Full-year net sales increase 11%, full year diluted EPS $2.80
DULUTH (Ga.), November 17, 2022–(BUSINESS WIRED)–Delta Apparel, Inc. (NYSE American : DLA), a leader in lifestyle and activewear products, and direct-to garment digital printing, announced today financial results for its 2022 fiscal fourth and full year.
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.
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 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. 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 the 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.
For the fourth quarter ending October 1, 2022
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Net sales were $115.5 Million, a slight rise over the prior year’s net sales of $114.7 Million. The net sales of the Salt Life Group segment increased by 15.6%, while net sales for the Delta Group segment fell 1.1%
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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.
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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.
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Operating income was $2.2million, which is a decrease of 78.0% compared to the previous year. 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.
The complete year ending October 1, 2022
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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.
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Gross profit rose 6.8% to $108.8million, an increase of $101.9 million over 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.
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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.
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Operating income was $31.8million. This resulted in an operating Margin of 6.6% compared with operating income of 32.7 million and 7.5% respectively in the previous year.
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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 $248.5million. This compares to $161.7million one year ago. The increase in inventory over the past year is due to increased input costs that impact materials, transportation and labor. There has also been an increase of units on hand.
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. 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. 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 for replay 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 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, 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
Forward-looking statements in this press release could contain 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 ability for us to borrow capital and service our variable rate debt; interest rate fluctuations increasing our obligations; the ability raise additional capital; the illiquidity and volatility Delta Apparel, Inc. disclaims any obligation or responsibility to revise forward-looking statements, except as required by law.
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SELECTED FINANCIAL DATA |
|||||||||||||||
|
(In thousand, except for share amounts) |
|||||||||||||||
|
Three Months End |
Twelve Months Finished |
||||||||||||||
|
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 |
|||||||||||
|
Net Interest Expense |
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 |
||||||||||
|
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 Stock |
|||||||||||||||
|
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 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 of 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 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 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 & Equity |
$ |
523,681 |
$ |
434,288 |
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