US: Superior Uniform Q4 profit slumps 33%
By Katie Smith | 27 February 2013
Career and workwear manufacturer Superior Uniform Group has booked a 33% decline in fourth-quarter net profit despite posting strong sales growth.
Net earnings reached US$485,000 for the three months to 31 December, compared to $725,000 in the same period last year.
The company said net earnings during the quarter includes an impairment loss of $1.2m related to its licensing agreement with EyeLevel Interactive North America.
Net sales increased 14% to $31m, up from $27.2m the previous year, driven by strong gains at the uniforms and related products segment and its remote staffing solutions business, which saw sales rise 12.8% and 55% respectively.
Over the full year, net earnings declined 26.7% to $3.1m from $4.1m the prior year. Sales rose 6.3% to $119.5m, compared to $112.4m the year before. Gross margin slipped to 33.3% from 35.8% the previous year.
CEO Michael Benstock said: "As we have discussed in our previous releases, our gross margins were greatly pressured in the first three quarters of 2012 as we worked our way through the higher priced inventory relative to the cotton crisis."
However, Benstock said the company saw gross margin improve during the fourth quarter to reach 34.2% against 33% in the first nine months of 2012.
"We believe that 2012 was a transition year for the company as we worked to improve our internal sales and marketing support systems for both our Uniforms and Related Products segment and our Remote Staffing Solutions segment. We enter 2013 in a very strong position and anticipate reporting continued significant improvement in our operating results," Benstock added.
Superior Uniform Group Announces 2012 Year End Earnings Release
Tue, 02/26/2013 - 08:18 -- Press Room
SUPERIOR UNIFORM GROUP, INC. REPORTS OPERATING RESULTS FOR 2012
6.3% Increase in Net Sales for 2012
Records Non-Cash Impairment Charge for Intangible Assets of $1,226,000 before tax benefit
14.0% Increase in Net Sales in Fourth Quarter 2012
83.3% Increase in Earnings Per Share in Fourth Quarter 2012 before Impairment Charge
SEMINOLE, Fla. - February 26, 2013 - Superior Uniform Group, Inc. (NASDAQ: SGC), manufacturer of uniforms, image apparel and accessories, today announced its fourth quarter and year-end operating results for 2012.
The Company announced that for the year ended December 31, 2012, net sales increased 6.3% to $119,486,000, compared to 2011 net sales of $112,373,000. Net earnings for the year ended December 31, 2012 were $3,031,000 or $0.49 per share (diluted) compared to $4,136,000 or $0.68 per share (diluted) reported for the year ended December 31, 2011.
Net earnings for the fourth quarter ended December 31, 2012 were $485,000 or $0.08 per share (diluted) compared to net earnings of $725,000 or $0.12 per share (diluted) reported for the fourth quarter ended December 31, 2011. Net earnings for the fourth quarter included a non-cash, pre-tax intangible asset impairment loss of $1,226,000 to write off the remaining balance of its intangible asset associated with its licensing agreement with EyeLevel Interactive North America, LLC. After tax, this charge resulted in a reduction of earnings per share (diluted) of approximately $0.14.
Michael Benstock, chief executive officer, commented: "We are very pleased to report a 6.3% increase in net sales for the year. We are especially pleased to report our fourth quarter results as we achieved a 14.0% increase in net sales and an increase of approximately 83% in our earnings per share (diluted) before consideration of the intangible asset impairment loss. We reported strong gains in net sales in the fourth quarter for both our Uniforms and Related Products segment at 12.8% and our Remote Staffing Solutions segment at 55%.
"As we have discussed in our previous releases, our gross margins were greatly pressured in the first three quarters of 2012 as we worked our way through the higher priced inventory relative to the cotton crisis. As a result, our gross margins for the year ended December 31, 2012 were 33.3% as compared to 35.8% for the prior year. As expected, we saw significant improvement in our gross margins in the fourth quarter up to 34.2% compared to 33.0% for the first nine months of 2012. We expect that this trend will continue in 2013.
"Although we believe that our everyBody media® product line provides us with an opportunity for significant growth in our Uniforms and Related Products segment in the future, we have not been able to generate any significant revenues from the product line during the last two years. We have attempted to negotiate an extension of the initial term of the related licensing agreement and are continuing to pursue this extension. However, we have not been successful to this point and cannot be assured that we will ultimately be able to negotiate an extension on reasonable terms. Additionally, we have been involved in two significant test programs with two separate customers during 2012. One of these programs was with a major retailer in the northeast in the fourth quarter. The test was adversely affected by hurricane Sandy and, as a result, the customer determined that it did not yet have sufficient data to conclude on moving forward with a full program. We are in the process of developing another test program with this customer in 2013. Additionally, while the feedback from the other test program has been positive, the customer has been slow to move to a full revenue producing program at this point. As a result of these items and the lack of an extension of the initial term at this point, we concluded that we did not have adequate, verifiable cash flows to support recovery of the intangible asset at December 31, 2012. Therefore, we recorded a pre-tax, non-cash impairment charge of $1,226,000 in the fourth quarter of 2012 to write off the remaining balance of the licensing agreement. Our operating results also include approximately $818,000 of amortization expense associated with this licensing agreement in each of the years ended December 31, 2012 and 2011. This amortization expense will not repeat in 2013.
"Our financial position remains very strong as we ended the year in a positive cash position and with a debt free balance sheet despite prepaying our regular quarterly dividend for the full year of 2013 during the fourth quarter of 2012.
"We believe that 2012 was a transition year for the Company as we worked to improve our internal sales and marketing support systems for both our Uniforms and Related Products segment and our Remote Staffing Solutions segment. We enter 2013 in a very strong position and anticipate reporting continued significant improvement in our operating results."
View entire Superior Uniform Group 2012 Year End Earnings Release.
Statements contained in this press release which are not historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to risks and uncertainties, including without limitation, those identified in the Company's SEC filings, which could cause actual results to differ from those projected.
Original source: http://www.superioruniformgroup.com/news/387/superior-uniform-group-announces-2012-year-end-earnings-release
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