Good afternoon, everyone. Welcome to Superior Group of Companies First Quarter 2021 Conference Call.

With us today on behalf of the company is Michael Benstock, the company's Chief Executive Officer; Andy Demott, its Chief Operating Officer, Chief Financial Officer and Treasurer; and from the Promotional Products Division we have Jake Himelstein, BAMKO’s Chief Operating Officer and Chief Financial Officer.

After the speakers' opening remarks, there will be question-and-answer session. This call is being recorded, and your participation implies that you agree to this. If you don’t, then simply drop off the line..

Thank you. This conference call may contain forward-looking statements about Superior Group of Companies', the company within the meaning of Securities Act of 1933, the Securities Exchange Act of 1935, the Private Securities Litigation Reform Act of 1995 and all rules and regulations issues there under.

Such statements are based upon management current expectations, projections, estimates and assumptions.

Words such as will, expect, believe, anticipate, think, outlook, hope and variations of such words and similar expressions identify such forward-looking statements, which includes statements on the impact of COVID-19 on the company's business, including inventory, supply chain, manufacturing capacity at the company's own and contract manufacturing facilities, service capacity and customer demand.

Forward-looking statements involve known and unknown risks and uncertainties that may cause feature results to differ materially from those suggested by the forward-looking statements. Such risks and uncertainties include, but are not limited to the following; the effect of the COVID-19 crisis on the U.S.

and global markets, our business operations, customers, suppliers and employees, the impact of the global supply chain disruption, general economic conditions in the areas of the United States in which the company's customers are located, changes in the markets where uniforms are worn, where promotional products are sold and where call center services are used, the impact of competition, the company's ability to successfully integrate operations following confirmation of acquisitions and the availability of manufacturing materials, as well as the risks and uncertainties disclosed on the company's periodic filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended December 31, 2020, the quarterly report on Form 10-Q for the quarter ended March 31, 2021 and the 8-K filed recently.

Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements may 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 to conform to actual results or changes in the company's expectations, whether as a result of new information, future events or otherwise, except as required by law.

Please note that all growth comparisons that management makes today will relate to the corresponding period in 2020, unless otherwise noted..

Thank you, Hala and good afternoon everyone. Thanks as always for joining us to discuss our Q1 results. Joining me today as usual are Andy who will report on the overall SGC results and status of our operations and Jake who will report on BAMKO’s financials and operations. After opening remarks, we will open the line for questions.

So, let's get started. I am very pleased to report another great quarter of substantial growth. I'd characterize our core businesses as mostly driving, growing both organically and through strategic acquisitions, we have again proven our ability to meet PPE demand, as well as service spot crisis PPE orders as they arise.

While we expect that to continue, our primary focus has always been and will remain our loyal long-term customers in the core products and services that we offer to them. Our disciplined long-term approach is yielding what we believe is sustainable organic growth in both our recurring customer base and with new customers across diverse end markets.

Our differentiated shared resources operating model that we've spoken about on previous calls continues to support accelerated returns as we gain economies of scale. Our omni-channel market strategy is paying dividends and we are enthusiastic about the great potential even yet to be unlocked.

First quarter net sales increased 49%, and net income grew by 211% when compared to the first quarter last year. While PPE was a strong contributor to our first quarter 2021 results, organic growth in our core businesses is the more pertinent narrative.

As we look ahead, our indicators are pointing to a strong recovery in our non-essential customer base, replacing crisis PPE sales. Overall, our operational investments, cost reductions and market response efforts completed over the last year further enhanced our ability to execute long-term growth and profitability in our core business segments.

Our Uniform segment reported strong growth and is sitting with a much increased backlog, which Andy will also address in his comments. Supply chain disruptions due to port congestion, rail and container and trucking capacity issues, interrupted the flow of inventory supply.

Even with our outstanding results, this tempered them to some degree, as well as our service KPIs. A larger than usual amount of uniform orders roughly estimated at $5 million received during the first quarter will be fulfilled in the second quarter.

This is not where we like to be positioned from a service standpoint, but it is the current condition that we're quickly overcoming in spite of logistical challenges..

Thank you, Michael and good afternoon, everyone. Our team at BAMKO is thrilled to report another extraordinary quarter, once again sharing a performance by our incredible team that surpassed expectations. For the first quarter, sales surged by 124.9% compared to the first quarter of 2020 to $58.9 million.

Yet again, we established a new watermark by delivering the largest quarter of Promotional Product sales in our company's history, excluding PPE. Operating margin reached 12.7% compared with 3.6% in the first quarter of 2020.

These operating results once again validate BAMKO's ability to continue to scale our business and achieve significant operating leverage. Our backlog at quarter-end was $40.8 million compared to $39.2 million in Q1, 2020.

What is most impressive is that PPE sales account for just $800,000 of the Q1, 2021 backlog versus $18.5 million of PPE in last year's first quarter. BAMKO's core Promotional Products business has more than replaced the large PPE backlog from a year prior.

This speaks to the strength of our business and we expect this trend to continue as companies put marketing budgets to work and their effort to reinvigorate their brands.

What we're seeing in macroeconomic trends and in consumer spending habits is that the return to pre-pandemic economic activity is actually happening more quickly than we had anticipated. There's an exuberance about a return to normalcy and a built up sense of anticipation that is being reflected in the actions of our clients.

We have been successful in showing our clients that expanding marketing budget now is the best way to recapture customers. At this pace, we would not be surprised to see activity exceed pre-pandemic levels in the coming months..

Thank you, Jake and good afternoon, everyone. I'm extremely pleased with how our teams continue to perform, especially through challenging times in our marketplace. We continue to outperform the market and our competitors to report solid results for our stakeholders.

We carried strong momentum from last year and are continuing to invest in the growth of our businesses organically and through selective acquisitions. We have a strong margin profile, an exceptional balance sheet and healthy cash flow generation capability.

All three elements are key foundational pillars that enable us to perform at a high level, strategically and operationally. During the quarter, we closed on the Gifts By Design acquisition. In addition to the acquisition cost of $6 million, CapEx spend was $6.7 million in the quarter.

While net borrowings increased $22.5 million, so did our EBITDA, keeping our debt to EBITDA ratio stable at 1.5 times at March 31, 2021. I'll now review operational highlights for the quarter. We are progressing well with technology and automation investments in our Eudora, Arkansas distribution center slated for completion later this year.

We're pleased to see improving efficiencies resulting from our investments in robotics and our CID Dallas distribution center, which will continue to gain additional competencies, using AI and machine learning.

Our third manufacturing facility in Haiti is on track and is expected to come online in the next few months, adding to our near shore production capabilities in a duty-free environment. Haiti's proximity enhances our ability to better service our customers.

And when completed, we expect to be producing about 30% of our product out of Haiti this year, about 70% of that coming from our own factories. Our distribution capabilities will be greatly expanded by the completion of our new 100,000 square foot replenishment warehouse also in Eudora, Arkansas later in the year. Turning to our financial highlights.

We had an outstanding start to the year with first quarter net sales up 49.4% compared to the prior year quarter to $140.8 million, all segments exceeded growth expectations once again. BAMKO was the largest contributor with a 124.9% increase accounting for $32.7 million of the overall quarterly sales growth.

$14.2 million of this increase for BAMKO resulted from PPE sales. Uniforms or related products net sales increased 17.4% to $70.6 million relative to the comparable period in 2020. PPE sales were $12.5 million versus $1.5 million of only our legacy PPE products in Q1 2020.

As Michael said, West Coast ports congestion hindered our ability to maximize Uniform segment growth this quarter. Total Uniform backlog at quarter-end was $44 million compared to $11.6 million last year. Of the quarter-end backlog, PPE accounted for $15.3 million versus essentially zero on March 31, 2020.

Jake discussed BAMKO's impressive results and backlog, which warrants another mention that our core Promotional Product sales are rebounding at a faster pace and beginning to replace PPE business at a higher level. The Office Gurus again reported high double-digit growth as demand has strengthened.

Net sales after intersegment eliminations increased 43.2% to $11.4 million. Overall, the team excelled at onboarding new customers and has continued providing superior services to our existing customer base.

As a reminder during the 2020 first quarter, TOG operations in El Salvador were impacted for more than a week due to the local government mandate to shutdown operations at the onset of the pandemic. For the quarter, we reported consolidated gross margin of 34.8% compared to 35.5% in the first quarter of 2020.

The variability is due to customer and product mix. While total SG&A expenses increased by 27.7% due to higher sales volume across our segments, we saw a significant improvement reflected as a percentage of net sales of 24.9% versus 29.2% in Q1 last year.

This increase in SG&A dollars is primarily due to increased sales commissions and employee compensation due to a significant increase in net sales for the current quarter. Of note, our 2020 first quarter included a $1.2 million reversal of the 2019 accrual for our 401(k) discretionary matching contribution.

Additionally, TOG incurred expenses related to compensation paid to agents without the benefit of sales in the amount of approximately $1 million due to the shutdown last year. Wage reductions were implemented at the beginning of Q2 last year. We have reinstated these pay rates to pre-COVID levels at the beginning of the second quarter of 2021.

Wage reduction savings taken last year were $2.4 million on an annualized basis, of which 25% would have been a benefit in this first quarter. Income from operations for the first quarter increased $13.9 million compared to $6 million in 2020 Q1, and operating margin reached 9.9% in the first quarter compared to 6.3% last year.

Net income for the first quarter markedly increased by 211.2% to $10.5 million or $0.66 per diluted share compared to $3.4 million or $0.22 per diluted share in last year's first quarter. Of note, diluted shares outstanding increased by 5.2% to 16 million shares compared to the same period last year.

Our effective rate for the quarter was 20.8% compared to 27.1% a year ago. Now for a few balance sheet highlights. Cash flow from operations were reduced in the first quarter, primarily due to significant accruals associated with the company's strong operating performance and which were reported in 2020 that were paid in the current period.

This included accrued incentive compensation and income taxes. Working capital increased for the quarter from $143.6 million at the end of 2020 to $165.3 million at the end of first quarter 2021. At March 31, 2021, we had cash and cash equivalents of $10.9 million. This is an increase of $5.7 million since last year.

This increase is mainly due to timing of customer payments received at the end of the quarter. We also paid a quarterly dividend of $0.10 per share during the first quarter. Capital expenditures were approximately $6.7 million with the investments primarily related to our expansion of the distribution facility in Eudora, Arkansas.

We anticipate continued heavy investing in our automation projects this year and expect CapEx to still be in the range of $16 million to $17 million for 2021. Lastly, the company is in the process of terminating its two non-contributory qualified defined benefit pension plans, which were fully funded as of March 31, 2021.

In April 2021, we settled the majority of our obligations under the plans by providing lump-sum payments of $13.7 million to eligible participants who elected to receive them.

And we expect to settle the remaining future obligations under the plans through the purchase of annuity contracts from one or more highly rated insurance companies in the second quarter. These settlements are being paid from the assets of the related pension plans.

We estimate that we will record a total non-cash pretax charge associated with the planned termination during the second quarter of 2021 of between $7.5 million and $8.5 million, which primarily represents the acceleration of deferred charges currently accrued and accumulated other comprehensive loss.

I'll now turn the call back to Michael for his closing remarks and a general outlook..

Thanks, Andy. Despite the operating landscape, we still have so much opportunity to unlock. We've always taken bold steps to navigate market challenges in the past and in most cases, in our 101-year history come out stronger than before. We remain confident this time it's no different.

To fuel future growth, we are making prudent investments in distribution, manufacturing, marketing and IT, as well as workforce expansion. We're recruiting heavily for talent in top positions. To date, this is our strongest push for key positions ever to take us to the next level.

In our Uniform segment, we are building out teams in sales, project management, design, plant management and other key areas as well. BAMKO continues to recruit several national sales reps as well as other key employees. The same is happening across our Uniform business.

Our M&A pipeline is where we wanted to be without distracting us for managing our business. Additionally, our international strategy is beginning to take hold and we are investigating distribution expansion possibilities beyond the new distribution point in Poland as we increase our scale internationally.

At TOG, demand for our niche call center services continues to increase and we are looking at a variety of options to augment long-term capacity.

This could potentially include acquiring call center businesses that bring us into new geographies that open us up to pools of agents and leaderships, as well as capacity and that might give us entry into new channels of service. We are operating in a dynamic environment seeing additional momentum in sales growth.

From our point of view, there has never been a better time for us to disrupt what we see as a weakened competitive landscape and take market share. Taking into consideration our organic growth rates and our recent acquisition, we are raising our sales outlook for the year and updating our long-term goals.

Previously, we guided to $450 million in net sales for 2021. Factoring in our Gifts By Design acquisition and updated organic growth expectations, our current estimates show us approaching $500 million in net sales for 2021. The Uniform segment is expected to grow at a CAGR of 12% from 2021 through 2025.

BAMKO is projecting a 12% CAGR during the same period, and TOG's trajectory continues to excel yielding expectations of 18% CAGR through 2025. We expect overall a 12.5% CAGR for SGC from 2021 to 2025.

Overall, we expect to exceed $800 million in net sales by 2025 in our current business units absent of any acquisitive growth and expect operating margins in excess of 10% in 2025.

Our strong performance is a result of our strategic diversification and integrated business model underpinned by the determination and the hard work of our entire team and our loyal customers. Business is never without its challenges, most of which lately precipitated by outside events.

We're working through those challenges and will prevail in overcoming them as we always do. With that, we would like to open the call for your questions..

We will now being the question-and-answer session. Our first question comes from Kevin Steinke from Barrington Research. Please go ahead..

Hey. Good afternoon, everyone..

Good afternoon, Kevin..

I wanted to just start off by talking about the Uniform segment pipeline, what you're seeing there? You mentioned some continued strength. Are you seeing the continued strength on the healthcare side? You have talked before in the past about reusable wear and things like that.

Are healthcare institutions still as interested as they were before, even with some sense that maybe the pandemic is starting to recede a bit, although still some way to go there? But just maybe some comments around that would be helpful..

Sure. Our healthcare business is very robust right now. It's driven by the usual channels that we operate in, the retail channels and the laundry channel basically and the institutional side. And there's no shortage of opportunities in that business. I mean, there's still a tremendous shortage of healthcare workers in this country.

Hospitals are still seeing pretty high censuses of employees as things get back to normal. They expect to even see higher ones from people who have delayed procedures and seeing doctors and so on. But a lot of it is new channels. Our e-channels on the CID side are very strong.

We spoke about, on the last call, UniFirst taking an interest in INDY and that they reported in a press release.

We've spoken about SanMar taking a pretty big position in the channel that we have not been in to date on the -- which services basically the 22,000 ad specialty companies out there, giving them the opportunity to buy a defined product from SanMar that we've designed for them.

And the online, both walmart.com and target.com, we're starting to gain some traction there. It's very early. But we expect it -- in the past, when we've entered in any new online channels and you go to the internet and you Google WonderWink and you'll see all the different online channels we're on, that they've grown very nicely.

So, we're feeling really good about the healthcare side. On the other side, what we're seeing is, as I said earlier, almost normalizing of what we call the essential businesses and other people call essential businesses during the pandemic, grocery, pharmacy and all big box.

They're starting to come down a little bit and be back to normal, not the crazy cadence that we're on last year of hiring people, seemed to have leveled off a little bit. They're not eliminating anybody.

They are finding and all these businesses are finding it hard to hire people right now interestingly, and I'll let everybody use their own imagination as to why that's true.

But what we're seeing is we're starting to see a resurgence of the businesses that weren't essential businesses that were really dormant or quiet during the early stages of the pandemic, foodservice restaurants and so on. Hotels, as I mentioned during my talk a little bit ago. And that's encouraging because they haven't been buying for a long time.

And they're also struggling to find employees. And a great way to motivate employees is to put them into a new uniform. And typically those customers do put their people into new uniform.

So, we expect as quickly as they can hire, Kevin, and the non-essential businesses, as we spoke about, we actually did this chart I think a couple of calls ago, where we showed that about 80% of our business services, the essential businesses and 20% services, the more non-essential businesses.

That 20% is starting to grow very, very nicely and come back -- particularly over the last few weeks, we have seen a resurgence. We all know that airplanes are -- the schedules are getting full again and airports are getting full again and so are limited service hotels. So, we're excited about that. We feel we're on the right trajectory.

There have been challenges on the -- both the -- all the uniform sides of the business. We think we've met them as well or better than anybody -- any of our competitors. That's our own sense.

And we feel like we've been able to do that because of our feet on the ground in China and some of the long relationships we have as well, but it's not a perfect situation. I would much rather -- we weren't having any issues along with our competitors. But there are those issues, which seem to be getting better over the last few weeks.

But in January and February -- well, December through February were absolutely awful. Who knows where it's going to turn now and where there's going to be shortages. But we're anticipating -- we're trying to anticipate as much of that as we possibly can..

Okay. Great. And those logistical issues you've talked about that are kind of rippling across the economy. Do you have a sense as to how much of a headwind that was to your growth? I think, you said it might have tempered growth a bit. But what's ….

Yeah. We would have done approximately -- I mean, it's hard to actually slice and dice it perfectly. But of orders that we took, we could have shipped about $5 million more, if we hadn't had those logistical issues. What we don't know is what orders would we have taken if we had inventory on the shelf..

Okay. Right. Got it. I think you might have mentioned that you see perhaps some of these issues clearing up by the fourth quarter. I know that still ways off.

But you have -- do you think there's some line of sight to those challenges beginning to subside?.

It's like predicting when the pandemic is going to end, when logistical challenges are going to end. We thought that by now the pandemic would be largely behind us. Although, there seems to be some places in the U.S., around the world that are suffering more than other places. And if we are coming out of it, we're coming out of it pretty slowly.

And -- but the same thing with logistical issues. A lot of it depends on supply and demand of container ships and rail space and truckers in the United States.

And I don't know what's going to happen with respect to when all these retailers who are stocking back up now, which is driving a lot of this, as well as all the internet buying, how long that's going to continue or how that's going to impact what they bring in around for their Christmas season, which is generally then bringing product in September, October, early November, what we're going to see.

We're challenged to get our inventories in better shape before that happens so that the impact is less. But yeah, I believe by fourth quarter, but -- my crystal ball is not always 100% right, but that's what we're basing our forecast on right now..

Okay. Fair enough. You also mentioned that some of these challenges are really hitting smaller competitors much more significantly and that perhaps could lead to some acquisition opportunities.

So, if there -- if you see a smaller business that's struggling with logistics issues, is that still kind of an attractive candidate for you to acquire, knowing that they're normally kind of a pretty good quality business, but just being challenged by external factors? Or how would you kind of think through that equation?.

Yeah. We look at those that struggle with sourcing, logistics, on the IT side of their business that have a disproportionate SG&A overall that we can help reduce by our development that we do in India in our back office that we have in Central America and Jamaica. So, those are great candidates for us.

A solid business that's already making some money that we can add great synergies to with all that we bring to the table. So, yes. It's not always outward forces. It happens to be in this case. A lot of these companies and the uniform companies jumped on in the PPE that way. And some of them did better than others, the smaller ones, we've heard.

And it saved them, quite frankly from destruction, otherwise. That coupled with the PPP money and SBA -- the low interest SBA loans and the forgivable SBA loans and everything, really helped them through this. So, months ago, we were talking to people and asking them would they consider some in their business said no, I'm okay.

Their business was down in the dumps, but they were okay, because they got PPE money. We know that's going to run out. And the government can't keep on sending people money. And when it does, we will have spoken to them already and they'll be prepared to have even more serious discussions with us than they're having now..

Okay. Great. And when I think about the strength at BAMKO, if you take out the PPE sales, it looks like they grew around 70% year-over-year. And you have noted clients starting to spend their marketing dollars and you're outperforming the industry.

But should we think how -- should we think about that in terms of just pent-up demand coming back versus taking market share? I noticed you still are talking about 12% longer term growth there, but that business is obviously doing really well.

So, can you just talk about some of those points, please?.

I'll let Jake jump in on that one. That's why we brought him to the call. So, Jake, go ahead..

Hey, Kevin. Nice to talk to you again and thanks for the congratulations on the great quarter. So, yeah, I mean, it's all the things you talked about. It's taking market share. It's bringing on new sales reps. It's growing existing clients.

It's the expansion of marketing budgets with our clients trying to recapture their customers and bringing employees back into the office, all of those things are having an impact.

And we've talked about a lot of the competitive landscape in the Promotional Products industry is twenty some odd thousand distributors and many of whom are smaller mom-and-pops, and they just can't offer what we're able to offer, whether it's to customers or to sales reps.

And so, we're really attractive landing spot for new salespeople, as well as for customers to continue to come on board. And we talked about it before. We've had a lot of success in converting customers that were PPE only customers, right, that we brought on, sold them masks, sanitizer, face shield.

And we've converted a lot of those to Promotional Products customers. And we continue to work with these customers to find additional opportunities to penetrate and get their Promotional Product business. And so, that's been a big source of success for us too. And we're really excited about what's to come.

The addition of Gifts By Design has been a really exciting one. We're already well under way, leveraging our client base and salesforce to extend corporate awards, incentives, recognition programs to our current and future client base. And we've already seen some successes there, and we're really excited about the potential..

Okay. Great.

And as you look at BAMKO, are there still maybe some gaps you'd like to fill in through acquisition? Are you going to mostly focus on organic growth going forward? What do you think the mix will be there?.

Yeah. And I think goes to what Michael said before, we're opportunistic, right? The right opportunity comes along that's accretive to the bottom line, good for culture, potentially puts us into a new line of business. Absolutely, we'll look at it. We're not going to force the issue. If there's nothing that fits that mold, we're not going to force it.

But if something comes along and it fits that mold, absolutely, we'll look at it. I mean, Michael mentioned it before there's quite a few companies that are struggling. Good companies, good underlying fundamentals, but struggling through logistics problems, supply problems, whatever it might be.

Maybe one of their big customers was affected in a major way by the pandemic. We're an attractive landing spot for them and can turn them a lot more profitable under our model. And again, we have the ability to scale through the infrastructure we've setup, technology, logistics, warehousing.

We have that setup to be a lot larger company than we are right now, and we're a really attractive landing spot to lot of those targets..

Okay. Great. You mentioned Eudora facility likely completed and layered this year.

Can you just review what you see in terms of a margin benefit from that going forward? I guess, kind of as we looked at 2022, is that kind of a step function change, or just kind of continue on that normal kind of trajectory toward 10%?.

Kevin, to the last part, yes, that helps us get to the 10%. That's anticipated in that number.

But keep in mind, the multitude of steps to get us to what we consider to be our most efficient place from a distribution standpoint, and that's -- we closed the HBI warehouse last year and sold the building along with the warehouse -- the office and the warehouse. And we moved all that to Arkansas.

When we moved to Arkansas, we anticipated that ultimately there would be some storage challenges there. And so our longer term plan was to take and put -- to have a receiving warehouse, which is the 100,000 square foot warehouse, which would be a replenishment warehouse to our main facility, which was 250,000 square feet.

So, we just put an addition 154,000 square feet I believe, I may be off by a few square feet there.

The additional square footage we put into the Arkansas facility, not the 100,000 for replenishment, which is down the road, but in the actual facility, was to house our technology that were bringing to the multi-shuttle system, which is going to ultimately replace the robotic systems that we have in that warehouse now and to bring us even greater efficiency.

So, we've taken all of HBI's business, all of Fashion Seal Healthcare's business now and it's being serviced out of Eudora, Arkansas, both from the 100,000 square foot building and the 300,000 square foot building. There are economies to that scale.

And as we grow, it will certainly give us -- from what we anticipate these next five years, our expectation is that that will service our needs during the next five years to get us to the level of growth that we stated..

Okay. Great. You mentioned for The Office Gurus potentially acquiring other call center businesses. I think that might have been the first time you've talked about that. So, I'm just curious about the types of businesses that could be available.

And are there a significant number of them with the kind of the same strategic and cultural fit in terms of your focus on the smaller number of agents, et cetera, that would be logical fits with that business?.

Yeah. Kevin, it's Andy. I mean, we think there's a fairly rich landscape out there of targets to acquire. And we've touched on it in the past. It was something we would consider. You're right. This is probably a little more forward in our statements this time about it.

And it really ties to -- one of the key things we're looking for beyond the normal stuff. It is always important to us the culture, the fit, the quality of the individuals that we're picking up and building out our team.

And in this case, it's really a matter of trying to find additional geographies that are rich in an employment -- or employee pool to be able to draw in as well as facilities. I mean, when we first started in the pandemic talk, we had expected that with the work-from-home that it had really taken a lot of our capacity constraints off.

And we weren't certain how long that was going to last or how far it was going to last. We do expect that it will -- ultimately, I think there's going to be a mix.

And I think Michael touched on it that we think ultimately 25% of our workforce will end up being work-from-home, which means at the tremendous rate at which they're growing, we're going to hit capacity constraints relatively soon and we need to consider those options.

One of the other factors that I left out when we were going over the key things is English speaking, quality of English, and that is critical for us -- I mean, sort of the quality of call centers that we have..

Yeah. Kevin, it's really had -- The Office Gurus has been on the cadence. Supposing there had not been a pandemic, because they grew nicely during the pandemic as were imported last quarter. And here they are -- as far as their business is concerned, the pandemic is not largely affecting them, except they have a lot of people still work-from-home.

But their customer base is growing at rates that quite frankly in our wildest dreams we hadn't anticipated. We have a cadence of people coming to us wanting us to do businesses.

Business with them there in our sweet spot, where we've spoken about the five to 25 seats, who are -- and some even larger, but still within our niche that we're very interested in servicing. And the word has gotten around. We've gotten a lot of awards over the last two or three years in particular.

Dominic Leide who runs that business has received a lot of recognition. He does a few white papers from time-to-time through different social media channels. And quite frankly, the word of mouth has been wonderful for us. So, it's a business that doesn't have a salesforce and the growth they have is just phenomenal.

We do, in many instances, use brokers, and would become their preferred vendor. And that's a great synergistic relationship with us with some of these brokers who've been dealing with us for years and we never let them down. But it's a good thing to have grown faster than you anticipated.

I don't know how long ago, I said, boy, during the pandemic that I don't think we have an infrastructure problem -- capacity issue for some years. I'm hoping I have a capacity issue sooner. It just means that the business is growing faster. We're not going to be buying any buildings. We'll lease buildings wherever we are.

We're looking at a few geographies, mostly in this Hemisphere, as well as the Southern Hemisphere. But Andy enumerated what the important points were for us when going out and looking for one..

Okay. Great. And lastly, I just wanted to ask about -- you mentioned the updated target of nearly $500 million of sales in 2021. Have you -- is there a specific number that you're assuming in there for PPE sales or kind of how do you build to that? I know, obviously, we're layering Gifts By Design, but any other color around that would be helpful..

Yeah. Kevin, I think whenever -- fairly consistent with what we said in November. What we've included in the $500 million for this year of PPE really is our legacy PPE business, as well as what we have in non-PPE business upcoming. And I think we ended the quarter, as I said, in the Uniform business with a PPE backlog of about $15.3 million.

So, really that's what's contemplated within our forecast for this year for PPE. On the Uniform side is another $15 million. BAMKOs, their backlog was only $800,000 at the end of the quarter for PPE.

And I expect they will -- I mean, I would expect they continue to pick some up, but it is not included in that $500 million projection for -- the approaching $500 million number for 2021 total..

Okay. Great. That's helpful. Thanks for taking all the questions and congratulations on the nice results..

Thank you, Kevin..

Thank you, Kevin..

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

All right. Thank you again for joining us for our quarterly call. We look forward to reporting second quarter results in July. Be well between now and then and we'll speak then..

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