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CEC Entertainment Inc., the parent company of Chuck E. Cheese, has announced its financial results for the third quarter ended October 3, 2010.
Third quarter 2010 same-store sales increased 3.8 percent. Meanwhile, comps for the first 39 weeks of the year reportedly increased 0.8 percent. For the year, the company is projecting a comps increase of 2.0 percent to 3.0 percent.
Total quarterly revenues increased 4.7 percent to $207.1 million during the third quarter of 2010, up from total quarterly revenues of $197.8 million in the third quarter of 2009. For the first 39 weeks of FY 2010, revenues have been reported at $634.5 million, a 0.6 percent increase compared to total revenues of $630.7 million in the first nine months of 2009.
Despite the increase in total quarterly revenues and same-store sales, net income for the third quarter of 2010 decreased slightly to $12.6 million compared to net income of $12.7 million in the third quarter of 2009. The decline reflects unfavorable items recorded during the third quarter of 2010 totaling approximately $1.1 million net of tax, or a $0.05 impact on diluted earnings per share. Diluted earnings per share increased to $0.60 for the third quarter of 2010, compared to $0.55 in the third quarter of 2009.
According to the company's earnings report, total reported revenues for the first nine months of 2010 were unfavorably impacted by one additional operating week in the company's 2009 fiscal year which caused the seasonally strong first week of the 2010 calendar year to shift into the fourth fiscal quarter of 2009 instead of in the first fiscal quarter of 2010.
Net income for the first nine months of 2010 was $51.2 million compared to net income of $55.8 million in the first nine months of 2009. Diluted earnings per share decreased to $2.38 for the first nine months of 2010, compared to $2.42 in the first nine months of 2009, and was unfavorably impacted by a $0.13 per share tax adjustment recorded during the second quarter of 2010 and the unfavorable adjustments recorded during the third quarter of 2010. Additionally, diluted earnings per share was impacted by the company's repurchase of approximately 3.7 million shares of its common stock since the beginning of the first quarter of 2009.
"Our third quarter financial performance including comparable store sales, operating margins and cash flow from operations reflects the strength of our industry-leading brand and the quality implementation of our strategies. During the first three quarters of this year we generated approximately $138 million of operating cash flow. We utilized $71 million for capital expenditures to add four additional stores and enhance 157 existing stores in the form of store expansions, major remodels and game enhancements," said Michael Magusiak, president and CEO. "Additionally, during this same time period, we repurchased 1.9 million shares of our common stock, representing approximately 9% of diluted shares outstanding, for $67 million."
Based on its current estimates, the company is projecting fourth quarter 2010 diluted earnings per share to be in a range of $0.17 to $0.19. This guidance incorporates the following assumptions for the fourth quarter of 2010:
The company also is projecting fiscal year 2011 diluted earnings per share to be in a range of $2.93 to $3.03.
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