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. 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.

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 channels. 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 are determined to increase output in order to meet the demand in this crucial 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 to Rehoboth Beach.

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 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 that he was proud to say, “I am incredibly proud to our associates as we continue to respond to 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.

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. The net sales of the Salt Life Group segment increased by 15.6%, while net sales for the Delta Group segment fell 1.1%
• Gross profit was $21.6million compared to $26.5million in the previous year period. Gross margins decreased 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. We began to reduce production of basic tees during the September quarter. This resulted is $1.1 million in unabsorbed fixed cost.
• 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 was $2.2million, which is a decrease of 78.0% compared to the previous year. This quarter saw a net loss $0.3 million (or $0.04 per diluted shares), compared with net income $6.9million (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 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.
• 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%. This compares to operating income of 32.7 million and 7.5% in previous years.
• Net income was $19.7 Million, or $2.80 diluted share. This compares to net income $20.3 million or $2.86 diluted shares in the preceding year.

At year-end, total net inventory was $248.5million compared to $161.7million a year earlier. The year-overyear inventory growth is due to increased input costs that impact materials, transportation and labour as well an increase in units.

At year-end, total net debt (capital lease financing, cash on hand) was $170.6million, compared with $121.7 million a previous year.

Conference Call

The Company will host a conference with its 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. 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. To access the replay telephone call, participants can 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 in direct-to-garment digital printing and fulfillment. They bring their DTG2Go technology, innovation and expertise to customer supply chains. 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, e-retailers, U.S. military and business-to-business websites. 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.

Forward-Looking Statements: Cautionary Note

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, financial situation, liquidity, capital investments and customer relationships; the volatility, uncertainty, and cost of raw materials; our ability and ability to open new retail stores; our ability and ability to manage our data security; restrictions on our ability borrow capital and service our indeb Delta Apparel, Inc. disclaims any obligation or responsibility to revise forward-looking statements, except as required by law.

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 Administration 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
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
Operating 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 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 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 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 Gains (Loss).		141				(786	)
Treasury Stock		(45,420	)			(42,149	)
Total Equity		182,722				164,194
Total Liabilities & Equity	$	523,681			$	434,288