Supplier Delta Apparel, Inc. (PPAI 188431, S9) has released financial results for its 2021 fiscal fourth quarter and full year, which ended October 2. On an annual basis, net sales were $436.8 million, up 14.6 percent from $381 million in the prior fiscal year. On a quarterly basis, although net sales of $114.7 million in fourth quarter 2021 were down from $116.7 million in the prior year fourth quarter, 2020’s fourth quarter was a 14-week quarter and calculated on a comparable 13-week quarter, sales increased 5.9 percent from the previous year.

“Our fourth-quarter and full-year performance, which outpaced our expectations, showcases the strength of our unique business model servicing diversified sales channels using our innovative supply chain technologies and vertically integrated, flexible manufacturing platform,” says Robert W. Humphreys, the supplier’s chairman and CEO. “We ended the fiscal year on a positive note, with broad-based fourth-quarter top-line performance and solid margin expansion. I am incredibly proud of our entire organization whose hard work has enabled us to post these extraordinary results.”

He credits the company’s Salt Life brand for creating brand awareness and consumer engagement that is driving exceptional growth in the company’s retail stores and in the wholesale business. Within the Delta Group, he says the company continues to see strong demand from brands, retailers and retail license accounts utilizing its comprehensive and diverse services. “With record-level manufacturing output we are rebuilding our inventory levels and I am confident we are poised to continue to deliver outstanding results in fiscal 2022 and beyond. We believe our solid financial position, including historically low debt leverage at only 2.5 times EBITDA, and strong cash flows allow us to fund our growth initiatives while also providing liquidity for other actions to increase shareholder value,” he says.

Fourth quarter 2021’s net sales performance showed the Delta Group and Salt Life Group segments up five percent and 13.8 percent, respectively. The company’s gross margin improved 170 basis points in fourth quarter to 23.1 percent from 21.4 percent in the prior-year quarter, driven by year-over-year improvement in both the Delta Group and Salt Life Group segments. Selling, general and administrative (SG&A) expenses increased slightly compared to fourth quarter 2020 to $17.7 million, or 15.5 percent of sales. The company notes that its SG&A costs as a percent of sales increased year-over-year primarily from higher distribution labor costs and the previous year benefiting from favorable adjustments to credit risk reserves.

Operating income in fiscal fourth quarter 2021 was $10.1 million, a 22.6-percent improvement from same quarter in 2020, resulting in net income of $6.9 million, or $0.96 per diluted share, compared to $5 million, or $0.71 per diluted share, in the prior-year period. Other income includes a $1.2 million favorable adjustment to contingent consideration associated with the fiscal year 2018 digital print acquisition. Fourth quarter last year included a favorable adjustment of $400,000.

For the fiscal full year, net sales in the Delta Group and Salt Life Group segments increased 12.5 percent and 33.9 percent, respectively, over the previous year. The company’s gross profit increased 49 percent to $101.8 million from $68.4 million last year, with gross margins improving 540 basis points to 23.3 percent of sales. Gross margins expanded in both business segments, with year-over-year improvement of 500 basis points in the Delta Group and 430 basis points in the Salt Life Group. SG&A expenses were $70.7 million in fiscal year 2021, or 16.2 percent of sales, an improvement of 170 basis points from the prior-year period. Delta Apparel reports operating income of $32.8 million, or 7.5 percent of sales, record operating results for the company. Net income was $20.3 million, or $2.86 per diluted share.

All-time record levels of manufacturing production during fiscal year 2021, partially offset by strong demand for products, resulted in an 11.1-percent increase in inventory from a year ago. The supplier reports that finished goods inventory in September 2021 remained lower than optimal, but higher manufacturing production in the first half of fiscal year 2022 is expected to position the company for a strong spring 2022 selling season.