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News
Key highlights for the first quarter of 2024 versus the first quarter of 2023 include:
- Total revenue decreased 3.7% to
$121.4 million from$126.1 million in the first quarter of 2023. - Comparable restaurant sales decreased 5.4% system-wide, comprised of a 5.7% decrease at company-owned restaurants and a 4.5% decrease at franchise restaurants.
- Net loss was
$6.1 million , or$0.14 loss per diluted share, compared to net loss of$3.1 million , or$0.07 loss per diluted share, in the first quarter of 2023. - Operating margin was (3.4)% compared to (1.8)% in the first quarter of 2023.
- Restaurant contribution margin(1) was 13.1% compared to 13.7% in the first quarter of 2023.
- Two new company-owned restaurants and one franchise restaurant opened in the first quarter of 2024.
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(1) Restaurant contribution margin is a non-GAAP measures. Reconciliation of operating income (loss) to restaurant contribution margin is included in the accompanying financial data. See “Non-GAAP Financial Measures.”
Liquidity Update
As of
Business Outlook
Based upon management’s current assessment following first quarter results, the Company is reiterating guidance related to its 2024 performance. The following is expected for the full year 2024:
- Total revenue of
$510 million to$525 million , including flat to +3% comparable restaurant sales growth; - Restaurant level contribution margins of 14% to 15%;
- General and administrative expenses of
$52 million to$55 million , inclusive of stock-based compensation expense of approximately$6 million ; - Depreciation and amortization of
$32 million to$34 million ; - Net interest expense of
$8 million to$9 million ; - New restaurant openings: 10-12 company-owned and up to 3 franchise-owned; and
- Capital expenditures of
$28 million to$32 million .
Non-GAAP Financial Measures
The Company believes that a quantitative reconciliation 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 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. These non-GAAP financial measures 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, loss on asset disposals, net lease exit costs (benefits), loss on sale of restaurants, severance and executive transition costs 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) before restaurant impairments, net lease exit costs (benefits), loss on sale of restaurants, severance and executive transition costs and loss on debt modifications 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
Non-GAAP Financial Measures
To supplement its condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in
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
Since 1995,
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 our business strategy and priorities, unit growth and planned restaurant openings, projected capital expenditures and all of the statements within “Business Outlook”. 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 execute on our strategic priorities; 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; economic conditions including any impact from inflation, an economic recession or a high 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 customers 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
| Noodles & Company Condensed Consolidated Statements of Operations (in thousands, except share and per share data, unaudited) |
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| Fiscal Quarter Ended | ||||||||
2024 |
2023 |
|||||||
| Revenue: | ||||||||
| Restaurant revenue | $ | 119,003 | $ | 123,227 | ||||
| Franchising royalties and fees, and other | 2,392 | 2,850 | ||||||
| Total revenue | 121,395 | 126,077 | ||||||
| Costs and expenses: | ||||||||
| Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||||||||
| Cost of sales | 29,701 | 31,025 | ||||||
| Labor | 38,417 | 39,830 | ||||||
| Occupancy | 11,829 | 11,486 | ||||||
| Other restaurant operating costs | 23,464 | 24,011 | ||||||
| General and administrative | 13,044 | 13,641 | ||||||
| Depreciation and amortization | 7,370 | 6,250 | ||||||
| Pre-opening | 437 | 492 | ||||||
| Restaurant impairments, closure costs and asset disposals | 1,229 | 1,569 | ||||||
| Total costs and expenses | 125,491 | 128,304 | ||||||
| Loss from operations | (4,096 | ) | (2,227 | ) | ||||
| Interest expense, net | 1,979 | 961 | ||||||
| Loss before taxes | (6,075 | ) | (3,188 | ) | ||||
| Provision for (benefit from) income taxes | 65 | (73 | ) | |||||
| Net loss | $ | (6,140 | ) | $ | (3,115 | ) | ||
| Loss per share | ||||||||
| Basic | $ | (0.14 | ) | $ | (0.07 | ) | ||
| Diluted | $ | (0.14 | ) | $ | (0.07 | ) | ||
| Weighted average common shares outstanding: | ||||||||
| Basic | 45,079,355 | 46,115,506 | ||||||
| Diluted | 45,079,355 | 46,115,506 | ||||||
| Noodles & Company Consolidated Selected Balance Sheet Data and Selected Operating Data (in thousands, except restaurant activity, unaudited) |
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| As of | ||||||||
2024 |
2024 |
|||||||
| Balance Sheet Data | ||||||||
| Total current assets | $ | 22,240 | $ | 22,624 | ||||
| Total assets | 360,377 | 368,095 | ||||||
| Total current liabilities | 72,513 | 67,514 | ||||||
| Total long-term debt | 81,176 | 80,218 | ||||||
| Total liabilities | 338,473 | 340,935 | ||||||
| Total stockholders’ equity | 21,904 | 27,160 | ||||||
| Fiscal Quarter Ended |
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2024 |
2024 |
2023 |
2023 |
2023 |
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| Selected Operating Data | ||||||||||||||||||||
| Restaurant Activity: | ||||||||||||||||||||
| Company-owned restaurants at end of period | 380 | 380 | 377 | 373 | 369 | |||||||||||||||
| Franchise restaurants at end of period | 89 | 90 | 91 | 92 | 92 | |||||||||||||||
| Revenue Data: | ||||||||||||||||||||
| Company-owned average unit volume | $ | 1,253 | $ | 1,314 | $ | 1,335 | $ | 1,327 | $ | 1,343 | ||||||||||
| Franchise average unit volume | $ | 1,223 | $ | 1,232 | $ | 1,244 | $ | 1,203 | $ | 1,257 | ||||||||||
| Company-owned comparable restaurant sales | (5.7 | )% | (4.3 | )% | (4.3 | )% | (5.9 | )% | 6.9 | % | ||||||||||
| Franchise comparable restaurant sales | (4.5 | )% | (3.6 | )% | (1.2 | )% | (3.4 | )% | 4.1 | % | ||||||||||
| System-wide comparable restaurant sales | (5.4 | )% | (4.2 | )% | (3.7 | )% | (5.5 | )% | 6.4 | % | ||||||||||
Reconciliations of Non-GAAP Measurements to GAAP Results
| Noodles & Company Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (in thousands, unaudited) |
||||||||
| Fiscal Quarter Ended(1) | ||||||||
2024 |
2023 |
|||||||
| Net loss | $ | (6,140 | ) | $ | (3,115 | ) | ||
| Depreciation and amortization | 7,370 | 6,250 | ||||||
| Interest expense, net | 1,979 | 961 | ||||||
| Provision for (benefit from) income taxes | 65 | (73 | ) | |||||
| EBITDA | $ | 3,274 | $ | 4,023 | ||||
| Restaurant impairments(2) | 171 | 86 | ||||||
| Loss on disposal of assets | 726 | 378 | ||||||
| Lease exit (benefits) costs, net | (331 | ) | 303 | |||||
| Severance and executive transition costs | 473 | — | ||||||
| Stock-based compensation expense | 1,186 | 1,391 | ||||||
| Adjusted EBITDA | $ | 5,499 | $ | 6,181 | ||||
______________________________
(1) Amounts for the fiscal quarter ended
(2) Restaurant impairments in all periods presented above include amounts related to restaurants previously impaired.
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, loss on disposal of assets, net lease exit costs (benefits), loss on sale of restaurants, 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 & Company Reconciliation of Net Loss to Adjusted Net Loss (in thousands, except share and per share data, unaudited) |
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| Fiscal Quarter Ended(1) | ||||||||
2024 |
2023 |
|||||||
| Net loss | $ | (6,140 | ) | $ | (3,115 | ) | ||
| Restaurant impairments(2) | 171 | 86 | ||||||
| Lease exit (benefits) costs, net | (331 | ) | 303 | |||||
| Severance and executive transition costs | 473 | — | ||||||
| Tax impact of adjustments above(3) | — | — | ||||||
| Adjusted net loss | $ | (5,827 | ) | $ | (2,726 | ) | ||
| Loss per share | ||||||||
| Basic | $ | (0.14 | ) | $ | (0.07 | ) | ||
| Diluted | $ | (0.14 | ) | $ | (0.07 | ) | ||
| Adjusted loss per share | ||||||||
| Basic | $ | (0.13 | ) | $ | (0.06 | ) | ||
| Diluted | $ | (0.13 | ) | $ | (0.06 | ) | ||
| Weighted average common shares outstanding | ||||||||
| Basic | 45,079,355 | 46,115,506 | ||||||
| Diluted | 45,079,355 | 46,115,506 | ||||||
_____________________________
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) before restaurant impairments, net lease exit costs (benefits), loss on sale of restaurants, severance and executive transition costs and loss on debt modification, 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.
(1) Amounts for the fiscal quarter ended
(2) Restaurant impairments in all periods presented above include amounts related to restaurants previously impaired.
(3) The tax impact of the other adjustments is immaterial while the Company has a full valuation allowance and significant net operating losses.
| Noodles & Company Reconciliation of Operating Loss to Restaurant Contribution (in thousands, unaudited) |
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| Fiscal Quarter Ended | ||||||||
2024 |
2023 |
|||||||
| Loss from operations | $ | (4,096 | ) | $ | (2,227 | ) | ||
| Less: Franchising royalties and fees, and other | 2,392 | 2,850 | ||||||
| Plus: General and administrative | 13,044 | 13,641 | ||||||
| Depreciation and amortization | 7,370 | 6,250 | ||||||
| Pre-opening | 437 | 492 | ||||||
| Restaurant impairments, closure costs and asset disposals | 1,229 | 1,569 | ||||||
| Restaurant contribution | $ | 15,592 | $ | 16,875 | ||||
| Restaurant contribution margin | 13.1 | % | 13.7 | % | ||||
_____________________________
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 Relations
investorrelations@noodles.com
Media
press@noodles.com
Source:
Source: Noodles & Company