California Pizza Kitchen Announces Financial Results for the Third Quarter of 2008
LOS ANGELES--(BUSINESS WIRE)--California Pizza Kitchen, Inc. (Nasdaq:CPKI) today reported revenues and net income for the third quarter ended September 28, 2008.
Highlights for the third quarter of 2008 relative to the same quarter a year ago were as follows:
- Total revenues grew approximately 7.4% to $174.0 million
- Comparable restaurant sales decreased 2.4%
- Net income of $5.0 million, or $0.20 per diluted share
Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, Inc., stated, "Given the state of the economy, we were very gratified to have delivered third quarter earnings at the high end of our expected range. Our performance was even more noteworthy given the adverse Fourth of July calendar shift and the consumer distractions during the quarter, including the Olympics, the political conventions, and Hurricanes Ike and Gustav. We estimate these events negatively affected comparable sales by approximately 1.0%." Rosenfield and Flax continued, "As we look to the fourth quarter, our sales trends reflect a continued weak economic environment that we anticipate will continue to impact consumer sentiment and spending behavior. Despite these challenges, we will continue to focus resources on menu innovation, guest satisfaction, growing revenue and maximizing operational efficiency. Additionally, we will nurture and drive our high-margin ancillary revenue streams as we work with new and existing franchise partners and Kraft which creates tremendous value for shareholders."
Rosenfield and Flax concluded, "Considering the continued pressures in credit markets, we are pleased to have secured five-year financing in May of this year through May of 2013 with terms far more favorable than would be available today. Prudent balance sheet management is of prime importance to us, and we are comfortably within our debt covenants. We are a strong Company with a formidable brand and consider ourselves ideally positioned when the economy turns."
Average weekly sales for the Company's 194 full service restaurants were $66,718 in the third quarter of 2008 compared to $68,972 for the same quarter last year.
During the third quarter, the Company added four full service restaurants in Novi, Michigan; Albuquerque, New Mexico; Baton Rouge, Louisiana and Roseville, California. In addition, the Company's international franchise partners Iris Co. Ltd., Grupo Calpik and WDI Corporation each added one full service restaurant in Seoul, South Korea; Mexico City, Mexico and Tumon Bay, Guam, respectively.
The Company also outlined its financial guidance for the full year 2008 based on the following assumptions:
- Comparable restaurant sales of approximately negative 2%
- Opening 12 full service restaurants
- Opening eight international full service franchise restaurants
- Opening two domestic CPK/ASAP franchise restaurants
- Opening one LA Food Show restaurant
- Earnings per diluted share of approximately $0.60-$0.63
The Company will host a conference call today at approximately 4:30 pm ET. A webcast of the conference call can be accessed at www.cpk.com.
California Pizza Kitchen, Inc., founded in 1985, is a leading casual dining chain. The Company's full service restaurants feature an imaginative line of hearth-baked pizzas, including the original BBQ Chicken Pizza, and a broad selection of distinctive pastas, salads, soups, appetizers and sandwiches. The average guest check is approximately $13.95. As of November 6, 2008, the company operates, licenses or franchises 251 locations, of which 205 are company-owned and 46 operate under franchise or license agreements. The Company also has a licensing agreement with Kraft Pizza Company which manufactures and distributes a line of California Pizza Kitchen premium frozen pizzas.
Information about California Pizza Kitchen, Inc. can be found on the Company's website at www.cpk.com.
This release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include projections of earnings, revenue or other financial items, statements of the plans, strategies and objectives of management for future operations, statements concerning proposed new products or developments, statements regarding future economic conditions or performance, statements of belief and statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "anticipate" and similar words.
Investors are cautioned that forward-looking statements are not guarantees of future performance and, therefore, undue reliance should not be placed on them. Our actual results may and will likely differ materially from the expectations referred to herein. Among the key factors that may have a direct bearing on our operating results, performance and financial condition are changing consumer preferences and demands, the execution of our expansion strategy, the continued availability of qualified employees and our management team, the maintenance of reasonable food and supply costs, our relationships with our distributors and numerous other matters discussed in the Company's filings with the Securities and Exchange Commission. California Pizza Kitchen undertakes no obligation to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
Selected Unaudited Consolidated Financial and Operating Data
(Dollars in thousands, except for per share and operating data)
Quarter Ended Nine Months Ended
September September September September
28, 30, 28, 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Statement of Income:
Revenues:
Restaurant sales $170,816 $159,665 $507,356 $464,101
Royalties from Kraft
licensing agreement 1,850 1,264 4,248 3,050
Domestic franchise revenues 721 668 2,120 1,854
International franchise
revenues 571 407 1,579 947
--------- --------- --------- ---------
Total revenues 173,958 162,004 515,303 469,952
Costs and expenses:
Food, beverage and paper
supplies 42,396 39,051 125,551 113,853
Labor (1) 62,557 57,463 188,833 170,574
Direct operating and
occupancy 36,140 31,273 103,451 90,741
--------- --------- --------- ---------
Cost of sales 141,093 127,787 417,835 375,168
General and administrative
(2) 13,314 11,831 39,441 36,828
Depreciation and amortization 11,044 9,418 32,475 26,981
Pre-opening costs 1,085 2,356 3,712 4,558
Store closure costs - 8,500 839 9,269
--------- --------- --------- ---------
Total costs and expenses 166,536 159,892 494,302 452,804
Operating income 7,422 2,112 21,001 17,148
Other (expense) income:
Interest (expense) income,
net (447) (42) (769) 137
--------- --------- --------- ---------
Total other (expense) income (447) (42) (769) 137
--------- --------- --------- ---------
Income before income tax
provision 6,975 2,070 20,232 17,285
Income tax provision 2,015 666 6,257 5,964
--------- --------- --------- ---------
Net income $ 4,960 $ 1,404 $ 13,975 $ 11,321
========= ========= ========= =========
Net income per common share:
Basic $ 0.20 $ 0.05 $ 0.55 $ 0.39
Diluted $ 0.20 $ 0.05 $ 0.54 $ 0.38
Shares used in computing net
income per common share (in
thousands) (3):
Basic 24,603 28,591 25,572 28,974
Diluted 24,679 29,191 25,660 29,889
Operating Data:
Locations open at end of
period 249 220 249 220
Company-owned full service
restaurants open at end of
period 194 176 194 176
Average weekly company-owned
full service restaurant sales $ 66,718 $ 68,972 $ 66,998 $ 67,822
18-month comparable company-
owned restaurant sales
increase -2.4% 3.5% -0.2% 4.5%
----------------------------------------------------------------------
(1) Labor expense for the three and nine months ended September 28,
2008 includes approximately $164,000 and $566,000 of stock-based
compensation, respectively, compared to $211,000 and $631,000 in the
three and nine months ended September 30, 2007, respectively.
(2) General and administrative expense for the three and nine months
ended September 28, 2008 includes approximately $1.6 million and $4.6
million of stock-based compensation, respectively, compared to $1.3
million and $4.9 million in the three and nine months ended September
30, 2007, respectively.
Quarter Ended Nine Months Ended
September September September September
28, 30, 28, 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Statement of Income
Percentages (1):
Revenues:
Restaurant sales 98.2% 98.6% 98.5% 98.8%
Royalties from Kraft
licensing agreement 1.1% 0.8% 0.8% 0.6%
Domestic franchise revenues 0.4% 0.4% 0.4% 0.4%
International franchise
revenues 0.3% 0.2% 0.3% 0.2%
--------- --------- --------- ---------
Total revenues 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Food, beverage and paper
supplies 24.8% 24.4% 24.7% 24.4%
Labor (2) 36.6% 36.0% 37.2% 36.8%
Direct operating and
occupancy 21.2% 19.6% 20.4% 19.6%
--------- --------- --------- ---------
Cost of sales 82.6% 80.0% 82.4% 80.8%
General and administrative
(3) 7.7% 7.3% 7.7% 7.8%
Depreciation and amortization 6.3% 5.8% 6.3% 5.7%
Pre-opening costs 0.6% 1.5% 0.7% 1.0%
Store closure costs 0.0% 5.2% 0.2% 2.0%
--------- --------- --------- ---------
Total costs and expenses 95.7% 98.7% 95.9% 96.4%
Operating income 4.3% 1.3% 4.1% 3.6%
Other (expense) income:
Interest (expense) income,
net -0.3% 0.0% -0.2% 0.0%
--------- --------- --------- ---------
Total other (expense) income -0.3% 0.0% -0.2% 0.0%
--------- --------- --------- ---------
Income before income tax
provision 4.0% 1.3% 3.9% 3.7%
Income tax provision 1.1% 0.4% 1.2% 1.3%
--------- --------- --------- ---------
Net income 2.9% 0.9% 2.7% 2.4%
========= ========= ========= =========
(1) Percentages are expressed as a percentage of total revenues,
except for cost of sales which is expressed as a percentage of
restaurant sales.
(2) Labor percentage includes approximately 10 basis points
attributable to stock-based compensation in both the three and nine
months ended September 28, 2008 and the three and nine months ended
September 30, 2007.
(3) General and administrative percentage includes approximately 90
basis points attributable to stock-based compensation in each of the
three and nine months ended September 28, 2008, compared to 80 and
100 basis points in the three and nine months ended September 30,
2007, respectively.
Selected Consolidated Balance Sheet Information
(Dollars in thousands)
Selected Consolidated Balance Sheet Information September December
28, 30,
2008 2007
--------- --------
Cash and cash equivalents $ 15,626 $ 10,795
Total assets 381,404 367,128
Total debt 63,000 21,000
Stockholders' equity 184,326 218,137
California Pizza Kitchen, Inc.
Units Summary
Total Units at Total Units at
-------------- --------------
Third Quarter June 29, September 28,
2008 2008 Opened Acquired Closed 2008
-------------- ------ --------------- --------------
Company-owned
full service
domestic 190 4 - - 194
Company-owned
ASAP domestic 9 - - - 9
Company-owned LA
Food Show 1 - - - 1
Franchised
domestic 17 - - - 17
Franchised
international 22 3 - - 25
Sports and
entertainment
venues 3 - - - 3
----------------------------------------------------
Total 242 7 - - 249
====================================================
CONTACT: California Pizza Kitchen
Media: Sarah Grover
Investors: Sue Collyns
310-342-5000
SOURCE: California Pizza Kitchen, Inc.
###
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