Delta Apparel Reports Fiscal Year 2002 Second Quarter Results
DULUTH, Ga., Jan 17, 2002 (BUSINESS WIRE) -- Delta Apparel, Inc. (AMEX:DLA) announces sales of $24.3 million for the quarter ended December 29, 2001, down $2.0 million, or 7.7%, from the prior year quarter.
Decreased sales were the result of a 4.2% decrease in unit volume and a 3.7% decrease in average selling prices from the prior year quarter. Lower average prices were the result of price decreases in certain basic styles. In addition, the drop in retail demand negatively impacted the Company's private label volume for the quarter. Operating earnings were $1.2 million, down $0.8 million from the prior year quarter. Lower operating earnings were primarily the result of lower selling prices, higher raw material cost and additional costs associated with the build in productivity at our new Mexico sewing facility. EBITDA for the quarter was $2.9 million, down $0.7 million from the prior year quarter.
Interest expense was $0.1 million for the quarter, compared to $0.3 million in the prior year quarter. The reduction in interest expense resulted from a decrease in average interest rates of over 300 basis points and a decrease in the average daily borrowings.
The effective income tax rate on pretax income for the three months ended December 29, 2001 was 36.9%, compared to 17.9% for the prior year quarter and 9.0% for the fiscal year ended June 30, 2001. During fiscal year 2001, the Company used $8.6 million in federal net operating loss carryforwards, resulting in the lower effective tax rate. The Company believes that its effective tax rate will be approximately 36% to 38% for fiscal year 2002.
Net earnings for the quarter were $0.7 million, or 2.8% of sales, down $0.7 million from the prior year quarter. Basic and diluted earnings per share for the quarter ended December 29, 2001 were $0.29 and $0.28 per share, respectively, down from $0.58 and $0.56 basic and diluted earnings per share for the prior year quarter.
Sales for the first six months of fiscal year 2002 were $55.4 million, down $1.7 million, or 2.9%, from the first six months of last year. For the six months ended December 29, 2001, operating earnings were $1.5 million, down $5.0 million from the first six months of last year. EBITDA for the first six months of fiscal year 2002 was $4.8 million, down $5.1 million, or 51.7%, from the first six months of last year.
Interest expense was $0.4 million for the six months ended December 29, 2001, compared to $0.6 million in the first six months of last year. This reduction in interest expense resulted from a decrease in average interest rates.
Net earnings for the first six months of fiscal year 2002 were $0.7 million, down $4.2 million from the first six months of last year. Basic and diluted earnings per share for the six months ended December 29, 2001 were $0.32 and $0.30 per share, respectively. For the six months ended December 30, 2000, basic and diluted earnings per share were $2.04 and $2.01 per share, respectively.
As previously reported, the Company's Tender Offer expired January 10, 2002. A total of 338,171 shares were validly tendered, not properly withdrawn, and accepted for purchase by the Company at a purchase price of $22.00 per share.
Robert W. Humphreys, President and CEO, commented, "While results in the December quarter, traditionally our weakest quarter, were below the prior year quarter, we are encouraged with the improvement in profitability compared with the first quarter of the current fiscal year. We expect this improvement to continue in the second half of the year. While activewear demand remains weak, inventories at the distributors have been reduced which should provide a quick rebound for the industry when the general economy improves."
"We are especially pleased with the results of our Tender Offer. We believe the repurchase of our shares is an excellent use of our capital and allows us to provide liquidity for our shareholders. We still have approximately $1.2 million authorized to continue the repurchase of shares in the open market, which we will continue to do at the current trading range. At current prices, share repurchases are accretive to our earnings."
Delta Apparel, Inc. is a vertically integrated manufacturer and marketer of high quality knit apparel. The Company specializes in selling undecorated T-shirts, golf shirts and tank tops to distributors, screen printers and private label accounts. Delta Apparel has operations in five states, two company-operated sewing facilities in Honduras and one company-operated sewing facility in Mexico. The Company employs about 2,700 worldwide.
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 Delta Apparel's expectations and are necessarily dependent upon assumptions, estimates and data that the Company believes 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. These 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 and the discovery of unknown conditions (such as with respect to environmental matters and similar items). Accordingly, any forward-looking statements do not purport to be predictions of future events or circumstances and may not be realized. The Company does not undertake to publicly 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 Six Months Ended
Dec 29, Dec 30, Dec 29, Dec 30,
2001 2000 2001 2000
--------- --------- --------- ---------
Net Sales $ 24,337 $ 26,370 $ 55,351 $ 57,019
Cost of Goods Sold 20,596 21,653 48,643 45,062
--------- --------- --------- ---------
Gross Margin 3,741 4,717 6,708 11,957
SG&A 2,675 2,762 5,340 5,422
Other Income 147 8 175 14
--------- --------- --------- ---------
Operating Income 1,213 1,963 1,543 6,549
Interest Expense 139 261 367 556
Taxes 396 305 434 1,079
--------- --------- --------- ---------
Net Income $ 678 $ 1,397 $ 742 $ 4,914
========= ========= ========= =========
Weighted Average Shares Outstanding
Basic 2,319 2,411 2,353 2,409
Diluted 2,429 2,477 2,459 2,448
Net Income per Common Share
Basic $ 0.29 $ 0.58 $ 0.32 $ 2.04
Diluted $ 0.28 $ 0.56 $ 0.30 $ 2.01
Dec 29, June 30, Dec 30,
2001 2001 2000
--------- --------- ---------
Current Assets
Cash $ 5,754 $ 165 $ 218
Receivables, Net 13,531 22,042 18,190
Income Tax Receivable - 1,086 930
Inventories 39,581 41,619 39,508
Deferred Income Taxes 981 925 516
Other Assets 1,119 1,597 1,188
--------- --------- ---------
Total Current Assets 60,966 67,434 60,550
Noncurrent Assets
Property, Plant & Equipment, Net 21,771 23,750 24,655
Other Noncurrent Assets 81 139 206
--------- --------- ---------
Total Noncurrent Assets 21,852 23,889 24,861
--------- --------- ---------
Total Assets $ 82,818 $ 91,323 $ 85,411
========= ========= =========
Current Liabilities
Current Portion of Long Term Debt $ 2,000 $ 8,435 $ 2,000
Income Tax Payable 125 - -
Other Current Liabilities 11,495 12,627 14,250
--------- --------- ---------
Total Current Liabilities 13,620 21,062 16,250
Noncurrent Liabilities
Long-Term Debt 4,667 5,667 9,642
Deferred Income Taxes 761 375 22
Other Noncurrent Liabilities 1,038 736 724
--------- --------- ---------
Total Noncurrent Liabilities 6,466 6,778 10,388
Stockholders' Equity 62,732 63,483 58,773
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $ 82,818 $ 91,323 $ 85,411
========= ========= =========
CONTACT: Delta Apparel, Inc.
Herb Mueller, 678/775-6948
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Released January 17, 2002