Delta Apparel Reports First Quarter Fiscal 2020 Results
February 03 2020 - 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 2020 first quarter ended December
28, 2019.
Robert W. Humphreys, the Company’s Chairman and
Chief Executive Officer, commented, “As we previously reported, our
first quarter sales results were impacted by the shortened holiday
calendar combined with an earlier shipping cut-off for in-hands
holiday receipts. With that said, we are pleased to have delivered
strong gross margin performance from our Delta Group segment that
more than offset our sales performance during the quarter. We
continue to drive efficiencies throughout our business while
scaling our integrated vertical manufacturing platform and believe
we are well-positioned to capitalize on the great growth
opportunities that lie ahead for Delta Apparel.”
For the first quarter ended December 28,
2019:
- Net sales were $95.9 million, down 5.7% from $101.7 million in
the prior year first quarter. Net sales in the Delta Group segment
and Salt Life Group segment decreased 5.8% and 4.7%, respectively,
from the prior year period.
- Gross profit was $19.9 million, a 7.1% increase from $18.6
million in the prior year first quarter. Gross margin improved 240
basis points to 20.7% driven by Delta Group’s improved process
efficiencies further leveraging the segment’s integrated vertical
manufacturing platform.
- Selling, general and administrative (“SG&A”) expenses as a
percentage of sales was 18.8%, compared to 16.5% in the prior year
first quarter. The increase in SG&A expenses principally
resulted from investments in our distribution expansion not yet
fully leveraged against revenues, coupled with higher equity
compensation costs.
- Operating income for the quarter was $2.6 million compared to
$41 thousand in the prior year first quarter, which included a $2.5
million discrete expense in connection with the resolution of
litigation surrounding a 2016 customer bankruptcy.
- Net income for the quarter was $0.9 million, or $0.13 per
diluted share, compared to a net loss of $1.1 million, or $0.17 per
share, in the prior year period. When adjusted for the discrete
$2.5 million pre-tax expense, or $0.31 per share, impact of the
litigation settlement, adjusted earnings for the first quarter of
fiscal 2019 was $0.14 per diluted share.
During the quarter, the Company spent
approximately $2.5 million on capital expenditures. The Company did
not repurchase shares during the period, and approximately $9.5
million remains available under the Company’s authorized share
repurchase program as of quarter-end. Total inventory at the end of
first quarter fiscal 2020 increased to $197.3 million compared to
$179.1 million at fiscal 2019 year-end, primarily driven from the
seasonal build of inventory as well as broader product offerings
within Activewear and Salt Life. Total debt, including capital
lease financing, as of the end of first quarter fiscal 2020 was
$147.4 million, up approximately 9% from the fiscal 2019 year-end
due primarily to the seasonal higher working capital along with
investments in distribution facilities.
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 888-394-8218. If calling from outside the
United States, please dial 323-794-2588. 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 March 3, 2020. 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 6108016.
About Delta Apparel, Inc. Delta
Apparel, Inc., along with its operating subsidiaries, DTG2Go, LLC,
Salt Life, LLC, and M.J. Soffe, LLC, is a vertically-integrated,
international apparel company that designs, manufactures, sources,
and markets a diverse portfolio of core activewear and lifestyle
apparel products under the primary brands of Salt Life®, COAST®,
Soffe®, and Delta. The Company is a market leader in the
direct-to-garment digital print and fulfillment industry, bringing
DTG2Go technology and innovation to the supply chain of its
customers. The Company specializes in selling casual and athletic
products through a variety of distribution channels and tiers,
including outdoor and sporting goods retailers, independent and
specialty stores, better department stores and mid-tier retailers,
mass merchants and e-retailers, the U.S. military, and through its
business-to-business e-commerce sites. The Company’s products are
also made 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 as well as through its
branded retail stores. The Company’s operations are located
throughout the United States, Honduras, El Salvador, and Mexico,
and it employs approximately 8,500 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 and availability; 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;
the impairment of intangible assets; changes in international trade
regulations; our ability to comply with trade regulations; changes
in employment laws or regulations or our relationship with
employees; foreign currency exchange rate fluctuations; negative
publicity resulting from violations of manufacturing standards or
labor laws or unethical business practices by our suppliers and
independent contractors; the illiquidity of our shares; price
volatility in our shares and the general volatility of the stock
market; 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 and as updated in our
subsequently filed Quarterly Reports on Form 10-Q. 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
SELECTED
FINANCIAL DATA: |
|
|
|
|
|
(In thousands,
except per share amounts) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
Dec 28, 2019 |
|
Dec 29, 2018 |
|
|
|
|
|
|
|
|
|
Net
Sales |
$ |
95,889 |
|
|
$ |
101,675 |
|
|
|
Cost of
Goods Sold |
|
75,996 |
|
|
|
83,105 |
|
|
|
Gross
Profit |
|
19,893 |
|
|
|
18,570 |
|
|
|
|
|
|
|
|
|
|
Selling,
General and Administrative |
|
18,073 |
|
|
|
16,784 |
|
|
|
Other
(Income) Expense, Net |
|
(817 |
) |
|
|
1,745 |
|
|
|
Operating
Income |
|
2,637 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
Interest
Expense, Net |
|
1,802 |
|
|
|
1,765 |
|
|
|
|
|
|
|
|
|
|
Income
(Loss) Before Provision For (Benefit From) Income
Taxes |
|
835 |
|
|
|
(1,724 |
) |
|
|
|
|
|
|
|
|
|
Provision
For (Benefit From) Income Taxes |
|
44 |
|
|
|
(499 |
) |
|
|
|
|
|
|
|
|
|
Consolidated Net Earnings (Loss) |
|
791 |
|
|
|
(1,225 |
) |
|
|
|
|
|
|
|
|
|
Net Loss
Attributable to Non-Controlling Interest |
|
(132 |
) |
|
|
(76 |
) |
|
|
|
|
|
|
|
|
|
Net
Earnings (Loss) Attributable to Shareholders |
$ |
923 |
|
|
$ |
(1,149 |
) |
|
|
|
|
|
|
|
|
|
Weighted
Average Shares Outstanding |
|
|
|
|
|
|
Basic |
|
6,950 |
|
|
|
6,924 |
|
|
|
|
Diluted |
|
7,072 |
|
|
|
6,924 |
|
|
|
|
|
|
|
|
|
|
Net
Earnings (Loss) per Common Share |
|
|
|
|
|
|
Basic |
$ |
0.13 |
|
|
$ |
(0.17 |
) |
|
|
|
Diluted |
$ |
0.13 |
|
|
$ |
(0.17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec 28,2019 |
|
Sep 28, 2019 |
|
Dec 29, 2018 |
|
|
(Unaudited) |
|
(Audited) |
|
(Unaudited) |
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
Cash |
$ |
433 |
|
|
$ |
605 |
|
|
$ |
558 |
|
|
Receivables,
Net |
|
55,477 |
|
|
|
60,887 |
|
|
|
56,857 |
|
|
Inventories,
Net |
|
197,315 |
|
|
|
179,107 |
|
|
|
187,653 |
|
|
Prepaids and Other
Assets |
|
3,698 |
|
|
|
2,999 |
|
|
|
3,670 |
|
Total
Current Assets |
|
256,923 |
|
|
|
243,598 |
|
|
|
248,738 |
|
|
|
|
|
|
|
|
Noncurrent
Assets |
|
|
|
|
|
|
Property, Plant &
Equipment, Net |
|
61,255 |
|
|
|
61,404 |
|
|
|
54,883 |
|
|
Goodwill and Other
Intangibles, Net |
|
59,052 |
|
|
|
59,504 |
|
|
|
60,625 |
|
|
Deferred Income
Taxes |
|
1,514 |
|
|
|
1,514 |
|
|
|
1,924 |
|
|
Operating Lease
Assets |
|
41,996 |
|
|
|
- |
|
|
|
- |
|
|
Investment in Joint
Venture |
|
10,689 |
|
|
|
10,388 |
|
|
|
9,399 |
|
|
Other Noncurrent
Assets |
|
2,584 |
|
|
|
1,580 |
|
|
|
1,760 |
|
Total
Noncurrent Assets |
|
177,090 |
|
|
|
134,390 |
|
|
|
128,591 |
|
|
|
|
|
|
|
|
Total
Assets |
$ |
434,013 |
|
|
$ |
377,988 |
|
|
$ |
377,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
Accounts Payable and
Accrued Expenses |
$ |
74,089 |
|
|
$ |
73,111 |
|
|
$ |
80,995 |
|
|
Current Portion of
Contingent Consideration |
|
2,700 |
|
|
|
2,790 |
|
|
|
638 |
|
|
Current Portion of
Finance Leases |
|
6,822 |
|
|
|
6,434 |
|
|
|
5,106 |
|
|
Current Portion of
Operating Leases |
|
8,497 |
|
|
|
- |
|
|
|
- |
|
|
Current Portion of
Long-Term Debt |
|
7,337 |
|
|
|
6,540 |
|
|
|
8,176 |
|
Total
Current Liabilities |
|
99,445 |
|
|
|
88,875 |
|
|
|
94,915 |
|
|
|
|
|
|
|
|
Noncurrent
Liabilities |
|
|
|
|
|
|
Long-Term Taxes
Payable |
|
3,875 |
|
|
|
3,977 |
|
|
|
3,862 |
|
|
Long-Term Contingent
Consideration |
|
5,970 |
|
|
|
6,304 |
|
|
|
9,644 |
|
|
Long-Term Finance
Leases |
|
12,734 |
|
|
|
12,836 |
|
|
|
11,512 |
|
|
Long-Term Operating
Leases |
|
34,430 |
|
|
|
- |
|
|
|
- |
|
|
Long-Term
Debt |
|
120,468 |
|
|
|
109,296 |
|
|
|
109,322 |
|
|
Deferred Income
Taxes |
|
1,561 |
|
|
|
1,519 |
|
|
|
2,404 |
|
|
Other Noncurrent
Liabilities |
|
1,119 |
|
|
|
1,293 |
|
|
|
315 |
|
Total
Noncurrent Liabilities |
|
180,157 |
|
|
|
135,225 |
|
|
|
137,059 |
|
|
|
|
|
|
|
|
|
Common
Stock |
|
96 |
|
|
|
96 |
|
|
|
96 |
|
|
Additional Paid-In
Capital |
|
58,825 |
|
|
|
59,855 |
|
|
|
58,658 |
|
|
Equity Attributable to
Non-Controlling Interest |
|
(413 |
) |
|
|
(281 |
) |
|
|
17 |
|
|
Retained
Earnings |
|
137,860 |
|
|
|
136,937 |
|
|
|
127,546 |
|
|
Accumulated Other
Comprehensive (Loss) Income |
|
(838 |
) |
|
|
(969 |
) |
|
|
(237 |
) |
|
Treasury
Stock |
|
(41,119 |
) |
|
|
(41,750 |
) |
|
|
(40,725 |
) |
Equity
Attributable to Delta Apparel, Inc. |
|
154,411 |
|
|
|
153,888 |
|
|
|
145,355 |
|
|
|
|
|
|
|
|
Total
Liabilities and Equity |
$ |
434,013 |
|
|
$ |
377,988 |
|
|
$ |
377,329 |
|
|
|
|
|
|
|
|
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