Superior Group of Companies Inc (SGC) 2023 Q3 法說會逐字稿

Good afternoon, everyone, and welcome to the Superior Group of Companies' third-quarter 2023 conference call. With us today are Michael Benstock, Chief Executive Officer; and Mike Koempel, Chief Financial Officer. And as a reminder, this conference call is being recorded.

大家下午好，歡迎參加 Superior Group of Companies 2023 年第三季電話會議。今天與我們在一起的有執行長 Michael Benstock；和財務長 Mike Koempel。提醒一下，本次電話會議正在錄音。

This call may contain forward-looking statements regarding the company's plans, initiatives, and strategies, and the anticipated financial performance of the company, including but not limited to sales and profitability. Such statements are based upon management's current expectations, projections, estimates, and assumptions.

本次電話會議可能包含有關公司計劃、舉措和策略以及公司預期財務業績（包括但不限於銷售額和盈利能力）的前瞻性陳述。此類陳述是基於管理層目前的預期、預測、估計和假設。

Words such as expect, believe, anticipate, think, outlook, hope, and variations of such words and similar expressions identify such forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements.

期望、相信、預期、思考、展望、希望等詞語以及這些詞語的變體和類似表達方式識別出此類前瞻性陳述。前瞻性陳述涉及已知和未知的風險和不確定性，可能導致未來結果與前瞻性陳述所暗示的結果有重大差異。

Such risks and uncertainties are further disclosed in the company's periodic filings with the Securities and Exchange Commission, including but not limited to the company's most recent annual report on Form 10-K and the quarterly reports on Form 10-Q.

此類風險和不確定性在公司向美國證券交易委員會提交的定期文件中進一步披露，包括但不限於公司最新的 10-K 表年度報告和 10-Q 表季度報告。

Shareholders, potential investors, and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The company does not undertake to update the forward-looking statements contained herein except as required by law. And now I'll turn the call over to Mr. Michael Benstock.

我們敦促股東、潛在投資者和其他讀者在評估本文中的前瞻性陳述時仔細考慮這些因素，並警告不要過度依賴此類前瞻性陳述。除法律要求外，本公司不承諾更新本文中包含的前瞻性聲明。現在我將把電話轉給邁克爾·本斯托克先生。

Thank you, operator, and thanks, everyone, for joining us today. I'll start by highlighting our consolidated third-quarter results, along with a discussion around our strategies that are setting us up for continued growth and margin expansion.

謝謝運營商，也謝謝大家今天加入我們。首先，我將重點介紹我們的第三季綜合業績，並討論我們的策略，這些策略為我們的持續成長和利潤率擴張奠定了基礎。

I'll walk through each of our segments and what we're doing to even more profitably grow each of our businesses. And then I'll turn it over to Mike to provide additional detail on our quarterly results as well as our updated full-year outlook. We'll then open the call for Q&A.

我將介紹我們的每個細分市場以及我們正在採取的措施，以更有效地發展我們的每項業務。然後我會將其轉交給麥克，以提供有關我們季度業績以及更新的全年展望的更多詳細資訊。然後我們將開始問答環節。

Earlier in the year, we discussed the back-end weighted nature of our financial performance this year. And as expected, our third-quarter results were the strongest of the year so far, reflecting sequential improvement across the business.

今年早些時候，我們討論了今年財務表現的後端加權性質。正如預期的那樣，我們第三季的業績是今年迄今為止最強勁的，反映出整個業務的連續改善。

We generated consolidated third-quarter revenues of $136 million, down only 2% year over year, which was a significant improvement over the second quarter's 13% year-over-year decline and up 5% from the second quarter. Our third-quarter consolidated adjusted EBITDA of $9.3 million is the highest quarterly result year to date, down just slightly compared to the prior year's $9.7 million, but up $1.8 million from the second quarter.

我們第三季的綜合收入為 1.36 億美元，年比僅下降 2%，與第二季年減 13% 和環比增長 5% 相比有了顯著改善。我們第三季綜合調整後 EBITDA 為 930 萬美元，是今年迄今為止最高的季度業績，與去年同期的 970 萬美元相比略有下降，但比第二季增加了 180 萬美元。

Lastly, diluted EPS of $0.19 was down from adjusted EPS of $0.27 a year earlier, excluding last year's impairment charge, but up $0.11 sequentially from the second quarter. The effect of the economic conditions on our business differs customer by customer, market by market, and segment by segment.

最後，稀釋後每股收益為 0.19 美元，低於去年同期調整後每股收益 0.27 美元（不包括去年的減損費用），但比第二季度連續增長 0.11 美元。經濟狀況對我們業務的影響因客戶、市場和細分市場而異。

We see conditions slowly improving as clients are starting to buy more, rebrand more, and issue more RFPs than past periods. Again, it is really on a customer by customer, market by market basis. While we're feeling optimistic about the long-term outlook, our success will be determined by our teams remaining focused on what we can control.

我們看到，隨著客戶開始比過去時期購買更多產品、重塑更多品牌並發出更多 RFP，情況正在慢慢改善。再說一次，這實際上是基於一個客戶一個客戶、另一個市場一個市場的基礎上的。雖然我們對長期前景感到樂觀，但我們的成功將取決於我們的團隊是否繼續專注於我們可以控制的事情。

This includes continuing to drive positive cash flow and further strengthening our balance sheet, while also increasing our investments to support longer-term growth when conditions normalize.

這包括繼續推動正現金流並進一步加強我們的資產負債表，同時增加我們的投資，以在情況正常化時支持長期成長。

Adhering to this focus, year to date we were able to generate operating cash flow of $59 million through continued reductions in working capital and lower capital expenditures. We ended September with an improved net leverage ratio of 2.9 times covenant EBITDA, a full turn better than at the start of the year after significantly reducing our net debt by $48 million year to date.

秉承這一重點，今年迄今為止，我們透過持續減少營運資本和降低資本支出，創造了 5,900 萬美元的營運現金流。截至 9 月底，我們的淨槓桿率已改善為契約 EBITDA 的 2.9 倍，比年初大幅減少了 4,800 萬美元的淨債務，這一情況比年初好得多。

Let's turn now to our three businesses. Our healthcare apparel segment, primarily consisting of the Wink and Fashion Seal Healthcare brands, produced its highest quarterly revenues of the year at $30 million for the third quarter, essentially flat year over year and up from $28 million in the second quarter.

現在讓我們談談我們的三項業務。我們的醫療保健服裝部門主要由 Wink 和 Fashion Seal Healthcare 品牌組成，第三季實現了今年最高的季度收入，達到 3,000 萬美元，與去年同期基本持平，高於第二季的 2,800 萬美元。

Adjusted EBITDA of $3.1 million was up from $2.2 million year over year and up from $1.9 million in the second quarter. The healthcare apparel market remains soft, but inventory equilibrium is getting closer for SGC, and we believe for the broader industry.

調整後 EBITDA 為 310 萬美元，高於去年同期的 220 萬美元，高於第二季的 190 萬美元。醫療保健服裝市場仍然疲軟，但 SGC 的庫存已接近平衡，我們相信整個行業也是如此。

This remains a large and growing addressable market. We intend to expand our market share well beyond the 2 million-plus caregivers who already wear our brands every day. Back in the spring, we launched our direct consumer website and went through an entire rebranding featuring our Wink product line, and it continues to perform above initial expectations.

這仍然是一個龐大且不斷成長的潛在市場。我們打算將我們的市場份額擴大到超過 200 萬名每天佩戴我們品牌的護理人員。早在春天，我們就推出了直接消費者網站，並以我們的 Wink 產品線為特色進行了整個品牌重塑，它的表現繼續高於最初的預期。

This new D2C channel is creating both higher consumer awareness and deeper engagement with our brand. We also launched earlier this year our B2B website, which is now helping wholesale accounts more efficiently engage with us. Overall, we see the improvement in our year-over-year growth rates continuing in the fourth quarter, and we're optimistic about the longer-term outlook.

這個新的 D2C 管道正在提高消費者認知度並加深對我們品牌的參與。我們也在今年稍早推出了 B2B 網站，該網站現在正在幫助批發客戶更有效地與我們互動。總體而言，我們認為第四季同比成長率持續改善，並且我們對長期前景持樂觀態度。

Turning to branded products, which is our largest segment, we're seeing the back-end weighted nature of the year playing out along with stronger profitability as our supply chain costs have normalized. We produced third-quarter revenues of $84 million. While down from $87 million in the prior year, the third-quarter result represents our highest quarterly revenues of the year and it's up from $80 million in the second quarter.

談到品牌產品，這是我們最大的細分市場，隨著我們的供應鏈成本已經正常化，我們看到今年後端加權的性質以及更強的獲利能力。我們第三季的營收為 8,400 萬美元。雖然第三季的業績低於前一年的 8,700 萬美元，但它代表了我們今年最高的季度收入，並且高於第二季的 8,000 萬美元。

Our adjusted EBITDA of $7 million was up from $5.6 million year over year and about flat to the second quarter. We've seen an upward demand trend now for over five months and have no reason to believe this won't continue.

調整後 EBITDA 為 700 萬美元，較去年同期的 560 萬美元有所成長，與第二季基本持平。我們已經看到五個多月來需求上升趨勢，並且沒有理由相信這種情況不會持續下去。

While the growth in this segment appears subdued, our pipeline and booking trends look very, very favorable, particularly with respect to the first part of next year. While the segment is generally related to HR and marketing spend and it's surely been impacted by the ongoing macro environment, our confidence is bolstered by what we've consistently seen over the past months.

儘管該細分市場的成長顯得疲軟，但我們的通路和預訂趨勢看起來非常非常有利，特別是在明年上半年。雖然該細分市場通常與人力資源和行銷支出相關，並且肯定受到當前宏觀環境的影響，但過去幾個月我們持續看到的情況增強了我們的信心。

I should mention that similar to our other business lines, our client retention remained strong, truly indicating it's a matter of seeing stronger economic conditions for us to further accelerate our growth potential. In the meantime, within branded products, we're focused on managing expenses and further expanding our margins, such that we'll be ready to fully capitalize on even stronger demand ahead.

我應該提到的是，與我們的其他業務線類似，我們的客戶保留率仍然很高，這真正表明我們需要看到更強勁的經濟狀況才能進一步加速我們的成長潛力。同時，在品牌產品中，我們專注於管理費用並進一步擴大利潤，以便我們準備好充分利用未來更強勁的需求。

Longer term, our aim is to significantly grow our branded products market share now at less than 2% of this very, very large $26 billion market.

從長遠來看，我們的目標是大幅提高我們的品牌產品市場份額，目前在這個價值 260 億美元的龐大市場中所佔的份額還不到 2%。

Our third segment to review is contact centers, which continues to generate our highest EBITDA margins as we push towards the high teen goal that we mentioned on our prior earnings call. Our third-quarter revenues of $24 million were up approximately $1 million, both year-over-year and from the second quarter and represents the highest revenue quarter in the Office Gurus history.

我們要審查的第三個部門是聯絡中心，隨著我們努力實現我們在先前的財報電話會議上提到的高青少年目標，該部門繼續為我們帶來最高的 EBITDA 利潤率。我們第三季的營收為 2,400 萬美元，年比和第二季均增加了約 100 萬美元，是 Office Gurus 歷史上收入最高的季度。

Our third-quarter adjusted EBITDA was $4.1 million, down from $5 million year over year, but up from $3.3 million in the second quarter. While we've incurred higher costs related to labor and talent, we're continuing to increase prices whenever possible and employ technology to create more efficiency as reflected by our higher gross margin for contact centers, which expanded nearly 2 percentage points from the second quarter to 55.5%.

我們第三季調整後的 EBITDA 為 410 萬美元，低於去年同期的 500 萬美元，但高於第二季的 330 萬美元。雖然我們在勞動力和人才方面產生了更高的成本，但我們將繼續盡可能提高價格，並利用技術來提高效率，這體現在我們的聯絡中心毛利率較高，比第二季度增長了近2個百分點至 55.5%。

As a result, the third-quarter EBITDA margin sequentially improved to 16.8% from 14.3% in the second quarter. Overall, we continue to add to our pipeline of new business for the Office Gurus, and we see compelling longer-term opportunities to grow this segment at attractive margins.

因此，第三季 EBITDA 利潤率從第二季的 14.3% 連續提高至 16.8%。總體而言，我們繼續為辦公室大師增加新業務，並且我們看到了以有吸引力的利潤成長這一細分市場的令人信服的長期機會。

With that, I'll turn it over to Mike for a closer look at our financial performance and our updated outlook for the year before we take your questions. Mike?

這樣，在回答您的問題之前，我會將其轉交給麥克，以便他更仔細地了解我們的財務表現和今年的最新前景。麥克風？

Thank you, Michael, and thanks, everyone, for joining the call. Our third-quarter results were the strongest so far in 2023, reflecting the back-end weighted pattern we described earlier in the year. Our quarterly revenue reached $136 million, up about $7 million from the second quarter. And importantly, we recorded stronger margins as well.

謝謝邁克爾，也謝謝大家加入這次電話會議。我們的第三季業績是 2023 年迄今為止最強勁的，反映了我們今年稍早描述的後端加權模式。我們的季度營收達到 1.36 億美元，比第二季增加約 700 萬美元。重要的是，我們的利潤率也更高。

Our gross margin came in at 39.1%, which is up 260 basis points versus a year ago and up 220 basis points from the second quarter. The margin expansion from last year was primarily led by our branded products business segment, which drove a 450 basis point improvement due to favorable pricing and customer mix and lower supply chain costs.

我們的毛利率為 39.1%，比去年同期成長 260 個基點，比第二季成長 220 個基點。去年的利潤成長主要是由我們的品牌產品業務部門帶動的，由於有利的定價和客戶組合以及較低的供應鏈成本，該業務部門推動了 450 個基點的改善。

Our third-quarter SG&A costs of $47 million were up $3.4 million from last year and increased as a percent of sales at 34.7% for the quarter compared to 31.6% for the third quarter of 2022. The increase in SG&A was driven by a $1.8 million fair value benefit on written put options in the third quarter of 2022 combined with current quarter increases in acquisition related earn-out liabilities, bad debt expense, and professional fees.

我們第三季的SG&A 成本為4,700 萬美元，比去年增加了340 萬美元，佔本季銷售額的百分比上升至34.7%，而2022 年第三季為31.6%。SG&A 的成長是由180 萬美元推動的2022 年第三季書面看跌選擇權的公允價值收益，加上本季與收購相關的盈餘負債、壞帳費用和專業費用的增加。

Our interest expense for the third quarter was $2.5 million, up from $1.8 million in the prior year quarter due to higher interest rates. Interest expense did improve slightly from the second quarter, reflecting lower debt outstanding as I'll discuss in a moment.

由於利率上升，我們第三季的利息支出為 250 萬美元，高於去年同期的 180 萬美元。利息支出確實較第二季略有改善，反映出未償債務減少，我稍後將討論這一點。

Third-quarter net income of $3.1 million or $0.19 per diluted share compared to the prior year quarter's net loss of $12.7 million or $0.80 per share. In the prior year third quarter, the company recognized pre-tax non-cash impairment charges related to goodwill of $21.5 million or $17.1 million net of tax or $1.07 per diluted share on an adjusted basis, which excludes impairment charges made in the prior year third quarter.

第三季淨利為 310 萬美元，即每股攤薄收益 0.19 美元，而去年同期淨虧損為 1,270 萬美元，即每股虧損 0.80 美元。 In the prior year third quarter, the company recognized pre-tax non-cash impairment charges related to goodwill of $21.5 million or $17.1 million net of tax or $1.07 per diluted share on an adjusted basis, which excludes impairment charges made in the prior year third四分之一.

This quarter's net income of $3.1 million or $0.19 per diluted share was down from $4.4 million or $0.27 per diluted share in the prior year, but up significantly from $1.2 million or $0.08 per diluted share in the second quarter.

本季淨利為310 萬美元，即稀釋後每股收益0.19 美元，低於上年同期的440 萬美元，即稀釋後每股收益0.27 美元，但較第二季度的淨利潤120 萬美元，即稀釋後每股收益0.08 美元大幅成長。

Turning to our balance sheet, we continue to make meaningful improvements. We continue to drive significant free cash flow, enabling an additional $19 million reduction in our debt outstanding during the quarter, while maintaining our cash and cash equivalents balance of $18 million, about flat with the start of the year.

談到我們的資產負債表，我們繼續做出有意義的改進。我們繼續推動大量自由現金流，使本季的未償債務額外減少 1,900 萬美元，同時將現金和現金等價物餘額維持在 1,800 萬美元，與年初基本持平。

Since the beginning of the year, our focus on reducing working capital and generating strong operating cash flow has resulted in $59 million of operating cash flow, as Michael mentioned. Therefore, as of September 30, our total debt outstanding of $108 million improved from $156 million at the start of the year, representing a 30% reduction.

正如麥可所提到的，自今年年初以來，我們專注於減少營運資本和產生強勁的營運現金流，從而實現了 5,900 萬美元的營運現金流。因此，截至 9 月 30 日，我們的未償債務總額為 1.08 億美元，較年初的 1.56 億美元有所改善，減少了 30%。

Wrapping up on the balance sheet, our net leverage ratio ended the quarter at 2.9 times trailing 12 month covenant EBITDA much improved from the net leverage ratio at the beginning of the year of 3.9 times.

總結一下資產負債表，本季末我們的淨槓桿率為 2.9 倍，過去 12 個月契約 EBITDA 比年初的 3.9 倍有很大改善。

I'll conclude with our updated full-year outlook, which as we've indicated throughout the year, remains back-end loaded. We expect a full-year revenue range of $538 million to $545 million, relative to the earlier range of $550 million to $560 million, which continues to reflect back half improvement, albeit at a lower growth rate.

最後，我將介紹我們最新的全年展望，正如我們全年所表明的那樣，該展望仍然是後端負載。我們預計全年收入範圍為 5.38 億美元至 5.45 億美元，而之前的範圍為 5.5 億美元至 5.6 億美元，儘管增長率較低，但仍反映了下半年的改善。

However, for earnings per diluted share, we're tightening our outlook range to $0.46 to $0.53, relative to the prior range of $0.45 to $0.55, reflecting continued sequential improvement from the first half of the year. For healthcare apparel, we expect to finish 2023 with low single digit sales growth for the year as inventory levels and customer demand begin to normalize.

然而，對於攤薄後每股收益，我們將預期範圍收緊至 0.46 美元至 0.53 美元，之前的範圍為 0.45 美元至 0.55 美元，反映出今年上半年持續改善。對於醫療保健服裝，隨著庫存水準和客戶需求開始正常化，我們預計到 2023 年年底，銷售額將以低個位數成長。

For branded products, while we look to finish the year stronger with sequential sales improvement in the fourth quarter, we expect a low teen sales decline for the total year, primarily driven by the first and second quarter results. Lastly, for contact centers, we expect to achieve full-year sales growth in the high single digits.

對於品牌產品，雖然我們希望透過第四季度的連續銷售改善來實現今年的強勁成長，但我們預計全年銷售額將出現較低的下降，這主要是由第一季和第二季業績推動的。最後，對於聯絡中心，我們預計全年銷售額將實現高個位數成長。

With that, operator, we can now begin the question-and-answer session if you would please open the lines.

話務員，如果您願意的話，我們現在可以開始問答環節了。

(Operator Instructions) Kevin Steinke, Barrington Research.

（操作員說明）Kevin Steinke，Barrington Research。

Good afternoon.

午安.

Hi, Kevin.

嗨，凱文。

Congratulations on the sequentially improved results. Just if we look to the full-year outlook, you adjusted the revenue range a bit. So just wondering this still again represents a stronger sequential quarter. You mentioned the upper demand trend in branded products. Well, I guess the outlook came down just a bit, so I don't know, I'm just trying to put my finger on maybe what changed relative to your last outlook. Is this quarter progressed?

祝賀結果不斷改善。就全年前景而言，您對收入範圍進行了一些調整。因此，我想知道這仍然代表著一個更強勁的連續季度。您提到了品牌產品的高端需求趨勢。嗯，我猜前景略有下降，所以我不知道，我只是想弄清楚相對於您上次的前景，可能發生了什麼變化。這個季度有進展嗎？

Sure, Kevin, this is Mike. I'll take that question. Yeah, as you said, we obviously pulled the sales guidance down a little bit. It still reflects continued growth in the fourth quarter within that range. Within branded products, as we said in our prepared remarks, they had demonstrated growth in the third quarter. We expected to see that growth continue into the fourth quarter.

當然，凱文，這是麥克。我來回答這個問題。是的，正如您所說，我們顯然將銷售指導下調了一點。它仍然反映出第四季度在該範圍內的持續成長。正如我們在準備好的評論中所說，在品牌產品中，它們在第三季度表現出了成長。我們預計這種成長將持續到第四季。

I think part of what plays into the range, particularly in branded products, we have a fair amount of volume in the back half of December, which we plan to deliver on that could create some variability in the fourth quarter. And as it relates to our contract business, we're also as we manage our cash flow and manage inventory tightly, we're managing the build of our contract assets, which ultimately turns into revenue as well.

我認為，在該系列產品中，特別是在品牌產品中，我們在 12 月下半月有相當大的銷量，我們計劃交付這些產品，這可能會在第四季度產生一些變化。由於它與我們的合約業務相關，因此我們在嚴格管理現金流和庫存的同時，也在管理合約資產的建設，這最終也會轉化為收入。

So as we've been tightening more on the working capital front, that's also had a little bit of a pullback on revenues. But again, I think as we look to the fourth quarter, we still see growth in the business, again, as I said, albeit at a slightly lower rate than we were originally expecting, but again, still anticipate that growth coming in the fourth quarter.

因此，隨著我們在營運資金方面進一步收緊，收入也略有下降。 But again, I think as we look to the fourth quarter, we still see growth in the business, again, as I said, albeit at a slightly lower rate than we were originally expecting, but again, still anticipate that growth coming in the fourth四分之一.

Okay, good. Thank you. And touching on healthcare apparel, you mentioned there the market still remains a bit soft, but you did have some pretty good sequential growth there in that segment. And I believe you mentioned that the market appears to be approaching inventory equilibrium, do you think end of 2023 is still the way to think about inventory coming back into balance?

好的。謝謝。談到醫療保健服裝，您提到市場仍然有點疲軟，但該領域確實取得了相當不錯的連續成長。我相信您提到市場似乎正在接近庫存平衡，您認為 2023 年底仍然是考慮庫存恢復平衡的方法嗎？

Maybe it's harder to read in the overall market, but just for you internally, how are things trending on the inventory side?

也許在整個市場上更難解讀，但就你們內部而言，庫存方面的趨勢如何？

Kevin, from an internal standpoint, we're trending toward our goal by the end of the year. You could see in the aggregate, our inventories across the peer group were down about $20 million from the beginning of the year. And that would obviously include our healthcare inventories coming down. So we are happy with the progress we've been making. We've got a little bit yet to go here in the fourth quarter.

凱文，從內部角度來看，我們正朝著今年年底的目標邁進。您可以看到，總體而言，我們同行的庫存比年初減少了約 2000 萬美元。這顯然包括我們的醫療保健庫存的下降。因此，我們對所取得的進展感到滿意。我們距離第四季的目標還有一段時間。

And again, our intent is to end the year in a much cleaner position than we did last year and entering 2024 in a way that we can really focus most of our energy forward rather than looking to reduce inventories and liquidate inventories. I think we're seeing the market in general improve to some extent. But I can only say at this point speak for ourselves and again, we're satisfied with the progress we've made and feel good about where we'll end the year from a healthcare perspective.

再說一次，我們的目的是在今年結束時比去年更加乾淨，並在進入 2024 年時，我們能夠真正將大部分精力集中在未來，而不是尋求減少庫存和清算庫存。我認為我們看到市場總體上有所改善。但我現在只能說，我們對自己所取得的進展感到滿意，並且從醫療保健的角度對今年結束的情況感到滿意。

Okay, thank you. Also following up on healthcare apparel, you mentioned the B2C e-commerce initiative continuing to trend well ahead of expectations. Maybe just any update on the outlook there, and it starts becoming a more meaningful part of the business and potential growth in 2024 and beyond.

好的謝謝。在跟進醫療保健服裝方面，您提到 B2C 電子商務計劃的發展趨勢繼續遠遠超出預期。也許只是對前景的任何更新，它就會開始成為 2024 年及以後業務和潛在成長中更有意義的一部分。

Hey Kevin, this is Michael; good question. We're excited about the progress we've made, even when you take it one step further and say, the broader digital market, which includes all those wholesale customers that we sell online as well like amazon.com, walmart.com, and target.com, and so on, obviously inclusive of both the direct to consumer and the B2B channels.

嘿凱文，這是麥可；好問題。我們對我們所取得的進步感到興奮，即使你更進一步說，更廣泛的數位市場，其中包括我們在線銷售的所有批發客戶，例如 amazon.com、walmart.com 和target.com 等，顯然包括直接面向消費者和B2B 通路。

We're very, very excited about the whole what's happening to us digitally. More people are buying online than ever. And while store traffic is still down and certainly the smaller retailers are struggling more than the larger retailers. And our emphasis, on -- at least on the investments we've made in our digital capability certainly has paid off somewhat this year; will continue to pay off in 2024 as we spend more on marketing and branding and to realize the full potential for 2024.

我們對數位化發生在我們身上的一切感到非常非常興奮。網上購物的人比以往任何時候都多。儘管商店客流量仍然下降，但規模較小的零售商無疑比規模較大的零售商處境更加艱難。我們的重點——至少是我們在數位能力所做的投資今年肯定已經得到了一定的回報；隨著我們在行銷和品牌推廣上投入更多資金，並在 2024 年充分發揮潛力，我們將在 2024 年繼續獲得回報。

We're learning as we go. We're testing and learning. We're gathering key customer insights. Our goal is to better inform our strategy, to spend more carefully, and in a more targeted manner. We see this talent becoming a larger portion of our business over time; will be significant enough in 2024 that we'll start reporting on it separately or giving more color separately. I don't think so.

我們邊走邊學。我們正在測試和學習。我們正在收集關鍵客戶的見解。我們的目標是更好地制定我們的策略，更加謹慎、更有針對性地支出。隨著時間的推移，我們看到這種人才在我們業務中所佔的比例越來越大；到 2024 年，它將變得足夠重要，我們將開始單獨報告它或單獨提供更多顏色。我不這麼認為。

I believe it is a competitive advantage to not doing so at this point as we're trying to grow it and we're testing out different strategies. I would hope in the following years it will be enough of a portion of our business that it would be meaningful to speak about.

我相信，目前不這樣做是一種競爭優勢，因為我們正在努力發展它，我們正在測試不同的策略。我希望在接下來的幾年裡，這將足以成為我們業務的一部分，值得談論。

Okay, thank you. And then a couple more here, the nice gross margin expansion that you had both year over year and sequentially are driven by branded products. You mentioned supply chain normalizing, I think some favorable mix, but just trying to get a sense as to how sustainable these higher levels are or if you anticipate some quarter-to-quarter variability, I know that can just vary based on customer mix, but just any thoughts on the margin -- gross margin profile going forward?

好的謝謝。還有一點，毛利率的逐年和連續成長都是由品牌產品所推動的。你提到供應鏈正常化，我認為一些有利的組合，但只是想了解這些更高水平的可持續性，或者如果你預計一些季度與季度之間的變化，我知道這可能會根據客戶組合而變化，但對利潤率有何想法—未來的毛利率狀況？

Sure, Kevin, as you said, there will be some variability in the margin mix, particularly again branded products where we're really pricing on an order by order basis. We're obviously very happy with the margin that we had in the third quarter, just given the mix of orders that we had in the branded product space combined with we're starting to see some of the what I will call lower supply chain cost inventory now coming through the system, particularly in that segment.

當然，凱文，正如你所說，利潤率組合會有一些變化，特別是品牌產品，我們實際上是按訂單定價的。顯然，我們對第三季度的利潤率非常滿意，考慮到我們在品牌產品領域的訂單組合，再加上我們開始看到一些我所說的供應鏈成本降低庫存現在通過系統進行，特別是在該領域。

So obviously, as we look ahead, we expect the fourth quarter margins to still be up to last year, probably a little bit more consistent with the first part of the year than, I would say, the third quarter. We'll monitor the fourth quarter as we talked about on the healthcare side, as we work toward hitting the end-of-year inventory target may determine how more or less promotionally we might need to be in the fourth quarter.

顯然，展望未來，我們預計第四季的利潤率仍將達到去年水平，可能比第三季與今年上半年更加一致。正如我們在醫療保健方面所討論的那樣，我們將密切關注第四季度的情況，因為我們努力實現年終庫存目標，這可能會決定我們在第四季度可能需要進行多少促銷。

That plays into the range of guidance that we've given. But we still expect good margins, again, as I said, probably more consistent with the first half of the year than I would say the third-quarter margin.

這符合我們給出的指導範圍。但正如我所說，我們仍然期望良好的利潤率，這可能比我所說的第三季利潤率更符合上半年。

Okay, great. Thanks for the color. And just lastly, just looking at the selling and administrative expense line, a sequential increase there on an absolute basis looks like that was driven by branded products. Just wondering if there's anything to call out there in terms of the increase in the expense base, yeah if there's something more non-recurring in there, some investments? Or perhaps I'm just trying to get some color on what's going on there and what it might look like going forward?

好的，太好了。謝謝你的顏色。最後，只要看看銷售和管理費用線，絕對基礎上的連續成長看起來是由品牌產品推動的。只是想知道在費用基礎的增加方面是否有什麼需要注意的，是的，是否有更多的非經常性的東西，一些投資？或者也許我只是想了解那裡正在發生的事情以及未來可能會是什麼樣子？

Sure. In the case of in the case of branded products, a big portion of the increase really related to commissions. So in the branded products business, the commission is based on margin. So given the improvement in margin and the growth in margin, despite sales being down single digit, really drove an increase in commission expense, and therefore, a larger piece of SG&A for the third quarter.

當然。就品牌產品而言，成長的很大一部分實際上與佣金有關。因此，在品牌產品業務中，佣金是基於利潤的。因此，考慮到利潤率的改善和利潤率的成長，儘管銷售額下降了個位數，但確實推動了佣金費用的增加，因此，第三季的銷售、一般管理費用（SG&A）佔比更大。

Okay. Thanks for taking the questions. I'll jump back in the queue.

好的。感謝您提出問題。我會跳回到隊列中。

Jim Sidoti, Sidoti & Company.

吉姆‧西多蒂 (Jim Sidoti)，西多蒂公司。

Hi, good morning -- sorry, good afternoon, and thanks for taking the questions. Just to follow up on the SG&A question, can you talk about headcount? Did you add salespeople in the third quarter and do you plan to add any more in the fourth quarter?

你好，早安——抱歉，下午好，感謝您提出問題。為了跟進 SG&A 議題，您能談談員工人數嗎？您在第三季增加了銷售人員嗎？您計劃在第四季增加更多銷售人員嗎？

Are you speaking about a particular segment or are you speaking about overall for all SGC?

您是在談論某個特定細分市場，還是在談論所有 SGC 的整體情況？

I guess primarily for branded products.

我想主要是針對品牌產品。

Branded products, we've added people. We will continue to add people. It's one of our revenue growing strategies. It's right up there with the best of them including other sales strategies that we have, Jim, including some inside sales strategies to try to go after smaller accounts, appointment setters, all kinds of things that we're doing right now differently than we've done before.

品牌產品，我們增加了人員。我們將繼續增加人員。這是我們的營收成長策略之一。它與其中最好的包括我們擁有的其他銷售策略，吉姆，包括一些內部銷售策略，以試圖追求較小的客戶，預約制定者，以及我們現在正在做的與我們不同的所有事情。以前做過。

But it is our intention to continue to grow branded products. So we're going to have to have more muscle behind us to do it and it's going to take more people to do it. We're recruiting actively and even added some talent to our recruiting pool to help recruit more people faster.

但我們的目的是繼續發展品牌產品。因此，我們必須有更多的力量來做到這一點，並且需要更多的人來做到這一點。我們正在積極招聘，甚至在我們的招聘庫中添加了一些人才，以幫助更快地招募更多人。

All right. And then with regard to capital allocation, I mean you did a great job of generating cash and paying off debt in the third quarter. Should we see a similar trend in the fourth quarter? Or are there opportunities out there, inorganic opportunities that you might pull the trigger on?

好的。關於資本配置，我的意思是，你們在第三季創造現金和償還債務方面做得很好。我們是否應該在第四季看到類似的趨勢？或者有沒有機會，你可能會扣下板機的無機機會？

For the balance of the year, Jim, we're going to remain focused on working capital. There's I would say you can tell from the first nine months, we drove significant improvement, I think obviously our working capital starting to normalize. So I would not anticipate a similar result in Q4.

吉姆，在今年剩餘的時間裡，我們將繼續專注於營運資金。我想說的是，從前九個月來看，我們取得了顯著的進步，我認為顯然我們的營運資本開始正常化。因此，我預計第四季度不會出現類似的結果。

But with that said, we're going to remain focused on that for the balance of the year as like what I've said previously, we really are targeting a net leverage ratio in the range of 2 to 2.5 times. So we're obviously getting closer. And so that's our focus here through the balance of the year. Then obviously, we'll begin to continue to look at our allocation priorities going forward once we achieve that net leverage objective.

但話雖如此，我們將在今年剩餘的時間裡繼續關注這一點，就像我之前所說的那樣，我們的淨槓桿率目標確實在 2 至 2.5 倍之間。所以我們顯然正在接近。這就是我們今年剩餘時間的重點。顯然，一旦我們實現了淨槓桿目標，我們將開始繼續考慮未來的分配優先事項。

All right. And then your three businesses, you seem to have pretty definite growth drivers in all three businesses, different drivers of the different businesses, but out of the three businesses, which one do you think are you most -- you're feeling best about at this point in this current line?

好的。然後你的三項業務，你似乎在所有三項業務中都有相當明確的成長驅動力，不同業務的不同驅動力，但是在這三項業務中，你認為哪一項是你最喜歡的— —你在這方面感覺最好當前行中的這一點？

That's a hard question because I'm feeling pretty good about all of them. So it's like asking me which kid I love more. But look, long term. I believe healthcare has tremendous potential, and it's one of the smallest of our businesses. And it's right there in the middle, but it has two segments, a wholesale and a retail and now (technical difficulty) to it.

這是一個很難回答的問題，因為我對他們所有人都感覺很好。這就像問我比較喜歡哪個孩子一樣。但從長遠來看。我相信醫療保健具有巨大的潛力，而且它是我們最小的業務之一。它就在中間，但它有兩個部分，批發和零售，現在（技術難度）。

But if you look at the growth of healthcare workers in the coming years, you look at the fact that it's not as price sensitive a business, most of it isn't. The wholesale side is, but the retail side, it's not you look at our capability to grow direct consumer in the coming years. The continued shortage of healthcare workers is going to have to be filled at one point or we're going to get -- we're all going to get old and not have anybody take care of us.

但如果你看看未來幾年醫療保健工作者的成長，你會發現這樣一個事實：它不是一個對價格敏感的行業，大部分都不是。批發方面是，但零售方面，這不是你看我們在未來幾年增加直接消費者的能力。醫護人員的持續短缺將在某個時刻必須被填補，否則我們就會——我們都會變老，沒有人照顧我們。

So the schools are going to have to fill that gap, whether through schools or through immigration or wherever they solve it. And that will bring millions of more healthcare workers into the workforce. So I'm feeling great about that. But I would say that our call center business is basically in its infancy.

因此，學校必須填補這一空白，無論是透過學校還是透過移民，或無論透過什麼方式解決。這將使數百萬醫護人員加入勞動力。所以我對此感覺很好。但我想說，我們的呼叫中心業務基本上還處於起步階段。

If you want the truth, I mean, we're a small call center business doing right now under $100 million. That has great opportunity. It provides great free cash flow for us to invest more in it as time goes on. And we've invested greatly in new strategies. We've put on our first sales executive this year, putting on a second one, building out a sales team around that.

如果你想知道真相，我的意思是，我們是一家小型呼叫中心企業，目前營業額不到 1 億美元。那有很大的機會。隨著時間的推移，它為我們提供了巨大的自由現金流，可以對其進行更多投資。我們在新策略上投入了大量資金。今年我們任命了第一位銷售主管，又任命了第二位銷售主管，並圍繞著這建立了一支銷售團隊。

First marketing dollars we've really ever spent will be this year and more so into next year and not being so reliant on others to bring us business. We've never actually had a salesforce. So we've grown business from zero to $80 million without a salesforce.

我們真正花費的第一筆行銷資金將在今年，明年會更多，並且不會那麼依賴其他人為我們帶來業務。我們其實從未有過銷售團隊。因此，在沒有銷售人員的情況下，我們的業務從零成長到了 8,000 萬美元。

And what Jake's done and Bill had done prior to him in branded products was no short of amazing to take a business that was doing $32 million seven years ago, that's doing if you just take the merchandise side of that, over $250 million a year. So why should I not be equally excited about all these three businesses?

傑克和比爾在他之前在品牌產品方面所做的事情對於一家七年前營業額為3200 萬美元的企業來說絕對是令人驚嘆的，如果你只考慮商品方面的話，每年的營業額超過2.5億美元。那麼，為什麼我不應該對這三項業務同樣感到興奮呢？

So I didn't answer your question because I don't want any of my children to be angry at me after this call. But I'm excited about it. I think we're in three great businesses that we did not have enough market share in, and I don't think it's going to be that hard to take market share away from our competition in the coming years with all that we're doing internally to make our business stronger.

所以我沒有回答你的問題，因為我不想讓我的任何孩子在這次通話後生我的氣。但我對此感到很興奮。我認為我們在三個偉大的業務中沒有足夠的市場份額，並且我認為在未來幾年中，透過我們所做的一切，從我們的競爭對手中奪取市場份額不會那麼困難內部使我們的業務更加強大。

All right. Well, thank you.

好的。嗯，謝謝。

David Marsh, Singular Research.

大衛馬什，奇異研究。

Thank you, guys, for taking the questions. First, I wanted to touch on the GAAP income tax expense in the quarter, which was extremely low as a percentage of continuing the income from continuing ops, could you just touch on that and give us some idea of what to expect in the next quarter and in the coming year? Were there some tax loss carryforwards that benefited you in the quarter and that will continue to benefit you as you roll forward?

謝謝你們提出問題。首先，我想談談本季的 GAAP 所得稅費用，該費用佔持續營運收入的百分比極低，您能否談談這一點並讓我們了解下個季度的預期來年呢？是否有一些稅收損失結轉在本季度使您受益，並且在您今後繼續受益？

Yeah, Dave, it's really in the quarter and so far this year, it's really been the mix of our profit, domestic versus international. And obviously, we have a large amount of profit through our contact center business in Central America. So we benefit from that mix, which has driven a lower rate this year in the what we call high single digits, and we would expect that to be the case through the balance of the year.

是的，戴夫，這確實是本季的情況，今年到目前為止，這確實是我們國內利潤和國際利潤的混合。顯然，我們透過中美洲的聯絡中心業務獲得了大量利潤。因此，我們從這種組合中受益，這導致今年利率下降，達到我們所說的高個位數，我們預計今年剩餘時間都會出現這種情況。

And then, obviously, next year as we look to plan next year, we'll relook obviously at the mix of where, again, our profit is from a foreign and domestic perspective. But that's really been the driver of the rate. This year we haven't had this year as many discrete items as we did last year, which drove the rate higher last year, again, due to the discrete nature of what we had. But at this point, it's really a reflection of our foreign versus domestic profit.

然後，顯然，明年當我們制定明年的計劃時，我們將再次從國外和國內的角度重新審視我們的利潤的組合。但這確實是利率的驅動因素。今年，我們的離散項目沒有去年那麼多，這又導致去年的比率更高，因為我們擁有的離散項目。但在這一點上，這實際上反映了我們的國外利潤與國內利潤的比較。

Got it. Thank you. And then secondly, just with regard to the call center business, I know in the last quarterly call you had talked about maybe some customers that had refreshed that quite as higher levels, but obviously some nice sequential growth this quarter. Just trying to parse through the guidance for the year that you gave.

知道了。謝謝。其次，就呼叫中心業務而言，我知道在上一季的電話會議中，您談到也許一些客戶已經刷新了相當高的水平，但顯然本季度出現了一些不錯的連續增長。只是試圖解析您提供的當年的指導。

I'm trying to figure out, are you guys thinking sequentially flat-ish for the fourth quarter? And could you just talk, I guess, more generally about how your renewals have been in the third quarter maybe versus second quarter and maybe the beginning of the fourth quarter versus the second quarter? Have you seen improvement there and just general, the overall tone of the segment?

我想弄清楚，你們認為第四季的業績是否會持平？我想，您能否更籠統地談談第三季與第二季以及第四季初與第二季相比的續約情況？您是否看到了那裡的改善以及該細分市場的整體基調？

We're seeing some improvement. And I spoke about it last quarter, the fact that to date we've lost a few hundred. Through the end of June, we've lost a few hundred to 300 and some odd seats of existing customers who we just scaled back because of the macro environment. And they've not since grown the number of seats that we have with them. But we've replaced all of those, and we spoke about that again last quarter, they had all been replaced by new seats.

我們看到了一些改進。上個季度我談到了這一點，到目前為止，我們已經損失了數百人。到 6 月底，我們已經失去了幾百到 300 個現有客戶，以及一些奇怪的現有客戶，由於宏觀環境的原因，我們剛剛縮減了這些客戶的規模。從那時起，他們就沒有增加我們與他們的座位數。但我們已經更換了所有這些，上個季度我們再次談到了這一點，它們都已被新座椅取代。

And we continue to put our new seats. We're putting on new seats at a clip that we haven't done before. But again, we're still trying to get a deficit of 300 some odd seats that we're fighting against all year in the comps. The good news is we're working on more larger opportunities than we've ever worked on. We put on as more customers than we've ever put on. Quite frankly, we're working on more opportunities. And that when realized will bring us greater degrees of revenue in future periods.

我們繼續放置新座位。我們正在以前所未有的速度安裝新座椅。但同樣，我們仍在努力爭取 300 個席位的赤字，這是我們全年在比賽中努力克服的。好消息是我們正在努力創造比以往任何時候都更大的機會。我們吸引的客戶比以往任何時候都多。坦白說，我們正在尋找更多機會。一旦實現，將為我們在未來帶來更大程度的收入。

We continue to put on seats in the month of November, and we'll put on a few in the month of December. December is not traditionally a period where we put on a lot of seats. Everybody holds back and says how they want to get going in January. But the quarter should turn out well in our guidance. With respect to the quarter, I'll let Mike speak to that, with respect to the call centers where we're headed with that.

我們將在 11 月繼續增加席位，並在 12 月增加一些席位。十二月傳統上不是我們放置大量座位的時期。每個人都忍住了，說他們想在一月如何開始。但在我們的指導中，本季的業績應該會很好。關於本季度，我將讓麥克談談我們即將開展的呼叫中心的工作。

Sure. Yeah, I mean, we expect to continue to see growth in that segment in the fourth quarter. I think as we touched on, there has been sequential growth throughout the year. Certainly from an EBITDA perspective, given that we started at a pretty low point in the first quarter with some of the cost increases and being a little late in terms of increasing pricing.

當然。是的，我的意思是，我們預計第四季度該領域將繼續成長。我認為正如我們所談到的，全年都出現了連續增長。當然，從 EBITDA 的角度來看，考慮到我們在第一季的起點相當低，一些成本增加了，而且在提高定價方面有點晚了。

But the pipeline is strong. As we've had before, we're onboarding more new customers and it's looking strong for the first quarter. So we feel, again, like the contact center business is picking up momentum throughout the year and into 2024.

但管道很強大。正如我們之前所做的那樣，我們正在吸引更多新客戶，第一季的情況看起來很強勁。因此，我們再次感到，聯絡中心業務在全年和 2024 年都在強勁成長。

Great. That's really very helpful. And then just lastly for me with regard to free cash flow, I mean, fantastic job on debt repayment year to date. Would we expect that there would be a little bit more sequential debt repayment in the fourth quarter or do you start to fight against some working cap trends a little bit? I mean, I guess, if you could just give us a holistic picture of what fourth quarter free cash flow looks like and where it's going.

偉大的。這確實非常有幫助。最後對我來說，關於自由現金流，我的意思是，今年迄今為止在債務償還方面做得非常出色。我們是否預計第四季度會有更多的連續債務償還，或者您是否開始與一些工作上限趨勢作鬥爭？我的意思是，我想，如果你能給我們一個關於第四季度自由現金流的整體情況以及它的去向的話。

Yesh. As I mentioned, I think we've made a lot of progress, I think, through -- for the first nine months. So I would expect here in the fourth quarter things to normalize a bit. And of course, as we look to the level of volumes in Q1 depending upon our inventory levels, we may need to start making some investments as we've planned for Q1 depending upon what those revenue levels look like.

是的。正如我所提到的，我認為我們在前九個月裡取得了很大進展。因此，我預計第四季情況會趨於正常化。當然，當我們根據我們的庫存水平來查看第一季的銷售水平時，我們可能需要開始進行一些投資，就像我們為第一季計劃的那樣，具體取決於這些收入水平。

So I would say, Dave, in Q4, we would still look where there's opportunity with free cash flow, still look to again, continue to bring the debt levels down to get toward that targeted ratio we're looking for, but certainly not at the level that we've been generating over the last three quarters.

所以我想說，戴夫，在第四季度，我們仍然會尋找自由現金流的機會，仍然會再次考慮，繼續降低債務水平，以達到我們正在尋找的目標比率，但肯定不會我們過去三個季度所達到的水平。

If you had a chance to look at our cash flow statement, we've already brought inventories down pretty significantly. So far this year receivables have been coming down. So I think we've made a lot of progress there, where again, there's still some opportunity there, but not to the extent that we've seen over the first three quarters.

如果您有機會查看我們的現金流量表，我們已經大幅降低了庫存。今年到目前為止，應收帳款一直在下降。因此，我認為我們在這方面取得了很大進展，仍然存在一些機會，但沒有達到我們在前三個季度中看到的程度。

Right. That makes a lot of sense. Well, thank you guys, very much for taking the questions and congrats on the quarter.

正確的。這很有意義。好吧，非常感謝你們提出問題，並祝賀本季。

Thank you.

謝謝。

(multiple speakers) our question-and-answer session, I'd like to turn the conference back over to Michael Benstock for any closing remarks.

（多名演講者）我們的問答環節，我想將會議轉回邁克爾·本斯托克（Michael Benstock）發表結束語。

Okay. Thank you, operator. I jumped the gun on there a little bit. I want to thank everybody for joining our call. We're looking forward to finishing the year strong. Our intention is to continually grow SGC's market share across all of our three attractive markets and to do so profitably, the ultimate goal, obviously, further enhancing shareholder value.

好的。謝謝你，接線生。我稍微把槍放在那裡。我要感謝大家加入我們的電話會議。我們期待著強勁地結束這一年。我們的目的是不斷增加 SGC 在我們所有三個有吸引力的市場中的市場份額，並實現盈利，最終目標顯然是進一步提高股東價值。

We are confident that we do so even during uncertain times. We look forward to updating you on our full-year results. And please don't hesitate to reach out with any questions before then. Enjoy the evening, and thanks again.

即使在不確定的時期，我們也有信心這樣做。我們期待向您通報我們全年業績的最新情況。在此之前如有任何問題，請隨時與我們聯絡。祝您有個愉快的夜晚，再次感謝。

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

會議現已結束。感謝您參加今天的演講。現在您可以斷開線路。