Presentation. We should have time at the end for Q&A, so if you do have a question, you can type it into the Q&A box at the bottom of your screen. With that out of the way, Mike, it's all yours.
Thanks, Jim, and good morning, everyone. We appreciate your time and interest in the Superior Group of Companies and are very excited to share the highlights of SGC and our compelling opportunities for growth. As Jim said, my name is Mike Koempel. I'm the CFO of SGC, and joining me today is Michael Benstock, our CEO. Michael's family started the business over 100 years ago, and Michael has worked in various positions throughout the business for 46 years, including 22 years as our CEO. Here is our safe harbor statement, which you can certainly read at your leisure on our website. Now I'll move to just share a few key investment highlights of Superior Group, and then we'll certainly get into more detail further in the presentation. We have three attractive, diversified businesses which operate in large, profitable growth industries.
The industries in which we participate are highly fragmented, with ample opportunity for organic growth given our modest share of the market, which is further enabled by our very strong customer retention across all of our segments. All of our segments have a history of growth and profitability, with our contact center business representing our highest margin and fastest growing business. Lastly, we have a solid balance sheet driven by strong operating cash flow. We've consistently paid a dividend since 1977, and we have a share repurchase authorization currently in place. Here's a quick look at our revenue growth over the years by segment as compared to 2024, with revenues of $566 million as compared to $377 million in 2019, which results in an 8% CAGR since 2019. Now I'll turn it over to Michael so we can go deeper into each of our segments.
Thanks, Mike. Hello, everybody, and good morning. Thanks for being with us today. We're going to begin with a quick overview for those who are new to the story. Although we've been around 100+ years, you'll learn as you get to know us that we're extremely entrepreneurial and equally as opportunistic. We've often been referred to as the 100-year-old startup, and it's that mentality that has really fueled us and empowered us to build three profitable businesses within a few different industries, which has resulted, as you'll learn, in SGC becoming a very diversified company. The first segment that we're going to discuss today is our oldest business, our healthcare apparel business. When you think of healthcare apparel, think of the scrubs that are worn by the 12 million healthcare professionals in the U.S. and other healthcare apparel worn by both caregivers and patients.
We're one of the largest and oldest providers of healthcare apparel in the United States. First, we have a synopsis of who wears healthcare apparel. In the interest of time, I'm going to skip most of this, but I do encourage you to spend some time with this if you're unfamiliar with these markets. The first part of our offering is what is referred to as institutional apparel. This is what you would see as a patient when you're in a hospital in an acute setting: scrubs, lab coats, isolation gowns, pajamas, patient gowns. These are the garments that are laundered generally by the hospital's own laundry or more often by a third party, and that third party is our customer, usually. The largest component of healthcare apparel, though, is the consumer scrub business.
The consumer base for this is made up of doctors, nurses, and other healthcare professionals who buy their scrubs through retailers or the many digital retailers, including us, and wear their scrubs home and launder their uniforms themselves. On the consumer portion of the business, we have two very strong brands: Wink, which is an internally developed brand that makes up the largest piece of our revenue. We complement that brand with an exclusive license from Carhartt, which we all know is one of the world's most iconic apparel and accessory brands. On the institutional side of healthcare apparel, servicing healthcare laundries and distributors, as we mentioned, we have one of the oldest and most well-known brands in the industry: Fashion Seal Healthcare. Fashion Seal was founded over 100 years ago by my great-grandmother. Let's move on a little bit.
Let's look at some of the highlights of our healthcare apparel and why we're excited about this segment. An interesting fact is that more than 2 million people wear our healthcare apparel every day. It's clear that although we are one of the top five players in the industry, there's just a ton of market share out there still for us to capture. We estimate the TAM of what we address to be over $4 billion and growing, and we look to capture more than our fair share of this growth going forward. One of the things to note, we have all the channels of distribution covered. In other words, our healthcare offering is available via wholesale, including specialty stores, e-tailers, retailers, laundries, and distributors. More recently, we've taken it a step further to address consumers directly and digitally. Our D2C channel is off to a great start.
Lastly, when you look at our impressive client list, you see that we have the privilege of serving a multitude of highly recognized customers. Our sales reach extends to some of the most prominent and influential healthcare organizations across various industries. Among those that we are proud to collaborate with are some of the leaders of the retail sector, as well as esteemed healthcare laundries, servicing healthcare providers on a truly formidable scale. Let's jump to our second business segment, which is branded products. This is our largest business segment. This segment is one that provides branded merchandise, also known as promotional products and logoed uniforms, to some of the largest companies in the world.
We build for our clients gifts that are used for employee and customer incentive programs, uniform programs, conference giveaways, gifts with purchase, branded retail revenue-producing merchandise, and pretty much any item in the world that you can imagine with a logo on it. Typically, when investors hear about branded products, they immediately think of those little stress balls that are foisted upon them at conferences and that they immediately throw out as soon as they get back to their hotel room. If there's one thing I want you to take away from this conversation today, it's we are not the stress ball guys. Our goal in this segment is actually to help our customers solve true business problems like improving employee retention or building deep brand loyalty or improving sales or developing buzz around a product or service launched.
We're incentivizing customers by curating what we believe are the most beautiful gifts that people actually want to keep and by developing branded retail products that customers will actually pay for and branded uniforms that employees are actually excited to wear. What types of products do we make? I think by example, you'll understand better. We make the uniforms for Taco Bell and have for a long time. In addition to that, we built out and merchandised the entire Taco Bell Taco Shop, in which we sell millions of dollars per year of really fun, iconic items to Taco Bell loyalists, like the Taco Bell onesie or the Taco Bell beach cruiser. For Dunkin', we design and source a number of retail items, like their drinkware, that are sold in their actual stores with their logo emblazoned on all the merchandise.
For Tesla, we produce their employee uniforms and a ton of really fun items that they use as employee gifts and customer gifts. And believe it or not, Elon Musk is actually involved in those purchases. For large retailers like Walmart and CVS, we make their uniforms for their employees that they wear each and every day. There is a lot of gig economy customers that we have latched onto in our business. We do the new driver kits for Instacart, DoorDash, Uber Eats, and Grubhub. For large tech companies like Microsoft, Amazon, we do millions of dollars of employee incentive giveaways to help them with their employee retention strategies. Let's look a little bit behind the scenes at what the numbers are in this industry. Most people are surprised to hear that this industry sits at about a $26 billion market.
Interesting fact, our industry has 25,000 competitors, both small and large, and is highly fragmented, as you can imagine. We have climbed from obscurity nine years ago to now being the eighth largest and ranked the fourth best in this business by multiple sources. We produce tens of millions of branded products per year. Another interesting fact is that over 5 million Americans go to work every day wearing uniforms made by us, made by HPI, which is part of this segment. Similar to healthcare, we are a top 10 player in the industry, but have so much upside potential of the market share to grab. As previously mentioned, our company proudly collaborates with some of the largest and most well-renowned brands across the globe. Our ability to penetrate and thrive in these diverse industries showcases that we have an adaptability and expertise in which no sector goes untouched.
It's essential to highlight we have extraordinary customer retention in all of our companies, including this company. We've fostered long-standing relationships for decades with many of these brands. It clearly signifies that we constantly deliver exceptional results, ensuring that our customers have a true, enduring trust in us and by consistently providing true value by exceeding their expectations. Next up, we'll take a look at our final segment, the contact center segment, and I'll turn it over to Mike to do that.
Thank you, Michael. Contact centers is our third business segment, which we operate as the Office Gurus. The Office Gurus is a group of nearshore contact centers supporting both inbound and outbound call services on behalf of a number of different brands across a variety of industries. As you can see on this slide, there's a number of compelling reasons for companies to outsource contact center operations. Outsourcing contact center operations enables companies to more quickly scale and gain cost leverage, both in terms of labor as well as technology. Additionally, customer support is not always a core competency of businesses, and outsourced providers can deliver dependable, consistent customer experiences in multiple languages. Why do customers choose the Office Gurus? We're a preferred provider for a number of reasons. Customers choose the Office Gurus because our clients prefer a nearshore capability that is more culturally aligned with reliable English fluency.
Also, by focusing on the small to medium-sized opportunities, we provide our clients with a high-touch service as compared to larger engagements with thousands of agents largely focused on transactional services. Lastly, we bring consistent processes, leverage analytics and technology, including artificial intelligence, which are all focused on improving the customer's experience for our clients. As you can see here, the Office Gurus operates from 10 offices across five nearshore countries, primarily in El Salvador and Belize, followed by Jamaica, the Dominican Republic, and a small footprint in the state of Florida. Our footprint provides access to various pools of talent to continue to support growth as well as risk mitigation. This is an industry in which quality customer service is of utmost importance.
You can see in this slide, we've been recognized as a leader within the business process industry, as well as being recognized as a great place to work. Clearly, the current inflationary environment, combined with the proliferation of remote work environments, has accelerated many companies' outsource plans as they've realized the remote workforce is their future, particularly in lower-cost nearshore locations rather than in the U.S. Similar to the other two segments, which Michael covered, in terms of growth opportunities, we represent a very small share of a very large market in the contact center business. Again, we are a leading provider to what we believe is an underserved market represented by small and medium-sized businesses. In fact, we get a lot of our business from customers who are outsourcing for the first time.
Our growth is fueled by both new customers as well as seat expansion with existing customers. This is our single fastest-growing business with a five-year sales CAGR of almost 22% and an EBITDA margin of almost 13%. Again, consistent with what you've seen in the previous two segments, we have high customer retention. In the case of our contact center business, we have net revenue retention exceeding 100%. Turning to our customer footprint, as you can see on this slide, our contact center business services a number of brands ranging from established, well-known brands to up-and-coming businesses. Our niche is small to medium-sized opportunities that could range from as few as 10 seats initially to over 100 seats. For that reason, our services focus on higher-quality conversational services versus large transactional-based services with hundreds of seats that you might find in other industries.
With that, I'll shift to a couple of overall financial highlights. Looking at our revenues over an extended period of time, you can see that SGC has grown significantly at an annualized growth rate of 11% and growth across all of our segments. The SGC revenue growth has been really a combination of both organic growth in all of our segments, as well as strategic acquisitions that have taken place in our branded products and healthcare apparel segments. In terms of our financial position, you can see during 2023 and 2024, we made significant progress, driving positive free cash flow and reducing both working capital and debt. As a result, our net leverage ratio, as you can see, has decreased by more than 50% since 2022 to 1.7x our trailing 12-month covenant EBITDA.
The business we operate has significant liquidity between cash and balance sheet and our outstanding revolver capacity. With that financial flexibility, we're focused on really four main priorities from a capital allocation perspective. First, we recognize the importance of the dividend as a return to our shareholders. For that reason, we've consistently paid a dividend since 1977 and at certain points in time have raised that dividend rate. Secondly, we have taken advantage of opportunistic share repurchases, completed a share repurchase plan that was initiated in 2024, and currently have a repurchase plan active today. Thirdly, we'll continue to make investments, necessary investments, capital investments in the organic growth of our business, typically on an annual basis that ranges to be about 1%-1.5% of revenues. Lastly, enabled by our financial position, we also will consider strategic acquisitions.
They're highly accretive and complementary to our existing businesses. Lastly, turning to our corporate social responsibility, you can find our latest report on our website, which you can certainly read at your leisure. We believe doing the right thing has always been at the core of who we are, and we will continue to support our employees and communities in which we live and work. That concludes our presentation. Again, we appreciate your interest, and I'll now turn it over to Jim to take any questions that you might have.
Great. Trying to get my camera back. Great. Thank you. I kind of call this the season of tariffs. It seems to be the big issue that everybody wants to talk about. I know about a month ago, you adjusted your guidance based on what you knew at the time about the current tariff situations. Now that we fast forward three or four weeks, what are you thinking now? Do you think you made the right adjustments? What do you see going forward?
I'll jump in. Fortunately, our healthcare business really is not impacted by the tariffs. We operate in duty-free and so far tariff-free countries. They are not as impacted by the tariffs, but you have to imagine that the countries who are not going to be impacted by the tariffs are going to feel emboldened because everybody's running to them saying, "Will you do work for me to raise wage rates and everything else?" There should be some pressure, and that's fine. We already have a price increase going into effect in July and August, depending on which side of that business it is. We are in good shape, and we are doing everything we can to protect our margin. On the branded products business, it's mostly an ad hoc business of taking orders in. At the time you take it in, you price in the tariffs.
We have tariff language in all of our confirmations of purchase orders that we will, in case of a tariff, pass the tariff cost, at least the tariff cost, onto any additional logistic costs, by the way, to our buyers. They understand that's a condition of doing business with us. Overall, the only place it really impacts us a little bit is the HPI portion, the contracted uniform portion, where we usually have one opportunity a year or one opportunity in a three-year contract. Some of those contracts we've had for 20, 30, 40 years, which answers another question that I saw pop up here. It's a very sticky business. We even have some customers who are indexed. If there's a tariff, their prices automatically go up. We have all kinds of conditions.
It could follow a little bit on that side of the business, but that's 25% of the business. It's not a major portion of the branded products business. We think we're in great shape. We, in the first Trump administration, started moving a lot of production out of China. We are not heavily reliant on China for finished products now.
What do you think the impact of the tariffs is on your branded products customers? Do you see them scaling back and hesitating? Have you seen any significant improvements?
I think up till now, we've seen marketing budgets and HR budgets being a little bit tight. They're spending less. They still have to spend. I mean, if you have a customer loyalty program, you don't just suspend it because of a tariff. You still have to give gifts. You give gifts from places you have a lot of choices to make. You give gifts from places that aren't as highly impacted by the tariffs, and you negotiate with your vendor for a better price, and you wind up negotiating with your customer for a higher price. I think where it's most impacted is on employee gifting, which is something you can hope for a while. Let's face it, everybody is trying to hoard still employees.
They've got good employees that have gone through a lot over the last five years to get themselves the right employees. They don't want their employees leaving, and gifting is a retention tool. It is kind of been steady state for us. We have taken market share, no doubt, because some of our customers are spending less or not spending at all. They've paused their purchasing, and our sales, as you've seen, have not dropped on the branded products side. When we come out of this, and maybe Trump's pronouncements yesterday about there being a deal with China could be—we are kind of going to come out of this sooner rather than later—could be very good for our business. When we do come out, we will come out much stronger than even we had contemplated.
You mentioned on the healthcare apparel side, there's plenty of share opportunity for you, plenty of share to be gained. What are you doing to gain that share? I know you've opened that direct-to-consumer website, and you have some new products, but can you just give us a little more color on what you're doing to gain share in that market?
It is really becoming more omnichannel is the main thing. It is not just a direct-to-consumer website. You have to understand that scrubs were not largely bought online prior to COVID. COVID changed that whole dynamic, and we did not have a digital presence prior to COVID. We had to kind of scurry after all the noise of COVID and then the supply chain issues that followed to get ourselves up and ramped up. We have had a real digital presence, I would say, for two years now. That is both selling to Amazon.com, Walmart.com, and all the other dot-coms, as well as our own direct-to-consumer. It is a shift away from store. We are still emphasizing—there are still a lot of stores out there selling uniforms, and we are still selling them.
The shift of—and we estimate 35% or more of all uniforms or all scrubs are bought online when they're bought by the actual person and not supplied by their institution who launders them for them. That is a major shift. We have stepped in line with that shift, and we are creating higher brand awareness. It really is bringing newness to the market faster than everybody else is our biggest strategy around that, and we've accomplished that. When everybody else had the overhang of inventory, we did too, but we were still, because we had the wherewithal to do it, the financial wherewithal to do it, we still were creating newness. Once we got out of—we got that past us over a year ago, we were able to really start bringing to the market new products. Again, consumers are spending less, also because of the uncertainty.
When they start spending at their normal levels and when institutions start selling or buying at their normal levels, we believe that we are highly positioned to continue to grow the company even at higher levels.
All right. Can you talk a little bit about capital allocation? I know you bought back, I think, about $7 million of stock in 2024. I think you bought back about $4 million in 2025. Are you continuing to buy back shares? Is that on a program? Or how does that work, and how much is left on the authorization?
Sure. As you know, Jim, we had a first program approved in 2024. It was for $10 million. We completed that program in the first quarter of this year. Upon completion of that program, the board approved a second authorization of up to $17.5 million, which we initiated in the first quarter. We are active in the market. Again, opportunistically, we see the share price, we believe, at a very attractive value, which is why we're in the market. We will report here in the second quarter where we stand in terms of remaining capacity. Again, we'll continue to be in a market where there's opportunities.
Okay. All right. I'm taking some questions from the audience. How well positioned are you for roll-ups in the uniform and the branded products markets given this downturn? Do you think you're more likely to be doing some more deals?
Yeah. We said when we got past this cloud of uncertainty, we have deals on the back burner that we will do, both in the branded products business as well as to get us better geographically positioned in the call center business. I saw there's a question here, which I'll answer at the same time. We are heavily invested in AI technology. I would say for a company our size in that business, we are more invested than anybody is. We have invested, I believe, even to a greater degree than some of our very, very large competitors. We believe it's fundamental to our business that it's a selling feature for us right now. We've actually won business because we have better AI technology than a lot of other call center businesses out there. I did want to just answer that one question.
I thought it was a very well-thought-out question.
Yeah. There's another question about CapEx investments. What are you planning in the near term to improve your operating leverage, especially across contact center?
Contact center is very little CapEx in our business. I mean, for a new employee, we buy a laptop, computer, a mouse, and a keyboard. If they're in center, we buy them a chair and a desk. That's pretty well it. We still have a great percentage of our employees working from home in the countries that allow them to work from home. We have a lot of capacity without having had any CapEx, particularly in that business. In our other businesses, we made in the last few years some very big investments in robotic technology in our distribution centers. We do not contemplate any large investments going forward. Generally, our CapEx runs 1%-1.5% per year. Every five to seven years, it'll ramp up to 3% because maybe we're putting in ERP or we're doing some major overhaul of something. That's consistently been the history.
All right. There's a question, I think you might have addressed it quickly, but just ask it again. With the major brands like CVS and Amazon, Walmart, once you get that business, how sticky is it, and how likely is it that those contracts get renewed?
Walmart, we've had for 47 years. I know that, at least 47, because I've been here 47 years, and we've had it since day one when Sam Walton used to come to our factory in Arkansas. We're still an Arkansas distribution center. That is how sticky that business is. CVS, I don't know the exact date. It's close to 30 years we've been doing business with CVS for both their front-of-the-house uniforms, their clerical uniforms, as well as their pharmacy uniforms. Amazon, we do both promotions for Amazon and some uniforms. That is generally a contract that comes up every three years on one side and every five years on the other. Generally, our contracts are three-year contracts. Companies that we deal with tend not to want to change companies. They might go out and do a price check every three years. Most don't.
Usually, they wait till five years. They let the contracts have evergreen clauses, so they go on for four or five years. Then they wake up, and it's, "Oh, we ought to do a price check." Generally, we're in line with the prices. Even if we're a little bit higher, there's a cost of change, which is why that business is so sticky. Our retention rates are phenomenal. It's actually in our investor deck on our website if you want to look at that.
Okay. I think we have time for one more. I just wanted to highlight the dividend. I think today's stock price dividend's up around 5%-6%. I think you recently increased it at the end of 2024. What's your plans for that? Do you think you'll continue to move that up as time goes on? Do you continue to expect to pay a dividend?
Yeah. Actually, our dividend rate's been, I think, Jim, our last increase was, I think, actually maybe a couple of years ago. We've been at a $0.56 dividend rate on an annual basis. We, of course, have active discussions with the board on a quarterly basis about the dividend. We'll evaluate the dividend rate in the future based on other capital needs, performance of the business, etc. Again, as I mentioned in my prepared remarks, we certainly recognize that paying a consistent dividend is important to our shareholders, and that's certainly a priority of ours. Again, we'll evaluate the rate from time to time as we move forward.
Okay. All right. We are out of time. Thank you, Mike and Michael, for presenting today and for taking the meetings, and thank you for.
We need more time. We need more time next time, Jim.
Yeah. Yeah. We'll have to.
A lot of unanswered questions. We invite people to take meetings with us whose questions are unanswered.
All right. If anybody does have questions, I'm sure if they email Mike or Michael, they would answer them, or you could email me directly, and then I will.
Absolutely. Yes. We'd be happy to. All right. Thank you, Jim. Thanks, everyone.
Thank you.