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

DULUTH (Ga.), November 17, 2022–(BUSINESS WIRED)–Delta Apparel, Inc. (NYSE American : DLA), a leader in lifestyle and activewear products, and direct-to garment digital printing, announced today financial results for its 2022 fiscal fourth and full year.

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. Our five market channels – Delta Direct and Global Brands, Retail Direct as well as DTG2Go were all able to deliver year-overyear sales growth in fiscal 2022.

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. 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’s segment had another record year in terms of operating and sales results. Overall sales surpassed the previous 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. The year ended with 21 Salt Life-branded retail doors opening across the U.S. coast, from Southern California to Key West to the east seaboard to Rehoboth Beach in Delaware.

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 during the first quarter of fiscal 2023 in order to better match overall demand.

Mr. Humphreys concluded that he was proud of his associates for their ability to adapt to the changing needs 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.

For the fourth quarter ending October 1, 2022

• Net sales of $115.5 million were slightly higher than the $114.7million net sales in the prior year. The net sales of the Salt Life Group segment increased by 15.6%, while net sales for the Delta Group segment fell 1.1%

• Gross profit was $21.6 Million, compared with $26.5 Million in the previous year period. 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.

• 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 in part to an increase in selling costs for the Salt Life retail stores expansion and increased distribution labor costs.

• Operating income fell by 78.0% to $2.2 million from the prior-year period. 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.

The complete year ending October 1, 2022

• Net sales increased 11.0% from $436.8 million to $484.9million, compared with the prior year. The previous year saw net sales for the Delta Group segment and Salt Life Group segment increase by 9.8% & 20.8% respectively.

• Gross profit rose 6.8% from $101.9million to $108.8million in the previous year. Gross margins declined 90 basis points by 22.4% in comparison to the previous year due to a decline at the Delta Group segment, partially offset by improvements in the Salt Life Group section.

• 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 millions, which resulted to an operating margin at 6.6%. This is compared with operating income of $32.7million and operating margins of 7.5% for 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 labor. There has also been an increase in 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

The Company will hold a conference phone call with senior management today at 4:30 pm to discuss its financial results. ET. You may join the call by dialing: 877-704 4453. To call from outside the United States please dial 201-389-920. A live webcast of the conference call will be available at www.deltaapparelinc.com. To register for the teleconference webcast, please visit the website at minimum 15 minutes before the call to download any software. The replay of the call can be accessed until December 17, 2022. Participants should dial toll free 844-512-2921. International callers can 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.

Forward-Looking Statements – Cautionary Note

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.

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Contacts

ICR, Inc.

Investors:
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Media:
Jessica Liddell, 203-682-8208
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