Superior Group (SGC) Q4 2025 Earnings Transcript

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Date

Tuesday, March 3, 2026, at 5 p.m. ET

Call Participants

• Chief Executive Officer — Michael Benstock
• Chief Financial Officer — Michael W. Koempel
• President, Branded Products — Jake Himelstein

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Takeaways

• Revenue -- $147 million, up 1% year over year and 6% sequentially from fiscal Q3 2025, reflecting a back-end-weighted cadence. (Fiscal year ended Dec. 31, 2025.)
• Branded Products Revenue -- $97 million, up 5% year over year and increased by more than $10 million sequentially due to the Three Point acquisition and organic growth.
• Healthcare Apparel Revenue -- $29 million, down 5% year over year, attributed to ongoing "macro uncertainty" affecting both wholesale and institutional healthcare channels.
• Contact Centers Revenue -- $22 million, down 8% year over year, with sequential stabilization after customer attrition not yet offset by new business wins.
• Consolidated Gross Margin -- 36.9%, nearly flat versus the prior-year quarter's 37.1%.
• Branded Products Gross Margin -- 34.4%, up 50 basis points year over year, despite "higher tariffs."
• Healthcare Apparel Gross Margin -- 33.6%, down 10 basis points from the previous year.
• Contact Centers Gross Margin -- 52.6%, down by roughly two percentage points due to "higher agent costs and a shift in our revenue mix" after the Jamaica center closure; partially offset by SG&A reductions.
• SG&A Expense -- Lower by $1.4 million versus prior year, resulting in SG&A at 33.2% of sales, compared to 34.4% a year earlier.
• EBITDA -- $8.6 million, representing a 19% increase from $7.3 million; EBITDA margin improved 90 basis points to 5.9%.
• Diluted EPS -- $0.23, nearly double the $0.13 from the prior-year period, with more than 28% sequential growth.
• Net Income -- $3.5 million, up from $2.1 million year over year.
• Operating Cash Flow -- $20 million for the year.
• Cash and Equivalents -- $24 million at year end, up $5 million over the year’s start.
• Total Liquidity -- Exceeds $100 million, combining cash and revolving credit availability.
• Net Interest Expense -- $1.3 million for the quarter, improved from $1.5 million a year earlier.
• Dividends and Share Repurchases -- $2 million paid in dividends and $2 million spent on share repurchases in fiscal Q4; $10 million remains authorized for further repurchases.
• 2026 Revenue Guidance -- Projected full-year range of $572 million-$585 million, implying up to 3% growth if macro conditions remain stable.
• 2026 EPS Guidance -- Full-year diluted EPS expected between $0.54 and $0.66, above $0.46 reported in 2025.
• Outlook for Margin Expansion -- CFO Michael W. Koempel said, "We would expect to see it in three areas. We do expect some gross margin improvement. We expect to see some of that improvement really in each of the business segments. So I think gross margin expansion will drive some level of improvement. A little bit of improvement on the SG&A line. I think that obviously there are some variables at play there, depending upon the level of revenue that we drive and the investments we might need to make in marketing as well as in some human capital. But then I would say the third piece is we are expecting lower interest expense as well."
• Trend in Healthcare Brands -- CFO Michael W. Koempel stated, "we continue to see significant growth again in both of those product lines. Again, largely within direct-to-consumer, but then also with our wholesale-based customers as well."
• Branded Products Sales Drivers -- President Jake Himelstein highlighted seasonality, "Our Q4 does tend to be traditionally a very strong quarter in the branded product segment because of employee holiday gifts, and this year was no exception."
• AI Adoption in Contact Centers -- CEO Michael Benstock asserted, "solutions that they found. We, in fact, have become the implementation partner for a couple of AI companies to help them implement it in other places that are not competitors of ours."
• Order Backlog and Pipeline -- Management described the Branded Products pipeline and order backlog as "solid," citing new wins already achieved in early 2026.
• Investment in Sales Force -- The company plans to "further expand" its sales force in Branded Products, including hires of both commission-only and salaried salespeople, anticipating a typical ramp period of 12–18 months for productivity.
• CapEx Expectations -- CFO Michael W. Koempel stated, "We are not expecting any major departure from what we have been running," regarding capital expenditures, with no individually significant investments planned for 2026.
• Acquisition Activity -- CEO Michael Benstock described the M&A environment as a "buyer's market," with "quite a robust field," but noted that "most" acquisition targets are "either too small or they are too broken."

Summary

Superior Group of Companies (NASDAQ:SGC) delivered revenue growth and improved profitability in the face of mixed trends across business segments, with margin expansion achieved via cost discipline and selective pricing strategies. Management set 2026 outlook for up to 3% revenue growth and significant EPS improvement, prioritizing further sales force expansion and share repurchases while maintaining flexibility through an ample liquidity position. The company stated that AI technology adoption is delivering efficiency gains and competitive differentiation in its contact center business, and described sizable pipelines for both new and existing client growth across all segments, supporting expectations for back-end-weighted performance in the coming year.

• Management anticipates improved working capital, with inventories targeted for reduction to boost cash flow.
• SG&A reductions were achieved in all three business segments, despite continued investments in sales, marketing, and technology.
• The closure of the lower-cost Jamaica center in July weighed on contact center margins but was more than offset by cost-control initiatives, including the use of AI.
• The direct-to-consumer channel for the Wink and Carhartt brands in healthcare apparel is experiencing ongoing "significant growth," despite overall sales softness in that segment during the quarter.
• The company expects growth in the contact center business to materialize primarily in the latter part of the second quarter and the back half of 2026, based on early pipeline conversions.
• Order size in Branded Products has decreased, but total segment growth has been maintained through increased market share, according to management commentary.
• Michael Benstock described current customer decision-making "velocity" as constrained, linking it to heightened geopolitical and economic uncertainty, with no indication that such patterns have fully normalized.
• Approximately $10 million remains available for future share repurchases, reflecting a continued emphasis on capital returns.

Industry Glossary

• SG&A: Selling, General, and Administrative expenses, encompassing all operating costs not directly tied to production or sales of goods.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization; an indicator of operating profitability.
• RFP: Request for Proposal; a process inviting bids from potential vendors or service providers in competitive contract procurement.

Full Conference Call Transcript

Michael Benstock: Thank you, operator, and thanks everyone for joining our call. I'll begin with an overview of our fourth quarter results followed by a discussion around market conditions. I'll also cover at a higher level how each of our business segments is performing along with some of our go-forward strategies. Michael will then walk us through a more detailed financial review, before we open it up for Q&A, for which we will be joined by Jake Himelstein, President of our Branded Products business. For the fourth quarter, solid growth in our branded products segment helped drive Superior Group of Companies, Inc. to an overall modest year-over-year increase in revenues; we also lowered expenses despite this growth.

As a result, we generated 19% higher EBITDA than the year-ago quarter, and our EPS nearly doubled to $0.23. In addition, as expected, fourth quarter results reflected the back-end-weighted nature of our business, with revenues up 6% sequentially and diluted earnings per share up more than 28%. Our outlook for Superior Group of Companies, Inc. for 2026 that Michael will share in a moment reflects solid growth expectations for the year, again with a back-end-weighted cadence due to expected order patterns and anticipated new customer growth in our contact centers segment. Turning to market conditions, there remains a degree of economic uncertainty amongst customers and prospects across all of our business lines.

Nevertheless, we were able to grow consolidated revenues during the fourth quarter. Again, the progress we have made in driving efficiencies and containing costs, as you see from our bottom-line performance reported today, should prove beneficial once macro conditions normalize and stronger demand returns. Taking a step back, our overarching strategy is to emerge stronger from these currently uncertain economic and geopolitical times with even greater market share as we have through past complex macro cycles. Our leadership team will accomplish this by continuing to strategically invest in growth while at the same time driving efficiencies and removing unneeded costs from the business.

Moving on to our business segments, Branded Products, our largest segment, had 5% year-over-year growth during the quarter or 14% sequential increase despite the challenging tariff environment’s impact on customer order patterns throughout the year. Our pipeline and order backlog remain solid and have already generated some large new wins this year. Looking ahead, we will be focused on growing our market share further in this attractive, highly fragmented market. Specifically, we anticipate further expanding our sales force as well as leveraging technology to make new and existing reps even more efficient.

Turning to healthcare apparel, revenue was off 5% year over year in the fourth quarter, which reflects macro uncertainty for both our wholesale-related consumer channels and institutional healthcare apparel. Similar to branded products, we are investing to grow demand, in this case to support our Fashion Seal, Wink, and Carhartt brands, while at the same time keeping a watchful eye on expenses. In fact, versus the year-ago quarter, despite continued marketing investments, we were able to drive a slight decline in SG&A resulting in a positive outcome for EBITDA. Going forward, we see opportunities to grow our digital and brick-and-mortar wholesale channels as well as our own direct-to-consumer channel, which continues to have momentum.

Our third business segment, contact centers, represents 15% of consolidated revenues, and saw an 8% annual decline in the top line driven by the downsizing and loss of existing customers from earlier in the year that have not yet been outweighed by new customer growth. Prospective customers have been slow to commit given the economic uncertainties, but our pipeline remains solid even after producing customer wins early this year and should translate into further growth, particularly in 2026. In addition, we are again controlling what we can. We reduced SG&A for contact centers by nearly $1 million, or 10%, versus the prior-year quarter, driven by streamlining our cost structure, including the strategic use of AI.

In closing, we are cautiously optimistic about the year ahead, and our strong balance sheet that Michael will discuss allows us to intelligently navigate current market conditions while positioning Superior Group of Companies, Inc. for long-term success. We also bought back a significant number of shares during the quarter, reflecting our belief that our stock has a compelling long-term value. Michael will now take us through a more detailed review of fourth quarter results; we will open it up for Q&A with Michael, Jake, and myself. Michael?

Michael W. Koempel: Thank you, Michael, and thank you again, everyone, for joining today's call. During the fourth quarter, we generated consolidated revenue of $147 million, which was up 1% year over year and up 6% sequentially from the third quarter, demonstrating the back-end-weighted cadence of our revenue as expected. Our largest segment, Branded Products, grew revenue 5% over the prior-year quarter to $97 million, primarily driven by revenue growth from the Three Point acquisition in December 2024 followed by modest organic growth. Sequentially, branded products grew quarterly sales by more than $10 million, fulfilling our back-end-weighted expectations.

Healthcare apparel is our next largest segment, which produced revenue of $29 million relative to $30 million a year earlier, as the macro uncertainty for wholesale-related consumer and institutional health apparel channels that Michael mentioned continued to weigh on growth. Rounding out our segments, revenue for contact centers was $22 million as compared to $24 million in the prior-year period, as customer losses and reductions with existing customers exceeded gains from new customers. Although we have started 2026 with early momentum, driven by a few conversions of our pipeline opportunities, as Michael mentioned.

We are cautiously optimistic that additional new opportunities will provide meaningful benefit starting in the latter part of the second quarter and drive year-over-year growth in the back half of the year. Looking at the bigger picture, continued tariff and economic uncertainty notwithstanding, our business pipelines across all our business segments remained solid to end the year and, as mentioned, we have yielded some important new wins in early 2026 thanks to our attractive competitive positioning and the investments that we have made in sales talent and marketing strategies. Assuming macro conditions continue to normalize, with some improvement in economic uncertainty ahead, we expect sales growth for all three segments in 2026, as I will speak to in a moment.

Moving down the income statement, our consolidated fourth quarter gross margin of 36.9% was nearly flat with the prior-year quarter's 37.1%. On a more granular basis, our Branded Products gross margin came in at 34.4%, up 50 basis points versus the prior year despite higher tariffs. Our healthcare apparel gross margin of 33.6% was nearly flat, off just 10 basis points. And for contact centers, gross margin was down about two percentage points to 52.6% due to higher agent costs and a shift in our revenue mix associated with the July closure of our lower-cost Jamaica center, which was more than offset by SG&A reductions.

Overall, Superior Group of Companies, Inc. made good progress reducing SG&A compared to the year-ago quarter, by about $1.4 million despite overall positive revenue growth. As a result, SG&A as a percent of sales came in at 33.2% for the fourth quarter, an improvement relative to 34.4% a year earlier. In fact, we were able to reduce SG&A across all three business. Putting it all together, our fourth quarter EBITDA of $8.6 million was up from $7.3 million in the year-earlier period, with our EBITDA margin improving by 90 basis points to 5.9%.

Turning to net interest expense, it was $1.3 million for the quarter, an improvement relative to $1.5 million in 2024, benefiting from a lower weighted average interest rate. Lastly, our fourth quarter net income of $3.5 million was up from $2.1 million in the prior-year period, and this equated to $0.23 of diluted EPS, up from $0.13 in the year-ago period. Shifting gears, our balance sheet remains solid with $24 million of cash and cash equivalents at year end, which was up $5 million versus the start of the year. We generated $20 million in positive operating cash flow during the year. And we remain well within covenant compliance.

Our total liquidity, including cash and availability under our revolving credit facility, is over $100 million, allowing for the continued execution of our growth initiatives while also returning significant capital to shareholders. In fact, during the fourth quarter, we paid out $2 million in dividends and another $2 million to repurchase our shares, which we consider a compelling value. We ended the year with approximately $10 million still available under our share repurchase authorization. Turning to our outlook for 2026. We are setting an initial full-year revenue range of $572 million to $585 million, which assumes no significant change in macro conditions due to geopolitical or other events, and implies 3% growth at the high end.

Taking these factors into consideration, we are also expecting full-year earnings per diluted share to be in the range of $0.54 to $0.66, suggesting significant improvement over $0.46 in 2025. Consistent with prior year, we expect a back-end-weighted cadence in 2026 for both the top and bottom lines. We feel confident in our outlook given our recent momentum, competitive advantages, growing pipelines of new business, and the attractive nature of the end markets we serve. And now, operator, if you could please open the lines, Michael, Jake, and I will be happy to take questions.

Operator: Thank you. We will now begin the question and answer session. The first question will come from Michael Kupinski with Noble Capital Markets. Please go ahead.

Michael Kupinski: Thank you for taking the questions and congratulations on your quarter. A couple of questions. I know that you have been investing in your Wink and Carhartt brands for some time, and I was wondering if there are some green shoots on how those investments have been paying off. And so I was wondering if you can get us an update there. And in addition, can you give us an update on the market environment for the healthcare apparel sector overall? Both from the standpoint of the direct-to-consumer side and also from the institutional uniform side of the business.

Michael W. Koempel: Hi, Michael. This is Mike. I'll take your questions. You know, what we are seeing on our branded healthcare apparel, the Wink brand, and then obviously, the license we have with Carhartt is still, you know, overall positive. I mean, we are continuing to see growth of those brands in our direct-to-consumer channel. You know, I know at this point, we have not disclosed specifics on that, and at some point, we will down the road as it continues to get bigger. But we continue to see significant growth again in both of those product lines. Again, largely within direct to consumer, but then also with our wholesale-based customers as well.

We had a little bit of softness in Q4, a couple of customers, which is why you saw the comp in healthcare apparel down in Q4. But we are seeing more positive momentum with those brands in the retail environment as we started off for 2026, which is why, as I mentioned in my prepared remarks, our expectation is growth overall in the healthcare apparel segment.

Michael Kupinski: Great for the color. Thank you. And then on contact center side, it appears that the revenue stabilized in the quarter. And I know that you indicated that the pipeline has improved. Are we still seeing some macro-driven hesitancy there? I was just wondering if are we starting to see some of that abate in the first quarter? Can you just kind of give us some sense of how new business is new, the environment is kind of improving there? I know that you are saying that it looks like it is back-half weighted there as well, but I was just wondering if you can give us a sense of how the pipeline is improving for that segment.

Michael Benstock: Mike, it is Michael Benstock. I am going to jump in and say something, and I will turn it over to Michael, who I think will have a more direct answer. But overall, in all of our businesses, we are still seeing this hold pattern of customers' decisions, ordering, deal-closing velocity just to us seems constrained. Sat in a meeting with other CEOs yesterday, a large group of CEOs, and that was the consensus. Everybody is feeling the same constraints. And the constraints are coming from the geopolitical climate, and the economic uncertainty. And had I said that a week ago, I would have said, well, you know, it is getting better.

But in the last week, a lot has happened to probably elevate that uncertainty for even a longer period of time. I think customers are waiting for clear market signals before making decisions. Now, having said that, we are seeing some very positive signs in the contact center business. I will let Michael get into that a little bit.

Michael W. Koempel: Sure. I would say, Michael, the best way to put it is we are cautiously optimistic. I mean, we certainly do not want to get ahead of ourselves, but I think that we, as you know from following us quarter to quarter in 2025, there was a significant amount of hesitancy and we were not seeing that pace of new customer growth that we had seen historically yet, again, as we spoke about in multiple quarters. A really strong pipeline. So we are encouraged by some of the movement we have seen here at the beginning of the year on the new customer front.

We are feeling also at the same time right now positive about the status of our existing customer base. Again, you might recall last year, we did have some challenge with respect to bankruptcy, some bankruptcy customers in the contact center space. Again, as of this point, we do not see that type of risk. So we are cautiously optimistic. And as I mentioned in my prepared remarks, we would expect to see some growth in the latter part of Q2, which would then bode well for us to drive a stronger growth in the back half of the year.

Michael Kupinski: Got you. One last question. On the branded product side, you mentioned about expanding the sales force. And I was wondering, we saw some nice growth in this quarter. I was wondering, in terms of the increase in revenue that we saw in the quarter, was that a result of the expanded sales force or were there other things at play in the revenue growth that we saw in the quarter?

Jake Himelstein: Hey, Michael, this is Jake Himelstein. To answer that question, it is a variety of factors. It certainly is part of our recruiting efforts to bring in additional salespeople. We have talked about it before, but we are very, a very desirable landing spot for salespeople in our industry. There are 100,000 people that sell products, branded products, across the country, and we are a very desirable landing spot because of the capabilities we have. But, you know, it was also because of some really good underlying fundamentals we had. Great program wins, really strong orders.

Our Q4 does tend to be traditionally a very strong quarter in the branded product segment because of employee holiday gifts, and this year was no exception.

Michael Kupinski: Perfect. Thanks for all the color, and congrats again.

Operator: The next question will come from James Philip Sidoti with Sidoti & Co. Please go ahead.

James Philip Sidoti: Hi, good afternoon. Thanks for taking the questions. I think the most impressive part of the quarter was you were able to basically double your EPS on flat revenue. So it shows you have done a pretty good job adapting to the current business environment. But looking ahead, you expect to grow revenue maybe about 2% or so next year, and you are looking for some pretty healthy EPS growth. Where do you expect the margin expansion to come from? On the gross margin or on the SG&A line? Can you give us a sense—

Michael W. Koempel: Jim, this is Michael. I will take the question. We would expect to see it in three areas. We do expect some gross margin improvement. We expect to see some of that improvement really in each of the business segments. So I think gross margin expansion will drive some level of improvement. A little bit of improvement on the SG&A line. I think that obviously there are some variables at play there, depending upon the level of revenue that we drive and the investments we might need to make in marketing as well as in some human capital. But then I would say the third piece is we are expecting lower interest expense as well.

We expect to drive against some continued improvement in working capital. We know that we can bring inventories down, which we have demonstrated in the past, and drive a lot of cash flow. So we are expecting to get a benefit out of lower debt outstanding, as well as interest rates versus 2025.

James Philip Sidoti: I did notice your accounts receivable ticked up in the fourth quarter. Has that already started to come down? And do you think that will come back to historical levels in Q1 and Q2?

Michael W. Koempel: Yes, there is nothing unusual there, Jim. It is really just the timing of sales. I mean, December was a really strong month for us. And so it is really just the timing of orders year over year. And so we will collect those receivables within our normal pattern and will be cash flow positive for us here in the first half of the year.

James Philip Sidoti: And can you comment on what the acquisition environment looks like? Are there more targets out there than there were twelve months ago, or less, or pretty much the same?

Michael Benstock: Oh, it is a deck a day. It is quite a robust field out there. And Jake, in particular, is fielding a lot of these. Most of them, quite frankly, we have no interest in. They are either too small or they are too broken. And they have no great value to us, but we are always looking. And I cannot say we are in really serious discussions right now with anybody on that side. And the same thing is true on The Office Gurus side. We have companies that we like. We have companies that we are talking to. We have companies we are digging into a little bit.

And particularly, as we said with The Office Gurus, in the Philippines, we do want a presence there, and we have been looking for a path for that. Absent finding that path, we will open up our own center in the Philippines. We feel like we can do it faster and cheaper by purchasing another company. But it is a very robust market out there. I think everybody is worried; it is not only the macro environment. It is, you know, people worrying about how AI is going to impact their business because they have invested nothing in it. And they see us as a way, a path forward, because they know we have.

And feel like we will be one of the last men standing in this race in all of our businesses. So it is a good time. It is definitely a buyer's market at this point.

James Philip Sidoti: All right. And then last one for me. CapEx has been around $4 million or $5 million the past couple of years. Do you anticipate any big expenditures this year? Do you have to make any big investments? Or do you think that is kind of a good run rate for 2026?

Michael W. Koempel: We are not, Jim, we are not expecting any major departure from what we have been running. We are planning for something in 2026 that is a little bit higher, but again, there is nothing that I would call at this point that is individually significant in nature. I think that we have made a big investment a few years ago, which we are able to leverage. And so, again, not expecting anything significant next year.

James Philip Sidoti: Alright. Thank you. That is it for me.

Operator: The next question will come from Keegan Tierney Cox with D.A. Davidson. Please go ahead.

Keegan Tierney Cox: Hey, guys. I just wanted to ask, you kind of talked about the AI piece of the business, especially, you know, helping improve sales and then in your contact center business. So I guess, what kind of AI tools are you guys currently using across the platform?

Michael Benstock: We are using many tools. Some we would not disclose on this call. We do not necessarily need all of our competition knowing what tools we are using. Some of them are proprietary. But essentially, we are monitoring just about every call that we are taking, which are hundreds of thousands of calls a week. And we are able to score them immediately. We are able to coach the agents on the spot as the call is progressing. We are able to set up all kinds of coaching opportunities afterwards. We are doing accent smoothing. We are doing noise cancellation. I mean, we are doing a lot, some of which I really would prefer not to disclose.

I mean, obviously, when we get into customer presentations or prospect presentations, we do disclose it because that is what helps us win the business. But I can tell you we are not behind the curve at all when it comes to AI and call centers. Most people are talking the game about what they should do and are having a terrible time trying to implement the different solutions that they found. We, in fact, have become the implementation partner for a couple of AI companies to help them implement it in other places that are not competitors of ours. And only because we have done it so many times.

You can imagine that when we implement an AI solution or a group of AI solutions to our centers, we are doing it to 20, 30, 40 customers, and every one of those is unique. Remember, they are all operating on different technologies. They bring their own technology to our center. So our implementation has to integrate with their technologies. And we have been able to do dozens of these. So they see us as a great path to creating a better implementation, which is what most people are struggling with right now.

Keegan Tierney Cox: And then, follow-up, just wanted to talk a little bit about the margin improvement in branded products. As I look, it is almost 250 basis points, 300 basis point improvement sequentially. Better gross margins, you know, on a full-year basis than in 2023 despite tariff pressure. I was just kind of wondering if you could parse out how much of the margin improvement you guys are seeing is on pricing versus cost reduction.

Jake Himelstein: It is both. Right? I do not think you can really split it out between the two, and it really does come from both. We are aggressively going out and searching for not just the lowest cost, but the best vendors globally. So when the tariff environment changes in one region or another, we will move between regions, and we do that better than just about anyone out there on the branded product side. So, you know, Keegan, we definitely see it as it relates to the cost side, but we are also really purposeful about exploring price ceiling and making sure that we are selling at the highest price we can.

And, you know, not all business is good business. And the clients that work best for us are the ones that see the value in what we are able to do, and ones that appreciate what we do. And so we are not in a race to the bottom. And that is not our business model on the branded product side. But, yes, it really does come down to both things you said. It is making sure that we are selling at that, you know, a fair, but, you know, the highest price that we can offer, and then also negotiating the best possible cost globally with our supplier network.

Keegan Tierney Cox: Got it. And then the last question is on if you guys are expecting any margin impact from investing in salespeople in the branded product segment. I guess, how do you balance adding salespeople with ongoing cost-saving SG&A reductions?

Jake Himelstein: So, Keegan, the best way to think about it is there are two types of salespeople that we look at. Some are commission-only, which means that they only get paid if they sell. And there are some that are salaried. And as we bring on people with salaries, which we have done and will continue to do, there is an investment period, and that investment ramp-up can be a year to eighteen months until they are actually seeing revenue come in the door. We are constantly bringing on new salespeople, both commission-only and salary, to build that base of salespeople. Right? The more people we have out there selling our product, the more opportunities we have with large enterprise opportunities.

So you hit the nail on the head. We are actively investing in new salespeople and sales management to be able to grow our future sales. And, again, that does not pay off today. It pays off twelve to eighteen months from now.

Keegan Tierney Cox: Awesome. Guys.

Operator: The next question will come from David P. Marsh with Singular Research. Please go ahead.

David P. Marsh: Hey guys, congratulations on the quarter. It is really, really good print. So, yes, I just wanted to run through each line. A couple of specific questions. On the branded product side, I mean, it is really nice, your number. I mean, could you talk about how that breaks down between, like, new customer wins and share with existing customers in terms of growth with existing customers?

Jake Himelstein: We really look at growth across the board. And the reason I say that is if you get to these large, large companies in our space, we are talking, like, Fortune 100 companies. A lot of them, we have so much potential to sell more to them that you get to a new department or to a new buyer, and it is almost like bringing on a new client. So a lot of times when we are talking to our sales team, we are telling them, you know, the best new client is an existing client. We can grow so much with existing, and there is so much opportunity there.

But the other side of that is we are actively involved in RFPs to bring on new logos. So we are preaching both. It is expand share of wallet with existing. Right? Might be selling them uniforms, but we also want to sell them promotional products. We also want to sell them point-of-purchase and point-of-sale displays. We also are actively involved in RFPs and then trying to bring on new logos. Our pipeline is really, really strong relative to recent periods. Now, exiting Q4, our RFP pipeline was meaningfully higher than the same period last year. And the good news is the skew, like, mix of the skew of it is towards larger enterprise programmatic clients.

That is the clients we want. Ones that are spending significant money; we are building programs for them. So we have already seen some of these RFPs in the pipeline convert in Q1. We expect a couple more to convert, which will drive revenue growth through 2026.

Michael Benstock: Let me color. Yes. I do not know if you have—in the last few quarters, we have said that our average order size has actually come down. But we have actually been able to grow the business. So when you look at that, I mean, the only conclusion you can draw from that, if your average order size is coming down but somehow you have grown the business, yes, some of that could come from price for sure. But most of that is just increased market share.

And we should see, when things get back to normal, all these customers—customers who were ordering less, ordering less expensive items, ordering fewer items—make it back to normal, we should be cranking on all cylinders.

David P. Marsh: Appreciate that, Michael. That is great color. Turning to the healthcare side, can you just talk about the state of the business? I mean, it just feels like this business at some point needs to share some growth overall. I mean, can you just talk about your assessment of your own market share and kind of the behavior of your competition in the marketplace, and I mean, we have to be adding more nurses and more doctors, I would think. And I think you would see some growth here overall in the market. Just talk about what your expectations are there and the market dynamic?

Michael W. Koempel: Sure. I mean, we are still very positive about the market overall. As you said, there is a shortage of healthcare workers, which is certainly going to be a benefit to this business over time. And we feel there is an opportunity for us to get an additional portion of that market share. What we have seen more recently, as I mentioned I think with an earlier question, we have seen a little bit of softness on the retail side of the business with a couple of customers in the digital space in the fourth quarter. We see that actually starting to improve here as we start 2026, so feeling more encouraged by that.

And then we have, I think, over the last couple of quarters, seen some pressure on the institutional healthcare side where spending by hospitals has been a little bit constrained just given some of the uncertainty and some of the government actions that have taken place. And so we are hopeful that improves on that side of the business as we head into 2026. But we are focused on continuing to drive brand awareness for our Wink brand. As I mentioned before, we are very happy with our exclusive license with Carhartt and the growth of that business, and we believe we can continue to grow those brands.

And again, as I mentioned before, starting to see some of the retail challenges that we experienced in Q4, we are starting to see some, like, I guess you would call green shoots in terms of positive change in trend as we are heading here into 2026.

David P. Marsh: Got it. Appreciate that. And then just lastly on the contact center business, I mean, in terms of just in terms of kind of overall business outlook for that segment, obviously, you guys took a hit with a customer bankruptcy, but it seems like—yeah. I am guessing that the rest of the portfolio has held up pretty well, but, I mean, you are just having a tough time backfilling that significant customer loss. And just could you just kind of assess kind of overall competitive dynamic of that marketplace?

Michael W. Koempel: Sure. We have had the challenge with not having the pace of new customer growth that we have historically had to offset some of the losses. And there is always going to be a level of churn in the business, as you would expect in any business. And we had, you know, two challenges. We had a higher level of turnover due in part to the bankruptcies than we have seen before. And just the decision-making of prospective customers had just been extremely slow. You know, two dynamics we had not seen, you know, before in that business happening at the same time. Again, as I mentioned in prior remarks, we are seeing that shift.

We believe that the base of our customers is more stable. We do not foresee any major bankruptcies or things of that nature, based on what we know today. And we have already had some conversion of what we call pipeline opportunities, which, again, we believe will lead to growth starting in the latter part of the second quarter into the second half. So, like I said, we are cautiously optimistic. We are encouraged, whichever words I guess you prefer. I think we are happy to see that we are seeing a shift here as we start the year. And we are going to stay focused on converting as many opportunities as we can in that market.

David P. Marsh: Got it. Thanks, Michael. Appreciate that. That is all for me, guys. Thanks so much for taking the questions.

Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Michael Benstock for any closing remarks.

Michael Benstock: Thank you, operator, and thanks, everyone, for joining us today. As always, we appreciate your interest in Superior Group of Companies, Inc. You heard today that we will continue buying back our stock as we believe it is grossly undervalued. It is in our shareholders' best interest that we do so. I want to thank our hard-working team for their outstanding efforts in a really challenging macro environment. They just have done a wonderful job to continue making the most of what they were able to of 2025 and now into 2026. And, of course, we thank our loyal customers for the business they give us and the trust they have in us each and every day.

As a firm, we will always try to do what we can do in our attractive businesses to create significant shareholder value. We look forward to seeing many of you during upcoming conferences and road shows. In the meantime, please do not hesitate to reach out with any additional questions. Thank you again for your interest in Superior Group of Companies, Inc., and enjoy the evening.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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