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Apparel labeling remains sound for future growth - Checkpoint
03 Nov '10
5 min read
Checkpoint Systems, Inc. reported financial results for the third quarter ended September 26, 2010.
Net revenues for the third quarter of 2010 were $203.3 million compared to net revenues for the third quarter of 2009 of $194.1 million. Net earnings attributable to Checkpoint Systems, Inc. for the third quarter of 2010 were $7.1 million, or $0.17 per diluted share, compared to net earnings attributable to Checkpoint Systems, Inc. for the third quarter of 2009 of $2.6 million, or $0.07 per diluted share.
Non-GAAP net earnings attributable to Checkpoint Systems, Inc. for the third quarter of 2010 excluding restructuring expense and the impact of a change in valuation allowances were $12.0 million, or $0.30 per diluted share. Non-GAAP net earnings attributable to Checkpoint Systems, Inc. for the third quarter of 2009 were $6.4 million, or $0.16 per diluted share.
"For the quarter just ended, we continued to realize organic revenue growth in all our business segments and our three major geographies. In particular, strong growth in our Alpha business was driven by retailers who seek solutions that enhance their merchandising and loss prevention. However, our EAS consumables business, which had been very strong through the first half of the year, slowed across most product lines and geographies. We believe this business will be back on track by early 2011. Additionally, our EAS systems business continues to be impacted by the prolonged economic sluggishness in Europe," said Rob van der Merwe, Chairman, President and Chief Executive Officer of Checkpoint Systems.
"Gross margin for the quarter declined, principally due to our Apparel Labeling Solutions business segment where changes in product mix, including the impact of lower margin products from our Brilliant Label business, continued from last quarter.
"Many of the issues that negatively affected the third quarter are projected to continue for the balance of the year and therefore we have updated guidance. At this time we do not believe the higher end of our previous guidance is achievable and we have reflected that in our current guidance," added van der Merwe.
Mr. van der Merwe concluded, "With today's third quarter results we are providing broad metrics of a SG&A restructuring plan first announced late last year. The program is expected to reduce SG&A costs by $20.0 million to $25.0 million, with roughly $15.0 million to $17.0 million of the restructuring savings expected to be realized in 2011 and the full benefit in 2012. The cost of the program is expected to be $20.0 million to $25.0 million. Finally, we believe that the impact of current conditions on our business is temporary and that our strategy to focus on the converging fields of shrink management, merchandise visibility and apparel labeling remains sound and provides a solid foundation for future growth."
Net revenues for the third quarter of 2010 were $203.3 million compared to net revenues for the third quarter of 2009 of $194.1 million. Net earnings attributable to Checkpoint Systems, Inc. for the third quarter of 2010 were $7.1 million, or $0.17 per diluted share, compared to net earnings attributable to Checkpoint Systems, Inc. for the third quarter of 2009 of $2.6 million, or $0.07 per diluted share.
Non-GAAP net earnings attributable to Checkpoint Systems, Inc. for the third quarter of 2010 excluding restructuring expense and the impact of a change in valuation allowances were $12.0 million, or $0.30 per diluted share. Non-GAAP net earnings attributable to Checkpoint Systems, Inc. for the third quarter of 2009 were $6.4 million, or $0.16 per diluted share.
"For the quarter just ended, we continued to realize organic revenue growth in all our business segments and our three major geographies. In particular, strong growth in our Alpha business was driven by retailers who seek solutions that enhance their merchandising and loss prevention. However, our EAS consumables business, which had been very strong through the first half of the year, slowed across most product lines and geographies. We believe this business will be back on track by early 2011. Additionally, our EAS systems business continues to be impacted by the prolonged economic sluggishness in Europe," said Rob van der Merwe, Chairman, President and Chief Executive Officer of Checkpoint Systems.
"Gross margin for the quarter declined, principally due to our Apparel Labeling Solutions business segment where changes in product mix, including the impact of lower margin products from our Brilliant Label business, continued from last quarter.
"Many of the issues that negatively affected the third quarter are projected to continue for the balance of the year and therefore we have updated guidance. At this time we do not believe the higher end of our previous guidance is achievable and we have reflected that in our current guidance," added van der Merwe.
Mr. van der Merwe concluded, "With today's third quarter results we are providing broad metrics of a SG&A restructuring plan first announced late last year. The program is expected to reduce SG&A costs by $20.0 million to $25.0 million, with roughly $15.0 million to $17.0 million of the restructuring savings expected to be realized in 2011 and the full benefit in 2012. The cost of the program is expected to be $20.0 million to $25.0 million. Finally, we believe that the impact of current conditions on our business is temporary and that our strategy to focus on the converging fields of shrink management, merchandise visibility and apparel labeling remains sound and provides a solid foundation for future growth."
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