What Superior Group of Companies (SGC) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue rose 5% to $146 million, with growth in Branded Products and Contact Centers offset by weakness in Healthcare Apparel; net income was $2.6 million, while EBITDA declined to $6.7 million.
• Healthcare Apparel revenue fell 3%, and segment margins were pressured by a $4 million inventory write-down and a roughly $1 million credit loss. Management expects discounting to weigh on margins into the first half of 2027 as it streamlines the product assortment.
• Superior raised the lower ends of its 2026 forecasts to $578 million in sales and $0.60 adjusted EPS. Its Select VoiceCom acquisition, purchased for about $27 million upfront, expands offshore Contact Center services and is expected to be earnings-accretive in Q1 2027.

Superior Group of Companies NASDAQ: SGC reported 5% revenue growth in the third quarter of 2026, as gains in Branded Products and Contact Centers helped offset inventory and credit charges in its Healthcare Apparel business.

Revenue rose to $146 million, while net income was $2.6 million, or $0.17 per diluted share. EBITDA fell to $6.7 million from $7.5 million a year earlier, as a decline in Healthcare Apparel more than offset growth in the company’s other two segments.

Management also raised the lower ends of its full-year sales and adjusted earnings forecasts and discussed its acquisition of Philippine business process outsourcing provider Select VoiceCom, which closed at the end of October.

Healthcare Apparel Charges Offset Segment Gains

Branded Products revenue rose 8% to $92 million, benefiting from higher volumes with existing customers and new customer additions. The segment’s gross margin improved by 160 basis points, primarily because of a favorable shift in pricing and customer mix, President and Chief Financial Officer Mike Koempel said. Segment EBITDA grew 31%.

Contact Centers revenue increased 7% to $24 million, driven by new and existing customers, while EBITDA rose 22%. Its gross margin was flat year over year but improved by 200 basis points from the second quarter.

Healthcare Apparel revenue declined 3% to $31 million as volumes fell among existing customers, partly because of a change in one customer’s financial position. Segment EBITDA was about $3.7 million lower than a year earlier.

Koempel said the Healthcare Apparel gross margin fell 580 basis points, reflecting a $4 million incremental inventory write-down as the company streamlined its product assortment. Tariff refunds of $1.8 million partly offset the impact. The business also recorded a credit loss charge of about $1 million tied to the customer’s financial position.

Koempel said the company was largely through the most challenging part of the assortment repositioning but expects margin pressure into the first half of 2027 as it discounts inventory. Management expects a narrower assortment to support higher margins and reduce inventory needs over time.

Select VoiceCom Adds Offshore Capabilities

Chief Executive Officer Michael Benstock said the Select VoiceCom acquisition expands the Contact Centers business, known as The Office Gurus, into offshore delivery. The purchase is expected to be accretive to earnings in the first quarter of 2027, its first full quarter under Superior’s ownership.

Dominic Leide, president of Contact Centers, said the acquisition allows the company to offer clients nearshore, onshore and offshore services, including blended arrangements. Select VoiceCom also brings healthcare expertise, including the ability to hire Filipino registered nurses and physical therapists, he said.

Koempel said Select VoiceCom generates approximately $20 million in annual revenue. Superior paid about $27 million in cash upfront, with a one-year earnout. The company did not disclose further profitability details and plans to provide more pro forma financial information in its annual filing.

The full-year guidance does not include revenue from Select VoiceCom, although Superior expects to record about two months of activity and acquisition-related closing costs in the fourth quarter, Koempel said.

Outlook and Balance Sheet

Superior now forecasts 2026 net sales of $578 million to $585 million, compared with its previous range of $572 million to $585 million. It expects adjusted earnings per diluted share of $0.60 to $0.66, up from a prior range of $0.54 to $0.66.

The company ended September with $28 million in cash and equivalents, compared with $24 million at the end of 2025. Operating cash flow was $31 million for the first nine months of 2026, up from $1 million in the comparable prior-year period. During the quarter, Superior amended and extended its $200 million credit facility for five years.

Benstock said the company remains interested in acquisitions in its other businesses but is not currently pursuing another Contact Centers deal while it integrates Select VoiceCom.

About Superior Group of Companies (NASDAQ:SGC)

Superior Group of Companies, Inc is a diversified provider of healthcare apparel, branded products and business services. The company operates through businesses that serve healthcare organizations, commercial enterprises and other institutional customers.

Its healthcare apparel operations provide uniforms, medical apparel and related products for healthcare professionals and facilities. The company's product portfolio has included brands such as Fashion Seal Healthcare, WonderWink and Medelita, offering scrubs, lab coats, outerwear and other workwear.

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