Delta Apparel Reports Fourth Quarter and Full Year Fiscal 2022 Results

Full Year Net Sales Rise 11%, Full year DilutedEPS of $2.80

DULUTH, Ga. November 17, 2022–(BUSINESS WIRE.)–Delta Apparel, Inc., a major provider of lifestyle apparel and core activewear, announced today its financial results for the 2022 fiscal fourth quarter, and the full year ending 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. 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. 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.

The story continues

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 you continue to respond the ever-changing requirements of our business,” Mr. Humphreys said. 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 $21.6million 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. The increase was primarily due to higher labor costs and selling costs related to the Salt Life retail store expansion.

• Operating income was $2.2million, which is a decrease of 78.0% compared to the previous year. 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.

Here’s the complete year ending October 1, 2022

• Net sales rose 11.0% from $436.8 million to $484.9million, an increase of 11.0%. 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. This resulted in an operating profit of 6.6% compared with operating income of 32.7 million and 7.5% respectively in the previous year.

• 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.

The total net inventory at year’s end was $248.5million, compared with $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

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. 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 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 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 Concerning Forward-Looking Statements

These statements may be forward-looking and could involve risks. 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 our shares 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.

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Contacts

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Media:
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