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.
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. With a strong double-digit increase in sales for the year, DTG2Go’s print-on-demand business is growing, and our order flow for digital first strategy far exceeds our capacity, our DTG2Go business continues to grow. 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 prior 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 near-shore, vertical manufacturing platform allowed us to respond quickly to market fluctuations and adjust production levels to manage inventory costs and reduce 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.
“I remain incredulous of our associates as we continue to respond the ever-changing requirements of our business,” concluded Mr. Humphreys. 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 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 in Salt Life Group increased 15.6% compared to the previous year, while net Sales in Delta Group decreased 1.1%
- Gross profit was $21.6m, compared with $26.5m in the previous year period. Gross margins decreased 440 basis points to 18.7%. A gross margin improvement in Salt Life Group helped offset a decrease in gross margin in Delta Group 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. This was due to an increase in selling costs as a result of the Salt Life retail outlet expansion and higher distribution labor cost.
- Operating income fell by 78.0% to $2.2 million from the prior-year period. 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.
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, in comparison to the previous year.
- Gross profit rose 6.8% from $101.9million to $108.8million in the previous year. Gross margins fell 90 basis points to 22.4% from the previous year, partially due to a decrease in the Delta Group segment. However, there was an improvement in the Salt Life Group segment.
- 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, which resulted in an operating margin 6.6%, as compared to operating revenue of $32.7million and operating margin 7.5% in previous years.
- 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 $248.5 millions, compared to $161.7million one year ago. 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.
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
At 4:30 pm, the Company will hold a conference phone call with senior management in order to discuss its financial results. ET. The Company invites all to join the call at 877-704-4533. To call from outside the United States please 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. You can replay the call until December 17, 2022. Participants should dial toll free 844-512-2921. International callers can dial 412-317-66671. The replay access code is 13733708.
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 is a leader in the sale of casual and athletic products through a range of channels and tiers. These include independent and specialty stores as well as better department stores and midtier retailers. Mass merchants and ecommerce sites, as well U.S. military. 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. 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; changes to the strategies and operations of our customers or suppliers; the ability of customers or suppliers to meet their obligations under our variable-rate indebtedness; fluctuations in interest rates; the loss of acquired intangibles; volatility; the stock exchange rate fluctuations Delta Apparel, Inc. does not assume any obligation to make forward-looking statements. These forward-looking statements are only made as a result of events and circumstances that occur after this press release.
| SELECTED FINANCIAL DATA | |||||||||||||||
| (In thousands, but not per share amounts) | |||||||||||||||
| Three Months Until the 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 of) Earnings before 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 |
|
|||
|
|
|
|
|
||||||||||||
| Net Loss (Income), Attributable To Non-Controlling Interest |
|
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 Venture 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 and payable expenses |
$ |
110,967 |
|
$ |
82,885 |
|
|||||||||
| Income Tax |
|
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 |
|
|||||||||
| Operating Leases Long-Term |
|
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 |
|
|||||||||