Note A— Description of Business and Basis of Presentation
Delta Apparel, Inc. (collectively with DTG2Go, LLC, Salt Life, LLC, M.J. Soffe, LLC, and other subsidiaries, "Delta Apparel," "we," "us," "our," or the "Company") is
a vertically-integrated, international apparel company with approximately
8,500
employees worldwide. We design, manufacture,
source, and market a diverse portfolio
of core activewear and lifestyle apparel products under our primary brands of Salt Life®, Soffe®, and Delta. We are a
market leader in the on-demand, digital print and
fulfillment industry,
bringing DTG2Go's proprietary
technology and innovation
to our customers'
supply chains.
We
specialize in selling
casual and
athletic products
through a variety of distribution
channels and tiers, including outdoor
and sporting goods retailers,
independent and specialty stores,
better department stores and mid-tier
retailers, mass merchants, eRetailers, the U.S.
military, and through our
business-to-business digital platform. Our products are also
made available direct-to-consumer
on our ecommerce sites
and in our
branded retail stores.
Our diversified go-to-market
strategy allows us
to capitalize on
our strengths in providing
activewear and lifestyle
apparel products to a broad and evolving customer base whose
shopping preferences may span multiple retail channels.
We design and internally manufacture the majority
of our products, with more
than 90% of the apparel
units that we sell sewn
in our own facilities.
This allows us to
offer
a high degree of
consistency and quality, leverage
scale efficiencies, and react quickly
to changes in trends within the
marketplace. We have
manufacturing operations
located in
the United
States, El
Salvador, Honduras,
and Mexico,
and we
use domestic
and foreign
contractors as
additional sources
of production.
Our distribution
facilities are strategically located throughout the United States to better serve our customers with same-day shipping on our catalog products and weekly
replenishments
to retailers. We
were incorporated in Georgia in 1999, and
our headquarters is located in Duluth, Georgia.
Our common stock trades on the NYSE
American under the
symbol “DLA."
We operate on a
52-53 week
fiscal year
ending on
the Saturday
closest to
September 30.
Our 2023 fiscal
year is
a 52-week
year and
will end
on September
30, 2023 ("fiscal
2023"). Accordingly, this Quarterly Report on Form 10-Q presents our results for our first quarter of fiscal 2023. Our 2022 fiscal year was a 52-week year and ended on
October 1, 2022 ("fiscal 2022").
For presentation purposes herein, all references to period
ended relate to the following fiscal years and dates:
We prepared the accompanying interim Condensed Consolidated
Financial Statements in accordance
with the instructions for Form
10-Q and Article 10 of Regulation S-
X. Accordingly, they do not include all of
the information and footnotes required
by U.S. generally accepted accounting
principles ("U.S. GAAP") for complete
financial
statements.
We
believe
these
Condensed
Consolidated
Financial
Statements include
all
normal
recurring
adjustments considered
necessary
for
a
fair
presentation.
Operating results for the three months ended December 2022 are not necessarily indicative of the results that may be expected for our fiscal 2023. Although our various
product lines are
sold on a
year-round basis,
the demand for
specific products or
styles reflects some
seasonality. By
diversifying our product
lines and go-to-market
strategies over
the years,
we have
reduced the
overall seasonality
of our
business. Consumer
demand for
apparel is
cyclical and
dependent upon
the overall
level of
demand for soft goods, which may or may not coincide with the overall level of discretionary consumer spending. These levels of demand change as regional, domestic
and international economic conditions
change. Therefore, the distribution
of sales by quarter in fiscal
2023 may not be indicative
of the distribution in future
years. These
Condensed Consolidated Financial Statements should be
read in conjunction with the
audited Consolidated Financial Statements and
footnotes included in our Annual
Report on Form 10-K for our fiscal 2022, filed with the United
States Securities and Exchange Commission (“SEC”).
Our Condensed Consolidated Financial Statements include the accounts of Delta
Apparel and its wholly-owned and majority-owned domestic and foreign subsidiaries.
We apply the equity method of accounting for our investment
in
31
% of the outstanding capital stock
of a Honduran company. During the three months ended December
2022 and December 2021, we received dividends
from this investment of $
0.9
0.6
million, respectively. Our Ceiba Textiles manufacturing facility is leased
under
an
operating
lease
arrangement with
this
Honduran
company.
During
the
three
months
ended
December
2022
and
December
2021, we
paid
approximately
$
0.4
million under this arrangement.
We make
available copies of materials we file
with, or furnish to, the SEC free
of charge at https://ir.deltaapparelinc.com.
The information found on our website is
not
part of this, or any
other, report that we
file with, or furnish to,
the SEC. In addition, we
will provide upon request, at no
cost, paper or electronic copies of our
reports
and other filings
made with the
SEC. Requests should be
directed to: Investor
Relations Department, Delta
Apparel, Inc., 2750 Premiere
Parkway, Suite
100, Duluth,
Georgia 30097. Requests can also be made by telephone to 864-232-5200,
or via email at investor.relations@deltaapparel.com.