Superior Group of Companies Inc

NASDAQ:SGC

Earnings Call Analysis

Revenue Holds Steady, Margins and Profits Rise

In the fourth quarter, revenue stood strong at $147 million, barely 1% lower compared to the same period of the prior year. Adjusted EBITDA surged to $9.9 million from a mere $3.5 million, showcasing a robust improvement in earnings before interest, taxes, depreciation, and amortization. Earnings per share (EPS) saw a remarkable turnaround, climbing to $0.22 from an adjusted loss of $0.06 per share, reflecting stronger profitability. The company successfully halved its net leverage ratio over the year, indicating a more resilient balance sheet. Revenue growth was noted in healthcare apparel and contact center segments, which was slightly tempered by a decline in branded products. A significant increase in gross margin rate by 760 basis points was overshadowed by a rise in SG&A of $49 million from $44 million the previous year and a slight elevation in year-over-year interest expenses, although debt reduction efforts were successful.

Financial Performance and Optimism in Uncertain Times

In a challenging economic landscape, the company maintained steady revenues, generating $147 million in the fourth quarter, slightly down by 1% year-over-year but showing resilience against their strongest quarterly comparison in 2023. Adjusted EBITDA presented a remarkable year-over-year increase, rising from $3.5 million to $9.9 million, accompanied by a positive swing in diluted EPS from an adjusted net loss of $0.06 per share last year to a gain of $0.22 per share. This financial health is further underscored by a significant reduction of almost 50% in the company's net leverage ratio, reflecting shrewd capital management and operational efficiency. The business has started to experience a slow recovery with rising client activities and the promise of a gradual increase in demand, based on increasing requests for proposals (RFPs) and other leading indicators, which gives a sense of cautious optimism for the future.

Segment Performances Reveal Strategic Focuses

Segment-wise, the company has shown strong performances with strategic investments. Healthcare apparel grew in both revenue and EBITDA, indicating improvements in market conditions, supported by digital initiatives like a new direct-to-consumer website under the Wink brand that's yielding positive results despite short-term profitability pressures due to investment requirements. Branded products forged ahead with the strongest revenue and EBITDA for the year, hinting at a recovering demand. The contact center segment, while impacted by increased labor costs, ultimately grew revenue year-over-year, and expectations are set for better margins and customer base expansion in 2024.

Robust Financial Position and Promising Outlook for 2024

The company's strategic initiatives have paid off, leading to halving the leverage ratio over the past year to under 2.0x trailing 12-month covenant EBITDA, a strong balance sheet with $20 million in cash and cash equivalents, and a powerful free cash flow of $79 million. They project a revenue growth for 2024 in the range of $558 to $568 million, up from $543 million in 2023, and an increase in earnings per diluted share from $0.54 to between $0.61 and $0.68. However, much like in 2023, the performance for 2024 is expected to be weighted towards the second half of the year, due to the cyclical nature of their markets.

Earnings Call Transcript 2023-Q4

[Operator]

Good afternoon, everyone. Welcome to the Superior Group of Companies Fourth Quarter 2023 Conference Call. With us today are Michael Benstock, Chief Executive Officer; and Mike Koempel, Chief Financial Officer. As a reminder, this conference is being recorded. 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 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 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 report 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 contained herein except as required by law. And now I'll turn the call over to Mr. Michael Benstock. Please go ahead.

[Michael Benstock, executive]

Thank you, operator. We appreciate everyone being on today's call. I'll start with our fourth quarter highlights and some broader perspective on 2023, and then I'll discuss our go-forward strategies to sustain and accelerate our momentum in the new year and beyond. Before I turn the call over to Mike for additional detail on fourth quarter results and our outlook for 2024. We'll then be happy to take questions. Throughout 2023, we talked about the back-end weighted nature of our financial performance, and that played out with our consolidated fourth quarter results being the strongest of the year. We generated $147 million of revenues during the fourth quarter, up sequentially and down just 1% versus the prior year quarter, which was our strongest year-over-year comparison of 2023. Fourth quarter adjusted EBITDA came in at $9.9 million, again, our strongest quarter of the year and up significantly from $3.5 million last year. We also produced $0.22 of diluted EPS in the fourth quarter, much improved from the adjusted $0.06 net loss per share last year and again, our best results of the year. In addition to improved earnings, as you can see in our results release today, we continue to drive strong operating cash flow while reducing working capital. As a result, we have strengthened our balance sheet, reduced our net leverage ratio by almost 50% during the year. Similar to what we described in our November call, business conditions have continued to slowly improve. Many clients are gradually expanding activities. And while demand certainly hasn't returned to full strength, we're cautiously optimistic that underlying trends will continue to move in the right direction and that we'll continue to see a gradual pickup in RFPs and other leading indicators. In this still uncertain environment, we have our teams focused on what we as a company can control, most importantly on quality service that leads to strong customer retention. In addition, we are strategically investing to fully capitalize on the very favorable long-term outlook for all 3 of our very attractive businesses. For those of you who need a quick primer on SGC in our 3 segments, we've released a brand-new investor slide deck today that's available on our website, and I would encourage you to take a look. Shifting gears, I will provide a high-level overview for each business segment and then turn it over to Mike for a deeper dive. Healthcare apparel, which primarily consists of the weak and fasten [ Seal ] Healthcare brands grew both revenues and EBITDA year-over-year. Market conditions for health care apparel have been improving with more positive signs emerging. Our addressable market for this segment is large and expanding, and our aim is to grow our market share well beyond the more than 2 million caregivers who already wear our brands every day to work. We began this process last year with our rebranding efforts under the Wink trademark and the launch of our direct-to-consumer website, which continues to produce favorable results. To build on this momentum, we'll continue our digital advertising efforts to further enhance customer awareness and engagement with Wink. As with any D2C startup, this required investment is a gating factor on profitability in the shorter term, but one that we firmly believe will establish a foundation for profitable sales growth over time. Combined with the favorable contribution from our B2B website, which we also launched last year and is adding efficiency to the wholesale process and the strengthening of our relationships with the other digital channels that we service, we see a compelling longer-term outlook for health care apparel. Moving on branded products. During the fourth quarter, we drove our strongest revenue and EBITDA results of the year. The gradual expansion of demand that began in mid-2023 that I referenced on our November call, continued through year-end, and we ended the year with a stronger pipeline than a year earlier. Our booking trends have remained favorable so far in the first quarter, albeit with the normal seasonality. Our focus within branded products is on strong customer retention and increasing share of wallet as well as driving RFP activity and sales rep recruiting while maintaining stronger margins. We're confident in our ability to capture share currently less than 2% of this large, attractive and growing market. Next up is our contact center business segment, which also grew revenue year-over-year. Increased costs related to labor and talent that first took hold in early 2023, weighed on quarterly profitability, but we will begin to anniversary these higher costs this first quarter. Our focus for contact centers is on increasing seats with existing customers and building the pipeline of new customers. We will continue to utilize the latest technology to enhance efficiency and take advantage of our ability to increase prices when possible to improve margins during 2024. Our pipeline of new business remains strong for the office screws, and we're bullish on the outlook for this high-margin business. I'll now turn the call over to Mike, who will walk us through our fourth quarter financial performance in greater detail and provide our outlook for 2024. We'll then take your questions. Mike, over to you.

[Michael Koempel, executive]

Thank you, Michael. Rounding out a back-end loaded year as we first referenced a year ago, our fourth quarter results were the strongest of 2023. Our quarterly revenue reached $147 million, which was up 8% sequentially from the third quarter and down 1% from last year. As compared to last year, fourth quarter sales increased in the health care apparel segment by 6% to $28 million and in the contact center segment by 5% to $23 million. These increases were more than offset by a 4% fourth quarter sales decline in our Branded Products segment to $98 million. While branded product sales were down, the fourth quarter results sequentially improved from the prior quarter and represents the strongest quarter of the year. Our gross margin rate climbed significantly over the past year, up 760 basis points. The margin increase was primarily due to last year's inventory write-downs of $7.8 million, primarily within our health care apparel segment and a favorable shift in the mix of pricing and customers and lower supply chain costs within our Branded Products segment. Our SG&A for the fourth quarter came in at $49 million relative to $44 million a year earlier. While the SG&A rate improved on a sequential basis by 130 basis points, the year-over-year rate increased by 360 basis points, primarily due to expense deleveraging from the sales decrease in our Branded Products segment, employee-related costs and depreciation in our contact center segment and lapping unrealized gains of $1.6 million recognized in 2022 on written put options. Our interest expense for the fourth quarter was $2.1 million, a slight improvement over the past year despite higher interest rates due to our successful efforts to reduce debt outstanding by $62 million during the year. Net income for the fourth quarter was $3.6 million or $0.22 per diluted share, up from net income of $2 million or $0.14 per diluted share in the year ago quarter, which included a onetime pretax nonoperating gain of $3 million or $0.20 per share. Therefore, excluding last year's gain, our fourth quarter result of $0.22 per diluted share was up significantly from last year's adjusted results of a $0.06 loss per share. The improved result was driven by the aforementioned increase in gross margin for the quarter. Consolidated EBITDA for the fourth quarter was $9.9 million compared to $3.5 million in the year ago quarter, including last year's gains that I previously mentioned. The EBITDA increase was primarily driven by the health care apparel segment, whose EBITDA improved significantly to $1.4 million in the fourth quarter from negative $6.5 million a year ago, mainly driven by last year's inventory write-downs. Also, despite a sales decrease in the fourth quarter, the Branded Products segment's EBITDA improved to $11.7 million in the fourth quarter from $10.8 million a year ago due to higher gross margins. These improvements were partially offset by an EBITDA decline in our contact center segment to $2.3 million in the fourth quarter from $3.8 million a year ago, primarily driven by labor increases earlier in the year. Turning to our balance sheet. We've continued to successfully reduce leverage, ending the year just under 2.0x trailing 12-month covenant EBITDA, a significant improvement relative to 2.9x just 3 months earlier in September and 3.9x at the end of 2022. In other words, we've cut our leverage ratio effectively in half over the past year. We also ended 2023 with cash and cash equivalents of $20 million, benefiting from our continued strong free cash flow and our focus on reducing working capital. Our operating cash flow for the year was $79 million. I'll wrap up with our full year 2024 outlook, which similar to 2023, we'll have a back-end loaded cadence due to the underlying nature of the markets we serve. Our outlook called for full year revenues in the range of $558 million to $568 million, up from 2023 revenues of $543 million. We also expect earnings per diluted share in a range of $0.61 to $0.68, up from 2023 $0.54. And I'll reiterate that similar to last year, we expect a back-end weighted pattern. This concludes our prepared remarks. And operator, if you could please open the line, Mike and I would be happy to take questions.

[Operator]

Certainly, we will now begin the question-and-answer session. [Operator Instructions]. Today's first question comes from David Marsh with Singular Research.

[David Marsh, analyst]

Congratulations on the quarter looks really, really good. Just if I could start, I want to talk about the contact center segment a little bit. It looks like it was down a little sequentially. And I know you guys had mentioned there were some subsets that have lost maybe some contracts that had been need, but it looks like you've had some pretty good backfill. Could you just talk about kind of the general cadence of that business and what your expectations are for the year in that particular business?

[Michael Benstock, executive]

Sure. Thanks for joining us. We're feeling good about the business. I mean last year was a little bit strange in that we had a lot of long-term customers cut back on the number of new agents that they had. And it was tough to make that up as the year went on. But we did make it up. And in the end, we ended up with a net gain of agents that we were able to build out. In addition, last year, we were a little late in putting price increases in, which certainly impacted the first half more than the second half of the year. We're feeling strong about the business. It's growing. The infrastructure is all in place for it to grow. The sales efforts are yielding our expectations for the business, and there's really nothing holding us back. There's still a strong demand. Pipeline is strong. First quarter should be pretty good. And we expect that, that momentum will continue to build throughout the year. Fourth quarter is usually the softest quarter in terms of growth of that business. People don't tend to put on new seats as they're ending the year and looking at their budgets, usually, that's when they're cutting back the most for the holiday season. And so, fourth quarter is always a little bit tenuous what's going to happen, but we're feeling strongly going into this year that we should see some pretty good growth.

[Michael Koempel, executive]

And Dave, just to build on that, if you look at the build, if you will, from Q3 to Q4, you'll see it's fairly consistent last year versus this year to Michael's point, just around the holidays that we experienced and the fewer hours worked in the month of December in the fourth quarter.

[David Marsh, analyst]

That's really helpful. Appreciate that. And then just turning to the adhering to the health care apparel business. I talked consistently about inventory and getting it right so. I saw that inventory did tick down a little bit again sequentially in the fourth quarter. Just wonder if you could give us an update there, just overall feel for your inventory levels to demand and if you feel like you're putting close to equilibrium and at a point where you could start to build again.

[Michael Koempel, executive]

Sure. Sure, Dave. This is Mike. I'll take your question. Yes, we talked at the beginning of the year about -- it would take us about a full year to get to what you refer to as equilibrium, and we feel like we've reached that point here at the end of the year. So, I think with obviously, the significant charges that we took in 2022 that proved to be the right decision in terms of helping us to clear through inventory through various channels. And so, we've worked the inventory down significantly by the end of this year and are shifting our focus really toward new product launches and new introductions as we get deeper into 2024. So, from a working capital perspective and inventory, we've really driven a lot of value there. I think that will certainly normalize as we go forward, and we'll look to invest in inventory where we see the opportunities and growth in certain categories.

[David Marsh, analyst]

Got it. And then just lastly for me. On the SG&A side, a little uptick in the quarter. I'm guessing that's just typical year-end accruals for incentive comp and things of that nature and sure we expect the reversion back to a level more similar to the prior couple of quarters going forward?

[Michael Koempel, executive]

Dave, I didn't quite catch your full question. The very last part in particular. Can you repeat that?

[David Marsh, analyst]

Sorry. Sure, sure, sure. SG&A, just an uptick a bit in the fourth quarter. I just wondered if that was just a typical fourth quarter seasonal incentive comp accrual type action. And if we would be right to expect a reversion back to -- I mean, 1Q 2Q, you guys really had things in check. I just wondered where should we expect the level of trend?

[Michael Koempel, executive]

Yes. No, no. Thanks, Dave. I would probably call it a couple of things. It wouldn't be driven by incentive comp accrual. I call it a couple of things. One, just as a reminder, in the Branded Products segment, the commissions that we pay, which obviously roll through SG&A are based on margin. And so, recognizing that the fourth quarter was the biggest quarter for branded products. we've got a larger commission expense in the fourth quarter, obviously, for good reason. And then one of the things I called out in the script is last year, we had favorability with respect to revaluing a stock put that we have. And actually, in the fourth quarter, we had an expense driven by the fact that our share price did appreciate. So that was an incremental expense, if you will, in Q4. So, we wouldn't expect that to be normalized going forward per se, but those were a couple of things that drove the uptick here in the fourth quarter.

[David Marsh, analyst]

Got it. I will yield to some of the folks who have questions. Again, congrats on the quarter to job.

[Operator]

The next question comes from Kevin Steinke with Barrington Research.

[Kevin Steinke, analyst]

So just wanted to discuss your 2024 outlook. You mentioned expecting the year to be back-end loaded again. What leads you to expect that? And how much improvement in the demand environment might be factoring into that? I know you said business conditions continue are gradually improving, but maybe not back to full strength yet. So maybe any thoughts on that, please?

[Michael Koempel, executive]

Sure. I'd say a couple of things, Kevin. First of all, in terms of the back-end loaded nature, I think a lot of that's driven by the fact that what we do see in our branded products businesses, they typically do have a strong Q3 and partially Q4, just as it relates to some degree to the holiday season, whether that's gifting for associates or for our customers' customers. And then also with our contact center business, typically, what we see is, as we just mentioned before, on the results for Q4 for the contact centers, we typically see that business come down a little bit in Q4 as our customers pull back and we have holidays, we start to add new customers in Q1. And then as we add them and onboard them, that drives more volume toward the back half of the year. So those 2 segments can tend to drive a little bit more performance toward again, the back half of the year. I would say that we wouldn't anticipate to be as back end weighted as it was this year, but back-end weighted nonetheless. Looking at the businesses and our guidance implicit in our guidance, our sale is sales growth across all 3 of our segments. I would say, for our branded products and health care apparel segments, our guidance assumes low single-digit growth. And then we would expect larger growth in our contact center segment anywhere from high single digit to low teen growth. And you put that together, and that speaks again to the range that we just provided.

[Kevin Steinke, analyst]

Okay. Yes. Fair enough. That's helpful. I was going to ask about the segment growth expectation, so I appreciate that. All right. So again, it doesn't sound like you're necessarily assuming some dramatic improvement in the demand environment, but it's just kind of your regular cadence of new business ramping up. And if you mentioned strong pipelines. So, it sounds like you're just basing that outlook based on what you see today and that should lead to a stronger second half of the year. Is that fair?

[Michael Benstock, executive]

Yes. I'll jump into -- yes, that is fair, Kevin. Thanks, Michael. I think we're seeing more predictability than you've seen over the last few years, '20 to '23 were pretty crazy for us '20 to '22, certainly because of the pandemic within ‘23 with the overhang of inventory. We finally feel like we've gotten to a place where our results are more predictable. And we certainly are going to work really hard towards exceeding the expectations. But I think we've set the expectations pretty well where we believe things will land right now and have very high confidence in those expectations.

[Kevin Steinke, analyst]

Okay. Great. And you mentioned the direct-to-consumer effort in health care apparel continue to be pleased with the results there. I don't know any more color you can provide there? And I assume it's still too small to really move the needle, but maybe any comments on just again, how that's ramping and what you might expect in 2024?

[Michael Benstock, executive]

I think what's really exciting, and I don't have any hard data that I can share on this, but the awareness of our brand, Wink and Carhartt, which we're a licensee of is much greater than it has been in the past as a result of a lot of our efforts. We're making a huge marketing investment to support that. And so, while it's not a huge part of what we do, it's getting bigger, and it's not only helping the marketing efforts, not only helping the direct-to-consumer, but it's helping us really across all the different channels that we're selling. You have the digital channels where we're selling into Amazon and walmart.com and so on, target.com and many others. And that's been very helpful as well as selling to retailers. We I think we're creating a demand for our products that we haven't in the past. And I've spoken about our marketing team on in the past. I think they're second and none. And I'm hoping that sometime in the not-too-distant future, we'll be able to start reporting more on the results, and it will have a bigger impact on our health care apparel business than it has today.

[Kevin Steinke, analyst]

Okay. Great. Lastly, I wanted to ask about gross margin. It was quite strong in 2023. I know you had some of the larger inventory write-down charges in 2022 that made that comparison a little easier. But even without that, those charges still some pretty healthy gross margin expansion. So, I'm just wondering if you could talk about what's driving that and speak to the levels of sustainability and gross margin or opportunities for improvement or pullback or how you think that might trend going forward.

[Michael Koempel, executive]

Sure, Kevin, this is Mike. Yes, I think consistent with what we've mentioned in at least the prior quarter, if not the previous 2. We continue to see strong margins in the Branded Products segment. With sales down, we've been able through pricing and customer mix as well as some favorability in supply chain costs to drive improved margins. Do you certainly see that happening again in the fourth quarter margin rate in the Branded Products business is 35% as compared to about 31% the year before. I think as we look forward, we look to sustain those margins. We think there's still a little bit of upside in the margin rate as we even get into 2024. But again, I think for the most part, certainly able to sustain that margin, which is implicit in our guidance. And as we talked about, we've taken some measures in the contact center business with price changes that we made earlier this year, and we'll continue to look for opportunities there where we can perhaps drive some rate improvement where we took a step back this year. We'll look to see how we can grow that margin in 2024.

[Michael Benstock, executive]

Yes. I'll jump on that too a little bit. We are laser-focused on gross margins, both at the factories that we manage in Haiti, creating better factory efficiency and looking at all kinds of means through process and improvement to gain more gross margin from what we produce ourselves. But outside of that, we're also looking at shifting as much as we possibly can to countries that we have free trade agreements where goods can be brought without duty into the United States at all. And that's a very part of our strategy as well. You know we have a redundant manufacturing strategy, Kevin. So, we still have to keep that in place because there are events in the world that we can't necessarily control all the time. But we are laser-focused on gross margins, and we would be very disciplined not to see some improvement in our gross margins.

[Kevin Steinke, analyst]

Okay. If I could just sneak one last one in because you mentioned Haiti, and I've read recently about some unsettled political conditions down there and just wondering if that's having any impact on your production down there. What's the state of that effort today?

[Michael Benstock, executive]

Sure. As you know, it's a good question. As you know, are the factories that we manage are on the border with the Dominican Republic and there were some earlier noise towards the end of last year with respect to the water rights and the water rights are being cut off to the Dominican by the Asians and that all got settled pretty quickly. So, we lost a little bit of time. Typically what happens in those situations where we lose a couple of days because of countrywide strikes or even some violence in different areas of Haiti, we'll lose a couple of days where people will stay home. And then because they have to eat, they have to support generally 10 to 12 people and their families by working for us. They do come to work, and we'll work weekends to make up for the days that they lose during the week. So, we've been lucky and fortunate that we haven't lost a lot of time yet. The situation in Port of [ prints ] is terrible and even other cities near the port. Unfortunately, we're far enough away from most of that noise that it doesn't greatly affect us yet. And we're watching it very carefully. The people who we operate in their industrial park where there are many people like us, even some of our competitors are watching it very carefully as well to ensure that this is least amount of disruption as possible. We do have always a plan B and a plan C, as you know, with our redundant manufacturing strategy. So should there be any disruption that actually affects our supply beyond we carry stocks, as you know, for all the different eventualities. But we do have other places we can manufacture as well. and we're obviously focused on that with the situation, [ hating ]. But I would say right now, we've been very fortunate for it not to have impacted us really greatly yet.

[Operator]

The next question comes from Jim Sidoti with Sidoti & Company.

[James Sidoti, analyst]

It seems like you expect the operating margin to expand about 50 basis points next year to just over 4% from just below just under 4% in 2023. Do you think that's more on the SG&A line you get the leverage or on the gross profit on?

[Michael Koempel, executive]

I think, Jim, we would expect, again, a little bit more expansion on the gross margin line. And obviously, as we add sales, we'll get a little bit of leverage we get a little bit of leverage in G&A, but I would attribute any operating income improvement largely through some expansion in margin.

[James Sidoti, analyst]

And how many sales folks do you think you'll add in 2024?

[Michael Koempel, executive]

How many sales?

[James Sidoti, analyst]

Yes, you said that one of the reasons you're not going to get the leverage on SG&A is because you're adding salespeople.

[Michael Koempel, executive]

What I meant to say, Jim, just to clarify, I would expect, as we're adding sales dollars, we'll get a little bit of leverage in G&A. But again, I'd say it would be more driven by margin expansion, just to clarify.

[James Sidoti, analyst]

On the gross margin one.

[Michael Koempel, executive]

Correct.

[James Sidoti, analyst]

Got it. And you seem to have turned the corner in terms of cash generation and leverage ratio. What do you think the uses for cash will be in 2024? Is the first priority going to be bolt-on acquisitions? Or do you think you could increase the dividend? Or are there other priorities?

[Michael Koempel, executive]

Sure. I mean our priorities will be consistent with what they have been pre this focus on the debt. Well, of course, with our board, revisit the dividend on a quarterly basis. The other thing that we will do, Jim, this year, we will increase our capital spending this year. I mean if you look at -- we just spent over $4 million in 2023, it's a very low number. So, we'll be investing a little bit more in CapEx, still not quite to what I would call the historical levels, but certainly more than we did in 2023. And from an M&A perspective, where I think we said before, we clearly have put that to the side. I think that's something that we'll certainly consider as we move forward. As we said before, even though we weren't actively looking to do any M&A transactions, we obviously keep the pipeline open, and we'll certainly continue to evaluate whether there's potential accretive opportunities. And we're certainly in a position where if there were, we could take advantage of that. And so that will be something that we'll evaluate throughout the year as a potential opportunity.

[Operator]

This concludes our question-and-answer session. I'd like to turn the call back over to Michael Benstock for any closing remarks.

[Michael Benstock, executive]

Thank you, operator. Firstly, I would like to publicly thank Phil Koosed for selling BAMKO to us almost 8 years ago. And Phil, thank you for your leadership as well as your time in the C-suite as our Chief Strategy Officer. We've accomplished a great deal during your time with SGC and are more diverse and stronger than ever. Personally, it's been an incredible experience for all of us who have had the privilege to work side-by-side with you for these 8 years. We are in a much better place than ever to succeed in part due to your having a voice in our future. We wish you and your family continued success in all that you choose to pursue. Secondly, I want to welcome our 2 new board members, Sue Lattmann, and Loreen Spencer. We're excited to have you join us. Your combined business and governance experience will be a great asset to SGC as we navigate our continued growth and success. Thirdly, we want to welcome Dr. Kelly Richmond Pope as our first Board observer and our brand-new observer program. This very unique and innovative program was conceived as an effort on our part to provide valuable public company board experience for people who, for reasons outside their control, historically have struggled with gaining entree to seats on public company boards. We're proud to be trailblazing in this initiative and setting an example for others by working to create a more diverse community of Board members for us and others in the future. With that, I'll close by saying we're excited about 2024. And again, we'd encourage you to have a look at our new investor deck on our website. We look forward to participating in upcoming investor conferences and presenting our Q1 results in the spring. Until then, be safe.

[Operator]

The conference has now concluded. Thank you very much for your participation. You may now disconnect your lines.