Centerplate, Inc. (Amex: CVP; TSX: CVP.un), today reported financial results for the third quarter and fiscal year-to-date ended September 30, 2008. Net sales for the quarter increased $32.7 million, or 13.3%, to $278.8 million, compared to net sales of $246.1 million for the third quarter of 2007.
The net sales increase for the third quarter of 2008 was primarily driven by improved Major League Baseball (MLB) sales of $22.8 million due to the opening of the Washington Nationals ball park, increased attendance at a number of the company's MLB facilities, and the 2008 All-Star game which took place at Yankee Stadium in July. Sales at convention centers increased $5.1 million due to increased events at some of the company's major convention centers and the commencement of operations at the Orange County Convention Center in August 2008. In addition, National Football League (NFL) sales increased $2.0 million primarily due to the timing of games played during the quarter versus prior year, and sales at all other facilities increased $2.8 million.
Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) decreased $3.5 million, or 13.4%, to $22.6 million for the third quarter of 2008 compared to $26.1 million in the third quarter of 2007, primarily due to $2.6 million in transaction costs associated with completing the merger agreement with Kohlberg & Company. Excluding these transaction costs, adjusted EBITDA for the third quarter decreased $0.9 million, or 3.8%, to $25.2 million compared to the third quarter of 2007. This decline is due to lower spending and higher labor costs at some convention centers and softness at some sports facilities driven by the economic downturn, opening expenses at the Washington Nationals and Orange County Convention Center and higher commissions at several of the company's facilities.
"We continue to be focused on completing our merger with Kohlberg & Company as we are confident it will enhance our current partnerships and make us more competitive in the market," said Janet Steinmayer, President and Chief Executive Officer of Centerplate. She added, "Net sales for the quarter increased primarily due to new accounts; however adjusted EBITDA for the quarter decreased due to opening expenses incurred at these new accounts, the softening economy, higher commissions, and transaction costs related to the Company's merger with Kohlberg & Company."
For the thirty-nine weeks ended September 30, 2008, net sales increased 13.6% to $650.3 million from $572.3 million in the comparable period in 2007. Adjusted EBITDA for the thirty-nine week period was $40.9 million compared to $46.8 million in the comparable period in 2007. The decline was partially due to $4.0 million in legal and transaction costs associated with the company's exploration of capital structure and other alternatives, including the merger with Kohlberg & Company. Excluding these transaction costs, adjusted EBITDA declined $1.9 million, or 4.1%, due to the softening economy and opening expenses at several new venues.
For the third quarter of 2008, the company reported a net loss of $24.9 million, or a loss of $1.19 per share, compared to net income of $6.0 million, or $0.27 per share, in the third quarter of 2007. The decline in net income was primarily due to an increase in income tax expense. This increase was the result of the Company's conclusion that it would not generate sufficient taxable income in the near future to realize all of its net deferred tax assets in the United States. The Company therefore recorded a full valuation allowance against its net deferred tax assets in the amount of $24.2 million. These tax assets can be recovered in the future should the Company generate sufficient taxable income to utilize them. For the thirty-nine weeks ended September 30, 2008, the company reported a net loss of $33.6 million or a loss of $1.60 per share compared to income of $0.2 million in the prior year period or $0.01 per share. This decline was primarily due to an increase in income tax expense as explained above. -- www.cnxmarketlink.com
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