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