IRVING, Texas - May 7, 2015 // PRNewswire // - CEC Entertainment, Inc. (the "Company") today announced financial results for its first quarter ended March 29, 2015.
"While sales results at our Chuck E. Cheese's stores were challenging, we made progress in a number of important areas during the first quarter," said Tom Leverton, Chief Executive Officer. "It was the first quarter to have all members of our new executive leadership team in place. Working together, we introduced a new menu nationwide in April at our Chuck E. Cheese's locations to enhance our dining offering for kids and adults, and we launched an initiative to add Wi-Fi to all of our locations. The enhancements we are making at our Chuck E. Cheese's stores coincide with changes we are making in our marketing strategy, including a change in our primary marketing agency. We believe these efforts, along with other projects currently being implemented, will drive future revenue growth. Meanwhile, we continued to be pleased with the operating performance and growth potential of Peter Piper Pizza which we acquired in October 2014."
Total revenues for the first quarter of 2015 increased 3.8%, or $9.7 million, over the prior year to $265.5 million. The increase primarily related to additional revenues of $18.8 million resulting from the Peter Piper Pizza acquisition, which closed in October 2014, partially offset by a decrease in same store sales at our Chuck E. Cheese's stores. Same store sales for the first quarter for Chuck E. Cheese's stores declined 5.0% from the prior year. Same store sales for the first quarter for Peter Piper Pizza stores increased 6.8% over the prior year, a period in which the Company did not own Peter Piper Pizza.
Adjusted EBITDA for the first quarter of 2015 decreased 1.8%, or $1.5 million, over the prior year to $80.7 million. The first quarter of 2015 includes Adjusted EBITDA for Peter Piper Pizza, which increased 21.3% over the prior year, a period in which the Company did not own Peter Piper Pizza, to $5.7 million. Adjusted EBITDA represents net loss adjusted to exclude interest expense, income taxes, depreciation and amortization, asset impairments, the effects of acquisition accounting adjustments, transaction and severance costs and certain other items.
The Company reported net income of $14.7 million for the first quarter of 2015, compared to a net loss of $13.2 million for the first quarter of 2014. The increase is primarily due to transaction costs incurred during the first quarter of 2014 related to the Merger.
As of March 29, 2015, cash and cash equivalents were $151.6 million, and total debt was $1.0 billion, with no borrowings drawn under the Company's $150.0 million revolving credit facility. Capital expenditures were $16.3 million for the first quarter of 2015, of which $7.8 million related to IT and growth initiatives, including new store development, major remodels, store expansions and major attractions.
As of March 29, 2015, the Company's system-wide portfolio consisted of:
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The Company will host a conference call beginning at 9:00 a.m. Central Time on Friday, May 8, 2015. The call can be accessed by dialing (855) 743-8451 or (330) 968-0151 for international participants and conference code 23926487.
A replay of the call will be available from 12:00 p.m. Central Time on May 8, 2015 through midnight Central Time on May 15, 2015. The replay of the call can be accessed by dialing (800) 585-8367 or (404) 537-3406 for international participants and conference code 23936487.
For more than 35 years, CEC Entertainment has served as a nationally recognized leader in family dining and entertainment. The Company and its franchisees operate a system of more than 590 Chuck E. Cheese's stores and 140 Peter Piper Pizza stores, with stores located in 47 states and 11 foreign countries or territories. For more information, please visit www.chuckecheese.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this report, other than historical information, may be considered "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, and are subject to various risks, uncertainties and assumptions. Statements that are not historical in nature and which may be identified by the use of words such as "may," "should," "could," "believe," "predict," "potential," "continue," "plan," "intend," "expect," "anticipate," "future," "project," "estimate," and similar expressions (or the negative of such expressions) are forward-looking statements. Forward-looking statements are made based on management's current expectations and beliefs concerning future events and, therefore, involve a number of assumptions, risks and uncertainties, including the risk factors described in Part I, Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 28, 2014, filed with the Securities and Exchange Commission on March 5, 2015. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ from those anticipated, estimated or expected. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including but not limited to:
The forward-looking statements made in this report relate only to events as of the date on which the statements were made. Except as may be required by law, we undertake no obligation to update our forward-looking statements to reflect events and circumstances after the date on which the statements were made or to reflect the occurrence of unanticipated events.
On February 14, 2014, the Company announced the completion of the acquisition of CEC Entertainment, Inc. by an affiliate of Apollo Global Management, LLC ("Apollo"). The acquisition is referred to as the "Merger." The accompanying consolidated statements of earnings and related information present the Company's results of operations for the period preceding the acquisition (Predecessor) and the period succeeding the acquisition (Successor) based on the mathematical combination of the Successor and Predecessor periods in the three months ended March 30, 2014. Although this combined presentation does not comply with GAAP, the Company believes that it provides a meaningful method of comparison.
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CEC ENTERTAINMENT, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
(in thousands)
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 Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"). The Company believes Adjusted EBITDA is a measure that provides investors with additional information to measure our performance. We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future, as well as other items. Further, we believe Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance and understanding certain significant items. 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.
The following table sets forth a reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA expressed as a percentage of total revenues for the periods shown:
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Adjusted EBITDA, a measure used by management to assess operating performance, is defined as Net income (loss) plus interest expense, income taxes and depreciation and amortization and adjusted to exclude asset impairments, the effects of acquisition accounting adjustments, transaction and severance costs, and certain other items.
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SOURCE CEC Entertainment, Inc.
For more than 35 years, CEC Entertainment is a family dining and entertainment franchise.