Exhibit 99.1
Delta Apparel Reports Third Quarter 2007 Results
-- Sales Increase to Record $85.0 Million --
-- Reports Diluted Earnings per Share of $0.32 --
--Declares Quarterly Dividend of $0.05--
DULUTH, Ga.--(BUSINESS WIRE)--April 27, 2007--Delta Apparel, Inc.
(AMEX: DLA) today reported financial results for its third fiscal
quarter ended March 31, 2007. The Company's results for the fiscal
2007 third quarter include the operations of FunTees, which was
acquired on October 2, 2006. The Company's results are consistent with
previously disclosed revenue and diluted earnings per share estimates.
Net sales for the three months ended March 31, 2007 increased
22.6% to a third quarter record of $85.0 million compared to $69.4
million in the prior year's third quarter. The increase was primarily
due to the addition of FunTees and sales growth in the Soffe business,
offset by lower sales in the Delta catalog and Junkfood businesses.
Net income for the third quarter was $2.8 million, or $0.32 per
diluted share, compared to the prior year's level of $2.7 million, or
$0.31 per diluted share.
Gross margins for the fiscal third quarter were 24.4% compared to
27.7% in the prior year third quarter principally as a result of the
inclusion of the FunTees business into the Company's overall results,
as the private label business generally carries lower gross margins
than the Company's branded businesses. Margins in the FunTees business
are expected to increase in fiscal year 2008 as lower cost textile
manufacturing is achieved from the integration into Delta's textile
facility. SG&A expenses for the fiscal 2007 third quarter decreased to
18.2% of sales compared to 20.1% of sales in the prior year period due
to the lower selling, general and administrative costs associated with
FunTees.
Robert W. Humphreys, President and CEO, commented, "We are pleased
to have met our revenue and earnings estimates for the third quarter
and continue our focus on building a platform that will enhance our
operating efficiencies and maximize segment growth. Looking at the
performance in our two segments, sales in our retail ready segment
were relatively flat compared to the prior year period. Sales growth
was impacted by order reductions at Junkfood and slower than expected
sell-through of the Soffe products at retail stemming from colder
weather that lasted throughout the third quarter in many regions of
the country. Despite this, Soffe continued to grow its revenue and is
on pace to have another year of double digit sales growth. Many of our
initiatives at Junkfood, including new licenses and enhanced products,
are gaining traction with our customers and we expect to achieve
revenue growth in the Junkfood business in the fourth quarter compared
to the prior year period."
Mr. Humphreys continued, "Our activewear segment did not achieve
the results we were expecting in the third quarter due to lower
pricing for basic t-shirts in the marketplace. We chose not to match
the lower pricing which decreased our total unit volume but slightly
improved our average selling price. We expect competitive pricing of
basic t-shirts will continue into the fourth quarter. While our
manufacturing efficiency with the integration of FunTees was below our
expectations in the third quarter and is expected to negatively impact
our fourth quarter earnings results, we are well underway to gaining
greater operating leverage and achieving improved manufacturing
efficiency in our activewear segment in the coming fiscal year."
Mr. Humphreys concluded, "We continue to make steady progress on
several major initiatives that we expect will improve our position as
a quality branded and private label activewear apparel company. During
the third quarter, we transitioned all the FunTees textile equipment
into our existing Maiden, N.C. plant and began producing the FunTees'
custom-knit products in that facility. Our Honduran textile initiative
is on pace to begin production in the first half of fiscal year 2008
and achieve cost savings over our U.S. textile manufacturing in the
second half of the year. These initiatives should improve our
profitability and lower our working capital requirements in our
activewear segment. We remain committed to enhancing shareholder value
and believe our initiatives will improve our prospects for growth in
all segments of our business in the upcoming fiscal year."
Fiscal 2007 Guidance
For the fourth fiscal quarter ending June 30, 2007, the Company
expects sales to be in the range of $100 to $106 million and diluted
earnings to be in the range of $0.50 to $0.55 per share. This compares
to sales of $82.5 million and diluted earnings of $0.73 per share in
the prior year fourth fiscal quarter. For the 2007 fiscal year, the
Company expects net sales to be in the range of $320 to $326 million
and diluted earnings per share to be in the range of $1.15 to $1.20.
This compares to previous fiscal 2007 guidance issued on February 2,
2007, of revenues in the range of $315 to $330 million and diluted
earnings per share in the range of $1.33 to $1.46.
Retail-Ready Apparel
This segment, which includes the Soffe and Junkfood businesses,
reported a slight sales decline of $0.1 million, or 0.4%, to $32.7
million for the third quarter of fiscal year 2007. The sales decline
was driven by lower sales in the licensed t-shirt business, offset
partially by increased sales in the Soffe business. While Junkfood
sales declined from the prior year third quarter, they were above the
Company's expectations for the quarter. Junkfood sales orders for the
fourth fiscal quarter are showing improvement and management
anticipates achieving fourth quarter sales growth over the prior year
period in this business. The Soffe business continued to increase its
sales, achieving a 3.6% increase in sales from its prior year third
quarter, although the cold weather throughout the third fiscal quarter
slowed the sales of spring merchandise. Operating income in the
Retail-Ready segment for the third fiscal quarter of 2007 increased
$0.2 million from the prior year quarter to $4.1 million due primarily
to manufacturing improvements achieved in the Soffe business.
Activewear Apparel
The activewear segment, which includes the Delta Apparel business
and the newly acquired FunTees business, reported sales of $52.3
million for the three months ended March 31, 2007 compared to $36.6
million in the prior year period. The increase in sales was primarily
a result of the inclusion of FunTees sales of $19.0 million, offset by
an 8.7% decline in sales in the Delta business. Sales of specialty and
private label products continued to be solid and yielded healthy
margins. Marketplace pricing of core basic t-shirts declined in the
third quarter which Delta did not match, resulting in 9.4% lower
volume than the prior year third quarter. The lower volume was offset
slightly by higher average selling prices. Operating income declined
$0.1 million to $1.1 million compared to $1.2 million in the prior
year third quarter due to these factors.
Dividend Payment
The Board of Directors declared a dividend of five cents per
common share of stock payable on Tuesday, May 29, 2007 to shareholders
of record as of the close of business on Wednesday, May 16, 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) 981-4903. 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 6,200 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 Nine Months Ended
March 31, April 1, March 31, April 1,
2007 2006 2007 2006
---------- -------- --------- ---------
Net Sales $85,013 $69,365 $220,642 $187,640
Cost of Goods Sold 64,294 50,149 166,494 131,461
---------- -------- --------- ---------
Gross Profit 20,719 19,216 54,148 56,179
Selling, General and
Administrative 15,471 13,953 42,984 40,421
---------- -------- --------- ---------
Operating Income 5,248 5,263 11,164 15,758
Other (Expense) Income, net (18) (128) 74 276
Interest Expense, net 1,384 1,056 3,813 2,738
---------- -------- --------- ---------
Income Before Provision for
Income Taxes and Extraordinary
Gain 3,846 4,079 7,425 13,296
Provision for Income Taxes 1,068 1,335 2,440 4,799
---------- -------- --------- ---------
Income before Extraordinary
Gain 2,778 2,744 4,985 8,497
Extraordinary Gain, Net of
Taxes - - 672 -
---------- -------- --------- ---------
Net Income $ 2,778 $ 2,744 $ 5,657 $ 8,497
========== ======== ========= =========
Weighted Average Shares
Outstanding
Basic 8,524 8,622 8,536 8,591
Diluted 8,686 8,730 8,701 8,645
Net Income per Common Share,
before Extraordinary Gain
Basic $ 0.33 $ 0.32 $ 0.58 $ 0.99
Diluted $ 0.32 $ 0.31 $ 0.57 $ 0.98
Net Income per Common Share,
after Extraordinary Gain
Basic $ 0.33 $ 0.32 $ 0.66 $ 0.99
Diluted $ 0.32 $ 0.31 $ 0.65 $ 0.98
March 31, July 1, April 1,
2007 2006 2006
--------- --------- ---------
Current Assets:
Cash $ 465 $ 642 $ 524
Accounts Receivable, Net 49,046 47,525 40,434
Income Taxes Receivable 1,023 - 737
Inventories, Net 132,534 103,660 112,710
Deferred Income Taxes 2,217 2,710 2,683
Other Assets 3,253 2,708 3,002
--------- --------- ---------
Total Current Assets 188,538 157,245 160,090
Noncurrent Assets:
Property, Plant & Equipment, Net 26,584 21,164 20,959
Goodwill and Other Intangibles,
Net 22,435 22,467 19,577
Deferred Income Taxes - - -
Other Assets 2,317 2,247 2,170
--------- --------- ---------
Total Noncurrent Assets 51,336 45,878 42,706
--------- --------- ---------
Total Assets $239,874 $203,123 $202,796
========= ========= =========
Current Liabilities:
Accounts Payable and Accrued
Expenses $ 55,879 $ 49,366 $ 41,760
Current Portion of Long Term
Debt 2,938 3,683 3,683
Income Taxes Payable - 986 -
--------- --------- ---------
Total Current Liabilities 58,817 54,035 45,443
Noncurrent Liabilities:
Long-Term Debt 75,464 46,967 60,582
Deferred Income Taxes 942 1,123 789
Other Noncurrent Liabilities 7 10 15
--------- --------- ---------
Total Noncurrent Liabilities 76,413 48,100 61,386
Stockholders' Equity 104,644 100,988 95,967
--------- --------- ---------
Total Liabilities and Stockholders'
Equity $239,874 $203,123 $202,796
========= ========= =========
CONTACT: Delta Apparel, Inc.
Deborah Merrill, (864) 232-5200 x6620
Chief Financial Officer
or
Investor Relations
Integrated Corporate Relations
Bill Zima, 203-682-8200