Superior Uniform Group Inc Reports Operating Results (10-Q)
Superior Uniform Group manufactures and sells a wide range of uniforms corporate I.D. career apparel and accessories for the hospital and healthcare fields; hotels; fast food and other restaurants; and public safety industrial transportation and commercial markets as well as corporate and resort embroidered sportswear. (Press Release) Superior Uniform Group Inc has a market cap of $42.33 million; its shares were traded at around $7 with a P/E ratio of 58.33 and P/S ratio of 0.34. The dividend yield of Superior Uniform Group Inc stocks is 7.71%. Highlight of Business Operations: As a result of these significant declines in our revenue, we have implemented aggressive cost reduction initiatives to limit the impact on our results of operations. These initiatives are aimed at eliminating nonessential positions, streamlining our existing processes and shifting administrative positions to our Central American subsidiary when possible. As a result of these initiatives, we have eliminated approximately $3.8 million in payroll and related benefits on an annual basis. These specific initiatives were started during the first quarter of 2009 and are expected to produce total payroll related savings during fiscal 2009 of approximately $2.9 million. These initiatives are in addition to prior year staff reductions. While we believe that we have implemented appropriate cost reduction measures to address the current economic environment, if weak economic conditions continue, it could have a material adverse effect on our revenues and results of operations.
Cost of goods sold, as a percentage of sales, approximated 68.8% for the three-month period ended March 31, 2009 and 67.2% for the three-month period ended March 31, 2008. The increase is primarily attributed to the significant reduction in net sales outpacing the reductions in overhead included within cost of sales. The Companys gross margins may not be comparable with other entities, since some entities include all of the cost related to their distribution network in cost of goods sold. As disclosed in Note 1 to the Condensed 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 quarters ended March 31, 2009 and 2008, respectively, were $1,685,578 and $1,993,257.
Accounts receivable and other current assets decreased 9.1% from $20,054,629 on December 31, 2008 to $18,238,341 as of March 31, 2009, primarily as a result of the significant reduction in net sales.
Accounts payable increased 4.1% from $4,626,789 on December 31, 2008 to $4,818,579 on March 31, 2009. This increase is inconsistent with the significant reduction shown in inventory levels above due to the fact that the Company pays for a significant portion of its inventory purchases at the time goods are shipped from its suppliers. Therefore a large portion of these purchases are never reflected in accounts payable.
Cash and cash equivalents increased by $768,750 from $133,152 on December 31, 2008 to $901,902 as of March 31, 2009. The Company generated $5,540,555 in cash from operating activities, and generated $199,144 in investing activities primarily related to proceeds from disposals of fixed assets of $318,823 offset by fixed asset additions of $123,091, and used $4,970,949 in financing activities. Financing activities included the payment of cash dividends as discussed below, net repayment of long-term debt of $4,029,604, and the reacquisition of the Companys common stock of $124,620. The Company is in full compliance with all terms, conditions and covenants of the revolving credit facility.
During the three months ended March 31, 2009 and 2008, respectively, the Company paid cash dividends of $816,779 and $900,538. The Company reacquired 18,452 shares of its common stock in the three-month period ended March 31, 2009. The Company did not reacquire any shares of its common stock in the three-month period ended March 31, 2008. The Company anticipates that it will continue to pay dividends and that it will reacquire and retire additional shares of its common stock in the future as financial conditions permit.
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