DELTA APPAREL, INC. Delta Apparel, Inc.
Annual Meeting
of Shareholders
February 20, 2024
Fiscal 2023
FORWARD-LOOKINGSTATEMENTS
• This presentation, related remarks, and responses to questions may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current expectations regarding future events and involve risks and uncertainties. Although we believe that our expectations are based on reasonable assumptions, actual results could differ materially from those projected in
this presentation. You should not unduly rely on forward-looking statements.
• Please refer to our most recent Form 10-K filed with the United States Securities and Exchange Commission (SEC) on December 28, 2023, our most recent Form 10-Q filed with the SEC on February 13, 2024, and other SEC filings for a more detailed discussion of some of the risks that could cause actual results to differ materially from those indicated in the forward-looking statements.
- Finally, please note that any forward-looking statements are made only as of the date of this presentation and we expressly disclaim any obligation to update or revise these statements after the presentation to reflect additional
events or circumstances or the occurrence of unanticipated events, except as may be required by law.
Delta Apparel, Inc. Annual Meeting of Shareholders 2024 | 2 | 2 |
BUSINESS OVERVIEW
KEY DRIVERS OF FY23 RESULTS
• Entered year with historically high cotton costs and slowing demand - Elevated inventory levels and supply chains - Weakening consumer demand
- Post COVID consumer behavior
• Made strategic decision to buy less cotton and reduce production to match lower demand
• 1H more challenging than industry anticipated and originally expected improving results/return to profitability in 2H
• Demand destruction initially seen in mass retail supply chain eventually impacted other channels, with overall severity greater than industry expectations
• Slower sell-through and more extensive production curtailment significantly impacted profitability throughout year:
- ~$26m in excess cotton cost above 10-year average impacting COGS
- ~$8m in production curtailment expenses impacting COGS
Delta Apparel, Inc. Annual Meeting of Shareholders 2024 | 3 |
BUSINESS OVERVIEW
KEY DRIVERS OF FY23 RESULTS
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Capital Deployment Optimization Plan designed to enhance cost structure and working capital long-term
- Implementation costs of ~$3.9m for FY23 (employee severance and non-cash expenses)
- Expect ongoing annual cost savings and efficiencies of ~$6m upon return to normalized production levels
Strong 1H growth in DTG2Go digital print business dampened by Fanatics business reset in 2H Strong growth in Salt Life business impacted in 2H by high inventory levels in wholesale channel Higher interest rate environment continued to increase cost of working capital
Delta Apparel, Inc. Annual Meeting of Shareholders 2024 | 4 |
CAPITAL DEPLOYMENT OPTIMIZATION (CDO) PLAN
ENHANCE COST STRUCTURE, OPTIMIZE WORKING CAPITAL,
AND REGAIN PROFITABILITY
Simplify manufacturing footprint
- Relocate cost-disadvantaged Mexico production to more
efficient Central America platform
- Eliminate third party textile fabric expense
- Scale textile fabric production in existing Honduras facility
- Scale sew and screenprint capacity in existing Honduras and El Salvador facilities
- Consolidate legacy DTG2Go print facility in Clearwater, FL
into existing hybrid "On-Demand DCs" combining digital printing and Delta Direct blank garment supply
Manage working capital
- Focus capital and resources on value-added "consumer-
ready" product sales
• Increase inventory turns
- Leverage production flexibility of vertical platform to reduce overall inventory levels
Delta Apparel, Inc. Annual Meeting of Shareholders 2024 | 5 |
CAPITAL DEPLOYMENT OPTIMIZATION (CDO) PLAN
CDO PLAN PROGRESS
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Complete transition of Mexico production to Central America by end of Q2 FY24
Increased textile fabric production and sew/screenprint capacity in Central America
Legacy DTG2Go printing facility closed and capacity absorbed into "On-Demand DC" footprint
Inventory levels continue to sequentially reduce - $196.3m at December 2023 (~24% reduction from December 2022)
Delta Apparel, Inc. Annual Meeting of Shareholders 2024 | 6 |
SALES & PROFITABILITY PERFORMANCE
Sales
(in millions)
$484.9
$431.7 $436.8
$415.3
$381.0
FY19 | FY20 | FY21 | FY22 | FY23 |
EBIT | EPS |
(in millions) |
$32.7 | $31.8 | |||||||||
$2.86 | $2.80 | |||||||||
$15.9 | $18.4 | |||||||||
$1.17 | ||||||||||
($7.1) | $0.47 | |||||||||
($29.4) | ($1.53) | ($4.75) | ||||||||
FY19 | FY20 | FY21 | FY22 | FY23 | Adjusted | FY19 FY20 | FY21 | FY22 | FY23 | Adjusted |
FY23 | FY23 |
EBITDA
(in millions)
$46.5 $46.8
$33.6
$27.7
$5.7 | |||||
($14.2) | |||||
FY19 | FY20 | FY21 | FY22 | FY23 | Adjusted |
FY23 |
Delta Apparel, Inc. Annual Meeting of Shareholders 2024 | 7 | 7 |
MANUFACTURING PLATFORMS
Number of Employees | Sept | Dec | |
FAYETTEVILLE | 2022 | 2023 | |
206 | 150 | ||
ROWLAND | |||
64 | 52 | ||
DELTA APPAREL CAMPECHE | CLOSED | 739 | - |
CAMPECHE SPORTWEAR | CLOSING 2ND QTR FY24 | 247 | - |
CEIBA TEXTILES | 620 | 522 | |
DELTA APPAREL HONDURAS | 906 | 685 | |
DELTA CORTEZ | 1,703 | 1,336 | |
TEXTILES LA PAZ | 3,245 | 2,815 | |
Textiles La Paz - Sew | 1,770 | 1,512 | |
Textiles La Paz - Screen Print | 408 | 371 | |
TOTAL | 7,730 | 5,560 |
8
U.S. REVOLVER DEBT
$152.3 | $155.5 | $153.1 |
$142.3 | $145.2 | |
$138.3 | ||
$126.4 $128.2
$110.9
(in millions)
Dec | Jan | Feb | Mar | Apr | May | Jun | Sep | Dec |
2022
(in millions)
Delta Apparel, Inc. Annual Meeting of Shareholders 2024 | 9 |
INVENTORY
$258.9
$251.3 $248.4
$243.2
$233.8 $231.4
$226.2 $214.5
$196.3
Dec | Jan | Feb | Mar | Apr | May | Jun | Sep | Dec |
2022
(in millions)
Delta Apparel, Inc. Annual Meeting of Shareholders 2024 | 10 |
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Delta Apparel Inc. published this content on 20 February 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 March 2024 18:38:05 UTC.
