Delta Systems Reports 2006 Fourth Quarter and Year-End Financial Results


    ROGERS, AR, March 6 /CNW/ - Delta Systems, Inc. (TSX-V: DLT), a leading
developer of factory automation solutions for the consumer packaged goods
industry, today reported its financial results for the fourth quarter and year
ended December 31, 2006. (All dollar amounts are reported in U.S. dollars
under U.S. GAAP).

    Q4 2006 Highlights
    -   Revenue for Q4 2006 increased 34% to $5.75 million compared to
        $4.29 million in Q4 2005
    -   Project backlog at year end totalled US$10.0 million, representing a
        122% increase from a year ago
    -   US$3.4 million automation equipment and motion control solution order
        from one of the world's largest privately-owned bakery companies;
        largest customer order in Company history
    -   US$1.68 million automation equipment and motion control solution
        order from Galletera del Norte S.A., a leading South American snack
        food manufacturer

    "We experienced a challenging first half in 2006, largely as a result of
a project cancellation and slower than expected orders in Q1, but we achieved
a strong rebound in our business in the second half of the year, with revenues
up 51% compared to the second half of 2005 and our project backlog at year end
up 122%," said Jake Bushey, President & CEO of Delta Systems. "We believe our
growth momentum is a direct result of adjustments to our business plan, which
involved bundling our controls technology with our automation equipment and
systems, and increasing our sales and marketing efforts on strategic accounts.
Our mid-year acquisition of Food Machinery Sales has also been a significant
factor with new customer wins and expanded market opportunities going
    "Looking ahead, we will continue to focus on our adjusted business plan
and increasing our sales and marketing activities towards strategic accounts
both in the U.S. and internationally. With our bundled controls and equipment
solution offering we believe we provide our customers a unique value
proposition," continued Mr. Bushey. "As disclosed in our recent 2007 business
outlook news release, we are targeting revenues in the range of $25 million to
$28 million, and Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA")(1) in the range of $750,000 to $1.5 million in 2007."
    Revenue for the three months ended December 31, 2006 increased 34% to
$5.75 million compared to $4.29 million in the fourth quarter a year ago. The
Company's increased revenue for the fourth quarter reflects increased customer
orders both in the U.S. and internationally. Revenue for the year ended
December 31, 2006 totalled $18.11 million compared to $18.81 million in 2005.
The Company's slight decline in revenue was primarily attributable to a
project cancellation, slower than expected sales orders in the first quarter,
and a customer-initiated suspension of a major project rollout, which has
still not been reinitiated.
    Earnings (loss) Before Interest, Taxes, Depreciation and Amortization
("EBITDA")(1) for the three months ended December 31, 2006, totaled
$(328,201), compared to EBITDA (loss) of $(416,072) in the fourth quarter a
year ago. EBITDA (loss) for the year ended December 31, 2006, totaled
$(2,086,301), compared to EBITDA (loss) of $(392,165) in 2005.
    Net loss for the fourth quarter of 2006 was $533,636 or $(0.03) per share
compared to a net loss of $611,395 or $(0.03) per share in the fourth quarter
a year ago. The decreased net loss for the fourth quarter of 2006 resulted
from increased revenue in relation to fixed costs. Net loss for the year ended
December 31, 2005 was $2.85 million or $(0.15) per share, compared to net loss
of $1.68 million or $(0.08) per share in 2005. The Company's increased net
loss in 2006 is primarily a result of: a $708,127 expense recorded by the
Company on a contract termination during the second quarter of 2006, net of
the re-acquisition of usable machines and materials of approximately $506,000
into inventory; increased sales and marketing expenses; and increased general
and administrative ("G&A") expenses related to the Company's acquisition of
Food Machinery Sales in June 2006.

    Summary Financial Information
    ($US)                    Three Months Ended          12 Months Ended
                                 December 31,              December 31,
                              2006         2005         2006         2005

    Net Sales             $ 5,749,496  $ 4,285,442  $18,112,484  $18,809,515
    Gross Profit            1,799,150    1,344,113  $ 5,103,882    6,153,061
    Gross Profit
     (% of revenue)             31.3%        31.4%        28.2%        32.7%
    Operating Expenses
     Depreciation and
     Amortization           2,221,220    1,819,055    7,500,758    6,757,589
    EBITDA (Loss)(1)         (328,201)    (416,072)  (2,086,301)    (392,165)
    Net Income (Loss)        (533,636)    (611,395) $(2,847,578)  (1,680,293)
    Net Earnings (Loss)
     Per Share (basic &
     diluted)             $     (0.03) $     (0.03) $     (0.15) $     (0.08)
    Weighted average
     common shares
     outstanding (basic)   19,627,533   20,180,524   19,627,533   20,264,523

    (1) EBITDA is a non-GAAP financial measure that is provided because it is
        commonly used as a measure of liquidity. EBITDA is defined as net
        income (loss) before income taxes, interest expense, interest income,
        and depreciation and amortization. Management believes that cash
        flows from operating activities, as determined in accordance with
        generally accepted accounting principles ("GAAP"), is the most
        comparable financial measure. EBITDA should not be construed as an
        alternative to cash flow from operations, and because it is not
        calculated under generally accepted accounting principles, the
        Company's EBITDA may not be comparable to similarly titled measures
        used by other companies.

    For fiscal 2007, Delta Systems currently expects to generate revenues in
the range of $25 million to $28 million, and Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA")1 in the range of $750,000 to
$1.5 million. The Company's financial guidance for 2007 is based upon its
current order backlog and business development activities with new and
existing customers. With a goal of achieving profitability in 2007, Delta will
focus on increasing revenue from its installed customer base, securing larger
implementations, and adding new customers.

    About Delta Systems
    Delta Systems, Inc. (TSX-V: DLT) develops factory automation solutions
for consumer packaged goods companies. The Company's comprehensive line of
automation equipment includes: high-speed flow wrappers, feeding and
distribution, and labeling and product tracking systems. Delta Systems'
PC-based motion control software, SoftFlow(TM), enhances the speed,
efficiency, precision and flexibility of automation applications on the plant
floor, while providing connectivity to other enterprise systems. The Company
offers a range of customer support services to optimize deployment,
utilization and systems integration. Delta Systems has installations with more
than 100 customers in North America and internationally, including 11 Fortune
500 companies. The Company is headquartered in Rogers, Arkansas, and has
approximately 100 employees at product development and customer support
facilities in both Arkansas and Georgia. For more information, please visit:

         The TSX Exchange has neither approved nor disapproved of the
                 information contained in this news release.

               Not for distribution to U.S. newswire services.

    Caution concerning forward-looking statements
    Certain statements contained in this news release may constitute "forward
looking statements". When used in this news release, the words "may," "would,"
"could," "will," "intend," "plan," "anticipate," "believe," "estimate,"
"expect," and similar expressions, as they relate to Delta Systems or its
management are intended to identify forward-looking statements. Such
statements reflect Delta Systems' current views with respect to future events
and are subject to certain risks, uncertainties and assumptions. Many factors
could cause the Company's actual results, performance or achievements to be
materially different from any future results, performance or achievements that
may be expressed or implied by such forward looking statements, including
among other things, those which are discussed under the headings "Risk
Factors" and elsewhere in documents that Delta Systems files from time to time
with securities regulatory authorities. Should one or more of these risks or
uncertainties materialize, or should assumptions underlying the
forward-looking statements prove incorrect, actual results may vary materially
from those described herein as intended, planned, anticipated, believed,
estimated or expected. Delta Systems does not intend, and does not assume any
obligation, to update these forward-looking statements.

    %SEDAR: 00022918E

For further information:

For further information: Jake Bushey, President and Chief Executive
Officer, Delta Systems, Inc., (479) 619-2585,;
Bruce Wigle, Investor Relations, The Equicom Group Inc., (416) 815-0700 ext.

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