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Delta Apparel Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 2, 2009 05:17PM
Delta Apparel Inc (DLA) filed Quarterly Report for the period ended 2009-09-26.
Highlight of Business Operations:
For the fiscal year ending July 3, 2010, we continue to expect our net sales to be in the range of $360 million to $380 million and earnings to be in the range of $0.80 to $1.00 per diluted share. This compares to our fiscal year 2009 net sales of $355.2 million and earnings of $0.76 per diluted share.
Net sales for the first quarter of fiscal year 2010 increased by $7.7 million to $99.1 million, an increase of 8.4% from the first quarter of the prior year. The retail-ready segment, which is comprised of the Soffe, Junkfood and To The Game businesses, reported sales of $52.0 million for the three months ended September 26, 2009, an increase of 25.5% over the prior year first quarter sales of $41.4 million. Excluding the $6.0 million in sales reported by To The Game, our headwear company acquired during the fourth quarter of
Capital expenditures in the first quarter of fiscal year 2010 were $1.3 million compared to $1.0 million in the first quarter of the prior year. Expenditures for the first quarter of fiscal year 2010 were primarily for continued improvements in our information technology in our retail-ready segment and capital expenditures intended to lower costs in our manufacturing facilities in our activewear segment. Total capital expenditures are expected to be approximately $4 million in fiscal year 2010.
Capital expenditures for the first three months of fiscal year 2010 were $1.3 million compared to $1.0 million for the first three months of the prior year. Expenditures for the first three months of fiscal year 2010 were primarily for continued improvements in our information technology in our retail-ready segment and capital expenditures intended to lower costs in our manufacturing facilities in our activewear segment. During the first quarter of fiscal year 2010, we also made a final payment of $0.7 million associated with the acquisition of To The Game, LLC. During the first quarter of fiscal year 2009, we paid an earnout payment of $2.6 million to the former Junkfood shareholders based on the performance of Junkfood for the fiscal year ended June 28, 2008.
Our Board of Directors has authorized the Companys management to use up to $15 million to repurchase Company stock in open market transactions under our Stock Repurchase Program. We did not purchase any shares of our common stock during the three months ended September 26, 2009. Since the inception of the Stock Repurchase Program, we have purchased 1,024,771 shares of our common stock pursuant to the program for an aggregate of $9.1 million. As of September 26, 2009, $5.9 million remained available for future purchases under our Stock Repurchase Program.
On April 2, 2007, we entered into an interest rate swap agreement and an interest rate collar agreement to manage our interest rate exposure and reduce the impact of future interest rate changes. Both agreements mature (or expire) on April 1, 2010. By entering into the interest rate swap agreement, we effectively converted $15.0 million of floating rate debt under our credit facility to a fixed obligation with a LIBOR rate of 5.06%. By entering into the interest rate collar agreement, we effectively provided a cap of 5.5% and a floor of 4.33% on LIBOR rates on $15.0 million of floating rate debt under our credit facility. Based on current prevailing interest rates, our interest expense is expected to decrease approximately $0.3 million per quarter when these swap and collar agreements expire.