Delta Apparel, Inc. (DLA) is a global company specializing in the design, manufacturing, sourcing, and marketing of activewear and lifestyle apparel products, ...
Delta Apparel, Inc. (DLA) functions as a vertically integrated manufacturer of apparel, catering to both U.S. and international markets. The company operates through two primary segments: the Delta Group and the Salt Life Group. The Delta Group focuses on core activewear, supplying blanks and branded basics, fleece, and custom digitally ...Delta Apparel, Inc. (DLA) functions as a vertically integrated manufacturer of apparel, catering to both U.S. and international markets. The company operates through two primary segments: the Delta Group and the Salt Life Group. The Delta Group focuses on core activewear, supplying blanks and branded basics, fleece, and custom digitally printed apparel via its DTG2Go brand. Products are distributed through a vast network of sporting goods retailers, fleet stores, and department stores. The Salt Life Group targets the coastal lifestyle demographic, offering specialized apparel, swimwear, accessories, and a craft beer line under the Salt Life brand.
From a business and financial perspective, Delta Apparel has faced significant headwinds. Historically, the company emphasized a vertical integration model, owning manufacturing facilities in Honduras, El Salvador, and Mexico to control the supply chain and BOM (Bill of Materials) costs. However, the company has recently navigated severe financial instability, characterized by high debt levels and negative operating margins. As of the latest reporting, the entity has faced existential challenges, including potential insolvency and restructuring, which have drastically impacted its stock valuation and market capitalization.
Key people include Robert W. Humphreys, who served as the long-standing Chairman and CEO during periods of both expansion and contraction. The company’s financial profile reflects high sensitivity to raw material costs (cotton prices) and inventory cycles, as evidenced by a long cash conversion cycle. With the apparel industry's shift toward direct-to-consumer and on-demand digital printing (DTG), Delta attempted to modernize its service offerings. Despite these efforts, the company struggled with liquidity, interest burdens, and significant debt-to-equity imbalances. Recent developments suggest a significant downturn in operations, highlighting the volatility of the blank apparel manufacturing sector and the difficulty of maintaining legacy vertical integration in a rapidly changing retail landscape.
YoYYoY means Year-over-Year. It compares the latest annual value with the previous annual value to show long-term trend strength.
QoQQoQ means Quarter-over-Quarter. It compares the latest quarter with the immediately previous quarter to show short-term momentum changes.
RevenueThe total money that came through the front door from selling things, before paying a single bill. Think of it as the grand total of every credit card swipe from customers. (YoY compares this year to last year's performance, while QoQ compares the current three months to the previous three).
$415.4M
-14.3%
-1.2%
Net IncomeThe absolute bottom line. If the company paid every single supplier, employee, banker, and tax collector, this is the actual money left in their pocket at the end of the day.
$-33.2M
-268.3%
-325.6%
Gross MarginThe basic markup. If they sell a $100 pair of sneakers, this percentage tells you how much of that price tag is profit right after paying for the rubber and shoelaces, but before paying for things like store rent or TV commercials.
+13.0%
-42.1%
-61.1%
Operating MarginThe 'day job' efficiency score. Out of every dollar a customer spends, this shows how many cents the company keeps after making the product AND paying for all the everyday corporate overhead (like salaries, marketing, and keeping the lights on).
-7.1%
-305.2%
-165.0%
Net MarginThe final take-home percentage. When you strip away every conceivable cost, tax, and interest payment, this is the exact number of cents the company truly gets to keep from every dollar in sales.
-8.0%
-296.4%
-331.0%
Free Cash FlowThe holy grail of corporate cash. It's the spendable, physical money left over after the business pays for its daily operations AND buys the big, expensive upgrades (like new factories or servers) it needs to survive. This is the 'free' money they can use to pay dividends or buy back stock.
$8.4M
+125.7%
+25.1%
FCF MarginThe ultimate cash conversion rate. It shows how good the company is at turning regular sales directly into cold, hard, spendable cash. A high percentage means the business is an absolute cash-printing machine.
+2.0%
+130.0%
+26.7%
Debt / EquityThe financial risk gauge. It compares how much of the company's empire was built using borrowed money (loans) versus the owners' own money (shareholders). A high number means they are heavily leveraged and playing a riskier game; a low number means they are playing it safe.
147.0%
+21.2%
+20.5%
Current RatioThe 12-month survival check. It simply compares the cash they have right now (plus things they can quickly turn into cash) against the immediate bills they absolutely must pay this year. A score above 1 means they have enough in the wallet to cover the upcoming bills without panicking.
2.28x
-2.8%
-8.4%
Total AssetsThe absolute size of the company's empire. It bundles together absolutely everything of value they own—from the cash in the register and the inventory in the warehouse, to the software patents in the vault and the factories on the ground.
Operator: Thank you, and good afternoon to everyone participating in Delta Apparel, Inc. Fiscal Year 2024 First Quarter Earnings Conference Call. Joining us from management are Bob Humphreys, Chairman and Chief Executive Officer; Justin Grow, Executive Vice President and Chief Administrative Officer; and Nancy Bubanich, Vice President and Chief Accounting Officer. Before we begin, I'd like to remind everyone that during the course of this conference call, projections or other forward-looking statements may be made by Delta Apparel's executives. Such projections and statements such as prediction and involve risks and uncertainty, and actual results may differ materially. Please refer to the periodic reports filed with the Securities and Exchange Commission, including the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in the projections or forward-looking statements. Please note that any forward-looking statements are made only as of today, and except as required by law. The company does not commit to update or revise any forward-looking statements even if it becomes apparent that any projected results will not be realized. I'll now turn the call over to Mr. Humphreys. Thank you. Please go ahead.
Robert Humphreys: Good afternoon. Thank you for joining us today and for your interest in Delta Apparel. Before we review our first quarter results, I would like to once again express gratitude to our teams throughout the various countries in which we operate our business for their hard work, flexibility and dedication through what remains a challenging period for our company as well as our industry. As we highlighted on our fiscal 2023 year-end call, we were faced with uniquely unfavorable market dynamics throughout most of last year, and many of those dynamics continue to impact our business in the first quarter of our 2024 fiscal year. Our teams have approached these prolonged difficult business conditions with determination and taking decisive and effective action to shore up our balance sheet and significantly reduce our debt, working capital and cost structure. The plan we initiated during fiscal year 2023 to optimize our cost structure and streamline operations is now substantially completed. At a high level, our plan included exiting Mexico and reducing our offshore manufacturing footprint from three countries to two and from six facilities to four. As a part of that restructuring, we transitioned our Mexico sowing and screen print capacity as well as the more expensive third-party fabric production we had to source in Mexico into our more efficient Central American manufacturing platform. When we can ramp up our manufacturing volumes back to a more normalized level, we expect this restructuring to generate approximately $6 million in annual run rate savings. Our plan included similar …
