | $ | $ | ||||||
| Current contract assets | ||||||||
| Current contract liabilities | ||||||||
Contract assets relate to goods produced without an alternative use for which the Company has an enforceable right to payment but which has not yet been invoiced to the customer. A portion of the amounts included in contract assets on December 31, 2021 were transferred to accounts receivable during the three months ended March 31, 2022. Contract liabilities relate to payments received in advance of the Company completing its performance under a contract. Contract liabilities are included in other current liabilities in our balance sheets. During the three months ended March 31, 2022, $
NOTE 6 – Contingencies:
The purchase price to acquire substantially all of the assets of BAMKO, Inc. (“BAMKO”) in 2016 included contingent consideration based on varying levels of BAMKO’s consolidated EBITDA in each measurement period through 2021. The remaining payment for the BAMKO acquisition-related contingent consideration payable is $
The Company is involved in various legal actions and claims arising from the normal course of business. In the opinion of management, the ultimate outcome of these matters is not expected to have a material impact on the Company’s results of operations, cash flows, or financial position.
NOTE 7 – Share-Based Compensation:
Share-based compensation is recorded in selling and administrative expense in the statements of comprehensive income. The following table details the share-based compensation expense by type of award for the periods presented (in thousands):
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Stock options and SARs | $ | $ | ||||||
| Restricted stock | ||||||||
| Performance shares | ||||||||
| Total share-based compensation expense | $ | $ | ||||||
Stock Options and Stock Appreciation Rights (“SARs”)
The Company grants stock options and stock-settled SARs to employees that allow them to purchase shares of the Company’s common stock. Stock options are also granted to outside members of the Board of Directors of the Company. The Company determines the fair value of stock options and SARs at the date of grant using the Black-Scholes valuation model.
All stock options and SARs granted prior to August 3, 2018 vested immediately when granted. Awards issued thereafter vest either one or years after the grant date. Employee awards expire years after the grant date, and those issued to directors expire years after the grant date. The Company issues new shares upon the exercise of stock options and SARs. Stock options and SARs granted in tandem with stock options are subject to accelerated vesting under certain circumstances as outlined in the 2013 Incentive Stock and Awards Plan (the “2013 Plan”).
A summary of stock option transactions during the three months ended March 31, 2022 follows:
| Weighted Average | Aggregate | |||||||||||||||
| No. of | Weighted Average | Remaining Life | Intrinsic Value | |||||||||||||
| Shares | Exercise Price | (in years) | (in thousands) | |||||||||||||
| Outstanding, January 1, 2022 | $ | $ | ||||||||||||||
| Granted(1) | ||||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Lapsed or cancelled | ) | |||||||||||||||
| Outstanding, March 31, 2022 | ||||||||||||||||
| Exercisable, March 31, 2022 | ||||||||||||||||
| (1) | The weighted average grant date fair value of stock options granted was $ |
As of March 31, 2022, the Company had $
A summary of stock-settled SARs transactions during the three months ended March 31, 2022 follows:
| Weighted Average | Aggregate | |||||||||||||||
| No. of | Weighted Average | Remaining Life | Intrinsic Value | |||||||||||||
| Shares | Exercise Price | (in years) | (in thousands) | |||||||||||||
| Outstanding, January 1, 2022 | $ | $ | ||||||||||||||
| Granted(1) | ||||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Lapsed or cancelled | ( | ) | ||||||||||||||
| Outstanding, March 31, 2022 | ||||||||||||||||
| Exercisable, March 31, 2022 | ||||||||||||||||
| (1) | The weighted average grant date fair value of SARs granted was $ |
As of March 31, 2022, the Company had $
Restricted Stock
The Company has granted shares of restricted stock to directors and certain employees, which vest at a specified future date, generally after years, over years or when certain conditions are met. The shares are subject to accelerated vesting under certain circumstances as outlined in the 2013 Plan. Expense for each of these grants is based on the fair value at the date of the grant and is being recognized on a straight-line basis over the respective service period.
A summary of restricted stock transactions during the three months ended March 31, 2022 follows:
| Weighted Average | ||||||||
| No. of | Grant Date | |||||||
| Shares | Fair Value | |||||||
| Outstanding, January 1, 2022 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Outstanding, March 31, 2022 | ||||||||
As of March 31, 2022, the Company had $
Performance Shares
The Company has granted performance shares, which either contain only service-based vesting conditions or service-based and performance-based vesting conditions. The service-based awards vest after the service period is met, which is generally to years. Expense for these grants is based on the fair value on the date of the grant and is being recognized on a straight-line basis over the respective service period. The performance-based awards generally vest after years if the performance and service targets are met. The Company evaluates the performance conditions associated with these grants each reporting period to determine the expected number of shares to be issued. Expenses for grants of performance shares are recognized on a straight-line basis over the respective service period based on the grant date fair value and expected number of shares to be issued. The awards are subject to accelerated vesting on a pro rata basis under certain circumstances as outlined in the 2013 Plan, except in those circumstances in which award agreements or change in control agreements specify full vesting.
A summary of performance share transactions during the three months ended March 31, 2022 follows:
| Weighted Average | ||||||||
| No. of | Grant Date | |||||||
| Shares | Fair Value | |||||||
| Outstanding, January 1, 2022 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Outstanding, March 31, 2022 | ||||||||
As of March 31, 2022, the Company had $
NOTE 8 – Income Taxes:
The Company calculates its interim income tax provision in accordance with the accounting guidance for income taxes in interim periods. At the end of each interim period, the Company makes its best estimate of the annual expected effective tax rate and applies that rate to its ordinary year-to-date income or loss. The tax expense or benefit related to significant, unusual, or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur.
The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income for the year and permanent and temporary differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or the tax environment changes.
For the three months ended March 31, 2022, the Company recorded a provision for income taxes of $
NOTE 9 – Net Income Per Share:
The Company’s basic net income per share is computed based on the weighted average number of shares of common stock outstanding for the period. Diluted net income per share includes the effect of the Company’s outstanding stock options, stock appreciation rights, unvested shares of restricted stock and unvested performance shares, if the inclusion of these items is dilutive.
The following table presents a reconciliation of basic and diluted net income per share for the three months ended March 31, 2022 and 2021:
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net income used in the computation of basic and diluted net income per share (in thousands) | $ | $ | ||||||
| Weighted average shares outstanding - basic | ||||||||
| Dilutive common stock equivalents | ||||||||
| Weighted average shares outstanding - diluted | ||||||||
| Net income per share: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
Awards to purchase
NOTE 10 – Operating Segment Information:
The Company classifies its businesses into
The Company evaluates the performance of each operating segment based on several factors of which the primary financial measures are net sales and income before taxes on income. Amounts for corporate expenses are included in the totals for the Uniforms and Related Products segment.
The following tables set forth financial information related to the Company’s operating segments (in thousands):
| Uniforms and Related Products | Remote Staffing Solutions | Promotional Products | Intersegment Eliminations | Total | ||||||||||||||||
| As of and For the Three Months Ended March 31, 2022: | ||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Cost of goods sold | ( | ) | ||||||||||||||||||
| Gross margin | ( | ) | ||||||||||||||||||
| Selling and administrative expenses | ( | ) | ||||||||||||||||||
| Other periodic pension cost | ||||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Income before taxes on income | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | $ | |||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | |||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||
| Uniforms and Related Products | Remote Staffing Solutions | Promotional Products | Intersegment Eliminations | Total | ||||||||||||||||
| As of and For the Three Months Ended March 31, 2021: | ||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Cost of goods sold | ( | ) | ||||||||||||||||||
| Gross margin | ( | ) | ||||||||||||||||||
| Selling and administrative expenses | ( | ) | ||||||||||||||||||
| Other periodic pension cost | ||||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Income before taxes on income | $ | $ | $ | $ | $ | |||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | $ | |||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | |||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||
NOTE 11 – Acquisition of Businesses:
Gifts By Design, Inc.
On January 29, 2021, the Company, through BAMKO, acquired substantially all of the assets of Gifts By Design, Inc. (“Gifts by Design”) of Seattle, Washington. Gifts by Design is a promotional products and branded merchandise agency that is well-established as a developer and supplier of corporate awards, incentives, and recognition programs for some of the world’s biggest brands. The purchase price for the acquisition consisted of $
Assets Acquired and Liabilities Assumed
The total purchase price was allocated to the tangible and intangible assets and liabilities of Gifts by Design based on their estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was allocated to goodwill.
The following table presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and liabilities of Gifts by Design based on their estimated fair values as of the effective date of the transaction (in thousands):
| Accounts receivable | $ | |||
| Prepaid expenses and other current assets | ||||
| Property, plant and equipment | ||||
| Intangible assets, net | ||||
| Goodwill | ||||
| Total assets | $ | |||
| Accounts payable | ||||
| Other current liabilities | ||||
| Total liabilities | $ |
The Company recorded $
Sutter’s Mill Specialties, Inc.
On December 2, 2021, the Company, principally through BAMKO, acquired substantially all of the assets of Sutter’s Mill Specialties, Inc. (“Sutter’s Mill”) of Tempe, Arizona. Sutter’s Mill is a vertically integrated manufacturer of high quality, decorated promotional products. Sutter’s Mill has the capability to print on demand and create customized promotional programs and products for customers of any size.
The purchase price of the acquisition consisted of the following: (a) approximately $
Fair Value of Consideration Transferred
A summary of the purchase price is as follows (in thousands):
| Cash consideration | $ | |||
| Restricted shares of Superior common stock issued | ||||
| Contingent consideration | ||||
| Total Consideration | $ |
Assets Acquired and Liabilities Assumed
The table below presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and liabilities of Sutter’s Mill based on their estimated fair values as of the effective date of the transaction. The assets and liabilities of Sutter’s Mill shown below are based on our preliminary estimates of their acquisition date fair values. Our final fair value determination may be different than those shown below.
The following is our preliminary assignment of the aggregate consideration (in thousands):
| Accounts receivable | $ | |||
| Inventories | ||||
| Prepaid expenses and other current assets | ||||
| Property, plant and equipment | ||||
| Operating lease right-of-use assets | ||||
| Intangible assets, net | ||||
| Goodwill | ||||
| Other assets | ||||
| Total assets | $ | |||
| Accounts payable | ||||
| Other current liabilities | ||||
| Long-term debt | ||||
| Long-term operating lease liabilities | ||||
| Total liabilities | $ |
In the first quarter of 2022, an adjustment to increase goodwill by $
The Company recorded $
NOTE 12 – Subsequent Event:
Effective May 1, 2022, the Company, through BAMKO, closed on the acquisition of substantially all of the assets of Guardian Products, Inc. (“Guardian”) of Norcross, Georgia. Guardian is a branded merchandise company that is one of the leading providers of promotional products to automotive dealers nationwide. The purchase price for the acquisition consisted of the following: (a) cash at closing, subject to working capital adjustments, (b) the potential for future payment in additional contingent consideration through May 1, 2025, and (c) the issuance of restricted shares of the Company’s common stock that vest over a -year period.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes thereto included in the Condensed Consolidated Financial Statements in Part I, Item 1 (“Financial Statements”) of this report and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021.
Cautionary Note Regarding Forward Looking Statements
Certain matters discussed in this Form 10-Q 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 Quarterly Report on Form 10-Q may include, without limitation: (1) the projected impact of the COVID-19 pandemic on our, our customers’, and our suppliers’ businesses, (2) projections of revenue, income, and other items relating to our financial position and results of operations, (3) statements of our plans, objectives, strategies, goals and intentions, (4) statements regarding the capabilities, capacities, market position and expected development of our business operations, and (5) 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; the effect of uncertainties related to the COVID-19 pandemic, including existing and possible future variants, on the United States of America (“U.S.” or “United States”) and global markets, our business, operations, customers, suppliers and employees, including without limitation the length and scope of restrictions imposed by various governments and organizations and the success of efforts to deliver effective vaccines on a timely basis to a number of people sufficient to prevent or substantially lower the severity of incidents of infection or variants, among other factors; our ability to navigate successfully the challenges posed by current global supply disruptions; general economic conditions, including employment levels, in the areas of the United States in which the Company’s customers are located; changes in the healthcare, retail, hotel, food service, transportation and other industries where uniforms and service apparel are worn; our ability to identify suitable acquisition targets, discover liabilities associated with such businesses during the diligence process, successfully integrate any acquired businesses, or successfully manage our expanding operations; the price and availability of cotton and other manufacturing materials; attracting and retaining senior management and key personnel; the effect of the Company’s material weakness in internal control over financial reporting; the Company’s ability to successfully remediate its material weakness in internal control over financial reporting and to maintain effective internal control over financial reporting; and other factors described in the Company’s filings with the Securities and Exchange Commission, including those described in the “Risk Factors” section herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this Form 10-Q and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law.
Recent Acquisitions
On January 29, 2021, the Company, through BAMKO, acquired substantially all of the assets of Gifts By Design, Inc. (“Gifts by Design”) of Seattle, Washington. Gifts by Design is a promotional products and branded merchandise agency that is well-established as a developer and supplier of corporate awards, incentives, and recognition programs for some of the world’s biggest brands. The purchase price for the acquisition consisted of $6.0 million in cash at closing.
On December 2, 2021, the Company, principally through BAMKO, acquired substantially all of the assets of Sutter’s Mill Specialties, Inc. (“Sutter’s Mill”) of Tempe, Arizona. Sutter's Mill is a vertically integrated manufacturer of high quality, decorated promotional products. Sutter's Mill has the capability to print on demand and create customized promotional programs and products for customers of any size. The purchase price of the acquisition consisted of the following: (a) approximately $10.5 million in cash, (b) the issuance of 45,620 restricted shares of Superior’s common stock that vest ratably over a three-year period, and (c) potential future payments of approximately $4.5 million in additional contingent consideration for calendar years 2022 through 2024 based on the results of the acquired business.
Effective May 1, 2022, the Company, through BAMKO, closed on the acquisition of substantially all of the assets of Guardian Products, Inc. (“Guardian”) of Norcross, Georgia. Guardian is a branded merchandise company that is one of the leading providers of promotional products to automotive dealers nationwide. The purchase price for the acquisition consisted of the following: (a) cash at closing, subject to working capital adjustments, (b) the potential for future payment in additional contingent consideration through May 1, 2025, and (c) the issuance of restricted shares of the Company’s common stock that vest over a three-year period.
Business Outlook
Superior Group of Companies, Inc. (together with its subsidiaries, the “Company,” “Superior,” “we,” “our,” or “us”) is comprised of three reportable business segments: (1) Uniforms and Related Products, (2) Remote Staffing Solutions, and (3) Promotional Products.
Uniforms and Related Products
In our Uniforms and Related Products segment, we manufacture and sell a wide range of uniforms, career apparel and accessories. Our primary products are service apparel, such as scrubs, lab coats, protective apparel and patient gowns, provided to the healthcare industry, and service apparel, such as uniforms, provided to workers employed by our customers in various industries, including retail, hotel, food service, transportation and other industries. We sell our brands of healthcare service apparel primarily to healthcare laundries, dealers, distributors and retailers. The COVID-19 pandemic initially created increased demand for healthcare service apparel from laundries, dealers and distributors that service hospitals and other medical facilities. From a long-term perspective, we expect that demand for our signature marketing brands, including Fashion Seal Healthcare® and WonderWink®, will continue to provide opportunities for growth and increased market share. Sales of uniforms are impacted by our customers’ opening and closing of locations and reductions, increases, and turnover of employees. The COVID-19 pandemic reduced demand for uniform apparel in many of our customers’ industries, such as the restaurant, transportation and hospitality industries. This, however, was partially offset by demand from customers in certain retail industries, such as grocery and pharmacy customers. The economic environment in the United States is continuing to return to pre-pandemic economic activity levels. While we continue to source some personal protective equipment for our customers, we anticipate that demand for personal protective equipment, including for our Uniforms and Related Products segment, will continue to decline. Based on the longer-term fundamentals of our uniforms business, however, we believe that we have growth opportunities to expand our market share.
Remote Staffing Solutions
This business segment (also known as “The Office Gurus”), which operates in El Salvador, Belize, Jamaica, Dominican Republic, and the United States, initially started to support the Company’s back office needs while improving overall efficiencies and lowering operating costs. After years of consistently improving key performance indicators, lowering costs and providing exceptional service to our Uniforms and Related Products segment in areas such as order entry, cash collections, vendor payables processing, customer service, sales, and others, The Office Gurus started selling their services to outside companies in 2009. The Office Gurus has become an award-winning business process outsourcer offering inbound and outbound voice, email, text, chat and social media support. Although the COVID-19 pandemic has generated uncertainties for our customers and their industries, we continue to see increased demand for our services. With an environment and career path designed to attract and maintain top talent across all sites, we believe The Office Gurus is positioned well to continue growing this business.
Promotional Products
For more than a decade, we sold promotional products on a limited basis to our existing Uniforms and Related Products customer base. While there were substantial opportunities to sell promotional products to those customers, it was not an area of focus, specialization, or expertise for us. On March 1, 2016, that changed with our acquisition of substantially all of the assets of BAMKO, Inc. (“BAMKO”). BAMKO has many strengths, well-developed systems, and time-tested processes that offer significant competitive advantages. With a robust back-office support platform operated out of India, direct-to-factory sourcing operations based in China, and proprietary technological platforms and programming capabilities that we believe are competitive, BAMKO is well positioned in the promotional products industry and continues to be a platform for potential future acquisitions. We completed two additional acquisitions in this segment in late 2017, as well as acquisitions in January 2021 and December 2021, and remain open to additional acquisitions going forward. In recent years we have seen an increase in customer orders in our promotional products business and expect growth opportunities for our core promotional products business to continue. The COVID-19 pandemic created significant opportunities for us within the personal protective equipment market. Although we will continue to source some personal protective equipment for our customers, we anticipate, based on supply and demand factors, that opportunities to supply personal protective equipment, including through our Promotional Products segment, will continue to decline. Our core promotional products business has not experienced the same downturn during the pandemic that many of our competitors experienced as increased activities from customers in certain industries, such as the delivery service industry, more than offset reduced activities from customers in other industries, such as the restaurant and entertainment industries. From a long-term perspective, we believe that this segment’s synergistic fit with our uniforms business will create opportunities to cross-sell the products of each of these business segments to new and existing customers.
COVID-19 Impact
The COVID-19 pandemic continues to affect our operations around the world and financial performance, and likely will continue to do so for an undetermined period of time. International, federal, state and local efforts to contain the spread of COVID-19 have continued. Government actions to address the situation remain in effect and new actions continue to be enacted or modified, including safety requirements such as recommended or mandatory use of face masks and other personal protective equipment and related products, recommended or mandated vaccinations, social distancing rules and guidelines, travel restrictions, temporary closures of non-essential businesses and other restrictive measures.
In responding to the needs of our customers, we have sourced personal protective equipment, including face masks, isolation gowns, sanitizers, gloves and COVID-19 testing kits, which contributed $3.7 million and $0.9 million to net sales during the three months ended March 31, 2022 for our Promotional Products segment and Uniforms and Related Products segment, respectively. Personal protective equipment net sales for our Promotional Products segment and Uniforms and Related Products segment were $14.2 million and $12.5 million, respectively, during the three months ended March 31, 2021.
Prolonged or recurring disruptions or instability in the United States and global economies, and how the world reacts to those disruptions or instability, could have long-term impacts on our business. These business impacts could negatively affect us in a number of ways, including, but not limited to, reduced demand for our core products and services, reductions to our revenue and profitability, costs associated with complying with new or amended laws and regulations affecting our business, declines in our stock price, reduced availability and less favorable terms of future borrowings, valuation of our pension obligations, reduced credit-worthiness of our customers, and potential impairment of the carrying value of goodwill or other indefinite-lived intangible assets. The extent to which the COVID-19 pandemic ultimately impacts our business, financial condition, results of operations or cash flows will depend on numerous factors that continue to evolve and which we may not be able to accurately predict at this time, including the delivery of effective vaccines on a timely basis to a number of people sufficient to prevent or substantially lower the severity of incidents of infection or possible future variants of the virus, the extent and effectiveness of containment actions, availability of widespread rapid testing and effective treatment alternatives. Prolonged or recurring periods of difficult market conditions could have material adverse impacts on our business, financial condition, results of operations and cash flows.
Sourcing of Goods and Raw Materials
Along with many manufacturers that source goods and raw materials from abroad, we are currently experiencing continued significant supply disruptions and delays due to a variety of reasons. These changes are partially driven by interruptions in global supply chains (including as a result of port congestion and trucking shortages) and partially by a shift in customer buying habits to e-commerce, which has the effect of increasing demand for shipping capacity from Asia, leading to capacity constraints. Both factors have increased shipping times as well as the price of shipping, whether by sea, air, rail, or vehicle, this year. Shipping delays combined with significant increases in orders for our products have recently created, and are expected to continue to create, inventory pressure for us.
An interruption in any of our supply sources or facilities could adversely affect our results of operations until alternate sources or facilities can be secured. The Uniforms and Related Products segment’s principal fabrics used in the manufacture of its finished goods are cotton, polyester, cotton-synthetic and poly-synthetic blends. The majority of such fabrics are sourced in China. The Promotional Products segment relies on the supply of different types of raw materials as well as textiles, including plastic, glass, fabric and metal. The vast majority of these raw materials are principally sourced from China, either directly by BAMKO or its suppliers. If we are unable to continue to obtain 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. Further, the Company and the Company’s suppliers generally source or manufacture finished goods in parts of the world that may be 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.
We currently believe challenges created by such supply chain disruptions are manageable. However, we have limited insight into the extent to which COVID-19 or other factors could further impair our sourcing of goods and materials.
| Results of Operations |
| Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021 |
| Net Sales (in thousands): |
| Three Months Ended March 31, |
||||||||||||
| 2022 |
2021 |
% Change |
||||||||||
| Uniforms and Related Products |
$ | 62,216 | $ | 70,568 | (11.8 | %) | ||||||
| Remote Staffing Solutions |
17,973 | 13,030 | 37.9 | % | ||||||||
| Promotional Products |
65,436 | 58,874 | 11.1 | % | ||||||||
| Net intersegment eliminations |
(2,043 | ) | (1,625 | ) | 25.7 | % | ||||||
| Consolidated Net Sales |
$ | 143,582 | $ | 140,847 | 1.9 | % | ||||||
Net sales for the Company increased 1.9% from $140.8 million for the three months ended March 31, 2021 to $143.6 million for the three months ended March 31, 2022. The principal components of this aggregate increase in net sales were as follows: (1) a decrease in net sales for our Uniforms and Related Products segment (contributing (5.9%)), (2) an increase in net sales for our Promotional Products segment (contributing 4.7%), and (3) an increase in net sales for our Remote Staffing Solutions segment after intersegment eliminations (contributing 3.1%).
Uniforms and Related Products net sales decreased 11.8%, or $8.4 million, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The decrease was primarily due to a decrease of $11.6 million in sales of personal protective equipment driven by the progression of the COVID-19 pandemic. This decrease was partially offset by an increase in demand for uniform apparel as a number of our customers’ industries, such as the restaurant, transportation and hospitality industries, have mostly recovered from the effects of the COVID-19 pandemic.
Remote Staffing Solutions net sales increased 37.9% before intersegment eliminations and 39.7% after intersegment eliminations for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. These increases were primarily attributed to our providing continued services in the current year period to our customer base that was expanded during 2021 and the onboarding of new customers in 2022.
Promotional Products net sales increased 11.1%, or $6.6 million, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily due to an increase of $17.1 million in net sales in our core promotional products business, partially offset by a decrease of $10.5 million in net sales of personal protective equipment. The increase in net sales in our core promotional products business was primarily driven by the acquisition of Sutter's Mill in December 2021 that contributed to an increase of net sales of $7.1 million, the growth of our customer base through continued market penetration experienced in 2021 and improved market conditions. The sale of personal protective equipment during the three months ended March 31, 2021 was driven by market demand as a result of the progression of the COVID-19 pandemic.
Cost of Goods Sold
Cost of goods sold consists primarily of direct costs of acquiring inventory, including cost of merchandise, inbound freight charges, purchasing costs, and inspection costs for our Uniforms and Related Products and Promotional Products segments. Cost of goods sold for our Remote Staffing Solutions segment includes salaries and payroll related benefits for agents. The Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs associated with out-bound freight are recorded in cost of goods sold. Other shipping and handling costs are included in selling and administrative expenses.
As a percentage of net sales, cost of goods sold for our Uniforms and Related Products segment was 66.9% for the three months ended March 31, 2022 and 66.2% for the three months ended March 31, 2021. The percentage increase was primarily driven by higher logistical costs during the current year period. Interruptions in global supply chains have led to higher logistical costs and are expected to continue in 2022, however, the extent to which we will be impacted is dependent on a number of factors that are difficult to predict. For additional information related to logistical challenges, please refer to the section “ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Outlook – Sourcing of Goods and Raw Materials.”
As a percentage of net sales, cost of goods sold for our Remote Staffing Solutions segment was 40.6% for the three months ended March 31, 2022 and 40.7% for the three months ended March 31, 2021. As a percentage of net sales, cost of goods sold remained relatively flat.
As a percentage of net sales, cost of goods sold for our Promotional Products segment was 69.9% for the three months ended March 31, 2022 and 68.7% for the three months ended March 31, 2021. The percentage increase was primarily the result of differences in the mix of products and customers and higher logistical costs during the current year period.
Selling and Administrative Expenses
Selling and administrative expenses increased 20.2%, or $7.1 million, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily due to an increase in employee costs, which was mostly driven by increases in headcount and sales commissions, and an increase in depreciation and amortization expense.
As a percentage of net sales, selling and administrative expenses for our Uniforms and Related Products segment was 34.3% for the three months ended March 31, 2022 and 28.9% for the three months ended March 31, 2021. The percentage increase was primarily due to a decrease in personal protective equipment net sales, which have disproportionately lower selling and administrative expenses associated with them, and increases in depreciation expense and third-party professional services.
As a percentage of net sales, selling and administrative expenses for our Remote Staffing Solutions segment was 35.5% for the three months ended March 31, 2022 and 36.2% for the three months ended March 31, 2021. As a percentage of net sales, selling and administrative expenses remained relatively flat.
As a percentage of net sales, selling and administrative expenses for our Promotional Products segment was 23.9% for the three months ended March 31, 2022 and 18.6% for the three months ended March 31, 2021. The percentage increase was primarily attributed to decrease in personal protective equipment net sales, which have disproportionately lower selling and administrative expenses associated with them, and increased investment to support future growth of this business, including the expansion of our workforce.
Interest Expense
Interest expense was $0.3 million for each of the three months ended March 31, 2022 and 2021.
Income Taxes
The effective income tax rate was 22.4% and 20.8% for the three months ended March 31, 2022 and 2021, respectively. The effective tax rate may vary from quarter to quarter due to unusual or infrequently occurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, taxes incurred in connection to the territorial style tax system, or other items.
Liquidity and Capital Resources
Overview
Management uses a number of standards in measuring the Company’s liquidity, such as: working capital, profitability ratios, cash flows from operating activities, and activity ratios. The Company’s balance sheet generally provides the ability to pursue acquisitions, invest in new product lines and technologies and invest in additional working capital as necessary.
The Company’s primary source of liquidity has been its net income and the use of credit facilities and term loans as described further below. Management currently believes that cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the Company’s anticipated working capital requirements and capital expenditures for the next twelve months. Management also currently believes that cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the Company’s anticipated working capital requirements and capital expenditures beyond the next twelve months. In the future, the Company may continue to use credit facilities and other secured and unsecured borrowings as a source of liquidity. The Company may also begin relying on the issuance of equity or debt securities, including under its universal shelf registration statement (File No. 333-249760). There can be no assurance that any such financings would be available to us on reasonable terms. Any future issuances of equity securities or securities convertible into or exercisable for equity securities may be dilutive to our shareholders. Additionally, the cost of the Company’s future sources of liquidity may differ from the costs of the Company’s sources of liquidity to date.
Working Capital
Superior’s Uniforms and Related Products segment markets itself to its customers as a “stock house.” Therefore, Superior carries inventories of both raw materials and finished products, the practice of which requires substantial working capital, which we believe to be common in the industry.
Cash and cash equivalents decreased by $0.6 million to $8.3 million as of March 31, 2022 from $8.9 million on December 31, 2021. Working capital increased to $206.4 million at March 31, 2022 from $188.1 million at December 31, 2021. The increase in working capital was primarily due to an increase in inventories and a decrease in other current liabilities. The increase in inventories was primarily driven by the timing of inventory purchases within our Uniforms and Related Products segment. The decrease in other current liabilities was primarily related to accruals as of December 31, 2021 associated with the Company’s performance in 2021, that were paid in 2022, including accrued compensation.
Cash Flows
Our cash flows from operating, investing and financing activities, as reflected in the statements of cash flows, are summarized in the following table (in thousands):
| Three Months Ended March 31, |
||||||||
| 2022 |
2021 |
|||||||
| Net cash provided by (used in): |
||||||||
| Operating activities |
$ | (8,727 | ) | $ | (2,255 | ) | ||
| Investing activities |
(4,313 | ) | (12,736 | ) | ||||
| Financing activities |
11,906 | 20,905 | ||||||
| Effect of exchange rates on cash |
514 | (175 | ) | |||||
| Net increase (decrease) in cash and cash equivalents |
$ | (620 | ) | $ | 5,739 | |||
Operating Activities. The increase in net cash used in operating activities during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily attributable to increased cash outflows for inventory and selling and administrative expenses, partially offset by decreased cash outflows for accounts payable and other current liabilities. Working capital cash changes during the three months ended March 31, 2022 included an increase of $8.7 million in inventories and a decrease of $5.7 million in accounts payable and other current liabilities. Working capital cash changes during the three months ended March 31, 2021 included a decrease of $15.1 million in accounts payable and other current liabilities.
Investing Activities. The decrease in net cash used in investing activities during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was attributable to $6.0 million of cash paid for the acquisition of Gifts by Design in 2021 and a decrease in capital expenditures of $2.5 million primarily related to the expansion of our distribution facility in Eudora, Arkansas, in 2021. From a long-term perspective, the Company expects to continue its ongoing capital expenditure program designed to improve the effectiveness and capabilities of its facilities and technology.
Financing Activities. The decrease in net cash provided by financing activities during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily attributable to a decrease in net borrowings of $9.0 million in debt.
Credit Facilities (See Note 3 to the Financial Statements)
As of March 31, 2022, the Company had approximately $130.6 million in outstanding borrowings under its credit facilities with Truist Bank, consisting of $79.2 million outstanding under the revolving credit facility, $13.5 million outstanding under a term loan maturing in February 2024 (“2017 Term Loan”) and $37.9 million outstanding under a term loan maturing in January 2026 (“2018 Term Loan”). The revolving credit facility, 2017 Term Loan and 2018 Term Loan are collectively referred to as the “Credit Facilities.”
On February 8, 2021, the Company entered into a Second Amended and Restated Credit Agreement with Truist Bank (the “Credit Agreement”), pursuant to which the maximum availability under the Company’s existing revolving credit facility was increased from $75.0 million to $125.0 million and its maturity date was extended until February 8, 2026. The 2017 Term Loan and the 2018 Term Loan remain outstanding with the same amortization schedules. The floor on LIBOR for the revolving credit facility was increased from zero to 0.25%, but the interest rates on the revolving credit facility and the term loans were not otherwise modified.
Obligations outstanding under the 2018 Term Loan have a variable interest rate of LIBOR plus a margin of between 0.85% and 1.65% (based on the Company’s funded debt to EBITDA ratio) (1.25% at March 31, 2022). Obligations outstanding under the revolving credit facility and the 2017 Term Loan generally have a variable interest rate of one-month LIBOR (with a 0.25% floor on LIBOR for the revolving credit facility) plus a margin of between 0.68% and 1.50% (based on the Company’s funded debt to EBITDA ratio) (1.08% for the revolving credit facility and 2017 Term Loan at March 31, 2022). The Company is obligated to pay a commitment fee of 0.15% per annum on the average unused portion of the commitment under the revolving credit facility. The available balance under the revolving credit facility is reduced by outstanding letters of credit. At March 31, 2022, the Company had undrawn capacity of $45.8 million under the revolving credit facility.
Contractual principal payments for the 2017 Term Loan are as follows: remainder of 2022 - $4.5 million; 2023 - $6.0 million; and 2024 - $3.0 million. Contractual principal payments for the 2018 Term Loan are as follows: remainder of 2022 - $6.9 million; 2023 through 2025 - $9.3 million per year; and 2026 - $3.1 million. The term loans do not contain pre-payment penalties.
The Credit Agreement contains customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments, and sales of assets. The Credit Agreement also requires the Company to maintain a fixed charge coverage ratio (as defined in the Credit Agreement) of at least 1.25:1 and a funded debt to EBITDA ratio (as defined in the Credit Agreement) not to exceed 5.0:1. As of March 31, 2022, the Company was in compliance with these ratios. The Credit Facilities are secured by substantially all of the operating assets of the Company as collateral, and the Company’s obligations under the Credit Facilities are guaranteed by all of its domestic subsidiaries. The Company’s obligations under the Credit Facilities are subject to acceleration upon the occurrence of an event of default as defined in the Credit Agreement.
Dividends and Share Repurchase Program
During the three months ended March 31, 2022 and 2021, the Company paid cash dividends of $1.9 million and $1.5 million, respectively. The Company anticipates that it will continue to pay dividends in the future as financial conditions permit.
On May 2, 2019, the Company’s Board of Directors approved a stock repurchase program of up to 750,000 shares of the Company’s outstanding common stock. There is no expiration date or other restriction governing the period over which the Company can make share repurchases under the program. All purchases under this program will be open market transactions. At March 31, 2022, the Company’s remaining repurchase capacity under its common stock repurchase program was 657,451 shares. Shares purchased under the common stock repurchase program are constructively retired and returned to unissued status. The Company considers several factors in determining when to make share repurchases, including among other things, the cost of equity, the after-tax cost of borrowing, the debt to total capitalization targets and its expected future cash needs.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
We are subject to market risk exposure related to changes in interest rates on our debt. Interest on our Credit Facilities are based upon the one-month LIBOR rate. In order to reduce the interest rate risk on our debt, the Company entered into an interest rate swap agreement on a portion of its borrowings. Excluding the effect of the interest rate swap agreement, a hypothetical increase in the LIBOR rate of 100 basis points as of January 1, 2022 would have resulted in approximately $0.3 million in additional pre-tax interest expense for the three months ended March 31, 2022. For further information regarding our debt instruments, see Note 3 to the Financial Statements.
Foreign Currency Exchange Risk
Sales to customers outside of the United States are subject to fluctuations in foreign currency exchange rates, which may negatively impact gross margin realized on our sales. Less than 5% of our sales contracts are not denominated in U.S. dollars. We cannot predict the effect of exchange rate fluctuations on our operating results. In certain cases, we may enter into foreign currency cash flow hedges to reduce the variability of cash flows associated with our sales and expenses denominated in foreign currency. As of March 31, 2022, we had no foreign currency exchange hedging contracts. There can be no assurance that our strategies will adequately protect our operating results from the effect of exchange rate fluctuations.
Financial results of our foreign subsidiaries in the Promotional Products segment are denominated in their local currencies, which include the Hong Kong dollar, the Chinese renminbi, the British pound, the Indian rupee, the Brazilian real and the Canadian dollar. These operations may also have net assets and liabilities not denominated in their functional currency, which exposes us to changes in foreign currency exchange rates that impact income. Excluding intercompany payables and receivables considered to be long-term investments, changes in exchange rates for assets and liabilities not denominated in their functional currency are reported as foreign currency gains (losses) within selling and administrative expenses in our statements of comprehensive income. During the three months ended March 31, 2022 and 2021, foreign currency losses were not significant. We also have exposure to foreign currency exchange risk from the translation of foreign subsidiaries from the local currency into the U.S. dollar. Comprehensive income during the three months ended March 31, 2022 and 2021 included a foreign currency translation adjustment gain of $0.9 and a foreign currency translation adjustment loss of $0.6 million, respectively, primarily related to exchange rate movements of the Brazilian real.
ITEM 4. Controls and Procedures
Disclosure Controls and Procedures
The Company conducted an evaluation, under supervision and with the participation of the Company’s principal executive officer, Michael Benstock, and the Company’s principal financial officer, Andrew D. Demott, Jr., of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were not effective because of the material weakness in the Company’s internal control over financial reporting described below and as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Management identified a material weakness relating to the accounting for income taxes as of December 31, 2021, principally related to the income tax provision and deferred tax accounts (liabilities and assets). The Company determined that management’s review controls over income taxes are not operating effectively to detect a material misstatement in the financial statements related to the completeness, accuracy, and presentation of the aforementioned areas of income taxes. As of March 31, 2022, this material weakness has not been remediated.
Notwithstanding the identified material weakness, management, including the Company’s principal executive officer and principal financial officer, have determined, based on the procedures they have performed, that the consolidated financial statements included in this Form 10-Q present fairly, in all material respects, the Company’s financial condition, results of operations and cash flows at the Evaluation Date, and for the periods presented, in accordance with U.S. GAAP.
Remediation Efforts with Respect to the Material Weakness
The Company’s management, under the oversight of the Audit Committee, is in the process of developing a plan to remediate the material weakness which is expected to include the following measures:
• implement a tax reporting software solution to streamline our income tax process and enhance our state and federal income tax reporting capabilities;
• hire additional qualified personnel to bolster the Company's in-house tax capabilities and capacity; and
• evaluate and, if necessary, enhance the level of precision in the management review controls related to income taxes.
The material weakness will not be considered remediated until management completes the remediation plan above, the enhanced controls operate for a sufficient period of time, and management has concluded, through testing, that the related controls are effective. The Company will monitor the effectiveness of its remediation plan and will refine its remediation plan as appropriate.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
We are a party to certain lawsuits in the ordinary course of business. We do not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows.
We are exposed to certain risks and uncertainties that could have a material adverse impact on our business, financial condition and operating results. There have been no material changes to the Risk Factors described in Part I, Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no unregistered sales of equity securities during the quarter ended March 31, 2022, that were not previously reported in a current report on Form 8-K.
The table below sets forth information with respect to purchases made by or on behalf of Superior Group of Companies, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the three months ended March 31, 2022.
| Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) |
||||||||||||
| January 1, 2022 to January 31, 2022 |
- | $ | - | - | ||||||||||||
| February 1, 2022 to February 28, 2022 |
- | - | - | |||||||||||||
| March 1, 2022 to March 31, 2022 |
- | - | - | |||||||||||||
| Total |
- | - | - | 657,451 | ||||||||||||
| (1) |
On May 2, 2019, the Company’s Board of Directors approved a stock repurchase program of up to 750,000 shares of the Company’s outstanding common stock. There is no expiration date or other restriction governing the period over which the Company can make share repurchases under the program. All purchases under this program will be open market transactions. |
Under our Credit Agreement, as amended, with Truist Bank, if an event of default exists, we may not make distributions to our shareholders. The Company is in full compliance with all terms, conditions and covenants of such agreement.
ITEM 3. Defaults upon Senior Securities
Not applicable.
ITEM 4. Mine Safety Disclosures
Not applicable.
None.
| Exhibit No. | Description | |
| 31.1* | Certification by the Chief Executive Officer (Principal Executive Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification by the Chief Financial Officer (Principal Financial Officer and Accounting Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32** | Certification by the Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS+ |
Inline XBRL Instance Document. |
|
| 101.SCH+ |
Inline XBRL Taxonomy Extension Schema. |
|
| 101.CAL+ |
Inline XBRL Taxonomy Extension Calculation Linkbase. |
|
| 101.DEF+ |
Inline XBRL Taxonomy Extension Definition Linkbase. |
|
| 101.LAB+ |
Inline XBRL Taxonomy Extension Label Linkbase. |
|
| 101.PRE+ |
Inline XBRL Taxonomy Extension Presentation Linkbase. |
|
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
*Filed herewith.
**Furnished herewith.
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 thereunto duly authorized.
| Date: May 4, 2022 | SUPERIOR GROUP OF COMPANIES, INC. | |
| By | /s/ Michael Benstock | |
| Michael Benstock | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: May 4, 2022 | ||
| By | /s/ Andrew D. Demott, Jr. | |
| Andrew D. Demott, Jr. | ||
| Chief Operating Officer and Chief Financial Officer (Principal Financial Officer) |
||
Exhibit 31.1
CERTIFICATIONS
I, Michael Benstock, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Superior Group of Companies, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 4, 2022
/s/ Michael Benstock
Michael Benstock
Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATIONS
I, Andrew D. Demott, Jr., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Superior Group of Companies, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 4, 2022 |
|
|
/s/ Andrew D. Demott, Jr. |
|
|
Andrew D. Demott, Jr. Chief Operating Officer and Chief Financial Officer (Principal Financial Officer) |
Exhibit 32
Written Statement of the Chief Executive Officer and the Chief Financial Officer
Pursuant to 18 U.S.C. §1350
Solely for the purposes of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and Chief Financial Officer of Superior Group of Companies, Inc. (the “Company”), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2022 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Michael Benstock
Michael Benstock
Chief Executive Officer
(Principal Executive Officer)
Date: May 4, 2022
/s/ Andrew D. Demott, Jr.
Andrew D. Demott, Jr.
Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)
Date: May 4, 2022
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Accounts receivable, allowance for doubtful accounts | $ 6,971 | $ 6,393 |
| Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized (in shares) | 300,000 | 300,000 |
| Preferred stock, shares issued (in shares) | 0 | 0 |
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
| Common stock, shares issued (in shares) | 16,171,034 | 16,127,505 |
| Common stock, shares outstanding (in shares) | 16,171,034 | 16,127,505 |
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands |
Performance Shares [Member]
Common Stock [Member]
|
Performance Shares [Member]
Additional Paid-in Capital [Member]
|
Performance Shares [Member]
Retained Earnings [Member]
|
Performance Shares [Member]
AOCI Attributable to Parent [Member]
|
Performance Shares [Member] |
Restricted and Performance Shares [Member]
Common Stock [Member]
|
Restricted and Performance Shares [Member]
Additional Paid-in Capital [Member]
|
Restricted and Performance Shares [Member]
Retained Earnings [Member]
|
Restricted and Performance Shares [Member]
AOCI Attributable to Parent [Member]
|
Restricted and Performance Shares [Member] |
Cumulative Effect, Period of Adoption, Adjustment [Member]
Common Stock [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Additional Paid-in Capital [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Retained Earnings [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
AOCI Attributable to Parent [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
AOCI Attributable to Parent [Member] |
Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance (in shares) at Dec. 31, 2020 | 15,391,660 | |||||||||||||||||||
| Balance at Dec. 31, 2020 | $ 15 | $ 61,844 | $ 141,972 | $ (12,201) | $ 191,630 | |||||||||||||||
| Common shares issued upon exercise of options, net (in shares) | 10,746 | |||||||||||||||||||
| Common shares issued upon exercise of options, net | 298 | (168) | 130 | |||||||||||||||||
| Performance based shares issued (in shares) | 39,675 | |||||||||||||||||||
| Performance based shares issued | 0 | |||||||||||||||||||
| Restricted shares issued (in shares) | 140,754 | |||||||||||||||||||
| Restricted shares issued | 0 | |||||||||||||||||||
| Share-based compensation expense | 832 | 832 | ||||||||||||||||||
| Tax withheld on vesting of performance based shares | $ (372) | $ (372) | ||||||||||||||||||
| Tax benefit from vesting of acquisition-related restricted stock | 171 | 171 | ||||||||||||||||||
| Cash dividends declared | (1,548) | (1,548) | ||||||||||||||||||
| Net earnings | 10,478 | 10,478 | ||||||||||||||||||
| Cash flow hedges, net of taxes | (5) | (5) | ||||||||||||||||||
| Pensions, net of taxes | 714 | 714 | ||||||||||||||||||
| Change in currency translation adjustment, net of taxes | (647) | (647) | ||||||||||||||||||
| Balance (in shares) at Mar. 31, 2021 | 15,582,835 | |||||||||||||||||||
| Balance at Mar. 31, 2021 | $ 15 | 62,773 | 150,734 | (12,139) | $ 201,383 | |||||||||||||||
| Balance (in shares) at Dec. 31, 2021 | 16,127,505 | 16,127,505 | ||||||||||||||||||
| Balance at Dec. 31, 2021 | $ (76) | $ (76) | $ 16 | 69,351 | 163,836 | (6,213) | $ 226,990 | |||||||||||||
| Common shares issued upon exercise of options, net (in shares) | 21,108 | |||||||||||||||||||
| Performance based shares issued (in shares) | 11,707 | |||||||||||||||||||
| Performance based shares issued | $ 0 | |||||||||||||||||||
| Restricted shares issued (in shares) | 23,677 | |||||||||||||||||||
| Restricted shares issued | 0 | |||||||||||||||||||
| Share-based compensation expense | 1,212 | 1,212 | ||||||||||||||||||
| Tax withheld on vesting of performance based shares | $ (232) | $ (232) | ||||||||||||||||||
| Cash dividends declared | (1,918) | (1,918) | ||||||||||||||||||
| Net earnings | 5,230 | 5,230 | ||||||||||||||||||
| Cash flow hedges, net of taxes | (5) | (5) | ||||||||||||||||||
| Pensions, net of taxes | 319 | 319 | ||||||||||||||||||
| Change in currency translation adjustment, net of taxes | 862 | $ 862 | ||||||||||||||||||
| Balance (in shares) at Mar. 31, 2022 | 16,171,034 | 16,171,034 | ||||||||||||||||||
| Balance at Mar. 31, 2022 | $ 16 | 70,685 | 166,914 | $ (5,037) | $ 232,578 | |||||||||||||||
| Common shares issued upon exercise of options and SARs, net (in shares) | 15,702 | |||||||||||||||||||
| Common shares issued upon exercise of options and SARs, net | $ 354 | $ (158) | $ 196 | |||||||||||||||||
| Tax withheld on vesting of restricted shares and performance based shares (in shares) | (7,557) |
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Cash dividends declared, per share (in dollars per share) | $ 0.12 | $ 0.10 |
| Cash flow hedges, tax | $ 1 | $ 1 |
| Pensions, tax | 110 | 114 |
| Change in currency translation adjustment, tax | $ 0 | $ 0 |
Note 1 - Description of Business and Basis of Presentation |
3 Months Ended |
|---|---|
Mar. 31, 2022 | |
| Notes to Financial Statements | |
| Significant Accounting Policies [Text Block] |
NOTE 1 – Description of Business and Basis of Presentation:
Description of business
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 its state of incorporation to Florida. Effective on May 3, 2018, Superior Uniform Group, Inc. changed its name to Superior Group of Companies, Inc.
Superior’s Uniforms and Related Products segment, through its primary signature marketing brands Fashion Seal Healthcare®, HPI®, and WonderWink®, manufactures (through third parties or its own facilities) and sells a wide range of uniforms, corporate identity apparel, career apparel and accessories that are worn by employees in the hospital and healthcare fields; retail stores; hotels; fast food and other restaurants; transportation; and the private security, industrial and commercial markets.
Superior services its Remote Staffing Solutions segment through multiple The Office Gurus® entities, including its subsidiaries in El Salvador, Belize, Jamaica, Dominican Republic and the United States (collectively, “TOG”). TOG is primarily a near-shore premium provider of cost effective multilingual telemarketing and business process outsourced solutions.
The Promotional Products segment, through the BAMKO®, Public Identity®, Tangerine®, Gifts by Design™ and Sutter's Mill™ brands, services customers that purchase primarily promotional and related products. The segment currently has sales offices in the United States, Brazil and Canada with support services in China, Hong Kong and India.
Basis of presentation
The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Intercompany items have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and filed with the Securities and Exchange Commission. Management believes that the information furnished includes all adjustments of a normal recurring nature that are necessary to fairly present our consolidated financial position, results of operations and cash flows for the periods indicated. The results of operations for any interim period are not necessarily indicative of results to be expected for the full year.
The Company refers to the condensed consolidated financial statements collectively as “financial statements,” and individually as “statements of comprehensive income,” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein.
Recent Accounting Pronouncements
We consider the applicability and impact of all Accounting Standard Updates (“ASUs”). ASUs not listed below were assessed and determined to be not applicable.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326).” The update changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking expected loss model that will result in the earlier recognition of allowance for losses. The Company adopted the new standard on January 1, 2022 using a modified retrospective transition approach by recognizing a cumulative-effect adjustment of $0.1 million to reduce our opening balance of retained earnings as of the adoption date. Prior period amounts have not been adjusted and continue to reflect our historical accounting.
Recently Issued Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. This guidance includes practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This guidance may be applied through December 31, 2022. The Company will apply this guidance to transactions and modifications to contracts and hedging relationships that reference LIBOR. |
Note 2 - Inventories |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Text Block] |
NOTE 2 – Inventories:
Inventories consisted of the following amounts (in thousands):
|
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Note 3 - Long-term Debt |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Long-Term Debt [Text Block] |
Debt consisted of the following (in thousands):
The Company is party to a credit agreement with Truist Bank, consisting of a revolving credit facility, a term loan maturing in February 2024 (“2017 Term Loan”) and a term loan maturing in January 2026 (“2018 Term Loan”). The revolving credit facility, 2017 Term Loan and 2018 Term Loan are collectively referred to as the “Credit Facilities.”
On February 8, 2021, the Company entered into a Second Amended and Restated Credit Agreement with Truist Bank (the “Credit Agreement”), pursuant to which the maximum availability under the Company’s existing revolving credit facility was increased from $75.0 million to $125.0 million and its maturity date was extended until February 8, 2026. The 2017 Term Loan and the 2018 Term Loan remain outstanding with the same amortization schedules. The floor on LIBOR for the revolving credit facility was increased from to 0.25%, but the interest rates on the revolving credit facility and the term loans were not otherwise modified. Except as described above, the covenants, events of default and substantially all of the other terms that were contained in the Company’s prior credit agreement with Truist Bank remain unchanged in the Credit Agreement.
Obligations outstanding under the 2018 Term Loan have a variable interest rate of LIBOR plus a margin of between 0.85% and 1.65% (based on the Company’s funded debt to EBITDA ratio) (1.25% at March 31, 2022). Obligations outstanding under the revolving credit facility and the 2017 Term Loan generally have a variable interest rate of one-month LIBOR (with a 0.25% floor on LIBOR for the revolving credit facility) plus a margin of between 0.68% and 1.50% (based on the Company’s funded debt to EBITDA ratio) (1.08% for the revolving credit facility and 2017 Term Loan at March 31, 2022). The Company is obligated to pay a commitment fee of 0.15% per annum on the average unused portion of the commitment under the revolving credit facility. The available balance under the revolving credit facility is reduced by outstanding letters of credit. As of March 31, 2022, there were no outstanding letters of credit under the revolving credit facility.
Contractual principal payments for the 2017 Term Loan are as follows: remainder of 2022 - $4.5 million; 2023 - $6.0 million; and 2024 - $3.0 million. Contractual principal payments for the 2018 Term Loan are as follows: remainder of 2022 - $6.9 million; 2023 through 2025 - $9.3 million per year; and 2026 - $3.1 million. The term loans do not contain pre-payment penalties.
The Credit Agreement contains customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments, and sales of assets. The Credit Agreement also requires the Company to maintain a fixed charge coverage ratio (as defined in the Credit Agreement) of at least and a funded debt to EBITDA ratio (as defined in the Credit Agreement) not to exceed As of March 31, 2022, the Company was in compliance with these ratios. The Credit Facilities are secured by substantially all of the operating assets of the Company as collateral, and the Company’s obligations under the Credit Facilities are guaranteed by all of its domestic subsidiaries. The Company’s obligations under the Credit Facilities are subject to acceleration upon the occurrence of an event of default as defined in the Credit Agreement.
The Company is a party to an interest rate swap with a total notional value of $6.0 million as of March 31, 2022 pursuant to which it makes fixed payments and receives floating payments. The Company entered into the interest rate swap to offset changes in expected cash flows due to fluctuations in the associated variable interest rates. The Company’s interest rate swap expires in February 2024. The interest rate swap is not designated as a hedge transaction. Changes in fair value and gains and losses on settlement on the interest rate swap are recognized in interest expense in our statements of comprehensive income. During the three months ended March 31, 2022, a gain of $0.1 million was recognized on the interest rate swap. No gain or loss was recognized on the interest rate swap during the three months ended March 31, 2021.
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Note 4 - Periodic Pension Expense |
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| Retirement Benefits [Text Block] |
NOTE 4 – Periodic Pension Expense:
The Company is the sponsor of an unfunded supplemental executive retirement plan in which several employees participate.
The Company had previously sponsored two noncontributory qualified defined benefit pension plans, providing for normal retirement at age 65, covering all eligible employees (as defined). During 2021, the Company completed the termination of its two noncontributory qualified defined benefit pension plans, which were fully funded. The pension plan terminations did not require a cash outlay by the Company. As of March 31, 2022, an asset surplus of $0.4 million remained undistributed in the pension plans that were terminated.
The following table details the net periodic pension expense under the Company’s plans for the periods presented (in thousands):
The service cost component is included in selling and administrative expenses in our statements of comprehensive income and the other components of net periodic pension cost are included in other periodic pension costs in our statements of comprehensive income.
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Note 5 - Net Sales |
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| Revenue from Contract with Customer [Text Block] |
NOTE 5 – Net Sales:
For our Uniforms and Related Products and Promotional Products segments, revenue is primarily generated from the sale of finished products to customers. Revenue for our Uniforms and Related Products and Promotional Products segments is recognized when the performance obligations under the contract terms are satisfied. For certain contracts with customers in which the Company has an enforceable right to payment for goods with no alternative use, revenue is recognized over time upon receipt of finished goods into inventory. Revenue for goods that do have an alternative use or that the customer is not obligated to purchase under the terms of a contract is generally recognized when the goods are transferred to the customer. Revenue from the sale of personal protective equipment, including face masks, isolation gowns, sanitizers, gloves and COVID-19 testing kits, is generally recognized at a point in time when the goods are transferred to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contract. The Company includes shipping and handling fees billable to customers in net sales. Shipping and handling activities that occur after the transfer of promised goods are accrued as control is transferred to the customer rather than being treated as a separate performance obligation.
For our Remote Staffing segment, revenue is generated from providing our customers with staffing solution services. Revenue for our Remote Staffing segment is recognized as services are delivered.
Revenue is measured at the amount of consideration we expect to receive in exchange for the goods or services. Variable consideration for estimated returns, allowances and other price variances is recorded based upon historical experience and current allowance programs. Contract termination terms may involve variable consideration clauses such as sales discounts and customer rebates, and revenue is adjusted accordingly for these provisions. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The promised amount of consideration in a contract is not adjusted for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised good or service to a customer and when the customer pays for that product or service will be one year or less. Sales taxes are excluded from the measurement of a performance obligation’s transaction price. Sales commissions are expensed as incurred when we expect that the amortization period of such costs will be one year or less.
The following table presents disaggregated revenue by operating segment for the periods presented (in thousands):
Contract Assets and Contract Liabilities
The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers (in thousands):
Contract assets relate to goods produced without an alternative use for which the Company has an enforceable right to payment but which has not yet been invoiced to the customer. A portion of the amounts included in contract assets on December 31, 2021 were transferred to accounts receivable during the three months ended March 31, 2022. Contract liabilities relate to payments received in advance of the Company completing its performance under a contract. Contract liabilities are included in other current liabilities in our balance sheets. During the three months ended March 31, 2022, $4.8 million of revenue was recognized from the contract liabilities balance as of December 31, 2021.
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Note 6 - Contingencies |
3 Months Ended |
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Mar. 31, 2022 | |
| Notes to Financial Statements | |
| Commitments and Contingencies Disclosure [Text Block] |
NOTE 6 – Contingencies:
The purchase price to acquire substantially all of the assets of BAMKO, Inc. (“BAMKO”) in 2016 included contingent consideration based on varying levels of BAMKO’s consolidated EBITDA in each measurement period through 2021. The remaining payment for the BAMKO acquisition-related contingent consideration payable is $3.4 million, which is expected to be paid in the second quarter of 2022. The purchase price to acquire substantially all of the assets of Tangerine Promotions, Ltd. and Tangerine Promotions West, Inc. (collectively “Tangerine”) in 2017 included contingent consideration based on varying levels of Tangerine’s EBITDA in each measurement period through 2021. The remaining payment for the Tangerine acquisition-related contingent consideration payable is $1.4 million, which is expected to be paid in the second quarter of 2022. The purchase price to acquire substantially all of the assets of Sutter’s Mill in 2021 included contingent consideration based on varying levels of Sutter’s Mill’s EBITDA in each measurement period from 2022 to 2024. The estimated fair value for Sutter’s Mill acquisition-related contingent consideration payable as of March 31, 2022 was $2.7 million. The total estimated undiscounted remaining payment related to this contingent consideration payable is between $2.4 million and $4.7 million. The Company will continue to evaluate this liability for remeasurement at the end of each reporting period and any changes will be recorded in the Company’s statements of comprehensive income. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the estimated value of the liability.
The Company is involved in various legal actions and claims arising from the normal course of business. In the opinion of management, the ultimate outcome of these matters is not expected to have a material impact on the Company’s results of operations, cash flows, or financial position.
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Note 7 - Share-based Compensation |
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| Share-Based Payment Arrangement [Text Block] |
NOTE 7 – Share-Based Compensation:
Share-based compensation is recorded in selling and administrative expense in the statements of comprehensive income. The following table details the share-based compensation expense by type of award for the periods presented (in thousands):
Stock Options and Stock Appreciation Rights (“SARs”)
The Company grants stock options and stock-settled SARs to employees that allow them to purchase shares of the Company’s common stock. Stock options are also granted to outside members of the Board of Directors of the Company. The Company determines the fair value of stock options and SARs at the date of grant using the Black-Scholes valuation model.
All stock options and SARs granted prior to August 3, 2018 vested immediately when granted. Awards issued thereafter vest either one or years after the grant date. Employee awards expire years after the grant date, and those issued to directors expire years after the grant date. The Company issues new shares upon the exercise of stock options and SARs. Stock options and SARs granted in tandem with stock options are subject to accelerated vesting under certain circumstances as outlined in the 2013 Incentive Stock and Awards Plan (the “2013 Plan”).
A summary of stock option transactions during the three months ended March 31, 2022 follows:
As of March 31, 2022, the Company had $1.5 million in unrecognized compensation cost related to nonvested stock options to be recognized over the remaining weighted average vesting period of 1.4 years.
A summary of stock-settled SARs transactions during the three months ended March 31, 2022 follows:
As of March 31, 2022, the Company had $0.4 million in unrecognized compensation cost related to nonvested SARs to be recognized over the remaining weighted average vesting period of 1.5 years.
Restricted Stock
The Company has granted shares of restricted stock to directors and certain employees, which vest at a specified future date, generally after years, over years or when certain conditions are met. The shares are subject to accelerated vesting under certain circumstances as outlined in the 2013 Plan. Expense for each of these grants is based on the fair value at the date of the grant and is being recognized on a straight-line basis over the respective service period.
A summary of restricted stock transactions during the three months ended March 31, 2022 follows:
As of March 31, 2022, the Company had $6.0 million of unrecognized compensation cost related to nonvested restricted stock grants expected to be recognized over the remaining weighted average vesting period of 2.8 years.
Performance Shares
The Company has granted performance shares, which either contain only service-based vesting conditions or service-based and performance-based vesting conditions. The service-based awards vest after the service period is met, which is generally to years. Expense for these grants is based on the fair value on the date of the grant and is being recognized on a straight-line basis over the respective service period. The performance-based awards generally vest after years if the performance and service targets are met. The Company evaluates the performance conditions associated with these grants each reporting period to determine the expected number of shares to be issued. Expenses for grants of performance shares are recognized on a straight-line basis over the respective service period based on the grant date fair value and expected number of shares to be issued. The awards are subject to accelerated vesting on a pro rata basis under certain circumstances as outlined in the 2013 Plan, except in those circumstances in which award agreements or change in control agreements specify full vesting.
A summary of performance share transactions during the three months ended March 31, 2022 follows:
As of March 31, 2022, the Company had $3.5 million of unrecognized compensation cost related to nonvested performance share grants expected to be recognized over the remaining weighted average service period of 4.2 years.
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Note 8 - Income Taxes |
3 Months Ended |
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Mar. 31, 2022 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
NOTE 8 – Income Taxes:
The Company calculates its interim income tax provision in accordance with the accounting guidance for income taxes in interim periods. At the end of each interim period, the Company makes its best estimate of the annual expected effective tax rate and applies that rate to its ordinary year-to-date income or loss. The tax expense or benefit related to significant, unusual, or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur.
The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income for the year and permanent and temporary differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or the tax environment changes.
For the three months ended March 31, 2022, the Company recorded a provision for income taxes of $1.5 million, which represents an effective tax rate of 22.4%. For the three months ended March 31, 2021, the Company recorded a provision for income taxes of $2.8 million, which represents an effective tax rate of 20.8%.
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Note 9 - Net Income Per Share |
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| Earnings Per Share [Text Block] |
NOTE 9 – Net Income Per Share:
The Company’s basic net income per share is computed based on the weighted average number of shares of common stock outstanding for the period. Diluted net income per share includes the effect of the Company’s outstanding stock options, stock appreciation rights, unvested shares of restricted stock and unvested performance shares, if the inclusion of these items is dilutive.
The following table presents a reconciliation of basic and diluted net income per share for the three months ended March 31, 2022 and 2021:
Awards to purchase 415,529 and 132,200 shares of common stock with weighted average exercise prices of $23.29 and $25.75 per share were outstanding during the three months ended March 31, 2022 and 2021, respectively, but were not included in the computation of diluted net income per share because the awards’ exercise prices were greater than the average market price of the common shares.
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Note 10 - Operating Segment Information |
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| Segment Reporting Disclosure [Text Block] |
NOTE 10 – Operating Segment Information:
The Company classifies its businesses into three operating segments based on the types of products and services provided. The Uniforms and Related Products segment consists of sales to customers of uniforms and related items. The Remote Staffing Solutions segment consists of sales of staffing solutions. The Promotional Products segment consists of sales to customers of promotional products and other branded merchandise.
The Company evaluates the performance of each operating segment based on several factors of which the primary financial measures are net sales and income before taxes on income. Amounts for corporate expenses are included in the totals for the Uniforms and Related Products segment.
The following tables set forth financial information related to the Company’s operating segments (in thousands):
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Note 11 - Acquisition of Businesses |
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| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination Disclosure [Text Block] |
NOTE 11 – Acquisition of Businesses:
Gifts By Design, Inc.
On January 29, 2021, the Company, through BAMKO, acquired substantially all of the assets of Gifts By Design, Inc. (“Gifts by Design”) of Seattle, Washington. Gifts by Design is a promotional products and branded merchandise agency that is well-established as a developer and supplier of corporate awards, incentives, and recognition programs for some of the world’s biggest brands. The purchase price for the acquisition consisted of $6.0 million in cash at closing.
Assets Acquired and Liabilities Assumed
The total purchase price was allocated to the tangible and intangible assets and liabilities of Gifts by Design based on their estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was allocated to goodwill.
The following table presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and liabilities of Gifts by Design based on their estimated fair values as of the effective date of the transaction (in thousands):
The Company recorded $3.7 million in identifiable intangibles at fair value, consisting of $2.5 million in acquired customer relationships and $1.2 million for the brand name. The intangible assets associated with the customer relationships are being amortized for years. The brand name is considered an indefinite-life asset and as such is not being amortized. The difference between the fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities.
Sutter’s Mill Specialties, Inc.
On December 2, 2021, the Company, principally through BAMKO, acquired substantially all of the assets of Sutter’s Mill Specialties, Inc. (“Sutter’s Mill”) of Tempe, Arizona. Sutter’s Mill is a vertically integrated manufacturer of high quality, decorated promotional products. Sutter’s Mill has the capability to print on demand and create customized promotional programs and products for customers of any size.
The purchase price of the acquisition consisted of the following: (a) approximately $10.5 million in cash, (b) the issuance of 45,620 restricted shares of Superior’s common stock that vest ratably over a year period, and (c) potential future payments of approximately $4.5 million in additional contingent consideration for calendar years 2022 through 2024 based on the results of the acquired business.
Fair Value of Consideration Transferred
A summary of the purchase price is as follows (in thousands):
Assets Acquired and Liabilities Assumed
The table below presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and liabilities of Sutter’s Mill based on their estimated fair values as of the effective date of the transaction. The assets and liabilities of Sutter’s Mill shown below are based on our preliminary estimates of their acquisition date fair values. Our final fair value determination may be different than those shown below.
The following is our preliminary assignment of the aggregate consideration (in thousands):
In the first quarter of 2022, an adjustment to increase goodwill by $0.1 million was made to the initial amounts recorded, which relates to additional consideration paid by the Company to the seller.
The Company recorded $2.0 million in identifiable intangibles at fair value, consisting of $1.2 million in acquired customer relationships, $0.1 million for a non-compete agreement and $0.7 million for the Sutter's Mill Specialties trade name. The intangible assets associated with the customer relationships are being amortized for years and the non-compete agreement is being amortized for years. The trade name is considered an indefinite-life asset and as such is not being amortized. The difference between the fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities. The acquisition of Sutter’s Mill was treated as an asset purchase for income tax purpose, and therefore, the resulting goodwill from this acquisition was deductible for U.S. income tax purposes. |
Note 12 - Subsequent Event |
3 Months Ended |
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Mar. 31, 2022 | |
| Notes to Financial Statements | |
| Subsequent Events [Text Block] |
NOTE 12 – Subsequent Event:
Effective May 1, 2022, the Company, through BAMKO, closed on the acquisition of substantially all of the assets of Guardian Products, Inc. (“Guardian”) of Norcross, Georgia. Guardian is a branded merchandise company that is one of the leading providers of promotional products to automotive dealers nationwide. The purchase price for the acquisition consisted of the following: (a) cash at closing, subject to working capital adjustments, (b) the potential for future payment in additional contingent consideration through May 1, 2025, and (c) the issuance of restricted shares of the Company’s common stock that vest over a -year period. |
Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2022 | |
| Accounting Policies [Abstract] | |
| Basis of Accounting, Policy [Policy Text Block] | Basis of presentation
The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Intercompany items have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and filed with the Securities and Exchange Commission. Management believes that the information furnished includes all adjustments of a normal recurring nature that are necessary to fairly present our consolidated financial position, results of operations and cash flows for the periods indicated. The results of operations for any interim period are not necessarily indicative of results to be expected for the full year.
The Company refers to the condensed consolidated financial statements collectively as “financial statements,” and individually as “statements of comprehensive income,” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein.
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| New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements
We consider the applicability and impact of all Accounting Standard Updates (“ASUs”). ASUs not listed below were assessed and determined to be not applicable.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326).” The update changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking expected loss model that will result in the earlier recognition of allowance for losses. The Company adopted the new standard on January 1, 2022 using a modified retrospective transition approach by recognizing a cumulative-effect adjustment of $0.1 million to reduce our opening balance of retained earnings as of the adoption date. Prior period amounts have not been adjusted and continue to reflect our historical accounting.
Recently Issued Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. This guidance includes practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This guidance may be applied through December 31, 2022. The Company will apply this guidance to transactions and modifications to contracts and hedging relationships that reference LIBOR. |
Note 2 - Inventories (Tables) |
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Note 3 - Long-term Debt (Tables) |
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Note 4 - Periodic Pension Expense (Tables) |
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Note 5 - Net Sales (Tables) |
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Note 7 - Share-based Compensation (Tables) |
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Note 9 - Net Income Per Share (Tables) |
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Note 10 - Operating Segment Information (Tables) |
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Note 11 - Acquisition of Businesses (Tables) |
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| Schedule of Business Acquisitions, by Acquisition [Table Text Block] |
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Note 1 - Description of Business and Basis of Presentation (Details Textual) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
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| Retained Earnings (Accumulated Deficit), Total | $ 166,914 | $ 163,836 |
| Cumulative Effect, Period of Adoption, Adjustment [Member] | ||
| Retained Earnings (Accumulated Deficit), Total | $ (100) |
Note 2 - Inventories - Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Finished goods | $ 95,345 | $ 90,395 |
| Work in process | 1,298 | 1,351 |
| Raw materials | 32,871 | 28,809 |
| Inventories | $ 129,514 | $ 120,555 |
Note 3 - Long-term Debt - Long-term Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Long-term debt, gross | $ 130,615 | $ 116,755 |
| Payments due within one year included in current liabilities | 15,286 | 15,286 |
| Debt issuance costs | 589 | 624 |
| Long-term debt less current maturities | 114,740 | 100,845 |
| Truist Bank [Member] | Revolving Credit Facility [Member] | ||
| Long-term debt, gross | 79,198 | 61,517 |
| BB&T [Member] | Term Loan Maturing February 26, 2024 [Member] | ||
| Long-term debt, gross | 13,500 | 15,000 |
| BB&T [Member] | Term Loan Maturing May 2020 [Member] | ||
| Long-term debt, gross | $ 37,917 | $ 40,238 |
Note 4 - Periodic Pension Expense (Details Textual) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
yr
| |
| Defined Benefit Plans Number of Plans | 2 |
| Defined Benefit Plans Retirement Age (Year) | yr | 65 |
| Noncontributory Qualified Defined Pension Plans [Member] | |
| Defined Benefit Plan, Remaining Undistributed Asset Surplus | $ | $ 0.4 |
Note 4 - Periodic Pension Expense - Net Periodic Benefit Cost (Details) - Pension Plan [Member] - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Service cost - benefits earned during the period | $ 51 | $ 46 |
| Interest cost on projected benefit obligation | 100 | 187 |
| Expected return on plan assets | 0 | (358) |
| Recognized actuarial loss | 428 | 600 |
| Net periodic pension cost | $ 579 | $ 475 |
Note 5 - Net Sales (Details Textual) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
| |
| Contract with Customer, Liability, Revenue Recognized | $ 4.8 |
Note 5 - Net Sales - Disaggregated Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Net sales | $ 143,582 | $ 140,847 |
| Intersegment Eliminations [Member] | ||
| Net sales | (2,043) | (1,625) |
| Uniforms and Related Products [Member] | ||
| Net sales | 62,216 | 70,568 |
| Uniforms and Related Products [Member] | Uniform and Related Product [Member] | ||
| Net sales | 61,268 | 58,029 |
| Uniforms and Related Products [Member] | Protective Equipment [Member] | ||
| Net sales | 948 | 12,539 |
| Remote Staffing Solutions [Member] | ||
| Net sales | 15,930 | 11,405 |
| Remote Staffing Solutions [Member] | Intersegment Eliminations [Member] | ||
| Net sales | (2,043) | (1,625) |
| Remote Staffing Solutions [Member] | Remote Staffing Solutions Services [Member] | ||
| Net sales | 17,973 | 13,030 |
| Promotional Products [Member] | ||
| Net sales | 65,436 | 58,874 |
| Promotional Products [Member] | Protective Equipment [Member] | ||
| Net sales | 3,678 | 14,218 |
| Promotional Products [Member] | Promotional Product [Member] | ||
| Net sales | $ 61,758 | $ 44,656 |
Note 5 - Net Sales - Accounts Receivable and Contract Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Accounts receivable | $ 105,848 | $ 107,053 |
| Current contract assets | 40,923 | 38,018 |
| Current contract liabilities | $ 9,180 | $ 8,804 |
Note 6 - Contingencies (Details Textual) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Business Combination, Contingent Consideration, Liability, Current | $ 4,763 | $ 4,507 |
| BAMKO [Member] | ||
| Business Combination, Contingent Consideration, Liability, Current | 3,400 | |
| Tangerine [Member] | ||
| Business Combination, Contingent Consideration, Liability, Current | 1,400 | |
| Sutter's Mill [Member] | ||
| Business Combination, Contingent Consideration, Liability, Total | 2,700 | |
| Sutter's Mill [Member] | Minimum [Member] | ||
| Business Combination, Contingent Consideration, Liability, Current | 2,400 | |
| Sutter's Mill [Member] | Maximum [Member] | ||
| Business Combination, Contingent Consideration, Liability, Current | $ 4,700 |
Note 7 - Share-based Compensation - Shared-based Compensation Expense and the Related Tax Benefit (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Share-based compensation expense | $ 1,212 | $ 832 |
| Stock Options and SARs [Member] | ||
| Share-based compensation expense | 360 | 452 |
| Restricted Stock [Member] | ||
| Share-based compensation expense | 619 | 203 |
| Performance Shares [Member] | ||
| Share-based compensation expense | $ 233 | $ 177 |
Note 7 - Share-based Compensation - Stock-settled Stock Appreciation Rights Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
Jan. 01, 2022 |
|
| Lapsed or cancelled (in shares) | (7,252) | ||
| Lapsed or cancelled, weighted average exercise price (in dollars per share) | $ 17.85 | ||
| Stock Appreciation Rights (SARs) [Member] | |||
| Outstanding SARS (in shares) | 291,059 | ||
| Outstanding (in dollars per share) | $ 14.99 | ||
| Outstanding SARS, weighted average remaining life (Year) | 2 years 10 months 17 days | 2 years 7 months 24 days | |
| Outstanding SARS, aggregate intrinsic value | $ 1,227 | $ 2,205 | |
| Granted SARs (in shares) | 37,297 | ||
| Granted SARS, weighted average exercise price (in dollars per share) | $ 20.13 | ||
| Exercised SARs (in shares) | (24,836) | ||
| Exercised SARS, weighted average exercise price (in dollars per share) | $ 15.16 | ||
| Lapsed or cancelled (in shares) | (2,308) | ||
| Lapsed or cancelled, weighted average exercise price (in dollars per share) | $ 16.97 | ||
| Outstanding SARS (in shares) | 301,212 | 291,059 | |
| Outstanding SARS, weighted average exercise price (in dollars per share) | $ 15.60 | $ 14.99 | |
| Exercisable (in shares) | 232,228 | ||
| Exercisable, weighted average exercise price (in dollars per share) | $ 13.48 | ||
| Exercisable, weighted average remaining life (Year) | 2 years 5 months 4 days | ||
| Exercisable, aggregate intrinsic value | $ 1,227 |
Note 7 - Share-based Compensation - Restricted Stock Transactions (Details) - Restricted Stock [Member] |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
$ / shares
shares
| |
| Outstanding (in shares) | shares | 458,166 |
| Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares | $ 19.51 |
| Granted (in shares) | shares | 23,677 |
| Granted, weighted average grant date fair value (in dollars per share) | $ / shares | $ 20.52 |
| Vested (in shares) | shares | (55,039) |
| Vested, weighted average grant date fair value (in dollars per share) | $ / shares | $ 19.50 |
| Outstanding (in shares) | shares | 426,804 |
| Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares | $ 19.57 |
Note 7 - Share-based Compensation - Performance Share Transactions (Details) - Performance Shares [Member] |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
$ / shares
shares
| |
| Outstanding (in shares) | shares | 193,523 |
| Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares | $ 21.50 |
| Granted (in shares) | shares | 59,578 |
| Granted, weighted average grant date fair value (in dollars per share) | $ / shares | $ 19.55 |
| Vested (in shares) | shares | (15,750) |
| Vested, weighted average grant date fair value (in dollars per share) | $ / shares | $ 16.97 |
| Outstanding (in shares) | shares | 237,351 |
| Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares | $ 21.31 |
Note 8 - Income Taxes (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Income Tax Expense (Benefit), Total | $ 1,510 | $ 2,750 |
| Effective Income Tax Rate Reconciliation, Percent, Total | 22.40% | 20.80% |
Note 9 - Net Income Per Share (Details Textual) - $ / shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 415,529 | 132,200 |
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Weight Average Exercise Price (in dollars per share) | $ 23.29 | $ 25.75 |
Note 9 - Earnings Per Share - Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Net income | $ 5,230 | $ 10,478 |
| Weighted average shares outstanding - basic (in shares) | 15,679,027 | 15,221,336 |
| Dilutive common stock equivalents (in shares) | 486,241 | 770,138 |
| Weighted average number of shares outstanding during the period, diluted (in shares) | 16,165,268 | 15,991,474 |
| Basic (in dollars per share) | $ 0.33 | $ 0.69 |
| Diluted (in dollars per share) | $ 0.32 | $ 0.66 |
Note 10 - Operating Segment Information (Details Textual) |
3 Months Ended |
|---|---|
Mar. 31, 2022 | |
| Number of Operating Segments | 3 |
Note 10 - Operating Segment Information - Information Related to the Operations of the Company's Operating Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
| Net sales | $ 143,582 | $ 140,847 | |
| Cost of goods sold | 93,801 | 91,804 | |
| Gross margin | 49,781 | 49,043 | |
| Selling and administrative expenses | 42,214 | 35,111 | |
| Other periodic pension cost | 528 | 429 | |
| Interest expense | 299 | 275 | |
| Income before taxes on income | 6,740 | 13,228 | |
| Depreciation and amortization | 2,923 | 2,217 | |
| Capital expenditures | 4,188 | 6,736 | |
| Total assets | 485,368 | 415,023 | $ 470,245 |
| Intersegment Eliminations [Member] | |||
| Net sales | (2,043) | (1,625) | |
| Cost of goods sold | (912) | (688) | |
| Gross margin | (1,131) | (937) | |
| Selling and administrative expenses | (1,131) | (937) | |
| Other periodic pension cost | 0 | 0 | |
| Interest expense | 0 | 0 | |
| Income before taxes on income | 0 | 0 | |
| Depreciation and amortization | 0 | 0 | |
| Capital expenditures | 0 | 0 | |
| Total assets | 0 | 0 | |
| Uniforms and Related Products [Member] | |||
| Net sales | 62,216 | 70,568 | |
| Uniforms and Related Products [Member] | Operating Segments [Member] | |||
| Net sales | 62,216 | 70,568 | |
| Cost of goods sold | 41,652 | 46,725 | |
| Gross margin | 20,564 | 23,843 | |
| Selling and administrative expenses | 21,317 | 20,382 | |
| Other periodic pension cost | 528 | 429 | |
| Interest expense | 244 | 261 | |
| Income before taxes on income | (1,525) | 2,771 | |
| Depreciation and amortization | 1,843 | 1,433 | |
| Capital expenditures | 1,947 | 6,176 | |
| Total assets | 304,752 | 286,183 | |
| Remote Staffing Solutions [Member] | |||
| Net sales | 15,930 | 11,405 | |
| Remote Staffing Solutions [Member] | Operating Segments [Member] | |||
| Net sales | 17,973 | 13,030 | |
| Cost of goods sold | 7,292 | 5,309 | |
| Gross margin | 10,681 | 7,721 | |
| Selling and administrative expenses | 6,372 | 4,722 | |
| Other periodic pension cost | 0 | 0 | |
| Interest expense | 0 | 0 | |
| Income before taxes on income | 4,309 | 2,999 | |
| Depreciation and amortization | 495 | 294 | |
| Capital expenditures | 1,931 | 407 | |
| Total assets | 33,429 | 23,090 | |
| Remote Staffing Solutions [Member] | Intersegment Eliminations [Member] | |||
| Net sales | (2,043) | (1,625) | |
| Promotional Products [Member] | |||
| Net sales | 65,436 | 58,874 | |
| Promotional Products [Member] | Operating Segments [Member] | |||
| Net sales | 65,436 | 58,874 | |
| Cost of goods sold | 45,769 | 40,458 | |
| Gross margin | 19,667 | 18,416 | |
| Selling and administrative expenses | 15,656 | 10,944 | |
| Other periodic pension cost | 0 | 0 | |
| Interest expense | 55 | 14 | |
| Income before taxes on income | 3,956 | 7,458 | |
| Depreciation and amortization | 585 | 490 | |
| Capital expenditures | 310 | 153 | |
| Total assets | $ 147,187 | $ 105,750 | |
Note 11 - Acquisition of Businesses (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Dec. 02, 2021 |
Jan. 29, 2021 |
Mar. 31, 2022 |
|
| Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) | 2 years | ||
| Restricted Stock [Member] | |||
| Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) | 3 years | ||
| Gifts By Design [Member] | |||
| Payments to Acquire Businesses, Gross | $ 6,000 | ||
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total | 3,673 | ||
| Gifts By Design [Member] | Trade Names [Member] | |||
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total | 1,200 | ||
| Gifts By Design [Member] | Customer Relationships [Member] | |||
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total | $ 2,500 | ||
| Finite-Lived Intangible Asset, Useful Life (Year) | 7 years | ||
| Sutter's Mill [Member] | |||
| Payments to Acquire Businesses, Gross | $ 10,533 | ||
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total | 2,031 | ||
| Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | $ 4,500 | ||
| Goodwill, Purchase Accounting Adjustments | $ 100 | ||
| Sutter's Mill [Member] | Restricted Stock [Member] | |||
| Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in shares) | 45,620 | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) | 3 years | ||
| Sutter's Mill [Member] | Trade Names [Member] | |||
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total | $ 700 | ||
| Sutter's Mill [Member] | Customer Relationships [Member] | |||
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total | $ 1,200 | ||
| Finite-Lived Intangible Asset, Useful Life (Year) | 7 years | ||
| Sutter's Mill [Member] | Noncompete Agreements [Member] | |||
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total | $ 100 | ||
| Finite-Lived Intangible Asset, Useful Life (Year) | 5 years |
Note 11 - Acquisition of Businesses - Aggregate Consideration (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 02, 2021 |
Jan. 29, 2021 |
|---|---|---|---|---|
| Goodwill | $ 39,652 | $ 39,434 | ||
| Gifts By Design [Member] | ||||
| Accounts receivable | $ 251 | |||
| Prepaid expenses and other current assets | 196 | |||
| Property, plant and equipment | 60 | |||
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total | 3,673 | |||
| Goodwill | 2,417 | |||
| Total assets | 6,597 | |||
| Accounts payable | 199 | |||
| Other current liabilities | 372 | |||
| Total liabilities | $ 571 | |||
| Sutter's Mill [Member] | ||||
| Accounts receivable | $ 4,701 | |||
| Prepaid expenses and other current assets | 135 | |||
| Property, plant and equipment | 1,043 | |||
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total | 2,031 | |||
| Goodwill | 1,019 | |||
| Total assets | 18,767 | |||
| Accounts payable | 3,209 | |||
| Other current liabilities | 389 | |||
| Total liabilities | 4,845 | |||
| Inventories | 9,149 | |||
| Operating lease right-of-use assets | 648 | |||
| Other assets | 41 | |||
| Long-term debt | 758 | |||
| Long-term operating lease liabilities | $ 489 |
Note 11 - Acquisition of Businesses - Purchase Price (Details) - Sutter's Mill [Member] $ in Thousands |
Dec. 02, 2021
USD ($)
|
|---|---|
| Payments to Acquire Businesses, Gross | $ 10,533 |
| Restricted shares of Superior common stock issued | 869 |
| Contingent consideration | 2,520 |
| Total Consideration | $ 13,922 |
Note 12 - Subsequent Event (Details Textual) |
May 01, 2022 |
|---|---|
| Subsequent Event [Member] | Guardian Products, Inc [Member] | Restricted Shares [Member] | |
| Business Acquisition, Equity Interested Issued, Vesting Period (Year) | 3 years |