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Delta Apparel, Inc (DLA) SEC Filing 10-Q Quarterly report for the period ending Saturday, December 28, 2019

Delta Apparel, Inc

CIK: 1101396 Ticker: DLA

Exhibit 99.1

 

 

Company Contact:

Deborah Merrill

 

 

(864)232-5200 x 6620

 

investor.relations@deltaapparel.com

 

 

Investor Relations and Media Contact: ICR, Inc.

Tom Filandro

 

(646)277-1235

Investors:

Tom.Filandro@icrinc.com 

Media:

Jessica Liddell

 

(203)682-8208

 

DLAPR@irinc.com

 

GREENVILLE, SC – February 3, 2020 – 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 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 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 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 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.

 

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  

 


The following information was filed by Delta Apparel, Inc (DLA) on Monday, February 3, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Delta Apparel, Inc's 10-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Document And Entity Information
Condensed Consolidated Balance Sheets (Current Period Unaudited)
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals)
Condensed Consolidated Statements Of Cash Flows (Unaudited)
Condensed Consolidated Statements Of Comprehensive Income (Loss) (Unaudited)
Condensed Consolidated Statements Of Operations (Unaudited)
Condensed Consolidated Statements Of Shareholders' Equity (Unaudited)
Note A - Basis Of Presentation And Description Of Business
Note B - Accounting Policies
Note C - New Accounting Standards
Note C - New Accounting Standards (Details Textual)
Note D - Revenue Recognition
Note D - Revenue Recognition (Details Textual)
Note D - Revenue Recognition (Tables)
Note D - Revenue Recognition - Disaggregation Of Revenue (Details)
Note E - Inventories
Note E - Inventories (Details Textual)
Note E - Inventories (Tables)
Note E - Inventories - Inventories (Details)
Note F - Debt
Note F - Debt (Details Textual)
Note F - Debt (Tables)
Note F - Debt - Long-Term Debt (Details)
Note F - Debt - Long-Term Debt (Details) (Parentheticals)
Note G - Leases
Note G - Leases (Details Textual)
Note G - Leases (Tables)
Note G - Leases - Future Payments Due For Lease Liabilities (Details)
Note G - Leases - Total Lease Cost (Details)
Note H - Selling, General And Administrative Expense
Note H - Selling, General And Administrative Expense (Details Textual)
Note I - Stock-Based Compensation
Note I - Stock-Based Compensation (Details Textual)
Note J - Purchase Contracts
Note J - Purchase Contracts (Tables)
Note J - Purchase Contracts - Minimum Payments Under Contracts (Details)
Note K - Business Segments
Note K - Business Segments (Details Textual)
Note K - Business Segments (Tables)
Note K - Business Segments - Schedule Of Segment Information (Details)
Note K - Business Segments - Segment Operating Income To The Consolidated Income Before Provision For Income Taxes (Details)
Note L - Income Taxes
Note L - Income Taxes (Details Textual)
Note M - Derivatives And Fair Value Measurements
Note M - Derivatives And Fair Value Measurements (Details Textual)
Note M - Derivatives And Fair Value Measurements (Tables)
Note M - Derivatives And Fair Value Measurements - Fair Value Of Derivative Instruments (Details)
Note M - Derivatives And Fair Value Measurements - Financial Assets (Liabilities) Measured At Fair Value (Details)
Note M - Derivatives And Fair Value Measurements - Outstanding Instruments (Details)
Note N - Legal Proceedings
Note O - Repurchase Of Common Stock
Note O - Repurchase Of Common Stock (Details Textual)
Note P - Goodwill And Intangible Assets
Note P - Goodwill And Intangible Assets (Details Textual)
Note P - Goodwill And Intangible Assets (Tables)
Note P - Goodwill And Intangible Assets - Goodwill And Components Of Intangible Assets (Details)
Note Q - Subsequent Events
Significant Accounting Policies (Policies)

Material Contracts, Statements, Certifications & more

Delta Apparel, Inc provided additional information to their SEC Filing as exhibits

Ticker: DLA
CIK: 1101396
Form Type: 10-Q Quarterly Report
Accession Number: 0001437749-20-001555
Submitted to the SEC: Mon Feb 03 2020 4:23:18 PM EST
Accepted by the SEC: Mon Feb 03 2020
Period: Saturday, December 28, 2019
Industry: Wholesale Apparel Piece Goods And Notions

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