Delta Apparel Inc. Q1 2010 Earnings Conference Call Transcript - Transcript - 2009/10/23 - Thomson StreetEvents

Report title: Delta Apparel Inc. Q1 2010 Earnings Conference Call Transcript

from Thomson StreetEvents
11 page (5457 word) report published Oct 23, 2009

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Abstract:

Final Transcript of DLA earnings conference call or presentation, 23-Oct-09 9:00am ET

Brief Excerpt:

...We started fiscal year 2010 with a solid first quarter, achieving organic sales growth and a significant improvement in earnings. Our acquisition of To The Game in the prior year fourth quarter contributed $6 million in sales and over $400,000 in operating profit during the quarter. While the retail demand for our apparel remained weak during the September quarter, we believe we achieved market share gains in all of our business units. We also further reduced inventories, resulting in improved inventory turns which is one of our key objectives for the current fiscal year. We operated our manufacturing facilities at less than full capacity during the quarter, which lowered our per-share earnings by $0.05. Based on our current outlook and inventory levels, we expect to run our manufacturing plants at full capacity for the remainder of this fiscal year. We reduced our debt by $11.3 million from June and are currently ahead of our debt reduction goals for the year. Debt levels will increase...

Report Type:

Transcript

Source:

Thomson StreetEvents

Company:

Delta Apparel Inc.

Ticker:

DLA

Time:

9:00am ET

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The following is excerpted from the question-and-answer section of the transcript.

(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)

Question: Alan Weber - Robotti & Co. - Analyst: Good morning. Just two general questions. What is with the acquisition of To The Game? You know, long term, do you expect that to have comparable margins that the Retail-Ready segment has?

Answer By: Bob Humphreys - Delta Apparel Inc. - President, Chairman, CEO

Question: Alan Weber - Robotti & Co. - Analyst: And what approximately are the current kind of yearly revenues?

Answer By: Bob Humphreys - Delta Apparel Inc. - President, Chairman, CEO

Question: Alan Weber - Robotti & Co. - Analyst: Okay. That's great. And then the other question is again your long term on your activewear and maybe it's just a guess on your part. You know, as you report the different segments any idea what that segment you think might be profitable? And again long term, as you stand here today, what do you think margins can be or should be in that business?

Answer By: Bob Humphreys - Delta Apparel Inc. - President, Chairman, CEO

Question: Alan Weber - Robotti & Co. - Analyst: Great and thanks for the good quarter.

Answer By: Bob Humphreys - Delta Apparel Inc. - President, Chairman, CEO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: Nice quarter. A couple of questions. First, to follow up on To The Game. You're saying your run rate is right around $25 million even with the gains and losses from where you started; and if your operating margins are going to be similar to what you did in Retail-Ready ready that would mean operating margins -- operating profits north of (technical difficulties) true?

Answer By: Deb Merrill - Delta Apparel Inc. - EVP and CFO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: In the operating margins are similar to what you get in the rest of Retail-Ready, you are looking at operating profits of north of $3 million in that business. Is that true?

Answer By: Deb Merrill - Delta Apparel Inc. - EVP and CFO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: But eventually you should get to that type of number?

Answer By: Deb Merrill - Delta Apparel Inc. - EVP and CFO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: And you paid $5 million for that? Or something.

Answer By: Deb Merrill - Delta Apparel Inc. - EVP and CFO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: Okay. Not too bad. You said we are going to have no down time you said manufacturing-wise for the rest of the year?

Answer By: Bob Humphreys - Delta Apparel Inc. - President, Chairman, CEO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: And refresh me. In the last nine months of last fiscal year, how much of a charge for down time did you have to take?

Answer By: Deb Merrill - Delta Apparel Inc. - EVP and CFO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: Okay. You mentioned in Soffe a couple of things. You said there were lots of opportunities that are kind of staring you in the face but you didn't clarify exactly what they were. But you also said you didn't have the capacity potentially to handle some of those opportunities. Could you talk about those two things?

Answer By: Bob Humphreys - Delta Apparel Inc. - President, Chairman, CEO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: Also within your discussion, you mentioned some new licenses that you hadn't mentioned before -- PGA, NBA. Can you talk about that and any other things you have new licenses for that you (multiple speakers)?

Answer By: Bob Humphreys - Delta Apparel Inc. - President, Chairman, CEO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: I hope the PJ license doesn't have vintage clothing because lime green -- I don't know. But whatever. Last question for you. SG&A, what kind of number are you looking for SG&A for the year? Is that a -- you might have gone over that, but --?

Answer By: Deb Merrill - Delta Apparel Inc. - EVP and CFO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: So somewhere around 20%?

Answer By: Deb Merrill - Delta Apparel Inc. - EVP and CFO

Question: Jamie Wilen - Wilen Management Company, Inc. - Analyst: A little south of that. Beautiful. Okay. Nice quarter. Great. Thanks.

Answer By: Bob Humphreys - Delta Apparel Inc. - President, Chairman, CEO

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