Exhibit 99.1
Delta Apparel Reports Second Quarter 2007 Results
-- Sales Increase to Record $72.9 Million --
-- Declares Quarterly Dividend of $0.05 --
DULUTH, Ga.--(BUSINESS WIRE)--Feb. 2, 2007--Delta Apparel, Inc.
(AMEX: DLA) today reported financial results for its second fiscal
quarter ended December 30, 2006. The Company's results for the fiscal
2007 second quarter include the operations of FunTees, which was
acquired on October 2, 2006. The Company's results are in-line with
the preliminary results announced on January 8, 2007.
Net sales for the three months ended December 30, 2006 increased
26.4% to a second quarter record of $72.9 million compared to $57.7
million in the prior year's second quarter. The increase was primarily
due to the addition of FunTees and strong sales in the Soffe business,
offset by lower sales in the Delta catalog and Junkfood businesses.
Net income for the second quarter was $0.6 million, or $0.07 per
diluted share, compared to the prior year's level of $2.4 million, or
$0.27 per diluted share.
Gross margins for the fiscal second quarter were 22.1% as compared
to 31.7% in the prior year second quarter principally as a result of
higher raw material prices, lower sales in the higher margin Junkfood
business and additional costs incurred from FunTees' integration into
Delta's textile operations. The inclusion of FunTees also reduced
overall gross margins for the second quarter as sales from its private
label business carry lower margins than the Company's branded
businesses. Margins are expected to increase in the FunTees business
as the transition to Delta's textile facility is completed in the
current fiscal year. SG&A expenses for the fiscal 2007 second quarter
decreased to 18.7% of sales compared to 23.9% of sales in the prior
year period due to the lower selling, general and administrative costs
associated with FunTees and lower management incentive costs.
Robert W. Humphreys, President and CEO, commented, "As we
discussed in early January, we did not achieve our plan for the second
quarter as a weaker than expected retail environment reduced customer
reorders at Junkfood and impacted the sales volume in our activewear
business. We believe FunTees will contribute to the performance of our
activewear segment in the fiscal second half through its expanded
private label programs and earnings contribution upon completion of
the textile integration. Junkfood continues to focus on its licenses,
artwork and product offerings, which continue to receive positive
responses in the apparel marketplace. We also remain focused on our
opportunities to increase Junkfood's presence in the mid-tier channel
and increase our distribution opportunities abroad. The Soffe business
continues to grow across each of its distribution channels and is
expected to achieve double-digit sales growth during the year."
Mr. Humphreys concluded, "We have built a strong platform for the
continued growth of our business and enjoy a diverse base of customers
across most major apparel distribution channels. Our manufacturing
operations are focused on continued cost savings and completing the
FunTees manufacturing integration. Our Honduran textile initiative is
on schedule and we anticipate beginning production during the first
half of fiscal 2008. The lower cost structure associated with offshore
textiles should improve our profitability and lower working capital
requirements. We believe these initiatives will provide us with a
strong platform for sales and profitability growth in the future."
Fiscal 2007 Guidance
For the third fiscal quarter ending March 31, 2007, the Company
expects sales to be in the range of $84 to $88 million and diluted
earnings to be in the range of $0.31 to $0.35 per share. This compares
to sales of $69.4 million and diluted earnings of $0.31 per share in
the prior year third fiscal quarter. For the full fiscal year, the
Company continues to expect net sales to be in the range of $315 to
$330 million and diluted earnings per share to be in the range of
$1.33 to $1.46.
Retail-Ready Apparel
This segment, which includes the Soffe and Junkfood businesses,
reported a sales decline of 11.5% to $25.9 million for the second
quarter of fiscal year 2007 compared to $29.2 million in the prior
year quarter. The sales decline was driven by lower sales in the
licensed t-shirt business, offset slightly by increased sales in the
Soffe business. While Junkfood sales improved from the first quarter
of fiscal 2007, it was lower than its second quarter prior year level.
In the prior year second quarter, Junkfood achieved a dramatic sales
increase, selling at almost twice its historical levels. The Soffe
business continued to increase its sales, achieving a 22.3% increase
in sales from its prior year second quarter. Operating income in the
Retail-Ready segment for the second fiscal quarter of 2007 decreased
$1.5 million from the prior year quarter to $1.1 million due primarily
to lower sales and margin pressures in the Junkfood business, offset
by the increased gross profit associated with the higher sales in the
Soffe business.
Activewear Apparel
The activewear segment, which includes the Delta Apparel business
and the newly acquired FunTees business, reported sales of $47.1
million for the three months ended December 30, 2006, a 65.2% increase
from the prior year second quarter. The increase in sales was
primarily a result of the inclusion of FunTees, offset by a 9.3%
decline in sales of the Delta business. In the Delta business, average
selling prices increased approximately 4% from the prior year second
quarter and increased approximately 2% from the 2007 first fiscal
quarter. The increased selling prices were offset by a decline in unit
volume, primarily in the core basic t-shirt products. More expensive
raw material prices, higher transportation costs, and costs associated
with the transition of the FunTees textiles all contributed to lower
gross margins in the activewear segment. Operating income declined
$0.5 million to $1.3 million compared to $1.8 million in the prior
year second quarter due to these factors.
Dividend Payment
The Board of Directors declared a dividend of five cents per
common share of stock payable on February 26, 2007 to shareholders of
record as of the close of business on February 14, 2007. 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 9:00 a.m. ET today. The Company
invites you to join the call by dialing (913) 981-5525. 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 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 6,000 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
FunTees 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 environmental matters and
similar items) and other risks described in "Item 1A. Risk Factors" in
our annual Report on Form 10-K for the fiscal year ended July 1, 2006
and 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.
(Tables to follow)
SELECTED FINANCIAL DATA:
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
Dec 30, Dec 31, Dec 30, Dec 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Net Sales $ 72,949 $ 57,702 $135,629 $118,275
Cost of Goods Sold 56,855 39,433 102,199 81,312
--------- --------- --------- ---------
Gross Profit 16,094 18,269 33,430 36,963
Selling, General and
Administrative 13,615 13,768 27,513 26,468
--------- --------- --------- ---------
Operating Income 2,479 4,501 5,917 10,495
Other Income, net 42 433 92 404
Interest Expense, net 1,482 997 2,429 1,682
--------- --------- --------- ---------
Income Before Income Taxes 1,039 3,937 3,580 9,217
Provision for Income Taxes 406 1,561 1,373 3,464
--------- --------- --------- ---------
Net Income, before
Extraordinary Gain $ 633 $ 2,376 $ 2,207 $ 5,753
--------- --------- --------- ---------
Extraordinary Gain, Net of
Taxes - - 672 -
--------- --------- --------- ---------
Net Income, after Extraordinary
Gain $ 633 $ 2,376 $ 2,879 $ 5,753
========= ========= ========= =========
Weighted Average Shares
Outstanding
Basic 8,539 8,621 8,543 8,577
Diluted 8,719 8,681 8,707 8,621
Net Income per Common Share,
before Extraordinary Gain
Basic $ 0.07 $ 0.28 $ 0.26 $ 0.67
Diluted $ 0.07 $ 0.27 $ 0.25 $ 0.67
Net Income per Common Share,
after Extraordinary Gain
Basic $ 0.07 $ 0.28 $ 0.34 $ 0.67
Diluted $ 0.07 $ 0.27 $ 0.33 $ 0.67
Dec 30, July 1, Dec 31,
2006 2006 2005
--------- --------- ---------
Current Assets
Cash $ 548 $ 642 $ 948
Receivables, Net 36,741 47,525 32,161
Income Tax Receivable 1,769 - 1,662
Inventories, Net 131,905 103,660 114,779
Deferred Income Taxes 2,254 2,710 2,619
Other Assets 2,697 2,708 2,098
--------- --------- ---------
Total Current Assets 175,914 157,245 154,267
Noncurrent Assets
Property, Plant & Equipment,
Net 25,048 21,164 20,692
Goodwill and Other
Intangibles, Net 22,557 22,467 19,717
Deferred Income Taxes - - -
Other Noncurrent Assets 2,306 2,247 1,855
--------- --------- ---------
Total Noncurrent Assets 49,911 45,878 42,264
--------- --------- ---------
Total Assets $225,825 $203,123 $196,531
========= ========= =========
Current Liabilities
Accounts Payable and Accrued
Expenses $ 43,500 $ 49,366 $ 39,588
Current Portion of Long Term
Debt 2,948 3,683 3,683
Income Tax Payable - 986 -
--------- --------- ---------
Total Current Liabilities 46,448 54,035 43,271
Noncurrent Liabilities
Long-Term Debt 75,444 46,967 58,689
Deferred Income Taxes 890 1,123 1,111
Other Noncurrent Liabilities 8 10 19
--------- --------- ---------
Total Noncurrent Liabilities 76,342 48,100 59,819
Stockholders' Equity 103,035 100,988 93,441
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $225,825 $203,123 $196,531
========= ========= =========
CONTACT: Delta Apparel
Deborah Merrill, 864-232-5200 x6620
Chief Financial Officer
or
Investor Relations
Integrated Corporate Relations
Bill Zima, 203-682-8200