Delta Apparel Says Q3 Sales & Earnings Increased

Nonetheless, a negative tax impact caused a net income loss for the fiscal year’s first nine months.

In a Nutshell:
- Delta Apparel’s Q3 sales were $112 million. Net income rose to $4.55 million.
- Sales for the nine-month period ended June 30 were up to $303 million, though there was a net income loss.

Top 40 supplier Delta Apparel (asi/49172) has reported that sales and earnings rose during its third quarter fiscal 2018, which ended June 30th. The company also reported a sales gain for the first nine months of the fiscal year, though earnings were down for that period – the consequence of a negative impact from U.S. tax reform.

According to Delta Apparel, net sales for the third quarter were $112 million, up 8% from $104 million in the prior-year third quarter. Earnings increased 9% to $0.62 per diluted share from $0.57 per diluted share. Net income tallied about $4.55 million, up from Q3 2017’s $4.47 million.

“We had a solid third quarter with overall sales and earnings growth despite some headwinds associated with the inflationary cost environment and well-documented challenges at retail,” said Robert W. Humphreys, Delta Apparel’s chairman and CEO.

For the first nine months of fiscal year 2018, Delta Apparel’s net sales increased to $303 million from $294 million in the prior-year period. Still, the company noted that a one-time tax expense of $10.6 million in the first quarter -- stemming from the recent U.S. tax reform legislation -- resulted in a $0.25 loss per diluted share for the first nine months. That compared with earnings of $1.07 per diluted share in the prior-year period. Relatedly, net income was off, registering a loss of $1.7 million for the nine months compared to last year’s $8.41 million profit. Excluding the tax expense, earnings for the first nine months were $1.18 per diluted share, up 10% year-over-year.

Encouragingly for the company, sales in Delta Apparel’s basics segment, which include B2B ecommerce revenue and digital print business, were up 14% overall to $90 million for the third quarter. The company noted that its digital print and fulfillment business, DTG2Go, achieved third quarter sales growth of 167% over the prior-year period. Increased sales from existing customers and new customer launches contributed to the strong performance, executives said. The company’s branded segment, which includes retail sales of its flagship Salt Life brand, were down $2 million to $23 million for Q3 – a decline partially resulting from unseasonably cool, wet weather hurting demand in the independent sales channel, especially in southeastern markets.

“Overall we are excited about the growth opportunities at Delta Apparel, Inc. driven by new products and category extensions, our broadening customer base, and our investments in the dynamic digital print market,” said Humphreys. “Our manufacturing investments have created scale efficiencies and platform flexibility that are allowing us to both reduce costs and internally produce merchandise that we previously sourced.”

With reported 2017 North American promotional products sales of $46.2 million, Delta Apparel ranked 35th on Counselor’s just-released list of the largest supplier’s in the industry.