Exhibit 99.1
Delta Apparel Announces Restructuring of U.S. Textile Operations
Company Expects to Incur $10.0 Million in Restructuring Related
Charges
Restructuring Initiatives Expected to Result in Cost Savings of
Approximately $0.26, $0.62 and $0.80 in Fiscal 2008, 2009 & 2010
Company Discusses Preliminary Fourth Quarter and FY2007 Results
Announces FY 2008 Revenue and Earnings Guidance
DULUTH, Ga.--(BUSINESS WIRE)--July 18, 2007--Delta Apparel, Inc.
(AMEX: DLA) today announced its plans to restructure its U.S. textile
operations by closing its manufacturing facility in Fayette, Alabama.
As a part of the Company's overall restructuring of its textile
manufacturing operations, the Company is also expensing its start-up
and excess manufacturing costs associated with the integration of
FunTees and the opening of its Honduran textile facility.
This reorganization is expected to occur in the Company's fiscal
first quarter of 2008, leaving the Company with two U.S. textile
operations, one located in Maiden, North Carolina and the other in
Fayetteville, North Carolina. Approximately 110 U.S. jobs will be
eliminated by the manufacturing restructuring.
The Company expects to incur total costs of approximately $10.0
million, or $0.75 per diluted share, associated with the
restructuring. The expenses will impact the Company's fiscal fourth
quarter of 2007 and the first two quarters of fiscal 2008. The
expenses are expected to impact the Company's financials as follows:
FY 07 Qtr 4 FY 08 Qtr 1 FY 08 Qtr 2 Total
------------ ------------ ------------ -------------
Cost of Sales $5.4 million $1.7 million $1.4 million $ 8.4 million
- ----------------- ------------ ------------ ------------ -------------
Restructuring
Charges $1.5 million $0.1 million -- $ 1.6 million
- ----------------- ------------ ------------ ------------ -------------
Total $6.9 million $1.8 million $1.4 million $10.0 million
- ----------------- ------------ ------------ ------------ -------------
Diluted EPS
Impact $0.51 $0.13 $0.10 $0.75
- ----------------- ------------ ------------ ------------ -------------
The $0.51 per diluted share expense in fiscal year 2007 includes
$0.40 per diluted share of start-up, excess and other cash costs
associated with the integration of FunTees and the opening of its
Honduran textile facility and includes $0.11 per diluted share for the
non-cash impact of asset impairments related to the reduction of
textile operations in the U.S. The Company expects its restructuring
initiatives will result in costs savings per diluted share of
approximately $0.26 in fiscal 2008, $0.62 in fiscal 2009, and $0.80 in
fiscal 2010.
This restructuring comes as the Company recently completed its
integration of FunTees textiles into its existing Maiden, N.C.
facility, which has improved operating margins in the FunTees business
by approximately 300 basis points over pre-acquisition operating
margin levels. Additionally, construction of the Company's new textile
facility in Honduras is on schedule and the Company expects to open
this facility in the second quarter of fiscal 2008. The Company
expects to be producing 500,000 pounds of fabric per week by its
fourth quarter of fiscal 2008 and anticipates increasing production to
one million pounds per week by its third quarter of fiscal 2009.
Robert W. Humphreys, President and CEO, commented, "We continue to
focus on improving the performance of our wholesale activewear
business. After evaluating our alternatives, we determined that we
must eliminate some of our domestic manufacturing capacity. It is
difficult to eliminate the jobs of these employees who have
contributed significantly to our growth and success over the years.
However, we believe the relocation of some of our U.S. textile
capacity to Central America is necessary to be cost-competitive
against other global producers. We believe our actions will result in
improved margins and profitability in fiscal 2008 and beyond."
Mr. Humphreys concluded, "We will continue to focus on maximizing
our operating performance in all key areas of our business. The
changes we are making should allow us to continue profitable growth in
the highly competitive apparel industry and provide us with a platform
to generate superior investment returns for our shareholders. We
remain encouraged by the opportunities within both our private label
and branded apparel businesses and believe the steps we are taking now
will result in a stronger, more competitive company in the years to
come."
Fourth Quarter and Fiscal 2007 Preliminary Results
The Company's sales for its 2007 fourth fiscal quarter are
approximately $92 million. This brings sales for the full 2007 fiscal
year to approximately $312 million, almost a 16% increase over the
prior fiscal year.
Including the $6.9 million, or $0.51 per diluted share, of
start-up, excess and impairment charges associated with its textile
restructuring, the Company now expects diluted earnings per share for
its fourth quarter to be in the range of $0.06 to $0.08 versus its
prior expectation of $0.50 to $0.55. As a result, earnings for the
full 2007 fiscal year are expected to be in the range of $0.71 to
$0.73 per diluted share. This compares to the Company's previously
disclosed expectations of earnings in the range of $1.15 to $1.20 per
diluted share prior to the restructuring related charges.
Fiscal 2008 Guidance
For the 2008 fiscal year ending June 28, 2008, the Company expects
net sales to be in the range of $335 to $350 million and diluted
earnings per share to be in the range of $1.36 to $1.52. This includes
the $3.2 million, or $0.23 per diluted share, of anticipated expenses
associated with the start-up of the new Honduran textile facility and
the shutdown of the Fayette, Alabama facility that will impact results
in the first two quarters of fiscal 2008.
Conference Call Information
The Company will hold a conference call with senior management to
discuss its restructuring initiatives today at 8:30 a.m. ET. Investors
can access the call by dialing 913-981-4911. A live webcast of the
conference call will be available on the Company's Web site at
www.deltaapparelinc.com. Please visit the Web site at least 15 minutes
early to register for the teleconference webcast and download any
necessary software. A replay of the call will be available from July
18, 2007 through July 25, 2007. To access the telephone replay,
participants should dial 719-457-0820. The access code for the replay
is: 2954693.
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.deltaapparelinc.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.
CONTACT: Delta Apparel, Inc.
Deborah Merrill, 864-232-5200 x6620
Chief Financial Officer
or
Integrated Corporate Relations
Investor Relations:
Bill Zima, 203-682-8200