Hala Elsherbini - Investor Relations Michael Benstock - Chief Executive Officer Andy Demott - Chief Operating Officer, Chief Financial Officer and Treasurer.

Kevin Steinke - Barrington Research Chris Reynolds - Neuberger Berman.

Good afternoon, everyone. Welcome to Superior Uniform Group’s 2016 Fourth Quarter and Year End Earnings Conference Call. With us today are Michael Benstock, the Company’s Chief Executive Officer and Andy Demott, its Chief Operating Officer, CFO and Treasurer. After the speakers’ opening remarks, there will be a Q&A session.

[Operator Instructions] This call is being recorded and your participation implies that you agree to this. If you don’t, then simply drop off the line. Now, I will turn the call over to Hala Elsherbini, Senior Vice President of Halliburton Investor Relations, who will read the Safe Harbor statement. Please go ahead..

Thank you. This conference call may contain forward-looking statements about Superior Uniform Group’s business opportunities and its anticipated results of operations. Please bear in mind that this information is subject to risks and uncertainties and actual results may differ from what you hear today.

Many of these risks and uncertainties are described in Superior Uniform Group’s Annual Report on Form 10-K for fiscal 2015 in this morning’s news release and in the company’s other filings with the SEC. Forward-looking statements in this conference call are based on management’s current expectations and beliefs.

Management does not undertake any duty to update these statements made during this conference call or elsewhere. Please note that all growth comparisons that management makes today will relate to the corresponding period in 2015 unless otherwise noted. With that, I will turn the call over to Michael..

Thank you, Hala and good afternoon everyone. Thank you for joining us to review our fourth quarter and fiscal 2016 results. I will start with a few highlights for both periods and then provide commentary on market trends. Next, Andy will give you some background on our financial performance. After which, I will offer some general thoughts on the future.

Then we will be happy to take your questions. We delivered strong fourth quarter performance with record earnings of solid finish to a year of diligently executing against our long-term strategic plan initiated in 2013. We extended our string of consecutive quarterly sales increases to 17 on a year-over-year basis, with revenues up 21.6%.

Turning to segment performance, I want to point out that we realigned our reporting structure and segmented the promotional products business, which includes only BAMKO sales. Andy will discuss this further in his remarks.

Uniforms and related products performed exceptionally well, up 6.5% in the quarter despite typical seasonality as customers are generally focused on their own holiday related sales during that period rather than uniform purchasing.

As our non-uniform business expands, we do expect these seasonality trends to even out as evidenced by BAMKO’s solid contribution. The team at BAMKO delivered strong results and finished the quarter with just under $8 million in sales. Our employee ID business contributed nicely, while working through a warehouse system implementation of HBI direct.

This pushed a small number of shipments into January, but that is now behind us and system performance is improving daily. We also delivered on the bottom line, with net income up 31.8% for record fourth quarter earnings of $4.4 million or $0.30 per diluted share.

Of note, earnings were positively impacted by the early adoption of an accounting standard related to stock-based compensation. Andy will address this in more detail during his remarks. Here are some 2016 highlights. On a full year basis, total net sales reached $252.6 million, up 20.1% over a very good year if you recall in 2015.

This included a 6.1% increase in revenues for the uniform segment during the year. We continued to see organic growth by penetrating current customers and acquiring new ones bolstered by strong employment trends and more robust voluntary employee turnover.

BAMKO, which we acquired effective March 1, generated net sales of $27.8 million representing a contribution of 11% of total net sales by our new promotional products segment. The team successfully penetrated existing customers, continue to build new relationships and leverage cross-selling opportunities with our legacy uniform customers.

Remote staffing solutions, the Office Gurus, consistently performed well with net sales to outside customers increasing by 20.1%. We continued to reach this underserved market of new customers that need fewer than 25 seats to fulfill multiple back and front office support functions.

This approach is attracting new customers and allowing us to expand work with current ones. Looking back at 2016, we achieved the number of impressive and fundamentally important milestones that reflect positive momentum for greater growth opportunities in the coming years. Let’s recap them.

In January, we opened our first company managed manufacturing facility in almost 20 years located in Haiti. The factory came online faster than anticipated and implementation has progressed exceptionally well supporting plans to accelerate expansion.

Our staff is currently at 180 and we expect to employ a total of approximately 300 people by the end of this year. That will give us a full complement of staff to reach our goal of $25 million in outlook for 2018. We also expect to see incremental margin improvement when the operation reaches full capacity by mid-2018.

As we have described on prior calls, we make the single line of engineered healthcare apparel professions to healthcare in that factories. Our competitive advantage here is not only are we a low cost and perhaps the lowest cost manufacturer, but we also have the ability to bundle orders, which better positions us to bid on larger contracts.

It’s proximity to United States also allows us to react to unexpected demand much more rapidly. During the year, we also restructured our approach to the healthcare market combining our direct and indirect sales and marketing efforts.

After 4 years of executing our strategic plan, it became clear that we aren’t fully realizing our desired return on investment part of this channel. We realigned our sales force to ensure business. Development costs were more in line with profitable opportunities.

Our combined sales professionals are trained to operate in both the direct and the indirect markets. You will recall that the direct markets includes such areas as large integrated delivery networks, outpatient services, home healthcare, long-term care chains and medical colleges, while the indirect focuses on laundries and distributors.

We have strengthened our channel efficiencies through a flatter and more focused operation leading us to engage in more profitable opportunities as we move forward.

Additionally, we consolidated our supply chain across our healthcare and non-healthcare channels giving our uniform segment stronger sourcing power and leading to an even better competitive environment for us. We expanded our global sourcing capabilities, including the leverage of BAMKO’s infrastructure in China giving us the competitive edge.

We also are realizing synergies, the cost effective web development, IT and accounting support in our India office. As I mentioned earlier, we are now breaking out the promotional products segment. After acquiring BAMKO, we became one of the largest branded merchandise promotional product distributors in the United States.

We are very proud that the team was recognized in January and awarded 5 out of 14 awards presented by the Promotional Products Association International. These included awards for BAMKO’s consumer, sales incentives, international, employee incentives and health and wellness programs.

This made BAMKO the most decorated firm in the promotional products industry for 2016. Of course, BAMKO represents the latest success in our acquisition strategy. We plan to remain aggressive in this area, because there are plenty of opportunities here.

Of the 22,000 companies in the promotional products industry, we have narrowed our list to around 150 that might meet our current acquisition criteria. The attributes are important to us are that they have revenues of $10 million to $25 million, good geographic penetration, strong customer base or product lines that we can leverage.

We are connecting with many of these targets and in conversations with several. We have the financial strength and experience integration team and expect to close one or two bolt-on acquisitions a year. The market for uniform segment acquisitions is very, very different. Here are the full of good targets is much more limited.

Many are family-owned, multi-generational operations that compete with us in non-healthcare markets primarily. We are in regular contact with these businesses and stand ready to capitalize throughout your time.

For our remote staffing solutions segment, the big news is that we completed the expansion of El Salvador operation, which nearly tripled its capacity. Our plan is to focus center to capacity in about 4 years if not sooner. We are very encouraged by the workforce and the planned build out of the sales force.

Our newly appointed VP of Sales will build an organization designed to accelerate its growth. The progress has been really encouraging.

Now for a perspective on the key market trends during the fourth quarter, we can’t say one way or another, the customers delay decisions on new branding initiatives or other expansion investments or purchasing decisions in the aftermath of the presidential election.

What we can say is that holiday season was surprisingly good for many retailers and when people buy more, companies hire more. Monthly employee turnover rates remain high during the quarter. Labor stats also show job – solid job creation in December.

Combined with the upward revisions for job creation in October and November the average monthly job creation for the fourth quarter was strong at 160,000 and the trend is continuing in the first quarter. These are strong key indicators for our business. I will now turn the call over to Andy for his financial review..

Thank you, Michael and good afternoon everyone. Let’s begin with our fourth quarter income statement. Net sales increased 21.6% to $64.7 million, once again all areas of our business showed improvements. Our uniforms and related product segment contributed 6.1% of the sales gain.

Remote staffing solutions accounted for 0.5% and as Michael mentioned we have now broken out the BAMKO acquisition to its own segment promotional products. During the quarter it contributed 15% of the sales gain.

It’s worth noting that there are still are few pieces of existing promotional products business that are being reported as part of our uniform segment. Over time we will be shifting these relationships into sales opportunities to BAMKO and into the promotional products segment.

Now, let’s see how each of these three businesses have performed compared with 2015 fourth quarter. Uniforms and related products segment sales rose 6.5%. All of this was from organic growth which reflected our continued success in penetrating the market as well as higher employee turnover.

In remote staffing solutions sales to outside customers grew 8.7% for the three months. We continue to reap the benefits of our successful efforts to expand our business with existing customers instead of new ones. As you know we acquired BAMKO last March, so there are no comparisons to the promotional products segment until next quarter.

Cost of goods sold grew 20.7% to $42.6 million. As a percent of sales this decreased to 65.9% from 66.4% for last year’s fourth quarter. As a result gross margin was 34.1% or $22.1 million for the quarter. This compares favorably with the gross margin of 33.6% or $17.9 million a year ago.

Because gross margin can fluctuate based upon customer mix, we believe looking at operating margins offers a better measure of our overall profitability. SG&A expenses grew 22.6% for the final three months reaching $16 million. As a percent of net sales SG&A was 24.8% compared with 24.6% at this time last year.

Interest expense rose 41.9% from this time last year to $0.2 million. This continued to reflect higher average borrowings related to the BAMKO acquisition. Income from operations increased 24.8% to $6 million. This gave us a 9.3% operating margin compared with 9.1% for last year’s fourth quarter.

Our effective tax rate decreased to 24.3% from 28.3% last year. The decrease in the effective rate year-over-year is primarily attributable to the adoption of ASU 2016-09 related to share based compensation.

As Michael mentioned we elected to early adopt this ASU which addresses among other things the accounting for income taxes and cash flow presentation of share based compensation.

Under ASU 2016-09 excess tax benefits for share based payments are reported as a reduction of income tax expense and reflected within operating cash flows rather than being recorded in paid in capital and reflected within financing cash flows. This adoption is retrospectively recorded in each of our quarters for 2016.

The change in accounting resulted in an income tax benefit of $0.4 million for the fourth quarter or $0.03 per diluted share. The impact to prior quarters in fiscal 2016 is addressed in detail in our Form 10-K filing.

Net income for our latest quarter increased 31.8% to $4.4 million on a diluted per share basis earnings were $0.30 compared with $0.23 a year ago. Additionally, a successful claim settlement contributed just under $0.02 of this improvement. We also paid a regular quarterly dividend of $0.0875 per share.

Now, let’s look at the highlights from our full year income statement, net sales jumped 20.1% to $252.6 million this growth was shared by all of our business.

Sales for uniforms and related products grew 6.1% for the year, remote staffing solutions revenues to outside customers showed 20.1% growth and promotional product sales reached $27.8 million for the 10 months since we acquired BAMKO which represented 11% of total sales. Cost of goods sold increased 19.2% to $165.6 million.

This represented 65.5% of sales versus 66% in 2015. Here is a little more color on what happened to each segment. Cost of goods sold at uniforms and related products represented 66.7% of sales compared with 67.1% for 2015. The improvement came primarily from lower direct product costs this year.

Remote staffing solutions saw cost of goods sold at 46.4% of sales in 2016 versus 45% in the prior year. The increase reflected more revenue coming from our domestic operations. This was 29.1% for the latest year compared with 23.7% in 2015. While the hourly rates are higher for our domestic business, we are in the lower margin percentage on them.

And for promotional products cost of goods sold were 65.2% of sales. SG&A expenses rose 27.6% to $66.4 million. As a percentage of sales SG&A was 26.3% compared with 24.7% a year ago. Exclusive of the expenses associated with the BAMKO acquisition, SG&A would have been 25.9% sales in 2016.

On the segment breakout uniforms and related products SG&A as percentage of sales was flat at about 24.8% for both years. Higher net sales and the claim settlement were offset by increased salaries, wage and benefits to support our growth in addition to increased medical costs in our self-insured medical plan.

For remote staffing solutions SG&A as a percentage of sales was about 34% in 2016 compared with 33.2% in 2015. This increase is attributed to a rise in wages and benefits to support our continued growth in addition to increased facility related cost and depreciation as we expanded our capacity in El Salvador.

Promotional products SG&A expenses were $10.4 million for the 10 months. This included approximately $1.1 million of expenses associated with the acquisition. Excluding these acquisition related expenses, SG&A expenses would have been 33.3% of sales.

And as a reminder BAMKO was built to service a much larger volume of business than we are currently serving. As such, it will take them time for us to grow into this structure.

This SG&A expense is expected to normalize over the next 3 years to 5 years exclusive of the impact of additional acquisitions which will be expected to expedite this normalization. Interest expense rose 32.6% the $0.7 million. Largely reflecting the debt we took on to acquire BAMKO. Operating income increased 5.3% to $19.9 million.

That gave us an operating margin of 7.9% compared with 9% a year ago. If you excluded the acquisition related expenses, our operating margin would have been 8.3% for the year. Our effective tax rate decreased to 26.4% from 30.9% last year. Again, the decrease in effective rate year-over-year is primarily attributable to the adoption of 2016-09.

The change in accounting resulted in an income tax benefit of approximately $0.9 million in 2016 or $0.06 per diluted share. Net income for the year rose 12% to $14.6 million. Diluted earnings per share were $0.98 versus $0.90 a year ago on 2.2% higher shares outstanding.

Again if you factor out the acquisition related expenses, our diluted earnings per share would have been $1.03 for fiscal 2016. In 2016 we continued our commitment of returning value to our shareholders to quarterly dividends and share repurchases. This includes the August dividend increase of 6% to $0.0875 per share.

For the year we pay total cash dividends of $4.7 million, up 10.6% from 2015. In addition, we repurchased about 45,000 shares of our common stock. Now let’s take a look at our balance sheet, our cash and cash equivalents increased nicely to $3.6 million. Our cash flows from operations were approximately $12 million, representing a 21% improvement.

We invested $15 million [ph] of net cash to acquire BAMKO and $7.4 million in capital expenditures. We are primarily focused on constructing our Haiti facility and the new call center building in El Salvador, in addition to no more capital – maintenance CapEx. In addition, financing activities added $13 million to the year.

Accounts receivable rose 39.8% to $41.8 million. This reflected higher sales for the year plus the BAMKO acquisition. Inventories grew 8.9% to $69.2 million, much lower than 21.1% rise in net sales.

The increase in inventory is lower than the increase in sales largely due to the fact that BAMKO does not required a substantial investment in inventory as most of their orders are make and ship. We also implemented tighter controls over inventory levels with an increased emphasis on more effective management in on our uniform segment.

Prepaid expenses and other current assets expanded by 16.1% to $7.2 million, primarily because of the BAMKO acquisition. As I mentioned, this operation doesn’t carry much inventory, but it has significant funds tied up in vendor deposits. Accounts payable grew 14.7% to $13.5 million.

This was largely due to the timing of inventory purchases and payables related to BAMKO. Other current liabilities grew 29% to $10.7 million. This reflected the current liabilities we acquired a long with BAMKO and an increase in income taxes payable.

As you can see our balance sheet is very strong, it gives us the flexibility to make acquisitions and invest in new products and technologies and fund our working capital needs as we grow.

[Indiscernible] of our efforts in these areas combined with improving the efficiency of all our operations gave us the record top and bottom line as we saw in the fourth quarter and for the full year. Now, I will turn the call back to Michael for his closing remarks including a general outlook for 2017..

Thanks Andy. As we enter 2017, I am feeling encouraged by the employment trends and our customers optimism and have aligned ourselves accordingly. However, there is some uncertainty around minimum wage, order adjustment taxes, healthcare reform and corporate tax rates.

If favorable changes in corporate tax rates are enacted will so ease uncertainly around investments for the future and as wages continue to rise this could create another good surge and grow. In addition, we are well positioned in the healthcare market.

In the most unlikely scenario of the affordable care act is repealed and not replaced there is still enough demand for healthcare from an aging population to keep this market robust for a long time.

And while there has been scrutiny in companies that are moving manufacturing offshore are not much focused in places on those that provide services from other countries as we do with the Office Gurus, if there was some type of import border adjustment taxes levied on our products being manufactured overseas then it will also affect our competition [indiscernible 0315] getting in front some very hefty price increases to our customers.

Understand though that our thought leadership is saying that non-luxury clothing is likely one of the last things that is going to come under scrutiny as the obvious implications of Superior negatively affecting middle-class America is not what any administration want to do with. In summary, during 2016 we executed on our multi-level growth strategy.

We remain flexible and nimble, as a result we now have a diversified business model that complements our core offering and provides the platform for sustained growth. Our next 3 years strategic growth outlook takes us into 2020. We approach our business with an eye towards prudent reinvestment in our business should drive organic growth.

Diversification of earning power and the ability to broaden the breadth of our product portfolio and customer reach. We expect to see similar long-term growth pace, accelerated by more rapid growth in our remote staffing solutions and from acquisitions.

For the next few 3 years to 5 years, our long-term guidance reflects sales from our uniform business to organically increase annually and in average of at least 6% per year. Remote staffing solutions should add $3 million to $3.5 million per year. And please note this is a new number in our guidance.

And promotional products should generate annual growth of more than 13% based on its current operations. That would give us company wide an average organic sales growth of more than 8% per year. We also intend to supplement this growth with additional acquisitions. Okay.

Overall, we see that you put all these numbers together and you wind up with average organic sales growth of more than 8% per year. Before we open for questions, I would like to take a moment to thank Alan Schwartz, a key executive of the company, who was very entirely moving into a part-time consultative role beginning in April.

Alan began his career with Superior in 1975. He served with me as Co-President for 11 years and then as President of the company beginning in 2003 and additional responsibility as Fashion Seal Healthcare Indirect since 2015. Alan will direct his focus on managing relationships with some of our larger customers going forward.

In his more than 40 year association with the company, Alan has been instrumental in his direction, success and progress. I am personally grateful for his partnership. We are fortunate to have had his leadership and equally so that he will remain in an important transitional role for the foreseeable future.

We also have the benefit of guidance as he remains on our Board of Directors. Additionally, I would like to acknowledge that Superior came in #24 in Fortune Magazine’s top 100 fastest growing companies in 2016.

This was based on revenue and earnings per share growth rates as well as shareholders return for the last three years among publicly traded companies that had a market cap of over $250 million. This is a great honor for our entire team. It’s been used in our marketing and is the testament to our diligence and perseverance that we practice daily.

We have come a long way in these past years and we have an equally challenging task ahead of us to reach the next level of our growth. We are excited for what the future has in store for us and hope that you continue with us on this journey. Thanks to your attention this afternoon.

Andy and I are ready to take your questions and I see a lot of people on here that we have seen before and met so ask away..

[Operator Instructions] Our first question is from Kevin Steinke of Barrington Research..

Good afternoon. I think I will start off by asking about the one positive change you made to your long-term guidance by increasing the annual revenue growth outlook for remote staffing.

So, is that just being enabled by the launch of the El Salvador facility and also I think you have talked about in the past maybe just putting a little bit more internal sales effort behind that business?.

Yes. Thanks, Kevin and good afternoon. You are right, without having the capacity we couldn’t add it, but without having sales, there would be no point. We believe our sales efforts are paying off.

I can tell you that the business is going very well and there being no limitation now in terms of space and the management now have to constantly try to figure out kind of how shift people around to create still a great environment, but a tighter environment is really welcoming.

So I have actually had a couple of businesses down there in the last few months, spent time with our sales group. We have made strategic planning there as well planning the next gross spreads and all is good and it’s really for both of those really..

Okay, good. And so the revenue growth outlook remains strong as you outlined over the next few years.

And talking about 2017 specifically, I know you don’t give specific guidance, but there would seem to be some factors that would point to or argue for operating margin expansion in 2017, perhaps leveraging the Haiti investment, BAMKO margins perhaps improving, leveraging the El Salvador investment, etcetera.

So, I mean is that just from a high level perspective the right way to think about 2017 in terms of margins and the impact that that can have on earnings growth in conjunction with the solid top line growth?.

Yes, Kevin. I think that’s exactly right. I mean, as you know we don’t give specific guidance on it, but that framework is I would be very comfortable with that..

Okay, prefect.

And specifically on one line item that the selling and administrative expenses came down almost $1 million sequentially, is that just some normal seasonality or is that also a function of some – maybe some of the cost streamlining efforts you have been doing?.

There may be a little bit of a just normal with this time of year. I mean we do have some variability in it. But as we talked at the end of the third quarter, we had done some streamlining on the direct healthcare effort.

And I think we had mentioned at that point, we thought that was the net savings of all of those things where we have done was about $1 million a year. So that would be probably a quarter of the number that you are talking about.

We did see healthcare which medical claims which we had been talking about for several quarters, for three quarter of the year is really kind of being higher than normal. They have normalized a bit in the quarter. So some of them were just timing is that helping to have them. But we are definitely making progress in that area.

We also – we made some streamlining efforts at BAMKO as well as we looked at where they are headed and trying to just make sure we are all headed in the right direction at the right levels..

Okay, good.

And then can you just talk about obviously it sounds like you are encouraged by BAMKO’s outlook, but just overall it’s the pipeline you are seeing there, especially now that you are almost a year into owning the business, how is the pipeline building in terms of both new opportunities and also cross-selling opportunities with your uniform customers?.

Good question. So I think I mentioned this in the prior call and I certainly have not been shy about talking about when we acquired a company.

And the first thing we try to do is understand that before we start making any wholesale changes in the business the first five months or six months we really spent observing, visiting all of their locations, spending time with them and their customers to understand them better what made them so successful.

And so since then in the last four months or five months, I think we have capitalized already on some cross-selling opportunities I can tell you that some of the opportunities have been pretty good size. Their pipeline is strong. It’s still a little bit choppy at their $28 million of orders until they bolt-on some acquisitions themselves.

They are going to see that kind of choppiness especially the side of the business that they are so prominent on, on the customized branded merchandise side just trying to get larger orders that can really push a quarter one way or another or push a month one way or another. But I monitor the pipeline weekly.

I have discussions with their President, Phil Koosed every single week about their pipeline.

And there is more opportunities than I have ever seen in it and it is a function of how many opportunities you are working on there, working on larger opportunities than they have ever worked on before only because they now have to wear with all from our financial power to take on some of those larger opportunities.

And they are very positive I mean their sales force is very, very engaged everywhere and so I think we will – that will be a growing division organically.

And of course I think on the previous conference call once I said we are very aggressive when somebody called me out for that and said what does very aggressive mean when it comes to acquisition [indiscernible] perhaps always just buried. We are very aggressive when it comes to that goes to acquisition pipeline, we are talking to lot of folks.

We did a lot of homework before we bought BAMKO and we have a lot of data on lot of companies and fortunately that’s helped to accelerate things a little bit where we are in conversations probably sooner than we might have been waited until we bought BAMKO. They are a great team.

They don’t have to reach out to people and begin the conversation with then and Andy and I jump in as needed, but we still are firm in our result to close one or two bolt-on acquisitions a year..

Okay great.

And just trying to get a little bit more inside into the new customers sales process for BAMKO, when they are competing for new customers, how competitive is that process, how does BAMKO distinguish itself and then once they land a new customer, what’s the likelihood that they get the next order from their customer I mean those trying to be sticky relationships or you sometimes tie up customers with exclusive agreements?.

Okay. Let’s start with the first part of the question, it’s a very competitive business. There is 22,000 companies out there and it seems that everybody knows somebody who works for promotional products company. So they don’t always know us when we walk in the door and say no somebody from one of our 22,000 competitors.

What distinguishes us when we walk in the door is our – first of all, our ability to design customize products. A large portion of BAMKO’s business is not off the shelf standard promotional products from an ad specialty suppliers, some with catalogues, somewhere in this country.

They do some of that and they do some filling work for customers that kind of work, but the real forte is being able to sit down with marketing departments, ad agencies, PR agencies for a client and talk about the customer’s brand and development side products that are more branded merchandize and more meet that customer’s requirement on unique products that can be that the customers can use in whatever way they plan on using them.

That is definitely something that distinguishes them and when you start differentiating who you are by the fact that you have products that nobody else has then you are in a different environment from a competitive environment, because everybody is trying to catch up to you.

You are not simply in a price point how much for this mug, how much for this cup. And while we do some mugs and cups that’s not the preponderance of our business, likely if the customer stays with you, we do some RFPs that want to do multilayer business.

We have some business relationships going back many, many years, some of them are exclusive, some of them are preferred, some of them are simply hunting licenses. You are not sticking with uniform business. The uniform business tends to have multi-layer contracts exclusivity.

There is big cost of change when customer decides to go with one of your competitors it’s going to buy out inventory and so on and all kind of computer and hook up – hooking up through their purchasing systems and so on to punch out. There is a lot involved website development.

In this case there is a little bit of less cost for change in this business, but there are still relationships out there that we have to break on barriers. And it’s a business you have got to call, you have got a call and you have got to show up, you have got a network and these guys are very good at it.

They have got a nice business, its growing double digits from many years and they know to do it. And they have modulated their growth to a certain standpoint over the years, because they knew that they didn’t have the capital to grow it faster and now they do and we will see what we can do..

Okay, that’s great color.

Just a couple of more questions for me, again I know you don’t give any specific guidance, but as you are a couple of months almost into this first quarter here, are there any larger uniform program roll outs you see coming through this quarter or how does the promotional products order pipeline look in terms of what might form the first quarter, just trying to get a sense for how the first quarter first half of the year might roll out based on order timing or rollout timing?.

I am going to let Andy give you the standard answer to that question, go ahead Andy..

We are really not going to give down the specifics on an individual quarter. There is really not anything that we are going to highlight on and then the things are going to come with the times that they do, but I mean, we are really – we are focused on the long-term where we are building our opportunities. We have got a great opportunities going on.

And I mean, our current backlog is in the 10-K, but that’s not necessarily with from what we breakout the promotional products side of that, it’s not necessarily the build to ship in the next quarter. It’s over the next quarter or two, but I mean, those numbers are in there. I mean, that’s as much as we are going to give..

Fair enough. Just couple of last housekeeping items here.

So, the change in accounting for share-based compensation is that just a benefit to 2016 or does any of that continue into 2017? And then just maybe a little more color if you can, just I think you talked about a $0.02 benefit from a client settlement?.

Yes. First on the stock compensation exit of tax benefit that will be a ongoing benefit. It all depends as long as you have a nice run up on the stock and you have got options being exercised and gains that generate tax benefits that will be ongoing.

Will it be at the same 880,000 that this year is that really depends on the stock price and what our employees do on their options in a particular year, but it will be an ongoing treatment, that’s not a cumulative effect adjustment, that was all related to the specific transactions that happened in 2016.

On the second item, it was not – go into specifics, it was not a customer settlement, it was tied to some external influences over a number of years and we are really not in a position to name who is related to, but it was not a major amount..

Okay, great. Well, good performance and thanks for taking my questions..

Alright. Thank you, Kevin..

The next question is from Chris Reynolds at Neuberger Berman..

Good afternoon, gentlemen..

Hey, Chris. Good afternoon..

Yes, I have a general question about the CAFTA Treaty and we hear a lot about NAFTA being repealed or modified, but not much about CAFTA and if that went hand in hand with repeal or modification of NAFTA and put restrictions on assembly of apparel in the Caribbean Basin, would that have a material impact? I think that it probably would and I just haven’t heard many people talk about CAFTA like they have the NAFTA Treaty.

And I know it’s impossible to give a precise answer, but I want to see if it’s been something that’s been discussed that perhaps we haven’t heard about?.

Yes, I was waiting for this question. There we go. We don’t make hardly anything under NAFTA. So, let’s put that aside. CAFTA, we do have our presence in Central America. It’s not what it was once. It was once much larger. It was once I believe was high as 70% of all our manufacturing with what’s going under cash.

We do manufacture in Haiti and Haiti has its own treatment that’s being given here by the U.S. non-treaty just that went allowance. It’s not a mutual agreed upon treaty.

What you are talking about though is CAFTA is a treaty and I believe that if the treaty is going to be taken off the table, that it has to be agreed to by Congress, but personally I must first say how I feel personally, I don’t think it’s going to happen, I think it’s a negotiating ploy on the part of the administration.

You will say would it impact us? Sure, it was. Would it impact a lot of my competitors? Absolutely. Are we trying to plan around that in the unlikely event that would happen with no notice? Yes. Are we – will we come out the back end of that as strong as we went in? We usually do. And that’s really all I can say about it.

It is something we are discussing constantly and what our Plan A and B and C are and what the timing of all this might be? Should it happen we will be as ready as it can possibly be..

Right. You will be impacted like other participants and I think it’s impossible to say, but thank you for the terrific work and the excellent operating results..

Thanks. I will follow-up with a follow-up answer to that too. If you close all the factories in Mexico and Central America that are making apparel for the U.S., you are going to force millions of people to try to come across our borders legally to get jobs, will be no jobs for them there.

And when that happens, you are only going to exacerbate a really bad and great situation that we have already. So, I really doubt that at the end of the day that all that we have been promised is going to happen..

Okay, well thank you..

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Benstock for closing remarks..

Thank you very much. Andy and I always appreciate your interest in our company and the time you take to be on these calls. We look forward to providing an update for our progress with first quarter in April and enjoy the rest of your winter..

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect..