Superior Group of Companies, Inc.

Good day and welcome to the Superior Group of Companies fourth quarter and fiscal year 2021 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. With us today are Michael Binstoff, the company's chief executive officer, and Andy DeMott, chief operating officer and chief financial officer. After the speaker's remarks, there will be a Q&A session. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. This call is being recorded, and your participation implies that you agree to this. If you do not agree, please disconnect your line. Now I'll turn the call over to Ms. Hala El-Shabini, Senior Manager Director of the Three-Part Advisors, who will read the Safe Harbor Statement. Please go ahead, ma'am.

Thank you, and good morning. This conference call may contain forward-looking statements about Superior Group of Companies, the companies. within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995, and all rules and regulations issued thereunder. Such statements are based upon management's current expectations, projections, estimates, and assumptions. Words such as will, expect, believe, anticipate, think, outlook, hope, and variations of such words and similar expressions identify such forward-looking statements, which include statements on the impact of COVID-19 on the company's business, including inventory, supply chain, manufacturing capacity at the company's own and contract manufacturing facilities, service capacity, and customer demand. Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following. The effects of COVID-19 crisis on the U.S. and global markets, our business, operations, customers, suppliers, and employees, general economic conditions in the areas of the United States in which the company's customers are located, changes in the markets where uniforms are worn, where promotional products are sold, and where call center services are used, the impact of competition, the company's ability to successfully integrate operations following consummation of acquisitions, and the availability of manufacturing materials, as well as the risks and uncertainties disclosed in the company's periodic filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K for the year ended December 31, 2020, the quarterly report on Form 10-Q for the quarter ended September 30, 2021, and the eight case filed recently. 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 company does not undertake to update the forward-looking statements contained herein to conform to actual results or changes in the company's expectations, whether as a result of new information, future events, or otherwise, except as required by law. Please note that all growth comparisons that management makes today will relate to the corresponding period in 2020, unless otherwise noted. And with that, I'll turn the call over to Michael.

Thank you, Holla. Good morning, everybody, and thanks for joining us for our fourth quarter and fiscal year 2021 earnings call. Today, I will discuss strategic initiatives, review performance highlights, and touch on the current macro environment. After that, Andy will provide an operational financial update. Phil Koussid, our Chief Strategy Officer, Jake Himmelstein, Banco's President, and Dominic Lighty, TOG's President, will participate in the Q&A session following our prepared remarks. We're very pleased to report that we exceeded our fiscal 2021 sales guidance, reaching $537 million in net sales. As you recall, we increased our top-line guidance twice during 2021. From a bottom-line perspective, inflationary and other cost pressures intensified as we moved through the end of the fourth quarter, which impacted results. Additionally, we incurred unusual non-cast charges, which Andy will discuss in more detail in his remarks. It is important to note that we took a range of pricing actions and cost control measures to mitigate the impact of future cost inflation as well. As we move past 2021 and finish lapping historic revenue comps, we are now seeing improved activity and expect normalized comparisons to resume as we progress into 2022. Investments in our people, business processes, technology, and product innovation underscore our ability to withstand and excel through market uncertainty. 2021 was marked by supply chain and logistic challenges, labor scarcity, and market uncertainty. which some competitors were less able to mitigate. While we also face these challenges, we are doing so with greater resilience than many. I'd like to highlight key achievements accomplished in 2021. In 2021, we established the Chief Strategy Officer role and appointed Phil Kusin, who brings his astute vision, passion, and entrepreneurial spirit to the C-suite. We executed two acquisitions during the year, first welcoming Gift by Designs in January. An industry leader, Gifts by Design, develops corporate awards, incentives, and recognition programs for some of the world's biggest brands. Sutter's mill specialties joined our team in December, bringing extensive in-house decoration, production, and engraving capabilities that further vertically integrate and elevate our unique and custom offerings to expand options for our clients. In the second quarter, we announced the integration of our branded uniforms and branded merchandise sales force and marketing teams. This combination of HBI and Banco exponentially increases our reach beyond four sales reps at HBI, adding 70-plus sales representatives from Banco who are now uncovering significant opportunities and yielding wins. We're taking a targeted approach to focus on our branded uniform core competencies and and particular vertical industries. We believe developing a deeper and more focused approach will further increase our market share in the uniform space. In May, we increased our regular quarterly cash dividend by 20%. The dividend is an important piece of our value proposition to shareholders and has been paid consistently since 1977. Overall, our organization made significant headway in strategic infrastructure investments with the preponderance of the expenditures behind us. We are well positioned against competitors and are enthusiastic as we enter 2022. We do want to mention some recent accolades we are very proud to receive, including recognition in Forbes Magazine 2022, America's Best Small Company Ranking. This is our second year in a row to be included on the list, and we are ranked number 66 out of the top 100 small cap companies. SGC was also recently named to Fortune Magazine's 100 Fastest Growing Companies list. Our brand building organization received many points of recognition during 2021, thanks to our dedicated team who drive our success. Now, let's speak to some segment highlights. Our core uniform revenues for fiscal 2021 increased 2.3% over 2020, excluding PPE sales, and decreased 8%, including PPE. Our fourth quarter 2021 core non-PPE revenues Uniform sales increased 15.4% compared to fourth quarter 2020. Interestingly, the quarter showed strength early on, but paced much slower in the second half of the quarter. Uncertainty related to the spread of the Omicron variant, customer hiring challenges and supply chain issues appeared to drive the slowdown in customer activity during the latter portion of the quarter. Of late, though, we are seeing elevated activity and accelerating rebounding uniform sales. As we move forward, we are optimistic and expect our core uniform sales to continue to grow throughout the year. We are seeing weakened competition in the uniform segment with two significant competitors exiting the space that competes with HPI and a few, lately more than a few, consolidations of competitors in the healthcare space that will narrow the field of choices for our customers. Keep in mind, that our greatest value proposition to customers who have uniforms needs is that we offer the widest range of workwear apparel than any of our competitors. We're differentiated in that we design, manufacture, and distribute both institutional and fashion healthcare apparel, as well as non-healthcare identity uniforms. The integration of our branded uniforms and branded merchandise sales force in the second quarter of 2021 is proving very beneficial, as I said earlier, to HVI, yielding big opportunities and significant wins that will translate to increased revenue later in this year. Our branded merchandise sales grew by an exceptional 65% for full year 2021 compared to 2020 when excluding PPE sales. Net sales for the fourth quarter were $63 million, growing approximately 12% when compared to fourth quarter 2020, and by almost 41% excluding PPE sales, perpetuating a strong trajectory as our fastest growing revenue segment driven by both organic and inorganic growth. Turning to the office gurus, our remote staffing solution segment, TOG posted a record-breaking year in terms of revenue growth, reporting a net sales increase for 54% year over year. We continue to add new agents, and unprecedented pace to meet the robust demand from existing and new customers. Our excellent reputation to meet customer needs drives the business's growth, with the exceptional culture drives high retention and internal promotion rates. I want to note during 2021, we celebrated more than 361 promotions, added nearly 1,000 employees. We also began a recent expansion into the Dominican Republic and welcomed the seasoned vice president, of human resources onto the team. Back to SGC for a moment. The continued dynamic operating environment prevents challenges as well as opportunities. While we're excited about taking market share, we're pragmatic about the headwinds we and most companies across the globe are currently facing, including labor scarcity, rising logistics, and freight costs and supply chain issues. These costs impact the bottom line for everybody. and we are continuously working to mitigate these impacts for ourselves and our customers. I will now turn the call over to Andy to discuss operational financial highlights in more detail.