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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net sales $ 138,467 $ 149,690 $ 419,609 $ 420,268 Costs and expenses: Cost of goods sold 85,389 89,144 260,764 253,650 Selling and administrative expenses 48,513 52,404 150,855 149,906 Interest expense, net 1,378 1,569 3,873 4,897 135,280 143,117 415,492 408,453 Income before income tax expense 3,187 6,573 4,117 11,815 Income tax expense 443 1,170 580 1,900 Net income $ 2,744 $ 5,403 $ 3,537 $ 9,915 Net income per share: Basic $ 0.19 $ 0.34 $ 0.24 $ 0.62 Diluted $ 0.18 $ 0.33 $ 0.23 $ 0.60 Weighted average shares outstanding during the period: Basic 14,738,863 16,107,549 15,050,834 16,118,885 Diluted 15,119,050 16,543,990 15,422,144 16,588,914 Other comprehensive income (loss), net of tax: Defined benefit pension plans $ 7 $ 23 $ 22 $ 68 Foreign currency translation adjustment ( 47 ) 530 2,056 ( 1,201 ) Other comprehensive income (loss) ( 40 ) 553 2,078 ( 1,133 ) Comprehensive income $ 2,704 $ 5,956 $ 5,615 $ 8,782 Cash dividends per common share $ 0.14 $ 0.14 $ 0.42 $ 0.42 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) September 30, December 31, 2025 2024 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 16,651 $ 18,766 Accounts receivable, net 97,415 95,092 Inventories 105,655 96,675 Contract assets 48,623 51,688 Prepaid expenses and other current assets 11,685 10,831 Total current assets 280,029 273,052 Property, plant and equipment, net 38,830 41,879 Operating lease right-of-use assets 12,726 15,567 Deferred tax asset 13,828 13,835 Intangible assets, net 48,440 51,137 Goodwill 2,434 2,304 Other assets 18,985 17,360 Total assets $ 415,272 $ 415,134 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 45,727 $ 50,942 Other current liabilities 42,902 44,367 Current portion of long-term debt 6,094 5,625 Current portion of acquisition-related contingent liabilities 648 814 Total current liabilities 95,371 101,748 Long-term debt 93,906 80,410 Long-term pension liability 13,614 13,315 Long-term acquisition-related contingent liabilities 743 935 Long-term operating lease liabilities 7,875 10,486 Other long-term liabilities 9,927 9,384 Total liabilities 221,436 216,278 Commitments and contingencies (Note 6) 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 15,968,792 and 16,484,921 shares, respectively 15 16 Additional paid-in capital 84,541 84,060 Retained earnings 112,561 120,139 Accumulated other comprehensive loss, net of tax: ( 3,281 ) ( 5,359 ) Total shareholders’ equity 193,836 198,856 Total liabilities and shareholders’ equity $ 415,272 $ 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 September 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, July 1, 2024 16,792,577 $ 16 $ 82,759 $ 122,106 $ ( 3,971 ) $ 200,910 Issuance of common stock under stock incentive plans and related tax effect 3,092 - 42 - - 42 Common shares repurchased and retired ( 463,707 ) - ( 2,227 ) ( 4,120 ) - ( 6,347 ) Share-based compensation expense - - 1,285 - - 1,285 Cash dividends declared ($ 0.14 per share) - - - ( 2,337 ) - ( 2,337 ) Comprehensive income (loss): Net income - - - 5,403 - 5,403 Pensions, net of taxes of $ 8 - - - - 23 23 Change in currency translation adjustment, net of taxes of $ 0 - - - - 530 530 Balance, September 30, 2024 16,331,962 $ 16 $ 81,859 $ 121,052 $ ( 3,418 ) $ 199,509 Balance, July 1, 2025 15,917,963 $ 15 $ 83,285 $ 112,017 $ ( 3,241 ) $ 192,076 Issuance of common stock under stock incentive plans and related tax effect 54,035 - ( 99 ) - - ( 99 ) Common shares repurchased and retired ( 3,206 ) - - ( 2 ) - ( 2 ) Share-based compensation expense - - 1,355 - - 1,355 Cash dividends declared ($ 0.14 per share) - - - ( 2,198 ) - ( 2,198 ) Comprehensive income (loss): Net income - - - 2,744 - 2,744 Pensions, net of taxes of $ 2 - - - - 7 7 Change in currency translation adjustment, net of taxes of $ 0 - - - - ( 47 ) ( 47 ) Balance, September 30, 2025 15,968,792 $ 15 $ 84,541 $ 112,561 $ ( 3,281 ) $ 193,836 6 Table of Contents SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ EQUITY nine MONTHS ENDED September 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 219,036 - 1,331 ( 213 ) - 1,118 Common shares repurchased and retired ( 451,786 ) - ( 2,227 ) ( 4,120 ) - ( 6,347 ) Share-based compensation expense - - 2,905 - - 2,905 Written put options - - 2,407 - - 2,407 Cash dividends declared ($ 0.42 per share) - - - ( 6,994 ) - ( 6,994 ) Comprehensive income (loss): Net income - - - 9,915 - 9,915 Pensions, net of taxes of $ 23 - - - - 68 68 Change in currency translation adjustment, net of taxes of $ 0 - - - - ( 1,201 ) ( 1,201 ) Balance, September 30, 2024 16,331,962 $ 16 $ 81,859 $ 121,052 $ ( 3,418 ) $ 199,509 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 183,838 - 90 - - 90 Common shares repurchased and retired ( 699,967 ) ( 1 ) ( 3,525 ) ( 4,402 ) - ( 7,928 ) Share-based compensation expense - - 3,916 - - 3,916 Cash dividends declared ($ 0.42 per share) - - - ( 6,713 ) - ( 6,713 ) Comprehensive income (loss): Net income - - - 3,537 - 3,537 Pensions, net of taxes of $ 7 - - - - 22 22 Change in currency translation adjustment, net of taxes of $ 0 - - - - 2,056 2,056 Balance, September 30, 2025 15,968,792 $ 15 $ 84,541 $ 112,561 $ ( 3,281 ) $ 193,836 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) Nine Months Ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 3,537 $ 9,915 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,157 9,872 Inventory write-downs 1,793 1,893 Credit loss expense 2,347 251 Share-based compensation expense 3,916 2,905 Change in fair value of acquisition-related contingent liabilities 659 363 Non-cash operating lease expense 2,843 1,625 Other, net 244 653 Changes in assets and liabilities, net of acquisition of a business: Accounts receivable ( 3,710 ) 3,891 Contract assets 3,326 ( 1,671 ) Inventories ( 10,535 ) 2,241 Prepaid expenses and other current assets ( 423 ) ( 1,292 ) Other assets ( 1,692 ) ( 959 ) Accounts payable and other current liabilities ( 10,636 ) ( 5,917 ) Payment of acquisition-related contingent liabilities ( 791 ) ( 686 ) Other long-term liabilities 1,235 1,413 Net cash provided by operating activities 1,270 24,497 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment ( 3,407 ) ( 2,911 ) Net cash used in investing activities ( 3,407 ) ( 2,911 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under revolving lines of credit 76,000 31,000 Payments under revolving lines of credit ( 58,000 ) ( 37,000 ) Payments of term loan ( 4,218 ) ( 3,281 ) Payment of cash dividends ( 6,713 ) ( 6,994 ) Payment of acquisition-related contingent liabilities ( 226 ) ( 897 ) Proceeds received on exercise of stock options and payments for shares withheld for taxes 90 1,118 Common shares repurchased and retired ( 7,928 ) ( 6,346 ) Net cash used in financing activities ( 995 ) ( 22,400 ) Effect of currency exchange rates on cash 1,017 ( 709 ) Net decreases in cash and cash equivalents ( 2,115 ) ( 1,523 ) Cash and cash equivalents balance, beginning of period 18,766 19,896 Cash and cash equivalents balance, end of period $ 16,651 $ 18,373 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 portfolio of brands Wink®, Fashion Seal Healthcare®, its trade name CID Resources and our license of Carhartt Medical, 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. Change in Accounting Policy The Company historically evaluated goodwill and indefinite-lived intangible assets for impairment during the fourth quarter or when an indicator of impairment existed. During the third quarter of 2025, the Company voluntarily changed its date of the annual goodwill impairment assessment for all of its reporting units as well as its indefinite-lived intangible assets to August 31 st . Historically the annual test was performed during the fourth quarter. The Company changed the date to provide timelier information for planning and forecasting purposes and provide additional time to complete the required impairment testing. The change did not represent a material change to the Company’s method of applying the accounting principle and was not retrospectively applied because the Company did not carry a goodwill balance in 2024 prior to the fourth quarter of 2024. No impairments were identified during the third quarter 2025 annual goodwill and indefinite-lived intangible impairment tests. 9 Table of Contents Reclassifications The accompanying financial statements for the prior year period contain certain reclassifications. Reclassifications 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 September 30, 2025 . 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. 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 Company will adopt the required disclosures in its annual financial statements as of December 31, 2025. The adoption of this guidance will not affect the Company’s consolidated results of operations, financial position or cash flows. 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. In July 2025, the FASB issued ASU 2025 - 05, "Financial Instruments - Credit Losses (Topic 326 ): Measurement of Credit Losses for Accounts Receivable and Contract Assets " . The FASB issued ASU 2025 - 05 to simplify the application of the current expected credit loss (CECL) model to short-term receivables and contract assets under ASC 606. The amendments introduce a practical expedient (available to all entities) that allows companies to assume current conditions as of the balance sheet date remain unchanged for the life of the asset, removing the need to incorporate complex macroeconomic forecasts for short-term assets. The scope includes current accounts receivable and contract assets arising from Topic 606, including those acquired in business combinations. The amendments are effective for annual periods beginning after December 15, 2025 ( interim periods included), with prospective application and early adoption permitted. 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 portfolio of brands Wink®, Fashion Seal Healthcare®, its trade name CID Resources and our license of Carhartt Medical, 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 September 30, 2025: Net sales $ 85,095 $ 31,520 $ 22,664 $ ( 812 ) $ - $ 138,467 Cost of goods sold 55,466 19,394 10,669 ( 140 ) - 85,389 Gross margin 29,629 12,126 11,995 ( 672 ) - 53,078 Selling and administrative expenses 23,501 9,779 10,283 ( 672 ) 5,622 48,513 Depreciation and amortization 1,396 832 661 - 86 2,975 Segment EBITDA $ 7,524 $ 3,179 $ 2,373 $ - $ ( 5,536 ) $ 7,540 Branded Products Healthcare Apparel Contact Centers Intersegment Eliminations Other Total For the Three Months Ended September 30, 2024: Net sales $ 92,547 $ 33,025 $ 25,038 $ ( 920 ) $ - $ 149,690 Cost of goods sold 59,037 19,216 11,296 ( 405 ) - 89,144 Gross margin 33,510 13,809 13,742 ( 515 ) - 60,546 Selling and administrative expenses 24,223 11,240 11,482 ( 515 ) 5,974 52,404 Impairment charge - 260 - - - 260 Depreciation and amortization 1,446 944 770 - 92 3,252 Segment EBITDA $ 10,733 $ 3,773 $ 3,030 $ - $ ( 5,882 ) $ 11,654 11 Table of Contents Branded Products Healthcare Apparel Contact Centers Intersegment Eliminations Other Total For the Nine Months Ended September 30, 2025: Net sales $ 264,216 $ 87,036 $ 70,866 $ ( 2,509 ) $ - $ 419,609 Cost of goods sold 173,884 54,761 33,277 ( 1,158 ) - 260,764 Gross margin 90,332 32,275 37,589 ( 1,351 ) - 158,845 Selling and administrative expenses 72,353 29,383 32,816 ( 1,351 ) 17,654 150,855 Depreciation and amortization 4,271 2,598 2,022 - 266 9,157 Segment EBITDA $ 22,250 $ 5,490 $ 6,795 $ - $ ( 17,388 ) $ 17,147 Branded Products Healthcare Apparel Contact Centers Intersegment Eliminations Other Total For the Nine Months Ended September 30, 2024: Net sales $ 260,911 $ 88,854 $ 73,422 $ ( 2,919 ) $ - $ 420,268 Cost of goods sold 167,534 53,335 34,075 ( 1,294 ) - 253,650 Gross margin 93,377 35,519 39,347 ( 1,625 ) - 166,618 Selling and administrative expenses 70,486 30,931 32,436 ( 1,625 ) 17,678 149,906 Impairment charge - 260 - - - 260 Depreciation and amortization 4,513 2,837 2,246 - 276 9,872 Segment EBITDA $ 27,404 $ 7,685 $ 9,157 $ - $ ( 17,402 ) $ 26,844 The following table reconciles income before income tax expense to Segment EBITDA (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Income before income tax expense $ 3,187 $ 6,573 $ 4,117 $ 11,815 Interest expense 1,378 1,569 3,873 4,897 Depreciation and amortization 2,975 3,252 9,157 9,872 Impairment charge - 260 - 260 Segment EBITDA $ 7,540 $ 11,654 $ 17,147 $ 26,844 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 $ 10.6 million and $ 10.5 million, for the three months ended September 30, 2025 and 2024 , respectively. Sales under bill-and-hold arrangements totaled $ 30.1 million and $ 24.1 million, for the nine months ended September 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): September 30, December 31, 2025 2024 Accounts receivable $ 97,415 $ 95,092 Current contract assets 48,623 51,688 Current contract liabilities 2,003 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 nine months ended September 30, 2025 , $ 2.6 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net income used in the computation of basic and diluted net income per share (in thousands) $ 2,744 $ 5,403 $ 3,537 $ 9,915 Weighted average shares outstanding - basic 14,738,863 16,107,549 15,050,834 16,118,885 Dilutive common stock equivalents 380,187 436,441 371,310 470,029 Weighted average shares outstanding - diluted 15,119,050 16,543,990 15,422,144 16,588,914 Net income per share: Basic $ 0.19 $ 0.34 $ 0.24 $ 0.62 Diluted $ 0.18 $ 0.33 $ 0.23 $ 0.60 Awards to purchase 654,495 and 309,778 shares of common stock with weighted average exercise prices of $ 16.52 and $ 21.44 per share were outstanding during the three months ended September 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 549,430 and 335,071 shares of common stock with weighted average exercise prices of $ 18.11 and $ 21.40 per share were outstanding during the nine months ended September 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): September 30, December 31, 2025 2024 Credit Facilities: Revolving credit facility due August 2027 $ 40,000 $ 22,000 Term loan due August 2027 60,469 64,688 Less: unamortized debt issuance costs ( 469 ) ( 653 ) Total Debt $ 100,000 $ 86,035 Less: Current portion of long-term debt 6,094 5,625 Long-term debt less current maturities $ 93,906 $ 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 5.4 % as of September 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 September 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 - $ 1.4 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 September 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. In the third quarter of 2025 the final contingent consideration payment was made totaling $ 1.0 million for the measurement period ended in April 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 September 30, 2025 was $ 1.4 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 and duties 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 duties 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): September 30, December 31, 2025 2024 Finished goods(1) $ 87,460 $ 81,621 Work in process 1,871 684 Raw materials 16,324 14,370 Inventories $ 105,655 $ 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 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 September 30, 2025 , the Company recorded tax expense of $ 0.4 million, which represents an effective tax rate of 13.9 %. For the nine months ended September 30, 2025 , the Company recorded tax expense of $ 0.6 million, which represents an effective tax rate of 14.1 %. The income tax expense and the effective tax rate for the three and nine months ended September 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 in both the three and nine months ended September 30, 2025, totaling $ 0.3 million and $ 1.0 million, respectively. For the three months ended September 30, 2024, the Company recorded a provision for income taxes of $ 1.2 million, which represents an effective tax rate of 17.8 %. For the nine months ended September 30, 2024, the Company recorded a provision for income taxes of $ 1.9 million, which represents an effective tax rate of 16.1 %. The income tax provision and the effective tax rate for the three and nine months ended September 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. 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 has considered the impact of OBBBA on its annual effective tax rate. These changes did not have a significant impact on the annual effective tax rate in the quarter ended September 30, 2025 . The Company is currently evaluating the future impacts of OBBBA on its consolidated financial statements. 17 Table of Contents NOTE 9 – Other Information : The activity in the allowance for doubtful accounts receivable was as follows (in thousands): September 30, December 31, 2025 2024 Balance at the beginning of year $ 3,101 $ 4,237 Credit loss (reversal) expense 2,347 232 Write-Off of Accounts Receivable ( 1,257 ) ( 1,368 ) Balance at the end of the period $ 4,191 $ 3,101 Other current liabilities consisted of the following (in thousands): September 30, December 31, 2025 2024 Salaries, wages, commissions and other compensation $ 14,551 $ 18,544 Contract liabilities 2,003 2,833 Accrued rebates 1,065 1,593 Current operating lease liabilities 4,575 4,572 Customer deposits 9,680 7,750 Other accrued expenses 11,028 9,075 Other current liabilities $ 42,902 $ 44,367 18 Table of Contents