Superior Group of Companies (SGC) 7 Nov 212021 Q3 Earnings call transcript

Good afternoon, everyone, and welcome to Superior Group of Companies Third Quarter 2021 Conference Call. With us today on behalf of the company are Michael Benstock, the company's Chief Executive Officer; Andy Demott, its Chief Operating Officer and Chief Financial Officer; Phil Koosed, its Chief Strategy Officer; and Jake Himelstein, BAMKO's President. [Operator instructions]. Today's conference call is being recorded and your participation implies that you do agree to this.

If you do not, then simply drop off the line.

turn Director call who of the Harbor to Elsherbini, to will like Safe Managing Senior Three statement. I'd the over conference Hala read Now Part Advisors, ahead. go Please

estimates statements company's facilities, Such and XXXX conference statements of includes believe, the Litigation hope, may service including manufacturing chain, thereunder. business, the This regulations manufacturing Private are such assumptions. within the such Words of the Securities of meaning and demand. Reform upon and think, variations which the expect, management's Securities statements, on the Group such inventory, own supply issued of the Securities you. Thank Exchange company, identify as and contain and forward-looking Act all at of based expressions about contract rules call forward-looking statements expectations, anticipate, Companies, capacity capacity Act will, XXXX, impact words of projections, of company's customer the similar and Act and Superior on XXXX, and outlook, COVID-XX current

to of annual periodic manufacturing competition, are the acquisitions, to, include, customers known well used; are and impact statements services as and and the company's center carefully statements. uncertainties future that the report with cause the December for where are and Such to Exchange may XX-K the ability except Securities where investors, United future the September the XX-Q expectations, Form recently. operations note following global are a States statements company's following; and conform uniforms the materially quarterly urged and the changes not company's the in general on XX, the to such the employees; risks results as worn, where uncertainties in to company's otherwise, company's as the of forward-looking as in consider by year including and the events whether materials, operations, or crisis made law. required all customers, suggested to on unknown place over differ herein risks evaluating growth and Commission, changes uncertainties statements. turn comparisons Forward-looking for that information, does XXXX, the to will otherwise in herein that undue results filed of new XX, sold disclosed of U.S. management of from Andy. forward-looking availability limited risks forward-looking and statements contained not those to and are COVID-XX Please the or With actual result successfully involve by not which other these X-K Form update but I'll of markets, promotional on products the potential ended are readers Shareholders, effect the in factors and located, noted. suppliers, business, in call filings forward-looking the our economic areas report cautioned markets the period The the integrate the relate to company call undertake and XXXX, conditions unless the corresponding to are that, quarter XXXX, makes ended today the in on the reliance consumption

the first. how Today, discuss and in going through we operational Phil sales $XXX.X X.X% QX a performance XXXX last sales strength were results on quarter healthcare declined I Good core and more high against year. environment. impressive and QX financial million then Jake businesses million, everyone. Hala. but We our review initiatives and current in by you, before demand. detail are questions. are the BPO we highlights will delivered cover of discuss then solid robust macro Consolidated navigating Thank comparison offerings $XXX.X afternoon, our sales to to Overall historically take will consolidated strategic your apparel third Michael net XXXX. and compared reflects in

included PPE XXXX PPE to QX wane. million $X.X continued of expected, sales, sales included while As crisis sales $XX.X QX million. XXXX

consolidated PPE by net actually XX.X%. increased Excluding sales, sales

strong current ability seeing as strong is year nine that momentum of This sales million is $XXX of market the million, entire in results our evident take share. and our team nine-month $XXX.X in execution the months XXXX. are compared We to testament first a to our of to

XX.X% Turning $XX.X to products sales last year. net and to related Uniforms compared or decreased segment results. million

to X.X% ago. million normalized year increased sales QX compared in Excluding XXXX. $X.X million to $XX.X PPE, to million the PPE a of $XX.X uniform $XX.X segment million, versus

end for in uniform by Gross primarily of demand are in XXXX higher diversified the QX a seeing PPE in decline in XX.X% expected to inflection an is XX.X% current due in uniform progressive offset margin segment offsetting versus logistical our our increased QX showing in sales this across apparel PPE, markets We to quarter. partially point XXXX that recovery lower costs sales.

BAMKO eliminations of I'll growth by Jake XX.X% team expectations. year SG&A last after compared QX sales reported primarily lower Office segment uniforms shortly, versus up The to and percentage for XXXX. Net $XX.X a to of X.X%, QX overhead. uniform margin expense continues was XX% will As 'XX X.X% to in were exceeding XX.X%, QX The Gurus. tremendous to sales intersegment sales, of million. was review due Operating absorb in to to so move our excel results for in significantly

engagements. new of customer developing QX 'XX, with decreased versus the in expanded current primarily for The to through relationships Gurus XX.X% in in opportunities new onboarding incremental Office XX% new clients, costs existing QX due period. continues of more customers to associated base Gross onboarding Our and margins XXXX grow to with

year in margin was XX.X% of growth to expenses percentage significant to segment we increased in for across higher logistics segments. to versus margin due for investments Operating a from SG&A were shifts margins Gurus product was gross costs, XXXX company support The product XX.X% our last XX.X%, QX XX.X% of as for mix QX of this consolidated of QX XX.X% sales, 'XX. and this which On XXXX in in segment. QX basis, a Office offset QX decreased by As for with consistent XXXX

was total and Operating versus in or XX.X% margin to flat was of or $XX.X percentage SG&A last compared a diluted sales, year million Income compared XX.X%, our Our ahead expenses share, to year. X.X% Net from last compared million XXXX X.X%, per $XX.X and QX last was X.X%. as well quarter XXXX million in third was of consolidated QX. diluted per year. $X.X million, remained amount the $X.XX share in QX to QX our $X.X expense of for income $X.XX operations SG&A

compared quarter year ago. for rate tax at to effective a Our the remained XX.X% XX.X%, constant

to our continued flows supported Moving by profile, generate solid we sheet. cash healthy a liquidity balance to

able increased to net X.X million year-end While debt borrowings to we quarter. of third from during at by the September the during quarter million, $XX.X generated strong by XX.X reduce million operating with flows XX, XXXX cash were

will gradual facilities to we accounts very operating week. a million, investments our Our at range our center $XX.X locations. end our line enhancements the new the progress made $X.X at began and covenant X.Xx, Arkansas is and across manufacturing movement primarily which increase an There to Eudora, and million. our debt-to-EBITDA in the system cash well good remains Through distribution of from and was equivalents be distribution our great system. and under testing current ratio related was million, with technology with CapEx at the period, quarter of beta We $X.X this desired limits. warehouse Cash nine-month

plan with XXX% of innovative be by operational QX technology Our end is XXXX. to the of the

against installed automation robotics efficiencies, our at million XXXX. We in distribution investments including plan our Dallas million benefits are for of our tracking overall $XX on well target to and with center. of And our is CapEx CID $XX CapEx

quarterly I'll review turn call BAMKO's dividend $X.XX performance. Jake? Jake to of to Lastly, the we paid third our regular quarter. the cash now during

third million. XX.X% income. Thank XXXX $XX.X you, the revenue X.X% million, $XX.X from income gross figures QX These in and XXXX year-over-year of a increase with operating and a quarter gross of of profit decrease Andy. XX.X% represent of BAMKO of $X.X in revenue in ended of million operating and year-over-year profit of

million However, compared total BAMKO's tell last same than this with the story. the million revenue PPE $XX.X $X in period year. had third in quarter whole doesn't less

strong until than that and XX million, things BAMKO's has year-over-year. the by to and clients, large the rise be due at in Excluding products variety the of XX.X% $XX.X in of PPE chain demand early million disruptions, less XXXX. merchandise. spend from sales to was of X.X%, part in and higher sale in conferences the PPE resulting backlog in part the lower in XXXX, delivered market marketing margin gross PPE headwinds, in among is BAMKO's global pause up the to is QX period in increasing of promotional backlog QX most Impressively, spend in branded new a and of This companies came events non-PPE. due Operating was general $X.X throughout same XX.X% many despite to including uncertainty caused Delta product revenue sales QX at benefited revenue than QX BAMKO from continued and below grew in-person sales, cancellation million same XXXX. reflected XXXX. supply normalize. the XX% $XX.X QX and of existing market the in promotional showing resurgence XXXX, This QX margin in the period a made September variant, backlog of

representatives of are BAMKO and and and began now sell trained to we QX, prospects. clients sales uncover to branded in sales HPI. uniforms announced Most and branded we As merchandise our teams and opportunities integrating both of the marketing

retail for in Many order of activity. HPI to Turning our in goals QX set significant consumer have hiring to demand. meet customers large

airline while increased have normalized compared our to seeing also channels and are stabilized to seem to are and demand We also XXXX, QX transportation Hospitality accounts from rebounding levels. customers. other entertainment

the Overall, September see from XXXX, in to million period go compared expected $X.X increased million the same non-PPE coming year. RFP XX, in to last in HPI's several at as are expect bid to $X.X XXXX. to We prospects quarters backlog activity large increased

turn our I'll over to Michael review healthcare the call the business, macro Now and apparel TOG environment. to

and this too, Thanks, afternoon, thank off. starting for Jake. Andy, you, everyone, Good

in against quarter. guidance tracking numbers, we're the well As outlined our last reflected goals

continues development The connecting team Let's begin trends healthcare and fashion-forward CID with design fit. with healthcare shaping uniforms apparel. and comfort innovate, to function, product

fall sustainably scrub team best and Distributors Association last for innovations WonderWink the Manufacturers laundry our focused new the American of and collection release the renewed week, the of was Just line. Uniform recognized North fabric fashion from WonderWink for INDY season our garment

In fact, place first of submissions crowded group among these submissions. two for a tied

and moving right Healthcare gaining and the Our groups future. direction essential fashion fans as Seal for more scrubs WonderWink INDY Fashion is offering product the laundries an see INDY in as

offerings. CID through this Ouanaminthe, in factories to and Haiti accommodate production for commitments From increasing strengthening the working in efficiencies We future line. our driving expected our are increased stocking volumes, product and particularly nearshore sales our standpoint, a are our growth position manufacturing higher

that from are moved facilities operate and areas of less in disruption. unrest We our are country events, fortunate other significantly far the earthquakes, and weather with

XXXX. XXXX diminish brand and our Seal XXXX. have in the to result stays lagged stockpiles buying Healthcare, XXXX For frenzy will healthcare demand hospital as during This in during the of demand a as improves. earlier is periods Fashion for pandemic anticipate sales increased increase We of compared

Additionally, continuation taking staying of are stronger our what chain increasing supply to ahead inventory products a steps necessary be all the we largely mitigated. best-selling taken will disruptions of are positions We've ensure in disruptions.

with be We by may who our are proactively many serviced reengaging of adequately prospects also our competitors. not

well positions to anticipated than demand long-established strategy increased the manufacturing better redundant us most. Our handle

comfortable our highly demand rapid is Office built for a be place Employers retains call best that culture this second market a Businesses increased Turning incredibly nearly customers. rapidly We the we for new leases El El No. Salvador are The future and to meet best XXX for expansion work Through Salvador were as in for excellent attracts We existing reputation both TOG TOG United persist to exceptional. to we remotely business, named talent. members profitable seats. adding is the service, accounts the robust and TOG growing customers. well adding recently positioned to Youth by honored capture at our the employs demand done center in the voice by who share. Gurus. X X,XXX Jamaica, in year. pipeline and in are strong nearshore the signed challenges To labor outsourcing The being industry with of total for fueled highly team motivated of work capacity States, the currently as additional as and a in-center of serve consecutive and

constraints, hard Logistical turn increased what a capacity causing is China much issues, the energy work for factories We can worldwide deliveries and of from are at we is certainly are were in working at inflated economy. U.S. and operating control current but what every manage textiles of the pricing standpoint. staffing costs hours crisis creating environment us already to delivery headwinds reduced delays. The affecting and

hours XX%, months. reduced in up XX% Our for mill polyester working sources and prices to by cotton are seeing while the both considerably yarn past

over As mitigate prices, we many prior to rising we opportunities on supply plus our relying more efficiency other a discussed on raise have and XXX-year not had history calls, to costs. strategies diverse have chain

This operating However, named offset higher-priced was instituted a our entire another strong note, year, person converging well a I embraces point in Institute dedication. to the of will and XX I'll Every well unpredictable their designed our we deeply at No. his products as for work by of from X BAMKO Phil entire Overall, ASI's of work Koosed, for our we the price turn passion that as our recently us Phil's and most to influential as products issues. Phil looking XXXX influential impact over vision Phil? that strong most no the promotional SGC We proud in validation XXXX. his huge the list appreciate an who combat shipping CSO. in be increases begin for and On Power a he remarks. with are QX is that, topped Specialty we us. thank as we With list. separate environment end are are strategic for industry responsibility warehouses. call as effective new that to it's that clients To in quarter, must recruiting team accomplishment closed industry Advertising the the efforts, and to and surprise hard ranks serve the Phil the this, figures

Thank collaborate, to a from by incredibly and privilege built you, continue years Michael. and ASI. And to and recognition a the we've team I'm recent grow over the really honored it's innovate, them. special with humbled

let's our our I'd take our on put sales aside touch strategies of context, and the unusual putting context. back impressive provide at growth, crisis look a comps initiatives for To I PPE and in by Before XXXX. step performance year in like that to performance

net $XX.X times XXXX, sales back were during at baseline our QX non-COVID Looking in for million. of XXXX

For excluding quarter, the total to XX.X% current $XXX.X increased sales PPE, million. net

leveraging in new We and clients support outstanding time of achieved bottom-line, with when diluted this critical sourcing through us QX relationship increased need. earned to into the to those By us XX.X% of they to customers. the remarkable On growth need EPS customers, a we by turn converting capabilities when coming our our who compared win strengthened XXXX. most, and longer-term business customers of our existing many and them existing

energized future. are the Looking ahead, we about

Automation omnichannel customers element initiatives We to continue and key to be long-term further expansion strategic better accelerate will growth drive will plan. are International deep that differentiate our to focus. technology will another positive into that through customer-centric transformative. is we to our some our our serve elevate efficiencies, strategic Leveraging to increasingly and technology elevate help presence very continues robotics results. will yield and

center Our Poland an August in now is new in ever-expanding servicing customer in opened distribution Europe. base that

for foundation build opportunities. pool serve to we and and are built new help of and to that, Europe. have a believe continue the our existing new for vision talent a have pleased strong in-country for the we'll questions. announce We strategic a With To better pioneer director resource We sales clear us will line open close, customers our we future.

instructions]. [Operator

question Kevin today from from comes Research. Steinke first Our Barrington

compete an about, off I for and respond start first that you market by and yourself in driving that you're activity to I activity mentioned pickup what's and positioning unexpected wanted how business? RFP believe talking to

this Kevin, Jake. is Hey,

regards struggling it's terms RFP out little problems. during progression have about of of that of look, I in a increased or And to peak providers what of the companies we lot of a this natural a logistical warehousing changing competitors A the activity, to been So in in RFP, just companies been lot marketplace. bit think problems, see their there's going the COVID. look, anxious probably were through

out comfortable talking standby years are now we'll RFP, or be have going years more that we're soon and mean, we've to out. out RFP for increased to seeing opportunities. that now and about just I been coming so, to they companies And feel said,

the see we're in expect increased of larger about winning those So we to excited activity prospects and some XXXX, of programs.

to issues? Okay, is challenging great. you've that customers recognized? think serve struggling their better in You ability other or competitively that competitors already well How differentiate much you able was serve the is do supply given some been chain think starting to market this environment, your well. to customers market to Do you something resonate in mentioned

was greatly the we it those hear say than Michael. have we've of a what accentuated think marketplace issues during our are. on the can't in But well time. we out very recognized, there, in Kevin. I lot ground without China. we fortunate but I that period It's people been this that suffering We're more

makes difference. relationships is instances, factory. they've of restrictions a relationship have direct friend, to get agent Same an getting with thing We're supposed our got sure freely is been who on got they're factory. at with within While ships the these from they've who trucks whole they're people is mills, time, lot who a to or making move able not reasonable most or space with had least dealing in a a to. to time our got we completed with China. when who the a Having time fabrics supposed on after an container In has ground a broker, the of that agent, between

of it's whether part And challenging. of a pretty these sit at put a out even water got logistics biggest things or a ship a about the transportation people, are the got extended after shipments logistics any they're helped people in great department. on follow lot once they on who up time. The good has truck for rail periods getting finally, that's So But all been of us and comes deal. We've time. unloaded, we've low-cost nightmare given

for done. think what we've I customers appreciate our us

casual think problem? was about restaurant, How the in somebody serving in has understand media I of great that supply the of could understand. pandemic a food restaurant, part business chain the a certainly, in a the early But deal customers there's couldn't a spoken this. dining

able and bigger some not being their to that get to had in things some their on because things these of goods, a to comes United from to pretty that with their later the get not get able than not the of of being some uniforms. came needed basis have they able being not people the And some problems It paper States printed situation offshore, get being a goods in United the even come tight. to day-to-day restaurant trucking is States able

redundant So manufacturing ground. on we're been because better you position people years XXX a I having could we're say for in and our too. guess, of this we've a in the because position And doing better

that supply makes been mean product or I Yes, meaningful sense. issues to measure you or your curious mean just supply meaningful the you that you've sales that. environment. constrained from But case. measuring if I any seen anything are that most just to immune on chain it, anything if been competitors from said current surprising better you're has you've in relative able impact if no available, there this wouldn't identify to one And be because the Right. wasn't is. positioned not obviously, But obviously,

wasn't been available Not it's because available. product because

it. wait just to longer have You for

get the we had instances simply product. couldn't haven't We where any

can't take time. some the then which higher we on monthly course, we been ship Sometimes of it. to the two it's an because there is our There's it been than product, we've sides been or our that sales. that. a was are don't is there get to lost has sales sales. There's we and but backlog, which have in And the able Yes, weekly impact a

the only I comment do would than shelf who us, more that sales Now to our and customers Seal off that? want you from lost contract BAMKO more we've but customers buy Fashion who buy CID to among Jake, don't HPI our do. impact many believe on Healthcare

you No, covered think well. I it

Okay.

right. All

Okay. That's understood.

through? you So some known you is historically current you price of in the customers, well quarter the mentioned prices accepted environment -- to there had costs need pretty and the opportunity up to and haven't quarter end the are any on do detecting any these Is marking it that. of much higher that increases in or pushback fourth passed near from be

the good prices competitors our are too. Well, is that raising news

there So other are suppliers.

pushback. no, where had some cases, need pushback more much I through that time now mean we they time any of we've is been pushback. some was some customers And So inventory more appropriate there's to with the cycle given them if have. in we haven't very but that little

X left crisis quarter in quarter. level out of PPE million for called that the Okay. and fourth we but third in think fourth what, down we next little a the here thinking how I in Good. about X.X now? for Should quarters? the to for dropped a of pipeline you BAMKO million, What's are the you maybe over PPE, right similar couple quarter think or about kind in

BAMKO's $X.X had the I mean Yes. mentioned about that backlog PPE. million of is at opening we in

touch a been it's is bit similar and last than million QX over contributed of pickup QX. more to be more. of there, but Yes, Kevin. in the less which $X I maybe here two uniform a substantially BAMKO course we it's think We little expect it the the quarters, within little expect I division going deliver than a had what that couple quarters of be and the pretty wouldn't and to last that, to to

Right.

Okay. makes Yes, sense.

Is period are you commented a thinking It's that it's facility, of something that's to at you or think for? shouldn't any that something period. for be you I organization just make the new prepared but disruption transitioning systems, digestion there's pace progress the anchored more distribution do you're measured sometimes technology planning about? As you with transition is new distribution learning or even robotic a normal we system that by a model? you just kind a as new toward just Eudora think

robots, We in We working days system. the get of put though following and coming continued and that's some in believe meet the even shortfall couple Chuck January the months, we bugs. do able or were been of debugging February. over out out we months And standards had CID I to to had since the our a

So that and so had case, no we were one us. following XXXX, lesson disruption. that learned when the Eudora's turned created us And for went our But shut bang In system on you we other one. major we big and then, we in off think go don't well that back Kevin. I disruption. didn't a

So we have learned a lesson.

be been while the they've just rest will warehouse of the We beta as works actually testing working. this

different have will it impact on testing that we're of absolutely do not but customers. will our have we We that beta levels certain

We will switch. not look to

good. good it's Always experience. even learn All from right. to Good, if experience, not best the

in more we to you When related past sales in comps comps. to lagged do pandemic? Seal start of So due those surge mentioned just moving in that part has difficult difficult healthcare terms Fashion the

Yes.

They that care it gowns items, take issues to taking being we sometimes anybody competitors' there and was then conference to what in into time. out these rented buying We're didn't and the know we've previous Once and the the from needs. pandemic have for launder the and through all next anticipate they the I worked backup laundries, year out and and that, will the cycle expecting service out, now. will facilities, standpoint. got more at reported being barrier pull there of will in it saw who to in cycle product the think a of well all products when on depending lot laundries, didn't isolation in, we through to bode and then fourth needs, out wasn't overbought calls scrubs products they last bit necessary because I logistic even a coats think in making then of back product, care of The those else are introduce And that. remember, they'll our times some redundant them hard all our it of in XX on customers' you of that And a is service. very, our of XXX and already, completely that wiped all so even they of We the calls bring customers' we just and have to and should all quarter little we about come these year. needs us. airfreighting they've our particular, very of

All right. Got it.

a sales bit little to specific mentioned new elaborate you of more? You for Europe. on a Can CID? that Was director that

and Yes. in there. all she team That based we our is and CID is Netherlands out the build Europe we'll as sell over

All right. Good.

sales So now, as XXX we're last year into approaching that? full the you talked still million. fourth about here quarter you quarter Do think we're on for course

answer. shortest Yes. That's the

Okay.

had Well, moment at answers for questions. but all taking right. the that that's all I I thanks the think All Now the question.

from Capital. Our SGF next Hughes Mike from question comes

with remote to Just wanted start the solutions business. staffing

pipeline customers? really left to or I is impressive onboarding ramp far revenue few think quarters, as the in a that sequential growth last business as for new the speak the in you customer. had Can customers just You've what's over new some

different projected The had choppy. between seats month. running we a year that XX over last continues, as at now. ramp XXX XXX budgets when points a call. runs did XXX XXX the we put discussed It this it's We we into We're and on and on well our would approximately little

And high, constantly didn't and the into in off center United finding we're failed when can't my other be bring El demand that we our they've people, remote, harder my existing as outsourcers, is they're they multiple that so to built going in to The to that from other it were the training little do, them why Salvador, already are bit I wanting turnover harder their because five-year mostly they're think retraining. expect to work is used be who find guidance. who Belize, tail employees extremely to customers are centers employees and in seeing that States. and Jamaica. us gotten both We the And centers and that's using to well a first-time as who -- fact employees

year very the of could that we is momentum going believe be our all at the than we're of we end higher projected November, at we're get we with the extent. certainly So Certainly, this We're XX finalizing to encouraged by amount this some be going. And budget can numbers. that. But to hangover do the activity certainly the to seeing, per that sustainable. keep beginning of those we into when we'll a the that month number of certain are post-COVID

Okay.

it's from will top to to reasonable the million the So level? line the that quarter business $XX fourth expect into grow continue

Yes.

And Okay. surprised onboarding as with. costs, strike XX-Q of very high kind that business calls the me begin out margins the then which given of some to me

you can costs? what kind would the margins of onboarding those look So like state without steady quantify

that's it's side we gross running, reduced And onboarding margin this in for the the a a is, Well, number, customers where mean I their but give a I I they charge margins rate, lot a line more but more both at numbers the XX% from mean where training, really there's more you look growing really normal, with mean -- when you're year were gross growing onboarding can't is margin fixed on at I the at the rate. time at you're of with if start there costs when where numbers probably a do within you than a your XX% at rates. perspective. training the really projected were typically operating

ongoing down so, in operating bit short-term. on sorry, still EBITDA a XX% margin be ends or But up expect that an margin, that term, And your little longer we in margin basis. XX%, on bringing the to

the promotional to business. turning then And Okay.

I 'XX quarter. XX.X excluding the was quarter September versus you acquisition-related PPE that revenue in the any in $XX.X current think indicated the million, revenue? Does contain

Sorry, the revenue? question was acquisition-related

Correct.

we Yes. Certainly, made this Gifts in an year, of Design. acquisition By February

So that revenue there of there. included is portion a in

quantify Okay. ballpark? Can a you

of across the impact Yes. is is a The The run consistent By quarters. Gifts quarterly year. million Design about that XX of all of rate for business pretty our

not that It's material. Okay.

this there here's million XX quarter. XX question. in XX the million backlog first was my quarter, So The last million quarter,

a the starting rolled activity, now -- the vaccines looks to out like little outsider, it's spring, and it in bit. a As back pull was there there's an flurry maybe of

positive comments, Just tie to just that for kind backlog business? the from that but your sounds that's like more incorrect, other decline prior your outlook of

the Yes. I of variant, end right. June. we of of That think kind outsized mean, impact had I QX hit look, Delta

So were Vaccines what events September, going we do of to out, QX, lot saw of a budgets were there lot back July, a going uncertainty to they starting around August, how and people with their come events. In to had exuberance. are to was marketing back. rolled go

finally that We're back into see the there. So are the coming we some saw of budgets People come where events end now realizing, starting of to the are year. QX back. before pullback marketing use

that come bit those a the Delta of the back QX. of business within So to due little some seeing variant we're in tailwinds have back pulled kind

raw material margins Okay. And those from I increases, has would business work and the been assume there? has that a how uses that so pricing resins higher costs? raw of price And compression there other does material

Yes.

price order order. on do product of vast made we is branded So side, the to is majority every sort order. merchandise of our The to

in then price just order. the mugs of x or and price was that plus increases XX%. x into that ceramic We're if of order increases six orders So order. pricing we're price someone cost Said the the today, another adding ago it's XX% months any individual into way,

expensive through We'll as margin keeping costs filters revenue both charge just consistent. source. of and kind it us our pretty our for products they become for more to So more

there? normal What's the just business. stronger last then quarter in And it one weaker? or Okay. fourth on Is that the question seasonality

year, ton prior, a quarter thing. gifts People COVID because at were lot lot look fourth a of back if a that there Not you seasonality. XXXX Typically, strength of a home. gifting was at-home in the doing and ton not saw of you of was Last seasonality. a

you stronger and QX If say any, not materially. touch to touch maybe were QX is a weaker, is but there's a

Okay.

quarter how your tying should you So comments with the September fourth least at kind protecting and of those pricing made that consistent about for the to the margins be quarter? business comments the margin in works,

we'd that's Yes, what expect.

an what actually think the increase gone that's has year-to-date, transit some is historically? of And in portion that there's But happening where inventory you've now indication ocean is number given seen in freight. the XX-Q, that the to inventory of Okay. then, moving what's there's inventory, transit with in versus understandable I which

A lot you. don't that have We more. number for

into it's us from country in in. but more, vendors' to of can a to whatever only sitting more get XX transportation standpoint. it docks a much tell in for usually it be So only it's picked transit, XX our It's product than taking significantly it's you but because not some is of the up well -- to on that I extra waiting it's days

I Did you? lose

still here. we're No,

were question I wasn't I just then. speaking. done apologize. my Okay. Yes, you sure last

reiterating be can on a they call on fourth seasonality is XXX dollars, the implying up And to business the in the to pretty promo year, you're if your couple ability nice of the that it? think core it implies for that have uniform business correct December your are quarter. -- have Is business center, the much do doesn't I XXX read if million you're a into growth staffing going quarter.

should TOG fair well better. That's as even a quarter-over-quarter do as expectation certainly

one. last like? the CapEx apologize. Okay. have look what XXXX early you One I on an will look Do

X%, More likely, warehouse revenue into more Eudora the major bit continue in X.X% all we range. down that to winding of we year, expect be next in a The little were our will just but projects.

from [Operator [Michael instructions]. [ph] from our comes And next Disler] [indiscernible]. question

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turn concluding like session. the for Benstock back any question-and-answer over and be Michael gentlemen, And with floor to today's I'd that, remarks. ladies to we'll closing

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