10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

December 31, 2022

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number

1-15583

DELTA APPAREL, INC.

______________________________

(Exact name of registrant as specified in its charter)

Georgia

58-2508794

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

2750 Premier Parkway

,

Suite 100

Duluth

,

Georgia

30097

(Address of principal executive offices)

(Zip Code)

(

678

)

775-6900

______________________________

(Registrant’s telephone number, including area code)

______________________________

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01

DLA

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the

preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past

90 days. Yes

☑

 No

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T

during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☑

 No

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth

company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange

Act. 

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☑

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised

financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

☐

 No

☑

As of January 27, 2023, there were outstanding

7,001,020

 shares of the registrant’s common stock, par value of $0.01 per share, which is the only class of outstanding

common or voting stock of the registrant.

TABLE OF CONTENTS

Page

PART I.

Item 1.

3

4

5

6

7

8

8

8

8

9

9

9

10

10

10

11

12

12

13

13

13

13

Item 2.

15

Item 4.

18

PART II.

18

Item 1.

18

Item 1A.

18

Item 2.

18

Item 5.

18

Item 6.

18

21

3

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets 

(Amounts in thousands, except share amounts and per share data)

(Unaudited)

December 2022

September 2022

Assets

Cash and cash equivalents

$

327

$

300

Accounts receivable, less allowances of $

63

 and $

109

, respectively

57,755

68,215

Other receivables

2,396

1,402

Income tax receivable

1,363

1,969

Inventories, net

258,891

248,538

Prepaid expenses and other current assets

4,114

2,755

Total current assets

324,846

323,179

Property, plant and equipment, net of accumulated depreciation of $

111,194

 and $

108,565

, respectively

72,771

74,109

Goodwill

37,897

37,897

Intangibles, net

23,427

24,026

Deferred income taxes

1,342

1,342

Operating lease assets

49,313

50,275

Equity method investment

9,045

9,886

Other assets

2,800

2,967

Total assets

$

521,441

$

523,681

Liabilities and Equity

Liabilities:

Accounts payable

$

79,844

$

83,553

Accrued expenses

20,808

27,414

Income taxes payable

321

379

Current portion of finance leases

8,603

8,163

Current portion of operating leases

8,585

8,876

Current portion of long-term debt

9,514

9,176

Total current liabilities

127,675

137,561

Long-term income taxes payable

2,841

2,841

Long-term finance leases

18,465

16,776

Long-term operating leases

42,015

42,721

Long-term debt

148,899

136,750

Deferred income taxes

2,232

4,310

Total liabilities

$

342,127

$

340,959

Shareholder's equity:

Preferred stock - $

0.01

 par value,

2,000,000

 shares authorized, none issued and outstanding

-

-

Common stock $

0.01

 par value,

15,000,000

 authorized,

9,646,972

 shares issued, and

7,001,020

 and

6,915,663

shares outstanding as of December 2022 and September 2022, respectively

96

96

Additional paid-in capital

60,559

61,961

Retained earnings

163,035

166,600

Accumulated other comprehensive income

210

141

Treasury stock -

2,645,952

 and

2,731,309

 shares as of December 2022 and September 2022, 

 respectively

(43,896)

(45,420)

Equity attributable to Delta Apparel, Inc.

180,004

183,378

Equity attributable to non-controlling interest

(690)

(656)

Total equity

179,314

182,722

Total liabilities and equity

$

521,441

$

523,681

See accompanying Notes to Condensed Consolidated Financial Statements.

4

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations 

(Amounts in thousands, except per share data)

(Unaudited)

Three Months Ended

December 2022

December 2021

Net sales

$

107,295

$

110,746

Cost of goods sold

93,672

87,743

Gross profit

13,623

23,003

Selling, general and administrative expenses

18,870

17,482

Other (income), net

(2,621)

(395)

Operating (loss) income

(2,626)

5,916

Interest expense, net

2,890

1,598

(Loss) earnings before provision for income taxes

(5,516)

4,318

(Benefit from) provision for income taxes

(1,917)

648

Consolidated net (loss) earnings

(3,599)

3,670

Net (loss) income attributable to non-controlling interest

(34)

25

Net (loss) earnings attributable to shareholders

$

(3,565)

$

3,645

Basic (loss) income per share

$

(0.51)

$

0.52

Diluted (loss) income per share

$

(0.51)

$

0.51

Weighted average number of shares outstanding

6,954

6,999

Dilutive effect of stock awards

-

86

Weighted average number of shares assuming dilution

6,954

7,085

See accompanying Notes to Condensed Consolidated Financial Statements.

5

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Amounts in thousands)

(Unaudited)

Three Months Ended

December 2022

December 2021

Net (loss) income attributable to shareholders

$

(3,565)

$

3,645

Other comprehensive income related to unrealized gain 

 on derivatives, net of income tax

69

212

Consolidated comprehensive (loss) income

$

(3,496)

$

3,857

See accompanying Notes to Condensed Consolidated Financial Statements.

6

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(Amounts in thousands, except share amounts)

(Unaudited)

Accumulated

Additional

Other

Non-

Common Stock

Paid-In

Retained

Comprehensive

Treasury Stock

Controlling

Shares

Amount

Capital

Earnings

Income

Shares

Amount

Interest

Total

Balance as of

September 2022

9,646,972

$

96

$

61,961

$

166,600

$

141

2,731,309

$

(45,420)

$

(656)

$

182,722

Net loss

-

-

-

(3,565)

-

-

-

-

(3,565)

Other comprehensive

income

-

-

-

-

69

-

-

-

69

Net loss attributable to

non-controlling

interest

-

-

-

-

-

-

-

(34)

(34)

Purchase of common

stock

-

-

-

-

-

-

-

-

-

Vested stock awards

-

-

(2,067)

-

-

(85,357)

1,524

-

(543)

Stock based

compensation

-

-

665

-

-

-

-

-

665

Balance as of

December 2022

9,646,972

$

96

$

60,559

$

163,035

$

210

2,645,952

$

(43,896)

$

(690)

$

179,314

Accumulated

Additional

Other

Non-

Common Stock

Paid-In

Retained

Comprehensive

Treasury Stock

Controlling

Shares

Amount

Capital

Earnings

(Loss)

Shares

Amount

Interest

Total

Balance as of

September 2021

9,646,972

$

96

$

60,831

$

146,860

$

(786)

2,672,312

$

(42,149)

$

(658)

$

164,194

Net income

-

-

-

3,645

-

-

-

-

3,645

Other comprehensive

income

-

-

-

-

212

-

-

-

212

Net income attributable

to non-controlling

interest

-

-

-

-

-

-

-

25

25

Purchase of common

stock

-

-

-

-

-

74,232

(2,143)

-

(2,143)

Vested stock awards

-

-

(1,766)

-

-

(76,460)

674

-

(1,092)

Stock based

compensation

-

-

140

-

-

-

-

-

140

Balance as of December

2021

9,646,972

$

96

$

59,205

$

150,505

$

(574)

2,670,084

$

(43,618)

$

(633)

$

164,981

See accompanying Notes to Condensed Consolidated Financial Statements.

7

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

Three Months Ended

December 2022

December 2021

Operating activities:

Consolidated net (loss) earnings

$

(3,599)

$

3,670

Adjustments to reconcile net (loss) earnings to net cash used in operating activities:

Depreciation and amortization

3,844

3,629

Amortization of deferred financing fees

84

81

(Benefit from) provision for deferred income taxes

(2,101)

754

Change in inventory market reserves

163

851

Non-cash stock compensation

665

140

Gain on disposal of equipment

58

2

Other, net

(89)

(390)

Changes in operating assets and liabilities:

-

-

Accounts receivable

9,466

1,993

Inventories, net

(10,516)

(22,206)

Prepaid expenses and other current assets

(1,443)

(1,449)

Other non-current assets

1,188

699

Accounts payable

(3,723)

7,584

Accrued expenses

(5,030)

(7,572)

Net operating lease liabilities

(35)

206

Income taxes

(854)

(140)

Other liabilities

-

(1,050)

Net cash used in operating activities

(11,922)

(13,198)

Investing activities:

Purchases of property and equipment, net

(2,081)

(1,822)

Proceeds from equipment under finance leases

4,417

-

Cash paid for intangible asset

-

(51)

Cash paid for business

-

(583)

Net cash provided by (used in) investing activities

2,336

(2,456)

Financing activities:

Proceeds from long-term debt

133,918

138,543

Repayment of long-term debt

(121,431)

(121,293)

Repayment of capital financing

(2,332)

(1,783)

Repurchase of common stock

-

(1,718)

Payment of withholding taxes on stock awards

(542)

(1,092)

Net cash provided by financing activities

9,613

12,657

Net increase (decrease) in cash and cash equivalents

27

(2,997)

Cash and cash equivalents at beginning of period

300

9,376

Cash and cash equivalents at end of period

$

327

$

6,379

Supplemental cash flow information

Finance lease assets exchanged for finance lease liabilities

$

4,461

$

20

Operating lease assets exchanged for operating lease liabilities

$

1,807

$

1,401

See accompanying Notes to Condensed Consolidated Financial Statements.

8

Delta Apparel, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

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:

Period Ended

Fiscal Year

Date Ended

December 2021

Fiscal 2022

January 1, 2022

March 2022

Fiscal 2022

April 2, 2022

June 2022

Fiscal 2022

July 2, 2022

September 2022

Fiscal 2022

October 1, 2022

December 2022

Fiscal 2023

December 31, 2022

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

 million and $

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.

Note B—Accounting Policies

Our accounting policies are consistent with those described in our Significant Accounting Policies in our Annual Report on Form 10-K for our fiscal 2022, filed with the

SEC. See Note C for consideration of recently issued accounting standards.

Note C—New Accounting Standards

Standards Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13,

Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

(“ASU

2016-13”), which requires an entity to assess impairment of its financial instruments based on the entity's estimate of expected credit losses. Since the issuance of ASU

2016-13, the FASB released several amendments to improve and clarify the implementation guidance. These standards have been collectively codified within ASC Topic

326,

Credit Losses

(“ASC 326”). As a smaller reporting company as defined by the SEC, the provisions of ASC 326 are effective as of the beginning of our fiscal year

2024. We are currently evaluating the impacts of the provisions of ASC 326 on our financial condition, results of operations, cash flows, and disclosures.

9

Note D—Revenue Recognition

Our Condensed Consolidated Statements of Operations include revenue streams from retail sales at our branded retail stores; direct-to-consumer ecommerce sales on our

consumer-facing websites; and sales from wholesale channels, which includes our business-to-business ecommerce sales and sales in our DTG2Go business. The table

below identifies the amount and percentage of net sales by distribution channel (in thousands):

Three Months Ended

December 2022

December 2021

Retail

$

3,455

3

%

$

2,903

3

%

Direct-to-consumer ecommerce

1,509

2

%

1,345

1

%

Wholesale

102,331

95

%

106,498

96

%

Net sales

$

107,295

100

%

$

110,746

100

%

The table below provides net sales by reportable segment and the percentage of net sales by distribution channel for each reportable segment (in thousands):

Three Months Ended December 2022

Net Sales

Retail

Direct-to-consumer

ecommerce

Wholesale

Delta Group

$

97,010

0.1

%

0.2

%

99.7

%

Salt Life Group

10,285

33.0

%

12.7

%

54.3

%

Total

$

107,295

Three Months Ended December 2021

Net Sales

Retail

Direct-to-consumer

ecommerce

Wholesale

Delta Group

$

101,921

0.2

%

0.3

%

99.5

%

Salt Life Group

8,825

30.4

%

12.0

%

57.6

%

Total

$

110,746

Note E—Inventories

Inventories, net of reserves of $

17.8

 million and $

17.7

 million as of December 2022 and September 2022, respectively, consisted of the following (in thousands):

December 2022

September 2022

Raw materials

$

22,166

$

22,603

Work in process

20,352

23,501

Finished goods

216,373

202,434

$

258,891

$

248,538

Raw materials include finished yarn and direct materials for the Delta Group, undecorated garments for the DTG2Go business, and direct embellishment materials for the

Salt Life Group.

Note F—Debt

Credit Facility

On May 10, 2016, we entered into a Fifth Amended and Restated Credit Agreement (as further amended, the “Amended Credit Agreement”) with Wells Fargo Bank,

National Association (“Wells Fargo”), as Administrative Agent, the Sole Lead Arranger and the Sole Book Runner, and the financial institutions named therein as Lenders,

which are Wells Fargo, PNC Bank, and Regions Bank. Our subsidiaries M.J. Soffe, LLC, Culver City Clothing Company, Salt Life, LLC, and DTG2Go, LLC (collectively,

the "Borrowers"), are co-borrowers under the Amended Credit Agreement. The Borrowers entered into amendments to the Amended Credit Agreement with Wells Fargo

and the other lenders on November 27, 2017, March 9, 2018, October 8, 2018, November 19, 2019, April 27, 2020, and August 28, 2020.

On June 2, 2022, the Borrowers entered into a Seventh Amendment to the Fifth Amended and Restated Credit Agreement with Wells Fargo Bank (the “Agent”) and the

other lenders set forth therein (the “Seventh Amendment”). The Seventh Amendment, (i) removes LIBOR based borrowing and utilizes SOFR (Secured Overnight

Financing Rate) as the primary pricing structure, (ii) amends the pricing structure based on SOFR plus a CSA (Credit Spread Adjustment) defined as

10

 bps for 1 month

and

15

 bps for 3-month tenors, (iii) sets the SOFR floor to

0

 bps, (iv) reloads the fair market value of real estate and intellectual property within the borrowing base

calculation and resets their respective amortization schedules, (v) sets the maturity date to

5

 years from the closing date, and (vi) updates the requirement for our Fixed

Charge Coverage Ratio (“FCCR”) for the preceding 12-month period must not be less than

1.0

 (previously

1.1

).

The Amended Credit Agreement allows us to borrow up to $

170

 million (subject to borrowing base limitations), including a maximum of $

25

 million in letters of credit.

Provided that no event of default exists, we have the option to increase the maximum credit to $

200

 million (subject to borrowing base limitations), conditioned upon the

Administrative Agent's ability to secure additional commitments and customary closing conditions. The Amended Credit Agreement contains a subjective acceleration

clause and a “springing” lockbox arrangement (as defined in ASC 470, Debt ("ASC 470")) whereby remittances from customers will be forwarded to our general bank

account and will not reduce the outstanding debt until and unless a specified event or an event of default occurs. We classify borrowings under the Amended Credit

Agreement as long-term debt with consideration of current maturities.

As of December 2022, we had $

142.3

 million outstanding under our U.S. revolving credit facility at an average interest rate of

6.7

%. Our cash on hand combined with

the availability under the U.S. credit facility totaled $

27.2

 million. At December 2022 and September 2022, there was $

23.1

 million and $

24.9

 million, respectively, of

retained earnings free of restrictions to make cash dividends or stock repurchases.

See Note P—Subsequent Events for a discussion of the Eighth and Ninth Amendments to the Fifth Amended and Restated Credit Agreement entered into on January 3,

2023, and February 3, 2023, respectively.

10

Honduran Debt

Since March 2011, we have entered into term loans and a revolving credit facility with Banco Ficohsa, a Honduran bank, to finance investments in both the operations

and capital expansion of our Honduran facilities. In December 2020, we entered into a new term loan and revolving credit facility with Banco Ficohsa, both with

five

-

year terms, and simultaneously settled the prior term loans and revolving credit facility with outstanding balances at the time of settlement of $

1.1

 million and $

9.5

 million,

respectively. Additionally, in May 2022, we entered into a new term loan with a

five

-year term with a principal amount of $

3.7

 million. These loans are secured by a first-

priority lien on the assets of our Honduran operations and are not guaranteed by our U.S. entities. These loans are denominated in U.S. dollars, and the carrying value of

the debt approximates its fair value. As the revolving credit facility permits us to re-borrow funds up to the amount repaid, subject to certain objective covenants, and we

intend to re-borrow funds, subject to those covenants, the amounts borrowed are classified as long-term debt. 

El Salvador Debt

In September 2022, we entered into a new term loan with a

five

-year term with a principal amount of $

3.0

 million with Banco Ficohsa, a Panamanian bank, to finance

investments in our El Salvador operations. This loan is secured by a first-priority lien on the assets of our El Salvador operations and is not guaranteed by our U.S. entities.

The loan is denominated in U.S. dollars, and the carrying value of the debt approximates its fair value. Information about this loan and the outstanding balance as of

December 2022 is listed as part of the long-term debt schedule above.

Additional information about these loans and the outstanding balances as of December 2022 is as follows (in thousands):

December 2022

Revolving credit facility with Banco Ficohsa, a Honduran bank, interest at

7.25

%, due August 2025

$

3,083

Term loan with Banco Ficohsa, a Honduran bank, interest at

7.5

%, quarterly installments which began September 2021 and are due through

December 2025

6,086

Term loan with Banco Ficohsa, a Honduran bank, interest at

7.5

%, quarterly installments beginning March 2023 through May 2027

3,656

Term loan with Banco Ficohsa, a Panamanian bank, interest at the prevailing market rate within the Panamanian Banking Market, monthly

installments which began October 2022 and are due through August 2027

2,878

Note G—Selling, General and Administrative Expense

We include in selling, general and administrative ("SG&A") expenses the costs incurred subsequent to the receipt of finished goods at our distribution facilities, such as

the cost of stocking, warehousing, picking, packing, and shipping goods for delivery to our customers. Distribution costs included in SG&A expenses totaled $

5.4

 million

and $

5.5

 million for the December 2022 and December 2021 quarters, respectively. In addition, SG&A expenses include costs related to sales associates, administrative

personnel, advertising and marketing expenses, retail store build-outs, and other general and administrative expenses.

Note H—Stock-Based Compensation

On February 6, 2020, our shareholders approved the Delta Apparel, Inc. 2020 Stock Plan ("2020 Stock Plan") to replace the 2010 Stock Plan, which was previously re-

approved by our shareholders on February 4, 2015, and was scheduled to expire by its terms on September 14, 2020. The 2020 Stock Plan is substantially similar in both

form and substance to the 2010 Stock Plan. The purpose of the 2020 Stock Plan is to continue to give our Board of Directors and its Compensation Committee the ability

to offer a variety of compensatory awards designed to enhance the Company’s long-term success by encouraging stock ownership among its executives, key employees

and directors. Under the 2020 Stock Plan, the Compensation Committee of our Board of Directors has the authority to determine the employees and directors to whom

awards may be granted, and the size and type of each award and manner in which such awards will vest. The awards available under the plan consist of stock options,

stock appreciation rights, restricted stock, restricted stock units, performance stock, stock performance units, and other stock and cash awards. Unvested awards, while

employed by the Company or serving as a director, become fully vested under certain circumstances as defined in the 2020 Stock Plan. Such circumstances include, but

are not limited to, the participant’s death or disability. The Compensation Committee is authorized to establish the terms and conditions of awards granted under the 2020

Stock Plan, to establish, amend and rescind any rules and regulations relating to the 2020 Stock Plan, and to make any other determinations that it deems necessary. Similar

to the 2010 Stock Plan, the 2020 Stock Plan limits the number of shares that may be covered by awards to any participant in a given calendar year and also limits the

aggregate awards of restricted stock, restricted stock units and performance stock granted in a given calendar year. Shares are generally issued from treasury stock upon

the vesting of the restricted stock units, performance units or other awards under the 2020 Stock Plan.

Compensation expense is recorded within SG&A in our Condensed Consolidated Statements of Operations over the vesting periods. During the December 2022 and

December 2021 quarters, we recognized $

0.5

 million and $

0.4

 million in stock-based compensation expense, respectively. Associated with this compensation cost are

income tax benefits recognized of $

0.2

 million and $

0.1

 million, respectively, for each of the three-month periods ended December 2022 and December 2021.

During the December 2022 quarter, restricted stock units representing

105,000

 shares of our common stock vested with the filing of our Annual Report on Form 10-K for

fiscal 2022 and were issued in accordance with their respective agreements. Of these vested awards, all were payable in common stock. 

During the December 2022 quarter, performance stock units and restricted stock units representing 5,000 and 18,000 shares of our common stock, respectively, were

forfeited.

As of December 2022, there was $

3.3

 million of total unrecognized compensation cost related to unvested awards granted under the 2020 Stock Plan. This cost is expected

to be recognized over a period of

1.9

 years.

Note I—Purchase Contracts

We have entered into agreements, and have fixed prices, to purchase yarn, finished fabric, and finished apparel and headwear products. At December 2022, minimum

payments under these contracts were as follows (in thousands):

Yarn

$

22,294

Finished fabric

4,435

Finished products

9,517

$

36,246

11

Note J—Business Segments

Our operations are managed and reported in

two

 segments, Delta Group and Salt Life Group, which reflect the manner in which the business is managed, and results are

reviewed by the Chief Executive Officer, who is our chief operating decision maker. 

The Delta Group is comprised of the following business units, which are primarily focused on core activewear styles: DTG2Go and Delta Activewear. 

DTG2Go 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 our

many customers. Our ‘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. We use highly-automated factory processes and

our proprietary software to deliver on-demand, digitally printed apparel direct to consumers on behalf of our customers. Via our multi-facility fulfillment footprint across

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 over 100

countries worldwide. DTG2Go has made significant investments in its “digital first” retail model providing digital graphic prints that meet the high-quality standards of

brands, retailers and intellectual property holders. Through integration with Delta Activewear, DTG2Go also services the eRetailer, ad-specialty, promotional and screen

print marketplaces, among others. 

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. Our 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. Our fashion basics line includes our Platinum Collection, which offers fresh, fashionable

silhouettes with a luxurious look and feel, as well as versatile fleece offerings. We offer 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. We also offer our 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 we continue 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, we offer customers a broad range of nationally recognized branded products including polos, outerwear, headwear,

bags and other accessories. Our Soffe products are also available direct to consumers at

www.soffe.com

. 

Our 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 the shipment of branded products with “retail-ready” value-

added services including embellishment, hangtags, and ticketing. 

Our Retail Direct channel serves brick and mortar and online retailers by providing our 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 and mass retailers. As a key element of the integrated Delta Group segment, each of Activewear’s primary channels offer a seamless

solution for replenishment strategies, small-run decoration needs, and quick reaction programs with on-demand digital print services, powered by DTG2Go. 

The Salt Life Group is comprised of our Salt Life business, which is built on the authentic, aspirational Salt Life 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. Consumers can also seamlessly experience the Salt Life brand through retail partners including surf shops, specialty stores, department stores, and outdoor

merchants or by accessing our Salt Life ecommerce site at

www.saltlife.com

. 

Our Chief Operating Decision Maker and management evaluate performance and allocate resources based on profit or loss from operations before interest, income taxes

and special charges ("segment operating earnings"). Our segment operating earnings may not be comparable to similarly titled measures used by other companies. The

accounting policies of our reportable segments are the same as those described in Note 2 in our Annual Report on Form 10-K for fiscal 2022, filed with the SEC.

Intercompany transfers between operating segments are transacted at cost and have been eliminated within the segment amounts shown in the following table (in

thousands).

Three Months Ended

December 2022

December 2021

Segment net sales:

Delta Group

$

97,010

$

101,921

Salt Life Group

10,285

8,825

Total net sales

$

107,295

$

110,746

Segment operating earnings:

Delta Group 

$

123

$

8,438

Salt Life Group

218

156

Total segment operating earnings

$

341

$

8,594

12

The following table reconciles the segment operating earnings to the consolidated (loss) income before provision for income taxes (in thousands):

Three Months Ended

December 2022

December 2021

Segment operating earnings

$

341

$

8,594

Unallocated corporate expenses

2,967

2,678

Unallocated interest expense

2,890

1,598

Consolidated (loss) income before provision for income taxes

$

(5,516)

$

4,318

Note K—Income Taxes

The Tax Cuts and Jobs Act of 2017 (the “2017 Tax Legislation”) enacted on December 22, 2017, significantly revised the U.S. corporate income tax code by, among

other things, lowering federal corporate income tax rates, implementing a modified territorial tax system and imposing a repatriation tax ("transition tax") on deemed

repatriated cumulative earnings of foreign subsidiaries which will be paid over eight years. In addition, new taxes were imposed related to foreign income, including a

tax on global intangible low-taxed income (“GILTI”) as well as a limitation on the deduction for business interest expense (“Section 163(j)"). GILTI is the excess of the

shareholder’s net controlled foreign corporations ("CFC") net tested income over the net deemed tangible income. GILTI income is eligible for a deduction of up to 50%

of the income inclusion, but the deduction is limited to the amount of U.S. adjusted taxable income. The Section 163(j) limitation does not allow the amount of deductible

interest to exceed the sum of the taxpayer's business interest income and 30% of the taxpayer’s adjusted taxable income. We have included in our calculation of our

effective tax rate the estimated impact of GILTI and Section 163(j). In addition, we have elected to account for the tax on GILTI as a period cost and, therefore, do not

record deferred taxes related to GILTI on our foreign subsidiaries.

Our effective income tax rate on operations for the three-months ended December 2022 was

35.0

% compared to a rate of

15.1

% in the same period of the prior year, and

an effective rate of

17.9

% for fiscal 2022. We generally benefit from having income in foreign jurisdictions that are either exempt from income taxes or have tax rates

that are lower than those in the United States. As such, changes in the mix of U.S. taxable income compared to profits in tax-free or lower-tax jurisdictions can have a

significant impact on our overall effective tax rate.

Note L—Derivatives and Fair Value Measurements

From time to time, we may use interest rate swaps or other instruments to manage our interest rate exposure and reduce the impact of future interest rate changes. These

financial instruments are not used for trading or speculative purposes. We have designated our interest rate swap contracts as cash flow hedges of our future interest

payments. As a result, the gains and losses on the swap contracts are reported as a component of other comprehensive income and are reclassified into interest expense as

the related interest payments are made. As of December 2022, all of our other comprehensive income was attributable to shareholders; none related to the non-controlling

interest. Outstanding instruments as of December 2022 are as follows:

Effective Date

Notional Amount

Fixed LIBOR 

Rate

Maturity Date

Interest Rate Swap

July 25, 2018

$

20.0

 million

3.18%

July 25, 2023

The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheets for derivatives related to our interest swap agreements as

of December 2022 and September 2022 (in thousands):

December 2022

September 2022

Deferred tax assets

$

(70)

$

(48)

Other non-current liabilities

280

189

Accumulated other comprehensive loss

$

210

$

141

From time to time, we may purchase cotton option contracts to economically hedge the risk related to market fluctuations in the cost of cotton used in our operations. We

do not receive hedge accounting treatment for these derivatives. As such, the realized and unrealized gains and losses associated with them are recorded within cost of

goods sold on the Condensed Consolidated Statement of Operations. No such cotton contracts were outstanding at December 2022 and September 2022.

ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value and expands disclosures about

fair value measurements. Assets and liabilities measured at fair value are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the

assets or liabilities. These levels are:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar

assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less active.

Level 3 – Unobservable inputs that are supported by little or no market activity for assets or liabilities and includes certain pricing models, discounted cash flow

methodologies and similar techniques.

13

The following financial liabilities are measured at fair value on a recurring basis (in thousands):

Fair Value Measurements Using

Quoted Prices

in

Significant 

Active Markets 

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

Period Ended

Total

(Level 1)

(Level 2)

(Level 3)

Interest Rate Swaps

December 2022

$

280

-

$

280

-

September 2022

$

189

-

$

189

-

The fair value of the interest rate swap agreements was derived from a discounted cash flow analysis based on the terms of the contract and the forward interest rate curves

adjusted for our credit risk, which fall in Level 2 of the fair value hierarchy. At December 2022 and September 2022, book value for fixed rate debt approximated fair

value based on quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities (a Level 2 fair value

measurement).

Note M—Legal Proceedings

At times, we are party to various legal claims, actions and complaints. We believe that, as a result of legal defenses, insurance arrangements, and indemnification provisions

with parties believed to be financially capable, such actions should not have a material adverse effect on our operations, financial condition, or liquidity.

Note N—Repurchase of Common Stock

As of September 28, 2019, our Board of Directors authorized management to use up to $

60.0

 million to repurchase stock in open market transactions under our Stock

Repurchase Program. We did

no

t purchase any shares of our common stock during the December 2022 quarter. Through December 2022, we have purchased

3,735,114

 shares of our common stock for an aggregate of $

56.4

 million under our Stock Repurchase Program since its inception. All purchases were made at the discretion

of management and pursuant to the safe harbor provisions of SEC Rule 10b-18. As of December 2022, $

3.6

 million remained available for future purchases under our

Stock Repurchase Program, which does not have an expiration date.

Note O—Goodwill and Intangible Assets

Components of intangible assets consist of the following (in thousands):

December 2022

September 2022

Accumulated

Net

Accumulated

Net 

Economic

Cost

Amortization

Value

Cost

Amortization

 Value

Life

Goodwill

$

37,897

$

-

$

37,897

$

37,897

$

-

$

37,897

N/A

Intangibles:

Tradename/trademarks

$

16,000

$

(4,984)

$

11,016

$

16,000

$

(4,851)

$

11,149

20

 –

30

 yrs

Customer relationships

7,400

(3,398)

4,002

7,400

(3,213)

4,187

20

 yrs

Technology

10,083

(2,834)

7,249

10,083

(2,610)

7,473

10

 yrs

License agreements

2,100

(966)

1,134

2,100

(940)

1,160

15

 –

30

 yrs

Non-compete 

 agreements

1,657

(1,631)

26

1,657

(1,600)

57

4

 –

8.5

 yrs

Total intangibles

$

37,240

$

(13,813)

$

23,427

$

37,240

$

(13,214)

$

24,026

Goodwill represents the acquired goodwill net of the $

0.6

 million impairment losses recorded in fiscal year 2011. As of December 2022, the Delta Group segment assets

include $

18.0

 million of goodwill, and the Salt Life Group segment assets include $

19.9

 million.

Depending on the type of intangible asset, amortization is recorded under cost of goods sold or selling, general and administrative expenses. Amortization expense for

intangible assets for the December 2022 and December 2021 quarters was $

0.6

 million and $

0.6

 million, respectively. Amortization expense is estimated to be

approximately $

1.4

 million for the year ended September 2023, approximately $

1.4

 million for the year ended September 2024, and approximately $

1.4

 million for the

years ended September 2025, 2026, and 2027.

Note P—Subsequent Events

On January 3, 2023, Delta Apparel, Inc. and its subsidiaries, M.J. Soffe, LLC, Culver City Clothing Company (f/k/a Junkfood Clothing Company), Salt Life, LLC, and

DTG2Go, LLC (f/k/a Art Gun, LLC) (collectively, the “Borrowers”) entered into an Eighth Amendment to the Fifth Amended and Restated Credit Agreement with Wells

Fargo Bank (the “Agent”) and the other lenders set forth therein (the “Eighth Amendment”). The Eighth Amendment essentially clarifies the Amended Credit Agreement’s

provisions regarding the inclusion of eligible in-transit inventory in the borrowing base and amends the definition of Increased Reporting Event to include 12.5% of the

lesser of the borrowing base and the maximum revolver amount as opposed to 12.5% of the line cap. 

On February 3, 2023, the Borrowers entered into a Ninth Amendment to the Fifth Amended and Restated Credit Agreement with the Agent and the other lenders set forth

therein (the “Ninth Amendment”). The Ninth Amendment adds an Accommodation Period beginning on the amendment date and continuing through the date following

September 30, 2023, upon which Borrowers satisfy minimum availability thresholds and during which: (i) the minimum borrowing availability thresholds applicable to

the Amended Credit Agreement are (a) through (and including) April 1, 2023, $

7,500,000

, (b) on and after April 2, 2023 through (and including) June 4, 2023, $

9,000,000

,

(c) on and after June 5, 2023, through the date following September 30, 2023, upon which Borrowers satisfy minimum availability thresholds, $

10,000,000

; and (d) at all

14

times thereafter, $

0

; (ii) the Fixed Charge Coverage Ratio (“FCCR”) covenant is suspended; (iii) Borrowers must maintain specified minimum EBITDA levels for trailing

three-month periods starting March 4, 2023; (iv) the Applicable Margin with respect to loans under the Amended Credit Agreement is increased by

50

 basis points; and

(v) a Cash Dominion Trigger Event occurs if availability is less than $

2,000,000

. The Ninth Amendment also, among other things, (i) amends the FILO maximum amount

calculation by reloading

5

% of eligible accounts receivable (capped at $

3,000,000

) and deferring the applicable amortization schedules to August 1, 2023; (ii) defers the

monthly amortization payments for real estate, machinery and equipment, and intellectual property assets to August 1, 2023; (iii) requires weekly reporting of availability

through the date following September 30, 2023, upon which Borrowers satisfy minimum availability thresholds; and (iv) prohibits certain restricted payments through

the date following September 30, 2023, upon which Borrowers satisfy minimum availability thresholds. 

The foregoing summary of the Eighth and Ninth Amendments and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety

by reference to the text of the Eighth and Ninth Amendments, which are filed herewith as Exhibits 10.1 and 10.2 to this Quarterly Report on Form 10-Q and which are

incorporated herein by reference. 

We expect the Eighth and Ninth Amendments will enhance our borrowing base and allow us to access more of our availability under the Amended Credit Agreement

while easing the financial covenant restrictions for the remainder of fiscal 2023.

See Part II, Item 5. Other Information for additional detail regarding the Ninth Amendment.

15

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. We may from time to

time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the SEC, in our press releases, and in

other reports to our shareholders. All statements, other than statements of historical fact, which address activities, events or developments that we expect or anticipate will

or may occur in the future are forward-looking statements. The words “plan”, “estimate”, “project”, “forecast”, “outlook”, “anticipate”, “expect”, “intend”, “remain”,

“seek", “believe”, “may”, “should” and similar expressions, and discussions of strategy or intentions, are intended to identify forward-looking statements.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current expectations and are necessarily

dependent upon assumptions, estimates and data that we believe are reasonable and accurate but may be incorrect, incomplete or imprecise. Forward-looking statements

are subject to a number of business risks and inherent uncertainties, any of which could cause actual results to differ materially from those set forth in or implied by the

forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial

condition to differ materially from those indicated in forward-looking statements include, among others, the following:

●

the general U.S. and international economic conditions;

●

the impact of the COVID-19 pandemic on our operations, financial condition, liquidity, and capital investments, including recent labor shortages,

inventory constraints, and supply chain disruptions;

●

significant interruptions or disruptions within our manufacturing, distribution or other operations;

●

deterioration in the financial condition of our customers and suppliers and changes in the operations and strategies of our customers and suppliers;

●

the volatility and uncertainty of cotton and other raw material prices and availability;

●

the competitive conditions in the apparel industry;

●

our ability to predict or react to changing consumer preferences or trends;

●

our ability to successfully open and operate new retail stores in a timely and cost-effective manner;

●

the ability to grow, achieve synergies and realize the expected profitability of acquisitions;

●

changes in economic, political or social stability at our offshore locations or in areas in which we, or our suppliers or vendors, operate;

●

our ability to attract and retain key management;

●

the volatility and uncertainty of energy, fuel and related costs;

●

material disruptions in our information systems related to our business operations;

●

compromises of our data security;

●

significant changes in our effective tax rate;

●

significant litigation in either domestic or international jurisdictions;

●

recalls, claims and negative publicity associated with product liability issues;

●

the ability to protect our trademarks and other intellectual property;

●

changes in international trade regulations;

●

our ability to comply with trade regulations;

●

changes in employment laws or regulations or our relationship with employees; or our ability to attract and retain employees;

●

negative publicity resulting from violations of manufacturing standards or labor laws or unethical business practices by our suppliers or independent

contractors;

●

the inability of suppliers or other third-parties, including those providing key equipment, transportation, and other services, to perform their obligations

or fulfill the terms of their contracts with us;

●

restrictions on our ability to borrow capital or service our indebtedness;

●

interest rate fluctuations increasing our obligations under our variable rate indebtedness;

●

the ability to raise additional capital;

●

the impairment of acquired intangible assets;

●

foreign currency exchange rate fluctuations;

●

the illiquidity of our shares; and

●

price volatility in our shares and the general volatility of the stock market.

A detailed discussion of significant risk factors that have the potential to cause actual results to differ materially from our expectations is set forth in Part 1 under the

subheading "Risk Factors" in our Annual Report on Form 10-K for fiscal 2022, filed with the SEC. Any forward-looking statements in this Quarterly Report on Form 10-

Q do not purport to be predictions of future events or circumstances and may not be realized. Further, any forward-looking statements are made only as of the date of this

Quarterly Report on Form 10-Q, and we do not undertake to publicly update or revise the forward-looking statements, except as required by the federal securities law.

16

Business Outlook

We were pleased to start our 2023 fiscal year with double-digit sales growth across four of our five go-to-market channels, including record sales and almost 20% growth

in our DTG2Go digital print channel as well as record sales and 17% growth in our Salt Life lifestyle brand channel. Our topline performance this quarter further illustrates

the resiliency of our multi-pronged business model, which allowed us to overcome the soft demand for basic tees impacting the mass retail supply chain and our Delta

Direct channel for the last several quarters. 

The milestone sales in our Delta Group segment’s DTG2Go channel highlight the market’s growing interest in our digital print and fulfillment strategies and its

appreciation for the reduced working capital investment; lower inventory risk; faster order-to-porch cycle; replenishment and quick activation capability; unlimited color

and design choice; and other benefits they provide. DTG2Go continues to effectively leverage two very unique advantages that differentiate it in the market – a multi-

facility footprint facilitating one-to-two day shipping speed to 99% of United States consumers and priority access to our Delta Direct channel’s low-cost vertical blank

tee and fleece supply. DTG2Go’s “Digital First” strategy continues to generate substantial new customer demand and we are encouraged with the productivity gains

achieved on the new technology. Further improvements in machine efficiency, quality and production rates are necessary for us to realize our long-term objectives in this

business. 

Our Delta Group segment’s Global Brands channel delivered double-digit sales growth for the quarter and continues to add value to the supply chains of multi-national,

regional and major sportswear brands and the United States armed forces as a preferred supplier of custom decorated products. We also achieved double-digit growth in

our Delta Group segment’s Retail Direct channel where we provide decorated and “retail ready” products directly to the brick and mortar locations and eCommerce

fulfillment centers of sporting goods and outdoor retailers, farm and fleet stores, department stores, and mid-tier and mass retailers. 

The growth in our Global Brands and Retail Direct channels was accelerated by new business resulting from the Activewear industry’s burgeoning emphasis on nearshore

sourcing strategies like those offered by our vertical platform in Central America coupled with our ability to meet the service and compliance requirements of the world’s

leading brands and retailers. We expect the focus on U.S. proximity sourcing strategies to continue and believe that both of these channels are positioned to generate

growth opportunities across our Delta Group segment over time.

As expected, our Delta Group segment’s results for the quarter were impacted by the reduced demand in the mass retail supply chain and the associated manufacturing

shutdowns that we, like many across the industry, initiated to recalibrate output as well as elevated raw material, energy and labor costs. Although the price of cotton,

one of our key raw materials, has moderated from last year’s notable highs, that high-cost cotton continues to flow through our cost of sales due to production cadences

and pressures margins accordingly. We expect to cycle through most of that higher-priced cotton in our second quarter and begin to see the benefit of lower input costs

in our results as we progress through the second half of our fiscal year. We will continue to leverage the flexibility of our vertical manufacturing strategy until we see

better equilibrium between inventories and demand and also focus on opportunities in higher margin areas of our Delta Direct channel outside of the mass retail supply

ecosystem. 

The momentum in our Salt Life Group segment continues with this quarter’s record sales and excellent bottom line performance as it moves into its traditionally strong

Spring selling season. The escalating growth across Salt Life’s direct-to-consumer retail and eCommerce channels should continue as it expands its brick and mortar retail

and digital footprints to keep pace with the brand’s consumer base stretching across the country. Salt Life is targeting six to eight new store openings this fiscal year,

including debut locations in New Jersey and Virginia, bringing its total store count to approximately 30 locations across nine states spanning the U.S. coastline from

California to Florida to New Jersey. 

Salt Life’s consumer eCommerce site, www.saltlife.com, now ships to all 50 states, including significant order flows to states outside of the brand’s traditional southeastern

base, and its wholesale business also continues to expand. There are now approximately 1,800 customer retail doors across 48 states and foreign countries offering Salt

Life products. We continue to see a tremendous runway for growth for the Salt Life brand across the United States and internationally. 

Looking ahead, we will further rely on the versatility of our multiple go-to-market strategies and focus on organic growth through both new customer acquisition and

expansion of existing relationships. We see outstanding opportunities deriving from our investments in DTG2Go’s digital technology platform and Salt Life’s authentic

lifestyle brand positioning. Moreover, we are now seeing some welcome cost stabilization in our Delta Group segment and expect these trends to positively impact

profitability as we progress throughout the year. Along the way, we will continue to prudently manage our working capital and expenses while pursuing opportunities

generated by our diversified business model.

Results of Operations

Financial results included herein have been presented on a generally accepted accounting principles ("GAAP") basis.

Net sales were $107.3 million in the first quarter of fiscal 2023, a decrease of 3.1% compared to the prior year first quarter net sales of $110.7 million. 

Net sales in the Delta Group segment declined 4.8% to $97.0 million in the first quarter of fiscal 2023 compared to $101.9 million in the prior year first quarter.

We saw record first quarter sales in our DTG2Go business and growth in our Global Brands and Retail Direct channels, offset by diminished demand in the mass

retail supply chain driving reduced sales in our Delta Direct channel.

The Salt Life Group segment first quarter fiscal 2023 revenue grew 16.5% to $10.3 million compared to $8.8 million in the prior year first quarter. The segment’s

record first quarter sales were driven by growth in both direct-to-consumer and wholesale channels. 

Gross margins were 12.7% for the first quarter of fiscal 2023, declining 810 basis points from the prior year first quarter gross margin of 20.8%.

The Delta Group segment gross margins were 8.0% for the first quarter of fiscal 2023, a decline of 100 basis points from the prior year first quarter margins of

18.0%. Gross margins were primarily impacted by higher inventory costs from inflationary raw material and other input pricing in fiscal 2022 flowing through

sales during the quarter, in addition to $3.4 million in plant curtailment costs. 

The Salt Life Group segment gross margins improved to 57.0% in the first quarter of fiscal 2023, an improvement of 370 basis points compared to 53.3% in the

prior year first quarter resulting from a favorable mix of sales, including increased Salt Life branded retail store and ecommerce sales. 

Selling, general, and administrative expenses ("SG&A") were $18.9 million in the first quarter of fiscal 2023, or 17.6% of sales, compared to $17.5 million, or 15.8% of

sales, in the prior year first quarter. The increase in SG&A expenses of $1.3 million compared to the prior year first quarter was primarily driven by higher selling costs

driven by our expanded Salt Life retail footprint, in addition to increased distribution and administrative costs. 

Other income for the 2023 and 2022 first fiscal quarters includes profits related to our Green Valley Industrial Park equity method investment. Additionally, in the first

quarter of fiscal 2023, we recognized a discrete gain of $2.5 million from the settlement of a commercial litigation matter.

Operating loss in the first quarter of fiscal 2023 was $2.6 million. This compares to operating income of $5.9 million in the prior year first fiscal quarter.

17

The Delta Group segment had operating income of $0.1 million in the first fiscal quarter of 2023, or 0.1% of net sales, compared to $8.4 million, or 8.3% of net

sales, in the prior year first quarter. The decrease in operating profit was driven by declining gross margins due to increased inflationary costs and plant curtailment

costs. 

The Salt Life Group segment had operating income of $0.3 million in the first fiscal quarter of 2023, or 2.5% of net sales, compared to $0.1 million, or 1.5% of

sales, in the prior year first quarter. The increase in operating profit was driven by higher sales volume and increased gross margins offset by higher selling and

distribution costs. 

Net interest expense for the first quarters of each of fiscal years 2023 and 2022 was $2.9 million and $1.6 million, respectively. 

Our effective tax rate on operations for the three-month period ended December 2022 was 35.0%. This compares to an effective tax rate of 15.1% for the same period in

the prior year and 17.9% for the full fiscal year 2022. Changes in the mix of U.S. taxable income compared to profits in tax-free or lower-tax jurisdictions drove this

change in our effective tax rate.

Net loss attributable to shareholders for the first fiscal quarter of 2023 was $3.6 million, or a loss of $0.51 per diluted share, compared to net income of $3.6 million, or

$0.51 per diluted share, in the prior year.

Accounts receivable were $57.8 million at December 2022, compared to $68.2 million as of September 2022. Days sales outstanding ("DSO") as of December 2022 were

47 days compared to 52 days at September 2022.

Net inventory as of December 2022 was $258.9 million, an increase of $10.4 million from September 2022 and $75.8 million from December 2021. The increase from

September 2022 stemmed primarily from timely Salt Life first quarter inventory deliveries compared to last year’s supply chain delays pushing scheduled deliveries into

the second quarter.

Total net debt, including capital lease financing and cash on hand, was $185.2 million as of December 31, 2022, an increase of $14.6 million from September 2022 and

$39 million from December 2021. Cash on hand and availability under the Company’s U.S. revolving credit facility totaled $27.2 million as of December 31, 2022, a

decrease of $7.5 million from September 2022 and $5.8 million from December 2021, with the increase from September 2022 principally driven by investments in the

business to support working capital needs. 

Liquidity and Capital Resources

Operating Cash Flows

Operating activities resulted in a cash usage of $11.9 million for the three months ended December 2022 compared to $13.2 million of cash used in the prior year. The

improvement in cash used in operating cash flows in the current year are due to the timing of payments from customers and to vendors, in addition to reduced inventory

in the first quarter of fiscal 2023 compared to the prior year as a result of reduced customer demand. 

Investing Cash Flows

Cash outflows for capital expenditures were $2.1 million during the first three months of 2023 compared to $1.8 million in the same period in the prior year. During the

three-months ended June 2022, there were $0.1 million of capital expenditures financed under a capital lease arrangement. We currently expect to spend less on capital

expenditures in 2023 as compared to 2022, with our expenditures expected to focus on digital print equipment, information technology, manufacturing efficiency, and

direct-to-consumer investments, including new Salt Life retail store openings. 

Financing Activities

During the three months ended December 2022, cash provided by financing activities was $9.6 million and primarily related to funding our operating activities, working

capital needs, and certain capital investments offset by scheduled loan principal payments.

Future Liquidity and Capital Resources

See Note F – Debt to the Condensed Consolidated Financial Statements for a discussion of our various financing arrangements, including the terms of our revolving U.S.

credit facility.

Our credit facility, as well as cash flows from operations, are intended to fund our day-to-day working capital needs, and along with capital lease financing arrangements,

to fund our planned capital expenditures. However, any material deterioration in our results of operations may result in the loss of our ability to borrow under our U.S.

revolving credit facility and to issue letters of credit to suppliers, or may cause the borrowing availability under that facility to be insufficient for our needs. Availability

under our credit facility is primarily a function of the levels of our accounts receivable and inventory. A significant deterioration in our accounts receivable or inventory

levels could restrict our ability to borrow additional funds or service our indebtedness. Additionally, a significant deterioration in our business results could cause our

availability to fall below minimum thresholds, thereby requiring us to maintain the minimum FCCR specified in our credit agreement, which we may not be able to

maintain. Refer to Item 5. Other Information for further information regarding our current financial covenants. While our availability at December 2022 was above the

minimum thresholds specified in our credit agreement, a significant deterioration in our business could cause our availability to fall below such thresholds, thereby

requiring us to maintain the minimum FCCR specified in our credit agreement.

Share Repurchase Program

The Company did not purchase any shares under our previously announced share repurchase program in the first quarter of fiscal 2023. The total amount repurchased

during the life of the program is $56.4 million. At the end of the first quarter of fiscal 2023, the Company had $3.6 million of remaining repurchase capacity under its

existing authorization.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which were prepared

in accordance with U.S. GAAP. The preparation of our Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported

amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during

the reporting periods. We base our estimates and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances,

the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results

18

may differ from these estimates under different assumptions or conditions. The most significant estimates and assumptions relate to revenue recognition, accounts

receivable and related reserves, inventory and related reserves, the carrying value of goodwill, and the accounting for income taxes.

A detailed discussion of critical accounting policies is contained in the Significant Accounting Policies included in Note 2 to the Audited Consolidated Financial

Statements included in our Annual Report on Form 10-K for fiscal 2022, and there have been no changes in those policies since the filing of that Annual Report on Form

10-K with the SEC.

Environmental and Other Regulatory Matters

We are subject to various federal, state and local environmental laws and regulations concerning, among other things, wastewater discharges, storm water flows, air

emissions and solid waste disposal. The labeling, distribution, importation, marketing, and sale of our 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. Our international operations

are also subject to compliance with the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other anti-bribery laws applicable to our operations.

The environmental and other regulations applicable to our business are becoming increasingly stringent, and we incur capital and other expenditures annually to achieve

compliance with these environmental standards and regulations. We currently do not expect that the amount of expenditures required to comply with these environmental

standards or other regulatory matters will have a material adverse effect on our operations, financial condition or liquidity. There can be no assurance, however, that future

changes in federal, state, or local regulations, interpretations of existing regulations or the discovery of currently unknown problems or conditions will not require

substantial additional expenditures. Similarly, while we believe that we are currently in compliance with all applicable environmental and other regulatory requirements,

the extent of our liability, if any, for past failures to comply with laws, regulations and permits applicable to our operations cannot be determined and could have a material

adverse effect on our operations, financial condition and liquidity.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to reasonably assure that information required to be disclosed in the reports that

we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s requirements. Disclosure

controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or

submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and principal accounting officer, as

appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and principal accounting officer, has evaluated the effectiveness of our disclosure controls and

procedures as of the end of period covered by this quarterly report ("the Evaluation Date") and, based on their evaluation, our Chief Executive Officer and principal

accounting officer have concluded that these controls and procedures were effective as of the Evaluation Date.

Changes in Internal Control Over Financial Reporting

There were no changes during the December 2022 quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial

reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note M—Legal Proceedings, in Part I, Item 1, which is incorporated herein by reference.

Item 1A. Risk Factors

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) Repurchases of Common Stock

See Note N—Repurchase of Common Stock, Part I, in Item 1, which is incorporated herein by reference.

Item 5. Other Information

Ninth Amendment to the Fifth Amended and Restated Credit Agreement

On February 3, 2023, Delta Apparel, Inc. and its subsidiaries, M.J. Soffe, LLC, Culver City Clothing Company (f/k/a Junkfood Clothing Company), Salt Life, LLC, and

DTG2Go, LLC (f/k/a Art Gun, LLC) (collectively, the “Borrowers”) entered into a Ninth Amendment to the Fifth Amended and Restated Credit Agreement with Wells

Fargo Bank (the “Agent”) and the other lenders set forth therein (“Ninth Amendment”). The Fifth Amended and Restated Credit Agreement, dated as of May 10, 2016,

was filed as Exhibit 10.1 to Delta Apparel’s Quarterly Report on Form 10-Q filed with the SEC on May 12, 2016. The First Amendment to the Amended Credit Agreement

was filed as Exhibit 10.2.5 to Delta Apparel’s Annual Report on Form 10-K filed with the SEC on November 28, 2017. The Consent and Second Amendment to the

Amended Credit Agreement was filed as Exhibit 10.1 to Delta Apparel’s Form 8-K filed with the SEC on March 13, 2018. The Consent and Third Amendment to the

Amended Credit Agreement was filed as Exhibit 10.1 to Delta Apparel’s Form 8-K filed with the SEC on October 9, 2018. The Consent and Fourth Amendment to the

Amended Credit Agreement was filed as Exhibit 10.2.8 to Delta Apparel's Annual Report on Form 10-K filed with the SEC on November 21, 2019. The Fifth Amendment

to the Amended Credit Agreement was filed as Exhibit 10.1 to Delta Apparel’s Quarterly Report on Form 10-Q filed with the SEC on April 30, 2020. The Sixth

Amendment to the Amended Credit Agreement was filed as Exhibit 10.1 to Delta Apparel’s Form 8-K filed with the SEC on August 31, 2020. The Seventh Amendment

to the Amended Credit Agreement was filed as Exhibit 10.1 to Delta Apparel’s Form 8-K filed with the SEC on June 3, 2022. 

The Ninth Amendment adds an Accommodation Period beginning on the amendment date and continuing through the date following September 30, 2023, upon which

Borrowers satisfy minimum availability thresholds and during which: (i) the minimum borrowing availability thresholds applicable to the Amended Credit Agreement

are (a) through (and including) April 1, 2023, $7,500,000, (b) on and after April 2, 2023 through (and including) June 4, 2023, $9,000,000, (c) on and after June 5, 2023,

through the date following September 30, 2023, upon which Borrowers satisfy minimum availability thresholds, $10,000,000; and (d) at all times thereafter, $0; (ii) the

Fixed Charge Coverage Ratio (“FCCR”) covenant is suspended; (iii) Borrowers must maintain specified minimum EBITDA levels for trailing three-month periods starting

March 4, 2023; (iv) the Applicable Margin with respect to loans under the Amended Credit Agreement is increased by 50 basis points; and (v) a Cash Dominion Trigger

19

Event occurs if availability is less than $2,000,000. The Ninth Amendment also, among other things, (i) amends the FILO maximum amount calculation by reloading 5%

of eligible accounts receivable (capped at $3,000,000) and deferring the applicable amortization schedules to August 1, 2023; (ii) defers the monthly amortization payments

for real estate, machinery and equipment, and intellectual property assets to August 1, 2023; (iii) requires weekly reporting of availability through the date following

September 30, 2023, upon which Borrowers satisfy minimum availability thresholds; and (iv) prohibits certain restricted payments through the date following September

30, 2023, upon which Borrowers satisfy minimum availability thresholds. 

We expect the Ninth Amendment will enhance our borrowing base and allow us to access more of our availability under the Amended Credit Agreement while easing the

financial covenant restrictions for the remainder of fiscal 2023.

The foregoing summary of the Ninth Amendment and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference

to the text of the Ninth Amendment, which is filed herewith as Exhibit 10.2 to this Quarterly Report on Form 10-Q and which is incorporated herein by reference.

Separate from the relationship related to the Amended Credit Agreement, as amended, certain lenders thereunder have engaged in, or may in the future engage in,

transactions with, and perform services for, Delta Apparel, Inc. and/or its subsidiaries in the ordinary course of business

20

Item 6. Exhibits

Exhibits

10.1

Eighth Amendment to Fifth Amended and Restated Credit Agreement, dated January 3, 2023, among Delta Apparel, Inc., M.J. Soffe, LLC, Culver City

Clothing Company, Salt Life, LLC, and DTG2Go, LLC, and the financial institutions named therein as Lenders, and Wells Fargo Bank, National

Association, as agent for Lenders.

10.2

Ninth Amendment to Fifth Amended and Restated Credit Agreement, dated February 3, 2023, among Delta Apparel, Inc., M.J. Soffe, LLC, Culver City

Clothing Company, Salt Life, LLC, and DTG2Go, LLC, and the financial institutions named therein as Lenders, and Wells Fargo Bank, National

Association, as agent for Lenders.

10.3

Agreement dated December 7, 2022

31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of the Principal Accounting Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant

to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of the Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of

2002.

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the

Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase

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Inline XBRL Taxonomy Extension Definition Linkbase

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104

Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto

duly authorized.

DELTA APPAREL, INC.

(Registrant)

Date

February 7, 2023

By:

/s/Nancy P. Bubanich

Nancy P. Bubanich

Chief Accounting Officer

EX-10.1

1

EXECUTION VERSION

EIGHTH AMENDMENT TO

FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

THIS EIGHTH AMENDMENT TO FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment") is made and entered into on January 3, 2023,

by and among DELTA APPAREL, INC., a Georgia corporation ("Delta"), M. J. SOFFE, LLC, a North Carolina limited liability company ("Soffe"), CULVER CITY

CLOTHING CONWANY, a Georgia corporation ("Culver City"), SALT LIFE, LLC, a Georgia limited liability company ("Salt Life"), DTG2GO, LLC, a Georgia

limited liability company ("DTG2GO"; Delta, Soffe, Culver City, Salt Life, and DTG2GO, each individually, a "Borrower" and, collectively, "Borrowers"); the parties

to the Credit Agreement (as defined below) from time to time as Lenders (each individually, a "Lender" and collectively, "Lenders"); and WELLS FARGO BANK,

NATIONAL ASSOCIATION, a national banking association ("Wells Fargo"), in its capacity as agent for Lenders (together with its successors in such capacity,

"Agent").

Recitals:

Borrowers, Agent and Lenders are parties to a certain Fifth Amended and Restated Credit Agreement dated as of May 10, 2016 (as at any time amended, restated,

modified or supplemented, the "Credit Agreement"), pursuant to which Agent and Lenders have made certain loans and other financial accommodations available to

Borrowers.

The parties desire to amend the Credit Agreement as hereinafter set forth.

NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby severally

acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1.

Definitions. All capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meaning ascribed to such terms in the

Credit Agreement.

2.

Amendments to Credit Agreement. The Credit Agreement is hereby amended as follows:

(a)

By deleting the last paragraph in the definition of "Borrowing Base" set forth in Schedule I . 1 to the Credit Agreement, and by substituting the

following in lieu thereof:

Notwithstanding anything to the contrary contained herein, (A) the portion of the Borrowing Base on any date calculated with reference to Eligible

Real Property, Eligible Intellectual Property and Eligible Equipment collectively, shall not exceed (i) at any time prior to the first day of the fiscal

month immediately following the Seventh Amendment Date, twenty percent (20%) of the Maximum Revolver Amount and (ii) at any time on and

after the first day of the fiscal month immediately following the Seventh Amendment Date, twenty-five percent (25%) of the Maximum Revolver

Amount, (B) the portion of the Borrowing Base on any date calculated with reference to Eligible In-Transit Inventory, shall not exceed $6,000,000

at any time, and (C) the aggregate amount of Adjusted Revolver Usage based on Eligible Inventory consisting of yarn classified as work-in-process

outstanding at any time shall not exceed $2,500,000 at any time.

(b)

By deleting the definitions of "Eligible In-Transit Inventory" and "Increased Reporting Event" set forth in Schedule 1.1 to the Credit Agreement

and by substituting the following in lieu thereof:

“Eligible In-Transit Inventory" means those items of Inventory that do not qualify as Eligible Inventory solely because they are not in a location set forth on

Schedule 4.23 or in transit among such locations and a Borrower does not have actual and exclusive possession thereof, but as to which,

(a)

such Inventory is either

(1)

the subject of a Qualified Import Letter of Credit and the applicable Letter of Credit has

been drawn upon in full and the Issuing Bank has honored such drawing, or

(2)

as determined by Agent in its Permitted Discretion, not subject to (i) any Person's right of

reclamation, repudiation, stoppage in transit or diversion or (ii) any other right or claim of any other Person which

is (or is capable of being) senior to, or pari passu with, the Lien of Agent or Agent determines that any Person's

right or claim impairs, or interferes with, directly or indirectly, the ability of Agent to realize on, or reduces the

amount that Agent may realize from the sale or other disposition of such Inventory,

(b)

such Inventory currently is in transit (whether by vessel, air, or land) from a location outside of the continental

United States to a location set forth on Schedule 4.23

(c)

title to such Inventory has passed to a Borrower,

(d)

such Inventory is insured against types of loss, damage, hazards, and risks, and in amounts, satisfactory to Agent

in its Permitted Discretion,

(e)

such Inventory either

2

(1)

is the subject of a negotiable bill of lading governed by the laws of a state within the United

States (x) that is consigned to Agent or one of its agents (either directly or by means of endorsements), (y) that

was issued by the carrier respecting the subject Inventory, and (z) that either is (I) in the possession of Agent or

a customs broker (in each case in the continental United States), or (Il) the subject of a telefacsimile copy that

Agent has received from the Issuing Bank which issued the applicable Letter of Credit and as to which Agent also

has received a confirmation from such Issuing Bank that such document is in-transit by air-courier to Agent or a

customs broker (in each case, in the continental United States), or

(2)

is the subject of a negotiable cargo receipt governed by the laws of a state within the United

States and is not the subject of a bill of lading (other than a negotiable bill of lading consigned to, and in the

possession of, a consolidator or Agent, or their respective agents) and such negotiable cargo receipt is (x)

consigned to Agent or one of its agents (either directly or by means of endorsements), (y) that was issued by a

consolidator respecting the subject Inventory, (z) that either is (I) in the possession of Agent or a customs broker

(in each case in the continental United States), or (Il) the subject of a telefacsimile copy that Agent has received

from the Issuing Bank which issued the applicable Letter of Credit and as to which Agent also has received a

confirmation from such Issuing Bank that such document is in-transit by air-courier to Agent or a customs broker

(in each case, in the continental United States),

(f) such Borrower has provided a certificate to Agent that certifies that, such Inventory meets all of Borrowers' representations and

warranties contained in the Loan Documents concerning Eligible In-Transit Inventory, that it knows of no reason why such Inventory

would not be accepted by such Borrower when it arrives in the continental United States and that the shipment as evidenced by the

documents conforms to the related order documents, and

(g) such Inventory shall not have been in transit for more than fortyfive (45) days.

"Increased Reporting Event" means, at any time, Alternate Excess Availability is less than the greater of (a) 12.5% of the lesser of the Borrowing

Base and the Maximum Revolver Amount, and (b) $20,000,000 (such amount to be increased pro rata with the amount of any increase in the

Commitments pursuant to Section 2.14).

3.

Ratification and Reaffirmation. Each Borrower hereby ratifies and reaffirms the Obligations, each of the Loan Documents and all of such Borrower's

covenants, duties, indebtedness and liabilities under the Loan Documents.

4.

Acknowledgments and Stipulations. Each Borrower acknowledges and stipulates that the Credit Agreement and the other Loan Documents executed by such

Borrower are legal, valid and binding obligations of such Borrower that are enforceable against such Borrower in accordance with the terms thereof; all of the Obligations

are owing and payable without defense, offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof, the same is

hereby waived by such Borrower); the security interests and Liens granted by such Borrower in favor of Agent are duly perfected, first priority security interests and

Liens; and, as of the opening of business on December 21, 2022, the unpaid principal amount of the Revolver Loans totaled $144,579,131.18, and the undrawn face

amount of all Letters of Credit totaled $425,000.

5.

Representations and Warranties. Each Borrower represents and warrants to Agent and Lenders, to induce Agent and Lenders to enter into this Amendment,

that no Default or Event of Default exists on the date hereof; the execution, delivery and performance of this Amendment have been duly authorized by all requisite

corporate action on the part of such Borrower and this Amendment has been duly executed and delivered by such Borrower; and all of the representations and warranties

made by such Borrower in the Credit Agreement are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any

representations and warranties that already are qualified or modified by materiality in the text thereof) on and as ofthe date hereof, as though made on and as of the date

hereof (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and

correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified

by materiality in the text thereof) as of such earlier date).

6.

Reference to Credit Agreement. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to '

I

this Agreement," "hereunder," or

words of like import shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

7.

Breach of Amendment. This Amendment shall be part of the Credit Agreement and a breach of any representation, warranty or covenant herein shall constitute

an Event of Default.

8.

Conditions Precedent. The effectiveness of the amendments contained in Section 2 hereof are subject to the satisfaction of each of the following conditions

precedent, in form and substance satisfactory to Agent, unless satisfaction thereof is specifically waived in writing by Agent:

(a)

Agent's receipt of duly executed counterparts of this Amendment;

(b)

Agent's receipt of a certificate from the Secretary of each Loan Party attesting to the resolutions of such Loan Party's board of directors authorizing

its execution, delivery, and performance of the Loan Documents to which it is a party;

(c)

no Default or Event of Default shall exist both before and after giving pro forma effect to this Amendment; and

(d)

the representations and warranties of each Borrower or its Subsidiaries contained in the Credit Agreement or in the other Loan Documents shall

be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified

or modified by materiality in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such

representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except

that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of

such earlier date).

9.

Expenses of Agent. Borrowers agree to pay, on demand, all costs and expenses incurred by Agent in connection with the preparation, negotiation and execution

of this Amendment and any other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including, without

3

limitation, the costs and fees of Agent's legal counsel and any taxes or expenses associated with or incurred in connection with any instrument or agreement referred to

herein or contemplated hereby.

10.

Effectiveness: Governing Law. This Amendment shall be effective upon acceptance by Agent and Lenders (notice of which acceptance is hereby waived),

whereupon the same shall be governed by and construed in accordance with the internal laws of the State of Georgia.

11.

Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

12.

No Novation etc. Except as otherwise expressly provided in this Amendment, nothing herein shall be deemed to amend or modify any provision of the Credit

Agreement or any of the other Loan Documents, each of which shall remain in full force and effect. This Amendment is not intended to be, nor shall it be construed to

create, a novation or accord and satisfaction, and the Credit Agreement as herein modified shall continue in full force and effect.

13.

Counterparts: Telecopied Signatures. This Amendment maybe executed in any number of counterparts and by different parties to this Amendment on separate

counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered

by a party by facsimile transmission shall be deemed to be an original signature hereto.

14.

Further Assurances. Each Borrower agrees to take such further actions as Agent shall reasonably request from time to time in connection herewith to evidence

or give effect to the amendments set forth herein or any of the transactions contemplated hereby.

15.

Section Titles. Section titles and references used in this Amendment shall be without substantive meaning or content of any kind whatsoever and are not a

part of the agreements among the parties hereto.

16.

Release of Claims. To induce Agent and Lenders to enter into this Amendment, each Borrower hereby releases, acquits and forever discharges Agent and

Lenders, and all officers, directors, agents, employees, successors and assigns ofAgent and Lenders, from any and all liabilities, claims, demands, actions or causes of

action of any kind or nature (if there be any), whether absolute or contingent, disputed or undisputed, at law or in equity, or known or unknown, that such Borrower now

has or ever had against Agent or any Lender arising under or in connection with any of the Loan Documents or otherwise. Each Borrower represents and warrants to

Agent and Lenders that such Borrower has not transferred or assigned to any Person any claim that such Borrower ever had or claimed to have against Agent or any

Lender.

17.

Waiver of Jury Trial . To the fullest extent permitted by applicable law, the parties hereto each hereby waives the right to trial by jury in any action, suit,

counterclaim or proceeding arising out of or related to this Amendment.

[Remainder of page intentionally left blank; signatures appear on following pages.]

4

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal and delivered by their respective duly authorized officers on

the date first written above.

BORROWERS:

 DELTA APPAREL INC. 

By: /s/ Nancy Bubanich

Name: Nancy Bubanich

Title: Chief Accounting Officer 

M.J. SOFFE, LLC

By: /s/ Nancy Bubanich

Name: Nancy Bubanich

Title: Chief Accounting Officer 

CULVER CITY CLOTHING COMPANY

By: /s/ Nancy Bubanich

Name: Nancy Bubanich

Title: Chief Accounting Officer 

SALT LIFE, LLC

By: /s/ Nancy Bubanich

Name: Nancy Bubanich

Title: Chief Accounting Officer 

DTG2GO, LLC

By: /s/ Nancy Bubanich

Name: Nancy Bubanich

Title: Chief Accounting Officer 

[Signatures continue on the following page.]

5

AGENT: 

WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Christopher M. Waterstreet

Name: Christopher M. Waterstreet

Title: Vice President

LENDERS:

WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Christopher M. Waterstreet

Name: Christopher M. Waterstreet

Title: Vice President

[Signatures continue on the following page.]

6

REGIONS BANK: 

By: /s/ Scott Martin 

Name: Scott Martin

Title: Managing Director

PNC BANK, NATIONAL ASSOCIATION: 

By: /s/ Doug Meckelnburg 

Name: Doug Meckelnburg

Title: 

EX-10.2

1

EXECUTION VERSION

NINTH AMENDMENT 

TO 

FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

THIS NINTH AMENDMENT TO FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is made and entered into on February

3, 2023, by and among

DELTA APPAREL, INC.

, a Georgia corporation (“Delta”),

M. J. SOFFE, LLC

, a North Carolina limited liability company (“Soffe”),

CULVER

CITY CLOTHING COMPANY

, a Georgia corporation (“Culver City”),

SALT LIFE, LLC

, a Georgia limited liability company (“Salt Life”),

DTG2GO, LLC

, a

Georgia limited liability company (“DTG2GO”; Delta, Soffe, Culver City, Salt Life, and DTG2GO, each individually, a “Borrower” and, collectively, “Borrowers”); the

parties to the Credit Agreement (as defined below) from time to time as Lenders (each individually, a “Lender” and collectively, “Lenders”); and

WELLS FARGO

BANK, NATIONAL ASSOCIATION

, a national banking association (“Wells Fargo”), in its capacity as agent for Lenders (together with its successors in such capacity,

“Agent”).

Recitals:

Borrowers, Agent and Lenders are parties to a certain Fifth Amended and Restated Credit Agreement dated as of May 10, 2016 (as at any time amended,

restated, modified or supplemented, the “Credit Agreement”), pursuant to which Agent and Lenders have made certain loans and other financial accommodations available

to Borrowers.

The parties desire to amend the Credit Agreement as hereinafter set forth.

NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby

severally acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Definitions.

 All capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meaning ascribed to such terms in the

Credit Agreement.

2. Amendments to Credit Agreement.

(a)

Certain Definitions. Schedule 1.1 of the Credit Agreement is hereby amended to add, in addition to and not in limitation thereof, the

following new definitions in the appropriate alphabetical order:

“ “Accommodation Period” means the period commencing upon the Ninth Amendment Date through and including the date upon which

Agent has received from Borrowers, (a) a Borrowing Base Certificate as of the month ending September 30, 2023, evidencing that the

Availability of Borrowers, as of the date of receipt of such Borrowing Base Certificate, is equal to or more than the greater of (i)

seventeen and one-half percent (17.50%) of the lesser of (A) the Borrowing Base or (B) the Maximum Revolver Amount and (ii)

$25,000,000 or (b) a written request by Borrowers to Agent, at any time after receipt of such Borrowing Base Certificate, to terminate

the Accommodation Period together with evidence that, as of the date of such written request, the Average Availability of Borrowers

for the consecutive thirty (30) day period ending on such date of determination is more than the greater of such amounts specified in the

foregoing clause (a). For purposes of this definition, Availability and Average Availability will be calculated without giving effect to

the Availability Block.

“Availability Block” means, (a) on and after the Ninth Amendment Date through (and including) April 1, 2023, $7,500,000, (b) on and

after April 2, 2023 through (and including) June 4, 2023, $9,000,000, (c) on and after June 5, 2023 through the date of (i) receipt by

Agent of a Borrowing Base Certificate as of the month ending September 30, 2023, evidencing that the Availability (calculated for this

purpose, without giving effect to the Availability Block) of Borrowers, as of the date of receipt of such Borrowing Base Certificate, is

equal to or more than the greater of (A) seventeen and one-half percent (17.50%) of the lesser of (1) the Borrowing Base or (2) the

Maximum Revolver Amount and (B) $25,000,000, $10,000,000 or (ii) a written request by Borrowers to Agent, at any time after receipt

of such Borrowing Base Certificate, to reduce the Availability Block, together with evidence that, as of the date of such written request,

the Average Availability of Borrowers for the consecutive thirty (30) day period ending on such date of determination is more than the

greater of such amounts specified in the foregoing clause (c) and (d) at all times thereafter, $0.

“Increased Interest Period” means on the first day of the Accommodation Period through and including the date after expiration of the

Accommodation Period and upon which Borrowers have provided evidence, in form and substance acceptable to Agent, that as of the

last day of any two (2) consecutive quarters, Borrowers have maintained a Fixed Charge Coverage Ratio greater than 1.00 to 1.00, in

each case, for the trailing three (3) month period then ended.

“Ninth Amendment Date” means February 3, 2023.

“Ninth Amendment Fee Letter” means that certain fee letter, dated as of the Ninth Amendment Date, among Borrowers and Agent, in

form and substance reasonably satisfactory to Agent.

“Non-Amortizing Period” means, with respect to the Borrowing Base, the period commencing on February 1, 2023 through and

including July 31, 2023.

“Restricted Payment Accommodation Period” means the period commencing upon the Ninth Amendment Date through and including

the date upon which Agent has received from Borrowers (a) a Borrowing Base Certificate as of the month ending September 30, 2023,

evidencing that the Availability of Borrowers, as of the date of receipt of such Borrowing Base Certificate, is equal to or more than the

greater of (i) twenty percent (20%) of the lesser of (A) the Borrowing Base or (B) the Maximum Revolver Amount and (ii) $30,000,000

or (b) a written request by Borrowers to Agent, at any time after receipt of such Borrowing Base Certificate, to terminate the Restricted

Payment Accommodation Period together with evidence that, as of the date of such written request, the Average Availability of

Borrowers for the consecutive thirty (30) day period ending on such date of determination is more than the greater of such amounts

specified in the foregoing clause (a). For purposes of this definition, Availability and Average Availability will be calculated without

giving effect to the Availability Block

2

(b)

Restricted Payments. Section 6.7(c) of the Credit Agreement is amended to add the following new sentence at the end

thereof:

“Notwithstanding the foregoing or anything to the contrary contained herein, in no event shall any Restricted Payments be made during

the Restricted Payment Accommodation Period.” 

(c)

Fixed Charge Coverage Ratio. Section 7(a) of the Credit Agreement is hereby amended and restated in its entirety to read as

follows:

“(a) Fixed Charge Coverage Ratio. Commencing on the date on which a Financial Covenant Period begins and measured as of

the end of the fiscal month immediately preceding the date on which a Financial Covenant Period first begins for which financial

statements have been received by Agent in accordance with this Agreement (or, in the event such Financial Covenant Period is due to a

Financial Covenant Trigger under clause (c) of the definition thereof, as of September 30, 2023) and as of each fiscal month end

thereafter during such Financial Covenant Period, have a Fixed Charge Coverage Ratio, measured on a fiscal month-end basis, tested

for the twelve fiscal (12) month period ending on such date, of not less than 1.00 to 1.00; provided, that, the Fixed Charge Coverage

Ratio hereunder shall not be tested prior to the month ending September 30, 2023; provided, further, that, regardless of whether a

Financial Covenant Period is in effect, Borrowers shall continue to submit, concurrently with the delivery of each Compliance Certificate

required to be delivered hereunder, calculations with respect to such Fixed Charge Coverage Ratio.”

(d)

EBITDA Performance to Plan. Section 7(b) of the Credit Agreement is hereby amended and restated in its entirety to read

as follows:

“(b) EBITDA Performance to Plan. Commencing with the fiscal month ending March 4, 2023, and as of the last day of each

month during the Accommodation Period, maintain EBITDA initially tested for the trailing one (1) month period then ended and

thereafter building, by month, to a trailing three (3) month period of not

less than the amount set forth below adjacent to such fiscal month end for such corresponding period then ended.

Fiscal Month Ending

EBITDA

March 4, 2023

$1,326,000

April 1, 2023

$3,757,000

May 6, 2023

$5,250,000

June 3, 2023

$4,449,000

July 1, 2023

$3,128,000

August 5, 2023

$3,049,000

September 2, 2023

$4,907,000

September 30, 2023

$7,521,000”

(e)

Applicable Margin. The definition of Applicable Margin set forth in Schedule 1.1 of the Credit Agreement is hereby amended and

restated in its entirety to read as follows:

“ “Applicable Margin” means, as of any date of determination and with respect to Base Rate Loans or SOFR Loans, as applicable, the

applicable margin set forth in the following table that corresponds to the Alternate Average Excess Availability of Borrowers for the

most recently completed fiscal quarter; provided, that for the period from the Seventh Amendment Date through and including June 30,

2022, the Applicable Margin shall be set at the margin in the row styled “Level II”; provided further, that any time an Event of Default

has occurred and is continuing, the Applicable Margin shall be set at the margin in the row styled “Level III”:

3

Level

Alternate Average Excess Availability

Applicable Margin Relative to Base

Rate Loans (the “Base Rate Margin”)

Applicable Margin

Relative to SOFR

Loans (the “SOFR

Margin”)

I

> 66.67% of the Revolver

Commitments

0.50% (or, during the Increased

Interest Period, 1.00%)

1.50% (or, during the

Increased Interest

Period, 2.00%)

II

< 66.67% of the Revolver

Commitments and > 33% of the

Revolver Commitments

0.75% (or, during the Increased

Interest Period, 1.25%)

1.75% (or, during the

Increased Interest

Period, 2.25%)

III

< 33.33% of Revolver Commitments

1.00% (or, during the Increased

Interest Period, 1.50%)

2.00% (or, during the

Increased Interest

Period, 2.50%)

The Applicable Margin shall be re-determined as of the first day of each fiscal quarter of Borrowers.”

(f)

Borrowing Base. The definition of Borrowing Base set forth in Schedule 1.1 of the Credit Agreement is hereby amended and restated

in its entirety to read as follows:

“ “Borrowing Base” means, as of any date of determination, the result of:

(a)

85% of the amount of Eligible Accounts, less the amount, if any, of the Dilution Reserve,

plus

(b)

the lesser of:

 (i) $102,000,000, or

(ii) the lesser of (A) sixty percent (60%) of the Value of Eligible Finished Goods Inventory, Eligible Raw Material

Inventory, and Eligible In-Transit Inventory; or (B) eighty-five percent (85%) of the Net Orderly Liquidation Value of such Eligible

Inventory,

plus

(c)

seventy percent (70%) of the appraised fair market value (based on the most recent appraisal completed prior to the Seventh

Amendment Date that is in form, contains assumptions and utilizes methods acceptable to Agent and that is performed by an appraiser acceptable to Agent)

of Eligible Real Property of Borrowers, which amount shall be reduced on the first day of each fiscal month, by an amount equal to $118,416.67; provided,

that, no such reduction shall occur during the Non-Amortizing Period; plus

(d)

eighty-five percent (85%) multiplied by the Net Orderly Liquidation Value (based on the most recent appraisal completed

prior to the Fourth Amendment Date that is in form, contains assumptions and utilizes methods acceptable to Agent and that is performed by an appraiser

acceptable to Agent) of the Eligible Equipment of Borrowers, which amount shall be reduced on the first day of each fiscal month (excluding Borrowers'

fiscal months ending each of May 2, 2020, May 30, 2020, June 27, 2020, August 1, 2020, August 29, 2020, October 3, 2020, November 7, 2020, January 2,

2021, February 6, 2021, March 6, 2021 and April 3, 2021), by an amount equal to $37,632.74; provided, that, no such reduction shall occur during the Non-

Amortizing Period;

plus

 (e) the lesser of:

(i)

twenty-five percent (25%) of the appraised fair market value (based on the most recent appraisal completed

prior to the Fourth Amendment Date that is in form, contains assumptions and utilizes methods acceptable to Agent and that is performed by an

appraiser acceptable to Agent) of the Eligible Intellectual Property of Borrowers, which amount shall be reduced on the first day of each fiscal

month, by an amount equal to $129,008.33; provided, that, no reduction shall occur during the Non-Amortizing Period; or

(ii)

twenty-five percent (25%) of the appraised fair market value (based on the first appraisal completed after the

Seventh Amendment Date that is in form, contains assumptions and utilizes methods acceptable to Agent and that is performed by an appraiser

acceptable to Agent) of the Eligible Intellectual Property of Borrowers, which amount shall be reduced on the first day of each fiscal month,

commencing on the first day of the first fiscal month beginning after Agent receives such appraisal by an amount equal to one-sixtieth of twenty-

five percent (25%) of the appraised fair market value (based on such appraisal) of the Eligible Intellectual Property of Borrowers; provided, that,

no reduction shall occur during the Non-Amortizing Period;

plus

(f)

 the FILO Formula Amount;

minus

(g)

 the aggregate amount of Receivable Reserves, Inventory Reserves, Bank Product Reserves, and other Reserves, if any, established by

Agent under Section 2.1(c) of the Agreement,

minus

 (h) the Availability Block.

Notwithstanding anything to the contrary contained herein, (A) the portion of the Borrowing Base on any date calculated with

reference to Eligible Real Property, Eligible Intellectual Property and Eligible Equipment collectively, shall not exceed (i) at any time prior to the first day

of the fiscal month immediately following the Seventh Amendment Date, twenty percent (20%) of the Maximum Revolver Amount and (ii) at any time on

and after the first day of the fiscal month immediately following the Seventh Amendment Date, twenty-five percent (25%) of the Maximum Revolver

4

Amount, (B) the portion of the Borrowing Base on any date calculated with reference to Eligible In-Transit Inventory, shall not exceed $6,000,000 at any

time, and (C) the aggregate amount of Adjusted Revolver Usage based on Eligible Inventory consisting of yarn classified as work-in-process outstanding at

any time shall not exceed $2,500,000 at any time.”

(g)

Cash Dominion Trigger Event. The definition of Cash Dominion Trigger Event set forth in Schedule 1.1 of the Credit Agreement is

hereby amended and restated in its entirety to read as follows:

“ “Cash Dominion Trigger Event” means (a) during the Accommodation Period, (i) upon notice thereof from Agent to Borrower at the

Agent’s sole discretion if Availability (calculated for this purpose, after giving effect to the Availability Block) of Borrowers is, at any

time, less than $2,000,000 or (ii) the occurrence of an Event of Default and (b) at all other times, (i) the occurrence of an Event of

Default, or (ii) Agent's reasonable determination that Availability (without giving effect to the FILO Formula Amount) is less than an

amount equal to twelve and one-half percent (12.5%) of the lesser of (1) the Borrowing Base and (2) the Revolving Commitments.”

(h)

FILO. The definition of FILO Maximum Amount set forth in Schedule 1.1 of the Credit Agreement is hereby amended and restated in

its entirety to read as follows:

“ “FILO Maximum Amount” means (a) on and after the Ninth Amendment Date through (and including) July 31, 2023, $3,000,000, (b)

on and after August 1, 2023, through (and including) October 31, 2023, $2,750,000, (c) on and after November 1, 2023, through (and

including) January 31, 2024, $2,500,000, (d) on and after February 1, 2024 through (and including) April 30, 2024, $2,250,000, (e) on

and after May 1, 2024, through (and including) July 31, 2024, $2,000,000, (f) on and after August 1, 2024 through (and including)

October 31, 2024, $1,750,000, (g) on and after November 1, 2024, through (and including) January 31, 2025, $1,500,000, (h) on and

after February 1, 2025, through (and including) April 30, 2025, $1,250,000, (i) on and after May 1, 2025, through (and including) July

31, 2025, $1,000,000, (j) on and after August 1, 2025, through (and including) October 31, 2025, $750,000, (k) on and after November

1, 2025, through (and including) January 31, 2026, $500,000, (l) on and after February 1, 2026, through (and including) April 30, 2026,

$250,000, and (m) at all times on and after May 1, 2026, $0.”

(i)

Financial Covenant Period. The definition of Financial Covenant Period set forth in Schedule 1.1 of the Credit Agreement

is hereby amended and restated in its entirety to read as follows:

“ “Financial Covenant Period”

means a period which shall commence on any date on which a Financial Covenant Trigger Event has

occurred and shall continue until the date on which Agent has determined that no Financial Covenant Trigger Event exists or has existed

for a period of sixty (60) consecutive days; provided, that, if a Financial Covenant Trigger Event occurs under clause (c) of the definition

thereof, the Financial Covenant Period shall continue until the date thereafter on which Agent receives from Borrowers

a written request

to terminate the Financial Covenant Period together with evidence that, as of the date of such written request, the Average Availability

of Borrowers for the consecutive thirty (30) day period ending on such date of determination is more than the greater the greater of (a)

seventeen and one-half percent (17.50%) of the lesser of (i) the Borrowing Base or (ii) the Maximum Revolver Amount and (b)

$25,000,000. For purposes of this definition, Average Availability will be calculated without giving effect to the Availability Block.”

(j)

Financial Covenant Trigger Event. The definition of Financial Covenant Trigger Event set forth in Schedule 1.1 of the Credit

Agreement is hereby amended and restated in tis entirety to read as follows:

“ “Financial Covenant Trigger Event” means (a) any date on which Alternate Excess Availability (without giving effect, at any time, to

the FILO Formula Amount) is less than 12.5% of the lesser of the Borrowing Base or the Maximum Revolver Amount, (b) any date on

which an Event of Default has occurred or (c) September 30, 2023 but only if the Availability of Borrowers, as of the date on which

Agent receives (and based on) the Borrowing Base Certificate for September 30, 2023, does not exceed the greater of (i) seventeen and

one-half percent (17.50%) of the lesser of (A) the Borrowing Base or (B) the Maximum Revolver Amount and (ii) $25,000,000. For

purposes of this definition Availability will be calculated without giving effect to the Availability Block.”

(k)

Collateral Reporting (Monthly). Clause (a) of the first row of Schedule 5.2 to the Credit Agreement is hereby amended and

restated in its entirety to read as follows:

“(a) [reserved],”

(l)

Collateral Reporting (Weekly). The third row of Schedule 5.2 to the Credit Agreement is hereby deleted in its entirety and

replaced with the third row as set forth on Exhibit A attached hereto.

3. Ratification and Reaffirmation. 

Each Borrower hereby ratifies and reaffirms the Obligations, each of the Loan Documents and all of such

Borrower's covenants, duties, indebtedness and liabilities under the Loan Documents.

4. Acknowledgments and Stipulations.

 Each Borrower acknowledges and stipulates that the Credit Agreement and the other Loan Documents

executed by such Borrower are legal, valid and binding obligations of such Borrower that are enforceable against such Borrower in accordance with the terms thereof; all

of the Obligations are owing and payable without defense, offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof,

the same is hereby waived by such Borrower); the security interests and Liens granted by such Borrower in favor of Agent are duly perfected, first priority security

interests and Liens; and, as of the opening of business on February 3, 2023,

the unpaid principal amount of the Revolver Loans totaled $149,693,285.22, and the undrawn

face

amount of all Letters of Credit totaled $425,000

5. Representations and Warranties.

 Each Borrower represents and warrants to Agent and Lenders, to induce Agent and Lenders to enter into this

Amendment, that no Default or Event of Default exists on the date hereof; the execution, delivery and performance of this Amendment have been duly authorized by all

requisite corporate action on the part of such Borrower and this Amendment has been duly executed and delivered by such Borrower; and all of the representations and

warranties made by such Borrower in the Credit Agreement are true and correct in all material respects (except that such materiality qualifier shall not be applicable to

any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on and as of the

date hereof (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true

5

and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified

by materiality in the text thereof) as of such earlier date).

6. Reference to Credit Agreement.

 Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,”

“hereunder,” or words of like import shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

7. Breach of Amendment.

 This Amendment shall be part of the Credit Agreement and a breach of any representation, warranty or covenant herein

shall constitute an Event of Default.

8. Conditions Precedent.

 The effectiveness of the amendments contained in Section 2 hereof are subject to the satisfaction of each of the following

conditions precedent, in form and substance satisfactory to Agent, unless satisfaction thereof is specifically waived in writing by Agent:

(a) Agent's receipt of duly executed counterparts of this Amendment, the Ninth Amendment Fee Letter, and all instruments and documents to be

entered into in connection herewith from the applicable Borrowers and Lenders;

(b) Agent’s receipt of all fees and expenses due and owing under the Ninth Amendment Fee Letter; 

(c) no Default or Event of Default shall exist both before and after giving pro forma effect to this Amendment; 

(d) the representations and warranties of each Borrower or its Subsidiaries contained in the Credit Agreement or in the other Loan Documents shall be

true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or

modified by materiality in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such

representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except

that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of

such earlier date); and

9.

Post-Closing Covenant

. Borrowers agree that they shall permit (or, cause to be permitted), within ninety (90) days from the Ninth Amendment

Date, the engagement and the scheduling of an appraisal of the Collateral in accordance with the terms and conditions of the Credit Agreement.

10. Expenses of Agent. 

Borrowers agree to pay,

on demand

, all costs and expenses incurred by Agent in connection with the preparation, negotiation

and execution of this Amendment and any other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto,

including, without limitation, the costs and fees of Agent's legal counsel and any taxes or expenses associated with or incurred in connection with any instrument or

agreement referred to herein or contemplated hereby.

11. Successors and Assigns.

 This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and

assigns.

12. No Novation, etc.

 Except as otherwise expressly provided in this Amendment, nothing herein shall be deemed to amend or modify any provision

of the Credit Agreement or any of the other Loan Documents, each of which shall remain in full force and effect. This Amendment is not intended to be, nor shall it be

construed to create, a novation or accord and satisfaction, and the Credit Agreement as herein modified shall continue in full force and effect.

13. Counterparts; Telecopied Signatures

. This Amendment may be executed in any number of counterparts and by different parties to this

Amendment on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. 

Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto.

14. Further Assurances.

 Each Borrower agrees to take such further actions as Agent shall reasonably request from time to time in connection herewith

to evidence or give effect to the amendments set forth herein or any of the transactions contemplated hereby.

15. Section Titles.

 Section titles and references used in this Amendment shall be without substantive meaning or content of any kind whatsoever and

are not a part of the agreements among the parties hereto.

16. Release of Claims. To induce Agent and Lenders to enter into this Amendment, each Borrower hereby releases, acquits and forever

discharges Agent and Lenders, and all officers, directors, agents, employees, successors and assigns of Agent and Lenders, from any and all liabilities, claims,

demands, actions or causes of action of any kind or nature (if there be any), whether absolute or contingent, disputed or undisputed, at law or in equity, or

known or unknown, that such Borrower now has or ever had against Agent or any Lender arising under or in connection with any of the Loan Documents or

otherwise. Each Borrower represents and warrants to Agent and Lenders that such Borrower has not transferred or assigned to any Person any claim that

such Borrower ever had or claimed to have against Agent or any Lender.

17. Waiver of Jury Trial.

To the fullest extent permitted by applicable law, the parties hereto each hereby waives the right to trial by jury in

any action, suit, counterclaim or proceeding arising out of or related to this Amendment

.

[Remainder of page intentionally left blank; signatures appear on following pages.]

- 1 -

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal and delivered by their respective duly authorized

officers on the date first written above.

BORROWERS:

DELTA APPAREL, INC.

By: /s/ Nancy P. Bubanich

Name:

Nancy P. Bubanich

Title: Chief Accounting Officer

M.J. SOFFE, LLC

By: /s/ Nancy P. Bubanich

Name:

Nancy P. Bubanich

Title: Chief Accounting Officer

CULVER CITY CLOTHING COMPANY

By: /s/ Nancy P. Bubanich

Name:

Nancy P. Bubanich

Title: Chief Accounting Officer

SALT LIFE, LLC

By: /s/ Nancy P. Bubanich

Name:

Nancy P. Bubanich

Title: Chief Accounting Officer

DTG2GO, LLC

By: /s/ Nancy P. Bubanich

Name:

Nancy P. Bubanich

Title: Chief Accounting Officer

[Signatures continue on the following page.]

- 1 -

AGENT:

WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Christopher Waterstreet

Name: 

Christopher Waterstreet

Title: Vice President

LENDERS:

WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Christopher Waterstreet

Name: 

 Christopher Waterstreet

Title: Vice President

[Signatures continue on the following page.]

- 1 -

REGIONS BANK

By: /s/ Scott Martin

Name: Scott Martin

Title: Managing Director

[Signatures continue on the following page.]

2

PNC BANK, NATIONAL ASSOCIATION

By: /s/ Doug Meckelnburg

Name: Doug Meckelnburg 

Title: Vice President

3

Exhibit A

To

Ninth Amendment

To

Fifth Amended and Restated Credit Agreement

Weekly (no later than

Wednesday of each week)

(a)

an executed Borrowing Base Certificate, provided, that, upon the date which Agent

receives a Borrowing Base Certificate as of the month ending September 30, 2023, evidencing

that the Availability (calculated for this purpose without giving effect to the Availability

Block) of Borrowers, as of the date of receipt of such Borrowing Base Certificate, is equal to

or more than the greater of (i) an amount equal to seventeen and one-half percent (17.5%) of

the lesser of (A) the Borrowing Base or (B) Maximum Revolver Amount and (ii) $25,000,000

or upon the date which Agent receives a written request by Borrowers to Agent, at any time

after receipt of such Borrowing Base Certificate, to provide collateral reports on monthly basis

together with evidence that, as of the date of such written request, the Average Availability of

Borrowers for the consecutive thirty (30) day period ending on such date of determination is

more than the greater of such amounts specified in the foregoing clause (a), Borrowers shall

deliver to Agent such calculations of the Borrowing Base and certification on a monthly basis

(no later than the 20th day of each month) (the “Decreased Reporting Event”); provided,

further, that, if Availability at any time after the Decreased Reporting Event is less than an

amount equal to the greater of (y) seventeen and one-half percent (17.5%) of the lesser of (1)

the Borrowing Base or (2) Maximum Revolver Amount and (z) $25,000,000, in Agent’s

discretion and at Agent’s request, Borrowers shall deliver to Agent such calculations of the

Borrowing Base and certification on a weekly basis until such time that Availability is greater

than such amount, at which time the delivery requirements shall revert to a monthly basis,

(b)

a detailed aging, by total, of Borrowers' Accounts, together with a reconciliation

and supporting documentation for any reconciling items noted (delivered electronically in an

acceptable format, if Borrowers have implemented electronic reporting),

(c)

a weekly Account roll-forward, in a format acceptable to Agent in its discretion,

tied to the beginning and ending account receivable balances of Borrowers' general ledger, and

(d)

a detailed calculation of those Accounts that are not eligible for the Borrowing

Base, if Borrowers have not implemented electronic reporting.

EX-10.3

1

Via E-Mail (rshanlever@hgrslaw.com)

Simone C. Walsh c/o

Rebecca Shanlever

H

ALL

, G

ILLIGAN

, R

OBERTS

& S

HANLEVER LLP

SEPARATION AGREEMENT

Dear Simone: 

This Separation Agreement (the “Agreement”) confirms various matters concerning your separation from employment so that no misunderstanding exists between you

and the Company. Acceptance by you of the separation benefits detailed below requires your acceptance of all of the terms and conditions within this Agreement. 

Your employment with Delta Apparel, Inc. (“Company”) ended as of December 1, 2022 (the "Separation Date"). The Company will pay you your regular base wages

earned through the Separation Date. Regular benefit contributions and taxes are deducted from these payments. Benefit information and information concerning your

legal rights under such matters as COBRA will, as applicable, be provided to you separately. This Agreement will not affect your existing rights in your 401(k) account. 

However, the Company will not be required or obligated to make any contributions to your 401(k) account after the Separation Date. 

I. Separation Benefits

The following separation benefits are being offered to you as an accommodation by the Company and are subject to receipt by the Company of a signed copy of this

Agreement, which includes a Release of Claims (the “Release”) and your agreement to reasonably and timely respond to the Company after today, upon the Company’s

request and for a period of six months, regarding any questions related to matters in which you were involved while an employee of the Company. In exchange for the

Release contained in this Agreement and your compliance with the foregoing response obligations, the Company will provide you with separation benefits as follows: 

1.

Voluntarily Resignation from Employment. You have voluntarily resigned from your employment with the Company as of the Separation Date and as

provided in the attached written notice of voluntary resignation, and the Company has waived the advance notice requirement provided in Section 4(d) of the 

November 30, 2021 Employment Agreement between you and the Company (“Employment Agreement”). You acknowledge and agree that you have voluntarily

resigned from your employment with the Company on your own terms, that your resignation was not (and should not be construed as) a constructive discharge, that you

were not coerced into resigning from your employment, and that your resignation is final and irrevocable on your part. You further agree and acknowledge that, during

your employment, you did not report any discriminatory, harassing, retaliatory, or similarly inappropriate conduct or treatment in connection with your employment

with the Company (including, but not limited to, in connection with your separation or the events leading to your separation) that has been based on or connected to any

protected characteristic (including, but not limited to, race, color, religion, national origin, sex, age, disability, or any other characteristic protected by applicable law). 

Moreover, you agree and acknowledge that, during your employment, you did not experience any discriminatory, harassing, retaliatory, or similarly inappropriate

conduct or treatment in connection with your employment with the Company (including, but not limited to, in connection with your separation or the events leading to

your separation) that has been based on or connected to your age. 

2.

Monetary Separation Benefits. The Company will provide you with monetary separation benefits in the amount of Thirty Thousand Two Hundred Fifty and

00/100 Dollars ($30,250). These monetary separation benefits will be paid in accordance with the Company’s regular payroll cycle and all applicable taxes and

deductions will be withheld.

3.

Unemployment Compensation. The Company will not contest an unemployment compensation claim that you file or may file with the appropriate state

unemployment agency relating to your separation from the Company. 

4.

Equity Compensation. Subject to the terms of the Delta Apparel, Inc. 2020 Stock Plan and the Restricted Stock Unit Award Agreement entered into between

you and the Company effective December 15, 2021 (dated November 30, 2021) governing an award of five thousand (5,000) restricted stock units eligible to vest in

connection with the Company’s fiscal year ended October 1, 2022 (“Equity Award Agreement 1”), including but not limited to the employment and income tax

withholding obligations therein, the Company will electronically deliver to you such shares, net of any shares deducted for tax withholding purposes, as soon as practical

following the expiration of the revocation period referenced below. 

II. Release of Claims & Agreement to Cooperate

In exchange for the above-referenced separation benefits, you, for yourself and your heirs, executors, administrators, legal representatives, successors and assigns, agree

to and do hereby release, and forever discharge the Company, its subsidiaries, affiliates and related companies, as well as their respective directors, officers, employees,

agents, predecessors, parent companies, subsidiaries, assigns, successors, affiliated entities, employee benefits plans, shareholders, and any other entities or individuals

(collectively “Released Parties”) with respect to any and all claims (which term is defined as including, but is not limited, to causes of action, suits, debts, sums of

money, agreements, promises, damages, costs, losses, expenses and demands whatsoever, at law or in equity, or before any federal, state or local administrative agency,

whether known or unknown, whether accrued or unaccrued, whether contingent or certain) which you now have, or any claims whatsoever which may hereafter arise

or accrue on account of the events, circumstances or occurrences related to your employment with the Company and/or its parent companies, affiliates or subsidiaries

up to and including the date that you sign this Agreement, or the termination of the employment relationship between you and the Company and/or its parent companies,

affiliates or subsidiaries, including, without limitation, any claims for or under: (1) breach of contract, express or implied (including breach of the Employment

Agreement, Equity Award Agreement 1, the Restricted Stock Unit and Performance Unit Award Agreement entered into between you and the Company effective

December 15, 2021 (dated November 30, 2021) governing an award of five thousand (5,000) restricted stock units and five thousand (5,000) performance units eligible

to vest in connection with the Company’s fiscal year ending September 30, 2023, and/or the achievement of certain performance measures in connection therewith

(“Equity Award Agreement 2”), and the Restricted Stock Unit Award Agreement entered into between you and the Company effective December 15, 2021 (dated

November 30, 2021) governing an award of thirteen thousand (13,000) restricted stock units eligible to vest in connection with the Company’s fiscal year ending

September 28, 2024 (“Equity Award Agreement 3”)); (2) Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, as well as any state

employment discrimination laws; (3) the Americans with Disabilities Act of 1990 and any amendments thereto, including the ADA Amendments Act of 2008; (4) the

Employee Retirement Income Security Act; (5) the False Claims Act (including the qui tam provision thereof); (6) the Occupational Safety and Health Act; (7) the

Family and Medical Leave Act of 1993 or any similar leave law in Georgia or any other state; (8) intentional or negligent infliction of emotional distress or “outrage”;

(9) defamation, libel or slander; (10) interference with employment and/or contractual relations or prospective business advantage; (11) wrongful or retaliatory discharge

or wrongful termination in violation of public policy; (12) invasion of privacy; (13) breach of the implied covenant of good faith and fair dealing; (14) fraud; (15) Section

1981 of the Civil Rights Act of 1866, as amended; (16) Executive Orders 11246, 13496 and 11141; (17) the Equal Pay Act of 1963 or any amendments thereto; (18) the

Consolidated Omnibus Budget Reconciliation Act of 1985; (19) the Rehabilitation Act of 1973; (20) the Sarbanes-Oxley Corporate Reform Act of 2002; (21) the Health

Insurance Portability and Accountability Act of 1996; (22) the Lilly Ledbetter Fair Pay Act of 2009; (23) the Fair Credit Reporting Act; (24) claims arising under the

United States and/or the constitutions of Georgia or any other state; (25) claims for wages and overtime pay, equity compensation, commissions, bonuses, or vacation

pay under Georgia’s wage payment, labor or similar laws, regulations and wage orders as well as any similar laws, regulations or wage orders in any other state; (26)

any claims arising under any other federal, state or local law, statute, regulation, ordinance, treaty or law of any other type, or any other cause of action or theory of

recovery arising by virtue of your employment relationship and/or affiliation with the Company or any public policy, tort or common law or any express or implied

2

contracts; (27) any claims for present or future effects of past events or actions; (28) any common law claims or claims founded in tort for negligence, negligent hiring,

negligent training or negligent supervision, promissory estoppel, detrimental reliance, quantum meruit, unjust enrichment, breach of contract (oral, written or implied),

or any other equitable basis or action; (29) claims that the Company treated or dealt with you unfairly; (30) the Age Discrimination in Employment Act of 1967 (29

U.S.C. 626) (“ADEA); (31) the Delta Apparel, Inc. 2020 Stock Plan; and/or (32) the Delta Apparel, Inc. Short-Term Incentive Compensation Plan. 

In connection with the foregoing, you acknowledge and agree that: 

1.

The Company has paid you all amounts due under the Employment Agreement other than your regular base wages earned through the Separation Date and any

valid, reimbursable business expenses properly submitted by you for reimbursement pursuant to the Company’s established policies and programs. 

2.

Your separation from employment with the Company is not a result of the Company’s breach, material or otherwise, of any provision of the Employment

Agreement. 

3.

You are not entitled to any of the post-termination benefits set forth in Section 2(c), 5 or Section 6 of the Employment Agreement. 

4.

Other than the above-referenced five thousand (5,000) restricted stock units awarded pursuant to Equity Award Agreement 1 and payable in shares of Delta

Apparel, Inc. common stock in accordance with Equity Award 

Agreement 1 and Paragraph 4 of Section 1 Separation Benefits in exchange for the Release contained in this Agreement and your compliance with the foregoing

response obligations, you are not entitled to any payment, share award or delivery, or other benefit or amount pursuant to Equity Award Agreement 1, Equity

Award 

Agreement 2, Equity Award Agreement 3, the Delta Apparel, Inc. 2020 Stock Plan, the Delta Apparel, Inc. ShortTerm Incentive Compensation Plan, or the

Employment Agreement, including but not limited to Section 2(c) of the Employment Agreement. 

Waiver of Rights or Claims under the ADEA

You specifically acknowledge that your waiver and release include, but are not limited to, claims under the ADEA. Specifically, you recognize and acknowledge that

your waiver and release of rights and claims under the ADEA shall be considered knowing and voluntary due to the following: (i) your waiver and release of rights

and claims under the ADEA is part of this written Release and Agreement between you, as employee, and the Company, as employer, and has been written in a manner

which you understand; (ii) your waiver and release of rights and claims under the ADEA specifically includes any claims which could have been brought under the

ADEA; (iii) you are not waiving or releasing any rights or claims under the ADEA that may arise after the date this Agreement is signed; (iv) you are waiving and

releasing rights or claims under the ADEA only in exchange for the above-referenced separation benefits; (v) you have been advised in writing to consult with an

attorney prior to agreeing to waive and release rights and claims under the ADEA; (vi) you hereby waive, on the advice of counsel, your right to have 21 days to

consider agreeing to waive and release rights and claims under the ADEA; (vii) you shall have 7 days following the signing of this Agreement to revoke your waiver

and release of rights and claims under the ADEA, and your waiver and release of rights and claims under the ADEA shall not become effective or enforceable until

such revocation period has expired; and (viii) you understand that your revocation of your waiver and release of rights and claims under the ADEA must be in writing

and received by the Company’s Chief Administrative Officer at 201 W. McBee Avenue, Suite 320, Greenville, South Carolina 29601, within 7 days after your execution

of this Agreement. 

You acknowledge that this Agreement does not encompass the following: (i) any rights or claims that may arise after you sign this Agreement; (ii) any rights or claims

that arise under any state’s workers’ compensation laws; (iii) any rights or claims prohibited by applicable law from being included in this Agreement; (iv) any rights

or claims to enforce or to challenge the validity of this Agreement; and (v) any rights or claims to participate in any proceedings before an administrative agency

responsible for enforcing labor and/or employment laws, e.g., the Equal Employment Opportunity Commission; you agree, however, to waive and release any right to

receive any monetary award for any charge or action against the Released Parties from any proceedings before an administrative

agency responsible for enforcing labor and/or employment laws. You further acknowledge that nothing in this Agreement (including the confidentiality and non-

disparagement provisions) shall be construed to limit your right to participate in administrative proceedings, to provide information to an agency responsible for 

enforcing unemployment compensation laws, or to file an action to enforce or to challenge the validity of this Agreement. 

III. Other Matters

You represent and agree that you have been paid and have received all paid or unpaid leave, compensation, wages, overtime, paid time off (excluding unused paid time

off, vacation or sick pay, to which you are not entitled), bonuses, benefits and/or expense reimbursements to which you may be entitled and that no other amounts,

except as provided in this Agreement, are due to you. Without waiving any prospective or retrospective rights under the Fair Labor Standards Act, you admit that you

have received from the Company all rights and benefits, if any, due or potentially due to you pursuant to the Fair Labor Standards Act or similar Georgia law. You

understand and acknowledge that it is the parties’ intent to release all claims that can be legally released but no more than that. 

You affirm that while you were employed with the Company, you had no known and unreported workplace injuries or occupational diseases and were not denied leave

under the Family and Medical Leave Act of 1993 or any similar leave law in any other state. 

You represent that you have not filed any civil actions or other suits, arbitration or other claims against the Company or any of the other Released Parties, and agree, to

the full extent permitted by law, that you will not file civil actions or suits or arbitration or other claims against Company or any of the other Released Parties with

respect to any claims that arose before and up to the date you sign this Agreement or any claim released herein. By signing this Agreement, you acknowledge that you

have waived all of the claims described above against the Released Parties and acknowledge that you will not seek or accept any individual remedy or damages from

any such party arising from any civil action that arises as of the execution of this Agreement. You agree that the Company or any of the other Released Parties would

and will be entitled to summary judgment in any such action based, among other grounds, on this Agreement. 

You agree that: (i) should you breach or fail to comply with any part of this Agreement, (ii) exercise your right hereunder to revoke your waiver and release of rights

and claims under the ADEA, or (iii) challenge the enforceability of some or all of the language in this Agreement, the above-referenced consideration provided by the

Company in Section I Separation Benefits consisting of giving you the opportunity to voluntarily resign from your employment with the Company and the Company’s

waiver of the advance notice requirements in Section 4(d) of the Employment Agreement may be invalidated in the Company’s sole discretion. You also agree that

should you breach or fail to comply with any part of this Agreement or exercise your right hereunder to revoke your waiver and release of rights and claims under the

ADEA, the consideration to which you will be entitled under Paragraph 2 of Section I Separation Benefits shall be reduced to Ten Thousand and 00/100 Dollars

($10,000), and all terms and conditions in this Agreement other than your waiver/release of claims under the ADEA shall remain fully binding and enforceable. Moreover,

you agree that if a challenge is made to the enforceability of some or all of the language in this Agreement, and a suit, demand, or claim is brought by you against any

Released Party, the Released Party will be entitled to a set-off in the full amount of payments made pursuant this Agreement in any action brought. 

You affirm that you have made the Company aware of each and every fact relating to any alleged wrongdoing or violations of laws, regulations, rules or mandatory

standards or requirements by the Company, its affiliates, subsidiaries or related entities or the officers, directors, employees, agents and representatives of any such

entities that you can recall at this time, and that you know of no facts whatsoever that relate in any way to any alleged wrongdoing or violations of laws, regulations,

3

rules or mandatory standards or requirements by the Company, its affiliates, subsidiaries or related entities or the officers, directors, employees, agents and representatives

of any such entities, including but not limited to any violations of internal Company policies or procedures or any law or regulation.

You represent and warrant that you have not assigned, transferred or conveyed to any individual or entity any alleged right, claim or cause of action of any kind which

is included within this Agreement and/or Release and that you are aware of no lien or other encumbrance on your rights, claims, and causes of action, and that you are

entitled to receive from the Company payment of the proceeds due to you under the Agreement. 

You agree to reasonably and timely respond to the Company after today, upon the Company’ s request and for a period of six months, regarding any

questions related to matters in which you were involved while an employee of the Company.

You understand that should you violate this Agreement or threaten the same, the Company will be entitled to an injunction restraining you from such violation or

threatened violation and will be entitled to recover the costs and attorneys’ fees incurred in pursuing an injunction. 

You acknowledge that, before signing this Agreement, you were given adequate time to consider this Agreement. You further acknowledge that: (i) you took advantage

of that time to consider this Agreement before signing it; (ii) you carefully read this Agreement; (iii) you had the opportunity to consult with an attorney before agreeing

to the terms of this Agreement and were hereby advised in writing to do so by the Company; (iv) you were, in fact, advised by counsel on the terms of the Agreement,

which your counsel negotiated, (v) you fully understand what this Agreement means; and (vi) you are entering into this Agreement voluntarily, on the advice of counsel. 

You affirm, covenant, and warrant that you are not a Medicare beneficiary and are not receiving, have not received in the past, will not have received at the time of

payment under this Agreement, are not entitled to, are not eligible for, and have not applied for or sought Social Security Disability or Medicare benefits. If any

statement in the preceding sentence is incorrect (for example, but not limited to, if you are a Medicare beneficiary, etc.), the following sentences (i.e., the remaining

sentences of this paragraph) apply. You affirm, covenant, and warrant you have made no claim for illness or injury against, nor are you aware of any facts supporting

any claim against, the Released Parties under which the Released Parties could be liable for medical expenses incurred by you before or after the execution of this

Release. You know of no medical expenses that Medicare has paid and for which the Released Parties are or could be liable now or in the future. You agree and affirm

that, to the best of your knowledge, no liens of any governmental entities, including those for Medicare conditional payments, exist. You will indemnify, defend, and

hold the Released Parties harmless from Medicare claims, liens, damages, conditional payments, and rights to payment, if any, including attorneys’ fees, and you

further agree to waive any and all future private causes of action for damages under 42 U.S.C .§ 1395y(b)(3)(A), et seq. The Company and you acknowledge and

understand that any present or future action or decision by the Centers for Medicare & Medicaid Services or Medicare on this Release, or your eligibility or entitlement

to Medicare or Medicare payments, will not render this release void or ineffective, or in any way affect the finality of this Release. 

IV. Return of Company Property

You hereby certify that all Company property, such as files, data, keys, manuals, designs, artwork, etc. and including any customer related or vendor related information,

product samples, product information, shipping, logistics or transportation information, technical information, any financial, accounting, sales, or purchase related

information, and/or any other Company confidential information you have in your possession has been returned to the Company. In addition, you hereby certify that all

Company information in your possession in electronic form, including any customer related or vendor related information, product or design information or materials,

samples, shipping, logistics or transportation information, technical information, any financial, accounting, sales, or purchase related information, and/or any other

Company confidential information has been returned to the Company. 

V. Confidentiality and Non-Disparagement

Both parties to this Agreement agree not to disclose or publicize the existence or contents of this Agreement, including the amount of monetary payments and the

Release, except (i) to prepare a party’s income tax returns or financial records; (ii) to satisfy the requirements of applicable law or regulation; (iii) to comply with the

lawful orders or processes of the courts; (iv) to enforce or comply with this Agreement; or (v) as otherwise may be agreed to in writing by both parties in advance of

any disclosure. Notwithstanding the foregoing, the Company may disclose the existence or contents of this Agreement to the extent required by applicable securities

laws or regulations, including but not limited to filing the Agreement with the United States Securities and Exchange Commission . You agree to avoid making any

disparaging comments about any of the Released Parties, whether orally or in writing. For purposes of this Agreement, “disparage” means remarks, comments, or

statements that impugn an individual’s character, honesty, integrity, morality, business acumen, or abilities, where such comments relate to the individual’s or entity’s

dealings with customers, vendors, or business partners. You agree to not disclose to anyone not expressly authorized by the Company any confidential information

concerning the Company and its affiliates and subsidiaries, specifically including information concerning the Company’s trade secrets, strategy, future plans, non-public

sales and profit data, and financial condition; provided, however, that this Agreement does not prohibit or restrict you from initiating communications directly with, or

responding to any inquiry from, or providing testimony before, any selfregulatory organization or state or federal regulatory authority, regarding this Agreement or its

underlying facts or circumstances. Any cooperation provision in the Agreement does not require you to contact the Company regarding the subject matter of any such

communications before engaging in such communications. 

This Agreement sets forth the entire agreement between you and the Company regarding the subject matter of this Agreement. In the event of any conflict between the

terms and conditions of this Agreement and those of Equity Award Agreement 1, Equity Award Agreement 2, Equity Award Agreement 3, the Delta Apparel, Inc. 2020

Stock Plan, the Delta Apparel, Inc. Short-Term Incentive Compensation Plan, the Employment Agreement, or any other agreement between you and the Company, the

terms and conditions of this Agreement will govern. This Agreement may not be modified or cancelled in any manner except by a writing signed by both you and the

Company’s Chief Administrative Officer. You acknowledge that the Company has made no promises to you other than those in this Agreement. This Agreement binds

your heirs, administrators, representatives, executors, successors, and assigns and will inure to the benefit of the Released Parties and their respective successors, agents,

employees, and assigns. No statement in this Agreement, payment made pursuant to this Agreement or other participation or performance by the Company hereunder

constitutes an admission of any violation of law or any wrongdoing whatsoever. The Company expressly denies any wrongdoing or violation of law. 

This Agreement, including the nature, validity, and effect of this Agreement, will be governed by, construed, and enforced in accordance with the laws of the State of

Georgia. If any provision of this Agreement is determined to be invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to delete

or modify any such invalid or unenforceable provisions and the remainder of the Agreement shall be given full force and effect. 

There shall be no waiver of any portion of this Agreement unless the waiver is evidenced in writing.

READ THIS AGREEMENT CAREFULLY AND CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING IT. THIS AGREEMENT INCLUDES A

RELEASE OF KNOWN AND UNKNOWN CLAIMS. IF YOU WISH, YOU SHOULD CONSULT WITH YOUR ATTORNEY.

THIS AGREEMENT IS NOT EFFECTIVE UNLESS AND UNTIL SIGNED BY AN AUTHORIZED

REPRESENTATIVE OF DELTA APPAREL,

INC.

AGREED AND ACCEPTED:

4

DELTA APPAREL, INC.

By: /s/ Justin M. Grow

Title: EVP & Chief Administrative Officer

Date: December 7, 2022

/s/ Simone C. Walsh December 7, 2022 

SIMONE C. WALSH December 7, 2022 

EX-31.1

1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Robert W. Humphreys, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of Delta Apparel, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements

made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial

condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange

Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant

and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that

material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during

the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to

provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance

with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the

disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter

(the registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal

control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the

registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to

adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial

reporting.

Date:

February 7, 2023

/s/ Robert W. Humphreys

Chairman and Chief Executive Officer 

EX-31.2

1

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER PURSUANT TO RULE 13a-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Nancy Bubanich, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of Delta Apparel, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements

made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial

condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange

Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant

and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that

material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during

the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with

generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the

disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter

(the registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal

control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the

registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to

adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial

reporting.

Date:

February 7, 2023

/s/ Nancy P. Bubanich

Chief Accounting Officer

EX-32.1

1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS

ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Robert W. Humphreys, the Chief Executive

Officer of Delta Apparel, Inc. (the “Company”), hereby certifies that to the best of his knowledge:

1.

The Quarterly Report on Form 10-Q for the quarterly period ended July 2, 2022, of the Company, as filed with the Securities and Exchange Commission on

the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:

February 7, 2023

/s/ Robert W. Humphreys

Robert W. Humphreys 

Chairman and Chief Executive Officer 

This certification is being furnished solely to comply with the provisions of § 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the accompanying

Report, including for purposes of Section 18 of the Exchange Act, or as a separate disclosure document. A signed original of this written certification required by

Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this

written certification required by Section 906, has been provided to the Company and will be rendered by the Company and furnished to the Securities and Exchange

Commission or its staff upon request.

EX-32.2

1

EXHIBIT 32.2

CERTIFICATION OF THE PRINCIPAL ACCOUNTING OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS

ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Nancy Bubanich, the Chief Accounting Officer of

Delta Apparel, Inc. (the “Company”), hereby certifies that to the best of her knowledge:

1.

The Quarterly Report on Form 10-Q for the quarterly period ended July 2, 2022, of the Company, as filed with the Securities and Exchange Commission on

the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:

February 7, 2023

/s/ Nancy P. Bubanich

Nancy P. Bubanich

Chief Accounting Officer

This certification is being furnished solely to comply with the provisions of § 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the accompanying

Report, including for purposes of Section 18 of the Exchange Act, or as a separate disclosure document. A signed original of this written certification required by

Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this

written certification required by Section 906, has been provided to the Company and will be rendered by the Company and furnished to the Securities and Exchange

Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Dec. 31, 2022	Jan. 27, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Fiscal Year Focus	2023
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity Registrant Name	DELTA APPAREL, INC.
Entity File Number	1-15583
Entity Incorporation, State or Country Code	GA
Entity Tax Identification Number	58-2508794
Entity Address, Address Line One	2750 Premier Parkway
Entity Address Address Line 2	Suite 100
Entity Address, City or Town	Duluth
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30097
City Area Code	678
Local Phone Number	775-6900
Title of 12(b) Security	Common Stock, par value $0.01
Trading Symbol	DLA
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		7,001,020
Entity Central Index Key	0001101396
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--09-30
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($)	Dec. 31, 2022	Oct. 01, 2022
Assets
Cash and cash equivalents	$ 327,000	$ 300,000
Accounts receivable, less allowances of $63 and $109, respectively	57,755,000	68,215,000
Other receivables	2,396,000	1,402,000
Income tax receivable	1,363,000	1,969,000
Inventories, net	258,891,000	248,538,000
Prepaid expenses and other current assets	4,114,000	2,755,000
Total current assets	324,846,000	323,179,000
Property, plant and equipment, net of accumulated depreciation of $111,194 and $108,565, respectively	72,771,000	74,109,000
Goodwill	37,897,000	37,897,000
Intangibles, net	23,427,000	24,026,000
Deferred income taxes	1,342,000	1,342,000
Operating lease assets	49,313,000	50,275,000
Equity method investment	9,045,000	9,886,000
Other assets	2,800,000	2,967,000
Total assets	521,441,000	523,681,000
Liabilities:
Accounts payable	79,844,000	83,553,000
Accrued expenses	20,808,000	27,414,000
Income taxes payable	321,000	379,000
Current portion of finance leases	8,603,000	8,163,000
Current portion of operating leases	8,585,000	8,876,000
Current portion of long-term debt	9,514,000	9,176,000
Total current liabilities	127,675,000	137,561,000
Long-term income taxes payable	2,841,000	2,841,000
Long-term finance leases	18,465,000	16,776,000
Long-term operating leases	42,015,000	42,721,000
Long-term debt	148,899,000	136,750,000
Deferred Income Tax Liabilities Net	2,232,000	4,310,000
Total liabilities	342,127,000	340,959,000
Shareholder's equity:
Preferred stock - $0.01 par value, 2,000,000 shares authorized, none issued and outstanding
Common stock $0.01 par value, 15,000,000 authorized, 9,646,972 shares issued, and 7,001,020 and 6,915,663 shares outstanding as of December 2022 and September 2022, respectively	96,000	96,000
Additional paid-in capital	60,559,000	61,961,000
Retained earnings	163,035,000	166,600,000
Accumulated other comprehensive income	210,000	141,000
Treasury stock - 2,645,952 and 2,731,309 shares as of December 2022 and September 2022, respectively	(43,896,000)	(45,420,000)
Equity attributable to Delta Apparel, Inc.	180,004,000	183,378,000
Equity attributable to non-controlling interest	(690,000)	(656,000)
Total equity	179,314,000	182,722,000
Total liabilities and equity	$ 521,441,000	$ 523,681,000

XML

Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2022	Oct. 01, 2022
Allowances for accounts receivable	$ 63	$ 109
Property, plant and equipment, accumulated deprecation	$ 111,194	$ 108,565
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	15,000,000	15,000,000
Common stock, shares issued (in shares)	9,646,972	9,646,972
Common stock, shares outstanding (in shares)	7,001,020	6,915,663
Treasury stock (in shares)	2,645,952	2,731,309

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Jan. 01, 2022
Net sales, Amount	$ 107,295	$ 110,746
Cost of goods sold	93,672	87,743
Gross profit	13,623	23,003
Selling, general and administrative expenses	18,870	17,482
Other (income), net	(2,621)	(395)
Operating (loss) income	(2,626)	5,916
Interest expense, net	2,890	1,598
(Loss) earnings before provision for income taxes	(5,516)	4,318
(Benefit from) provision for income taxes	(1,917)	648
Consolidated net (loss) earnings	(3,599)	3,670
Net (loss) income attributable to non-controlling interest	(34)	25
Net (loss) earnings attributable to shareholders	$ (3,565)	$ 3,645
Basic (loss) income per share (in dollars per share)	$ (0.51)	$ 0.52
Diluted (loss) income per share (in dollars per share)	$ (0.51)	$ 0.51
Weighted average number of shares outstanding (in shares)	6,954	6,999
Dilutive effect of stock awards (in shares)		86
Weighted average number of shares assuming dilution (in shares)	6,954	7,085

XML

Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Jan. 02, 2021
Net (loss) income attributable to shareholders	$ (3,565)	$ 3,645
Other comprehensive income related to unrealized gain on derivatives, net of income tax	69	212
Consolidated comprehensive (loss) income	$ (3,496)	$ 3,857

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Treasury Stock [Member]	Non-controlling Interest [Member]
Balance (in shares) at Oct. 02, 2021		9,646,972				2,672,312
Balance at Oct. 02, 2021	$ 164,194,000	$ 96,000	$ 60,831,000	$ 146,860,000	$ (786,000)	$ (42,149,000)	$ (658,000)
Net earnings	3,645,000			3,645,000
Other comprehensive income (loss)	212,000				212,000
Net (loss) income attributable to non-controlling interest	25,000						25,000
Purchase of common stock	(2,143,000)					$ (2,143,000)
Purchase of common stock (in shares)						74,232
Vested stock awards	(1,092,000)		(1,766,000)			$ 674,000
Vested stock awards (in shares)						(76,460)
Stock based compensation	140,000		140,000
Balance (in shares) at Jan. 01, 2022		9,646,972				2,670,084
Balance at Jan. 01, 2022	$ 164,981,000	$ 96,000	59,205,000	150,505,000	(574,000)	$ (43,618,000)	(633,000)
Balance (in shares) at Oct. 01, 2022	6,915,663	9,646,972				2,731,309
Balance at Oct. 01, 2022	$ 182,722,000	$ 96,000	61,961,000	166,600,000	141,000	$ (45,420,000)	(656,000)
Net earnings	(3,565,000)			(3,565,000)
Other comprehensive income (loss)	69,000				69,000
Net (loss) income attributable to non-controlling interest	$ (34,000)						(34,000)
Purchase of common stock (in shares)	0
Vested stock awards	$ (543,000)		(2,067,000)			$ 1,524,000
Vested stock awards (in shares)						(85,357)
Stock based compensation	$ 665,000		665,000
Balance (in shares) at Dec. 31, 2022	7,001,020					2,645,952
Balance at Dec. 31, 2022	$ 179,314,000	$ 96,000	$ 60,559,000	$ 163,035,000	$ 210,000	$ (43,896,000)	$ (690,000)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Jan. 01, 2022
Operating activities:
Consolidated net (loss) earnings	$ (3,599)	$ 3,670
Adjustments to reconcile net (loss) earnings to net cash used in operating activities:
Depreciation and amortization	3,844	3,629
Amortization of deferred financing fees	84	81
(Benefit from) provision for deferred income taxes	(2,101)	754
Change in inventory market reserves	163	851
Non-cash stock compensation	665	140
Gain on disposal of equipment	58	2
Other, net	(89)	(390)
Changes in operating assets and liabilities:
Accounts receivable	9,466	1,993
Inventories, net	(10,516)	(22,206)
Prepaid expenses and other current assets	(1,443)	(1,449)
Other non-current assets	1,188	699
Accounts payable	(3,723)	7,584
Accrued expenses	(5,030)	(7,572)
Net operating lease liabilities	(35)	206
Income taxes	(854)	(140)
Other liabilities		(1,050)
Net cash used in operating activities	(11,922)	(13,198)
Investing activities:
Purchases of property and equipment	(2,081)	(1,822)
Proceeds from equipment under finance leases	4,417
Cash paid for intangible asset		(51)
Cash paid for business		(583)
Net cash provided by (used in) investing activities	2,336	(2,456)
Financing activities:
Proceeds from long-term debt	133,918	138,543
Repayment of long-term debt	(121,431)	(121,293)
Repayment of capital financing	(2,332)	(1,783)
Repurchase of common stock		(1,718)
Payment of withholding taxes on stock awards	(542)	(1,092)
Net cash provided by financing activities	9,613	12,657
Net increase (decrease) in cash and cash equivalents	27	(2,997)
Cash and cash equivalents at beginning of period	300	9,376
Cash and cash equivalents at end of period	327	6,379
Supplemental cash flow information
Finance lease assets exchanged for finance lease liabilities	4,461	20
Operating lease assets exchanged for operating lease liabilities	$ 1,807	$ 1,401

XML

Description of Business and Basis of Presentation

3 Months Ended

Dec. 31, 2022

Business Description and Basis of Presentation [Abstract]

Description of Business and Basis of Presentation

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

 million and $

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.

Period Ended

Fiscal Year

Date Ended

December 2021

Fiscal 2022

January 1, 2022

March 2022

Fiscal 2022

April 2, 2022

June 2022

Fiscal 2022

July 2, 2022

September 2022

Fiscal 2022

October 1, 2022

December 2022

Fiscal 2023

December 31, 2022

XML

Accounting Policies

3 Months Ended

Dec. 31, 2022

New Accounting Standards [Abstract]

New Accounting Standards

Note B—Accounting Policies

Our accounting policies are consistent with those described in our Significant Accounting Policies in our Annual Report on Form 10-K for our fiscal 2022, filed with the

SEC. See Note C for consideration of recently issued accounting standards.

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New Accounting Standards

3 Months Ended

Dec. 31, 2022

Accounting Standards Update and Change in Accounting Principle[Abstract]

New Accounting Standards

Note C—New Accounting Standards

Standards Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13,

Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

(“ASU

2016-13”), which requires an entity to assess impairment of its financial instruments based on the entity's estimate of expected credit losses. Since the issuance of ASU

2016-13, the FASB released several amendments to improve and clarify the implementation guidance. These standards have been collectively codified within ASC Topic

326,

Credit Losses

(“ASC 326”). As a smaller reporting company as defined by the SEC, the provisions of ASC 326 are effective as of the beginning of our fiscal year

2024. We are currently evaluating the impacts of the provisions of ASC 326 on our financial condition, results of operations, cash flows, and disclosures.

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Revenue Recognition

3 Months Ended

Dec. 31, 2022

Revenue Recognition [Abstract]

Revenue Recognition

Note D—Revenue Recognition

Our Condensed Consolidated Statements of Operations include revenue streams from retail sales at our branded retail stores; direct-to-consumer ecommerce sales on our

consumer-facing websites; and sales from wholesale channels, which includes our business-to-business ecommerce sales and sales in our DTG2Go business. The table

below identifies the amount and percentage of net sales by distribution channel (in thousands):

The table below provides net sales by reportable segment and the percentage of net sales by distribution channel for each reportable segment (in thousands):

Three Months Ended

December 2022

December 2021

Retail

$

3,455

3

%

$

2,903

3

%

Direct-to-consumer ecommerce

1,509

2

%

1,345

1

%

Wholesale

102,331

95

%

106,498

96

%

Net sales

$

107,295

100

%

$

110,746

100

%

Three Months Ended December 2022

Net Sales

Retail

Direct-to-consumer

ecommerce

Wholesale

Delta Group

$

97,010

0.1

%

0.2

%

99.7

%

Salt Life Group

10,285

33.0

%

12.7

%

54.3

%

Total

$

107,295

Three Months Ended December 2021

Net Sales

Retail

Direct-to-consumer

ecommerce

Wholesale

Delta Group

$

101,921

0.2

%

0.3

%

99.5

%

Salt Life Group

8,825

30.4

%

12.0

%

57.6

%

Total

$

110,746

XML

Inventories

3 Months Ended

Dec. 31, 2022

Inventories [Abstract]

Inventories

Note E—Inventories

Inventories, net of reserves of $

17.8

 million and $

17.7

 million as of December 2022 and September 2022, respectively, consisted of the following (in thousands):

Raw materials include finished yarn and direct materials for the Delta Group, undecorated garments for the DTG2Go business, and direct embellishment materials for the

Salt Life Group.

December 2022

September 2022

Raw materials

$

22,166

$

22,603

Work in process

20,352

23,501

Finished goods

216,373

202,434

$

258,891

$

248,538

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Debt

3 Months Ended

Dec. 31, 2022

Debt [Abstract]

Debt

Note F—Debt

Credit Facility

On May 10, 2016, we entered into a Fifth Amended and Restated Credit Agreement (as further amended, the “Amended Credit Agreement”) with Wells Fargo Bank,

National Association (“Wells Fargo”), as Administrative Agent, the Sole Lead Arranger and the Sole Book Runner, and the financial institutions named therein as Lenders,

which are Wells Fargo, PNC Bank, and Regions Bank. Our subsidiaries M.J. Soffe, LLC, Culver City Clothing Company, Salt Life, LLC, and DTG2Go, LLC (collectively,

the "Borrowers"), are co-borrowers under the Amended Credit Agreement. The Borrowers entered into amendments to the Amended Credit Agreement with Wells Fargo

and the other lenders on November 27, 2017, March 9, 2018, October 8, 2018, November 19, 2019, April 27, 2020, and August 28, 2020.

On June 2, 2022, the Borrowers entered into a Seventh Amendment to the Fifth Amended and Restated Credit Agreement with Wells Fargo Bank (the “Agent”) and the

other lenders set forth therein (the “Seventh Amendment”). The Seventh Amendment, (i) removes LIBOR based borrowing and utilizes SOFR (Secured Overnight

Financing Rate) as the primary pricing structure, (ii) amends the pricing structure based on SOFR plus a CSA (Credit Spread Adjustment) defined as

10

 bps for 1 month

and

15

 bps for 3-month tenors, (iii) sets the SOFR floor to

0

 bps, (iv) reloads the fair market value of real estate and intellectual property within the borrowing base

calculation and resets their respective amortization schedules, (v) sets the maturity date to

5

 years from the closing date, and (vi) updates the requirement for our Fixed

Charge Coverage Ratio (“FCCR”) for the preceding 12-month period must not be less than

1.0

 (previously

1.1

).

The Amended Credit Agreement allows us to borrow up to $

170

 million (subject to borrowing base limitations), including a maximum of $

25

 million in letters of credit.

Provided that no event of default exists, we have the option to increase the maximum credit to $

200

 million (subject to borrowing base limitations), conditioned upon the

Administrative Agent's ability to secure additional commitments and customary closing conditions. The Amended Credit Agreement contains a subjective acceleration

clause and a “springing” lockbox arrangement (as defined in ASC 470, Debt ("ASC 470")) whereby remittances from customers will be forwarded to our general bank

account and will not reduce the outstanding debt until and unless a specified event or an event of default occurs. We classify borrowings under the Amended Credit

Agreement as long-term debt with consideration of current maturities.

As of December 2022, we had $

142.3

 million outstanding under our U.S. revolving credit facility at an average interest rate of

6.7

%. Our cash on hand combined with

the availability under the U.S. credit facility totaled $

27.2

 million. At December 2022 and September 2022, there was $

23.1

 million and $

24.9

 million, respectively, of

retained earnings free of restrictions to make cash dividends or stock repurchases.

See Note P—Subsequent Events for a discussion of the Eighth and Ninth Amendments to the Fifth Amended and Restated Credit Agreement entered into on January 3,

2023, and February 3, 2023, respectively.

Honduran Debt

Since March 2011, we have entered into term loans and a revolving credit facility with Banco Ficohsa, a Honduran bank, to finance investments in both the operations

and capital expansion of our Honduran facilities. In December 2020, we entered into a new term loan and revolving credit facility with Banco Ficohsa, both with

five

-

year terms, and simultaneously settled the prior term loans and revolving credit facility with outstanding balances at the time of settlement of $

1.1

 million and $

9.5

 million,

respectively. Additionally, in May 2022, we entered into a new term loan with a

five

-year term with a principal amount of $

3.7

 million. These loans are secured by a first-

priority lien on the assets of our Honduran operations and are not guaranteed by our U.S. entities. These loans are denominated in U.S. dollars, and the carrying value of

the debt approximates its fair value. As the revolving credit facility permits us to re-borrow funds up to the amount repaid, subject to certain objective covenants, and we

intend to re-borrow funds, subject to those covenants, the amounts borrowed are classified as long-term debt. 

El Salvador Debt

In September 2022, we entered into a new term loan with a

five

-year term with a principal amount of $

3.0

 million with Banco Ficohsa, a Panamanian bank, to finance

investments in our El Salvador operations. This loan is secured by a first-priority lien on the assets of our El Salvador operations and is not guaranteed by our U.S. entities.

The loan is denominated in U.S. dollars, and the carrying value of the debt approximates its fair value. Information about this loan and the outstanding balance as of

December 2022 is listed as part of the long-term debt schedule above.

Additional information about these loans and the outstanding balances as of December 2022 is as follows (in thousands):

December 2022

Revolving credit facility with Banco Ficohsa, a Honduran bank, interest at

7.25

%, due August 2025

$

3,083

Term loan with Banco Ficohsa, a Honduran bank, interest at

7.5

%, quarterly installments which began September 2021 and are due through

December 2025

6,086

Term loan with Banco Ficohsa, a Honduran bank, interest at

7.5

%, quarterly installments beginning March 2023 through May 2027

3,656

Term loan with Banco Ficohsa, a Panamanian bank, interest at the prevailing market rate within the Panamanian Banking Market, monthly

installments which began October 2022 and are due through August 2027

2,878

XML

Selling, General and Administrative Expense

3 Months Ended

Dec. 31, 2022

Selling, General and Administrative Expense [Abstract]

Selling, General and Administrative Expense

Note G—Selling, General and Administrative Expense

We include in selling, general and administrative ("SG&A") expenses the costs incurred subsequent to the receipt of finished goods at our distribution facilities, such as

the cost of stocking, warehousing, picking, packing, and shipping goods for delivery to our customers. Distribution costs included in SG&A expenses totaled $

5.4

 million

and $

5.5

 million for the December 2022 and December 2021 quarters, respectively. In addition, SG&A expenses include costs related to sales associates, administrative

personnel, advertising and marketing expenses, retail store build-outs, and other general and administrative expenses.

XML

Stock-based Compensation

3 Months Ended

Dec. 31, 2022

Stock-based Compensation [Abstract]

Stock-based Compensation

Note H—Stock-Based Compensation

On February 6, 2020, our shareholders approved the Delta Apparel, Inc. 2020 Stock Plan ("2020 Stock Plan") to replace the 2010 Stock Plan, which was previously re-

approved by our shareholders on February 4, 2015, and was scheduled to expire by its terms on September 14, 2020. The 2020 Stock Plan is substantially similar in both

form and substance to the 2010 Stock Plan. The purpose of the 2020 Stock Plan is to continue to give our Board of Directors and its Compensation Committee the ability

to offer a variety of compensatory awards designed to enhance the Company’s long-term success by encouraging stock ownership among its executives, key employees

and directors. Under the 2020 Stock Plan, the Compensation Committee of our Board of Directors has the authority to determine the employees and directors to whom

awards may be granted, and the size and type of each award and manner in which such awards will vest. The awards available under the plan consist of stock options,

stock appreciation rights, restricted stock, restricted stock units, performance stock, stock performance units, and other stock and cash awards. Unvested awards, while

employed by the Company or serving as a director, become fully vested under certain circumstances as defined in the 2020 Stock Plan. Such circumstances include, but

are not limited to, the participant’s death or disability. The Compensation Committee is authorized to establish the terms and conditions of awards granted under the 2020

Stock Plan, to establish, amend and rescind any rules and regulations relating to the 2020 Stock Plan, and to make any other determinations that it deems necessary. Similar

to the 2010 Stock Plan, the 2020 Stock Plan limits the number of shares that may be covered by awards to any participant in a given calendar year and also limits the

aggregate awards of restricted stock, restricted stock units and performance stock granted in a given calendar year. Shares are generally issued from treasury stock upon

the vesting of the restricted stock units, performance units or other awards under the 2020 Stock Plan.

Compensation expense is recorded within SG&A in our Condensed Consolidated Statements of Operations over the vesting periods. During the December 2022 and

December 2021 quarters, we recognized $

0.5

 million and $

0.4

 million in stock-based compensation expense, respectively. Associated with this compensation cost are

income tax benefits recognized of $

0.2

 million and $

0.1

 million, respectively, for each of the three-month periods ended December 2022 and December 2021.

During the December 2022 quarter, restricted stock units representing

105,000

 shares of our common stock vested with the filing of our Annual Report on Form 10-K for

fiscal 2022 and were issued in accordance with their respective agreements. Of these vested awards, all were payable in common stock. 

During the December 2022 quarter, performance stock units and restricted stock units representing 5,000 and 18,000 shares of our common stock, respectively, were

forfeited.

As of December 2022, there was $

3.3

 million of total unrecognized compensation cost related to unvested awards granted under the 2020 Stock Plan. This cost is expected

to be recognized over a period of

1.9

 years.

XML

Purchase Contracts

3 Months Ended

Dec. 31, 2022

Purchase Contracts [Abstract]

Purchase Contracts

Note I—Purchase Contracts

We have entered into agreements, and have fixed prices, to purchase yarn, finished fabric, and finished apparel and headwear products. At December 2022, minimum

payments under these contracts were as follows (in thousands):

Yarn

$

22,294

Finished fabric

4,435

Finished products

9,517

$

36,246

XML

Business Segments

3 Months Ended

Dec. 31, 2022

Business Segments [Abstract]

Business Segments

Note J—Business Segments

Our operations are managed and reported in

two

 segments, Delta Group and Salt Life Group, which reflect the manner in which the business is managed, and results are

reviewed by the Chief Executive Officer, who is our chief operating decision maker. 

The Delta Group is comprised of the following business units, which are primarily focused on core activewear styles: DTG2Go and Delta Activewear. 

DTG2Go 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 our

many customers. Our ‘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. We use highly-automated factory processes and

our proprietary software to deliver on-demand, digitally printed apparel direct to consumers on behalf of our customers. Via our multi-facility fulfillment footprint across

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 over 100

countries worldwide. DTG2Go has made significant investments in its “digital first” retail model providing digital graphic prints that meet the high-quality standards of

brands, retailers and intellectual property holders. Through integration with Delta Activewear, DTG2Go also services the eRetailer, ad-specialty, promotional and screen

print marketplaces, among others. 

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. Our 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. Our fashion basics line includes our Platinum Collection, which offers fresh, fashionable

silhouettes with a luxurious look and feel, as well as versatile fleece offerings. We offer 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. We also offer our 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 we continue 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, we offer customers a broad range of nationally recognized branded products including polos, outerwear, headwear,

bags and other accessories. Our Soffe products are also available direct to consumers at

www.soffe.com

. 

Our 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 the shipment of branded products with “retail-ready” value-

added services including embellishment, hangtags, and ticketing. 

Our Retail Direct channel serves brick and mortar and online retailers by providing our 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 and mass retailers. As a key element of the integrated Delta Group segment, each of Activewear’s primary channels offer a seamless

solution for replenishment strategies, small-run decoration needs, and quick reaction programs with on-demand digital print services, powered by DTG2Go. 

The Salt Life Group is comprised of our Salt Life business, which is built on the authentic, aspirational Salt Life 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. Consumers can also seamlessly experience the Salt Life brand through retail partners including surf shops, specialty stores, department stores, and outdoor

merchants or by accessing our Salt Life ecommerce site at

www.saltlife.com

. 

Our Chief Operating Decision Maker and management evaluate performance and allocate resources based on profit or loss from operations before interest, income taxes

and special charges ("segment operating earnings"). Our segment operating earnings may not be comparable to similarly titled measures used by other companies. The

accounting policies of our reportable segments are the same as those described in Note 2 in our Annual Report on Form 10-K for fiscal 2022, filed with the SEC.

Intercompany transfers between operating segments are transacted at cost and have been eliminated within the segment amounts shown in the following table (in

thousands).

The following table reconciles the segment operating earnings to the consolidated (loss) income before provision for income taxes (in thousands):

Three Months Ended

December 2022

December 2021

Segment net sales:

Delta Group

$

97,010

$

101,921

Salt Life Group

10,285

8,825

Total net sales

$

107,295

$

110,746

Segment operating earnings:

Delta Group 

$

123

$

8,438

Salt Life Group

218

156

Total segment operating earnings

$

341

$

8,594

Three Months Ended

December 2022

December 2021

Segment operating earnings

$

341

$

8,594

Unallocated corporate expenses

2,967

2,678

Unallocated interest expense

2,890

1,598

Consolidated (loss) income before provision for income taxes

$

(5,516)

$

4,318

XML

Income Taxes

3 Months Ended

Dec. 31, 2022

Income Taxes [Abstract]

Income Taxes

Note K—Income Taxes

The Tax Cuts and Jobs Act of 2017 (the “2017 Tax Legislation”) enacted on December 22, 2017, significantly revised the U.S. corporate income tax code by, among

other things, lowering federal corporate income tax rates, implementing a modified territorial tax system and imposing a repatriation tax ("transition tax") on deemed

repatriated cumulative earnings of foreign subsidiaries which will be paid over eight years. In addition, new taxes were imposed related to foreign income, including a

tax on global intangible low-taxed income (“GILTI”) as well as a limitation on the deduction for business interest expense (“Section 163(j)"). GILTI is the excess of the

shareholder’s net controlled foreign corporations ("CFC") net tested income over the net deemed tangible income. GILTI income is eligible for a deduction of up to 50%

of the income inclusion, but the deduction is limited to the amount of U.S. adjusted taxable income. The Section 163(j) limitation does not allow the amount of deductible

interest to exceed the sum of the taxpayer's business interest income and 30% of the taxpayer’s adjusted taxable income. We have included in our calculation of our

effective tax rate the estimated impact of GILTI and Section 163(j). In addition, we have elected to account for the tax on GILTI as a period cost and, therefore, do not

record deferred taxes related to GILTI on our foreign subsidiaries.

Our effective income tax rate on operations for the three-months ended December 2022 was

35.0

% compared to a rate of

15.1

% in the same period of the prior year, and

an effective rate of

17.9

% for fiscal 2022. We generally benefit from having income in foreign jurisdictions that are either exempt from income taxes or have tax rates

that are lower than those in the United States. As such, changes in the mix of U.S. taxable income compared to profits in tax-free or lower-tax jurisdictions can have a

significant impact on our overall effective tax rate.

XML

Derivatives and Fair Value Measurements

3 Months Ended

Dec. 31, 2022

Derivatives and Fair Value Measurements [Abstract]

Derivatives and Fair Value Measurements

Note L—Derivatives and Fair Value Measurements

From time to time, we may use interest rate swaps or other instruments to manage our interest rate exposure and reduce the impact of future interest rate changes. These

financial instruments are not used for trading or speculative purposes. We have designated our interest rate swap contracts as cash flow hedges of our future interest

payments. As a result, the gains and losses on the swap contracts are reported as a component of other comprehensive income and are reclassified into interest expense as

the related interest payments are made. As of December 2022, all of our other comprehensive income was attributable to shareholders; none related to the non-controlling

interest. Outstanding instruments as of December 2022 are as follows:

The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheets for derivatives related to our interest swap agreements as

of December 2022 and September 2022 (in thousands):

From time to time, we may purchase cotton option contracts to economically hedge the risk related to market fluctuations in the cost of cotton used in our operations. We

do not receive hedge accounting treatment for these derivatives. As such, the realized and unrealized gains and losses associated with them are recorded within cost of

goods sold on the Condensed Consolidated Statement of Operations. No such cotton contracts were outstanding at December 2022 and September 2022.

ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value and expands disclosures about

fair value measurements. Assets and liabilities measured at fair value are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the

assets or liabilities. These levels are:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar

assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less active.

Level 3 – Unobservable inputs that are supported by little or no market activity for assets or liabilities and includes certain pricing models, discounted cash flow

methodologies and similar techniques.

The following financial liabilities are measured at fair value on a recurring basis (in thousands):

The fair value of the interest rate swap agreements was derived from a discounted cash flow analysis based on the terms of the contract and the forward interest rate curves

adjusted for our credit risk, which fall in Level 2 of the fair value hierarchy. At December 2022 and September 2022, book value for fixed rate debt approximated fair

value based on quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities (a Level 2 fair value

measurement).

December 2022

September 2022

Deferred tax assets

$

(70)

$

(48)

Other non-current liabilities

280

189

Accumulated other comprehensive loss

$

210

$

141

Fair Value Measurements Using

Quoted Prices

in

Significant 

Active Markets 

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

Period Ended

Total

(Level 1)

(Level 2)

(Level 3)

Interest Rate Swaps

December 2022

$

280

-

$

280

-

September 2022

$

189

-

$

189

-

Effective Date

Notional Amount

Fixed LIBOR 

Rate

Maturity Date

Interest Rate Swap

July 25, 2018

$

20.0

 million

3.18%

July 25, 2023

XML

Legal Proceedings

3 Months Ended

Dec. 31, 2022

Legal Proceedings [Abstract]

Legal Proceedings

Note M—Legal Proceedings

At times, we are party to various legal claims, actions and complaints. We believe that, as a result of legal defenses, insurance arrangements, and indemnification provisions

with parties believed to be financially capable, such actions should not have a material adverse effect on our operations, financial condition, or liquidity.

XML

Repurchase of Common Stock

3 Months Ended

Dec. 31, 2022

Repurchase of Common Stock [Abstract]

Repurchase of Common Stock

Note N—Repurchase of Common Stock

As of September 28, 2019, our Board of Directors authorized management to use up to $

60.0

 million to repurchase stock in open market transactions under our Stock

Repurchase Program. We did

no

t purchase any shares of our common stock during the December 2022 quarter. Through December 2022, we have purchased

3,735,114

 shares of our common stock for an aggregate of $

56.4

 million under our Stock Repurchase Program since its inception. All purchases were made at the discretion

of management and pursuant to the safe harbor provisions of SEC Rule 10b-18. As of December 2022, $

3.6

 million remained available for future purchases under our

Stock Repurchase Program, which does not have an expiration date.

XML

Goodwill and Intangible Assets

3 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

Note O—Goodwill and Intangible Assets

Components of intangible assets consist of the following (in thousands):

Goodwill represents the acquired goodwill net of the $

0.6

 million impairment losses recorded in fiscal year 2011. As of December 2022, the Delta Group segment assets

include $

18.0

 million of goodwill, and the Salt Life Group segment assets include $

19.9

 million.

Depending on the type of intangible asset, amortization is recorded under cost of goods sold or selling, general and administrative expenses. Amortization expense for

intangible assets for the December 2022 and December 2021 quarters was $

0.6

 million and $

0.6

 million, respectively. Amortization expense is estimated to be

approximately $

1.4

 million for the year ended September 2023, approximately $

1.4

 million for the year ended September 2024, and approximately $

1.4

 million for the

years ended September 2025, 2026, and 2027.

December 2022

September 2022

Accumulated

Net

Accumulated

Net 

Economic

Cost

Amortization

Value

Cost

Amortization

 Value

Life

Goodwill

$

37,897

$

-

$

37,897

$

37,897

$

-

$

37,897

N/A

Intangibles:

Tradename/trademarks

$

16,000

$

(4,984)

$

11,016

$

16,000

$

(4,851)

$

11,149

20

 –

30

 yrs

Customer relationships

7,400

(3,398)

4,002

7,400

(3,213)

4,187

20

 yrs

Technology

10,083

(2,834)

7,249

10,083

(2,610)

7,473

10

 yrs

License agreements

2,100

(966)

1,134

2,100

(940)

1,160

15

 –

30

 yrs

Non-compete 

 agreements

1,657

(1,631)

26

1,657

(1,600)

57

4

 –

8.5

 yrs

Total intangibles

$

37,240

$

(13,813)

$

23,427

$

37,240

$

(13,214)

$

24,026

XML

Subsequent Events

3 Months Ended

Dec. 31, 2022

Notes To Financial Statements [Abstract]

Subsequent Events

Note P—Subsequent Events

On January 3, 2023, Delta Apparel, Inc. and its subsidiaries, M.J. Soffe, LLC, Culver City Clothing Company (f/k/a Junkfood Clothing Company), Salt Life, LLC, and

DTG2Go, LLC (f/k/a Art Gun, LLC) (collectively, the “Borrowers”) entered into an Eighth Amendment to the Fifth Amended and Restated Credit Agreement with Wells

Fargo Bank (the “Agent”) and the other lenders set forth therein (the “Eighth Amendment”). The Eighth Amendment essentially clarifies the Amended Credit Agreement’s

provisions regarding the inclusion of eligible in-transit inventory in the borrowing base and amends the definition of Increased Reporting Event to include 12.5% of the

lesser of the borrowing base and the maximum revolver amount as opposed to 12.5% of the line cap. 

On February 3, 2023, the Borrowers entered into a Ninth Amendment to the Fifth Amended and Restated Credit Agreement with the Agent and the other lenders set forth

therein (the “Ninth Amendment”). The Ninth Amendment adds an Accommodation Period beginning on the amendment date and continuing through the date following

September 30, 2023, upon which Borrowers satisfy minimum availability thresholds and during which: (i) the minimum borrowing availability thresholds applicable to

the Amended Credit Agreement are (a) through (and including) April 1, 2023, $

7,500,000

, (b) on and after April 2, 2023 through (and including) June 4, 2023, $

9,000,000

,

(c) on and after June 5, 2023, through the date following September 30, 2023, upon which Borrowers satisfy minimum availability thresholds, $

10,000,000

; and (d) at all

times thereafter, $

0

; (ii) the Fixed Charge Coverage Ratio (“FCCR”) covenant is suspended; (iii) Borrowers must maintain specified minimum EBITDA levels for trailing

three-month periods starting March 4, 2023; (iv) the Applicable Margin with respect to loans under the Amended Credit Agreement is increased by

50

 basis points; and

(v) a Cash Dominion Trigger Event occurs if availability is less than $

2,000,000

. The Ninth Amendment also, among other things, (i) amends the FILO maximum amount

calculation by reloading

5

% of eligible accounts receivable (capped at $

3,000,000

) and deferring the applicable amortization schedules to August 1, 2023; (ii) defers the

monthly amortization payments for real estate, machinery and equipment, and intellectual property assets to August 1, 2023; (iii) requires weekly reporting of availability

through the date following September 30, 2023, upon which Borrowers satisfy minimum availability thresholds; and (iv) prohibits certain restricted payments through

the date following September 30, 2023, upon which Borrowers satisfy minimum availability thresholds. 

The foregoing summary of the Eighth and Ninth Amendments and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety

by reference to the text of the Eighth and Ninth Amendments, which are filed herewith as Exhibits 10.1 and 10.2 to this Quarterly Report on Form 10-Q and which are

incorporated herein by reference. 

We expect the Eighth and Ninth Amendments will enhance our borrowing base and allow us to access more of our availability under the Amended Credit Agreement

while easing the financial covenant restrictions for the remainder of fiscal 2023.

See Part II, Item 5. Other Information for additional detail regarding the Ninth Amendment.

XML

Revenue Recognition (Tables)

3 Months Ended

Dec. 31, 2022

Revenue Recognition [Abstract]

Disaggregation of Revenue

Three Months Ended

December 2022

December 2021

Retail

$

3,455

3

%

$

2,903

3

%

Direct-to-consumer ecommerce

1,509

2

%

1,345

1

%

Wholesale

102,331

95

%

106,498

96

%

Net sales

$

107,295

100

%

$

110,746

100

%

Three Months Ended December 2022

Net Sales

Retail

Direct-to-consumer

ecommerce

Wholesale

Delta Group

$

97,010

0.1

%

0.2

%

99.7

%

Salt Life Group

10,285

33.0

%

12.7

%

54.3

%

Total

$

107,295

Three Months Ended December 2021

Net Sales

Retail

Direct-to-consumer

ecommerce

Wholesale

Delta Group

$

101,921

0.2

%

0.3

%

99.5

%

Salt Life Group

8,825

30.4

%

12.0

%

57.6

%

Total

$

110,746

XML

Inventories (Tables)

3 Months Ended

Dec. 31, 2022

Inventories [Abstract]

Schedule of Inventory, Current

December 2022

September 2022

Raw materials

$

22,166

$

22,603

Work in process

20,352

23,501

Finished goods

216,373

202,434

$

258,891

$

248,538

XML

Debt (Tables)

3 Months Ended

Dec. 31, 2022

Debt [Abstract]

Schedule of Long-Term Debt Instruments

December 2022

Revolving credit facility with Banco Ficohsa, a Honduran bank, interest at

7.25

%, due August 2025

$

3,083

Term loan with Banco Ficohsa, a Honduran bank, interest at

7.5

%, quarterly installments which began September 2021 and are due through

December 2025

6,086

Term loan with Banco Ficohsa, a Honduran bank, interest at

7.5

%, quarterly installments beginning March 2023 through May 2027

3,656

Term loan with Banco Ficohsa, a Panamanian bank, interest at the prevailing market rate within the Panamanian Banking Market, monthly

installments which began October 2022 and are due through August 2027

2,878

XML

Purchase Contracts (Tables)

3 Months Ended

Dec. 31, 2022

Purchase Contracts [Abstract]

Long-Term Purchase Commitment

Yarn

$

22,294

Finished fabric

4,435

Finished products

9,517

$

36,246

XML

Business Segments (Tables)

3 Months Ended

Dec. 31, 2022

Business Segments [Abstract]

Schedule of Segment Information

Three Months Ended

December 2022

December 2021

Segment net sales:

Delta Group

$

97,010

$

101,921

Salt Life Group

10,285

8,825

Total net sales

$

107,295

$

110,746

Segment operating earnings:

Delta Group 

$

123

$

8,438

Salt Life Group

218

156

Total segment operating earnings

$

341

$

8,594

Segment Operating Income to the Consolidated Income Before Provision for Income Taxes

Three Months Ended

December 2022

December 2021

Segment operating earnings

$

341

$

8,594

Unallocated corporate expenses

2,967

2,678

Unallocated interest expense

2,890

1,598

Consolidated (loss) income before provision for income taxes

$

(5,516)

$

4,318

XML

Derivatives and Fair Value Measurements (Tables)

3 Months Ended

Dec. 31, 2022

Derivatives and Fair Value Measurements [Abstract]

Outstanding Instruments

December 2022

September 2022

Deferred tax assets

$

(70)

$

(48)

Other non-current liabilities

280

189

Accumulated other comprehensive loss

$

210

$

141

Fair Value of Derivative Instruments

Fair Value Measurements Using

Quoted Prices

in

Significant 

Active Markets 

Other

Significant

for

Observable

Unobservable

Identical Assets

Inputs

Inputs

Period Ended

Total

(Level 1)

(Level 2)

(Level 3)

Interest Rate Swaps

December 2022

$

280

-

$

280

-

September 2022

$

189

-

$

189

-

Financial Assets (Liabilities) Measured at Fair Value

Effective Date

Notional Amount

Fixed LIBOR 

Rate

Maturity Date

Interest Rate Swap

July 25, 2018

$

20.0

 million

3.18%

July 25, 2023

XML

Goodwill and Intangible Assets (Tables)

3 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets [Abstract]

Goodwill and Components of Intangible Assets

December 2022

September 2022

Accumulated

Net

Accumulated

Net 

Economic

Cost

Amortization

Value

Cost

Amortization

 Value

Life

Goodwill

$

37,897

$

-

$

37,897

$

37,897

$

-

$

37,897

N/A

Intangibles:

Tradename/trademarks

$

16,000

$

(4,984)

$

11,016

$

16,000

$

(4,851)

$

11,149

20

 –

30

 yrs

Customer relationships

7,400

(3,398)

4,002

7,400

(3,213)

4,187

20

 yrs

Technology

10,083

(2,834)

7,249

10,083

(2,610)

7,473

10

 yrs

License agreements

2,100

(966)

1,134

2,100

(940)

1,160

15

 –

30

 yrs

Non-compete 

 agreements

1,657

(1,631)

26

1,657

(1,600)

57

4

 –

8.5

 yrs

Total intangibles

$

37,240

$

(13,813)

$

23,427

$

37,240

$

(13,214)

$

24,026

XML

Description of Business and Basis of Presentation (Narrative) (Details) $ in Millions	3 Months Ended
	Dec. 31, 2022 USD ($) Item	Jan. 01, 2022 USD ($)
Business Description and Basis of Presentation [Line Items]
Number of employees | Item	8,500
Ceiba Textiles Manufacturing Facility Lease [Member]
Business Description and Basis of Presentation [Line Items]
Operating lease payments	$ 0.4	$ 0.4
Honduran Equity Method Investment [Member]
Business Description and Basis of Presentation [Line Items]
Ownership percentage	31.00%
Dividends from investment	$ 0.9	$ 0.6

XML

Revenue Recognition (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Jan. 01, 2022
Disaggregation of Revenue [Line Items]
Net sales, Amount	$ 107,295	$ 110,746
Net Sales [Member]
Disaggregation of Revenue [Line Items]
Net sales, Amount		$ 110,746
Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	100.00%	100.00%
Delta Group [Member]
Disaggregation of Revenue [Line Items]
Net sales, Amount	$ 97,010
Delta Group [Member] | Net Sales [Member]
Disaggregation of Revenue [Line Items]
Net sales, Amount		$ 101,921
Salt Life Group [Member]
Disaggregation of Revenue [Line Items]
Net sales, Amount	10,285
Salt Life Group [Member] | Net Sales [Member]
Disaggregation of Revenue [Line Items]
Net sales, Amount		8,825
Retail [Member]
Disaggregation of Revenue [Line Items]
Net sales, Amount	$ 3,455	$ 2,903
Retail [Member] | Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	3.00%	3.00%
Retail [Member] | Delta Group [Member] | Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	0.10%	0.20%
Retail [Member] | Salt Life Group [Member] | Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	33.00%	30.40%
Ecommerce [Member]
Disaggregation of Revenue [Line Items]
Net sales, Amount	$ 1,509	$ 1,345
Ecommerce [Member] | Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	2.00%	1.00%
Ecommerce [Member] | Delta Group [Member] | Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	0.20%	0.30%
Ecommerce [Member] | Salt Life Group [Member] | Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	12.70%	12.00%
Wholesale [Member]
Disaggregation of Revenue [Line Items]
Net sales, Amount	$ 102,331	$ 106,498
Wholesale [Member] | Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	95.00%	96.00%
Wholesale [Member] | Delta Group [Member] | Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	99.70%	99.50%
Wholesale [Member] | Salt Life Group [Member] | Net Sales [Member] | Reportable Segment Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales, Percentage	54.30%	57.60%

XML

Inventories (Narrative) (Details) - USD ($) $ in Millions	Dec. 31, 2022	Oct. 01, 2022
Inventories [Abstract]
Inventory reserves	$ 17.8	$ 17.7

XML

Inventories (Schedule of Inventory, Current) (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Oct. 01, 2022
Inventories [Abstract]
Raw materials	$ 22,166	$ 22,603
Work in process	20,352	23,501
Finished goods	216,373	202,434
Inventories, net of reserves	$ 258,891	$ 248,538

XML

Debt (Narrative) (Details) $ in Thousands	1 Months Ended	3 Months Ended
	May 31, 2022 USD ($)	Dec. 31, 2022 USD ($)	Jan. 01, 2022 USD ($)	Oct. 01, 2022 USD ($)	Apr. 02, 2022
Debt Instrument [Line Items]
Repayments of long-term debt		$ 121,431	$ 121,293
Term Loan Established December 2020 [Member]
Debt Instrument [Line Items]
Stated interest rate		7.50%
Term Loan Established December 2020 [Member] | Banco Ficohsa [Member]
Debt Instrument [Line Items]
Maturity (Years)		5 years
Repayments of long-term debt	$ 1,100
Term Loan Established May 2022 [Member]
Debt Instrument [Line Items]
Stated interest rate		7.50%
Term Loan Established May 2022 [Member] | Banco Ficohsa [Member]
Debt Instrument [Line Items]
Maturity (Years)		5 years
Face amount		$ 3,700
Term Loan Established September 2022 [Member] | Banco Ficohsa [Member]
Debt Instrument [Line Items]
Maturity (Years)		5 years
Face amount		$ 3,000
Revolving Credit Facility [Member] | Banco Ficohsa [Member]
Debt Instrument [Line Items]
Repayments of long-term debt	$ 9,500
Revolving Credit Facility [Member] | Line of Credit [Member] | Banco Ficohsa [Member]
Debt Instrument [Line Items]
Stated interest rate		7.25%
Amended Credit Agreement [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maturity (Years)		5 years
Fixed Charge Coverage Ratio requirement		1.0			1.1
Maximum borrowing capacity		$ 170,000
Maximum borrowing capacity provided that no event of default exists		200,000
Outstanding		$ 142,300
Interest rate during the period		6.70%
Remaining available		$ 27,200
Retained earnings free of restrictions to make cash dividends or stock repurchases		$ 23,100		$ 24,900
Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | One Month SOFR [Member]
Debt Instrument [Line Items]
Basis point spread		10.00%
Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | Three Month SOFR [Member]
Debt Instrument [Line Items]
Basis point spread		15.00%
Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | SOFR Floor [Member]
Debt Instrument [Line Items]
Basis point spread		0.00%
Amended Credit Agreement [Member] | Letter of Credit [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 25,000

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Debt (Schedule of Long-Term Debt Instruments) (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Oct. 01, 2022
Debt Instrument [Line Items]
Long-term debt	$ 148,899	$ 136,750
Line of Credit [Member] | Revolving Credit Facility [Member] | Banco Ficohsa [Member]
Debt Instrument [Line Items]
Long-term debt	$ 3,083
Stated interest rate	7.25%
Term Loan Established December 2020 [Member]
Debt Instrument [Line Items]
Long-term debt	$ 6,086
Stated interest rate	7.50%
Term Loan Established May 2022 [Member]
Debt Instrument [Line Items]
Long-term debt	$ 3,656
Stated interest rate	7.50%
Term Loan Established October 2022 [Member]
Debt Instrument [Line Items]
Long-term debt	$ 2,878

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Selling, General and Administrative Expense (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2022	Jan. 01, 2022
Selling, General and Administrative Expense [Abstract]
Distribution costs	$ 5.4	$ 5.5

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Stock-based Compensation (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2022	Jan. 01, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation expense	$ 0.5	$ 0.4
Stock-based compensation expense, tax benefit	$ 0.2	$ 0.1
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Vested in period (in shares)	105,000
The 2020 Stock Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized compensation	$ 3.3
Period for recognition (Years)	1 year 10 months 24 days

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Purchase Contracts (Minimum Payments Under Contracts) (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Purchase Commitment, Excluding Long-Term Commitment [Line Items]
Minimum payments	$ 36,246
Yarn [Member]
Purchase Commitment, Excluding Long-Term Commitment [Line Items]
Minimum payments	22,294
Finished Fabric [Member]
Purchase Commitment, Excluding Long-Term Commitment [Line Items]
Minimum payments	4,435
Finished Products [Member]
Purchase Commitment, Excluding Long-Term Commitment [Line Items]
Minimum payments	$ 9,517

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Business Segments (Narrative) (Details)	3 Months Ended
	Dec. 31, 2022 Item
Business Segments [Abstract]
Number of operating segments	2

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Business Segments (Schedule of Segment Information) (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Jan. 01, 2022
Segment Reporting Information [Line Items]
Net sales	$ 107,295	$ 110,746
Segment operating earnings	(2,626)	5,916
Delta Group [Member]
Segment Reporting Information [Line Items]
Net sales	97,010
Salt Life Group [Member]
Segment Reporting Information [Line Items]
Net sales	10,285
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	107,295	110,746
Segment operating earnings	341	8,594
Operating Segments [Member] | Delta Group [Member]
Segment Reporting Information [Line Items]
Net sales	97,010	101,921
Segment operating earnings	123	8,438
Operating Segments [Member] | Salt Life Group [Member]
Segment Reporting Information [Line Items]
Net sales	10,285	8,825
Segment operating earnings	$ 218	$ 156

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Business Segments (Segment Operating Income to the Consolidated Income Before Provision for Income Taxes) (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Jan. 01, 2022
Segment Reporting Information [Line Items]
Segment operating earnings	$ (2,626)	$ 5,916
Unallocated corporate expenses	18,870	17,482
Unallocated interest expense	2,890	1,598
(Loss) earnings before provision for income taxes	(5,516)	4,318
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Segment operating earnings	341	8,594
Unallocated corporate expenses	2,967	2,678
Unallocated interest expense	2,890	1,598
(Loss) earnings before provision for income taxes	$ (5,516)	$ 4,318

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Income Taxes (Narrative) (Details)	3 Months Ended		12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Oct. 01, 2022
Income Taxes [Abstract]
Effective income tax rate, percent	35.00%	15.10%	17.90%

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Derivatives and Fair Value Measurements (Outstanding Instruments) (Details) - Interest Rate Swap [Member] $ in Millions	3 Months Ended
	Dec. 31, 2022 USD ($)
Derivative [Line Items]
Effective Date	Jul. 25, 2018
Notional amount	$ 20.0
Maturity Date	Jul. 25, 2023
London Interbank Offered Rate (LIBOR) [Member]
Derivative [Line Items]
Fixed LIBOR Rate	0.0318%

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Derivatives and Fair Value Measurements (Fair Value of Derivative Instruments) (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Oct. 01, 2022
Deferred Tax Assets [Member]
Derivative [Line Items]
Derivative assets (liabilities)	$ (70)	$ (48)
Other Non-current Liabilities [Member]
Derivative [Line Items]
Derivative assets (liabilities)	280	189
Accumulated Other Comprehensive (Loss) [Member]
Derivative [Line Items]
Derivative assets (liabilities)	$ 210	$ 141

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Derivatives and Fair Value Measurements (Financial Assets (Liabilities) Measured at Fair Value) (Details) - Interest Rate Swap [Member] - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Dec. 31, 2022	Oct. 01, 2022
Derivative [Line Items]
Derivative liabilities	$ (280)	$ (189)
Fair Value, Inputs, Level 2 [Member]
Derivative [Line Items]
Derivative liabilities	$ (280)	$ (189)

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Repurchase of Common Stock (Narrative) (Details) - USD ($)	3 Months Ended		33 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jul. 02, 2022	Oct. 03, 2020
Repurchase of Common Stock [Abstract]
Amount authorized for repurchase				$ 60,000,000.0
Shares repurchased (in shares)	0		3,735,114
Value of stock repurchased		$ 2,143,000	$ 56,400,000
Remaining amount authorized for repurchase	$ 3,600,000

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Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jul. 02, 2011	Oct. 01, 2022
Goodwill and Intangible Assets [Line Items]
Goodwill impairment loss			$ 600
Goodwill, Net Value	$ 37,897			$ 37,897
Amortization expense for intangible assets	600	$ 600
Amortization expense, remainder of the year	1,400
Amortization expense, 2023	1,400
Amortization expense, 2024	1,400
Amortization expense, 2025	1,400
Amortization expense, 2026	1,400
Amortization expense, 2027	$ 1,400
Payment for intangible asset		$ 51
Technology-Based Intangible Assets [Member]
Goodwill and Intangible Assets [Line Items]
Economic Life (Years)	10 years
Delta Group [Member]
Goodwill and Intangible Assets [Line Items]
Goodwill, Net Value	$ 18,000
Salt Life Group [Member]
Goodwill and Intangible Assets [Line Items]
Goodwill, Net Value	$ 19,900

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Goodwill and Intangible Assets (Goodwill and Components of Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Oct. 01, 2022
Goodwill and Intangible Assets [Line Items]
Goodwill, Cost	$ 37,897	$ 37,897
Goodwill, Net Value	37,897	37,897
Intangibles, Cost	37,240	37,240
Intangibles, Accumulated Amortization	(13,813)	(13,214)
Intangibles, Net Value	23,427	24,026
Trademarks and Trade Names [Member]
Goodwill and Intangible Assets [Line Items]
Intangibles, Cost	16,000	16,000
Intangibles, Accumulated Amortization	(4,984)	(4,851)
Intangibles, Net Value	$ 11,016	11,149
Trademarks and Trade Names [Member] | Minimum [Member]
Goodwill and Intangible Assets [Line Items]
Economic Life (Years)	20 years
Trademarks and Trade Names [Member] | Maximum [Member]
Goodwill and Intangible Assets [Line Items]
Economic Life (Years)	30 years
Customer Relationships [Member]
Goodwill and Intangible Assets [Line Items]
Intangibles, Cost	$ 7,400	7,400
Intangibles, Accumulated Amortization	(3,398)	(3,213)
Intangibles, Net Value	$ 4,002	4,187
Economic Life (Years)	20 years
Technology-Based Intangible Assets [Member]
Goodwill and Intangible Assets [Line Items]
Intangibles, Cost	$ 10,083	10,083
Intangibles, Accumulated Amortization	(2,834)	(2,610)
Intangibles, Net Value	$ 7,249	7,473
Economic Life (Years)	10 years
Licensing Agreements [Member]
Goodwill and Intangible Assets [Line Items]
Intangibles, Cost	$ 2,100	2,100
Intangibles, Accumulated Amortization	(966)	(940)
Intangibles, Net Value	$ 1,134	1,160
Licensing Agreements [Member] | Minimum [Member]
Goodwill and Intangible Assets [Line Items]
Economic Life (Years)	15 years
Licensing Agreements [Member] | Maximum [Member]
Goodwill and Intangible Assets [Line Items]
Economic Life (Years)	30 years
Noncompete Agreements [Member]
Goodwill and Intangible Assets [Line Items]
Intangibles, Cost	$ 1,657	1,657
Intangibles, Accumulated Amortization	(1,631)	(1,600)
Intangibles, Net Value	$ 26	$ 57
Noncompete Agreements [Member] | Minimum [Member]
Goodwill and Intangible Assets [Line Items]
Economic Life (Years)	4 years
Noncompete Agreements [Member] | Maximum [Member]
Goodwill and Intangible Assets [Line Items]
Economic Life (Years)	8 years 6 months

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Subsequent Events (Narrative) (Details) - Subsequent Event [Member] - Revolving Credit Facility [Member]	Jan. 03, 2023 USD ($)
Subsequent Event [Line Items]
Line of Credit Facility, Minimum Available Threshold
Line of Credit Facility, Increase In Applicable Margin	50.00%
Line of Credit Facility, Cash Dominion Trigger Event	$ 2,000,000
Line of Credit Facility, FILO Maximum, Eligible Accounts Receivable	5.00%
Line of Credit Facility, FILO Maximum, Eligible Accounts Receivable, Cap	$ 3,000,000
April 1, 2023
Subsequent Event [Line Items]
Line of Credit Facility, Minimum Available Threshold	7,500,000
June 4, 2023
Subsequent Event [Line Items]
Line of Credit Facility, Minimum Available Threshold	9,000,000
September 30, 2023
Subsequent Event [Line Items]
Line of Credit Facility, Minimum Available Threshold	$ 10,000,000