California Pizza Kitchen, Inc. (Nasdaq:CPKI) today reported financial results for the first quarter ending April 3, 2011.

Highlights for the first quarter of 2011 were as follows:

  • Total revenues decreased 0.5% from prior year to $156.0 million.
  • Full-service comparable restaurant sales decreased 2.1%.
  • Supplemental gift card revenue of $0.7 million compared to $1.4 million in the prior year.
  • Net income of $2.1 million, or $0.09 per diluted share.

Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, stated, "We were pleased that first quarter earnings exceeded our previously estimated range and credit effective cost management at both the restaurant and corporate level for achieving these results. In mid-February, we launched our menu optimization program which reduced hourly labor cost relative to the prior year and shifted our sales mix to higher margin items. We attained these productivity and margin gains without sacrificing the guest experience and look forward to realizing the full impact of this initiative throughout the year."

Rosenfield and Flax continued, "In 2011, we are focusing on several key areas that will serve as a foundation for building sustainable shareholder value. Menu optimization should not only reduce costs, but also scale our menu selections to a level which improves overall execution. New product introductions will include a balance of craveable CPK items as well as seasonal selections and choices in line with health and wellness trends. Our global presence will continue to expand with the expected opening of 10 international franchised locations and we will continue to optimize our four-wall full-service restaurant portfolio. Achieving measurable success across these objectives will not only enhance our brand equity, but also increase our return on assets, bolster our free cash flow, and further strengthen our balance sheet."

Average weekly sales for the Company's 200 full-service restaurants were $57,431 in the first quarter of 2011 compared to $59,082 in the same quarter last year.

During the first quarter of 2011, the Company opened a full-service restaurant in Braintree, MA. International franchise partners opened a full-service restaurant in India, the Company's second location in the country, and a full-service restaurant in Mexico, the Company's tenth location in the country.

The Company outlined financial guidance for the second quarter of 2011 based on the following estimates and assumptions:

  • Full-service comparable restaurant sales between 0% and positive 1.0%.
  • Opening of two international franchised restaurants.
  • Earnings in the range of $0.20 to $0.21 per diluted share.

The Company will host a conference call today at approximately 4:30 pm ET. A webcast of the conference call can be accessed at www.cpk.com.

California Pizza Kitchen, Inc., founded in 1985, is a leading casual dining chain featuring an imaginative line of hearth-baked pizzas, including the original BBQ Chicken Pizza, and a broad selection of distinctive pastas, salads, appetizers, soups, sandwiches and desserts. Of the chain's 267 restaurants, 207 are company-owned and 60 operate under franchise or license agreements. CPK premium pizzas are also available to sports and entertainment fans at three Southern California venues including Dodger Stadium, Angel Stadium of Anaheim and STAPLES Center. Also included in the Company's portfolio of concepts is LA Food Show Grill & Bar, which has locations in Manhattan Beach and Beverly Hills, California. The Company also has a licensing arrangement with Nestlé USA, Inc. to manufacture and distribute a line of California Pizza Kitchen premium frozen products. For more details, visit www.cpk.com.

This release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include projections of earnings, revenue or other financial items, statements of the plans, strategies and objectives of management for future operations, statements concerning proposed new products or developments, statements regarding future economic conditions or performance, statements of belief and statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "anticipate," "guidance," "forecast" and similar words.

Investors are cautioned that forward-looking statements are not guarantees of future performance and, therefore, undue reliance should not be placed on them. Our actual results may differ materially from the expectations referred to herein. Among the key factors that may have a direct bearing on our operating results, performance and financial condition are changing consumer preferences and demands, the execution of our expansion strategy, the continued availability of qualified employees and our management team, the maintenance of reasonable food and supply costs, our relationships with our distributors and numerous other matters discussed in the Company's filings with the Securities and Exchange Commission. California Pizza Kitchen undertakes no obligation to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Selected Unaudited Consolidated Financial and Operating Data
(Dollars in thousands, except for per share and operating data)
   
 
13 Weeks Ended 13 Weeks Ended
April 3, April 4,
  2011     2010  
 
Statement of Operations:
 
Revenues:
Restaurant sales $ 153,549 $ 154,429
Royalties from licensing agreement 1,052 1,044
Domestic franchise revenues 760 672
International franchise revenues   602     549  
Total revenues 155,963 156,694
 
Costs and expenses:
Food, beverage and paper supplies 36,975 36,387
Labor 58,915 58,812
Direct operating and occupancy   35,001     35,083  
Cost of sales 130,891 130,282
 
General and administrative 12,041 12,741
Pre-opening costs 233 302
 

Operating income before depreciation and amortization, store closure costs and litigation, settlement and other costs (1)

  12,798     13,369  
 
Depreciation and amortization 9,022 9,135
Store closure costs 55 466
Litigation, settlement and other costs (2)   929     289  
Total costs and expenses 153,171 153,215
 
Operating income 2,792 3,479
 
Interest expense, net   (3 )   (36 )
 
Income before income tax provision 2,789 3,443
Income tax provision   664     943  
Net income $ 2,125   $ 2,500  
 
Net income per common share:
Basic $ 0.09 $ 0.10
Diluted $ 0.09 $ 0.10
 
Shares used in computing net income per common share (in thousands):
 
Basic 24,583 24,233
Diluted 24,962 24,418
 
Operating Data:
Locations open at end of period 266 253
Company-owned full-service restaurants open at
end of period 200 196
Average weekly company-owned full-service
restaurant sales $ 57,431 $ 59,082
18-month comparable company-owned full-service
restaurant sales decrease -2.1 %

-2.7

%
 

(1) This is a non-GAAP measure and is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. We believe this measure provides additional information to facilitate the comparison of our past and present financial results and provides an additional means for investors to evaluate business performance. However, use of this measure should not be construed as an indication that our future results will be unaffected by excluded items.

(2) For the 13 weeks ended April 3, 2011, other costs represent expenses related to the review of strategic alternatives.

 

  13 Weeks Ended   13 Weeks Ended
April 3, April 4,
2011 2010
 
Statement of Operations Percentages (1):
 
Revenues:
Restaurant sales 98.4 % 98.5 %
Royalties from licensing agreement 0.7 % 0.7 %
Domestic franchise revenues 0.5 % 0.4 %
International franchise revenues 0.4 % 0.4 %
Total revenues 100.0 % 100.0 %
 
Costs and expenses:
Food, beverage and paper supplies 24.1 % 23.6 %
Labor 38.4 % 38.1 %
Direct operating and occupancy 22.8 % 22.7 %
Cost of sales 85.3 % 84.4 %
 
General and administrative 7.7 % 8.1 %
Pre-opening costs 0.1 % 0.2 %
 

Operating income before depreciation and amortization, store closure costs and litigation, settlement and other costs

8.2 % 8.5 %
 
Depreciation and amortization 5.8 % 5.8 %
Store closure costs 0.0 % 0.3 %
Litigation, settlement and other costs 0.6 % 0.2 %
Total costs and expenses 98.2 % 97.8 %
 
Operating income 1.8 % 2.2 %
 
Interest expense, net 0.0 % 0.0 %
 
Income before income tax provision 1.8 % 2.2 %
Income tax provision 0.4 % 0.6 %
Net income 1.4 % 1.6 %
 

(1) Percentages are expressed as a percentage of total revenue except for cost of sales which is expressed as a percentage of restaurant sales.

 
Selected Consolidated Balance Sheet Information
(Dollars in thousands)
   
 
April 3, January 2,
2011 2011
 
Cash and cash equivalents $ 17,054 $ 21,230
Total assets 320,615 330,944
Long term debt - -
Stockholders' equity 197,170 194,411
 

California Pizza Kitchen, Inc.
Units Summary
         
 
Total Units at Total Units at
First Quarter 2011 January 2, 2011 Opened Closed April 3, 2011
Company-owned full-service domestic 200 1 1 200
Company-owned ASAP domestic 5 - 1 4
Company-owned LA Food Show 2 - - 2
Company-owned full-service international 1 - - 1
Franchised domestic 20 - - 20
Franchised international 32 2 1 33
Campus, sports & entertainment venues (seasonal) 6   -   -   6
Total 266   3   3   266
 

California Pizza Kitchen
Media: Sarah Grover
Investors: Sue Collyns
310-342-5000