What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-04 compared with 2025-11-03 · 85 added, 160 removed, 103 unchanged (70% of the section changed)

18 unchanged sentences

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.

In our Contact Centers segment (also known as “The Office Gurus”), which operates in El Salvador, Belize, Dominican Republic and, the United States and in 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.

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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.

Additionally, the U.S.'s 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 expired on September 30, 2025.

If not renewed and/or retroactively extended, the cost of continuing to do business in these countries likely will negatively impact our results of operations and financial position, or result in us moving sourcing and manufacturing from these countries to countries with more favorable cost structures.

We are monitoring these imposed tariffs and duties, related ongoing negotiations and the status of the trade agreements and preferences involving the U.S.

During 2025, the U.S.

government imposed higher tariffs and/or new tariffs which impacted certain sources of the Company’s materials and production.

Additionally, the U.S.'s 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), expired on September 30, 2025.

In February 2026, these agreements were retroactively extended until December 2026.

If not renewed and/or extended beyond December 2026, the cost of continuing to do business in these countries likely will negatively impact our results of operations and financial position, or result in us moving sourcing and manufacturing from these countries to countries with more favorable cost structures.

We will continue to monitor 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 and could interrupt our manufacturing processes and adversely affect our reputation and our relationships with our customers.

Prolonged or recurring disruptions or instability in the United States and global political and economic environment, 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 and duties 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.

See Item 1, “ NOTE 6 – Contingencies and Geographic Supply Concentrations.

In February 2026, the United States Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs, effectively invalidating the tariffs imposed via that method.

These IEEPA tariffs stopped being collected on February 24, 2026.

The Supreme Court’s ruling left open the questions of whether, how, and when payors of the tariffs might receive refunds;

subsequently, the U.S.

government created a system through which refunds of certain entries could be processed.

A new 10% tariff has been implemented under Section 122 of the Trade Act of 1974, effective as of February 24, 2026.

Although the United States Supreme Court ruling invalidated the tariffs paid prior to February 24, 2026, as of March 31, 2026, the Company has not recorded a tariff refund receivable due to the uncertainty of the amount and collection of a refund.

It is uncertain how inflation and interest rates will be impacted in 2026 by the imposition of tariffs and other trade-related actions or inactions.

World events, such as the Russia-Ukraine War, the joint U.S.-Israeli War with Iran in 2026 and other conflicts in the Middle East, continue to negatively affect the global economy.

Additionally, civil unrest in countries where we manufacture products, like Haiti, may result in our facilities incurring damage or destruction and could interrupt our manufacturing processes and adversely affect our reputation and our relationships with our customers.

Prolonged or recurring disruptions or instability in the United States and global political and economic environments, 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, increased costs related to higher oil and natural gas prices and/or supply imbalances in the oil and natural gas markets, costs associated with complying with new or amended laws and regulations and mitigating the increased cost of the new tariffs and duties 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 and goodwill.

Results of Operations

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

For the Three Months Ended September 30,

Branded Products

Healthcare Apparel

Contact Centers

Net intersegment eliminations

Consolidated net sales

Gross margin:

Branded Products

Healthcare Apparel

Contact Centers

Net intersegment eliminations

Consolidated gross margin

Selling and administrative expenses:

Branded Products

Healthcare Apparel

Contact Centers

Intersegment Eliminations

Consolidated selling and administrative expenses

Interest expense, net

Income before income tax expense

Income tax expense

(1) Please refer to "Non-GAAP Financial Measure" below for a reconciliation of EBITDA to net (loss) income.

The Company generated net income of $2.7 million and $5.4 million during the three months ended September 30, 2025 and 2024, respectively.

The decrease in net income during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to a decrease in net sales and gross margins across all of our reportable segments, partially offset by a decrease in selling and administrative expenses.

EBITDA was $7.5 million and $11.7 million during the three months ended September 30, 2025 and 2024, respectively.

The EBITDA decrease was primarily due to the decrease in net sales and gross margins across all of our reportable segments, partially offset by a decrease in selling and administrative expenses.

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 for the Company decreased 7.5%, or $11.2 million, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The decrease was attributable to decreases in net sales across all of our reportable segments.

Branded Products net sales decreased 8.1%, or $7.5 million, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The decrease was primarily due to $8.0 million in timing of orders delivered in the prior quarter and lower sales volume and pricing from existing customers.

These were partially offset by a $2.9 million increase resulting from revenue generated by 3Point following the acquisition in December 2024.

Healthcare Apparel net sales decreased 4.6%, or $1.5 million, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The decrease was primarily due to volume decreases within existing customer accounts.

Contact Centers net sales decreased 9.5% or $2.4 million, before intersegment eliminations for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The 9.5% decrease versus the year-ago quarter reflects continued macroeconomic headwinds, which continue to contribute to client downsizing and client attrition outpacing new customer acquisitions.

Gross margin rate for the Company was 38.3% for the three months ended September 30, 2025 and 40.4% for the three months ended September 30, 2024.

Gross margin rate for our Branded Products segment was 34.8% for the three months ended September 30, 2025 and 36.2% for the three months ended September 30, 2024.

The decrease in the gross margin rate was attributable to customer sales mix for the three months ended September 30, 2025.

Gross margin rate for our Healthcare Apparel segment was 38.5% for the three months ended September 30, 2025 and 41.8% for the three months ended September 30, 2024.

The gross margin rate decreased as compared to the prior year period due to product cost reductions in the prior year.

Gross margin rate for our Contact Centers segment was 52.9% for the three months ended September 30, 2025 and 54.9% for the three months ended September 30, 2024.

The decrease in the gross margin rate was attributable to higher agent costs and unfavorable margin mix associated with the closure of our Jamaica contact center.

Selling and Administrative Expenses

As a percentage of net sales, total selling and administrative expenses was 35.0% for the three months ended September 30, 2025 and for the three months ended September 30, 2024.

As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 27.6% for the three months ended September 30, 2025 and 26.2% for the three months ended September 30, 2024.

The rate increase was primarily related to expense deleverage from the net sales decrease for the three months ended September 30, 2025.

The decrease in selling and administrative expenses of $0.7 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was due to lower employee related costs driven by headcount reductions.

As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 31.0% for the three months ended September 30, 2025 and 34.0% for the three months ended September 30, 2024.

The rate decrease was primarily due to lower employee related costs.

As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 45.4% for the three months ended September 30, 2025 which improved slightly from 45.9% for the three months ended September 30, 2024.

The rate decreased as compared to the prior year period driven by a prior year increase in credit loss reserve and lower employee related costs in the current period.

Selling and administrative expenses for Other, which represents Corporate costs, decreased primarily due to lower employee related costs.

Interest Expense, Net

Interest expense, net decreased to $1.4 million for the three months ended September 30, 2025 from $1.6 million for three months ended September 30, 2024.

This decrease was due to a lower weighted average interest rate on those borrowings from 6.3% for the three months ended September 30, 2024 to 5.4% for the three months ended September 30, 2025.

Income tax expense decreased to $0.4 million for the three months ended September 30, 2025 from $1.2 million for the three months ended September 30, 2024.

The effective tax rate was 13.9% and 17.8% for the three months ended September 30, 2025 and 2024, respectively.

Income tax expense and the effective tax rate for the three months ended September 30, 2025 and September 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 three months ended September 30, 2025 and 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.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

For the Nine Months Ended September 30,

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025 (in thousands)

For the Three Months Ended March 31,

Branded Products

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Interest expense, net

Income before income tax expense

Income tax expense

Income (loss) before income tax expense

Income tax expense (benefit)

Net income (loss)

(1) Please refer to "Non-GAAP Financial Measure" below for a reconciliation of EBITDA to net (loss) income.

The Company generated net income of $3.5 million and $9.9 million during the nine months ended September 30, 2025 and 2024, respectively.

The decrease in net income during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to lower gross margins at all three of our reportable segments, partially offset by a decrease in interest expense.

EBITDA was $17.1 million and $26.8 million during the nine months ended September 30, 2025 and 2024, respectively.

The EBITDA decrease was primarily due to lower gross margins at all three of our reportable segments.

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 for the Company decreased 0.2% or $0.7 million, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The decrease was attributable to decreases in net sales in our Healthcare Apparel and Contact Centers reportable segments.

Branded Products net sales increased 1.3%, or $3.3 million, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The increase was due to a $9.1 million increase resulting from revenue generated by 3 Point following the acquisition in December 2024, offset by a decrease within existing large enterprise accounts.

Healthcare Apparel net sales decreased 2.0% or $1.8 million, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The decrease was primarily due to volume decreases within existing customer accounts.

Contact Centers net sales decreased 3.5% or $2.6 million, before intersegment eliminations for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The 3.5% decrease versus the year-ago period reflects continued macroeconomic headwinds, which continue to contribute to client downsizing and client attrition outpacing new customer acquisitions.

Gross margin rate for the Company was 37.9% for the nine months ended September 30, 2025 and 39.6% for the nine months ended September 30, 2024.

The gross margin rate decrease was driven by gross margin rate decreases in all three of our reportable segments.

Gross margin rate for our Branded Products segment was 34.2% for the nine months ended September 30, 2025 and 35.8% for the nine months ended September 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 37.1% for the nine months ended September 30, 2025 and 40.0% for the nine months ended September 30, 2024.

The gross margin rate decreased as compared to the prior year period due to product cost reductions in the prior year and during the current year $0.6 million higher tariff costs in advance of price increases to our customers.

Gross margin rate for our Contact Centers segment was 53.0% for the nine months ended September 30, 2025, down slightly from 53.6% for the nine months ended September 30, 2024.

The Company generated net income of $0.8 million and a net loss of ($0.8) million during the three months ended March 31, 2026 and 2025, respectively.

The increase in net income for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 is inclusive of $1.0 million of severance payments in the Healthcare Apparel reportable segment, and was primarily due to an increase in consolidated gross margins across our Branded Products and Healthcare Apparel reportable segments, along with a decrease in consolidated interest expense, net.

EBITDA was $4.8 million and $3.5 million during the three months ended March 31, 2026 and 2025, respectively.

The EBITDA increase was primarily due to increased earnings driven by the increase in consolidated gross margins.

For a reconciliation of EBITDA to net income, its most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), please read “Non-GAAP Financial Measure” below.

Net sales for the Company increased 2.8%, or $3.8 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The increase was attributable to increases in net sales in our Branded Products and Healthcare Apparel reportable segments, partially offset by a decline in our Contact Centers segment.

Branded Products net sales increased 5.1%, or $4.4 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The increase was primarily due to volume increases in branded uniform apparel within existing customer accounts.

Healthcare Apparel net sales increased 4.9%, or $1.3 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The increase was primarily due to volume increases within existing customer accounts.

Contact Centers net sales decreased 8.1% or $2.0 million, before intersegment eliminations for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The 8.1% decrease versus the year-ago quarter reflects prior year client attrition that exceeded growth from new customer acquisitions.

Gross margin rate for the Company was 37.1% for the three months ended March 31, 2026 and 36.8% for the three months ended March 31, 2025.

The rate increase was due to an improvement in gross margin rates in our Branded Products segment.

Gross margin rate for our Branded Products segment was 34.1% for the three months ended March 31, 2026 and 32.0% for the three months ended March 31, 2025.

The rate increase was primarily driven by a favorable shift in the mix of pricing and customers.

Gross margin rate for our Healthcare Apparel segment was 35.6% for the three months ended March 31, 2026 and 37.2% for the three months ended March 31, 2025.

The rate decrease was primarily driven by higher costs compared to the prior year period driven by increased sales with lower margin existing customers.

Gross margin rate for our Contact Centers segment was 52.2% for the three months ended March 31, 2026 and 53.6% for the three months ended March 31, 2025.

The decrease in the gross margin rate was primarily attributable to higher employee related costs as compared to the prior year period.

Selling and Administrative Expenses

As a percentage of net sales, total selling and administrative expenses was 36.0% for the nine months ended September 30, 2025 and 35.7% for the nine months ended September 30, 2024.

As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 27.4% for the nine months ended September 30, 2025 and 27.0% for the nine months ended September 30, 2024.

The increase in selling and administrative expenses of $1.9 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was driven by increased sales resulting in higher sales commission expense, an adjustment to credit loss reserves of $0.5 million and increased costs from 3Point acquired in December 2024, offset by lower employee related costs driven by headcount reductions.

As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 33.8% for the nine months ended September 30, 2025 and 34.8% for the nine months ended September 30, 2024.

The rate decrease as compared to the prior year period was primarily driven by a decrease in depreciation expense and lower employee related costs.

As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 46.3% for the nine months ended September 30, 2025 and 44.2% for the nine months ended September 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, are consistent with the prior year period.

Selling and administrative expenses were relatively flat for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

As a percentage of net sales, total selling and administrative expenses was 35.8% for the three months ended March 31, 2026 and 36.5% for the three months ended March 31, 2025.

The rate decrease was due to an improvement in selling and administrative expenses as a percentage of net sales rates in our Contact Centers segment and a reduction in Other selling and administrative expenses.

Branded Products selling and administrative expense increased $1.3 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to increased commission expense.

As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 27.2% for the three months ended March 31, 2026,up slightly from 27.1% for the three months ended March 31, 2025.

Healthcare Apparel selling and administrative expense increased $1.3 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to $1.0 million employee severance costs and higher digital media costs.

As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 37.7% for the three months ended March 31, 2026 and 34.9% for the three months ended March 31, 2025.

Contact Centers selling and administrative expense decreased $1.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to cost reductions implemented in 2025 related to closure of its Jamaica office and elimination of various administrative support costs.

As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 43.0% for the three months ended March 31, 2026 and 45.1% for the three months ended March 31, 2025.

Selling and administrative expenses for Other, which represents Corporate costs, decreased $0.9 million primarily due to lower third party professional services related expenses and lower stock-based compensation expenses.

Interest Expense, Net

Interest expense, net decreased to $3.9 million for the nine months ended September 30, 2025 from $4.9 million for nine months ended September 30, 2024.

This decrease was due to a lower weighted average interest rate on those borrowings from 6.5% for the nine months ended September 30, 2024 to 5.4% for the nine months ended September 30, 2025.

Income tax expense decreased to $0.6 million for the nine months ended September 30, 2025 from $1.9 million for the nine months ended September 30, 2024.

The effective tax rate was 14.1% and 16.1% for the nine months ended September 30, 2025 and 2024, respectively.

Income tax expense and the effective tax rate for the nine months ended September 30, 2025 and September 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 nine months ended September 30, 2025 and 2024 totaling $1.0 million and $0.5 million respectively.

Interest expense, net decreased to $0.9 million for the three months ended March 31, 2026 from $1.2 million for the three months ended March 31, 2025.

This decrease was due to a lower weighted average interest rate on those borrowings from 5.4% for the three months ended March 31, 2025 to 4.9% for the three months ended March 31, 2026.

Income tax expense increased to $0.2 million for the three months ended March 31, 2026 from a benefit of $0.1 million for the three months ended March 31, 2025.

The effective tax rate was 20.9% and 16.3% for the three months ended March 31, 2026 and 2025, respectively.

Income tax expense and the effective tax rate for the three months ended March 31, 2026 and March 31, 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 rate was further impacted by discrete items related to the Company’s share-based compensation and long-term incentive plans during the current quarter.

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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.

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 and operating leases and fund capital expenditures, dividends, stock repurchases, any potential merger and acquisition activity and other general corporate purposes.

Management 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

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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.

The Company's material contractual obligations include outstanding debt, long-term pension liability, operating leases, acquisition-related contingent liabilities and non-qualified deferred compensation plan liabilities in Other Liabilities.

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Capital expenditures

Capital expenditures were $3.4 million and $2.9 million for the nine months ended September 30, 2025 and 2024, respectively.

Capital expenditures were $0.6 million and $1.1 million for the three months ended March 31, 2026 and 2025, respectively.

Sources of Capital and Liquidity

Cash Flows from Operations

Net cash provided by operating activities primarily results from cash collected from our segments' customers, offset by cash payments made for raw materials, finished goods, salaries and payroll-related benefits, leases and other general corporate expenditures.

For the nine months ended September 30, 2025, net cash provided by operating activities was $1.3 million.

Cash collections from customers exceeded aggregate cash payments to vendors, lessors and employees.

These cash collections were offset by cash payments including $10.5 million of cash outflows for inventory purchases.

The inventory balance is up from the prior year primarily due to the sales decrease in Healthcare Apparel, as well as, the timing of purchases.

For the nine months ended September 30, 2024, net cash provided by operating activities was $24.5 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.

Net cash provided by operating activities primarily results from cash collected from customers for our promotional products, branded uniforms, healthcare apparel and accessories, offset by cash payments made for raw materials, finished goods, salaries and payroll related benefits, leases and other general corporate expenditures

For the three months ended March 31, 2026, net cash provided by operating activities was $9.4 million.

Cash collections from customers exceeded aggregate cash payments to vendors, lessors and employees primarily driven by the Company's collection of receivable balances.

For the three months ended March 31, 2025, net cash used in operating activities was $2.0 million.

Lower net sales and cash collections, as well as higher costs of goods sold resulted in net cash used in operating activities.

In addition, inventory increased resulting in a use of cash of $2.2 million.

Credit Facilities and Debt Activity

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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 nine months ended September 30, 2025, the Company had $76.0 million in borrowings and $58.0 million in payments on the revolving credit facility.

For the nine months ended September 30, 2025, the Company had $4.2 million in payments on the term loan.

For the nine months ended September 30, 2024, the Company had $31.0 million in borrowings and $37.0 million in payments on the revolving credit facility.

For the nine months ended September 30, 2024, the Company had $3.3 million in payments on the term loan.

For the three months ended March 31, 2026, the Company had $10.0 million in borrowings and $15.0 million in payments on the revolving credit facility.

For the three months ended March 31, 2026, the Company had $1.4 million in payments on the term loan.

For the three months ended March 31, 2025, the Company had $19.0 million in borrowings and $8.0 million in payments on the revolving credit facility.

For the three months ended March 31, 2025, the Company had $1.4 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.

Please refer to Note 5 to our 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 nine months ended September 30, 2025 and 2024, the Company paid cash dividends of $6.7 million and $7.0 million, respectively.

During the three months ended March 31, 2026 and 2025, the Company paid cash dividends of $2.2 million and $2.3 million, respectively.

The Company anticipates that it will continue to pay dividends in the future as financial conditions permit.

On September 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 September 20, 2025 and ending on the earlier of the date on which the Repurchase Limit is reached or other events specified in the Plan.

On March 20, 2026, the “Company entered into a 10b5-1 trading plan (the “Plan”) for the purpose of repurchasing up to $2.5 million in 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 "Exchange Act").

The Plan allows the Company to repurchase shares up to the Repurchase Limit commencing March 21, 2026 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.

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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, 2025.

The preparation of our financial statements in conformity with GAAP requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities and disclosures at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

There have been no material changes to the critical accounting estimates disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024, except that the critical accounting estimate set forth under, “Annual Impairment Tests” is updated as follows:

Annual Impairment Tests:

The Company performs its goodwill and indefinite-lived intangible impairment tests annually or more frequently as events or changes in circumstances warrant.

The timing of the annual impairment tests was changed to August 31 st , and historically was performed during the fourth quarter.

Indefinite-lived Intangible Assets:

As of August 31, 2025, the Company performed its annual impairment test for its indefinite-lived trade name intangible assets which did not result in an impairment.

We conducted a quantitative assessment using the relief-from-royalty method, which we believe to be an acceptable methodology due to its common use by valuation specialists in determining the fair value of intangible assets.

This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these assets.

The assumptions that have the most significant effect on the fair value calculations are the royalty rates, projected revenue growth rates, discount rates, and terminal values.

Each royalty rate is determined based on the profitability of the trade name to which it relates.

In determining the fair value of our trade name indefinite lived intangible assets as of August 31, 2025, we used the following key assumptions:

• Royalty rates of 0.75% - 3.0%;

• A tax rate of 27.0%;

• A long-term growth rate of 3.0%;

• Assumed discount rates of 14.5% - 16.5%

The discounted cash flow approach that we use for valuing goodwill as part of our impairment testing approach involves estimating future cash flows expected to be generated from the related assets, discounted to their present value using a risk-adjusted discount rate.

Terminal values are also estimated and discounted to their present value.

Assessing the recoverability of goodwill requires us to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on our forecasts, business plans, economic projections, anticipated future cash flows and marketplace data.

We performed our annual impairment test as of August 31, 2025, which did not result in any goodwill impairment.

In determining the fair value of our reporting unit, we used the following assumptions:

Expected cash flows underlying our business plans for the initial five-year period were based on a detailed, multi-year forecast performed by our BAMKO reporting unit;

Long-term growth rate of 3.0%;

Discount rate of 14.0%

Non-GAAP Financial Measure

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The following table reconciles net income to EBITDA (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net income (loss)

Interest expense, net

Income tax expense

Income tax expense (benefit)

Depreciation and amortization

Impairment charge

Cautionary Note Regarding Forward Looking Statements

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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 September 30, 2025 .

and other factors described in the Company’s filings with the Securities and Exchange Commission (the "SEC"), including those risks described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 entitled "Risk Factors" and other disclosures contained therein and in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 .

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis