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. Our diversified approach to market strategies and our vertically integrated manufacturing and services platforms enabled us to navigate an economic and business environment that is constantly changing. In fiscal 2022, all five of our market channels, Delta Direct, Global Brands Retail Direct, DTG2Go and Salt Life, saw year-over-year growth in sales.

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’s segment had another record 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 doors were open across the U.S. from Southern California up to Key West and along the eastern seaboard up to Rehoboth Beach.

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 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. 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 in Salt Life Group increased 15.6% compared to the previous year, while net Sales in Delta Group decreased 1.1%
• Gross profit was $21.6 Million, compared with $26.5 Million 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. The net loss for the quarter was $0.3million, or $0.04 per dilute share. This compares with net income of $6.9million, or $0.96, in the prior-year period.

Here’s the complete year ending October 1, 2022

• From $436.8million in the previous year, net sales rose 11.0% to $484.9 Million. 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 rose 6.8% to $108.8million, an increase of $101.9 million over 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, 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 $19.7million, or $2.80 per share, as compared to net earnings of $20.3million, or $2.86 each diluted share in the previous year.

At year-end, total net inventory was $248.5 million. 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

At 4:30 p.m. today, the Company will host a conference call with its senior management to discuss financial results. ET. You can join the call by dialing (877) 704-4453. 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. The replay of the call can be accessed until December 17, 2022. To access the replay telephone call, participants can dial toll free 844-512-2921. International callers can 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 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 mid-tier retail stores. Mass merchants and ecommerce sites, the U.S. Military, and business-to-business ecommerce 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.

Cautionary Note Concerning 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; 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. 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
Selling price of goods		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
Earnings per common share net (loss)
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
Operating 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 portion of long-term debt		9,176				7,067
Total Current Liabilities		137,561				105,461
Noncurrent Liabilities
Long-Term Taxes Easily Payable		2,841				3,220
Leases for long-term finance		16,776				15,669
Operating leases for 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 Noncurrent 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