IRVING, Texas - May 9, 2018 // PRNewswire // - CEC Entertainment, Inc. (the "Company") today announced financial results for its first quarter ended April 1, 2018.
First quarter Results (1)
Total revenues were $254.9 million for the first quarter of 2018 compared to $264.9 million for the first quarter of 2017. Company venue sales for the first quarter of 2018 decreased $10.8 million from the first quarter of 2017, primarily driven by a 5.1% decline in comparable venue sales. Also, deferred amusement revenue was $1.8 million less than the first quarter of 2017, resulting in cash revenue from our Company-operated venues decreasing $12.7 million from the first quarter of 2017.
The Company reported net income of $12.2 million for the first quarter of 2018, compared to net income of $17.2 million for the first quarter of 2017. First quarter 2018 net income reflects the decline in revenue and a decrease in Company-operated venue cost margins, partially offset by lower general and administrative expenses, lower depreciation and a lower effective tax rate related to the tax law changes enacted in December 2017.
"While we continued to feel the impact of several challenges to our business in the first quarter, we were encouraged by the early results of the measures we put in place to address the issues, including launching new advertising campaigns addressing moms and kids, as well as a revitalized approach to birthdays," said Tom Leverton, Chief Executive Officer. "Our comparable venue sales performance improved each month during the quarter and we have seen that trend continue recently. Looking at March and April together, which removes the impact of calendar shifts with spring breaks and Easter, our comparable venue sales improved approximately 1% over the same nine-week period in 2017. Comparable venue sales for the first five weeks of our second quarter have increased in the mid-single digit percent range. While this is encouraging, we continue to push forward with the previously mentioned initiatives, as well as some others."
During the first quarter of 2018, Adjusted EBITDA decreased $14.0 million to $69.6 million compared to the first quarter of 2017.
Balance Sheet and Liquidity
On May 8, 2018, the Company entered into an incremental assumption agreement with certain of the revolving credit facility lenders in its senior credit facility to extend the maturity of $95.0 million of its revolving credit facility through November 16, 2020. Other revolving credit facility lenders have until 5:00 pm New York time on May 11, 2018 to elect to extend the maturity of their revolving credit facility commitments. The maturity date of any amount of the revolving credit facility that is not extended will remain February 14, 2019.
As of April 1, 2018, the Company had cash and cash equivalents of $98.7 million and $984.6 million principal outstanding on its debt, with net availability of $140.1 million on the undrawn revolving credit facility. During the first quarter of 2018, the Company made $18.6 million of capital expenditures, of which $5.3 million related to growth initiatives, $1.1 million related to IT initiatives, and $12.1 million related to maintenance capital expenditures, primarily consisting of game enhancements and general venue capital expenditures.
As of April 1, 2018, the Company's system-wide portfolio consisted of:
Conference Call Information:
The Company will host a conference call beginning at 9:00 a.m. Central Time on Wednesday, May 9, 2018. The call can be accessed by dialing (855) 743-8451 or (330) 968-0151 for international participants and conference code 6082796.
A replay of the call will be available from 12:00 p.m. Central Time on May 9, 2018 through 11:00 p.m. Central Time on May 26, 2018. The replay of the call can be accessed by dialing (800) 585-8367 or (404) 537-3406 for international participants and conference code 6082796.
For 40 years, CEC Entertainment has served as the nationally recognized leader in family dining and entertainment with both its Chuck E. Cheese's and Peter Piper Pizza venues. As America's #1 place for birthdays, Chuck E. Cheese's goal is to create positive, lifelong memories for families through fun, food, and play and is the place Where A Kid Can Be A Kid ®. Committed to providing a fun, safe environment, Chuck E. Cheese's helps protect families through industry-leading programs such as Kid Check®. As a strong advocate for its local communities, Chuck E. Cheese's has donated more than $14 million to schools through its fundraising programs and supports its new national charity partner, Boys and Girls Clubs of America. Peter Piper Pizza, with its neighborhood pizzeria feel, features dining, entertainment and carryout. The solution to 'the family night out', Peter Piper Pizza takes pride in delivering a food first, parent friendly experience that reconnects family and friends. Expanding nationally, Peter Piper Pizza recently opened locations in Oklahoma, Nevada, New Mexico, Arizona and Texas featuring an all new prototype design. As of April 1, 2018, the Company and its franchisees operated a system of 608 Chuck E. Cheese's and 148 Peter Piper Pizza venues, with locations in 47 states and 14 foreign countries and territories. For more information, visit chuckecheese.com and peterpiperpizza.com.
Dale R. Black
Investor Inquiries
EVP & CFO
CEC Entertainment, Inc.
(972) 258-4525
dblack@cecentertainment.com
Christelle Dupont
Media Inquiries
Public Relations Manager
CEC Entertainment, Inc.
(972) 258-4223
cdupont@cecentertainment.com
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements, which involve risks and uncertainties. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this press release, including statements regarding our strategy, future operations, objectives of management and expected market growth, 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 31, 2017, filed with the Securities and Exchange Commission on March 28, 2018. 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:
These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause our results to vary from expectations include, but are not limited to:
The forward-looking statements made in this press release reflect our views with respect to future events as of the date of this press release and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, undue reliance should not be placed on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this press release and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report. We anticipate that subsequent events and developments will cause our views to change. Our forward-looking statements do not reflect the potential impact of any future acquisitions, merger, dispositions, joint ventures or investments we may undertake. We qualify all of our forward-looking statements by these cautionary statements.
- financial tables follow -
CEC ENTERTAINMENT, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
(in thousands, except percentages)
Non-GAAP Financial Measures
Certain financial measures presented in this press release, such as Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") and Adjusted EBITDA as a percentage of revenues ("Adjusted EBITDA Margin") are not recognized terms under accounting principles generally accepted in the United States ("GAAP"). The Company's management believes that the presentation of these measures is appropriate to provide useful information to investors regarding its operating performance and its capacity to incur and service debt and fund capital expenditures. Further, the Company believes that Adjusted EBITDA is used by many investors, analysts and rating agencies as a measure of performance. The Company also presents Adjusted EBITDA because it is substantially similar to Credit Agreement EBITDA, a measure used in calculating financial ratios and other calculations under our debt agreements, except for (i) adding back the change in deferred amusement revenue, and (ii) excluding the annualized full year effect of Company-operated and franchised venues that were opened and closed during the year. By reporting Adjusted EBITDA, the Company provides a basis for comparison of its business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.
The Company's definition of Adjusted EBITDA allows for the exclusion of certain non-cash and other income and expense items that are used in calculating net income from continuing operations. However, these are items that may recur, vary greatly and can be difficult to predict. They can represent the effect of long-term strategies as opposed to short-term results. In addition, certain of these items can represent the reduction of cash that could be used for other corporate purposes. These measures should not be considered as alternatives to operating income, cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance, or cash flows as measures of liquidity. These measures have important limitations as analytical tools, and users should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, the Company relies primarily on its GAAP results and uses Adjusted EBITDA and Adjusted EBITDA Margin only supplementally.
The following table sets forth a reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA Margin for the periods shown:
SOURCE CEC Entertainment, Inc.
For more than 35 years, CEC Entertainment is a family dining and entertainment franchise.