dla20210510_10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-15583

DELTA APPAREL, INC.

(Exact name of registrant as specified in its charter)

Georgia		58-2508794
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

322 South Main Street
Greenville, SC		29601
(Address of principal executive offices)		(Zip Code)

(864) 232-5200

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.01		DLA		NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☑

Non-accelerated filer ☐

Smaller reporting company ☑

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 28, 2021, there were outstanding 6,974,660 shares of the registrant’s common stock, par value of $0.01 per share, which is the only class of outstanding common or voting stock of the registrant.

Table of Contents

TABLE OF CONTENTS

		Page
PART I.	Financial Information

Item 1.	Financial Statements (unaudited):

	Condensed Consolidated Balance Sheets — June 2021 and September 2020	3

	Condensed Consolidated Statements of Operations — Three and Nine months ended June 2021 and June 2020	4

	Condensed Consolidated Statements of Comprehensive Income — Three and Nine months ended June 2021 and June 2020	5

	Condensed Consolidated Statements of Shareholders' Equity — Three and Nine months ended June 2021 and June 2020	6

	Condensed Consolidated Statements of Cash Flows — Nine months ended June 2021 and June 2020	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8
	Note A—Basis of Presentation and Description of Business	8
	Note B—Accounting Policies	8
	Note C—New Accounting Standards	8
	Note D—Revenue Recognition	9
	Note E—Inventories	9
	Note F—Debt	10
	Note G—Selling, General and Administrative Expense	10
	Note H—Stock-Based Compensation	10
	Note I—Purchase Contracts	10
	Note J—Business Segments	11
	Note K—Income Taxes	11
	Note L—Derivatives and Fair Value Measurements	12
	Note M—Legal Proceedings	12
	Note N—Repurchase of Common Stock	13
	Note O—Goodwill and Intangible Assets	13
	Note P—Subsequent Events	13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 4.	Controls and Procedures	15

PART II.	Other Information

Item 1.	Legal Proceedings	15

Item 1A.	Risk Factors	15

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 5.	Other Information	15

Item 6.	Exhibits	15

Signatures		16

Exhibits
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Table of Contents

PART 1.

FINANCIAL INFORMATION

Item 1.

Financial Statements

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Amounts in thousands, except share amounts and per share data)

(Unaudited)

	*June 2021*			*September 2020*
Assets
Cash and cash equivalents	$	11,389		$	16,458
Accounts receivable, less allowances of $173 and $684, respectively		66,520			60,146
Other receivables		449			854
Income tax receivable		-			983
Inventories, net		152,312			145,515
Prepaid expenses and other current assets		4,704			2,812
Total current assets		235,374			226,768

Property, plant and equipment, net of accumulated depreciation of $96,925 and $92,123, respectively		66,397			63,950
Goodwill		37,897			37,897
Intangibles, net		26,750			19,948
Deferred income taxes		3,139			4,052
Operating lease assets		48,241			54,645
Equity method investment		10,333			10,573
Other assets		2,063			2,398
Total assets	$	430,194		$	420,231

Liabilities and Equity
Liabilities:
Accounts payable	$	44,609		$	49,800
Accrued expenses		24,207			20,174
Income taxes payable		1,714			379
Current portion of finance leases		7,102			6,956
Current portion of operating leases		8,974			9,039
Current portion of long-term debt		7,520			7,559
Current portion of contingent consideration		1,200			2,120
Total current liabilities		95,326			96,027

Long-term income taxes payable		3,220			3,599
Long-term finance leases, less current maturities		17,319			11,328
Long-term operating leases, less current maturities		41,093			46,570
Long-term debt, less current maturities		111,782			112,782
Long-term contingent consideration		1,900			4,300
Other non-current liabilities		2,883			2,939
Total liabilities	$	273,523		$	277,545

Shareholder's equity:
Preferred stock - $0.01 par value, 2,000,000 shares authorized, none issued and outstanding		-			-
Common stock - $0.01 par value, 15,000,000 authorized, 9,646,972 shares issued, and 6,974,660 and 6,890,118 shares outstanding as of June 2021 and September 2020, respectively		96			96
Additional paid-in capital		60,284			61,005
Retained earnings		140,006			126,564
Accumulated other comprehensive loss		(893	)		(1,322	)
Treasury stock - 2,672,312 and 2,756,854 shares as of June 2021 and September 2020, respectively		(42,149	)		(43,133	)
Equity attributable to Delta Apparel, Inc.		157,344			143,210
Equity attributable to non-controlling interest		(673	)		(524	)
Total equity		156,671			142,686
Total liabilities and equity	$	430,194		$	420,231

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	June 2021			June 2020			June 2021			June 2020

Net sales	$	118,666		$	71,801		$	322,015		$	264,351
Cost of goods sold		88,427			68,819			246,677			220,893
Gross profit		30,239			2,982			75,338			43,458

Selling, general and administrative expenses		19,914			15,206			53,005			51,130
Other (income) loss, net		(1,578	)		9,364			(218	)		7,724
Operating income (loss)		11,903			(21,588	)		22,551			(15,396	)

Interest expense, net		1,735			1,710			5,225			5,320
Earnings before provision for (benefit from) income taxes		10,168			(23,298	)		17,326			(20,716	)
Provision for (benefit from) income taxes		2,019			(5,454	)		4,032			(4,884	)
Consolidated net earnings (loss)		8,149			(17,844	)		13,294			(15,832	)
Net loss attributable to non-controlling interest		12			63			149			286
Net earnings (loss) attributable to shareholders	$	8,161		$	(17,781	)	$	13,443		$	(15,546	)

Basic earnings (loss) per share	$	1.17		$	(2.58	)	$	1.93		$	(2.24	)
Diluted earnings (loss) per share	$	1.14		$	(2.58	)	$	1.90		$	(2.24	)

Weighted average number of shares outstanding		6,975			6,890			6,956			6,932
Dilutive effect of stock awards		153			-			121			-
Weighted average number of shares assuming dilution		7,128			6,890			7,077			6,932

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Amounts in thousands)

(Unaudited)

	Three Months Ended					Nine Months Ended
	June 2021		June 2020			June 2021		June 2020

Net earnings (loss) attributable to shareholders	$	8,161	$	(17,781	)	$	13,443	$	(15,546	)
Other comprehensive income (loss) related to unrealized gain (loss) on derivatives, net of income tax		105		3			429		(461	)
Consolidated comprehensive income (loss)	$	8,266	$	(17,778	)	$	13,872	$	(16,007	)

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

Delta Apparel, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(Amounts in thousands, except share amounts)

(Unaudited)

									*Accumulated*
					*Additional*				*Other*								*Non-*
	*Common Stock*				*Paid-In*		*Retained*		*Comprehensive*			*Treasury Stock*					*Controlling*
	*Shares*		*Amount*		*Capital*		*Earnings*		*Income (Loss)*			*Shares*		*Amount*			*Interest*			*Total*
Balance as of September 2019		9,646,972	$	96	$	59,855	$	136,937	$	(969	)		2,725,555	$	(41,750	)	$	(281	)	$	153,888

SEC Form 10-Q filed by Delta Apparel, Inc.