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Checkpoint Systems, Inc. Announces Second Quarter 2009 Results
Posted by: gurufocus (IP Logged)
Date: August 6, 2009 08:29AM
Press Release: Checkpoint Systems, Inc. Announces Second Quarter 2009 Results
THOROFARE, N.J.--(BUSINESS WIRE)--Checkpoint Systems, Inc. (NYSE: CKP) today reported financial results for the second quarter ended June 28, 2009.
Net revenues for the second quarter of 2009 were $181.9 million compared to net revenues for the second quarter of 2008 of $236.2 million. Net earnings attributable to Checkpoint Systems, Inc. for the second quarter of 2009 were $6.9 million, or $0.18 per diluted share, compared to net earnings attributable to Checkpoint Systems, Inc. for the second quarter of 2008 of $14.4 million, or $0.36 per diluted share. Non-GAAP net earnings attributable to Checkpoint Systems, Inc. for the second quarter of 2009 excluding restructuring expense were $7.4 million, or $0.19 per diluted share. Non-GAAP net earnings attributable to Checkpoint Systems, Inc. for the second quarter of 2008 were $11.6 million, or $0.29 per diluted share. (See accompanying Reconciliation of GAAP to Non-GAAP Financial Measures.)
“We are pleased with our second quarter results. Although the global retail markets remain a challenging environment, Checkpoint is continuing its efforts to extend its shrink management portfolio into a broader solutions proposition. Our ability to continue to take share in the highly competitive apparel labeling business, coupled with proactive global cost-reduction initiatives led to solid results for the quarter,” said Rob van der Merwe, Chairman, President and Chief Executive Officer of Checkpoint Systems.
Mr. van der Merwe concluded, “Even as the retail markets continue to lack the conviction of a near-term upward move, we continue to manage the business for the future, using our strong balance sheet and cash flows, while at the same time carefully monitoring spending. Our commitment to our stated strategy to focus on the opportunities we see in the converging fields of shrink management, merchandise tracking and visibility, and apparel labeling remains unchanged.”
Selected analysis and discussion for the second quarter of 2009:
Checkpoint also announced today that it has entered into a definitive agreement to acquire Brilliant Label Manufacturing Ltd., a China-based manufacturer of woven and printed labels. Total consideration for the acquisition of $38 million includes a cash payment of approximately $23 million and the assumption of Brilliant’s debt of approximately $15 million. Checkpoint expects the transaction to close by the end of the third quarter 2009, and to be slightly dilutive to earnings this year and accretive in 2010.
Brilliant, through its woven and printed label manufacturing facilities in Hong Kong and China, is expected to generate revenues of more than $40 million in 2010. Its customer base includes many of the world’s leading retailers and apparel manufacturers.
“With the Brilliant acquisition, Checkpoint takes a significant step to strengthen and expand its core apparel labeling offering,” said Rob van der Merwe. “Brilliant’s woven and printed label manufacturing capabilities move us closer to our previously announced strategy of becoming the recognized number two global provider of apparel labeling solutions.”
Outlook for 2009
Based on an assessment of current market conditions, Checkpoint is providing guidance for 2009. This guidance includes the Brilliant acquisition but does not include the impact of unusual charges, such as additional restructuring expense, that the Company may incur during the year, and assumes a continuation of current exchange rates.
Checkpoint Systems will host a conference call today, August 6, 2009, at 10:00 AM Eastern Time, to discuss its 2009 second quarter results. The conference call will be simultaneously broadcast live over the Internet. Listeners may access the webcast at Checkpoint Systems Web site through the Conference Calls link or Investors section of the Web site. A replay will be available following the event.
Checkpoint Systems, Inc.
Checkpoint Systems is a global leader in shrink management, merchandise visibility and apparel labeling solutions. Checkpoint enables retailers and their suppliers to reduce shrink, improve shelf availability and leverage real-time data to achieve operational excellence. Checkpoint solutions are built upon 40 years of RF technology expertise, diverse shrink management offerings, a broad portfolio of apparel labeling solutions, market-leading RFID applications, innovative high-theft solutions and its Web-based Check-Net data management platform. As a result, Checkpoint customers enjoy increased sales and profits by improving supply-chain efficiencies, by facilitating on-demand label printing and by providing a secure open-merchandising environment enhancing the consumer’s shopping experience. For more information, visit Checkpoint Systems.
Caution Regarding Forward-Looking Statements
This press release includes information that constitutes forward-looking statements. Forward-looking statements often address our expected future business and financial performance, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” or “will.” By their nature, forward-looking statements address matters that are subject to risks and uncertainties. Any such forward-looking statements may involve risk and uncertainties that could cause actual results to differ materially from any future results encompassed within the forward-looking statements. Factors that could cause or contribute to such differences include: our ability to integrate our acquisitions and to achieve our financial and operational goals for our acquisitions; changes in international business conditions; foreign currency exchange rate and interest rate fluctuations; lower than anticipated demand by retailers and other customers for our products; slower commitments of retail customers to chain-wide installations and/or source tagging adoption or expansion; possible increases in per unit product manufacturing costs due to less than full utilization of manufacturing capacity as a result of slowing economic conditions or other factors; our ability to provide and market innovative and cost-effective products; the development of new competitive technologies; our ability to maintain our intellectual property; competitive pricing pressures causing profit erosion; the availability and pricing of component parts and raw materials; possible increases in the payment time for receivables as a result of economic conditions or other market factors; changes in regulations or standards applicable to our products; the ability to implement cost reduction in field service, sales, and general and administrative expense, and our manufacturing and supply chain operations without significantly impacting revenue and profits; our ability to maintain effective internal control over financial reporting; and additional matters disclosed in our Securities and Exchange Commission filings. We do not undertake to update our forward-looking statements, except as required by applicable securities laws.
Reconciliation of Non-GAAP Financial Measures in Accordance with SEC Regulation G
Checkpoint Systems, Inc. reports financial results in accordance with U.S. GAAP and herein provides some Non-GAAP measures. These Non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. These Non-GAAP measures are intended to supplement the Company\'s presentation of its financial results that are prepared in accordance with GAAP. The Company uses the Non-GAAP measures presented to evaluate and manage the Company\'s operations internally. The Company is also providing this information to assist investors in performing additional financial analysis that is consistent with financial models developed by research analysts who follow the Company.
Set forth below is a reconciliation of the Non-GAAP financial measures used in this release to the most directly comparable measures based on GAAP.