Good afternoon, everyone. Welcome to the Superior Group of Company’s Second Quarter 2020 Earnings Conference Call. With us today are Michael Benstock, the company’s Chief Executive Officer; and Andy Demott, its Chief Operating Officer, Chief Financial Officer and Treasurer. After the speakers’ opening remarks, there will be a Q&A session. The 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 Managing Director of Three Part Advisors, who will read the safe harbor statement. Please go ahead.

Thank you. Good morning. This conference call may contain forward-looking statements about Superior Group of Companies, the company, within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995, and all rules and regulations issued thereunder. Such statements are based upon management’s 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 future 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; 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 consummation of acquisitions; and the availability of manufacturing materials as well as the risks and uncertainties disclosed in 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, 2019, the quarterly report on Form 10-Q for the quarter ended June 30, 2020, 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 made herein, and are cautioned not to place undue reliance on such forward-looking statements. The company does not undertake to update the forward-looking statements contained herein 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 2019, unless otherwise noted. With that, I’ll turn the call over to Michael.

Thank you, Hala. And firstly, thank you for all listening to the longest forward-looking statement and safe harbor statement we’ve ever had to put out there, but it is a sign of the times. Good morning to all of you and thank you for joining us to discuss our record-setting Q2 2020 results. We have prepared a supplemental slide presentation to augment our prepared remarks today to help bring more clarity to our current results and future potential. If you aren’t following along now, you can go to the presentation on our website in the Investors section anytime during or after the call. Before we get started, I’d like to acknowledge and thank our frontline healthcare workers and the employees who are supporting them in the continued fight against COVID-19. The SGC family extends our deepest gratitude and our commitment in support of your heroic efforts. We are proud of what we have accomplished during the second quarter, posting a 72.7% increase in consolidated net sales and a remarkable 456% increase in diluted earnings per share, truly epic results for our company’s 100-year history. I’m sure you will agree that we’ve appropriately earned our name as a Superior Group of Companies. We’ll take a close look at segment performance highlights and then Andy will follow with operational and financial highlights. I’ll have some closing remarks, of course, before we open the call for your questions. Our Uniforms and Related Products segment is comprised of both healthcare and employee ID divisions, with each on a normalized basis making up approximately 50% of the segment sales through a wide variety of uniform offerings. The diversity of our end-markets and distribution channels, coupled with an intentional more than decade-long strategy to focus on more recession-resilient sectors have served us well during the pandemic. While we support some very loyal and noteworthy customers in businesses that were operating at far less than capacity, we still are, if at all, the overwhelming majority of our Uniform division serve essential businesses that remained open and likewise are experiencing demand pressures. We never measured it this way before, but to give you a clearer view of the state of our current business, let me share this with you. Healthcare uniforms from Fashion Seal Healthcare and CID Resources, and what is categorized now as Essential Workwear apparel from HPI, account for on a normalized basis approximately 80% of our total Uniform business. HPI’s dominant end markets are the essential sectors of pharmacies, hardware, grocery stores, auto-supply, and big-box retailers. HPI does have exposure to nonessential hospitality-driven businesses, including travel, food service, and entertainment. These weaker business channels will make up approximately 20% of HPI’s normalized business. Our overall Uniform results were enhanced by the strength of healthcare products and PPE sales activity mitigating most of our downside. We expect sustained strength in these essential business channels that will continue to provide an offset to challenged businesses that are slow to recover. Our healthcare divisions are thriving with even more collaboration and realized synergies between Fashion Seal Healthcare and CID Resources as well as HPI. Let’s walk through this tremendous channel and sales leverage opportunity. Our 100-year-old division Fashion Seal Healthcare has long-standing customer relationships, some that span more than 50 years. Our team demonstrated flexibility and quickly pivoted to the high demand for our traditional, well-respected PPE and uniform offerings, which include isolation gowns, scrub shirts and pants, warm-up jackets, scrub caps, and barrier coats. We saw a tremendous boost to CID’s fashion-oriented retail scrub offering with the influx of hiring into healthcare systems. Our third quarter launch of the WonderWink commercial launderable INDY line has garnered significant interest in the marketplace and from our largest healthcare laundry customers with preorders and commitments already made for this product. We feel this is a game-changer in this space. And we have taken long positions on this product to meet more expected contract wins. The high demand for CID products led to strong retail and e-tail account sales in addition to sales through our Fashion Seal Healthcare partners, which in total, drove record CID results. Additionally, Fashion Seal’s customer base of distributors, laundries, and now retail stores as well as e-tailers is tapping into CID offerings to penetrate healthcare institutions around the country. Given spending habits are more conservative in the current crisis, we are also seeing the market shift to CID’s strengths as the leading designer of high-value fashionable, functional, and great-fitting scrub apparel. From a channel perspective, we are meeting the changing needs of our existing customers through our loyal healthcare laundries dealers, brick-and-mortar sales channels as well as via Amazon and other B2B resellers. We’re essentially building out a B2B omni-channel strategy across our Uniform divisions that include synergies with HPI’s brand ambassador workwear and BAMKO’s branded products and sourcing expertise. There is such a blend between our divisions where each sells many different products through all channels. It’s truly a differentiated strength. We also expanded our inventory positions in select traditional PPE product lines, and have taken larger product positions to meet our existing customers’ growing demand as well as from new customer opportunities. In fact, each of our Uniform divisions as well as BAMKO now has a supplemental offering of PPE products that includes these newly sourced facemasks, wipes, goggles, gloves, and hand sanitizers. Andy will outline a breakdown between our traditional product sales and PPE sales further in his remarks. These nontraditional PPE product orders in places needed, in many cases, shipped directly from the factory to our customer. Turning to the truly epic performance and 217.8% sales growth at BAMKO, the team showed acuity, as always leadership, and remarkable sourcing aptitude, executing our pivot to PPE procurement production since the onset of the pandemic. Close to 80% of these PPE sales were to new customers that BAMKO had not previously worked with. Many of these new customers had already transitioned to traditional Promotional Product customers. Further, BAMKO benefited immensely from the strength in the gig economy sector, recording record sales to companies in the grocery/meal delivery service sector and at-home fitness solutions. It is estimated that the promotional products industry non-PPE revenue, this is for the industry, fell by between 60% and 70% in the second quarter of 2020. While BAMKO is not immune to this decline due to the event cancellations and budget cuts, we fared far better than our competitors in both PPE and non-PPE sales. This slide shows the monthly shift from traditional business, offset by improvement from PPE sales. We noted last quarter that in the first few weeks after the pandemic hit, promotional product bookings were down nearly 80%. In April and May, this rebounded to promotional product bookings being down around 50%, and by June down just 30%. We continue to uncover new opportunities and widen relationships with existing customers to augment our substantial backlog of scheduled future shipments. As anticipated, many companies in the highly fragmented Promotional Products industry are facing serious financial challenges due to the ongoing crisis. BAMKO is able to leverage its competitive disruption by adding nine seasoned representatives, easy for me to say, representatives with an existing book of business from a competitor who closed their Canadian division. This move expands our strong branded solutions offering and sourcing capabilities to the Canadian market. BAMKO was also recently recognized as the 19th largest branded merchandise company in the industry in 2019, a ranking that we expect to place much higher in 2020, as they were also recognized as the fastest-growing company in the industry. I’d like to illustrate the success we’ve seen with the BAMKO acquisition since the year before we acquired them in 2016. This slide shows BAMKO’s revenue growth from $31.5 million for fiscal 2015 to $107.5 million in 2019, a 35.9% CAGR. They have almost already equaled their 2019 full-year sales with $101.6 million in net sales in the current 6-month period ended June 30. More importantly, we proved our investment thesis that BAMKO’s operating infrastructure was built to optimize profitability as the company scaled larger. This has certainly proved true with BAMKO’s operating margins at 13.5% for the second quarter. BAMKO is uniquely positioned to continue to capitalize on customer demand for PPE. And as we’ve said earlier, it has already converted many of these PPE customers to traditional promotional product customers. That being said, while Q2 will be hard to replicate, we do expect to sustain comparative levels of accelerated growth in earnings on a long-term basis in spite of the short-term uncertainty in the promotional products business and the potential for moderation in PPE product demand. Now turning to The Office Gurus division, our remote staffing solutions. Our entire team returned to full force and the pre-pandemic operating levels in June, while still operating from home. TOG’s business continuity, ability to provide high-quality customer service during the global disruption drove increased business with existing customers as well as new customer acquisitions. Additionally, we are also seeing high demand for near-shore call centers. We are currently executing remote training for new agents and have onboarded over 200 new agents to meet our growing customer demand. Our work-from-home solution is proving effective, and we see it as an excellent opportunity to grow the business with minimal capital infusion. Some TOG agents have recently returned to offices as required by customers, but we are doing this at a slow pace to ensure the safety of our employees as well as to protect business continuity. The Office Gurus also received recognition, being named First Place Call Center and one of the Best Companies for Young Professionals by Employers for Youth, an organization that seeks to recognize the best companies for young professionals in Latin America. Overall, for SGC, the global macro environment continues to be uncertain and dynamic, make no mistake. Under these unique circumstances, we have demonstrated the flexibility of our teams and of our business model. We are continuously in a state of review and planning for a wide range of potential business and financial scenarios. Our long-term approach to the business, including investments in technology, operating efficiencies, redundancies, and sourcing and manufacturing and shared resources prepared us well to meet the challenges we face today and going forward. I will now turn the call over to Andy, and then I’ll return with my closing remarks.

Thank you, Michael, and good morning, everyone. As noted earlier, we filed our Form 10-Q for the second quarter ended June 30, 2020, earlier this morning. Before I begin with a review of our operational and financial highlights, I would also like to acknowledge the tremendous amount of workforce productivity, collaboration, and superior customer service across our entire organization during these unprecedented times. Our continued focus has been on the health and safety of our employees and their families, supporting our customers and communities, and ensuring strong financial liquidity. Our second quarter and 6-month results played out better than our expectations in terms of both our results and our ability to further improve our liquidity and debt leverage position. As noted on this slide, we are very pleased to see our debt-to-EBITDA ratio dramatically improved from 4 times at December 31, 2019, to 1.9 times at June 30, well under our 5 times covenant ratio. Through significant cash generated from operations and an accelerated inventory turn on excess CID product, we reduced outstanding debt by over $16 million during the quarter. Year-to-date, we’ve reduced outstanding debt by approximately $34.3 million. Our new ERP implementation at CID completed in February greatly enhances our ability to manage inventory more effectively, and we expect to improve inventory turns to continue further supporting our liquidity. We are maintaining an aggressive posture on controlling operating expense levels and prioritizing key capital expenditures to protect our profitability and fortify our balance sheet position. Additionally, in June, we announced the consolidation of our Georgia HPI distribution centers into the company’s expanded Eudora, Arkansas distribution center. The consolidation is expected to yield approximately $2 billion of annual savings as well as provide significant advantages, including updated material handling technology, decreased average receiving and shipment times, lower distribution costs, and the ability to scale and handle aggressive growth plans. Technology enhancements for automation and testing are expected to be completed in the first half of next year. We are extremely proud of our overall net sales growth of 72.7%. Once again, BAMKO led the tremendous sales increase, contributing 56% with our Uniforms and Related Products business contributing 16.4%. The Office Gurus, our Remote Staffing Solutions segment, contributed 0.3%. For a closer review of our record sales growth, this slide illustrates year-over-year net sales growth with a breakdown between core product offerings and PPE sales across our segments. Second quarter Uniforms and Related Product net sales increased 24.9% or $15.1 million compared to last year. High market demand for core healthcare uniforms at both Fashion Seal Healthcare and CID represented net sales increases of approximately $17.1 million, and PPE products to healthcare customers increased by $6 million. As Michael mentioned, certain sectors in our employee ID channels were more severely impacted by COVID-19 disruptions. And absent PPE product sales, these weaker channels declined by roughly 44%. Overall, HPI’s legacy sales were down approximately 33%, partially offset by PPE product sales of $2.1 million. COVID-19 disruptions also impacted our uniform production facilities in Haiti, resulting in downtime of between 3 and 5 weeks depending on the location. The interruption created minimal headwinds due to our large inventory positions and our redundant manufacturing model, which allowed us to ramp production in our facilities elsewhere. It was an extraordinary quarter for BAMKO with sales up 217.8%, driven by PPE sales of $49.7 million during the second quarter. This included a notable mix of branded PPE products for certain customers as well as fulfilling general orders for facemasks, gloves, wipes, and hand sanitizers as well as record sales to customers in the gig economy sector. While we expect Q3 revenue of traditional promotional products to trend downward year-over-year, this will be offset to an extent by continued PPE product orders to both the new and existing clients. BAMKO’s total backlog at June 30 was $54.2 million, primarily consisting of products to be delivered in Q3 and Q4 of this year. Of this backlog, almost 60% represents traditional promotional product revenue with the balance being for PPE. We expect continued strength into the fourth quarter. However, at the lower rate of growth than we saw in Q2. Now operating at full capacity, The Office Gurus reported net sales growth of 3.6% to $8.1 million. Prior to the disruptions from the pandemic, TOG sales were $2.7 million in the month of February compared to the month of June sales of $3 million. We are now trending ahead of pre-COVID levels, and we expect to see double-digit growth in the second half of this year in comparison with the second half of 2019. Turning back to our consolidated operating results. Gross margins as a percentage of sales for the second quarter were relatively flat at 35.1%. As a percent of sales, consolidated SG&A expenses for the second quarter decreased by over 6 percentage points to 22.9%, reflecting leverage from higher sales volume across all business segments and the company’s austerity measures to reduce operating expenses. Of note, SG&A for the quarter did include significant increases in provisions for bad debt reserves of $3.4 million, primarily related to nonessential channels and the ongoing market uncertainty from the prolonged pandemic. Record sales growth also led to a significant increase in sales commissions. Income from operations significantly increased to $19.6 million and operating margins more than doubled to 12.3% for the quarter. Our effective tax rate for the quarter was 19.6% compared to 23.8% a year ago. The change in rate was principally the result of the effect of foreign, state, and local taxes between the comparable periods. Second quarter net income increased a remarkable 446% from $2.8 million to $15.2 million or $1 per diluted share, marking our highest quarterly earnings in the company’s 100-year history. In fact, the $1 per share earned for the quarter is higher than any 6-month period in the company’s history. We continue to prudently manage our cash flow. And at June 30, we had cash and cash equivalents of $5.1 million. For the 6-month period ended June 30, CapEx was flat at approximately $5 million and is on track to be lower than our original plan for the year of $12 million to $13 million. Due to the uncertainty at the beginning of the pandemic, we previously announced last quarter that we were suspending our dividend, and as a result, we did not pay a dividend during the second quarter. As a result of the tremendous improvement in our operating results, the cash flow generated from operations, and the corresponding reduction in outstanding debt, the Board of Directors announced this morning that we are reinstituting our regular quarterly dividend of $0.10 per share, and that we would also be paying a special dividend of $0.10 per share. As you know, we have consistently paid a dividend since 1977, and the board continues to view a sustainable recurring dividend as an important component of SGC’s value proposition.

Thanks, Andy. I know there’s been a lot of information we’ve given you here, and I hope you take the time to absorb it and get some good questions as a result. During a time of great adversity, our team members pulled together, remained extremely focused on the needs of our customers and delivering outstanding performance. In abundance of caution, last quarter, we altered many sales strategies as well as implemented deep cost-cutting measures to ensure that we maintained our momentum no matter what unseen challenges were ahead of us. I’m very proud of our record second quarter and 6-month performance. And we will continue to manage our business in a thoughtful and conservative manner, providing critical services to our customers while supporting our communities. As we are known for in a crisis, we managed to deleverage as we moved into a better liquidity position. We will continue to make every effort to preserve our liquidity and improve our balance sheet with debt repayment as a top priority. We anticipate strong third quarter results with very strong backlogs, including PPE as of June 30, with more than $50 million, and robust continued sales for the first few weeks of the quarter. However, visibility beyond that remains low due to the ever-changing disparate impacts of the pandemic. With our long-term guidance on a 5-year look back remains consistent. While it remains consistent on our core business, there are significant variables that could favorably alter our outlook. As we navigate the coming months, we will continue to be very calculated in our strategic planning and scenario analysis. And plan to revisit our guidance metrics once we have better clarity. In the meantime, we hope we have provided adequate transparency into our underlying markets, operations, and liquidity position. We take our role as responsible corporate citizens very seriously. Those of you who know us a long time know that’s true. Doing the right thing is part of the fabric of our culture. It’s just who we are and have been for 100 years. We are committed to continuously advancing diversity inclusion across our global organization. Different perspectives and backgrounds cultivate creativity and drive business innovation. We are pleased to share that we recently published our 2020 corporate social responsibility report. We conducted a materiality scan across our peer group, reviewed internal key performance indicators and consulted with key stakeholders to determine material, environmental, social, and governance initiatives important to our stakeholders. We have always been committed to corporate responsibility, and we will continue to enhance our disclosure and build upon key ESG metrics. We sent out a communication to our investor e-mail list earlier this week with a link to the report, which is posted to our website. We hope you take time to review it and welcome your feedback on our inaugural CSR report. SGC’s century-long legacy of entrepreneurism, resilience, and the ability to rise from adversity as a stronger and more fortified business is very evident during these times, thanks to the expertise and dedication of our superior team members. With that, we’d like to open the call for your questions.

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

Good morning, everyone, and congratulations on the really strong results.

Thank you.

So I wanted to dig more into the PPE sales you had in the quarter. That’s really quite a remarkable transition that you made there from having no PPE sales for BAMKO in the year ago quarter to about $50 million in Q2 2020. Just, I guess that speaks to kind of the strength of the company and the overall organization that you were able to make such a quick transition and capitalize on that opportunity. But maybe just talk more about the strengths of the organization in terms of the supply chain and also gaining all those new customers. What enabled you to make such a quick and rapid transition to capitalize on the opportunity you saw there?

Great. Good question. I think first and foremost is, BAMKO has a lot of strengths in many respects. They’re world-class in just about everything they do. But their sourcing is certainly one that sets them apart from most of their competition. And quite frankly, most companies, their relationships at any given time in over - they’re working in 150 factories around the world. And they’re managing those relationships in all the different substrates, plastics, and steel, and metals, and glass, and so on. Their strength is sourcing. And when the need came to source PPE products, with their people on the ground, they knew where to go. They knew how to monitor the quality. They knew how to guarantee the shipment. And how to make sure that we set ourselves apart from all the other people making promises to the same customers we were making promises to that we could actually deliver. And I have to tell you, I wish everybody had believed what they told them. But there were many instances, Kevin, where we went to a customer, we made an offer to them. Maybe that prospect or customer didn’t know us that well, wound up getting the business or thinking they were giving the business to somebody else, turned us away, told us we didn’t get it. And then, a few weeks later, were back at our door saying, the people I gave it to, they were cheaper, but they can’t deliver. We had all our people on the ground monitoring freight costs, which went wild during this time, both ocean and airfreight, and making sure that we were able to secure space in air cargo when we needed it and secure space in factories. It’s not as easy as just calling an agent as most people do in the United States, and have that agent out shopping for you, and you send the money and you hope that you get product in return. Our people were able to guarantee that. So it is a core competency. It’s probably their greatest strength. And BAMKO could source anything. So PPE was just another product they could source, and there was a tremendous need for it, and there still is. And it’s why I think in the last call, we said that we had booked. And that was in the middle of April or so, we said we had booked $60 million of product already. And you can see. Our backlogs are still way up there. It’s not only BAMKO’s backlog in PPE, but it’s also HPI’s backlog in PPE and Fashion Seal Healthcare, well exceeding that. So we feel like we’re in a great position. I mean they’re a very, very unique organization. Now, to the second part of your question, with respect to customers, a lot of people they’re reaching out to were people they prospected over the years, they weren’t able to get in the door from a promotional standpoint. But when those companies were in trouble, we reached out to them or they reached out to us. We reached out to everybody, quite frankly. And people say, yeah, I remember you guys, you tried to do our promotional business. So, well, here we are, we can do this too. A lot of them took us up on it. And quite frankly, we’ve converted some of that to promotional business at this point, not only the PPE business. So it’s just testimony to the great organization. And our sourcing teams in Florida from the Uniform divisions and the teams at BAMKO, which are all over the world, really work hand-in-hand. And when I say hand-in-hand, I mean they were working 24/7 with all the opportunities that were coming in the door.

Okay. That’s great. That’s very helpful. And so it sounds like you referenced it there that this is opening up some new doors for you, your ability to execute on PPE. So do you think that can be meaningful going forward, your demonstrated ability to execute on this PPE opportunity to add new customers in the non-PPE traditional promo-products space?

No doubt. I mean we’re going to be remembered that we took care of these people in their time of need. And these are the same people who are buying the PPE products that are buying promotional products. So I - and oftentimes, uniforms. So I have no doubt that what’s happened within the organization with the melding of all of our divisions’ strengths working together literally night and day, that that’s going to bring much more opportunity to the company going forward. I’d say it’s crisis time, and it’s a terrible time for our country. But we certainly didn’t waste any time coming out of the gate and making sure that we were relevant during this time.

Okay. Yeah, got it. I wanted to switch to CID. You mentioned record sales for them there. Demand for healthcare uniform-related products being strong. Absent the current environment, which is benefiting them, can you just talk about CID’s positioning now? Are they in a position to grow sustainably going forward? I know you’ve integrated them onto some new technology in terms of SAP and a new warehouse management system. So maybe just talk about where CID is from a long-term perspective and their ability to kind of grow and take market share going forward?

It’s a good question. I think what’s happened is that CID has become much more B2B omni-channel during this period. Certainly, we had our toe dipped prior to COVID. But as more people bought online, we saw the potential to accelerate that. And our Internet sales has grown substantially, multiplied from where it was before. There’s weaker competition who’s going to come out of this. There also might be some fewer customers. We know customers are struggling. We’re doing all we can to try to support the strongest of those to make sure - to help them get through this. But it’s a time of change. And that market of how people buy is going to change, and we will change along with it. We have our Indy product coming out. CID did not have a product that was laundered. Well, nobody did prior to our introduction of Indy. We have product actually arriving now, and we’ll be shipping over the next 7 or 8 months. But quite frankly, most of our early productions, which if you remember, we were on an accelerated basis, remember, we actually delayed, releasing the Indy product because we felt the demand was so great. So we raised the quantities, our initial production quantities of what we’re going to produce and put on the shelf. Most of that is presold already, so going even better and better than we thought. And we think now with what is going on with COVID-19 and kind of a new - this being somewhat of a new era in how people think about their uniform and how it’s meant to protect them and so on. That CID will benefit from that greatly. We don’t think - at one point, and we probably said this on a call, that industry of caregiver, that level of caregiver, things weren’t - prices - quite as price sensitive. We think that there’s going to be a shift from some of the higher-priced items to more core items, which is really our sweet spot. It’s 80% of CID’s product is already in that spot. So we’re well positioned to grow that business. And it’s going to take an omni-channel B2B strategy in order to accomplish that. It’s not going to be easy. I mean that market is not going to grow by 25% or 30% or 40% a year, but it should have steady growth. We’ve shown that in previous webcasts, the expectation for that industry. And it’s not going to be any less than what we expected. We did get some big bumps out of this during the quarter because our healthcare systems around the country were hiring hundreds of thousands of workers just to screen people at the doors and wanted them in scrubs and lab coats. And in some cases, barrier coats and isolation gowns for testing and all that other stuff. But CID is going to fare well over the long-term. I think in the short-term, they’re going to be fine, too.

Okay. Great. Let’s just maybe talk about the Uniform business. Outside of healthcare, obviously mostly serving essential businesses and that channel has been strong; non-essential, weak in this environment, of course. But just maybe step back and take a look at competitively where you stand for HPI overall going forward? And how you feel about kind of the longer-term targets that you have there for that business?

Good question. The - prior to COVID, HPI’s pipeline was pretty much at record highs. We’re working on a lot of RFPs. Obviously, a lot of those got delayed or canceled or whatever. At this point, some have actually come back to life. Some will take a little bit longer to come back to life. We will still continue to focus our business on the essential channels, which will grow. It’s a pretty sticky business. So you don’t - those contracts don’t necessarily come up for bid every year, every 3 years or even every 5 years. So we’ve got to be very vigilant to get in front of people, usually when they’re having some pain. And that’s when we can best strike and convince them to look our way. We’ve helped a lot of people who weren’t customers during this COVID-19 getting their PPE and so on. We’re hoping that, that buys us some goodwill to be able to look - take a more careful look at us on the uniform side. There’s - we’ve spoken about it in the past. Our market share, overall, we cloth about 6 million people. But our market share is still so small that there is so much room for upside. The competitive field at HPI is going to narrow. There’s no doubt about it. We’ve heard of other uniform companies, mostly smaller uniform companies that were primarily invested in the non-essential channels, who are doing no business right now or very little business and are not sustainable. There will come a time where we will take a look at their customer - well, we’re taking a look at their customers already. But take a look at their sales force and take a look at their business, and see what could we absorb with that business into our business to be able to take those customers and put them on board. This is not much different than what happened during the last recession. It’s not much different than what happened during the cotton crisis. We did the same thing. And each time, we gained market share. So I think there is an opportunity to gain market share, the market share maybe a little bit smaller on the non-essential businesses. It’s not going to get any smaller on the essential businesses. I mean the essential businesses, I put out a list the other day of all the people in the United States in large companies who are saying that they’re going to be hiring. And you go through that list and a good amount of them, dozens of them, list of about 200 companies, are already our customers. And they’re hiring. So 1 customer is hiring 150,000 and another customer’s hiring 30,000, and there’s going to be turnover, there’s no doubt. People have been out to work. Companies come back to business, their employees - ex-employees have found other work or going back-to-school or whatever they’re going to do, there’s going to be more turnover. And I believe just like there was after the last recession, there was a whole movement to rebrand businesses and get in the public eye, we’re going to see a lot more rebranding being done by people to help elevate their brands after all this. And become, first and foremost, on people’s minds.

Okay. Great. And then - so coming out of this crisis, it sounds like there’s an opportunity to emerge stronger competitively. You talked about picking up some seasoned reps in BAMKO from another competitor who closed their Canadian division. I mean what - do you see potential acquisition opportunities coming out of this as maybe others are struggling? Or do you want to stay focused on an organic growth strategy going forward, and maybe just pick up business opportunistically from those who kind of fall by the wayside? Or what’s kind of the view of how you can capitalize on these moments, both from an organic and inorganic perspective?

Kevin, our long-term focus is always really going to be more on the organic side and looking to take advantage of opportunities to add reps or to pick up customers from troubled competitors. However, as we always are, we’ll keep an opportunistic eye out for situations where there may be a troubled entity that we could acquire that we would be able to just roll straight up under our company and not have to take on a lot of infrastructure. We don’t have a need to do it. But if the opportunities come up, I mean, we’ll consider it. We’re certainly in a very good financial position to be able to do it.

Okay. And what’s the state of the upgrade in your Eudora facility in Arkansas? I know you did the consolidation there. But what - when does that project complete? Or how much more CapEx does that require going forward?

Okay. We originally thought because the supplier of the equipment didn’t know how long they’d be hunkered down in Europe, building this equipment because of COVID-19. So we had put an expectation out there that it might not be until the second quarter of next year. But in fact, we’ll begin testing the equipment. It will be in place at the end of this year. Most of the expense then will happen this year. Our CapEx will still be, as Andy said, less this year than we originally anticipated, a little bit of that roll into next year. There’s other CapEx that we’re pretty far along in considering with respect to some additional robots at one of our other warehouses, which will bring us some much-improved efficiency and service capabilities. But originally, we had said that this year’s CapEx would be between $12 million and $13 million. It’s going to be some number - it’s going to be less than $10 million this year. And part of that - an additional $2 million or $3 million will roll over to next year.

Okay. And then for The Office Gurus, you’ve had some success with transitioning your agents to working from home. Longer term, what do you think that this does for your need to build out call centers in the future? I mean what’s - what do you think the mix is going forward of people working in a center versus working from home? And if you think those two channels can be equally effective?

I think for certain customers, both channels can be effective. Some people need an in-office solution and some people need an at-home solution. Sometimes, it depends on the use of private information and security and credit cards and so on. I would tell you this, that at the rate that we believe Dominic can grow that business, a few months ago, we were saying, okay, we can work from home. That’s - it will be a long time before we have to build any infrastructure. But if he keeps on putting on seats at the rate he’s putting on seats, even if he has a lot of his people working at home, we’ll need more infrastructure. We’re okay for a couple of years now, Kevin. We - I don’t see anything in the next 2.5 years in terms of CapEx related to infrastructure for The Office Gurus. Beyond that, if we have to invest, it’s only because we’ve accelerated our growth beyond what our - well beyond what our guidance currently is.

Okay. Great. And then on the balance sheet, it’s great that you’ve been able to pay down some debt here with some ongoing strength in PPE orders going into the second half of the year, would you like to try to continue to pay down debt? Or do you feel more comfortable at the leverage ratios you’re at now?

Kevin, I think we always like to be lower than we are. We’re always looking to drive it down. We ended the quarter with a little over $7 million outstanding on our revolver. So we’re close to having that pretty well paid off. It really depends on what happens as far as opportunities, where if we continue to get large PPE opportunities that are ongoing, they could require additional working capital on the balance sheet in the short term. I mean we’re in a position that we probably - will still pay down a bit, but it’s kind of variable at this point as to which way it ultimately goes. But we are clearly in a position now where our liquidity is of no concern right now.

And Kevin, my father, who’s 90 years old now in our 100-year-old company and probably listening from home, always said cash is king. And he’s listening. He’s probably smiling right now. But we’ve said, we never enjoyed where we were sitting as highly leveraged as we were, which for some people didn’t concern them. But for us, it was just uncomfortable because it restricted our flexibility to a certain extent. We have much better flexibility at our current levels. I’m hoping that we need capital to accelerate the growth of the business beyond even what our guidance has been. And as Andy said, we’ll be opportunistic when it comes to acquisitions that are priced correctly. I mean, we’re not going to pay any crazy multiple for an acquisition nor we’re going to go into a business and try to fix it. It’s got to be a business that brings a lot of value to us in one way or another. So we’ve had other people ask before, what’s your comfort level with debt? We’ve always said it’s between 1 and 2 times. We’re below 2 times. So we’re pretty comfortable right now, but we will pay it down further.

Okay, great. Well, that’s all I had for today. And, again, congratulations on the very strong results.

Thank you.

Thank you.

Our next question comes from Fred Foulkes with Boston University. Please go ahead.

Hi, guys. Congratulations on a great quarter and being so nimble and strategic. And you’re talking about your father. I was a Director of Panera Bread for a long time. And the Co-Founder’s father was on the Board till he is 102. And he was President of a bank during the recession. He always says, don’t go into debt, don’t go into debt. So I admire what you’re doing on the balance sheet. I have two questions. On sort of your - when contracts come up, it’s a like - a drugstore chain or a hospital, whatever, do you sort of review it pretty much as recurring revenue? I mean how likely is - what percentage of time do renew? And then the second question is you’re designing new products and more attractive uniforms, etc., etc. Is there any input from potential customers in terms of their employees who actually wear them? Or is it people in purchasing who make the decisions on quality, and price, and availability, reputation, and stuff like that? So those are my two questions.

Okay. Contracts come in all shapes and forms. Some are 1-year contracts, 2-year contracts, 3-year contracts, 5-year contracts. A lot of them have an evergreen renewal on an annual basis if the contract is not put out to RFP. We’ve got some contracts that are 5-year contracts that are in their 15th year of ever - really 20-year contracts that just keep going and going. Sometimes we have customers who never go out to bid. But that’s true of our competitors too, if they’re satisfying them. Changing the uniform program can be a traumatic experience. It impacts your employees, impacts your customers, impacts how you market yourself. So you generally don’t see a lot of turnover of contract business, and that would affect a company like HPI more than anything who’s doing the employee ID uniforms. To the second point, it’s very rare that it’s just purchasing that we’re dealing with when we’re designing a new uniform program. Oftentimes, they’re - HR is involved, marketing is involved. And I’m talking about our customer. And employee committees are involved. Employees are very, very invested in what they’re going to wear. They wanted to be comfortable. They don’t want to look like a clown when they leave. The implication with their uniform. They don’t want to be embarrassed by their uniform. They are the walking-talking brand ambassador for that business. And I think more and more companies are realizing that with all the branding they do, with all the money they spend on advertising, branding and trying to obtain allegiance to their brand, that the best means of marketing is the walking-talking brand ambassador they have working for them. It’s the only means of direct contact that many of their customers have. So we’re seeing a more and more that a lot more people are getting involved, there’s a lot more consideration. There’s a lot more testing of the product once it’s out there on the employees’ backs. They may do a 10-store test or a 20-store test and get feedback and surveys, and then we make adjustments to fabric and fit, and all other things, to satisfy what we hope is the majority of those employees.

Okay, thank you, and congratulations.

Thank you very much.

Showing no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Michael Benstock for any closing remarks.

Thank you, Sarah. Of course, we appreciate your time, trust, and support for the company. These have been crazy times. And I’m sure you’re listening to other calls that are not quite as optimistic as ours. And we feel badly for everybody who’s not doing as well as we are. But our employees are safe and our customers are trying to push through this as best they can. I look forward to updating you with Andy on our third quarter 2020 results in October. I want you to know, we recently posted and will continue to post some marketing videos on our website that tell more about our company’s long history, which actually goes back to the company’s founding by Rose Benstock, my great-grandmother. I think there’s a little history on that. And then there’s a video that my father stars in, giving more of an updated history of the company. And then there’s a very slick video. All of this was made in-house with respect to what our capabilities are today. So I hope you get a chance to look at it. Please stay safe and healthy, and we’ll see you next quarter.

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