Delta Apparel Reports Fiscal 2013 Second Quarter and Six Months Results

  Delta Apparel Reports Fiscal 2013 Second Quarter and Six Months Results

  Company achieved record revenue for both the second-quarter and first-half

Business Wire

GREENVILLE, S.C. -- January 28, 2013

Delta Apparel, Inc. (NYSE MKT: DLA) today reported record revenues for its
fiscal 2013 second quarter and first six months ended December 29, 2012.

Net sales for the fiscal 2013 second quarter were $106.8 million, a 1.2 %
increase over 2012 second quarter sales of $105.5 million. Net income for the
2013 second quarter was $46 thousand, or $0.01 per diluted share, compared
with a loss in the 2012 second quarter of $13.6 million, or $1.61 per diluted
share. As previously reported, net income for the fiscal 2012 second quarter
and first half was negatively impacted by a one-time inventory markdown of
$16.2 million resulting from record high cotton costs combined with selling
price decreases in Delta’s line of basic undecorated t-shirts.

For the first six months of fiscal 2013, sales increased 3.4% to $236.9
million compared to $229.0 million for the first six months of fiscal 2012.
Net income for the first six months of fiscal 2013 was $3.6 million, or $0.42
per diluted share, compared to a loss of $9.2 million, or $1.09 per share, in
the prior-year six-month period. Fiscal 2013 first half net income was
affected by a one-time charge of $1.2 million related to the previously
reported Audit Committee internal investigation completed in September 2012
that reduced 2013 first quarter earnings per share by $0.10.

The Company’s second quarter benefitted from solid year-over-year sales growth
in its Delta Catalog, Junkfood, The Game and Art Gun businesses. This growth
was offset somewhat by continued softness in the Company’s Soffe business and
lower selling prices within its FunTees and Delta Catalog businesses due to
lower priced cotton.

Basics Segment Review

Second quarter 2013 sales in the basics segment rose to $58.8 million, a 2.2%
increase over the comparable 2012 period. The increase resulted from a 13.1%
rise in basics segment volume, which was offset somewhat by lower average
selling prices in both the Delta Catalog and FunTees businesses. The addition
of new customers in the blank and private-label business was the principal
driver of the volume increase. Delta Catalog experienced a 15% increase in
unit volume, driving 7.8% sales growth. Due to lower pricing, FunTees
experienced a net sales decline of 7.3% despite a 6% increase in volume.
Efficient use of new print programs using Delta Catalog blanks and the success
of Delta’s Six Sigma initiatives in reducing manufacturing costs bolstered
revenue and provided improved margins for the basics segment.

Branded Segment Review

Branded segment sales for the second quarter were $47.9 million, up slightly
from the prior year second quarter. Junkfood, The Game and Art Gun each
experienced double-digit net sales growth, which was offset by continued
weakness in the Soffe business. While Soffe’s strategic sporting goods channel
gained new distribution and better product placement, its independent sporting
goods business remained slow. Soffe's juniors business with mid-tier
department stores also remained slow but various girls and "missy" college
programs performed well in that channel. Junkfood continued to add specialty
retail customers and new design-for-fee business, and its professional sports
license business continues to grow, largely through e-commerce channels. The
Game continues to show good growth, led by Salt Life, which is experiencing
strong buy-in from customers. Salt Life will start shipping its new footwear
line in the March quarter. Art Gun grew net sales 83% in the second quarter
and has been profitable throughout the first half. Driving its growth were
several new e-commerce sites and direct-to-garment fulfillment opportunities
that were added to the Art Gun platform since the beginning of the 2013 fiscal
year.

Robert W. Humphreys, Delta Apparel’s Chairman and Chief Executive Officer,
commented that while the Company’s second quarter was not as strong as
expected, it is still on track to meet its full-year guidance. "During the
second quarter we completed several projects that are designed to reduce costs
and leverage customer relationships. The Game’s basic tee products now employ
a completely vertical production model extending from textiles through screen
printing. This provides a low cost structure and facilitates rapid product
replenishment. The Salt Life brand continues to gain in popularity. Our Fall
2013 line received an excellent reaction from buyers at the recent Surf Expo
in Orlando, Florida, and we are making good headway in establishing the brand
on the West Coast."

"Delta made good progress in bringing all of our bookstore business under The
Game's operation and we expect to complete the consolidation by the end of
this fiscal year. This will help us leverage our bookstore relationships and
reduce our selling, general and administrative costs going forward."

"In the second quarter, we added additional equipment to our Art Gun business
and went to a twenty-four/seven operation to support holiday growth and
provide quicker shipping to customers spread across more than 65 countries. We
also continued to expand sales on our own e-commerce sites, which grew 71
percent over last year’s first half. While e-commerce is a very small part of
our business, it is an area of exceptional growth that will continue to gain
importance to our business."

"Obviously, the Soffe business offers one of our biggest challenges as well as
one of our biggest opportunities. In this regard, we are addressing Soffe’s
cost structure to bring it in line with that of our other business units.
Beyond that, we are seizing a number of opportunities to leverage customer
relationships through new, more creative sales and marketing programs to
coincide with and enhance the rapidly evolving marketing strategies of
mid-tier retailers and independent sporting goods operators."

Mr. Humphreys concluded, "While the economic outlook in the U.S. continues to
lack certainty, current demand for our products is firm and we believe we can
meet our sales and earnings expectations in each of the two remaining quarters
of fiscal 2013."

Fiscal 2013 Guidance

The Company continues to believe that the guidance previously provided for
fiscal 2013 can be achieved. Based on anticipated net sales growth and higher
unit volume leveraging fixed costs, the Company believes that it will reach
record revenues in the range of $500 to $510 million for fiscal 2013 or about
a 3% increase over 2012. Net income is expected to be in a range of $1.65 to
$1.80 per diluted share.

Conference Call

The Company will hold a conference call with senior management to discuss the
financial results at 4:30 p.m. ET today. The Company invites you to join the
call by dialing 888-417-8533. If calling from outside the United States, dial
719-325-2402. Use confirmation number 2142335. 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 February 28, 2013. To access the telephone replay, participants should
dial toll-free 877-870-5176. International callers can dial 858-384-5517. The
access code for the replay is 2142335.

About Delta Apparel, Inc.

Delta Apparel, Inc., along with its operating subsidiaries, M. J. Soffe, LLC,
Junkfood Clothing Company, To The Game, LLC and Art Gun, LLC, is an
international design, marketing, manufacturing, and sourcing company that
features a diverse portfolio of lifestyle branded activewear apparel and
headwear, and produces high quality private label programs. The Company
specializes in selling casual and athletic products across distribution tiers
and in most store types, including specialty stores, boutiques, department
stores, mid-tier and mass chains. From a niche distribution standpoint, the
Company also has strong distribution at college bookstores and the U.S.
military. The Company’s products are made available direct-to-consumer on its
websites at www.soffe.com, www.junkfoodclothing.com, www.saltlife.com and
www.deltaapparel.com. Additional products can be viewed at www.2thegame.com
and www.thecottonexchange.com. The Company's operations are located throughout
the United States, Honduras, El Salvador, and Mexico, and it employs
approximately 7,100 people worldwide. Additional information about the Company
is available at www.deltaapparelinc.com.

Statements and other information in this press release that are not reported
financial results or other historical information are forward-looking
statements subject to the safe harbor created by the Private Securities
Litigation Reform Act of 1995. These are based on our expectations and are
necessarily dependent upon assumptions, estimates and data that we believe are
reasonable and accurate but may be incorrect, incomplete or imprecise.
Forward-looking statements are also subject to a number of business risks and
uncertainties, any of which could cause actual results to differ materially
from those set forth in or implied by the forward-looking statements. The
risks and uncertainties include, among others, the general U.S and
international economic conditions; the ability to grow, achieve synergies and
realize the expected profitability of recent acquisitions; the volatility and
uncertainty of raw material, transportation and energy prices and the
availability of these products and services; changes in consumer confidence,
consumer spending, and demand for apparel products; the ability of our brands
and products to meet consumer preferences within the prevailing retail
environment; significant interruptions in our distribution network or
information systems; the financial difficulties encountered by our customers
and higher credit risk exposure; the competitive conditions in the apparel and
textile industries; changes in environmental, tax, trade, employment and other
laws and regulations; changes in the economic, political and social stability
of our offshore locations; significant litigation in either domestic or
international jurisdictions, the relative strength of the United States dollar
as against other currencies; and other risks described from time to time in
our reports filed with the Securities and Exchange Commission. Accordingly,
any forward-looking statements do not purport to be predictions of future
events or circumstances and may not be realized. Further, any forward-looking
statements are made only as of the date of this press release and we do not
undertake publicly to update or revise the forward-looking statements even if
it becomes clear that any projected results will not be realized.

SELECTED FINANCIAL DATA:
(In thousands, except per share amounts)
                 Three Months Ended               Six Months Ended
                     Dec 29,        Dec 31,           Dec 29,      Dec 31,
                     2012              2011              2012            2011
                                                                         
Net Sales            $ 106,750         $ 105,486         $ 236,864       $ 229,009
Cost of Goods         83,995          105,345         182,256        197,613 
Sold
Gross Profit           22,755            141               54,608          31,396
                                                                         
Selling,
General and            21,875            20,182            47,736          44,744
Administrative
Other Expense         34              (52     )        190            (59     )
(Income), Net
Operating              846               (19,989 )         6,682           (13,289 )
Income (Loss)
                                                                         
Interest              887             992             1,963          1,885   
Expense, Net
                                                                         
(Loss) Income
Before
(Benefit)              (41     )         (20,981 )         4,719           (15,174 )
Provision for
Income Taxes
                                                                         
(Benefit)
Provision for         (87     )        (7,389  )        1,110          (5,996  )
Income Taxes
                                                                         
Net Income           $ 46             $ (13,592 )       $ 3,609         $ (9,178  )
(Loss)
                                                                         
Weighted
Average Shares
Outstanding
     Basic             8,302             8,465             8,350           8,458
     Diluted           8,613             8,465             8,632           8,458
                                                                         
Net Income
(Loss) per
Common Share
     Basic           $ 0.01            $ (1.61   )       $ 0.43          $ (1.09   )
     Diluted         $ 0.01            $ (1.61   )       $ 0.42          $ (1.09   )
                                                                                   

                                  Dec 29,      Jun 30,      Dec 31,
                                                       2012            2012            2011
                                                                                       
Current Assets
  Cash                                                 $ 940           $ 467           $ 355
  Receivables,                                           56,751          73,856          51,389
  Net
  Income Tax                                             8,831           8,796           6,736
  Receivable
  Inventories,                                           168,357         161,633         182,917
  Net
  Prepaids and                                           4,994           3,770           4,869
  Other Assets
  Deferred                                              3,500          4,964          4,810
  Income Taxes
Total Current                                            243,373         253,486         251,076
Assets
                                                                                       
Noncurrent
Assets
  Property,
  Plant &                                                39,549          39,425          39,427
  Equipment,
  Net
  Goodwill and
  Other                                                  23,305          23,609          23,913
  Intangibles,
  Net
  Other
  Noncurrent                                            3,691          3,874          3,912
  Assets
Total
Noncurrent                                               66,545          66,908          67,252
Assets
                                                                                     
Total Assets                                           $ 309,918       $ 320,394       $ 318,328
                                                                                       
                                                                                       
Current
Liabilities
  Accounts
  Payable and                                          $ 61,975        $ 62,928        $ 62,142
  Accrued
  Expenses
  Current
  Portion of                                            3,529          3,529          3,286
  Long-Term
  Debt
Total Current                                            65,504          66,457          65,428
Liabilities
                                                                                       
Noncurrent
Liabilities
  Long-Term                                              101,351         110,949         117,222
  Debt
  Deferred                                               3,128           3,803           3,583
  Income Taxes
  Other
  Noncurrent                                            190            218            147
  Liabilities
Total
Noncurrent                                               104,669         114,970         120,952
Liabilities
                                                                                       
Shareholders'                                            139,745         138,967         131,948
Equity
                                                                                     
Total
Liabilities
and                                                    $ 309,918       $ 320,394       $ 318,328
Shareholders'
Equity

Contact:

Delta Apparel, Inc.
Deborah Merrill, 864-232-5200 x6620
Chief Financial Officer
or
Investor Relations Contact:
Sally Wallick, 404-806-1398
CFA
investor.relations@deltaapparel.com
 
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