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    SGC
    Earnings call· Jun 2026(Q2 FY26)

    SUPERIOR GROUP OF COMPANIES Q2 FY26 earnings call SGC

    Aug 4, 2026 Source

    Executive summary

    Superior Group of Companies Q2 FY26 — Strong Consolidated Performance Driven by Branded Products

    Superior Group of Companies delivered a strong Q2 FY26, with consolidated revenue up 3% and adjusted EPS more than doubling, primarily driven by robust performance in its Branded Products segment. The company's diversified business model helped navigate a choppy demand environment, offsetting challenges in Healthcare Apparel, which is undergoing a strategic transition, and Contact Centers, which showed sequential improvement. Management remains optimistic about future growth and margin expansion, supported by a solid balance sheet and growing operating cash flow.

    Highlights

    5

    • Consolidated revenue increased 3% year-over-year to $148 million.

    • Consolidated EBITDA improved 27% to $7.7 million.

    • Adjusted diluted EPS more than doubled to $0.21, up from $0.10 in Q2 FY25.

    • Branded Products segment revenue grew 6% year-over-year to $98 million, with EBITDA increasing 25%.

    • SG&A as a percent of sales improved 160 basis points year-over-year to 34.7%.

    Concerns

    4

    • Healthcare Apparel revenue declined 4% year-over-year to $27 million.

    • Healthcare Apparel gross margin decreased 260 basis points, impacted by a $2.6 million noncash inventory write-down.

    • Healthcare Apparel segment EBITDA declined $1 million year-over-year.

    • Contact Centers revenue was down 4% year-over-year to $23 million.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year 2026 Net Sales
    $572 million to $585 million
    high materiality
    High
    Full-year 2026 Adjusted Diluted EPS
    $0.54 to $0.66
    high materiality
    High
    Healthcare Apparel Margin Pressure
    Continue through balance of this year
    medium materiality
    High
    Healthcare Apparel Margin Improvement
    Begin to see improvements
    medium materiality
    Medium
    Contact Centers Top Line and EBITDA Margin
    Sequentially improve
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Branded Products
    Revenue growth driven primarily by higher volumes with existing customers. Gross margin expansion and SG&A improvement contributed to strong EBITDA growth. Pipeline is strong across existing and new customers.
    Gross margin: 36.5%Gross margin change: up nearly a full percentage pointSG&A improvement as a percent of sales
    		$98M6%—EBITDA up 25%
    Healthcare Apparel
    Revenue decline and gross margin decrease largely due to a noncash inventory write-down tied to a strategic decision to accelerate the shift to a more focused product offering. SG&A as a percent of sales increased slightly on the lower revenue base. Transition under new leadership is expected to lead to stronger, more sustainable margins over time.
    Gross margin: 32.9%Gross margin change: down 260 bpsNoncash inventory write-down: $2.6MNet tariff refund benefit: $1.8M
    		$27M-4%—EBITDA declined $1M year-over-year
    Contact Centers
    Year-over-year decline reflects client attrition in 2025. Sequential improvement driven by a net increase in agents year-to-date and stronger conversion from a larger new business pipeline. Gross margin was lower due to higher human capital costs for future growth, offset by improved SG&A.
    Gross margin: 50.9%Gross margin change: down 170 bps
    		$23M-4%improved sequentially for the second consecutive quarterStronger EBITDA for the quarter

    Operational metrics

    12
    Consolidated Revenue
    $148Mup 3% YoY
    Q2 FY26

    Consolidated revenue for the second quarter.

    Consolidated EBITDA
    $7.7Mup 27% YoY
    Q2 FY26

    Consolidated EBITDA for the second quarter.

    Adjusted Diluted EPS
    $0.21more than doubled from $0.10 in Q2 FY25
    Q2 FY26

    Adjusted diluted EPS for the second quarter, excluding a noncash impairment charge.

    Net Interest Expense
    $981,000improved from $1.25M in Q2 FY25
    Q2 FY26

    Net interest expense for the second quarter, due to lower weighted average interest rate and decreased average debt outstanding.

    Net Income (GAAP)
    $1.2M
    Q2 FY26

    GAAP net income for the second quarter.

    Diluted EPS (GAAP)
    $0.08
    Q2 FY26

    GAAP diluted EPS for the second quarter.

    Noncash Impairment Charge
    $2.6M pretax$2M net of tax, $0.13 per diluted share
    Q2 FY26

    Pretax noncash impairment charge related to trade names in the Healthcare Apparel segment. Does not affect cash position or operating cash flow.

    Adjusted Net Income
    $3.1Mup from $1.6M in Q2 FY25
    Q2 FY26

    Adjusted net income for the second quarter, excluding the impairment charge.

    Cash and Equivalents
    $23M
    end of Q2 FY26

    Cash and equivalents balance at the end of the second quarter.

    SG&A as % of Sales
    34.7%improved 160 bps YoY
    Q2 FY26

    Consolidated SG&A as a percentage of sales, driven by expense leverage in Branded Products and improved credit loss expense.

    Consolidated Gross Margin
    38%down 40 bps YoY
    Q2 FY26

    Consolidated gross margin for the second quarter.

    Healthcare Apparel Inventory
    a little over $90Mlowest in at least 6 or 7 quarters
    end of Q2 FY26

    Inventory balance for Healthcare Apparel, reflecting efforts to create more efficiency.

    Industry KPIs

    6
    MetricValueDetails
    Inventory positiona little over $90MUSD
    Revenue by channel—
    Operating margin sg a34.7%%
    Share buyback capital return$2.2MUSD
    Tariff cost exposure recovery$1.8MUSD
    Franchise product cycle performance—

    Deals & partnerships

    3
    Guardian ProductsAcquired a company specializing in promotional products and branded merchandise for auto dealerships.

    Acquisition made a little over 4 years ago, serving as a blueprint for future additive acquisitions.

    UndisclosedPotential acquisition of a company in the Contact Centers business.

    Management has a 'certain level of urgency' to either complete an acquisition or start up a call center in the Philippines this year.

    UndisclosedPotential start-up of a call center in the Philippines.

    Alternative to an acquisition in the Contact Centers business, with a goal to commence operations this year.

    Risks & headwinds

    4
    Choppy demand environmentCurrent

    General market condition

    Mitigation: Leveraging diversified business model and strong customer relationships.

    Healthcare Apparel margin pressureH2 FY26

    Shorter-term margin pressure expected to continue through balance of FY26

    Mitigation: Strategic transition to a more focused product offering under new leadership, aiming for stronger, more sustainable margins in 2027.

    Consumer spending pullbackCurrent

    Caregiver community spending less due to high cost of living (food, gas, rent)

    Mitigation: Offering a good, better, best, and value channel for consumer products (Wink and Carhartt scrubs) to cater to various price points.

    Contact Centers client attritionPast (2025), now improving

    Reflected in 4% YoY revenue decline in Q2 FY26

    Mitigation: Sequential improvement driven by net increase in agents and stronger conversion from a larger new business pipeline.

    What to watch in Q3 FY26

    5

    Healthcare Apparel Margin Trajectory

    Next quarter (Q3 FY26)
    CurrentGross margin down 260 bps in Q2 FY26
    TargetSigns of reduced pressure or improvement

    Why it matters

    Management expects shorter-term margin pressure to continue through H2 FY26, with improvements in 2027; tracking this will indicate the effectiveness of the strategic transition.

    We would expect some shorter-term margin pressure to continue through the balance of this year, not to the extent that you're seeing in the second quarter, but I would anticipate still some margin pressure on a year-over-year basis and then begin to see improvements in 2027.

    Q&A highlights

    8

    When will Chris Hine's operational changes in Healthcare Apparel lead to measurable revenue growth and margin improvement, and what are the key changes?

    Chris Hine is focusing on product and assortment, moving towards a more focused offering. Shorter-term margin pressure is expected to continue through the balance of 2026, with improvements anticipated in 2027, as product changes have long lead times.

    “We would expect some shorter-term margin pressure to continue through the balance of this year, not to the extent that you're seeing in the second quarter, but I would anticipate still some margin pressure on a year-over-year basis and then begin to see improvements in 2027.”

    asked by Michael Kupinski · answered by Michael Koempel

    2 min read6 chapters

    Detailed Narrative

    01

    Consolidated Performance and Diversification Strategy

    Superior Group of Companies reported a strong second quarter, with consolidated revenue increasing 3% year-over-year to $148 million. This growth, coupled with a 160 basis point improvement in SG&A, led to a 27% rise in EBITDA to $7.7 million and adjusted diluted EPS of $0.21, more than double the prior year. The company emphasized its diversified business model as key to navigating a 'choppy demand environment,' with strong segments offsetting challenges in others.

    02

    Branded Products Segment Drives Growth

    The Branded Products segment, the company's largest business, was a primary growth engine, with revenue up 6% year-over-year to $98 million. This was driven by higher volumes from existing customers, favorable customer mix, and improved sourcing. The segment also achieved gross margin expansion and SG&A improvement as a percentage of sales, contributing to a 25% increase in Branded Products EBITDA. Management noted a strong and replenishing pipeline of new opportunities.

    03

    Healthcare Apparel Undergoing Strategic Transition

    The Healthcare Apparel segment faced a challenging quarter, with revenue declining 4% to $27 million and segment EBITDA down $1 million year-over-year. Gross margin decreased 260 basis points, primarily due to a $2.6 million noncash inventory write-down related to a strategic decision to accelerate a shift to a more focused product offering. This transition, under new leadership, is expected to result in continued shorter-term margin pressure through the balance of 2026, with improvements anticipated in 2027.

    04

    Contact Centers Show Sequential Improvement

    The Contact Centers segment saw revenue decline 4% year-over-year to $23 million, reflecting client attrition from 2025. However, the segment improved sequentially for the second consecutive quarter, driven by a net increase in agents year-to-date and stronger conversion from a significantly larger new business pipeline. Despite lower gross margins due to initial investments for new customers, improved SG&A led to stronger EBITDA for the quarter, with sequential top-line and EBITDA margin improvement expected to continue.

    05

    Balance Sheet Strength and Capital Allocation

    The company ended the second quarter with $23 million in cash and equivalents, having generated $18 million in operating cash flow in the first half of the year. This financial flexibility supports strategic investments in growth opportunities and capital returns to shareholders. Superior Group paid $2.2 million in dividends during the quarter and has approximately $9 million remaining under its share repurchase authorization. Inventory levels in Healthcare Apparel were noted as being at their lowest in 6-7 quarters, with further efficiency opportunities identified.

    06

    Selective M&A Strategy

    Superior Group maintains a selective M&A strategy, focusing on acquisitions that are additive to its business by expanding service capabilities, entering new channels, or reaching new customer bases or geographies, particularly in digital. The company is not interested in generic promotional companies. While actively seeking opportunities, management indicated that any significant acquisition this year, beyond a potential Contact Centers deal or a Philippines call center start-up, is unlikely.

    AI-generated summary of the company’s earnings call. Not investment advice.