SUPERIOR GROUP OF COMPANIES, INC. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes thereto included in the Consolidated Financial Statements in Part I, Item 1 (“Financial Statements”) of this report and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024. The financial position, results of operations, cash flows and other information included herein are not necessarily indicative of the financial position, results of operations and cash flows that may be expected in future periods. See "Cautionary Note Regarding Forward-Looking Statements" below for a discussion of uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Business Outlook Superior Group of Companies, Inc. (together with its subsidiaries, the “Company,” “Superior,” “we,” “our,” or “us”) is comprised of three reportable business segments: (1) Branded Products, (2) Healthcare Apparel and (3) Contact Centers. Branded Products In our Branded Products segment, we produce and sell customized merchandising solutions, promotional products and branded uniform programs to our customers. As a strategic branding partner, we offer our customers customized branding solutions and strategies that generate favorable brand impressions, bolster customer retention and enhance employee engagement. Our products are sold to customers in a wide range of industries, including retail chain, food service, entertainment, technology, transportation and other industries. Sales volumes in this segment are impacted by a number of factors, including marketing programs of our customers and turnover of our customers’ employees, often times driven by the opening and closing of locations. From a long-term perspective, we believe that synergies within this segment will create opportunities to cross-sell products to new and existing customers. Healthcare Apparel In our Healthcare Apparel segment, 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 gowns. We sell our brands of healthcare service apparel to healthcare laundries, dealers, distributors and retailers primarily in the United States. From a long-term perspective, we expect that demand for our signature marketing brands, including Fashion Seal Healthcare® and Wink®, will continue to provide opportunities for growth and increased market share. Contact Centers In our Contact Centers segment (also known as “The Office Gurus”), which operates 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. These services are also provided internally to the Company’s other two operating segments. The Office Gurus has become an award-winning business process outsourcer offering inbound and outbound voice, email, text, chat and social media support. The nearshore call-center market has grown as businesses look to reduce operating costs while maintaining high-quality customer support. Nearshore operators are able to provide comparable service to their U.S. counterparts at a fraction of the price. With an environment and career path designed to attract and maintain top talent across all sites, we believe The Office Gurus is positioned well to continue growing this business. 19 Table of Contents Global Economic and Political Conditions During 2025, higher tariffs and/or new tariffs impacting certain sources of the Company’s materials and production were imposed by the U.S. government. Additionally, the U.S. has trade agreements and/or preferences with certain countries in Africa, through the African Growth and Opportunity Act ("AGOA"), and with Haiti, through the Haitian Hemispheric Opportunity through Partnership Encouragement Act ("HOPE") and the Haiti Economic Lift Program of 2010 ("HELP"), all of which are set to expire on September 30, 2025, if not renewed or extended. We are monitoring these imposed tariffs, related ongoing negotiations and the status of the trade agreements and preferences involving the U.S. government and the countries in which we source and/or manufacture products. See Item 1, “ NOTE 6 – Contingencies and Geographic Supply Concentrations ,” and "Item 1A — Risk Factors — Recently imposed tariffs may have a material adverse impact on our business. " It is uncertain how inflation and interest rates will be impacted during the remainder of 2025 by the imposition of tariffs and other trade-related actions or inactions. World events, including the Russia-Ukraine War and the ongoing conflict in the Middle East continue to have negative effects on the global economy. Civil unrest in countries where we manufacture products, such as Haiti, may result in our facilities incurring damage or destruction that interrupts our manufacturing processes and adversely affects our reputation and our relationships with our customers. Prolonged or recurring disruptions or instability in the United States and global economies, and how the world reacts to those disruptions or instability, could have long-term impacts on our business. These business impacts could negatively affect us in a number of ways, including, but not limited to, reduced demand for our core products and services, declines in our revenue and profitability, costs associated with complying with new or amended laws and regulations and mitigating the increased cost of the new tariffs affecting our business, declines in our stock price, reduced availability and less favorable terms of future borrowings, negative impacts on the valuation of our pension obligations, reduced credit-worthiness of our customers, and potential impairment of the carrying value of indefinite-lived intangible assets. 20 Table of Contents Results of Operations Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 For the Three Months Ended June 30, 2025 2024 $ Change % Change Net sales: Branded Products $ 92,647 $ 81,296 $ 11,351 14.0 % Healthcare Apparel 28,253 26,592 1,661 6.2 % Contact Centers 23,977 24,832 (855 ) (3.4 %) Net intersegment eliminations (832 ) (984 ) 152 (15.4 %) Consolidated net sales 144,045 131,736 12,309 9.3 % Gross margin: Branded Products 33,016 28,126 4,890 17.4 % Healthcare Apparel 10,016 10,200 (184 ) (1.8 %) Contact Centers 12,613 12,961 (348 ) (2.7 %) Net intersegment eliminations (319 ) (532 ) 213 (40.0 %) Consolidated gross margin 55,326 50,755 4,571 9.0 % Selling and administrative expenses: Branded Products 25,432 22,969 2,463 10.7 % Healthcare Apparel 10,078 9,879 199 2.0 % Contact Centers 11,612 10,533 1,079 10.2 % Intersegment Eliminations (319 ) (532 ) 213 (40.0 %) Other 5,437 5,715 (278 ) (4.9 %) Consolidated selling and administrative expenses 52,240 48,564 3,676 7.6 % Interest expense, net 1,250 1,541 (291 ) (18.9 %) Income before income tax expense 1,836 650 1,186 182.5 % Income tax expense 285 50 235 470.0 % Net income $ 1,551 $ 600 $ 951 158.5 % EBITDA(1) $ 6,064 $ 5,559 $ 505 9.1 % (1) Please refer to "Non-GAAP Financial Measure" below for a reconciliation of EBITDA to net (loss) income. 21 Table of Contents Net Income The Company generated net income of $1.6 million and $0.6 million during the three months ended June 30, 2025 and 2024, respectively. The increase in net income during the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was primarily due to an increase in net sales and gross margins at our Branded Products segment. EBITDA EBITDA was $6.1 million and $5.6 million during the three months ended June 30, 2025 and 2024, respectively. The EBITDA increase was primarily due to the increase in net sales and gross margins at our Branded Products segment during the three months ended June 30, 2025. For a reconciliation of EBITDA to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Non-GAAP Financial Measure” below. Net Sales Net sales for the Company increased 9.3%, or $12.3 million, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was attributable to increases in net sales in our Branded Products and Healthcare Apparel reportable segments. Branded Products net sales increased 14.0%, or $11.4 million, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was attributable to $8.0 million in timing of orders delivered, $3.8 million of organic expansion with existing large enterprise accounts including higher tariffs and $3.1 million increase resulting from revenue generated by 3 Point following the acquisition in December 2024. Healthcare Apparel net sales increased 6.2%, or $1.7 million, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily due to volume increases within existing customer accounts. Contact Centers net sales decreased 3.4% or $0.9 million, before intersegment eliminations for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The 3.4% decline versus the year-ago quarter reflects continued macroeconomic headwinds, which continue to contribute to client downsizing and client attrition outpacing new customer acquisitions. 22 Table of Contents Gross Margin Gross margin rate for the Company was 38.4% for the three months ended June 30, 2025 and 38.5% for the three months ended June 30, 2024. Gross margin rate for our Branded Products segment was 35.6% for the three months ended June 30, 2025 and 34.6% for the three months ended June 30, 2024. The increase in the gross margin rate was attributable to customer sales mix for the three months ended June 30, 2025. Gross margin rate for our Healthcare Apparel segment was 35.5% for the three months ended June 30, 2025 and 38.4% for the three months ended June 30, 2024. The gross margin rate decreased as compared to the prior year period due to higher cost of goods including the recently enacted higher tariff costs in advance of price increases to our customers. Gross margin rate for our Contact Centers segment was 52.6% for the three months ended June 30, 2025, up slightly from 52.2% for the three months ended June 30, 2024. Selling and Administrative Expenses As a percentage of net sales, total selling and administrative expenses was 36.3% for the three months ended June 30, 2025 and 36.9% for the three months ended June 30, 2024. As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 27.5% for the three months ended June 30, 2025 and 28.3% for the three months ended June 30, 2024. The rate decrease was primarily related to net sales increases for the three months ended June 30, 2025. The increase in selling and administrative expenses of $2.5 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was due to $1.6 million higher employee related costs driven by increased sales and gross margin, an adjustment to credit loss reserves of $0.5 million and increased costs resulting from the acquisition of 3Point in December 2024. As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 35.7% for the three months ended June 30, 2025 and 37.2% for the three months ended June 30, 2024. The rate decrease was primarily related to higher sales in the period ended June 30, 2025. As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 48.4% for the three months ended June 30, 2025 and 42.4% for the three months ended June 30, 2024. The rate increase as compared to the prior year period was primarily driven by an increase in credit loss expense. Selling and administrative expenses for Other, which represents Corporate costs, decreased primarily due to lower supplemental executive retirement plan expenses. Interest Expense, Net Interest expense, net decreased to $1.3 million for the three months ended June 30, 2025 from $1.5 million for three months ended June 30, 2024. This decrease was due to a lower weighted average interest rate on those borrowings from 6.5% for the three months ended June 30, 2024 to 5.6% for the three months ended June 30, 2025. Income Taxes Income tax expense increased to $0.3 million for the three months ended June 30, 2025 from $0.1 million for the three months ended June 30, 2024. The effective tax rate was 15.5% and 7.7% for the three months ended June 30, 2025 and 2024, respectively. Income tax expense and the effective tax rate for the three months ended June 30, 2025 and June 30, 2024 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 effective tax rate may vary from quarter to quarter due to discrete, unusual or non-recurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, or other items. 23 Table of Contents Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 For the Six Months Ended June 30, 2025 2024 $ Change % Change Net sales: Branded Products $ 179,121 $ 168,364 $ 10,757 6.4 % Healthcare Apparel 55,516 55,829 (313 ) (0.6 %) Contact Centers 48,202 48,384 (182 ) (0.4 %) Net intersegment eliminations (1,697 ) (1,999 ) 302 (15.1 %) Consolidated net sales 281,142 270,578 10,564 3.9 % Gross margin: Branded Products 60,703 59,867 836 1.4 % Healthcare Apparel 20,149 21,710 (1,561 ) (7.2 %) Contact Centers 25,594 25,605 (11 ) 0.0 % Net intersegment eliminations (679 ) (1,110 ) 431 (38.8 %) Consolidated gross margin 105,767 106,072 (305 ) (0.3 %) Selling and administrative expenses: Branded Products 48,852 46,263 2,589 5.6 % Healthcare Apparel 19,604 19,691 (87 ) (0.4 %) Contact Centers 22,533 20,954 1,579 7.5 % Intersegment Eliminations (679 ) (1,110 ) 431 (38.8 %) Other 12,032 11,704 328 2.8 % Consolidated selling and administrative expenses 102,342 97,502 4,840 5.0 % Interest expense, net 2,495 3,328 (833 ) (25.0 %) Income before income tax expense 930 5,242 (4,312 ) (82.3 %) Income tax expense 137 730 (593 ) (81.2 %) Net income $ 793 $ 4,512 $ (3,719 ) (82.4 %) EBITDA(1) $ 9,607 $ 15,190 $ (5,583 ) (36.8 %) (1) Please refer to "Non-GAAP Financial Measure" below for a reconciliation of EBITDA to net (loss) income. 24 Table of Contents Net Income The Company generated net income of $0.8 million and $4.5 million during the six months ended June 30, 2025 and 2024, respectively. The decrease in net income during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to higher selling and administrative expenses at our Branded Products and Contact Centers segments and lower margins in our Healthcare Apparel segment, partially offset by an increase in gross margin at our Branded Products segment and a decrease in interest expense. EBITDA EBITDA was $9.6 million and $15.2 million during the six months ended June 30, 2025 and 2024, respectively. The EBITDA decrease was primarily due to higher selling and administrative expenses at our Branded Products and Contact Centers segments and lower margins at our Healthcare Apparel segment, partially offset by an increase in gross margin at our Branded Products segment. For a reconciliation of EBITDA to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Non-GAAP Financial Measure” below. Net Sales Net sales for the Company increased 3.9% or $10.6 million, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was attributable to an increase in net sales in our Branded Products reportable segment. Branded Products net sales increased 6.4%, or $10.8 million, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was attributable to $8.0 million in timing of orders delivered, $7.8 million of organic expansion with existing large enterprise accounts including higher tariffs and $6.2 million increase resulting from revenue generated by 3 Point following the acquisition in December 2024. These were partially offset by volume decreases in branded uniform apparel from existing customers. Healthcare Apparel net sales decreased 0.6% or $0.3 million, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease was primarily due to volume decreases in institutional apparel within existing customer accounts. Contact Centers net sales decreased 0.4% or $0.2 million, before intersegment eliminations for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The 0.4% decline versus the year-ago period reflects continued macroeconomic headwinds, which continue to contribute to client downsizing and client attrition outpacing new customer acquisitions. 25 Table of Contents Gross Margin Gross margin rate for the Company was 37.6% for the six months ended June 30, 2025 and 39.2% for the six months ended June 30, 2024. The gross margin rate decrease was primarily driven by our Healthcare Apparel and Branded Products reportable segments. Gross margin rate for our Branded Products segment was 33.9% for the six months ended June 30, 2025 and 35.6% for the six months ended June 30, 2024. The gross margin rate decreased as compared to the prior year period due to sourcing mix resulting in higher product costs and lower pricing to existing customers. Gross margin rate for our Healthcare Apparel segment was 36.3% for the six months ended June 30, 2025 and 38.9% for the six months ended June 30, 2024. The gross margin rate decreased as compared to the prior year period primarily driven by higher cost of goods including the recently enacted higher tariff costs in advance of price increases to our customers. Gross margin rate for our Contact Centers segment was 53.1% for the six months ended June 30, 2025, up slightly from 52.9% for the six months ended June 30, 2024. Selling and Administrative Expenses As a percentage of net sales, total selling and administrative expenses was 36.4% for the six months ended June 30, 2025 and 36.0% for the six months ended June 30, 2024. As a percentage of net sales, selling and administrative expenses for our Branded Products segment was relatively flat at 27.3% for the six months ended June 30, 2025 and 27.5% for the six months ended June 30, 2024. The increase in selling and administrative expenses of $2.6 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was due to $1.9 million higher employee related costs, driven by increased sales and gross margin, an adjustment to credit loss reserves of $0.5 million and increased costs from 3Point acquired in December 2024. As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 35.3% for the six months ended June 30, 2025 and 35.3% for the six months ended June 30, 2024. As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 46.7% for the six months ended June 30, 2025 and 43.3% for the six months ended June 30, 2024. The rate increase as compared to the prior year period was primarily driven by an increase in credit loss expense. Selling and administrative expenses for Other, which represents Corporate costs, increased by $0.3 million, primarily driven by third party professional fees and stock-based compensation expense during the six months ended June 30, 2025. Interest Expense, Net Interest expense, net decreased to $2.5 million for the six months ended June 30, 2025 from $3.3 million for six months ended June 30, 2024. This decrease was due to a lower weighted average interest rate on those borrowings from 6.6% for the six months ended June 30, 2024 to 5.6% for the six months ended June 30, 2025. Income Taxes Income tax expense decreased to $0.1 million for the six months ended June 30, 2025 from $0.7 million for the six months ended June 30, 2024. The effective tax rate was 14.7% and 13.9% for the six months ended June 30, 2025 and 2024, respectively. Income tax expense and the effective tax rate for the six months ended June 30, 2025 and June 30, 2024 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 rates were further favorably impacted by the performance of the Company’s compensation plans during the six months ended June 30, 2025 and June 30, 2024. The effective tax rate may vary from quarter to quarter due to discrete, unusual or non-recurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, or other items. 26 Table of Contents Liquidity and Capital Resources Liquidity Analysis Short-Term Liquidity For the next twelve months, our primary capital requirements are for capital to maintain our operations, meet contractual obligations, primarily consisting of our revolving credit facility, term loan, operating leases and acquisition-related contingent liabilities, and fund capital expenditures, dividends, stock repurchases, any potential merger and acquisition activity and other general corporate purposes. Management currently believes that the combination of our current cash level, cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the above requirements for the next twelve months. Long-Term Liquidity Beyond the next twelve months, our principal demand for funds will be for maintenance of our core business, to satisfy long-term contractual obligations, stock repurchases, any potential merger and acquisition activity and the Company’s ongoing capital expenditure program designed to improve the effectiveness and capabilities of its facilities and technology. The Company at all times evaluates its capital expenditure program in light of prevailing economic conditions. The Company's material contractual obligations include outstanding debt, operating leases, long-term pension liability and non-qualified deferred compensation plan liabilities in Other Liabilities. Management currently believes that the combination of our current cash level, cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the above requirements. Cash Requirements Working Capital Needs The Company carries inventories of both raw materials and finished products, the practice of which requires substantial working capital, which we believe to be common in the industry. The Company also requires working capital to invest in new product lines and technologies. Capital expenditures Capital expenditures were $2.7 million and $2.0 million for the six months ended June 30, 2025 and 2024, respectively. 27 Table of Contents Sources of Capital and Liquidity Cash Flows from Operations Net cash provided by operating activities primarily results from cash collected from customers for our promotional products, branded uniforms, healthcare apparel and contact centers, offset by cash payments made for raw materials, finished goods, salaries and payroll related benefits, leases and other general corporate expenditures. For the six months ended June 30, 2025, net cash provided by operating activities was $2.9 million. Cash collections from customers exceeded aggregate cash payments to vendors, lessors, employees and lenders. These cash payments included $10.7 million of cash outflows for inventory purchases, up from the prior year primarily due to the timing of purchases. For the six months ended June 30, 2024, net cash provided by operating activities was $16.3 million. Cash collections from customers exceeded aggregate cash payments to vendors, lessors, employees and lenders primarily driven by the Company’s collection of receivable balances and increases in cash inflows for inventory. Credit Facilities and Debt Activity The Company’s primary source of liquidity has been its net income and the use of credit facilities and term loans. The Company has access to a Revolving Credit Facility with a maximum principal amount of $125.0 million and a term loan in the original aggregate principal amount of $75.0 million 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. For the six months ended June 30, 2025, the Company had $57.0 million in borrowings and $41.0 million in payments on the revolving credit facility. For the six months ended June 30, 2025, the Company had $2.8 million in payments on the term loan. For the six months ended June 30, 2024, the Company had $10.0 million in borrowings and $24.0 million in payments on the revolving credit facility. For the six months ended June 30, 2024, the Company had $1.9 million in payments on the term loan. In the future, the Company may continue to use credit facilities and other secured and unsecured borrowings as a source of liquidity. Additionally, the cost of the Company’s future sources of liquidity may differ from the costs of the Company’s sources of liquidity to date. Please refer to Note 5 to our Condensed Notes to the Consolidated Financial Statements located in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details on our outstanding long-term debt. Dividends and Share Repurchase Program During the six months ended June 30, 2025 and 2024, the Company paid cash dividends of $4.5 million and $4.7 million, respectively. The Company anticipates that it will continue to pay dividends in the future as financial conditions permit. On June 19, 2025, the “Company entered into a 10b5-1 trading plan (the “Plan”) for the purpose of repurchasing up to a specified number of shares of the Company’s outstanding common stock (the “Repurchase Limit”) in accordance with the $17.5 million share repurchase program previously authorized by the Company’s Board of Directors, which was announced by the Company on March 11, 2025. The Plan is intended to comply with Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended. The Plan allows the Company to repurchase shares up to the Repurchase Limit commencing June 20, 2025 and ending on the earlier of the date on which the Repurchase Limit is reached or other events specified in the Plan. Repurchases of common stock under the Plan will be administered through an independent broker and are subject to certain price, market, volume and timing constraints specified in the Plan. 28 Table of Contents Critical Accounting Estimates See Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2024. Non-GAAP Financial Measure EBITDA, which is a non-GAAP financial measure, is defined as net income excluding interest expense, net, income tax expense, depreciation and amortization expense and impairment charges. The Company believes EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the Company’s core operating results from period to period by removing (i) the impact of the Company’s capital structure (interest expense from outstanding debt), (ii) tax consequences and (iii) asset base (depreciation and amortization). The Company uses EBITDA internally to monitor operating results and to evaluate the performance of its business. In addition, the compensation committee has used EBITDA in evaluating certain components of executive compensation, including performance-based annual incentive programs. EBITDA is not a measure of financial performance under GAAP. EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate EBITDA are significant components in understanding and assessing the Company’s results of operations. The Company’s EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner. The following table reconciles net income to EBITDA (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income $ 1,551 $ 600 $ 793 $ 4,512 Interest expense, net 1,250 1,541 2,495 3,328 Income tax expense 285 50 137 730 Depreciation and amortization 2,978 3,368 6,182 6,620 EBITDA $ 6,064 $ 5,559 $ 9,607 $ 15,190 29 Table of Contents Cautionary Note Regarding Forward Looking Statements Certain matters discussed in this Form 10-Q are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by use of the words “may,” “will,” “should,” “could,” “expect,” "anticipate,” “estimate,” “believe,” “intend,” “project,” “potential,” or “plan” or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements in this Quarterly Report on Form 10-Q may include, without limitation: (1) projections of revenue, income, and other items relating to our financial position and results of operations, including short term and long term plans for cash, (2) statements of our plans, objectives, strategies, goals and intentions, (3) statements regarding the capabilities, capacities, market position and expected development of our business operations and (4) statements of expected industry and general economic trends. Such forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect the anticipated results. Such risks and uncertainties include, but are not limited to, the following: the impact of competition; uncertainties related to tariffs, duties, trade wars and related matters, supply disruptions, inflationary environments (including with respect to shipping costs and the cost of finished goods and raw materials and shipping costs), employment levels (including labor shortages), and general economic and political conditions in the areas of the world in which the Company operates or from which it sources its supplies or the areas of the United States of America ( “ U.S. ” or “ United States ” ) in which the Company ’ s customers are located; changes in the healthcare, retail chain, food service, transportation and other industries where uniforms and service apparel are worn; our ability to identify suitable acquisition targets, discover liabilities associated with such businesses during the diligence process, successfully integrate any acquired businesses, or successfully manage our expanding operations; the price and availability of raw materials; attracting and retaining senior management and key personnel; the Company ’ s ability to maintain effective internal control over financial reporting; and other factors described in the Company’s filings with the Securities and Exchange Commission, including those described in the “Risk Factors” section herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 . 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 forward-looking statements made herein are only made as of the date of this Form 10-Q and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law. 30 Table of Contents