What changed in SUPERIOR GROUP OF COMPANIES, INC.'s 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of SUPERIOR GROUP OF COMPANIES, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+202 added−245 removedSource: 10-K (2025-03-11) vs 10-K (2024-03-14)
Top changes in SUPERIOR GROUP OF COMPANIES, INC.'s 2024 10-K
202 paragraphs added · 245 removed · 148 edited across 7 sections
- Item 7. Management's Discussion & Analysis+78 / −122 · 48 edited
- Item 1A. Risk Factors+88 / −81 · 74 edited
- Item 1. Business+20 / −20 · 16 edited
- Item 1C. Cybersecurity+2 / −11
- Item 5. Market for Registrant's Common Equity+8 / −5 · 4 edited
Item 1. Business
Business — how the company describes what it does
16 edited+4 added−4 removed26 unchanged
Item 1. Business
Business — how the company describes what it does
16 edited+4 added−4 removed26 unchanged
2023 filing
2024 filing
Biggest changeEnvironmental Matters Compliance with federal, state, and local laws regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has had no material effect upon our operations or earnings, capital expenditures or competitive position and we do not expect it to have a material impact in the foreseeable future.
Biggest changeSee “ Risk Factors - Changes to trade regulation, quotas, duties, tariffs or other restrictions caused by the changing U.S. and geopolitical environments or otherwise, such as those with respect to China, which may materially harm our revenue and results of operations, such as by increasing our costs and/or limiting the amount of products that we can import. ” Environmental Matters Compliance with federal, state, and local laws regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has had no material effect upon our operations or earnings, capital expenditures or competitive position and we do not expect it to have a material impact in the foreseeable future.
Major competitors for our Healthcare Apparel segment include companies such as Medline Industries, Inc., Careismatic Brands, Barco Uniforms, Inc., FIGS, Inc., Encompass Medical and Standard Textile Co., Inc. We are a significant supplier of caregiver and patient apparel to hospitals, laundries and distributors that service hospitals and consumers.
Major competitors for our Healthcare Apparel segment include companies such as Medline Industries, Inc., Careismatic Brands, Barco Uniforms, Inc., FIGS, Inc., Encompass Medical and Standard Textile Co., Inc. We are a significant supplier of patient and caregiver apparel to hospitals, laundries and distributors that service hospitals and consumers.
We compete directly and indirectly with various companies that provide contact center and other business process solutions on an outsourced basis such as TaskUs, Transparent BPO, Concentrix + Webhelp, Focus Services, Ubiquity, CCI and RDI. TOG also competes with local entities in other offshore locations. The list of potential competitors includes both publicly traded and privately held companies.
We compete directly and indirectly with various companies that provide contact center and other business process solutions on an outsourced basis such as TaskUs, Inc., Transparent BPO, Concentrix + Webhelp, Focus Services LLC, Ubiquity, CCI and RDI. TOG also competes with local entities in other offshore locations. The list of potential competitors includes both publicly traded and privately held companies.
Superior does not 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 Bangladesh, China, Haiti, Madagascar, Vietnam and the United States.
Superior does not 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: Bangladesh, China, Haiti, Madagascar, Vietnam 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, or the imposition of duties, tariffs or other import regulations by 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.
During the years ended December 31, 2023 and 2022, our Contact Centers segment accounted for approximately 16% and 13%, respectively, of net sales. 3 Table of Contents Competition Superior competes in its Branded Products segment with a multitude of national and regional companies, such as, BDA, Inc., HALO Branded Solutions, Inc., Staples, Inc., Cimpress PLC, HH Global Group Limited, Lands’ End, Inc. and Workwear Outfitters, LLC.
During the years ended December 31, 2024 and 2023, our Contact Centers segment accounted for approximately 17% and 16%, respectively of net sales. 3 Table of Contents Competition Superior competes in its Branded Products segment with a multitude of national and regional companies, such as, BDA, Inc., HALO Branded Solutions, Inc., Staples, Inc., Cimpress PLC, HH Global Group Limited, Lands’ End, Inc. and Workwear Outfitters, LLC.
If Superior or its suppliers are unable to source raw materials from China, it could significantly disrupt Superior’s business as it also would for our competitors.
If Superior or its suppliers are unable to source raw materials from China, it could significantly disrupt Superior’s business as it also would for many of our competitors.
We make this information available on our website free of charge as soon as reasonably practicable after we or they electronically file the information with, or furnish it to, the SEC. We also provide electronic copies of such filings free of charge upon request.
We make this information available on our website free of charge as soon as reasonably practicable after we or they electronically file the information with, or furnish it to, the SEC. We also provide electronic copies of such filings free of charge upon request. 6 Table of Contents
For a depiction of net sales from external customers, Segment Adjusted EBITDA and total assets by segment for the years ended December 31, 2023 and 2022, please refer to Note 17 to our Consolidated Financial Statements included in Part II, Item 8 (“Financial Statements and Supplementary Data”) (collectively referred to as “Financial Statements,” and individually referred to as “statements of comprehensive income (loss),” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein).
For a depiction of net sales from external customers and Segment EBITDA by segment for the years ended December 31, 2024 and 2023, please refer to Note 2 to our Consolidated Financial Statements included in Part II, Item 8 (“Financial Statements and Supplementary Data”) (collectively referred to as “Financial Statements,” and individually referred to as “statements of comprehensive income (loss),” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein).
During the years ended December 31, 2023 and 2022, our Branded Products segment accounted for approximately 63% and 67%, respectively, of net sales. During the years ended December 31, 2023 and 2022, our Healthcare Apparel segment accounted for approximately 21% and 20%, respectively, of net sales. For more information on our reportable business segments, please refer to “ Item 7.
During the years ended December 31, 2024 and 2023, our Branded Products segment accounted for approximately 62% and 63%, respectively, of net sales. During the years ended December 31, 2024 and 2023, our Healthcare Apparel segment accounted for approximately 21% and 21%, respectively, of net sales. For more information on our reportable business segments, please refer to “ Item 7.
Superior is comprised of three reportable business segments: (1) Branded Products, (2) Healthcare Apparel, and (3) Contact Centers. Superior’s Branded Products segment, primarily through its signature marketing brands BAMKO® and HPI®, produces and sells customized merchandise, promotional products and branded uniform programs.
In 2018, the Company changed its name to Superior Group of Companies, Inc. Superior is comprised of three reportable business segments: (1) Branded Products, (2) Healthcare Apparel, and (3) Contact Centers. Superior’s Branded Products segment, primarily through its signature marketing brands BAMKO® and HPI®, produces and sells customized merchandise, promotional products and branded uniform programs.
As of December 31, 2023, the Company had approximately 6,900 employees worldwide, of which approximately 6,800 were full-time employees and approximately 100 were part-time employees. As of December 31, 2023, approximately 830 employees were employed in the U.S. and approximately 6,070 employees were employed in foreign countries.
As of December 31, 2024, the Company had approximately 7,200 employees worldwide, of which approximately 7,100 were full-time employees and approximately 100 were part-time employees. As of December 31, 2024, approximately 820 employees were employed in the U.S. and approximately 6,380 employees were employed in foreign countries.
Services Through the recruitment and employment of highly qualified English, Spanish and bilingual-speaking agents, we provide our customers with outsourced, nearshore business process outsourcing, contact and call-center support services to North American customers in our Contact Centers segment.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Business Outlook, ” which disclosure is incorporated herein by reference. Services Through the recruitment and employment of highly qualified English, Spanish and bilingual-speaking agents, we provide outsourced, nearshore business process outsourcing, contact and call-center support services to North American customers in our Contact Centers segment.
Branded products are manufactured through third parties or in Superior’s own facilities, and are sold to customers in a wide range of industries, including chain retailer, food service, entertainment, technology, transportation and a wide range of other industries.
Branded products are manufactured through third parties or in Superior’s own facilities, and are sold to customers in a wide range of industries, including chain retail, food service, entertainment, technology, transportation and a wide range of other industries. The segment currently has sales offices in the United States and Brazil, with support services in China and India.
Customers Branded Products, Healthcare Apparel and Contact Centers segments have a substantial number of customers, none of which accounted for more than 10% of each segment’s 2023 net sales.
Customers Branded Products and Contact Center segments have a substantial number of customers, none of which accounted for more than 10% of either segment’s 2024 net sales. Our Healthcare Apparel segment has one customer who accounts for 10% of the segment’s 2024 net sales.
The Contact Centers segment has the Company’s largest labor force at approximately 4,300 full-time employees as of December 31, 2023. 5 Table of Contents Available Information The Company maintains an internet website at the following address: www.superiorgroupofcompanies.com. The information on the Company’s website is not incorporated by reference in this annual report on Form 10-K.
Available Information The Company maintains an internet website at the following address: www.superiorgroupofcompanies.com. The information on the Company’s website is not incorporated by reference in this annual report on Form 10-K.
Removed
In 2018, the Company changed its name to Superior Group of Companies, Inc. On May 1, 2022, the Company, through BAMKO, acquired substantially all of the assets of Guardian Products, Inc. (“Guardian”) based in Norcross, Georgia. Guardian is a branded merchandise company that is one of the leading providers of promotional products to automotive dealers nationwide.
Added
The Contact Centers segment has the Company’s largest labor force at approximately 4,300 employees as of December 31, 2024. 5 Table of Contents Recent Acquisitions On December 4, 2024, the Company, through BAMKO, acquired substantially all of the assets of Cormark Inc. doing business as 3Point Brand Management ("3Point or acquired company"), for a total purchase price of $6.4 million.
Removed
The segment currently has sales offices in the United States, Canada, Brazil, the United Kingdom and Colombia, with support services in China and India.
Added
The acquired company is an advertising company that specializes in creating a brand for some the country’s biggest brands through apparel, promotional marketing and other products.
Removed
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Business Outlook, ” which disclosure is incorporated herein by reference.
Added
The purchase price for the acquisition consisted of the following: (a) $4.0 million of cash consideration, (b) the issuance of 89,445 restricted shares of Superior’s common stock valued at $1.5 million, and (c) estimated contingent future payments of $0.9 million based on the results of the acquired business through December 2027.
Removed
For the year ended December 31, 2023, Fashion Seal Healthcare (presently registered with the United States Patent and Trademark Office until 2029) and Wink™ represented approximately 39% and 43%, respectively, of sales in that segment.
Added
The restricted shares vest ratably over a three-year period and are subject to transfer restrictions. The total payments related to the contingent future payment is capped at $0.9 million per year and $2.6 million over the three year measurement period. Total goodwill recorded in connection with the acquisition was $2.3 million, and assigned to the Branded Products reportable segment.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
74 edited+14 added−7 removed73 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
74 edited+14 added−7 removed73 unchanged
2023 filing
2024 filing
Biggest changeThe countries in which our products are manufactured or into which they are imported may from time-to-time impose new quotas, duties, tariffs and requirements as to where raw materials must be purchased to qualify for free or reduced duty. These countries also may create additional workplace regulations or other restrictions on our imports or adversely modify existing restrictions.
Biggest changeIn response, in part, to tariffs levied on products imported from China we have shifted some production out of China and may seek to shift additional production out of China, which may result in additional costs and disruption to our operations. 13 Table of Contents The countries in which our products are manufactured or into which they are imported may from time-to-time impose new quotas, duties, tariffs and requirements as to where raw materials must be purchased to qualify for free or reduced duty.
Our ability to forecast demand for our products has from time to time been and will continue to be affected by various factors, including unanticipated changes in general market conditions, and economic conditions or consumer confidence in future economic conditions. Failure to accurately forecast demand may result in inefficient inventory supply or increased costs.
Our ability to forecast demand for our products has from time to time been and will continue to be affected by various factors, including unanticipated changes in general market conditions, economic conditions, or consumer confidence in future economic conditions. Failure to accurately forecast demand may result in inefficient inventory supply or increased costs.
In addition, if we experience increased volatility in shipping times from our suppliers and manufacturers and/or production disruptions, we may experience a shortage of products available for sale. Alternatively, if we advance the timing of inventory shipments to mitigate perceived freight transit time volatility and/or sales below our expectations, we may experience excess inventory levels.
In addition, if we experience increased volatility in shipping times from our suppliers and manufacturers and/or production disruptions, we may experience a shortage of products available for sale. Alternatively, if we advance the timing of inventory shipments to mitigate perceived freight transit time volatility or experience sales below our expectations, we may experience excess inventory levels.
Unanticipated issues related to integration may result in additional expense and in disruption to our operations, and may require a disproportionate amount of our management’s attention, any of which could negatively impact our ability to achieve anticipated benefits, such as revenue and cost synergies.
Unanticipated issues related to integration may result in additional expense and disruption to our operations, and may require a disproportionate amount of our management’s attention, any of which could negatively impact our ability to achieve anticipated benefits, such as revenue and cost synergies.
Our business may be impacted by unforeseen or catastrophic events, including the emergence of pandemics or other widespread health emergencies, terrorist attacks, extreme weather events or other natural disasters and other unpredicted events.
Our business may be impacted by unforeseen or catastrophic events, including the emergence of pandemics or other widespread health emergencies, extreme weather events or other natural disasters, terrorist attacks, and other unpredicted events.
Changes in tax laws or regulations in the jurisdictions in which we do business, including the United States, or changes in how the tax laws are interpreted, could further impact our effective tax rate, further restrict our ability to repatriate undistributed offshore earnings, or impose new restrictions, costs or prohibitions on our current practices and reduce our net income and adversely affect our cash flows.
Changes in tax laws or regulations in the jurisdictions in which we do business, including the United States, or changes in how the tax laws are interpreted, could impact our effective tax rate, restrict our ability to repatriate undistributed offshore earnings, or impose new restrictions, costs or prohibitions on our current practices and reduce our net income and adversely affect our cash flows.
Changes to trade regulation, quotas, duties, tariffs or other restrictions caused by the changing U.S. and geopolitical environments or otherwise, such as those with respect to China, may materially harm our revenue and results of operations, such as by increasing our costs and/or limiting the amount of products that we can import.
Changes to trade regulation, quotas, duties, tariffs or other restrictions caused by the changing U.S. and geopolitical environments or otherwise, such as those with respect to China, which may materially harm our revenue and results of operations, such as by increasing our costs and/or limiting the amount of products that we can import.
Failure to anticipate, identify or promptly react to changing trends or styles may result in decreased demand for our products, as well as excess inventories and markdowns, which could result in inventory write-downs which may have a material adverse effect on our business, results of operations and financial condition.
Failure to anticipate, identify or promptly react to changing trends or styles may result in decreased demand for our products, as well as excess inventories and markdowns, which could result in inventory write-downs or write-offs which may have a material adverse effect on our business, results of operations and financial condition.
These competitors may offer products and services that may, among other things, provide automated alternatives to the services that we provide in the marketplace or otherwise change the way that contact centers engage so as to make our outsourced customer contract management solution less attractive to existing and potential customers.
These competitors may offer products and services that may, among other things, provide automated alternatives to the services that we provide in the marketplace or otherwise change the way that contact centers engage so as to make our outsourced customer contract management solution less attractive to existing and potential customers or less profitable.
Substantially all of the operating assets of the Company are pledged as collateral under our indebtedness. Our credit agreement requires compliance with certain financial ratios and covenants and satisfaction of specified financial tests. Failure to meet any financial ratios, covenants or financial tests could result in an event of default under our credit agreement.
Substantially all of the operating assets of the Company are pledged as collateral under our credit agreement. Our credit agreement requires compliance with certain financial ratios and covenants and satisfaction of specified financial tests. Failure to meet any financial ratios, covenants or financial tests could result in an event of default under our credit agreement.
Failure to comply with such laws and regulations may expose us to potential liability and have an adverse effect on our results of operations. Our business may be impacted by non-performance by manufacturers to whom we made advance payments.
Failure to comply with such laws and regulations may expose us to potential liability and have an adverse effect on our results of operations. Our business may be impacted by the non-performance of manufacturers to whom we made advance payments.
In addition, if one or more of our competitors is able to reduce their production costs by taking advantage of any reductions in raw material prices or favorable sourcing agreements, we may face pricing pressures from those competitors and may be forced to reduce our prices or face a decline in revenues, either of which could have a material adverse effect on our business, results of operations and financial condition. 10 Table of Contents We face intense competition within our industries and our revenue and/or profits may decrease if we are not able to respond to this competition effectively.
In addition, if one or more of our competitors is able to reduce their production costs by taking advantage of any reductions in raw material prices or favorable sourcing agreements, we may face pricing pressures from those competitors and may be forced to reduce our prices or face a decline in revenues, either of which could have a material adverse effect on our business, results of operations and financial condition. 11 Table of Contents We face intense competition within our industries and our revenue and/or profits may decrease if we are not able to respond to this competition effectively.
Furthermore, if any of our customers experience a significant downturn in their business, or fail to remain committed to our programs or brands, the customer may reduce or discontinue purchases from us, which has happened.
Furthermore, if any of our customers experience a significant downturn in their business, or fail to remain committed to our programs or brands, the customers may reduce or discontinue purchases from us, which has happened.
There also is no guarantee that we will be able to negotiate and conclude extensions of existing license agreements on similar economic terms or at all. 6 Table of Contents Our customers may cancel or decrease the quantity of their orders, which could negatively impact our operating results. Sales to many of our customers are on an order-by-order basis.
There also is no guarantee that we will be able to negotiate and conclude extensions of existing license agreements on similar economic terms or at all. 7 Table of Contents Our customers may cancel or decrease the quantity of their orders, which could negatively impact our operating results. Sales to many of our customers are on an order-by-order basis.
Our financial performance will be negatively affected by these pricing pressures if we are forced to reduce our prices and we cannot reduce our product costs proportionally or if our product costs increase and we cannot increase our prices proportionally. 11 Table of Contents Our results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on our customers’ businesses and levels of business activity.
Our financial performance will be negatively affected by these pricing pressures if we are forced to reduce our prices and we cannot reduce our product costs proportionally or if our product costs increase and we cannot increase our prices proportionally. 12 Table of Contents Our results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on our customers’ businesses and levels of business activity.
An inability to meet customer demand and delays in the delivery of our products to our customers could result in reputational harm and damaged customer relationships and have an adverse effect on our business, financial condition and results of operations. 7 Table of Contents We pursue acquisitions from time-to-time to expand our business, which may pose risks to our business.
An inability to meet customer demand and delays in the delivery of our products to our customers could result in reputational harm and damaged customer relationships and have an adverse effect on our business, financial condition and results of operations. 8 Table of Contents We pursue acquisitions from time-to-time to expand our business, which may pose risks to our business.
In order to finance such acquisitions, we may need to obtain additional funds either through public or private financings, including bank and other secured and unsecured borrowings and/or the issuance of equity or debt securities. There can be no assurance that such financings would be available to us on reasonable terms.
In order to finance such acquisitions, we may need to obtain additional funds either through public or private financings, including bank and other secured and unsecured borrowings and/or the issuance of equity or debt securities. There can be no assurance that such financings will be available to us on reasonable terms.
If, for any reason, one or more senior executive or key personnel was not to remain active in our company, or if we were unable to attract and retain senior management or key personnel or our costs to do so increase significantly, our results of operations could be adversely affected.
If, for any reason, one or more senior executive or key personnel was not to remain active in our company, or if we were unable to attract and retain senior management or key personnel or our costs to do so increased significantly, our results of operations could be adversely affected.
We maintain business interruption insurance, but it may not adequately protect us from the adverse effects that could result from significant disruptions to our distribution system, such as the long-term loss of customers or an erosion of our brand image.
We maintain business interruption insurance, but it may not adequately protect us from the adverse effects that could result from significant disruptions to our distribution systems, such as the long-term loss of customers or an erosion of our brand image.
Growth of our business through acquisition generally increases our operating complexity and the level of responsibility for both existing and new management personnel. Managing and sustaining our growth and expansion may require substantial enhancements to our operational and financial systems and controls, as well as additional administrative, operational and financial resources.
Growth of our business through acquisitions generally increases our operating complexity and the level of responsibility for both existing and new management personnel. Managing and sustaining our growth and expansion may require substantial enhancements to our operational and financial systems and controls, as well as additional administrative, operational and financial resources.
Major competitors for our Contact Centers segment include companies such as TaskUs, Transparent BPO, Concentrix + Webhelp, Focus Services, Ubiquity, CCI and RDI. We also compete with a multitude of foreign, regional and local competitors that vary by market.
Major competitors for our Contact Centers segment include companies such as TaskUs, Inc., Transparent BPO, Concentrix + Webhelp, Focus Services LLC, Ubiquity, CCI and RDI. We also compete with a multitude of foreign, regional and local competitors that vary by market.
Compromising and/or loss of information could result in loss of sales or legal or regulatory claims which could adversely affect our revenues and profits or damage our reputation. 8 Table of Contents Failure to comply with data privacy and security laws and regulations could adversely affect our operating results and business.
Compromising and/or loss of information could result in loss of sales or legal or regulatory claims which could adversely affect our revenues and profits or damage our reputation. 9 Table of Contents Failure to comply with data privacy and security laws and regulations could adversely affect our operating results and business.
Failure to comply with U.S. and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business.
Failure to comply with U.S. and non-U.S. data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business.
The occurrence of unforeseen or catastrophic events, such as the emergence of pandemics or other widespread health emergencies (or concerns over the possibility of such pandemics or emergencies), terrorist attacks, extreme weather events or other natural disasters or other unpredicted events, could create economic and financial disruptions, and could lead to operational difficulties (including travel limitations) that could impair our ability to source and supply products and services and manage our businesses, and could negatively impact our customers’ ability or willingness to purchase our products and services.
The occurrence of unforeseen or catastrophic events, such as the emergence of pandemics or other widespread health emergencies (or concerns over the possibility of such pandemics or emergencies), extreme weather events or other natural disasters, terrorist attacks, or other unpredicted events, could create economic and financial disruptions, and could lead to operational difficulties that could impair our ability to source and supply products and services and manage our businesses, and could negatively impact our customers’ ability or willingness to purchase our products and services.
Further, lower than forecasted demand could also result in excess manufacturing capacity or reduced manufacturing efficiencies, which could result in lower margins.
Further, lower than forecasted demand could result in excess manufacturing capacity or reduced manufacturing efficiencies, which could result in lower margins.
In the event that payments become due under the SERP, we will have to use cash flow from operations or other sources to fund our obligations. As of December 31, 2023, we had $13.6 million in unfunded obligations related to the SERP. 13 Table of Contents Risks Relating to Our Common Stock Certain existing shareholders have significant control.
In the event that payments become due under the SERP, we will have to use cash flow from operations or other sources to fund our obligations. As of December 31, 2024, we had $13.6 million in unfunded obligations related to the SERP. 15 Table of Contents Risks Relating to Our Common Stock Certain existing shareholders have significant control.
These proceedings could cause us to incur costs and may require us to devote resources to defend against these claims and could ultimately result in a loss or other remedies, such as product recalls, which could adversely affect our financial position and results of operations. 15 Table of Contents Volatility in the global financial markets could adversely affect results.
These proceedings could cause us to incur costs and may require us to devote resources to defend against these claims and could ultimately result in a loss or other remedies, such as product recalls, which could adversely affect our financial position and results of operations. Volatility in the global financial markets could adversely affect results.
Major competitors for our Branded Products segment include companies such as BDA, Inc., HALO Branded Solutions, Inc., Staples, Inc., Cimpress PLC, HH Global Group Limited and Lands’ End, Inc. Major competitors for our Healthcare Apparel segment include companies such as Medline Industries, Inc., Careismatic Brands, Barco Uniforms, Inc., FIGS, Inc., Encompass Medical and Standard Textile Co., Inc.
Major competitors for our Branded Products segment include companies such as BDA, Inc., HALO Branded Solutions, Inc., Staples, Inc., Cimpress PLC, HH Global Group Limited, Lands’ End, Inc. and Workwear Outfitters, LLC. Major competitors for our Healthcare Apparel segment include companies such as Medline Industries, Inc., Careismatic Brands, Barco Uniforms, Inc., FIGS, Inc., Encompass Medical and Standard Textile Co., Inc.
Even if we are able to acquire businesses on favorable terms, managing growth through acquisitions is a difficult process that includes: integration and training of personnel, combining facility and operating procedures, and additional processes related to the integration of acquired businesses within our existing organization.
Even if we are able to acquire businesses on favorable terms, managing growth through acquisitions is a difficult process that includes: integration and training of personnel, combining facility and operating procedures, and taking additional actions related to the integration of acquired businesses within our existing organization.
Inventory levels in excess of customer demand may also result in inventory write-downs or write-offs (as occurred in 2022) and the sale of excess inventory at discounted prices, which would cause our gross margin to suffer and could impair the strength and premium nature of our brands.
Inventory levels in excess of customer demand may also result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would cause our gross margin to suffer and could impair the strength and premium nature of our brands.
An escalating war in the Middle East, prolonged inflationary conditions, high and/or increased interest rates, additional sanctions or retaliatory measures related to the Russia-Ukraine crisis, or other situations, could further negatively affect U.S. and international commerce and exacerbate or prolong the period of high energy prices.
Conflicts in the Middle East, prolonged inflationary conditions, high and/or increased interest rates, additional sanctions or retaliatory measures related to the Russia-Ukraine crisis, or other situations, could further negatively affect U.S. and international commerce and exacerbate or prolong the period of high energy prices.
Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions could result in a material adverse effect on our business, results of operations and financial condition.
Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions could result in a material adverse effect on our business, results of operations and financial condition. 18 Table of Contents
We are unable to predict the likely duration and severity of any disruption in financial markets and adverse economic conditions and the effects they may have on our business and financial condition. Furthermore, significant or sustained inflation could have an adverse impact on our operating and general and administrative expenses.
We are unable to predict the likely duration and severity of any disruption in financial markets and adverse economic conditions and the effects they may have on our business and financial condition. Furthermore, increased inflation could have an adverse impact on our operating and general and administrative expenses.
We will continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
We will continue to monitor and assess the impact of these laws, and any new ones enacted, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
We are subject to international, federal, national, regional, state, local and other laws and regulations affecting our business, including but not limited to those promulgated under the Occupational Safety and Health Act, the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and regulations of the Consumer Products Safety Commission, the Food, Drug, and Cosmetic Act, the rules and regulations of the Food and Drug Administration (FDA), the Foreign Corrupt Practices Act of 1977 (FCPA), various securities laws and regulations including but not limited to the Securities Exchange Act of 1934, the Securities Act of 1933, and the Nasdaq Stock Market LLC Rules, various labor, workplace and related laws, and environmental laws and regulations.
We are subject to international, federal, national, regional, state, local and other laws and regulations affecting our business, including but not limited to those promulgated under the Occupational Safety and Health Act, the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and regulations of the Consumer Products Safety Commission, the Food, Drug, and Cosmetic Act, the rules and regulations of the Food and Drug Administration (FDA), various anti-corruption and anti-bribery laws, various securities laws and regulations including but not limited to the Securities Exchange Act of 1934, the Securities Act of 1933, and the rules of the Nasdaq Stock Market LLC, various labor, workplace and related laws, and environmental laws and regulations.
An interruption in any of our supply sources or facilities, such as widely occurred during 2021, could adversely affect our results of operations until alternate sources or facilities can be secured. Principal raw materials used to manufacture the Company’s products include cotton, polyester, spandex, cotton-synthetic, poly-synthetic blends, textiles, plastic, glass, fabric and metal.
An interruption in any of our supply sources or facilities could adversely affect our results of operations until alternate sources or facilities can be secured. Principal raw materials used to manufacture the Company’s products include cotton, polyester, spandex, cotton-synthetic, poly-synthetic blends, textiles, plastic, glass, fabric and metal.
If our remedial measures are insufficient to address the material weakness, or if one or more additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, or our disclosure controls and procedures are again determined to be ineffective, we may not be able to prevent or identify irregularities or ensure the fair and accurate presentation of our financial statements included in our periodic reports filed with the U.S.
However, if one or more additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, or our disclosure controls and procedures are determined to be ineffective, we may not be able to prevent or identify irregularities or ensure the fair and accurate presentation of our financial statements included in our periodic reports filed with the U.S.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. As further disclosed in “Item 9A.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Our distribution centers and storage locations include computer-controlled and automated equipment and rely on warehouse management systems to manage supply chain fulfillment operations, which means our operations are complicated, require coordination between our distribution centers and storage locations and are subject to a number of risks related to cybersecurity, the proper operation of software and hardware, including connections between software and/or hardware, electronic or power interruptions or other system failures.
Our distribution centers and storage locations, as well as those operated by third parties, include computer-controlled and automated equipment and rely on warehouse management systems to manage supply chain fulfillment operations, which means these operations are complicated, require coordination between distribution centers and storage locations and are subject to a number of risks related to cybersecurity, the proper operation of software and hardware, including connections between software and/or hardware, electronic or power interruptions and other system failures.
Adverse changes in these costs and restrictions could harm our business. We cannot assure that future trade agreements or regulations will not provide our competitors an advantage over us or increase our costs, either of which could have a material adverse effect on our business, results of operations or financial condition.
We cannot assure that future trade agreements or regulations will not provide our competitors an advantage over us or increase our costs, either of which could have a material adverse effect on our business, results of operations or financial condition.
The measures we have in place to monitor and protect our information technology systems might not provide sufficient protection from catastrophic events, power surges, viruses, malicious software (including ransomware), attempts to gain unauthorized access to data or other types of cyber-based attacks.
The measures we have in place to monitor and protect our information technology systems might not provide sufficient protection from catastrophic events, power surges, viruses, malicious software (including ransomware), attempts to gain unauthorized access to data or other types of cyber-based attacks. Cyber-attacks are becoming more frequent, sophisticated, damaging and difficult to predict.
For example, all 50 states and several U.S. territories now have data breach laws that require timely notification to affected individuals, and at times regulators, credit reporting agencies and other bodies, if a company has experienced the unauthorized access or acquisition of certain personal information. Other state laws include the California Consumer Privacy Act, as amended (“CCPA”).
For example, all 50 states and several U.S. territories now have data breach laws that require timely notification to affected individuals, and at times regulators, credit reporting agencies and other bodies, if a company has experienced the unauthorized access or acquisition of certain personal information.
We may face increased competition from these competitors as they mature and expand their capabilities. Risks Relating to Our Indebtedness and Retirement Plan Obligations Our indebtedness may limit cash flow available to invest in the ongoing needs of our business. As of December 31, 2023, our total consolidated indebtedness was $94.4 million.
We may face increased competition from these competitors as they mature and expand their capabilities. 14 Table of Contents Risks Relating to Our Indebtedness and Retirement Plan Obligations Our indebtedness may limit cash flow available to invest in the ongoing needs of our business. As of December 31, 2024, our total consolidated indebtedness was $86.0 million.
The GDPR imposes, among other things, data protection requirements that include strict obligations and restrictions on the ability to collect, analyze and transfer EU personal data/information, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations (including possible fines for certain violations of up to the greater of 20 million Euros or 4% of total company revenue).
The GDPR imposes, among other things, data protection requirements that include strict obligations and restrictions on the ability to collect, analyze and transfer EU personal data/information, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations.
If we experience problems with our distribution systems, our ability to meet customer expectations, manage inventory and complete sales may be harmed. Our products are either distributed through our distribution centers in the United States or shipped directly from our vendors to our customers.
If we experience problems with our distribution systems, our ability to meet customer expectations, manage inventory and complete sales may be harmed. Our products are distributed through third-party logistics centers or our own distribution centers, or are shipped directly from our vendors to our customers.
In the event that advance payments are made to manufacturers that do not have the ability to satisfy their contractual obligations due to their financial instability, geopolitical unrest or other factors, we may incur unrecoverable losses which could have a material adverse effect on our business, results of operations and financial condition. 9 Table of Contents Implementation of technology initiatives could disrupt our operations in the near term and fail to provide the anticipated benefits.
In the event that advance payments are made to manufacturers that do not have the ability to satisfy their contractual obligations due to their financial instability, geopolitical unrest or other factors, we may incur unrecoverable losses which could have a material adverse effect on our business, results of operations and financial condition.
As a result, our executive officers and directors, and certain of their family members, have significant influence over the election of our Board of Directors, the approval or disapproval of any other matters requiring shareholder approval, and the affairs and policies of our company. We have identified a material weakness in our internal control over financial reporting.
As a result, our executive officers and directors, and certain of their family members, have significant influence over the election of our Board of Directors, the approval or disapproval of any other matters requiring shareholder approval, and the affairs and policies of our company.
At December 31, 2023, our executive officers and directors, and certain of their family members collectively owned approximately 29.4% of our outstanding common stock.
At December 31, 2024, our executive officers and directors, and certain of their family members collectively owned approximately 27.6% of our outstanding common stock.
These proceedings may be in jurisdictions with reputations for aggressive application of laws and procedures against corporate defendants. We are impacted by trends in litigation, including class-action allegations brought under various consumer protection and employment laws. Due to the inherent uncertainties of litigation in both domestic and foreign jurisdictions, we cannot accurately predict the ultimate outcome of any such proceedings.
We are impacted by trends in litigation, including class-action allegations brought under various consumer protection and employment laws. Due to the inherent uncertainties of litigation in both domestic and foreign jurisdictions, we cannot accurately predict the ultimate outcome of any such proceedings.
As cyber-attacks become more frequent, sophisticated, damaging and difficult to predict, any such event could negatively impact our business operations, such as by product disruptions that result in an unexpected delay in operations, interruptions in our ability to deliver products and services to our customers, loss of confidential or otherwise protected information, corruption of data and expenses related to the repair or replacement of our information technology systems.
Any such event or attack could negatively impact our business operations, such as through product disruptions that result in an unexpected delay in operations, interruptions in our ability to deliver products and services to our customers, loss of confidential or otherwise protected information, corruption of data and expenses related to the repair or replacement of our information technology systems, including payments made in ransomware attacks.
In addition, the threat of a wider war in the Middle East after the Hamas terrorist attacks on Israel could affect oil prices and have other effects on the global economy. Both crises have potentially far-reaching impacts on energy and food markets and global trade.
In addition, the conflict in the Middle East could affect oil prices and have other effects on the global economy. Both crises have potentially far-reaching impacts on energy and food markets and global trade.
As our business grows, we continue to make significant investments in our technology, including in the areas of warehouse management, enterprise risk management and product design. The costs, potential problems and interruptions associated with the implementation of technology initiatives could disrupt or reduce the efficiency of our operations in the near term.
Implementation of technology initiatives could disrupt our operations in the near term and fail to provide the anticipated benefits. As our business grows, we continue to make significant investments in our technology, including in the areas of warehouse management, enterprise risk management and product design.
The prices we pay for these fabrics and components and our finished goods are dependent on the market price for the raw materials used to produce them, primarily cotton and chemical components of synthetic fabrics including raw materials such as chemicals and dyestuffs.
The prices we pay for these fabrics and components are dependent on the market price for the raw materials used to produce them, including cotton and chemical components of synthetic fabrics including raw materials such as chemicals and dyestuffs, in addition to any import duties imposed on those fabrics and components that are imported.
Moreover, if we are unable to adequately staff our distribution centers to meet demand or if the cost of such staffing is higher than historical or projected costs, our results of operations could be harmed.
Moreover, if we are unable to adequately staff our distribution centers to meet demand or if the cost of such staffing is higher than historical or projected costs, our results of operations could be harmed. Our third party logistics providers face similar risks, which translates into downstream risk for us.
Our share price may change significantly, and our shareholders may not be able to resell shares of our common stock at or above the price they paid or at all, and they could lose all or part of their investment as a result.
Securities and Exchange Commission or other regulatory authorities, shareholder lawsuits, a loss of investor confidence and damage to our reputation. 16 Table of Contents Our share price may change significantly, and our shareholders may not be able to resell shares of our common stock at or above the price they paid or at all, and they could lose all or part of their investment as a result.
At this time, the extent and duration of these economic and political events and their effects on the economy and the Company are impossible to predict, but the impact on the Company’s business could be material.
At this time, the extent and duration of these economic and political events and their effects on the economy and the Company are impossible to predict, but the impact on the Company’s business could be material. Our manufacturing facilities and warehouses in Haiti are at risk of damage or disruption from civil unrest and other occurrences.
Furthermore, the Company and the Company’s suppliers generally source or manufacture finished goods in parts of the world that have been and may be in the future affected by economic uncertainty, political unrest, logistical challenges (such as port strikes and embargos), foreign currency fluctuations, labor disputes, health emergencies, or the imposition of duties, tariffs or other import regulations by the United States, any of which could result in additional cost or limit our supply of necessary goods and raw materials.
See “Changes to trade regulation, quotas, duties, tariffs or other restrictions caused by the changing U.S. and geopolitical environments or otherwise, such as those with respect to China, which may materially harm our revenue and results of operations, such as by increasing our costs and/or limiting the amount of products that we can import.” Furthermore, the Company and the Company’s suppliers generally source or manufacture finished goods in parts of the world that have been and may be in the future affected by economic uncertainty, political unrest, logistical challenges (such as port strikes and embargos), foreign currency fluctuations, labor disputes, health emergencies, natural disasters, or the imposition of duties, tariffs or other import regulations by the United States or other countries, any of which could result in additional cost or limit our supply of necessary goods and raw materials.
The U.S. government may decide to impose or alter existing import quotas, duties, tariffs or other restrictions on products or raw materials sourced from those countries, which include countries from which we import raw materials or in which we manufacture our products.
It may decide to impose or alter those or other import quotas, duties, tariffs or other restrictions on countries from which we source products and/or raw materials or in which we manufacture our products, including China and countries in Latin America.
Any such quotas, duties, tariffs or restrictions could have a material adverse effect on our business, results of operations or financial condition. 12 Table of Contents The apparel industry, including branded uniforms and healthcare, is subject to changing fashion trends and if we misjudge consumer preferences, the image of one or more of our brands may suffer and the demand for our products may decrease.
The apparel industry, including branded uniforms and healthcare, is subject to changing fashion trends and if we misjudge consumer preferences, the image of one or more of our brands may suffer and the demand for our products may decrease.
Nor can we assure that the changing geopolitical and U.S. political environments will not result in a trade agreement or regulation being altered which adversely affects our company.
Nor can we assure that the changing geopolitical and U.S. political environments will not result in a trade agreement or regulation being altered which adversely affects our company. In fact, effective February 4, 2025 and March 4, 2025, the U.S. government imposed additional tariffs on certain countries, including China, from which we source products and raw materials.
Deterioration in these general economic conditions may result in: • declining revenue, which can lead to excess capacity and declining operating cash flow; • reductions in management’s estimates for future revenue and operating cash flow growth; • increases in borrowing rates and other deterioration in factors that impact our weighted average cost of capital; and • deteriorating real estate values. 14 Table of Contents If our assessment of intangible assets or long-lived assets indicates an impairment of the carrying value for which we recognize an impairment charge, this may again adversely affect our financial condition and results of operations, potentially materially so.
Deterioration in these general economic conditions may result in: • declining revenue, which can lead to excess capacity and declining operating cash flow; • reductions in management’s estimates for future revenue and operating cash flow growth; • increases in borrowing rates and other deterioration in factors that impact our weighted average cost of capital; and • deteriorating real estate values.
Our credit agreement contains, and the terms of any future indebtedness we incur may contain, limitations on our ability to pay dividends. Although we have paid cash dividends in the past, there can be no assurance that we will continue to pay any dividend in the future.
Our credit agreement contains, and the terms of any future indebtedness we incur may contain, limitations on our ability to pay dividends.
While we believe that our employee relations are good, and very few of our employees are currently subject to collective bargaining agreements, unions have traditionally been active in the U.S. apparel industry and recently have become more active generally.
Our operations rely heavily on our employees, and any labor shortage, disruption or stoppage caused by poor relations with our employees could reduce our operating margins and income. While we believe that our employee relations are good, and very few of our employees are currently subject to collective bargaining agreements, unions have traditionally been active in the U.S. apparel industry.
We cannot assure that our owned or licensed intellectual property or the operation of our business does not infringe on or otherwise violate the intellectual property rights of others. It is possible that third parties will assert claims against us on such basis; if they do we cannot assure you that we will be able to successfully resolve such claims.
It is possible that third parties will assert claims against us on such basis, and if they do we cannot assure that we will be able to successfully resolve such claims.
Controls and Procedures” of this Annual Report on Form 10-K, management has identified a material weakness relating to segregation of duties, change management and user access within certain proprietary information technology systems of the Contact Centers segment.
We reported a material weakness relating to segregation of duties, change management and user access within certain proprietary information technology systems of the Contact Centers segment in 2023 and 2022. This material weakness has been remediated as of December 31, 2024.
General Risk Factors We are subject to periodic litigation in both domestic and international jurisdictions that may adversely affect our financial position and results of operations. From time-to-time we may be involved in legal or regulatory actions regarding product liability, employment practices, intellectual property infringement, bankruptcies, telemarketing compliance, consumer protections and other litigation or enforcement matters.
From time-to-time we may be involved in legal or regulatory actions regarding product liability, employment practices, intellectual property infringement, bankruptcies, telemarketing compliance, consumer protections and other litigation or enforcement matters. These proceedings may be in jurisdictions with reputations for aggressive application of laws and procedures against corporate defendants.
If we are unable to remediate the material weakness and otherwise maintain an effective system of internal control over financial reporting, it could result in us not preventing or detecting on a timely basis a material misstatement of the Company’s financial statements.
While we have remediated the material weakness identified in 2023 and 2022, we may identify a material weakness in internal control in the future, which could result in us not preventing or detecting on a timely basis a material misstatement of the Company’s financial statements.
For example, during the year ended December 31, 2022, the Company recorded non cash goodwill and indefinite lived trade name impairment charges totaling $45.9 million and $5.6 million respectively. The estimated fair value of our intangible assets and long-lived assets is impacted by general economic conditions in the locations in which we operate.
These accounting principles require that we record an impairment charge if circumstances indicate that the asset carrying values exceed their estimated fair values. For example, during the year ended December 31, 2022, the Company recorded non-cash goodwill and indefinite lived trade name impairment charges totaling $45.9 million and $5.6 million, respectively.
In light of continuing inflationary pressures, the Federal Reserve may decide to raise rates again. World events, such as the Russian invasion of Ukraine and the resulting economic sanctions, have impacted the global economy, including by exacerbating inflationary and other pressures.
Economic and political events in recent years have altered the landscape in which we and other U.S. companies operate in a variety of ways. Inflation and interest rates remain high despite recent abatements. World events, such as the Russian invasion of Ukraine and the resulting economic sanctions, have impacted the global economy, including by exacerbating inflationary and other pressures.
They may also require us to divert resources from our core business to ensure that implementation is successful. In addition, new or upgraded technology might not provide the anticipated benefits, might take longer than expected to realize the anticipated benefits, might fail or might cost more than anticipated.
In addition, new or upgraded technology might not provide the anticipated benefits, might take longer than expected to realize the anticipated benefits, might fail or might cost more than anticipated. Failure to preserve positive labor relationships with our employees could adversely affect our results of operations.
Some of our locations and those of our suppliers, such as those located in the U.S., Central America and Haiti, also are exposed to hurricanes, earthquakes, floods and other extreme weather events; the damage that such events could produce could affect the supply of our products and services.
Some of our locations, as well as those of our suppliers, are in locations where they are exposed to hurricanes, earthquakes, floods and other extreme weather events. For example, our corporate headquarters is located in Florida and we have a manufacturing facility located in Haiti.
We are subject to international, federal, national, regional, state, local and other laws and regulations, and failure to comply with them may expose us to potential liability.
While we multi-source many of our programs on many of our materials, which we believe better enables us to respond to these types of events, we cannot be sure that our plans will fully protect us from all such disruptions. 10 Table of Contents We are subject to international, federal, national, regional, state, local and other laws and regulations, and failure to comply with them may expose us to potential liability.
We assess our intangible assets and long-lived assets for impairment when required by generally accepted accounting principles in the United States (“GAAP”). These accounting principles require that we record an impairment charge if circumstances indicate that the asset carrying values exceed their estimated fair values.
We have recognized, and may recognize in the future, impairment charges, which could materially adversely affect our financial condition and results of operations. We assess our intangible assets and long-lived assets for impairment when required by generally accepted accounting principles in the United States (“GAAP”).
Our most significant trademarks, which are critically important to the marketing and operation of Superior’s Healthcare Apparel segment, are Fashion Seal Healthcare® and Wink™. For the year ended December 31, 2023, Fashion Seal Healthcare and Wink represented approximately 39% and 43%, respectively, of sales in that segment.
Our most significant trademarks, which are critically important to the marketing and operation of our Healthcare Apparel segment, are Fashion Seal Healthcare® and Wink®. We cannot assure that our owned or licensed intellectual property or the operation of our business does not infringe on or otherwise violate the intellectual property rights of others.
Removed
The CCPA, among other things, contains disclosure obligations for businesses that collect personal information about California residents and affords those individuals new rights relating to their personal information that may affect our ability to collect and/or use personal information. Other states and the federal government are considering new data privacy and/or security laws.
Added
Even if we or our suppliers are able to source raw materials from China, we or they may face increased import duties as a result of changes in U.S. trade policy.
Removed
Failure to preserve positive labor relationships with our employees could adversely affect our results of operations. Our operations rely heavily on our employees, and any labor shortage, disruption or stoppage caused by poor relations with our employees could reduce our operating margins and income.
Added
Extreme weather and geologic events could make it difficult or impossible to manufacture or deliver products to our customers (including by affecting the ability of our workers to perform at full capacity for a period of time), receive production materials from our suppliers, or perform critical functions, which could adversely affect our business globally or in certain regions.
Removed
Economic and political events in recent years have altered the landscape in which we and other U.S. companies operate in a variety of ways. In response to inflationary pressures, the U.S. Federal Reserve repeatedly has raised interest rates, resulting in an increase in the cost of borrowing for us, our customers, our suppliers, and other companies relying on debt financing.
Added
There also are multiple climate change-related laws and regulations in the United States and internationally that either have gone into effect or could go into effect. The cost to comply with such laws and regulations could be significant and have an adverse effect on our results of operations.
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
0 edited+2 added−11 removed0 unchanged
2023 filing
2024 filing
Removed
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We recognize the increasing volume and sophistication of cyber threats and take our responsibility to protect the information and systems under our purview seriously. We consider cybersecurity threat risks alongside other Company risks as part of our overall risk assessment process.
Added
Item 1C. Cybersecurity 19 Item 2. Properties 20 Item 3. Legal Proceedings 20 Item 4. Mine Safety Disclosures 20 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. Reserved 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22 Item 7A.
Removed
Our cybersecurity processes aim to provide a comprehensive approach to assess, identify, manage, mitigate, and respond to cybersecurity threats. We maintain a cybersecurity risk program predicated on a risk-based approach. We use cost-effective controls that are commensurate with the risk and sensitivity of our specific information systems, control systems and enterprise data.
Added
Quantitative and Qualitative Disclosures About Market Risk 33 Item 8. Financial Statements and Supplementary Data 34
Removed
Our cybersecurity program incorporates best practices and industry standards from multiple sources and is designed to comply with applicable regulations. The cybersecurity program includes, but is not limited to, the following elements: risk assessment, policies and procedures, training and awareness, auditing, log collection and analysis, threat hunting and intelligence surveillance, compliance monitoring and testing, and incident response.
Removed
Our internal professionals collaborate with external subject matter specialists, as necessary. All third parties engaged for such matters are subjected to scrutiny to ensure they satisfy our security standards.
Removed
We periodically review our third party engagements to ensure that the providers maintain the necessary levels of protection and competency, as well as to oversee and identify potential cybersecurity risks and/or threats from such engagements.
Removed
We describe how risks from cybersecurity threats could materially affect us, including our business strategy, results of operations, or financial condition, as part of our risk factor disclosures at Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K.
Removed
Cybersecurity Governance Cybersecurity is an important part of our risk management processes and an area of focus for our Board and management.
Removed
Our Board and its Corporate Governance, Nominating and Ethics Committee are responsible for oversight of our cybersecurity risk, including the effectiveness of cybersecurity risk management policies and protocols, while our Chief Information Officer (CIO) is responsible for our cybersecurity strategy and execution.
Removed
As part of the Board’s oversight, its Corporate Governance, Nominating and Ethics Committee, which is comprised entirely of independent directors, receives quarterly reports from executive management about the prevention, detection, mitigation, and remediation of cybersecurity incidents. The Board receives at least an annual report from executive management.
Removed
Additionally, we have processes by which a cybersecurity incident would be escalated internally and, when appropriate, reported to the Board (or appropriate committee), as well as for updating the Board regarding such incident until it has been resolved. Our CIO has more than 25 years of technology and information systems leadership experience, including as CIO of multiple consumer-focused companies.
Removed
Our CIO reports to our chief executive officer. 17 Table of Contents
Item 2. Properties
Properties — owned and leased real estate
2 edited+0 added−0 removed1 unchanged
Item 2. Properties
Properties — owned and leased real estate
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2023 filing
2024 filing
Biggest changePetersburg, Florida Leased 8,193 Corporate, Branded Products, Healthcare Apparel and Contact Centers Belmopan, Belize Leased 33,470 Contact Centers Compton, California Leased 24,449 Branded Products Coppell, Texas Leased 114,105 Healthcare Apparel Eudora, Arkansas Leased 260,000 Branded Products and Healthcare Apparel Kingston, Jamaica Leased 19,500 Contact Centers La Libertad, El Salvador Owned 52,591 Contact Centers Lake Providence, Louisiana Leased 215,000 Branded Products and Healthcare Apparel Lexington, Mississippi Owned 40,000 Healthcare Apparel Monticello, Arkansas Leased 92,000 Branded Products and Healthcare Apparel Oak Grove, Louisiana Leased 68,330 Branded Products Ouanaminthe, Haiti Leased 120,000 Branded Products and Healthcare Apparel Peachtree Corners, Georgia Leased 23,400 Branded Products Phoenix, Arizona Leased 116,850 Branded Products Romeoville, Illinois Leased 28,290 Branded Products San Ignacio, Belize Owned 11,732 Contact Centers San Salvador, El Salvador Leased 17,777 Contact Centers Santiago, Dominican Republic Leased 7,900 Contact Centers The Company has an ongoing program designed to maintain and improve its facilities.
Biggest changePetersburg, Florida Leased 8,193 Corporate Office, Branded Products, Healthcare Apparel and Contact Centers Belmopan, Belize Leased 25,970 Contact Centers Coppell, Texas Leased 114,105 Healthcare Apparel Eudora, Arkansas Leased 260,000 Branded Products and Healthcare Apparel Kingston, Jamaica Leased 4,500 Contact Centers La Libertad, El Salvador Owned 52,591 Contact Centers Lake Providence, Louisiana Leased 215,000 Branded Products and Healthcare Apparel Lexington, Mississippi Owned 40,000 Healthcare Apparel Oak Grove, Louisiana Leased 68,330 Branded Products Ouanaminthe, Haiti Leased 120,000 Branded Products and Healthcare Apparel Peachtree Corners, Georgia Leased 23,400 Branded Products Phoenix, Arizona Leased 116,850 Branded Products Romeoville, Illinois Leased 28,290 Branded Products San Ignacio, Belize Owned 11,732 Contact Centers San Salvador, El Salvador Leased 17,776 Contact Centers Santiago, Dominican Republic Leased 7,400 Contact Centers Tigard, Oregon Leased 11,197 Branded Products The Company has an ongoing program designed to maintain and improve its facilities.
Item 2. Properties The following table describes the material facilities we owned or leased as of December 31, 2023: Location Status Square Feet Uses St.
Item 2. Properties The following table describes the material facilities we owned or leased as of December 31, 2024: Location Status Square Feet Uses St.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+4 added−1 removed2 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+4 added−1 removed2 unchanged
2023 filing
2024 filing
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1, 2023 to October 31, 2023 - $ - - November 1, 2023 to November 30, 2023 - - - December 1, 2023 to December 31, 2023 - - - Total - - - 657,451 (1) On May 2, 2019, the Company’s Board of Directors approved a stock repurchase program of up to 750,000 shares of the Company’s outstanding common stock.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1, 2024 to October 31, 2024 67,713 $ 14.96 67,713 November 1, 2024 to November 30, 2024 3,973 15.03 3,973 December 1, 2024 to December 31, 2024 - - - Total 71,686 14.96 71,686 $2,580,426 (1) On August 9, 2024, the Company’s Board of Directors approved a new stock repurchase plan.
Information regarding the Company’s equity compensation plans is incorporated by reference to the information set forth in Item 12 of Part III of this Form 10-K under the section entitled “Equity Compensation Plan Information.” Issuer Purchases o f Equity Securities The table below sets forth information with respect to purchases made by or on behalf of Superior Group of Companies, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the three months ended December 31, 2023.
Information regarding the Company’s equity compensation plans is incorporated by reference to the information set forth in Item 12 of Part III of this Form 10-K under the section entitled “Equity Compensation Plan Information.” Issuer Purchases o f Equity Securities The table below sets forth information with respect to purchases made by or on behalf of Superior Group of Companies, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the three months ended December 31, 2024.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which Superior’s common shares are traded is the NASDAQ Stock Market under the symbol “SGC.” We declared aggregate cash dividends of $0.56 per share during the fiscal year ended December 31, 2023, which were paid in the first, second, third and fourth quarters of 2023.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which Superior’s common shares are traded is the NASDAQ Stock Market under the symbol “SGC.” We declared aggregate cash dividends of $0.56 per share during the fiscal year ended December 31, 2024, which were paid in the first, second, third and fourth quarters of 2024.
The Company is in full compliance with all terms, conditions and covenants of such agreement. On February 27, 2024, we had 126 shareholders of record.
The Company is in full compliance with all terms, conditions and covenants of such agreement. On February 28, 2025, we had 115 shareholders of record.
Removed
There is no expiration date or other restriction governing the period over which the Company can make share repurchases under the program. All purchases under this program will be open market transactions.
Added
Under the plan, the Company is authorized to repurchase up to $10 million of its common stock over a period of one year ending in August 2025.
Added
The stock repurchase plan allows the Company to purchase common stock from time to time through, among other ways, open market purchases, privately negotiated transactions, block purchases, and/or pursuant to Rule 10b5-1 trading plans, subject to applicable securities laws and other legal requirements and relevant factors.
Added
The number of shares purchased and the timing of any purchases will depend upon a number of factors, including the price and availability of the Company’s stock and general market conditions.
Added
Unregistered Sales o f Equity Securities As part of the $6.4 million acquisition of 3Point, the Company issued 89,445 shares of its common stock to the sellers on December 4, 2024. The shares were issued in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506(b) thereunder.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
48 edited+30 added−74 removed14 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
48 edited+30 added−74 removed14 unchanged
2023 filing
2024 filing
Biggest changeFor a reconciliation of Adjusted EBITDA to net income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Non-GAAP Financial Measure” below. 21 Table of Contents The Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Operations The following table provides highlights of our financial performance (in thousands, except percentages): For the Years Ended December 31, 2023 2022 % Change Net sales: Branded Products $ 342,680 $ 387,931 (11.7 %) Healthcare Apparel 113,878 113,321 0.5 % Contact Centers 91,500 84,218 8.6 % Net intersegment eliminations (4,756 ) (6,639 ) (28.4 %) Consolidated net sales 543,302 578,831 (6.1 %) Gross margin: Branded Products 114,627 114,797 (0.1 %) Healthcare Apparel 42,281 32,602 29.7 % Contact Centers 49,148 49,779 (1.3 %) Net intersegment eliminations (2,509 ) (3,819 ) (34.3 %) Consolidated gross margin 203,547 193,359 5.3 % Selling and administrative expenses: Branded Products 88,225 90,118 (2.1 %) Healthcare Apparel 38,209 39,295 (2.8 %) Contact Centers 39,682 33,631 18.0 % Intersegment Eliminations (2,509 ) (3,819 ) (34.3 %) Other 19,598 17,095 14.6 % Consolidated selling and administrative expenses 183,205 176,320 3.9 % Goodwill impairment charge - 45,918 (100.0 %) Intangible assets impairment charge - 5,581 (100.0 %) Other periodic pension cost 855 2,116 (59.6 %) Interest expense 9,718 4,894 98.6 % Gain on sale of property, plant and equipment - 3,435 (100.0 %) Income (loss) before income tax expense 9,769 (38,035 ) (125.7 %) Income tax expense (benefit) 997 (6,065 ) (116.4 %) Net income (loss) $ 8,772 $ (31,970 ) (127.4 %) Net Sales Net sales for the Company decreased 6.1% from $578.8 million for the year ended December 31, 2022 to $543.3 million for the year ended December 31, 2023.
Biggest changeThese business impacts could negatively affect us in a number of ways, including, but not limited to, reduced demand for our core products and services, reductions to our revenue and profitability, costs associated with complying with new or amended laws and regulations affecting our business, declines in our stock price, reduced availability and less favorable terms of future borrowings, valuation of our pension obligations, reduced credit-worthiness of our customers, and potential impairment of the carrying value of indefinite-lived intangible assets. 23 Table of Contents The Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Operations The following table provides highlights of our financial performance (in thousands, except percentages): For the Years Ended December 31, 2024 2023 $ Change % Change Net sales: Branded Products $ 353,314 $ 342,680 $ 10,634 3.1 % Healthcare Apparel 119,191 113,878 5,313 4.7 % Contact Centers 96,949 91,500 5,449 6.0 % Net intersegment eliminations (3,778 ) (4,756 ) 978 (20.6 %) Consolidated net sales 565,676 543,302 22,374 4.1 % Gross margin: Branded Products 124,723 114,627 10,096 8.8 % Healthcare Apparel 45,746 42,281 3,465 8.2 % Contact Centers 52,207 49,148 3,059 6.2 % Net intersegment eliminations (2,098 ) (2,509 ) 411 (16.4 %) Consolidated gross margin 220,578 203,547 17,031 8.4 % Selling and administrative expenses: Branded Products 94,384 88,225 6,159 7.0 % Healthcare Apparel 41,149 38,209 2,940 7.7 % Contact Centers 42,999 39,682 3,317 8.4 % Intersegment Eliminations (2,098 ) (2,509 ) 411 (16.4 %) Other 23,492 20,453 3,039 14.9 % Consolidated selling and administrative expenses 199,926 184,060 15,866 8.6 % Interest expense 6,358 9,718 (3,360 ) (34.6 %) Income before income tax expense 14,294 9,769 4,525 46.3 % Income tax expense 2,290 997 1,293 129.7 % Net income 12,004 8,772 3,232 36.8 % EBITDA(1) $ 34,097 $ 33,482 $ 615 1.8 % (1) Please refer to "Non-GAAP Financial Measure" below for a reconciliation of EBITDA to net income. 24 Table of Contents Net Income The Company generated net income of $12.0 million during the year ended December 31, 2024 and net income of $8.8 million during the year ended December 31, 2023.
Income tax expense and the effective tax rate for the year ended December 31, 2023 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.
Income tax expense and the effective tax rate for the year ended December 31, 2024 and 2023 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.
The presentation of the Company’s Adjusted EBITDA may change from time to time, including as a result of changed business conditions, new accounting pronouncements or otherwise. If the presentation changes, the Company undertakes to disclose any change between periods and the reasons underlying that change.
The presentation of the Company’s EBITDA may change from time to time, including as a result of changed business conditions, new accounting pronouncements or otherwise. If the presentation changes, the Company undertakes to disclose any change between periods and the reasons underlying that change.
From a long-term perspective, we expect that demand for our signature marketing brands, including Fashion Seal Healthcare® and Wink™, will continue to provide opportunities for growth and increased market share. 20 Table of Contents Contact Centers In our Contact Centers segment (also known as “The Office Gurus”), which operates in El Salvador, Belize, Jamaica, Dominican Republic, and the United States, we provide outsourced, nearshore business process outsourcing, contact and call-center support services to North American customers.
From a long-term perspective, we expect that demand for our signature marketing brands, including Fashion Seal Healthcare® and Wink®, will continue to provide opportunities for growth and increased market share. 22 Table of Contents Contact Centers In our Contact Centers segment (also known as “The Office Gurus”), which operates in El Salvador, Belize, Jamaica, Dominican Republic, and the United States, we provide outsourced, nearshore business process outsourcing, contact and call-center support services to North American customers.
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.
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.
We currently anticipate that we will spend more in capital expenditures in 2024 than we spent in 2023. Management currently believes that the combination of our current cash level, cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the above requirements for the next twelve months.
We currently anticipate that we will spend more in capital expenditures in 2025 than we spent in 2024. Management currently believes that the combination of our current cash level, cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the above requirements for the next twelve months.
The Company expects to permanently reinvest the earnings from its wholly-owned Brazilian and UK subsidiaries, and accordingly, has not provided deferred taxes on the subsidiaries’ undistributed net earnings or basis differences. The Company believes that the tax liability that would be incurred upon repatriation of the earnings from its Brazilian and UK subsidiaries is immaterial at December 31, 2023.
The Company expects to permanently reinvest the earnings from its wholly-owned Brazilian and UK subsidiaries, and accordingly, has not provided deferred taxes on the subsidiaries’ undistributed net earnings or basis differences. The Company believes that the tax liability that would be incurred upon repatriation of the earnings from its Brazilian and UK subsidiaries is immaterial at December 31, 2024.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our Financial Statements, which present our results of operations for the years ended December 31, 2023 and 2022, as well as our financial positions at December 31, 2023 and 2022, contained elsewhere in this Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our Financial Statements, which present our results of operations for the years ended December 31, 2024 and 2023, as well as our financial positions at December 31, 2024 and 2023, contained elsewhere in this Form 10-K.
Reserves are also estimated for uncertain tax positions that are currently unresolved. The Company routinely monitors the potential impact of such situations and believes that it is properly reserved. For the year ended December 31, 2023, there was no significant change in total unrecognized tax benefits.
Reserves are also estimated for uncertain tax positions that are currently unresolved. The Company routinely monitors the potential impact of such situations and believes that it is properly reserved. For the year ended December 31, 2024, there was no significant change in total unrecognized tax benefits.
As of December 31, 2023, we had an accrued liability of $0.8 million for unrecognized tax benefits. We accrue interest and penalties related to unrecognized tax benefits in income tax expense, and the related liability is included in other long-term liabilities in our balance sheet. 30 Table of Contents
As of December 31, 2024, we had an accrued liability of $0.9 million for unrecognized tax benefits. We accrue interest and penalties related to unrecognized tax benefits in income tax expense, and the related liability is included in other long-term liabilities in our balance sheet. 32 Table of Contents
Adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation or as an alternative to net income (loss), 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.
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 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.
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. EBITDA is not a measure of financial performance under GAAP.
If actual product demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required, which may be material. An additional write-down in value of 5% of inventories would result in additional expense of approximately $5.0 million.
Historical inventory usage, current revenue trends and market conditions are considered in estimating both excess and obsolete inventories. If actual product demand and market conditions are less favorable than those projected by management, inventory write-downs may be required, which may be material. An additional write-down in value of 5% of inventories would result in additional expense of approximately $5.0 million.
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), (iv) the non-cash charges from asset impairments and (v) gains or losses on the sale of property, plant and equipment.
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).
We believe that the following critical accounting policies and estimates have a higher degree of inherent uncertainty and require our most significant judgments. 28 Table of Contents Revenue Recognition Revenue is measured at the amount of consideration we expect to receive in exchange for the goods or services.
We believe that the following critical accounting policies and estimates have a higher degree of inherent uncertainty and require our most significant judgments. Revenue Recognition 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.
An escalating war in the Middle East, prolonged inflationary conditions, high and/or increased interest rates, additional sanctions or retaliatory measures related to the Russia-Ukraine crisis, or other situations, could further negatively affect U.S. and international commerce and exacerbate or prolong the period of high energy prices.
While inflation and interest rates decreased in 2024, the effects of the conflict in the Middle East, further fluctuations in inflationary conditions and interest rates, additional sanctions or retaliatory measures related to the Russia-Ukraine crisis or other situations, including deteriorating or prolonged diplomatic tension between the United States and China, could further negatively affect U.S. and international commerce and exacerbate or prolong the period of high energy prices.
The following table reconciles net income (loss) to Adjusted EBITDA (in thousands): Years Ended December 31, 2023 2022 Net income (loss) $ 8,772 $ (31,970 ) Interest expense 9,718 4,894 Income tax expense (benefit) 997 (6,065 ) Depreciation and amortization 13,995 13,004 Goodwill impairment charge - 45,918 Intangible assets impairment charge - 5,581 Gain on sale of property, plant and equipment - (3,435 ) Adjusted EBITDA $ 33,482 $ 27,927 Critical Accounting Policies and Estimates Our discussion and analysis of financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP.
The following table reconciles net income to EBITDA (in thousands): Years Ended December 31, 2024 2023 Net income $ 12,004 $ 8,772 Interest expense 6,358 9,718 Income tax expense 2,290 997 Depreciation and amortization 13,185 13,995 Intangible assets impairment charge 260 - EBITDA $ 34,097 $ 33,482 30 Table of Contents Critical Accounting Estimates Our discussion and analysis of financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP.
Contact Centers net sales increased 8.6% before intersegment eliminations and 11.8% after intersegment eliminations for the year ended December 31, 2023 compared to the year ended December 31, 2022. These increases were primarily attributed to onboarding of new customers in 2023. Gross Margin Gross margin is defined as net sales less cost of goods sold.
Contact Centers net sales increased 6.0% before intersegment eliminations and 7.4% after intersegment eliminations for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase in net sales was attributable to sales growth from both new and existing customers. Gross Margin Gross margin is defined as net sales less cost of goods sold.
Additionally, we use a non-GAAP financial measure to evaluate our results of operations. For important information regarding the use of such non-GAAP financial measure, including reconciliations to the most comparable GAAP measure, see the section titled “Non-GAAP Financial Measure” below. Recent Acquisitions On May 1, 2022, the Company, through BAMKO, acquired substantially all of the assets of Guardian Products, Inc.
Additionally, we use a non-GAAP financial measure to evaluate our results of operations. For important information regarding the use of such non-GAAP financial measure, including reconciliations to the most comparable GAAP measure, see the section titled “Non-GAAP Financial Measure” below. Business Outlook Superior Group of Companies, Inc.
As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 33.6% for the year ended December 31, 2023 and 34.7% for the year ended December 31, 2022.
As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 44.4% for the year ended December 31, 2024 and 43.4% for the year ended December 31, 2023.
The rate increase was primarily driven by a favorable shift in the mix of pricing and customers, lower supply chain costs and a decrease in inventory write-downs of $1.4 million. Gross margin rate for our Healthcare Apparel segment was 37.1% for the year ended December 31, 2023 and 28.8% for the year ended December 31, 2022.
Gross margin rate for our Healthcare Apparel segment was 38.4% for the year ended December 31, 2024 and 37.1% for the year ended December 31, 2023. The rate increase was primarily driven by lower supply chain costs.
Global Economic and Political Conditions Economic and political events in recent years have altered the landscape in which we and other U.S. companies operate in a variety of ways. In response to inflationary pressures, the U.S.
Global Economic and Political Conditions Economic and political events over the past several years have altered the landscape in which we and other U.S. companies operate in a variety of ways. World events, including the Russian invasion of Ukraine and the resulting economic sanctions have impacted the global economy, including by exacerbating inflationary and other pressures.
Inventories are stated at the lower of cost or net realizable value. Judgments and estimates are used in determining the likelihood that goods on hand can be sold to customers. Historical inventory usage, current revenue trends and market conditions are considered in estimating both excess and obsolete inventories.
Inventories The Company at all times carries inventories of both raw materials and finished products. Inventories are stated at the lower of cost or net realizable value. Judgments and estimates are used in determining the likelihood that goods on hand can be sold to customers.
Additionally, the cost of the Company’s future sources of liquidity may differ from the costs of the Company’s sources of liquidity to date. Working Capital Superior carries inventories of both raw materials and finished products, the practice of which requires substantial working capital, which we believe to be common in the industry.
Cash Requirements Working Capital Needs The Company carries inventories of both raw materials and finished products, the practice of which requires substantial working capital, which we believe to be common in the industry.
Goodwill and indefinite-lived intangible assets such as trade names are not amortized but are subject to an annual (or under certain circumstances more frequent) impairment test in the fourth quarter based on their estimated fair value.
Intangibles Indefinite-lived intangible assets such as trade names are not amortized but are subject to an annual impairment test in the fourth quarter based or on an interim basis if there are indicators of impairment present.
Material Long-Term Plans for Cash Beyond the next twelve months, our principal demand for funds will be for maintenance of our core business, to satisfy the requirements shown in the columns “2025-2026” and “2027-2028” in the contractual obligations table below, as well as the obligations described in footnote (3) to the table, and the continuation of the Company’s ongoing capital expenditure program designed to improve the effectiveness and capabilities of its facilities and technology.
Long-Term Liquidity Beyond the next twelve months, our principal demand for funds will be for maintenance of our core business, to satisfy long-term contractual obligations, stock repurchases, any potential merger and acquisition activity and the Company’s ongoing capital expenditure program designed to improve the effectiveness and capabilities of its facilities and technology.
Adjusted EBITDA Adjusted EBITDA (a non-GAAP financial measure) was $33.5 million and $27.9 million during the years ended December 31, 2023 and 2022, respectively.
EBITDA EBITDA was $34.1 million and $33.5 million during the years ended December 31, 2024 and 2023, respectively.
Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Inventories The Company at all times carries inventories of both raw materials and finished products.
Contract termination terms may involve 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 will not occur when the uncertainty associated with the variable consideration is resolved.
Gross margin rate for the Company was 37.5% for the year ended December 31, 2023 and 33.4% for the year ended December 31, 2022. The rate increase was primarily due to a decrease in inventory write-downs of $11.2 million and an improvement in gross margin rate for our Branded Products segment, the Company’s largest segment.
Gross margin rate for the Company was 39.0% for the year ended December 31, 2024 up from 37.5% for the year ended December 31, 2023. The rate increase was primarily due to an improvement in gross margin rates in our Branded Products and Healthcare Apparel reportable segments.
Adjusted EBITDA during the year ended December 31, 2023 compared to the year ended December 31, 2022 increased primarily due to a decrease in inventory write-downs, partially offset by an increase in Contact Centers selling and administrative expenses.
EBITDA for the year ended December 31, 2024 compared to the year ended December 31, 2023 increased primarily due to increased net sales and gross margins in all three of our reportable segments, partially offset by an increase in selling and administrative expenses across all of our reportable segments.
Selling and Administrative Expenses As a percentage of net sales, total selling and administrative expenses was 33.7% for the year ended December 31, 2023 and 30.5% for the year ended December 31, 2022.
The rate remained flat year over year as cost increases kept pace with revenue increases. 25 Table of Contents Selling and Administrative Expenses As a percentage of net sales, total selling and administrative expenses was 35.3% for the year ended December 31, 2024 and 33.9% for the year ended December 31, 2023.
Gross margin rate for our Contact Centers segment was 53.7% for the year ended December 31, 2023 and 59.1% for the year ended December 31, 2022. The rate decrease was primarily due to increased employee related costs of our agents, partially offset by price increases.
Gross margin rate for our Contact Centers segment was 53.8% for the year ended December 31, 2024 and 53.7% for the year ended December 31, 2023.
The Company’s primary source of liquidity has been its net income and the use of credit facilities and term loans as described further below. The cost of borrowing increased in 2023, with the weighted average interest rate on outstanding borrowings under the revolving credit facility of 6.7% at December 31, 2023 compared to 6.2% at December 31, 2022.
The cost of borrowing decreased in 2024, with the weighted average interest rate on outstanding borrowings under our Credit Facilities of 5.5% at December 31, 2024 compared to 6.7% at December 31, 2023. As of December 31, 2024, the Company had undrawn capacity of $103.0 million under the revolving credit facility.
The increase in net income during the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily due to goodwill and indefinite-lived intangible asset impairment charges of $51.5 million incurred in the prior year period, a decrease in inventory write-downs of $11.2 million, partially offset by increases in income tax expense, Contact Centers selling and administrative expenses and interest expense.
The increase in net income during the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to increases in net sales and gross margins in all three of our reportable segments, and a decrease in interest expense, partially offset by an increase in selling and administrative expenses across all of our reportable segments.
The weighted average interest rate on our outstanding borrowings for the year ended December 31, 2023 was 7.0% compared to 2.4% for the year ended December 31, 2022. Income Taxes The effective income tax rate was 10.2% and 15.9% for the years ended December 31, 2023 and 2022, respectively.
Income Taxes Income tax expense increased to $2.3 million for the year ended December 31, 2024 from $1.0 million for the year ended December 31, 2023. The effective tax rate was 16.0% and 10.2% for the year ended December 31, 2024 and 2023, respectively.
As of December 31, 2023, the Company had $94.4 million in outstanding borrowings under its Credit Facilities, consisting of $25.0 million outstanding under the revolving credit facility and $69.4 million outstanding under a term loan.
For the year ended December 31, 2024, the Company had $7.7 million of net debt payments, consisting of $50.0 million in payments on the revolving credit facility and $4.7 million of payments in the term loan.
The rate increase was primarily attributed to increased employee related expenses, including pay rate increases and costs associated with employees returning to the office, and an increase in depreciation expense.
The rate increase was primarily attributable to an increase in employee related expenses, including both headcount and select pay rate increases to support sales growth, as well as, an increase in bad debts expense.
This sale was part of management’s plan to relocate the Company’s corporate headquarters to St. Petersburg, Florida. Interest Expense Interest expense increased to $9.7 million for the year ended December 31, 2023 from $4.9 million for the year ended December 31, 2022.
Interest Expense Interest expense decreased to $6.4 million for the year ended December 31, 2024 from $9.7 million for the year ended December 31, 2023.
The rate decrease was primarily driven by reductions in overhead costs. 23 Table of Contents As a percentage of net sales, selling and administrative expenses for our Contact Centers segment was 43.4% for the year ended December 31, 2023 and 39.9% for the year ended December 31, 2022.
The rate increase was primarily due to increased employee related costs and sales commissions, partially offset by a decrease in bad debts expense for customer accounts. As a percentage of net sales, selling and administrative expenses for our Healthcare Apparel segment was 34.5% for the year ended December 31, 2024 and 33.6% for the year ended December 31, 2023.
The Company at all times evaluates its capital expenditure program in light of prevailing economic conditions.
The Company at all times evaluates its capital expenditure program in light of prevailing economic conditions. The Company's material contractual obligations include outstanding debt, operating leases, long-term pension liability and non-qualified deferred compensation plan liabilities in Other Liabilities.
For more information on the written put options, please refer to the disclosure in Note 1 to the Financial Statements, which is incorporated herein by reference. As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 25.7% for the year ended December 31, 2023 and 23.2% for the year ended December 31, 2022.
The rate increase was primarily driven by increased commissions, employee related costs, increased expenditures related to marketing, advertising activities and the expiration of our written put option. As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 26.7% for the year ended December 31, 2024 and 25.7% for the year ended December 31, 2023.
The decrease was primarily driven by a net sales decline in Branded Products, partially offset by an increase in Healthcare Apparel and Contact Centers net sales. Branded Products net sales decreased 11.7%, or $45.3 million, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Healthcare Apparel net sales increased 4.7%, or $5.3 million, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to higher digital sales from both our wholesale customers and our direct-to-consumer website, partially offset by lower volume from our store-based wholesale customers.
As of December 31, 2023 and 2022, indefinite-lived intangible assets of $13.6 million and $14.2 million were included in the Branded Products segment and the Healthcare Apparel segment, respectively. Income Taxes The Company is required to estimate and record income taxes payable for federal, state and foreign jurisdictions in which the Company operates.
As part of our annual impairment assessments the Company determined the fair values were greater than the carrying values. 31 Table of Contents Income Taxes The Company is required to estimate and record income taxes payable for federal, state and foreign jurisdictions in which the Company operates.
As of December 31, 2023, the Company had undrawn capacity of $100.0 million under the revolving credit facility. In the future, the Company may continue to use credit facilities and other secured and unsecured borrowings as a source of liquidity. The Company may also begin relying on the issuance of equity or debt securities.
In the future, the Company may continue to use credit facilities and other secured and unsecured borrowings as a source of liquidity. Additionally, the cost of the Company’s future sources of liquidity may differ from the costs of the Company’s sources of liquidity to date.
Dividends and Share Repurchase Program During the years ended December 31, 2023 and 2022, the Company paid cash dividends of $9.2 million and $8.7 million, respectively. The Company anticipates that it will continue to pay dividends in the future as financial conditions permit.
Please refer to Note 5 to our Consolidated Financial Statements located in Item 8 of Part II of this Annual Report on Form 10-K for additional details on our outstanding long-term debt. Dividends and Share Repurchase Program During the years ended December 31, 2024 and 2023, the Company paid cash dividends of $9.3 million and $9.2 million, respectively.
The previous Remote Staffing Solutions segment was renamed Contact Centers segment. All prior period segment information has been recast to reflect this change in reportable segments. Branded Products In our Branded Products segment, we produce and sell customized merchandising solutions, promotional products and branded uniform programs to our customers.
(together with its subsidiaries, the “Company,” “Superior,” “we,” “our,” or “us”) is comprised of three reportable business segments: (1) Branded Products, (2) Healthcare Apparel and (3) Contact Centers. Branded Products In our Branded Products segment, we produce and sell customized merchandising solutions, promotional products and branded uniform programs to our customers.
Excess cash generated from operating activities during the year ended December 31, 2023 was used to repay outstanding borrowings under the revolving credit facility. 26 Table of Contents Credit Facilities (See Note 8 to the Financial Statements) 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.
The Company has access to a Revolving Credit Facility with a maximum principal amount of $125.0 million and a term loan in the original aggregate principal amount of $75.0 million and the ability to request incremental revolving credit or term loan facilities in an aggregate amount of up to an additional $75.0 million, subject to obtaining additional lender commitments and satisfying certain other conditions.
Summary of Results Net Income (loss) The Company generated net income of $8.8 million during the year ended December 31, 2023 and a net loss of $32.0 million during the year ended December 31, 2022.
For the year ended December 31, 2023, the Company had $61.8 million in net debt payments, consisting of $64.0 million in payments on the revolving credit facility and $3.8 million in payments on the term loan.
Removed
(“Guardian”) based in Norcross, Georgia. Guardian is a branded merchandise company that is one of the leading providers of promotional products to automotive dealers nationwide.
Added
The ongoing conflict in the Middle East could continue to affect oil prices and have other negative effects on the global economy. Civil unrest in countries where we manufacture products, such as Haiti, may result in our facilities incurring damage or destruction that interrupts our manufacturing processes and adversely affects our reputation and our relationships with our customers.
Removed
The purchase price for the acquisition consisted of the following: (a) $11.1 million in cash, (b) the issuance of 116,550 restricted shares of Superior’s common stock (the “Guardian Stock”) that vest ratably over a three-year period, and (c) estimated potential future payments of approximately $2.3 million in additional contingent consideration based on the results of the acquired business through April 2025.
Added
Prolonged or recurring disruptions or instability in the United States and global economies, and how the world reacts to those disruptions or instability, could have long-term impacts on our business.
Removed
The Guardian Stock is subject to transfer restrictions over the three-year period following the closing of the acquisition. Business Outlook Superior is comprised of three reportable business segments: (1) Branded Products, (2) Healthcare Apparel and (3) Contact Centers.
Added
For a reconciliation of EBITDA to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Non-GAAP Financial Measure” below. Net Sales Net sales for the Company increased 4.1% or $22.4 million, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Removed
Beginning in the second quarter of 2022, the Company realigned its reportable segments to correspond with changes to its organizational responsibilities, management structure and operating model. Prior to implementing the current segment reporting, the Company’s Uniforms and Related Products segment included both healthcare apparel and uniforms.
Added
The increase was attributable to net sales increases in all three of our reportable segments. Branded Products net sales increased 3.1%, or $10.6 million, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to the expansion of business within existing accounts and new client wins.
Removed
As part of the change in reportable segments, the branded portion of the uniforms business was combined with the previous Promotional Products segment to form the Branded Products segment, the healthcare apparel business became its own segment named Healthcare Apparel and income and expenses related to corporate functions that are not specifically attributable to an individual reportable segment are no longer presented in segment results.
Added
Gross margin rate for our Branded Products segment was 35.3% for the year ended December 31, 2024 and 33.5% for the year ended December 31, 2023. The gross margin rate increased as compared to the prior year period primarily driven by sourcing mix resulting in lower product costs and pricing increases to existing customers.
Removed
Federal Reserve repeatedly has raised interest rates, resulting in an increase in the cost of borrowing for us, our customers, our suppliers, and other companies relying on debt financing. World events, such as the Russian invasion of Ukraine and the resulting economic sanctions, have impacted the global economy, including by exacerbating inflationary and other pressures.
Added
The rate increase was primarily attributable to an increase in expenditures related to marketing and advertising activities along with employee related costs which were partially offset by expense leverage on increased net sales.
Removed
In addition, the threat of a wider war in the Middle East after the Hamas terrorist attacks on Israel could affect oil prices and have other effects on the global economy. Both crises have potentially far-reaching impacts on energy and food markets and global trade.
Added
Selling and administrative expenses for our Other segment, which represents unallocated Corporate costs, increased by $3.0 million, primarily driven by an increase in employee related costs, third party professional services and the fair value recognition of a written put option which expired in the second quarter of 2024.
Removed
At this time, the extent and duration of these economic and political events and their effects on the economy and the Company are impossible to predict, but the impact on the Company’s business could be material.
Added
This decrease was due to a $30.7 million decrease in our weighted average outstanding borrowings along with a decrease in the weighted average interest rate on those borrowings from 6.7% for the year ended December 31, 2023 to 5.5% for the year ended December 31, 2024.
Removed
The decrease was primarily due to decreased demand during the first half of 2023 as a result of then-current market conditions that tightened our customers’ advertising spending, the timing of new branded uniform rollout programs for certain customers and a decrease of $6.3 million in net sales of personal protective equipment driven by the easing of the COVID-19 pandemic.
Added
The effective tax rate may vary from year to year 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. 26 Table of Contents Liquidity and Capital Resources Liquidity Analysis Short-Term Liquidity For the next twelve months, our primary capital requirements are for capital to maintain our operations, meet contractual obligations, primarily consisting of our revolving credit facility, term loan, operating leases and acquisition-related contingent liabilities, and fund capital expenditures, dividends, stock repurchases, any potential merger and acquisition activity and other general corporate purposes.
Removed
These decreases were partially offset by an increase in net sales of $12.8 million attributable to the acquisition of Guardian in May 2022. 22 Table of Contents Healthcare Apparel net sales increased 0.5%, or $0.6 million, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Added
For additional details related to the Company’s long-term contractual obligations for long-term debt see Note 5, for contractual obligations for leases see Note 14 and for contractual obligations for acquisition-related contingent liabilities see Note 7.
Removed
The increase was primarily due to an increase in digital sales, including the launch of a direct-to-consumer website during the year ended December 31, 2023, partially offset by challenging market conditions as a result of saturated inventory levels in the industry post-COVID-19 pandemic that led to a decrease in demand for healthcare apparel during 2023.
Added
Management currently believes that the combination of our current cash level, cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the above requirements.
Removed
Inventory write-downs during the year ended December 31, 2022 included write-downs of $11.4 million on excess and obsolete inventory related to discontinued styles and personal protective equipment within our Healthcare Apparel segment. Gross margin rate for our Branded Products segment was 33.5% for the year ended December 31, 2023 and 29.6% for the year ended December 31, 2022.
Added
Please refer to Notes 5 and 15 to our Consolidated Financial Statements located in Item 8 of this Annual Report on Form 10-K for our contractual obligations, including schedules of future minimum payments.
Removed
The rate increase was primarily due to decrease in inventory write-downs of $9.8 million, partially offset by the impact of challenging market conditions and strategic efforts to right size inventory levels resulting in lower selling prices.
Added
The Company also requires working capital to invest in new product lines and technologies. 27 Table of Contents Capital expenditures Capital expenditures were $4.4 million and $5.0 million for the years ended December 31, 2024 and 2023, respectively. Debt Service Obligations In 2024 and 2023, we paid interest of $5.9 million and $9.6 million, respectively.
Removed
The rate increase was primarily attributed to expense deleverage resulting from the 11.7% decrease in Branded Products net sales, an increase in selling and administrative expenses for our Contact Centers segment and unrealized losses of $0.5 million recognized in 2023 compared to unrealized gains of $1.6 million recognized in 2022 on written put options, partially offset by a decrease in bad debt expense.
Added
Sources of Capital and Liquidity Cash on Hand As of December 31, 2024, we had $18.8 million of cash on our balance sheet, of which $15.7 million of cash was held at foreign subsidiaries.
Removed
The rate increase was primarily due to expense deleverage on the 11.7% decrease in net sales and costs incurred during 2023 to consolidate warehouse facilities related to promotional products inventory, partially offset by a decrease in bad debt expense of $2.3 million due to improved collection efforts.
Added
Excess cash of $9.0 million from foreign operations may generally be transferred to operations in the US. 28 Table of Contents Cash Flows from Operations Net cash provided by operating activities primarily results from cash collected from customers for our promotional products, branded uniforms, healthcare apparel and accessories, offset by cash payments made for raw materials, salaries and payroll related benefits, leases and other general corporate expenditures.
Removed
Goodwill Impairment Charge In conjunction with the re-segmentation during the second quarter of 2022, the Company performed a goodwill impairment analysis and determined that the estimated fair value of the previous Uniforms and Related Products segment was lower than its carrying value primarily as the result of current market conditions, decline in expected cash flows and decrease in the Company’s stock price.
Added
In 2024, net cash provided by operating activities was $33.4 million. Cash collections from customers exceeded aggregate cash payments to vendors, lessors, employees and lenders primarily driven by the Company’s efforts to reduce outstanding receivable balances. In 2023, net cash provided by operating activities was $78.9 million.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
4 edited+0 added−0 removed6 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
4 edited+0 added−0 removed6 unchanged
2023 filing
2024 filing
Biggest changeExcluding intercompany payables and receivables considered to be long-term investments, changes in exchange rates for assets and liabilities not denominated in their functional currency are reported as foreign currency transaction gains (losses) within selling and administrative expenses in our statements of comprehensive income (loss). During the years ended December 31, 2023 and 2022 foreign currency losses were not significant.
Biggest changeExcluding intercompany payables and receivables considered to be long-term investments, changes in exchange rates for assets and liabilities not denominated in their functional currency are reported as foreign currency transaction gains (losses) within selling and administrative expenses in our statements of comprehensive income. During the years ended December 31, 2024 and 2023 foreign currency transaction gains (losses) were not significant.
In certain cases, we may enter into foreign currency cash flow hedges to reduce the variability of cash flows associated with our sales and expenses denominated in foreign currency. As of December 31, 2023, we had no foreign currency exchange hedging contracts.
In certain cases, we may enter into foreign currency cash flow hedges to reduce the variability of cash flows associated with our sales and expenses denominated in foreign currency. As of December 31, 2024, we had no foreign currency exchange hedging contracts.
We also have exposure to foreign currency exchange risk from the translation of foreign subsidiaries from the local currency into the U.S. dollar. Comprehensive income (loss) during the years ended December 31, 2023 and 2022, included a foreign currency translation adjustment gain of $0.7 million and a foreign currency translation adjustment loss of $0.2 million, respectively. 31 Table of Contents
We also have exposure to foreign currency exchange risk from the translation of foreign subsidiaries from the local currency into the U.S. dollar. Comprehensive income (loss) during the years ended December 31, 2024 and 2023, included a foreign currency translation adjustment loss of $3.4 million and a foreign currency translation adjustment gain of $0.7 million, respectively. 33 Table of Contents
A hypothetical increase in the SOFR of 100 basis points as of January 1, 2023 would have resulted in approximately $1.2 million in additional pre-tax interest expense for the year ended December 31, 2023. For further information regarding our debt instruments, see Note 8 to the Financial Statements.
A hypothetical increase in the SOFR of 100 basis points as of January 1, 2024 would have resulted in approximately $0.9 million in additional pre-tax interest expense for the year ended December 31, 2024. For further information regarding our debt instruments, see Note 5 to the Financial Statements.