Delta Apparel Stock

Delta Apparel, Inc., together with its subsidiaries, operates as a vertically integrated international apparel company. The company's subsidiaries are DTG2Go, LLC; Salt Life, LLC; and M.J. Soffe, LLC.

The company designs, manufactures, sources, and markets a diverse portfolio of core activewear and lifestyle apparel products under its primary brands of Salt Life, Soffe, and Delta. The company is a market leader in the on-demand, digital print and fulfillment industry, bringing DTG2Go's proprietary technology and innovation to its customers' supply chain. The company specializes 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 its business-to-business digital platform. The company's products are also made available direct-to-consumer on its ecommerce sites and in its branded retail stores. The company's diversified go-to-market strategy allows it to capitalize on its strengths to provide its activewear and lifestyle apparel products to a broad and evolving customer base whose shopping preferences may span multiple retail channels.

The company designs and internally manufactures the majority of its products with more than 90% of the apparel units that it sells sewn in its own facilities. The company has manufacturing operations located in the United States, El Salvador, Honduras, and Mexico. It uses domestic and foreign contractors as additional sources of production. The company's distribution facilities are strategically located throughout the United States to better serve its customers with same-day shipping on its catalog products and weekly replenishments to retailers.

Segments, Products, Brands, and Customers

The company operates in two segments, Delta Group and Salt Life Group.

Delta Group segment

The Delta Group includes the following business units primarily focused on core activewear styles: DTG2Go and Delta Activewear.

DTG2Go

The company is a market leader in the on-demand, direct-to-garment digital print and fulfillment industry, bringing technology and innovation to the supply chains of its many customers. The company's 'On-Demand DC' digital solution provides retailers and brands with immediate access to utilize DTG2Go's broad network of print and fulfillment facilities, while offering the scalability to integrate digital fulfillment within the customer's own distribution facilities. The company uses highly-automated factory processes and its proprietary software to deliver on-demand, digitally printed apparel direct to consumers on behalf of its customers. Via its eight fulfillment facilities throughout the United States, DTG2Go offers a robust digital supply chain, shipping custom graphic products within 24 to 48 hours to consumers in the United States and to many countries worldwide.

DTG2Go has made significant investments in its 'digital-first' retail model, providing digital graphic prints that meet the high-quality standards required for brands, retailers, and intellectual property holders. Throughout fiscal year 2023 (the year ended September 30, 2023), the company continued to invest in research and development initiatives related to the setups, formulas and processes needed to serve its customers. Through integration with Delta Activewear, DTG2Go also services the eRetailer, ad-specialty, promotional and screen print marketplaces, among others.

Delta Activewear

Delta Activewear is a preferred supplier of activewear apparel to regional and global brands, as well as direct to retail and wholesale markets. The Activewear business is organized around three key customer channels - Delta Direct, Global Brands, and Retail Direct - that are distinct in their go-to-market strategies and how their respective customer bases source their various apparel needs. The company's Delta Direct channel services the screen print, promotional, and eRetailer markets, as well as retail licensing customers that sell through to many mid-tier and mass market retailers. Delta Direct products include a broad portfolio of apparel and accessories under the Delta, Delta Platinum, and Soffe brands, as well as sourced items from select third party brands.

The company's fashion basics line includes its Platinum Collection, which offers fresh, fashionable silhouettes with a luxurious look and feel, as well as versatile fleece offerings. The company offers innovative apparel products, including the Delta Dri line of performance shirts built with moisture-wicking material to keep athletes dry and comfortable; ringspun garments with superior comfort, style and durability; and Delta Soft, a collection with an incredible feel and price. The company also offers its heritage, mid- and heavier-weight Delta Pro Weight and Magnum Weight tee shirts.

The iconic Soffe brand offers activewear for spirit makers and record breakers and is widely known for the original 'cheer short' with the signature roll-down waistband. Soffe carries a wide range of activewear for the entire family. Soffe's heritage is anchored in the military, and the company continues to be a proud supplier to both active duty and veteran United States military personnel worldwide. The Soffe men's assortment features the tagline 'anchored in the military, grounded in training' and offers everything from physical training gear certified by the respective branches of the military, classic base layers that include the favored 3-pack tees, and the iconic 'ranger panty'. Complementing the Delta and Soffe brand apparel, the company provides its customers with a broad range of product categories from nationally recognized brands, including polos, outerwear, headwear, bags and other accessories. The company's Soffe products are also available direct to consumers at www.soffe.com.

The company's Global Brands channel serves as a key supply chain partner to large multi-national brands, major branded sportswear companies, trendy regional brands, and all branches of the United States armed forces, providing services ranging from custom product development to shipment of branded products with 'retail-ready' value-added services, including embellishment, hangtags, and ticketing.

The company's Retail Direct channel serves brick and mortar and online retailers by providing its portfolio of Delta, Delta Platinum, and Soffe products directly to the retail locations and ecommerce fulfillment centers of a diversified customer base, including sporting goods and outdoor retailers, specialty and resort shops, farm and fleet stores, department stores, and mid-tier retailers.

As a key element of the integrated Delta Group segment, each of Activewear's primary channels offers a seamless solution for small-run decoration needs with on-demand digital print services, powered by DTG2Go.

Salt Life Group segment

Salt Life

Salt Life is an authentic, aspirational lifestyle brand that represents a passion for the ocean, the salt air, and, more importantly, a way of life and all it offers, from surfing, fishing, and diving to beach fun and sun-soaked relaxation. The Salt Life brand combines function and fashion with a tailored fit for the active lifestyles of those that 'live the Salt Life'. With increased worldwide appeal, Salt Life has continued to provide the cotton graphic tees and logo decals that originally drove awareness for the brand, and expanded into performance apparel, swimwear, board shorts, sunglasses, bags, and accessories. In fiscal year 2023, Salt Life grew its retail footprint to include twenty-five stores across the U.S. coastline from Southern California to Key West and up the eastern seaboard to Riverhead, New York. Consumers can also seamlessly experience the Salt Life brand through one of the company's retail partners, which include surf shops, specialty stores, department stores, and outdoor merchants or by accessing its Salt Life ecommerce site at www.saltlife.com.

Manufacturing, Sourcing, and Distribution

The vast majority of the company's products are manufactured or sewn in facilities that it owns or leases and operates to support both the Delta Group and Salt Life Group. To a lesser extent, the company also uses third-party contractors and suppliers to supplement its requirements. The company's vertically integrated manufacturing operations include a textile facility and multiple sew and decoration facilities.

The company's manufacturing operations begin with the purchase of yarn and other raw materials from third-party suppliers. The company has operated with a supply agreement with Parkdale Mills, Inc. and Parkdale America, LLC (collectively 'Parkdale') to supply its yarn requirements since 2005, with its existing agreement running through December 31, 2024. Under the supply agreement, the company purchases all of its yarn requirements for use in the company's manufacturing operations from Parkdale, excluding yarns that Parkdale does not manufacture or cannot manufacture due to temporary capacity constraints.

Many of the garments the company produces will be decorated using screen printing or digital printing technology, and will be retail-packaged, including ticketing, hang tags, and hangers. These services can be performed domestically for quick-turn service or internationally in its El Salvador facility. The company offers digital fulfillment services, powered by DTG2Go, at seven domestic facilities, including five such facilities that are integrated with Delta Group distribution centers. These facilities support its strategy of establishing integrated fulfillment locations that combine its DTG2Go state-of-the-art digital platform with its Delta Activewear supply of fashion and core basic garments.

The company operates seven distribution facilities strategically located throughout the United States that carry in-stock inventory for shipment to customers, with most shipments made via third-party carriers.

Sales and Marketing

The company's sales and marketing functions consist of both employed and independent sales representatives and agencies located throughout the country. Its sales teams service specialty and resort shops; department, mid-tier and mass retailers; sporting goods stores; and eRetailers and the U.S. military, as well as other sales channels. The company's brands leverage both in-house and outsourced marketing communication professionals to amplify their lifestyle statements.

The majority of the company's apparel products are produced based on forecasts to permit quick shipments to its customers, however, its custom programs are generally made only to order. During 2023, the company shipped its products to approximately 6,600 customers, many of whom have numerous retail doors.

Trademarks and License Agreements

Salt Life is an authentic, aspirational lifestyle brand that embraces those who love the ocean and everything associated with living the 'Salt Life'. Soffe has stood for quality and value in the athletic and activewear market for more than 60 years. The company's other registered trademarks include Intensity Athletics, Kudzu, Pro Weight, Magnum Weight, and the Delta Design logo trademark. While the company's strategy is to own the intellectual property the company uses within its business, it is an official intellectual property licensee for branches of the United States military, which it operates within its Soffe branded business.

Seasonality

Although the company's various product lines are sold on a year-round basis (year ended September 2023), the demand for specific products or styles reflects some seasonality. By diversifying the company's product lines and go-to-market strategies over the years, it has reduced the overall seasonality of its business.

Environmental and Other Regulatory Matters

The labeling, distribution, importation, marketing, and sale of the company's products are subject to extensive regulation by various federal agencies, including the Federal Trade Commission, Consumer Product Safety Commission and state attorneys general in the United States. The company's international operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act (the 'FCPA') and other anti-bribery laws applicable to its operations.

History

Delta Apparel, Inc. was founded in 1903. The company was incorporated in Georgia in 1999.