Delta Apparel Reports Fiscal 2019 Third Quarter and Nine-Month Results
July 31 2019 - 4:05PM
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 CallThe 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 StatementsThis 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
x6620investor.relations@deltaapparel.com
Investor Relations and Media Contact: ICR, Inc.
Investors:Tom Filandro, 646-277-1235
Media:Jessica Liddell, 203-682-8208DLAPR@icrinc.com
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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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