Delta Apparel Reports Fourth Quarter and Full Year Fiscal 2022 Results

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