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
7,000
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 second 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 and six months ended March 2023 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
six months
ended March
2023 and March 2022,
we received dividends
from this investment
of $
1.2
1.1
million, respectively.
Our Ceiba Textiles
manufacturing facility is
leased
under an operating lease
arrangement with this Honduran
company. During the six months
ended March 2023
and March 2022, we
paid approximately $
0.9
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.