Superior Group of Companies NASDAQ: SGC reported higher revenue and profitability in the first quarter of 2026, with management citing broad-based progress across its segments despite a macroeconomic backdrop the company described as uncertain.
On the company’s earnings call, Chief Executive Officer Michael Benstock said first-quarter revenue increased 3% year over year and that operating leverage helped lift earnings. “Gross margin rate improved by 30 basis points. SG&A came down as a % of sales by nearly a full point, and EBITDA increased to $4.8 million from $3.5 million last year,” Benstock said. Earnings per share were $0.06 compared to a $0.05 loss in the first quarter of 2025.
Benstock added that the company is “staying focused on execution” even as external uncertainty remains elevated, including “added uncertainty around the Iran conflict.” He pointed to the company’s “broad business mix, good customer relationships, and supply chain flexibility” as strengths in the current environment.
First-quarter financial results
President and Chief Financial Officer Michael Koempel said consolidated revenue rose to $141 million. He reiterated that the company’s results are typically “back half weighted with sequential improvement through the year,” which he said is reflected in Superior Group’s 2026 guidance.
Gross margin improved to 37.1% from the prior year. By segment, Koempel said Branded Products gross margin was 34.1%, “consistent with the fourth quarter” and up 210 basis points year over year due to weaker customer mix in the prior-year period. Healthcare Apparel gross margin fell 160 basis points to 35.6% “mainly because of growth with lower margin customers.” Contact Centers gross margin was 52.2%, down 140 basis points due to higher labor costs.
SG&A as a percentage of sales improved to 35.8% from 36.5%. Koempel said SG&A totaled $50 million and included $1 million in severance costs, and was “essentially flat year-over-year despite our top line growth.” EBITDA rose to $4.8 million, and EBITDA margin improved 80 basis points to 3.4%.
Net interest expense was “a little over $900,000,” down from more than $1.2 million in the year-ago quarter, which Koempel attributed to an improved net debt position and a lower weighted-average interest rate. Net income was about $800,000 versus a net loss of about $800,000 a year earlier.
Segment performance: Branded Products and Healthcare Apparel grow
Branded Products, the company’s largest segment, grew revenue 5% year over year to $91 million. Benstock said the segment has now posted 5% growth “for the second quarter in a row,” driven by volume gains within existing customer accounts. He said the company improved gross margin and held SG&A near 27% of sales, which helped EBITDA improve versus last year. Benstock added that the company’s “pipeline and backlog remains strong,” and that management plans to continue investing in sales talent and technology to support growth.
In the question-and-answer session, Branded Products President Jake Himelstein said the business remains diversified across industries and does not have “any concentration in any given industry,” addressing a question about potential softness in restaurant-industry demand. While he described the macro environment as “a bit choppy,” he said activity remains “really healthy,” citing execution, conversion of RFPs, ramping new sales reps, and expanding existing accounts.
Himelstein also said the RFP pipeline at the close of the first quarter “was the strongest it’s been in memory,” with some opportunities expected to close in the second quarter and beyond.
Healthcare Apparel revenue increased 5% to $29 million. Benstock said growth was driven by volume gains in existing wholesale accounts and continued progress in direct-to-consumer channels, though he noted that Koempel would address lower EBITDA in the segment. Benstock also introduced Chris Hein, who joined recently as president of Healthcare Apparel, saying Hein brings “deep multi-channel apparel experience” and a track record of building teams and driving results.
Koempel said Hein joined in late March and is still evaluating the business. “There will be some shift of the strategy,” Koempel said, adding that the company expects changes and will share more as Hein gets further into his review.
Contact Centers: revenue down year over year, sequential improvement expected
Contact Centers revenue declined 8% year over year to $22 million, which Benstock attributed mainly to prior-year client attrition. However, both Benstock and Koempel highlighted sequential improvement from the fourth quarter, supported by expansion within existing customers.
Benstock said the segment’s opportunity pipeline is “still at a historical high,” and that with easier comparisons ahead, the company is focused on turning pipeline into year-over-year growth. He added that Contact Centers SG&A declined by more than 200 basis points as a percentage of sales compared to the year-ago quarter, reflecting benefits from prior cost reduction work and ongoing investments in AI and other technologies. As a result, he said segment EBITDA was down only slightly year over year, while margin improved.
In response to an analyst question, Koempel said the company expects further sequential improvement and “would expect to see growth in the back half of the year for Contact Centers.”
Balance sheet, capital returns, guidance, and areas of uncertainty
Koempel said the company ended March with $23 million in cash and cash equivalents and generated more than $9 million of operating cash flow in the quarter, on top of $20 million produced in 2025. During the quarter, the company paid $2 million in dividends and repurchased $700,000 of stock, with $9.4 million remaining under its share repurchase authorization.
Management maintained full-year guidance, calling the quarter a “solid start.” Koempel said the company continues to expect 2026 net sales of $572 million to $585 million and diluted EPS of $0.54 to $0.66, which he said would be a meaningful improvement versus $0.46 generated last year. He reiterated that both revenue and EPS are expected to be weighted to the back half of the year.
Koempel also said first-quarter EPS came in “a little bit higher” than expectations due to timing, including some Branded Products revenue arriving earlier than planned and favorable expenses, which he said reflected a mix of true reductions and quarterly timing shifts.
On potential tariff refunds, Benstock said the company “initiated the re-refund process” for certain applicable tariffs, but emphasized uncertainty around “if and when we receive” refunds and noted that timelines for tariffs that did not initially qualify are not yet defined.
Benstock also addressed sourcing and logistics volatility, saying the company has seen logistics costs rise but that the impact would not have been reflected in the first quarter because inventory had been on hand before recent disruptions. He said the company is working with vendors to mitigate pressure and does not expect the issue to materially change its outlook, while noting the company may need to adjust pricing over time if impacts emerge.
Finally, Benstock said the M&A environment in contact centers is “very rich,” describing industry consolidation driven in part by differing levels of investment in AI and automation. He said the company is evaluating opportunities and suggested investors “should expect to see some movement” over the next year or so, with an emphasis on finding the right fit and potentially adding capacity in a lower-cost environment.
About Superior Group of Companies NASDAQ: SGC
Superior Group of Companies is a global developer and manufacturer of specialty packaging materials, including films, laminations and pressure-sensitive adhesives. Founded in 1969 and headquartered in Santa Fe Springs, California, the company combines advanced printing technologies with materials science expertise to deliver customized packaging solutions for industries such as food and beverage, healthcare, personal care and household products.
Through a network of manufacturing and distribution facilities across North America, Europe and Asia, Superior Group serves both multinational brand owners and regional producers.
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