Superior Group of Companies NASDAQ: SGC reported second-quarter revenue growth, higher EBITDA and more than doubled adjusted earnings per share, while maintaining its full-year outlook amid continued transition work in its Healthcare Apparel business.
Chief Executive Officer Michael Benstock said consolidated revenue increased 3% year over year, while SG&A as a percentage of sales improved by 160 basis points. EBITDA rose 27% to $7.7 million, and adjusted diluted earnings per share reached $0.21, compared with $0.10 in the second quarter of 2025.
“Our results highlight the benefit of our diversified business as we continue to navigate a choppy demand environment,” Benstock said. He cited customer relationships, technology, supply-chain flexibility and service capabilities as factors supporting the company’s outlook.
Revenue Growth Led by Branded Products
Second-quarter consolidated revenue totaled $148 million. Branded Products revenue increased 6% to $98 million, driven by higher volumes from existing customers. The segment’s gross margin increased to 36.5%, nearly a percentage point above the prior-year period, aided by customer mix.
Branded Products EBITDA increased 25% year over year. Jake Himelstein, president of the Branded Products segment, said favorable customer mix and improved sourcing on larger programs supported margins.
Himelstein said the segment’s pipeline remains strong across both existing and prospective customers, with some opportunities converting into programs that are generating revenue in 2026 and are expected to extend into 2027. He said decision-making on requests for proposals remains slow, but the size of the pipeline has helped produce wins.
The company also said it is gaining share organically by expanding relationships with current customers across departments that purchase uniforms, promotional products and gifts. Himelstein said normalized tariff conditions have helped reduce customer uncertainty compared with prior periods.
On acquisitions, management said it remains open to deals that expand its capabilities, customer reach, geographic presence or digital offerings. Benstock said the company is not seeking conventional promotional-product companies without differentiated capabilities.
Healthcare Apparel Absorbs Transition Costs
Healthcare Apparel revenue declined 4% to $27 million, which Chief Financial Officer Mike Kemple attributed to tariff refunds. Segment gross margin was 32.9%, reflecting a $2.6 million incremental non-cash inventory write-down that was partly offset by a $1.8 million net tariff-refund benefit.
The company also recorded a $2.6 million pre-tax non-cash impairment charge related to trade names in the Healthcare Apparel segment. The charge equaled $2 million after tax, or $0.13 per diluted share, and did not affect cash or operating cash flow.
Benstock said the business is accelerating a shift to a more focused product offering. Kemple said Chris Hine, who had been in the business for roughly three to four months, has concentrated initially on product assortment, merchandising and sourcing because of the segment’s long product lead times.
Management expects some year-over-year margin pressure to continue through the remainder of 2026, though not at the level seen in the second quarter. Kemple said improvements are expected to begin in 2027.
Inventory efficiency remains a focus in Healthcare Apparel. Kemple said the company sees further opportunity to lower overall inventory, while continuing to invest in categories where demand warrants it and avoiding inventory reductions that could hurt sales.
Contact Centers Shows Sequential Improvement
Contact Centers revenue fell 4% year over year to $23 million, reflecting client attrition during 2025. However, revenue improved sequentially for the second consecutive quarter, following an 8% year-over-year decline in the first quarter.
The segment’s gross margin was 50.9%, down 170 basis points from the year-earlier period, as the company incurred higher human-capital costs and initial investments to onboard new customers. Kemple said some onboarding costs will not recur and that gross margin should improve in the second half.
Despite lower gross margin, Contact Centers EBITDA improved, supported by lower SG&A expenses, cost reductions and efficiencies. Kemple said the company is using technology and artificial intelligence solutions to improve customer experiences and operating efficiency.
Management expects continued sequential top-line improvement in the segment during the second half, supported by expansion with existing clients, more customer-seat additions and improved conversion of new business. Benstock said the company has urgency around expanding Contact Centers and could either complete an acquisition this year or begin a Philippine call-center startup that would begin generating revenue in 2027.
Cash Flow, Capital Returns and Outlook
Net income for the quarter was $1.2 million, or $0.08 per diluted share. Excluding the trade-name impairment, adjusted net income was $3.1 million, or $0.21 per diluted share.
- Second-quarter EBITDA: $7.7 million, compared with $6.1 million a year earlier.
- Second-quarter gross margin: 38%, down 40 basis points year over year.
- Net interest expense: $981,000, down from $1.25 million, reflecting lower interest rates and lower average debt.
- Cash and equivalents at quarter-end: $23 million.
- First-half operating cash flow: $18 million.
- Second-quarter dividends paid: $2.2 million.
- Remaining share-repurchase authorization: approximately $9 million.
The company reaffirmed its 2026 outlook for net sales of $572 million to $585 million and adjusted diluted EPS of $0.54 to $0.66. Kemple said the guidance assumes a back-half-weighted year, including seasonal strength in Healthcare Apparel and sequential improvement in Contact Centers.
Management said it retained the outlook despite the second-quarter performance because Healthcare Apparel remains in transition and could experience variability in demand and margins through the rest of the year. The company plans to revisit guidance after the third quarter.
About Superior Group of Companies (NASDAQ:SGC)
Superior Group of Companies is a global developer and manufacturer of specialty packaging materials, including films, laminations and pressure-sensitive adhesives. Founded in 1969 and headquartered in Santa Fe Springs, California, the company combines advanced printing technologies with materials science expertise to deliver customized packaging solutions for industries such as food and beverage, healthcare, personal care and household products.
Through a network of manufacturing and distribution facilities across North America, Europe and Asia, Superior Group serves both multinational brand owners and regional producers.
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