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Checkpoint Systems, Inc. Announces Second Quarter 2013 Results

Checkpoint Systems, Inc. (NYSE: CKP) today reported financial results for the second quarter ended June 30, 2013.

Second Quarter GAAP Results:

Net revenues from continuing operations in the second quarter of 2013 decreased 3.1%, 2.5% on a constant dollar basis, to $172.0 million from $177.6 million in the second quarter of 2012. During the quarter, gross profit margins were 40.5% compared with 39.7% in the 2012 second quarter.

Selling, general, and administrative (SG&A) expenses in the second quarter of 2013 decreased $8.4 million or 12.8% to $56.9 million from $65.2 million in the second quarter of 2012. The second quarter of 2013 included approximately $8.6 million of additional cost reductions from the global restructuring programs and continued tight expense control.

Operating income in the second quarter of 2013 was $6.5 million compared with an operating loss of $84.5 million in the same period last year. Operating expenses in the second quarter of 2013 included restructuring expenses ($1.6 million), management transition expenses ($1.2 million), and Shore to Shore acquisition costs associated with ongoing arbitration ($0.3 million). These expenses were partially offset by the gain on sale of our interest in the non-strategic Sri Lanka subsidiary ($0.2 million). The second quarter of 2012 loss included goodwill impairment charges ($64.4 million), restructuring expenses ($21.3 million), management transition expenses ($2.9 million), and acquisition costs ($0.1 million).

Foreign exchange loss was $2.0 million during the second quarter of 2013 compared to $0.4 million during the second quarter of 2012. The increased foreign exchange loss is primarily attributed to dollar fluctuations versus currencies in emerging markets where hedging is either impossible or impractical.

Net earnings from continuing operations during the second quarter of 2013 were $0.03 per diluted share compared with a loss of $2.24 per diluted share in the same period last year.

Second Quarter Adjusted non-GAAP Operating Income and Earnings per Share:

Adjusted non-GAAP operating income from continuing operations was $9.3 million in the second quarter of 2013 compared with $4.2 million in the same period last year. Adjusted non-GAAP net income from continuing operations was $0.11 per share compared to a net loss of $0.16 per share in the second quarter of 2012. The 2013 non-GAAP results exclude restructuring expenses ($1.2 million, net of tax), management transition expenses ($1.2 million, net of tax), a make-whole premium on debt ($0.6 million, net of tax), a valuation allowance adjustment ($0.3 million) acquisition costs ($0.3 million, net of tax), and the gain on sale of our interest in the non-strategic Sri Lanka subsidiary ($0.2 million, net of tax). The 2012 results exclude the goodwill impairment charges ($64.4 million, net of tax), restructuring expenses ($17.0 million, net of tax), management transition expenses ($2.9 million, net of tax), a valuation allowance adjustment ($0.5 million), and acquisition costs ($0.1 million, net of tax).

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