Delta Apparel (DLA) Announces Completion of North Carolina Textile Facility Sale; Updates on Manufacturing Realignment

September 13, 2016 4:37 PM EDT
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Delta Apparel, Inc. (NYSE: DLA) reported that it has completed the sale of its Maiden, North Carolina textile facility and certain assets used in those operations. The closure of this facility in July 2016 was part of the Company’s previously announced manufacturing realignment aimed at maximizing production at its lower cost facilities, eliminating duplicative fixed costs, and leveraging the latest dyeing and finishing technology available. The realignment is expected to significantly lower production costs, improve gross margins and ultimately boost operating earnings by an estimated $8 million annually, or approximately $0.70 per diluted share.

More than half of the expense associated with the manufacturing realignment was recorded in the Company’s fiscal 2016 third quarter earnings, and the remainder, approximately $0.12 per diluted share, will be recorded in the Company’s fiscal 2016 fourth fiscal quarter. Cash flow realized from the sale of the Maiden assets was approximately $1.7 million, which will be used to lower debt levels.

Robert W. Humphreys, Delta Apparel’s Chairman and Chief Executive Officer, commented, “While it was a difficult decision to close the Maiden facility, we are pleased that the new owner plans to continue using it as a wet-processing facility that will provide continued employment opportunities in the Maiden community. We have successfully partnered with established domestic textile producers to source fabric for our made-in-the-USA products previously produced at this plant, and will continue to sew the fabric into garments at our Rowland, North Carolina apparel facility.”

“In addition, we are efficiently sourcing in-country fabric to use in our Mexico sew and screen print facilities, which now serve as a quick-turn operation to support continued growth in our full-package catalog programs. We began increasing fabric production in our Honduran textile facility in June, and have successfully increased output in that facility on schedule, and should be at full production levels by the end of calendar 2016.”

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