dla20220615_10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 2, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-15583

DELTA APPAREL, INC.

(Exact name of registrant as specified in its charter)

Georgia		58-2508794
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

2750 Premier Parkway, Suite 100
Duluth, Georgia		30097
(Address of principal executive offices)		(Zip Code)

(678) 775-6900

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.01		DLA		NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☑

Non-accelerated filer ☐

Smaller reporting company ☑

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 19, 2022, there were outstanding 6,914,939 shares of the registrant’s common stock, par value of $0.01 per share, which is the only class of outstanding common or voting stock of the registrant.

Table of Contents

TABLE OF CONTENTS

		Page
PART I.	Financial Information

Item 1.	Financial Statements (unaudited):

	Condensed Consolidated Balance Sheets — June 2022 and September 2021	3

	Condensed Consolidated Statements of Operations — Three and Nine months ended June 2022 and June 2021	4

	Condensed Consolidated Statements of Comprehensive Income — Three and Nine months ended June 2022 and June 2021	5

	Condensed Consolidated Statements of Shareholders' Equity — Three and Nine months ended June 2022 and June 2021	6

	Condensed Consolidated Statements of Cash Flows — Nine months ended June 2022 and June 2021	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8
	Note A—Basis of Presentation and Description of Business	8
	Note B—Accounting Policies	9
	Note C—New Accounting Standards	9
	Note D—Revenue Recognition	10
	Note E—Inventories	11
	Note F—Debt	11
	Note G—Selling, General and Administrative Expense	11
	Note H—Stock-Based Compensation	12
	Note I—Purchase Contracts	12
	Note J—Business Segments	13
	Note K—Income Taxes	14
	Note L—Derivatives and Fair Value Measurements	14
	Note M—Legal Proceedings	15
	Note N—Repurchase of Common Stock	15
	Note O—Goodwill and Intangible Assets	16
	Note P—Subsequent Events	16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 4.	Controls and Procedures	20

PART II.	Other Information

Item 1.	Legal Proceedings	20

Item 1A.	Risk Factors	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 5.	Other Information	20

Item 6.	Exhibits	21

Signatures		22

Exhibits
EX-10.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Table of Contents

PART 1.

FINANCIAL INFORMATION

Item 1.

Financial Statements

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Amounts in thousands, except share amounts and per share data)

(Unaudited)

	*June 2022*			*September 2021*
Assets
Cash and cash equivalents	$	542		$	9,376
Accounts receivable, less allowances of $91 and $251, respectively		68,435			66,973
Other receivables		1,433			761
Income tax receivable		-			356
Inventories, net		227,671			161,703
Prepaid expenses and other current assets		3,798			3,794
Total current assets		301,879			242,963

Property, plant and equipment, net of accumulated depreciation of $105,998 and $99,225, respectively		75,144			67,564
Goodwill		37,897			37,897
Intangibles, net		24,627			26,291
Deferred income taxes		1,164			1,854
Operating lease assets		47,570			45,279
Equity method investment		10,277			10,433
Other assets		2,893			2,007
Total assets	$	501,451		$	434,288

Liabilities and Equity
Liabilities:
Accounts payable	$	76,244		$	52,936
Accrued expenses		25,936			29,949
Income taxes payable		666			379
Current portion of finance leases		8,265			6,621
Current portion of operating leases		8,044			8,509
Current portion of long-term debt		7,615			7,067
Current portion of contingent consideration		563			-
Total current liabilities		127,333			105,461

Long-term income taxes payable		2,841			3,220
Long-term finance leases		18,802			15,669
Long-term operating leases		40,940			38,546
Long-term debt		128,230			101,680
Long-term contingent consideration		-			1,897
Other non-current liabilities		1,591			3,621
Total liabilities	$	319,737		$	270,094

Shareholder's equity:
Preferred stock - $0.01 par value, 2,000,000 shares authorized, none issued and outstanding		-			-
Common stock - $0.01 par value, 15,000,000 authorized, 9,646,972 shares issued, and 6,914,939 and 6,974,660 shares outstanding as of June 2022 and September 2021, respectively		96			96
Additional paid-in capital		60,822			60,831
Retained earnings		166,882			146,860
Accumulated other comprehensive loss		(7	)		(786	)
Treasury stock - 2,732,033 and 2,672,312 shares as of June 2022 and September 2021, respectively		(45,432	)		(42,149	)
Equity attributable to Delta Apparel, Inc.		182,361			164,852
Equity attributable to non-controlling interest		(647	)		(658	)
Total equity		181,714			164,194
Total liabilities and equity	$	501,451		$	434,288

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	June 2022			June 2021			June 2022			June 2021

Net sales	$	126,875		$	118,666		$	369,319		$	322,015
Cost of goods sold		96,182			88,427			282,100			246,677
Gross profit		30,693			30,239			87,219			75,338

Selling, general and administrative expenses		22,416			19,914			59,613			53,005
Other (income), net		(1,018	)		(1,578	)		(1,947	)		(218	)
Operating income		9,295			11,903			29,553			22,551

Interest expense, net		1,971			1,735			5,370			5,225
Earnings before provision for income taxes		7,324			10,168			24,183			17,326
Provision for income taxes		1,087			2,019			4,149			4,032
Consolidated net earnings

SEC Form 10-Q filed by Delta Apparel Inc.