Full Year Net Sales Increase 11%, Full Year
Diluted EPS of $2.80
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. The combination
of our diversified go-to-market strategies with our vertically
integrated manufacturing and service platforms allowed us to
successfully navigate a dynamic business and economic environment.
All five of our market channels - Delta Direct, Global Brands,
Retail Direct, DTG2Go, and Salt Life - delivered year-over-year
sales growth in fiscal 2022.
Within our Delta Group segment, we continued to see solid growth
in our regional screen print and ad specialty businesses along with
increasing interest in the supply chain solutions offered in our
Global Brands and Retail Direct channels. Our DTG2Go
print-on-demand business continues to grow, with a strong
double-digit sales increase on the year, and order flow for our
digital first strategy exceeds our current capacity. We remain
extremely focused on increasing output to meet demand in this
important growth area.
Our Salt Life segment achieved another record year of sales and
operating results, with overall sales outpacing the prior 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. We ended the year with 21 Salt Life branded
retail doors open for business across the U.S. coastline from
Southern California to Key West and up the eastern seaboard to
Rehoboth Beach, Delaware.
The flexibility of our vertical, near-shore manufacturing
platform enabled us to quickly respond to market fluidity and
adjust production levels to manage inventory and mitigate higher
input costs. We currently plan to operate some of our facilities at
less than full capacity in the first half of fiscal 2023 until
inventories better align with overall demand.
Mr. Humphreys concluded, "I remain incredibly proud of our
associates as they continue to respond to the ever-changing needs
of our business. Thanks to their hard work and dedication, we move
into our new fiscal year with a highly resilient and diversified
business model ready to seize opportunities and meet the challenges
ahead."
For the fourth quarter ended October 1, 2022:
- Net sales were $115.5 million, a slight increase over prior
year period net sales of $114.7 million. Net sales in the Salt Life
Group segment increased 15.6% over the prior year period, while net
sales in the Delta Group segment decreased 1.1%.
- Gross profit was $21.6 million, compared to $26.5 million in
the prior year period, with gross margins declining 440 basis
points to 18.7%. Gross margin improvement in the Salt Life Group
segment helped offset a gross margin decline in the Delta Group
segment driven by higher input costs in its Activewear and DTG2Go
businesses and unabsorbed fixed manufacturing costs. We started
reducing production of basic tees in the September quarter, which
resulted in $1.1 million of 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.
Selling costs associated with the Salt Life retail store expansion
and higher distribution labor costs primarily drove the
increase.
- Operating income was $2.2 million, a decline of 78.0% from the
prior year period. The decline resulted in a net loss of $0.3
million, or $0.04 per diluted share for the quarter compared to net
income of $6.9 million, or $0.96 per diluted share, in the prior
year period.
For the full year ended October 1, 2022:
- Net sales increased 11.0% to $484.9 million from $436.8 million
in the prior year. Net sales in the Delta Group and Salt Life Group
segments increased 9.8% and 20.8%, respectively, over the prior
year.
- Gross profit increased 6.8% to $108.8 million from $101.9
million in the prior year. Gross margins were 22.4%, a decline of
90 basis points from the prior year driven by a decline in the
Delta Group segment partially offset by 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 $31.8 million, resulting in an operating
margin of 6.6%, compared to operating income of $32.7 million and
operating margin of 7.5% in the prior year.
- Net income was $19.7 million, or $2.80 per diluted share,
compared to net income of $20.3 million, or $2.86 per diluted
share, in the prior year.
Total net inventory at year-end was $248.5 million, compared to
$161.7 million a year ago. The year-over-year inventory expansion
reflects higher input costs impacting materials, transportation and
labor as well as an increase in units on hand.
Total net debt, including capital lease financing and cash on
hand, at year-end was $170.6 million, compared to $121.7 million a
year ago.
Conference Call
The Company will hold a conference call with senior management
to discuss its financial results today at 4:30 p.m. ET. The Company
invites you to join the call by dialing 877-704-4453. If calling
from outside the United States, please dial 201-389-0920. A live
webcast of the conference call will be available at
www.deltaapparelinc.com. Please visit the website at least 15
minutes early to register for the teleconference webcast and
download any necessary software. A replay of the call will be
available through December 17, 2022. To access the telephone
replay, participants should dial toll-free 844-512-2921.
International callers can dial 412-317-6671. The access code for
the 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
the direct-to-garment digital print and fulfillment industry,
bringing proprietary DTG2Go technology and innovation to customer
supply chains. The Company specializes in selling casual and
athletic products through a variety of distribution channels and
tiers, including outdoor and sporting goods retailers, independent
and specialty stores, better department stores and mid-tier
retailers, mass merchants and e-retailers, the U.S. military, and
through its business-to-business e-commerce 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 Regarding Forward-Looking Statements
This press release may contain “forward-looking” statements that
involve risks and uncertainties. Any number of factors could cause
actual results to differ materially from anticipated or forecasted
results, including, but not limited to, the general U.S. and
international economic conditions; the impact of the COVID-19
pandemic and government/social actions taken to contain its spread
on our operations, financial condition, liquidity, and capital
investments, including recent labor shortages, inventory
constraints, and supply chain disruptions; significant
interruptions or disruptions within our manufacturing, distribution
or other operations; deterioration in the financial condition of
our customers and suppliers and changes in the operations and
strategies of our customers and suppliers; the volatility and
uncertainty of cotton and other raw material prices and
availability; the competitive conditions in the apparel industry;
our ability to predict or react to changing consumer preferences or
trends; our ability to successfully open and operate new retail
stores in a timely and cost-effective manner; the ability to grow,
achieve synergies and realize the expected profitability of
acquisitions; changes in economic, political or social stability at
our offshore locations or in areas in which we, or our suppliers or
vendors, operate; our ability to attract and retain key management;
the volatility and uncertainty of energy, fuel and related costs;
material disruptions in our information systems related to our
business operations; compromises of our data security; significant
changes in our effective tax rate; significant litigation in either
domestic or international jurisdictions; recalls, claims and
negative publicity associated with product liability issues; the
ability to protect our trademarks and other intellectual property;
changes in international trade regulations; our ability to comply
with trade regulations; changes in employment laws or regulations
or our relationship with employees; negative publicity resulting
from violations of manufacturing standards or labor laws or
unethical business practices by our suppliers and independent
contractors; the inability of suppliers or other third-parties,
including those related to transportation, to fulfill the terms of
their contracts with us; restrictions on our ability to borrow
capital or service our indebtedness; interest rate fluctuations
increasing our obligations under our variable rate indebtedness;
the ability to raise additional capital; the impairment of acquired
intangible assets; foreign currency exchange rate fluctuations; the
illiquidity of our shares; price volatility in our shares and the
general volatility of the stock market; and the other factors set
forth in the "Risk Factors" contained in our most recent Annual
Report on Form 10-K filed with the Securities and Exchange
Commission and as updated in our subsequently filed Quarterly
Reports on Form 10-Q. Except as may be required by law, Delta
Apparel, Inc. expressly disclaims any obligation to update these
forward-looking statements to reflect events or circumstances after
the date of this press release or to reflect the occurrence of
unanticipated events.
SELECTED FINANCIAL DATA: (In thousands, except per share
amounts)
Three Months Ended Twelve Months Ended
September 2022 September 2021 September 2022
September 2021 Net Sales
$
115,539
$
114,735
$
484,859
$
436,750
Cost 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) 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
Operating Lease Assets
50,275
45,279
Investment in Joint Venture
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
Accounts Payable and Accrued Expenses
$
110,967
$
82,885
Income Tax Payable
379
379
Current Portion of 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 Payable
2,841
3,220
Long-Term Finance Leases
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 to Non-Controlling Interest
(656
)
(658
)
Retained Earnings
166,600
146,860
Accumulated Other Comprehensive Gain (Loss)
141
(786
)
Treasury Stock
(45,420
)
(42,149
)
Total Equity
182,722
164,194
Total Liabilities and Equity
$
523,681
$
434,288
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221117006040/en/
ICR, Inc.
Investors: Tom Filandro, 646-277-1235
investor.relations@deltaapparel.com
Media: Jessica Liddell, 203-682-8208 DLAPR@icrinc.com
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