SGC's Q3 Net Income Halves Amid Sales Slump, Debt Rises

TL;DR

**SGC's Q3 results are a red flag, with net income plummeting and debt climbing – time to be cautious.**

AI Summary

SUPERIOR GROUP OF COMPANIES, INC. (SGC) reported a significant decline in net income for both the three and nine months ended September 30, 2025. For the three months, net income decreased by 49.2% to $2.744 million from $5.403 million in the prior year. Net sales also fell by 7.5% to $138.467 million from $149.690 million. The nine-month period saw an even steeper 64.3% drop in net income to $3.537 million from $9.915 million, despite a marginal 0.16% decrease in net sales to $419.609 million from $420.268 million. The Branded Products segment experienced a 8.1% decline in net sales for the three months, from $92.547 million to $85.095 million, and a 29.9% decrease in Segment EBITDA from $10.733 million to $7.524 million. The Contact Centers segment also saw a 9.5% reduction in net sales to $22.664 million, partly due to the closure of its Jamaica operations on June 15, 2025. Long-term debt increased to $93.906 million as of September 30, 2025, up from $80.410 million at December 31, 2024, indicating increased leverage. The company also repurchased and retired 699,967 common shares for $7.928 million during the nine months ended September 30, 2025.

Why It Matters

SGC's substantial decline in net income and sales, particularly in its Branded Products segment, signals potential challenges in market demand and competitive positioning. The increase in long-term debt to $93.906 million could raise concerns for investors regarding financial flexibility and future interest expenses, especially if profitability continues to erode. For employees, the closure of the Jamaica Contact Centers operation on June 15, 2025, highlights potential job insecurity in underperforming segments. Customers might experience shifts in service or product offerings as the company navigates these financial pressures, while the broader market will watch how SGC adapts its strategy in a competitive uniform and promotional products industry.

Risk Assessment

Risk Level: high — The company's net income for the nine months ended September 30, 2025, decreased by 64.3% to $3.537 million from $9.915 million in the prior year, indicating significant profitability challenges. Furthermore, long-term debt increased by 16.8% to $93.906 million from $80.410 million at December 31, 2024, raising concerns about financial leverage and liquidity, especially with net cash provided by operating activities dropping from $24.497 million to $1.270 million.

Analyst Insight

Investors should consider reducing exposure to SGC given the sharp decline in profitability and increasing debt. Monitor future filings closely for signs of stabilization in sales and net income, and evaluate management's strategy to address the Branded Products segment's underperformance and overall debt levels.

Financial Highlights

debt To Equity

0.42

revenue

$138.467M

operating Margin

2.30%

total Assets

$415.272M

total Debt

$100.000M

net Income

$2.744M

eps

$0.18

gross Margin

38.33%

cash Position

$16.651M

revenue Growth

-7.5%

Revenue Breakdown

Key Numbers

• $138.467M — Net sales for Q3 2025 (Decreased from $149.690 million in Q3 2024)
• $2.744M — Net income for Q3 2025 (Decreased from $5.403 million in Q3 2024)
• $419.609M — Net sales for nine months ended Sept 30, 2025 (Decreased from $420.268 million in the prior year period)
• $3.537M — Net income for nine months ended Sept 30, 2025 (Decreased from $9.915 million in the prior year period)
• $93.906M — Long-term debt as of Sept 30, 2025 (Increased from $80.410 million at Dec 31, 2024)
• 15,968,792 — Shares outstanding as of Oct 30, 2025 (Reflects share repurchases)
• $0.18 — Diluted net income per share for Q3 2025 (Decreased from $0.33 in Q3 2024)
• $0.23 — Diluted net income per share for nine months ended Sept 30, 2025 (Decreased from $0.60 in the prior year period)
• $1.270M — Net cash provided by operating activities for nine months ended Sept 30, 2025 (Decreased significantly from $24.497 million in the prior year period)
• $7.928M — Common shares repurchased and retired for nine months ended Sept 30, 2025 (Represents 699,967 shares)

Key Players & Entities

• SUPERIOR GROUP OF COMPANIES, INC. (company) — registrant
• BAMKO (company) — signature marketing brand in Branded Products segment
• HPI (company) — signature marketing brand in Branded Products segment
• Wink (company) — brand in Healthcare Apparel segment
• Fashion Seal Healthcare (company) — brand in Healthcare Apparel segment
• CID Resources (company) — trade name in Healthcare Apparel segment
• Carhartt Medical (company) — license in Healthcare Apparel segment
• The Office Gurus (company) — entity in Contact Centers segment
• Chief Executive Officer (person) — Company's Chief Operating Decision Maker
• FASB (regulator) — issued accounting standards updates

FAQ

Risk Factors

• Increased Leverage [medium — financial]: Long-term debt increased to $93.906 million as of September 30, 2025, from $80.410 million at December 31, 2024. This indicates a higher reliance on debt financing, potentially increasing financial risk.
• Segment Performance Decline [high — operational]: The Branded Products segment saw an 8.1% decline in net sales and a 29.9% decrease in Segment EBITDA for Q3 2025. The Contact Centers segment experienced a 9.5% reduction in net sales.
• Declining Profitability [high — financial]: Net income for Q3 2025 fell by 49.2% to $2.744 million, and for the nine months ended September 30, 2025, it dropped by 64.3% to $3.537 million. This significant decrease in profitability is a major concern.
• Reduced Operating Cash Flow [high — financial]: Net cash provided by operating activities for the nine months ended September 30, 2025, decreased significantly to $1.270 million from $24.497 million in the prior year period.
• Decreasing Net Sales [medium — market]: Net sales for Q3 2025 decreased by 7.5% to $138.467 million. While the nine-month sales saw a marginal 0.16% decrease, the trend indicates a challenging sales environment.

Industry Context

The apparel and business services sectors are subject to fluctuating consumer demand and operational complexities. Companies like Superior Group of Companies, Inc. face challenges in managing supply chains, brand perception, and the efficiency of service delivery, especially in the contact center space which is increasingly competitive and subject to technological shifts.

Regulatory Implications

As a publicly traded company, SGC is subject to SEC regulations and accounting standards. Any misstatements or failures in internal controls could lead to regulatory scrutiny and penalties. The company must also comply with labor laws and international trade regulations relevant to its global operations.

What Investors Should Do

1. Monitor debt levels and cash flow generation closely.
2. Analyze segment performance drivers for recovery.
3. Evaluate the impact of share repurchases on EPS.

Key Dates

• 2025-09-30: End of Third Quarter and Nine-Month Period — Reporting period for the financial results showing significant declines in net income and sales.
• 2025-06-15: Closure of Jamaica Operations — Contributed to the reduction in net sales for the Contact Centers segment.

Glossary

Segment EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization, calculated at the segment level. (Used to measure the profitability of individual business segments, showing a significant decline in the Branded Products segment.)

Diluted Net Income Per Share

Net income per share calculated after accounting for all dilutive potential common shares, such as stock options and convertible securities. (Reflects the earnings available to each outstanding share of common stock on a fully diluted basis, showing a sharp decrease.)

Net cash provided by operating activities

The total cash generated from a company's normal business operations over a period. (A key indicator of a company's financial health and ability to generate cash internally, which has significantly decreased.)

Contract assets

Represents the entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditional on something other than the passage of time. (Part of current assets, its change can impact working capital management.)

Year-Over-Year Comparison

Compared to the prior year, Superior Group of Companies, Inc. (SGC) has experienced a significant downturn in financial performance. Net sales for the nine months ended September 30, 2025, saw a slight decrease of 0.16% to $419.609 million, while net income plummeted by 64.3% to $3.537 million. This indicates a substantial erosion of profitability. Operating cash flow has also drastically reduced, falling from $24.497 million to $1.270 million year-over-year, signaling potential liquidity pressures. The company's long-term debt has increased, suggesting a higher leverage position.

Key Financial Figures

• $0.001 — ange on which registered Common Stock $0.001 par value per share SGC NASDAQ In

Filing Documents

• sgc20250930c_10q.htm (10-Q) — 1119KB
• ex_857053.htm (EX-31.1) — 11KB
• ex_857054.htm (EX-31.2) — 12KB
• ex_857055.htm (EX-32) — 6KB
• 0001437749-25-032806.txt ( ) — 4803KB
• sgc-20250930.xsd (EX-101.SCH) — 35KB
• sgc-20250930_cal.xml (EX-101.CAL) — 43KB
• sgc-20250930_def.xml (EX-101.DEF) — 226KB
• sgc-20250930_lab.xml (EX-101.LAB) — 214KB
• sgc-20250930_pre.xml (EX-101.PRE) — 254KB
• sgc20250930c_10q_htm.xml (XML) — 791KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 4

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19

Controls and Procedures

Item 4. Controls and Procedures 32

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 33

Risk Factors

Item 1A. Risk Factors 33

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 34

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 34

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 34

Other Information

Item 5. Other Information 34

Exhibits

Item 6. Exhibits 35

SIGNATURES

SIGNATURES 36 2 Table of Contents Page

Financial Statements

Financial Statements Consolidated Statements of Comprehensive Income (Unaudited) 4 Consolidated Balance Sheets (Unaudited) 5 Consolidated Statements of Shareholders' Equity (Unaudited) 6 Consolidated Statements of Cash Flows (Unaudited) 8 Condensed Notes to the Consolidated Financial Statements (Unaudited) Note 1 - Description of Business and Basis of Presentation 9 Note 2 - Operating Segment Information 11 Note 3 - Net Sales 13 Note 4 - Net Income Per Share 14 Note 5 - Long-Term Debt 15 Note 6 - Contingencies and Geographic Supply Considerations 16 Note 7 - Inventories 16 Note 8 - Income Taxes 17 Note 9 - Other Information 18 3 Table of Contents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

ITEM 1. Financial Statements SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In thousands, except shares and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net sales $ 138,467 $ 149,690 $ 419,609 $ 420,268 Costs and expenses: Cost of goods sold 85,389 89,144 260,764 253,650 Selling and administrative expenses 48,513 52,404 150,855 149,906 Interest expense, net 1,378 1,569 3,873 4,897 135,280 143,117 415,492 408,453 Income before income tax expense 3,187 6,573 4,117 11,815 Income tax expense 443 1,170 580 1,900 Net income $ 2,744 $ 5,403 $ 3,537 $ 9,915 Net income per share: Basic $ 0.19 $ 0.34 $ 0.24 $ 0.62 Diluted $ 0.18 $ 0.33 $ 0.23 $ 0.60 Weighted average shares outstanding during the period: Basic 14,738,863 16,107,549 15,050,834 16,118,885 Diluted 15,119,050 16,543,990 15,422,144 16,588,914 Other comprehensive income (loss), net of tax: Defined benefit pension plans $ 7 $ 23 $ 22 $ 68 Foreign currency translation adjustment ( 47 ) 530 2,056 ( 1,201 ) Other comprehensive income (loss) ( 40 ) 553 2,078 ( 1,133 ) Comprehensive income $ 2,704 $ 5,956 $ 5,615 $ 8,782 Cash dividends per common share $ 0.14 $ 0.14 $ 0.42 $ 0.42 See accompanying Condensed Notes to the Consolidated Financial Statements. 4 Table of Contents SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except shares and par value data) September 30, December 31, 2025 2024 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 16,651 $ 18,766 Accounts receivable, net 97,415 95,092 Inventories 105,655 96,675 Contract assets 48,623 51,688 Prepaid expenses and other current assets 11,685 10,831 Total current assets 280,029 273,052 Property, plant and equipment, net 38,830 41,879 Operating lease right-of-use assets 12,7

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