CEC's CEO Discusses Q1 2013 Results - Earnings Call Transcript

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CEC Entertainment Inc. (CEC) Q1 2013 Results Earnings Call May 2, 2013 4:30 PM ET


Mike Magusiak - President and CEO

Dick Frank - Executive Chairman

Tiffany Kice - Executive Vice President and CFO


Michael Gallo - C.L. King

J.R. Bizzell - Stephens Inc.

Robert Derrington - Northcoast Research


Ladies and gentlemen, thank you very much for standing by. And welcome to the CEC Entertainment First Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session, with instructions provided at that time. (Operator Instructions)

As a reminder, today’s conference is being recorded. And now I’d like to turn the conference over to your host, President and CEO, Mr. Mike Magusiak. Please go ahead, sir.

Mike Magusiak

Thank you. Welcome to our conference call. I'm Mike Magusiak, President and CEO of the company, and I'm joined by Dick Frank, our Executive Chairman; and Tiffany Kice, our Executive Vice President and Chief Financial Officer.

Before we begin today's discussion, I would like to make you aware that some of the information presented today may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those implied in the forward-looking statements. Information regarding the company's risk factors was included in our press release and is also included in the company's filings with the SEC.

Reconciliation information related to non-GAAP financial measures discussed on this call may be found in the company's first quarter earnings releases and on the company's website under Investor Information.

Tiffany will begin today’s call with an overview of our financial performance during the first quarter of 2013. I will then discuss our sales performance to date, our strategic plan and our growth opportunities. Tiffany will then go over our business outlook and finally, Dick will provide concluding remarks before we open the call for Q&A.

Tiffany Kice

Thank you, Mike, and good afternoon, everyone. Comparable store sales for the quarter increased 1.6% with January up 2.1%, February down 6.8% and March up 9.2%. As previously communicated during our year end earnings announcement, February began with the difficult start, with the first two weeks of comparable store sales coming in down approximately 14%.

We believe the primary factors that drove this decrease were external in nature and related to the delay in tax return refund, the expiration of the 2% payroll tax break and the increase in gas prices.

With the second half of February coming in flat and March coming in at up 9.2%. We believe that we benefited from the late income tax refund, as well as comparison to sales negatively impacted by unseasonably warm weather in March of the prior.

Given the continued positive performance into the month of April of 4.8% in comparable store sales, we believe that our strategies are beginning to gain momentum, although we remain in the early stages of this evaluation.

Diluted earnings per share increased to $1.90 for the first quarter of 2013, as compared to $1.81 in the prior year. I’ll now walk you through the details of our financial results.

Total revenues increased $8.5 million or 3.4% to $255.3 million in the first quarter of 2013, with approximately $3.9 million of the increase being derived from the 1.6% increase in comparable store sales and $4.6 million and additional revenue from new store openings in both fiscal 2012 and 2013.

Cost of food, beverage, entertainment and merchandise as a percentage of company store sales decreased 50 basis points. We believe this decrease was primarily attributable to changes in our pricing strategy that was fully implemented in the fourth quarter of 2012. The decrease was partially offset by $0.14 or 9.2% increase in the average price per pound of cheese during the first quarter of 2013.

Labor expenses as a percentage of company store sales decreased 40 basis points to 24.7%. This decrease is reflective of improved productivity, partially offset by 0.6% increase in average hourly wage rate and an increase in store level bonuses.

Advertising expense increased $2.8 million or 100 basis points as a percentage of total revenues to 4.6%. The increase related to our planned increase of advertising spend associated with national television advertising, the production of new commercials and a new digital advertising campaign.

General and administrative expenses increased $1.4 million to $15 million from the prior year first quarter. The increase primarily related to an increase of operational and support center management bonuses as a result of improved sales performance and higher -- as a result of improved sales performance and also higher professional fees, primarily related to the modernization of various information technology platforms.

Our effective tax rate decreased to 38.4%, as compared to 38.8% in the first quarter of the prior year, primarily related to the reinstatement of the workers opportunity tax credit at the beginning of the calendar year.

Diluted EPS was $1.90 in the first quarter of 2013, as compared to a $1.81 in the prior year. Diluted EPS benefited from a 2.1% decrease in the number of weighted average diluted shares outstanding, primarily driven by our share repurchases since the first quarter of 2012 and a 3% increase in net income.

Let’s now turn to a few highlights from our cash flow statement and balance sheet. During the first quarter of 2013, we generated $76 million of operating cash flow. We utilized this cash by investing $15.7 million primarily in new and existing stores, reducing our outstanding borrowings on a revolving credit facility by $46.5 million and repurchasing approximately 10 million of our common stock.

We ended the quarter with the balance of $343 million on the company's revolving credit facility. Our leverage ratio was 2.13 to 1 as defined in our credit facility agreement, which is well within our debt covenant restriction of 3 to 1.

We repurchased approximately 300,000 shares of our common stock during the first quarter of 2013 for an aggregate purchase price of approximately $10 million. On April 30, 2013, our Board authorized an additional 100 million increase to our stock repurchase plan bringing are available total to 137 million authorized for future share repurchases to be utilized on an opportunistic basis.

In regards to dividend on April 30, 2013 our Board declared our second quarter 2013 dividend of $0.24 per share to be paid in July of 2013.

We are committed to returning capital to our shareholders, since the beginning of fiscal 2010 we have repurchased 181.7 million or 5.2 million shares of our common enemy and we have paid out 31.6 million in dividend for a total return of capital shareholders of $213.3 million or 39% of the $547.2 million operating cash flow generated over the same.

I'll now turn the call over to Mike to discuss our first quarter sales performance, as well as an update on our strategic plan and growth opportunity.

Mike Magusiak

Thanks Tiffany. We continue to believe that we have developed a very solid sales and profitability plan for 2013, as well as lay the foundation to increase long-term shareholder value.

Comparable store sales increased 1.6% during the first quarter, the breakout by period is as follows, period one was positive 2.1%, period two was negative 6.8% and period three was positive 9.2%. We believe the increase in comparable store sales is primarily related to record warm weather in the Midwest and Northeast in March of 2012, which negatively impacted our prior year results.

Additionally, while we are still in the early stages of evaluating the impact of the changes to our strategic plan implemented earlier this year. We believe that certain components of our strategy are beginning to gain traction. Comparable store sales during the first four weeks of the second quarter have increased 4.8%, resulting in year to date comparable store sales increasing 2.3%.

Year-to-date comparable store sales in the first 17 weeks of the year by region are as follows, the Western region was positive 0.6%, the Northeast was positive 1.8%, the Southeast was positive 2.9% and our Central region was positive 3.9%.

We remained committed to our strategic plan which we believe will increase sales in 2013 and establish a strong foundation to build future sales. The main components of our plan are: first, a strong marketing plan targeting both kids and moms with the objective of increasing guest traffic; second, the continued execution of our value proposition supported by advertising; and third, an enhanced strategy of capital reinvestment into our existing locations.

As previously communicated, our marketing expenditures are expected to increase approximately $6 million to $41.4 million in 2013 from $35.4 million in 2012. Advertising expenditures increased $2.8 million in the first quarter which represents the largest quarterly increase in advertising expense planned for 2013.

The first quarter of this year represented first time that all of our marketing strategies were fully implemented. The primary components of our annual marketing plan continue to include: first, a strong television media plan that increases our media by approximately 27% compared to 2012; second, a strong digital plan of approximately $5.5 million, which encompasses search, brand, value and promotional elements.

We’re doubling our expenditures compared to 2012 and have committed to a 52-week digital plan for this year; and finally, an enhanced creative plan that is a combination of brand advertising and promotional advertising providing families with reasons to visit our locations.

We implemented our second quarter promotion utilizing an automated reality app called Say Cheese! at the beginning of April. This free downloadable app enables kids and parents to take pictures with a three-dimensional Chuck E. Cheese in all domestic and Canadian locations. You can visit our website at www.chuckecheese.com to view families posting pictures taken with the app on our website under the share memories ticket.

In addition, we’re implementing a new summer promotion starting at the beginning of June and are finalizing our promotion for the fourth quarter. For competitive reasons we are not providing details of these promotions until after their launch day. We believe that these promotions supported by increased TV and digital media will increase customer traffic.

The next component of our plan to increase sales is a continued implementation of our value strategy. We implemented new menu boards in all company stores during October of last year. We believe the new menu boards offer a good value for both food and entertainment, including reduced price points for pizza and value deals. We believe that our revised menu pricing provides us with a strong base to market everyday value.

In addition, we implemented revised coupon offers in the third and fourth quarters of last year to provide greater flexibility to our guests with package deals of pizza, drinks and tokens, at very affordable price points and various coupon offers for salads, sandwiches, buffalo wings and token packages. These coupon offers are supported across our new website, and in both print and digital media.

And finally, we’re supporting our value initiatives with a television commercial featuring our new value deals that started airing Monday, February the 18th.

The last significant component of our sales strategy is continued reinvestment in our facilities and entertainment attractions. Because of our strong commitment to reinvesting in our stores over the past few years, we’re able to significantly reduce capital expenditures in our existing stores and still maintain outstanding facilities, games and rides.

The existing store capital plan for 2013 is approximate $25 million which compares to approximately $40 million in 2012 and $65 million in 2013. We project the existing store capital plan for 2013 will impact 169 stores, including 150 game enhancements, eight major remodels, and 11 expansions. We’ve recently made some significant enhancements to our existing store capital strategy by fully utilizing used or transport games from existing stores in combination with new games and rides.

This substantially reduces the cost of game enhancements and enables us to impact each of our stores on a more frequent basis. Following the 169 stores that we intend to reach with capital improvements in 2013, we anticipate we will improve approximately 250 stores in 2014 with game enhancements, major remodels and store expansions.

The preliminary existing store capital expenditure plan for 2014 is $25 million which approximates our 2013 spending plan. We remain committed to the evolution of our entertainment attractions and are currently focused on a number of major new attractions that we intend to test in our stores during the remainder of 2013. Our primary objective of identifying and testing major attractions in 2013 is to promote these attractions in 2014 to increase guest visitations.

In addition to developing what we believe is a strong sales plan; we have also implemented a fairly significant cost reduction program that will offset a portion of expense increases. This plan contributed to a 1.1% reduction in company store operating cost from 68.9% in the first quarter of 2012 to 67.8% in the first quarter of this year.

Our profitability plan includes: first, we implemented a revised pricing structure primarily in the third and fourth quarters of last year, including reduced menu prices for certain food items, including pizza and salads which have been more than offset by increased token price. In addition, we reduced the discounts on a number of our coupon offers.

Second, we modified our price and merchandise ticket categories from eight different categories to seven different categories, resulting in an annualized cost reduction of approximately $1.2 million. The roll out of the modified ticket categories was completed in mid March.

Third, we’ve refined our pizza dough resulting in what we believe is an enhanced product with a crispier crust and reduced sodium content. The roll out was completed by the end of February and has a projected annualized cost reduction totaling $1.2 million. The combination of the three cost reduction initiatives stated above primarily contributed to the cost of sales reduction of 0.5% in the first quarter of this year compared to the first quarter of last year.

Fourth, we reduced existing store capital expenditures, excluding new stores, which is anticipated to result in a reduction in comparable store depreciation expense by approximately $1.5 million in 2013 versus 2012. Depreciation and amortization expense as a percentage of sales decreased 0.2% during the first quarter compared to the same quarter last year.

In addition to the cost savings initiatives stated above in which we’ve quantify expected reduction in expenses, we’re focused on reducing other expenses that we believe will benefit future quarters. These include the implementation of required non-slip footwear for all of our store employees, the installation of energy cost-efficient thermostats and approximately 200 stores and the reduction of certain birthday party costs.

Now, I would like to discuss the growth of our concept through new locations, both domestically and internationally. Starting with domestic growth, during 2012, we opened 12 new locations, including three relocations and we acquired one franchise store. We closed six stores, including the three relocated stores, resulting in the net addition of seven company stores.

New stores contributed to accelerated revenue growth during the quarter. Revenue increased $8.5 million, or 3.4%. Comparable store sales contributed approximately 46% of the increase in revenue with the vast majority of the remaining revenue growth attributable to new stores opened in 2012 and 2013.

For 2013, we anticipate opening 15 new stores, including one relocation. We anticipate closing approximately five stores, including the relocated store, resulting in the net addition of approximately 10 stores. From 2007 through 2010, we opened a total of 25 new or relocated stores.

These stores averaged over $2 million in sales during 2012 and produced a cash return on investment of slightly over 20%. Internationally, as of April 2013, we have 17 franchise stores open, including nine stores that have opened since the fourth quarter of 2010. Our most recent international store opening occurred in April of this year in Panama City, Panama. We’ve increased our international prospect significantly in the last two years, signing 10 development agreements, providing our franchise partners with the rights to open a total of 61 stores.

In 2012 alone, we signed seven new development agreements for the development of 42 stores in Mexico, Peru, the Philippines, Trinidad, Iran, Saudi Arabia and the United Arab Emirates. I believe that we have made outstanding international development concept as evidenced by the significant average unit sales volume of our stores overseas, which provides us with an excellent long-term growth vehicle with specific growth emphasis in Latin America, Asia and the Middle East.

With that, I'll turn it over to Tiffany to review our business outlook for fiscal 2013.

Tiffany Kice

Thank you, Mike. As Mike discussed we believe that our sales are starting to gain momentum with year-to-date sales coming in at up 2.3% through April. However, given the substantial volatility we experienced during the first quarter, we remained cautious.

At this time, we anticipate an increase in comparable store sales of 1.5% to 2.5% for the fiscal year and diluted earnings per share to be in a range of $2.80 to $2.95. Incorporated into this guidance are the following assumptions for fiscal 2013.

12 to 15 new company-owned stores, including one store relocation; average cheese block prices in the range of the $1.75 to $1.85 per pound; depreciation and amortization to remain relatively flat; rent expense to increase approximately 4% to 5% from the prior year; advertising expense to increase $6 million from the prior year to support our comprehensive and multifaceted advertising plan; capital expenditures to range from approximately $82 million to $84 million and payment of four quarterly dividends totaling approximately $17 million.

I will now turn the call over to Dick for some concluding remarks.

Dick Frank

Thanks, Tiffany. We’re encouraged by the financial performance of the first quarter with comparable store sales, increasing 1.6% and diluted earnings per share increasing to $1.90. As both Mike and Tiffany pointed out, we experienced a great deal of sales volatility within the quarter with February comparable store sales being negative 6.8% before posting positive comps in March of 9.2%.

This type of volatility makes an evaluation of our sales strategies difficult. But given the sales performance through April of 2013, we do believe our strategies are beginning to gain traction. As we look back over the year -- over the last year, 18 months, we believe we have learnt a great deal as we have attempted to revitalize our brand in advertising as we move to the future.

In essence, we have been focused on laying a foundation for future growth. Key elements of our plan include first, everyday value messaging, supported by a multimedia campaign. Second, aggressive advertising targeting both kids and moms. Third, revise capital plan that will allow us to impact our stores more frequently at a reduced capital costs. Fourth, the introduction of new major entertainment attractions, which will begin to test as early as this summer. And lastly, growth through both domestic and international new store development.

Certainly, our strategies will evolve over time. But we believe that these key elements will guide us in the years ahead.

At this time, Mike, Tiffany and I will be glad to answer any questions that any of you may have.

Question-and-Answer Session


(Operator Instructions) And we’ll now go to our first question from the line of Michael Gallo with C.L. King. Please go ahead.

Michael Gallo - C.L. King

Hi. Good afternoon and good to see the stabilization.

Mike Magusiak

Thank you.

Michael Gallo - C.L. King

Mike, I just want to parse in a little bit more on just the weather impact. Obviously, March was unseasonably cold, particularly in the Midwest, but I mean to a large degree I think a lot of April was as well. You gave the break down I think of the Central Region year to date. I was wondering if you have a breakdown of what the Central Region did in March and April and what the other regions did on a relative basis in those months.

Mike Magusiak

Yeah. I mean. First in April -- I'm sorry, starting with March, the central was up 12.2%, but the northeast was up 15.1%. The southeast was up 11.2%. The western was 0.5% down and then in April every one of the regions was positive. The western was up 2.9%. The northeast was up 3.2%. The southeast was up 5.1 and the central was up 8.4.

Michael Gallo - C.L. King

Okay. Great. I guess when you look at just the characteristics of the comps. It seemed like at least in the quarter that you reported that you saw a bigger increase on the entertainment revenue as a component of the comp and as opposed to the food. Was that at all a reflection of how you bundled the offers? Help us with how we should look at that because it seemed like you saw a greater complaint growth on the entertainment side? Thank you.

Mike Magusiak

Tiffany can take that piece.

Tiffany Kice

Yeah, Mike. I mean, we really look at the total revenues first off and we are pleased with the 3.4% increase there. Your correct food and beverage has remained relatively flat. So, what I think you are seeing is kind of the rebalancing of our menu and a lot of the changes that we have made from a pricing strategy on the menu board. We have lowered the pizza prices, changed the components in the value meals and what we believe happening is more people are buying more tokens through the bill changer and other ways and so that’s increasing your merchant entertainment line.

Michael Gallo - C.L. King

Okay. Great. Thank you.

Mike Magusiak

And then just one thing to add on to what Tiffany was saying and Mike, a question that you had about the weather last year. Our comps last year in March were down 8.5%. But I don't believe that was all weather because the prior year in March, the comps were actually positive 5.1%. So it is always difficult on a period-by-period basis with our concept to look comps, at comps over a short period of time. So what we look at is on a broader basis through April that they are up about 2.3%. And I think that’s a function of a number of strategies that we implemented.

First, as we said earlier, we increased media weights by about 37% in the first quarter, and that's relatively comparable to the 27% increase for the year. Secondly, we talked about the value proposition. And I really think that as we have lowered our menu price points for value deals, pizza and salad bar and then also offering our guests more flexibility with coupons that that is a much better value for our guests.

And then third, we are actually supporting that with a specific commercial that started airing February, the 18th to parents talking about our everyday value. And then we started a promotion in April of this year with augmented reality, and we believe that providing our guests not only with brand message, but also promotional messages for reasons for kids to come in helps our guest visitation. And we're going to continue that through the rest of the year with our next promotion starting at the beginning of June. So that from my perspective are the primary factors that impacted sales.

Michael Gallo - C.L. King

Thanks very much.


Thank you. We will now go to the line of Will Slabaugh with Stephens Inc. Please go ahead.

J.R. Bizzell - Stephens Inc.

Yeah. Thanks. This is J.R. Bizzell on for Will. Congrats on the quarter, guys and ladies. I just wanted to -- I know you said media was up 37% in 1Q. The media spend is up in 1Q. Just wondering if you can give us an idea what the out quarters are going to look like on a percentage increase basis.

Mike Magusiak

Yeah. We would be happy to do that. When I mentioned that 37% that is in trips, media weights on television. But what you are going to see is that by far is the biggest increase for the year versus second quarter it might be up around a million and a half. And then both the third and fourth quarters are both below a million dollar increase, so substantial decreases versus the dollar increase in the first quarter. And that may move a little bit, but that will give you some perspective on the dollar spend.

Tiffany Kice

And some of that is because we had already started doing the digital advertising in the latter half of 2012.

J.R. Bizzell - Stephens Inc.

Thanks for the detail. Switching to -- on that marketing plan I know you’ve re-ramped it and it is showing great success so far. And just wondering if you can kind of discuss the mix you are seeing, maybe on the menu front? Are you getting more -- on a demographic basis, is there a change you are experiencing?

Mike Magusiak

We don't see a necessary shift there. We are in our stores all the time and we don't see any evidence of that. What I do think is happening is we have a very good value now on our food, and we also have a very good and excellent value on our tokens. I think that just gives the marketing a much stronger base to advertise fun for all, fun for less.

J.R. Bizzell - Stephens Inc.

All right. Great. Congrats on the quarter.


(Operator Instructions) We will now go the line of Robert Derrington with Northcoast Research. Please go ahead.

Robert Derrington - Northcoast Research

Yeah. Thank you. Mike, along the line of the mix profile, not your customer mix but essentially what they're buying. Did you see a variation between the bundle deals, more large bundles or medium-sized or any kind of help that you can provide us with there?

Mike Magusiak

Yeah. I would be to happy to do that, Bob. I think first of all, what we saw was a significant increase in value deals and we really see that as positive because that’s what we are trying to do is to promote everyday value in our stores. And one of the things that we did is we dropped the price points on those value deals and we now have across United States, a value deal that starts at $19.99. And that is up significantly, Bob, because of that price point. But what happens is when kids run out of tokens and they will buy more tokens, whether it would be a bill changer or token deals and add on other food items to that lower-priced value deal.

Robert Derrington - Northcoast Research

One thing that I noticed, Mike, that $19.99 deal you are talking about used to be a thought, a large pizza with two drinks and 25 tokens. And now it looks like I think it is a medium pizza with two drinks and 20 tokens. So was that part of the plan to kind of help keep prices similar, but also maybe help your cost of sales?

Mike Magusiak

That’s exactly right, Bob. Our discounts on our value meals are very similar to the older discounts, what’s much more attractive is our price points for those value meals, but the discounts are fairly close.

Robert Derrington - Northcoast Research

Have the consumers, as they look at these things, do they tend to ask questions to be concerned or any issues around resistance to that or was the mix more than satisfactory?

Mike Magusiak

No. Just the opposite from my prospective Bob, to me the way I measure either acceptance or any hesitation toward them is, what they pull out of their valets and value meals are up significantly. So we’ve actual seen that been very, very well receive and then we couple that with coupon that add much more flexibility albeit at lower discount but because of the coupons have packaged deals and offers to buy wings or salad bar or tokens, guest have much more flexibility in selecting coupons that meet their specific family needs

Dick Frank

Bob, the other thing on our value packages that I think is important when you talk about acceptance. Past, just wanting to get a 999 price point and rebalance between our food and token value, we had also few our research in just be now the store is new, previous to that we really didn’t have a value package really for the family sizes of Mom’s or Dad’s coming in with their child or three people.

And with all of our packages prior to that, starting with a large pizza and four drinks, we felt we didn’t have real a value offering so again the smaller party size, and so I think that as Mike said, the acceptance of that 999 for our guest to spend were really positively receive and we see that in the mix I believe.

Robert Derrington - Northcoast Research

No. Along that line, Dick, could you give us a little bit of color on how, one last question, yeah, I'm sorry, how did the birthday party business do relative to some of the just traditional walk up business, I know walk up business at one time had been somewhat soft, how is that mix?

Mike Magusiak

I’ll take that and I will turn it back over to Dick on kind of foundation of where we are growing our concept, because I think what you see in the first quarter, Bob, is really just the first time that we’ve had all of our strategies fully implemented in, from my perspective and I also believe from Dick or Tiffany’s, all we’re doing is laying the foundation to grow future sales and profitability.

But if you look on a year-to-date basis through April and I might be off a little bit. birthday sales were down about 6% -- 5% to 6%. And we believe that the primary reason for that is we’ve shifted a significantly more percentage or a higher percentage of our advertising spend on TV to everyday occasions.

And birthdays are very, very important to us but as we've been trying to drive more frequency on and everyday occasion. We’re still going to focus on birthdays. We’ve got a new birthday package of rolling up in the second half of this year. And we think that that's a strong package. And then naturally those birthday parties that comparable-store sales that I gave you are down 5% to 6%. That is included naturally in our comps. So Dick, you may talk about maybe a little bit of the foundation of what we’re trying to build with sales going forward.

Dick Frank

I think the only add on I would make probably Mike is that even though we reduced our advertising spend on birthdays, it’s still accounts for roughly 15% of our total advertising budget or expenditures and that's in line with sort of the mix of birthday parties to walk in. We typically over the course of the year have about 12% to 15% of our revenues coming from birthday sales.

And so we think that to approximate that in terms of our total advertising expenditures strategically make sense over a longer period of time. And again as Mike was talking, it just all comes back, I think too. Our efforts here really to sort of lay the foundation and it got little bit difficult early in the year with a big falloff in the early part of February that comp store sales for us to really have a sense of whether the strategies are working and what was working and so forth.

But I think the thing that we feel the best about today is that foundation is in place all the strategies now were in place for the first quarter for really the first time as we sort of revised everything. And I think that foundation for the future is really strong. And I think it has to do with sort of our value pricing like we’ve talked about here just a second ago but also just the excellent shape of our stores from a from capital standpoint, the aggressive marketing against moms and dads as well as the kids.

And then going forward, we’re really excited about now bringing in behind that our major new attractions to sort of bring some vitality in the way sort of TicketBlaster did or Skytubes. Bob, you’ve been around the long time and can think back to one we brought the Skytubes in. And so we’ve been working. Our games people been working and entertainment people on major new attractions and we’re really excited now to be to a point where we’ll start to test some of those here this summer and hopefully have those ready by 2014 to start to put in to some major markets.

So I think it's really as always the sales is never the result of any one thing, but I think all of our strategies are coming together in way that are really allowing us to move things forward. And so as we look forward, we’re cautiously optimistic that these things are really starting to make a difference for us.

Robert Derrington - Northcoast Research

I’m really happy for you guys. Congratulations

Mike Magusiak

Thank you, Bob


Thank you. At this time, we have no further questions in queue.

Mike Magusiak

We appreciate your participation on our call. And as always, if you have any additional questions, please feel free to call Tiffany, Dick or myself. Thank you very much. Bye


And thank you very much; ladies and gentlemen. That does conclude our conference for today. Thank you very much for your participation and for using AT&T executive teleconference service. Have a good day.

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