Company Contact: | Deborah Merrill | |
(864)232-5200 x 6620 | ||
investor.relations@deltaapparel.com | ||
Investor Relations and Media Contact: ICR, Inc. | ||
Investor: | Tom Filandro | |
(203)682-8200 | ||
Tom.Filandro@icrinc.com | ||
Media: | Jessica Liddell | |
(203)682-8208 | ||
DLAPR@irinc.com |
• | Net sales were $102.8 million, up almost 3% from $100.0 million in the prior year second quarter. Net sales in the Delta Group segment increased almost 4% over the prior year period and net sales in the Salt Life Group segment declined approximately 4% from the prior year period. |
• | Gross margin sequentially improved 10 basis points from the first quarter to 18.4% in the second quarter, but declined compared to 22.2% in the prior year second quarter. Anticipated transition costs from changes in the private label product mix and higher-cost raw materials in the Delta Group segment, coupled with higher than expected digital print acquisition integration expenses and delayed spring sales in the Salt Life Group segment, drove a decline in gross profit to $18.9 million from $22.2 million in the prior year period. The majority of these cost impacts are now behind us and we expect gross profit to improve in the back half of the year. |
• | Selling, general and administrative ("SG&A") expenses as a percentage of sales were 16.6%, compared to 16.7% in the prior year second quarter. |
• | The above-referenced cost impacts drove a decline in operating income for the quarter to $2.8 million compared to $5.6 million in the prior year second quarter, with Delta Group segment operating income declining $2.4 million and Salt Life Group segment operating income declining $0.1 million. We expect profitability to increase in the second half of the year as we enter our traditionally strong selling season with an expanding product mix and better balance between selling prices and raw material costs. |
• | Net income for the quarter was $0.9 million, or $0.13 per diluted share, compared to $3.6 million, or $0.48 per diluted share, in the prior year period. |
• | Net sales were $204.5 million, up 7.4% from $190.3 million in the comparable period last year. Net sales in the Delta Group segment increased 8.2% over the prior year and net sales in the Salt Life Group segment increased 1.5% over the prior year. |
• | Gross profit was $37.5 million, down 2.9% from $38.6 million in the comparable period last year. Gross margin was 18.3% compared to 20.3% in the prior year period. |
• | SG&A expenses as a percentage of sales improved 20 basis points from last year to 16.5%. |
• | Operating income was $2.9 million compared to $7.4 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 litigation stemming from The Sports Authority's March 2016 bankruptcy. Delta Group segment operating income was impacted by the litigation expense and declined $4.1 million over the prior year, while Salt Life Group segment operating income was relatively flat compared to the prior year. |
• | The Company experienced a net loss for the period of $209 thousand, or $0.03 per diluted share, an improvement over the prior year period’s net loss of $6.3 million, or $0.87 per diluted share. Excluding the above-referenced $2.5 million litigation expense, the Company achieved net income of $1.9 million, or $0.27 per diluted share, for the six months ended March 30, 2019. |
SELECTED FINANCIAL DATA: | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
March 30, 2019 | March 31, 2018 | March 30, 2019 | March 31, 2018 | |||||||||||||
Net Sales | $ | 102,838 | $ | 100,004 | $ | 204,513 | $ | 190,346 | ||||||||
Cost of Goods Sold | 83,930 | 77,769 | 167,036 | 151,741 | ||||||||||||
Gross Profit | 18,908 | 22,235 | 37,477 | 38,605 | ||||||||||||
Selling, General and Administrative | 17,056 | 16,737 | 33,841 | 31,717 | ||||||||||||
Other (Income) Expense, Net | (843 | ) | (116 | ) | 902 | (464 | ) | |||||||||
Operating Income | 2,695 | 5,614 | 2,734 | 7,352 | ||||||||||||
Interest Expense, Net | 1,985 | 1,350 | 3,750 | 2,685 | ||||||||||||
Income (Loss) Income Before Provision for Income Taxes | 710 | 4,264 | (1,016 | ) | 4,667 | |||||||||||
(Benefit From) Provision for Income Taxes | (115 | ) | 632 | (614 | ) | 10,988 | ||||||||||
Consolidated Net Income (Loss) | 825 | 3,632 | (402 | ) | (6,321 | ) | ||||||||||
Net Loss Attributable to Non-Controlling Interest | (117 | ) | — | (193 | ) | — | ||||||||||
Net Income (Loss) Attributable to Shareholders | $ | 942 | $ | 3,632 | $ | (209 | ) | $ | (6,321 | ) | ||||||
Weighted Average Shares Outstanding | ||||||||||||||||
Basic | 6,943 | 7,195 | 6,933 | 7,231 | ||||||||||||
Diluted | 7,103 | 7,496 | 6,933 | 7,231 | ||||||||||||
Net Income (Loss) per Common Share | ||||||||||||||||
Basic | $ | 0.14 | $ | 0.50 | $ | (0.03 | ) | $ | (0.87 | ) | ||||||
Diluted | $ | 0.13 | $ | 0.48 | $ | (0.03 | ) | $ | (0.87 | ) | ||||||
March 30, 2019 | September 29, 2018 | March 31, 2018 | ||||||||||||||
(Unaudited) | (Audited) | (Unaudited) | ||||||||||||||
Current Assets | ||||||||||||||||
Cash | $ | 1,777 | $ | 460 | $ | 434 | ||||||||||
Receivables, Net | 59,946 | 46,879 | 60,083 | |||||||||||||
Income Tax Receivable | — | 38 | — | |||||||||||||
Inventories, Net | 186,526 | 174,983 | 172,213 | |||||||||||||
Prepaids and Other Assets | 3,002 | 3,062 | 4,185 | |||||||||||||
Total Current Assets | 251,251 | 225,422 | 236,915 | |||||||||||||
Noncurrent Assets | ||||||||||||||||
Property, Plant & Equipment, Net | 54,311 | 52,114 | 50,093 | |||||||||||||
Goodwill and Other Intangibles, Net | 60,151 | 53,715 | 50,602 | |||||||||||||
Deferred Income Taxes | 1,924 | 1,374 | 1,996 | |||||||||||||
Investment in Joint Venture | 9,731 | 8,980 | 4,140 | |||||||||||||
Other Noncurrent Assets | 1,687 | 2,004 | 2,148 | |||||||||||||
Total Noncurrent Assets | 127,804 | 118,187 | 108,979 | |||||||||||||
Total Assets | $ | 379,055 | $ | 343,609 | $ | 345,894 | ||||||||||
Current Liabilities | ||||||||||||||||
Accounts Payable and Accrued Expenses | $ | 73,857 | $ | 64,750 | $ | 63,984 | ||||||||||
Income Tax Payable | — | — | 256 | |||||||||||||
Current Portion of Contingent Consideration | 3,190 | 638 | — | |||||||||||||
Current Portion of Capital Lease Financing | 5,308 | 3,846 | 2,336 | |||||||||||||
Current Portion of Long-Term Debt | 7,435 | 6,577 | 6,356 | |||||||||||||
Total Current Liabilities | 89,790 | 75,811 | 72,932 | |||||||||||||
Noncurrent Liabilities |
Long-Term Taxes Payable | 3,451 | 4,259 | 7,414 | |||||||||||||
Long-Term Contingent Consideration | 6,104 | 9,904 | 5,850 | |||||||||||||
Long-Term Capital Lease Financing | 11,150 | 9,302 | 8,402 | |||||||||||||
Long-Term Debt | 120,043 | 92,083 | 105,798 | |||||||||||||
Deferred Income Taxes | 2,192 | 2,132 | — | |||||||||||||
Other Noncurrent Liabilities | 658 | — | — | |||||||||||||
Total Noncurrent Liabilities | 143,598 | 117,680 | 127,464 | |||||||||||||
Common Stock | 96 | 96 | 96 | |||||||||||||
Additional Paid-In Capital | 59,121 | 61,979 | 60,561 | |||||||||||||
Equity Attributable to Non-Controlling Interest | (100 | ) | 93 | — | ||||||||||||
Retained Earnings | 128,486 | 128,695 | 121,032 | |||||||||||||
Accumulated Other Comprehensive (Loss) Income | (493 | ) | 136 | 167 | ||||||||||||
Treasury Stock | (41,443 | ) | (40,881 | ) | (36,358 | ) | ||||||||||
Equity Attributable to Delta Apparel, Inc. | 145,667 | 150,118 | 145,498 | |||||||||||||
Total Liabilities and Equity | $ | 379,055 | $ | 343,609 | $ | 345,894 |