Delta Apparel, Inc. (PPAI 188431, S9) has reported that sales and profits are up in the Greenville, South Carolina, company’s financial results for fiscal 2019 fourth quarter and its full year, which ended September 28. Overall sales in the quarter increased 16.2 percent to $108 million in the fourth quarter of fiscal 2019, while full-year net sales were $431.7 million, up 9.2 percent from the previous year.

“We are thrilled with our overall performance for the fourth quarter and full year,” says Robert W. Humphreys, chairman and CEO. “Both our Delta Group and Salt Life Group segments achieved double-digit sales growth for the quarter and drove results exceeding our expectations. We were also able to expand gross margins in the back half of the year, maintain our cost discipline and finish the year with increasing profitability.”

For the fourth quarter, net sales in the Delta Group segment increased 16.6 percent over the prior year period, and net sales in the Salt Life Group segment increased 12.5 percent from the prior year period. For the company, gross profit for the quarter was $22.9 million, an increase of 19.5 percent compared to the same quarter in 2018. The gross margin was 21.2 percent compared to 20.6 percent in the prior year fourth quarter driven by year-over-year improvement in both the Delta Group and Salt Life Group segments. Operating income for the quarter was $4.8 million compared to $3.5 million in the prior year fourth quarter, with the increase driven primarily by an increase of $1.6 million in the Delta Group segment. Net income was $3.5 million, or $0.50 per diluted share, compared to $3.1 million, or $0.43 per diluted share, in the prior year period.

Looking at the full year and breaking down its net sales growth, sales in the Delta Group segment increased 9.3 percent over the prior year and net sales in the Salt Life Group segment increased 8.1 percent. Gross profit for the year was $85.2 million, up 3.8 percent from $82 million last year, and gross margin was 19.7 percent compared to 20.7 percent in the prior year period but Delta Apparel notes that gross margins expanded sequentially each quarter through the year.

The company’s operating income was $15.9 million compared to $17.4 million last year, with the majority of the decrease attributed to a discrete expense of $2.5 million taken during the first quarter of 2019 in connection with the resolution of litigation surrounding a 2016 customer bankruptcy. Delta Group segment operating income, which was impacted by the litigation expense, declined $2.3 million over the prior year, while Salt Life Group segment operating income increased $1.4 million compared to the previous year due in part to the favorable settlement of a commercial litigation matter in the third quarter.

Delta Apparel’s net income for the year was $8.2 million, or $1.17 per diluted share, compared to prior year net income of $1.3 million, or $0.18 per diluted share. Adjusting for the $0.31 per diluted share expense impact of the bankruptcy litigation and the benefit of $0.10 per diluted share arising from the commercial litigation settlement, net income was $1.38 per diluted share. In fiscal year 2018, after adjusting for the $1.44 per diluted share expense due to tax reform legislation, net income was $1.62 per diluted share.

“As we look ahead to fiscal 2020, we are excited to see positive momentum across our business segments,” says Humphrey. “In our Delta Group, we continue to diversify our customer base across multiple channels of distribution, and our Activewear business’s entry into the full-service distributor channel in 2020 should only enhance our versatility. Our DTG2Go business turned in another extremely strong year, more than doubling its revenue, and we continue to be in a prime position to capitalize on what we see as the still largely untapped growth potential of digital printing. Our Salt Life lifestyle brand also enters the new year with good things happening in a variety of areas, and we remain very focused on expanding the brand’s direct-to-consumer strategies and partnerships with national and regional retailers.”