Delta Apparel Reports Fourth Quarter and Full Year Fiscal 2022 Results
DULUTH, Ga.–(BUSINESS WIRE(NYSE American: DLA) – Today, Delta Apparel, Inc., a leader in lifestyle and activewear products, and digital printing, announced its financial results for the 2022 fiscal fourth quarter, and year.
Robert W. Humphreys, the Company’s Chairman and Chief Executive Officer, commented, “We are pleased to announce results marking our second consecutive year of strong organic growth. Our diversified approach to market strategies and our vertically integrated manufacturing, service and platform platforms enabled us to navigate an economic and business environment that is constantly changing. In fiscal 2022, all five market channels, Delta Direct, Global Brands and Retail Direct, DTG2Go and Salt Life, saw year-over-year growth.
In our Delta Group segment we saw steady growth in both our regional screenprint and ad specialty business, as well as increasing interest in the supply chains offered by our Global Brands channel and Retail Direct channels. With a double-digit increase in sales, DTG2Go’s print-on demand business continues to expand. The order volume for the digital first strategy is exceeding our capacity. This important area of growth is still a priority for us. We are determined to increase our output.
Salt Life’s segment had another record-breaking year in terms of operating and sales results. Overall sales surpassed the previous year by 21%. The Salt Life brand’s ability to connect with consumers across its many marketing touchpoints led to organic growth in all three Salt Life omni-channel markets – wholesale, retail and eCommerce – in the fourth quarter. Ending the year, 21 Salt Life retail outlets were open along the U.S. Coast from Southern California to Key West to Rehoboth Beach to Delaware.
Our near-shore, vertical manufacturing platform allowed us to respond quickly to market fluctuations and adjust production levels in order to control inventory costs and manage inputs. We are currently planning to run some of our facilities below full capacity for the first half 2023 in order to better match overall demand.
Humphreys said, “I am incredibly proud to our associates as we continue to respond the changing needs of our company.” Their hard work and dedication enabled us to enter our fiscal year with a resilient business model that is flexible and adaptable, ready to face the future and take advantage of opportunities.
The fourth quarter of 2022 ended on October 1, 2018.
- Sales were $115.5 Million, slightly more than $114.7M in the prior year. The net sales of the Salt Life Group segment increased by 15.6%, while the Delta Group segment saw net sales decrease 1.1%.
- Gross profit stood at $21.6 million, an increase of $26.5million in the preceding year. The gross margins fell 440 basis point to 18.7%. A gross margin increase in Salt Life Group helped offset a decline in Delta Group segments due to increased input costs at its Activewear business and DTG2Go business, as well as unabsorbed fixed production costs. In the September quarter we began to reduce production of basic tees, which led to $1.1 million in unabsorbed fixed cost.
- Selling, general and administrative (“SG&A”) expenses were $19.8 million, compared to $17.7 million in the prior year period. SG&A expenses as a percentage of sales increased 170 basis points to 17.2%, compared to 15.5% in the prior year period. The increase was primarily due to higher labor costs and selling costs related to the Salt Life retail store expansion.
- The operating income for the quarter was $2.2million, which is a decrease of 78.0% compared to the previous year. This quarter’s net loss was $0.3 million or $0.04 per share. It compares to the net income of $6.9million or $0.96 per share in the previous year.
Here’s the complete list of events for the year that ended on October 1, 2022
- The net sales increased by 11.0%, to $484.9M from $436.8 Million in the preceding year. Over the preceding year, net sales for the Delta Group and Salt Life Group segments grew 9.8% and 28% respectively.
- From $101.9million in the previous year, gross profit rose 6.8% to $108.8million. The decline in Delta Group’s segment, partially offset by improvements in Salt Life Group, led to a decrease in gross margins of 22.4%. This was a 90 basis point decline from previous year.
- Selling, general and administrative (“SG&A”) expenses were $79.5 million, compared to $70.7 million in the prior year, driven by selling costs associated with expansion of Salt Life’s retail footprint and higher distribution labor costs. SG&A expenses as a percentage of sales were relatively flat at 16.4%, compared to 16.2% in the prior year.
- Operating income reached $31.8million, which resulted in an operating margin at 6.6%. This is compared with operating income of 32.7 million and 7.5% respectively in the previous year.
- The net income for the year was $19.7million, which is $2.80 per share. This compares to $20.3 million or $2.86 per share in the previous year.
At year-end, total inventory stood at $248.5 million as opposed to $161.7 millions a year prior. An increase in stock levels year-over-year is due to higher input costs that impact materials, transport and labor.
At year-end, total net debt (capital lease financing, cash on hand) was $170.6million, as compared with $121.7 million one year earlier.
Conferencing Call
Today at 4:30 PM, Company senior managers will be able to join a conference phone call. They will discuss financial results. ET. To join the company’s call, dial 877-704-453. For international calls, dial 201-389-920. A live webcast of the conference call will be available at www.deltaapparelinc.com. Register for the Teleconference Webcast by visiting the website no later than 15 minutes prior to the start of the conference call and downloading any software. The replay will be accessible until December 17th, 2022. Access to the replay can be accessed by calling toll free 844-512-2921. International callers should dial 412-317-671. Access code 13733708 is the access code to replay
About Delta Apparel, Inc.
Delta Apparel, Inc., along with its operating subsidiaries DTG2Go, LLC, Salt Life, LLC, and M.J. Soffe, LLC, is a vertically-integrated, international apparel company that designs, manufactures, sources, and markets a diverse portfolio of core activewear and lifestyle apparel products under the primary brands of Salt Life®, Soffe®, and Delta. Market leader in direct to garment digital printing and fulfillment, the Company brings DTG2Go technology innovation and market leadership to customers supply chains. The Company is a leader in the sale of casual and sports products via a range of channels and tiers. These include independent and specialty retailers, sporting and outdoor retailers, superior department stores and mid-tier retail stores, mass merchants, ecommerce websites, U.S. military and business-to-business sites. The Company’s products are also made available direct-to-consumer on its websites at www.saltlife.com, www.soffe.com and www.deltaapparel.com as well as through its branded retail stores. The Company’s operations are located throughout the United States, Honduras, El Salvador, and Mexico, and it employs approximately 8,600 people worldwide. Additional information about the Company is available at www.deltaapparelinc.com.
A Cautionary Note Concerning Forward-Looking Statements
This press release may contain “forward-looking” statements that involve risks and uncertainties. A number of factors can cause actual results not to be as expected. This includes, but isn’t limited to: the U.S., international and global economic climates and government/social action taken to stop the spread of the COVID-19 pandemic; financial conditions of our customers, suppliers, and vendors; the availability of raw materials and volatility; how we manage our inventory; whether or not our employees are able to work with them; security of information systems; risks associated with our business operations. Delta Apparel, Inc. does not assume any responsibility to revise forward-looking statements, except as required or permitted by law.
SELECTED FINANCIAL DATA | |||||||||||||||
(In thousand, except for amounts per share) | |||||||||||||||
End of Three Months | Twelve months ended | ||||||||||||||
September 2022 | September 2021 | September 2022 | September 2021 | ||||||||||||
Net Sales |
$ |
115,539 |
|
$ |
114,735 |
|
$ |
484,859 |
|
$ |
436,750 |
|
|||
Price of the Goods Sold |
|
93,914 |
|
|
88,192 |
|
|
376,016 |
|
|
334,870 |
|
|||
Gross profit |
|
21,625 |
|
|
26,543 |
|
|
108,843 |
|
|
101,880 |
|
|||
|
|
|
|
||||||||||||
Selling, General and Administration Expenses |
|
19,845 |
|
|
17,737 |
|
|
79,455 |
|
|
70,743 |
|
|||
Other (Income), Total |
|
(448 |
) |
|
(1,355 |
) |
|
(2,393 |
) |
|
(1,574 |
) |
|||
Operating Income |
|
2,228 |
|
|
10,161 |
|
|
31,781 |
|
|
32,711 |
|
|||
|
|
|
|
||||||||||||
Interest expenses, net |
|
2,361 |
|
|
1,619 |
|
|
7,732 |
|
|
6,844 |
|
|||
|
|
|
|
||||||||||||
(Loss), Earnings Prior to Provision For Income Taxes |
|
(133 |
) |
|
8,542 |
|
|
24,049 |
|
|
25,867 |
|
|||
|
|
|
|
||||||||||||
Provisions for income taxes |
|
157 |
|
|
1,672 |
|
|
4,307 |
|
|
5,705 |
|
|||
|
|
|
|
||||||||||||
Consolidated net (Loss Earnings) |
|
(290 |
) |
|
6,870 |
|
|
19,742 |
|
|
20,162 |
|
|||
|
|
|
|
||||||||||||
NON-Controlling Interest Causes Net Loss |
|
9 |
|
|
(14 |
) |
|
(2 |
) |
|
134 |
|
|||
|
|
|
|
||||||||||||
Net (Loss Earnings) Attributable To Shareholders |
$ |
(281 |
) |
$ |
6,856 |
|
$ |
19,740 |
|
$ |
20,296 |
|
|||
|
|
|
|
||||||||||||
Weighted Average Shares Outstanding |
|
|
|
|
|||||||||||
Basic |
|
6,915 |
|
|
6,975 |
|
|
6,953 |
|
|
6,961 |
|
|||
Do not mix |
|
6,915 |
|
|
7,142 |
|
|
7,047 |
|
|
7,093 |
|
|||
|
|
|
|
||||||||||||
Average Net Loss Earnings Per Common Share |
|
|
|
|
|||||||||||
Basic |
$ |
(0.04 |
) |
$ |
0.98 |
|
$ |
2.84 |
|
$ |
2.92 |
|
|||
Do not mix |
$ |
(0.04 |
) |
$ |
0.96 |
|
$ |
2.80 |
|
$ |
2.86 |
|
|||
|
|
||||||||||||||
|
|
||||||||||||||
September 2022 |
September 2021 |
||||||||||||||
|
|
||||||||||||||
Current Assets |
|
|
|||||||||||||
Cash |
$ |
300 |
|
$ |
9,376 |
|
|||||||||
Receiveables net |
|
71,586 |
|
|
68,090 |
|
|||||||||
Inventories, Net |
|
248,538 |
|
|
161,703 |
|
|||||||||
Prepaids and other assets |
|
2,755 |
|
|
3,794 |
|
|||||||||
The total current assets |
|
323,179 |
|
|
242,963 |
|
|||||||||
|
|
||||||||||||||
Noncurrent assets |
|
|
|||||||||||||
Property, Plant & Equipment, Net |
|
74,109 |
|
|
67,564 |
|
|||||||||
Goodwill and Other intangibles Net |
|
61,923 |
|
|
64,188 |
|
|||||||||
Inferred income taxes |
|
1,342 |
|
|
1,854 |
|
|||||||||
Operating Lease Assets |
|
50,275 |
|
|
45,279 |
|
|||||||||
Joint Venture Investment |
|
9,886 |
|
|
10,433 |
|
|||||||||
Additional Noncurrent Assets |
|
2,967 |
|
|
2,007 |
|
|||||||||
Noncurrent assets total |
|
200,502 |
|
|
191,325 |
|
|||||||||
|
|
||||||||||||||
Total assets |
$ |
523,681 |
|
$ |
434,288 |
|
|||||||||
|
|
||||||||||||||
|
|
||||||||||||||
Actual Liabilities |
|
|
|||||||||||||
Accrued and payable expenses |
$ |
110,967 |
|
$ |
82,885 |
|
|||||||||
Income Tax Payable |
|
379 |
|
|
379 |
|
|||||||||
Finance Leases – Current Provision |
|
8,163 |
|
|
6,621 |
|
|||||||||
The Current Part of Operating Leases |
|
8,876 |
|
|
8,509 |
|
|||||||||
Present Portion Long-Term Debt |
|
9,176 |
|
|
7,067 |
|
|||||||||
Total Current Liabilities |
|
137,561 |
|
|
105,461 |
|
|||||||||
|
|
||||||||||||||
Noncurrent Liabilities |
|
|
|||||||||||||
Paiable Long-Term Taxes |
|
2,841 |
|
|
3,220 |
|
|||||||||
Leasing long-term finance |
|
16,776 |
|
|
15,669 |
|
|||||||||
Operational Leases for Long-Term Terms |
|
42,721 |
|
|
38,546 |
|
|||||||||
Debt for the Long-Term |
|
136,750 |
|
|
101,680 |
|
|||||||||
Long-Term Contingent Consideration |
|
– |
|
|
1,897 |
|
|||||||||
Inferred income taxes |
|
4,310 |
|
|
1,520 |
|
|||||||||
Other non-current liabilities |
|
– |
|
|
2,101 |
|
|||||||||
Total Noncurrent Liabilities |
|
203,398 |
|
|
164,633 |
|
|||||||||
|
|
||||||||||||||
Common stock |
|
96 |
|
|
96 |
|
|||||||||
Additional paid-in capital |
|
61,961 |
|
|
60,831 |
|
|||||||||
Equity Attributable To Non-Controlling Interest |
|
(656 |
) |
|
(658 |
) |
|||||||||
Restricted Earnings |
|
166,600 |
|
|
146,860 |
|
|||||||||
Accumulated Other Comprehensive Win (Loss). |
|
141 |
|
|
(786 |
) |
|||||||||
Treasury Stock |
|
(45,420 |
) |
|
(42,149 |
) |
|||||||||
Total Equity |
|
182,722 |
|
|
164,194 |
|
|||||||||
|
|
||||||||||||||
Total Liabilities & Equity |
$ |
523,681 |
|
$ |
434,288 |
|