v3.26.1
Note 2 - Operating Segment Information
 6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Segment Reporting [Text Block]

NOTE 2 – Operating Segment Information:

 

The Company manages and reports the following segments:

 

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

 

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

 

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

 

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

 

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

 

Adjusted EBITDA is not a measure of financial performance under GAAP. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate Adjusted EBITDA are significant components in understanding and assessing the Company’s results of operations. The Company’s Adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate Adjusted EBITDA in the same manner.

 

The chief operating decision maker, who is the Company’s Chief Executive Officer, evaluates the performance of our segments. Segment Adjusted EBITDA, as reported below for each segment, is our primary measure of segment profitability under U.S. GAAP ASC 280 “Segment Reporting”. Amounts included in income before income tax expense and excluded from Segment Adjusted EBITDA include: interest expense, net, impairments and depreciation and amortization expense. Total Segment Adjusted EBITDA is a non-GAAP financial measure and is reconciled to its most closely comparable GAAP metric of income before income tax expense (benefit) in the table below.

 

Please see reconciliations of Adjusted EBITDA and Total Segment Adjusted EBITDA included in the Non-GAAP Financial Measures tables below.

 

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

 

  

Branded Products

  

Healthcare Apparel

  

Contact Centers

  

Intersegment Eliminations

  

Total

 

For the Three Months Ended June 30, 2026:

                    

Net sales

 $98,390  $27,231  $23,094  $(879) $147,836 

Cost of goods sold

  62,518   18,264   11,344   (409)  91,717 

Gross margin

  35,872   8,967   11,750   (470)  56,119 

Selling and administrative expenses

  26,001   9,946   10,354   (470)  45,831 

Tradename impairment charge

  -   2,600   -   -   2,600 

Add backs:

                    

Tradename impairment charge

  -   2,600   -   -   2,600 

Segment depreciation and amortization

  1,344   819   649   -   2,812 

Segment Adjusted EBITDA

 $11,215  $(160) $2,045  $-  $13,100 

Less corporate selling and administrative expenses

                  5,496 

Add back corporate depreciation and amortization

                  72 

Adjusted EBITDA

                 $7,676 
                     
  

Branded Products

  

Healthcare Apparel

  

Contact Centers

  

Intersegment Eliminations

  

Total

 

For the Three Months Ended June 30, 2025:

                    

Net sales

 $92,647  $28,253  $23,977  $(832) $144,045 

Cost of goods sold

  59,631   18,237   11,364   (513)  88,719 

Gross margin

  33,016   10,016   12,613   (319)  55,326 

Selling and administrative expenses

  25,432   10,078   11,612   (319)  46,803 

Add backs:

                    

Segment depreciation and amortization

  1,395   854   639   -   2,888 

Segment Adjusted EBITDA

 $8,979  $792  $1,640  $-  $11,411 

Less corporate selling and administrative expenses

                  5,437 

Add back corporate depreciation and amortization

                  90 

Adjusted EBITDA

                 $6,064 

 

  

Branded Products

  

Healthcare Apparel

  

Contact Centers

  

Intersegment Eliminations

  

Total

 

For the Six Months Ended June 30, 2026:

                    

Net sales

 $189,259  $55,832  $45,347  $(1,724) $288,714 

Cost of goods sold

  122,400   36,684   21,983   (806)  180,261 

Gross margin

  66,859   19,148   23,364   (918)  108,453 

Selling and administrative expenses

  50,747   20,724   19,917   (918)  90,470 

Tradename impairment charge

  -   2,600   -   -   2,600 

Add backs:

                    

Tradename impairment charge

  -   2,600   -   -   2,600 

Segment depreciation and amortization

  2,718   1,642   1,237   -   5,597 

Segment Adjusted EBITDA

 $18,830  $66  $4,684  $-  $23,580 

Less corporate selling and administrative expenses

                  11,225 

Add back corporate depreciation and amortization

                  145 

Adjusted EBITDA

                 $12,500 
                     
  

Branded Products

  

Healthcare Apparel

  

Contact Centers

  

Intersegment Eliminations

  

Total

 

For the Six Months Ended June 30, 2025:

                    

Net sales

 $179,121  $55,516  $48,202  $(1,697) $281,142 

Cost of goods sold

  118,418   35,367   22,608   (1,018)  175,375 

Gross margin

  60,703   20,149   25,594   (679)  105,767 

Selling and administrative expenses

  48,852   19,604   22,533   (679)  90,310 

Add backs:

                    

Segment depreciation and amortization

  2,875   1,766   1,361   -   6,002 

Segment Adjusted EBITDA

 $14,726  $2,311  $4,422  $-  $21,459 

Less corporate selling and administrative expenses

                  12,032 

Add back corporate depreciation and amortization

                  180 

Adjusted EBITDA

                 $9,607 

 

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

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2026

  

2025

  

2026

  

2025

 

Income before income tax expense

 $1,211  $1,836  $2,265  $930 

Interest expense, net

  981   1,250   1,893   2,495 

Corporate selling and administrative expenses

  5,496   5,437   11,225   12,032 

Segment depreciation and amortization

  2,812   2,888   5,597   6,002 

Tradename impairment charge

  2,600   -   2,600   - 

Total Segment Adjusted EBITDA

 $13,100  $11,411  $23,580  $21,459 

 

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

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2026

  

2025

  

2026

  

2025

 

Net income

 $1,221  $1,551  $2,055  $793 

Interest expense, net

  981   1,250   1,893   2,495 

Income tax (benefit) expense

  (10)  285   210   137 

Segment depreciation and amortization

  2,812   2,888   5,597   6,002 

Corporate depreciation and amortization

  72   90   145   180 

Tradename impairment charge

  2,600   -   2,600   - 

Adjusted EBITDA

 $7,676  $6,064  $12,500  $9,607