Earnings Call Excerpt
California Pizza Kitchen Inc. (CPKI)
Q3 2008 Earnings Call
November 06, 2008 4:30 pm ET
Executives
Rick Rosenfield - Co-Chief Executive Officer
Larry Flax - Co-Chief Executive Officer
Susan Collyns - Chief Financial Officer
Analysts
David Tarantino - Robert Baird
Brian Moore - Wedbush Morgan
Matthew Difrisco - Oppenheimer
Bryan Elliott - Raymond James
Mitch Speiser - Buckingham
Larry Miller - RBC Capital Markets
Tom Forte - Telsey Advisors
Steve Anderson - MKM Partners
Conrad Lyon - Global Hunter
Ronald Schmelzer - JP Morgan
Presentation
Operator
Good afternoon. My name is Tamaqua and I will be your conference operator today. At this time I would like to welcome everyone to the California Pizza Kitchen third quarter earnings conference call. (Operator Instructions) Mr. Rosenfield, you may begin.
Richard Rosenfield
Thank you, operator and good afternoon everyone. Thanks for joining us on our third quarter 2008 earnings call. I’m Rick Rosenfield, Co-CEO of California Pizza Kitchen and with me on the phone today is Mr. Co-CEO Larry Flax; and Susan Collyns our Chief Financial Officer.
Before we begin, I need to remind everyone that part of our discussions this afternoon will include forward-looking statements. They are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer all of you to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks that may have a direct bearing on our operating results, performance and financial conditions.
Basically, we had an inter line quarter despite generating comparable sales that were slightly lower than our original forecast. Comp sales fell 2.4% versus our expectation of down 2%, while EPS was $0.20, which was at the high end of our August 7 guidance of $0.18 to $0.21. Overall our performance while gratifying under the circumstances, certainly underscores the difficulties of today’s economic environment.
Today total revenue grew 7.4% to $174 million including 34% plus growth from the combination of our Kraft alliance and our franchising business. We are especially pleased with the performance of these ancillary revenue streams which are more important than ever to our bottom line and we believe they’ll continue to play a vital role in developing the CPK brand with minimal investment, capital and risk on our part.
The single serve pizza product for one had a successful launch in the second quarter and we will be following up with our first CPK branded non-pizza product with Kraft early next year. I’d like to remind you that our Kraft pizza is in all 50 states, District of Columbia, and in 17,000 locations. This visibility as well as Kraft’s required advertising spend are important components of our brand positioning and awareness. With this arrangement, our brand advertising expenditures are dramatically increasing with no effect on our P&L.
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