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Checkpoint posts highest gross profit margins in 10 years
12
Nov '14
Checkpoint Systems, Inc, a RFID solutions provider for the retail industry, said in the third fiscal quarter of 2014, it reported the highest gross profit margins ever seen in the last ten years.

Gross profit margin at Checkpoint expanded 390 basis points to 44.2% in the third fiscal quarter ending September 28, 2014 from 40.3% for the third fiscal quarter of 2013.

"Gross profit margins were higher, driven by continued manufacturing cost reductions, benefits of Project LEAN and manufacturing and supply chain efficiencies,” CEO - George Babich, said.

However, GAAP net revenues from continuing operations in the third quarter of 2014 fell 8.2%, to $160.6 million from $174.9 million in the third quarter of 2013.

According to Checkpoint, foreign currency translation effects resulted in a $0.4 million or 0.2% decline in net revenues.

In the reporting quarter, SG&A expenses rose $4.1 million or 8.0% to $55.5 million from $51.4 million in the prior year quarter.

Operating income in the quarter under review slipped to $10.8 million, $2.8 million lower than $13.6 million in the same period last year.

An $11.6 million net non-cash charge related to certain tax valuation allowances led to Checkpoint posting loss of $0.10 per diluted share versus income of $0.17 per diluted share in the year ago quarter.

George Babich said, “Retailers continue to be cautious with their in-store capital investments, resulting in delays of some previously planned project launches.

“Despite these headwinds, we remain on track to achieve our EBITDA and earnings estimates for 2014,” he explained.

Checkpoint said it will continue to develop additional cost savings and margin enhancement initiatives over and above those in the global restructuring initiatives.

“The value of these opportunities currently is expected to be $12 million to $15 million by the end of 2014, with an annualized benefit of $15 million to $20 million,” the RFID marketer informed.

CFO Jeff Richard said, “Checkpoint has delivered $14.5 million of free cash flow in the third quarter of 2014 against free cash flow burn of $23.8 million in the prior year quarter.”

In its outlook for the full year 2014, Checkpoint now expects revenues to be in the range of $640 million to $665 million, compared with previous guidance of $675 million to $715 million.

EBITDA is expected to be in the range of $70 million to $80 million, which is unchanged from previous guidance. (AR)

Fibre2fashion News Desk - India

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