Exhibit 99.1
Delta Apparel Reports Record First
Quarter 2006 Results
DULUTH, Ga.--(BUSINESS WIRE)--Nov. 4, 2005--Delta Apparel, Inc.
-- Sales Increase to Record $60.6 Million
-- Gross Margins Improve 950 Basis Points to 30.9%
-- Basic Earnings Per Share Increase to Record $0.40
-- Company Raises Earning Estimate Range for Fiscal 2006
-- Declares Quarterly Dividend of $0.04
Delta Apparel, Inc. (AMEX: DLA) today reported financial results
for its fiscal first quarter ended October 1, 2005. The Company's
results for the first quarter include six weeks of operations from
Junkfood Clothing Company which was acquired on August 22, 2005.
Net sales for the three months ended October 1, 2005, rose 11.6%
to a record $60.6 million compared to $54.3 million in the prior
year's first quarter. This increase was driven by the Junkfood
Clothing acquisition as well as by increased sales in all key product
areas at Soffe. Gross margins improved 950 basis points to 30.9%
compared to 21.3% in the prior year first quarter. First quarter
operating income increased 400 basis points to $6.0 million compared
to $3.1 million in the prior year. Net income for the first quarter
was $3.4 million, or $0.40 per basic share, compared to the prior
year's level of $1.4 million, or $0.17 per basic share in the prior
year. This is a one cent improvement over the Company's previously
announced basic earnings per share expectation of $0.36 to $0.39.
Robert W. Humphreys, President and CEO, commented, "Our business
is off to a great start for the fiscal year and we are very pleased to
have achieved record sales, increased margins, and record earnings in
our first quarter. We achieved significant margin improvements in our
core Delta Apparel business, our Soffe business grew as retail orders
remained solid in each of our key product categories, and demand
remained strong for the Junkfood product offering."
Mr. Humphreys continued, "As we continue to grow our organization,
we are working to enhance our operational infrastructure, expand our
customer base, and increase sales and profits. We are in the process
of consolidating our West Coast distribution center and believe the
integration of our Delta and Soffe distribution facilities into one
larger location will better serve our customers. This move will expand
our Activewear Apparel capacity which should lower our stock outages
and enhance sales in the West Coast region. The development of our
expanded spring product line in our Retail-Ready businesses remains on
track and should provide us with additional sales opportunities in the
months ahead."
Activewear Apparel
This segment, which includes the core Delta Apparel business,
reported sales of $29.6 million for the three months ended October 1,
2005 compared to $33.0 million in the prior year quarter. Operating
income for the first quarter of 2006 increased to $2.0 million
compared to $9 thousand in the prior year, primarily related to less
expensive raw materials and lower manufacturing costs flowing through
cost of sales, partially offset by higher selling, general and
administrative costs. Selling, general and administrative expenses
increased compared to the prior year due to higher distribution costs
associated with the addition of the New Jersey distribution center
that opened in last year's third quarter, higher management incentive
costs associated with the improved operating results, and the
expensing of stock options.
Retail-Ready Apparel
This segment, which includes the Soffe and Junkfood businesses,
reported a sales increase of 45.4% to $31.0 million for the first
quarter of fiscal year 2006 compared to $21.3 million in the prior
year. The first quarter of fiscal year 2006 included six weeks of
operations from Junkfood Clothing Company, that was acquired on August
22, 2005. Operating income for the first quarter increased 24.4% to
$3.9 million compared to $3.1 million in the prior year.
The Company acquired substantially all of the assets of Liquid
Blaino Designs, Inc. d/b/a Junkfood Clothing on August 22, 2005. The
purchase price for the transaction consisted of $24.3 million of cash,
a $2.5 million seller promissory note, and contingent payments with
respect to each of the four fiscal years following closing, payable if
certain performance targets are met. Based upon a preliminary
allocation of the purchase price, the Company has $19.7 million of
goodwill and other intangibles on its balance sheet associated with
the acquisition of Junkfood Clothing Company.
Fiscal 2006 Guidance
For the second fiscal quarter ended December 31, 2005, the Company
expects sales to be in the range of $54 to $58 million and basic
earnings to be in the range of $0.26 to $0.30 per share. This compares
to the prior year second fiscal quarter actual sales of $49.2 million
and basic earnings of $0.14 per share. Based on our first quarter
results, the Company is increasing its earnings expectations for the
2006 fiscal year. For the twelve months ended July 1, 2006, the
Company continues to expect sales to be in the range of $265 to $275
million, and is increasing its expectation of basic earnings to the
range of $1.71 to $1.80 per share. This is a four cent per share
increase from the previously announced fiscal 2006 guidance of basic
earnings of $1.67 to $1.76 per share issued on August 23, 2005. When
comparing fiscal 2006 estimates to fiscal 2005 results, the following
chart highlights the Company's fiscal year 2005 basic earnings per
share, adjusted for the impact of the sale of its Edgefield, South
Carolina yarn spinning facility and adjusted for the reversal of the
tax liability associated with the Company's decision to permanently
reinvest its foreign earnings in Honduras.
Actual FY05 Basic Earnings Per Share $1.35
Sale of Edgefield Plant (0.26)
Reversal of Foreign Earnings Tax Liability (0.08)
----------
Adjusted FY05 Basic Earnings per Share $1.01
Mr. Humphreys concluded, "We are encouraged by the strength of our
business and are pleased to be increasing our earnings guidance for
fiscal year 2006. The Activewear Apparel segment is meeting our
expectations and we are taking steps in our distribution network to
grow the sales in this segment in the second half of the year. Our
Retail-Ready segment is enjoying strong demand in the Soffe and
Junkfood businesses. We continue with our cost savings initiatives
across the entire Company and expect these savings to positively
impact our results in the second half of the year."
Dividend Payment
The Board of Directors declared a dividend of four cents per
common share of stock payable on November 28, 2005 to shareholders of
record as of the close of business on November 16, 2005. This dividend
was declared pursuant to the Company's previously announced quarterly
dividend program, which the Company may amend or terminate at any
time.
Conference Call
The Company will hold a conference call with senior management to
discuss the financial results at 10:00 a.m. ET today. The Company
invites you to join the call by dialing (913) 981-4913. A live webcast
of the conference call will be available on the Company's web site at
www.deltaapparel.com.
About Delta Apparel, Inc.
Delta Apparel, Inc., along with its wholly owned subsidiaries, M.
J. Soffe Co. and Junkfood Clothing Company, is a marketer, designer,
manufacturer and distributor of high quality branded and private label
apparel. We specialize in selling a variety of casual and athletic
tops and bottoms, embellished and unembellished T-shirts, and fleece
products for the ever-changing apparel market. We focus on our broad
distribution of products, selling our products to specialty and
boutique stores, high-end and mid-tier retail stores, sporting goods
stores, screen printers and private label accounts. In addition,
certain products are sold in college bookstores and to the U.S.
Military. Our operations are in the United States, Honduras, Mexico
and Costa Rica and we employ approximately 4,100 worldwide. Additional
information on our company is available at www.deltaapparel.com.
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 our expectations and
are necessarily dependent upon assumptions, estimates and data that we
believe 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 our 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. We do not undertake publicly to update or revise
the forward-looking statements even if it becomes clear that any
projected results will not be realized.
SELECTED FINANCIAL DATA:
(In thousands, except per share amounts)
Three Months Ended
Oct. 1, Oct. 2,
2005 2004
--------- ---------
Net Sales $ 60,573 $ 54,300
Cost of Goods Sold 41,879 42,723
-------- --------
Gross Margin 18,694 11,577
Selling, General and Administrative 12,700 8,446
Other Expense (Income) 29 (10)
-------- --------
Operating Income 5,965 3,141
Interest Expense 685 703
Taxes 1,903 994
-------- --------
Net Income $ 3,377 $ 1,444
======== ========
Weighted Average Shares Outstanding
Basic 8,532 8,282
Diluted 8,559 8,548
Net Income per Common Share
Basic $ 0.40 $ 0.17
Diluted $ 0.39 $ 0.17
Oct. 1, July 2, Oct. 2,
2005 2005 2004
--------- --------- ---------
Current Assets
Cash $ 363 $ 298 $ 208
Receivables, Net 42,074 36,611 29,397
Inventories 105,015 99,026 105,901
Deferred Income Taxes 1,491 1,252 1,269
Other Assets 1,967 1,968 1,328
-------- -------- --------
Total Current Assets 150,910 139,155 138,103
Noncurrent Assets
Property, Plant & Equipment, Net 20,231 19,950 20,626
Goodwill and Other Intangibles, Net 19,692 - -
Deferred Income Taxes 141 - 252
Other Noncurrent Assets 1,452 409 2,225
-------- -------- --------
Total Noncurrent Assets 41,516 20,359 23,103
--------- --------- ---------
Total Assets $192,426 $159,514 $161,206
======== ======== ========
Current Liabilities
Accounts Payable and Accrued
Expenses $ 44,111 $ 36,700 $ 27,201
Current Portion of Long Term Debt 3,683 15,065 15,497
Income Tax Payable 1,859 480 584
-------- -------- --------
Total Current Liabilities 49,653 52,245 43,282
Noncurrent Liabilities
Long-Term Debt 48,143 17,236 29,627
Deferred Income Taxes - 171 -
Other Noncurrent Liabilities 3,451 3,398 11,557
-------- -------- --------
Total Noncurrent Liabilities 51,594 20,805 41,184
Stockholders' Equity 91,179 86,464 76,740
-------- -------- --------
Total Liabilities and Stockholders'
Equity $192,426 $159,514 $161,206
======== ======== ========
CONTACT: Delta Apparel, Inc., Duluth
Company Contact
Herb Mueller, 678-775-6900
or
Investor Relations Contact
Bill Zima, 203-682-8200