DELTA APPAREL, INC.

(DLA)
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Delayed Nyse  -  04:00 2022-08-17 pm EDT
20.75 USD   +0.10%
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Delta Apparel : Reports Third Quarter Fiscal 2022 Sales and Earnings - Form 8-K

08/04/2022 | 04:35pm EDT

Delta Apparel Reports Third Quarter Fiscal 2022 Sales and Earnings

Continues Quarterly Sales Year-over-Year Growth

Delta Apparel, Inc. (NYSE American: DLA), a leading provider of core activewear and lifestyle apparel products, today announced financial results for its fiscal 2022 third quarter ended July 2, 2022.

Robert W. Humphreys, the Company's Chairman and Chief Executive Officer, commented, "We are pleased to achieve another quarter of revenue growth in what remains a dynamic operating environment. We delivered third-quarter sales growth across both our Delta Group and Salt Life Group segments. In our Delta Group segment, we registered year-over-year sales growth of 3% as we continued to benefit from our broad channels of distribution. Demand increased for both our Global Brands and on-demand digital print business, somewhat offset by a decline in our Delta Direct business. At Salt Life, we saw strong year-over-year sales growth of 30%, further validating the brand's broad lifestyle appeal."

Humphreys further commented, "Our continued growth in the face of economic headwinds validates our investment in Salt Life's retail footprint. This investment combined with our growth in the wholesale channel and updated ecommerce site is allowing us to deliver a strong omnichannel shopping experience to our end consumers. With the opening of four new Salt Life locations during the quarter, we have achieved our fiscal 2022 year-end target of opening 20 retail stores. As a result, we are now operating Salt Life branded stores across seven states. At DTG2Go, we continue to make progress with our on-demand digital-first strategy and enjoyed another quarter of unit and revenue growth while broadening the footprint of our digital equipment to service increasing demand.

Overall, we made good progress in the third quarter with a solid performance as our team stayed focused on our long-term strategies while simultaneously managing through a changing economy and consumer expectations. Our manufacturing investments have created scale efficiencies and platform flexibility positioning us well to continue to grow our business."

For the third quarter ended July 2, 2022:

Net sales were $126.9 million in the third quarter of fiscal 2022, an increase of 7% compared to the prior year third quarter net sales of $118.7 million. Net sales in the Delta Group segment grew 3% to $106.0 million in the third quarter of fiscal 2022 compared to $102.6 million in the prior year third quarter. The Salt Life segment net sales grew 30% to $20.9 million compared to $16.1 million in the prior year third quarter.

Within the Delta Group, segment sales increased in the Global Brands business with both revenue and unit expansion with an expanded array of value-added service offerings. Sales in the Delta Direct channel declined following the reduction in market demand for activewear primarily in the Retail License business. In the digital print business, DTG2Go increased sales over both the third quarter of fiscal 2021 and the second quarter of the current year, benefitting from the demand for the Company's digital-first technology and growth in installed capacity.

The strong sales performance in the Salt Life business was driven by double-digit year-over-year growth in both the wholesale and retail channels. Continued strong bookings from wholesale partners and the successful opening of four new Salt Life stores in the quarter led to year-over-year sales growth. Largely driven by constraints in inventory available, Salt Life's sales in its e-commerce channel were down year-over-year; however, web demand has accelerated sequentially with sales increasing over 40% from the second quarter of 2022.

On a consolidated basis, third quarter gross margins were 24.2%, declining 130 basis points from 25.5% in the prior year, largely as a result of inflationary cost pressures, which are now flowing through the cost of sales. During the quarter, the impact of higher cotton prices, energy, and freight costs were the largest drivers of margin pressure.

Selling, general, and administrative expenses ("SG&A") were $22.4 million, or 17.7% of sales, compared to $19.9 million, or 16.8% of sales, in the prior year third quarter. The increase in SG&A expenses was primarily driven by higher variable selling costs and travel expenses compared to the same period last year. In addition, distribution costs were higher primarily due to increased wages.

Operating income in the third quarter of 2022 decreased to $9.3 million, or 7.3% of sales, compared to the prior year third quarter profit of $11.9 million, or 10.0% of sales.

Net income was $6.2 million, or $0.88 per diluted share, as compared to prior year net income of $8.2 million, or $1.14 per share.

Net inventory as of June 2022 was $227.7 million, an increase of $30.0 million from March 2022 and $75.4 million from June 2021. The increase in inventory levels reflect planned increased production combined with higher input costs.

Total net debt and cash on hand was $162.4 million at June 2022, an increase of $9.0 million from March 2022 including capital lease financing. Cash on hand and availability under the Company's U.S. revolving credit facility totaled $30.8 million at June 2022, a $4.4 million decrease from March 2022.

The Company invested approximately $5.5 million on capital expenditures during the third quarter of fiscal 2022, substantially in continuing investments in digital print equipment and Salt Life retail store openings, compared to $3.2 million during the prior year third quarter.

In the third quarter of fiscal 2022 under the previously announced share repurchase program, the Company purchased 33,934 shares for $1.0 million, bringing the total amount repurchased to $56.4 million during the life of the program. At the end of the third quarter of fiscal 2022, the Company had $3.6 million of remaining repurchase capacity under the existing authorization.

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 844-825-9789. If calling from outside the United States, please dial 412-317-5180. 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 September 4, 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 10168456.

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 DTG2Go technology and innovation to the supply chain of its customers. 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 9,100 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 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.

Investor Relations and Media Contact: ICR,Inc.

Investors:

Tom Filandro, 646-277-1235 investor.relations@deltaapparel.com

Media:

Jessica Liddell, 203-682-8208 DLAPR@icrinc.com

SELECTED FINANCIAL DATA:

(In thousands, except per share amounts)

Three Months Ended

Nine Months Ended

June 2022

June 2021

June 2022

June 2021

Net Sales

$ 126,875 $ 118,666 $ 369,319 $ 322,015

Cost of Goods Sold

96,182 88,427 282,100 246,677

Gross Profit

30,693 30,239 87,219 75,338

Selling, General and Administrative Expenses

22,416 19,914 59,613 53,005

Other (Income), Net

(1,018 ) (1,578 ) (1,947 ) (218 )

Operating Income

9,295 11,903 29,553 22,551

Interest Expense, Net

1,971 1,735 5,370 5,225

Earnings Before Provision For Income Taxes

7,324 10,168 24,183 17,326

Provision For Income Taxes

1,087 2,019 4,149 4,032

Consolidated Net Earnings

6,237 8,149 20,034 13,294

Net Loss (Income) Attributable to Non-Controlling Interest

3 12 (11 ) 149

Net Earnings Attributable to Shareholders

$ 6,240 $ 8,161 $ 20,023 $ 13,443

Weighted Average Shares Outstanding

Basic

6,946 6,975 6,966 6,956

Diluted

7,065 7,128 7,061 7,077

Net Earnings per Common Share

Basic

$ 0.90 $ 1.17 $ 2.87 $ 1.93

Diluted

$ 0.88 $ 1.14 $ 2.84 $ 1.90

June 2022

September 2021

June 2021

Current Assets

Cash

$ 542 $ 9,376 $ 11,389

Receivables, Net

69,868 68,090 66,969

Inventories, Net

227,671 161,703 152,312

Prepaids and Other Assets

3,798 3,794 4,704

Total Current Assets

301,879 242,963 235,374

Noncurrent Assets

Property, Plant & Equipment, Net

75,144 67,564 66,397

Goodwill and Other Intangibles, Net

62,524 64,188 64,647

Deferred Income Taxes

1,164 1,854 3,139

Operating Lease Assets

47,570 45,279 48,241

Investment in Joint Venture

10,277 10,433 10,333

Other Noncurrent Assets

2,893 2,007 2,063

Total Noncurrent Assets

199,572 191,325 194,820

Total Assets

$ 501,451 $ 434,288 $ 430,194

Current Liabilities

Accounts Payable and Accrued Expenses

$ 102,180 $ 82,885 $ 68,816

Income Tax Payable

666 379 1,714

Current Portion of Finance Leases

8,265 6,621 7,102

Current Portion of Operating Leases

8,044 8,509 8,974

Current Portion of Long-Term Debt

7,615 7,067 7,520

Current Portion of Contingent Consideration

563 - 1,200

Total Current Liabilities

127,333 105,461 95,326

Noncurrent Liabilities

Long-Term Taxes Payable

2,841 3,220 3,220

Long-Term Finance Leases

18,802 15,669 17,319

Long-Term Operating Leases

40,940 38,546 41,093

Long-Term Debt

128,230 101,680 111,782

Long-Term Contingent Consideration

- 1,897 1,900

Other Noncurrent Liabilities

1,591 3,621 2,883

Total Noncurrent Liabilities

192,404 164,633 178,197

Common Stock

96 96 96

Additional Paid-In Capital

60,822 60,831 60,284

Equity Attributable to Non-Controlling Interest

(647 ) (658 ) (673 )

Retained Earnings

166,882 146,860 140,006

Accumulated Other Comprehensive Loss

(7 ) (786 ) (893 )

Treasury Stock

(45,432 ) (42,149 ) (42,149 )

Total Equity

181,714 164,194 156,671

Total Liabilities and Equity

$ 501,451 $ 434,288 $ 430,194

Disclaimer

Delta Apparel Inc. published this content on 04 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 August 2022 20:30:03 UTC.


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Financials (USD)
Sales 2022 492 M - -
Net income 2022 - - -
Net Debt 2022 163 M - -
P/E ratio 2022 -
Yield 2022 -
Capitalization 143 M 143 M -
EV / Sales 2022 0,62x
EV / Sales 2023 0,51x
Nbr of Employees 9 100
Free-Float 60,5%
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Managers and Directors
Robert W. Humphreys Chairman & Chief Executive Officer
Matthew Joel Miller President
Simone C. Walsh Chief Financial Officer, Treasurer & VP
George Jay Gogue Independent Director
James Bradley Campbell Independent Director
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