Checkpoint Systems, Inc. (NYSE: CKP) today reported financial results for the second quarter ended June 24, 2012. The Company also provided an update on the strategic business review it initiated in May, and announced a significant new profit improvement plan, Project LEAN, to return Checkpoint to profitable growth, as well as an amended Lender Agreement.
Net revenues decreased 8.5%, 4.0% on a constant currency basis, to $198.4 million from $216.8 million in the year-earlier quarter and the Company reported a loss of $2.30 per diluted share, compared with earnings of $0.24 per diluted share in the second quarter of 2011.
The Company reported adjusted non-GAAP operating income of $3.3 million in the second quarter of 2012 compared to $17.1 million in the year-earlier quarter, which included $16.7 million of other operating income due to the sale of customer related receivables associated with the renewal and extension of sales type lease arrangements.
Checkpoint Systems' interim Chief Executive Officer and President George Babich said, “Revenue continues to be impacted by global economic uncertainty, especially in Europe and disruptions caused by our Apparel Labeling restructuring. Gross profit margins continue to be impacted by under absorption as we complete our manufacturing consolidation, execution issues which are currently being addressed through our restructuring plan and unfavorable mix as a result of a large sale of Hard Tag @ Source last year. Importantly though, SG&A expenses for the second quarter decreased by $10.8 million, or 13.6%, compared with the same period last year. The second quarter of 2012 includes $5.4 million in savings from restructuring and a $2.9 million charge from contractual costs associated with the CEO transition announced in May, 2012.”Mr. Babich continued, “Although we are operating in an extremely challenging economic environment where retailers are reducing capital expenditures and ordering fewer products, we continue to win new national and international customers with our EAS solutions. With our restructuring initiatives in place, we will be well positioned for substantial growth ahead of the eventual economic improvement in our end markets.”