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CST: 22/10/2019 16:42:01   

Delta Apparel Reports Fiscal 2019 Third Quarter and Nine-Month Results

83 Days ago

Strength in Digital Print and Expansion at Salt Life Drive Sales and Earnings Growth for Quarter

GREENVILLE, S.C., July 31, 2019 (GLOBE NEWSWIRE) -- Delta Apparel, Inc. (NYSE American: DLA), a leading provider of core activewear and lifestyle apparel products, today announced financial results for its fiscal year 2019 third quarter and nine months ended June 29, 2019.

Robert W. Humphreys, the Company’s Chairman and Chief Executive Officer, commented, “Our team delivered a strong quarter with accelerated sales growth and profitability, and we are pleased with the performance across both our Delta Group and Salt Life Group segments. Our DTG2Go digital print business continues to grow rapidly and our investments in that area are allowing us to capitalize on the disruption digital print technology is driving on graphic tees. Our Salt Life business also executed a great quarter, with strong performance across all of its major sales channels.  We continue to be encouraged by the apparel growth we are seeing with regional and national retailers across multiple geographies.”

Mr. Humphreys continued, “The successes we are seeing across our business validate our focus on expanding our go-to-market strategies and sales channels as well as investing in manufacturing technology and distribution speed. We look forward to closing our fiscal year with more positive momentum.”

For the third quarter ended June 29, 2019:

  • Net sales were $119.3 million, up 6.3% from $112.2 million in the prior year third quarter. Net sales in the Delta Group segment increased 5% over the prior year period and net sales in the Salt Life Group segment increased 18% from the prior year period.
  • Gross profit was $24.8 million, an increase of 2.2% compared to $24.3 million in the prior year third quarter. As expected, gross margin sequentially improved 240 basis points from the second quarter to 20.8% in the third quarter.
  • Selling, general and administrative ("SG&A") expenses as a percentage of sales improved 100 basis points to 15%, compared to 16% in the prior year third quarter.
  • Other income included a $1.3 million discrete gain in the Salt Life Group segment realized from the settlement of a commercial litigation matter.  Net of related expenses that are included in SG&A, the matter resulted in an improvement to operating income of $1.0 million, or approximately $0.10 diluted earnings per share.
  • Operating income for the quarter was $8.4 million compared to $6.7 million in the prior year third quarter, with the increase driven by profitability growth in both segments along with the above-referenced discrete gain.
  • Net income for the quarter was $4.9 million, or $0.70 per diluted share, compared to the prior year period of $4.6 million, or $0.62 per diluted share.

For the nine months ended June 29, 2019:

  • Net sales were $323.8 million, up 7% from $302.5 million in the comparable period last year.
  • Gross profit was $62.3 million compared to $62.9 million in the comparable period last year and gross margin was 19.2% compared to 20.8% in the prior year period.
  • SG&A expenses as a percentage of sales improved 40 basis points to 16%, compared to 16.4% in the prior year period.
  • Operating income was $11.3 million compared to $14.0 million in the comparable period last year, with the majority of the decrease attributable to a discrete expense of $2.5 million taken during the first quarter in connection with the resolution of a customer bankruptcy matter within the Delta Group segment. 
  • Net income for the period was $4.7 million, or $0.67 per diluted share, compared to the prior year period’s net loss of $1.8 million, or $0.25 per diluted share.

During the quarter, the Company spent approximately $6.6 million on capital expenditures and $308 thousand to repurchase 14,000 shares of its stock. Total debt, including capital lease financing, as of the end of the first nine months of fiscal 2019 was $149 million, up approximately $33 million from the end of the prior year period.  The majority of the increase was driven by debt of $18 million incurred in connection with the Company’s recent digital print acquisitions, with the remainder attributable to higher working capital and investments in capacity to support the acquired businesses and other growth initiatives. Total inventory at the end of the first nine months of fiscal 2019 was $177.8 million compared with $169.6 million a year ago due primarily to increased units on hand from the recent digital print acquisitions as well as higher average cost per unit from the stronger mix of fashion basics, fleece and performance products in inventory to support the growth in these categories.

Conference Call
The Company will hold a conference call with senior management to discuss its financial results today at 4:30 PM ET. The Company invites you to join the call by dialing 800-347-6311. If calling from outside the United States, please dial 323-994-2131. A live webcast of the conference call will be available at www.deltaapparelinc.com. Please visit the website at least 15 minutes early to register for the teleconference webcast and download any necessary software. A replay of the call will be available through August 31, 2019. To access the telephone replay, participants should dial toll-free 844-512-2921. International callers can dial 412-317-6671. The access code for the replay is 8758320.

About Delta Apparel, Inc.
Delta Apparel, Inc., along with its operating subsidiaries, Salt Life, LLC, M. J. Soffe, LLC, and DTG2Go, LLC, is an international design, marketing, manufacturing, and sourcing company that features a diverse portfolio of core activewear and lifestyle apparel and related accessory products. The Company specializes in selling casual and athletic products through a variety of distribution channels and distribution tiers, including department stores, mid and mass channels, e-retailers, sporting goods and outdoor retailers, independent and specialty stores, and the U.S. military. The Company’s products are also available direct-to-consumer at its branded retail stores and on its websites at www.saltlife.com, www.coastapparel.com, www.soffe.com and www.deltaapparel.com. The Company’s operations are located throughout the United States, Honduras, El Salvador, and Mexico, and it employs approximately 8,300 people worldwide. Additional information about the Company is available at www.deltaapparelinc.com.

Cautionary Note Regarding Forward-Looking Statements
This press release may contain “forward-looking” statements that involve risks and uncertainties. Any number of factors could cause actual results to differ materially from anticipated or forecasted results, including, but not limited to, the volatility and uncertainty of cotton and other raw material prices; the general U.S. and international economic conditions; competitive conditions in the apparel industry; restrictions on our ability to borrow capital or service our indebtedness; deterioration in the financial condition of our customers and suppliers and changes in the operations and strategies of our customers and suppliers; changing consumer preferences or trends; our ability to successfully open and operate new retail stores; changes in economic, political or social stability at our offshore locations; significant interruptions within our manufacturing or distribution facilities or other operations; our ability to attract and retain key management; significant changes in our effective tax rate; interest rate fluctuations increasing our obligations under our variable rate indebtedness; the ability to raise additional capital; the ability to grow, achieve synergies and realize the expected profitability of acquisitions; the volatility and uncertainty of energy, fuel and other costs; material disruptions in our information systems; compromises of our data security; 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; and the other factors set forth in the "Risk Factors" contained in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. Except as may be required by law, Delta Apparel, Inc. expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

Company Contact:

Deborah Merrill, 864-232-5200 x6620
investor.relations@deltaapparel.com

Investor Relations and Media Contact:
ICR, Inc.

Investors:
Tom Filandro, 646-277-1235

Media:
Jessica Liddell, 203-682-8208
DLAPR@icrinc.com 

                 
SELECTED FINANCIAL DATA:                
(In thousands, except per share amounts)                
    Three Months Ended   Nine Months Ended  
    Jun 29, 2019   Jun 30, 2018   Jun 29, 2019   Jun 30, 2018  
                   
Net Sales $   119,260     $   112,182     $   323,773     $   302,528    
Cost of Goods Sold     94,470         87,919         261,505         239,660    
Gross Profit     24,790         24,263         62,268         62,868    
                   
Selling, General and Administrative     17,931         17,936         51,771         49,654    
Other Income, Net     (1,477 )       (341 )       (574 )       (805 )  
Operating Income     8,336         6,668         11,071         14,019    
                   
Interest Expense, Net     1,989         1,522         5,739         4,207    
                   
Income Before Provision for Income Taxes     6,347         5,146         5,332         9,812    
                   
Provision for Income Taxes     1,510         596         896         11,583    
                   
Consolidated Net Income (Loss)     4,837         4,550         4,436         (1,771 )  
                   
Net Loss Attributable to Non-Controlling Interest     (89 )       -          (283 )       -     
                   
Net Income (Loss) Attributable to Shareholders $   4,926     $   4,550     $   4,719     $   (1,771 )  
                   
Weighted Average Shares Outstanding                  
  Basic     6,928         7,116         6,931         7,193    
  Diluted     7,080         7,388         7,065         7,193    
                   
Net Income (Loss) per Common Share                
  Basic $   0.71     $   0.64     $   0.68     $   (0.25 )  
  Diluted $   0.70     $   0.62     $   0.67     $   (0.25 )  
                   
                   
    Jun 29, 2019   Sep 29, 2018   Jun 30, 2018      
    (Unaudited)   (Audited)   (Unaudited)      
                   
Current Assets                
  Cash $   371     $   460     $   393        
  Receivables, Net     68,763         46,879         62,567        
  Income Tax Receivable     -          38         -         
  Inventories, Net     177,779         174,983         169,601        
  Prepaids and Other Assets     3,384         3,062         3,881        
Total Current Assets     250,297         225,422         236,442        
                   
Noncurrent Assets                
  Property, Plant & Equipment, Net     58,422         52,114         50,794        
  Goodwill and Other Intangibles, Net     59,957         53,715         51,294        
  Deferred Income Taxes     1,053         1,374         1,488        
  Investment in Joint Venture     10,038         8,980         4,590        
  Other Noncurrent Assets     1,658         2,004         2,355        
Total Noncurrent Assets     131,128         118,187         110,521        
                   
Total Assets $   381,425     $   343,609     $   346,963        
                   
                   
Current Liabilities                
  Accounts Payable and Accrued Expenses $   65,069     $   64,750     $   66,018        
  Income Tax Payable     593         -          291        
  Current Portion of Contingent Consideration     2,790         638         -         
  Current Portion of Capital Lease Financing     6,084         3,846         3,309        
  Current Portion of Long-Term Debt     7,040         6,577         6,156        
Total Current Liabilities     81,576         75,811         75,774        
                   
Noncurrent Liabilities                
  Long-Term Taxes Payable     3,492         4,259         7,414        
  Long-Term Contingent Consideration     6,604         9,904         -         
  Long-Term Capital Lease Financing     13,012         9,302         8,007        
  Long-Term Debt     123,236         92,083         98,858        
  Deferred Income Taxes     2,036         2,132         -         
  Other Noncurrent Liabilities     1,184         -          7,200        
Total Noncurrent Liabilities     149,564         117,680         121,479        
                   
  Common Stock     96         96         96        
  Additional Paid-In Capital     59,602         61,979         61,318        
  Equity Attributable to Non-Controlling Interest     (190 )       93         -         
  Retained Earnings     133,414         128,695         125,581        
  Accumulated Other Comprehensive (Loss) Income     (887 )       136         267        
  Treasury Stock     (41,750 )       (40,881 )       (37,552 )      
Equity Attributable to Delta Apparel, Inc.     150,285         150,118         149,710        
                   
Total Liabilities and Equity $   381,425     $   343,609     $   346,963        
                   

 

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