EX-99 2 exhibit_99-1true.htm

Exhibit 99.1

 

 

 

Contact:

True Religion Apparel, Inc.

 

Pete Collins, Chief Financial Officer

 

(323) 266-3072

 

 

Investor Relations

 

Andrew Greenebaum / Laura Foster

 

ICR, Inc.

 

(310) 954-1115

 

 

True Religion Apparel Reports 2008 First Quarter Financial Results

 

 

-

-- Record Q1 08 net sales of $53.4 million, an increase of 47.4% from $36.2 million in Q1 07 --

 

-

--Q1 08 net income grew 34.7% to $6.9 million from $5.2 million in Q1 07—

 

-

--Q1 08 diluted EPS reaches $0.29 vs. $0.22 in Q1 07

 

-

-- Increases 2008 net sales and EPS guidance ---

 

VERNON, California – May 8, 2008 – True Religion Apparel, Inc. (Nasdaq: TRLG) today announced financial results for the first quarter ended March 31, 2008.

 

 

-

Net sales for the 2008 first quarter were $53.4 million, an increase of 47.4% from $36.2 million in the 2007 first quarter. Net sales in the Company’s U.S. wholesale segment increased 29.5% to $32.5 million from $25.1 million in the prior year. The Company’s international wholesale business increased 28.5% to $8.9 million from $6.9 million in the 2007 first quarter. Net sales for the consumer direct segment, which includes the Company’s branded retail stores and e-commerce site, increased 190.3% to $11.8 million from $4.1 million in the prior year.

 

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Gross profit in the 2008 first quarter was $30.5 million, or 57.1% of net sales, compared to $20.4 million, or 56.3% of net sales, in the first quarter of 2007. The improvement in gross margin reflects the ongoing segment mix shift towards the Company’s higher margin consumer direct business.

 

 

-

Selling, general and administrative (“SG&A”) expenses for the 2008 first quarter increased 65.8% to $19.1 million from $11.5 million in the 2007 first quarter. SG&A expenses for the first quarter of 2008 included $3.0 million of incremental operating costs for the expansion of the company's consumer direct business, $2.0 million of additional restricted stock compensation, $1.0 million in incremental marketing expense related to the Company’s 2008 marketing campaign and $0.4 million in incremental professional fees related to the 2006 and 2007 financial report restatement. The Company’s first quarter 2007 SG&A expenses included $1.2 million of severance and recruiting costs related to the replacements of two former executives.

 

-

Operating income for the 2008 first quarter increased 27.9% to $11.4 million, or 21.2% of net sales, compared to $8.9 million, or 24.5% of net sales in the 2007 first quarter.

 

-

True Religion’s effective tax rate for the first quarter of 2008 was 41.0%.

 

-

Net income for the 2008 first quarter was $6.9 million, or $0.29 per diluted share based on weighted average shares outstanding of 24.1 million, compared to $5.2 million, or $0.22 per diluted share based on weighted average shares outstanding of 23.8 million in the 2007 first quarter.

“The first quarter of 2008 marked a continuation of the strong growth True Religion delivered in the second half of 2007,” said Jeffrey Lubell, chairman and chief executive officer of True Religion Apparel. “We achieved year over year revenue growth of 47% thanks to the positive customer response to our spring 2008 collection. Our first quarter results reflect the continued execution within each of our major growth platforms, as we exceeded our internal expectations of our U.S. wholesale business, improved our international performance, and continued to provide our customers with an expanding assortment of sportswear product offerings to complement our core premium denim jean collections. We are confident that we are moving in the right direction to establish True Religion as a truly global, aspirational brand.”

 

Store Openings

During the 2008 first quarter, True Religion opened 3 new stores, bringing its total store count as of the end of the first quarter to 18 stores. To date in the second quarter, the Company has opened seven new stores, bringing the total store count to 25 stores as of May 8, 2008. The Company anticipates opening at least 10 additional new stores before the end of the year, for a total of at least 35 stores by year end 2008.

 

Q1 2008 Segment Results

(Amounts in thousands)

 

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2008

 

 

2007

% Increase/Decrease

Net Sales

 

 

 

 

 

 

 

Wholesale-US

$

32,511

 

$

25,101

29.5%

Wholesale-Int'l

 

8,903

 

 

6,926

28.5%

Consumer Direct

 

11,778

 

 

4,056

190.3%

Other

 

 

240

 

 

159

50.9%

 

$

53,432

 

$

36,242

47.4%

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin %

 

 

Gross Margin %

Gross Profit

 

 

 

 

 

 

Wholesale-US

$

16,904

52.0%

$

13,502

53.8%

Wholesale-Int'l

 

4,145

46.6%

 

3,695

53.3%

Consumer Direct

 

9,196

78.1%

 

3,064

75.5%

Other

 

 

240

100.0%

 

159

100.0%

 

$

30,485

57.1%

$ 

20,420

56.3%

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin %

 

 

Operating Margin %

Operating Income

 

 

 

 

 

 

Wholesale-US

$

9,047

27.8%

$

8,216

32.7%

Wholesale-Int'l

 

3,981

44.7%

 

3,580

51.7%

Consumer Direct

 

4,739

40.2%

 

1,646

40.6%

Other

 

(6,417)

NM

 

(4,565)

NM

 

$ 

11,350

21.2%

$

8,877

24.5%

 

 

2008 Guidance

 

The Company now expects that its 2008 net sales will be $220 million to $225 million (as compared to the $210 million to $215 million that it anticipated at the beginning of 2008) and its 2008 EPS will be $1.52 to $1.56 (as compared to $1.48 to $1.52 at the beginning of 2008). The Company’s 2008 net sales are expected to increase 27% to 30% compared to 2007 net sales of $173 million. The Company’s 2008 diluted EPS is expected to increase 31% to 34% compared to 2007 diluted EPS of $1.16.

 

The Company’s updated EPS guidance reflects an increase in its expected share count, now 24.1 million as compared to 23.7 million at the time of the Company’s initial guidance, and a reduced effective tax rate,

41.0 percent versus 42.0 percent; these changes have offsetting impacts to the expected 2008 EPS guidance.

 

Segment Guidance

($ in millions)

 

Year Ending

 

 

December 31, 2008

 

 

Net Sales

 

 

Pre-Tax Income

 

Pre-Tax Margin

US Wholesale

$

124 – 126.5

 

$

40.0 – 41.6

 

32.6%

International Wholesale

 

35 – 36

 

 

16

 

45.1%

Consumer Direct

 

59 – 61

 

 

24

 

40.0%

Licensing

 

1.5

 

 

1.2

 

80.0%

Corporate Overhead

 

-

 

 

(19.2)

 

NM

Total

$

220 - 225

 

$

62.0 – 63.6

 

28.2%

*Pre-tax margin assumes mid-point of net sales and pre-tax income guidance range

 

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 of the call will be available for approximately one week following the conclusion of the call by dialing (800) 406-7325 (domestic) or (303) 590-3030 (international) and entering passcode: 3875598.

 

About True Religion Apparel, Inc.

True Religion Apparel, Inc. is a growing, design-based premium aspirational 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 in denim, sportswear, and licensed products, may be found in premium department stores and boutiques in 50 countries around the world, including the United States, Canada, Germany, United Kingdom, Japan, Korea, France, Spain, Sweden, Greece, Italy, Mexico, Australia, South Africa and China. For more information, please visit www.truereligionbrandjeans.com.

 

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act 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, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Form 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.

 

SOURCE: True Religion Apparel, Inc.

 

 

TRUE RELIGION APPAREL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2008

 

 

2007

 

 

 

 

 

 

 

Net sales

$

53,432

 

$

36,242

Cost of sales

 

22,947

 

 

15,822

Gross profit

 

30,485

 

 

20,420

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

19,135

 

 

11,543

 

 

 

 

 

 

 

Operating income

 

11,350

 

 

8,877

 

 

 

 

 

 

 

Other Income

 

(424)

 

 

(343)

 

 

 

 

 

 

 

Income before provision for income taxes

 

11,774

 

 

9,220

Provision for income taxes

 

4,827

 

 

4,061

Net Income

$

6,947

 

$

5,159

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

Basic

$

0.30

 

$

0.23

 

Diluted

$

0.29

 

$

0.22

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

23,221

 

 

22,879

 

Diluted

 

24,070

 

 

23,827

 

 

 

TRUE RELIGION APPAREL, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

March 31,

 

December 31,

 

 

 

2008

 

2007

ASSETS

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

$

47,828

 

$

28,686

Marketable securities, available for sale

 

-

 

 

5,345

Accounts receivable, net of allowances:

 

 

 

 

 

 

From factor

 

16,553

 

 

14,709

 

From customers

 

6,562

 

 

13,189

Inventory

 

24,619

 

 

20,771

Deferred income tax assets

 

2,766

 

 

4,707

Prepaid expenses and other current assets

 

2,385

 

 

2,305

 

 

 

 

 

 

 

 

Total current assets

 

100,713

 

 

89,712

Property and equipment, net

 

15,157

 

 

11,579

Marketable securities, available for sale

 

10,022

 

 

10,200

Deferred income tax assets

 

561

 

 

561

Other assets

 

1,212

 

 

1,206

TOTAL ASSETS

$

127,665

 

$

113,258

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

$

14,157

 

$

9,597

Accrued salaries, wages and benefits

 

2,545

 

 

4,059

Income taxes payable

 

5,912

 

 

3,210

Total current liabilities

 

22,614

 

 

16,866

Long-term deferred rent

 

1,396

 

 

1,145

Total liabilities

 

24,010

 

 

18,011

Stockholders' Equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 20,000 shares

 

 

 

 

 

 

 

authorized, 0 issued and outstanding

 

-

 

 

-

 

Common stock, $0.0001 par value, 80,000 shares authorized, 24,050 and 23,587 

 

 

 

 

 

 

 

issued and outstanding, respectively

 

2

 

 

2

 

Additional paid-in capital

 

30,384

 

 

26,491

 

Accumulated other comprehensive income

 

(177)

 

 

-

 

Retained earnings

 

73,446

 

 

68,754

Total stockholders' equity

 

103,655

 

 

95,247

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

127,665

 

$

113,258

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

2008

 

 

2007

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

$

6,947

 

$

5,159

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

592

 

 

340

 

Provision for bad debts, returns, and markdowns

 

301

 

 

155

 

Stock-based compensation

 

3,864

 

 

2,150

 

Tax benefit from stock option exercises

 

-

 

 

70

 

Excess tax benefit from stock option exercises and restricted stock vesting

 

(29)

 

 

(67)

 

Deferred income taxes

 

1,941

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable from customers

 

6,327

 

 

641

 

 

Accounts receivable from factor

 

(1,844)

 

 

(3,309)

 

 

Inventory

 

(3,848)

 

 

537

 

 

Prepaid income taxes and income taxes payable

 

2,702

 

 

2,825

 

 

Prepaid expenses and other

 

122

 

 

230

 

 

Accounts payable and accrued expenses

 

3,629

 

 

408

 

 

Accrued salaries, wages and benefits

 

(1,514)

 

 

(920)

 

 

Long-term deferred rent

 

251

 

 

149

Net cash provided by operating activities

 

19,441

 

 

8,368

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Capital expenditures

 

(3,237)

 

 

(3,332)

 

Purchases of marketable securities

 

-

 

 

(5,015)

 

Sales of marketable securities

 

5,203

 

 

-

 

Expenditures to establish trademarks

 

(40)

 

 

-

Net cash provided by (used in) investing activities

 

1,926

 

 

(8,347)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from exercise of stock options

 

-

 

 

70

 

Tax withholding payment for stock-based compensation

 

(2,254)

 

 

(1,516)

 

Excess tax benefit from stock option exercises and restricted stock vesting

 

29

 

 

67

Net cash (used in) provided by financing activities

 

(2,225)

 

 

(1,379)

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

19,142

 

 

(1,358)

Cash and cash equivalents, beginning of period

 

28,686

 

 

44,878

Cash and cash equivalents, end of period

$

47,828

 

$

43,520