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Superior Uniform Group Inc (SGC) filed Quarterly Report for the period ended 2011-09-30.
Superior Uniform Group Inc. has a market cap of $71.38 million; its shares were traded at around $11.91 with a P/E ratio of 16.54 and P/S ratio of 0.67. The dividend yield of Superior Uniform Group Inc. stocks is 4.53%. Superior Uniform Group Inc. had an annual average earning growth of 16.5% over the past 5 years.
This is the annual revenues and earnings per share of SGC over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of SGC.
Highlight of Business Operations:
The current economic environment in the United States remains challenging. Our primary products are provided to workers employed by our customers and, as a result, our business prospects are dependent upon levels of employment among other factors. Our revenues are impacted by the opening and closing of locations by our customers and reductions and increases in headcount by our customers. Additionally, voluntary employee turnover has been reduced significantly as a result of fewer alternative jobs available to employees of our customers. Fewer available jobs coupled with less attrition results in decreased demand for our uniforms and service apparel. In an effort to mitigate these factors in the current economic environment, we have implemented the following strategies. First, we are actively pursuing acquisitions to increase our market share in our image apparel business which consists of uniforms and service apparel. Second, we diversified our business model by providing remote staffing solutions to other businesses. We entered this business sector to provide remote staffing solutions to the Company at a lower cost in order to improve our own operating results. Our remote staffing operations, located in El Salvador, Costa Rica and Seminole, FL. have enabled us to reduce our operating expenses and to more effectively service our customers’ needs. We began selling remote staffing services to third parties at the end of 2009. We have grown our remote staffing business to third party customers from approximately $120,000 in annual net sales in 2009 to approximately $1 million in net sales in 2010. We generated net sales of approximately $2,162,000 from our remote staffing business in the first nine months of 2011 as compared to $503,000 in the first nine months of 2010. We are aggressively marketing our remote staffing services to third parties and believe that this area will be a strong growth sector for the Company in 2011 and beyond. Finally, we are pursuing new product lines to enhance our market position in the image apparel business. Toward this end, we entered into a licensing agreement in January of 2011 that provides us with access to patented technology which will allow us to market a new line of image apparel to our customers. Our new line of image apparel is designed to provide our customers with the ability to turn their employee uniforms into point of sale advertisements that will, in turn, give them the ability to generate advertising revenues for their businesses. We believe that this new product line will provide us with the opportunity for significant growth in our image apparel business in the future. We expect to begin generating revenues from this new product line in the fourth quarter of 2011.Net sales increased 12.6% from $27,301,000 for the three months ended September 30, 2010 to $30,731,000 for the three months ended September 30, 2011. The increase in net sales for the quarter is split between growth in our image apparel business (10.2%) and increases in net sales from our remote staffing business (2.4%). Net sales increased 6.5% from $79,910,000 for the nine months ended September 30, 2010 to $85,135,000 for the nine months ended September 30, 2011. The increase in net sales for the nine-month period is split between growth in our image apparel business (4.5%) and increases in net sales from our remote staffing business (2.0%).
Cost of goods sold, as a percentage of net sales, approximated 63.6% for the three months ended September 30, 2011 compared to 63.6% for the three months ended September 30, 2010. We experienced an increase in cost of sales as a percentage of net sales related to our image apparel business (0.1%), which was offset by the impact of lower cost of sales as a percentage of net sales in our remote staffing business. The increase as a percentage of net sales for our image apparel business is attributed primarily to an increase in direct product costs as a percentage of net sales during the current quarter (0.8%) due to higher raw material costs primarily related to shortages of cotton offset by lower indirect costs as a percentage of net sales due to the increased volume to cover such costs (0.7%). These increases in product costs began to affect our current inventory prices during the first quarter of 2011 and could adversely impact our margins going forward. Our remote staffing net sales increased approximately $651,000 in the current quarter. The direct costs of sales associated with this operation are significantly lower than those in our image apparel business. The impact of this item on our direct product costs as a percentage of net sales was a 0.1% reduction in the current quarter. Cost of goods sold, as a percentage of net sales, approximated 63.6% for the nine months ended September 30, 2011 compared to 64.6% for the nine months ended September 30, 2010. The decrease as a percentage of net sales is attributed primarily to a decrease in direct product costs as a percentage of net sales during the current nine-month period (0.6%). This decrease is due to a combination of the factors discussed above. First, we increased prices during the last year in order to cover higher product and operating costs. Second, our remote staffing net sales increased approximately $1,659,000 in the current nine-month period. The direct costs of sales associated with this operation are significantly lower than those in our image apparel business. The impact of this item on our direct product costs as a percentage of net sales was a 0.2% reduction in the current nine-month period. As disclosed in Note 1 to the Consolidated Financial Statements, the Company includes a portion of the costs associated with its distribution network in selling and administrative expenses. The amounts included in selling and administrative expenses for the three-month periods ended September 30, 2011 and 2010, respectively, were $1,586,000 and $1,537,000. The amounts included in selling and administrative expenses for the nine-month periods ending September 30, 2011 and 2010, respectively, were $4,425,000 and $4,652,000.
Selling and administrative expenses, as a percentage of net sales approximated 27.9% and 29.1% respectively, for the three-month periods ended September 30, 2011 and 2010. The decrease as a percentage of sales is attributed primarily to the impact of higher net sales to cover operating expenses (3.5%) which was partially offset by higher salaries and benefits (1.0%) and higher amortization of intangible assets associated with the licensing rights we acquired in January of 2011 as discussed above (0.7%) and various other minor increases (0.6%). Selling and administrative expenses, as a percentage of net sales, were approximately 30.5% and 29.9%, respectively, for the first nine months of 2011 and 2010. The increase as a percentage of sales is attributed primarily to higher salaries and benefits (1.1%), higher amortization of intangible assets associated with the licensing rights we acquired in January of 2011 as discussed above (0.7%) and expense incurred for a major consulting project completed in the current period to study customer markets and to refine our strategic plan to capitalize on the opportunities identified (0.7%) and various other minor increases (0.1%) which was partially offset by the impact of higher net sales to cover operating expenses (2.0%).
The Company’s effective tax rate for the three months ended September 30, 2011 was 27.7% versus 30.8% for the three months ended September 30, 2010. The 3.1% decrease in such effective tax rate is attributed primarily to a reduction in the accrual for uncertain tax positions in the current period primarily for expiration of the statute of limitations on various positions (2.0%) and other miscellaneous changes (1.1%). The Company’s effective tax rate for the nine months ended September 30, 2011 was 31.4% versus 33.8% for the nine months ended September 30, 2010. The 2.4% decrease in such effective tax rate is attributed primarily to a reduction in the accrual for uncertain tax positions in the current period primarily for expiration of the statute of limitations on various positions (1.3%) and other miscellaneous changes (1.1%).
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