Delta Apparel (DLAPQ) 4 May 232023 Q2 Earnings call transcript

Good afternoon, ladies and gentlemen, and thank you to everyone participating in Delta Apparel's Fiscal Year 2023 Second 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, 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 suggest prediction and involve risk 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. factors those cause or contained important differ results forward-looking identify from materially in documents that actual could to statements. These the projections over as turn even as will would that Mr. today, to company projected to revise note any results any statements not the becomes commit made Please now forward-looking apparent update statements any forward-looking does not realized. I and it like by required only except call or law, if to the be are of that Humphreys. Please go ahead, sir.

afternoon, thank you for Good interest us in joining your and today Delta and Apparel.

you We distinct discuss the are glad market we focus. strategies model and to be like operating quarter Apparel second with much results, on highlight which our the Delta prior to which, diversity X quarter the the of resiliency our of

of businesses our As other mass the continue the generally environment, business levels rates. notable impacted uncertain as as to to and inventory high by well in our economic expected, portfolio other parts continue the grow within at retail chains, supply be while

their needs take recognize customers challenging Before to second to what highlights, and our quarter a United El apparel them of overall the many remains and few want States thank for through market. Mexico, meet the teams I Salvador of throughout our our you Honduras, a continuing in I

hard their success dedication. Our all above and resiliency as work and daily are testament to a a company

well performance sales we fiscal record at X and line to growth record year-over-year very second of our XXXX including line go-to-market of to year, XX%, X growth channels, of of and top Life DTGXGo second and are Turning report results the as sales growth our for as pleased Salt our year-over-year at quarter XX%. double-digit bottom across quarter

growing exceptional e-commerce brick-and-mortar sales in and either In business, either their top merchants our DTGXGo, where users is channel directly achieved or directly Direct where we Salt directly of or Salt retail we products performance the to for and to double-digit products and to and provide an point centers. Retail X Apparel, our direct growth Life important our which vertical Delta line with addition along at channel, Life close the e-commerce to of channels area layer often retail DTGXGo customers locations removed. Brands decorated retail fulfillment to end sale, we sell to or consumer-ready typically is an Global

in decoration we services services, In we for such tagging provide hang which sales these the to value-adding paid packaging, are addition notifications as customer. other connection often and advanced retail with shipping by

channels consumer-ready at to in consistent also business of Direct's this emphasis the we inventory going also reduces which base typically to on year, ad promotional products primary results line Direct customer Delta and suggest customer blank from channel. channel and sales retail they regional the softness rate softness more these during high channel our areas quarter pass-through and sell return Delta with license but supply top area also chain. We're demand us saw have sell mid-tier decorate in offset first this we an inventory better to into as product where customers more we the higher Life the optimize and softness plan ways quicker to these on turn also look capital to continues products in retail and cost to consumer-ready be print record margins, base and some carry we working us put raw environment. Similar the a well-publicized specialty strategies. These our in levels our lower related in supply our growth allow Delta As of pricing the chains. The for themselves the primarily cotton such, and who forward DTGXGo of mass material selling retail that risk allowed We continuing due of dynamic seeing Direct Salt in some perspective, to to quarter our capital. to spring the interest apparel within variety invested manage

parts result, high States We brands global and a channel over-inventory sportswear seeing brands to product brands to custom degree regional branches and we companies, manifested are similar production this of impacts levels the have, second all cycles the provide as dynamic where in of large of the the quarter. inventory Forces. The the in a are during a and longer our decorated been multinational channel, industry and in across sales United delayed Armed

with some and business forward upon expanding perspective, our nice our our are line in customers our branded was key seeing the an our quarter top performance Delta depth due the growth to overall direct several military somewhat that for retail in primarily below forward. From ongoing going expectations of issues to business building demand category. license as the We new look as well we channels

well reduce operating moderating significantly challenging continue action the quarters quarter Delta we level a to fiscal in as of channel have the line year. to anticipated of to the to also our work our decisive and we lesser capacity impacted in and we through but performance production our Direct channel improve and build to for the demand on calibrating with at our much align results units bottom half production the levels brands in as inventory plant softness second higher-priced efforts believe through our our We impact throughout upticks move operating and positioned in us a inventory degree. These capitalize the X the absorb last quarter, factors global the

the reducing inventory place seen on initiatives we from reduction Delta have licensing, our We parts coming channel reductions relatively including encouraging recently, on December achieved in X% position. we retail front to of signs Direct make have and the an of keenly demand in inventory in remain focused Although some incremental certain our quarters.

margins we as to these as inventory through progress cycle initiatives cost the of quarter. Moreover, back the we year. fiscal through higher results through our in the our sequential realizing we half of continue improvement third are We see

structure, overall national Delta by offering at coinciding our solution. further reduce efficient purchase one legacy and significant Clearwater, our in with digital and on-demand under reduction single-purpose integrated a the blank capacity includes enhances production cost output. DTGXGo also distribution better model DTGXGo and have facility our Florida, fabrics. In in our to into roof. This strategic We in more consolidated manufacturing This provided to unmatched facilities workforce printing in our including our other taken our efforts of garment housing competitive our production DC dual-purpose source of manufacturing Direct Direct digital facility the the leverages Delta Campeche reduce business, optimize reductions to offshore Mexico actions DTGXGo we footprint

through me financial then to to them our highlights Let at detail of results. now and the questions. who then open the join will up with business call Justin, over who the go in more end to I'll review will of our follow Nancy, turn discussion a up for

Justin?

the Thanks, million, Bob. market including Total X year-over-year quarter for our X channels both Salt growth, double-digit were of $XXX.X Life. record registering with DTGXGo for sales and quarters

brands top continuing due Direct However, below and line our Delta channel came global some in to as the softness our in performance channel degree. Bob our to our in expectations mentioned, overall

higher line not income, during by outstanding in performance mix Life also Our operating exceptional only included quarter growth Group primarily top the segment's a driven but expansion gross results, Salt and margin of was including based its as e-commerce wholesale, distribution all direct-to-consumer margins. direct-to-consumer Life's double-digit operating and collectively of sales. Salt broadly well XX% retail growth across channels sales as of overall fueling channels,

XXrd its and the Pines, to quarter, market. year XXnd Life's the date store are foothold first just retail Northeast and Life Rehoboth later to United New Florida, footprint Life this brand's Beach, open XXth store location with Northeast further the last market and opened growing Virginia Pembroke has store York the store in solidifying its Salt Jersey branded opened the our plans first in in New also Delaware During doing Florida Jersey and brand's market state Long in in in and opened well year expand branch. The first its locations in Salt the to store its team in the the of plans New high-performing recently and States. The Salt

stores fiscal truly approximately retail has per Live branded on are These in job of square We productive profit sales generate and executing foot of locations year first year and $XXX expect our team retail strategy. The operation. retail excellent end our operations. an highly to with in typically X-wall around in done Salt XX average their

last products the Life' and grew outside channel and Lab shipping product which site for Salt addition, consumers and outside doors and the driver In e-commerce in site territories see the profitable to Live Western channels future a approximately margin clip sales key southeastern stores one key for brand quarter. United in in gain a our our quarter at revenue We maximize over grew Salt of at for with for healthy Sales years and full year customer Salt as new accounted continued to remains XX% The this opened some data both site sold the experience in e-commerce growth stronghold. The e-commerce The to present and accounts the second the as approximately saltlife.com also States. a least quarter. many of business X% many a on and line continues remain these also grew brand a wholesale stores encouraged year most Life's Salt Salt during the XX quarter. X,XXX Life's sales channel how channel Life's and by States pillar for the to the retail and brand acquisition to to channel, business, Salt XX wholesale retail fiscal valuable sales at the awareness great potential best the customers consumer attracts Life's including retail Midwest prior direct-to-consumer country, XX% of retail. Same-store in United for traditional serve provides year the across come. Salt builders distribution growth key across the remains and a locations. models of states during driver new

sales retailers are our delays channel. uncertainty Life, inventory due pushing And revenue quarter, to growth our among to We low double-digit come to seeing we in expect more generally wholesale sales down impact full continue issues for slightly supply consumers to in of well-publicized in the teens. some quarter, chain third among our last quarter. Overall, wholesale Salt the general flat in the this expect accounts year at year's we into and second

and during extremely designer lifestyle the office, goods brand ethos. We market dining, multibillion-dollar new home about another entry home Magnussen to as and sleep with a the living, Salt furniture including to Home, and coastal offer Salt will with its the entertainment, into home excited Salt for way other branded manufacturer. The Life spaces, as industry-leading addition and wide are restaurants We new Salt furnishings significant dynamic across country, the products quarter collection an through current consumers Life home of Life's connect agreement array a see Life portfolio, inspired as the beverages. well license license

to over for channel our revenue significant As expands expect portfolio wholesale. Salt Life e-commerce branded income time, the serve retail, license and as another royalty with it we generates along

to flexibility, market of well our of in recognizes more benefits potential which today's are to and more on-demand long-term in as remain shifting evident growth opportunity year-over-year DTGXGo to Group strong in posting DTGXGo creation another digital, confident be Group environment. the to digital elevated brand business apparel rate growth inventory execute and traditional becomes continued Delta we Delta the Now more across interest Delta customer even and in segment. value customization valuable and key driver with reduction of for continues the Apparel. The The decorated sales team speed all growth our of quarter a this XX%. segment, revenue

and from leadership derive the advantages digital We leverage in blank position the of with unique as continue quality we garment printer highest serve, as Direct country. network both to our integration well channels across markets largest the print the operations the locations digital our of as Delta our we distribution

operational cost of and DTGXGo DTGXGo supply fabric of and chain give in recently quality equipment efficiency the Polaris internally delta expertise quality for our business. use Our we in improvements Central and network to blank custom development advantages also and in strategic our creating near-shore the us is benefits product strategic level the to goal connection we driving on efficiencies team call across industry, gain laser-focused X we with necessary both direct in deliver the in customers its up to operating our America the manufactured the scaling continue and which and vertical strategy. in garment. The printing locations and adopted digital-first experience possible highest

the period drive demand across seasonal our consistency ink lower the across fleet been and relatively the to and these X summer the to has the systems of in recalibration better initiative and advantage first completed and our operating fleet spring of and with taking upgrade are We others entire locations. Phoenix quality processes digital-first early standardize includes This facility production follow. of software, digital and equipment in

However history. equipment channels within need core we spec our production use rates currently digital on first other the than in the best are in

working are on the Direct challenging the variability those manufacturing Polaris outside standards used third-party digital-first meet We to customer higher the of garments to to equipment base. Printing on due purchased match quality rates print be Delta made of the platform can our processes.

recently present of on We within provide adjustments base customer time spec breadth adoption by to digital-first due rates. Larger quality sizes initiatives our So base colors satisfaction. made and impact colors challenges our fleece also of our production and Delta blanks to product garments, new the digital-first the to positively greater the customer equipment. implemented improve sized over to will consumer certain we

season. To We from which market the holiday third ramp our targeting on promotional our we of number build our locations migration narrowed sometime it the and service digital-first across as also and specialty digital initially we overall our we and quarter. ad into markets further to the platform. as launch additional the in We and business-to-business we such a for reincorporating print products developed consistency have capitalize offering to anticipate locations up grow expect portal share, provide process products

not advantage for submit allow traditional easily customers fulfillment DTGXGo order for and offering take our directly digital portal smaller fulfillment and that specifications graphics replenishment and screen associated seamlessly to may and the will printing. on-demand be into quick of new quantity, service network suitable Our orders

of We our continue unique scale relationships. for ways leverage look network fulfillment and innovate customer vertical digital and strategies combination integration, to new that expand strong our to

provide platform on their based suited fulfillment ideally individualized decorated products apparel is on-demand Our customized interests. to want consumers the that

sales and sales potential at meaningful as productivity DTGXGo gross output see to that of increased we side season. of pricing through continue We develop further margin holiday and growth strategies, the gains

Our team fiscal our during cost our and on driving keenly initiatives and quarter. key focused platform targets achieving fourth operating these our across remains

our to and its Moving channels. activewear business go-to-market X

we mentioned, growth channel, to from customers Global Brands strength Bob Military business. well As as our our see new as in continue in

retailers on sporting go-to-market direct our mid-tier in offer trend packaged outdoor down platform. The retailers. positive full environment. Sales and from to the stores we that customers to in near-shoring more during take channel experienced conservative quarter Brands demand products shore softness see in putting were result. have Nonetheless, and the sourcing like provide evident and view was some from temporal America Global slightly as our emphasis the continue a we near So brand bookings retailers, a large year-over-year approach future brands decorated current those a strategies where goods and we trend as stores, choppy channel retail department softness are as to mass and and our we farm Central fleet

to consumers are across commercial flow. for quarter long-term our another and our growth, players team and both sell Group to base We to segment generate in customer brands opportunities of direct and channels believe products e-commerce significant continue expand brick-and-mortar retail retail-ready opportunities positioned fully going provide direct Delta double-digit closer decorated many across delivered we retail global our the both that forward. These us growth in to channels strong Our channel.

provide, year, flow. In The we value-added in turns growth spring our emphasis given promotion, from retail and channel, we bring higher Delta provide As ad while to print down these channels specialty year-over-year. rightsizing the other continue garments the margins environment blank resulting inventory quarter earlier we e-commerce similar to our softness experienced initiatives retailer first of services place in continued, paid low retail in a channels. those we and saw and as regional that they plan specialty in this with Direct saw inventory Bob such sales programs to similarly the compared in where approximately dynamics touched we channel, on, we to XX% are more demand commercial and channels mass licensing we for on

Given overhead and advantage in significantly fourth But t's quarter of also effective again structure, capacity vertical our once time. These production during and in more the full which we production more the opportunities the detail. manufacturing the touch for in facilities while during quarter, to year and of will off Nancy demand in quarter, impacted market finished take as operated our us level efforts structure our below blank actions continuing the been soft our of some year we building progresses. shutdown leveraged goods our margins reduce continuing match profitability with and strategically our the to inventory position beginning have last market believe on

some we seeing business signs As gradually inventory prudently may be year. that down but in demand continue are improving, Bob to throughout channel mass mentioned, channel levels the will the we work the as higher manage

me pass overview Let of to Nancy results. an over financial our it for now

Thank you, Justin.

quarter, XXXX year fiscal in million our the second quarter. For second year compared million sales $XXX.X to were prior net $XXX.X

quarter Group input wholesale. Gross for much as segment primarily for of the attributable offset quarter. Net in compared March Bob our second demand, $XXX.X year to and go-to-market million to output a channels, Group the margins quarter. $XX.X to year X.X% by to the XX.X% increase our the growth prior as in compared well quarter margin the decline primarily retail were Salt segment sales as direct-to-consumer decline higher through screen were XX.X%, energy, what in additional freight in driven Justin and the continue margins segment's brands. Net across Delta million, of high-cost sales, in our double-digit by Life costs. The year's year prior direct-to-consumer platform, overall million to that margins in quarter, prior However, last channel, channel XXXX production were direct Life majority lower improved double-digit gross we $XX.X the sales well inventory Delta driven second as other and as favorable growth a and retail as regional increased our sales. XX.X% across dyes the work year of Group compared DTGXGo to year e-commerce manufacturing and calibrate flowing as resulted second as XX% in prior was in The production below retail global our and slightly with we is sales, cotton, of cotton printing Salt were through. Gross March channels Direct's costs million and was curtailments, sales the compared the continued with to Delta the to from segment Group quarter second and record softness XX.X% well improvement well license last to in channels quarter. from gross quarter mentioned, the demand including cost continued sales our the in achieve did a by including growth The growth chemicals, environment both elevated double-digit during $XX in over which year. as a XX% The continuing sales prior represents curtailments to labor X mix from store

overall or ordinary XX% obsolete the of retail stores also the $XX.X these sales general year XX.X% well business. Selling, sales cost in as quarter Salt in as sales since our compared year. currently SG&A as the and Our million prior retail effect our move administrative by was flat were through slow-moving including for Life or $XX.X be course able increase expect compared opening X locations prior of declined and items The fiscal primarily in of for XXXX. a new to the store full percentage lower sales. million of to the approximately inventory the to we're as expenses deleveraging to percentage We year of expansion, quarter, year driven

business return. in Industrial during in dividends million generate located, Park other connection in where provided approximately profits to with These $X provide of cost the for incurred and mentioned. We Honduras, to other incurred fiscal in approximately $X.X income in Clearwater structure an quarter excellent $XX.X million expense, our Justin print our quarter investment offset quarter. second to including Green Bob $X.X and compared $XXX,XXX Valley operating dividends and the helped efforts facility income recorded manufacturing to experienced digital in in of Ceiba the expense equity textiles to an prior the activewear million loss the streamline million year facility severance that in continues Our operating and is our of closing

of for production the the $XX.X net expense was measures Investor our $X.XX period. We facility back income, per prior most and incurred to at expenses was we quarter double second in business a management deltaapparelinc.com. Interest of second the million quarter or our Relations the million quarter adjusted the or our driven those in print reconciliation and note by incurred listeners the XXXX, or and the $X structure access non-GAAP rates in Overall, directly activewear $X.X $XX.X quarter, million streamlining net a of to million income and share share compared curtailing of may and in that per debt adjusted to for EBITDA than prior of collective digital to loss more higher year and closing $X.X expense add quarter the year million the on the manufacturing Our EBITDA year cost compared interest EBITDA of diluted fiscal net $X period. million $X.X measures both measures in million website prior GAAP comparable during $X.X our levels. the diluted page

market hand. the well increase Total transportation inputs, cost inventory on to and units year-over-year low and generally balance an million raw as sheet The was liquidity. inventory $XXX.X year our to compared position. ago expansion reflects at a inventory a quarter in higher in was $XXX.X as Turning labor end when million material,

appropriately to business As with manage our previously mentioned, we on-hand in manufacturing to continue balance output activewear and inventory. our demand measures take proactive

million, from December that the up by sequentially including continue was quarter we the progress at million million year. Net December. we financing $XXX.X hand expect decreased debt, capital XXXX to $X inventory as $XX trend quarter cash through from and lease and on almost Our end,

continue incremental as our decreases the the through back We to expect of progress year. half in we debt

million and initiatives. invested expenditures During manufacturing Salt we as technology facility, $X approximately well to information capital the in retail opening quarter, Life start relating as

Now back I'll the Bob. call to over turn

Thanks, Nancy. The over in dynamic, ability industry business proud been apparel several of quarters. the has never extremely team's navigate our to tough conditions more last of and parts some market our I'm

ahead the to taken As manage remainder decisive in good actions position fiscal put of we we've look to take of manufacturing our in should favorable output last fiscal year, advantage third to that demand. of inventory our down the year quarter calibrate us the a and changes since our

markets to consumers apparel, range today and our of chain. is to customers that supply needs. Delta the of environment a including continue on enhance many the higher-margin our capital, customers' provide debt will shareholders, deploying environment the interest impact managing our we most resources focus current of generate and we to decorated or will and result areas inventory the and a our close to in more rates With company actions navigate economic the ability diversified These highly channels. directly agile and positive general wide we working better capital delta products business apparel our levels for equipped to fluid expect meet a rising uncertainty, Apparel operating reducing to where in where them serves in

in initiatives can have. years profitability for our to operator, positions and to We the growth any call the and focus that company for this delever we continue you will come. And up versatility open may questions on now

Group. [Operator question Instructions] from Dana at Your first come will Telsey Telsey

the of on about are and environment current where the Group gross today elevated impact higher production curtailment with cotton and the margin the cost from and As you inventory you think the Delta costs.

the would As items? the year? do much move as you each through margin through see the move with unpack the they those Do gross of lessen? we go they of we to you where year, forward? targeted as lessen we inventories And do remainder how How

we standpoint. lot yes, and we a sequential our from permanent of Certainly, have quarter And a then quarter as reduction output So by in quarter cost. third our to March quarter, a and improvement fourth make see actions take expecting. revenue difficult in fiscal been some the was did reduce our we

a traction. weeks demand seen now for last or have in that looks it's some the like pickup We X X getting

inventory we go that's down And So we as see the back through of half year. encouraging. our the going sequentially

progress the pointed out, March we in Nancy made that As significant in quarter.

So encouraging. And ahead. that was slightly we're

If you look now period April, million coming also forecasts were more end we at been has dollars debt as than is several of down reduced for and of fact, our what our this in expected the time.

starting So And debt both we are about encouraged results income some we an and inventory demand. have taken, are that point to at on see the of actions those improving level this level.

T-shirt the wholesale Got your about it. And Bob, outlook in channel? And the it for what's channel? when you talk the improving is demand,

where the half that had impacted far undecorated So in so basic so largely in this -- been is of year. first improvement we've seen yes, tees the

ordering So it garments channel the mass appears are us. more through flowing orders are freely that and people from

to lower prices, cotton into And start Got future just does feed cotton your funnel? bookings on and it. price when

Yes.

lower through will little cost a bit So we as going this price sales better through of month the we'll out sequentially, cotton fiscal get see year. each rest we really go of

you do do the quarter this Okay. of it look peak with forward? loss? go as the Or And weakness how level frame you at

next quarters. we to as Yes. our the see go our revenue operating we closer loss the through quarters, We X see getting prior and year narrowing subsequent in --

investor. Richard a comes Your private from next question Jackson,

impacting start times through better? your to You to have Do when higher you enough think debt interest get availability carry on obviously hand payments. you the rates, through and that cash you have to

Yes.

Okay. the Can you give on Fanatics us business? an update

in Well, that during business the it revenue quarter. drove our record

Justin going Polaris equipment through have it pointed resetting our that As our locations we're in those. of all and out,

are slow going silhouette. it that be and for rate garments, extra-large what to eliminate also Fanatics we standpoint from cost of quarter These down types some a hire our than to the it going of X. We're garments what to or to types production we're So colors, some wants want next be. some defect is higher

So in get as to holiday. of couple a a slow think for we and go be through a profit we to it's better quarters, down level position to going it

in there's goals strategic their with But changed that's Okay. nothing long-term you?

Yes, working them and I work quality don't think we that. continue so. on to on with well, overall They're as their

So...

be And you the give of licensing, us of idea could home on just kind what the opportunity finally, Okay. furnishings. a can then rough there for

have point. also we're about beverages restaurants talking at the You and one

obviously, continue, There's that to a obviously the home Well, what in they think, significant have developed. is a, successful furnishings Right. we be is minimum for to long being marketplace. But term, just the guarantee.

we're So have be. has partner premature the rates would long-term we but this royalty time forecast a there to encouraged the table to at it's good that up aggressively, think I stepped what that

And about beverage? restaurants the possible and what Okay. the

Yes.

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good food. a it's So and it's and a a job, great minimum, good do but experience they

does the So that branding for us. royalty receive the for needle good Life, Salt we not but move

And do for are other opportunity areas there licensing? of think you

we're a for us, meaningful the brand really we move what get furnishings We inquiries, the you on. with lot the that to careful we the has and people believe put allow potential Again, as we'll imagine. home and but something can needle Life continue to as be about so, to be Salt of might excited

Your from Capital. question at next [indiscernible] Samir Patel comes

questions. got I've X

The first strategic. one is

business. XX production investing capital debottleneck months and Regarding to had even ago, that Delta record Group, levels, we're to XX some you

up built you inventory low the to and are cost of Now absorb production having volumes. have

go about plan being manage position don't future more on you in agile. Can the how you this potential talked depth more a into again? little for in fluctuations you You to that get demand

Yes.

production capital. rates, from that have not as Obviously, products vertical need limiting we interest production. and areas. source some with We've cut will are returns that So higher permanently we out our higher the outside we be taken on some loans, working we out in we

gross and turns in style be And margins SKU that. associated careful so with we'll and

know when Delta to more asked Okay. the to and you do And this, a I but directly, Group profitability? of Dana expect return couple others

Delta think or year this return early will year. either next to profitability, I the Group late

Okay.

bigger picture past your is, XX% the And is look, the then stock Okay. year. question over down

discount significant value. to a traded You liquidation

which is a with investors, today's lot a environment, might this, a all be extremely into we is Life lot scaring brand of potential. growth have in popular heading an particularly off debt, You Amidst of recession. Salt

reasons. today could your over which business than significantly probably for cap. I Life know own sell that segment You million, put is you've its in $XXX for market Salt more

when about to value the is talk maybe think time shareholders. for that you crystallize So

Well, I think there's a time. don't specific

that's of number the and some drove a over and in gains and businesses other businesses. businesses harvested sold the have we had invested We the what years and in the Life money our in Salt investment

do this adverse not certainly go down to we're through will year. that. But So think levels doing we our coming be fiscal significantly we debt as

on balance assets our have other as sheet. premium carrying over value current garner their We would well that a

from who standpoint. assets people are, our valued of what a value for our there's that book not on through look assets assets think a are books that and really lot tangible So are I see

So looks things to year, ways from provide on and and we we'll Board shareholders, that. continue to outside certainly, at advice and value our monetize to every meeting do experts that board every get

[Operator from question Instructions] Your at come Management. Wilen next Jamie will Wilen

further do in? opportunities. expect I'd In Furnishings, Home discussion when Bob, licensing like the kick you for to to to start that Hey,

So shipments it will next to with spring. start kick in

the royalty And forward -- some get everything? move the to a what going standard in payment with your getting you you as that kind that Okay. or royalty upfront licensing on is pay standard is a that against and is of they'll guarantee be

Yes.

to serious. payment decides guarantee and who's it upfront and an get serious not and a we So

you. Got

getting lot I lot using the Okay. assume? And Life of different a inquiries you're and of a name Life message, businesses and the Salt for Salt

Well, yes, discard lot that a we are won't and we Life things we lot, Salt that with. a do get not associated

a should as market it number hurt different this making of brand. many have going too but That's can we be in. a products, one are areas thought that that over work licensed that Life types licensing around So was And in our through harm. that mistakes, that one we could good of or fact, Salt thought acquired there's our are We really it back to build when marketplace. was People do continue, in in to now is idea no how call and into we with was proving managed we being us, fights and it. our areas the hurt starting being

As have is their And you York stores from stores? opened opened. going the difference are Salt other several that the are you've there beachfront retail any continue Life over and last New do significant stores to expand chain, what still just years? versus you that you Is you when the to New say trajectory basically Jersey,

Yes.

that that of to in will been going and yes, the interstates So or playbook centers beach. towns garner people in working we'll continue And be these beach has us, that. that all for are or on stores from on either

for Long York, New expect Island open. example, in to locations So the that are we on X

they're to same the stores that they're same other And and Yes. the -- I metrics expect the would metrics you size or assume? opened, all similar you've

correct. That's

target moving On you to how along your to forward, And operating margin? path? that what have you're is Okay. are what do there? that is And DTGXGo, you path on the get far as

target low to operating been is we've our now since business. in margins years the had level X about teens margin in It's operating that business. that So

then is building and equipment for hiring efficiency business less that run a workforce allows to So our that holiday focus a now us with year-round consistent and and of terminating thing. people and the more sort consistently

we've the need it's our garment best on but been So continue got be. we where quality ship at quality to [indiscernible] to goals having improvement yet work and equipment, on on first to to not ever we've And our Justin we're our efficiency we customers. equipment, Polaris mentioned, it and really to as have a

that versus percentage cotton? printing now what And garments polyester are of you're

It's a small amount is polyester.

Okay.

Okay. And lastly, then on inventories.

took You to shutdown weeks weeks June of take in quarter. production you Are any few the expecting a of quarter? this shutdown

coming we running unplanned additional we're completely we don't At but orders are of not No. now, anticipate pace that weeks the in, seeing full, right shutdown.

Okay. And people significantly you've your of better reduced held your inventory in levels by $XX million publicly the this is year, industry. some than which

in would carry them bit to you at So everybody little like as you shape where a would the levels I than your you better company be to forward? where move else. year-end? And inventory But like you're would assume

Yes.

we about where expect to got they well. through we make expect to obviously, a costs, we've as to come So And next units year be million reduction as by go year-end. some to dictated then down $XX will in further, we but least that inventories at further progress degree cotton continue on

last... Good. One

help return manufacturing Some to do that. higher we higher environment, generate But this we've shareholders. our productivity our a proper have for will a in to of that us to allow out the quarter taken rate interest in clearly, have inventory of

you. do Got current over is where internalization go, time? what to that your expect DTG And you On head to rate?

consumer garment. So when today, the that increase at and a important our how the it's we are expect finding made is XX% little experience overall over are and they to partners a to and particularly product consistency to perhaps that because faster receive finding rate equipment we Polaris is the on continue and it and of

people, garments might differently is and made we you, -- on poor where to that different ways and then in chemistry perform that, dying mean in but the it. it's by were garment on So have necessarily printing what process different I when we be a different don't that print quality colors going

we've the have end the we to consistent consumer. that shipped actually the So more can garment better quality,

also a get a that a helps great up? competitive having assume rate internalization goes bit Okay. them it you high down as manage and more quickly is little your but Obviously, rate really advantage, inventory I

their of digitally Absolutely. are on us didn't of saying, customers was after And quantities it customers what if we portal in years where print you our by live deliver. it, small wholesale about come order and going give Justin a and talking can garments for

great to channel of our that's So another digital. add a on distribution opportunity

Excellent.

You're these Thanks. moving the to doing businesses and job Bob. it, I high-margin, next a appreciate of level. them taking great high-growth

There telephone. are no further questions from the

will turn the any conference Bob back I remarks. So closing for to Humphreys

our Well, to shareholders forward work and on forward joining to thank third results. the speaking behalf us of quarter all and look look today, our Thank after to we you. for you you continuing to

you would all this does gentlemen, and call thank participating afternoon. please and to lines. your to like your conference for ask We Ladies you for conclude this disconnect