True Religion Apparel Reports Continued Revenue, Income Growth for 2006 Third Quarter.Highlights:
* Third quarter net sales Net Sales
The amount a seller receives from the buyer after costs associated with the sale are deducted.
This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increase 22.6% to quarterly record $42.9 million
* Net income grows to $8.2 million, after giving effect to the balance of a one-time settlement expense and to a banking expense, which together amounted to approximately $799,000
* Earnings per diluted share increases to $0.35, after giving effect to a one-time settlement expense and banking expense equal to $0.02 per diluted share
* Company signs first global licensing deals for footwear and headwear head·wear
A hat or other covering for the head. to help drive brand to broader lifestyle collection; Enters into leases for six new True Religion stores in California, New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , New Jersey and Florida; Opens outlet store An outlet store or factory outlet is a retail store in which manufacturers sell their stock directly to the public through their own branded stores. The stores can be can be brick and mortar or online. in Desert Hills, California
LOS ANGELES Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. -- True Religion Apparel, Inc. (Nasdaq:TRLG) today announced financial results for the third quarter ended September 30, 2006.
Net sales for the 2006 third quarter increased 22.6% to $42.9 million from $35.0 million in the 2005 third quarter, although were below the company's internal projections. During the quarter, the company's product mix at retail outside the U.S., which was heavily denim-based, negatively impacted sales due to exceptionally warm weather and, as much as the recovery has been solid, sales in Japan did not perform up to the company's original forecast.
Excluding unusual expenses in the quarter related to the balance of the Indigo Group arbitration settlement and legal and professional fees related to the company's ongoing engagement of Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. , which together amounted to approximately $799,000 before income taxes, or $0.02 per diluted share, adjusted net income grew 13% to $8.7 million, or $0.37 per diluted share. This compares with net income of $7.7 million, or $0.33 per diluted share for the third quarter of 2005. Giving effect to these expenses, reported net income for the 2006 third quarter grew 6% to $8.2 million, or $0.35 per diluted share. Management believes that including non-GAAP net income per diluted share for the current period provides a useful and relevant measure for comparative year-over-year operating performance. Refer to the attached table for details regarding the basis for the adjusted net income per diluted share calculation.
"On both financial and operating metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. , this was a great quarter with progress on many fronts that supported our goal of becoming a global lifestyle brand with a strong denim foundation," said Jeff Lubell, Chief Executive Officer of True Religion Apparel, Inc. "We advanced initiatives that will enhance our ability to develop a richer product offering and broaden distribution channels. Subsequent to the end of the third quarter, we signed our first licensing agreements for footwear, headwear, scarves scarves
A plural of scarf1.
a plural of scarf1 and gloves; added key new members to our design and marketing teams; signed leases for new stores in Los Angeles, New York and New Jersey, and opened our first outlet store in Desert Hills, CA. As the holiday season approaches, we are hard at work to offer an increasingly diverse product mix to our growing customer base, drawing on our hallmarks of fit, style and high attention to detail."
Gross profit in the third quarter increased to $22.4 million from $18.4 million in the third quarter of 2005. Third quarter 2006 gross margins stood steady at 52.2% compared with 52.7%, in the same period last year.
Selling, general and administrative expenses in the quarter increased to $8.8 million from $5.8 million in the 2005 third quarter, primarily reflecting ongoing infrastructure enhancements including personnel, facilities, warehousing, replenishment replenishment
the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. systems, marketing initiatives and retail build-out.
Net income from operations was $13.6 million, or 31.6% of sales, in the 2006 third quarter, versus $12.7 million, or 36.2% of sales, in the same period in 2005.
For the nine-month period ended September 30, 2006, net sales increased 41.8% to $109.3 million from $77.1 million in the same period last year. Net income, excluding a one-time arbitration settlement of $2.1 million primarily recorded in the second quarter and unusual banking expenses previously discussed for the most recent quarter, increased 41% to $21.3 million, or $0.91 per diluted share. On a reported basis, net income rose 24.0% to $19.6 million, or $0.83 per diluted share, versus $15.8 million, or $0.68 per diluted share in the first nine months of 2005.
Gross profit in the 2006 nine-month period was $57.5 million, compared with $39.6 million last year. Gross margins for the nine month period increased to 52.6% from 51.3% in 2005.
Selling, general and administrative expenses for the first nine months of the year were $23.6 million, compared with $13.8 million in the first nine months of 2005. Included in the increase for 2006 is $2.5 million non-cash compensation and SFAS SFAS Statement of Financial Accounting Standards
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Net income from operations for the first nine months of 2006 was $33.9 million, equal to 31.1% of sales, versus $25.8 million, or 33.5% of sales, in the same period last year.
2006 Financial Guidance
Reflecting current visibility for the remainder of 2006, the company adjusted its expectation of total sales for the full year to $138 million to $140 million, representing a growth rate of 35% to 36% over last year. Earnings per diluted share, before giving effect to the one-time expenses related to the arbitration settlement and unusual banking expenses, equal to $0.08, is expected to be in the range of $1.11 to $1.12 for 2006.
Investor Conference Call
True Religion management will host a conference call to discuss the financial results and answer questions today at 4:30 p.m. ET. The conference call will be available to all interested parties through a live webcast at www.truereligionbrandjeans.com and www.earnings.com. Please visit the Web site at least 15 minutes prior to the start of the call to register and download any necessary software. For those unable to listen to the live broadcast, the call will be archived for a year at both sites. A telephone replay will be available for approximately one week following the conclusion of today's call by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international) and entering passcode: 6804146.
About True Religion Apparel, Inc.
True Religion Apparel, Inc. is a growing, design-based premium global lifestyle brand. The company designs, manufactures and markets True Religion Apparel products, including its premium True Religion Brand Jeans. Its expanding product line, which includes high quality distinctive styling and fit, may be found in premier department stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. and boutiques in 50 countries including the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada, Germany, United Kingdom, France, Spain, Scandinavia, Greece, Italy, Mexico, South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , Australia, South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. , the Middle East, Korea, Japan, and China. For more information, please visit www.truereligionbrandjeans.com.
This press release contains forward-looking statements forward-looking statement
A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "safe harbor Safe Harbor
1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated.
2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including uncertainties as to the nature of the apparel industry, including changing customer demand and tastes, seasonality, customer acceptance of new products, the impact of competitive products and pricing, dependence on existing management and general economic conditions. Our Annual Report on Form 10-K Form 10-K
A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information.
See 10-K. , recent and forthcoming Quarterly Reports on Form 10-Q Form 10-Q
See 10-Q. , recent Current Reports on Form 8-K Form 8-K
The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock.
See 8-K. , and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
[TABLE OMITTED] [TABLE OMITTED] (1)Effect of an adjustment for non-recurring legal settlement expense and for legal and investment banking expenses associated with a review of strategic alternatives.