Delta Clothing, Greenville, South Carolina, reported financial results for its fiscal fourth quarter 2021 and fiscal year ended October 2, 2021 last week.
“Our performance in the fourth quarter and full year, which exceeded our expectations, demonstrates the strength of our unique business model serving diverse sales channels through our innovative supply chain technologies and our platform. flexible and vertically integrated manufacturing, ”said Robert W. Humphreys, director of Delta Apparel President and CEO. “We ended the year on a positive note, with overall fourth quarter sales performance and strong margin expansion. I am incredibly proud of our entire organization whose hard work has enabled us to show these extraordinary results.
Brand awareness and consumer engagement with Salt Life is at an all time high, resulting in exceptional growth in our branded retail stores as well as in our wholesale business. Within our Delta group, we continue to see strong demand from brands, retailers and retail license accounts using our comprehensive and diverse services. With record manufacturing output, we are rebuilding our inventory levels and I have no doubts that we are ready to continue delivering exceptional results in fiscal 2022 and beyond. We believe that our strong financial position, including historically low leverage of just 2.5 times EBITDA, and strong cash flow allow us to fund our growth initiatives while providing liquidity for others. actions aimed at increasing shareholder value.
For the fourth quarter ended in September 2021:
- Net sales were $ 114.7 million from $ 116.7 million in the fourth quarter of the previous year, which was a 14-week quarter. Calculated on a comparable 13-week quarter, sales increased 5.9% year-over-year, with the Delta Group and Salt Life Group segments up 5.0% and 13.8 %, respectively.
- Gross margin improved 170 basis points to 23.1% from 21.4% in the prior year quarter, driven by year-over-year improvement in the Delta Group and Salt segments Life Group.
- Selling, general and administrative (“SG&A”) expenses increased slightly from the prior year quarter to $ 17.7 million, or 15.5% of sales. Selling and administrative expenses as a percentage of sales increased year-over-year, mainly due to higher distribution labor costs and the prior year benefiting from favorable adjustments in sales. reserves for credit risk.
- Other income includes a favorable adjustment of $ 1.2 million of the contingent consideration associated with the acquisition of digital printing for fiscal 2018. The prior year quarter included a favorable adjustment of $ 0.4 million of dollars.
- Operating income was $ 10.1 million, an improvement of 22.6% over the same period last year, resulting in net income of 6.9 Million, or $ 0.96 per diluted share, compared to $ 5 million, or $ 0.71 per diluted share, for the prior year period.
For the year ended September 2021:
- Net sales were $ 436.8 million, up 14.6% from $ 381 million last year. Delta Group and Salt Life Group segment net sales increased 12.5% and 33.9%, respectively, compared to the prior year period.
- Gross margin increased 49% to $ 101.8 million from $ 68.4 million the previous year, with gross margins improving 540 basis points to 23.3% of sales. Gross margins increased in both business segments, with a year-over-year improvement of 500 basis points in the Delta group and 430 basis points in the Salt Life group.
- General and administrative expenses were $ 70.7 million in fiscal 2021, or 16.2% of sales, an improvement of 170 basis points from the same period a year earlier .
- Operating income was $ 32.8 million, or 7.5% of sales, a record operating result for the Company.
- Net income was $ 20.3 million, or $ 2.86 per diluted share.
Record levels of manufacturing output in fiscal 2021, partially offset by strong demand for products, resulted in an 11.1% increase in inventories from a year ago. Inventories of finished goods in September 2021 remain below optimum, but higher manufacturing production in the first half of fiscal 2022 should position the company for a strong sales season in spring 2022.
Total net debt, including leasing and cash on hand, in September 2021 was $ 121.7 million, which is comparable to the previous year. Cash and availability under the Company’s US revolving credit facility was $ 45.3 million in September 2021, an improvement of $ 2 million from June 2021.
The company remains optimistic about the overall opportunities for the continued growth of the business and believes that its future free cash flow, free liquidity and availability under its credit facilities are sufficient to support the growth initiatives of the company. company while providing liquidity to the company to repurchase its common shares in accordance with its previously announced share repurchase program or take other actions that the board of directors may deem appropriate to increase shareholder value.
For more information visit www.deltaapparel.com.