Delta Apparel Reports Fourth Quarter and Full Year Fiscal 2022 Results

Full Year Net Sales Rise 11%, Full year DilutedEPS of $2.80

DULUTH (Ga.), November 17, 2022–(BUSINESS WIRE.) –Delta Apparel, Inc., a major provider of lifestyle apparel and core activewear, announced today its financial results for the 2022 fiscal fourth quarter, and for the full year ending October 1, 2022.

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. Combining our diverse go-to market strategies with our vertically-integrated manufacturing and service platforms helped us navigate a dynamic economic and business environment. Our five market channels – Delta Direct and Global Brands, Retail Direct as well as DTG2Go were all able to deliver year-overyear sales growth in fiscal 2022.

We saw steady growth in our Delta Group segment’s regional screen print and advertising specialty businesses, and increased interest in the supply chains offered by our Global Brands channel and Retail Direct channel. The DTG2Go print on-demand business continues its growth with strong double-digit sales increases over the past year and an increase in order flow for our digital-first strategy. We are determined to increase output in order to meet the demand in this crucial growth area.

Salt Life achieved record sales and operating results in another year, surpassing 21% the previous year. 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 doors were open across the U.S. from Southern California up to Key West and along the eastern seaboard to Rehoboth Beach.

Continue the story

Our vertical, near-shore manufacturing platform allows us to react quickly to market changes and adjust production levels in order to manage inventory and lower input costs. We plan to keep some of our facilities operating at less than their full capacity during the first half fiscal 2023, until inventory levels are better aligned with overall demand.

Mr. Humphreys concluded by saying, “I remain incredibly proud about our associates because they continue to react to the ever-changing requirements of our business. We enter the new fiscal year with a highly resilient, diversified business model that is ready to take advantage of opportunities and meet all challenges.

The fourth quarter ended on October 1, 2022

• The net sales reached $115.5million, which is a slight increase on the $114.7 million in prior year periods. The net sales in Salt Life Group increased 15.6% compared to the previous year, while net Sales in Delta Group decreased 1.1%

• Gross profit was $21.6million, up from $26.5 million in prior year. Gross margins declined 440 basis points, to 18.7%. The Salt Life Group segment saw a net improvement in gross margins, while the Delta Group segment experienced a decline in gross margins due to higher input costs for its Activewear and DTG2Go businesses as well as unabsorbed fixed manufacturing cost. In the September quarter, we began reducing production of basic T-shirts. This resulted in $1.1million in unabsorbed fixed costs.

• 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 mainly due to higher labor costs and selling costs related to the Salt Life retail store expansion.

• Operating income 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 net income of $6.9million or $0.96 per share in the previous year period.

Here’s the complete year ending October 1, 2022

• From $436.8million in the previous year, net sales rose 11.0% to $484.9million. The net sales of the Delta Group and Salt Life Group segments grew by 9.8% and 20%, respectively, over last year.

• Gross profit rose 6.8% from $101.9million to $108.8million in the previous year. Gross margins declined 90 basis points by 22.4% in comparison to the previous year due to a decline at the Delta Group segment, partially offset by improvements in the Salt Life Group section.

• 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 was $31.8m, which resulted to an operating margin at 6.6%. This is a contrast to operating income of 32.7 million and 7.5% in prior years.

• Net income was $19.7 millions, or $2.80 diluted share. This compares to net income $20.3 million, which is $2.86 diluted share.

The total net inventory at year’s end was $248.5million, compared with $161.7million a year earlier. The increase in inventory year-over-year is due to higher input costs, which impact materials, transportation, and labor, as well as an increased number of units.

At year-end, total net debt (capital lease financing, cash on hand) was $170.6million, compared with $121.7 million a previous year.

Conference Call

At 4:30 p.m. today, the Company will host a conference call with its senior management to discuss financial results. ET. The Company invites all to join the call at 877-704-4533. For international calls, dial 201-389-920. A live webcast of the conference call will be available at www.deltaapparelinc.com. To register for the teleconference webcast, please visit the website at minimum 15 minutes before the call to download any software. The replay of the call can be accessed until December 17, 2022. Participants can access the replay by dialing toll-free at 844-512-2921. International callers may dial 412-317-66671. Access code 13733708 is the replay access code

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. The Company is a market-leader in direct-to-garment digital printing and fulfillment. They bring their DTG2Go technology, innovation and expertise to customer supply chains. The Company sells casual and athletic products through many distribution channels, including independent and specialty shops, higher-end department stores and mid-tier retailers as well as mass merchants and online e-retailers. 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.

Cautionary Note regarding Forward-Looking statements

These statements may be forward-looking and could involve risks. There are many factors that could cause actual results not to be as expected or forecasted. These include the U.S. economic situation and government/social measures taken to contain it; the impact of COVID-19 on our operations, financial conditions, liquidity and capital investments; the volatility of cotton and other raw materials; the ability of customers and suppliers to meet their financial obligations; fluctuations in interest rates increasing our obligations under our variable-rate indebtedness; raising additional capital; the illiquidity and volatility of our shares, as well as our quarterly reports on Form 10-Q. Delta Apparel, Inc. disclaims any obligation or responsibility to revise forward-looking statements, except as required by law.

Visit businesswire.com to see the source version https://www.businesswire.com/news/home/20221117006040/en/

Contacts

ICR, Inc.

Investors:
Tom Filandro, 646-277-1235
investor.relations@deltaapparel.com

Media:
Jessica Liddell, 203-682-8208
DLAPR@icrinc.com