Delta Apparel Reports Fiscal 2019 Second Quarter and Six-Month Results

Company achieves year-over-year sales growth for quarter

GREENVILLE, S.C., May 06, 2019 (GLOBE NEWSWIRE) -- 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 second quarter and first six months ended March 30, 2019.

Robert W. Humphreys, the Company’s Chairman and Chief Executive Officer, commented, “We were pleased to deliver another quarter of top-line growth despite challenges from unseasonable weather in key markets and this year’s later spring break selling period. Our Delta Group segment posted a nice sales increase for the quarter and our fast-growing digital print business, DTG2Go, was once again a bright spot, with sales growth of 177%.”

Mr. Humphreys continued, “Both our Delta Group and Salt Life Group segments achieved top-line growth for the first half of the year and we are off to a strong start to the second half. We see exciting opportunities for growth and increased profitability across all of our businesses as we leverage our investments in manufacturing technology and distribution, and expand into additional sales channels. We continue to believe Delta Apparel is uniquely positioned to succeed in today’s dynamic retail environment.”

For the second quarter ended March 30, 2019:

  • 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.

For the six months ended March 30, 2019:

  • 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.

During the quarter, the Company spent approximately $1.9 million on capital expenditures and $717 thousand to repurchase 35,353 shares of its stock. Total debt, including capital lease financing, as of the end of the first six months of fiscal 2019 was $143.9 million, up approximately $32 million from the end of our 2018 fiscal year due principally to the Company’s recent digital print acquisition, capital expenditures, share repurchases and our seasonal build in inventory. Total inventory at the end of the first six months of fiscal 2019 was $186.5 million compared with $172.2 million a year ago due primarily to increased units on hand from the recent digital print acquisitions as well as higher costs per unit driven by product mix and the inflationary environment.

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 866-575-­6539. If calling from outside the United States, please dial 323-794-2423. A live webcast of the conference call will be available at 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 June 6, 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 9980067.

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,, and The Company’s operations are located throughout the United States, Honduras, El Salvador, and Mexico, and it employs approximately 8,100 people worldwide. Additional information about the Company is available at

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 and Media Contact:
ICR, Inc.

Tom Filandro, 646-277-1235

Jessica Liddell, 203-682-8208  

(In thousands, except per share amounts)              
    Three Months Ended   Six Months Ended
    Mar 30, 2019   Mar 31, 2018   Mar 30, 2019   Mar 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 )
    Mar 30, 2019   Sep 29, 2018   Mar 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      




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