California Pizza Kitchen Announces Financial Results for the Third Quarter 2009
LOS ANGELES--(BUSINESS WIRE)-- California Pizza Kitchen, Inc. (Nasdaq: CPKI) today reported revenues and net income for the third quarter ended September 27, 2009.
Highlights for the third quarter of 2009 relative to the same quarter a year ago were as follows:
- Total revenues decreased 5.3% to $164.8 million
- Full service comparable restaurant sales decreased 8.0%
- Net income increased 16.8% to $5.8 million
- Earnings per diluted share increased 20% to $0.24
Outstanding debt of $37.0 million, a $13.0 million reduction from the second quarter of 2009 Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, Inc., stated, "Our ability to drive bottom-line results in the current environment was largely due to the sustainable operating efficiencies we realized throughout 2009. To complement this success, we have launched several revenue and traffic building initiatives in the fourth quarter in addition to yesterday's new menu introduction. These initiatives include our sales productivity report, take-out call center, catering program and an expanded wine program. These efforts are in line with our strategy which we believe will enhance our brand equity, maximize financial performance and build shareholder value over the long run."
Average weekly sales for the Company's 198 full service restaurants were $60,945 in the third quarter of 2009 compared to $66,718 for the same quarter last year.
During the third quarter of 2009, the Company added one full service restaurant in Cherry Hill, New Jersey. In addition, one of the Company's franchise partners launched the first California Pizza Kitchen on a college campus, opening a fast-casual location at Hofstra University in Hempstead, New York.
The Company also outlined its financial guidance for the fourth quarter of 2009 based on the following assumptions:
- Comparable restaurant sales between negative 5.5% and negative 6.5%
- Opening one international full service franchise restaurant
- Earnings estimated in the range of $0.16-$0.18 per diluted share
In 2010, the Company anticipates opening eight full service restaurants, while franchise partners are expected to open eight international and two domestic franchise locations.
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 $14.30. As of November 5, 2009 the Company operates, licenses or franchises 256 locations, of which 208 are company-owned and 48 operate under franchise or license agreements. The Company also has a licensing agreement with Kraft Pizza Company which manufactures and distributes a variety of California Pizza Kitchen premium frozen products.
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," "guidance" 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 deteriorating economic conditions, revenue from third party licensees and franchisees, changing consumer preferences and demands, the continued availability of qualified employees and our management team, the maintenance of reasonable food and supply costs, our exposure to the California market 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 27, September 28, September 27, September 28,
2009 2008 2009 2008
Statement of Income:
Revenues:
Restaurant sales $ 161,156 $ 170,816 $ 487,860 $ 507,356
Royalties from Kraft licensing agreement 2,501 1,850 5,425 4,248
Domestic franchise revenues 714 721 2,039 2,120
International franchise revenues 468 571 1,515 1,579
Total revenues 164,839 173,958 496,839 515,303
Costs and expenses:
Food, beverage and paper supplies 37,009 42,396 115,094 125,551
Labor (1) 60,929 62,557 184,608 188,833
Direct operating and occupancy 35,819 36,140 106,633 103,451
Cost of sales 133,757 141,093 406,335 417,835
General and administrative (2) 12,617 13,314 38,725 39,441
Depreciation and amortization 10,060 11,044 28,726 32,475
Pre-opening costs 243 1,085 1,944 3,712
Store closure costs 185 - 185 839
Total costs and expenses 156,862 166,536 475,915 494,302
Operating income 7,977 7,422 20,924 21,001
Interest expense, net (166 ) (447 ) (663 ) (769 )
Income before income tax provision 7,811 6,975 20,261 20,232
Income tax provision 2,020 2,015 5,780 6,257
Net income $ 5,791 $ 4,960 $ 14,481 $ 13,975
Net income per common share:
Basic $ 0.24 $ 0.20 $ 0.60 $ 0.55
Diluted $ 0.24 $ 0.20 $ 0.60 $ 0.54
Shares used in computing net income per common share (in thousands):
Basic 24,123 24,603 24,029 25,572
Diluted 24,286 24,679 24,098 25,660
Operating Data:
Locations open at end of period 255 249 255 249
Company-owned full service restaurants open at
end of period 197 194 197 194
Average weekly company-owned full service
restaurant sales $ 60,945 $ 66,718 $ 62,141 $ 66,998
18-month comparable company-owned
full service restaurant sales decrease -8.0 % -2.4 % -6.9 % -0.2 %
(1) Labor expense for the three and nine months ended September 27, 2009
includes approximately $0.1 million and $0.4 million of stock-based
compensation, respectively, compared to $0.2 million and $0.6
million in the three and nine months ended September 28, 2008,
respectively.
(2) General and administrative expense for the three and nine months
ended September 27, 2009 includes approximately $1.5 million and
$4.7 million of stock-based compensation, respectively, compared to
$1.6 million and $4.6 million in the three and nine months ended
September 28, 2008,respectively.
Quarter Ended Nine Months Ended
September 27, September 28, September 27, September 28,
2009 2008 2009 2008
Statement of Income Percentages (1):
Revenues:
Restaurant sales 97.8 % 98.2 % 98.2 % 98.5 %
Royalties from Kraft licensing agreement 1.5 % 1.1 % 1.1 % 0.8 %
Domestic franchise revenues 0.4 % 0.4 % 0.4 % 0.4 %
International franchise revenues 0.3 % 0.3 % 0.3 % 0.3 %
Total revenues 100.0 % 100.0 % 100.0 % 100.0 %
Costs and expenses:
Food, beverage and paper supplies 23.0 % 24.8 % 23.6 % 24.7 %
Labor (2) 37.8 % 36.6 % 37.8 % 37.2 %
Direct operating and occupancy 22.2 % 21.2 % 21.9 % 20.4 %
Cost of sales 83.0 % 82.6 % 83.3 % 82.4 %
General and administrative (3) 7.7 % 7.7 % 7.8 % 7.7 %
Depreciation and amortization 6.1 % 6.3 % 5.8 % 6.3 %
Pre-opening costs 0.1 % 0.6 % 0.4 % 0.7 %
Store closure costs 0.1 % 0.0 % 0.0 % 0.2 %
Total costs and expenses 95.2 % 95.7 % 95.8 % 95.9 %
Operating income 4.8 % 4.3 % 4.2 % 4.1 %
Interest expense, net -0.1 % -0.3 % -0.1 % -0.2 %
Income before income tax provision 4.7 % 4.0 % 4.1 % 3.9 %
Income tax provision 1.2 % 1.1 % 1.2 % 1.2 %
Net income 3.5 % 2.9 % 2.9 % 2.7 %
(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 27, 2009 and the three and nine months
ended September 28, 2008.
(3) General and administrative percentage includes approximately 90
basis points attributable to stock-based compensation in the three
and nine months ended September 27, 2009 and the three and nine
months ended September 28, 2008.
Selected Consolidated Balance Sheet Information
(Dollars in thousands)
Selected Consolidated Balance September 27, December 28,
Sheet Information 2009 2008
Cash and cash equivalents $ 14,345 $ 14,392
Total assets 351,486 368,413
Total debt 37,000 74,000
Stockholders' equity 197,466 174,532
California Pizza Kitchen, Inc.
Units Summary
Total Units at Total Units at
Third Quarter 2009 June 28, 2009 Opened Acquired Closed September 27, 2009
Company-owned full service domestic 197 1 - 1 197
Company-owned ASAP domestic 9 - - - 9
Company-owned LA Food Show 2 - - - 2
Franchised domestic 18 1 - 1 18
Franchised international 27 - - - 27
Sports and entertainment venues 2 - - - 2
Total 255 2 - 2 255
Source: California Pizza Kitchen, Inc.
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