[Management View]
Superior Group of Companies (SGC) reported sequential improvements in earnings, net income, and EBITDA from the prior quarter, though metrics remain below prior-year levels. Management highlighted macroeconomic uncertainty and sector-specific demand softness as primary drivers behind topline contraction. Successful expense management was emphasized, with annualized cost actions fully phased in, maintaining a flat SG&A ratio of 35% despite declining sales. The company is equipped with ample liquidity and acquisition readiness, with a robust and expanding pipeline in the branded products segment.

[Outlook]
Full-year revenue guidance was tightened to $560 million–$570 million, raising the midpoint and narrowing the range from previous guidance. Management remains focused on leveraging sales capabilities and maintaining tight expense management. Prospects for normalized demand and further profitability improvement are contingent on stabilization of trade policy and broader economic conditions.

[Financial Performance]
- Branded Products Revenue: $85 million, down from $93 million YoY.
- SG&A Expenses: $48 million, down $4 million YoY.
- Net Income: $2.7 million, up from $1.6 million in Q2 but down from $5.4 million YoY.
- Cash and Liquidity: $17 million in cash and over $100 million total liquidity.

[Q&A Highlights]
Question 1: Can you describe the environment for branded products and whether it is normalizing?
Answer: The market has been challenged due to the tariff environment, influencing customer behavior. The new tariff announcements are positive and expected to provide stability. SGC has been proactive in communicating with clients and building a pipeline and backlog.

Question 2: Where are you in working off the inventory for branded products and healthcare?
Answer: SGC has been opportunistic in sourcing inventory from lower tariff jurisdictions and domestic sources. The healthcare side leverages Haiti sourcing, which is advantageous in terms of duty.

Question 3: Can you quantify the impact of losing a client in the call center and discuss the pipeline?
Answer: The impact is about a couple of million dollars annually. The business is still transitioning, and there is potential for growth or retention. The pipeline remains strong, with some movement expected to benefit in 2026.

Question 4: Can you talk about your pricing power and ability to maintain or increase prices?
Answer: SGC has been able to pass through cost increases to customers, especially in branded products and healthcare. The contact center business does not have tariff impacts, so no significant pricing changes are expected there.

Question 5: Is the expected revenue increase in Q4 primarily in branded products or spread across segments?
Answer: The increase is primarily related to the branded product segment, driven by strong bookings and pipeline.

Question 6: Can you provide color on sales trends by month and acquisition opportunities?
Answer: Sales are expected to build month to month, with December being the largest. The acquisition environment is rich, with many opportunities, especially in branded products. SGC is being aggressive but selective in pursuing acquisitions.

Question 7: How much did the cost savings program help this quarter?
Answer: The cost savings program contributed about $2 million to the $4 million reduction in SG&A expenses. Annualized savings are targeted at $13 million.

[Sentiment Analysis]
The tone of the management was cautiously optimistic, emphasizing strategic positioning and cost management amid uncertainty. Analysts' questions focused on understanding the impact of tariffs, inventory management, pricing power, and acquisition opportunities.

[Quarterly Comparison]
| Metric | Q3 FY2025 | Q2 FY2025 | Q3 FY2024 |
|-------------------------|-----------|-----------|-----------|
| Branded Products Revenue| $85M | N/A | $93M |
| SG&A Expenses | $48M | N/A | $52M |
| Net Income | $2.7M | $1.6M | $5.4M |
| Cash and Liquidity | $17M | N/A | N/A |

[Risks and Concerns]
- Persistent macroeconomic uncertainty and sector-specific demand softness.
- Tariff-related volatility influencing customer behavior and order timing.
- Potential impact of losing clients in the call center segment.

[Final Takeaway]
Superior Group of Companies demonstrated effective cost management and strategic positioning amid a challenging macroeconomic environment. While revenue and net income remain below prior-year levels, the company has maintained a flat SG&A ratio and built a robust pipeline in the branded products segment. The tightened full-year revenue guidance reflects cautious optimism, with future profitability contingent on economic stabilization and trade policy clarity. Investors should monitor the company's ability to convert its strong pipeline into sales and navigate ongoing uncertainties.