Delta Apparel, Inc. reported earnings more than tripled in the first quarter ended January 1 as sales grew 17 percent. 

Sales increased 16 percent in the Delta Group segment and 24 percent at Salt Life.

Robert W. Humphreys, Chairman and CEO, commented, “We delivered strong first-quarter results that not only exceeded our expectations but reached a first-quarter record for our company with sales surpassing $110 million. Our bottom-line results were also impressive as we registered EPS growth of nearly 300 percent. The fast start to the new fiscal year reflected broad-based performance across both our Delta and Salt Life business segments. Our one-of-a-kind vertically integrated supply chain with same-day ship at the piece level combined with our leading on-demand digital print platform in DTG2Go drove significant growth in our Delta Group segment. Salt Life’s expanding direct-to-consumer business, combined with record wholesale shipments to our retail partners, sets the stage for another year of significant organic growth for Delta Apparel.”

Humphreys continued, “Today’s retail environment remains highly fluid, and Delta Apparel’s proven track record of success anchored on our unique business model servicing diversified sales channels using our vertically-integrated, flexible manufacturing platform positions us particularly well for many of our entire organization for their unwavering dedication to servicing our customers each and every day. We are off to an excellent start in the new fiscal year, and we continue to believe our solid financial position and strong cash flows will allow us to fund our growth initiatives while also providing liquidity for other actions to increase shareholder value,” concluded Humphreys.

For the first quarter ended January 1, 2022

  • Net sales were $110.7 million in the first quarter of fiscal 2022, an increase of 17 percent compared to the prior year’s first-quarter net sales of $94.7 million. Net sales in the Delta Group segment grew 16 percent to $101.9 million compared to $87.6 million in the first fiscal quarter of the prior year. Salt Life segment net sales increased 24 percent from the first quarter of the prior year to $8.8 million.
  • Gross margins were 20.8 percent, contracting 60 basis points from 21.4 percent in the prior year, in line with expectations and driven mainly by the pressure of inflationary costs in our manufacturing operations.
  • Selling, general, and administrative expenses (“SG&A”) were $17.5 million, or 15.8 percent of sales, compared to $16.0 million, or 16.9 percent of sales, in the prior year’s first quarter. The increase in SG&A expenses of $1.5 million compared to the prior year’s first quarter was driven by higher variable selling costs. SG&A benefited from leveraging fixed costs against higher sales in the first quarter compared to the first quarter in the prior fiscal year.
  • Operating income increased to $5.9 million, or 5.3 percent of sales, compared to the prior year’s first-quarter profit of $3.1 million, or 3.3 percent of sales.
  • Net income was $3.6 million, or $0.51 per diluted share, an increase of 313 percent compared to $0.9 million, or $0.13 per diluted share for the same period in the prior year driven by higher operating profits and a lower tax rate.
  • Net inventory as of December 2021 was $183.1 million, an increase of $21.4 million from September 2021 and $34.6 million from December 2020. The improved inventory levels reflect increased production as the company reached record manufacturing levels during the past year.
  • Total net debt, including capital lease financing and cash on hand, was $139.6 million at December 2021, increasing $17.9 million from September 2021. Cash on hand and availability under the company’s U.S. revolving credit facility totaled $33.0 million at December 2021, a $12.4 million decrease from September 2021 principally driven by investments in the business to support working capital needs.
  • The company spent approximately $1.8 million on capital expenditures during the first quarter of fiscal 2022 compared to $6.9 million during the prior year’s first quarter.

Share Repurchase Program
In the first quarter of fiscal 2022 under the previously announced share repurchase program, the company repurchased 74,232 shares for $2.1 million, bringing the total amount repurchased to $54.6 million. At the end of the first quarter of fiscal 2022, the company had $5.4 million of remaining repurchase capacity under its existing authorization.

Delta Apparel’s operating subsidiaries include DTG2Go, LLC, Salt Life, LLC and M.J. Soffe, LLC.

Photo courtesy Delta Apparel/Salt Life