Noodles & Company (Nasdaq: NDLS) today announced financial
results for its second quarter ended July 4, 2023.
Key highlights for the
second quarter of
2023 versus the
second quarter of
2022 include:
- Total revenue decreased 4.5% to
$125.2 million from $131.1 million in the second quarter of
2022.
- Comparable restaurant sales
decreased 5.5% system-wide, comprised of a 5.9% decrease at
company-owned restaurants and a 3.4% decrease at franchise
restaurants.
- Net loss was $1.3 million, or $0.03
loss per diluted share, compared to net income of $1.3 million, or
$0.03 per diluted share, in the second quarter of 2022.
- Operating margin was (0.2)%
compared to 1.4% in the second quarter of 2022.
- Restaurant contribution margin(1)
was 14.8% compared to 15.5% in the second quarter of 2022.
- Adjusted EBITDA(1) was $9.3
million, a decrease of $1.9 million compared to the second quarter
of 2022.
- Adjusted net loss(1) was $0.8
million, or a $0.02 loss per diluted share, compared to adjusted
net income of $2.4 million, or $0.05 per diluted share, in the
second quarter of 2022.
- Six new company-owned restaurants
opened in the second quarter of 2023.
_____________________
(1) |
Restaurant contribution margin, EBITDA, adjusted EBITDA, and
adjusted net income (loss) are non-GAAP measures. Reconciliations
of operating income (loss) to restaurant contribution margin, net
income (loss) to EBITDA and adjusted EBITDA and net income (loss)
to adjusted net income (loss) are included in the accompanying
financial data. See “Non-GAAP Financial Measures.” |
|
|
“During the beginning of the second quarter
2023, we saw meaningful softness in our guest trends. We attribute
this in large part to being too aggressive on our pricing strategy,
which included an incremental 5% increase in February of this
year,” said Dave Boennighausen, Chief Executive Officer of Noodles
& Company. “We have gained traction from our performance early
in the second quarter as we pivoted to value messaging, with
comparable restaurant sales improving from a 7.7% system-wide
decline in May to a 3.8% decline in July, the first month of the
third quarter.”
“We are aggressively executing strategies to
further drive comparable restaurant sales growth,” Boennighausen
continued. “We are particularly focused on price optimization,
leverage of our new customer data platform and robust rewards
database, and expansion of our growing catering business.
Furthermore, we are assessing and reigniting our culinary
offerings, including the launch of a broadly appealing Chicken
Parmesan in September, as well as engagement of a leading industry
culinary consultant to assist us in comprehensively evaluating and
improving our menu. As we execute these strategies, our efforts to
respond quickly and effectively will be further supported by
digital menu boards, which we anticipate will be installed at 75%
of company restaurants by the end of the third quarter.”
Boennighausen concluded, “We are encouraged by
the growth in our dine-in sales during the second quarter, and
believe the digital menu rollout will further support growth for
in-restaurant sales while allowing the flexibility to execute
quickly on our initiatives to enhance the brand across all
channels. Average unit volumes have stabilized and are growing, and
the cost environment continues to improve. This results in a
business model that we believe can yield positive free cash flow
while supporting new store growth, and we continue to anticipate
meaningful Adjusted EBITDA growth in 2023 relative to the prior
year. Additionally, as part of our strategy to deliver shareholder
value, our Board of Directors has authorized a share repurchase
program allowing the Company to repurchase up to $5.0 million of
its common stock.”
Second Quarter 2023 Financial
Results
Total revenue decreased $5.9 million in the
second quarter of 2023, or 4.5%, to $125.2 million, compared to
$131.1 million in the second quarter of 2022. This decrease was
primarily due to a decline in comparable restaurant sales due to
lower guest count, partially offset by growth in new restaurant
openings.
In the second quarter of 2023, system-wide
comparable restaurant sales decreased 5.5%, comprised of a 5.9%
decrease at company-owned restaurants and a 3.4% decrease at
franchise restaurants.
Operating margin declined to (0.2)% in the
second quarter of 2023 from 1.4% in the second quarter of 2022.
Restaurant contribution margin decreased to 14.8% in the second
quarter of 2023, compared to 15.5% in the second quarter of 2022.
Decreases in operating and restaurant contribution margin were
primarily due to deleverage from the Company’s comparable sales
decline offset partially by favorability in the Company’s cost of
sales as a percentage of sales.
Six company-owned restaurants opened during the
second quarter of 2023 and two company-owned restaurants closed.
There were 465 restaurants system-wide at the end of the second
quarter 2023, comprised of 373 company-owned restaurants and 92
franchise restaurants.
For the second quarter of 2023, the Company
reported a net loss of $1.3 million, or $0.03 loss per diluted
share, compared with net income of $1.3 million in the second
quarter of 2022, or $0.03 per diluted share. Loss from operations
for the second quarter of 2023 was $0.3 million, compared to income
from operations of $1.9 million in the second quarter of 2022.
Adjusted net loss was $0.8 million, or $0.02
loss per diluted share, in the second quarter of 2023, compared to
adjusted net income of $2.4 million, or $0.05 per diluted share, in
the second quarter of 2022. Adjusted EBITDA decreased 16.9%, or
$1.9 million, to $9.3 million in the second quarter of 2023
compared to the year-earlier period.
Liquidity Update & Share Repurchase
Authorization:
As of July 4, 2023, the Company had $3.1
million of cash on hand and outstanding debt of $64.7 million. The
amount available for future borrowings under its revolving credit
facility was $57.4 million as of July 4, 2023.
On July 26, 2023, the Company’s Board of
Directors authorized a share repurchase program pursuant to which
the Company may repurchase up to $5.0 million of common stock. The
share repurchase program expires after 12 months.
Business Outlook:
Based upon management’s current assessment
following second quarter results, the Company has revised guidance
related to its 2023 performance. The following is now expected for
the full year 2023:
- Total revenue of $500 million to
$510 million;
- Negative low single-digit
Comparable Restaurant Sales;
- Restaurant level contribution
margins of 14.5% to 15.0%;
- General & administrative
expense of $50 million to $53 million, inclusive of non-cash
stock-based compensation expense and $250,000 of corporate
restructuring costs;
- Adjusted EBITDA of $35 million to
$40 million;
- Depreciation and amortization of
$26.5 million to $27.5 million;
- Disposal of assets of $3.0 million
to $3.5 million;
- Net interest expense of $4.5
million to $5.0 million;
- Stock-based compensation of $5.5
million to $6.5 million;
- Adjusted EPS of ($0.11) to $0.00,
including the expected benefit from our new share repurchase
program;
- Approximately 5.0% new restaurant
growth system-wide, with a majority of openings being
company-owned; and
- Capital expenditures of $45 to $50
million in 2023.
Non-GAAP Financial Measures
The Company believes that a quantitative
reconciliation of certain of the Company’s non-GAAP financial
measures guidance to the most comparable financial measures
calculated and presented in accordance with GAAP cannot be made
available without unreasonable efforts. A reconciliation of
these certain non-GAAP financial measures would require the Company
to provide guidance for various reconciling items that are outside
of the Company’s control and cannot be reasonably predicted due to
the fact that these items could vary significantly from period to
period. A reconciliation of certain non-GAAP financial measures
would also require the Company to predict the timing and
likelihood of outcomes that determine future impairments and the
tax benefit thereof. None of these measures, nor their
probable significance, can be reliably quantified. The non-GAAP
financial measures noted above have limitations as analytical
financial measures, as discussed below in the section entitled
“Non-GAAP Financial Measures.” In addition, the guidance with
respect to non-GAAP financial measures is a forward-looking
statement, which by its nature involves risks and uncertainties
that could cause actual results to differ materially from the
Company’s forward-looking statement, as discussed below in the
section entitled “Forward-Looking Statements.”
Key Definitions
Average Unit Volumes —
represent the average annualized sales of all company-owned
restaurants for a given time period. AUVs are calculated by
dividing restaurant revenue by the number of operating days within
each time period and multiplying by the number of operating days we
have in a typical year. Based on this calculation, temporarily
closed restaurants are excluded from the definition of AUV, however
restaurants with temporarily reduced operating hours are included.
This measurement allows management to assess changes in consumer
traffic and per person spending patterns at our restaurants. In
addition to the factors that impact comparable restaurant sales,
AUVs can be further impacted by effective real estate site
selection and maturity and trends within new markets.
Comparable Restaurant Sales —
represents year-over-year sales comparisons for the comparable
restaurant base open for at least 18 full periods. This measure
highlights performance of existing restaurants, as the impact of
new restaurant openings is excluded. Changes in comparable
restaurant sales are generated by changes in traffic, which we
calculate as the number of entrées sold and changes in per-person
spend, calculated as sales divided by traffic. Restaurants that
were temporarily closed or operating at reduced hours remained in
comparable restaurant sales.
Restaurant Contribution and Restaurant
Contribution Margin — restaurant contribution represents
restaurant revenue less restaurant operating costs, which are costs
of sales, labor, occupancy and other restaurant operating items.
Restaurant contribution margin represents restaurant contribution
as a percentage of restaurant revenue. Restaurant contribution and
restaurant contribution margin are presented because they are
widely-used metrics within the restaurant industry to evaluate
restaurant-level productivity, efficiency and performance.
Management also uses restaurant contribution and restaurant
contribution margin as metrics to evaluate the profitability of
incremental sales at our restaurants, restaurant performance across
periods, and restaurant financial performance compared with
competitors. See “Non-GAAP Financial Measures” below.
EBITDA and Adjusted EBITDA —
EBITDA represents net income (loss) before interest expense, net,
provision (benefit) for income taxes and depreciation and
amortization. Adjusted EBITDA represents net income (loss) before
interest expense, net, provision (benefit) for income taxes,
depreciation and amortization, restaurant impairments, closure
costs and asset disposals, fees, costs related to corporate matters
and stock-based compensation. EBITDA and Adjusted EBITDA are
presented because: (i) management believes they are useful measures
for investors to assess the operating performance of our business
without the effect of non-cash charges such as depreciation and
amortization expenses and restaurant impairments, asset disposals
and closure costs, and (ii) management uses them internally as a
benchmark for certain of our cash incentive plans and to evaluate
our operating performance or compare performance to that of
competitors. See “Non-GAAP Financial Measures” below.
Adjusted Net Income (Loss) —
represents net income (loss) plus various adjustments and the tax
effects of such adjustments. Adjusted net income (loss) is
presented because management believes it helps convey supplemental
information to investors regarding the Company’s performance,
excluding the impact of special items that affect the comparability
of results in past quarters and expected results in future
quarters. See “Non-GAAP Financial Measures” below.
Conference Call
Noodles & Company will host a conference
call to discuss its second quarter financial results on Wednesday,
August 9, 2023 at 4:30 PM Eastern Time. The conference call
can be accessed live by registering here. While not required, it is
recommended that you join 10 minutes prior to the event start time.
The conference call will also be webcast live from the Company’s
corporate website at investor.noodles.com, under the “Events &
Presentations” page. An archive of the webcast will be available at
the same location on the corporate website shortly after the call
has concluded.
Non-GAAP Financial Measures
To supplement its condensed consolidated
financial statements, which are prepared and presented in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”), the Company uses the following
non-GAAP financial measures: EBITDA, adjusted EBITDA, adjusted net
income (loss), adjusted earnings (loss) per share, restaurant
contribution and restaurant contribution margin (collectively, the
“non-GAAP financial measures”). The presentation of this financial
information is not intended to be considered in isolation or as a
substitute for, or to be superior to, the financial information
prepared and presented in accordance with GAAP. The Company uses
these non-GAAP financial measures for financial and operational
decision making and as a means to evaluate period-to-period
comparisons. The Company believes that they provide useful
information about operating results, enhance the overall
understanding of past financial performance and future prospects
and allow for greater transparency with respect to key metrics used
by management in its financial and operational decision making.
Adjusted net income (loss) is presented because management believes
it helps convey supplemental information to investors regarding the
Company’s operating performance excluding the impact of restaurant
impairment and closure costs and costs related to corporate
transactions and the tax effect of such adjustments. However, the
Company recognizes that non-GAAP financial measures have
limitations as analytical financial measures. The Company
compensates for these limitations by relying primarily on its GAAP
results and using non-GAAP metrics only supplementally. There are
numerous of these limitations, including that: adjusted EBITDA does
not reflect the Company’s capital expenditures or future
requirements for capital expenditures; adjusted EBITDA does not
reflect interest expense or the cash requirements necessary to
service interest or principal payments, associated with our
indebtedness; adjusted EBITDA does not reflect depreciation and
amortization, which are non-cash charges, although the assets being
depreciated and amortized will likely have to be replaced in the
future, and do not reflect cash requirements for such replacements;
adjusted EBITDA does not reflect the cost of stock-based
compensation; adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs; adjusted net income
(loss) does not reflect cash expenditures, or future requirements,
for lease termination payments and certain other expenses
associated with reduced new restaurant development; and restaurant
contribution and restaurant contribution margin are not reflective
of the underlying performance of our business because
corporate-level expenses are excluded from these measures. When
analyzing the Company’s operating performance, investors should not
consider non-GAAP financial metrics in isolation or as substitutes
for net income (loss) or cash flow from operations, or other
statement of operations or cash flow statement data prepared in
accordance with GAAP. The non-GAAP financial measures used by the
Company in this press release may be different from the measures
used by other companies. To the extent that the Company provides
guidance, it does so only on a non-GAAP basis and does not provide
reconciliations of such forward-looking non-GAAP measures to GAAP.
Specifically, forecasted adjusted EBITDA, adjusted earnings per
share, and contribution margin are forward-looking non-GAAP
measures. Quantitative reconciling information for these measures
is unavailable without unreasonable efforts. The corresponding GAAP
measures (net income, earnings per share, and income (loss) from
operations, respectively) are not accessible on a forward-looking
basis and such information is likely to be significant to an
investor.
For more information on the non-GAAP financial
measures, please see the “Reconciliation of Non-GAAP Measurements
to GAAP Results” tables in this press release. These accompanying
tables have more details on the GAAP financial measures that are
most directly comparable to non-GAAP financial measures and the
related reconciliations between these financial measures.
About Noodles & Company
Since 1995, Noodles & Company has been
serving guests Uncommon Goodness and noodles your way, with noodles
and flavors you know and love as well as new ones you’re about to
discover. From indulgent Wisconsin Mac & Cheese to
better-for-you Zoodles, Noodles serves a world of flavor in every
bowl. Made up of more than 450 restaurants and 8,000 passionate
team members, Noodles is dedicated to nourishing and inspiring
every guest who walks through the door. To learn more or find the
location nearest you, visit www.noodles.com.
Forward-Looking Statements
In addition to historical information, this
press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties such as the number of
restaurants we intend to open, projected capital expenditures and
estimates of our effective tax rates. In some cases, you can
identify forward-looking statements by terms such as “may,”
“might,” “will,” “objective,” “intend,” “should,” “could,” “can,”
“would,” “expect,” “believe,” “design,” “estimate,” “predict,”
“potential,” “plan” or the negative of these terms and similar
expressions intended to identify forward-looking statements. These
statements reflect our current views with respect to future events
and are based on currently available operating, financial and
competitive information. Examples of forward-looking statements
include all matters that are not historical facts, such as
statements regarding expectations with respect to unit growth and
planned restaurant openings, projected capital expenditures, and
potential volatility through 2023 due to the current high
inflationary environment and economic uncertainties, including the
affects on the consumer sentiment and behavior. Our actual results
may differ materially from those anticipated in these
forward-looking statements due to reasons including, but not
limited to, our ability to sustain our overall growth, including
our digital sales growth; our ability to open new restaurants on
schedule and cause those newly opened restaurants to be successful;
our ability to achieve and maintain increases in comparable
restaurant sales and to successfully execute our business strategy,
including new restaurant initiatives and operational strategies to
improve the performance of our restaurant portfolio; the success of
our marketing efforts, including our ability to introduce new
products; current economic conditions including any impact from
inflation or an economic recession; a rising interest rate
environment; price and availability of commodities and other supply
chain challenges; our ability to adequately staff our restaurants;
changes in labor costs; other conditions beyond our control such as
weather, natural disasters, disease outbreaks, epidemics or
pandemics impacting our customer or food supplies; and consumer
reaction to industry related public health issues and health
pandemics, including perceptions of food safety. For additional
information on these and other factors that could affect the
Company’s forward-looking statements, see the Company’s risk
factors, as they may be amended from time to time, set forth in its
filings with the SEC, included in our most recently filed Annual
Report on Form 10-K, and, from time to time, in our subsequently
filed Quarterly Reports on Form 10-Q. The Company disclaims
and does not undertake any obligation to update or revise any
forward-looking statement in this press release, except as may be
required by applicable law or regulation. To the extent that the
Company provides guidance, it does so only on a non-GAAP basis and
does not provide reconciliations of such forward-looking non-GAAP
measures to GAAP. Specifically, forecasted adjusted EBITDA,
adjusted EPS and restaurant contribution margin are forward-looking
non-GAAP measures. Quantitative reconciling information for these
measures is unavailable without unreasonable efforts. The
corresponding GAAP measures (net income, earnings per share and
operating margin, respectively) are not accessible on a
forward-looking basis and such information is likely to be
significant to an investor.
Noodles & CompanyCondensed
Consolidated Statements of Operations(in
thousands, except share and per share data,
unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
July 4,2023 |
|
June 28,2022 |
|
July 4,2023 |
|
June 28,2022 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant revenue |
|
$ |
122,394 |
|
|
$ |
128,274 |
|
$ |
245,621 |
|
|
$ |
238,235 |
|
Franchising royalties and fees, and other |
|
|
2,760 |
|
|
|
2,793 |
|
|
5,610 |
|
|
|
5,394 |
|
Total revenue |
|
|
125,154 |
|
|
|
131,067 |
|
|
251,231 |
|
|
|
243,629 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): |
|
|
|
|
|
|
|
|
Cost of sales |
|
|
30,700 |
|
|
|
35,664 |
|
|
61,725 |
|
|
|
66,435 |
|
Labor |
|
|
39,657 |
|
|
|
38,828 |
|
|
79,487 |
|
|
|
74,321 |
|
Occupancy |
|
|
11,365 |
|
|
|
11,074 |
|
|
22,851 |
|
|
|
22,223 |
|
Other restaurant operating costs |
|
|
22,594 |
|
|
|
22,792 |
|
|
46,605 |
|
|
|
44,658 |
|
General and administrative |
|
|
12,463 |
|
|
|
12,744 |
|
|
26,104 |
|
|
|
24,584 |
|
Depreciation and amortization |
|
|
6,437 |
|
|
|
5,763 |
|
|
12,687 |
|
|
|
11,484 |
|
Pre-opening |
|
|
609 |
|
|
|
353 |
|
|
1,101 |
|
|
|
761 |
|
Restaurant impairments, closure costs and asset disposals |
|
|
1,609 |
|
|
|
1,971 |
|
|
3,178 |
|
|
|
3,360 |
|
Total costs and expenses |
|
|
125,434 |
|
|
|
129,189 |
|
|
253,738 |
|
|
|
247,826 |
|
(Loss) income from
operations |
|
|
(280 |
) |
|
|
1,878 |
|
|
(2,507 |
) |
|
|
(4,197 |
) |
Interest expense, net |
|
|
1,054 |
|
|
|
489 |
|
|
2,015 |
|
|
|
926 |
|
(Loss) income before
taxes |
|
|
(1,334 |
) |
|
|
1,389 |
|
|
(4,522 |
) |
|
|
(5,123 |
) |
(Benefit from) provision for
income taxes |
|
|
(30 |
) |
|
|
44 |
|
|
(103 |
) |
|
|
(39 |
) |
Net (loss) income |
|
$ |
(1,304 |
) |
|
$ |
1,345 |
|
$ |
(4,419 |
) |
|
$ |
(5,084 |
) |
(Loss) earnings per
Class A and Class B common stock, combined |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.03 |
) |
|
$ |
0.03 |
|
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Diluted |
|
$ |
(0.03 |
) |
|
$ |
0.03 |
|
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Weighted average shares of
Class A and Class B common stock outstanding,
combined: |
|
|
|
|
|
|
|
|
Basic |
|
|
46,363,208 |
|
|
|
45,881,354 |
|
|
46,239,357 |
|
|
|
45,803,927 |
|
Diluted |
|
|
46,363,208 |
|
|
|
46,108,720 |
|
|
46,239,357 |
|
|
|
45,803,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noodles & CompanyCondensed
Consolidated Statements of Operations as a Percentage of
Revenue(unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
July 4,2023 |
|
June 28,2022 |
|
July 4,2023 |
|
June 28,2022 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant revenue |
|
97.8 |
% |
|
97.9 |
% |
|
97.8 |
% |
|
97.8 |
% |
Franchising royalties and fees, and other |
|
2.2 |
% |
|
2.1 |
% |
|
2.2 |
% |
|
2.2 |
% |
Total revenue |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
Costs and expenses: |
|
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): (1) |
|
|
|
|
|
|
|
|
Cost of sales |
|
25.1 |
% |
|
27.8 |
% |
|
25.1 |
% |
|
27.9 |
% |
Labor |
|
32.4 |
% |
|
30.3 |
% |
|
32.4 |
% |
|
31.2 |
% |
Occupancy |
|
9.3 |
% |
|
8.6 |
% |
|
9.3 |
% |
|
9.3 |
% |
Other restaurant operating costs |
|
18.5 |
% |
|
17.8 |
% |
|
19.0 |
% |
|
18.7 |
% |
General and administrative |
|
10.0 |
% |
|
9.7 |
% |
|
10.4 |
% |
|
10.1 |
% |
Depreciation and amortization |
|
5.1 |
% |
|
4.4 |
% |
|
5.0 |
% |
|
4.7 |
% |
Pre-opening |
|
0.5 |
% |
|
0.3 |
% |
|
0.4 |
% |
|
0.3 |
% |
Restaurant impairments, closure costs and asset disposals |
|
1.3 |
% |
|
1.5 |
% |
|
1.3 |
% |
|
1.4 |
% |
Total costs and expenses |
|
100.2 |
% |
|
98.6 |
% |
|
101.0 |
% |
|
101.7 |
% |
(Loss) income from
operations |
|
(0.2 |
)% |
|
1.4 |
% |
|
(1.0 |
)% |
|
(1.7 |
)% |
Interest expense, net |
|
0.8 |
% |
|
0.4 |
% |
|
0.8 |
% |
|
0.4 |
% |
(Loss) income before
taxes |
|
(1.1 |
)% |
|
1.1 |
% |
|
(1.8 |
)% |
|
(2.1 |
)% |
(Benefit from) provision for
income taxes |
|
(0.1 |
)% |
|
— |
% |
|
— |
% |
|
— |
% |
Net (loss) income |
|
(1.0 |
)% |
|
1.0 |
% |
|
(1.8 |
)% |
|
(2.1 |
)% |
_______________________(1) As a percentage of
restaurant revenue.
Noodles & CompanyConsolidated
Selected Balance Sheet Data and Selected Operating
Data(in thousands, except restaurant activity,
unaudited) |
|
|
|
As of |
|
|
July 4,2023 |
|
January 3,2023 |
Balance Sheet
Data |
|
|
Total current assets |
|
$ |
23,824 |
|
$ |
21,636 |
Total assets |
|
|
357,574 |
|
|
343,843 |
Total current liabilities |
|
|
64,544 |
|
|
64,113 |
Total long-term debt |
|
|
63,202 |
|
|
46,051 |
Total liabilities |
|
|
321,494 |
|
|
305,479 |
Total stockholders’
equity |
|
|
36,080 |
|
|
38,364 |
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended |
|
|
|
July 4,2023 |
|
|
April 4,2023 |
|
January 3,2023 |
|
September 27,2022 |
|
June 28,2022 |
Selected Operating
Data |
|
|
|
Restaurant Activity: |
|
|
|
|
|
|
|
|
|
|
|
Company-owned restaurants at end of period |
|
|
373 |
|
|
|
369 |
|
|
|
368 |
|
|
|
366 |
|
|
|
363 |
|
Franchise restaurants at end of period |
|
|
92 |
|
|
|
92 |
|
|
|
93 |
|
|
|
93 |
|
|
|
93 |
|
Revenue Data: |
|
|
|
|
|
|
|
|
|
|
|
Company-owned average unit volume |
|
$ |
1,327 |
|
|
$ |
1,343 |
|
|
$ |
1,379 |
|
|
$ |
1,387 |
|
|
$ |
1,421 |
|
Franchise average unit volume |
|
$ |
1,203 |
|
|
$ |
1,257 |
|
|
$ |
1,276 |
|
|
$ |
1,260 |
|
|
$ |
1,276 |
|
Company-owned comparable restaurant sales |
|
|
(5.9 |
)% |
|
|
6.9 |
% |
|
|
10.2 |
% |
|
|
3.4 |
% |
|
|
5.1 |
% |
Franchise comparable restaurant sales |
|
|
(3.4 |
)% |
|
|
4.1 |
% |
|
|
1.3 |
% |
|
|
(3.8 |
)% |
|
|
5.3 |
% |
System-wide comparable restaurant sales |
|
|
(5.5 |
)% |
|
|
6.4 |
% |
|
|
8.7 |
% |
|
|
2.1 |
% |
|
|
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of Non-GAAP Measurements
to GAAP Results
Noodles & CompanyReconciliation
of Net (Loss) Income to EBITDA and Adjusted
EBITDA(in thousands, unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
July 4,2023 |
|
June 28,2022 |
|
July 4,2023 |
|
June 28,2022 |
Net (loss) income |
|
$ |
(1,304 |
) |
|
$ |
1,345 |
|
$ |
(4,419 |
) |
|
$ |
(5,084 |
) |
Depreciation and
amortization |
|
|
6,437 |
|
|
|
5,763 |
|
|
12,687 |
|
|
|
11,484 |
|
Interest expense, net |
|
|
1,054 |
|
|
|
489 |
|
|
2,015 |
|
|
|
926 |
|
(Benefit from) provision for
income taxes |
|
|
(30 |
) |
|
|
44 |
|
|
(103 |
) |
|
|
(39 |
) |
EBITDA |
|
$ |
6,157 |
|
|
$ |
7,641 |
|
$ |
10,180 |
|
|
$ |
7,287 |
|
Restaurant impairments,
closure costs and asset disposals |
|
|
1,609 |
|
|
|
1,971 |
|
|
3,178 |
|
|
|
3,360 |
|
Stock-based compensation
expense |
|
|
1,496 |
|
|
|
1,499 |
|
|
2,886 |
|
|
|
2,668 |
|
Costs related to corporate
matters |
|
|
28 |
|
|
|
63 |
|
|
58 |
|
|
|
63 |
|
Adjusted EBITDA |
|
$ |
9,290 |
|
|
$ |
11,174 |
|
$ |
16,302 |
|
|
$ |
13,378 |
|
______________________________
EBITDA and adjusted EBITDA are supplemental
measures of operating performance that do not represent and should
not be considered as alternatives to net income (loss) or cash flow
from operations, as determined by GAAP, and our calculation thereof
may not be comparable to that reported by other companies. These
measures are presented because we believe that investors’
understanding of our performance is enhanced by including these
non-GAAP financial measures as a reasonable basis for evaluating
our ongoing results of operations.
EBITDA is calculated as net income (loss) before
interest expense, net, provision (benefit) for income taxes and
depreciation and amortization. Adjusted EBITDA further adjusts
EBITDA to reflect the eliminations shown in the table above.
EBITDA and adjusted EBITDA are presented
because: (i) we believe they are useful measures for investors
to assess the operating performance of our business without the
effect of non-cash charges such as depreciation and amortization
expenses and restaurant impairments, closure costs and asset
disposals and (ii) we use adjusted EBITDA internally as a
benchmark for certain of our cash incentive plans and to evaluate
our operating performance or compare our performance to that of our
competitors. The use of adjusted EBITDA as a performance measure
permits a comparative assessment of our operating performance
relative to our performance based on our GAAP results, while
isolating the effects of some items that vary from period to period
without any correlation to core operating performance or that vary
widely among similar companies. Companies within our industry
exhibit significant variations with respect to capital structures
and cost of capital (which affect interest expense and income tax
rates) and differences in book depreciation of property, plant and
equipment (which affect relative depreciation expense), including
significant differences in the depreciable lives of similar assets
among various companies. Our management believes that adjusted
EBITDA facilitates company-to-company comparisons within our
industry by eliminating some of these foregoing variations.
Adjusted EBITDA as presented may not be comparable to other
similarly-titled measures of other companies, and our presentation
of adjusted EBITDA should not be construed as an inference that our
future results will be unaffected by excluded or unusual items.
Noodles & CompanyReconciliation
of Net (Loss) Income to Adjusted Net (Loss)
Income(in thousands, except share and per share
data, unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
July 4,2023 |
|
June 28,2022 |
|
July 4,2023 |
|
June 28,2022 |
Net (loss) income |
|
$ |
(1,304 |
) |
|
$ |
1,345 |
|
|
$ |
(4,419 |
) |
|
$ |
(5,084 |
) |
Restaurant impairments,
divestitures and closure costs (a) |
|
|
526 |
|
|
|
1,009 |
|
|
|
1,363 |
|
|
|
1,633 |
|
Costs related to corporate
matters (b) |
|
|
28 |
|
|
|
63 |
|
|
|
58 |
|
|
|
63 |
|
Tax impact of adjustments
above (c) |
|
|
(19 |
) |
|
|
(5 |
) |
|
|
(39 |
) |
|
|
(5 |
) |
Adjusted net (loss)
income |
|
$ |
(769 |
) |
|
$ |
2,412 |
|
|
$ |
(3,037 |
) |
|
$ |
(3,393 |
) |
|
|
|
|
|
|
|
|
|
(Loss) earnings per
Class A and Class B common stock, combined |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.03 |
) |
|
$ |
0.03 |
|
|
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Diluted |
|
$ |
(0.03 |
) |
|
$ |
0.03 |
|
|
$ |
(0.10 |
) |
|
$ |
(0.11 |
) |
Adjusted (loss) earnings per
Class A and Class B common stock, combined (d) |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.02 |
) |
|
$ |
0.05 |
|
|
$ |
(0.07 |
) |
|
$ |
(0.07 |
) |
Diluted |
|
$ |
(0.02 |
) |
|
$ |
0.05 |
|
|
$ |
(0.07 |
) |
|
$ |
(0.07 |
) |
Weighted average Class A and
Class B common stock outstanding, combined (d) |
|
|
|
|
|
|
|
|
Basic |
|
|
46,363,208 |
|
|
|
45,881,354 |
|
|
|
46,239,357 |
|
|
|
45,803,927 |
|
Diluted |
|
|
46,363,208 |
|
|
|
46,108,720 |
|
|
|
46,239,357 |
|
|
|
45,803,927 |
|
_____________________________
Adjusted net income (loss) is a supplemental
measure of financial performance that is not required by or
presented in accordance with GAAP. We define adjusted net income
(loss) as net income (loss) plus the impact of adjustments and the
tax effects of such adjustments. Adjusted net income (loss) is
presented because management believes it helps convey supplemental
information to investors regarding our performance, excluding the
impact of special items that affect the comparability of results in
past quarters to expected results in future quarters. Adjusted net
income (loss) as presented may not be comparable to other
similarly-titled measures of other companies, and our presentation
of adjusted net income (loss) should not be construed as an
inference that our future results will be unaffected by excluded or
unusual items. Our management uses this non-GAAP financial measure
to analyze changes in our underlying business from quarter to
quarter based on comparable financial results.
(a) |
Reflects the adjustment to eliminate the impact of divestiture
costs and ongoing closure costs recognized during the first two
quarters of 2023 and 2022. Both periods include ongoing closure
costs from restaurants closed in previous years. These expenses are
included in the “Restaurant impairments, closure costs and asset
disposals” line in the Condensed Consolidated Statements of
Operations. |
(b) |
Reflects the adjustments to eliminate the expenses related to
certain corporate matters. |
(c) |
Reflects the tax impact of the other adjustments discussed in (a)
through (b) above using the estimated annual effective tax
rate. |
(d) |
Adjusted per share amounts are calculated by dividing adjusted net
income (loss) by the basic and diluted weighted average shares
outstanding. |
Noodles & CompanyReconciliation
of Operating (Loss) Income to Restaurant
Contribution (in thousands,
unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
July 4,2023 |
|
June 28,2022 |
|
July 4,2023 |
|
June 28,2022 |
(Loss) income from operations |
|
$ |
(280 |
) |
|
$ |
1,878 |
|
|
$ |
(2,507 |
) |
|
$ |
(4,197 |
) |
Less: Franchising royalties
and fees, and other |
|
|
2,760 |
|
|
|
2,793 |
|
|
|
5,610 |
|
|
|
5,394 |
|
Plus: General and
administrative |
|
|
12,463 |
|
|
|
12,744 |
|
|
|
26,104 |
|
|
|
24,584 |
|
Depreciation and amortization |
|
|
6,437 |
|
|
|
5,763 |
|
|
|
12,687 |
|
|
|
11,484 |
|
Pre-opening |
|
|
609 |
|
|
|
353 |
|
|
|
1,101 |
|
|
|
761 |
|
Restaurant impairments, closure costs and asset disposals |
|
|
1,609 |
|
|
|
1,971 |
|
|
|
3,178 |
|
|
|
3,360 |
|
Restaurant contribution |
|
$ |
18,078 |
|
|
$ |
19,916 |
|
|
$ |
34,953 |
|
|
$ |
30,598 |
|
|
|
|
|
|
|
|
|
|
Restaurant contribution
margin |
|
|
14.8 |
% |
|
|
15.5 |
% |
|
|
14.2 |
% |
|
|
12.8 |
% |
_____________________________
Restaurant contribution represents restaurant
revenue less restaurant operating costs, which are the cost of
sales, labor, occupancy and other operating items. Restaurant
contribution margin represents restaurant contribution as a
percentage of restaurant revenue. Restaurant contribution and
restaurant contribution margin are non-GAAP measures that are
neither required by, nor presented in accordance with GAAP, and the
calculations thereof may not be comparable to similar measures
reported by other companies. These measures are supplemental
measures of the operating performance of our restaurants and are
not reflective of the underlying performance of our business
because corporate-level expenses are excluded from these
measures.
Restaurant contribution and restaurant
contribution margin have limitations as analytical tools and should
not be considered in isolation or as substitutes for analysis of
our results as reported under GAAP. Management does not consider
these measures in isolation or as an alternative to financial
measures determined in accordance with GAAP. However, management
believes that restaurant contribution and restaurant contribution
margin are important tools for investors and other interested
parties because they are widely-used metrics within the restaurant
industry to evaluate restaurant-level productivity, efficiency and
performance. Management also uses these measures as metrics to
evaluate the profitability of incremental sales at our restaurants,
restaurant performance across periods, and restaurant financial
performance compared with competitors.
Contacts:Investor
Relationsinvestorrelations@noodles.com
MediaDanielle
Moorepress@noodles.comSource: Noodles & Company
Noodles (NASDAQ:NDLS)
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