EXHIBIT 99.1
Delta Apparel Announces Preliminary First Quarter 2007 Results
-- Company Updates First Quarter and Fiscal Year 2007 Guidance --
-- Company Completes Acquisition of FunTees, Inc. --
DULUTH, Ga.--(BUSINESS WIRE)--Oct. 16, 2006--Delta Apparel, Inc.
(AMEX: DLA) today announced preliminary financial results for the
first quarter ended September 30, 2006 and updated its guidance for
the fiscal year ended June 30, 2007.
The Company currently expects first quarter revenues in the range of $61
million to $63 million versus its prior expectation of $64 to $68 million. It
also now expects diluted earnings per share in the range of $0.25 to $0.27
versus prior guidance of $0.41 to $0.45. As reported in the Company's August 18,
2006 earnings release, net income in the first quarter of 2007 includes an
extraordinary gain associated with the final earn-out payment made to the former
M. J. Soffe shareholders. This extraordinary gain is expected to be
approximately $0.09 per diluted share for the 2007 first fiscal quarter.
For the full fiscal year, the Company continues to expect net sales to be in
the range of $325 to $340 million. The Company now expects diluted earnings per
share to be in the range of $1.81 to $2.00 per diluted share for the 2007 fiscal
year versus its prior guidance of $1.91 to $2.05 per diluted share.
Robert W. Humphreys, the Company's President and Chief Executive Officer,
commented, "While we set new sales records for our first quarter, sales were
below our expectations in our Junkfood business. Revenue in our Delta business
was ahead of the prior year but lower than expected, and margins during the
quarter were depressed by weak pricing and promotional freight costs. We
continued to experience strong sales in our Soffe business through all of its
distribution channels and expect the growth at Soffe to continue throughout the
year."
Mr. Humphreys concluded, "As we look ahead, our Junkfood business is
entering the second fiscal quarter with a stronger backlog which should drive
improved results as compared to the first quarter of this year. We are well
underway with the integration of Fun-Tees and expect to realize immediate
savings on raw material and transportation costs. Additional savings should be
realized when we complete the manufacturing integration in the second half of
this fiscal year. These factors, including the expected positive impact of the
Fun-Tees acquisition, should enable us to make up for a portion of the first
quarter shortfall as the year progresses. We are building a well-diversified
distribution model and believe that our prospects remain strong for growth and
healthy profitability in fiscal 2007 and beyond."
The Company also announced that it has completed the previously announced
acquisition of Fun-Tees, Inc. for a total purchase price of $20 million in cash,
subject to certain post-closing adjustments, including an adjustment based on
the actual working capital purchased. Delta Apparel funded the acquisition
through draws under its revolving credit facility. After the $20 million payment
for the purchase of Fun-Tees, the Company had an aggregate of approximately $69
million outstanding under the revolving lines of credit with approximately $16
million of aggregate credit availability.
Fun-Tees is in the business of designing, manufacturing, marketing, and
selling private labeled custom knit t-shirts primarily to major branded
sportswear companies. Delta Apparel believes that the strength of Fun-Tees is
its flexibility to custom-manufacture products in a variety of garment styles,
fabrics and colors. Fun-Tees was founded in 1972 and is headquartered in
Concord, North Carolina. Delta Apparel expects the Fun-Tees acquisition to
increase the activewear segment sales by approximately $70 million in sales on
an annual basis and be immediately accretive to per share earnings.
Delta Apparel will hold a conference call to discuss its fiscal 2007 first
quarter results on Friday, November 3, 2006 at 9:00 a.m. ET. The Company will
provide the dial-in numbers and webcast information in the coming weeks.
About Delta Apparel, Inc.
Delta Apparel, Inc., along with its wholly owned subsidiaries, M. J. Soffe
Company and Junkfood Clothing Company, is a marketer, manufacturer and
distributor of high quality branded and private label activewear apparel. The
Company specializes in selling a variety of casual and athletic activewear tops
and bottoms, embellished and unembellished T-shirts, and fleece products for the
ever-changing apparel market. The Company focuses on its broad distribution of
apparel 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. The Company's operations are located throughout the United States,
Honduras, El Salvador and Mexico and the Company employs approximately 5,800
people worldwide. Additional information on the 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, the ability to achieve synergies in connection with the Fun-Tees
acquisition and to integrate it successfully into our business, 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.
CONTACT: Delta Apparel, Inc.
Deborah Merrill, 864-232-5200 x6620
or
Investor Relations:
Integrated Corporate Relations
Bill Zima, 203-682-8200