SUPERIOR GROUP OF COMPANIES, INC.

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

See accompanying Condensed Notes to the Consolidated Financial Statements.

Superior Group of Companies**, Inc. and Subsidiaries**

Condensed Notes to the****Consolidated Financial Statements (Unaudited)

NOTE1 – 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 in1920 and was incorporated in1922 as a New York company under the name Superior Surgical Mfg. Co., Inc. In1998, 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 throughthird 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 (throughthird 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 Form10-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 arenot 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 thefourth quarter or when an indicator of impairment existed. During thethird quarter of2025, 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 31st. Historically the annual test was performed during thefourth* 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 didnot represent a material change to the Company’s method of applying the accounting principle and wasnot retrospectively applied because the Company didnot carry a goodwill balance in2024 prior to thefourth quarter of2024. No impairments were identified during thethird quarter2025 annual goodwill and indefinite-lived intangible impairment tests.

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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 Note7 Inventories. These reclassifications didnot 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 PronouncementsNot Yet Adopted**

In* December 2023,the FASB issued ASU2023*-09, "Income Taxes (Topic740*)—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 havenot* 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 willnot* affect the Company’s consolidated results of operations, financial position or cash flows.

In* November 2024,the FASB issued ASU2024*-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220*-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 ASU2025*-05, "Financial Instruments - Credit Losses (Topic326*): Measurement of Credit Losses for Accounts Receivable and Contract Assets**". The FASB issued ASU2025*-05 to simplify the application of the current expected credit loss (CECL) model to short-term receivables and contract assets under ASC606. 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 Topic606, 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.

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NOTE2 –** 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 (throughthird 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’stwo 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 arenot 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 isnot presented as this information isnot 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):

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The following table reconciles income before income tax expense to Segment EBITDA (in thousands):

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NOTE3 – 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 withno 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 isnot 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* mayinvolve 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 willnot* occur when the uncertainty associated with the variable consideration is resolved. The promised amount of consideration in a contract isnot 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 beone 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 beone year or less.

For further information regarding our net sales disaggregated by reportable segment see Note2.

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 Topic606. Sales under bill-and-hold arrangements totaled $10.6 million and $10.5 million, for thethree months ended* September 30, 2025and2024*, respectively. Sales under bill-and-hold arrangements totaled $30.1 million and $24.1 million, for thenine months ended* September 30, 2025and2024*, 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):

Contract assets relate to goods produced without an alternative use for which the Company has an enforceable right to payment but which hasnot 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 thenine months ended* September 30, 2025*, $2.6 million of revenue was recognized from the contract liabilities balance as of* December 31, 2024*.

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NOTE4 – 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:

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 thethree months ended* September 30, 2025and2024*, respectively, but werenot 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 thenine months ended* September 30, 2025and2024*, respectively, but werenot 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.

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NOTE5 – Long-Term Debt:

Debt consisted of the following (in thousands):

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 wereno outstanding letters of credit under the revolving credit facility.

Contractual principal payments for the term loan, which doesnot contain pre-payment penalties, are as follows: remainder of2025 - $1.4 million;2026 - $6.6 million; and2027 - $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 butnot 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 to1.0 and a net leverage rationot to exceed 4.0 to1.0. 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 thefour most recently ended fiscal quarters. As of* September 30, 2025*, the Company was in compliance with these ratios.

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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 2022included contingent consideration based on varying levels of Guardian’s EBITDA in each measurement period through April 2025.In thethird* quarter of2025 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 of3Point in* December 2024included 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 thesecond quarter of2026. The total payments related to this contingent consideration payable is capped at $0.9 million per year and $2.6 million over thethree-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* mayfluctuate 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 isnot 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 doesnot 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.

During2025 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.

NOTE7 – Inventories:

Inventories consisted of the following amounts (in thousands):

(1) Certain raw materials were reclassified to finished goods in the current period and the December 31, 2024balances were adjusted to the current period presentation.

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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, butnot 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 thethree months ended* September 30, 2025*, the Company recorded tax expense of $0.4 million, which represents an effective tax rate of 13.9%. For thenine 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 thethree andnine 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 thethree andnine months ended* September**30,* 2025, totaling $0.3 million and $1.0 million, respectively.

For thethree 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 thenine* 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 thethree* andnine 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 in2025* and others implemented through2027. The Company has considered the impact of OBBBA on its annual effective tax rate. These changes didnot 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.

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NOTE*9*** – Other Information****:**

The activity in the allowance for doubtful accounts receivable was as follows (in thousands):

Other current liabilities consisted of the following (in thousands):

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