With us we have the CEO Michael Benstock and the president and CFO Mike Koempel. As always, this will be a 30-minute presentation. We should have time at the end for Q&A, so if you do have some questions, you can type it into that Q&A box at the bottom of your screen. With that out of the way, it's all yours, Mike.
Thanks, James, and good morning, everyone. We appreciate your interest in the Superior Group of Companies and the opportunity to share the highlights of our company. As James said, my name is Mike Koempel. I'm the president and CFO of Superior Group of Companies, and 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 with the company for over 45 years, including as our CEO for over 20 years. You can see our safe harbor statement here. With that, I'll skip right to what we really see as the attractive investment highlights for our company. We have, as you'll see, three attractive, diversified businesses, all operating in large, profitable growth industries.
They all have had, as you'll see, a history of organic growth across all three businesses, including with strong customer retention of existing customers. Historically, we've had high margin and profitable operations in all three businesses, including the contact center segment, which is our highest margin business. Last but not least, we have a solid balance sheet driven by strong operating cash flow, which supports our return of capital to shareholders, including an uninterrupted dividend since 1977. Now, just giving you a quick snapshot of the revenues since 2018. You can see we just finished a year at $566 million. We've had a compound annual growth rate of 7% since 2019, with, led by branded products and then followed by our healthcare apparel and contact center segments.
With that, I'm now gonna turn it over to Michael to jump into the segments. Michael, you're on mute.
All right.
There you go.
Okay. Good morning, everybody. Thanks for joining us. As you'll find out as we move through this presentation, we're pretty prominent in each of the businesses that we're gonna represent to you today. The first one we're going to talk about is our healthcare apparel. Our healthcare apparel business has been around for 105 years. It's the original business that was started by my great-grandmother back in the day. We have multiple brands that we have in healthcare apparel, basically creating an omni-channel resource for any caregiver who needs healthcare apparel.
We sell institutionally into laundries who service the more acute areas of the hospital with scrubs, and as well as patient gowns and lab coats, as well as the fashion items, which are sold, not only in retail stores, but also sold, digitally, through the likes of Amazon and Walmart, as well as our own direct-to-consumer site. Our brands on the retail side are Wink, and we're a licensee of Carhartt. It's a very iconic brand and popular brand at the moment, and we expect into the future. Our institutional brand is called Fashion Seal Healthcare. Really anybody who's ever worked in healthcare, while they were studying, while they were learning, while they were preparing, for their positions, has worn a Fashion Seal Healthcare scrub or lab coat.
More than two million people go to work every single day wearing our healthcare apparel. This is a market that has a TAM of over $4 billion. It's clear that while we're one of the top five players in the industry, there's still a ton of market share for us to be able to take. As I said, we have all channels of distribution covered, and we feel very comfortable that where we are placed is where we need to be, and there's really nowhere else for us to go. When you look at our list of customers, you can see we have you know, some of the most iconic laundries.
Everybody knows them as well as some of the chains doing all types of work in the healthcare field and very proud of our list of customers. We are quite well known to them. We are quite important to their offerings. Let's jump into our second business segment, which is branded products. You think of branded products sometimes as, you know, the merchandise that is given away at trade shows, the stress balls and the tchotchkes, whatever. That's not really our business. I'm not saying that that's not some of our business. It's a very small part of our business. Our focus is really curating gifts to employees and to loyal customers with people who have large amounts of spend.
So you can think of customer incentive programs, uniform programs, yes, conference giveaways, gifts with purchase, is very common, as well as branded retail revenue-producing merchandise that gets sold on the shelf of our customers. Let's look a little bit behind the numbers in this market. The numbers are. This is a $27 billion market. Yes, you know, even with the economic swings of the last couple of years and the pressure on marketing budgets and HR budgets where most of the spend happens, it hasn't really fallen below that. There are over 25,000 companies that we compete with in this industry, and they range in size from mom-and-pop selling out of their car, you know, to multi-million-dollar businesses like ourselves and larger.
We are the ninth largest, according to an industry publication. We've climbed somewhat from obscurity in the last 10 years to that position. Very, very proud of the growth in that business. We produce tens of millions of branded products every day. Something else to note here is that in our branded products area, which I mentioned earlier, we also have uniforms. Uniforms are a pretty good offering within our branded products category. Over five million Americans go to work every day wearing our uniforms, so very, very proud of that. These are logoed uniforms you could imagine for fast food and airlines and the like. Let's go to the next slide, Mike. We collaborate with some of the largest companies out there. You...
When you look, this is a very small snapshot of our customer base. You go up and down Main Street, look left and right, you're going to see our uniforms. Nearly every day of your life, you're gonna see. If you're gonna have breakfast, you know, you've got Waffle House, you've got IHOP, and you've got Denny's. Throughout your day, you're going to see our uniforms. We really have an exceptional customer offering in this area, and our retention in this area is phenomenal. We consistently deliver, you know, what we promise, both from a product standpoint and from a service standpoint.
When you look at this list, many of these customers not only buy uniforms from us, but also buy their promotional products from us for their employee gifting and their customer gifting in their own websites where they have loyalists who buy their products, as we put them up on the website. Next, Mike is gonna take you through our final segment. Mike.
Thanks, Michael. Contact centers is our third business, which we operate under the banner name 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 across a variety of industries, which you'll see here in a moment. We operate across three nearshore countries, El Salvador and Belize and the Dominican Republic, as well as a small footprint in the state of Florida. By focusing on the small to medium size opportunities, which is really our sweet spot, we provide our clients with high-touch service as compared to larger engagements with thousands of agents that are largely focused on transactional services.
As we provide these services to our customers, we also bring consistent processes, we leverage analytics and technology, including the latest AI solutions, which are all focused on improving our efficiency as well as the customer's experience for our clients. This is another large and growing market. As you can see on the upper left, it's well over $100 billion in the US alone, and our market share is very minimal because, again, we're focused on onboarding clients that are smaller, that often have quickly growing needs. We'll start as low as 10-20 seats, and growing. We can grow those customers into well over 100 seats over a period of time.
This is our single fastest-growing segment with a CAGR of almost 17% from 2018, combined with a strong EBITDA margin of 10% in 2025 and a high net revenue retention consistent with the retention that we've seen in our other segments as well. Also, you can see here we service a wide range of businesses across a very wide range of industries. You can see legal, travel and leisure, and retail, just to name a few, again, with a variety of both inbound and outbound services in a number of capacities for these types of customers. Now, again, zooming back out just to provide some quick financial highlights.
Here, looking at our revenue over a longer time horizon, you can see since 2015, we've grown the business from $210 million in 2015 to $566 million, just in our last fiscal year, with an average growth rate of 10%. We have growth across all three of our segments, as you can see in the upper right-hand side of the slide, and it includes both organic growth as well as acquisitive growth in our healthcare apparel and branded product segments. Looking at our capital allocation priorities, we really have four focuses. The dividend payment, which I mentioned at the beginning. We know that's an important value proposition to our investors. We've paid that dividend since 1977.
We've also been executing a share repurchase program since 2024. We had one program in 2024, which we completed. We initiated a second program in 2025, and we have about $10 million remaining on our current approved plan. Of course, we'll continue to invest in the organic growth of our business. We invest about 1%-1.5% of revenues on a normalized basis to again support the organic growth of our business. Then lastly, mergers and acquisitions. We'll continue to look for strategic acquisitions in our segments that can complement our existing segments, and again, provide some strategic improvement in the business and capitalize on the capabilities that we already have in place. That really, James, concludes our presentation.
I'll kick it back over to you to take any questions that you or the audience might have.
Great. Thanks. Thanks for highlighting the three businesses. Let's just some current events-side questions. You know, tariffs were a big part of this story the last year or so. Can you talk about the impact to SGC from the recent Supreme Court regarding tariffs, and can you talk about your diversity of sourcing and how that's helped you navigate these tariff challenges?
Yeah. I don't know how much time we have left, but we could spend probably the rest of it on that one question, but I'll jump in. You know, the Supreme Court ruling on tariffs, it, you know, doesn't really bring any kind of finality to what's been going on because the current administration is bent on finding ways to implement tariffs using other resources that they have to do so. So we don't believe that it's, you know, those tariffs may go away. There'll be some reimbursements from those tariffs, I'm sure. Who knows how long it'll take? Who knows what that will be? And nobody knows what the replacement for those tariffs will be. So far, I would say we're just holding where we are.
We're not changing our pricing to our customers. We're not really having a lot of discussions with them. I think they understand. Many of them buy products as well, and they know that we're not only their source of supply for, you know, uniforms, but for other products as well. We're just waiting it out at this point. Either way, we believe it'll be a net zero kind of transaction. If tariffs went away, we would lower our prices. We would, you know, be back to where we were before we raised our prices to cover the tariffs. You know, our diversity of sourcing has helped us a lot.
As tariffs have moved from country to country at different levels, fortunately, we have multiple sources of supply, and some of those are our own factories in Haiti, which have operated with little or no tariffs, and as well as others that operate under some free trade agreements in Africa. You know, it has been a constant chess game. I have to admit that we've had a redundant supply chain strategy for decades now, and it's helped us exactly in times like this and through cotton crises and through all kinds of, you know, supply chain, you know, constraints that there have been over the last few decades. This is unprecedented, and fortunately, we've got the right people moving the chess pieces.
As you can see, you know, we have not been terribly hurt by all this going on.
All right. The other big change since you reported is the war in Iran. Can you talk about, you know, are you starting to see your costs rise due to the shipping disruptions and the impact of rising oil prices?
Well, fortunately, we don't bring anything through the Straits of Hormuz, so you know, we're not very worried about that. Rising oil prices will impact our manufacturing. Look, a lot of polyester is an oil-based product. We would expect over time to see some increases. We would also expect that many of our supply partners will absorb a lot of that cost until it's unbearable for them to do so. When it is, they will give us adequate notice so that we can let our customer base know there's gonna be a price increase. Keep in mind that at any given time in our uniform businesses, we have 5-6 months' worth of inventory sitting on the shelf at lower prices.
Even if rising oil prices, we have like a 6-month window before we really have to raise prices. On the promotional products business, while that might impact some of the costs of the products, every order is an ad hoc order that we price at that time. If it's going to cost us more for the logistics or it's gonna cost us more for the product, we're going to price that into the product so that we don't get hurt.
All right. A question from Mike. You know, the balance sheet's gotten a lot better since I first started covering the name about two and a half years ago. Can you update us on where you are now in terms of cash and debt, and what debt level would you be comfortable with if you were to do an acquisition, and how would this impact your share buyback?
We ended the year from a debt and net leverage standpoint in a really good position, James. Really, as Michael and I have said on numerous occasions, you know, we wanna maintain a leverage ratio, you know, in that 2-2.5 times. I mean, that enables us to make the normal, so to speak, investments in the business as well as be opportunistic in the event that there might be an acquisition or something of that nature. We've been able to stay in that zone and do so in a way that does enable us obviously to keep the dividend going. I also mentioned in my prepared remarks the share repurchase program.
You know, we bought back $10 million of stock this past year. Yet still ended with $24 million of cash on the balance sheet, with net debt that was just up slightly over the year before. That's a testament to, you know, we do have a strong balance sheet. We do generate a lot of cash. We generated almost $20 million of operating cash flow in 2025. That was on top of generating about $33 million of operating cash flow the year before. I like where, you know, how we're managing the balance sheet. There's always opportunities for improvement.
You know, I'll never say that we've got the perfect balance sheet, and we'll always look at areas such as inventory to see how we can turn our inventory even more efficiently. There's opportunities there. I think we're well-positioned, again, to support the business as well as take advantage of potential acquisitive opportunities that we might identify as we move forward.
From an M&A view, you know, are you looking at all three of your business segments when you think about acquisitions, or are you focused more on branded products?
Yeah. We're mainly focused in the two of our segments, which would be branded products and our contact center segment. As Michael mentioned, in the branded products industry, there's over 25,000 companies in that space. There's certainly opportunity for us to grow the business through acquisition. We wanna do so in a strategic way, and in a meaningful way. Not interested really in doing multiple small acquisitions that would be a roll-up. It would really be something that we obviously would want to acquire that could really, you know, move the needle, so to speak.
In the contact center space, as I mentioned, we're a nearshore operation, and so we are interested in looking at other geographies in order to expand our service offering to potential customers. That might be an area of interest as, again, as we explore the market.
All right. You know, another topic that's popular with investors right now is AI. You've been adopting some AI, especially in that contact centers business. Are you using that to support your other businesses or, you know, what's the benefit of that and, you know, can you speak to what you've done with AI?
Yes. You know, we had our first AI conference as a company, a strategic meeting, back right before a year before COVID, and nobody was talking about AI back then. But we were. We were no doubt an early adopter of AI in our contact centers. Nearly every transaction that we have with a client's client, whether it's on the phone or whether it's email or text or however it's handled, has AI layered on top of that conversation so that we're able to check the customer sentiment, coach the agent while they're on the phone, look at behavioral issues with a particular customer that we might have seen before with that same customer, to try to guide that customer toward the outcome that we're looking for. We have accent reduction.
We have noise cancellation. I mean, there's so many different layers. QA is actually quality control is actually done oftentimes on 100% of customers' calls. We use AI to dig into all the calls that have been made, which could be tens of thousands of calls, to find out which ones are achieving the highest level of success, so we can emulate those in future transactions or conversations with customers. That's on the call center, but we feel we're way ahead of where most people are in call centers. You know, we're not the largest call center by far. As Mike said, it's over a $100 billion marketplace. There are people out there with hundreds of thousands of employees taking care of customers as agents, and we have about 5,000.
Huge difference between them and us. We're very agile. We're very nimble. We have an AI team at The Office Gurus, which is our call center business, that really is very much on top of what's happening and not afraid at all to implement AI. In fact, are so good at implementing it that we become the implementation partner for a couple of AI companies from our call center. Not only implementation partner, but the company that will help them maintain their customers' AI as we move forward. We will get paid. We are getting paid for that. It's another line of business within our call center businesses. On our branded products business, we're employing AI everywhere.
We're employing it in doing decks for customers, in designing products, product development, engineering, as well as, you know, cost mapping. Recently, you know, we're looking into a lot of other areas, including we have a fair amount of programmers on our staff, where we can use AI to make that a much more efficient and probably get to a higher quality level in our programming, and be able to do a lot of testing using AI. There are efforts all over this company. As a matter of fact, in May, we're bringing together all the businesses just to have another AI discussion, totally focused on that. It's something we're excited about. We see the benefits of it.
You know, you can look at it like, will it eliminate people? Of course, it will. But we're looking for our customers to have a better experience by us layering AI into that relationship. Hopefully, that will result in even higher retention and higher spend on our customers' part.
All right. Just sticking with that contact center business for one more. You know, 2025 you did lose a customer there that went through a bankruptcy. But you've also expanded distribution and you reported that you've seen an increase in the number of leads for that business. Question is, how long do you think it'll take to convert these leads into new business and replace the revenue that you lost due to that customer bankruptcy?
We did see, you know, as you mentioned, we had a bankruptcy last year in the solar industry that was just impacted by government regulations. You know, I think one thing that was actually encouraging to us last year in that segment has been we've built an incredibly large pipeline. Probably, it's at a record level in terms of real opportunities for new customers. What we were experiencing on the flip side was much longer decision-making by these prospective customers than we've seen historically. It's understandable. They're all facing the same uncertain environment that we are. Understandably, they're more cautious about making changes throughout 2025.
What we mentioned in our earnings call in early March is we're starting to see what I would call some green shoots of those prospective customers in our pipeline starting to convert business to new business for us. For that reason, we would expect to start to see the benefit of new customer conversion in the latter half of Q2, and then building for the balance of the year, which I think will enable us to really drive stronger growth in that segment in the back half of the year, and really start to capitalize on the pipeline that we've built in that organization. We're seeing a lot of interest, again, from a lot of different industries, a lot of different sizes of companies.
I think as we talked about before, we've made some investments in sales capability, both talent as well as, you know, Michael mentioned, was talking about AI. We're using AI solutions in the marketing area for that business. We're definitely seeing the benefit of that through the pipeline, and now we're starting to see the conversion of those pipeline opportunities, which will drive benefit to us this year.
All right. If we switch over to Branded Products, there has been some consolidation with your customers there. Can you talk about, you know, what you think of the Cintas/UniFirst merger?
Yeah. That's, you know, both are customers of our healthcare business. Good customers of our healthcare business, as a matter of fact. We figure it will take six months, eight months to get through the regulatory process. It'll take another six or eight months till they figure out, you know, their supply chain and, you know, the redundancy of product that there might be out there. We think it's a good thing. These are two great companies coming together, who by all means are going to take additional market share. You know, the no question about it, as they onboard UniFirst. You know, we're excited. It's a good deal.
You know, the same thing when you go back to Cintas's merger with G&K. Both of them were our customers. It was very helpful to us that when they bought G&K, they could actually buy more than they were buying before between the two of them. We think it's a good thing.
All right. We're getting close to time, so one last one. You know, to me, one of the greatest assets of your company is your ability to adapt. You showed that during COVID when you really stepped up during that healthcare crisis. Last year, when you saw things were slowing down a little, you were very quick to cut costs, to implement some cost savings and maintain earnings in a slower revenue growth year. You know, what do you expect for 2026? Do you have any additional initiatives in place? You know, what do you think is the outlook for 2026?
Our outlook for 2026 is really focused on revenue growth. You know, that's that is our number one priority. With that said, as you mentioned, in the past where we have seen, you know, potential threats to revenue growth or increases in costs elsewhere, you know, we have taken cost reduction initiatives. That's always part of our plan, James, that you know, we'll invest in the business to drive growth. But if we see risk to the business, we always have, I would say, a number of ideas at hand where we can get more efficient, reduce costs if necessary. We'll continue to watch our cost structure very closely.
Michael alluded to the fact that, you know, one of the reasons we look at AI is that could be an opportunity for us to get more efficient and reduce costs, but also deliver more value to the customer, which is very important. We'll continue to keep a close eye on cost and look for efficiencies as we move forward. Again, if the macro environment were to become very challenging, we'll certainly evaluate the need for deeper initiatives as necessary.
Do you expect that revenue growth across all three of the businesses?
We do.
Okay. All right. Great. All right. We are at time. I just wanna say thank you again for taking the time this morning. I know we're gonna keep you busy for the rest of the day with some meetings, so I continue to.
Thanks, everybody. Have a great day
the viewers for taking the time to watch.
Thank you.