Superior Group May 2025 slides: Contact Centers lead growth, debt ratio improves

Introduction & Market Context

Superior Group of Companies (NASDAQ:SGC) released its May 2025 investor presentation highlighting the company’s diversified business model across three segments: Healthcare Apparel, Branded Products, and Contact Centers. The presentation comes after SGC reported mixed Q4 2024 results, with earnings per share of $0.13 falling short of the forecasted $0.17 and revenue of $145.4 million slightly below expectations.

Despite these recent challenges, SGC’s stock has shown resilience, though it has experienced significant volatility in after-hours trading on May 8, 2025, with shares dropping 9.07% to $9.52 after closing up 2.45% during regular trading hours.

The presentation emphasizes SGC’s 105-year history since its founding in 1920 and its consistent dividend payments since 1977, positioning the company as a stable investment with growth potential across its diversified business segments.

Business Segment Overview

SGC operates through three distinct business segments, each targeting different markets but contributing to the company’s overall growth strategy. The consolidated revenue CAGR from 2019 to 2024 stands at 8%, with significant variations in performance across segments.

As shown in the following chart of revenue growth across business segments:

The Contact Centers segment has demonstrated the strongest growth trajectory, expanding from $31 million in 2019 to $93 million in 2024. Meanwhile, Healthcare Apparel revenue has remained relatively flat at $119 million in 2024 compared to $118 million in 2019, while Branded Products grew from $228 million to $354 million during the same period.

The company’s long-term revenue growth shows a sustained annualized growth rate of 11% since 2014, as illustrated in this comprehensive chart:

This growth pattern reflects SGC’s ability to navigate market challenges while expanding its business, though recent quarters have shown some softening as indicated in the Q4 2024 earnings report.

Financial Performance Highlights

SGC’s 2024 financial performance shows a mixed picture across its three business segments. The company reported total revenue of $565.6 million for 2024, with segment EBITDA of $34.1 million.

The detailed financial breakdown by segment reveals varying profitability levels:

Contact Centers emerged as the highest-margin business with a 12.6% EBITDA margin in 2024, followed by Branded Products at 10.3% and Healthcare Apparel at 7.3%. This aligns with the company’s characterization of Contact Centers as its "highest-margin and fastest-growing business" in the presentation.

The company has also made significant progress in strengthening its balance sheet, with the debt to EBITDA ratio improving from 4.0x in 2019 to 1.7x by the end of 2024:

This improvement in financial leverage positions SGC well for future growth investments while maintaining financial flexibility. However, it’s worth noting that the Q4 2024 earnings showed some challenges, with EPS of $0.13 missing analyst expectations of $0.17, suggesting potential headwinds in the most recent quarter despite the overall positive multi-year trend.

Growth Opportunities by Segment

Each of SGC’s business segments operates in large addressable markets with significant growth potential. The Contact Centers segment, despite being the smallest by revenue, shows the most promising growth trajectory.

The Contact Center growth opportunities are particularly compelling:

With a massive $121 billion Total (EPA:TTEF) Addressable Market (TAM) in the US alone and only approximately 0.1% market share, Contact Centers present substantial room for expansion. The segment’s impressive 21.6% five-year revenue CAGR through 2024 and strong 103% net revenue retention rate demonstrate its growth momentum.

The Branded Products segment also shows solid growth potential:

As the 8th largest branded products distributor among more than 25,000 in the US, SGC has established a strong position in this fragmented market. With only about 1% market share of a $26 billion TAM, significant growth opportunities remain, supported by a 9.2% five-year revenue CAGR through 2024.

The Healthcare Apparel segment, while showing the slowest growth at 0.2% CAGR, still maintains solid market positioning:

With approximately 5% market share in a $4.4B US market and strong 90% annual customer retention, the Healthcare Apparel segment provides a stable foundation despite its modest growth rate.

SGC’s impressive client roster across segments includes many major brands, enhancing its credibility and growth potential:

Balance Sheet and Capital Allocation

SGC’s capital allocation strategy focuses on balancing shareholder returns with investments for future growth. The company has maintained dividend payments consistently since 1977, demonstrating its commitment to returning capital to shareholders.

The company’s capital allocation priorities include:

1. Dividend payments

2. Share repurchases (with board-authorized plans in 2024 and 2025)

3. Investments to support organic growth

4. Strategic mergers and acquisitions

This balanced approach, combined with improving debt metrics, positions SGC to pursue growth opportunities while maintaining financial discipline. The Q4 2024 earnings report noted that the company generated $33 million in operating cash flow for the full year and ended with $19 million in cash and cash equivalents.

Forward-Looking Statements

Looking ahead, SGC has provided an optimistic outlook for 2025, projecting revenue growth of up to 5% with guidance between $585 million and $595 million, according to the Q4 2024 earnings report. The company also expects EPS to grow by up to 12%, with guidance set between $0.75 and $0.82.

CEO Michael Binstock emphasized the company’s preparedness for potential tariff impacts in the earnings call, stating, "We are well positioned for whatever is going to happen from a tariff standpoint." He also highlighted the company’s acquisition strategy and focus on cost containment through enhanced efficiencies.

The presentation positions SGC as having significant growth potential across all three business segments, particularly in Contact Centers where the company has established itself as a leading provider in an underserved segment. With its diversified business model, improving financial position, and established market presence, SGC aims to continue its growth trajectory while navigating economic uncertainties and competitive pressures in 2025.

Full presentation:

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