ST. LOUIS, June 8 /PRNewswire-FirstCall/ -- CPI Corp.
(NYSE: CPY) today reported results for the fiscal 2010 first
quarter ended May 1, 2010.
- First-quarter net sales in fiscal 2010 increased 2% to
$95.5 million from $93.5 million for the prior-year first quarter,
principally as the result of favorable changes in net revenue
recognition and foreign currency translation.
- Fiscal 2010 first-quarter comparable same-store sales,
described herein, decreased 2% versus the prior-year first
quarter.
- First-quarter PictureMe Portrait Studio® brand comparable
store sales increased 4% quarter-over quarter.
- First-quarter Sears Portrait Studio brand comparable store
sales decreased 9% quarter-over-quarter.
- First-quarter Adjusted EBITDA in fiscal 2010 improved to
$15.3 million versus $11.3 million in the prior-year first quarter.
- First-quarter diluted EPS improved to $0.91 per share in fiscal 2010 versus
$0.34 per share in the prior-year
first quarter.
"Our strong first quarter earnings performance is testament to
the Company's progress in stabilizing the top-line while continuing
to drive strong productivity gains and cost reductions across the
organization," said Renato Cataldo,
president and chief executive officer. "We are on track for
substantial earnings gains in 2010 and believe we can drive
positive sales comparisons by the end of the year. We also
continue to expect the Kiddie Kandids operations to be strongly
accretive to earnings and have made good progress on our store
rollout opening 123 locations as of June
7, 2010."
Net sales for the first quarter of fiscal 2010 increased 2%, to
$95.5 million from the $93.5 million reported in the fiscal 2009 first
quarter. Excluding the negative impact of store closures
($2.3 million) and the positive
impacts of a net revenue recognition change ($3.1 million), foreign currency translation
($2.2 million), and other items
totaling $1.1 million, comparable
same-store sales decreased approximately 2%.
The Company also reported net income of $6.5 million, or $0.91 per diluted share, for the fiscal 2010
first quarter, compared with $2.3
million, or $0.34 per diluted
share, reported for the first quarter of fiscal 2009. The
improvement in net income year-over-year reflects the impact of
cost reductions and productivity improvements implemented
throughout the organization as well as a favorable change in net
revenue recognition due to the acceleration of lab shipping
schedules in the first quarter of 2010. The favorable
recognition in the first quarter of 2010 positively affected net
earnings by approximately $0.21 per
diluted share and will result in a corresponding unfavorable
adjustment to net income in the second quarter of 2010.
Foreign currency translation effects did not have a material
impact on net earnings. The Kiddie Kandids studio operations
did not have a material impact to the Company's earnings in the
first quarter of 2010. First-quarter Adjusted EBITDA
increased to $15.3 million versus
$11.3 million in the prior-year
comparable period.
Net sales from the Company's PictureMe Portrait Studio® (PMPS)
brand, on a comparable same-store basis, excluding impacts of store
closures, net revenue recognition change, foreign currency
translation and other items totaling ($2.2
million), increased 4% in the first quarter of 2010 to
$53.2 million from $51.3 million in the first quarter of 2009.
The increase in PMPS sales performance for the first quarter
was the result of an 8% increase in average sale per customer
sitting, offset in part by an approximate 4% decrease in the number
of sittings.
Net sales from the Company's Sears Portrait Studio (SPS) brand,
on a comparable same-store basis, excluding impacts of store
closures, net revenue recognition change, foreign currency
translation and other items totaling ($1.9
million), decreased 9% in the first quarter of 2010 to
$41.2 million from $45.3 million in the first quarter of
2009. SPS sales performance for the first quarter was
the result of a decline of approximately 9% in the number of
sittings and a flat average sale per customer sitting versus the
prior year quarter.
Cost of sales, excluding depreciation and amortization expense,
declined to $6.5 million in the first
quarter of 2010, from $7.0 million in
the first quarter of 2009. The decrease
is principally attributable to improved product mix and
increased productivity from lab consolidations.
Selling, general and administrative (SG&A) expense declined
to $73.8 million in the first quarter
from $75.1 million in the prior-year
quarter primarily due to reductions in studio employment costs from
improved scheduling and selected operating hour reductions, offset
in part by increases in incentive compensation and host commission
expenses.
Depreciation and amortization expense was $4.5 million in the first quarter of 2010,
compared with $6.0 million in the
first quarter of 2009. Depreciation expense decreased as a
result of the full depreciation of certain assets acquired in
connection with the 2005 digital conversion of SPS and 2007
acquisition of PCA and the closure of certain PMPS locations
throughout fiscal 2009.
In the first quarter of 2010, the Company recognized a
$296,000 charge for other charges and
impairments, compared with a $420,000
charge in the first quarter of 2009. The charges are
primarily related to lab closures and costs incurred in connection
with the Kiddie Kandids asset acquisition.
Capital Structure
On June 3, 2010, the Company's
Brampton, Ontario facility was
sold for $2.5 million, of which
$1.9 million has been received and
was immediately used to pay down outstanding long-term debt in
connection with certain mandatory prepayment requirements under its
Credit Agreement. The remaining balance will be used to pay
down outstanding long-term debt when certain tax clearances have
been achieved. As of June 7,
2010, the Company has $65.0
million of total debt outstanding and approximately
$12.8 million of cash and cash
equivalents.
Preliminary Second Quarter Net Sales
The Company's preliminary net sales for the first five weeks of
the second quarter of fiscal 2010, on a comparable same-store
point-of-sale basis, excluding the impacts of foreign currency
translation, declined 7% compared with the corresponding period in
the prior year. PMPS and SPS net sales for the first five
weeks of the second quarter were -4% and -10%, respectively.
Conference Call/Webcast Information
The Company will host a conference call and audio webcast on
Tuesday, June 8, 2010, at
10:00 a.m. Central time to discuss
the financial results and provide a Company update. To
participate on the call, please dial 866-202-3048 or 617-213-8843
and reference passcode 81901077 at least five minutes before start
time.
The webcast can be accessed on the Company's own site at
http://www.cpicorp.com as well as http://www.earnings.com. To
listen to a live broadcast, please go to these websites at least 15
minutes prior to the scheduled start time in order to register,
download, and install any necessary audio software. A replay
will be available on the above websites as well as by dialing
888-286-8010 or 617-801-6888 and providing passcode 34126871.
The replay will be available through June 22 by phone and for 30 days on the Internet.
CPI Corp. uses the Investor Relations page of its website at
http://www.cpicorp.com to make information available to its
investors and the public. You can sign up to receive e-mail
alerts whenever the Company posts new information to the
website.
About CPI Corp.
For more than 60 years, CPI Corp. (NYSE: CPY) has been dedicated
to helping customers conveniently create cherished photography
portrait keepsakes that capture a lifetime of memories.
Headquartered in St. Louis,
Missouri, CPI Corp. provides portrait photography services
at approximately 3,000 locations in North
America, principally in Sears, Walmart and Babies "R" Us
stores. CPI's conversion to a fully digital format allows its
studios to offer unique posing options, creative photography
selections, a wide variety of sizes and an unparalleled assortment
of enhancements to customize each portrait – all for an affordable
price.
Forward-Looking Statements
The statements contained in this press release that are not
historical facts are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, and
involve risks and uncertainties. The Company identifies
forward-looking statements by using words such as "preliminary,"
"plan," "expect," "looking ahead," "anticipate," "estimate,"
"believe," "should," "intend" and other similar expressions.
Management wishes to caution the reader that these
forward-looking statements, such as the Company's outlook for
portrait studios, net income, future cash requirements, cost
savings, compliance with debt covenants, valuation allowances,
reserves for charges and impairments and capital expenditures, are
only predictions or expectations; actual events or results may
differ materially as a result of risks facing the Company.
Such risks include, but are not limited to: the Company's
dependence on Sears, Walmart and Toys "R" Us, the approval of the
Company's business practices and operations by Sears, Walmart and
Toys "R" Us, the termination, breach, limitation or increase of the
Company's expenses by Sears and Toys "R" Us under the license
agreements, or Walmart under the lease and license agreements,
customer demand for the Company's products and services, the
economic recession and resulting decrease in consumer spending,
manufacturing interruptions, dependence on certain suppliers,
competition, dependence on key personnel, fluctuations in operating
results, a significant increase in piracy of the Company's
photographs, widespread equipment failure, compliance with debt
covenants, high level of indebtedness, implementation of marketing
and operating strategies, outcome of litigation and other claims,
impact of declines in global equity markets to pension plan and
impact of foreign currency translation. The risks described
above do not include events that the Company does not currently
anticipate or that it currently deems immaterial, which may also
affect its results of operations and financial condition. The
Company undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
CPI
CORP.
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(In
thousands except per share amounts)
|
|
|
|
|
|
|
|
|
|
12
Weeks
|
Vs.
|
12
Weeks
|
|
|
|
|
|
|
|
May 1,
2010
|
|
May 2,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
95,498
|
|
$
93,467
|
|
|
|
|
|
|
Cost and
expenses:
|
|
|
|
|
Cost
of sales (exclusive of depreciation and
|
|
|
|
|
amortization shown below)
|
6,522
|
|
7,005
|
|
Selling,
general and administrative expenses
|
73,821
|
|
75,107
|
|
Depreciation
and amortization
|
4,465
|
|
6,039
|
|
Other
charges and impairments
|
296
|
|
420
|
|
|
85,104
|
|
88,571
|
|
|
|
|
|
|
Income
from operations
|
10,394
|
|
4,896
|
|
|
|
|
|
|
Interest
expense
|
1,321
|
|
1,491
|
|
|
|
|
|
|
Interest
income
|
68
|
|
122
|
|
|
|
|
|
|
Other
income, net
|
710
|
|
9
|
|
|
|
|
|
|
Income
before income tax provision
|
9,851
|
|
3,536
|
|
|
|
|
|
|
Income
tax provision
|
3,311
|
|
1,207
|
|
|
|
|
|
|
Net
income
|
$
6,540
|
|
$
2,329
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per common share - diluted
|
$
0.91
|
|
$
0.34
|
|
|
|
|
|
|
Net
income per common share - basic
|
$
0.91
|
|
$
0.34
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common and
|
|
|
|
|
common
equivalent shares outstanding:
|
|
|
|
|
Diluted
|
7,176
|
|
6,949
|
|
|
|
|
|
|
Basic
|
7,169
|
|
6,949
|
|
|
|
|
|
CPI
CORP.
|
|
ADDITIONAL
CONSOLIDATED OPERATING INFORMATION
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
12
Weeks
|
Vs.
|
12
Weeks
|
|
|
|
|
|
|
|
May 1,
2010
|
|
May 2,
2009
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$
4,791
|
|
$
907
|
|
|
|
|
|
|
EBITDA
is calculated as follows:
|
|
|
|
|
Net
income
|
$
6,540
|
|
$
2,329
|
|
Income
tax provision
|
3,311
|
|
1,207
|
|
Interest
expense
|
1,321
|
|
1,491
|
|
Depreciation
and amortization
|
4,465
|
|
6,039
|
|
Other
non-cash charges
|
80
|
|
73
|
|
|
|
|
|
|
EBITDA
(1) & (5)
|
$
15,717
|
|
$
11,139
|
|
|
|
|
|
|
Adjusted
EBITDA (2)
|
$
15,313
|
|
$
11,330
|
|
|
|
|
|
|
EBITDA
margin (3)
|
16.46%
|
|
11.92%
|
|
|
|
|
|
|
Adjusted
EBITDA margin (4)
|
16.03%
|
|
12.12%
|
|
|
|
|
|
|
|
|
|
|
|
(1)
EBITDA represents net earnings from continuing operations before
interest expense, income taxes, depreciation and amortization and
other non-cash charges. EBITDA is included because it is one
liquidity measure used by certain investors to determine a
company's ability to service its indebtedness. EBITDA is
unaffected by the debt and equity structure of the company. EBITDA
does not represent cash flow from operations as defined by GAAP, is
not necessarily indicative of cash available to fund all cash flow
needs and should not be considered an alternative to net income
under GAAP for purposes of evaluating the Company's results of
operations. EBITDA is not necessarily comparable with
similarly-titled measures for other companies.
|
|
|
|
|
|
|
|
|
|
|
|
(2)
Adjusted EBITDA is calculated as follows:
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$
15,717
|
|
$
11,139
|
|
EBITDA adjustments:
|
|
|
|
|
Kiddie Kandids costs
|
200
|
|
0
|
|
Other transition related costs - PCA
Acquisition
|
87
|
|
136
|
|
Translation gain
|
(705)
|
|
-
|
|
Reserves for severance and related costs
|
-
|
|
178
|
|
Other
|
14
|
|
(123)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
15,313
|
|
$
11,330
|
|
|
|
|
|
|
(3)
EBITDA margin represents EBITDA, as defined in (1), stated as a
percentage of sales.
|
|
|
|
|
|
|
(4)
Adjusted EBITDA margin represents Adjusted EBITDA, as defined in
(2), stated as a percentage of sales.
|
|
|
|
|
|
|
(5) As
required by the SEC's Regulation G, a reconciliation of EBITDA, a
non-GAAP liquidity measure, with the
|
|
most directly comparable GAAP liquidity measure, cash flow
from continuing operations follows:
|
|
|
|
|
|
|
|
12
Weeks
|
Vs.
|
12
Weeks
|
|
|
|
|
|
|
|
May 1,
2010
|
|
May 2,
2009
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$
15,717
|
|
$
11,139
|
|
Income
tax provision
|
(3,311)
|
|
(1,207)
|
|
Interest
expense
|
(1,321)
|
|
(1,491)
|
|
Adjustments
for items not requiring cash:
|
|
|
|
|
Deferred income taxes
|
2,334
|
|
1,375
|
|
Deferred revenues and related costs
|
606
|
|
3,627
|
|
Other, net
|
657
|
|
(351)
|
|
Decrease
(increase) in current assets
|
(598)
|
|
(2,795)
|
|
Increase
(decrease) in current liabilities
|
(2,985)
|
|
(4,155)
|
|
Increase
(decrease) in current income taxes
|
755
|
|
(154)
|
|
|
|
|
|
|
Cash
flows from continuing operations
|
$
11,854
|
|
$
5,988
|
|
|
|
|
|
CPI
CORP.
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
MAY 1,
2010 AND MAY 2, 2009
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
May 1,
2010
|
|
May 2,
2009
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash equivalents
|
$
13,674
|
|
$
26,839
|
|
Other current assets
|
33,798
|
|
41,766
|
|
Net
property and equipment
|
34,159
|
|
46,026
|
|
Intangible
assets
|
60,583
|
|
61,374
|
|
Other
assets
|
|
17,800
|
|
17,767
|
|
|
|
|
|
|
|
Total assets
|
|
$
160,014
|
|
$
193,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
$
53,221
|
|
$
64,427
|
|
Long-term
debt obligations
|
54,306
|
|
95,440
|
|
Other
liabilities
|
35,268
|
|
30,543
|
|
Stockholders'
equity
|
17,219
|
|
3,362
|
|
|
|
|
|
|
|
Total liabilities and stockholders'
|
|
|
|
|
equity
|
|
$
160,014
|
|
$
193,772
|
|
|
|
|
|
|
SOURCE CPI Corp.