Record First Quarter Sales at Salt Life and
DTG2Go
Double-Digit Growth Across Four of Five
Go-To-Market Channels
Delta Apparel, Inc. (NYSE American: DLA), a leading provider of
core activewear, lifestyle apparel, and on-demand digital print
strategies, today announced financial results for its fiscal year
2023 first quarter ended December 31, 2022.
Chairman and Chief Executive Officer Robert W. Humphreys
commented, “We were pleased to deliver double-digit sales growth
across four of our five main go-to-market channels and overall
sales of $107 million for the quarter. Our Salt Life Group segment
hit on all cylinders, delivering record first quarter sales fueled
by 17% growth over last year and strong acceleration across
direct-to-consumer and wholesale channels. The Salt Life team
continues to do an excellent job of expanding the brand’s retail
and digital footprints to remain accessible to its loyal and
growing consumer following across the country.
Our DTG2Go business also posted record first quarter sales with
growth of nearly 20% over last year. We continue to see high demand
for DTG2Go’s ‘Digital First’ offering and many opportunities to
grow sales and improve profitability as we increase output on
recently adopted technology and leverage competitive advantages
from ‘hyper local’ fulfillment strategies and the Delta Direct
vertical blank tee platform. Our Activewear business’s Global
Brands and Retail Direct channels also registered double-digit
sales growth for the quarter and continue to seize opportunities
generated by the increasing industry focus on nearshore sourcing
solutions like those we offer in Central America.
As expected, our results for the quarter were heavily impacted
by reduced demand in the mass retail supply chain served by our
Delta Direct channel and the inflationary cotton and other input
costs evident across the industry. The manufacturing shutdowns that
we, like many of our competitors, initiated during the quarter to
recalibrate production output also impacted the bottom line.
Mr. Humphreys concluded, “We’ve been very intentional over the
years in building agility and market diversity into our business,
and our topline performance nearing last year’s record first
quarter sales in a much lower demand environment for basic tees
this time around highlights our team’s ability to execute on that
strategy. Moving forward, we look for another record year at Salt
Life, continued sales growth at DTG2Go, and improving profitability
at Activewear in the second half of our fiscal year.”
For the first quarter ended December 31, 2022:
- Net sales were $107.3 million in the first quarter compared to
prior year first quarter net sales of $110.7 million. Net sales in
the Delta Group segment were $97.0 million compared to $101.9
million in the prior year first quarter. Salt Life Group segment
net sales grew 17% to $10.3 million from prior year first quarter
net sales of $8.8 million.
- Gross margins were 12.7% compared to 20.8% in the prior year,
largely driven by inflationary raw material costs and production
curtailment expenses.
- Selling, general, and administrative expenses (SG&A) were
$18.9 million, or 17.6% of sales, compared to $17.5 million, or
15.8% of sales, in the prior year first quarter. The year-over-year
increase in SG&A was driven primarily by higher selling costs
in our Salt Life Group segment from the opening of additional
retail stores as well as increased distribution labor and supply
costs in our Delta Group segment.
- Operating income declined year-over-year from $5.9 million, or
5.3% of sales, to an operating loss of $2.59 million, or (2.4%) of
sales.
- Net income declined from $3.6 million, or $0.51 per diluted
share, to a loss of $3.6 million, or ($0.51) per diluted share, and
included a one-time $2.5 million benefit from the settlement of a
litigation matter.
- Net inventory as of December 31, 2022, was $258.8 million, an
increase of $10.4 million from September 2022 and $75.8 million
from December 2021. The increase from September 2022 stemmed
primarily from timely Salt Life first quarter inventory deliveries
compared to last year’s supply chain delays pushing scheduled
deliveries into the second quarter.
- Total net debt, including capital lease financing and cash on
hand, was $185 million as of December 31, 2022, an increase of
$14.6 million from September 2022 and $46 million from December
2021. Cash on hand and availability under the Company’s U.S.
revolving credit facility totaled $27.2 million as of December 31,
2022, a decrease of $7.5 million from September 2022 and $5.8
million from December 2021, with the decrease from September 2022
principally driven by investments in the business to support
working capital needs.
- The Company spent approximately $2.1 million on capital
expenditures during the first quarter compared to $1.8 million
during the prior year first quarter, with the expenditures focused
on Salt Life retail store build-outs, additional equipment, and
information technology and manufacturing enhancements.
Conference Call
After the market close on February 7, 2023, financial results
for the Company’s fiscal year 2023 first quarter ended December 31
2022, will be released and, at 4:30 p.m. ET, the Company’s senior
management will hold a conference call to discuss its financial
results and business outlook. 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 March 7, 2023. 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 13735669.
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 8,500 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 December 2022 December
2021 Net Sales
$
107,295
$
110,746
Cost of Goods Sold
93,672
87,743
Gross Profit
13,623
23,003
Selling, General and Administrative Expenses
18,870
17,482
Other Income, Net
(2,621
)
(395
)
Operating (Loss) Income
(2,626
)
5,916
Interest Expense, Net
2,890
1,598
(Loss) Earnings Before (Benefit From) Provision For
Income Taxes
(5,516
)
4,318
(Benefit From) Provision For Income Taxes
(1,917
)
648
Consolidated Net (Loss) Earnings
(3,599
)
3,670
Net Loss (Income) Attributable to Non-Controlling
Interest
34
(25
)
Net (Loss) Earnings Attributable to Shareholders
$
(3,565
)
$
3,645
Weighted Average Shares Outstanding Basic
6,954
6,999
Diluted
6,954
7,085
Net (Loss) Earnings per Common Share Basic
$
(0.51
)
$
0.52
Diluted
$
(0.51
)
$
0.51
December 2022 September 2022
December 2021 Current Assets Cash
$
327
$
300
$
6,379
Receivables, Net
61,514
71,586
66,180
Inventories, Net
258,891
248,538
183,058
Prepaids and Other Assets
4,114
2,755
5,162
Total Current Assets
324,846
323,179
260,779
Noncurrent Assets Property, Plant & Equipment,
Net
72,771
74,109
66,350
Goodwill and Other Intangibles, Net
61,324
61,923
63,663
Deferred Income Taxes
1,342
1,342
1,030
Operating Lease Assets
49,313
50,275
43,423
Investment in Joint Venture
9,045
9,886
10,202
Other Noncurrent Assets
2,800
2,967
1,929
Total Noncurrent Assets
196,595
200,502
186,597
Total Assets
$
521,441
$
523,681
$
447,376
Current Liabilities Accounts Payable and
Accrued Expenses
$
100,652
$
110,967
$
83,321
Income Taxes Payable
321
379
356
Current Portion of Contingent Consideration
-
-
1,897
Current Portion of Finance Leases
8,603
8,163
6,581
Current Portion of Operating Leases
8,585
8,876
8,197
Current Portion of Long-Term Debt
9,514
9,176
7,265
Total Current Liabilities
127,675
137,561
107,617
Noncurrent Liabilities Long-Term Taxes Payable
2,841
2,841
3,186
Deferred Income Taxes
2,232
4,310
1,520
Long-Term Finance Leases
18,465
16,776
13,946
Long-Term Operating Leases
42,015
42,721
37,208
Long-Term Debt
148,899
136,750
118,149
Other Noncurrent Liabilities
-
-
769
Total Noncurrent Liabilities
214,452
203,398
174,778
Common Stock
96
96
96
Additional Paid-In Capital
60,559
61,961
59,205
Equity Attributable to Non-Controlling Interest
(690
)
(656
)
(633
)
Retained Earnings
163,035
166,600
150,505
Accumulated Other Comprehensive Gain (Loss)
210
141
(574
)
Treasury Stock
(43,896
)
(45,420
)
(43,618
)
Total Equity
179,314
182,722
164,981
Total Liabilities and Equity
$
521,441
$
523,681
$
447,376
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230207006040/en/
Company Contact: Justin Grow, 864-232-5200
x6604 investor.relations@deltaapparel.com Investor Relations and
Media Contact: ICR, Inc. Investors: Tom Filandro, 646-277-1235
Media: Jessica Liddell, 203-682-8208 DLAPR@icrinc.com
Delta Apparel (AMEX:DLA)
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