In a Nutshell

*Sales rose by 25.6%, but net income was down about $500,000.

*Performance in Superior’s promotional products division was “lower than anticipated,” an executive said.

Superior Group of Companies, parent firm of Top 40 distributor BAMKO (asi/131431), announced Thursday that second-quarter net sales reached $82.4 million, a 25.6% increase over the same quarter the prior year. Still, net income for the quarter declined, tallying $3.8 million, or $0.25 per diluted share, compared to Q2 2017’s $4.3 million, or $0.29 per diluted share.

Looking forward, Superior sees profits coming back up, noting that an acquisition impacted earnings in its fiscal second quarter, which ended June 30. “Earnings…were reduced by a pre-tax charge of approximately $1.6 million, or approximately $0.08 per diluted share, for expenses associated with the acquisition of CID Resources Inc.,” Superior said in a statement.

Michael Benstock, CEO of Superior Group of Companies

Furthermore, Superior said the adoption of ASC 606 rules regarding revenue recognition reduced net sales by $2.9 million, triggering a reduction in net income and earnings per diluted share of $600,000 and $0.04, respectively. After this initial adoption, ASC 606 should not have a major impact on comparative results in the future, Superior said.

Meanwhile, Superior reported that performance in its promo/branded merchandise segment didn’t quite hit the mark. The division includes Public Identity, BAMKO and Tangerine Promotions – a former Top 40 distributor acquired by BAMKO in late 2017. Superior did not break out specific sales and income numbers for the division. However, with reported 2017 North American promotional product revenue of $79.9 million, BAMKO ranks 25^th on Counselor’s just-released list of the Top 40 largest distributors in the industry.

“While our current operating results in our Uniform segment and our Promotional segment were lower than anticipated, we remain confident in our long-term outlook and believe our current investments in these segments will provide significant returns for the company in the future,” said CEO Michael Benstock.

In its earnings release, Superior noted that The Office Gurus, the company’s remote staffing segment, had what was characterized as a strong quarter, with net sales to outside customers increasing by $2.3 million, or 50.6%. Overall, Superior is optimistic about the future. "Over the last year, we completed three acquisitions that have us positioned for significant improvement in our future growth prospects for both net sales and earnings,” said Benstock. “We are highly focused on successfully integrating these acquisitions to achieve the maximum long-term benefits for the company and its shareholders.”