Delta Apparel, Inc. (PPAI 188431) has released financial results for the Greenville, South Carolina-based company’s fiscal 2020 first quarter, which ended December 28, 2019. Net sales in the quarter at $95.9 million were down 5.7 percent from the same quarter last year, although gross profits of $19.9 million were up 7.1 percent.
“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,” says Robert W. Humphreys, the company’s chairman and CEO. “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.”
Fiscal first quarter net sales in the Delta Group segment and Salt Life Group segment decreased 5.8 percent and 4.7 percent, respectively, from the same period last year. Gross margin for the company improved 240 basis points to 20.7 percent 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 were 18.8 percent, compared to 16.5 percent in the first quarter of last year. The increase in SG&A expenses principally resulted from investments in 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 $41,000 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 same period last year. 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.
