Superior Group of Companies, Inc. (SGC) Cash Flow Statement

The OCF-to-net-income ratio averaged above 4x across the ten-quarter window (excluding the two working-capital-driven negatives in 2025Q1 and 2025Q3), which tells us SGC's accounting earnings are depressed far more than its cash earnings. This gap is not necessarily a sign of quality — it largely reflects depreciation on a legacy asset base (~$3M/quarter) that is not being replaced at an equivalent rate, a dynamic examined in the capex section. Given the prior finding that operating margins sit near 1.5% in 2026Q2, the market may be treating reported earnings as the binding constraint, while cash flow tells a somewhat less dire story.

The pattern is clear: Q4 (holiday shipping season) generates outsized cash ($17.9M FCF, 12.2% margin), while Q1 and Q3 see that cash absorbed by inventory and receivable builds. This seasonality means single-quarter FCF figures are misleading without normalization; a trailing-twelve-month lens would smooth to roughly $45-50M of FCF on ~$574M of revenue, a high-single-digit margin. However, the flat revenue trajectory identified in the income statement analysis means there is no incremental operating leverage to expand structural FCF — any sustained improvement will require either working capital discipline or an inflection in the top line, neither of which is evident in the trailing data.

A capex-to-depreciation ratio near one-third over a multi-year window is unusual for an industrial apparel manufacturer and suggests SGC is harvesting cash from its asset base rather than renewing it. While this flatters near-term free cash flow (the ~$2M/quarter gap between D&A and capex is effectively a non-cash subsidy to FCF), it raises questions about whether production capacity, equipment, or logistics infrastructure is being maintained to competitive standards. Investors should treat a portion of reported FCF as a drawdown on productive assets; if management eventually restores capex toward D&A, sustainable free cash flow could compress meaningfully from current levels.

The magnitude of these swings — often exceeding quarterly operating income by a factor of five or more — implies SGC operates with a working capital cycle highly sensitive to order timing and shipping cadence, consistent with its promotional apparel manufacturing model where holiday-season production builds precede revenue recognition. The negative $12.8M swing in 2025Q3 coincided with the only negative OCF quarter in the trailing ten, underscoring how exposed cash generation is to a single quarter's inventory or receivable timing. Analysts should monitor whether the cumulative multi-year trend in working capital is neutral or structurally consuming cash; the data here suggests episodic reversals, not a one-directional build.