Delta Apparel(DLA) - 2024 Q2 - Quarterly Report

Company Information and Filing Details Registrant Information 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] 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] Filer Status 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 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] PART I. Financial Information Item 1. Financial Statements (unaudited) This section presents the company's unaudited condensed consolidated financial statements and accompanying notes for the period Condensed Consolidated Balance Sheets 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][35][57] Condensed Consolidated Statements of Operations 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 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 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] Condensed Consolidated Statements of Cash Flows 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][127] - 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][128] - 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][129] Notes to Condensed Consolidated Financial Statements (unaudited) Note A—Basis of Presentation and Description of Business - 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] - 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][57] - 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] Note B—Accounting Policies - 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] Note C—New Accounting Standards - 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] - 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][40] Note D—Revenue Recognition 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 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][113] Note F—Debt - 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] - 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] 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 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] Note H—Stock-Based Compensation 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] - 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][68] Note I—Purchase Contracts 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 - 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][79] 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 - 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][84][85] Note L—Fair Value Measurements - 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] Note M—Legal Proceedings - 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] Note N—Repurchase of Common Stock - 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] - As of March 2024, $3.6 million remains available for future repurchases under the stock repurchase program, which has no expiration date[89] Note O—Goodwill and Intangible Assets - 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] 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 - 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] - 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] Note Q—Subsequent Events - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's Q2 FY2024 performance, liquidity challenges, and strategic adjustments amid industry downturns Business Outlook - 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] - 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] - 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] - 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] Results of Operations 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] - 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] 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 - 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] 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][124][125] Liquidity and Capital Resources - 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] - Investing activities provided $4.6 million in cash, mainly from the $6.2 million in proceeds from the sale of the Knoxville facility[128] - Financing activities used $39.7 million in cash, primarily related to the net repayment and drawing of debt[129] - 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] Share Repurchase Program - The company made no share repurchases during the current fiscal year through March 30, 2024[136] - 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] Critical Accounting Policies - 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] - The most significant estimates and assumptions involve revenue recognition, accounts receivable, inventories, the carrying value of goodwill, and income tax accounting[137] Environmental and Other Regulatory Matters - The company is subject to various environmental laws and extensive regulations covering product labeling, distribution, import, marketing, and sales[139] - 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] Item 4. Controls and Procedures Management confirms the effectiveness of disclosure controls and procedures with no material changes to internal controls this quarter Evaluation of Disclosure Controls and Procedures - 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] Changes in Internal Control Over Financial Reporting - 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] PART II. Other Information Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] - 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] - 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] - 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][157] - 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] - 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][160] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 5. Other Information 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] - Justin M Grow has notified the company of his resignation as Executive Vice President, Chief Administrative Officer, effective July 2, 2024[164] Item 6. Exhibits 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][166] - Also included are the Inline XBRL Instance Document and related taxonomy extension, calculation, definition, label, and presentation linkbase files[166] Signatures 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]