Superior Group of Companies Inc (SGC) 2024 Q2 法說會逐字稿

Good afternoon, everyone. Welcome to the Superior Group of Companies Second Quarter 2024 Conference Call. With us today are Michael Benstock, Chief Executive Officer; and Mike Koempel, Chief Financial Officer. As a reminder, this conference call is being recorded.

大家下午好。歡迎參加卓越集團公司 2024 年第二季電話會議。今天與我們在一起的有執行長 Michael Benstock；和財務長 Mike Koempel。謹此提醒，本次電話會議正在錄音中。

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. 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 involves known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements.

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的前瞻性陳述，包括但不限於銷售額和盈利能力。此類陳述是基於管理層目前的預期、預測、估計和假設。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. 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, except as required by law. I'll now turn the call over to Michael Benstock.

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。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，該公司不承諾更新前瞻性陳述。我現在將電話轉給邁克爾·本斯托克。

Thank you, operator, and welcome to our call. Today, I'll start with the financial highlights from our second quarter. Next, I'll cover how each of the three business segments performed, including a high-level discussion of some of our go-forward strategies. I'll then turn the call over to Mike to take us through a detailed financial discussion and our outlook for 2024, after which both Mike and I would be happy to take your questions.

謝謝您，接線員，歡迎您致電我們。今天，我將從第二季的財務亮點開始。接下來，我將介紹三個業務部門的表現，包括對我們的一些前進策略的高層討論。然後我會將電話轉給 Mike，讓他帶領我們進行詳細的財務討論以及我們對 2024 年的展望，之後我和 Mike 都將很樂意回答您的問題。

Let's get started. We delivered profitable results in the second quarter. However, our results were not as strong as we had originally forecasted due to softening market conditions as well as supply chain delays. We expect to recover the revenue associated with the supply chain delays in the Branded Products and Healthcare Apparel segments in the third quarter. On that basis, we are maintaining our full year outlook.

讓我們開始吧。我們在第二季度實現了盈利。然而，由於市場狀況疲軟以及供應鏈延遲，我們的業績不如我們最初預測的那麼強勁。我們預計第三季將恢復與品牌產品和醫療保健服裝領域供應鏈延遲相關的收入。在此基礎上，我們維持全年展望。

On a consolidated basis, we generated revenues of $132 million, up 2% over the prior-year period. Our EBITDA of $5.6 million was down from $7.4 million a year earlier, with a margin of 4.2% compared to 5.8%. Our continued growth in gross margin dollars and gross margin percentage were more than offset by higher SG&A as compared to last year. While our second quarter SG&A costs were down slightly from the first quarter, our costs deleveraged on the lower-than-expected revenues.

綜合來看，我們的營收為 1.32 億美元，比上年同期成長 2%。我們的 EBITDA 為 560 萬美元，低於去年同期的 740 萬美元，利潤率為 4.2%，而去年同期為 5.8%。與去年相比，我們毛利率和毛利率的持續成長被更高的銷售及管理費用所抵銷。雖然我們第二季的銷售、管理及行政費用較第一季略有下降，但由於收入低於預期，我們的成本去槓桿化了。

As a result, our second quarter diluted EPS was $0.04 as compared to $0.08 in the prior-year quarter. We continue to drive solid operating cash flow during the second quarter, which with the balance sheet improvements we made over the past year, enabled us to maintain a strong net leverage ratio. Therefore, we remain in a strong financial position to make strategic investments that will help us capture additional market share over the long-term across our three very attractive end markets, while standing ready for any highly compelling M&A opportunities. I mentioned last quarter that we were cautiously optimistic on the demand trends across our three business segments.

因此，我們第二季的攤薄每股收益為 0.04 美元，而去年同期為 0.08 美元。我們在第二季度繼續推動穩健的營運現金流，加上我們去年的資產負債表改善，使我們能夠保持強勁的淨槓桿率。因此，我們仍保持強勁的財務狀況，可以進行策略性投資，這將有助於我們在三個非常有吸引力的終端市場中長期佔據更多市場份額，同時為任何極具吸引力的併購機會做好準備。我上季提到，我們對三個業務部門的需求趨勢持謹慎樂觀態度。

While first quarter demand was strong, we began to see a shift to slower customer decisions to purchase during the back half of the second quarter as the uncertainty around inflation, interest rates, the upcoming election and global geopolitics weigh on our customer sentiment. With that said, we remain focused on what we can control, which is positioning the company for long-term growth. I'll reiterate what I mentioned last quarter. Superior Group of Companies still has a very small but growing share of three large, attractive and growing end markets.

儘管第一季需求強勁，但由於通膨、利率、即將舉行的選舉和全球地緣政治的不確定性影響了我們的客戶情緒，我們開始看到第二季後半段客戶的購買決策開始放緩。話雖如此，我們仍然專注於我們可以控制的事情，這為公司的長期成長奠定了基礎。我將重申上個季度提到的內容。Superior Group of Companies 在三個大型、有吸引力且不斷增長的終端市場中所佔的份額仍然很小，但份額不斷增長。

We are driven to win more than our fair share of new customers, while maintaining impressive customer retention statistics through providing a superior customer experience. We're optimistic on the future, given the enormous size of our target markets, and our own ability to capitalize through wise investment in our people, our products and technology. Turning to our business segments, I'll start with Healthcare Apparel. During the second quarter, our revenue was down 5% due largely to continued softness in our store-based uniform wholesale business, and the timing of revenues as compared to last year due in part to temporary supply chain issues.

我們致力於贏得更多的新客戶，同時透過提供卓越的客戶體驗來保持令人印象深刻的客戶保留統計數據。考慮到我們目標市場的巨大規模，以及我們透過對員工、產品和技術進行明智投資來獲利的能力，我們對未來持樂觀態度。談到我們的業務領域，我將從醫療保健服裝開始。第二季度，我們的收入下降了 5%，這主要是由於我們以商店為基礎的製服批發業務持續疲軟，以及與去年相比收入的時間安排，部分原因是臨時供應鏈問題。

These headwinds were partially offset by continued strong growth in our digital business, both in our wholesale and direct-to-consumer channels. While the gross margin rate was up versus last year, the SG&A percentage increased at a higher rate, primarily driven by investments in marketing, to drive further awareness of the Wink brand and support for the early stages of our direct-to-consumer channel. As a result, EBITDA was $1.3 million as compared to $1.9 million in the prior year quarter. Despite the second quarter sales decline in Healthcare Apparel, we believe our selling strategies in Healthcare Apparel, including last year's successful rebranding under the Wink trademark, and expanding our direct-to-consumer efforts, will drive long-term growth.

這些不利因素被我們批發和直接面向消費者管道的數位業務持續強勁成長所部分抵消。雖然毛利率較去年有所上升，但銷售、一般費用百分比以更高的速度增長，這主要是由於營銷投資的推動，以進一步提高Wink 品牌的知名度並為我們直接面向消費者渠道的早期階段提供支持。結果，EBITDA 為 130 萬美元，而去年同期為 190 萬美元。儘管醫療保健服裝第二季度銷售額下降，但我們相信我們在醫療保健服裝的銷售策略，包括去年在 Wink 商標下成功的品牌重塑，以及擴大我們直接面向消費者的努力，將推動長期成長。

Over time, we see ourselves capturing significant additional share of this large growing and resilient addressable market, expanding well beyond the more than 2 million caregivers who already wear our brands to work every day. Turning to branded products, our revenue was up 2% compared to the year-ago quarter, despite an inventory shift related to certain contract, uniform customers whose inventory was contemplated to be on the shelf in June but instead arrived in the third quarter. As a result, the revenues from these contract assets will be realized in the third quarter. Interestingly, the overall demand trajectory for BAMKO in particular, which is the largest portion of the segment, is being driven by a significant increase in the number of customer orders, partially offset by smaller order sizes and lower value products, reflecting a cautious buying pattern by our customers.

隨著時間的推移，我們看到自己在這個不斷成長且富有彈性的潛在市場中佔據了顯著的額外份額，遠遠超出了每天穿著我們品牌上班的超過 200 萬名護理人員的規模。談到品牌產品，我們的營收與去年同期相比成長了2%，儘管與某些合約制服客戶相關的庫存轉移，這些客戶的庫存原計劃在6 月上架，但實際上在第三季度才到達。因此，這些合約資產的收入將在第三季實現。有趣的是，特別是BAMKO（該細分市場中最大的部分）的整體需求軌跡是由客戶訂單數量大幅增加推動的，但部分被較小的訂單規模和較低價值的產品所抵消，反映出謹慎的購買模式由我們的客戶。

However, the increased number of orders, including from new customers, results in capturing additional market share and therefore greater opportunity for growth when the headwinds normalize for expanded revenue. The good news is that customers haven't stopped buying. They are, however, being more prudent with their spend. The increase in gross margin dollars and rate was offset by higher SG&A, which was primarily driven by employee-related costs, including commissions on the higher gross margins. As a result, the Branded Products EBITDA of $6.7 million was down slightly from $7 million a year earlier.

然而，訂單數量的增加（包括來自新客戶的訂單數量）會導致獲得額外的市場份額，從而在收入擴大的逆風正常化時獲得更大的成長機會。好消息是顧客並沒有停止購買。然而，他們在支出方面更加謹慎。毛利率和毛利率的成長被較高的銷售及管理費用所抵消，這主要是由員工相關成本推動的，包括較高毛利率帶來的佣金。因此，品牌產品 EBITDA 為 670 萬美元，較上年同期的 700 萬美元略有下降。

From a strategic standpoint, our game plan for Branded Products revolves around strong customer retention, growing their wallet share, driving greater RFP activity, increasing our sales rep recruiting. Our market share of less than 2% has ample room to expand in this $24 billion market. Wrapping up our business segment discussion, Contact Centers grew revenues 9% year-over-year, accelerating slightly from last quarter's 7% revenue increase. Due to the attractive long-term growth opportunities, TOG continues to invest in advance in talent and satellite offices to support new and existing customer growth, which puts pressure on both gross margin and SG&A , but only in the short-term.

從策略角度來看，我們的品牌產品計劃圍繞著強大的客戶保留率、增加他們的錢包份額、推動更大的 RFP 活動、增加我們的銷售代表招募。我們的市佔率不到 2%，在這個價值 240 億美元的市場中有足夠的擴張空間。結束我們對業務部門的討論後，聯絡中心的營收年增了 9%，比上季 7% 的營收增幅略有加快。由於具有吸引力的長期成長機會，TOG 繼續提前投資於人才和衛星辦事處，以支援新客戶和現有客戶的成長，這對毛利率和 SG&A 均構成壓力，但僅限於短期。

As a result, our EBITDA performance was almost flat with the prior-year period at $3.2 million, despite the stronger topline results. We're seeing solid demand for TOG's offering from both existing and new customers. And our strategy is to continue growing our pipeline and ultimately earning more business, while ensuring that our offering is competitive and reflects the value we bring to our clients. We're also investigating and already using some of the latest technology to provide the highest quality customer experience while at the same time employing additional technologies to enhance our efficiency and grow margins over time.

因此，我們的 EBITDA 表現幾乎與去年同期持平，為 320 萬美元，儘管營收結果更為強勁。我們看到現有客戶和新客戶對 TOG 產品的強勁需求。我們的策略是繼續擴大我們的管道並最終贏得更多業務，同時確保我們的產品具有競爭力並反映我們為客戶帶來的價值。我們也正在研究並且已經使用一些最新技術來提供最高品質的客戶體驗，同時採用其他技術來提高我們的效率並隨著時間的推移增加利潤。

I'll now turn the call over to Mike to walk us through our second quarter financial results in greater detail and to provide an update on our outlook for the full year. Mike?

現在我將把電話轉給麥克，讓他更詳細地向我們介紹第二季的財務業績，並提供我們全年展望的最新情況。麥克風？

Thank you, Michael. During the second quarter, we grew our topline 2% over the prior-year period. This was our second consecutive quarter of year-over-year growth. And while our second quarter revenue was somewhat light versus our forecast, we're able to reiterate our full year revenue expectations, given our favorable outlook for the rest of the year. Our consolidated sales growth was driven by our Branded Products segment, which grew 2% to $81 million and our Contact Centers segment, which grew 9% to $25 million.

謝謝你，麥可。第二季度，我們的營收比去年同期成長了 2%。這是我們連續第二個季度實現同比增長。雖然我們第二季的收入低於我們的預測，但考慮到我們對今年剩餘時間的樂觀前景，我們能夠重申我們的全年收入預期。我們的綜合銷售額成長是由品牌產品部門和聯絡中心部門推動的，前者成長 2%，達到 8,100 萬美元，後者成長 9%，達到 2,500 萬美元。

These increases were partially offset by a 5% sales decline in our Healthcare Apparel segment to $27 million for the quarter. In terms of our profitability, our consolidated gross margin expanded 170 basis points over the prior year, coming in at 38.5%. Both Branded Products and Healthcare Apparel continue to drive year-over-year margin expansion with increases of 240 basis points and 120 basis points, respectively, driven by a combination of improved supply chain costs and pricing. These gross margin rate increases were partially offset by a 140 basis point decline at our Contact Centers segment, driven by increases in employee-related costs of our agents, included agent training in anticipation of new clients in the back half of the year.

這些成長被我們的醫療保健服裝部門本季銷售額下降 5% 至 2,700 萬美元所部分抵銷。獲利能力方面，綜合毛利率較上年增加170個基點，達38.5%。在供應鏈成本和定價改善的共同推動下，品牌產品和醫療服裝繼續推動利潤率年增，分別成長 240 個基點和 120 個基點。這些毛利率的成長被我們的聯絡中心部門 140 個基點的下降所部分抵消，這是由於我們的座席員工相關成本增加，包括下半年預計新客戶的座席培訓。

Our SG&A expenses were $48 million for the quarter, up from $43 million a year earlier, primarily driven by higher sales related compensation from growth in the Branded Products gross margin, higher marketing and advertising expenses, increased third-party professional fees and increases in employee-related costs. Our EBITDA of $5.6 million was down from $7.4 million in the prior-year period. Looking at this by segment, Branded Products EBITDA was down just slightly to $6.7 million, as stronger sales and a stronger gross margin were offset by higher SG&A expenses. Healthcare Apparel EBITDA came in at $1.3 million, down from $1.9 million in the prior-year period, primarily due to the lower revenues and higher marketing expenses this quarter. Contact Centers EBITDA was almost flat year-over-year at $3.2 million, as sales growth was offset by the combination of a lower gross margin rate and a higher SG&A rate, largely reflecting investments in talent to support future sales growth.

本季我們的SG&A 費用為4,800 萬美元，高於去年同期的4,300 萬美元，主要是由於品牌產品毛利率成長帶來的銷售相關薪酬增加、行銷和廣告費用增加、第三方專業費用增加以及員工人數增加相關費用。我們的 EBITDA 為 560 萬美元，低於去年同期的 740 萬美元。以細分市場來看，品牌產品 EBITDA 略有下降，至 670 萬美元，因為銷售成長和毛利率上升被 SG&A 費用上升所抵銷。醫療保健服裝 EBITDA 為 130 萬美元，低於上年同期的 190 萬美元，主要是由於本季收入減少和行銷費用增加。聯絡中心EBITDA 同比幾乎持平，為320 萬美元，原因是銷售成長被較低的毛利率和較高的SG&A 率相結合所抵消，這在很大程度上反映了為支持未來銷售成長而進行的人才投資。

Shifting gears, our interest expense for the second quarter was $1.5 million. That sequentially improved from $1.8 million in the first quarter this year and much improved from $2.6 million in the year-earlier quarter. The interest expense decrease from last year was primarily driven by a $53 million reduction in our weighted average debt outstanding, which I'll touch on in a moment. In terms of net income, we reported $600,000 for the second quarter or $0.04 per diluted share relative to $1.2 million or $0.08 per diluted share in a year-ago period.

換個角度來看，我們第二季的利息支出為 150 萬美元。這一數字較今年第一季的 180 萬美元有所改善，也較去年同期的 260 萬美元有所改善。利息支出較去年下降主要是因為我們的加權平均未償債務減少了 5,300 萬美元，我稍後會談到這一點。就淨利潤而言，我們報告第二季度淨利潤為 60 萬美元，即稀釋後每股收益 0.04 美元，而去年同期為 120 萬美元，即稀釋後每股收益 0.08 美元。

Turning to our balance sheet, which continued to improve, we ended the second quarter with cash and cash equivalents of $13 million, and we reduced our debt outstanding by another $12 million during the quarter. We've also generated $16 million in operating cash flow year-to-date, and our net leverage ratio at the end of the second quarter was 1.7 times trailing 12-month covenant EBITDA, much improved relative to 3.7 times a year earlier. I'll wrap up with our full year 2024 outlook, which is unchanged from what we provided on our last quarterly call. Specifically, we look for full year revenues to be in the range of $563 million to $570 million, and a full year earnings per diluted share to be in the range of $0.73 to $0.79.

談到我們的資產負債表，我們的資產負債表持續改善，第二季末我們的現金和現金等價物為 1,300 萬美元，本季的未償債務又減少了 1,200 萬美元。年初至今，我們也產生了 1,600 萬美元的營運現金流，第二季末的淨槓桿率為 1.7 倍，較去年同期的 3.7 倍為 12 個月契約 EBITDA。最後，我將介紹我們對 2024 年全年的展望，該展望與我們在上一季電話會議中提供的展望沒有變化。具體來說，我們預計全年營收將在 5.63 億美元至 5.7 億美元之間，全年稀釋後每股收益將在 0.73 美元至 0.79 美元之間。

These ranges call for acceleration over our first half results, including the later timing of quarterly sales that were originally expected during the second quarter as previously discussed. That concludes our prepared remarks. And operator, if you could please open the lines, Michael and I would be happy to take questions.

這些範圍要求我們上半年業績的加速，包括如前所述，最初預計在第二季度進行的季度銷售時間的延遲。我們準備好的演講到此結束。接線員，如果您可以接通電話，邁克爾和我很樂意回答問題。

(Operator Instructions) Kevin Steinke, Barrington Research. Please go ahead.

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

Thank you and good afternoon.

謝謝你，下午好。

Hi, Kevin.

嗨，凱文。

I wanted to start off by asking about the supply chain delays. You mentioned Healthcare Apparel and Branded Products. And you've mentioned the delayed revenue being pushed to the third quarter. Just trying to get a sense as to, if you could, size the revenue that was delayed, and therefore how much the third quarter will benefit?

我想先詢問供應鏈延誤的情況。您提到了醫療保健服裝和品牌產品。您提到了推遲到第三季的收入。只是想了解一下（如果可以的話）推遲的收入規模，以及第三季將受益多少？

Hi, Kevin. This is Mike. I'll take the question. What we started to see during the second quarter, was really a combination of certain suppliers reducing capacity, and then just an increase in demand in getting product, particularly out of China. So, we started to see some delays in product that we were receiving.

嗨，凱文。這是麥克。我來回答這個問題。我們在第二季開始看到，實際上是某些供應商減少了產能，然後只是產品需求增加，特別是來自中國的需求增加。因此，我們開始發現我們收到的產品出現了一些延誤。

It impacted us on the finished goods side, which again did directly impact the recognition of revenue. And then we also saw it in terms of delaying some of our fabric to our production facility in Haiti, which also did impact sales in the healthcare side as well. So, we really again, we experienced those delays, which did create a shortfall in our expectations, to the tune of, I would say, approximately a few million dollars for the quarter. And so, again, that's timing, some of which we began to recognize in the month of July, and we'll recognize throughout the third quarter primarily.

它對我們的成品產生了影響，也直接影響了收入的確認。然後我們也看到了延遲將一些布料運往海地生產設施的情況，這也確實影響了醫療保健方面的銷售。因此，我們真的再次經歷了這些延誤，這確實造成了我們的預期缺口，我想說，本季大約有幾百萬美元。因此，這又是一個時機，其中一些我們在 7 月就開始認識到，並且我們將主要在整個第三季度認識到。

Yes, Kevin, some of those delays were precipitated by the fact that with the anticipation that there could be tariffs placed on a lot of products coming out of China in particular next year, if Trump is were to be elected, a lot of people are trying to accelerate their shipments out of Asia. And that has placed a lot of demand on the backbone of the logistics companies to try to meet that demand. So, that's certainly one of the reasons for the delay.

是的，凱文，其中一些延誤是由於預期可能會對來自中國的許多產品徵收關稅，特別是明年，如果川普當選，很多人都會試圖加速他們的出貨量離開亞洲。這對物流公司的骨幹提出了很大的要求，以努力滿足這種需求。所以，這肯定是延遲的原因之一。

Okay. Great. That's helpful commentary. And with regard to the softer market conditions, you mentioned the slower customer decision-making. Does that apply primarily to Branded Products? Is that kind of across the segments? And is that slower decision-making continued thus far as you progressed into the third quarter?

好的。偉大的。這是很有幫助的評論。關於市場狀況疲軟，您提到顧客決策速度較慢。這主要適用於品牌產品嗎？這是跨細分市場的嗎？隨著進入第三季度，這種緩慢的決策是否仍在繼續？

Good question. We had a leadership summit about a week and a half ago, and brought all of our presidents together. And they all concurred that they had never seen slower decision-making on all of our customers' part. RFPs are going out. The responses to the RFPs are taking forever. Sometimes we're being told that we've been awarded business, and it takes forever to get things through people's legal departments.

好問題。大約一個半星期前，我們舉行了一次領導高峰會，所有總統都聚集在一起。他們一致認為，我們所有客戶的決策速度從未如此緩慢。RFP 即將發出。對 RFP 的答覆需要很長時間。有時我們被告知我們已經獲得了業務，但要花很長時間才能通過人們的法律部門。

Even after that happens, it is taking our customers the longest period of time to actually pull the trigger and give us purchase orders and that is true in all of our businesses. I don't know what's causing that exactly, except an uneasiness on their part or mandates from their own companies to just slow their spending down or defer certain spending items. The spending will be there. It's just taking longer than ever.

即使發生這種情況，我們的客戶也需要花費最長的時間才能真正扣動扳機並向我們發出採購訂單，這在我們所有的業務中都是如此。我不知道到底是什麼原因造成的，除了他們的不安或他們自己的公司要求放慢支出或推遲某些支出項目。支出將會在那裡。只是花費的時間比以往任何時候都長。

We're even seeing it in our pipelines that our pipelines of business are larger than they've been in some time. But part of the reason why they're larger than they've been for sometime is it's taking people longer to make a decision, so that's just a fact of life. We're happy that our pipelines are dramatically larger than have been in the past. When things do start to pop, we believe that that will result in us taking additional market share.

我們甚至在我們的管道中看到，我們的業務管道比以往任何時候都要大。但它們比以往任何時候都更大的部分原因是人們需要更長的時間才能做出決定，所以這只是生活的事實。我們很高興我們的管道比過去大得多。當事情開始流行時，我們相信這將導致我們獲得更多的市場份額。

Okay. Thank you. So you talked about increased marketing and advertising expenses, I think, in relation to direct-to-consumer and healthcare, maybe some other areas. Could you just expand upon that? And, again, what the magnitude of that was? And if that will continue into the back half of the year?

好的。謝謝。所以你談到了行銷和廣告費用的增加，我認為，與直接面向消費者和醫療保健有關，也許還有其他一些領域。您能對此進行擴充嗎？再說一遍，其規模有多大？這種情況是否會持續到今年下半年？

Hey, Kevin, this is Mike again. So, the predominant increase in marketing advertising continues to be in the Healthcare Apparel segment. As Michael mentioned in the prepared remarks, that's still attributable to us rebranding and continuing to build the awareness of the Wink brand, which we, I'd say, officially rebranded last year, as well as continuing to invest in the growth of direct-to-consumer. Obviously, these are heavier investments, in the early stages of that channel specifically, which, again, over time, we would expect to gain leverage as we build that customer base.

嘿，凱文，我又是麥克。因此，行銷廣告的主要成長仍然是在醫療保健服裝領域。正如邁克爾在準備好的演講中提到的那樣，這仍然歸功於我們的品牌重塑和繼續建立Wink 品牌的知名度，我想說的是，我們去年正式重塑了品牌，並繼續投資於直接增長-對消費者。顯然，這些都是較大的投資，特別是在該管道的早期階段，隨著時間的推移，我們期望在建立客戶群時獲得影響力。

So, that certainly is putting pressure on healthcare in particular, especially in a quarter, as you can see, where sales are down. We expect to gain more leverage on that as we move forward with our sales expectation in the back half of the year. But, again, we'll continue to have a meaningful investment. But again, we would expect to begin to gain some leverage in return on that as we move into the back half of this year.

因此，這無疑給醫療保健帶來了壓力，特別是在銷售額下降的季度，正如您所看到的。隨著下半年銷售預期的推進，我們預計將獲得更多的槓桿作用。但是，我們將繼續進行有意義的投資。但同樣，當我們進入今年下半年時，我們預計將開始獲得一些槓桿作為回報。

Okay. Yes, that's helpful commentary. Just lastly, I wanted to ask about the second half of the year. As you think about the outlook. Obviously, you talked about some of the revenue being delayed due to supply chain issues, but that you expect that to come back. But I guess, does your outlook also assume kind of a typical seasonal ramp in revenue? Is that something you're seeing or expecting in the business? And is that kind of factored into the outlook?

好的。是的，這是有用的評論。最後，我想問一下下半年的情況。當你思考前景時。顯然，您談到了由於供應鏈問題導致部分收入延遲，但您預計這些收入會回來。但我想，您的前景是否也假設收入有典型的季節性成長？這是您在業界看到或期待的事情嗎？這是否會納入前景？

That is what we're expecting, Kevin. I would say just add a little bit more to what Michael was saying, in terms of RFPs, and our Contact Center business, where the decision-making has been longer. You know the good news is that our pipeline is very strong, particularly with new customers. And so, with that timing of the decision-making, that would translate for them in a larger magnitude of sales, in the back half of the year, Q4 in particular, than we might otherwise see just because of the timing. And again, that is factoring into the back half of the year.

這就是我們所期待的，凱文。我想說的是，在 RFP 和我們的聯絡中心業務方面，對邁克爾所說的內容再補充一點，因為決策時間更長。您知道，好消息是我們的管道非常強大，尤其是新客戶。因此，根據決策的時機，這將為他們帶來更大的銷售額，特別是在今年下半年，特別是第四季度，比我們僅僅因為時機而看到的銷售額更大。再說一遍，這也是今年下半年的因素。

Okay. Thank you for taking the questions. I'll turn it back over.

好的。感謝您提出問題。我會把它翻回來。

Keegan Cox, D.A. Davidson.

基根·考克斯，D.A.戴維森。

Yes. How's it going?

是的。怎麼樣了？

Hi, Keegan. Thank you

嗨，基岡。謝謝

I just wanted to ask and dig a little bit more on the higher SG&A. I got that it was from kind of early investment in your Contact Center business. But I was just wondering if you could talk about it a little more and why you're growing that out.

我只是想詢問並深入了解更高的 SG&A。我了解到這是來自對聯絡中心業務的早期投資。但我只是想知道你是否可以多談談它以及為什麼你要把它發展出來。

Sure. The SG&A increase driven by a handful of factors. One being we did have an increase in gross margin with our Branded Products business. And as we said before, we pay commissions based on gross margin dollars. So as gross margin dollars rise, so will our commission expense within Branded Products.

當然。SG&A 成長是由多種因素推動的。其中之一是我們的品牌產品業務的毛利率確實有所增加。正如我們之前所說，我們根據毛利率支付佣金。因此，隨著毛利率的上升，我們品牌產品的佣金費用也會上升。

I would say within our Branded Products space, as well as our Contact Centers, we are making some investments in talent to support what we believe to be obviously the future trend, growth trend of those businesses. So building out what I would call a little bit more infrastructure. Thirdly, with also within the Contact Center business, we have made some incremental investments in a couple of what I would call satellite offices, obviously off of our current office format, which really helps us enable to access additional pools of talent, train, onboard faster. So again, we're making some of those investments in the early stages here to support the growth of new customers coming on board.

我想說的是，在我們的品牌產品領域以及我們的聯絡中心中，我們正在對人才進行一些投資，以支持我們認為顯然是這些業務的未來趨勢和成長趨勢。因此，建造我所說的更多基礎設施。第三，在聯絡中心業務中，我們對一些我稱之為衛星辦公室的地方進行了一些增量投資，這顯然不符合我們目前的辦公室格式，這確實有助於我們獲得更多的人才庫、培訓、入職快點。因此，我們在早期階段進行了一些投資，以支持新客戶的成長。

And then lastly, another meaningful part would be the marketing and advertising expense that I just referenced with Kevin, which again is predominantly within our healthcare business.

最後，另一個有意義的部分是我剛剛與凱文提到的行銷和廣告費用，這又主要在我們的醫療保健業務中。

Awesome. And then to kind of just follow-up on that, you talked a little bit about supply chain delays, and I know you guys have facilities in the Caribbean like in Haiti and such. Have they been impacted at all by the storms heading through there?

驚人的。然後，為了跟進這一點，您談到了供應鏈延遲，我知道你們在加勒比海地區（例如海地等）設有設施。他們受到經過那裡的風暴的影響嗎？

They have not been impacted by the storms, thankfully. And the civil unrest in Haiti, which is the other side of what happens in Haiti that could impact, has not impacted us much at all either. We've really had no downtime in the past quarter as a result. So, we're in good shape there.

值得慶幸的是，他們沒有受到風暴的影響。海地的內亂是海地發生的可能影響的另一面，但也沒有對我們造成太大影響。因此，我們在上個季度確實沒有停機情況。所以，我們在那裡狀況良好。

Awesome. And then I think I just had one more kind of – you're talking, Michael, about the pipeline of business kind of picking up in the back half of the year. And I just wanted to dig down into what segment that's in? Is it in the Contact Center? Just trying to make sure I got it right from it management.

驚人的。然後我想我還有一個想法——邁克爾，你說的是下半年業務的成長。我只是想深入了解它屬於哪個部分？是在聯絡中心嗎？只是想確保我從管理層那裡得到了正確的資訊。

Yes, that's in the Contact Center business where the pipeline of prospects is much higher. And when I say prospects, I'm talking about people, who we’re having serious conversations with about taking over their business, that they only make it to that list if that's the case. And then, of course the second side of that is even when we're told that we've won, it's taking longer to close business. But business is closing at a rate that we're very satisfied with.

是的，在聯絡中心業務中，潛在客戶的管道要高得多。當我說潛在客戶時，我指的是我們正在與他們就接管他們的業務進行認真對話的人，只有在這種情況下，他們才會進入名單。當然，第二個方面是，即使我們被告知我們贏了，結束業務也需要更長的時間。但業務正在以我們非常滿意的速度結束。

Awesome. Thank you.

驚人的。謝謝。

Jim Sidoti, Sidoti & Co.

吉姆·西多蒂，西多蒂公司

Hi. Good afternoon. And thanks for taking the questions. So, I'm looking at the results for the first half of the year and the results of the guidance. And it seems that you expect Q3 and Q4 to be even better than Q1 was. So what's giving you that confidence?

你好。午安.感謝您提出問題。所以，我正在看上半年的結果和指導結果。看來您預計第三季和第四季會比第一季更好。那麼是什麼給了你這樣的信心呢？

I would say a couple of things, Jim. One is there is what I'll call some seasonality in terms of we know historically that Branded Products in particular typically has a very strong third quarter leading into the fourth quarter. Two, I would say that from a timing perspective, we talked a little bit about the supply chain delays, which will obviously benefit the back half of the year. Thirdly, I would say from a from a timing perspective, there are a couple of customers in the healthcare business where those sales took place in the first half of last year are now coming in the back half of this year.

我想說幾件事，吉姆。其中之一是我所說的季節性，因為我們從歷史上知道，品牌產品通常在第三季和第四季都有非常強勁的表現。第二，我想說，從時間角度來看，我們討論了一些供應鏈延遲的問題，這顯然將有利於今年下半年。第三，我想說，從時間角度來看，醫療保健行業有一些客戶去年上半年發生的銷售現在在今年下半年發生。

Kind of gets a little bit to what Michael was referring to in terms of the timing of decision-making. And those sales are purchase orders. Those are sales ready to go. And then lastly, I would just again comment on what Michael and I touched on before. Just from a Contact Center standpoint, just in terms of the timing and onboarding of new customers, which is coming.

有點像麥可所說的決策時機。這些銷售是採購訂單。這些都是準備好的銷售。最後，我想再次評論邁克爾和我之前談到的內容。僅從聯絡中心的角度來看，就即將到來的新客戶的時機和加入而言。

Again, that put a little bit of pressure on SG&A expense for Contact Centers in the second quarter as we were training in advance of the back half of the year. But because of the timing of new customers, we expect that to drive improved sales trend in the back half for that segment as well.

這再次給第二季度聯絡中心的 SG&A 費用帶來了一些壓力，因為我們在下半年之前進行了培訓。但由於新客戶的時機，我們預期這也將推動該細分市場後半段銷售趨勢的改善。

And historically, Q4 is even better than Q3. The fact that you're going to, I guess, do some catch-up in Q3 this year, do you think that those two quarters will be a little more leveled off?

從歷史上看，第四季甚至比第三季還要好。事實上，我想，您將在今年第三季進行一些追趕，您認為這兩個季度會更加平穩嗎？

They'd be a little bit more balanced, Jim, to your point. Yes.

吉姆，按照你的觀點，他們會更平衡一點。是的。

And then in terms of the hiring salespeople for Branded Products, are you finding that to be any easier? Or is that still a challenge for you?

那麼在招募品牌產品銷售人員方面，您是否發現這更容易？或者這對你來說仍然是一個挑戰嗎？

It's never easy to wedge somebody away who's comfortable in their current environment. We've had more success in the last quarter than we've had in prior quarters. But we're satisfied with it. We're getting return for our efforts, and looking at a lot of other ways, as well, to grow sales, other than hiring additional salespeople. If we can create some operational efficiency, that will make the salesforce we have even more efficient.

要將那些在當前環境中感到舒適的人拒之門外絕非易事。我們在上個季度取得的成功比前幾季要多。但我們對此很滿意。我們的努力正在得到回報，除了僱用更多的銷售人員之外，我們還尋找許多其他方法來增加銷售額。如果我們能夠創造一些營運效率，那將使我們的銷售團隊更有效率。

We're in the process of rolling some things out internally, somewhat using some AI technology as well to do so. That will help our current salesforce achieve what we believe are better results for us as well.

我們正在內部推出一些東西，在某種程度上也使用了一些人工智慧技術來做到這一點。這將幫助我們目前的銷售人員取得我們認為對我們更好的結果。

All right. And then last one for me. On the one area where you have made a lot of progress is your gross margin, up significantly from 2022 and 2023. Do you think that these levels are sustainable?

好的。然後是我的最後一張。你們取得很大進展的一個領域是毛利率，較 2022 年和 2023 年大幅上升。您認為這些水平可持續嗎？

We would expect, Jim, to maintain the margins where we've been. If you look back, historically, just to last year, you really started to see our margin rate go up in the third quarter of last year. And we've continued that trend. So, I'd say we'd have margins in the back half more consistent with last year only because, again, we start lapping the stronger margins that we started to accrue in the third quarter.

吉姆，我們預計利潤率將維持在原來水準。如果你回顧歷史，就去年而言，你真的開始看到我們的保證金率在去年第三季有所上升。我們延續了這一趨勢。因此，我想說，我們下半年的利潤率與去年更加一致，只是因為我們再次開始獲得第三季開始累積的更強勁的利潤率。

Okay. But it sounds like you think in the high 30s. That's a pretty sustainable number.

好的。但這聽起來就像你想像的30多歲的人一樣。這是一個相當可持續的數字。

Yes.

是的。

All right. Thank you.

好的。謝謝。

Thanks Jim.

謝謝吉姆。

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Benstock for any closing remarks.

我們的問答環節到此結束。我想將會議轉回本斯托克先生發表閉幕詞。

Yes. Thank you, operator. I want to thank everyone for joining the call, for the great questions as well. We're excited about our company growth prospects, and everyone here at SGC is focused on strong execution. We look forward to updating you again on our next call.

是的。謝謝你，接線生。我要感謝大家加入這次電話會議，也感謝大家提出的好問題。我們對公司的發展前景感到興奮，SGC 的每個人都專注於強大的執行力。我們期待在下次通話中再次向您通報最新情況。

And please don't hesitate to reach out if you have any further questions before then. Enjoy the rest of your summer. Thanks again for being with us today. And as always, thank you for your interest in SGC.

如果您在此之前還有任何其他問題，請隨時與我們聯絡。享受你剩下的夏天。再次感謝您今天與我們同在。一如既往，感謝您對 SGC 的關注。

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

會議現已結束。感謝您參加今天的演講。現在您可以斷開連接