CFO Mike Koempel. As always, this is a 30-minute presentation. The company will speak for about 15 minutes, and we should have some time at the end for questions. If you have a question, you can enter it into that chat box or that question box at the bottom of your screen. With that out of the way, it's all yours, Michael and Mike.
Great. Thanks, Jim, and good morning, everyone. We appreciate your time and interest in the Superior Group of Companies, and Michael and I are very excited to share the highlights of our company and our compelling opportunities for growth. As Jim mentioned, my name is Mike Koempel. I'm the President and CFO of SGC. Joining me today is Michael Benstock, our Chairman and CEO. Michael's family started the business over 100 years ago, and Michael has worked in various positions throughout the business for over 45 years, including 22 years as our CEO. Here is our safe harbor statement, which you can read at your leisure. Now I'll provide a few investment highlights as it relates to Superior Group of Companies.
As I mentioned, we were founded over 100 years ago, and as you'll see later in our presentation, we have three attractive, diversified segments that operate in large, profitable industries. We have ample organic growth opportunity across all three businesses. You'll see we have very modest market share with the respective addressable markets, and all of our segments have strong customer retention. Historically, we've had high margin, profitable operations in our three businesses, which benefit from increasing scale, with contact centers being our highest margin and fastest growing business. Over the last couple of years, there's been a major focus in delivering a solid balance sheet with strong operating cash flow, working capital improvement, which has really helped facilitate strategic investment in the business as well as return capital to our shareholders. Last but not least, we have got significant insider ownership with an uninterrupted dividend since 1977.
Before digging deeper into the segments, just to provide you a quick snapshot of the sales of our business. Last year, on a consolidated basis, our revenues were $566 million, and since 2019, our CAGR sales growth has been 8%, with growth across all three of our business segments. With that, now I'll turn it over to Michael, and he and I will go into each individual segment.
Great. Thanks, Mike. Hello, everyone. Good morning. We're going to begin with a quick overview for those of you who are new to our story. Although we've been around 100 plus years, you're going to learn as you get to know us that we're extremely entrepreneurial, equally as opportunistic. We've been referred to many times as the 100-year-old startup, but it's really what we like to get across, it's the mentality of being open to new things that has empowered us to build three very profitable businesses within a few different industries. You'll note that we have become a very diversified company. The first segment that we'll discuss today is our oldest business, our legacy business, our healthcare apparel business. When you think of healthcare apparel, think of the scrubs that are worn by over 12 million healthcare professionals in the U.S., as well as patients, by the way.
We are the largest and oldest providers of healthcare apparel in the country. We have a synopsis here of who wears medical apparel, and I'm sure there'll be a couple of aha moments as you read this because so many people wear healthcare apparel. In the interest of time, I'm going to skip over most of this, but I encourage you to spend some time after this if you're unfamiliar with these markets. The first part of our offering is what we refer to as institutional apparel. This is what you would see as a patient when you're in a hospital or another acute setting: scrubs, lab coats, isolation gowns, pajamas, patient gowns. The scrubs we're talking about are generally scrubs that are worn under an operating room gown and are changed many times during the day as a doctor performs multiple operations.
These garments are laundered generally by the hospital's own laundry, or more often today, they're laundered by a third party, and that third party is our customer. The larger component of healthcare apparel, though, is the consumer scrub business, often referred to as the fashion side of scrubs. The consumer base for this is made up of doctors, nurses, all kinds of 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, 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 Rose. 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 single day to work. 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 of that fair share of this growth going forward. One of the things to note, we have all channels of distribution covered.
In other words, we're totally omnichannel, whether wholesale or retail or e-tail or however. By the way, our direct-to-consumer just started just a couple of years ago. We've taken it a step further to make sure we address consumers digitally and directly however they shop. Lastly, when you look at our impressive client list, and this is a small version of our client list, as you can imagine, we have the privilege of serving a multitude of really highly recognized companies. Some of the most prominent and influential healthcare organizations across various industries buy our scrubs. Proud to collaborate with these folks, that they trust us in servicing some of, as we get to service some of the best healthcare providers on a really, truly formidable scale across the country. Let's jump to our second business segment, which is our branded products segment. Segment, obviously, is our largest segment.
As you'll notice, we get to the financials. We provide branded merchandise, also known as promotional products, and logoed uniforms, which falls under the heading of branded products, to some of the largest companies in the United States. 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 think of that has a logo on it. Typically, when investors hear about branded products, they immediately think of the little stress balls that are foisted upon them at conferences, and they're immediately thrown out as soon as they get back to the hotel room. If there's one thing I want you to take away from this slide, it is that 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, building deep brand loyalty, or developing a buzz around a product or service launch. We're incentivizing customers by curating beautiful gifts that people actually want to keep and by developing retail products that customers actually pay for and branded uniforms that employees are actually excited to wear. Let me give you some examples here of what type of products we make. We make the uniforms for Taco Bell, but in addition to that, we built out merchandise for the entire online Taco Bell Taco Shop, in which we sell millions of dollars per year of really fun, iconic items like the Taco Bell onesie or the Taco Bell beach cruiser.
For Dunkin', we design and source a number of retail items like drinkware for them that are sold in their actual stores. When you go into a Dunkin' store and you buy drinkware, it's likely you might be buying our drinkware. For Tesla, we produce their employee uniforms and a ton of really fun items that they use as employee gifts and customer gifts. For large retailers like Walmart and CVS, we make their uniforms for their employees that they wear each and every day. For gig economy customers, we make the new driver kits for Instacart, DoorDash, Grubhub, and many others. For large tech companies like Microsoft and Amazon, we do millions of dollars in employee incentive giveaways to help them with their employee retention strategies.
Let's look a little bit more into the numbers, which are really impressive behind our industry, and you'll be surprised to hear that the branded products industry sits at approximately a $26 billion market. Here are some interesting facts. Our industry has 25,000 companies in the U.S. as competitors, small and large. It's a highly fragmented business. We have climbed from obscurity nine years ago to now being in the top 10 largest branded distributors in the U.S. 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 the uniforms made by Superior Group of Companies, which are a part of this segment. Overall, if you heard the healthcare news a little while ago, the 2 million and you got the 5 million, 7 million Americans wear our apparel to work every single day.
As previously mentioned, our company proudly collaborates with some of the largest and most renowned brands across the globe. This is like a walk down Main Street for everybody, really. Our employee retention is phenomenal. We have long-lasting relationships with some of our clients for decades. It consistently signifies that we deliver exceptional results with our clients. They have true enduring trust in us, and we create real value for them each and every day. It's a wonderful group of customers, and as I said, this is just a smattering of some of our customers. Let's jump to the next slide, Mike.
Okay, I can take it from here.
Here we go.
Thanks, Michael. Contact centers is our third business, 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 brands, which you'll see in a moment, across a variety of industries. There are a number of compelling reasons for companies to outsource contact center operations, as you can see a number of reasons here on the slide. Outsourcing contact center operations enables companies to quickly scale and gain cost leverage, both in terms of labor as well as technology. Additionally, we recognize that customer support is not always a core competency of businesses, so outsourced providers can deliver dependable, consistent customer experiences in multiple languages. There's a number of factors that we believe make The Office Gurus the preferred provider.
Customers choose The Office Gurus because our clients prefer a nearshore capability that is more culturally aligned with reliable English fluency. By focusing on the small to medium-sized opportunities, we provide our clients with high-touch service as compared to larger engagements with thousands of agents largely focused on transactional services. Lastly, we bring consistent processes and leverage analytics and technology, which are all focused on improving the customer's experience for all of our clients. As you can see here, a quick snapshot, The Office Gurus operates across three nearshore countries: El Salvador, Belize, and the Dominican Republic, as well as in the state of Florida. In addition to having office footprints, it's also important to note that we also have work from home in all of these regions, which provide us significant capacity for growth across all of these locations.
Our footprint provides access to various pools of talent to continue to support that growth, as well as risk mitigation for our clients. This is clearly an industry in which quality customer service is of utmost importance. You can see on the slide we've been recognized as a leading provider within the industry, as well as being recognized as a great place to work within a very competitive labor market across all of these countries. Clearly, with the inflationary environment combined with the continued proliferation and acceptance of remote work environments, it's certainly accelerated many companies' outsourcing plans as they've realized that remote workforces are the future, particularly in lower-cost nearshore locations rather than in the U.S. In terms of growth opportunities, we're already a leading provider to an underserved market, as I mentioned before, represented by small and medium-sized businesses.
In fact, we get a lot of our business from customers who are outsourcing this need for the first time. Our growth is fueled by both new customers as well as seat expansion with existing customers. This is another large and growing market, which exceeds $100 billion in the U.S. alone. As you can see, our market share is minimal because, again, we're focusing on the smaller to medium-sized customers that often have the opportunity to grow quickly. As I mentioned at the beginning of our presentation, this is our fastest growing business. You can see over the last five years, the cumulative adjusted growth has been 22% through 2024, with a very attractive EBITDA margin of 12.6% in 2024, with a net revenue retention of over 100%. Again, consistent with our other segments, strong customer retention.
As you can see here, our contact center services business services a number of brands ranging from established well-known brands up to up-and-coming businesses. Again, our niche is the small to medium-sized opportunities that could range from as few as 10 seats and growing to over 100 seats. For that reason, it's really important to note that our service focuses on higher quality conversational service versus the large transactional-based services with hundreds of seats that you might find in other industries. Now moving on to overall for our financial highlights. I shared before our revenues back to 2019. Here, this gives you an even longer history of our business. You can see that our growth since 2014 has been 11% on an annualized basis.
We're projecting our sales, our guidance to be in 2025 at a range of $550 to $575 million, still forecasting growth at the high end of our range. As you scan across the page, you'll see that we've had growth consistently over this time across all three of our segments, a combination of organic growth as well as some portion of growth driven by acquisitions in our branded products and healthcare apparel segments. As we think about capital allocation strategy, it really cuts across what I'll call four priorities here: dividend payments, which I mentioned before. We've had an uninterrupted dividend since 1977. At points in time, we have increased the dividend rate. We certainly recognize that's an important value proposition to our shareholders, and it certainly continues to be an important priority of the business. Secondly, share repurchases.
If you followed our business over the last couple of years, you know that we initiated a share repurchase program in August of 2024. We completed that program and initiated a second program in the first quarter of this year, and we continue to stay in the market and look for opportunistic buys as we move forward for additional share repurchases. Thirdly, we'll obviously continue to look for investments to support the organic growth of our business, whether that's to drive efficiencies in our warehousing capabilities or manufacturing capabilities. Typically, our investments range in the 1% to 1.5% of revenues, and again, we'll continue to hold that as a priority of the business.
Last but not least, while we're focused on organic growth, we'll also look for strategic opportunities, strategic acquisitions primarily in two of our segments: in the branded products segment, where we've had a history of acquisitions, as well as in our contact center services segment, which might provide the opportunity for additional geographies that could complement our existing business and again provide also further growth opportunities. Very quickly, a few statistics here.
Mike, let's skip the last two slides so we get some time for questions here. It's out on our deck, pages 24 and 25, if you want to go out to our website to grab that. Let's jump right into questions.
Okay.
If you don't mind, Mike.
All right, great. The first question is related to the news from last week, and congratulations, Mike, on the promotion to President.
Thank you.
Can you speak to this and how it fits into the company's growth plans?
Yeah, we're excited. You know, I've held a lot of titles: Chairman, CEO, President. All three Presidents from the different divisions report to me, as well as CIO reports to me. I have a lot of direct reports, and I've looked for the opportunity over the years to be able to pass on some of those responsibilities to somebody capable. I'm excited. Mike's been with me for three years and been a fantastic financial partner. It's not just deserving of the title, but very capable of now taking on more responsibility. Each of the three segment Presidents will now report up to him. The C-level executives will still report to me, as will Mike. He's a great steward of our business, and I'm looking forward to seeing what he does in this new responsibility.
Great. Next, AI. It's been a hot topic in the news lately, and you guys have definitely been on the cutting edge of AI, especially for your contact center services business. You use that business not only as a separate business to support your other businesses. Can you speak to how you're using AI to support the contact center services business and your other businesses?
Yeah, a number of years ago, the first use of AI was actually to try to reduce headcount in a few of our back office jobs supporting our business. We were very successful in that. We became, you know, much more curious. We overlay our tech stack is full of AI, and we lay that into nearly, or can lay that into nearly every conversation we have with our customer's customer. We're very proud of the fact that we've actually taken business from some of the larger players in the BPO business for the fact that we are more advanced than they are when it comes to AI. We look at it as an opportunity to create efficiencies with our customers, to offer that to our customers, existing customers, to create a certain amount of loyalty.
Yeah, we can put in AI and reduce headcount by 20% and reduce your cost by 20%. You know that we're looked upon very favorably, especially if that client has multiple call centers that they're dealing with. We become the call center of choice, especially if our metrics are better than everybody else's as a result of having used that AI, which is what's happening right now. We also see it as a sales opportunity to go on the tech stack and say, "Hey, look at what we're doing." We are so good at implementing AI, and I know that's been, there was an article in The Wall Street Journal the other day and The New York Times about how everybody, you know, overrated the impact AI was going to have. That's because the implementations have been so bad.
Our implementation has been so good that we have AI companies coming to us now, asking us to be the implementers of their AI to other businesses. We've actually taken on a couple of projects to be able to do that to see if that could actually be a business line for us. More importantly, we've taken 35 customers and already brought them up on our AI stack. Every one of them is different. You know, you say, "Oh, 35, you did the same thing." No, we did something different for all 35. Those are 35 different businesses that needed to be prompted in a way to make it successful. I would say I'm excited about AI, and I understand why other BPOs businesses or contact center businesses would not be so excited about it.
All right. Now, how about we move to the balance sheet? It looks a lot better today than it did two years ago. Can you just update the audience on how the balance sheet is right now, what the debt levels you're comfortable with, and how this plays onto your share buyback program, how this, you know, works with your share buyback program? Sure, Jim, as you mentioned, we made a lot of progress. It was a major focus in 2023 and 2024. Entering this year, our net leverage ratio was about 1.7 times EBITDA. It's certainly given us the opportunity to bring, obviously, our debt levels down. As Michael and I have said, you know, on a number of occasions, we really want to operate, you know, in that two, maybe up to 2.5 times leverage ratio. That gives us the flexibility to make investments where we need to.
You touched on the share repurchase program, which we initiated in August of last year. We've purchased $15 million of stock since August, and we've seen our leverage ratio still stay within, you know, our targeted range. In the second quarter, we were at 2.2 times leverage. I think, again, what we're really balancing is staying within that targeted range, which gives us the flexibility to make strategic investments in the business or what we see as opportunities to repurchase our stock. We've been able to really balance those things, and that'll continue to be our focus going forward, which, again, having a strong balance sheet enables us to do that. Yeah.
A related question from the audience noted that the dividend, which is unusually high for a company your size, 4% or 5% yield, which is a hell of a lot better than I'm getting in my bank account right now. Any update on the dividend? Any plans to, I mean, do you think the dividend is safe at this point and you'll continue to pay that out going forward?
Jim, you should buy our stock. Yes.
What?
Yes, we're comfortable with the dividend, and as I mentioned in the presentation, it is and will remain an important capital allocation priority for the business.
Okay. All right. You know, the first couple of quarters of 2025 has been a tale of two cities, you know, regarding customer sentiment, especially for branded products. A lot of concern in the first quarter, a little bit less concern in the second quarter. Do you think the tariffs are still an issue for your customers and causing them to rethink some of their purchasing decisions?
I think, you know, as you noted, Jim, in the second quarter, you see branded products really had a, what I'll call, somewhat of a rebound from the first quarter. The sales were up 14%. We definitely have seen customer sentiment improve compared to where we started the beginning of the year. At the beginning of the year, tariff was creating a lot of noise, some hesitation in purchasing, and we've seen that subside. We're seeing more willingness to move forward with branded products programs. With that said, I'd still say there's still some level of, I'd say, uncertainty out there. Obviously, the Fed recently cutting the interest rate we think will be helpful. The signal that they might do a couple more cuts we think will help companies feel even more comfortable with making decisions, particularly you mentioned branded products.
As we look at our contact center business, we've said before where there's been some slower decision-making there, where we believe with the interest rate changes, the tariff uncertainty subsiding, that that should help create an unlock for our customers and prospective customers that will help drive growth as we move forward.
Right. Sticking with the contact center services business, on the last call, you indicated that the pipeline there was higher than it's ever been with regard to new customers. How long does it take to convert those customers into actual business? How's that going?
As we said in prior calls, we've certainly seen it this year take longer to make that decision. Once the decision is made, it takes a little bit longer from a ramp-up perspective. As I just mentioned, with the tariff uncertainty largely subsided and with interest rates coming down, hopefully coming down more, we believe that will help facilitate that pipeline and really provide some growth, some significant growth in that contact center segment. We had a headwind with a couple of bankruptcies due to economic policies as it related to solar. I think we've got a lot of those headwinds behind us, and we're looking forward to converting that pipeline as quickly as possible.
All right. One of the other things you implemented this year was a cost-savings plan. Can you update us on how that's going and how much you hope to reduce your costs in 2025 as a result?
Yeah, sure. In May, with the first quarter earnings release, we announced that we had initiated a $13 million reduction in our annualized budgeted expenses. Those plans were well underway at that time. Overall, we would expect to achieve about half of those annualized reductions in our budgeted expenses this year. They were across all of our businesses across a number of initiatives. Some were immediate, some were dependent upon contract renewals, which kick in at different points in time. We are tracking against all of the initiatives that we put in place. Of course, we'd expect to see a full benefit as we get into 2026.
All right. I know it's a little early to talk about 2026 guidance, but just in general terms, in terms of the sales teams, do you expect to expand the sales teams for any of the three businesses in 2026?
Yes, expand, upskill, and really be aggressive as heck out there in the marketplace.
Is that for all your businesses?
All of our businesses.
All right. Great. Great. It's great to have you back at the conference. I really appreciate it. Congratulations again, Mike, on the promotion. I guess we'll be talking again in about five or six weeks when you're ready to release your third quarter results.
Great. Thank you very much, everybody, for joining us.
Yeah, thank you.
Thank you.