SUPERIOR GROUP OF COMPANIES, INC. Annual Report - Your Investor's Guide

For investors seeking a clear understanding of Superior Group of Companies, Inc. (SGC), this guide distills the essential insights from their latest annual report. We'll cut through the jargon to provide a concise overview of their business, financial performance, and strategic outlook.

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Understanding Superior Group of Companies, Inc. (SGC)

Superior Group of Companies, Inc. (Nasdaq: SGC) is a leading provider of uniforms, branded products, and promotional merchandise. The company helps businesses and organizations project a professional image through its diverse offerings across three main segments:

• Healthcare Apparel: SGC designs and manufactures scrubs and medical uniforms under popular brands like Wink™ and Zoey and Chloe, serving healthcare professionals.
• Branded Products: This segment offers promotional products and corporate gifts that help companies build their brand identity.
• Contact Center & Uniforms: SGC supplies uniforms and related products for various industries, including public safety, hospitality, and retail.

SGC operates as an "accelerated filer," meaning it submits reports to the SEC faster than some smaller companies, providing investors with timely information. It also qualifies as a "smaller reporting company," which allows for some scaled-back disclosure requirements while still offering comprehensive financial details. As of June 30, 2025, SGC's publicly traded shares had a total market value of approximately $116.3 million, with about 15.7 million shares outstanding as of February 28, 2026.

Financial Performance: A Look at 2025

SGC delivered moderate growth and profitability for the fiscal year ended December 31, 2025.

• Revenue: Net sales reached $550.2 million, increasing 5.8% from $520.0 million in 2024. Strong performance in the Healthcare Apparel segment and increased demand for branded products primarily drove this growth.
  • "Bill-and-hold arrangements"—where SGC bills customers but temporarily holds goods before shipping—contributed $38.6 million to sales in 2025, up from $33.6 million in 2024. This represents approximately 7% of total net sales, a growing but still relatively small portion of overall revenue.
• Profitability:
  • Gross Profit rose to $192.6 million in 2025, up from $182.0 million in 2024, maintaining a stable gross margin of approximately 35%.
  • Operating Income increased to $38.5 million in 2025, compared to $32.0 million in 2024, reflecting improved operational efficiency.
  • Net Income for the year totaled $25.1 million, a healthy 25.5% increase from $20.0 million in 2024.
  • Diluted Earnings Per Share (EPS) stood at $1.60 in 2025, up from $1.27 in 2024.
• Cash Flow & Balance Sheet:
  • SGC generated strong cash flow from operations of $40.3 million in 2025, demonstrating its ability to convert sales into cash.
  • As of December 31, 2025, the company held $32.5 million in cash and cash equivalents. It effectively managed its debt, reporting total long-term debt of $148.0 million. Inventory levels remained well-managed at $110.0 million, reflecting efficient supply chain practices.
• Shareholder Returns: SGC continued its commitment to shareholders, paying quarterly cash dividends totaling $0.60 per share for fiscal year 2025.

Strategic Focus and Outlook

SGC's strategy focuses on leveraging its strong brand portfolio, expanding e-commerce capabilities, and pursuing targeted acquisitions to enhance market share and product offerings. Management emphasizes:

• Innovation: Introducing new product lines and materials, particularly in healthcare apparel, to meet evolving customer demands.
• Operational Excellence: Investing in technology and supply chain optimization to improve efficiency and reduce costs.
• Digital Transformation: Enhancing online platforms to improve customer experience and drive direct-to-consumer sales. For 2026, the company anticipates continued modest revenue growth, driven by new product launches and market penetration efforts. SGC will also focus on maintaining healthy profit margins amidst ongoing economic uncertainties.

Managing Key Risks

Like all businesses, SGC navigates various risks, which the company actively monitors and manages:

• Cybersecurity: Recognizing the critical importance of data security, SGC maintains a robust cybersecurity framework. Its Board of Directors and Audit Committee oversee the program. The Chief Information Officer (CIO), who brings over 20 years of technology and security experience, leads day-to-day implementation. The Audit Committee receives quarterly updates on prevention, detection, and remediation efforts, while the full Board conducts an annual review. SGC also has a clear incident response plan in place to ensure swift and effective action.
• Supply Chain Volatility: As a global apparel and products company, SGC faces potential disruptions in raw material sourcing (e.g., cotton, polyester), manufacturing, and shipping. Geopolitical events, trade disputes, and labor shortages can impact costs and delivery times. SGC mitigates these risks through diversified supplier relationships and strategic inventory management.
• Inflation and Economic Conditions: Rising costs for raw materials, labor, and transportation, coupled with potential shifts in consumer spending due to economic downturns, can impact SGC's profitability and sales volume. The company aims to manage these pressures through pricing strategies and operational efficiencies.
• Competition: The uniform and promotional products markets are highly competitive. SGC continuously invests in brand differentiation, product innovation, and customer service to maintain its market position against both established players and new entrants.
• Talent Acquisition and Retention: Attracting and retaining skilled employees—from designers to sales professionals and manufacturing staff—remains crucial for SGC's continued success. Labor market dynamics and wage inflation pose ongoing challenges.

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In summary, Superior Group of Companies, Inc. achieved a solid financial performance in 2025, marked by revenue growth and increased profitability. With a clear strategic direction and proactive risk management, SGC positions itself to continue its growth trajectory while navigating the complexities of the global market.