Note 2 - Operating Segment Information

9 Months Ended

Sep. 30, 2025

Segment Reporting Disclosure [Text Block]

NOTE 2 – Operating Segment Information:

The Company manages and reports the following segments:

Branded Products segment: Primarily through our signature marketing brands BAMKO® and HPI®, we produce and sell customized merchandising solutions, promotional products and branded uniform programs. Branded products are sold to customers in a wide range of industries, including retail chain, food service, entertainment, technology, transportation and other industries. The segment currently has sales offices in the United States and Brazil, with support services in China and India.

Healthcare Apparel segment: Primarily through our portfolio of brands Wink®, Fashion Seal Healthcare®, its trade name CID Resources and our license of Carhartt Medical, we manufacture (through third parties or in our own facilities) and sell a wide range of healthcare apparel, such as scrubs, lab coats, protective apparel and patient apparel. This segment sells its products to healthcare laundries, dealers, distributors and retailers primarily in the United States.

Contact Centers: Through multiple The Office Gurus® entities, including our subsidiaries in El Salvador, Belize, Dominican Republic, the United States and Jamaica until its closure on June 15, 2025, we provide outsourced, nearshore business process outsourcing, contact and call-center support services to North American customers.

Intersegment eliminations include the elimination of revenues and costs from services provided by the Contact Centers segment to the Company’s two other segments. Such costs are recognized as selling and administrative expenses in the Branded Products and Healthcare Apparel segments. Income and expenses related to corporate functions that are not specifically attributable to an individual reportable segment are presented within Other in the table below.

The chief operating decision maker, who is the Company’s Chief Executive Officer, evaluates the performance of our segments. Segment EBITDA is the profitability metric reported to the Company’s CODM for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment. Segment EBITDA is calculated as net sales less cost of goods sold and selling and administrative expenses. Segment information for total assets is not presented as this information is not used by the Company’s CODM in measuring segment performance or allocating resources between segments.

The following tables set forth financial information related to the Company’s operating segments (in thousands):

	Branded Products		Healthcare Apparel		Contact Centers		Intersegment Eliminations			Other			Total
For the Three Months Ended September 30, 2025:
Net sales	$	85,095	$	31,520	$	22,664	$	(812	)	$	-		$	138,467
Cost of goods sold		55,466		19,394		10,669		(140	)		-			85,389
Gross margin		29,629		12,126		11,995		(672	)		-			53,078
Selling and administrative expenses		23,501		9,779		10,283		(672	)		5,622			48,513
Depreciation and amortization		1,396		832		661		-			86			2,975
Segment EBITDA	$	7,524	$	3,179	$	2,373	$	-		$	(5,536	)	$	7,540

	Branded Products		Healthcare Apparel		Contact Centers		Intersegment Eliminations			Other			Total
For the Three Months Ended September 30, 2024:
Net sales	$	92,547	$	33,025	$	25,038	$	(920	)	$	-		$	149,690
Cost of goods sold		59,037		19,216		11,296		(405	)		-			89,144
Gross margin		33,510		13,809		13,742		(515	)		-			60,546
Selling and administrative expenses		24,223		11,240		11,482		(515	)		5,974			52,404
Impairment charge		-		260		-		-			-			260
Depreciation and amortization		1,446		944		770		-			92			3,252
Segment EBITDA	$	10,733	$	3,773	$	3,030	$	-		$	(5,882	)	$	11,654

	Branded Products		Healthcare Apparel		Contact Centers		Intersegment Eliminations			Other			Total
For the Nine Months Ended September 30, 2025:
Net sales	$	264,216	$	87,036	$	70,866	$	(2,509	)	$	-		$	419,609
Cost of goods sold		173,884		54,761		33,277		(1,158	)		-			260,764
Gross margin		90,332		32,275		37,589		(1,351	)		-			158,845
Selling and administrative expenses		72,353		29,383		32,816		(1,351	)		17,654			150,855
Depreciation and amortization		4,271		2,598		2,022		-			266			9,157
Segment EBITDA	$	22,250	$	5,490	$	6,795	$	-		$	(17,388	)	$	17,147

	Branded Products		Healthcare Apparel		Contact Centers		Intersegment Eliminations			Other			Total
For the Nine Months Ended September 30, 2024:
Net sales	$	260,911	$	88,854	$	73,422	$	(2,919	)	$	-		$	420,268
Cost of goods sold		167,534		53,335		34,075		(1,294	)		-			253,650
Gross margin		93,377		35,519		39,347		(1,625	)		-			166,618
Selling and administrative expenses		70,486		30,931		32,436		(1,625	)		17,678			149,906
Impairment charge		-		260		-		-			-			260
Depreciation and amortization		4,513		2,837		2,246		-			276			9,872
Segment EBITDA	$	27,404	$	7,685	$	9,157	$	-		$	(17,402	)	$	26,844

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Income before income tax expense	$	3,187	$	6,573	$	4,117	$	11,815
Interest expense		1,378		1,569		3,873		4,897
Depreciation and amortization		2,975		3,252		9,157		9,872
Impairment charge		-		260		-		260
Segment EBITDA	$	7,540	$	11,654	$	17,147	$	26,844

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

SUPERIOR GROUP OF COMPANIES, INC. 10-Q