Top 40 distributor BAMKO’s (asi/131431) total sales declined by 3.8% year over year in the third quarter of 2023, tallying $83.51 million.

Through the first nine months of the year, BAMKO’s sales were down about $41 million, or 14%, compared to the same period in 2022. Revenue registered just under $245 million through the end of September, according to a tally of figures in a financial report released Nov. 6 by Superior Group of Companies (SGC), BAMKO’s publicly traded parent firm.

Still, BAMKO CEO Jake Himelstein – a member of Counselor’s Power 50 list of promo’s most influential people – told ASI Media that there are reasons for optimism.

For one thing, Q3 sales were the highest of any quarter so far this year. For another, gross margin improved year over year in the third quarter, rising from 30.2% in 2022’s Q3 to 34.6% in Q3 2023, Himelstein said.

That helped contribute to SGC’s branded-products segment – essentially, BAMKO – increasing adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from about $5.6 million in Q3 2022 to $7 million in this year’s third quarter, executives said. For the year, segment EBITDA is up 5.4% to $21.45 million, despite the topline sales retreat.

While #promoproducts industry growth slowed in Q3, especially for the largest distributors, there were positives to report -- including a healthy level-headed optimism about Q4. Stats, graphics, and lots of insights from distributors.https://t.co/omwsy8HS3Q

— Chris Ruvo (@ChrisR_ASI) November 1, 2023

“We are seeing a number of positive leading indicators of increased spend among our clients and prospects alike,” Himelstein told ASI Media. “Notably, demand for holiday orders has significantly outpaced last year, and we’ve seen our order pipeline steadily increasing over the past five months. Factors bolstering this pattern of increased demand have been stronger earnings from our tech clients, continued low unemployment numbers, and better than expected GDP growth.”

Earlier this year, Himelstein said macroeconomic headwinds in the technology and gig economy sectors – big end-markets for BAMKO – had been key factors in the sales slump.

BAMKO’s Q3 performance was generally in tune with the collectively tepid tenor of sales results produced by promo’s largest distributors in Q3. ASI Research shows that distributors that annually produce revenue of more than $5 million generated an average year-over-year sales increase of just 0.3% in the third quarter.

BAMKO increased full-year annual sales 80% in 2022 thanks to a successful integration of another SGC business, contributions from acquisitions and organic growth. Its $387.9 million in 2022 North American promo revenue led to the firm ranking eighth on Counselor’s most recent list of the largest distributors in the industry.

A Dimmer Financial Forecast for SGC’s 2023

Beyond BAMKO, SGC has two other business segments: healthcare apparel and contact centers. Across all three segments, SGC’s total company sales decreased 1.9% on an annual basis in Q3 to $136.1 million.

Net income was $3.1 million, or $0.19 per diluted share, compared to a net loss of $12.7 million, or -$0.80 per diluted share, for the third quarter of 2022. Last year’s heavy Q3 loss was tied to impairment charges that didn’t recur in this year’s comparable quarter. If you remove those impairment charges, net income in 2022’s Q3 would have been $4.4 million, or $0.27 per share.

Through the first nine months of 2023, SGC’s total sales were down 8%, coming in at $396 million. Net income for the first nine months was $5.2 million, or $0.32 per diluted share.

$3.1 Million
SGC’s company-wide net income in Q3 2023.

Amid worse than anticipated performance, SGC lowered its total company sales forecast for full-year 2023 from a range of $550 million to $560 million to a range of $538 million to $545 million. Earnings per share outlook dimmed a bit, with the predicted range for 2023 now $0.46 to $0.53, compared to an earlier forecast of $0.45 to $0.55.

Even so, SGC CEO Michael Benstock pointed to positives.

In Q3, “we delivered stronger sequential results that are consistent with our back-end weighted full-year outlook, while again producing positive free cash flow, further reducing debt and strategically investing to capitalize on future demand,” Benstock noted. “Our board’s latest quarterly dividend approval reflects our shared confidence in the opportunities across all three of our attractive end-markets, and our ability to further enhance shareholder value.”