The Company recorded $3.7 million in identifiable intangibles at fair value, consisting of $2.5 million in acquired customer relationships and $1.2 million for the brand name. The intangible assets associated with the customer relationships are being amortized for ~~seven~~ ~~years. The brand name is considered an indefinite-life asset and as such is~~ ~~not~~ being amortized. The difference between the fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities.

On ~~December 2, 2021,~~ the Company, principally through BAMKO, acquired substantially all of the assets of Sutter’s Mill Specialties, Inc. (“Sutter’s Mill”) of Tempe, Arizona. Sutter’s Mill is a vertically integrated manufacturer of high quality, decorated promotional products. Sutter’s Mill has the capability to print on demand and create customized promotional programs and products for customers of any size.

~~The purchase price of the acquisition consisted of~~ the following: (a) ~~approximately $10.5~~$11.1 million in cash, (b) the issuance of ~~45,620~~116,550 restricted shares of Superior’s common stock (the “Guardian Stock”) that vest ratably over a three ~~year~~-year period, and (c) estimated potential future payments of approximately ~~$4.5~~$2.3 million in additional contingent consideration ~~for calendar years~~ ~~2022~~ ~~through~~ ~~2024~~ based on the results of the acquired ~~business.~~business through April 2025. The Guardian Stock is subject to transfer restrictions over the three-year period following the closing of the acquisition.

The following table ~~below~~ presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and liabilities of ~~Sutter’s Mill~~Guardian based on their estimated fair values as of the effective date of the ~~transaction. The assets and liabilities of Sutter’s Mill shown below are based on our preliminary estimates of their acquisition date fair values. Our final fair value determination~~ ~~may~~ ~~be different than those shown below.~~

~~The following is our preliminary assignment of the aggregate consideration~~transaction (in thousands):

~~In the~~ ~~first~~ ~~quarter of~~ ~~2022,~~ ~~an adjustment to increase goodwill by $0.1 million was made to the initial amounts recorded, which relates to additional consideration paid by the Company to the seller.~~

The Company recorded ~~$2.0~~$5.9 million in identifiable intangibles at fair value, consisting of ~~$1.2~~$5.0 million in acquired customer relationships, ~~$0.1~~$0.2 million for a non-compete agreement and $0.7 million for the ~~Sutter's Mill Specialties~~Guardian Products trade name. The intangible assets associated with the customer relationships are being amortized for seven years, ~~and~~ the non-compete agreement is being amortized for five ~~years. The~~years and the trade name is ~~considered an indefinite-life asset and as such is~~ ~~not~~being ~~amortized.~~ amortized for two years.

The difference between the fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities. The acquisition of ~~Sutter’s Mill~~Guardian was treated as an asset purchase for income tax purpose, and therefore, the resulting goodwill from this acquisition ~~was~~is deductible for U.S. income tax purposes.

The goodwill associated with the Guardian acquisition was fully impaired during the year ended December 31, 2022 as a result of the Company’s goodwill impairment test performed during the third quarter of 2022, which was triggered by the depressed market price of the Company's common stock and corresponding significant decline in the Company’s market capitalization.

~~Effective~~On May ~~1, 2022,~~4, 2023, the Company and its domestic subsidiaries entered into the First Amendment to its Credit Agreement with the Administrative Agent and the lenders, which (i) provides a covenant relief period through ~~BAMKO, closed on~~December 31, 2023, which the ~~acquisition~~Company may opt to terminate during the fourth quarter of ~~substantially all of the assets of Guardian Products, Inc. (“Guardian”) of Norcross, Georgia. Guardian is~~2023 if it has a ~~branded merchandise company that is~~consolidated total net leverage ratio at or below 4.00 to ~~one~~1.0 ~~of the leading providers of promotional products to automotive dealers nationwide. The purchase price~~ for the ~~acquisition consisted~~two preceding consecutive fiscal quarters; (ii) permits a maximum consolidated total net leverage ratio of ~~the following: (a) cash at closing, subject~~4.5 to ~~working capital adjustments, (b) the potential for future payment in additional contingent consideration through~~ ~~May~~ 1, 4.8 to ~~2025,~~1, 4.5 to 1 and ~~(c)~~4.0 to 1 for the ~~issuance~~first, second, third and fourth quarters of 2023, respectively; (iii) amends the applicable margin pricing grid to add a tier of applicable margins (2.5% for SOFR rate loans) if the consolidated total net leverage ratio is greater than or equal to 4.0 to 1, which tier would only apply during the covenant relief period; (iv) prohibits capital expenditures during the covenant relief period that exceed $10 million, with additional limitations imposed on a quarterly basis; (v) prohibits acquisitions and incremental loans during the covenant relief period; (vi) adds sale and leaseback transactions to the list of transactions that require the Company to use the net proceeds thereof to make a mandatory prepayment under the Credit Agreement; (vii) limits restricted ~~shares~~payments to $20 million in any fiscal year, and no more than $10 million during the covenant relief period, with additional limitations imposed on a quarterly basis during the covenant relief period; and (viii) lowers the amount of permissible investments in non-loan party subsidiaries to $5 million during the ~~Company’s common stock that vest over a~~ ~~three-year~~covenant relief period.

1817

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes thereto included in the Condensed Consolidated Financial Statements in Part I, Item 1 (“Financial Statements”) of this report and in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Cautionary Note Regarding Forward Looking Statements

Certain matters discussed in this Form 10-Q are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by use of the words “may,” “will,” “should,” “could,” “expect,” ~~anticipate,~~"anticipate,” “estimate,” “believe,” “intend,” “project,” “potential,” or “plan” or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements in this Quarterly Report on Form 10-Q may include, without limitation: (1) ~~the projected impact of the COVID-19 pandemic on our, our customers’, and our suppliers’ businesses, (2)~~ projections of revenue, income, and other items relating to our financial position and results of operations, ~~(3)~~including short term and long term plans for cash (2) statements of our plans, objectives, strategies, goals and intentions, ~~(4)~~(3) statements regarding the capabilities, capacities, market position and expected development of our business operations, ~~and (5)~~(4) statements of expected industry and general economic ~~trends.~~trends and (5) the projected impact of the COVID-19 pandemic on our, our customers’, and our suppliers’ businesses.

Such forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect the anticipated results. Such risks and uncertainties include, but are not limited to, the following: the impact of competition; ~~the effect of~~ uncertainties related to supply disruptions, inflationary environment (including with respect to the ~~COVID-19 pandemic~~cost of finished goods and raw materials and shipping costs), ~~including existing~~employment levels (including labor shortages) and ~~possible future variants,~~ ongeneral economic and political conditions in the areas of the world in which the Company operates or from which it sources its supplies or the areas of the United States of America (“U.S.” or “United States”) in which the Company’s customers are located; lingering effects of the COVID-19 pandemic, including existing and possible future variants, on the United States and global markets, our business, operations, customers, suppliers and employees, including ~~without limitation~~ the length and scope of restrictions imposed by various governments and organizations and the continuing success of efforts to deliver effective vaccines ~~on a timely basis to a number of people sufficient to prevent or substantially lower the severity of incidents of infection or variants,~~and boosters, among other factors; our ability to navigate successfully the challenges posed by current global supply disruptions; general economic conditions, including employment levels, in the areas of the United States in which the Company’s customers are located;factors; changes in the healthcare, retail, hotel, food service, transportation and other industries where uniforms and service apparel are worn; our ability to identify suitable acquisition targets, discover liabilities associated with such businesses during the diligence process, successfully integrate any acquired businesses, or successfully manage our expanding operations; the price and availability of cotton and other manufacturing materials; attracting and retaining senior management and key personnel; the effect of the Company’s material weakness in internal control over financial reporting;the Company’s ability to successfully remediate its material weakness in internal control over financial reporting and to maintain effective internal control over financial reporting;and other factors described in the Company’s filings with the Securities and Exchange Commission, including those described in the “Risk Factors” section herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this Form 10-Q and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law.

Recent Acquisitions

On January 29, 2021, the Company, through BAMKO, acquired substantially all of the assets of Gifts By Design, Inc. (“Gifts by Design”) of Seattle, Washington. Gifts by Design is a promotional products and branded merchandise agency that is well-established as a developer and supplier of corporate awards, incentives, and recognition programs for some of the world’s biggest brands. The purchase price for the acquisition consisted of $6.0 million in cash at closing.

On December 2, 2021, the Company, principally through BAMKO, acquired substantially all of the assets of Sutter’s Mill Specialties, Inc. (“Sutter’s Mill”) of Tempe, Arizona. Sutter's Mill is a vertically integrated manufacturer of high quality, decorated promotional products. Sutter's Mill has the capability to print on demand and create customized promotional programs and products for customers of any size. The purchase price of the acquisition consisted of the following: (a) approximately $10.5 million in cash, (b) the issuance of 45,620 restricted shares of Superior’s common stock that vest ratably over a three-year period, and (c) potential future payments of approximately $4.5 million in additional contingent consideration for calendar years 2022 through 2024 based on the results of the acquired business.

~~Effective~~ May 1, 2022, the Company, through BAMKO, ~~closed on the acquisition of~~acquired substantially all of the assets of Guardian Products, Inc. (“Guardian”) of Norcross, Georgia. Guardian is a branded merchandise company that is one of the leading providers of promotional products to automotive dealers nationwide. The purchase price for the acquisition consisted of the following: (a) $11.1 million in cash, ~~at closing, subject to working capital adjustments,~~ (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 ~~for~~ future ~~payment~~payments of approximately $2.3 million in additional contingent consideration ~~through May 1, 2025, and (c)~~based on the ~~issuance of restricted shares~~results of the ~~Company’s common stock that vest~~acquired business through April 2025. The Guardian Stock is subject to transfer restrictions over athe three-year ~~period.~~period following the closing of the acquisition.

Business Outlook

Superior Group of Companies, Inc. (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. 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 ~~(2)~~segment included both healthcare apparel and uniforms. 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. The previous Remote Staffing Solutions ~~and (3) Promotional Products.~~segment was renamed Contact Centers segment. All prior period segment information has been recast to reflect this change in reportable segments.

~~Uniforms and Related~~Branded Products

In our ~~Uniforms and Related~~Branded Products segment, we produce and sell customized merchandising solutions, promotional products and branded uniform programs to our customers. As a strategic branding partner, we offer our customers customized branding solutions and strategies that generate favorable brand impressions, bolster customer retention and enhance employee engagement. Our products are sold to customers in a wide range of industries, including retail, hotel, food service, entertainment, technology, transportation and other industries. Sales volumes in this segment are impacted by a number of factors, including marketing programs of our customers and turnover of our customers’ employees, often times driven by the opening and closing of locations. From a long-term perspective, we believe that synergies within this segment will create opportunities to cross-sell products to new and existing customers.

Healthcare Apparel

In our Healthcare Apparel segment, we manufacture (through third parties or in our own facilities) and sell a wide range of ~~uniforms, career apparel and accessories. Our primary products are service~~healthcare apparel, such as scrubs, lab coats, protective apparel and patient gowns, provided to the healthcare industry, and service apparel, such as uniforms, provided to workers employed by our customers in various industries, including retail, hotel, food service, transportation and other industries.gowns. We sell our brands of healthcare service apparel ~~primarily~~ to healthcare laundries, dealers, distributors and ~~retailers. The COVID-19 pandemic initially created~~retailers primarily in the United States. In 2021, the Company saw increased demand for healthcare service apparel from laundries, dealers, ~~and~~ distributors, ~~that~~ service hospitals and other medical facilities. However, as a result of the effects from the COVID-19 pandemic, the healthcare apparel market in 2022 was oversupplied creating a slowdown in demand. This softening of demand has continued thus far in 2023. In an effort to capture additional market share, in the first quarter of 2023 the Company launched a direct-to-consumer website and began rebranding its signature marketing brand WonderWink® to Wink™. From a long-term perspective, we expect that demand for our signature marketing brands, including Fashion Seal Healthcare® and ~~WonderWink®~~Wink™, will continue to provide opportunities for growth and increased market share. Sales of uniforms are impacted by our customers’ opening and closing of locations and reductions, increases, and turnover of employees. The COVID-19 pandemic reduced demand for uniform apparel in many of our customers’ industries, such as the restaurant, transportation and hospitality industries. This, however, was partially offset by demand from customers in certain retail industries, such as grocery and pharmacy customers. The economic environment in the United States is continuing to return to pre-pandemic economic activity levels. While we continue to source some personal protective equipment for our customers, we anticipate that demand for personal protective equipment, including for our Uniforms and Related Products segment, will continue to decline. Based on the longer-term fundamentals of our uniforms business, however, we believe that we have growth opportunities to expand our market share.

~~Remote Staffing Solutions~~Contact Centers

This business segment (also known as “The Office Gurus”), which operates in El Salvador, Belize, Jamaica, Dominican Republic, and the United States, ~~initially started~~provides outsourced, nearshore business process outsourcing, contact and call-center support services to ~~support~~North American customers. These services are also provided internally to the Company’s ~~back office needs while improving overall efficiencies and lowering~~other two operating costs. After years of consistently improving key performance indicators, lowering costs and providing exceptional service to our Uniforms and Related Products segment in areas such as order entry, cash collections, vendor payables processing, customer service, sales, and others, The Office Gurus started selling their services to outside companies in 2009.segments. The Office Gurus has become an award-winning business process outsourcer offering inbound and outbound voice, email, text, chat and social media support. ~~Although~~The nearshore call-center market has experienced a period of growth as businesses look to reduce operating costs while maintaining high-quality customer support. Nearshore operators are able to provide comparable service to their U.S. counterparts at a fraction of the ~~COVID-19 pandemic has generated uncertainties for our customers and their industries, we continue to see increased demand for our services.~~price. With an environment and career path designed to attract and maintain top talent across all sites, we believe The Office Gurus is positioned well to continue growing this business.

2019

~~Promotional Products~~Global Economic and Political Conditions

~~For more than~~Economic and political events this year have altered the landscape in which we and other U.S. companies operate in a ~~decade, we sold promotional products on a limited basis~~variety of ways. In response to our existing Uniforms and Related Products customer base. While there were substantial opportunities to sell promotional products to those customers, it was not an area of focus, specialization, or expertise for us. On March 1, 2016, that changed with our acquisition of substantially all ofinflationary pressures, the ~~assets of BAMKO, Inc. (“BAMKO”). BAMKO~~U.S. Federal Reserve has many strengths, well-developed systems, and time-tested processes that offer significant competitive advantages. With a robust back-office support platform operated out of India, direct-to-factory sourcing operations basedrepeatedly raised interest rates, resulting in China, and proprietary technological platforms and programming capabilities that we believe are competitive, BAMKO is well positioned in the promotional products industry and continues to be a platform for potential future acquisitions. We completed two additional acquisitions in this segment in late 2017, as well as acquisitions in January 2021 and December 2021, and remain open to additional acquisitions going forward. In recent years we have seen an increase in ~~customer orders in our promotional products business and expect growth opportunities for our core promotional products business to continue. The COVID-19 pandemic created significant opportunities~~the cost of borrowing for us, ~~within the personal protective equipment market. Although we will continue to source some personal protective equipment for~~ our customers, ~~we anticipate, based~~our suppliers, and other companies relying on ~~supply~~debt financing. It has indicated that it may raise rates further. World events, including the Russian invasion of Ukraine and ~~demand factors, that opportunities~~the resulting economic sanctions, have impacted the global economy, including by exacerbating inflationary and other pressures. Prolonged inflationary conditions, high and/or increased interest rates, and additional sanctions or retaliatory measures related to ~~supply personal protective equipment,~~the Russia-Ukraine crisis, or other situations, including ~~through our Promotional Products segment, will continue to decline. Our core promotional products business has not experienced~~deteriorating or prolonged diplomatic tension between the ~~same downturn during~~United States and China, could further negatively affect U.S. and international commerce and exacerbate or prolong the ~~pandemic that many~~period of ~~our competitors experienced as increased activities from customers in certain industries, such as~~high energy prices. At this time, the ~~delivery service industry, more than offset reduced activities from customers in other industries, such as the restaurant~~extent and ~~entertainment industries. From a long-term perspective, we believe that this segment’s synergistic fit with our uniforms business will create opportunities to cross-sell the products of each~~duration of these ~~business segments~~economic and political events and their effects on the economy and the Company are too difficult to ~~new and existing customers.~~

~~COVID-19 Impact~~

The COVID-19 pandemic continues to affect our operations around the world and financial performance, and likely will continue to do so for an undetermined period of time. International, federal, state and local efforts to contain the spread of COVID-19 have continued. Government actions to address the situation remain in effect and new actions continue to be enacted or modified, including safety requirements such as recommended or mandatory use of face masks and other personal protective equipment and related products, recommended or mandated vaccinations, social distancing rules and guidelines, travel restrictions, temporary closures of non-essential businesses and other restrictive measures.

In responding to the needs of our customers, we have sourced personal protective equipment, including face masks, isolation gowns, sanitizers, gloves and COVID-19 testing kits, which contributed $3.7 million and $0.9 million to net sales during the three months ended March 31, 2022 for our Promotional Products segment and Uniforms and Related Products segment, respectively. Personal protective equipment net sales for our Promotional Products segment and Uniforms and Related Products segment were $14.2 million and $12.5 million, respectively, during the three months ended March 31, 2021.predict.

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. These business impacts could negatively affect us in a number of ways, including, but not limited to, reduced demand for our core products and services, 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 ~~goodwill or other~~ indefinite-lived intangible assets. The extent to which the COVID-19 pandemic ultimately impacts our business, financial condition, results of operations or cash flows will depend on numerous factors that continue to evolve and which we may not be able to accurately predict at this time, including the delivery of effective vaccines on a timely basis to a number of people sufficient to prevent or substantially lower the severity of incidents of infection or possible future variants of the virus, the extent and effectiveness of containment actions, availability of widespread rapid testing and effective treatment alternatives. Prolonged or recurring periods of difficult market conditions could have material adverse impacts on our business, financial condition, results of operations and cash flows.

~~Sourcing~~Summary of ~~Goods and Raw Materials~~Results

~~Along with many manufacturers that source goods~~Net Income

The Company generated net income of $0.9 million during the three months ended March 31, 2023 and ~~raw materials from abroad, we are currently experiencing continued significant supply disruptions and delays~~net income of $5.2 million during the three months ended March 31, 2022. The decrease in net income during the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was primarily due to ~~a variety of reasons. These changes are~~decreases in Branded Products net sales and Healthcare Apparel net sales, an increase in Contact Centers selling and administrative expenses, and an increase in interest expense, partially ~~driven~~offset by ~~interruptions~~an decrease in global supply chains (including as a result of port congestion and trucking shortages) and partially by a shift in customer buying habits to e-commerce, which has the effect of increasing demand for shipping capacity from Asia, leading to capacity constraints. Both factors have increased shipping times as well as the price of shipping, whether by sea, air, rail, or vehicle, this year. Shipping delays combined with significant increases in orders for our products have recently created, and are expected to continue to create, inventory pressure for us.

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. The Uniforms and Related Products segment’s principal fabrics used in the manufacture of its finished goods are cotton, polyester, cotton-synthetic and poly-synthetic blends. The majority of such fabrics are sourced in China. The Promotional Products segment relies on the supply of different types of raw materials as well as textiles, including plastic, glass, fabric and metal. The vast majority of these raw materials are principally sourced from China, either directly by BAMKO or its suppliers. If we are unable to continue to obtain our raw materials and finished products from China or if our suppliers are unable to source raw materials from China, it could significantly disrupt our business. Further, the Company and the Company’s suppliers generally source or manufacture finished goods in parts of the world that may be 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.income tax expense.

~~We currently believe challenges created~~EBITDA

EBITDA (a non-GAAP financial measure) was $6.9 million and $10.0 million during the three months ended March 31, 2023 and 2022, respectively. EBITDA during the three months ended March 31, 2023 compared to the three months ended March 31, 2022 decreased primarily due to decreases in Branded Products net sales and Healthcare Apparel net sales and an increase in selling and administrative expenses, partially offset by ~~such supply chain disruptions are manageable. However, we have limited insight into the extent~~an increase in Contact Centers net sales. For a reconciliation of EBITDA to ~~which COVID-19 or other factors could further impair our sourcing of goods~~net income, its most directly comparable financial measure calculated and ~~materials.~~presented in accordance with GAAP, please read “Non-GAAP Financial Measure” below.

~~Results of~~ Operations

Three Months Ended March 31, ~~2022~~2023 Compared to Three Months Ended March 31, ~~2021~~2022

Net Sales (in thousands):

Three Months Ended March 31,

2022

2021

% Change

Uniforms and Related Products
$ 62,216 $ 70,568 (11.8 %)
Remote Staffing Solutions
17,973 13,030 37.9 %
Promotional Products
65,436 58,874 11.1 %
Net intersegment eliminations
(2,043 ) (1,625 ) 25.7 %
Consolidated Net Sales
$ 143,582 $ 140,847 1.9 %

	Three Months Ended March 31,
	2023			2022			% Change
Branded Products	$	81,851		$	97,083			(15.7	%)
Healthcare Apparel		28,154			30,568			(7.9	%)
Contact Centers		22,056			17,974			22.7	%
Net intersegment eliminations		(1,288	)		(2,043	)		(37.0	%)
Consolidated Net Sales	$	130,773		$	143,582			(8.9	%)

Net sales for the Company ~~increased 1.9% from $140.8~~decreased 8.9%, or $12.8 million, for the three months ended March 31, ~~2021~~2023 compared to ~~$143.6~~the three months ended March 31, 2022. The decrease was driven by declines in Branded Products and Healthcare Apparel, partially offset by an increase in Contact Centers.

Branded Products net sales decreased 15.7%, or $15.2 million, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. The ~~principal components~~decrease was primarily due to decreased demand as a result of ~~this aggregate increase~~current market conditions that have tightened our customers’ advertising spending, the timing of new branded uniform rollout programs for certain customers and a decrease of $3.9 million in net sales of personal protective equipment driven by the easing of the COVID-19 pandemic. These decreases were ~~as follows: (1) a decrease in~~partially offset by net sales ~~for our Uniforms and Related Products segment (contributing (5.9%)), (2) an increase~~of $6.5 million attributable to the acquisition of Guardian in ~~net sales for our Promotional Products segment (contributing 4.7%), and (3) an increase in net sales for our Remote Staffing Solutions segment after intersegment eliminations (contributing 3.1%).~~May 2022.

~~Uniforms and Related Products~~

Healthcare Apparel net sales decreased ~~11.8%~~7.9%, or ~~$8.4~~$2.4 million, for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. The decrease was primarily due to a decrease ~~of $11.6 million in sales of personal protective equipment driven by the progression of the COVID-19 pandemic. This decrease was partially offset by an increase~~ in demand for ~~uniform~~healthcare apparel asresulting from a ~~number~~continuation of ~~our customers’ industries, such as the restaurant, transportation and hospitality industries, have mostly recovered from the effects of the COVID-19~~challenging market conditions with saturated inventory levels post-COVID-19 pandemic.

~~Remote Staffing Solutions~~Contact Centers net sales increased ~~37.9%~~22.7% before intersegment eliminations and ~~39.7%~~30.4% after intersegment eliminations for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. These increases were primarily attributed to ~~our providing continued services in the current year period to our customer base that was expanded during 2021 and the~~ onboarding of new customers ~~in 2022.~~during the last twelve months and providing expanded services to our existing customers.

~~Promotional Products net sales increased 11.1%, or $6.6 million,~~Gross Margin

Gross margin rate for the Company was 36.0% for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily due to an increase of $17.1 million in net sales in our core promotional products business, partially offset by a decrease of $10.5 million in net sales of personal protective equipment. The increase in net sales in our core promotional products business was primarily driven by the acquisition of Sutter's Mill in December 2021 that contributed to an increase of net sales of $7.1 million, the growth of our customer base through continued market penetration experienced in 20212023 and ~~improved market conditions. The sale of personal protective equipment during the three months ended March 31, 2021 was driven by market demand as a result of the progression of the COVID-19 pandemic.~~

~~Cost of Goods Sold~~

Cost of goods sold consists primarily of direct costs of acquiring inventory, including cost of merchandise, inbound freight charges, purchasing costs, and inspection costs for our Uniforms and Related Products and Promotional Products segments. Cost of goods sold for our Remote Staffing Solutions segment includes salaries and payroll related benefits for agents. The Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs associated with out-bound freight are recorded in cost of goods sold. Other shipping and handling costs are included in selling and administrative expenses.

~~As a percentage of net sales, cost of goods sold for our Uniforms and Related Products segment was 66.9%~~34.7% for the three months ended March 31, ~~2022~~2022. The rate increase was primarily due to an improvement in gross margin rate for our Branded Products segment, the Company's largest segment, and ~~66.2%~~the Contact Centers segment, our highest gross margin segment, representing a larger portion of total gross margin.

Gross margin rate for our Branded Products segment was 31.6% for the three months ended March 31, ~~2021. The percentage increase was primarily driven by higher logistical costs during the current year period. Interruptions in global supply chains have led to higher logistical costs~~2023 and are expected to continue in 2022, however, the extent to which we will be impacted is dependent on a number of factors that are difficult to predict. For additional information related to logistical challenges, please refer to the section ~~“ITEM 2. Management~~’~~s Discussion and Analysis of Financial Condition and Results of Operations~~ – ~~Business Outlook~~ – ~~Sourcing of Goods and Raw Materials.~~”

~~As a percentage of net sales, cost of goods sold for our Remote Staffing Solutions segment was 40.6%~~29.1% for the three months ended March 31, ~~2022~~2022. The rate increase was primarily driven by a favorable shift in the mix of pricing and ~~40.7%~~customers.

Gross margin rate for our Healthcare Apparel segment was 35.9% for the three months ended March 31, ~~2021. As a percentage of net sales, cost of goods sold remained relatively flat.~~

~~As a percentage of net sales, cost of goods sold for our Promotional Products segment was 69.9%~~2023 and 39.3% for the three months ended March 31, ~~2022~~2022. The rate decrease was primarily driven by challenging market conditions and ~~68.7%~~strategic efforts to right size inventory levels resulting in lower selling prices.

Gross margin rate for our Contact Centers segment was 53.5% for the three months ended March 31, ~~2021.~~2023 and 59.4% for the three months ended March 31, 2022. The ~~percentage increase~~rate decrease was primarily ~~the result~~due to increased employee related costs of ~~differences in the mix of products and customers and higher logistical costs during the current year period.~~our agents, partially offset by price increases.

Selling and Administrative Expenses

~~Selling~~As a percentage of net sales, total selling and administrative expenses ~~increased 20.2%, or $7.1 million,~~was 33.2% for the three months ended March 31, ~~2022 compared to~~2023 and 29.4% for the three months ended March 31, ~~2021.~~2022. The selling and administrative expense rate increased across all segments.

As a percentage of net sales, selling and administrative expenses for our Branded Products segment was 24.5% for the three months ended March 31, 2023 and 22.2% for the three months ended March 31, 2022. The rate increase was primarily due to ~~an increase~~expense deleverage on the 15.7% decrease in ~~employee costs,~~sales, partially offset by lower selling and administrative expenses resulting from a decrease in expense of $0.8 million which ~~was mostly driven by increases~~resulted from the remeasurement of acquisition contingent liabilities and a decrease in ~~headcount and~~ sales ~~commissions, and an increase in depreciation and amortization~~commission expense.

As a percentage of net sales, selling and administrative expenses for our ~~Uniforms and Related Products~~Healthcare Apparel segment was ~~34.3%~~33.8% for the three months ended March 31, ~~2022~~2023 and ~~28.9%~~33.0% for the three months ended March 31, ~~2021.~~2022. The ~~percentage~~rate increase was primarily due to aexpense deleverage on the 7.9% decrease in ~~personal protective equipment net~~ sales, ~~which have disproportionately~~partially offset by lower selling and administrative expenses ~~associated with them, and increases~~resulting from a decrease in ~~depreciation expense and third-party professional services.~~employee related expenses, including sales commissions.

As a percentage of net sales, selling and administrative expenses for our ~~Remote Staffing Solutions~~Contact Centers segment was 43.8% for the three months ended March 31, 2023 and 35.5% for the three months ended March 31, ~~2022 and 36.2%~~2022. The percentage increase was primarily attributed to increased investment in organizational infrastructure, including personnel, to support future growth of this segment.

Interest Expense

Interest expense increased to $2.6 million for the three months ended March 31, ~~2021. As a percentage of net sales, selling and administrative expenses remained relatively flat.~~

~~As a percentage of net sales, selling and administrative expenses~~2023 from $0.3 million for three months ended March 31, 2022. This increase was primarily due to an increase in interest rates on our ~~Promotional Products segment was 23.9%~~outstanding borrowings. The weighted average interest rate on our outstanding borrowings for the three months ended March 31, ~~2022 and 18.6%~~2023 was 6.6% compared to 0.9% for the three months ended March 31, 2021. The percentage increase was primarily attributed to decrease in personal protective equipment net sales, which have disproportionately lower selling and administrative expenses associated with them, and increased investment to support future growth of this business, including the expansion of our workforce.2022.

~~Interest Expense~~Income Taxes

~~Interest~~Income tax expense ~~was $0.3 million~~ for ~~each of~~the three months ended March 31, 2023 compared to the three months ended March 31, 2022 ~~and 2021.~~

~~Income Taxes~~

decreased by $1.5 million. The decrease in income tax expense was driven by a decrease in pre-tax income. The effective income tax rate was ~~22.4%~~6.0% and ~~20.8%~~22.4% for the three months ended March 31, 2023 and 2022, respectively. The effective tax rate for the three months ended March 31, 2023 was favorably impacted by discrete non-taxable gains on the Company’s written put option and ~~2021,~~income generated on the Company’s SERP totaling $0.4 million and $0.2 million, respectively. The effective tax rate may vary from quarter to quarter due to discrete, unusual or ~~infrequently occurring~~non-recurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, ~~taxes incurred in connection to the territorial style tax system,~~ or other items.

Liquidity and Capital Resources

Overview

Management uses a number of standards in measuring the Company’s liquidity, such as: working capital, profitability ratios, cash flows from operating activities, and activity ratios. The Company’s balance sheet generally provides the ability to pursue acquisitions, invest in new product lines and technologies and invest in additional working capital as necessary.

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. Management currently believes that cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the Company’s anticipated working capital requirements and capital expenditures for the next twelve months. Management also currently believes that cash flows provided by operating activities and availability under the revolving credit facility will be sufficient to satisfy the Company’s anticipated working capital requirements and capital expenditures beyond the next twelve months. 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, including under its universal shelf registration statement (File No. 333-249760)., to the extent available. There can be no assurance that any such financings would be available to us on reasonable terms. Any future issuances of equity securities or securities convertible into or exercisable for equity securities may be dilutive to our shareholders. 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’s Uniforms and Related Products segment markets itself to its customers as a “stock house.” Therefore,~~ 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 and cash equivalents ~~decreased~~increased by ~~$0.6~~$8.9 million to ~~$8.3~~$26.6 million as of March 31, ~~2022~~2023 from ~~$8.9~~$17.7 million on December 31, ~~2021.~~2022. Working capital ~~increased~~decreased to ~~$206.4~~$220.6 million at March 31, ~~2022~~2023 from ~~$188.1~~$232.8 million at December 31, ~~2021.~~2022. The ~~increase~~decrease in working capital was primarily due to a decrease in accounts receivable, an increase in ~~inventories~~accounts payable, a decrease in other accounts receivable and a decrease in inventory, partially offset by an increase in cash and cash equivalents and a decrease in other current liabilities. The decreases in accounts receivable and other accounts receivables were primarily driven by decreased sales for the quarter within our Branded Products segment and the collection of customer payments, including credit card payments.

The increase in ~~inventories~~accounts payable and cash and cash equivalents was primarily driven by the timing of payments to vendors and decreased in purchasing activities during the period. The decrease in inventory ~~purchases within our Uniforms and Related Products segment.~~was primarily driven by a decrease in receipts during the period. The decrease in other current liabilities was primarily related to ~~accruals as~~the timing of ~~December 31, 2021~~payments associated with ~~the Company’s performance~~costs incurred in ~~2021,~~2022 that were paid in ~~2022,~~2023, including accrued commissions and other compensation.

Material Short-Term Plans for Cash

For the remainder of the year 2023, our primary capital requirements are to maintain our operations, meet contractual obligations, fund capital expenditures, pay dividends and for other general corporate purposes. We currently anticipate that we will spend less in capital expenditures in 2023 than we spent in 2022. 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.

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 long term contractual obligations and the continuation of the Company’s ongoing capital expenditure program designed to improve the effectiveness and capabilities of its facilities and technology. 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, acquisition-related contingent liabilities, unfunded supplemental executive retirement plan liabilities and non-qualified deferred compensation plan liabilities. In the first quarter of 2023, the Company’s Branded Products segment entered into a new long-term lease for a warehouse in Phoenix, Arizona with total estimated rental payments of $7.4 million. This new lease is part of management’s plan to consolidate warehousing facilities related to promotional products inventory. 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.

Cash Flows

Our cash flows from operating, investing and financing activities, as reflected in the statements of cash flows, are summarized in the following table (in thousands):

	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022
Net cash provided by (used in):
Operating activities	$	(8,727	)	$	(2,255	)	$	25,050		$	(8,727	)
Investing activities		(4,313	)		(12,736	)		(2,114	)		(4,313	)
Financing activities		11,906			20,905			(14,198	)		11,906
Effect of exchange rates on cash		514			(175	)		140			514
Net increase (decrease) in cash and cash equivalents	$	(620	)	$	5,739		$	8,878		$	(620	)

Operating Activities. The increase in net cash ~~used in~~provided by operating activities during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022 was primarily attributable to ~~increased~~decreases in cash outflows for inventory and accounts payable and an increase in cash inflows from accounts receivable, partially offset by an increase in cash outflows for selling and administrative expenses, ~~partially offset by decreased~~a decrease in net sales and an increase in interest paid. Working capital cash ~~outflows for~~changes during the three months ended March 31, 2023 included a decrease of $10.2 million in accounts ~~payable and other current liabilities.~~receivable. Working capital cash changes during the three months ended March 31, 2022 included an increase of $8.7 million in ~~inventories~~inventory and a decrease of $5.7 million in accounts payable and other current liabilities. ~~Working capital cash changes during the three months ended March 31, 2021 included a decrease of $15.1 million in accounts payable and other current liabilities.~~

Investing Activities. The decrease in net cash used in investing activities during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022 was attributable to ~~$6.0 million of cash paid for the acquisition of Gifts by Design in 2021 and~~ a decrease in capital expenditures ~~of $2.5 million primarily related~~in the current period as compared to the expansion of our distribution facility in Eudora, Arkansas, in 2021. From a long-term perspective, the Company expects to continue its ongoing capital expenditure program designed to improve the effectiveness and capabilities of its facilities and technology.prior year period.

Financing Activities. The ~~decrease~~increase in net cash ~~provided by~~used in financing activities during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022 was primarily attributable to ~~a decrease~~$11.9 million in net repayments of debt in the current period compared to $13.9 million of net borrowings of ~~$9.0 million~~debt in ~~debt.~~the prior year period. Excess cash generated from operating activities during the three months ended March 31, 2023 was used to repay outstanding borrowings under the revolving credit facility.

Credit Facilities (See Note 3 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.

As of March 31, ~~2022,~~2023, the Company had ~~approximately $130.6~~$144.2 million in outstanding borrowings under its ~~credit facilities with Truist Bank,~~Credit Facilities, consisting of ~~$79.2~~$72.0 million outstanding under the revolving credit facility ~~$13.5~~and $72.2 million outstanding under a term loan maturing in February 2024 (“2017 Term Loan”) and $37.9 million outstanding under a term loan maturing in January 2026 (“2018 Term Loan”). The revolving credit facility, 2017 Term Loan and 2018 Term Loan are collectively referred to as the “Credit Facilities.”

~~On February 8, 2021,~~loan. As of March 31, 2023, the Company ~~entered into a Second Amended and Restated Credit Agreement with Truist Bank (the “Credit Agreement”), pursuant to which the maximum availability~~had undrawn capacity of $53.0 million under the Company’s existing revolving credit facility was increased from $75.0 million to $125.0 million and its maturity date was extended until February 8, 2026. The 2017 Term Loan and the 2018 Term Loan remain outstanding with the same amortization schedules. The floor on LIBOR for the revolving credit ~~facility was increased from zero to 0.25%, but the interest rates on the revolving credit facility and the term loans were not otherwise modified.~~facility.

Obligations outstanding under the ~~2018 Term Loan have~~Credit Facilities accrue interest at a variable rate equal to the secured overnight financing rate (“SOFR”) plus an adjustment of between 0.10% and 0.25% (depending on the applicable interest ~~rate of LIBOR~~period) plus a margin of between ~~0.85%~~1.0% and ~~1.65% (based~~2.0% (depending on the Company’s ~~funded debt~~net leverage ratio). During the covenant relief period described in Note 12 to ~~EBITDA ratio) (1.25%~~the Financial Statements, the applicable margin may reach 2.5% for SOFR rate loans. The weighted average interest rate on our outstanding borrowings under the Credit Facilities was 6.6% at March 31, ~~2022). Obligations outstanding under~~2023. During the term of the revolving credit facility, ~~and~~ the ~~2017 Term Loan generally have~~Company will pay a ~~variable interest rate of one-month LIBOR (with a 0.25% floor on LIBOR for the revolving credit facility) plus a margin of between 0.68% and 1.50% (based~~commitment fee on the ~~Company’s funded debt to EBITDA ratio) (1.08% for~~unused portion of the revolving credit facility equal to between 0.125% and ~~2017 Term Loan at March 31, 2022)~~0.250% (depending on the Company’s net leverage ratio). ~~The Company is obligated to pay a~~During the covenant relief period, the commitment fee ~~of 0.15% per annum on the average unused portion of the commitment under the revolving credit facility.~~may reach 0.300%. The available balance under the revolving credit facility is reduced by outstanding letters of credit. AtAs of March 31, ~~2022, the Company had undrawn capacity~~2023, there were no outstanding letters of ~~$45.8 million~~credit under the revolving credit facility.

Contractual principal payments for the ~~2017 Term Loan~~term loan are as follows: remainder of ~~2022 - $4.5 million;~~ 2023 - ~~$6.0~~$2.8 million; ~~and~~ 2024 - ~~$3.0 million. Contractual principal payments for the 2018 Term Loan are as follows: remainder of 2022 - $6.9~~$4.7 million; ~~2023 through~~ 2025 - ~~$9.3 million per year; and~~$5.6 million; 2026 - ~~$3.1~~$6.6 million and 2027 - $52.5 million. The term ~~loans do~~loan does not contain pre-payment penalties.

The Credit Agreement contains customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments, and sales of assets. The Credit Agreement also requires the Company to maintain a fixed charge coverage ratio (as defined in the Credit Agreement) of at least 1.25:1 and a funded debt to EBITDA ratio (as defined in the Credit Agreement) not to exceed 5.0:1. As of March 31, 2022, the Company was in compliance with these ratios. The Credit Facilities are secured by substantially all of the operating assets of the Company, ~~as collateral,~~ and the Company’s obligations under the Credit Facilities are guaranteed by all of its domestic subsidiaries. The Company’s obligations under the Credit Facilities are subject to acceleration upon the occurrence of an event of default as defined in the Credit Agreement. The Credit Agreement contains customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments (including dividends and related distributions), liquidations, mergers, consolidations or acquisitions, affiliate transactions and sales of assets or subsidiaries. The Credit Agreement also requires the Company to comply with a fixed charge coverage ratio of at least 1.25 to 1.0 and a net leverage ratio not to exceed 4.0 to 1.0, except during the covenant relief period. The Company’s net leverage ratio (as defined in the Credit Agreement) is generally calculated as the ratio of (a) indebtedness minus unrestricted cash to (b) consolidated EBITDA for the four most recently ended fiscal quarters. As of March 31, 2023, the Company was in compliance with these ratios as the Company’s fixed charge coverage and net leverage ratios were 1.5 to 1.0 and 3.8 to 1.0, respectively.

On May 4, 2023, the Company and its domestic subsidiaries entered into a First Amendment to Credit Agreement with the Administrative Agent and the lenders, which (i) provides a covenant relief period through December 31, 2023, which the Company may opt to terminate during the fourth quarter of 2023 if it has a consolidated total net leverage ratio at or below 4.00 to 1.0 for the two preceding consecutive fiscal quarters; (ii) permits a maximum consolidated total net leverage ratio of 4.5 to 1, 4.8 to 1, 4.5 to 1 and 4.0 to 1 for the first, second, third and fourth quarters 2023, respectively; (iii) amends the applicable margin pricing grid to add a tier of applicable margins (2.5% for SOFR rate loans) if the consolidated total net leverage ratio is greater than 4.0 to 1, which tier would only apply during the covenant relief period; (iv) prohibits capital expenditures during the covenant relief period that exceed $10 million, with additional limitations imposed on a quarterly basis; (v) prohibits acquisitions and incremental loans during the covenant relief period; (vi) adds sale and leaseback transactions to the list of transactions that require the Company to use the net proceeds thereof to make a mandatory prepayment under the Credit Agreement; (vii) limits restricted payments to $20 million in any fiscal year, and no more than $10 million during the covenant relief period, with additional limitations imposed on a quarterly basis during the covenant relief period; and (viii) lowers the amount of permissible investments in non-loan party subsidiaries to $5 million during the covenant relief period.

Dividends and Share Repurchase Program

During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company paid cash dividends of ~~$1.9~~$2.3 million and ~~$1.5~~$1.9 million, respectively. The Company anticipates that it will continue to pay dividends in the future as financial conditions permit.

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. 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. At March 31, ~~2022,~~2023, the Company’s remaining repurchase capacity under its common stock repurchase program was 657,451 shares. Shares purchased under the common stock repurchase program are constructively retired and returned to unissued status. The Company considers several factors in determining when to make share repurchases, including among other things, the cost of equity, the after-tax cost of borrowing, the debt to total capitalization targets and its expected future cash needs.

Non-GAAP Financial Measure

EBITDA, which is a non-GAAP financial measure, is defined as net income excluding interest expense, income tax expense and depreciation and amortization expense. The Company believes EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the Company’s core operating results from period to period by removing (i) the impact of the Company’s capital structure (interest expense from outstanding debt), (ii) tax consequences and (iii) asset base (depreciation and amortization). The Company uses EBITDA internally to monitor operating results and to evaluate the performance of its business. In addition, the compensation committee has used EBITDA in evaluating certain components of executive compensation, including performance-based annual incentive programs.

EBITDA is not a measure of financial performance under GAAP and 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 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. 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.

The following table reconciles net income to EBITDA (in thousands):

	Three Months Ended March 31,
	2023		2022
Net income	$	888	$	5,230
Interest expense		2,570		299
Income tax expense		57		1,510
Depreciation and amortization		3,388		2,923
EBITDA	$	6,903	$	9,962

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

We are subject to market risk exposure related to changes in interest rates on our debt. Interest on our Credit Facilities ~~are~~is based upon the ~~one-month~~secured overnight financing rate (“SOFR”). As SOFR is a relatively new reference rate with a limited history, there may or may not be more volatility than with other reference rates such as LIBOR, ~~rate. In order to reduce~~which may result in increased borrowing costs for the ~~interest rate risk on our debt, the Company entered into an interest rate swap agreement on a portion of its borrowings. Excluding the effect of the interest rate swap agreement, a~~Company. A hypothetical increase in the ~~LIBOR rate~~SOFR of 100 basis points as of January 1, ~~2022~~2023 would have resulted in approximately ~~$0.3~~$0.4 million in additional pre-tax interest expense for the three months ended March 31, ~~2022.~~2023. For further information regarding our debt instruments, see Note 3 to the Financial Statements.

Foreign Currency Exchange Risk

Sales to customers outside of the United States are subject to fluctuations in foreign currency exchange rates, which may negatively impact gross margin realized on our sales. Less than 5% of our sales contracts are ~~not~~ denominated in ~~U.S. dollars.~~foreign currencies. We cannot predict the effect of exchange rate fluctuations on our operating results. 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 March 31, ~~2022,~~2023, we had no foreign currency exchange hedging contracts. There can be no assurance that our strategies will adequately protect our operating results from the effect of exchange rate fluctuations.

Financial results of our foreign subsidiaries in the ~~Promotional~~Branded Products segment are denominated in their local currencies, which include the Hong Kong dollar, the Chinese renminbi, the British pound, the Indian rupee, the Brazilian real and the Canadian dollar. These operations may also have net assets and liabilities not denominated in their functional currency, which exposes us to changes in foreign currency exchange rates that impact income. Excluding 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 three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, foreign currency losses were not significant. 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 during the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 included a foreign currency translation adjustment gain of $0.3 million and $0.9 ~~and a foreign currency translation adjustment loss of $0.6~~ million, ~~respectively, primarily related to exchange rate movements of the Brazilian real.~~

respectively.

ITEM 4. Controls and Procedures

Disclosure Controls and Procedures

The Company conducted an evaluation, under supervision and with the participation of the Company’s principal executive officer, Michael Benstock, and the Company’s principal financial officer, ~~Andrew D. Demott, Jr.,~~Michael Koempel, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were not effective because of the material weakness in the Company’s internal control over financial reporting described below and as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

~~Management~~As of December 31, 2022, management identified a material weakness relating to segregation of duties, change management and user access and within certain proprietary information technology systems of the ~~accounting for income taxes as of December 31, 2021, principally related to the income tax provision and deferred tax accounts (liabilities and assets).~~Contact Centers segment. The Company determined that management’s review controls over ~~income taxes~~these areas are not ~~operating~~designed effectively to detect a material misstatement ~~in the financial statements~~ related to the completeness, accuracy, and presentation of the ~~aforementioned areas of income taxes. As of March 31, 2022, this material weakness has not been remediated.~~financial statements.

Notwithstanding the identified material weakness, management, including the Company’s principal executive officer and principal financial officer, have determined, based on the procedures they have performed, that the consolidated financial statements included in this Form 10-Q present fairly, in all material respects, the Company’s financial condition, results of operations and cash flows at the Evaluation Date, and for the periods presented, in accordance with U.S. GAAP.

Remediation Efforts with Respect to the Material Weakness

The Company’s management, under the oversight of the Audit Committee, ~~is in the process of developing~~has developed a plan to remediate the material weakness relating to certain proprietary information technology systems of the Contact Centers segment identified as of December 31, 2022 which ~~is expected to include~~includes the following measures:

• (i) develop information technology general controls to manage access and program changes within our proprietary system; (ii) implement ~~a tax reporting software solution~~processes and controls to ~~streamline our income tax process~~better identify and ~~enhance our state~~manage segregation of duties; and ~~federal income tax reporting capabilities;~~

~~• hire~~(iii) design and implement additional ~~qualified personnel to bolster the Company's in-house tax capabilities~~enhanced review and ~~capacity; and~~

~~• evaluate and, if necessary, enhance the level of precision in the management review controls related to income taxes.~~monitoring controls.

The material weakness will not be considered remediated until management completes the remediation plan above, the enhanced controls operate for a sufficient period of time, and management has concluded, through testing, that the related controls are effective. The Company will monitor the effectiveness of its remediation plan and will refine its remediation plan as appropriate.

Changes in Internal Control over Financial Reporting

~~There~~Except as discussed above under “Ongoing Remediation Efforts with Respect to the Material Weakness," there were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

2726

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

We are a party to certain lawsuits in the ordinary course of business. We do not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows.

ITEM 1A. Risk Factors

We are exposed to certain risks and uncertainties that could have a material adverse impact on our business, financial condition and operating results. ~~There~~Except as set forth below, there have been no material changes to the Risk Factors described in Part I, Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our business, results of operations or financial condition.

Events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver; on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership; and on May 1, 2023, First Republic Bank failed and regulators sold substantially all of its assets to JPMorgan Chase & Co. The failure of First Republic Bank occurred despite a previous attempt by some of the nation’s largest banks to shore up First Republic’s capital. Although we assess our banking and customer relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impacted.

In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or other obligations, result in breaches of our contractual obligations or result in violations of federal or state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our business, results of operations or financial condition.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the quarter ended March 31, ~~2022,~~2023, that were not previously reported in a current report on Form 8-K.

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 March 31, ~~2022.~~2023.

Period	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)
January 1, ~~2022~~2023 to January 31, ~~2022~~2023		-	$	-		-
February 1, ~~2022~~2023 to February 28, ~~2022~~2023		-		-		-
March ~~1, 2022~~31, 2023 to March 31, ~~2022~~2023		-		-		-
Total		-		-		-		657,451

⁽¹⁾

Under our Credit Agreement, ~~as amended, with Truist Bank,~~ if an event of default exists, we may not make distributions to our shareholders. The Company is in full compliance with all terms, conditions and covenants of such agreement.

ITEM 3. Defaults upon Senior Securities

Not applicable.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

~~None.~~On May 4, 2023, the Company and its domestic subsidiaries entered into the First Amendment to its Credit Agreement with the Administrative Agent and the lenders, which (i) provides a covenant relief period through December 31, 2023, which the Company may opt to terminate during the fourth quarter of 2023 if it has a consolidated total net leverage ratio at or below 4.00 to 1.0 for the two preceding consecutive fiscal quarters; (ii) permits a maximum consolidated total net leverage ratio of 4.5 to 1, 4.8 to 1, 4.5 to 1 and 4.0 to 1 for the first, second, third and fourth quarters 2023, respectively; (iii) amends the applicable margin pricing grid to add a tier of applicable margins if the consolidated total net leverage ratio is greater than or equal to 4.0 to 1, which tier would only apply during the covenant relief period; (iv) prohibits capital expenditures during the covenant relief period that exceed $10 million, with additional limitations imposed on a quarterly basis; (v) prohibits acquisitions and incremental loans during the covenant relief period; (vi) adds sale and leaseback transactions to the list of transactions that require the Company to use the net proceeds thereof to make a mandatory prepayment under the Credit Agreement; (vii) limits restricted payments to $20 million in any fiscal year, and no more than $10 million during the covenant relief period, with additional limitations imposed on a quarterly basis during the covenant relief period; and (viii) lowers the amount of permissible investments in non-loan party subsidiaries to $5 million during the covenant relief period.

ITEM 6. Exhibits

Exhibit No.		Description
10.1*		First Amendment to Credit Agreement, dated May 4, 2023
31.1*		Certification by the Chief Executive Officer (Principal Executive Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification by the Chief Financial Officer (Principal Financial ~~Officer and Accounting~~ Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**		Certification by the Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS+		Inline XBRL Instance Document.
101.SCH+		Inline XBRL Taxonomy Extension Schema.
101.CAL+		Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF+		Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB+		Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE+		Inline XBRL Taxonomy Extension Presentation Linkbase.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*Filed herewith.

**Furnished herewith.

+ Submitted electronically herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May ~~4, 2022~~8, 2023	SUPERIOR GROUP OF COMPANIES, INC.

	By	/s/ Michael Benstock
		Michael Benstock
		Chief Executive Officer
		(Principal Executive Officer)


Date: May ~~4, 2022~~8, 2023
	By	/s/ ~~Andrew D. Demott, Jr.~~Michael Koempel
		~~Andrew D. Demott, Jr.~~Michael Koempel
		~~Chief Operating Officer and~~ Chief Financial Officer (Principal Financial Officer)

State or other jurisdiction of incorporation or organization:	I.R.S. Employer Identification No.:
Florida	11-1385670

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock $0.001 par value per share		SGC		NASDAQ

Large accelerated filer ☐		Accelerated filer ☒
Non-accelerated filer ☐		Smaller Reporting Company ☐☒
		Emerging Growth Company ☐



	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Statements of Comprehensive Income (Unaudited)	3
Condensed Consolidated Balance Sheets (Unaudited)	4
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)	5
Condensed Consolidated Statements of Cash Flows (Unaudited)	6
Notes to the Condensed Consolidated Financial Statements (Unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and ~~Results~~Summary of ~~Operations~~Results	1918
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2625
Item 4. Controls and Procedures	26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	2827
Item 1A. Risk Factors	2827
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3. Defaults Upon Senior Securities	28
Item 4. Mine Safety Disclosures	28
Item 5. Other Information	28
Item 6. Exhibits	29
SIGNATURES	30

	Three Months Ended March 31,						Three Months Ended March 31,
	*2022*			2021			2023		2022
Net sales	$	143,582		$	140,847		$	130,773	$	143,582

Costs and expenses:
Cost of goods sold		93,801			91,804			83,665		93,801
Selling and administrative expenses		42,214			35,111			43,379		42,214
Other periodic pension costs		528			429			214		528
Interest expense		299			275			2,570		299
		136,842			127,619			129,828		136,842
Income before taxes on income		6,740			13,228			945		6,740
Income tax expense		1,510			2,750			57		1,510
Net income	$	5,230		$	10,478		$	888	$	5,230

Net income per share:
Basic	$	0.33		$	0.69		$	0.06	$	0.33
Diluted	$	0.32		$	0.66		$	0.06	$	0.32

Weighted average shares outstanding during the period:
Basic		15,679,027			15,221,336			15,882,994		15,679,027
Diluted		16,165,268			15,991,474			16,118,329		16,165,268

Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income, net of tax:
Recognition of net losses included in net periodic pension costs	$	319		$	714		$	41	$	319
Loss on cash flow hedging activities		(5	)		(5	)		-		(5	)
Foreign currency translation adjustment		862			(647	)		307		862
Other comprehensive income		1,176			62			348		1,176
Comprehensive income	$	6,406		$	10,540		$	1,236	$	6,406

Cash dividends per common share	$	0.12		$	0.10		$	0.14	$	0.12

☒		QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, ~~2022~~2023

Address of principal executive offices:
~~10055 Seminole Boulevard~~200 Central Avenue, Suite 2000
~~Seminole,~~St. Petersburg, Florida ~~33772-2539~~33701

Registrant’s telephone number, including area code:
727-397-9611

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value data)

	*March 31,*			December 31,			March 31,			December 31,
	*2022*			2021			2023			2022
		(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	8,315		$	8,935		$	26,600		$	17,722
Accounts receivable, less allowance for doubtful accounts of $6,971 and $6,393, respectively		105,848			107,053
Accounts receivable, less allowance for doubtful accounts of $6,346 and $7,622, respectively								94,859			104,813
Accounts receivable - other		6,453			5,546			398			3,326
Inventories		129,514			120,555			122,214			124,976
Contract assets		40,923			38,018			51,390			52,980
Prepaid expenses and other current assets		21,196			19,162			11,856			14,166
Total current assets		312,249			299,269			307,317			317,983
Property, plant and equipment, net		52,034			49,690			51,460			51,392
Operating lease right-of-use assets		8,511			8,246			13,853			9,113
Deferred tax asset								10,704			10,718
Intangible assets, net		59,380			60,420			54,427			55,753
Goodwill		39,652			39,434
Other assets		13,542			13,186			12,658			11,982
Total assets	$	485,368		$	470,245		$	450,419		$	456,941

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	52,858		$	52,340		$	50,580		$	42,060
Other current liabilities		32,986			38,989			31,608			38,646
Current portion of long-term debt		15,286			15,286			3,750			3,750
Current portion of acquisition-related contingent liabilities		4,763			4,507			806			736
Total current liabilities		105,893			111,122			86,744			85,192
Long-term debt		114,740			100,845			139,673			151,567
Long-term pension liability		15,545			15,420			13,019			12,864
Long-term acquisition-related contingent liabilities		2,719			2,569			1,612			2,245
Long-term operating lease liabilities		3,956			3,729			8,468			3,936
Deferred tax liability		515			359
Other long-term liabilities		9,422			9,211			8,248			8,538
Total liabilities								257,764			264,342
Commitments and contingencies (Note 6)
Shareholders’ equity:
Preferred stock, $.001 par value - authorized 300,000 shares (none issued)		0			0
Common stock, $.001 par value - authorized 50,000,000 shares, issued and outstanding 16,171,034 and 16,127,505 shares, respectively		16			16
Preferred stock, $.001 par value - authorized 300,000 shares (none issued)								-			-
Common stock, $.001 par value - authorized 50,000,000 shares, issued and outstanding 16,498,312 and 16,376,683 shares, respectively								16			16
Additional paid-in capital		70,685			69,351			73,730			72,615
Retained earnings		166,914			163,836			121,572			122,979
Accumulated other comprehensive income (loss), net of tax:
Accumulated other comprehensive loss, net of tax:
Pensions		(4,258	)		(4,577	)		(1,072	)		(1,113	)
Cash flow hedges		42			47
Foreign currency translation adjustment		(821	)		(1,683	)		(1,591	)		(1,898	)
Total shareholders’ equity		232,578			226,990			192,655			192,599
Total liabilities and shareholders’ equity	$	485,368		$	470,245		$	450,419		$	456,941

												Accumulated																	Accumulated
												Other																	Other
						Additional						Comprehensive			Total								Additional						Comprehensive			Total
	Common			Common		Paid-In			Retained			(Loss) Income,			Shareholders’			Common			Common		Paid-In			Retained			(Loss) Income,			Shareholders’
	Shares			Stock		Capital			Earnings			net of tax			Equity			Shares			Stock		Capital			Earnings			net of tax			Equity
Balance, January 1, 2021		15,391,660		$	15	$	61,844		$	141,972		$	(12,201	)	$	191,630
Common shares issued upon exercise of options, net		10,746					298			(168	)					130
Performance based shares issued		39,675			0		0			0			0			0
Restricted shares issued		140,754														0
Share-based compensation expense							832									832
Tax withheld on vesting of performance based shares					0		(372	)		0			0			(372	)
Tax benefit from vesting of acquisition-related restricted stock					0		171			0			0			171
Cash dividends declared ($0.10 per share)										(1,548	)					(1,548	)
Comprehensive income (loss):
Net earnings										10,478						10,478
Cash flow hedges, net of taxes of $1													(5	)		(5	)
Pensions, net of taxes of $114													714			714
Change in currency translation adjustment, net of taxes of $0													(647	)		(647	)
Balance, March 31, 2021		15,582,835		$	15	$	62,773		$	150,734		$	(12,139	)	$	201,383

Balance, January 1, 2022		16,127,505		$	16	$	69,351		$	163,836		$	(6,213	)	$	226,990			16,127,505		$	16	$	69,351		$	163,836		$	(6,213	)	$	226,990
Cumulative-effect adjustment from adoption of ASU 2016-13					0		0			(76	)		0			(76	)										(76	)					(76	)
Common shares issued upon exercise of options and SARs, net		15,702					354			(158	)					196			15,702					354			(158	)					196
Performance based shares issued		11,707			0		0			0			0			0			11,707														-
Restricted shares issued		23,677			0		0			0			0			0
Restricted shares issued, net of forfeitures																			23,677														-
Share-based compensation expense							1,212									1,212								1,212									1,212
Tax withheld on vesting of restricted shares and performance based shares		(7,557	)		0		(232	)		0			0			(232	)		(7,557	)				(232	)								(232	)
Cash dividends declared ($0.12 per share)										(1,918	)					(1,918	)
Cash dividends declared ($0.12 per share)																											(1,918	)					(1,918	)
Comprehensive income (loss):
Net earnings										5,230						5,230
Cash flow hedges, net of taxes of $1													(5	)		(5	)
Pensions, net of taxes of $110													319			319
Change in currency translation adjustment, net of taxes of $0													862			862
Net income																											5,230						5,230
Cash flow hedges, net of taxes of $1																														(5	)		(5	)
Pensions, net of taxes of $110																														319			319
Change in currency translation adjustment, net of taxes of $0																														862			862
Balance, March 31, 2022		16,171,034		$	16	$	70,685		$	166,914		$	(5,037	)	$	232,578			16,171,034		$	16	$	70,685		$	166,914		$	(5,037	)	$	232,578

Balance, January 1, 2023																			16,376,683		$	16	$	72,615		$	122,979		$	(3,011	)	$	192,599
Common shares issued upon exercise of options and SARs, net																			4,604					35									35
Restricted shares issued, net of forfeitures																			117,025														-
Share-based compensation expense																								1,080									1,080
Cash dividends declared ($0.14 per share)																											(2,295	)					(2,295	)
Comprehensive income (loss):
Net income																											888						888
Pensions, net of taxes of $14																														41			41
Change in currency translation adjustment, net of taxes of $0																														307			307
Balance, March 31, 2023																			16,498,312		$	16	$	73,730		$	121,572		$	(2,663	)	$	192,655

						Weighted Average		Aggregate							Weighted Average		Aggregate
	No. of			Weighted Average		Remaining Life		Intrinsic Value		No. of			Weighted Average		Remaining Life		Intrinsic Value
	Shares			Exercise Price		(in years)		(in thousands)		Shares			Exercise Price		(in years)		(in thousands)
Outstanding, January 1, 2022		779,938		$	16.12		3.27	$	5,097
Outstanding, January 1, 2023											962,775		$	15.89		3.26	$	301
Granted⁽¹⁾		103,203			20.13						182,097			12.04
Exercised		(21,108	)		16.25						(4,604	)		7.60
Lapsed or cancelled		(7,252	)		17.85						(92,457	)		20.77
Outstanding, March 31, 2022		854,781			16.59		3.33		2,939
Exercisable, March 31, 2022		564,335			13.87		2.66		2,755
Outstanding, March 31, 2023											1,047,811			14.83		3.46		30
Exercisable, March 31, 2023											536,233			15.41		2.26		30

	Uniforms and Related Products			Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Three Months Ended March 31, 2022:
Net sales	$	62,216		$	17,973	$	65,436	$	(2,043	)	$	143,582
Cost of goods sold		41,652			7,292		45,769		(912	)		93,801
Gross margin		20,564			10,681		19,667		(1,131	)		49,781
Selling and administrative expenses		21,317			6,372		15,656		(1,131	)		42,214
Other periodic pension cost		528			0		0		0			528
Interest expense		244			0		55		0			299
Income before taxes on income	$	(1,525	)	$	4,309	$	3,956	$	0		$	6,740

Depreciation and amortization	$	1,843		$	495	$	585	$	0		$	2,923
Capital expenditures	$	1,947		$	1,931	$	310	$	0		$	4,188
Total assets	$	304,752		$	33,429	$	147,187	$	0		$	485,368

	Branded Products		Healthcare Apparel		Contact Centers		Intersegment Eliminations			Other			Total
As of and For the Three Months Ended March 31, 2022:
Net sales	$	97,083	$	30,568	$	17,974	$	(2,043	)	$	-		$	143,582
Cost of goods sold		68,868		18,553		7,293		(913	)		-			93,801
Gross margin		28,215		12,015		10,681		(1,130	)		-			49,781
Selling and administrative expenses		21,557		10,087		6,372		(1,130	)		5,328			42,214
Other periodic pension cost		-		-		-		-			528			528
Interest expense		55		18		-		-			226			299
Income (loss) before taxes on income	$	6,603	$	1,910	$	4,309	$	-		$	(6,082	)	$	6,740

Depreciation and amortization	$	1,383	$	981	$	495	$	-		$	64		$	2,923
Capital expenditures	$	1,543	$	711	$	1,931	$	-		$	3		$	4,188

Accounts receivable	$	251
Prepaid expenses and other current assets		196
Property, plant and equipment		60
Intangible assets, net		3,673
Goodwill		2,417
Total assets	$	6,597
Accounts payable		199
Other current liabilities		372
Total liabilities	$	571

Cash consideration	$	10,533	$	11,077
Restricted shares of Superior common stock issued		869		2,000
Contingent consideration		2,520		1,119
Total Consideration	$	13,922	$	14,196

Accounts receivable	$	4,701
Inventories		9,149
Prepaid expenses and other current assets		135
Property, plant and equipment		1,043
Operating lease right-of-use assets		648
Intangible assets, net		2,031
Goodwill		1,019
Other assets		41
Total assets	$	18,767
Accounts payable		3,209
Other current liabilities		389
Long-term debt		758
Long-term operating lease liabilities		489
Total liabilities	$	4,845

Accounts receivable	$	1,656
Inventories		621
Prepaid expenses and other current assets		272
Property, plant and equipment		15
Intangible assets		5,886
Goodwill		6,463
Total assets	$	14,913
Accounts payable		533
Other current liabilities		184
Total liabilities	$	717