DULUTH, Ga.–(BUSINESS WIRE)–Delta Apparel, Inc. (NYSE American: DLA), a leading provider of core activewear and lifestyle apparel products and direct-to-garment digital printing, today announced financial results for its 2022 fiscal fourth quarter and full year ended 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 (Global Brands), Retail Direct (DTG2Go) and Salt Life, delivered year-overyear sales growth in fiscal 2022.
Our Delta Group segment saw solid growth in regional screen printing and ad specialty business, as well as increasing interest in supply chain solutions in Global Brands channels and Retail Direct channels. 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 will continue to focus on increasing production to meet this critical 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. The year ended with 21 Salt Life-branded retail doors opening across the U.S. coast, from Southern California to Key West to the east seaboard to Rehoboth Beach in Delaware.
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 are currently planning to operate some facilities at a reduced capacity in the first quarter of fiscal 2023 so that inventories can better match overall demand.
Mr. Humphreys concluded that he was proud of his associates for their ability to adapt to the changing needs of our business. Their hard work and dedication enabled us to enter our new fiscal year with an extremely resilient and diverse business model, ready to face the challenges and seize opportunities.
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. Net sales for the Salt Life Group segment grew 15.6% over prior year, while nets sales for the Delta Group segment declined 1.1%.
- Gross profit was $21.6 Million, up from $26.5 Million in the prior-year period. Gross margins fell 440 basis points to 18.7%. A gross margin improvement in Salt Life Group helped offset a decrease in the Delta Group segment due to higher input cost in Activewear and DTG2Go and unabsorbed fixed production costs. 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 primarily due to higher labor costs and selling costs related to the Salt Life retail store expansion.
- Operating income fell by 78.0% to $2.2 million from the previous year. This quarter saw a net loss $0.3 million (or $0.04 per diluted shares), compared with net income $6.9 million (or $0.96 per dilutedshare) in the prior year period.
The complete year ending October 1, 2022
- Net sales increased 11.0% from $436.8million to $484.9million, compared with the previous year. Net sales for the Delta Group segment and Salt Life Group segment increased by 9.8% & 20.8% respectively over the previous year.
- Gross profit increased 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 prior year. This was due to a decline in Delta Group, which was partially offset by an increase in Salt Life Group.
- 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 $31.8million. This resulted in an operating profit of 6.6% compared to operating revenue of $32.7million and operating margins of 7.5% during the previous year.
- Net income was $19.7m, or $2.80 diluted share. This compares to net income $20.3m, or 2.86 diluted shares, in the preceding year.
At year-end, total net inventory was $248.5million. This compares to $161.7million one year ago. The year-overyear inventory growth is due to increased input costs that impact materials, transportation and labour as well an increase in units.
The total amount of net debt at year-end (capital lease financing and cash on the hand) was $170.6 million, as compared to $121.7 millions a year earlier.
Conference Call
The Company will hold a conference phone call with senior management today at 4:30 pm to discuss its 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. Register for the teleconference and download the software by visiting the website at least fifteen minutes prior to the event. You can replay the call 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 within the direct-to garment digital printing and fulfillment industry. It brings its DTG2Go technology to customers’ supply chains and innovations. 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
This press release may contain “forward-looking” statements that involve risks and uncertainties. A number of factors can cause actual results to differ materially to those anticipated or forecasted, including but not limited to: the general U.S. economy and social actions taken by the government/social to contain the COVID-19 pandemic; the impact on our operations of the COVID-19 pandemic on the U.S., global and local economies; the financial situation of our customers, suppliers, and vendors; changes to the strategies and operations of our customers, suppliers, and suppliers; the vulnerability of our products and intellectual Delta Apparel, Inc. does not assume any obligation to make forward-looking statements. These statements are only made to reflect changes in circumstances or events that occur after the date of the press release.
| SELECTED FINANCIAL DATA | |||||||||||||||
| (In thousands, except for amounts per share) | |||||||||||||||
| Three Months End | Twelve Months End | ||||||||||||||
| September 2022 | September 2021 | September 2022 | September 2021 | ||||||||||||
| Net Sales |
$ |
115,539 |
|
$ |
114,735 |
|
$ |
484,859 |
|
$ |
436,750 |
|
|||
| Price of goods sold |
|
93,914 |
|
|
88,192 |
|
|
376,016 |
|
|
334,870 |
|
|||
| Gross profit |
|
21,625 |
|
|
26,543 |
|
|
108,843 |
|
|
101,880 |
|
|||
|
|
|
|
|
||||||||||||
| Selling, general and administrative expenses |
|
19,845 |
|
|
17,737 |
|
|
79,455 |
|
|
70,743 |
|
|||
| Other (Income), Net |
|
(448 |
) |
|
(1,355 |
) |
|
(2,393 |
) |
|
(1,574 |
) |
|||
| Operating Income |
|
2,228 |
|
|
10,161 |
|
|
31,781 |
|
|
32,711 |
|
|||
|
|
|
|
|
||||||||||||
| Interest expense, net |
|
2,361 |
|
|
1,619 |
|
|
7,732 |
|
|
6,844 |
|
|||
|
|
|
|
|
||||||||||||
| (Loss), Earnings Prior to Provision For Income Taxes |
|
(133 |
) |
|
8,542 |
|
|
24,049 |
|
|
25,867 |
|
|||
|
|
|
|
|
||||||||||||
| Provision for Income Taxes |
|
157 |
|
|
1,672 |
|
|
4,307 |
|
|
5,705 |
|
|||
|
|
|
|
|
||||||||||||
| Consolidated Net Loss Earnings |
|
(290 |
) |
|
6,870 |
|
|
19,742 |
|
|
20,162 |
|
|||
|
|
|
|
|
||||||||||||
| Non-controlling interest is the cause of net loss (income). |
|
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 |
|
|||
| Diluted |
|
6,915 |
|
|
7,142 |
|
|
7,047 |
|
|
7,093 |
|
|||
|
|
|
|
|
||||||||||||
| Net (Loss Earnings) per Common Share |
|
|
|
|
|||||||||||
| Basic |
$ |
(0.04 |
) |
$ |
0.98 |
|
$ |
2.84 |
|
$ |
2.92 |
|
|||
|
Diluted |
$ |
(0.04 |
) |
$ |
0.96 |
|
$ |
2.80 |
|
$ |
2.86 |
|
|||
|
|
|
||||||||||||||
|
|
|
||||||||||||||
|
September 2022 |
September 2021 |
||||||||||||||
|
|
|
||||||||||||||
| Current Assets |
|
|
|||||||||||||
| Cash |
$ |
300 |
|
$ |
9,376 |
|
|||||||||
| Receivables net |
|
71,586 |
|
|
68,090 |
|
|||||||||
| Inventories, Net |
|
248,538 |
|
|
161,703 |
|
|||||||||
| Prepaids and Other Assets |
|
2,755 |
|
|
3,794 |
|
|||||||||
| 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 |
|
|||||||||
| Deferred Income Taxes |
|
1,342 |
|
|
1,854 |
|
|||||||||
| Lease Assets |
|
50,275 |
|
|
45,279 |
|
|||||||||
| Joint Ventures Investment |
|
9,886 |
|
|
10,433 |
|
|||||||||
| Other Noncurrent Assets |
|
2,967 |
|
|
2,007 |
|
|||||||||
| Total Noncurrent Assets |
|
200,502 |
|
|
191,325 |
|
|||||||||
|
|
|
||||||||||||||
| Total assets |
$ |
523,681 |
|
$ |
434,288 |
|
|||||||||
|
|
|
||||||||||||||
|
|
|
||||||||||||||
| Current Liabilities |
|
|
|||||||||||||
| Accrued Expenses and Accounts Payable |
$ |
110,967 |
|
$ |
82,885 |
|
|||||||||
| Income Tax Payable |
|
379 |
|
|
379 |
|
|||||||||
| Current Portion Finance Leases |
|
8,163 |
|
|
6,621 |
|
|||||||||
| Current Portion Of Operating Leases |
|
8,876 |
|
|
8,509 |
|
|||||||||
| Current Part of Long-Term Debt |
|
9,176 |
|
|
7,067 |
|
|||||||||
| Total Current Liabilities |
|
137,561 |
|
|
105,461 |
|
|||||||||
|
|
|
||||||||||||||
| Noncurrent Liabilities |
|
|
|||||||||||||
| Long-Term taxes payable |
|
2,841 |
|
|
3,220 |
|
|||||||||
| Leases for long-term finance |
|
16,776 |
|
|
15,669 |
|
|||||||||
| Long-Term Operating Leases |
|
42,721 |
|
|
38,546 |
|
|||||||||
| Long-term Debt |
|
136,750 |
|
|
101,680 |
|
|||||||||
| Long-Term Contingent Consideration |
|
– |
|
|
1,897 |
|
|||||||||
| Deferred 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 |
) |
|||||||||
| Retained Earnings |
|
166,600 |
|
|
146,860 |
|
|||||||||
| Accumulated Other Comprehensive Loss (Loss). |
|
141 |
|
|
(786 |
) |
|||||||||
| Treasury Stock |
|
(45,420 |
) |
|
(42,149 |
) |
|||||||||
| Total Equity |
|
182,722 |
|
|
164,194 |
|
|||||||||
|
|
|
||||||||||||||
| Total Liabilities and Equity |
$ |
523,681 |
|
$ |
434,288 |
|
|||||||||