CEC Entertainment, Inc. today announced its financial results for the first quarter ended April 3, 2011. Total revenues for the first quarter of 2011 increased 4.1% to $256.4 million from $246.3 million in the first quarter of 2010. The increase was primarily due to a weighted average Company-owned store increase of approximately eight stores as compared to the first quarter of 2010, and a comparable store sales increase of 1.1%.
Net income for the first quarter ended April 3, 2011 increased to $34.1 million compared to net income of $33.9 million in the first quarter of 2010. Diluted earnings per share was $1.71 for the first quarter of 2011 compared to diluted earnings per share of $1.53 in the first quarter of 2010, an increase of 11.8%. The increase in diluted earnings per share for the first quarter of 2011 was favorably impacted by the repurchase of 2.8 million shares of stock since the first quarter of 2010.
The Company’s Board of Directors declared a cash dividend of $0.20 per share on February 22, 2011 that was paid on April 21, 2011. On May 3, 2011, the Company’s Board of Directors declared a cash dividend of $0.20 per share to be paid on July 7, 2011 to stockholders of record as of June 2, 2011.
Michael Magusiak, President and Chief Executive Officer, stated that, “Our financial performance during the first quarter of 2011, including a comparable store sales increase of 1.1% and operating cash flow of $88.5 million, reflects the strength of our brand and the quality implementation of our strategies. Our significant operating cash flow enables us to grow our concept with new stores, execute a strong existing store capital plan that will impact approximately 200 stores this year, and continue to return a significant amount of capital to our shareholders in the form of share repurchases and cash dividends.”
Mr. Magusiak also stated, “During 2010, we repurchased approximately $78 million of our common stock totaling approximately 2.2 million shares, which represented approximately 10% of our weighted average diluted shares outstanding at the end of the 2010 fiscal year. During the first quarter of 2011, we again confirmed our long-term commitment to our stock repurchase plan by repurchasing approximately $22 million of our common stock totaling approximately 0.6 million shares, representing 3% of weighted average diluted shares outstanding at the end of the first quarter of 2011. In addition, during the first quarter of 2011, we initiated a quarterly dividend of $0.20 per share, or $0.80 per share on an annual basis. We intend to pay regular quarterly dividends for the foreseeable future including our recent announcement of our second quarter of 2011 dividend of $0.20 per share.”
Business Outlook:
Based on its current estimates, the Company is projecting fiscal year 2011 diluted earnings per share to be in a range of $3.00 to $3.10. This guidance incorporates the following assumptions for the 2011 fiscal year:
- comparable store sales up 1.0% to 2.0%;
- five additional Company-owned stores, inclusive of three relocations;
- average cheddar block prices in a range of $1.60 to $1.80 per pound;
- combined depreciation and rent expense will increase approximately 6% from the prior year;
- advertising expense as a percentage of total revenues will decrease approximately 0.1 percentage points;
- effective tax rate of approximately 38.7%;
- capital expenditures will range from $92.0 million to $93.0 million, impacting approximately 200 stores and the development of approximately five Company-owned stores, inclusive of three relocations;
- intend to repurchase Company common stock on an opportunistic basis; and
- two additional quarterly dividend payments during fiscal 2011.
We estimate that diluted earnings per share for the second quarter of 2011 will be in a range of $0.28 to $0.32.
Non-GAAP Financial Measures:
The Company reports and discusses its operating results using financial measures consistent with accounting principles generally accepted in the United States (“GAAP”). From time to time in the course of financial presentations, earnings conference calls or otherwise, the Company may disclose certain non-GAAP financial measures such as Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Free Cash Flow. The non-GAAP financial measures presented in this earnings release should not be viewed as alternatives or substitutes for the Company’s reported GAAP results.
For more than 30 years, CEC Entertainment has served as the nationally recognized leader in family dining and entertainment and the place Where a Kid can be a Kid. The Company and its franchisees operate a system of 555 Chuck E. Cheese’s stores located in 48 states and seven foreign countries or territories. Currently, 508 locations in the United States and Canada are owned and operated by the Company. CEC Entertainment, Inc. and its franchises have the common goal of creating lifelong memories for families through fun, food and play. Each Chuck E. Cheese’s features musical and comic robotic entertainment, games, rides and play areas as well as a variety of dining options including pizza, sandwiches, a salad bar and desserts. Committed to providing a fun, safe environment, Chuck E. Cheese’s helps protect families through industry-leading programs such as Kid Check.
Chuck E. Cheese’s aims to promote positive, lifelong memories inside and outside of its stores. In addition to providing a fun entertainment experience for millions of families across the world, Chuck E. Cheese’s has donated more than $6 million to schools and non-profit institutions through its fundraising programs.