EXHIBIT 99.1
DELTA APPAREL ANNOUNCES RECORD SALES FOR THIRD QUARTER OF FISCAL YEAR 2003
DULUTH, Ga.--(BUSINESS WIRE)--April 22, 2003--Delta Apparel, Inc. (AMEX-DLA)
announces record sales of $33.9 million for the third fiscal quarter of fiscal
year 2003, a 3.1% increase from the prior year third fiscal quarter.
The sales increase of $1.0 million over the prior year quarter was the result of
a 10.4% increase in volume, partially offset by a 6.6% decrease in average
selling prices. Sales of heavyweight adult and youth short sleeve tees and
private label programs drove the volume increase for the quarter. Lower average
selling prices were primarily the result of price promotions on the basic adult
short sleeve white and colored tees. Operating income was $2.6 million for the
quarter, a decrease of $0.5 million, or 16.7%, from $3.1 million in the third
fiscal quarter of the prior year. The decrease resulted primarily from the lower
selling prices, partially offset by lower raw material costs, and higher
distribution costs, driven from the February opening of the Florida distribution
center. In addition, the Company began producing dyed fabric at its Fayette,
Alabama plant during the quarter. This led to an increase in off-quality costs
due to the initial trials of the dyeing equipment.
Interest expense was $0.2 million for the quarter, an increase of $51,000 from
the prior year quarter. The increase in interest expense resulted from an
increase of approximately $5.4 million in average debt outstanding, slightly
offset by a reduction in the average interest rates. The higher average debt
outstanding was the result of the higher accounts receivable and inventory
levels during the quarter.
The effective income tax rate on pretax income for the three months ended March
29, 2003 was 38.3%, compared to 37.1% for the third fiscal quarter of the prior
year and 33.0% for the fiscal year ended June 29, 2002. In fiscal year 2002, the
Company reversed the valuation allowance against its net operating loss
carryforwards, resulting in the effective tax rate of 33.0%. The Company expects
its annualized effective tax rate to more closely approximate statutory rates
for fiscal year 2003.
Net earnings for the quarter were $1.5 million, or 4.4% of sales, down $0.4
million from the prior year quarter. Basic and diluted earnings per share for
the quarter ended March 29, 2003 were $0.37 and $0.35 per share on 4.05 million
and 4.21 million shares, respectively. Basic and diluted earnings per share for
the quarter ended March 30, 2002 were $0.46 and $0.43 on 4.08 million and 4.32
million shares, respectively (after giving effect to the 2-for-1 stock split
effective as of September 20, 2002). On March 29, 2003, the Company had 4.01
million shares outstanding.
Sales for the first nine months of fiscal year 2003 were $92.8 million, up $4.5
million, or 5.2%, from the first nine months of the prior year. For the nine
months ended March 29, 2003, operating earnings were $7.7 million, up $3.0
million from the first nine months of the prior year.
Interest expense was $0.5 million for the nine months ended March 29, 2003,
which is consistent with the first nine months of last year. Higher average
borrowings, offset by a decrease in average interest rates resulted in interest
expense being consistent with the prior year.
Net earnings for the first nine months of fiscal year 2003 were $4.4 million, up
$1.8 million from the first nine months of last year. Basic and diluted earnings
per share for the nine months ended March 29, 2003 were $1.09 and $1.05 per
share, respectively. For the nine months ended March 30, 3002, basic and diluted
earnings per share were $0.58 and $0.55 per share, respectively.
Accounts receivable increased $2.9 million from March 30, 2002 to $20.2 million
on March 29, 2003. The increase was a result of higher sales during the current
year quarter and higher days sales outstanding.
Inventories on March 29, 2003 were $50.4 million, consistent with inventory
levels on December 28, 2002. Inventory has increased $14.9 million from June 29,
2002 and has increased $11.0 million from the prior year quarter. The Company
built higher levels of inventory in the first half of the year to prepare for
the opening of its Florida distribution center which occurred during the current
quarter, causing finished goods to increase by $2.8 million from the prior year
quarter. Although in-process inventory continued to be higher than the prior
year quarter and June 29, 2002, it remained consistent with the level at
December 28, 2002. The Company expects in-process inventory to remain at current
levels as it continues to produce more products to support the new distribution
center and its anticipated sales growth for fiscal year 2003. The Company's raw
material inventory decreased $1.8 million during the quarter, although it
remained higher than at June 29, 2002. The Company had increased its raw
material inventory since June 29, 2002 to take advantage of lower cotton prices
and to support its increased textile capacity. The Company expects raw material
inventories to decrease significantly during the fourth fiscal quarter.
The Company purchased 81,500 shares of its stock through its Stock Repurchase
Program during the quarter ended March 29, 2003 for a total cost of $1.2
million. For the nine months ended March 29, 2003, the Company purchased 130,204
shares for a total cost of $1.9 million.
Robert W. Humphreys, President and CEO, commented, "We are excited about the
record sales achieved in the third quarter, particularly given the difficult
retail environment. We expect to continue our growth in the final quarter of our
fiscal year. Our new Florida distribution center opened in February and
shipments were made to our customers the same month. The Florida distribution
center should further contribute to our sales growth in the fourth quarter. We
introduced dyeing in our Fayette, Alabama facility which will give us greater
manufacturing flexibility in the future, though we did experience higher quality
and yield costs during the quarter due to the startup."
Delta Apparel, Inc. is a vertically integrated manufacturer and marketer of high
quality knit apparel. The Company specializes in selling undecorated T-shirts,
golf shirts and tank tops to screen printers, private label accounts and
distributors. Delta Apparel has operations in six states, two company-operated
sewing facilities in Honduras and one company-operated sewing facility in
Mexico. The Company employs about 3,200 worldwide.
Statements and other information in this press release that are not reported
financial results or other historical information are forward-looking
statements. These are based on Delta Apparel's expectations and are necessarily
dependent upon assumptions, estimates and data that the Company believes are
reasonable and accurate but may be incorrect, incomplete or imprecise.
Forward-looking statements are also subject to a number of business risks and
uncertainties, any of which could cause actual results to differ materially from
those set forth in or implied by the forward-looking statements. The risks and
uncertainties include, among others, changes in the retail demand for apparel
products, the cost of raw materials, competitive conditions in the apparel and
textile industries, the relative strength of the United States dollar as against
other currencies, changes in United States trade regulations, the discovery of
unknown conditions (such as with respect to environmental matters and similar
items) and other risks described from time to time in the Company's reports
filed with the Securities and Exchange Commission. Accordingly, any
forward-looking statements do not purport to be predictions of future events or
circumstances and may not be realized. The Company does not undertake publicly
to update or revise the forward-looking statements even if it becomes clear that
any projected results will not be realized.
Contact: Delta Apparel, Inc.
Herb Mueller 678/775-6948
SELECTED FINANCIAL DATA:
(In thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
MAR 29, MAR 30, MAR 29, MAR 30,
2003 2002 2003 2002
------------------- ------------------ ------------------ -----------------
NET SALES $ 33,870 $ 32,860 $ 92,755 $ 88,211
COST OF GOODS SOLD 27,755 26,618 75,515 75,261
------------------- ------------------ ------------------ -----------------
GROSS MARGIN 6,115 6,242 17,240 12,950
SG&A 3,486 3,076 9,354 8,416
OTHER EXPENSE (INCOME) 12 25 154 (149)
------------------- ------------------ ------------------ -----------------
OPERATING INCOME 2,617 3,141 7,732 4,683
INTEREST EXPENSE 209 157 527 524
TAXES 923 1,106 2,774 1,540
------------------- ------------------ ------------------ -----------------
NET INCOME $ 1,485 $ 1,878 $ 4,431 $ 2,619
=================== ================== ================== =================
WEIGHTED AVERAGE SHARES OUTSTANDING *
BASIC 4,053 4,075 4,056 4,495
DILUTED 4,207 4,319 4,205 4,725
NET INCOME PER COMMON SHARE
BASIC $ 0.37 $ 0.46 $ 1.09 $ 0.58
DILUTED $ 0.35 $ 0.43 $ 1.05 $ 0.55
MAR 29, JUNE 29, MAR 30,
2003 2002 2002
------------------ ------------------ -----------------
CURRENT ASSETS
CASH $ 228 $ 4,102 $ 795
RECEIVABLES, NET 20,238 22,812 17,355
INCOME TAX RECEIVABLE 667 - -
INVENTORIES 50,373 35,483 39,363
DEFERRED INCOME TAXES 695 1,119 1,261
OTHER ASSETS 1,745 1,835 819
------------------ ------------------ -----------------
TOTAL CURRENT ASSETS 73,946 65,351 59,593
NONCURRENT ASSETS
PROPERTY, PLANT & EQUIPMENT, NET 22,157 22,992 21,170
OTHER NONCURRENT ASSETS 68 3 52
------------------ ------------------ -----------------
TOTAL NONCURRENT ASSETS 22,225 22,995 21,222
------------------ ------------------ -----------------
TOTAL ASSETS $ 96,171 $ 88,346 $ 80,815
================== ================== =================
CURRENT LIABILITIES
CURRENT PORTION OF LONG TERM DEBT $ 2,000 $ 2,000 $ 2,000
INCOME TAX PAYABLE - 1,860 1,661
OTHER CURRENT LIABILITIES 17,987 17,718 12,514
------------------ ------------------ -----------------
TOTAL CURRENT LIABILITIES 19,987 21,578 16,175
NONCURRENT LIABILITIES
LONG-TERM DEBT 9,909 3,667 5,917
DEFERRED INCOME TAXES 722 700 608
OTHER NONCURRENT LIABILITIES 1,371 1,123 1,079
------------------ ------------------ -----------------
TOTAL NONCURRENT LIABILITIES 12,002 5,490 7,604
STOCKHOLDERS' EQUITY 64,182 61,278 57,036
------------------ ------------------ -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 96,171 $ 88,346 $ 80,815
================== ================== =================
* ADJUSTED FOR 2-FOR-1 STOCK SPLIT EFFECTIVE AS OF SEPTEMBER 20, 2002