Bay Street News

Delta Apparel Reports Fourth Quarter and Full Year Fiscal 2018 Results

Company achieves sales and profitability growth for quarter and full year

Adjusted diluted EPS improves 33% for the year

GREENVILLE, S.C., Nov. 15, 2018 (GLOBE NEWSWIRE) — Delta Apparel, Inc. (NYSE American: DLA), a leading provider of core activewear and lifestyle apparel and related accessories, today announced financial results for its fourth quarter and full fiscal year 2018 ended September 29, 2018.

Robert W. Humphreys, Delta Apparel, Inc.’s Chairman and Chief Executive Officer, commented, “We are pleased to have delivered fourth quarter sales growth of 2% along with solid bottom line performance despite significant weather interruptions at two of our major distribution centers.  Our DTG2Go digital print business and our Activewear business drove strong top and bottom-line performance in our re-aligned Delta Group segment. While our Salt Life business was impacted by the hurricanes this quarter, the Salt Life brand continues to grow its lifestyle presence and expand its market reach. We remain extremely optimistic about that business going forward.”

Mr. Humphreys continued, “Fiscal 2018 was an important year for Delta Apparel. We grew our sales year-over-year and, excluding the impacts of the recent tax reform legislation, significantly increased our profitability.  We also made important strides in building our DTG2Go business with an acquisition in March and a follow-on acquisition in October, solidifying our industry-leading position in the digital print and fulfillment space. Finally, we continued to increase consumer awareness of our Salt Life brand through our expansion into additional product categories, and growth with national and regional retailers and in our own direct-to-consumer channels. We believe that the strategic actions we have taken over the past year position us well to capitalize on the many growth opportunities we see ahead for our Company.”

To better reflect Delta Apparel, Inc.’s current operating model, the Company has re-aligned its reporting segments and now refers to them as the Delta Group and the Salt Life Group. The Delta Group is comprised of the Company’s DTG2Go digital print business as well as its Delta Activewear business and Soffe brand. The Salt Life Group is comprised of the Salt Life and Coast lifestyle brands. The fourth quarter and full year results reflect these changes to the Company’s reporting segments.

For the fourth quarter ended September 29, 2018:

For the full year ended September 29, 2018:

The Company improved its operating cash flow by nearly $7 million to $20.9 million in fiscal year 2018.  Total inventory at the end of fiscal year 2018 remained relatively flat with a year ago at $175 million, with lower units on hand partially being offset by higher cost per unit inventory resulting from inflationary increases.  During fiscal year 2018, the Company spent $13.3 million on capital expenditures, $16.4 million on the digital print acquisition, and $9.0 million on share repurchases.  Total debt, including capital lease financing, at the end of fiscal year 2018 was $111.8 million compared to $96.2 million at the end of the prior year.

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 888-224-1121.  If calling from outside the United States, please dial 323-994-2082.  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 December 15, 2018.  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 8037708.

Use of Non-GAAP Measures

In an effort to provide investors with additional information regarding the Company’s results as determined by United States generally accepted accounting principles (GAAP), the Company also provides non-GAAP information that management believes is useful to investors. The Company discusses adjusted net sales, adjusted net income, and adjusted earnings per diluted share as performance measures because management uses these measures in evaluating the Company’s underlying performance on a consistent basis across periods. Management also believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of the Company’s recurring performance. These non-GAAP measures can be calculated using the information in this press release. These non-GAAP measures have limitations as analytical tools, and securities analysts, investors and other interested parties should not consider any of these non-GAAP measures in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.

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 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.  The Company’s operations are located throughout the United States, Honduras, El Salvador, and Mexico, and it employs approximately 7,700 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/Caitlin Morahan, 203-682-8200
Tom.Filandro@icrinc.com / Caitlin.Morahan@icrinc.com 

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

                 
SELECTED FINANCIAL DATA:                
(In thousands, except per share amounts)                
    Three Months Ended   Twelve Months Ended  
    Sep 29, 2018   Sep 30, 2017   Sep 29, 2018   Sep 30, 2017  
                   
Net Sales $   92,922     $   91,327     $   395,450     $   385,082    
Cost of Goods Sold     73,769         74,663         313,429         304,360    
Gross Profit     19,153         16,664         82,021         80,722    
                   
Selling, General and Administrative     17,317         14,884         66,969         67,408    
Other Income, Net     (1,622 )       (557 )       (2,351 )       (2,865 )  
Operating Income     3,458         2,337         17,403         16,179    
                   
Interest Expense, Net     1,507         1,143         5,713         5,011    
                   
Income Before Provision for Income Taxes     1,951         1,194         11,690         11,168    
                   
(Benefit From) Provision for Income Taxes     (1,124 )       (905 )       10,460         657    
                   
Consolidated Net Earnings     3,075         2,099         1,230         10,511    
                   
Net Loss Attributable to Non-Controlling Interest     (32 )       –          (107 )       –     
                   
Net Earnings Attributable to Shareholders $   3,107     $   2,099     $   1,337     $   10,511    
                   
Weighted Average Shares Outstanding                 
  Basic     7,018         7,387         7,149         7,531    
  Diluted     7,304         7,713         7,425         7,882    
                   
Net Income per Common Share                
  Basic $   0.44     $   0.28     $   0.19     $   1.40    
  Diluted $   0.43     $   0.27     $   0.18     $   1.33    
                   
                   
                   
        Sep 29, 2018   Sep 30, 2017      
                   
Current Assets                
  Cash     $   460     $   572        
  Receivables, Net         46,879         47,557        
  Income Tax Receivable         38         352        
  Inventories, Net         174,983         174,551        
  Prepaids and Other Assets         3,062         4,662        
Total Current Assets         225,422         227,694        
                   
Noncurrent Assets                
  Property, Plant & Equipment, Net         52,114         42,706        
  Goodwill and Other Intangibles, Net         53,715         36,068        
  Deferred Income Taxes         1,374         5,002        
  Investment in Joint Venture         8,980         4,140        
  Other Noncurrent Assets         2,004         2,192        
Total Noncurrent Assets         118,187         90,108        
                   
Total Assets     $   343,609     $   317,802        
                   
                   
Current Liabilities                
  Accounts Payable and Accrued Expenses     $   64,750     $   64,039        
  Current Portion of Contingent Consideration         638         –         
  Current Portion of Capital Lease Financing         3,846         848        
  Current Portion of Long-Term Debt         6,577         7,548        
Total Current Liabilities         75,811         72,435        
                   
Noncurrent Liabilities                
  Long-Term Taxes Payable         4,259         –         
  Long-Term Contingent Consideration         9,904         1,600        
  Long-Term Capital Lease Financing         9,302         2,519        
  Long-Term Debt         92,083         85,306        
  Deferred Income Taxes         2,132         –         
  Other Noncurrent Liabilities         –          55        
Total Noncurrent Liabilities         117,680         89,480        
                   
  Common Stock         96         96        
  Additional Paid-In Capital         61,979         61,065        
  Equity Attributable to Non-Controlling Interest         93         –         
  Retained Earnings         128,695         127,358        
  Accumulated Other Comprehensive Income (Loss)         136         (35 )      
  Treasury Stock         (40,881 )       (32,597 )      
Equity Attributable to Delta Apparel, Inc.         150,118         155,887        
                   
Total Liabilities and Equity     $   343,609     $   317,802