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, today announced financial results from its 2022 fiscal fourth quarter. The 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. Combining our diverse go-to market strategies with our vertically-integrated manufacturing and service platforms helped us navigate a dynamic economic and business environment. 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.
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. 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 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 up to Rehoboth Beach.
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 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 by saying, “I remain incredibly proud about our associates because they continue to react to the ever-changing requirements of our 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
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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%
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Gross profit was $21.6million compared to $26.5million during the previous year. Gross margins decreased 440 basis points to 18.7%. A gross margin improvement in Salt Life Group helped offset a decrease in gross margin in Delta Group due to higher input cost in Activewear and DTG2Go and unabsorbed fixed production costs. 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 fell by 78.0% to $2.2 million from the previous year. This quarter saw a net loss $0.3 million (or $0.04 per diluted shares), compared with net income $6.9 million (or $0.96 per dilutedshare) in the prior year period.
The complete year ending October 1, 2022
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Net sales increased 11.0% from $436.8 million to $484.9million, compared with the previous year. 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, which resulted in an operating margin 6.6%, as compared to operating revenue of $32.7 million and operating profit of 7.5% in previous years.
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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.
The total net inventory at year’s end was $248.5million, compared with $161.7million a year earlier. The increase in inventory year-over-year is due to higher input costs, which impact materials, transportation, and labor, as well as an increased number of units.
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. You can join the call by dialing (877) 704-4453. 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. 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. 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 within the direct-to garment digital printing and fulfillment industry. It brings its DTG2Go technology to customers’ supply chains and innovations. 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. There are many factors that could cause actual results not to be as expected or forecasted. These include the U.S. economic situation and government/social measures taken to contain it; the impact of COVID-19 on our operations, financial conditions, liquidity and capital investments; the volatility of cotton and other raw materials; changes to the strategies and operations of our customers or suppliers; the ability of customers or suppliers to meet their obligations under our variable-rate indebtedness; fluctuations in interest rates; the loss of acquired intangibles; volatility; the stock exchange rate fluctuations Delta Apparel, Inc. disclaims any obligation or responsibility to revise forward-looking statements, except as required by law.
SELECTED FINANCIAL DATA |
|||||||||||||||
(In thousands, except for amounts per share) |
|||||||||||||||
Three Months Until the 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 |
|||||||||||
Interest expense, net |
2,361 |
1,619 |
7,732 |
6,844 |
|||||||||||
(Loss of) 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 |
|||||||||||||
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 Part 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 |
|||||||||||||
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 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 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 |
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