Q4 2024 Superior Group of Co Inc Earnings Call
Jamie: [music].
Good afternoon, and welcome to the Superior group of companies fourth quarter 2024 conference call.
Speaker Change: With us today are Michael Benstock, Chief Executive Officer, and Michael Campbell, Chief Financial Officer.
Speaker Change: As a reminder, this conference call is being recorded.
Speaker Change: 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.
Speaker Change: Such statements are based upon management's current expectations projections estimates and assumptions were.
Speaker Change: Words, such as expect believe anticipate think outlook hope and variations of such words and similar expressions identify such forward looking statements.
Speaker Change: 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 such risks and uncertainties are further disclosed in the Companys periodic filings with the Securities and Exchange Commission, including but not limited to the company's most recent.
Speaker Change: Annual report on Form 10-K, and quarterly reports on Form 10-Q.
Speaker Change: 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.
Speaker Change: The company does not undertake to update the forward looking statements, except as required by law.
Speaker Change: And now I'll turn the call over to Michael Benstock. Please go ahead. Thank.
Speaker Change: Thank you operator today I'll review, our consolidated full year and fourth quarter financial highlights along with a discussion of our three business segments. I'll, then turn the call over to Mike who will take us through a more detailed financial discussion and provide our outlook for 2020, but after that we'll open the lines to take your questions.
Speaker Change: Fourth quarter results came in largely as expected, placing us within our full year 2024 outlook ranges, which as a reminder, we had raised after the first quarter, our full year consolidated revenue and diluted EPS were up 4% and 35% respectively over the prior year and we are pleased to have achieved this result under the current macro.
Speaker Change: With economic conditions, which have presented numerous challenges.
Speaker Change: Market conditions continue to reflect customer hesitancy, given the uncertainty around inflation interest rates geopolitical conflicts, the new administration and the general economic direction, while we cannot control. These external factors. We are committed to tackling the aspects of our business that are within our control our team has shown resilience.
Speaker Change: And adaptability focusing on cost management, maximizing our operational efficiencies enhancing customer experience and driving innovation within our product lines.
Speaker Change: That said with tremendous opportunities for growth even in a more prudent spending climate.
Speaker Change: During the fourth quarter consolidated revenue was down 1% versus the prior year, which if you recall had been a strong quarter for us.
Positive growth in health care apparel and contact centers was offset by a decrease in our branded products segment, we generated fourth quarter diluted EPS of <unk> 13 cents relative to 'twenty two.
Speaker Change: Last year again, this put us within our full year outlook range and as expected was a tough year over year comp given the outsized strength in the fourth quarter of 2023, we also generated positive operating cash flow, enabling us to maintain a strong leverage ratio our solid financial foundation provides us the opera.
Speaker Change: <unk> tended to make strategic investments in our three very attractive end markets. While also opportunistically repurchasing our shares which Mike will speak to.
Speaker Change: Starting with branded products, we did achieve modest growth in the promotional products channel driven by a combination of both new and existing customers. We are investing in sales leadership to expand our share of wallet with existing customers as well as to add new customers at a faster pace overall, our expanding market share should result in stronger growth over time.
Speaker Change: Especially once economic uncertainty lifts turning to health care apparel, while overall market conditions remain soft, especially for the brick and mortar wholesale related channel, we look to grow our digital channels over time, both wholesale and direct to consumer. We're also investing in sales branding and marketing to further drive weak brand aware.
Speaker Change: Yes.
Speaker Change: As for contact centers, which remains our highest margin segment. We are encouraged by the revenue growth potential, especially now that we have a sales team in place for the first time since launching this business in 2008, we did see a positive contribution from brand new customers during the quarter, which more than offset the decline with existing customers due in part to end.
Speaker Change: Of year seasonal adjustments, our contact center strategy is to continue growing our customer count with our new internal sales capability by targeting small and medium sized enterprises with greater marketing support. Most importantly, we're implementing some of the very latest technology to not only enhance the customer experience, but to optimize our.
On costs and long term profitability.
Speaker Change: Now I'll hand, it over to Mike for a detailed walk through our fourth quarter results as well as our initial outlook for 2025 before we take your questions Mike.
Mike: Thank you Michael and thanks, everyone for joining us today on a consolidated basis, our fourth quarter revenues were down 1% relative to the prior year period, completing what was again as anticipated a back half weighted year for S E T and placing us within our outlook range.
Mike: Want to again emphasize that we expect a similar pattern for 2025.
Mike: Looking closer at topline performance, starting with branded product revenue was up 5% year over year sales of promotional products grew while branded uniform sales with existing customers were down year over year, primarily due to stronger uniform program rollouts in the year ago quarter.
Mike: We grew health care revenue, 8% over the prior year, primarily driven by growth in our digital channels as well as some favorable sales timing in our non digital channels.
Mike: And for contact centers, we drove 4% topline growth.
Mike: We now have a sales force in place as Michael just mentioned and while we saw a decline from existing customers. This was offset by an even stronger contribution from new customers, but also provide the opportunity for future seat expansion.
Mike: Turning to margins and profitability, our consolidated gross margin for the fourth quarter of 37, 1% was down to 70 basis points relative to the year earlier quarter. Despite the tough comparison.
Mike: And SG&A as a percent of revenues at 34, 4% was about a percentage point higher.
Mike: This resulted in consolidated EBITDA of $7 $3 million versus $9 9 million in the fourth quarter of 2023.
Mike: On a segment by segment basis branded products fourth quarter gross margin was down a percentage point to 33, 9% driven by sourcing mix and lower volume related to our branded uniform programs.
Mike: As we have said in the past the sales and margin mix of uniform programs can vary on a quarterly basis, depending upon the timing of program Rollouts and sourcing considerations.
Mike: SG&A as a percent of revenues for the fourth quarter increased about a percentage point to 25, 9% mainly driven by deleveraging.
Mike: As a result branded products EBITDA was $8 $9 million for the quarter down from $11 $7 million the prior year.
Mike: Turning to health care apparel, while our fourth quarter gross margin of 33, 7% was up three percentage points due to higher sourcing costs related to manufacturing in Haiti, we did achieve better leverage on SG&A as a percent of revenues.
Mike: By more than a full percentage point on the 8% sales increase.
Mike: As a result, our health care apparel EBITDA came in at $1 $1 million relative to $1 4 million in the year earlier period.
Mike: As for our contact centers, which is our highest margin segment, we drove a stronger fourth quarter gross margin of 54, 7% up more than two five percentage points from last year.
Mike: SG&A as a percentage of revenues at 44, 9% improved slightly from 45, 1% in a year ago quarter.
Mike: This resulted in EBITDA of just over $3 million up from $2 $3 million and a year ago period.
Mike: Our fourth quarter interest expense was $1 $5 million, which improved sequentially and also marks a significant improvement from $2 $1 billion in the prior year period.
Mike: This improvement was driven by lower weighted average debt outstanding as I'll discuss in a moment and a more favorable weighted average interest rate down to 130 basis points over the past year.
Mike: Our fourth quarter net income, reflecting the EBITDA trends already discussed was $2 $1 million relative to $3 $6 million and the very strong fourth quarter of 2023, and we generated earnings per diluted share of 13 cents.
Mike: Relative to 'twenty two.
Mike: Our balance sheet has continued to strengthen with yearend cash and cash equivalents of $19 million at year end compared to $20 million at the end of 2023 <unk>.
Mike: <unk> completing more than $7 million of share repurchases during the year as well as a small acquisition completed during the fourth quarter.
Mike: We also reduced our outstanding debt to $86 million at year end improved from $93 million a year earlier.
Mike: For the year, we produced strong operating cash flow of $33 million.
Mike: Porting, our net leverage ratio, which ended 2024 at just one seven times trailing 12 month Covenant EBITDA improving from two times at the start of the year.
Mike: Providing an update on our share repurchase plan introduced last August during the fourth quarter, we repurchased approximately 72000 shares for $1 $1 million at an average price of $14 96 per share.
Mike: We ended the year with approximately $2 $6 million remaining under our initial authorization.
Mike: Today, we are announcing that our board has authorized an additional $17 $5 million share repurchase plan with no program exploration and we intend to continue buying back shares depending upon a number of market factors.
Mike: In support of the new repurchase program and reflecting our improved financial profile. Our bank Syndicate agreed to amend our credit agreement to increase the annual amount of permitted payments for shareholder distributions and share repurchases and alike.
Mike: I'll wrap up with our initial outlook for 2025 as.
Speaker Change: As Michael mentioned in prior calls and spoke of in his opening remarks, there are lingering factors, resulting in customer hesitancy and overall economic uncertainty.
Speaker Change: Taking these factors into consideration, we look for full year revenues to be in the range of $585 million to $595 million, suggesting year over year growth at the high end of 5%.
Speaker Change: And we look for full year earnings per diluted share to be in the range of 75 to 82.
Speaker Change: Suggesting 12% year over year growth at the high end.
Speaker Change: As mentioned earlier, we expect a back end weighted cadence to 2025.
Speaker Change: Similar to what we have achieved in each of the past two years.
Speaker Change: And with that operator, if you could please open the line Michael I will be happy to take questions.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If you were using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Speaker Change: Our first question today comes from Jim Sidoti with Sidoti <unk> Company. Please go ahead.
Jim Sidoti: Hi, good afternoon, thanks for taking the questions.
Jim Sidoti: I'm just looking through the cash flow statement. It looks like you did an acquisition $4 million acquisition in the quarter can you, let us know what that was.
Jim Sidoti: Hi, Jim This is Mike. Thanks for the question, Yes, we did a small acquisition in December.
Jim Sidoti: Of this past year, and we really have.
Jim Sidoti: We consider it really a small opportunistic acquisition it enabled us to add a few new what I would call blue chip customers that we really feel.
Jim Sidoti: Good.
Jim Sidoti: Really provide us with some growth with those new customers and it also enabled us to add some experienced talent as well. So we identified an opportunistic transaction and really took advantage of it and will again provide us with some some growth here in 2025.
Speaker Change: So it sounds like it's a branded products.
Jim Sidoti: Business.
Jim Sidoti: It is it is branded products business.
Jim Sidoti: Okay and you know.
Jim Sidoti: The overall guidance Ive seen pretty much in line with where I was where the street was a little bit lower or are you seeing a higher material cost or labor cost.
Jim Sidoti: Can you just give a little color on what's going on on the cost side.
Jim Sidoti: Sure as I mentioned in my prepared remarks, we saw for the quarter was a slightly.
Jim Sidoti: Lower margin rate and the health care business again due to some higher costs associated with our manufacturing in Haiti. Some of that has to do with the fact that.
Jim Sidoti: With holidays, we've got some less production, so absorbing less of the cost which.
Jim Sidoti: <unk>, which is put it put a little bit of pressure on margin in the fourth quarter. We took physical inventory had some inventory that we had written off not yeah, what I would call significant but it kind of adds up along with some of the incremental production costs. So I'd say that the cost in Haiti again incrementally.
Jim Sidoti: ROE a little bit more pressure on the margin, which to your point then.
Jim Sidoti: Impacted some of the flow through on the sales that we had for the quarter.
Jim Sidoti: Alright, and it sounds like you think costumed.
Jim Sidoti: Cost is going to remain near that level.
Jim Sidoti: In 2025.
Jim Sidoti: For the most part I think again part of our part of our our charge and 80 was again associated with some year end inventories that we had taken wouldn't expect that to.
Jim Sidoti: To repeat itself, but but in terms of just the the larger production costs, we would expect that to continue into 2025.
Jim Sidoti: Alright, and then last one for me.
Speaker Change: You did raise prices on the contact centers business and I think you might have raised prices.
Jim Sidoti: On your other businesses as well over the past 12 to 18 months.
Jim Sidoti: Are those price increases sticking and do you think do you have any additional pricing power.
Jim Sidoti: In the future.
Jim Sidoti: What's the pricing environment look like.
Jim Sidoti: Oh, no we're not we're a little bit of a crazy. This is Michael we're in a little bit of a crazy environment now where everybody is expecting prices to go up.
Jim Sidoti: So yes, we will be continuing to raise prices. We have continued to raise prices as was necessary also.
Jim Sidoti: Found some efficiencies along the way, where we didn't need to.
Jim Sidoti: Some of our products and services did not raise prices, but we do expect price increases in the future.
Jim Sidoti: But for the large part.
Jim Sidoti: Because I'm sure. There's a question in here, that's going to come about tariffs.
Jim Sidoti: We might as well you know laid out there we are very well positioned or whatever's going to happen from a tariff standpoint, we contemplated.
Jim Sidoti: A lot of what has already happened and has already been announced and we feel were in a.
Jim Sidoti: But.
Jim Sidoti: We're still waiting and watching because it's it's a very fluid situation. We know what's been announced we know what we know what's been announced again and pulled back.
Jim Sidoti: But we've diversified our supply chain greatly over the last few years during the first Trump administration, we started doing it because some of our thoughts that tariffs were going to increase further and not knowing whether he was going to get elected second time or not we pulled back and we went to other countries.
Jim Sidoti: Have much less risk.
Jim Sidoti: The us, but we certainly have been watching it we.
Jim Sidoti: We have already proceeded with negotiations with our with all of our vendors that has worked out very very favorably wont get it took my product byproduct, what's happened because it does differ by product for.
Jim Sidoti: For each product, even with our logistics vendors we've seen some some.
Jim Sidoti: Our ability to put pressure on them to reduce some costs there so.
Jim Sidoti: We're in good shape.
I think to the extent that we're going to see cost increases, we're going to be able to pass those on.
Jim Sidoti: And the fact, you're buying back another I think it was $17 million a share.
Jim Sidoti: Sure.
Jim Sidoti: It sounds like you're pretty confident that cash flow is going to continue to remain strong over the next few quarters.
Jim Sidoti: We would expect to continue to generate good cash flow and is it as it relates to the the share buyback as we've done in the past we will monitor the market going forward and based on a number of factors, we'll obviously make decisions along the way to to purchase within that program.
Jim Sidoti: Alright, thank you.
Jim Sidoti: Yeah.
Speaker Change: The next question is from Kenan Cox with D. A Davidson. Please go ahead.
Kenan Cox: Hi, Michael and Mike.
Kenan Cox: Hi, how are you.
Kenan Cox: Yeah.
Speaker Change: So my question was just on the branded product segment I know you guys were cycling what you said more.
Speaker Change: Uniforms from or branded uniforms I was wondering if those customers are still around in your business and you're just waiting for and you're cycling like a big contract.
Speaker Change: What we're looking for and growth there.
Speaker Change: Sure on the on the branded uniform program side.
Speaker Change: Theres been no turnover and customers we've retained all the yeah. The the the large customers that we have.
Speaker Change: What I was really referring to in the prepared remarks is that with with our existing customers. They they will from time to time rollout new uniform programs and of course, the timing of that can vary from year to year or within the quarter and so.
Speaker Change: What we saw in comparing the fourth quarter of this year to last year last year was we had.
Speaker Change: Our rollout begin to take place in the fourth quarter of last year, which was beneficial to the quarter and.
Speaker Change: And the timing of.
Speaker Change: The new program did not occur in the fourth quarter of 'twenty four but it is going to take place in 2025. So again just the.
Speaker Change: The difference in the timing of when our existing customers are rolling out programs.
Speaker Change: That makes sense. Thank you and then just a follow up it seems like margins are.
Speaker Change: Pretty strongly with contact center business I was wondering if you guys are seeing any labor cost increases their overseas or at home.
Speaker Change: Not to the extent beyond what we reported.
Speaker Change: I know about a year ago.
Speaker Change: We've kept a pretty steady state.
Speaker Change: Of being able to to keep up with the pressure that we had.
Speaker Change: We were when we raised our rates a year ago I couldn't be racing to a level that made us extremely competitive and we haven't had to do much since then.
Speaker Change: Spotty places in particular jobs that we've had to do things for but we certainly have been able to recoup that through price increase and we were happy key game with the the gross margin rate and contact centers at 54.
Speaker Change: 7% was consistent.
Speaker Change: Consistent with the third quarter and up from the first half of the year.
Speaker Change: So happy to see that we're maintaining the higher margin in the back half of the year.
Speaker Change: Thank you.
David Marsh: The next question is from David Marsh with singular research. Please go ahead.
Speaker Change: Yeah.
David Marsh: Hey, guys. Thank you very much for taking the questions and congrats on the quarter.
Speaker Change: Looking at the.
Speaker Change: At the leverage you guys have done a great job, bringing leverage down would you say that you know that.
Speaker Change: This level that you're at a pretty comfortable level or.
Speaker Change: As you weigh uses of cash flow you know do you think that maybe you want to reduce it some more here.
Speaker Change: US a little insight there.
Speaker Change: David I'll take that we're obviously, we're very comfortable with where we're we are.
Speaker Change: At our current leverage ratio with that said you know we've mentioned before that with with a very strong leverage ratio that we have combined with the capacity and our current credit facilities, we certainly have the opportunity.
Speaker Change: For cat.
Speaker Change: Capital investment or capital allocation, such as share repurchases, a potential M&A activity et cetera.
Speaker Change: So we will certainly look to to utilize that capacity. If if there is compelling opportunities as Mike while I have said.
Speaker Change: In the past where we.
Speaker Change: Definitely we'd like to be in the two to two and a half range of leverage.
Speaker Change: Taking into account some of the activities that I mentioned, and then with free cash flow, having that opportunity over time to get that back down to under two but again I think we're very comfortable and.
Speaker Change: We're in a position where again, we can use the capacity that we have to take advantage of some potential opportunities that might arise.
Speaker Change: Speaking of acquisitions you guys are you know you pulled the trigger on a small one in the quarter and branded products can you just talk about kind of more broadly the acquisition landscape and kind of maybe help.
Speaker Change: Lets understand what your priorities would be in terms of the business lines around acquisitions.
Speaker Change: Good question.
Speaker Change: It's one of the richest environments we've ever seen.
Speaker Change: There's plenty of opportunity.
Speaker Change: It's one of those things where you can imagine.
Speaker Change: All right you Kiss a lot of frogs, along the way until you're fine.
Speaker Change: You know what you're looking for.
Speaker Change: What we're looking for are.
Speaker Change: It almost immediately accretive businesses.
Speaker Change: That that.
Speaker Change: Don't put any pressure on our leverage ratios.
Speaker Change: And they've got to have great leadership, with a great culture and easily integrated.
Speaker Change: Integrated well.
Speaker Change: Yes.
Speaker Change: These are the things we look for.
Speaker Change: And quite frankly, there's there's not one of those things.
Speaker Change: That isn't as important as the next we would not buy a business that was missing one of those components and you know what I think.
Speaker Change: Where we're seeing some great companies out there some are beyond our capacity.
Speaker Change: But.
Speaker Change: We're certainly very engaged particularly in the branded products business.
Speaker Change: And we're also more engaged than ever in the call center business and looking for the right.
Speaker Change: Company, but that would get us into a geography that we're not currently in that would make us even more attractive to our customer base.
Speaker Change: Okay.
Speaker Change: And then just.
Speaker Change: I wanted to kind of dig into your comments, Mike about 25 guidance, just a little bit.
Speaker Change: Yeah, I caught back end loaded, but what I didn't really catch was and I kind of was trying to derive it from some of the Michaels comments early on.
Speaker Change: Just as we're starting the year.
Speaker Change: Should we expect you know like a meaningful sequential slowdown.
Speaker Change: And then a really heavy backend load or maybe not as much of a kind of more of a flattish to slightly down start.
Speaker Change: Kind of a gradual build I'm just trying to.
Speaker Change: Trying to trying to model this year.
Yeah.
Speaker Change: Yes somewhere between there is the right number.
Speaker Change: Yeah, I would characterize it Dave more is a I'd say a more gradual build this year.
Speaker Change: So shifting a little bit more more backend weighted.
Speaker Change: Obviously, there's you know.
Speaker Change: A lot of uncertainty that's taking place right now and and so you know our belief is that the.
Speaker Change: Well things will.
Speaker Change: It will become clear as we move forward and so we're expecting a little bit more of a gradual build this year then.
Speaker Change: Then we saw last year, and then you know again ramping up.
Speaker Change: Later in the year third quarter is always an important quarter for us it will continue to be an important quarter, but that's that's how I would characterize the.
Speaker Change: The calendar <unk> at this point.
Speaker Change: Okay. That's really helpful. And then if I could just sneak in one more.
Speaker Change: Guys you've mentioned in the prepared remarks.
Speaker Change: Some some comments just a quick comment really about health.
Speaker Change: Health care apparel and the online channel and this is something you've mentioned in the past.
Speaker Change: You know periodically on calls just wanted to see if if that online channel as you know quite to a place where you know its something that you.
Speaker Change: You you want to talk about you know more meaningfully or is it just kind of still a supplement too.
Speaker Change: Yes, kind of the traditional brick and mortar and shipping and things of that nature.
Speaker Change: Yes, I would say for competitive reasons, we really don't want to speak about it.
Speaker Change: Too much.
Speaker Change: Shared numbers.
Speaker Change: And our strategies and where we're spending our money and what our return on.
Speaker Change: Advertising spend it's been but it's been very very favorable.
Speaker Change: As favorable as as many of the consumer driven companies even better than most.
So we're just going to sit tight with the numbers for a while more sometime before we'll actually start reporting all of those metrics.
No I get it. Thanks, thanks, so much I appreciate the color.
Speaker Change: The next question is from Kevin Steinke with Barrington Research. Please go ahead.
Kevin Steinke: Thank you.
Kevin Steinke: So I just wanted to ask about the the general tone among customers you mentioned still some uncertainty obviously, but.
Kevin Steinke: It felt like maybe there was you know.
Kevin Steinke: A little more optimism about what it.
Kevin Steinke: Just opening up are expanding as we entered the year. So I don't know if you.
Kevin Steinke: Kind of a increase on and uncertainty over the last month.
Kevin Steinke: A month or so or kind of you know.
Kevin Steinke: Or are we kind of just wondering if there's been any kind of fits and starts in terms of you know the demand environment.
Kevin Steinke: I think that's a good characterization fits and starts but let's take it one segment at a time so on the branded product say say, we're certainly seeing positive signs of increased spend among our clients in.
Kevin Steinke: In the fourth quarter result.
Kevin Steinke: Result in increased bookings strong backlog headed into the new year.
Kevin Steinke: More recently as you can imagine we've noticed a growing sense of call. It uncertainty regarding the repercussion, particularly of tariffs on the overall economy.
Kevin Steinke: And the consequent impact on the cost of our branded merchandise.
Kevin Steinke: They're worried that these tariffs could disrupt existing supply chains.
Kevin Steinke: Leading to potential delays and increased cost for our clients.
We're well positioned to weather this as I said, we've actively diversified our supply chain.
Kevin Steinke: Out of tariff countries. We're also taking market share from our competitors, who are not as well prepared as we are.
Kevin Steinke: To handle the current environment, that's scribes branded products on health care apparel, we had a very strong Q4 across our omnichannel mess and distributor channels.
Kevin Steinke: Demand for new collections that were introduced in the fall of 'twenty four continues to grow.
Kevin Steinke: As consumers have increasingly asked.
Kevin Steinke: For our retail facing brands, which are linked and carhartt medical.
Kevin Steinke: While we delivered a strong Q4, we're getting to experience economic marketplace uncertainty even in this place where these are necessary item for people to buy from both our consumers and.
Kevin Steinke: And customers, who are reselling our products leading to delays in purchasing.
Kevin Steinke: And installing new groups.
Kevin Steinke: We're in a strong inventory position with increased brand awareness to meet men take share from our competitors across our portfolio and that's the good news is we brought in a fair amount of product early.
Kevin Steinke: In contemplating these tariffs so we should be in pretty good shape.
Kevin Steinke: On the contact center side.
Kevin Steinke: It varies varies greatly across we're agnostic as far as who we serve and we have many many different types of customers, but I would say the prevailing theme of cost containment through it.
Kevin Steinke: Enhanced efficiencies is absolutely consistent across the board.
Kevin Steinke: This is also merit I would say mirrored in our in our business pipeline.
Kevin Steinke: Which we believe as a tremendous opportunity exists for us to capture additional market share.
Kevin Steinke: Prospective clients are looking for a PPO partners capable of helping them reduce costs.
Kevin Steinke: And we believe with the innovative technologies that we employ.
Kevin Steinke: That and the other requirements that we can meet that we're in a very good position to take more market share.
Kevin Steinke: With that we're still seeing slower decision, making consummate new deals got a great backlog.
But.
Kevin Steinke: There's also an uptick in price checking.
Kevin Steinke: Disguised as Rfps, but.
Kevin Steinke: We're participating in it it's a numbers game and we're participating in as many as we can to win as much business as possible.
Speaker Change: Okay. Thanks, that's helpful color and.
Speaker Change: With regard to branded products in the gross margin in the fourth quarter I know you called out the.
Speaker Change: A mix impact there but.
You know as we kind of think about 2025 do you think.
Speaker Change: Gross margin kind of rebound.
Speaker Change: Annualized basis, something similar as to what it was in full year 2024.
Speaker Change: Are there other thoughts on the margin.
Speaker Change: <unk> branded products.
Speaker Change: Yeah, Kevin I would say it really over the course of the year balancing out.
Speaker Change: As I mentioned in the question or in the prepared remarks when it when it comes to some of the branded uniform programs you know in any given quarter. The result could be skewed one way or the other depending upon again the timing of program.
Speaker Change: And so when you look at it over the course of the year, it's it's more balanced and so and again, that's just a branded uniform program part obviously you have a large promotional products business as well that that's been driving good margins. So really if you were to look at that segment overall.
Speaker Change: For the for the balance of the year and 25 of it I would expect it to be fairly consistent year over year.
Speaker Change: Okay. Thank you and then.
Speaker Change: Right.
Speaker Change: Any any significant investments.
Speaker Change: Planned for.
Speaker Change: For 2025 in terms of just SG&A investments or do you think you start to get a bit of leverage there.
Speaker Change: After the revenue growth.
Speaker Change: There's no significant investments anticipated.
Speaker Change: So you as we've talked about before I think you are alluding to in prior calls you know we've we've certainly made what call investments in SG&A across each of our segments and selling capabilities and we'd certainly expect to begin.
Leveraging those investments as we move forward and continue to grow the top line.
Speaker Change: So.
Speaker Change: No nothing I would expect as unusual from an expense perspective going into 2025.
Speaker Change: Okay. Thank you and this just lastly, just wondering about.
Speaker Change: What's embedded in the EPS guidance for 2025 in terms of.
Speaker Change: More potential debt pay down and potentially lower interest expense or maybe do you see more going to share repurchases and maybe west took to debt reduction.
Speaker Change: Trying to.
Speaker Change: You know balance out those factors when you're kind of thinking about interest expense.
Speaker Change: Sure I think were.
Speaker Change: I would expect interest expense to be improved from 2024.
Speaker Change: And I think that would be a combination of.
Speaker Change: Bringing our weighted average debt outstanding down combined with I'd say, a little bit of rate increase of course.
Speaker Change: That's uncertain as well.
Speaker Change: But we factored in a couple of those components as we think about our interest expense going forward.
Speaker Change: Okay. Thanks, a lot I'll turn it back over.
Speaker Change: Thanks Kim.
Speaker Change: 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 today's call in closing I'd like to thank our employees for their unwavering dedication our customers for their loyalty and our investors for their trust in our vision. We are focused on navigating these challenges and seizing opportunities that will allow us to deliver long term value. We look forward to updating you on our progress as we move through 2002.
Michael Benstock: Five and please feel free to reach out with any additional questions enjoyed evening. Thanks again for your interest in FCC.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].