SUPERIOR GROUP OF COMPANIES, INC. 10-Q

ITEM 1. Financial Statements SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In thousands, except shares and per share data) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net sales $ 144,045 $ 131,736 $ 281,142 $ 270,578 Costs and expenses: Cost of goods sold 88,719 80,981 175,375 164,506 Selling and administrative expenses 52,240 48,564 102,342 97,502 Interest expense, net 1,250 1,541 2,495 3,328 142,209 131,086 280,212 265,336 Income before income tax expense 1,836 650 930 5,242 Income tax expense 285 50 137 730 Net income $ 1,551 $ 600 $ 793 $ 4,512 Net income per share: Basic $ 0.10 $ 0.04 $ 0.05 $ 0.28 Diluted $ 0.10 $ 0.04 $ 0.05 $ 0.27 Weighted average shares outstanding during the period: Basic 14,813,984 16,221,073 15,206,819 16,124,553 Diluted 15,101,942 16,769,297 15,573,692 16,611,375 Other comprehensive income (loss), net of tax: Defined benefit pension plans $ 8 $ 23 $ 15 $ 46 Foreign currency translation adjustment 1,092 ( 1,251 ) 2,103 ( 1,732 ) Other comprehensive income (loss) 1,100 ( 1,228 ) 2,118 ( 1,686 ) Comprehensive income (loss) $ 2,651 $ ( 628 ) $ 2,911 $ 2,826 Cash dividends per common share $ 0.14 $ 0.14 $ 0.28 $ 0.28 See accompanying Condensed Notes to the Consolidated Financial Statements. 4 Table of Contents SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except shares and par value data) June 30, December 31, 2025 2024 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 21,026 $ 18,766 Accounts receivable, net 94,194 95,092 Inventories 106,597 96,675 Contract assets 53,762 51,688 Prepaid expenses and other current assets 10,003 10,831 Total current assets 285,582 273,052 Property, plant and equipment, net 40,221 41,879 Operating lease right-of-use assets 13,746 15,567 Deferred tax asset 13,830 13,835 Intangible assets, net 49,320 51,137 Goodwill 2,434 2,304 Other assets 18,123 17,360 Total assets $ 423,256 $ 415,134 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 56,464 $ 50,942 Other current liabilities 41,610 44,367 Current portion of long-term debt 5,625 5,625 Current portion of acquisition-related contingent liabilities 1,600 814 Total current liabilities 105,299 101,748 Long-term debt 93,720 80,410 Long-term pension liability 13,514 13,315 Long-term acquisition-related contingent liabilities 668 935 Long-term operating lease liabilities 8,711 10,486 Other long-term liabilities 9,268 9,384 Total liabilities 231,180 216,278 Commitments and contingencies (Note 5) Shareholders’ equity: Preferred stock, $ .001 par value - authorized 300,000 shares ( none issued) - - Common stock, $ .001 par value - authorized 50,000,000 shares, issued and outstanding 15,917,963 and 16,484,921 shares, respectively 15 16 Additional paid-in capital 83,285 84,060 Retained earnings 112,017 120,139 Accumulated other comprehensive loss, net of tax: ( 3,241 ) ( 5,359 ) Total shareholders’ equity 192,076 198,856 Total liabilities and shareholders’ equity $ 423,256 $ 415,134 See accompanying Condensed Notes to the Consolidated Financial Statements. 5 Table of Contents SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY THREE MONTHS ENDED June 30, 2025 AND 2024 (Unaudited) (In thousands, except shares and per share data) Accumulated Other Additional Comprehensive Total Common Common Paid-In Retained Income (Loss), Shareholders’ Shares Stock Capital Earnings net of tax Equity Balance, April 1, 2024 16,743,723 $ 16 $ 79,602 $ 123,946 $ ( 2,743 ) $ 200,821 Issuance of common stock under stock incentive plans and related tax effect 48,854 - 740 ( 113 ) - 627 Share-based compensation expense - - 605 - - 605 Written put options - - 1,812 - - 1,812 Cash dividends declared ($ 0.14 per share) - - - ( 2,327 ) - ( 2,327 ) Comprehensive income (loss): Net income - - - 600 - 600 Pensions, net of taxes of $ 8 - - - - 23 23 Change in currency translation adjustment, net of taxes of $ 0 - - - - ( 1,251 ) ( 1,251 ) Balance, June 30, 2024 16,792,577 $ 16 $ 82,759 $ 122,106 $ ( 3,971 ) $ 200,910 Balance, April 1, 2025 16,244,241 $ 15 $ 83,931 $ 114,825 $ ( 4,341 ) $ 194,430 Issuance of common stock under stock incentive plans and related tax effect 76,051 - 99 - 99 Common shares repurchased and retired ( 402,329 ) - ( 2,024 ) ( 2,124 ) - ( 4,148 ) Share-based compensation expense - - 1,279 - - 1,279 Cash dividends declared ($ 0.14 per share) - - - ( 2,235 ) - ( 2,235 ) Comprehensive income (loss): Net income - - - 1,551 - 1,551 Pensions, net of taxes of $ 2 - - - - 8 8 Change in currency translation adjustment, net of taxes of $ 0 - - - - 1,092 1,092 Balance, June 30, 2025 15,917,963 $ 15 $ 83,285 $ 112,017 $ ( 3,241 ) $ 192,076 6 SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ EQUITY six MONTHS ENDED June 30, 2025 AND 2024 (Unaudited) (In thousands, except shares and per share data) Accumulated Other Additional Comprehensive Total Common Common Paid-In Retained Income (Loss), Shareholders’ Shares Stock Capital Earnings net of tax Equity Balance, January 1, 2024 16,564,712 $ 16 $ 77,443 $ 122,464 $ ( 2,285 ) $ 197,638 Issuance of common stock under stock incentive plans and related tax effect 227,865 - 1,289 ( 213 ) - 1,076 Share-based compensation expense - - 1,620 - - 1,620 Written put options - - 2,407 - - 2,407 Cash dividends declared ($ 0.28 per share) - - - ( 4,657 ) - ( 4,657 ) Comprehensive income (loss): Net income - - - 4,512 - 4,512 Pensions, net of taxes of $ 15 - - - - 46 46 Change in currency translation adjustment, net of taxes of $ 0 - - - - ( 1,732 ) ( 1,732 ) Balance, June 30, 2024 16,792,577 $ 16 $ 82,759 $ 122,106 $ ( 3,971 ) $ 200,910 Balance, January 1, 2025 16,484,921 $ 16 $ 84,060 $ 120,139 $ ( 5,359 ) $ 198,856 Issuance of common stock under stock incentive plans and related tax effect 129,803 - 189 - 189 Common shares repurchased and retired ( 696,761 ) ( 1 ) ( 3,525 ) ( 4,400 ) - ( 7,926 ) Share-based compensation expense - - 2,561 - - 2,561 Cash dividends declared ($ 0.28 per share) - - - ( 4,515 ) - ( 4,515 ) Comprehensive income (loss): Net income - - - 793 - 793 Pensions, net of taxes of $ 5 - - - - 15 15 Change in currency translation adjustment, net of taxes of $ 0 - - - - 2,103 2,103 Balance, June 30, 2025 15,917,963 $ 15 $ 83,285 $ 112,017 $ ( 3,241 ) $ 192,076 See accompanying Condensed Notes to the Consolidated Financial Statements. 7 Table of Contents SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 793 $ 4,512 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,182 6,620 Inventory write-downs 1,042 888 Credit loss expense 2,100 ( 383 ) Share-based compensation expense 2,561 1,620 Change in fair value of acquisition-related contingent liabilities 520 296 Other, net 182 775 Changes in assets and liabilities, net of acquisition of a business: Accounts receivable ( 569 ) 10,578 Contract assets ( 1,682 ) ( 4,526 ) Inventories ( 10,692 ) 3,936 Prepaid expenses and other current assets 1,267 ( 1,309 ) Other assets ( 789 ) ( 761 ) Accounts payable and other current liabilities 1,740 ( 6,424 ) Other long-term liabilities 291 478 Net cash provided by operating activities 2,946 16,300 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment ( 2,716 ) ( 1,974 ) Net cash used in investing activities ( 2,716 ) ( 1,974 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under revolving lines of credit 57,000 10,000 Payments under revolving lines of credit ( 41,000 ) ( 24,000 ) Payments of term loan ( 2,812 ) ( 1,875 ) Payment of cash dividends ( 4,515 ) ( 4,657 ) Payment of acquisition-related contingent liabilities - ( 557 ) Proceeds received on exercise of stock options and payments for shares withheld for taxes 189 1,076 Common shares repurchased and retired ( 7,926 ) - Net cash provided by (used in) financing activities 936 ( 20,013 ) Effect of currency exchange rates on cash 1,094 ( 835 ) Net increase in cash and cash equivalents 2,260 ( 6,522 ) Cash and cash equivalents balance, beginning of period 18,766 19,896 Cash and cash equivalents balance, end of period $ 21,026 $ 13,374 See accompanying Condensed Notes to the Consolidated Financial Statements. 8 Table of Contents Superior Group of Companies , Inc. and Subsidiaries Condensed Notes to the Consolidated Financial Statements (Unaudited) NOTE 1 – Description of Business and Basis of Presentation : Description of business Superior Group of Companies, Inc. (together with its subsidiaries, “the Company,” “Superior,” “we,” “our,” or “us”) was organized in 1920 and was incorporated in 1922 as a New York company under the name Superior Surgical Mfg. Co., Inc. In 1998, the Company changed its name to Superior Uniform Group, Inc. and redomiciled to Florida. Effective on May 3, 2018, Superior Uniform Group, Inc. changed its name to Superior Group of Companies, Inc. Superior’s Branded Products segment, primarily through its signature marketing brands BAMKO® and HPI®, produces and sells customized merchandising solutions, promotional products and branded uniform programs. Branded products are manufactured through third parties or in Superior’s own facilities, and are sold to customers in a wide range of industries, including retail chain, food service, entertainment, technology, transportation and other industries. The segment currently has sales offices or operations in the United States, Canada and Brazil, with support services in China and India. Superior’s Healthcare Apparel segment, primarily through its signature marketing brands Fashion Seal Healthcare®, Wink® and CID Resources, manufactures (through third parties or in its own facilities) and sells a wide range of healthcare apparel, such as scrubs, lab coats, protective apparel and patient apparel. This segment sells its products to healthcare laundries, dealers, distributors, retailers and consumers primarily in the United States. Superior’s Contact Centers segment, through multiple The Office Gurus® entities, including subsidiaries in El Salvador, Belize, Dominican Republic, the United States and in Jamaica until its closure on June 15, 2025, provides outsourced, nearshore business process outsourcing, contact and call-center support services to North American customers. Basis of presentation The accompanying unaudited consolidated financial statements of Superior included herein have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Intercompany items have been eliminated in consolidation. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2024 , and filed with the SEC. Management believes that the information furnished includes all adjustments of a normal recurring nature that are necessary to fairly present our consolidated financial position, results of operations and cash flows for the periods indicated. The results of operations for any interim period are not necessarily indicative of results to be expected for the full year. The Company refers to the consolidated financial statements collectively as “financial statements,” and individually as “statements of comprehensive income,” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein. Reclassifications The accompanying financial statements for the prior year period contain certain reclassifications. Reclassifications only impact items within our statements of comprehensive income, our statements of shareholders' equity, our statements of cash flows and Note 7 Inventories. These reclassifications did not have an effect on the Company’s consolidated results of operations, financial position or cash flows for the quarter ended June 30, 2025 . 9 Table of Contents Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023 - 09, "Income Taxes (Topic 740 ) — Improvements to Income Tax Disclosures" . The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024, which for the Company is the calendar year beginning January 1, 2025. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. The adoption of this guidance will not affect the Company’s consolidated results of operations, financial position or cash flows and the Company is currently evaluating the effect the guidance will have on its disclosures. In November 2024, the FASB issued ASU 2024 - 03, “ Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses “ The ASU requires the disclosure of additional information about specific categories of costs and expenses in the notes to the consolidated financial statements. This guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. This ASU will likely result in additional disclosures. We are currently evaluating the provisions of this ASU. 10 Table of Contents NOTE 2 – Operating Segment Information : The Company manages and reports the following segments: Branded Products segment: Primarily through our signature marketing brands BAMKO® and HPI®, we produce and sell customized merchandising solutions, promotional products and branded uniform programs. Branded products are sold to customers in a wide range of industries, including retail chain, food service, entertainment, technology, transportation and other industries. The segment currently has sales offices in the United States and Brazil, with support services in China and India. Healthcare Apparel segment: Primarily through our signature marketing brands Fashion Seal Healthcare®, Wink® and CID Resources, we manufacture (through third parties or in our own facilities) and sell a wide range of healthcare apparel, such as scrubs, lab coats, protective apparel and patient apparel. This segment sells its products to healthcare laundries, dealers, distributors and retailers primarily in the United States. Contact Centers: Through multiple The Office Gurus® entities, including our subsidiaries in El Salvador, Belize, Dominican Republic, the United States and Jamaica until its closure on June 15, 2025, we provide outsourced, nearshore business process outsourcing, contact and call-center support services to North American customers. Intersegment eliminations include the elimination of revenues and costs from services provided by the Contact Centers segment to the Company’s two other segments. Such costs are recognized as selling and administrative expenses in the Branded Products and Healthcare Apparel segments. Income and expenses related to corporate functions that are not specifically attributable to an individual reportable segment are presented within Other in the table below. The chief operating decision maker, who is the Company’s Chief Executive Officer, evaluates the performance of our segments. Segment EBITDA is the profitability metric reported to the Company’s CODM for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment. Segment EBITDA is calculated as net sales less cost of goods sold and selling and administrative expenses. Segment information for total assets is not presented as this information is not used by the Company’s CODM in measuring segment performance or allocating resources between segments. The following tables set forth financial information related to the Company’s operating segments (in thousands): Branded Products Healthcare Apparel Contact Centers Intersegment Eliminations Other Total For the Three Months Ended June 30, 2025: Net sales $ 92,647 $ 28,253 $ 23,977 $ ( 832 ) $ - $ 144,045 Cost of goods sold 59,631 18,237 11,364 ( 513 ) - 88,719 Gross margin 33,016 10,016 12,613 ( 319 ) - 55,326 Selling and administrative expenses 25,432 10,078 11,612 ( 319 ) 5,437 52,240 Depreciation and amortization 1,395 854 639 - 90 2,978 Segment EBITDA(1) $ 8,979 $ 792 $ 1,640 $ - $ ( 5,347 ) $ 6,064 Branded Products Healthcare Apparel Contact Centers Intersegment Eliminations Other Total For the Three Months Ended June 30, 2024: Net sales $ 81,296 $ 26,592 $ 24,832 $ ( 984 ) $ - $ 131,736 Cost of goods sold 53,170 16,392 11,871 ( 452 ) - 80,981 Gross margin 28,126 10,200 12,961 ( 532 ) - 50,755 Selling and administrative expenses 22,969 9,879 10,533 ( 532 ) 5,715 48,564 Depreciation and amortization 1,567 956 753 - 92 3,368 Segment EBITDA(1) $ 6,724 $ 1,277 $ 3,181 $ - $ ( 5,623 ) $ 5,559 11 Branded Products Healthcare Apparel Contact Centers Intersegment Eliminations Other Total For the Six Months Ended June 30, 2025: Net sales $ 179,121 $ 55,516 $ 48,202 $ ( 1,697 ) $ - $ 281,142 Cost of goods sold 118,418 35,367 22,608 ( 1,018 ) - 175,375 Gross margin 60,703 20,149 25,594 ( 679 ) - 105,767 Selling and administrative expenses 48,852 19,604 22,533 ( 679 ) 12,032 102,342 Depreciation and amortization 2,875 1,766 1,361 - 180 6,182 Segment EBITDA(1) $ 14,726 $ 2,311 $ 4,422 $ - $ ( 11,852 ) $ 9,607 Branded Products Healthcare Apparel Contact Centers Intersegment Eliminations Other Total For the Six Months Ended June 30, 2024: Net sales $ 168,364 $ 55,829 $ 48,384 $ ( 1,999 ) $ - $ 270,578 Cost of goods sold 108,497 34,119 22,779 ( 889 ) - 164,506 Gross margin 59,867 21,710 25,605 ( 1,110 ) - 106,072 Selling and administrative expenses 46,263 19,691 20,954 ( 1,110 ) 11,704 97,502 Depreciation and amortization 3,067 1,893 1,476 - 184 6,620 Segment EBITDA(1) $ 16,671 $ 3,912 $ 6,127 $ - $ ( 11,520 ) $ 15,190 The following table reconciles income before income tax expense to Segment EBITDA (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Income before income tax expense $ 1,836 $ 650 $ 930 $ 5,242 Interest expense 1,250 1,541 2,495 3,328 Depreciation and amortization 2,978 3,368 6,182 6,620 Segment EBITDA $ 6,064 $ 5,559 $ 9,607 $ 15,190 12 Table of Contents NOTE 3 – Net Sales: For our Branded Products and Healthcare Apparel segments, revenue is primarily generated from the sale of finished products to customers. Revenues for our Branded Products and Healthcare Apparel segments are recognized when the performance obligations under the contract terms are satisfied. For certain contracts with customers in which the Company has an enforceable right to payment for goods with no alternative use, revenue is recognized over time upon receipt of finished goods into inventory. Revenue for goods that do have an alternative use or that the customer is not obligated to purchase under the terms of a contract is generally recognized when the goods are transferred to the customer. The Company includes shipping and handling fees billable to customers in net sales. Shipping and handling activities that occur after the transfer of promised goods are accrued as control is transferred to the customer rather than being treated as a separate performance obligation. For our Contact Centers segment, revenue is generated from providing our customers with contact center services. Revenue for our Contact Centers segment is recognized as services are delivered. Revenue is measured at the amount of consideration we expect to receive in exchange for the goods or services. Variable consideration for estimated returns, allowances and other price variances is recorded based upon historical experience and current allowance programs. Contract terms may involve variable consideration clauses such as sales discounts and customer rebates, and revenue is adjusted accordingly for these provisions. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The promised amount of consideration in a contract is not adjusted for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised good or service to a customer and when the customer pays for that product or service will be one year or less. Sales taxes are excluded from the measurement of a performance obligation’s transaction price. Sales commissions are expensed as incurred when we expect that the amortization period of such costs will be one year or less. For further information regarding our net sales disaggregated by reportable segment see Note 2. The Company recognizes revenue when the customer takes control of the inventory, either upon shipment or when the material is made available for pick up. If the customer is deemed to take control of the inventory prior to pick up, the Company recognizes the revenue as a bill-and-hold transaction in accordance with Topic 606. Sales under bill-and-hold arrangements totaled $ 11.6 million and $ 9.7 million, for the three months ended June 30, 2025 and 2024 , respectively. Sales under bill-and-hold arrangements totaled $ 19.5 million and $ 13.6 million, for the six months ended June 30, 2025 and 2024 , respectively. Contract Assets and Contract Liabilities The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers (in thousands): June 30, December 31, 2025 2024 Accounts receivable $ 94,194 $ 95,092 Current contract assets 53,762 51,688 Current contract liabilities 2,078 2,833 Contract assets relate to goods produced without an alternative use for which the Company has an enforceable right to payment but which has not yet been invoiced to the customer. Contract liabilities relate to payments received in advance of the Company completing its performance under a contract. Contract liabilities are included in other current liabilities in our balance sheets. During the six months ended June 30, 2025 , $ 2.4 million of revenue was recognized from the contract liabilities balance as of December 31, 2024 . 13 Table of Contents NOTE 4 – Net Income Per Share: The Company’s basic net income per share is computed based on the weighted average number of shares of common stock outstanding for the period. Diluted net income per share includes the effect of the Company’s outstanding stock options, stock appreciation rights, nonvested shares of restricted stock and nonvested performance shares, if the inclusion of these items is dilutive. The following table presents a reconciliation of basic and diluted net income per share for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income used in the computation of basic and diluted net income per share (in thousands) $ 1,551 $ 600 $ 793 $ 4,512 Weighted average shares outstanding - basic 14,813,984 16,221,073 15,206,819 16,124,553 Dilutive common stock equivalents 287,958 548,224 366,873 486,822 Weighted average shares outstanding - diluted 15,101,942 16,769,297 15,573,692 16,611,375 Net income per share: Basic $ 0.10 $ 0.04 $ 0.05 $ 0.28 Diluted $ 0.10 $ 0.04 $ 0.05 $ 0.27 Awards to purchase 689,402 and 295,361 shares of common stock with weighted average exercise prices of $ 16.59 and $ 21.90 per share were outstanding during the three months ended June 30, 2025 and 2024 , respectively, but were not included in the computation of diluted net income per share because the awards’ exercise prices were greater than the average market price of the common shares. Awards to purchase 496,897 and 347,718 shares of common stock with weighted average exercise prices of $ 18.91 and $ 21.38 per share were outstanding during the six months ended June 30, 2025 and 2024 , respectively, but were not included in the computation of diluted net income per share because the awards’ exercise prices were greater than the average market price of the common shares. 14 Table of Contents NOTE 5 – Long-Term Debt: Debt consisted of the following (in thousands): June 30, December 31, 2025 2024 Credit Facilities: Revolving credit facility due August 2027 $ 38,000 $ 22,000 Term loan due August 2027 61,875 64,688 Less: unamortized debt issuance costs ( 530 ) ( 653 ) Total Debt $ 99,345 $ 86,035 Less: Current portion of long-term debt 5,625 5,625 Long-term debt less current maturities $ 93,720 $ 80,410 On August 23, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”) among the Company, the domestic subsidiaries of the Company, as guarantors, the lenders party thereto (the “Lenders”), and PNC Bank, National Association, as administrative agent for the Lenders (the “Administrative Agent”), pursuant to which the Lenders are providing the Company senior secured credit facilities maturing in August 2027 consisting of a revolving credit facility in the aggregate maximum principal amount of $ 125.0 million and a term loan in the original aggregate principal amount of $ 75.0 million (collectively, the “Credit Facilities”), and the ability to request incremental revolving credit or term loan facilities in an aggregate amount of up to an additional $ 75.0 million, subject to obtaining additional lender commitments and satisfying certain other conditions. Obligations outstanding under the Credit Facilities accrue interest at a variable rate equal to the secured overnight financing rate ("SOFR") plus an adjustment between 0.10 % and 0.25 % (depending on the applicable interest period) plus a margin between 1.0 % and 2.0 % (depending on the Company’s net leverage ratio). The weighted average interest rate on our outstanding borrowings under the Credit Facilities was 5.6 % as of June 30, 2025 . During the term of the revolving credit facility, the Company will pay a commitment fee on the unused portion of the revolving credit facility equal to between 0.125 % and 0.250 % (depending on the Company’s net leverage ratio). The available balance under the revolving credit facility is reduced by outstanding letters of credit. As of June 30, 2025 , there were no outstanding letters of credit under the revolving credit facility. Contractual principal payments for the term loan, which does not contain pre-payment penalties, are as follows: remainder of 2025 - $ 2.8 million; 2026 - $ 6.6 million; and 2027 - $ 52.5 million. The Credit Facilities are secured by substantially all of the operating assets of the Company, and the Company’s obligations under the Credit Facilities are guaranteed by all of its domestic subsidiaries. The Company’s obligations under the Credit Facilities are subject to acceleration upon the occurrence of an event of default as defined in the Credit Agreement. The Credit Agreement contains customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments (including dividends and related distributions), liquidations, mergers, consolidations or acquisitions, affiliate transactions and sales of assets or subsidiaries. The Credit Agreement also requires the Company to comply with a fixed charge coverage ratio of at least 1.25 to 1.0 and a net leverage ratio not to exceed 4.0 to 1.0. The Company’s net leverage ratio (as defined in the Credit Agreement) is generally calculated as the ratio of (a) indebtedness minus unrestricted cash to (b) consolidated EBITDA for the four most recently ended fiscal quarters. As of June 30, 2025 , the Company was in compliance with these ratios. 15 Table of Contents NOTE 6 – Contingencies and Geographic Supply Concentrations: Contingencies The purchase price to acquire substantially all of the assets of Guardian Products, Inc. (“Guardian”) in May 2022 included contingent consideration based on varying levels of Guardian’s EBITDA in each measurement period through April 2025. The fair value of Guardian acquisition-related contingent consideration payable as of June 30, 2025 was $ 1.0 million, all of which is expected to be paid in the third quarter of 2025. The purchase price to acquire substantially all of the assets of 3Point in December 2024 included contingent consideration based on varying levels of the acquired company’s EBITDA in each measurement period through December 2027. The estimated fair value of the acquired company's acquisition-related contingent consideration payable as of June 30, 2025 was $ 1.2 million, of which $ 0.9 million is expected to be paid in the second quarter of 2026. The total payments related to this contingent consideration payable is capped at $ 0.9 million per year and $ 2.6 million over the three year measurement period. The Company will continue to evaluate the acquired company's liability for remeasurement at the end of each reporting period and any changes will be recorded in the Company’s statements of comprehensive income. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be different from the estimated value of the liability. The Company is involved in various legal actions and claims arising from the normal course of business. The ultimate outcome of these matters is not expected to have a material impact on the Company’s results of operations, cash flows, or financial position. Geographic Concentrations in the Available Supply of Materials and Product The principal fabrics used in the manufacture of finished apparel goods for Superior’s Branded Products and Healthcare Apparel segments are cotton, polyester, spandex, cotton-synthetic and poly-synthetic blends. The majority of such fabrics are sourced, directly or indirectly, from China. The Company does not have a concentration of suppliers of finished apparel in any single country or region of the world, however, it does contract to manufacture or source the majority of its apparel in the following countries: Haiti, China, Madagascar, Vietnam, Pakistan, Bangladesh, and the United States. Additionally, we generally source or manufacture apparel in parts of the world that may be affected by economic uncertainty, political unrest, labor disputes, health emergencies, natural disasters or the imposition of duties, tariffs or other import regulations by the United States. The Branded Products segment also relies on the supply of other types of finished products including hard goods such as drinkware and injection molded plastics along with raw materials that are principally sourced from China, either directly or indirectly. During 2025 higher and/or new tariffs impacting certain sources of the Company's materials and production, were imposed by the U.S. government. We continue to monitor these imposed tariffs and the ongoing negotiations between the U.S. government and the countries in which we manufacture, as well as, evaluate sourcing alternatives. NOTE 7 – Inventories: Inventories consisted of the following amounts (in thousands): June 30, December 31, 2025 2024 Finished goods(1) $ 88,072 $ 81,621 Work in process 1,816 684 Raw materials 16,709 14,370 Inventories $ 106,597 $ 96,675 1 ) Certain raw materials were reclassified to finished goods in the current period and the December 31, 2024 balances were adjusted to the current period presentation. 16 Table of Contents NOTE 8 – Income Taxes: The Company calculates its interim income tax (benefit) provision in accordance with the accounting guidance for income taxes in interim periods. At the end of each interim period, the Company makes its best estimate of the annual expected effective tax rate and applies that rate to its ordinary year-to-date income or loss. The tax expense or benefit related to significant, unusual, or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income for the year and permanent and temporary differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or the tax environment changes. For the three months ended June 30, 2025 , the Company recorded tax expense of $ 0.3 million, which represents an effective tax rate of 15.5 %. For the six months ended June 30, 2025 , the Company recorded tax expense of $ 0.1 million, which represents an effective tax rate of 14.7 %. The income tax expense and the effective tax rate for the three and six months ended June 30, 2025 were primarily impacted by the variability in the mix of earnings across the Company’s foreign and domestic operations, subject to various statutory tax rates in those jurisdictions. The tax rate was further favorably impacted by the performance of the Company’s compensation plans during the six months ended June 30, 2025, totaling $ 0.7 million. For the three months ended June 30, 2024, the Company recorded a provision for income taxes of $ 0.1 million, which represents an effective tax rate of 7.7 %. For the six months ended June 30, 2024, the Company recorded a provision for income taxes of $ 0.7 million, which represents an effective tax rate of 13.9 %. The income tax provision and the effective tax rate for the three and six months ended June 30, 2024 was primarily impacted by the variability in the mix of earnings across the Company’s foreign and domestic operations, subject to various statutory tax rates in those jurisdictions. The tax rate was further favorably impacted by the windfall benefits associated with stock option exercises during the six months ended June 30, 2024, totaling $ 0.5 million. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA includes significant changes to the domestic and international tax provisions, such as modifications to the global tax framework, the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently evaluating OBBBA's impact on its consolidated financial statements. 17 NOTE 9 – Other Information : The activity in the allowance for doubtful accounts receivable was as follows (in thousands): June 30, December 31, 2025 2024 Balance at the beginning of year $ 3,101 $ 4,237 Credit loss (reversal) expense 2,100 232 Write-Off of Accounts Receivable ( 510 ) ( 1,368 ) Balance at the end of the period $ 4,691 $ 3,101 Other current liabilities consisted of the following (in thousands): June 30, December 31, 2025 2024 Salaries, wages, commissions and other compensation $ 12,208 $ 18,544 Contract liabilities 2,078 2,833 Accrued rebates 1,236 1,593 Current operating lease liabilities 4,681 4,572 Customer deposits 8,816 7,750 Other accrued expenses 12,591 9,075 Other current liabilities $ 41,610 $ 44,367 18 Table of Contents