Delta Apparel, Inc. Investor Presentation March 2019 Forward - PowerPoint PPT Presentation

Delta Apparel, Inc. Investor Presentation March 2019

Forward Looking Statements This presentation contains “Forward Looking” statements which reflect the Company's current § expectations regarding future events and which involve risks and uncertainties. Although we believe that our expectations are based on reasonable assumptions, actual results could differ materially from those projected in this presentation. Please refer to the written materials made available to you in connection with this presentation as well § as the Company’s most recent Form 10-K and other SEC filings for a more detailed discussion of some of the risks facing the Company that could affect the forward looking statements in this presentation. Finally, please note that any “Forward Looking” statements are made only as of the date of this § presentation and the Company does not commit to update or revise these statements even if it becomes apparent that any projected results will not be realized. Delta Apparel, Inc. Investor Presentation | 2

Fiscal 2018 A Year of Accomplishments § Grew sales year-over-year and significantly improved profitability § Achieved 10% sales growth in our core Delta Catalog business and record revenue in our FunTees private label business Solidified our industry-leading position in the digital print and fulfillment § market with DTG2Go § Increased consumer awareness of Salt Life brand with expansion into new products, including Salt Life Lager Improved operating cash flows by nearly $7 million to $20.9 million § § Repurchased 464k shares of DLA stock for $9 million under our Share Repurchase Program Realigned our business into the Delta Group and Salt Life Group to further § leverage our core expertise and more efficiently manage the business Delta Apparel, Inc. Investor Presentation | 3

Delta Apparel, Inc. DELTA GROUP ~$360 million * SALT LIFE GROUP ~$40 million * Activewear Activewear Manufacturing * Based on FY18 results Delta Apparel, Inc. Investor Presentation | 4

Delta Apparel, Inc. – Sales Growth $396 $370 $112 $104 $100 $98 $93 $91 $90 $76 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annual (in millions) FY17 * FY18 * Excludes $9.4 million of sales from the since-divested Junkfood Clothing Company business Delta Apparel, Inc. Investor Presentation | 5

DLA Sales and Earnings Growth 8% 33% 7% $18 $1.62 $396 $370 $16 $1.22 FY17 FY18 FY17 FY18 FY17 FY18 Operating Profit Sales Diluted EPS (in millions) (in millions) Note: Comparison excludes $9.4 million in prior year sales and prior year pre-tax gain of approximately $1.0 million on sale of since-divested Junkfood Clothing Company business. Also excludes $10.6 million impact on fiscal year 2018 results from United States tax reform. Delta Apparel, Inc. Investor Presentation | 6

Fiscal 2019 Growth Initiatives Strong core business, Delta Activewear, continues to § gain market share and expand customer base DTG2Go’s cutting edge technology is revolutionizing the § changing retail platform with digital print and fulfillment capabilities Significant growth potential with lifestyle brand, Salt Life § Double-digit growth across our eCommerce sites; § remains our most profitable sales channel Delta Apparel, Inc. Investor Presentation | 7

Strong Core Business, Delta Activewear Consistent 5% Sales CAGR over eighteen years § Generating ~ 10% EBITDA margins § ~ $284 ~ $180 $115 FY00 FY08 FY18 Sales (in millions) Delta Apparel, Inc. Investor Presentation | 8

Strong Core Business, Delta Activewear Strategically Expanding Margins Lowest margins Highest margins (4%) CAGR +6% CAGR +63% CAGR $150 $137 $109 $98 $37 $14 FY16 FY18 FY16 FY18 FY16 FY18 CORE BASICS PRIVATE LABEL FASHION BASICS Sales (in millions) Delta Apparel, Inc. Investor Presentation | 9

Fashion Basics Delta Apparel, Inc. Investor Presentation | 10

Strong Core Business, Delta Activewear MANUFACTURING § Fayetteville, NC § Rowland, NC § Ceiba Textiles, Honduras Cranbury, NJ Chicago, IL § Campeche, Mexico § La Paz, El Salvador § San Pedro Sula, Honduras Fayetteville, NC Clinton, TN 0 Rowland, NC Sante Fe Springs, CA DISTRIBUTION Opelika, AL Dallas, TX § Chicago, IL § Clinton, TN § Cranbury, NJ § Dallas, TX Miami, FL § Miami, FL Campeche, MX § Opelika, AL § Santa Fe Springs, CA San Pedro Sula, HN Ceiba, HN La Paz, ES Delta Apparel, Inc. Investor Presentation | 11

… Poised for 20% Sales CAGR Only vertical digital print supplier in the world § - Seamless fulfillment integrated with Delta garments o Fashion and core basics, fleece and shorts Industry leader in digital print and fulfillment capabilities § - Innovative technology - Ability to produce over 70,000 unique prints per day o Equipment on order to increase to over 90,000 per day State-of-the-art equipment § World class quality assurance § Speed-to-market § - Orders shipped in 24-48 hours - Worldwide shipping to over 100 countries Delta Apparel, Inc. Investor Presentation | 12

…Poised for 20% Sales CAGR 2019 Expansion: Reaching 99% of US population in 1-2 day ship with ~ 50% in 1 day Storm Lake, IA Cranbury, NJ * Reno, NV Fayetteville, NC Dallas, TX * 1 day 2 day 3-4 day Clearwater, FL * DTG facility integrated with Delta Activewear distribution Miami, FL * Delta Apparel, Inc. Investor Presentation | 13

…Poised for 20% Sales CAGR Cutting-Edge Equipment Kornit ATLAS Prints 80% more per hour than current AVK 1000 § Utilizes new ‘odor-less’ pre-spray § Prints 6-color, with two additional heads for future ink options § More ergonomically designed § Kornit Polyester Technology Beta-testing first high-quality polyester and poly- § blend digital printer High demand in activewear market for solution § DTG2Go is first to bring this to market § Delta Apparel, Inc. Investor Presentation | 14

… Poised for 20% Sales CAGR Acquired DTG2Go Acquired Art Gun Built proprietary Acquired SSI Digital Print March 2018 ~ $100m technology and December 2009 October 2018 grew business ~ $50m ~ $27m ~ $15m $10m $0m FY10 FY14 FY17 FY18 FY19E 5 Year Outlook DTG2Go achieving double-digit operating profits with 20%+ EBITDA margins Delta Apparel, Inc. Investor Presentation | 15

… Poised for 20% Sales CAGR How large is the potential digital print market? Digital Impressions < 5% of total Graphic Impressions Delta Apparel, Inc. Investor Presentation | 16

… Poised for 20% Sales CAGR e-RETAILERS BRANDS PROMOTION TRADITIONAL AL RETAILERS PRODUCTS SCREEN PRINTERS Delta Apparel, Inc. Investor Presentation | 17

…Positioned for Double-Digit Growth Delta Apparel, Inc. Investor Presentation | 18

…Positioned for Double-Digit Growth Reaching a wide demographic mix of consumers who embrace a lifestyle of water sports and beach activities Direct-to-Consumer Sales Mix Youth: 5% Mens: 60% Accessories: 15% Ladies: 20% Delta Apparel, Inc. Investor Presentation | 19

…Positioned for Double-Digit Growth Tweets Followers Likes 40.9K 65.2K 45.3K @ r e a l s a l t l i f e Followers Likes 1.1M 1.1M @livethesaltlife Posts Followers 4.7K 213K @ r e a l s a l t l i f e Videos Subscribers Views Minutes Watched 66k 76.6K 26.6M 36.4M + @realsaltlife Delta Apparel, Inc. Investor Presentation | 20

Over 2 Million Decals Sold Delta Apparel, Inc. Investor Presentation | 21

- Tampa, Florida Delta Apparel, Inc. Investor Presentation | 22

eCommerce Over Two Million Consumers Visit Saltlife.com Annually Shipping to all 50 states § Site traffic trending up § Conversion rates up 10% § ~20% Increasing average order value 16% § ~$4.5m 39% $3.8m 71% $3.3m 40% $2.4m $1.4m FY15 FY16 FY17 FY18 FY19E eCommerce Sales Growth Sales Delta Apparel, Inc. Investor Presentation | 23

SWIM & OPTICS Delta Apparel, Inc. Investor Presentation | 24

Salt Life Beverage § Launched in Florida - Summer 2018 – Sold in over 3,000 doors in Florida • 900 Publix doors; 300 Winn Dixie doors • Regional & independent stores • Restaurants and bars § Offered draught beer – Fall 2018 § Expanding distribution in 2019 Tennessee North Carolina • Georgia • • South Carolina • Alabama • Delta Apparel, Inc. Investor Presentation | 25

Salt Life Restaurants Operated through Licensee Fernandina Beach, FL - NEW St. Augustine Beach, FL Jacksonville Beach, FL Delta Apparel, Inc. Investor Presentation | 26

eCommerce – Sales Growth B to C Salt Life and Soffe 12% FY17 FY18 15% 5% 12% 11% 24% $1,336 $1,538 $1,045 $1,432 $5,092 $1,279 $1,191 $846 $1,359 $4,553 $1,336 $1,157 Q1 Q2 Q3 Q4 Annual FY19 Q1 (in thousands) Delta Apparel, Inc. Investor Presentation | 27

eCommerce – Sales Growth B to B Delta Activewear and Soffe FY17 21% FY18 27% 25% 30% 30% 1% $4,038 $5,238 $4,640 $5,882 $20,788 $6,228 $3,981 $3,557 $4,696 $17,139 $4,038 $4,905 Q1 Q2 Q3 Q4 Annual FY19 Q1 (in thousands) Delta Apparel, Inc. Investor Presentation | 28