News

Chuck E. Cheese parent reports troubling Q4 financial results

March 28, 2018

Chuck E. Cheese parent, CEC Entertainment, Inc. today reported dismal Q4 2017 results, which leadership said the executive team is already addressing. Highlights included: 

• Company venue sales down $7.2 million from Q4 2016.
• Comparable venue sales down 6 percent. 
• Deferred amusement revenue down $3.4 million from Q4 2016.
• Cash revenue from company-operated venues down $10.6 million from last year Q4. 
• Total revenues dropped from $204.6 million in Q4 2016 to $196.7 million for the same period this year. 

Net income for Q4 2017 was $52.9 million compared to a net loss of $10.1 million for the same period last year, thanks largely to a $66.6 million adjustment to the company's deferred income tax liability related due to tax law changes. Before the impact of this adjustment, Q4 2017 net loss was $13.7 million, due largely to revenue declines and higher marketing costs. 

"There were several factors which impacted our business in 2017, which our team is addressing diligently," CEO Tom Leverton, said in the release. "We have put several measures in place to address these challenges, including launching new advertising campaigns addressing moms and kids, as well as a revitalized approach to birthdays. Additionally, we have identified several improvements to our website and digital marketing platform. 

"While our primary focus has been on revenue, we recently implemented several changes in our corporate support structure to better align with our recent performance. We are optimistic that these combined revenue and cost initiatives should have a positive impact on our revenues and operating results in future periods."

During the fourth quarter of 2017, adjusted EBITDA decreased $11.4 million to $25.5 million compared to the fourth quarter of 2016. As of Dec. 31, 2017, cash and cash equivalents were $67.2 million, and the principal outstanding on debt was $986.5 million, with net availability of $140.1 million on the company's undrawn revolving credit facility. 

During the fourth quarter of 2017, capital expenditures were $19.6 million, of which $8.1 million related to growth initiatives, $1.9 million related to IT initiatives and $9.6 million related to maintenance capital expenditures. The expenditures were largely made to enhance games and for general venue capital expenditures, according to the release.