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Key highlights for the first quarter of 2015 versus the same quarter a year ago include:
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Total revenue increased 18.1% to
$105.8 million from$89.5 million . - Comparable restaurant sales increased 0.8% for company-owned restaurants, 1.4% for franchise restaurants and 0.9% system-wide.
- Restaurant contribution margin decreased to 16.2% from 17.3%.
- 16 new restaurants opened system-wide in the first quarter, including 13 company-owned and three franchise restaurants.
-
GAAP net income decreased to a loss of
$2.8 million from net income of$1.4 million . The Company recorded a$5.9 million pre-tax impairment charge related to eight restaurants in 2015. -
Adjusted net income(1) decreased to
$0.9 million , from$1.4 million , and adjusted earnings per diluted share decreased to$0.03 from$0.05 . -
Adjusted EBITDA(1) increased to
$8.8 million from$8.4 million .
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(1) Adjusted net income and adjusted EBITDA are non-GAAP measures. A reconciliation of GAAP net income to each of these measures is included in the accompanying financial data. See "Non-GAAP Financial Measures."
First Quarter 2015 Financial Results
Total revenue increased
Sixteen new restaurants opened system-wide in the first quarter of 2015, including 13 company-owned and three franchise restaurants. Total restaurants at the end of the first quarter totaled 455, comprised of 399 company-owned and 56 franchise restaurants. In the first quarter of 2015, comparable restaurant sales increased 0.8% for company-owned restaurants, 1.4% for franchise restaurants and 0.9% system-wide.
Restaurant contribution margin decreased to 16.2% in the first quarter of 2015, compared with 17.3% in the first quarter of 2014. The decrease was primarily due to deleverage on lower average unit volumes due to a higher mix of immature restaurants.
The Company reported a GAAP loss of
2015 Outlook
Based upon management's current assessment following first quarter results (including the Company's restaurant comparable sales), the Company has revised guidance and currently expects the following for full year 2015:
- Unit growth of 12% to 14% system-wide;
- Comparable restaurant sales growth in the low single digits;
- Restaurant level contribution margin of 18.0% to 19.0%;
- Adjusted diluted earnings per share growth to be approximately flat; and
- An adjusted effective tax rate between 39% and 40%.
The sensitivity of the Company's earnings per diluted share for fiscal year 2015 is estimated at the following:
-
For each 1.0% change in guest counts, approximately
$0.04 annualized; -
For each 10 basis point change in restaurant level contribution margin, approximately
$0.01 annualized; and -
For each
$500,000 in pre-tax income or expense, approximately$0.01 .
Key Definitions:
Comparable Restaurant Sales represent year-over-year sales comparisons for restaurants open for at least 18 full periods.
Restaurant Contribution Margin represents restaurant revenue less restaurant operating costs which are costs of sales, labor, occupancy and other restaurant operating costs.
Adjusted EBITDA represents net income before interest expense, provision for income taxes, asset disposals, closure costs and restaurant impairments, depreciation and amortization, stock-based compensation, management fees and other one-time expenses. Adjusted EBITDA is presented because: (i) management believes it is a useful measure for investors to assess the operating performance of our business without the effect of non-cash charges such as depreciation and amortization expenses and asset disposals, closure costs and restaurant impairments and (ii) management uses it 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 represents net income plus various adjustments and the tax effects of these adjustments. Adjusted net income 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
The conference call can be accessed live over the phone by dialing (877) 303-1298 or for international callers by dialing (253) 237-1032. A replay will be available after the call and can be accessed by dialing (855) 859-2056 or for international callers by dialing (404) 537-3406; the passcode is 31416887. The replay will be available until
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company uses the following non-GAAP financial measures: adjusted EBITDA, adjusted net income and adjusted EPS (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 is presented because management believes it helps convey supplemental information to investors regarding the Company's performance excluding the impact of restaurant impairment costs and the tax effect of such adjustments. The non-GAAP measures used by the Company in this press release may be different from the measures used by other companies.
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
Founded in 1995,
Forward-Looking Statements
This press release contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words, and variations of words, such as "believe," "estimate," "anticipate," "expect," "intend," "may," "will," "would" and similar expressions are intended to identify our forward-looking statements. Examples of forward-looking statements include all matters that are not historical facts, such as statements regarding 2015 guidance, including unit growth, comparable restaurant sales growth, restaurant level contribution margin, adjusted diluted earnings per share and our expected adjusted effective tax rate, and operating margins, new restaurant development, additional public company expenses, our target and adjusted net income and targeted restaurant openings. By their nature, forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from the Company's forward-looking statements. These risks and uncertainties include: our ability to achieve and maintain increases in comparable restaurant sales and to successfully execute our growth strategy; our ability to open new restaurants on schedule; current economic conditions; price and availability of commodities; consumer confidence and spending patterns; the assumptions used in the adjustment of interest expense and the adjustments for certain incremental legal, accounting, insurance and other compliance costs used in the calculation of adjusted net income; changes in consumer tastes and the level of acceptance of the Company's restaurant concepts (including consumer acceptance of prices and the success of our catering offerings); consumer reactions to public health issues and perceptions of food safety; seasonal factors; and
weather. 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
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| Consolidated Statements of Income | ||
| (in thousands, except share and per share data, unaudited) | ||
| Fiscal Quarter Ended | ||
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| 2015 | 2014 | |
| Revenue: | ||
| Restaurant revenue | $ 104,782 | $ 88,448 |
| Franchising royalties and fees | 979 | 1,071 |
| Total revenue | 105,761 | 89,519 |
| Costs and expenses: | ||
| Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||
| Cost of sales | 27,812 | 23,848 |
| Labor | 33,029 | 27,198 |
| Occupancy | 12,218 | 9,865 |
| Other restaurant operating costs | 14,717 | 12,206 |
| General and administrative | 8,418 | 7,009 |
| Depreciation and amortization | 6,919 | 5,610 |
| Pre-opening | 880 | 1,113 |
| Restaurant impairment, asset disposals and closure costs | 6,086 | 214 |
| Total costs and expenses | 110,079 | 87,063 |
| (Loss) income from operations | (4,318) | 2,456 |
| Interest expense | 229 | 20 |
| (Loss) income before income taxes | (4,547) | 2,436 |
| (Benefit) provision for income taxes | (1,795) | 1,012 |
| Net (loss) income |
|
$ 1,424 |
| Earnings per share of Class A and Class B common stock, combined: | ||
| Basic |
|
$ 0.05 |
| Diluted |
|
$ 0.05 |
| Weighted average shares of Class A and Class B common stock outstanding, combined: | ||
| Basic | 29,843,204 | 29,606,321 |
| Diluted | 29,843,204 | 31,059,324 |
| Noodles & Company | ||
| Consolidated Statements of Income as a Percentage of Revenue | ||
| (in thousands, unaudited) | ||
| Fiscal Quarter Ended | ||
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| 2015 | 2014 | |
| Revenue: | ||
| Restaurant revenue | 99.1% | 98.8% |
| Franchising royalties and fees | 0.9 | 1.2 |
| Total revenue | 100.0 | 100.0 |
| Costs and Expenses: | ||
| Restaurant Operating Costs (exclusive of depreciation and amortization shown separately below): (1) | ||
| Cost of sales | 26.5 | 27.0 |
| Labor | 31.5 | 30.8 |
| Occupancy | 11.7 | 11.2 |
| Other restaurant operating costs | 14.0 | 13.8 |
| General and administrative | 8.0 | 7.8 |
| Depreciation and amortization | 6.5 | 6.3 |
| Pre-opening | 0.8 | 1.2 |
| Restaurant impairments, asset disposals and closure costs | 5.8 | 0.2 |
| Total costs and expenses | 104.1 | 97.3 |
| (Loss) income from operations | (4.1) | 2.7 |
| Interest expense | 0.2 | — |
| (Loss) income before income taxes | (4.3) | 2.7 |
| (Benefit) provision for income taxes | (1.7) | 1.1 |
| Net (loss) income | (2.6)% | 1.6% |
| ________________________ | ||
| (1) As a percentage of restaurant revenue. | ||
| Noodles & Company | ||
| Consolidated Selected Balance Sheet Data and Selected Operating Data | ||
| (in thousands, except restaurant activity and comparable restaurant sales, unaudited) | ||
| As of | ||
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| 2015 | 2014 | |
| Balance Sheet Data | ||
| Total current assets | $ 22,917 | $ 22,776 |
| Total assets | 235,329 | 238,903 |
| Total current liabilities | 28,389 | 25,831 |
| Total long-term debt | 22,460 | 27,500 |
| Total liabilities | 96,544 | 98,788 |
| Total stockholders' equity | 138,785 | 140,115 |
| Fiscal Quarter Ended | |||||
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| 2015 | 2014 | 2014 | 2014 | 2014 | |
| Selected Operating Data | |||||
| Restaurant Activity: | |||||
| Company-owned restaurants at end of period | 399 | 386 | 370 | 343 | 331 |
| Franchise restaurants at end of period | 56 | 53 | 55 | 67 | 63 |
| Revenue Data: | |||||
| Company-owned average unit volumes | $ 1,136 | $ 1,147 | $ 1,152 | $ 1,156 | $ 1,163 |
| Franchise average unit volumes | $ 1,134 | $ 1,131 | $ 1,130 | $ 1,127 | $ 1,126 |
| Company-owned comparable restaurant sales | 0.8% | 1.3% | 1.6% | (0.6)% | (1.4)% |
| Franchise comparable restaurant sales | 1.4% | 1.5% | 2.0% | (1.2)% | (3.3)% |
| System-wide comparable restaurant sales | 0.9% | 1.3% | 1.7% | (0.7)% | (1.6)% |
Reconciliations of Non-GAAP Measurements to GAAP Results
| Noodles & Company | ||
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||
| (in thousands, unaudited) | ||
| Fiscal Quarter Ended | ||
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| 2015 | 2014 | |
| (in thousands, unaudited) | ||
| Net income |
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$ 1,424 |
| Depreciation and amortization | 6,919 | 5,610 |
| Interest expense | 229 | 20 |
| Provision for income taxes | (1,795) | 1,012 |
| EBITDA | $ 2,601 | $ 8,066 |
| Asset disposals, closure costs and restaurant impairment | 6,086 | 214 |
| Stock-based compensation expense | 161 | 140 |
| Adjusted EBITDA | $ 8,848 | $ 8,420 |
| ______________________________ |
| EBITDA and adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net income 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 before interest expense, provision for income taxes and depreciation and amortization. Adjusted EBITDA further adjusts EBITDA to reflect the additions and 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 asset disposals, closure costs and restaurant impairments 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 Income to Adjusted Net Income | ||
| (in thousands, except share and per share data, unaudited) | ||
| Fiscal Quarter Ended | ||
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| 2015 | 2014 | |
| (in thousands, unaudited) | ||
| Net income |
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$ 1,424 |
| Restaurant impairment costs (a) | 5,907 | — |
| Tax effect of adjustments (b) | (2,287) | — |
| Adjusted net income | $ 868 | $ 1,424 |
| Adjusted earnings per Class A and Class B common stock, combined | ||
| Basic | $ 0.03 | $ 0.05 |
| Diluted | $ 0.03 | $ 0.05 |
| Pro forma weighted average Class A and Class B common stock outstanding, combined (c) | ||
| Basic | 29,843,204 | 29,606,321 |
| Diluted | 30,898,660 | 31,059,324 |
| _____________________________ |
| Adjusted net income is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define adjusted net income as net income plus the impact of adjustments and the tax effects of these adjustments. Adjusted net income 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 as presented may not be comparable to other similarly-titled measures of other companies, and our presentation of adjusted net income 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 impairing eight restaurants. These expenses are included in the "Restaurant impairment, asset disposals and closure costs" line in the Consolidated Statements of Income |
| (b) Reflects the tax expense associated with the adjustment in (a) above at the statutory tax rate of 38.72% for 2015. |
| (c) Adjusted per share amounts are calculated by dividing adjusted net income by the adjusted basic and diluted weighted average shares outstanding. |
CONTACT: Investor Relations
investorrelations@noodles.com
Media
Kristina Jorge
(646) 277-1234
press@noodles.com
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