Delta Apparel(US:DLA)2024-02-12 16:00Financial 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].