Delta Apparel Reports Second Quarter Fiscal 2024 Results
For the second quarter ended
-
Net sales were
$78.9 million compared to prior year period net sales of$110.3 million .Salt Life Group segment net sales were$15.5 million compared to prior year period net sales of$18.9 million . Net sales in theDelta Group segment were$63.4 million compared to$91.3 million in the prior year period.
-
Gross margins were 4.3% compared to 14.7% in the prior year period, driven primarily by production curtailments in the
Delta Group segment. Adjusted for the cost impacts of these product curtailments (“Production Curtailment Costs”), first quarter gross margins were 14.4%.Delta Group segment gross margins were (6.3%) compared to 5.5% in the prior year period. Adjusted for the Production Curtailment Costs,Delta Group segment gross margins were 6.3%.Salt Life Group segment gross margins were 47.5% versus 59% in the prior year period, driven primarily by price discounting activity and the timing of inventory receipts.
-
Selling, general, and administrative expenses (“SG&A”) decreased from
$19.3 million in the prior year period to$17.9 million , while SG&A as a percentage of sales increased over the prior year period to 22.8%.
-
Operating loss increased from
$5.3 million in the prior year period to$24.4 million . Adjusting for the Production Curtailment Costs, the costs associated with strategic restructuring actions (the “Restructuring Costs”), and an$8.8 million non-cash impairment charge on the goodwill in ourDTG2Go business (the “Impairment Charge”), operating loss was$6.0 million .Delta Group segment operating loss increased from$7.4 million to$22.4 million . Adjusted for the Production Curtailment Costs, Restructuring Costs, and Impairment Charge,Delta Group segment operating loss was$3.9 million . Operating income in theSalt Life Group segment was$197 thousand compared to$4.6 million in the prior year period.
-
Net interest expense was
$3.5 million compared to$3.7 million in the prior year period, with the decrease driven by lower borrowings partially offset by the elevated interest rate environment.
-
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was a loss of
$20.9 million . Adjusted for the Production Curtailment Costs, Restructuring Costs, and Impairment Charge, EBITDA was a loss of$2.4 million .Delta Group segment EBITDA was a loss of$19.4 million . Adjusted for the Production Curtailment Costs, Restructuring Costs, and Impairment Charge,Delta Group segment EBITDA was a loss of$1.0 million .Salt Life Group segment EBITDA was$744 thousand .
-
Net loss increased to
$36.3 million , or$5.15 per share, from a net loss of$7.0 million , or$1.00 per share. Adjusted for the Production Curtailment Costs, Restructuring Costs, and Impairment Charge, net loss was$17.8 million , or$2.53 per share.
-
Net inventory as of
March 30, 2024 , was$156.9 million , a year-over-year decrease of 35% from inventory of$243.2 million atMarch 2023 and a sequential decrease of almost 40% from inventory of$258.9 million atDecember 2022 .
-
Debt outstanding under our
U.S. revolving credit facility was$95.8 million atMarch 30, 2024 , a year-over-year reduction of$57.4 million fromMarch 2023 . Total net debt, including capital lease financing and cash on hand, was$126.2 million as ofMarch 30, 2024 , an approximately 35% reduction from$194.3 million atMarch 2023 .
-
Cash on hand and availability under our
U.S. revolving credit facility totaled$11.8 million as ofMarch 30, 2024 , an increase of$4.4 million fromDecember 2023 and a decrease of$2.4 million fromSeptember 2023 .
-
Capital spending was
$200 thousand during the second quarter compared to$2 million during the prior year second quarter.
No Conference Call
The Company will not be holding a conference call to discuss its financial results for its fiscal year 2024 second quarter.
Non-GAAP Financial Measures
Reconciliations of GAAP gross margins to non-GAAP gross margins, GAAP operating income to non-GAAP operating income, GAAP net income to non-GAAP net income, GAAP net income to non-GAAP EBITDA, GAAP net income to non-GAAP adjusted EBITDA, and GAAP operating income to non-GAAP EBITDA and adjusted EBITDA are presented in tables accompanying the selected financial data included in this release and provide useful information to evaluate the Company’s operational performance. A description of the amounts excluded on a non-GAAP basis are provided in conjunction with these tables. Non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP EBITDA and non-GAAP adjusted EBITDA should be evaluated in light of the Company’s financial statements prepared in accordance with GAAP.
About
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, our ability to obtain necessary liquidity and/or access capital or that such liquidity or capital will be available on terms acceptable to us or at all; the general
SELECTED FINANCIAL DATA: | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
|
|
|
|
|||||||||||||
|
$ |
78,936 |
|
$ |
110,335 |
|
$ |
158,869 |
|
$ |
217,630 |
|
||||
Cost of Goods Sold |
|
75,580 |
|
|
94,126 |
|
|
146,767 |
|
|
187,798 |
|
||||
Gross Profit |
|
3,356 |
|
|
16,209 |
|
|
12,102 |
|
|
29,832 |
|
||||
Selling, General and Administrative Expenses |
|
17,961 |
|
|
19,298 |
|
|
36,576 |
|
|
38,168 |
|
||||
Impairment of |
|
8,780 |
|
|
- |
|
|
8,780 |
|
|
- |
|
||||
Other Expense (Income), Net |
|
1,051 |
|
|
2,265 |
|
|
(3,870 |
) |
|
(356 |
) |
||||
Operating Loss |
|
(24,436 |
) |
|
(5,354 |
) |
|
(29,384 |
) |
|
(7,980 |
) |
||||
Interest Expense, Net |
|
3,471 |
|
|
3,723 |
|
|
7,047 |
|
|
6,613 |
|
||||
Loss Before Provision For (Benefit From) Income Taxes |
|
(27,907 |
) |
|
(9,077 |
) |
|
(36,431 |
) |
|
(14,593 |
) |
||||
Provision for (Benefit From) Income Taxes |
|
8,393 |
|
|
(2,079 |
) |
|
8,403 |
|
|
(3,996 |
) |
||||
Consolidated Net Loss |
|
(36,300 |
) |
|
(6,998 |
) |
|
(44,834 |
) |
|
(10,597 |
) |
||||
Net Loss Attributable to Non-Controlling Interest |
|
6 |
|
|
6 |
|
|
12 |
|
|
40 |
|
||||
Net Loss Attributable to Shareholders |
$ |
(36,294 |
) |
$ |
(6,992 |
) |
$ |
(44,822 |
) |
$ |
(10,557 |
) |
||||
Weighted Average Shares Outstanding | ||||||||||||||||
Basic |
|
7,051 |
|
|
7,001 |
|
|
7,027 |
|
|
6,978 |
|
||||
Diluted |
|
7,051 |
|
|
7,001 |
|
|
7,027 |
|
|
6,978 |
|
||||
Net Loss per Common Share | ||||||||||||||||
Basic |
$ |
(5.15 |
) |
$ |
(1.00 |
) |
$ |
(6.38 |
) |
$ |
(1.51 |
) |
||||
Diluted |
$ |
(5.15 |
) |
$ |
(1.00 |
) |
$ |
(6.38 |
) |
$ |
(1.51 |
) |
||||
|
|
|
||||||||||||||
Current Assets | ||||||||||||||||
Cash |
$ |
705 |
|
$ |
187 |
|
$ |
625 |
|
|||||||
Receivables, Net |
|
37,133 |
|
|
47,868 |
|
|
64,825 |
|
|||||||
Inventories, Net |
|
156,894 |
|
|
212,365 |
|
|
243,167 |
|
|||||||
Prepaids and Other Assets |
|
3,298 |
|
|
2,542 |
|
|
4,096 |
|
|||||||
Total Current Assets |
|
198,030 |
|
|
262,962 |
|
|
312,713 |
|
|||||||
Noncurrent Assets | ||||||||||||||||
Property, Plant & Equipment, Net |
|
59,741 |
|
|
65,611 |
|
|
70,739 |
|
|||||||
|
|
40,473 |
|
|
50,391 |
|
|
60,731 |
|
|||||||
Deferred Income Taxes |
|
- |
|
|
7,822 |
|
|
1,342 |
|
|||||||
Operating Lease Assets |
|
54,534 |
|
|
55,464 |
|
|
56,174 |
|
|||||||
Investment in Joint Venture |
|
10,052 |
|
|
10,082 |
|
|
9,036 |
|
|||||||
Other Noncurrent Assets |
|
3,069 |
|
|
2,906 |
|
|
2,239 |
|
|||||||
Total Noncurrent Assets |
|
167,869 |
|
|
192,276 |
|
|
200,261 |
|
|||||||
Total Assets |
$ |
365,899 |
|
$ |
455,238 |
|
$ |
512,974 |
|
|||||||
Current Liabilities | ||||||||||||||||
Accounts Payable and Accrued Expenses |
$ |
74,701 |
|
$ |
80,321 |
|
$ |
84,652 |
|
|||||||
Income Taxes Payable |
|
869 |
|
|
710 |
|
|
671 |
|
|||||||
Current Portion of Finance Leases |
|
7,880 |
|
|
8,442 |
|
|
8,843 |
|
|||||||
Current Portion of Operating Leases |
|
9,886 |
|
|
9,124 |
|
|
8,861 |
|
|||||||
Current Portion of Long-Term Debt |
|
103,026 |
|
|
16,567 |
|
|
8,962 |
|
|||||||
Total Current Liabilities |
|
196,362 |
|
|
115,164 |
|
|
111,989 |
|
|||||||
Noncurrent Liabilities | ||||||||||||||||
Long-Term Taxes Payable |
|
1,184 |
|
|
2,131 |
|
|
2,131 |
|
|||||||
Deferred Income Taxes |
|
559 |
|
|
- |
|
|
337 |
|
|||||||
Long-Term Finance Leases |
|
10,250 |
|
|
14,029 |
|
|
17,483 |
|
|||||||
Long-Term Operating Leases |
|
45,837 |
|
|
47,254 |
|
|
48,804 |
|
|||||||
Long-Term Debt |
|
5,757 |
|
|
126,465 |
|
|
159,591 |
|
|||||||
Total Noncurrent Liabilities |
|
63,587 |
|
|
189,879 |
|
|
228,346 |
|
|||||||
Common Stock |
|
96 |
|
|
96 |
|
|
96 |
|
|||||||
|
|
60,916 |
|
|
61,315 |
|
|
60,912 |
|
|||||||
Equity Attributable to Non-Controlling Interest |
|
(719 |
) |
|
(707 |
) |
|
(696 |
) |
|||||||
Retained Earnings |
|
88,566 |
|
|
133,387 |
|
|
156,043 |
|
|||||||
Accumulated Other Comprehensive Gain (Loss) |
|
- |
|
|
- |
|
|
180 |
|
|||||||
Treasury Stock |
|
(42,909 |
) |
|
(43,896 |
) |
|
(43,896 |
) |
|||||||
Total Equity |
|
105,950 |
|
|
150,195 |
|
|
172,639 |
|
|||||||
Total Liabilities and Equity |
$ |
365,899 |
|
$ |
455,238 |
|
$ |
512,974 |
|
Reconciliation of Gross Margin, Operating Loss, and Net Loss to Non-GAAP Measures Adjusted Gross Margin, Adjusted Operating Loss, and Adjusted Net Loss | ||||||||||||||||
Unaudited | ||||||||||||||||
(in thousands) | ||||||||||||||||
Reconciliation of Gross Margin to Adjusted Gross Margin – Unaudited | ||||||||||||||||
Three Months Ending | Six Months Ending | |||||||||||||||
|
|
|
|
|||||||||||||
Gross Margin |
$ |
3,356 |
|
$ |
16,209 |
|
$ |
12,102 |
|
$ |
29,832 |
|
||||
Production Curtailment Costs (1) |
|
8,027 |
|
|
879 |
|
|
9,375 |
|
|
4,249 |
|
||||
Adjusted Gross Margin |
$ |
11,383 |
|
$ |
17,088 |
|
$ |
21,477 |
|
$ |
34,081 |
|
||||
|
14.4 |
% |
|
15.5 |
% |
|
13.5 |
% |
|
15.7 |
% |
|||||
Reconciliation of Operating Loss to Adjusted Operating Loss – Unaudited | ||||||||||||||||
Three Months Ending | Six Months Ending | |||||||||||||||
|
|
|
|
|||||||||||||
Operating Loss |
$ |
(24,436 |
) |
$ |
(5,354 |
) |
$ |
(29,384 |
) |
$ |
(7,980 |
) |
||||
Production Curtailment Costs (1) |
|
8,027 |
|
|
879 |
|
|
9,375 |
|
|
4,249 |
|
||||
Restructuring Costs (2) |
|
1,664 |
|
|
813 |
|
|
2,477 |
|
|
813 |
|
||||
Goodwill Impairment Charges (3) |
|
8,780 |
|
|
- |
|
|
8,780 |
|
|
- |
|
||||
Adjusted Operating Loss |
$ |
(5,965 |
) |
$ |
(3,662 |
) |
$ |
(8,752 |
) |
$ |
(2,918 |
) |
||||
Reconciliation of Net Loss to Adjusted Net Loss – Unaudited | ||||||||||||||||
Three Months Ending | Six Months Ending | |||||||||||||||
|
|
|
|
|||||||||||||
Net Loss |
$ |
(36,294 |
) |
$ |
(6,992 |
) |
$ |
(44,822 |
) |
$ |
(10,557 |
) |
||||
Production Curtailment Costs (1) |
|
8,027 |
|
|
879 |
|
|
9,375 |
|
|
4,249 |
|
||||
Restructuring Costs (2) |
|
1,664 |
|
|
813 |
|
|
2,477 |
|
|
813 |
|
||||
Goodwill Impairment Charges (3) |
|
8,780 |
|
|
- |
|
|
8,780 |
|
|
- |
|
||||
Tax Impact |
|
9 |
|
|
(387 |
) |
|
12 |
|
|
(1,392 |
) |
||||
Adjusted Net Loss |
$ |
(17,814 |
) |
$ |
(5,687 |
) |
$ |
(24,178 |
) |
$ |
(6,887 |
) |
||||
Reconciliation of Delta Group Segment Gross Margin to Delta Group Segment Adjusted Gross Margin - Unaudited | ||||||||||||||||
Three Months Ending | Six Months Ending | |||||||||||||||
|
|
|
|
|||||||||||||
Gross Margin |
$ |
(4,017 |
) |
$ |
5,000 |
|
$ |
40 |
|
$ |
12,759 |
|
||||
Production Curtailment Costs (1) |
|
8,027 |
|
|
879 |
|
|
9,375 |
|
|
4,249 |
|
||||
Adjusted Gross Margin |
$ |
4,010 |
|
$ |
5,879 |
|
$ |
9,415 |
|
$ |
17,008 |
|
||||
|
6.3 |
% |
|
6.4 |
% |
|
7.1 |
% |
|
9.0 |
% |
|||||
Reconciliation of Delta Group Segment Operating Loss to Delta Group Segment Adjusted Operating Loss - Unaudited | ||||||||||||||||
Three Months Ending | Six Months Ending | |||||||||||||||
|
|
|
|
|||||||||||||
Operating Income |
$ |
(22,350 |
) |
$ |
(7,487 |
) |
$ |
(21,860 |
) |
$ |
(7,363 |
) |
||||
Production Curtailment Costs (1) |
|
8,027 |
|
|
879 |
|
|
9,375 |
|
|
4,249 |
|
||||
Restructuring Costs (2) |
|
1,664 |
|
|
813 |
|
|
2,477 |
|
|
813 |
|
||||
Goodwill Impairment Charges (3) |
|
8,780 |
|
|
- |
|
|
8,780 |
|
|
- |
|
||||
Adjusted Operating Loss |
$ |
(3,879 |
) |
$ |
(5,795 |
) |
$ |
(1,228 |
) |
$ |
(2,301 |
) |
||||
(1) Production Curtailment Costs consist of unabsorbed fixed costs, temporary unemployment benefit payments, and other expense items resulting from the Company’s decision to reduce production levels. | ||||||||||||||||
(2) Restructuring Costs consist of employee severance benefits paid in connection with the transition of our more expensive |
||||||||||||||||
(3) Goodwill Impairment Charges consists of non-cash charge associated with our |
Reconciliations of GAAP Net Loss and GAAP Operating Loss to Non-GAAP Measure Earnings Before Interest Taxes Depreciation and Amortization ("EBITDA") and Adjusted Net Loss and Adjusted Operating (Loss) Income to Adjusted EBITDA |
||||||||
Unaudited | ||||||||
(in thousands) | ||||||||
Reconciliation of Net Loss to EBITDA and Adjusted Net Loss to Adjusted EBITDA – Unaudited | ||||||||
Three Months Ending | Six Months Ending | |||||||
|
|
|||||||
Net Loss |
$ |
(36,294 |
) |
$ |
(44,822 |
) |
||
Interest Expense, Net |
|
3,471 |
|
|
7,047 |
|
||
Provision For Income Taxes |
|
8,393 |
|
|
8,403 |
|
||
Delta Group Segment Depreciation and Amortization |
|
2,916 |
|
|
5,957 |
|
||
Salt Life Group Segment Depreciation and Amortization |
|
547 |
|
|
1,081 |
|
||
Unallocated Depreciation and Amortization |
|
57 |
|
|
115 |
|
||
EBITDA |
|
(20,910 |
) |
|
(22,219 |
) |
||
Production Curtailment Costs (1) |
|
8,027 |
|
|
9,375 |
|
||
Restructuring Costs (2) |
|
1,664 |
|
|
2,477 |
|
||
Goodwill Impairment Charges (3) |
|
8,780 |
|
|
8,780 |
|
||
Tax Impact |
|
9 |
|
|
12 |
|
||
Adjusted Net Loss |
|
(17,814 |
) |
|
(24,178 |
) |
||
Interest Expense, Net |
|
3,471 |
|
|
7,047 |
|
||
Benefit From Income Taxes |
|
8,384 |
|
|
8,391 |
|
||
Delta Group Segment Depreciation and Amortization |
|
2,916 |
|
|
5,957 |
|
||
Salt Life Group Segment Depreciation and Amortization |
|
547 |
|
|
1,081 |
|
||
Unallocated Depreciation and Amortization |
|
57 |
|
|
115 |
|
||
Adjusted EBITDA |
$ |
(2,439 |
) |
$ |
(1,587 |
) |
||
Reconciliation of Delta Group Segment Operating Loss to |
||||||||
Three Months Ending | Six Months Ending | |||||||
|
|
|||||||
Delta Group Segment Operating Income |
$ |
(22,350 |
) |
$ |
(21,860 |
) |
||
Delta Group Segment Depreciation and Amortization |
|
2,916 |
|
|
5,957 |
|
||
Delta Group Segment EBITDA |
|
(19,434 |
) |
|
(15,903 |
) |
||
Production Curtailment Costs (1) |
|
8,027 |
|
|
9,375 |
|
||
Restructuring Costs (2) |
|
1,664 |
|
|
2,477 |
|
||
Goodwill Impairment Charges (3) |
|
8,780 |
|
|
8,780 |
|
||
Adjusted Delta Group Segment Operating Income |
|
(3,879 |
) |
|
(1,228 |
) |
||
Delta Group Segment Depreciation and Amortization |
|
2,916 |
|
|
5,957 |
|
||
Adjusted Delta Group Segment EBITDA |
$ |
(963 |
) |
$ |
4,729 |
|
||
Reconciliation of Salt Life Group Segment Operating Income (Loss) to Salt Life Group Segment EBITDA – Unaudited | ||||||||
Three Months Ending | Six Months Ending | |||||||
|
|
|||||||
Salt Life Group Segment Operating Income (Loss) |
$ |
197 |
|
$ |
(1,933 |
) |
||
Salt Life Group Segment Depreciation and Amortization |
|
547 |
|
|
1,081 |
|
||
Salt Life Group Segment EBITDA |
$ |
744 |
|
$ |
(852 |
) |
||
(1) Production Curtailment Costs consist of unabsorbed fixed costs, temporary unemployment benefit payments, and other expense items resulting from the Company’s decision to reduce production levels. | ||||||||
(2) Restructuring Costs consist of employee severance benefits paid in connection with the transition of our more expensive |
||||||||
(3) Goodwill Impairment Charges consists of non-cash charge associated with our |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508438976/en/
Company Contact:
Justin Grow, 864-232-5200 x6604
investor.relations@deltaapparel.com
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