Core Points - FUJIFILM Healthcare Americas Corporation has been awarded a second four-year contract by the Defense Logistics Agency (DLA) for its surgical C-arm systems, specifically the Persona C mobile fluoroscopy system, to be deployed in multiple U.S. military medical treatment facilities [1][3] - The contract is valued at over $10 million and follows a competitive evaluation process where Fujifilm was selected for its technology, functionality, adaptability, service support, and cybersecurity compliance [3] - The first delivery and installation of the C-arm systems under this new contract is expected to begin in early Q1 of 2025, with additional installations planned over the next four years [2] Company Achievements - Fujifilm has previously been awarded a four-year contract in December 2021 for deploying its surgical C-arm technology at military medical facilities [2] - The company has also received grants from various branches of the U.S. Federal Government, including recent authorizations for its ASPIRE Cristalle Acquisition Workflow System and Synapse® 7x to operate on U.S. Department of Defense networks [4] Company Overview - FUJIFILM Healthcare Americas Corporation specializes in diagnostic imaging and medical informatics solutions, with a comprehensive range of technologies for disease detection, diagnosis, and treatment [6] - The company is headquartered in Lexington, Massachusetts, and is part of FUJIFILM Holdings Corporation, which operates globally across healthcare, electronics, business innovation, and imaging sectors [7]

[Company Information and Filing Details](index=1&type=section&id=Company%20Information%20and%20Filing%20Details) [Registrant Information](index=1&type=section&id=Registrant%20Information) Delta Apparel, Inc, a Georgia corporation, lists its common stock on the NYSE American under the ticker DLA and has filed all required reports - Company Name: DELTA APPAREL, INC, State of Incorporation: Georgia, Headquarters: 2750 Premier Parkway, Suite 100, Duluth, Georgia 30097[2](index=2&type=chunk) Registrant Details | Metric | Detail | | :--- | :--- | | Ticker Symbol | DLA | | Trading Market | NYSE American | | Security Class | Common Stock, $0.01 Par Value | | Telephone Number | (678) 775-6900 | - The company has filed all required reports in the past 12 months and has been subject to such filing requirements for the past 90 days[2](index=2&type=chunk) [Filer Status](index=2&type=section&id=Filer%20Status) The company is classified as an accelerated filer and a smaller reporting company but is not a large accelerated or emerging growth company Filer Type Status | Filer Type | Status | | :--- | :--- | | Large accelerated filer | No | | Accelerated filer | Yes | | Non-accelerated filer | No | | Smaller reporting company | Yes | | Emerging growth company | No | | Shell company | No | [Outstanding Shares](index=2&type=section&id=Outstanding%20Shares) As of May 7, 2024, the company had 7,051,153 shares of common stock outstanding - As of May 7, 2024, there were **7,051,153 shares** of the company's $0.01 par value common stock outstanding, which is the only class of common or voting stock[4](index=4&type=chunk) [PART I. Financial Information](index=7&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements (unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the company's unaudited condensed consolidated financial statements and accompanying notes for the period [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Key Balance Sheet Data (in thousands of U.S. dollars) | Metric | Mar 2024 | Sep 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 705 | 187 | 518 | 277.0% | | Accounts receivable, net | 35,206 | 45,130 | (9,924) | -22.0% | | Inventories, net | 156,894 | 212,365 | (55,471) | -26.1% | | Total current assets | 198,030 | 262,962 | (64,932) | -24.7% | | Goodwill | 19,917 | 28,697 | (8,780) | -30.6% | | Intangible assets, net | 20,556 | 21,694 | (1,138) | -5.2% | | Total assets | 365,899 | 455,238 | (89,339) | -19.6% | | Total current liabilities | 196,362 | 115,164 | 81,198 | 70.5% | | Total long-term liabilities | 63,597 | 189,879 | (126,282) | -66.5% | | Total liabilities | 259,949 | 305,043 | (45,094) | -14.8% | | Total shareholders' equity | 105,950 | 150,195 | (44,245) | -29.5% | - **Total current liabilities increased sharply by 70.5%**, primarily because the current portion of long-term debt grew from $16.6 million in September 2023 to $103.0 million in March 2024, reflecting debt reclassification due to a financial covenant breach under the U.S. Revolving Credit Facility[13](index=13&type=chunk)[35](index=35&type=chunk)[57](index=57&type=chunk) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Key Operations Data (in thousands of U.S. dollars, except per share data) | Metric | Three Months Ended Mar 30, 2024 | Three Months Ended Mar 30, 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | 78,936 | 110,335 | (31,399) | -28.5% | | Cost of sales | 75,580 | 94,126 | (18,546) | -19.7% | | Gross profit | 3,356 | 16,209 | (12,853) | -79.3% | | Selling, general and administrative expenses | 17,961 | 19,298 | (1,337) | -6.9% | | Goodwill impairment loss | 8,780 | - | 8,780 | N/A | | Operating loss | (24,436) | (5,354) | (19,082) | 356.4% | | Net loss | (36,300) | (6,998) | (29,302) | 418.7% | | Net loss attributable to shareholders | (36,294) | (6,992) | (29,302) | 419.1% | | Basic loss per share | (5.15) | (1.00) | (4.15) | 415.0% | Key Operations Data (in thousands of U.S. dollars, except per share data) | Metric | Six Months Ended Mar 30, 2024 | Six Months Ended Mar 30, 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | 158,869 | 217,630 | (58,761) | -27.0% | | Cost of sales | 146,767 | 187,798 | (41,031) | -21.9% | | Gross profit | 12,102 | 29,832 | (17,730) | -59.4% | | Selling, general and administrative expenses | 36,576 | 38,168 | (1,592) | -4.2% | | Goodwill impairment loss | 8,780 | - | 8,780 | N/A | | Operating loss | (29,384) | (7,980) | (21,404) | 268.2% | | Net loss | (44,834) | (10,597) | (34,237) | 323.1% | | Net loss attributable to shareholders | (44,822) | (10,557) | (34,265) | 324.6% | | Basic loss per share | (6.38) | (1.51) | (4.87) | 322.5% | [Condensed Consolidated Statements of Comprehensive Loss](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Key Comprehensive Loss Data (in thousands of U.S. dollars) | Metric | Three Months Ended Mar 30, 2024 | Three Months Ended Mar 30, 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net loss attributable to shareholders | (36,294) | (6,992) | (29,302) | 419.1% | | Other comprehensive (loss) income related to unrealized (loss) gain on derivatives, net of income tax | - | (30) | 30 | -100.0% | | Consolidated comprehensive loss | (36,294) | (7,022) | (29,272) | 416.9% | Key Comprehensive Loss Data (in thousands of U.S. dollars) | Metric | Six Months Ended Mar 30, 2024 | Six Months Ended Mar 30, 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net loss attributable to shareholders | (44,822) | (10,557) | (34,265) | 324.6% | | Other comprehensive (loss) income related to unrealized (loss) gain on derivatives, net of income tax | - | 39 | (39) | -100.0% | | Consolidated comprehensive loss | (44,822) | (10,518) | (34,304) | 326.1% | [Condensed Consolidated Statements of Shareholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Changes in Shareholders' Equity (in thousands of U.S. dollars) | Metric | Balance at Sep 30, 2023 | Balance at Mar 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Common stock | 96 | 96 | 0 | | Additional paid-in capital | 61,315 | 60,916 | (399) | | Retained earnings | 133,387 | 88,566 | (44,821) | | Accumulated other comprehensive income (loss) | - | - | 0 | | Treasury stock | (43,896) | (42,909) | 987 | | Equity attributable to Delta Apparel, Inc | 150,902 | 106,669 | (44,233) | | Equity attributable to noncontrolling interests | (707) | (719) | (12) | | **Total equity** | **150,195** | **105,950** | **(44,245)** | - **Total equity decreased by $44.2 million** from September 30, 2023, to March 30, 2024, primarily due to the net loss incurred during the period[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Key Cash Flow Data (in thousands of U.S. dollars) | Activity Type | Six Months Ended Mar 30, 2024 | Six Months Ended Mar 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Net cash from operating activities | 35,690 | (19,139) | 54,829 | | Net cash from investing activities | 4,563 | 1,922 | 2,641 | | Net cash from financing activities | (39,735) | 17,542 | (57,277) | | Net increase in cash and cash equivalents | 518 | 325 | 193 | | Cash and cash equivalents at end of period | 705 | 625 | 80 | - **Cash flow from operations shifted from a net outflow to a net inflow** compared to the prior year period, mainly driven by a significant reduction in inventory[25](index=25&type=chunk)[127](index=127&type=chunk) - The increase in cash flow from investing activities was primarily due to **$6.3 million in proceeds from the sale of the Knoxville facility**[25](index=25&type=chunk)[128](index=128&type=chunk) - Cash flow from financing activities shifted from a net inflow to a net outflow, primarily related to the **net repayment and drawing of debt**[25](index=25&type=chunk)[129](index=129&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) [Note A—Basis of Presentation and Description of Business](index=14&type=section&id=Note%20A%E2%80%94Basis%20of%20Presentation%20and%20Description%20of%20Business) - Delta Apparel, Inc is a vertically integrated, international apparel company with approximately 6,000 employees that designs, manufactures, sources, and sells core activewear and lifestyle apparel products under brands including Salt Life®, Soffe®, and Delta[27](index=27&type=chunk) - In the second quarter of fiscal 2024, the company **failed to comply with one or more financial covenants** under its U.S. Revolving Credit Facility, constituting an event of default, which led to debt being reclassified as current and raised substantial doubt about its ability to continue as a going concern[35](index=35&type=chunk)[57](index=57&type=chunk) - Since January 2024, certain suppliers have **discontinued previously allowed extended credit**, preventing the company from procuring sufficient production inputs and causing manufacturing facilities to operate below planned levels[35](index=35&type=chunk) [Note B—Accounting Policies](index=16&type=section&id=Note%20B%E2%80%94Accounting%20Policies) - The company's accounting policies are consistent with those described under "Significant Accounting Policies" in its Fiscal 2023 Annual Report on Form 10-K[37](index=37&type=chunk) [Note C—New Accounting Standards](index=16&type=section&id=Note%20C%E2%80%94New%20Accounting%20Standards) - The company adopted ASU No 2016-13 (Financial Instruments—Credit Losses) at the beginning of fiscal 2024, with no material impact on its financial condition, results of operations, cash flows, or disclosures[38](index=38&type=chunk) - The company is currently evaluating the impact of ASU No 2023-07 (Segment Reporting) and ASU No 2023-09 (Income Tax Disclosures), which will become effective in fiscal 2025 and 2026, respectively[39](index=39&type=chunk)[40](index=40&type=chunk) [Note D—Revenue Recognition](index=16&type=section&id=Note%20D%E2%80%94Revenue%20Recognition) Net Sales by Distribution Channel (in thousands of U.S. dollars) | Channel | Three Months Ended Mar 2024 | % of Total | Three Months Ended Mar 2023 | % of Total | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Retail | 3,729 | 5% | 3,156 | 3% | 573 | 18.2% | | DTC E-commerce | 1,392 | 1% | 1,163 | 1% | 229 | 19.7% | | Wholesale | 73,815 | 94% | 106,016 | 96% | (32,201) | -30.4% | | **Total Net Sales** | **78,936** | **100%** | **110,335** | **100%** | **(31,399)** | **-28.5%** | Net Sales by Reportable Segment (in thousands of U.S. dollars) | Segment | Three Months Ended Mar 2024 | Three Months Ended Mar 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Delta Group | 63,401 | 91,344 | (27,943) | -30.6% | | Salt Life Group | 15,535 | 18,991 | (3,456) | -18.2% | | **Total** | **78,936** | **110,335** | **(31,399)** | **-28.5%** | [Note E—Inventories](index=18&type=section&id=Note%20E%E2%80%94Inventories) Inventory Composition (in thousands of U.S. dollars) | Category | Mar 2024 | Sep 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Raw materials | 13,181 | 20,262 | (7,081) | -35.0% | | Work-in-process | 8,673 | 17,695 | (9,022) | -51.0% | | Finished goods | 135,040 | 174,408 | (39,368) | -22.6% | | **Inventories, net** | **156,894** | **212,365** | **(55,471)** | **-26.1%** | - **Net inventories decreased significantly by 26.1%** as of March 2024 compared to September 2023, reflecting the company's efforts to reduce stock across raw materials, work-in-process, and finished goods[43](index=43&type=chunk)[113](index=113&type=chunk) [Note F—Debt](index=18&type=section&id=Note%20F%E2%80%94Debt) - As of March 2024, the company had **$95.8 million outstanding** under its U.S. Revolving Credit Facility at an average interest rate of 9.1%[58](index=58&type=chunk) - In the second quarter of fiscal 2024, the company **failed to comply with one or more financial covenants** under its U.S. Revolving Credit Facility, constituting an event of default and resulting in the debt being classified as a current liability[57](index=57&type=chunk) Honduras and El Salvador Debt (in thousands of U.S. dollars) | Loan Type | Interest Rate | Maturity Date | Balance at Mar 2024 | | :--- | :--- | :--- | :--- | | Honduras Revolving Credit | 9.0% | Aug 2025 | 4,156 | | Honduras Term Loan 1 | 9.0% | Dec 2025 | 3,551 | | Honduras Term Loan 2 | 8.75% | May 2027 | 2,760 | | El Salvador Term Loan | 9.8% | Aug 2027 | 2,251 | [Note G—Selling, General and Administrative Expense](index=22&type=section&id=Note%20G%E2%80%94Selling,%20General%20and%20Administrative%20Expense) Selling, General and Administrative Expenses (in thousands of U.S. dollars) | Period | Three Months Ended Mar 2024 | Three Months Ended Mar 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | SG&A Expense | 17,961 | 19,298 | (1,337) | -6.9% | | Distribution Costs | 5,200 | 5,700 | (500) | -8.8% | | Period | Six Months Ended Mar 2024 | Six Months Ended Mar 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | SG&A Expense | 36,576 | 38,168 | (1,592) | -4.2% | | Distribution Costs | 10,100 | 11,200 | (1,100) | -9.8% | - Although SG&A expenses decreased in absolute terms, the **SG&A expense as a percentage of sales increased** due to the decline in net sales[104](index=104&type=chunk) [Note H—Stock-Based Compensation](index=22&type=section&id=Note%20H%E2%80%94Stock-Based%20Compensation) Stock-Based Compensation Expense (in thousands of U.S. dollars) | Period | Three Months Ended Mar 2024 | Three Months Ended Mar 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Stock-based compensation expense | 100 | 400 | (300) | -75.0% | | Income tax benefit | 33 | 200 | (167) | -83.5% | | Period | Six Months Ended Mar 2024 | Six Months Ended Mar 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Stock-based compensation expense | 700 | 1,000 | (300) | -30.0% | | Income tax benefit | 200 | 300 | (100) | -33.3% | - As of March 2024, total unrecognized compensation cost related to unvested awards was **$1.0 million**, expected to be recognized over 1.7 years[71](index=71&type=chunk) - In the December 2023 quarter, the company issued **70,150 restricted stock units and 70,150 performance stock units**, scheduled to vest upon the filing of the fiscal 2025 Form 10-K report[67](index=67&type=chunk)[68](index=68&type=chunk) [Note I—Purchase Contracts](index=24&type=section&id=Note%20I%E2%80%94Purchase%20Contracts) Minimum Payments Under Purchase Contracts (as of Mar 2024, in thousands of U.S. dollars) | Category | Amount | | :--- | :--- | | Yarn | 13,361 | | Finished fabric | 2,905 | | Finished products | 8,779 | | **Total** | **25,045** | [Note J—Business Segments](index=24&type=section&id=Note%20J%E2%80%94Business%20Segments) - The company operates through two reportable segments: the **Delta Group**, focusing on core activewear and the DTG2Go business, and the **Salt Life Group**, a lifestyle brand[74](index=74&type=chunk)[79](index=79&type=chunk) Segment Net Sales (in thousands of U.S. dollars) | Segment | Three Months Ended Mar 2024 | Three Months Ended Mar 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Delta Group | 63,401 | 91,344 | (27,943) | -30.6% | | Salt Life Group | 15,535 | 18,991 | (3,456) | -18.2% | | **Total Net Sales** | **78,936** | **110,335** | **(31,399)** | **-28.5%** | | Segment | Six Months Ended Mar 2024 | Six Months Ended Mar 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Delta Group | 133,004 | 188,354 | (55,350) | -29.4% | | Salt Life Group | 25,865 | 29,276 | (3,411) | -11.6% | | **Total Net Sales** | **158,869** | **217,630** | **(58,761)** | **-27.0%** | Segment Operating (Loss) Income (in thousands of U.S. dollars) | Segment | Three Months Ended Mar 2024 | Three Months Ended Mar 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Delta Group | (22,350) | (7,487) | (14,863) | 198.5% | | Salt Life Group | 197 | 4,649 | (4,452) | -95.8% | | **Total Segment Operating Loss** | **(22,153)** | **(2,838)** | **(19,315)** | **680.6%** | | Segment | Six Months Ended Mar 2024 | Six Months Ended Mar 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Delta Group | (21,860) | (7,363) | (14,497) | 196.9% | | Salt Life Group | (1,933) | 4,866 | (6,799) | -139.7% | | **Total Segment Operating Loss** | **(23,793)** | **(2,497)** | **(21,296)** | **852.9%** | [Note K—Income Taxes](index=26&type=section&id=Note%20K%E2%80%94Income%20Taxes) - For the six months ended March 30, 2024, the company's **effective income tax rate was (23.1%)** compared to 27.5% in the prior year period, primarily due to recording an $8.4 million valuation allowance against deferred tax assets and the losses incurred[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) [Note L—Fair Value Measurements](index=27&type=section&id=Note%20L%E2%80%94Fair%20Value%20Measurements) - As of March 2024 and September 2023, the carrying values of fixed-rate debt approximated their fair values, which were based on quoted market prices for similar securities or current interest rates for debt with similar remaining maturities (Level 2 fair value measurements)[86](index=86&type=chunk) [Note M—Legal Proceedings](index=28&type=section&id=Note%20M%E2%80%94Legal%20Proceedings) - The company is involved in various legal claims and proceedings but does not currently believe these actions will have a material adverse effect on its operations, financial condition, or liquidity, supported by legal defenses, insurance, and indemnification provisions[88](index=88&type=chunk) [Note N—Repurchase of Common Stock](index=28&type=section&id=Note%20N%E2%80%94Repurchase%20of%20Common%20Stock) - The company **did not purchase any shares of its common stock** under its repurchase program as of March 2024; cumulative repurchases since inception total 3,735,114 shares for $56.4 million[89](index=89&type=chunk) - As of March 2024, **$3.6 million remains available** for future repurchases under the stock repurchase program, which has no expiration date[89](index=89&type=chunk) [Note O—Goodwill and Intangible Assets](index=28&type=section&id=Note%20O%E2%80%94Goodwill%20and%20Intangible%20Assets) - In the second quarter of fiscal 2024, the company recorded an **$8.8 million goodwill impairment loss** for its DTG2Go reporting unit due to adverse market conditions, current year profitability, impacts on future business results, and a significant decline in market capitalization[91](index=91&type=chunk) Goodwill, Net (in thousands of U.S. dollars) | Segment | Mar 2024 | Sep 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Delta Group | - | 8,780 | (8,780) | -100.0% | | Salt Life Group | 19,917 | 19,917 | 0 | 0.0% | | **Total Goodwill, Net** | **19,917** | **28,697** | **(8,780)** | **-30.6%** | Intangible Assets, Net (in thousands of U.S. dollars) | Category | Mar 2024 | Sep 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Tradenames/Trademarks | 10,350 | 10,616 | (266) | -2.5% | | Customer relationships | 3,077 | 3,447 | (370) | -10.7% | | Technology | 6,124 | 6,574 | (450) | -6.8% | | License agreements | 1,005 | 1,057 | (52) | -4.9% | | **Total Intangible Assets, Net** | **20,556** | **21,694** | **(1,138)** | **-5.2%** | [Note P—Sale-Leaseback Transaction](index=28&type=section&id=Note%20P%E2%80%94Sale-Leaseback%20Transaction) - On December 28, 2023, the company completed a sale-leaseback of its property in the Knoxville, Tennessee area for **$6.5 million**, recognizing a gain on sale of $5.4 million[95](index=95&type=chunk) - The company used the net proceeds to repay outstanding borrowings under its U.S. asset-based revolving credit facility and will continue to operate at the property under an initial six-year lease term[95](index=95&type=chunk) [Note Q—Subsequent Events](index=29&type=section&id=Note%20Q%E2%80%94Subsequent%20Events) - In May 2024, the largest customer of the DTG2Go digital-first model notified the company it no longer intends to source products from the platform, which may trigger further long-lived asset impairment indicators in the third quarter of fiscal 2024[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's Q2 FY2024 performance, liquidity challenges, and strategic adjustments amid industry downturns [Business Outlook](index=30&type=section&id=Business%20Outlook) - The company saw signs of improving activewear demand in the second quarter, but the **18-plus month industry downturn** continues to impact operations and production levels[98](index=98&type=chunk) - **Managing liquidity and preserving access to capital** are the company's highest priorities, with debt and inventory levels both down over 35% year-over-year[98](index=98&type=chunk) - The company has decided to refocus its Delta Activewear business on the Delta Direct and Retail Direct channels and is exploring the **sale of its El Salvador manufacturing operations**[98](index=98&type=chunk) - The company continues to explore the **sale of its Salt Life business**, a sale-leaseback transaction for its Fayetteville, North Carolina campus, and other strategic initiatives[99](index=99&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Summary of Operating Results (in millions of U.S. dollars, except per share data) | Metric | Q2 2024 | Q2 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | 78.9 | 110.3 | (31.4) | -28.5% | | Gross Margin | 4.3% | 14.7% | -10.4% | -70.7% | | Operating Loss | (24.4) | (5.3) | (19.1) | 356.4% | | Net Loss Attributable to Shareholders | (36.3) | (7.0) | (29.3) | 419.1% | | Basic Loss Per Share | (5.15) | (1.00) | (4.15) | 415.0% | - The decline in gross margin was primarily driven by **reduced production volumes and production curtailment costs**; adjusted for these costs, the second quarter gross margin was 14.4%[102](index=102&type=chunk) - Other expense included an **$8.8 million goodwill impairment charge** and $1.7 million in restructuring costs, partially offset by a $5.4 million gain on the sale of the Knoxville facility[105](index=105&type=chunk) Key Balance Sheet Metrics (in millions of U.S. dollars) | Metric | Mar 2024 | Sep 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Accounts receivable, net | 35.2 | 45.1 | (9.9) | -22.0% | | Inventories, net | 156.9 | 212.4 | (55.5) | -26.1% | | Total net debt | 126.2 | 165.3 | (39.1) | -23.7% | | Cash on hand and credit availability | 11.8 | N/A | N/A | N/A | [Non-GAAP Financial Measures](index=32&type=section&id=Non-GAAP%20Financial%20Measures) - The company provides non-GAAP financial information, such as adjusted gross margin, operating income, and net income, as well as EBITDA and Adjusted EBITDA, to help investors evaluate ongoing operating performance[115](index=115&type=chunk) Adjusted Financial Metrics (Three Months Ended Mar 2024, in thousands of U.S. dollars) | Metric | GAAP | Adjustments | Adjusted | | :--- | :--- | :--- | :--- | | Gross Margin | 3,356 | Production Curtailment Costs: 8,027 | 11,383 | | Operating Loss | (24,436) | Production Curtailment Costs: 8,027; Restructuring Costs: 1,664; Goodwill Impairment: 8,780 | (5,965) | | Net Loss | (36,294) | Production Curtailment Costs: 8,027; Restructuring Costs: 1,664; Goodwill Impairment: 8,780; Tax Impact: 9 | (17,814) | | EBITDA | (20,910) | Production Curtailment Costs: 8,027; Restructuring Costs: 1,664; Goodwill Impairment: 8,780; Tax Impact: 9 | (2,439) (Adjusted EBITDA) | - Adjustments include **production curtailment costs** (unabsorbed fixed costs, temporary unemployment benefits), **restructuring costs** (employee severance), and the **goodwill impairment charge** for the DTG2Go business[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) - For the six months ended March 30, 2024, **operating activities provided $35.7 million in cash**, compared to a $19.1 million use of cash in the prior year period, primarily due to inventory reduction[127](index=127&type=chunk) - **Investing activities provided $4.6 million in cash**, mainly from the $6.2 million in proceeds from the sale of the Knoxville facility[128](index=128&type=chunk) - **Financing activities used $39.7 million in cash**, primarily related to the net repayment and drawing of debt[129](index=129&type=chunk) - The company's current liquidity position raises **substantial doubt about its ability to continue as a going concern** for the next 12 months, requiring it to raise capital or obtain other liquidity to meet operational needs and debt obligations[133](index=133&type=chunk) [Share Repurchase Program](index=38&type=section&id=Share%20Repurchase%20Program) - The company made **no share repurchases** during the current fiscal year through March 30, 2024[136](index=136&type=chunk) - The share repurchase program has cumulatively repurchased **$56.4 million in stock**, with $3.6 million remaining available for repurchase as of the end of the second quarter of fiscal 2024[136](index=136&type=chunk) [Critical Accounting Policies](index=38&type=section&id=Critical%20Accounting%20Policies) - The company's critical accounting policies are consistent with those described in its Fiscal 2023 Annual Report on Form 10-K, except for the adoption of the accounting standard related to the measurement of credit losses[138](index=138&type=chunk) - The most significant estimates and assumptions involve **revenue recognition, accounts receivable, inventories, the carrying value of goodwill, and income tax accounting**[137](index=137&type=chunk) [Environmental and Other Regulatory Matters](index=38&type=section&id=Environmental%20and%20Other%20Regulatory%20Matters) - The company is subject to various environmental laws and extensive regulations covering product labeling, distribution, import, marketing, and sales[139](index=139&type=chunk) - The company incurs annual expenditures to comply with environmental standards and does not currently anticipate a material adverse effect, though future regulatory changes could lead to additional costs[140](index=140&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures with no material changes to internal controls this quarter [Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, with the participation of the CEO and Chief Accounting Officer, evaluated the effectiveness of the company's disclosure controls and procedures as of March 30, 2024, and concluded that they were effective[142](index=142&type=chunk) [Changes in Internal Control Over Financial Reporting](index=38&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There were no changes in internal control over financial reporting during the quarter ended March 2024 that have materially affected, or are reasonably likely to materially affect, such controls[144](index=144&type=chunk) [PART II. Other Information](index=40&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note M—Legal Proceedings in Part I, Item 1 for detailed information on the company's legal matters - Refer to Note M—Legal Proceedings in Part I, Item 1[145](index=145&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including strategic plan uncertainty, supply chain disruptions, operating losses, and debt covenant defaults - The company's future success depends on its ability to implement strategic plans, including asset monetization and business restructuring, with **no guarantee of success**[147](index=147&type=chunk) - **Volatility in cotton and other raw material prices** could disrupt the supply chain and harm the business, as the company may be unable to pass costs to customers or may face inventory costs higher than new production costs[148](index=148&type=chunk) - In the second quarter of fiscal 2024, **liquidity issues prevented the company from procuring sufficient production inputs**, causing manufacturing facilities to operate below capacity, which increased unit costs and reduced gross margins[151](index=151&type=chunk) - The company incurred **operating losses in fiscal 2023 and the first six months of fiscal 2024** and failed to comply with certain EBITDA and other thresholds in its U.S. asset-based revolving credit facility, constituting an event of default[155](index=155&type=chunk)[157](index=157&type=chunk) - The company's financial statements are prepared on a going concern basis, but **substantial doubt exists about its ability to continue as a going concern**, requiring it to raise capital or obtain other liquidity to avoid a material adverse effect on the business[158](index=158&type=chunk) - The company recorded **goodwill impairment charges of $9.2 million in fiscal 2023 and $8.8 million in March 2024**, and may need to record further impairments in the future[159](index=159&type=chunk)[160](index=160&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section refers to Note N—Repurchase of Common Stock in Part I, Item 1 for details on the company's common stock repurchases - Refer to Note N—Repurchase of Common Stock in Part I, Item 1[162](index=162&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) This section discloses personnel changes on the company's Board of Directors and among its executive officers - Dr Bill C Hardgrave **resigned from the company's Board of Directors** on May 6, 2024[164](index=164&type=chunk) - Justin M Grow has notified the company of his **resignation as Executive Vice President, Chief Administrative Officer**, effective July 2, 2024[164](index=164&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q report, including officer certifications and interactive data files - Exhibits include certifications by the CEO and Chief Accounting Officer pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act[165](index=165&type=chunk)[166](index=166&type=chunk) - Also included are the Inline XBRL Instance Document and related taxonomy extension, calculation, definition, label, and presentation linkbase files[166](index=166&type=chunk) [Signatures](index=44&type=section&id=Signatures) [Signatures](index=44&type=section&id=Signatures) The report was duly signed on May 9, 2024, by the company's Chief Accounting Officer - This report has been signed on May 9, 2024, by Nancy P Bubanich, Chief Accounting Officer of Delta Apparel, Inc[169](index=169&type=chunk)

Delta Apparel, Inc. (DLA) posted first-quarter fiscal 2024 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Both metrics decreased year over year. The company expressed a cautious outlook for the remainder of the fiscal year, anticipating flat demand across most of its markets relative to the previous year.Despite the challenging start to the fiscal year, Delta Apparel remains focused on managing liquidity and working capital. The company is also evaluating options to generate ...

Delta Apparel (DLA) came out with a quarterly loss of $0.94 per share versus the Zacks Consensus Estimate of a loss of $0.91. This compares to loss of $0.51 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -3.30%. A quarter ago, it was expected that this maker of branded and private-label apparel would post a loss of $0.80 per share when it actually produced a loss of $0.72, delivering a surprise of 10%.Over the last four quart ...

Yes, exact, debt levels. Yeah. I think more to come on that as we just work through the options that are accessible to us and work with our lenders and other sources of liquidity. Got it. And then on the Activewear business, where does the demand profile stand relative to maybe how it was three months ago or six months ago? Is it at all changing in terms of what you're seeing out of the industry? And Thank you. Best of luck. Operator Thank yo0u. [Operator Instructions] There are no further questions at this ...

Financial Performance - Net sales for the first quarter of fiscal 2024 were $79.9 million, down 25.5% from $107.3 million in the prior year[100]. - Delta Group segment net sales decreased to $69.6 million, a decline of 28.2% from $97.0 million year-over-year, although units sold in the Delta Direct channel increased by 6%[101]. - Salt Life Group segment net sales were $10.3 million, slightly up from the prior year, with growth in direct-to-consumer channels offset by weakness in wholesale[102]. - Gross margins for the first quarter were 10.9%, down from 12.7% in the prior year, primarily due to Production Curtailment Costs; adjusted gross margins were 12.6%[103]. - Operating loss for the first quarter was $4.9 million, or (6.2%) of sales, compared to a loss of $2.6 million, or (2.4%) of sales in the prior year[107]. - Net loss attributable to shareholders for the first quarter was $8.5 million, or ($1.22) per share, compared to a net loss of $3.6 million, or ($0.51) per share in the prior year[114]. - The company reported a net loss of $8.5 million for the three months ended December 2023, compared to a net loss of $3.6 million in the same period last year[122]. Cash Flow and Debt Management - Total net debt decreased by $20.9 million to $144.4 million at December 2023, reflecting efforts to reduce working capital[117]. - Cash on hand and availability under the U.S. revolving credit facility totaled $7.4 million at December 2023[117]. - Operating cash flows provided $15.4 million for the three months ended December 2023, a significant increase from net cash used in operations of $11.9 million in the prior year[127]. - Cash provided by investing activities totaled $5.9 million, primarily due to proceeds of $6.2 million from the sale of a facility[128]. - Financing activities resulted in $21.1 million in cash used, compared to cash provided of $9.6 million in the same period last year, mainly due to debt repayments[129]. Capital Expenditures and Future Outlook - The company anticipates a reduction in capital expenditures for fiscal 2024[128]. - The total amount repurchased under the share repurchase program is $56.4 million, with $3.6 million remaining under the existing authorization[135]. - The company faces substantial doubt regarding its ability to continue as a going concern over the next 12 months, indicating a need for additional capital[132]. Segment Performance - Adjusted operating income for the Delta Group Segment was $2.65 million, with an adjusted gross margin of $5.41 million, representing 7.8% of sales[122]. - The Salt Life Group Segment reported an operating loss of $2.13 million and an EBITDA of $(1.6) million for the three months ended December 2023[124]. - Adjusted EBITDA for the Delta Group Segment was reported at $5.69 million[123]. Environmental Compliance - The company is subject to various federal, state, and local environmental laws and regulations concerning wastewater discharges, air emissions, and solid waste disposal[138]. - The company incurs annual capital and other expenditures to comply with increasingly stringent environmental standards and regulations[139]. - Current expenditures for compliance are not expected to have a material adverse effect on the company's operations, financial condition, or liquidity[139]. - Future changes in regulations or undiscovered compliance issues could require substantial additional expenditures[139]. - The company believes it is currently in compliance with all applicable environmental and regulatory requirements[139]. - The extent of potential liability for past compliance failures cannot be determined and could adversely affect the company's operations and financial condition[139]. Retail Expansion - Salt Life expanded its retail footprint with a new store in Virginia, bringing the total to 28 stores, and the eCommerce channel continued to grow[98].

DULUTH, Ga.--(BUSINESS WIRE)--Delta Apparel, Inc. (NYSE American: DLA), a leading provider of core activewear, lifestyle apparel products, and on-demand digital print strategies, today announced that it will report its fiscal year 2024 first quarter results on Monday, February 12, 2024, after the market closes. At 4:30 p.m. ET on that day, the Company will also hold a conference call with senior management to discuss its financial results. The Company invites you to join the call by dialing 888-886-7786. If ...

Sustainability and Environmental Impact - In 2023, electricity usage at the Ceiba Textiles facility was reduced by 30.8% compared to the 2018 baseline due to the installation of a solar power array[50]. - Total greenhouse gas emissions were reduced by 26.7% in 2023 compared to the 2018 baseline, avoiding the equivalent of 12,634 metric tons of CO2 emissions[51]. - The company implemented a system that reuses leftover dye water, saving approximately 4 million gallons of water per year[56]. - In 2023, water intensity rose by 2.6% against the 2018 baseline, primarily due to reduced fabric production, while absolute water consumption decreased by 26.6%[57]. - The steam textile dryer installed in 2022 is capable of drying 66% more pounds of fabric per week while using 25% less energy[54]. - The company has maintained a "Green" status for compliance with dyes and chemicals since 2017, indicating the highest level of compliance[66]. - The company is committed to sustainable sourcing and does not source cotton from regions with water stress[68]. - The company is subject to various federal, state, and local environmental laws and regulations, including wastewater discharges and air emissions[96]. - Compliance with environmental standards incurs annual capital and other expenditures, but the company does not expect these to materially affect operations or financial condition[97]. - Future changes in regulations could require substantial additional expenditures, although current compliance is believed to be satisfactory[97]. Production and Sourcing - In fiscal years 2023 and 2022, approximately 60% and 80% of the fabrics used in internally produced garments were manufactured in-house[40]. - Less than 10% of total products were sourced from third-party suppliers in fiscal years 2023 and 2022[40]. - Over 90% of Delta Apparel's garments are created with U.S. cotton, which is known for its quality and sustainability practices[68]. - Delta Apparel purchased approximately 13,276 metric tons of yarn during fiscal year 2023[71]. Customer and Market Engagement - The company shipped products to approximately 6,600 customers in fiscal year 2023, with no single customer accounting for more than 10% of total sales[45]. - The company operates seven distribution facilities across the U.S. to support quick-turn needs of customers[42]. Employee Relations and Safety - Delta Apparel's 2023 incident rate for total recordable cases was 0.2%, significantly lower than the apparel industry average incident rate of 1.7%[85]. - Delta Apparel provided more than 114,000 hours of professional development and safety training for employees in 2023[82]. - Approximately 90% of employees at two facilities in Honduras are party to multi-year collective bargaining agreements, indicating strong labor relations[76]. - Delta Apparel's employee base consists of approximately 6,811 employees, with a diverse gender distribution of 47% male and 53% female[78]. Corporate Strategy and Assessment - Delta Apparel's self-assessment using the Higg Index resulted in a total score in the upper quartile compared to industry competitors[72]. - The company aims to maintain competitive advantages through integrated design, manufacturing, sourcing, and marketing capabilities[93]. - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[227].

Financial Data and Key Metrics Changes - For the fiscal year 2023, total sales were $415.4 million, a decrease of 14% from $484.9 million in the prior year [4][30] - Gross margins for the fourth quarter were 11.2%, down from 18.7% in the prior year, primarily due to production curtailments and inflationary cotton costs [28][67] - Net income for the quarter was a loss of $16.4 million or $2.34 per share, compared to a loss of $281,000 or $0.04 per share in the prior year [29][70] Business Line Data and Key Metrics Changes - The Salt Life Group segment net sales were $59 million, slightly down from $60 million in the prior year [30] - Delta Group segment net sales were $356.3 million, down from $424.8 million in the prior year [30] - Salt Life's same-store sales for the fourth quarter were flat year-over-year, with a 4% decrease for the full year due to choppy retail traffic [21][46] Market Data and Key Metrics Changes - The activewear market showed signs of stabilization, but overall business was impacted by high inventory levels and a higher interest rate environment [37][40] - E-commerce sales for Salt Life grew 41% year-over-year for the quarter and 54% for the year, indicating strong performance in direct-to-consumer channels [46] Company Strategy and Development Direction - The company is focused on reducing working capital, controlling costs, and maintaining high service levels to drive long-term growth [9][58] - Strategic initiatives include transitioning operations to more efficient facilities and optimizing the cost structure to generate higher returns [11][35] - The company plans to continue investing in product development and decoration platforms to drive higher margin sales growth [19][24] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment remains challenging due to high cotton prices and reduced demand, but they expect conditions to improve in fiscal 2024 [4][10] - The company anticipates net sales in the range of $400 million to $415 million for fiscal 2024, with operating profit margins between approximately 2% and 3.5% [58] Other Important Information - The company is conducting a strategic review of its Salt Life business following an unsolicited purchase offer [6] - The company expects to realize approximately $31.5 million from sale-leaseback transactions of several properties [15] Q&A Session Summary Question: What is the level of demand going forward? - Management indicated that demand remains choppy, with some areas like ad specialty and e-retailer businesses performing well, while others are slower [74] Question: When do gross margins normalize? - Management expects to see benefits from lower cotton costs starting in the second quarter of fiscal 2024 [78] Question: What is the outlook for new store openings for Salt Life? - One new store is expected to open in Virginia, with no other leases signed at this time [84]

Financial Performance - Net sales for Q3 fiscal 2023 were $106.3 million, a decline of 16% from $126.9 million in Q3 fiscal 2022[84]. - The Delta Group segment net sales decreased 16% to $89.1 million in Q3 fiscal 2023 compared to $106.0 million in the prior year[85]. - Salt Life Group segment net sales declined 18% to $17.2 million in Q3 fiscal 2023, while direct-to-consumer sales grew over 100% in ecommerce[87]. - Operating loss for Q3 fiscal 2023 was $4.5 million, a decrease of 148% from an operating profit of $9.3 million in Q3 fiscal 2022[93]. - Net loss attributable to shareholders for Q3 2023 was $6.3 million, or $0.90 per diluted share, compared to net income of $6.2 million, or $0.88 per diluted share in the prior year[100]. - Adjusted net income for the first nine months of fiscal 2023 was $7.2 million, or $1.02 per diluted share, excluding Production Curtailment & Cotton Costs and Restructuring Costs[100]. Cost Management and Savings - The company expects to achieve annual cost savings of up to $6 million from transitioning production to a lower-cost platform in Central America[80]. - Gross margins for Q3 fiscal 2023 were 13.1%, down from 24.2% in the prior year, primarily due to production curtailments and inflationary cotton costs[88]. Sales Forecast and Projections - For fiscal year 2024, the company anticipates net sales in the range of $410 to $425 million with operating profit margins of 3.25% to 4.25%[83]. Debt and Inventory Management - Inventory was reduced by approximately 20% and long-term debt decreased by approximately 15% from recent highs[80]. - Accounts receivable decreased to $41.7 million as of June 2023 from $68.2 million in September 2022, with Days Sales Outstanding (DSO) improving to 36 days from 52 days[101]. - Net inventory as of June 2023 was $226.2 million, a decrease of $22.3 million from September 2022, attributed to lower input costs and a decrease in units on hand[101]. - Total net debt was $166.2 million at June 2023, a decrease of $4.4 million from September 2022[102]. Cash Flow and Expenditures - Operating cash flows provided $10.8 million for the nine months ended June 2023, compared to net cash used in operations of $13.4 million in the prior year[110]. - Capital expenditures for the first nine months of 2023 were $3.5 million, down from $11.6 million in the same period last year, with an anticipated total of approximately $8.0 million for fiscal 2023[111]. - Cash used in financing activities was $11.7 million during the nine months ended June 2023, primarily for debt repayments[112]. Share Repurchase and Compliance - The company did not repurchase any shares in the June 2023 quarter, with a total of $56.4 million repurchased to date and $3.6 million remaining under the repurchase program[117]. - The company is currently in compliance with the applicable EBITDA covenant in its U.S. revolving credit facility as of June 2023[116]. Taxation - The effective tax rate for the nine-month period ended June 2023 was 27.0%, compared to 17.2% for the same period in the prior year[99]. Business Growth Initiatives - The DTG2Go business is expected to achieve double-digit sales growth due to recent technology and consumer satisfaction initiatives[82].