CEC Entertainment Reports Financial Results for the First Quarter 2010
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CEC Entertainment, Inc. today reported net earnings of $33.9 million for the first quarter ended April 4, 2010, compared to net earnings of $34.1 million in the first quarter of 2009. Diluted earnings per share increased to $1.53 for the first quarter of 2010, compared to $1.48 in the first quarter of 2009. The increase in diluted earnings per share benefited from a 3.9% decrease in the number of weighted average diluted shares outstanding between the two periods associated with the Company’s common stock repurchases. Total quarterly revenues decreased 0.7% to $246.3 million during the first quarter of 2010 from total quarterly revenues of $248.1 million in the first quarter of 2009. This decrease is primarily due to the effect of one additional operating week in the Company’s 2009 fiscal year which caused the seasonally strong first week of the 2010 calendar year to shift into the fourth fiscal quarter of 2009 instead of in the first fiscal quarter of 2010. First quarter 2010 comparable store sales on a same calendar week basis (comparing weeks 1 through 13 of fiscal year 2010 to weeks 2 through 14 of fiscal year 2009) grew 0.7%.
Michael Magusiak, President and Chief Executive Officer, stated that, “We’re relatively pleased with our comparable store sales performance in the first quarter of 2010. As we move forward in 2010, our outlook for the business is best characterized as one of cautious optimism. The consumer environment remains uncertain, but we believe our strategies are solid. We are pleased with the results realized from our capital initiatives, our continued focus on birthday party sales, school and non-profit fundraisers, and our recent changes to our pricing and coupon strategies. We intend to build upon these proven and successful initiatives to further improve our future comparable store sales performance.”
Business Outlook:
Based on its current estimates, the Company is projecting fiscal year 2010 diluted earnings per share to be in a range of $2.70 to $2.80, representing a growth rate of 8.0% to 12.0% over fiscal year 2009 diluted earnings per share excluding the benefit of the extra week in fiscal year 2009. A reconciliation of diluted earnings per share excluding the estimated impact of the 53rd operating week in fiscal year 2009 is set forth in a table accompanying this release. This guidance incorporates the following full fiscal year 2010 assumptions:
- comparable store sales, on a calendar week basis, up 1.0% to 2.0%;
- seven additional Company-owned stores, including one relocation;
- average cheddar block prices in a range of $1.55 to $1.65 per pound;
- slight labor pressure due to minimum wage increases and increases in unemployment taxes;
- depreciation and rent expense will grow 4% and 3%, respectively;
- advertising expense as a percentage of total revenue will decrease 0.1 to 0.2 percentage points;
- effective tax rate of approximately 38.0%;
- total capital expenditures will range from $96.0 million to $100.0 million;
- free cash flow used to repurchase Company common stock on an opportunistic basis.
Celebrating over 30 years of success as a place Where a Kid can be a Kid®, CEC Entertainment, Inc. is a nationally recognized leader in family dining and entertainment. Chuck E. Cheese’s stores feature musical and comic entertainment by robotic and animated characters, arcade-style and skill oriented games, video games, rides and other activities intended to appeal to families with children between the ages of two and 12 and offers a variety of pizzas, sandwiches, appetizers, a salad bar and desserts. The Company and its franchisees operate a system of 546 Chuck E. Cheese’s stores located in 48 states (excluding Wyoming and Vermont) and six foreign countries or territories. Currently, 498 locations in the United States and Canada are owned and operated by the Company.
