IRVING TX, -- CEC Entertainment Inc., parent company of Chuck E. Cheese's, reported increased first-quarter earnings that came in above analysts' estimates. The company also reported that it plans to buy back an additional $100 million worth of its shares.
The Irving, TX-based company reported first-quarter net income of $33.3 million, or $1.90 a share, up 3% from $32.3 million, or $1.81 per share, last year. Analysts expected to see earnings of $1.81 a share.
Revenue for the quarter rose by 3% to $255.3 million, from $246.8 million last year. Analysts expected to see revenue of $247.78 million. The increase was primarily due to a 1.6% increase in comparable store sales, as well as additional revenue from six new stores opened since the first quarter of 2012.
CEC president and chief executive Michael Magusiak said that during 2013's first quarter, Chuck E. Cheese's new value pricing, marketing initiatives and operational strategies were fully implemented for the first time.
"While we recognize that considerable uncertainty remains in the U.S. economy and that consumers continue to experience various financial pressures, we are encouraged by the 1.6% increase in comparable store sales this quarter," Magusiak said. "We are fully committed to our strategic plan, and to returning capital to our shareholders as evidenced by our recently announced quarterly cash dividend of 24¢ per share and an additional authorization to repurchase $100 million under our stock repurchase plan."
CEC currently has authorization to repurchase $137 million of its common stock.
CEC is projecting comparable store sales of 1.5% to 2.5% for fiscal 2013 and diluted earnings per share in a range between $2.80 and $2.95. This outlook assumes that 12 to 15 new stores will be opened, cheese block prices will hold between $1.75 and $1.85 a pound, and depreciation and amortization remain flat. It also assumes that rents will not rise more than 5%, an increase of $6 million in advertising expenses, and capital expenditures ranging from approximately $82 to $84 million. CEC expects to pay four quarterly dividends of about $17 million.
CEC and its franchisees operate 566 Chuck E. Cheese's stores located in 47 states and eight foreign countries and territories. Some 515 locations in the U.S. and Canada are owned and operated by the company.