SUPERIOR GROUP OF COMPANIES, INC.
For the period ended Jun 30, 2026. Filed Aug 4, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 4, 2026
SGC$13.44+1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-04.
0001437749-26-014543
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0001437749-26-025511
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 77 previous paragraphs and 116 current paragraphs.
42 unchanged; 30 reworded; 37 added; 5 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
The Company generated net income of $1.2 million and $1.6 million during the three months ended June 30, 2026 and 2025, respectively. The decrease in net income for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was due to a significant decline in our Healthcare Apparel segment results, primarily driven by a trade name impairment charge and write-down of inventory, partially offset by net tariff refunds. This decline was partially offset by growth in our Branded Products and Contact Centers segments.
Current report
Adjusted EBITDA
Current report
Healthcare Apparel net sales decreased 3.6%, or $1.0 million, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to tariff refunds.
Current report
Gross margin rate for our Healthcare Apparel segment was 32.9% for the three months ended June 30, 2026 and 35.5% for the three months ended June 30, 2025. The rate decrease was primarily driven by the impact of a $2.6 million additional write-down of inventory, partially offset by $1.8 million of net tariff refunds.
Current report
Selling and administrative expenses decreased $0.9 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. As a percentage of net sales, total selling and administrative expenses was 34.7% for the three months ended June 30, 2026 and 36.3% for the three months ended June 30, 2025. The rate decrease was driven by expense leverage in our Branded Products segment and lower expenses in our Contact Centers segments.
Current report
Branded Products selling and administrative expenses increased $0.6 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. As a percentage of net sales, selling and administrative expenses was 26.4% for the three months ended June 30, 2026, down slightly from 27.5% for the three months ended June 30, 2025 driven by expense leverage from the second quarter sales increase.
Current report
Healthcare Apparel selling and administrative expenses decreased $0.1 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Selling and administrative expenses as a percentage of net sales increased to 36.5% for the three months ended June 30, 2026 from 35.7% for the three months ended June 30, 2025.
Current report
Contact Centers selling and administrative expenses decreased $1.3 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 due to a reduction in credit loss expense as compared to the prior year period. As a result, selling and administrative expenses as a percentage of net sales decreased to 44.8% for the three months ended June 30, 2026 from 48.4% for the three months ended June 30, 2025.
Current report
Corporate selling and administrative expenses were about flat to last year.
Current report
Intangible Assets Impairment Charge
Current report
As a result of an interim impairment assessment, an impairment charge totaling $2.6 million was recognized in the second quarter of 2026 to reduce the carrying value of Healthcare Apparel trade names to their estimated fair value.
Current report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025 (in thousands)
Current report
Net Income
Current report
Adjusted EBITDA
Current report
Net Sales
Current report
Branded Products net sales increased 5.7% or $10.1 million, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was primarily due to $11.9 million of volume increases within existing customer accounts partially offset by tariff refunds.
Current report
Gross Margin
Current report
Gross margin rate for the Company was 37.6% for the six months ended June 30, 2026 and 2025.
Current report
Gross margin rate for our Healthcare Apparel segment was 34.3% for the six months ended June 30, 2026 and 36.3% for the six months ended June 30, 2025. The rate decrease was primarily driven by the impact of a $2.6 million additional write-down of inventory, partially offset by $1.8 million net tariff refunds.
Current report
Selling and Administrative Expenses
Current report
Interest Expense, Net
Current report
Interest expense, net decreased to $1.9 million for the six months ended June 30, 2026 from $2.5 million for the six months ended June 30, 2025. This decrease was due to a lower weighted average interest rate on borrowings, from 5.6% for the six months ended June 30, 2025 to 4.8% for the six months ended June 30, 2026.
Current report
Intangible Assets Impairment Charge
Current report
As a result of an interim impairment assessment, an impairment charge totaling $2.6 million was recognized in the second quarter of 2026 to reduce the carrying value of Healthcare Apparel trade names to their estimated fair value.
Current report
Income Taxes
Current report
Capital expenditures were $1.9 million and $2.7 million for the six months ended June 30, 2026 and 2025, respectively.
Current report
For the six months ended June 30, 2026, net cash provided by operating activities was $17.7 million. Cash collections from customers exceeded aggregate cash payments to vendors, lessors and employees, primarily driven by the Company's collection of receivable balances and by reduced inventory purchasing, which provided $2.4 million of cash in the current period compared to $10.7 million of cash outflows in the prior year period. These sources were partially offset by an $8.2 million increase in contract assets.
Current report
Interim Impairment Tests:
Current report
The Company performs its goodwill and indefinite-lived intangible impairment tests annually as of August 31st or more frequently as events or changes in circumstances warrant.
Current report
Indefinite-lived Intangible Assets:
Current report
An indicator of impairment related to the CID Resources indefinite lived intangible assets was identified during the second quarter of 2026 for which a quantitative interim impairment test was performed. 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. The impairment was primarily driven by updated assumptions reflecting lower expected future sales and profitability of the brands.
Current report
In determining the fair value of our trade name indefinite lived intangible assets as of June 30, 2026, we used the following key assumptions:
Current report
• Royalty rates of 0.5% - 2.5%;
Current report
• A tax rate of 27.0%;
Current report
• A long-term growth rate of 3.0%; and
Current report
• Assumed discount rate of 17.0%.
Current report
As a result of the impairment assessment, an impairment charge totaling $2.6 million was recognized in the second quarter of 2026 to reduce the carrying value of the trade names to their estimated fair value.
Removed paragraphs (5)
Previous report
EBITDA
Previous report
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.
Previous report
Capital expenditures were $0.6 million and $1.1 million for the three months ended March 31, 2026 and 2025, respectively.
Previous report
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.
Previous report
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.
Reworded paragraphs (30)
Previous wording
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.*”
Current wording
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 and during the six months ended June 30, 2026, the Company recorded a consolidated duties receivable of $2.3 million within other current assets through a reduction of inventory and reversal of cost of goods sold of $0.4 million, primarily in its Healthcare Apparel segment of which the majority has been collected. 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.*”
Previous wording
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.
Current wording
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. The Company's accounting policy is to recognize tariff refunds (as a reduction of cost of goods sold) when the refund is probable and recognize corresponding refunds to customers (as a reduction of net sales) where contractually required or an implicit obligation exists. As of June 30, 2026, the Company has recorded a $4.3 million tariff refund, of which $3.1 million has been received in cash and corresponding refunds to customers of $2.7 million. The U.S. government implemented a new 10.0% tariff under Section 122 of the Trade Act of 1974, effective as of February 24, 2026. This tariff terminated on July 24, 2026. The U.S. government implemented new tariffs generally ranging from 10.0% to 12.5% under Section 301 of the Trade Act of 1974, effective as of July 24, 2026.
Previous wording
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.
Current wording
It is uncertain how inflation and interest rates will be impacted during the remainder of this year and in future years 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.
Previous wording
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.
Current wording
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 additional impairment of the carrying value of indefinite-lived intangible assets and potentially goodwill.
Previous wording
(1) Please refer to "Non-GAAP Financial Measure" below for a reconciliation of EBITDA to net (loss) income.
Current wording
(1) Please refer to "Non-GAAP Financial Measure" below for a reconciliation of Adjusted EBITDA to net income.
Previous wording
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.
Current wording
Adjusted EBITDA was $7.7 million and $6.1 million during the three months ended June 30, 2026 and 2025, respectively. The Adjusted EBITDA increase was primarily due to growth in our Branded Products and Contact Centers segments, partially offset by a decline in our Healthcare Apparel segment. For a reconciliation of Adjusted 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.
Previous wording
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.
Current wording
Net sales for the Company increased 2.6%, or $3.8 million, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was attributable to increases in net sales in our Branded Products segment, partially offset by declines in our Healthcare Apparel and Contact Centers segments.
Previous wording
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.
Current wording
Branded Products net sales increased 6.2%, or $5.7 million, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily due to volume increases of $7.5 million within existing customer accounts, partially offset by tariff refunds.
Previous wording
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.
Current wording
Contact Centers net sales decreased 3.7% or $0.9 million, before intersegment eliminations for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The 3.7% decrease versus the prior period reflects client attrition that exceeded growth from new customer acquisitions.
Previous wording
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.
Current wording
Gross margin rate for the Company was 38.0% for the three months ended June 30, 2026 and 38.4% for the three months ended June 30, 2025. The rate decrease was primarily due to lower gross margin rates in our Healthcare Apparel and Contact Centers segments.
Previous wording
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.
Current wording
Gross margin rate for our Branded Products segment was 36.5% for the three months ended June 30, 2026 and 35.6% for the three months ended June 30, 2025. The rate increase was primarily driven by a favorable shift in the mix of pricing and customers.
Previous wording
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.
Current wording
Gross margin rate for our Contact Centers segment was 50.9% for the three months ended June 30, 2026 and 52.6% for the three months ended June 30, 2025. The decrease in the gross margin rate was primarily attributable to higher employee-related costs as compared to the prior year period.
Previous wording
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.
Current wording
Interest expense, net decreased to $1.0 million for the three months ended June 30, 2026 from $1.3 million for the three months ended June 30, 2025. This decrease was due to a lower weighted average interest rate on borrowings, from 5.6% for the three months ended June 30, 2025 to 4.8% for the three months ended June 30, 2026.
Previous wording
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.
Current wording
The Company generated net income of $2.1 million and $0.8 million during the six months ended June 30, 2026 and 2025, respectively. The increase in net income for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to growth in our Branded Products and Contact Centers segments along with a decrease in consolidated interest expense, net partially offset by a loss in our Healthcare Apparel segment.
Previous wording
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.
Current wording
Healthcare Apparel net sales increased 0.6% or $0.3 million, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was primarily due to volume increases within existing customer accounts partially offset by tariff refunds.
Previous wording
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.
Current wording
Selling and administrative expenses decreased $0.6 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. As a percentage of net sales, total selling and administrative expenses was 35.2% for the six months ended June 30, 2026 and 36.4% for the six months ended June 30, 2025. The rate decrease was due to an improvement in selling and administrative expenses as a percentage of net sales rates in our Branded Products and Contact Centers segments, partially offset by an increased rate in our Healthcare Apparel segment.
Previous wording
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.
Current wording
Branded Products selling and administrative expense increased $1.9 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to increased commission expense from increased gross margin. As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 26.8% for the six months ended June 30, 2026, down slightly from 27.3% for the six months ended June 30, 2025.
Previous wording
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.
Current wording
Healthcare Apparel selling and administrative expense increased $1.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to $1.0 million of employee severance costs. As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 37.1% for the six months ended June 30, 2026 and 35.3% for the six months ended June 30, 2025.
Previous wording
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.
Current wording
Contact Centers selling and administrative expense decreased $2.6 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to a reduction in credit loss expense as compared to the prior year period and cost reductions implemented in 2025 related to the closure of our Jamaica office. As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 43.9% for the six months ended June 30, 2026 and 46.7% for the six months ended June 30, 2025.
Previous wording
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.
Current wording
Corporate selling and administrative expenses decreased $0.8 million primarily due to lower third-party professional services and lower share-based compensation expenses.
Previous wording
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. 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.
Current wording
Income tax expense increased to $0.2 million for the six months ended June 30, 2026 from $0.1 million for the six months ended June 30, 2025. The effective tax rate was 9.3% and 14.7% for the six months ended June 30, 2026 and 2025, respectively. Income tax expense and the effective tax rate for the six months ended June 30, 2026 was primarily impacted by the discrete tax benefit relating to the $2.6 million trade name impairment charge recorded during the current quarter, as well as items related to the Company’s share-based compensation and long-term incentive plans. The rate for both periods was further impacted by the variability in the mix of earnings across the Company’s foreign and domestic operations, which are subject to various statutory tax rates in those jurisdictions. The effective tax rate may vary from quarter to quarter due to discrete, unusual or non-recurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, or other items.
Previous wording
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.
Current wording
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 any potential merger and acquisition activity, capital expenditures, dividends, stock repurchases 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.
Previous wording
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.
Current wording
For the six months ended June 30, 2025, net cash provided by operating activities was $2.9 million. Cash collections from customers exceeded aggregate cash payments to vendors, lessors, employees and lenders. These cash payments included $10.7 million of cash outflows for inventory purchases, up from the prior year primarily due to the timing of purchases.
Previous wording
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.
Current wording
For the six months ended June 30, 2026, the Company had $26.0 million in borrowings and $35.0 million in payments on the revolving credit facility. For the six months ended June 30, 2026, the Company had $2.8 million in payments on the term loan.
Previous wording
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.
Current wording
For the six months ended June 30, 2025, the Company had $57.0 million in borrowings and $41.0 million in payments on the revolving credit facility. For the six months ended June 30, 2025, the Company had $2.8 million in payments on the term loan.
Previous wording
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.
Current wording
During the six months ended June 30, 2026 and 2025, the Company paid cash dividends of $4.4 million and $4.5 million, respectively. The Company anticipates that it will continue to pay dividends in the future as financial conditions permit.
Previous wording
EBITDA, which is a non-GAAP financial measure, is defined as net income excluding interest expense, net, income tax expense, depreciation and amortization expense and impairment charges. The Company believes EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the Company’s core operating results from period to period by removing (i) the impact of the Company’s capital structure (interest expense from outstanding debt), (ii) tax consequences and (iii) asset base (depreciation and amortization). The Company uses EBITDA internally to monitor operating results and to evaluate the performance of its business. In addition, the compensation committee has used EBITDA in evaluating certain components of executive compensation, including performance-based annual incentive programs.
Current wording
Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income excluding interest expense, net, income tax expense, depreciation and amortization expense and impairment charges. The Company believes Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the Company’s core operating results from period to period by removing (i) the impact of the Company’s capital structure (interest expense from outstanding debt), (ii) tax consequences, (iii) asset base (depreciation and amortization) and (iv) impairments. The Company uses Adjusted EBITDA internally to monitor operating results and to evaluate the performance of its business. In addition, the compensation committee has used Adjusted EBITDA in evaluating certain components of executive compensation, including performance-based annual incentive programs.
Previous wording
EBITDA is not a measure of financial performance under GAAP. EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate EBITDA are significant components in understanding and assessing the Company’s results of operations. The Company’s EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner.
Current wording
Adjusted EBITDA is not a measure of financial performance under GAAP. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate Adjusted EBITDA are significant components in understanding and assessing the Company’s results of operations. The Company’s Adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate Adjusted EBITDA in the same manner.
Previous wording
The following table reconciles net income to EBITDA (in thousands):
Current wording
The following table reconciles net income to Adjusted EBITDA (in thousands):
Previous wording
Such forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect the anticipated results. Such risks and uncertainties include, but are not limited to, the following: the impact of competition; uncertainties related to tariffs, duties,**trade wars and related matters, supply disruptions, inflationary environments (including with respect to shipping costs and the cost of finished goods and raw materials and shipping costs), employment levels (including labor shortages), and general economic and political conditions in the areas of the world in which the Company operates or from which it sources its supplies or the areas of the United States of America (“U.S.”* or*“United States”) in which the Company’s customers are located; changes in the healthcare, retail chain, food service, transportation and other industries where uniforms and service apparel are worn; our ability to identify suitable acquisition targets, discover liabilities associated with such businesses during the diligence process, successfully integrate any acquired businesses, or successfully manage our expanding operations; the price and availability of raw materials; attracting and retaining senior management and key personnel;the Company’*s ability*to maintain effective internal control over financial reporting;and other factors described in the Company’s filings with the Securities and Exchange Commission (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. The forward-looking statements made herein are only made as of the date of this Form 10-Q and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law.*
Current wording
Such forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect the anticipated results. Such risks and uncertainties include, but are not limited to, the following: the impact of competition; the impact of global conflicts, such as the Russia-Ukraine War and the joint U.S.-Israeli War with Iran in 2026,**uncertainties related to tariffs, duties, trade wars and related matters, supply disruptions, inflationary environments (including with respect to shipping costs and the cost of finished goods and raw materials and shipping costs), employment levels (including labor shortages), and general economic and political conditions in the areas of the world in which the Company operates or from which it sources its supplies or the areas of the United States of America (“U.S.”* or*“United States”) in which the Company’s customers are located; changes in the healthcare, retail chain, food service, transportation and other industries where uniforms and service apparel are worn; our ability to identify suitable acquisition targets, discover liabilities associated with such businesses during the diligence process, successfully integrate any acquired businesses, or successfully manage our expanding operations; the price and availability of raw materials; attracting and retaining senior management and key personnel;the Company’*s ability*to maintain effective internal control over financial reporting;and other factors described in the Company’s filings with the Securities and Exchange Commission (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 June 30, 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. The forward-looking statements made herein are only made as of the date of this Form 10-Q and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law.*
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
An income tax benefit of ($0.01) million was recognized for the three months ended June 30, 2026 compared to an income tax expense of $0.3 million for the three months ended June 30, 2025. The effective tax rate was (0.8%) benefit and 15.5% expense for the three months ended June 30, 2026 and 2025, respectively. Income tax expense and the effective tax rate for the three months ended June 30, 2026 was primarily impacted by the discrete tax benefit relating to the $2.6 million trade name impairment charge recorded during the second fiscal quarter of 2026. The rate for both periods was further impacted by the variability in the mix of earnings across the Company’s foreign and domestic operations, subject to various statutory tax rates in those jurisdictions. The effective tax rate may vary from quarter to quarter due to discrete, unusual or non-recurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, or other items.
Current report — wording carried from elsewhere
(1) Please refer to "Non-GAAP Financial Measure" below for a reconciliation of Adjusted EBITDA to net income.
Current report — wording carried from elsewhere
Adjusted EBITDA was $12.5 million and $9.6 million during the six months ended June 30, 2026 and 2025, respectively. The Adjusted EBITDA increase was primarily due to growth in our Branded Products and Contact Centers segments partially offset by a loss in our Healthcare Apparel segment. For a reconciliation of Adjusted 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.
Current report — wording carried from elsewhere
Net sales for the Company increased 2.7% or $7.6 million, for the six months ended June 30, 2026 compared to the six months ended June 30, 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.
Current report — wording carried from elsewhere
Contact Centers net sales decreased 5.9% or $2.9 million, before intersegment eliminations for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The 5.9% decrease versus the prior year period reflects client attrition that exceeded growth from new customer acquisitions.
Current report — wording carried from elsewhere
Gross margin rate for our Branded Products segment was 35.3% for the six months ended June 30, 2026 and 33.9% for the six months ended June 30, 2025. The rate increase was primarily driven by a favorable shift in the mix of pricing and customers.
Current report — wording carried from elsewhere
Gross margin rate for our Contact Centers segment was 51.5% for the six months ended June 30, 2026 and 53.1% for the six months ended June 30, 2025. The decrease in the gross margin rate was primarily attributable to higher employee related costs as compared to the prior year period.