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Checkpoint Systems Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 29, 2010 08:18AM
Checkpoint Systems Inc. (CKP) filed Quarterly Report for the period ended 2010-07-29. Checkpoint Systems Inc. has a market cap of $810.1 million; its shares were traded at around $20.52 with a P/E ratio of 19.8 and P/S ratio of 1.1. Checkpoint Systems Inc. had an annual average earning growth of 0.8% over the past 10 years.CKP is in the portfolios of Westport Asset Management, Chuck Royce of Royce& Associates, Kenneth Fisher of Fisher Asset Management, LLC, Bruce Kovner of Caxton Associates.
Highlight of Business Operations:
In August 2008, we announced a manufacturing and supply chain restructuring program designed to accelerate profitable growth in our ALS business and to support incremental improvements in our EAS systems and labels businesses. We anticipate this program to result in total restructuring charges of approximately $4 million to $5 million, or $0.10 to $0.12 per diluted share. We expect implementation of this program to be substantially complete by the end of 2010 and to result in annualized cost savings of approximately $6 million.
Shrink Management Solutions revenues increased by $14.4 million, or 11.1%, during the second quarter of 2010 compared to 2009. Foreign currency translation had a negative impact of approximately $0.5 million. The remaining revenue increase was due to growth in our EAS consumables business, Alpha business, and CheckView® business of $10.6 million, $9.3 million, and $3.7 million, respectively. The increase was partially offset by decreases in our EAS systems, RFID business, and Library business of $6.0 million, $2.2 million, and $0.5 million, respectively.
Our Alpha business revenues increased by $9.3 million during the second quarter of 2010 as compared to the second quarter of 2009. The increase was due to increases in revenues in all regions, including $5.2 million in the U.S., $2.5 million in Europe, $1.2 million in Asia, and $0.4 million in International Americas. The increase in the U.S. was primarily due to an increase in volumes with several large chain customers. The increases in Europe and Asia were the result of a general increase in demand for Alpha products as market conditions for high theft prevention products improved during the second quarter of 2010. The increase in Europe was also due to new large customer orders in the U.K. in the second quarter of 2010 with no such comparable orders during 2009. The increase in International Americas was primarily due to a new large customer order in Mexico in the second quarter of 2010 with no such comparable orders during 2009.
CheckView® revenues increased $3.7 million during the second quarter of 2010 as compared to the second quarter of 2009. The increase was primarily due to increases in revenues of $3.3 million in the U.S. and $1.5 million in International Americas, which was partially offset by a $0.9 million decrease in Asia. The growth in revenues in the U.S. was due to an increase in service revenues and an increase in our Banking business. The increase in International Americas revenues was due to a new large chain roll-out in Canada during the second quarter of 2010 with no such comparable roll-out during 2009. The decrease in Asia was the result of fewer new store openings in Japan, Australia, and Malaysia during the second quarter of 2010 compared to the second quarter of 2009. Although our quarter comparison has improved since last year, our CheckView® business is dependent on new store openings and the capital spending of our customers, all of which have been impacted, and may continue to be impacted in the future by current economic trends.
Apparel Labeling Solutions revenues increased by $13.6 million, or 39.3%, during the second quarter of 2010 as compared to the second quarter of 2009. Foreign currency translation had a negative impact of approximately $0.7 million. Apparel Labeling Solutions benefited $9.7 million during the second quarter of 2010 due to our Brilliant business which was acquired in August 2009. The remaining increase of $4.6 million was due primarily to increases in Europe and Asia as a result of higher demand from our apparel retailer customers.
Retail Merchandising Solutions (“RMS”) revenues decreased by $1.7 million, or 9.6%, during the second quarter of 2010 as compared to the second quarter of 2009. Foreign currency translation had a negative impact of approximately $0.5 million. The remaining decrease of $1.2 million in our RMS business was due to a decrease in our revenues from retail display systems (“RDS”) of $0.6 million and a decrease in revenues of hand-held labeling systems (“HLS”) of $0.6 million. RDS declined due to a general reduction of store remodel work in Europe as a result of the current economic environment. We anticipate RDS and HLS to continue to face difficult revenue trends in 2010 due to the impact of current economic conditions on the RDS business and continued shifts in market demand for HLS products.
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