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Key highlights for the fiscal year of 2015 include:
- Total revenue increased 12.8% to
$455.5 million compared to fiscal year 2014. - Comparable restaurant sales decreased 0.2% for company-owned restaurants, 0.9% for franchise restaurants and 0.3% system-wide.
- 70 new restaurants opened system-wide in 2015, including 51 company-owned and 19 franchise restaurants.
- 16 company-owned and one franchise restaurant were closed in the fourth quarter.
- GAAP net loss of
$13.8 million , which includes pre-tax closure, impairment, and asset disposal costs of$29.6 million . - Adjusted net income(1) of
$3.9 million , or$0.13 per diluted share. - Adjusted EBITDA(1) of
$38.0 million . - Restaurant contribution margin of 16.2%.
Key highlights for the fourth quarter of 2015 include:
- Total revenue increased 7.9% to
$117.1 million compared to the fourth quarter of 2014. - Comparable restaurant sales decreased 0.9% for company-owned restaurants, 2.1% for franchise restaurants and 1.1% system-wide.
- 21 new restaurants opened system-wide in the fourth quarter, including 14 company-owned and seven franchise restaurants.
- 16 company-owned and one franchise restaurant were closed in the quarter.
- GAAP net loss of
$4.3 million . - Adjusted net loss(1) of
$0.1 million , or$0.00 per diluted share. - Adjusted EBITDA(1) of
$7.8 million . - Restaurant contribution margin of 14.9%.
______________________
(1) Adjusted net (loss) income and Adjusted EBITDA are non-GAAP measures. A reconciliation of GAAP net (loss) income to each of these measures is included in the accompanying financial data. See "Non-GAAP Financial Measures."
Reddy continued, "We believe the fundamental business is strengthening and that we have improved the foundation from which we expect to build sales and profits over the long term. Our underlying sales momentum has continued into 2016, with comparable sales growth quarter-to-date through
Fiscal Year Ended 2015 Financial Results
Total revenue increased
Adjusted net income(2) decreased to
Restaurant contribution margin decreased to 16.2% as a percentage of restaurant revenue during fiscal year 2015, compared with 19.1% in the fiscal year 2014. This decrease was primarily due to increased marketing and promotional costs, increased labor pressures and deleverage from lower average unit volumes compared to the prior year.
Fourth Quarter 2015 Financial Results
Total revenue increased
Adjusted net (loss) income(2) decreased to a net loss of
Restaurant contribution margin decreased to 14.9% in the fourth quarter of 2015, compared with 20.0% in the fourth quarter of 2014. The decrease was primarily due to increased marketing and promotional costs, increased labor pressures and deleverage from lower average unit volumes compared to the prior year.
______________________
(2) Adjusted net (loss) income is a non-GAAP measure. A reconciliation of GAAP net (loss) income to Adjusted net (loss) income is included in the accompanying financial data. See "Non-GAAP Financial Measures."
2016 Outlook
For 2016, management expects the following:
- Approximately 50 new restaurants system-wide, including 40 to 45 company-owned restaurant openings;
- Total revenue of
$505.0 to$515.0 million ; - Low single digit comparable restaurant sales growth;
- Restaurant level contribution margin of 14.0% to 16.0%;
-
Adjusted EBITDA of
$38.0 to$40.0 million , or flat to 5% growth; - Adjusted diluted earnings per share of
$0.04 to$0.08 ; and - An estimated tax rate of approximately 38% to 40%.
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 (loss) income before interest expense, benefit or provision for income taxes, restaurant impairments, closure costs and asset disposals, depreciation and amortization, stock-based compensation expense and other atypical or non-cash 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 restaurant impairments, closure costs and asset disposals 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 the competitors. See "Non-GAAP Financial Measures" below.
Adjusted Net (Loss) Income represents net (loss) income after various adjustments and the tax effects of these adjustments. Adjusted net (loss) 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 32810437. 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 (loss) income and adjusted earnings per share (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 (loss) income is presented because management believes it helps convey supplemental information to investors regarding the Company's performance excluding the impact of restaurant impairment and closure costs, stock-based compensation expense associated with the vesting of stock options granted prior to the Company's IPO, transaction costs related to restaurant purchases, write-offs related to obsolete inventory, litigation reserves 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 2016 guidance, comparable restaurant sales
and operating margins, new restaurant development, expected public company expense, and our outlook, in particular, our target revenue and Adjusted EBITDA, targeted restaurant openings and effective tax rate. 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 maintain increases in comparable restaurant sales and to successfully execute our growth strategy; whether new restaurants we open are profitable and whether opening new restaurants will negatively affect sales at existing restaurants; changes in consumer tastes and the level of acceptance of our restaurant concept (including consumer acceptance of prices); our ability to open new restaurants on schedule; current economic trends; price and availability of
commodities; labor costs; 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 (loss) income; consumer reaction to public health issues and perception 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
| Noodles & Company | ||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||
| (in thousands, except share and per share data, unaudited) | ||||||||||||||||
| Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenue: | ||||||||||||||||
| Restaurant revenue | $ | 115,715 | $ | 107,204 | $ | 450,482 | $ | 398,993 | ||||||||
| Franchise royalties and fees | 1,413 | 1,342 | 4,969 | 4,748 | ||||||||||||
| Total revenue | 117,128 | 108,546 | 455,451 | 403,741 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||||||||||||||||
| Cost of sales | 31,840 | 28,684 | 120,455 | 107,217 | ||||||||||||
| Labor | 37,280 | 32,082 | 143,145 | 120,492 | ||||||||||||
| Occupancy | 12,691 | 11,426 | 50,300 | 42,540 | ||||||||||||
| Other restaurant operating costs | 16,672 | 13,598 | 63,549 | 52,580 | ||||||||||||
| General and administrative | 10,209 | 8,588 | 37,244 | 31,394 | ||||||||||||
| Depreciation and amortization | 6,842 | 6,818 | 27,802 | 24,787 | ||||||||||||
| Pre-opening | 1,257 | 1,143 | 4,407 | 4,425 | ||||||||||||
| Restaurant impairments, closure costs and asset disposals | 6,801 | 733 | 29,616 | 1,391 | ||||||||||||
| Total costs and expenses | 123,592 | 103,072 | 476,518 | 384,826 | ||||||||||||
| (Loss) income from operations | (6,464 | ) | 5,474 | (21,067 | ) | 18,915 | ||||||||||
| Interest expense | 613 | 197 | 1,432 | 365 | ||||||||||||
| (Loss) income before income taxes | (7,077 | ) | 5,277 | (22,499 | ) | 18,550 | ||||||||||
| (Benefit) provision for income taxes | (2,823 | ) | 1,742 | (8,734 | ) | 7,122 | ||||||||||
| Net (loss) income | $ | (4,254 | ) | $ | 3,535 | $ | (13,765 | ) | $ | 11,428 | ||||||
| Earnings per Class A and Class B common stock, combined | ||||||||||||||||
| Basic | $ | (0.15 | ) | $ | 0.12 | $ | (0.48 | ) | $ | 0.38 | ||||||
| Diluted | $ | (0.15 | ) | $ | 0.11 | $ | (0.48 | ) | $ | 0.37 | ||||||
| Weighted average Class A and Class B common stock outstanding, combined | ||||||||||||||||
| Basic | 27,708,421 | 29,798,974 | 28,938,901 | 29,717,304 | ||||||||||||
| Diluted | 27,708,421 | 30,884,874 | 28,938,901 | 31,001,099 | ||||||||||||
| Noodles & Company | ||||||||||||
| Consolidated Statements of Income as a Percentage of Revenue | ||||||||||||
| (unaudited) | ||||||||||||
| Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| Revenue: | ||||||||||||
| Restaurant revenue | 98.8 | % | 98.8 | % | 98.9 | % | 98.8 | % | ||||
| Franchise royalties and fees | 1.2 | 1.2 | 1.1 | 1.2 | ||||||||
| 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 | 27.5 | 26.8 | 26.7 | 26.9 | ||||||||
| Labor | 32.2 | 29.9 | 31.8 | 30.2 | ||||||||
| Occupancy | 11.0 | 10.7 | 11.2 | 10.7 | ||||||||
| Other restaurant operating costs | 14.4 | 12.7 | 14.1 | 13.2 | ||||||||
| General and administrative | 8.7 | 7.9 | 8.2 | 7.8 | ||||||||
| Depreciation and amortization | 5.8 | 6.3 | 6.1 | 6.1 | ||||||||
| Pre-opening | 1.1 | 1.1 | 1.0 | 1.1 | ||||||||
| Restaurant impairments, closure costs and asset disposals | 5.8 | 0.7 | 6.5 | 0.3 | ||||||||
| Total costs and expenses | 105.5 | 95.0 | 104.6 | 95.3 | ||||||||
| (Loss) income from operations | (5.5 | ) | 5.0 | (4.6 | ) | 4.7 | ||||||
| Interest expense | 0.5 | 0.2 | 0.3 | 0.1 | ||||||||
| (Loss) income before income taxes | (6.0 | ) | 4.9 | (4.9 | ) | 4.6 | ||||||
| (Benefit) provision for income taxes | (2.4 | ) | 1.6 | (1.9 | ) | 1.8 | ||||||
| Net (loss) income | (3.6 | )% | 3.3 | % | (3.0 | )% | 2.8 | % | ||||
________________________
(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 | ||||||||
| 2015 | 2014 | |||||||
| Balance Sheet Data | ||||||||
| Total current assets | $ | 25,401 | $ | 22,776 | ||||
| Total assets | 239,961 | 238,539 | ||||||
| Total current liabilities | 32,914 | 25,831 | ||||||
| Total long-term debt | 67,732 | 27,136 | ||||||
| Total liabilities | 146,189 | 98,424 | ||||||
| Total stockholders' equity | 93,772 | 140,115 | ||||||
| Fiscal Quarter Ended | ||||||||||||||||
| 2015 | 2015 | 2015 | 2015 | 2014 | ||||||||||||
| Selected Operating Data | ||||||||||||||||
| Restaurant Activity: | ||||||||||||||||
| Company-owned restaurants at end of period | 422 | 424 | 411 | 399 | 386 | |||||||||||
| Franchise restaurants at end of period | 70 | 64 | 61 | 56 | 53 | |||||||||||
| Revenue Data: | ||||||||||||||||
| Company-owned average unit volumes | $ | 1,103 | 1,111 | 1,123 | 1,136 | 1,147 | ||||||||||
| Franchise average unit volumes | $ | 1,121 | 1,128 | 1,138 | 1,134 | 1,131 | ||||||||||
| Company-owned comparable restaurant sales | (0.9 | )% | (0.7 | )% | 0.1 | % | 0.8 | % | 1.3 | % | ||||||
| Franchise comparable restaurant sales | (2.1 | )% | (1.9 | )% | (0.5 | )% | 1.4 | % | 1.5 | % | ||||||
| System-wide comparable restaurant sales | (1.1 | )% | (0.9 | )% | — | % | 0.9 | % | 1.3 | % | ||||||
Reconciliations of Non-GAAP Measurements to GAAP Results
| Noodles & Company | ||||||||||||||||
| Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA | ||||||||||||||||
| (in thousands, unaudited) | ||||||||||||||||
| Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (in thousands, unaudited) | ||||||||||||||||
| Net (loss) income | $ | (4,254 | ) | $ | 3,535 | $ | (13,765 | ) | $ | 11,428 | ||||||
| Depreciation and amortization | 6,842 | 6,818 | 27,802 | 24,787 | ||||||||||||
| Interest expense | 613 | 197 | 1,432 | 365 | ||||||||||||
| (Benefit) provision for income taxes | (2,823 | ) | 1,742 | (8,734 | ) | 7,122 | ||||||||||
| EBITDA | $ | 378 | $ | 12,292 | $ | 6,735 | $ | 43,702 | ||||||||
| Restaurant impairments, closure costs and asset disposals | 6,801 | 733 | 29,616 | 1,391 | ||||||||||||
| Stock-based compensation expense | 433 | 309 | 1,469 | 1,330 | ||||||||||||
| Litigation reserves | 200 | — | 200 | — | ||||||||||||
| Transaction costs (a) | — | 42 | — | 100 | ||||||||||||
| Adjusted EBITDA | $ | 7,812 | $ | 13,376 | $ | 38,020 | $ | 46,523 | ||||||||
______________________________
EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net (loss) 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 (loss) 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 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.
(a) Expenses related to the acquisition of 19 franchise restaurants. Sixteen of the restaurants were acquired in
| Noodles & Company | ||||||||||||||||
| Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income | ||||||||||||||||
| (in thousands, except share and per share data, unaudited) | ||||||||||||||||
| Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (in thousands, unaudited) | ||||||||||||||||
| Net (loss) income | $ | (4,254 | ) | $ | 3,535 | $ | (13,765 | ) | $ | 11,428 | ||||||
| Restaurant impairment costs (a) | 6,544 | — | 28,637 | — | ||||||||||||
| Litigation reserves | 200 | — | 200 | — | ||||||||||||
| Non-recurring stock-based compensation (b) | — | — | — | 147 | ||||||||||||
| Transaction costs (c) | — | 42 | — | 100 | ||||||||||||
| Obsolete inventory (d) | — | 490 | — | 490 | ||||||||||||
| Tax effect of adjustments (e) | (2,602 | ) | (204 | ) | (11,124 | ) | (283 | ) | ||||||||
| Adjusted net (loss) income | $ | (112 | ) | $ | 3,863 | $ | 3,948 | $ | 11,882 | |||||||
| Adjusted earnings per Class A and Class B common stock, combined (f) | ||||||||||||||||
| Basic | $ | — | $ | 0.13 | $ | 0.14 | $ | 0.40 | ||||||||
| Diluted | $ | — | $ | 0.13 | $ | 0.13 | $ | 0.38 | ||||||||
| Pro forma weighted average Class A and Class B common stock outstanding, combined (f) | ||||||||||||||||
| Basic | 27,708,421 | 29,798,974 | 28,938,901 | 29,717,304 | ||||||||||||
| Diluted | 27,708,421 | 30,884,874 | 29,616,249 | 31,001,099 | ||||||||||||
_____________________________
Adjusted net (loss) income is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define Adjusted net (loss) income as net (loss) income plus the impact of certain adjustments listed in the table above and the tax effects of these adjustments. Adjusted net (loss) 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 and expected results in future quarters. Adjusted net (loss) income as presented may not be comparable to other similarly-titled measures of other companies and our presentation of Adjusted net (loss) 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 on comparable financial results.
(a) Reflects the adjustment to eliminate the impact of impairing six restaurants in the fourth quarter ended
(b) Reflects the annual vesting of the options granted to the Chief Executive Officer and then-President and Chief Operating Officer prior to our IPO.
(c) Transaction-related expenses reflect costs incurred from the purchase of 19 franchise locations. Sixteen of the restaurants were acquired in
(d) Reflects the asset write-off from the dissolving of a relationship with an overseas vendor.
(e) Reflects the tax expense associated with the adjustments in (a) through (e) above.
(f) Adjusted per share amounts are calculated by dividing Adjusted net (loss) income by the adjusted basic and diluted weighted average shares outstanding.
Contacts: Investor Relations investorrelations@noodles.com MediaKristina Jorge (646) 277‐1234 press@noodles.com
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