Delta Apparel(US:DLA)2023-08-08 16:00Financial 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].