Delta Apparel, Inc. finished out its fiscal year with a bang, announcing double-digit sales gains, a nearly doubled bottom line, the opening of a new factory in Honduras, and the acquisition of North Carolina-based t-shirt manufacturer, Fun-Tees, Inc. The acquisition of Fun-Tees will cost Delta $20 million in cash and is expected to close in early October. Management expects the acquisition to add approximately $70 million in annual sales to its Activewear segments sales and to be immediately accretive to earnings.
Delta Apparel, Inc. fiscal Q4 net sales were $82.5 million, an increase of 24.4%, compared to $66.3 million in the prior year’s fourth quarter. The Retail-Ready segment, which includes the Soffe and Junkfood businesses, reported a sales increase of 58.0% to $40.4 million for the fourth quarter of fiscal year 2006 compared to $25.6 million in the prior year. Operating income for the quarter increased 124.6% to $8.7 million compared to $3.9 million in the prior year due to the addition of the Junkfood business and a 32.6% jump in sales at Soffe. The Activewear segment, which includes the Delta Apparel business, reported sales of $42.0 million for the fourth quarter of fiscal 2006, a 3.3% increase from the prior year quarter.
Gross margins increased 340 basis points to 28.7% compared to 25.3% in the prior year fourth quarter. Selling, general and administrative expenses improved 60 basis points to 15.9% of net sales compared to 16.5% of net sales in the fourth quarter of the prior year. Net income was $6.3 million, or 74 cents per basic share, in the fiscal fourth quarter of 2006 compared to the prior year’s level of $3.2 million, or 38 cents per basic share.
For the first fiscal quarter, Delta expects sales to be in the range of $64 to $68 million with diluted earnings per share between 41 cents and 45 cents per share. For the 2007 fiscal year, the Company expects sales to be in the range of $325 to $340 million and diluted earnings per share to be in the range of $1.91 to $2.05.
|Delta Apparel, Inc.|
|Fiscal 2006 Results|
|(in $ millions)||2006||2005||Change|
|Gross Margin||29.6%||23.6%||+590 bps|