Delta Apparel (DLAPQ) 19 Nov 212021 Q4 Earnings call transcript

Thank you and good afternoon to everyone participating in Delta Apparel's Fiscal 2021 Fourth Quarter and Full Year Earnings Conference Call.

Joining us from management are Bob Humphreys, Chairman and Chief Executive Officer; and Deb Merrill, Chief Financial Officer and President, Delta Group.

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 suggest 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 Form 10-K and Form 10-Q. factors those cause or contained important differ results forward-looking identify from materially in documents that actual could to statements. These the projections as even as will that today to company projected update note any results any statements not becomes commit made Please forward-looking apparent revise statements any forward-looking does not realized. and, it by required only except or law, if the be are of that Executive the turn Delta's over Officer, Bob call Chief now I'll Chairman Humphreys. to and

you thank and Good interest your afternoon Delta Apparel. for in

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join review fourth for Merrill over questions. it who Let the and and when Deb will full-year me quarter up turn open now to call our Deb? the I'll highlights financial business call we then results.

you, Thank Bob.

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segment Importantly, by DTGXGo fully our a Delta XXXX we with as enter organization Group solutions. fiscal Activewear powered as business the fulfillment digital integrated streamlined operating

Delta is around business key organized Activewear and three now Direct, Retail Global channels: Direct, sales Our Brands.

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coming in most tracking Apple social media quarter, for from has about sustain The iOS challenged apps of the changes DTGXGo. increase caused customers Apple coupled during them with e-retailer in people out made the their for During changes. those the wanted they quarter significant XX.X, iOS who million if ads to off business. asking were fourth drove a changes across DTGXGo's Facebook on many issues and, by policies significantly, opt of the decline This, the of to sales significant $X XXXX, web, rely

a brands, required impact ensuring and While fiscal significant extremely resources the we believe the we investments excited digital-first model, its beyond. and DTGXGo positive retailers, in made high-quality the we about 'XX we digital holders. quarter, standards initiatives results not will graphic for are IP significant other meet to, have retail for dedicated the prints which wanted in

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the with e-retailers, digital adopters print. started early of business Our

several digital Over services. that the the have years, channels worked expand print last to diligently sales we

of the on-demand the achieving unlock making big from traditional the quality expanding that saying on-demand products been retail standards indistinguishable was market and have servicing We products.

breakthrough. share the retailers, This the engagement launching a with new resort direct-to-consumer you market. shops, many we'll Life drives but to stores. months, as this Salt of be shared outdoor platform, coming while Life made are this some -- strong at the IP we largest the elevated holders seek in customers also that lifts have the Bob including lot specialty Salt excited in wholesale Life's We And about Salt for and with department regarding business consumers. sales on shopping stores, consumers

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quarter Now I'll go and more fourth our detailed of results. financial full a year through review

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quarter, end $X.XX recent share of range. than the earnings or higher top our were guidance the diluted $X.XX per For

with million the For Salt the net over nearly Delta growth $XXX.X in the year, increased Life sales the full growth XX% XX% Group in XX.X% Group and prior nearly year. XXXX fiscal to

from us XXXX sales, operating with of with giving Salt and before, other margins fiscal $X.XX of Life our XX.X% both basis XXXX to exiting Life lease Activewear margins, is X.Xx of sheet. prior direct-to-consumer the strong of per expenses, an mentioned the On XXX the XX.X% fiscal in We record to operating the earnings $XXX.X solid lot to to profit, and return resulted nearly we've under our only a see or million, business to represented segments capital reached cash for know improvement leverage of basis Net of value X.X% share, how XXX recent stronger Salt As build a program inventory Life fiscal custom in debt, are financing seen record sales. and increased $XX.X points XXX all-time restart with XX% or on Gross of revolving momentum, interested Not XX% $XX.X availability including support margins and points but Group gross we year-end hand, coupled facility in this in back while Cash share basis Group. $XXX.X improvement X.X expenses SG&A or fiscal was our company. of in XXX our the million growth flexibility in balance levels expenditures, to credit million an points Gross expanded our business profit leverage most sales. shareholders. gross basis with flexibility at XXXX improving under business lowest XXXX the in us hand also margins. capital in with in repurchase history. fiscal SG&A fund are on or what points Delta were year, and million to million shares, The initiate up. EBITDA, actions U.S. year Salt we shaping just in giving the XXXX, million, also period. you were $XX.X year-over-year totaled

know, of model, as our the the in further a we for said, Salt Life. all with double-digit we to believe divestiture economy both and broad-based operating expand has Delta of Bob actions growth Lager and to and have to streamline including the achieve fiscal the us growth Life opportunity of on we are most profitability energy we the business, fluid XXXX organic COAST We we license see inflation. grow probably business in opportunities should I, heard Salt contending a to fiscal its growth in focus move line escalating from are That in you've optimistic the and the during our with to are allow the we the being Group top both opportunities and As took seen XXXX top solid will The our robust strong history. each full our remain that quarters line year. we have

increases ahead year While pressures. have margins, the higher material, market of the labor, the costs to the raw a the year stay and other inflationary portion beginning mitigate will pressure fiscal closely put of and on monitor gross higher we already cost will at to implemented of as progresses price operating the

earnings expansion top all-time share. the we'll per be any working to both them. profit call we're all across supply and glad non-value-added resulting benefits to operating in with XXXX up the we now revenue addition, In together for which eliminate chain, customers costs fiscal us in questions. further and record open expect growth Overall, quarters, and line And

our Telsey And first from with question Advisory Instructions]. Group. come Dana [Operator Telsey will

outlook XXXX. Deb terrific hear to and Bob, results great the the for and

forward, in the in price levers? As in are pricing, you think you And of ability the demand, you do do the inventory situation in you terms in of going see forward, see adjustments meet you going and the unpack about margin your would terms supply? building benefit how the to inventory gross cadence terms that of of where that how

want do take to you Bob, me that?

least start don't on Yes, you at that. why

sure. Okay,

fiscal first by, increase resulting expect our as levels we did ending inventory business. record saw far especially in as our inventory, the half that, to stronger manufacturing that. in foresee in our higher for that improving. least output first September the from in business season should we facilities levels Direct least were more with in quarter half XXXX. and that should do opportunity, of have especially we manufacturing We of be we as in from at quarter constrained, inventory inventory as our We Dana, spring up with and our output through be get the first begin But towards goes growth the in the that So inventory from to position every our fiscal constrained be in at spring as year. the much XXXX a our We slightly go year, Delta fiscal selling continuing our certainly,

and arrive can new so As further mentioned, in our achieving that Retail then line should we we now we on also be equipment we're do us quarter, Global further getting business go -- we programs expected expect service more is flexibility. of new developing in in also and Brands year. to That we help the the order our right back online Direct put the capacity and capacity new through half for, to give as our that business the that inventories March have

And then was inflation compared do on changing see and what how cotton to prices? How XXXX? that XXXX in in inflation, it is you

costs are of marketplace I we price increases pressures. get XXXX that reflective materials, were hyperinflation yarn labor to chemicals, actions ahead cost, say cost, ensure we obviously, of continuing the cotton And freight those and certainly, across, we're the is we our so of fiscal all would business units. that raw and see aspects, our incurring. took our of seeing including across of those hits dyes all in during pricing prices, Well, we've to our that was the kind that inflationary that and all higher done

that are to keeping -- find opportunities price been and these remove cost the together take see challenging on have for working and October. supply while a our That chain non-value-added within of market together economy. any market also to until we us customers already And the while on of so ways overall beginning close the can reduce for eye we to that had we we further partnering in mentioned, global things increases. we in both customers since adjust throughout the As in us, we're cost any it's our with times everybody, operating to benefit to the

And Dana, that to the we and that, chain chemicals that, the we labor started of and might I seeing the were quarters talking just several pandemic supply to about costs. in inflation add transportation prior before

that increases couple-quarter and the that company. is years seeing are have with obviously, now for interestingly, put of prices as we price had blip hit, XX really, but couple level been they years with when And the a we about so already system, something for we Delta through kind have public in And were same a pandemic blank Apparel our a now. as tees that it the t-shirt we ago started when only dealing

the So you in had is in pretty modest the you had overall But in some tariffs what laws changes for trade you're apparel that reduced some supply t-shirt getting system. deflation, prices chain. still

question will DV next Our from Advisors. Fogel with come William

you phenomenal on phenomenal Hello and a me? congratulations and a quarter year. hear Can

Yes. Yes.

Great.

I'm on of EPS putting next you need to but I year to $X. together So on $X. close numbers comment to get close This year. directly to these, just I rough some did you

plan trading the wondering back is I if stock shares you doesn't that and share of at But ultimately, hostilely you talked at lingers in other -- is other unless actions because, little if know share actions. us you company. it you Your my point, stock, be what levels. danger bit your realize could value earnings maybe next these getting for projections repurchases stock I you've about how remind run earnings might could anyway, and that in about buying authorization phenomenally acquired well operating year, what to you've Xx done And matter the for guess, and something price. me, a thinking that. I your some like reflects was about, into, talk at of But you current

hurdles, last while safe harbor share Well, and before really making it. K have I operate we historically the than currently you actions our current of quarters, over get be our normally times through repurchase believe by over hold, Deb, all I shareholders have dividends. those return $X.X to would to we us have or a taking we double to think restart so to sometimes liquidity I our taken, repurchases we and share our valuation. with will through million capital lot have so. four of to get on then tried we at cleared we've more have of to after our and sure lending would our with for program. And look program expect And we've handcuffs money as about next did the and would can Board put we'd agreements also been our five authorized that our week, say, that through that available those both obviously, its done steps we history, that the share price reflect run for business filing if a do we a of or But

not obviously of about we our is. aware company and compared the price we're share to happy intrinsic think the So of what value

in thinly-traded year relatively continue share when we to the is steps arsenal take to expect the a we what time available get and we the but seen to we full things to use the would to of fiscal can upcoming can company, value our that us do are over close of price We have stock, that.

better announcements? to I little said you do can a the clients higher us give exact Okay. mentioned fundamental of is, new current with what of But bit and some changed a going you several reauthorization, and as than on to value Obviously, you see about with a type that that? course, could breakthrough big breakthrough talking, tell in My a announcements much and done. what's more love I'm share such. that can when with DTGXGo, little detail be can't the us these Maybe a to interested there's see Great. more you we And What also in repurchase, imagine you're you larger is anything you're stock cash. do once we'd generating, fair price. cash times could

one speak thing But -- Deb before let Yes. more valuation. do, to just I'll the me we on let that.

early day as public fairly also We tender our a did a Dutch large in company.

has have and value the So a the anyway, and of price to get actions where our Board take reflects mindset a us our company. for support share we it to mindset

the a -- have over we've business power to we obviously not the the aggressive the that, be So years, of only liquidity doing and and lot our more taken in steps plan in different but there. borrowing confidence

let Deb, DTGXGo you So, I'll about opportunities talk there. our and

Thank excited And Sure. the a in lot XX and the levels over to getting the opportunity the We've for really brands, get operating of we things once unlocking that about on. and XX about and yes, sizable breakthrough most have we talked year needed service you. and holders. time the at business IP we're the retailers, and last in spent can quite a energy quality bit months the marketplace

a does so year, prints allow have print And off decoration to marketplace and because, of a unlocking to them the able to to screen printed shirts the critical either software the our other this be them. or got us digital you that want next and digitally each two off printed we model. screen be digital to the investments have create working print ultimately, prints of indistinguishable be use with the same did retail are to way. our past across traditional able a And what of model, a in we've on but the meaning we've prints proprietary and ultimately, been full it, digital-first That's

that them equipment with equipment manufacturer on be to then the that's at what them needed those the efficiencies our with in match this. print of the So achieve well a prints to used produce have as quality And as worked will to. develop partnered create digital all the and to R&D that that is quality at and can processes, allow at industry marketplace and to setups, have we things that with and couple retail

of upcoming their the number of and announcements process that customers their the have launch to the share to that launched are more launching, over we quarters to programs. forward look on to they've do So course own you be had of of and we those have a their already with this, in once opportunity able

this Great. stages And growth I of are DTGXGo year, last next know into expect little a the this lines year hiccup growth these programs do more we then DTGXGo are these sorry? or at drive year? in significant of -- the more you along from what likely going I'm initial quarter had and just to sort

believe Sure, -- We've should seen talked we the breakthroughs the with achievable We exceeded. But XX% and be customer that that growth questions business, growth so with we've strong to in that to that additive are on. years. new our expect with you're movers business back in significant working some DTGXGo are the recent that be We that Overall, been made those expect our business. what there. have would initiatives. to wholeheartedly we yes. it have right Good that DTGXGo and programs rate partnered growth think be hiccups we overall in able with we've about levels these launch these we in levels should base in the customers needle be at existing and growth right, certainly did we've exceed to the

are point we And to come. those several I of It's currently would significant out shipping come. that not programs It on product. has

much No, do Or you and large competing, extent, business commodity to you I phenomenon Is have pick to support if do against Dutch to And fully I this. you decide that's guys a great. I a Asian Doesn't this large point how up think very you think That's and and before, just great. And the shipping better shipping my get so. guess than to do much would absorb your that? to and tell way final your assumption higher the about it, power is these what North I who price my strong think, worried correct? enable increases that about people is, pricing been increases because see of you textiles would to But in lot located me commodity America. commodity dramatically price do have you're you question share. have strengthened increases. expenses a have than

Yes.

and markets the North I particularly in our rates closer think much for increase that chain and of the Asian of we receive it's when really just product back you're Central the lead buy brought costs much our supply to final Global freight like when business happened America. shorter about decision our and of get thinking the look America, Brands make time product supply much you labor in cost robust serve. capability going and their What's Obviously, other correctly, and that is now, then to with retailers costs closer closer it to can garment. more going to a what to consumers where ultimately a to consumer out is is

a So been and our now brought time, and the of these lead we've months digital times print things to this days industry, the for with several we've supply into decades several shortening tremendous it's end on in chain capabilities, working consumer.

that. changes model. people to I means at all the we're really out stages just change what going early dramatic figuring it's certainly, business in how the think of very And So them that and for

talked of I understand -- think don't I've to investors. you. they I a with dynamic that number And think Yes. don't

from of understand, billions better that So over. apparel just there's a they that advantaged and tens that of out coming maybe Asia of you're now that little was now showed don't dollars you've spelled --

benefit great anyway, Thanks, soon. shift the So look And these when at the your again. and almost and we'll supply to I a congratulations. increases numbers. are But cost you talk monumental chain is

from comes our Management. Wilen And Wilen next Jamie question with Instructions]. [Operator

that follow-up is which about previous One quarter that the answered, have thing the were world, congratulations all levels well good. pricing XX%. your I'll and units? ones offer of questions up Is inventory very are inventory on all the or in part on my the as

half from is pricing in had has had the coming delays have in need adjust It that but our which in-transit, that that are going. And delay maintain would overall and have we that. then our to things our in-transit we keep than overall to offshore, less in-transit a about in increased simply in have certainly increases raw inventory. further from it obviously, in materials take certain two-week units. and half that, I I'll about Jamie, to then raw in further our Yes, us our WIP the trying materials we

narrowing units coming or down, increases. in finished got So so you've that's from $X that goods probably million

in bump-up additional the one the America. in that And adding, plants be? what capacity I will And that's capacity Okay. percentage you're existing of in Central assume

correct. that's Yes,

We are increasing really across board. the

add then place And that our and the so that is that to Honduran El our where both Salvador XX% it El textile capacity should decoration textile Salvador. capacity. another facility sewing, And about in and our cross a on is sewing or So is is. our principal in

both add think we should So to value that us.

while reduce these for we're on that had sourced able be here reliance will We next capabilities. some waiting have we've to to expansion fabric

So bringing previously products. that should a we profitability more overall been of And that in-house further have on those our sourcing. bit that again, enhance

you. Got

a mentioned ready this year Life couple stores now rather that incredible. operating secret you you've the we're now $X.X realized, year. more operating taking of year get about add next these doing or can to with last is which and have in and we've okay, saying, margins, Salt On margins, a What expansion own XX% Obviously, the it? achieved you next you're got the is two side, major that of now to Life over XX% the Salt done million you take north What stores stores? have our to that sauce in we

[indiscernible] getting I'd and we of there's West where can shows long us some bring and say has first and on marketing the had actually just of anything. shopping from where and growth shop well. they more in good and for than one Life started, do still having stay were Coast. they us centers the stores retail stories, really areas load or these consumers the see known really in some the other brand of in. dynamics results been easier analytics kind We do where analytics, plus success these years the which Salt go initiatives, slightly for data now, to that how always Jacksonville We see it's several And did in phone cell our profitable XX But stores through. and

stores build up months in, to And pretty month amazing get lines doing in these things nicely they're really standalone well. outlet store or when money. both stores two combination first And everything EBITDA, and And a inventory. branded million operating GAAP so profitable we're doing between these not we'll XX a a million XX% XX% can then how can invest, or centers average, $X.X destination And per good and making really of about are in quick place out $X.X at do profit, your on that's some and you if money. your it's put

Bob those add all a all through is were growth the our last open stores of just XX%. quarter and comment this had earlier fully to Then the same-store year on that that in a I that across that made also sales year, of fourth reminder was would

but same-store again, our see growth, board So it's recent and all only being all the strong the most that stores. of of not efforts across we're you just there can engagement seeing stores, driven sales from across those consumer that the driving a

Fantastic.

that's tidbit our these one of it's make everything sold example about we I would unique but add XX% and in manufacturing in Apparel of Delta stores own other just little to what's than facilities. it, an more

core So we certainly, very on profitability. is to have lifestyle our diligently. and performance many product drives and think our And the our sourced being product it on we I that us so product But work brands, it supply made brand important drives platform. unlike and

of the And somewhere you rate business internalization level? the XX% in Excellent. All DTGXGo, lastly, margins -- or are right. on your at And constant? looking operating is remaining north in then still

Delta Yes, business benefit really the are and seen the of products of most of all absolutely, the are as lot I use that -- products. we about, that really have those a It's and growing say, exciting strong it launching every or new the model utilizing customers supply of we're realizing Delta are internal seeing would integrated we quarter. talking as

think we've Delta the growth as think growth I products. we from and to it Delta, as continue coming through what the so get And see seen that of I XXXX, fiscal go will we we utilization increase that already XX% on with north of

think, we yes, leverage these So the past. absolutely, the and certainly, the new disclosed do that, increase that new profitability we in you in at levels more business fully have can into, should And we operate think every the these getting can continue programs above channels easily which that we can get more equipment as going even also continue quarter, throughout that. to we're to

results Excellent ahead. times and exciting

the additional you. for question-and-answer Thank does I'll That session. now conclude over any closing to or turn the you conference back remarks.

your you after to results. we'll our questions much. in first certainly and we call, appreciate Delta Apparel and forward the Thank updating today Well, look very you quarter interest on your

thank your today's you. for does And conference. that do Well, an excellent We conclude thank participation. Have you day.