Noodles & Company (NASDAQ:NDLS) today announced financial
results for its third quarter ended September 27, 2016.
Key highlights for the third quarter of
2016 versus the same quarter a year ago include:
- Total revenue increased 4.6% to $122.7 million from $117.3
million.
- Net loss was $9.8 million in each of the third quarters of 2016
and 2015, or $0.35 loss per diluted share. During the third quarter
of 2016, the Company recorded $7.2 million of pre-tax charges
related to a litigation settlement, severance costs, and expenses
related to a reduction in new unit development. During the third
quarter of 2015, the Company recorded a $16.2 million pre-tax
impairment charge related to 25 restaurants.
- Adjusted net loss(1) was $1.1 million, or $0.04 loss per
diluted share, compared to adjusted net income of $0.1 million, or
$0.00 per diluted share.
- Adjusted EBITDA(1) decreased to $6.2 million from $8.7
million.
- Comparable restaurant sales decreased 0.7% system-wide,
decreased 0.9% for company-owned restaurants, and increased 0.6%
for franchise restaurants.
- Fourteen new restaurants opened system-wide in the third
quarter, including twelve company-owned restaurants and two
franchise restaurants.
______________________(1) Adjusted net income
(loss) and adjusted EBITDA are non-GAAP measures. A reconciliation
of GAAP net income (loss) to each of these measures is included in
the accompanying financial data. See “Non-GAAP Financial
Measures.”
Dave Boennighausen, Chief Financial Officer and
interim Chief Executive Officer of Noodles & Company, stated,
“Despite the results of the third quarter, I am convinced that we
are making important progress, implementing strategies to increase
operational consistency, enhance our menu, and improve our
profitability. While the opportunity for substantial improvement in
our financial performance will take time, we are seeing steady
progress in our top-line results and are positioning the Company to
improve long-term shareholder value.”
Boennighausen continued, “We are also embarking
on a two-pronged strategy to immediately improve our team and guest
member experience across all of our restaurants, while implementing
tests of several culinary, operational, and marketing initiatives
to bring the brand back to superior performance. At the same time,
we recognize the burden that certain recently opened and
underperforming restaurants have had on our financial and human
capital resources, and are actively evaluating strategies to
address these restaurants so that our resources can be deployed
towards restaurants with greater earnings potential.”
Third Quarter 2016 Financial Results
Total revenue increased $5.4 million in the
third quarter of 2016, or 4.6%, to $122.7 million, compared to
$117.3 million in the third quarter of 2015. This increase was the
result of new restaurants opened system-wide since the beginning of
the third quarter of 2015, partially offset by the closure of 16
company-owned restaurants in the fourth quarter of 2015 and a
decline in comparable restaurant sales. Additionally, average unit
volumes (“AUVs”) overall decreased $24,000 compared to the prior
year due primarily to lower AUVs at our restaurants that have been
open for less than 18 full periods compared to our system-wide
average.
Fourteen new restaurants opened system-wide in
the third quarter of 2016, including twelve company-owned and two
franchise restaurants. We had 528 restaurants at the end of the
third quarter, comprised of 455 company-owned and 73 franchise
restaurants. In the third quarter of 2016, comparable restaurant
sales decreased 0.9% for company-owned restaurants, increased 0.6%
for franchise restaurants and decreased 0.7% system-wide.
Restaurant contribution margin decreased to
12.4% in the third quarter of 2016, compared to 15.2% in the third
quarter of 2015. This decrease was primarily due to deleverage on
lower AUVs, increased cost of sales and increased labor costs.
The Company reported a net loss of $9.8 million
in each of the third quarters of 2016 and 2015. In the third
quarter of 2016, the company recorded $7.2 million of pre-tax
charges related to a litigation settlement, severance costs, and
expenses related to a reduction in new unit development. In the
third quarter of 2015, the Company recorded a $16.2 million pre-tax
impairment charge related to 25 restaurants resulting from the
Company’s assessment of their expected future cash flows relative
to their asset bases, based on recent results. Adjusted net loss of
$1.1 million in the third quarter of 2016 decreased from adjusted
net income of $0.1 million in the third quarter of 2015. Adjusted
EBITDA decreased to $6.2 million in the third quarter of 2016 from
$8.7 million in the third quarter of 2015.
First Three Quarters of 2016 Financial
Results
Total revenue increased $19.8 million in the
first three quarters of 2016, or 5.8%, to $358.1 million, compared
with $338.3 million in the first three quarters of 2015. This
increase was the result of new restaurants opened system-wide since
the beginning of the first quarter of 2015, partially offset by the
closure of 16 company-owned restaurants in the fourth quarter of
2015 and a decline in comparable restaurant sales. Additionally,
AUVs overall decreased $24,000 compared to the prior year due
primarily to lower AUVs at our restaurants that have been open for
less than 18 full periods compared to our system-wide average.
In the first three quarters of 2016, the Company
opened 38 new restaurants system-wide, including 34 company-owned
and 4 franchise restaurants.
In the first three quarters of 2016, comparable
restaurant sales decreased 0.6% for company-owned restaurants, 0.6%
for franchise restaurants and 0.6% system-wide.
Restaurant contribution margin decreased to
13.1% in the first three quarters of 2016, compared with 16.7% in
the first three quarters of 2015. The decrease was primarily due to
deleverage on lower AUVs, increased labor costs, investments in
marketing initiatives and additional maintenance costs.
The Company reported a net loss of $26.3 million
in the first three quarters of 2016, compared with net loss of $9.5
million in the first three quarters of 2015. In the first three
quarters of 2016, the Company recorded a $10.3 million pre-tax
impairment charge related to 12 restaurants resulting from the
Company’s assessment of their expected future cash flows relative
to their asset bases, based on recent results. The Company also
incurred $1.7 million of pre-tax ongoing costs related to
restaurants closed in the fourth quarter of 2015. In the first
three quarters of 2015, the Company recorded a $22.1 million
pre-tax impairment charge related to 33 restaurants. Adjusted net
loss was $3.6 million for the first three quarters of 2016, which
was a decrease from adjusted net income of $4.0 million in the
first three quarters of 2015. Adjusted EBITDA decreased to $19.2
million from $30.2 million in the first three quarters of 2015.
2016 Outlook
Based upon management’s current assessment
following third quarter results, the Company has revised guidance
and currently expects the following for full year 2016:
- Approximately 44 new restaurants system-wide, including
approximately 38 company-owned restaurant openings;
- Total revenue of $486 million to $490 million;
- Modestly negative comparable restaurant sales growth;
- Restaurant level contribution margin of 12.6% to 13.6%;
- Adjusted EBITDA of $25 million to $27 million; and
- Adjusted diluted loss per share of ($0.15) to ($0.19)
The Company believes that a quantitative
reconciliation of the Company’s non-GAAP financial measures
guidance, namely adjusted EBITDA and adjusted diluted loss per
share, 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 predict the
timing and likelihood of outcomes that determine future
impairments and the tax benefit of any such future
impairments. Neither of these measures, nor their probable
significance, can be reliably quantified due to the inability to
forecast future impairments. 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
Comparable Restaurant Sales —
represent year-over-year sales comparisons for the comparable
restaurant base 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 (loss) before interest expense, provision (benefit) for
income taxes, depreciation and amortization, restaurant
impairments, closure costs and asset disposals, litigation
settlements, severance costs and stock-based compensation. 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,
asset disposals and closure costs, 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 (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 CallNoodles &
Company will host a conference call to discuss its third quarter
financial results on Thursday, November 3, 2016 at 4:30 PM
Eastern Time. 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 89355594. The
replay will be available until Thursday, November 10, 2016. 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
this location shortly after the call has concluded until Thursday,
November 10, 2016.
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: adjusted EBITDA, adjusted net income
(loss) and adjusted earnings (loss) 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 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, lease termination payments and
certain other expenses associated with reduced new restaurant
development, loss from litigation settlement, severance costs and
stock-based compensation expense 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; and
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.
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.
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
Noodles & Company is a fast-casual
restaurant chain where globally inspired dishes come together to
create a World Kitchen. Recognized by Parents Magazine as a Top
Family Friendly Restaurant and Health Magazine as one of America’s
Healthiest Fast Food Restaurants, Noodles & Company is a
restaurant where Japanese Pan Noodles rest comfortably next to
Penne Rosa and Wisconsin Mac & Cheese, but where world flavors
don’t end at just noodles. Inspired by some of the world’s most
celebrated flavor combinations, Noodles & Company’s menu offers
soups, salads and shareables, too. Everything is made fresh to
order, just as you like it, using quality ingredients. Dishes are
delivered to the table allowing guests time to sit and relax or
grab a quick bite. With more than 500 locations nationwide, from
California to Connecticut, guests can find a location nearest them
and take a tour of the global World Kitchen menu by visiting
www.noodles.com.
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 costs and potential
losses associated with our data security incident, 2016 guidance,
including new restaurant development, total revenue, comparable
restaurant sales growth, restaurant level contribution margin,
adjusted EBITDA and adjusted diluted earnings (loss) per share;
operating margins; additional public company expenses; our target
and adjusted net income (loss). 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: costs associated
with our data security incident, including legal fees,
investigative fees, other professional fees and the cost of
communications with customers, as well as potential losses
associated with settling payment card networks’ expected claims and
litigation associated with the data security breach; our ability to
achieve and maintain increases in comparable restaurant sales and
to successfully execute our growth strategy; the success of our
marketing efforts; our ability to open new restaurants on schedule;
current economic conditions; price and availability of commodities;
our ability to adequately staff our restaurants; changes in 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 to calculate 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
SEC, included in our Annual Report on Form 10-K for the fiscal year
ended December 29, 2015 filed on March 1, 2016. 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.
|
Noodles & Company |
Condensed Consolidated Statements of
Operations |
(in thousands, except share and per share
data, unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Three Fiscal Quarters Ended |
|
|
September 27, 2016 |
|
September 29, 2015 |
|
September 27, 2016 |
|
September 29, 2015 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant revenue |
|
$ |
121,442 |
|
|
$ |
116,151 |
|
|
$ |
354,511 |
|
|
$ |
334,767 |
|
Franchising royalties and fees |
|
1,239 |
|
|
1,177 |
|
|
3,563 |
|
|
3,555 |
|
Total
revenue |
|
122,681 |
|
|
117,328 |
|
|
358,074 |
|
|
338,322 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): |
|
|
|
|
|
|
|
|
Cost of
sales |
|
33,112 |
|
|
30,941 |
|
|
95,465 |
|
|
88,616 |
|
Labor |
|
40,973 |
|
|
37,687 |
|
|
117,723 |
|
|
105,865 |
|
Occupancy |
|
13,792 |
|
|
12,911 |
|
|
40,794 |
|
|
37,609 |
|
Other
restaurant operating costs |
|
18,470 |
|
|
17,003 |
|
|
53,958 |
|
|
46,878 |
|
General
and administrative |
|
15,251 |
|
|
9,384 |
|
|
35,128 |
|
|
27,034 |
|
Depreciation and amortization |
|
7,006 |
|
|
7,117 |
|
|
20,983 |
|
|
20,959 |
|
Pre-opening |
|
856 |
|
|
1,108 |
|
|
2,689 |
|
|
3,150 |
|
Restaurant impairments, closure costs and asset disposals |
|
2,283 |
|
|
16,479 |
|
|
14,547 |
|
|
22,815 |
|
Total
costs and expenses |
|
131,743 |
|
|
132,630 |
|
|
381,287 |
|
|
352,926 |
|
Loss from
operations |
|
(9,062 |
) |
|
(15,302 |
) |
|
(23,213 |
) |
|
(14,604 |
) |
Interest expense,
net |
|
738 |
|
|
391 |
|
|
1,964 |
|
|
818 |
|
Loss before income
taxes |
|
(9,800 |
) |
|
(15,693 |
) |
|
(25,177 |
) |
|
(15,422 |
) |
Provision (benefit) for
income taxes |
|
41 |
|
|
(5,872 |
) |
|
1,124 |
|
|
(5,911 |
) |
Net loss |
|
$ |
(9,841 |
) |
|
$ |
(9,821 |
) |
|
$ |
(26,301 |
) |
|
$ |
(9,511 |
) |
Loss per share of
Class A and Class B common stock, combined: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.35 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.95 |
) |
|
$ |
(0.32 |
) |
Diluted |
|
$ |
(0.35 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.95 |
) |
|
$ |
(0.32 |
) |
Weighted average shares
of Class A and Class B common stock outstanding,
combined: |
|
|
|
|
|
|
|
|
Basic |
|
27,802,020 |
|
|
28,253,859 |
|
|
27,786,827 |
|
|
29,349,061 |
|
Diluted |
|
27,802,020 |
|
|
28,253,859 |
|
|
27,786,827 |
|
|
29,349,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noodles & Company |
Condensed Consolidated Statements of
Operations as a Percentage of Revenue |
(unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Three Fiscal Quarters Ended |
|
|
September 27, 2016 |
|
September 29, 2015 |
|
September 27, 2016 |
|
September 29, 2015 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant revenue |
|
99.0 |
% |
|
99.0 |
% |
|
99.0 |
% |
|
98.9 |
% |
Franchising royalties and fees |
|
1.0 |
% |
|
1.0 |
% |
|
1.0 |
% |
|
1.1 |
% |
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 |
|
27.3 |
% |
|
26.6 |
% |
|
26.9 |
% |
|
26.5 |
% |
Labor |
|
33.7 |
% |
|
32.4 |
% |
|
33.2 |
% |
|
31.6 |
% |
Occupancy |
|
11.4 |
% |
|
11.1 |
% |
|
11.5 |
% |
|
11.2 |
% |
Other
restaurant operating costs |
|
15.2 |
% |
|
14.6 |
% |
|
15.2 |
% |
|
14.0 |
% |
General
and administrative |
|
12.4 |
% |
|
8.0 |
% |
|
9.8 |
% |
|
8.0 |
% |
Depreciation and amortization |
|
5.7 |
% |
|
6.1 |
% |
|
5.9 |
% |
|
6.2 |
% |
Pre-opening |
|
0.7 |
% |
|
0.9 |
% |
|
0.8 |
% |
|
0.9 |
% |
Restaurant impairments, closure costs and asset disposals |
|
1.9 |
% |
|
14.0 |
% |
|
4.1 |
% |
|
6.7 |
% |
Total
costs and expenses |
|
107.4 |
% |
|
113.1 |
% |
|
106.5 |
% |
|
104.3 |
% |
Loss from
operations |
|
(7.4 |
)% |
|
(13.1 |
)% |
|
(6.5 |
)% |
|
(4.3 |
)% |
Interest expense,
net |
|
0.6 |
% |
|
0.3 |
% |
|
0.5 |
% |
|
0.2 |
% |
Loss before income
taxes |
|
(8.0 |
)% |
|
(13.4 |
)% |
|
(7.0 |
)% |
|
(4.5 |
)% |
Provision (benefit) for
income taxes |
|
— |
% |
|
(5.0 |
)% |
|
0.3 |
% |
|
(1.7 |
)% |
Net loss |
|
(8.0 |
)% |
|
(8.4 |
)% |
|
(7.3 |
)% |
|
(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,
unaudited) |
|
|
|
As of |
|
|
September 27, 2016 |
|
December 29, 2015 |
Balance Sheet
Data |
|
|
|
|
|
|
|
|
Total current
assets |
|
$ |
27,136 |
|
|
$ |
25,401 |
|
Total assets |
|
239,595 |
|
|
239,961 |
|
Total current
liabilities |
|
35,458 |
|
|
32,914 |
|
Total long-term
debt |
|
83,990 |
|
|
67,732 |
|
Total liabilities |
|
168,763 |
|
|
146,189 |
|
Total stockholders’
equity |
|
70,832 |
|
|
93,772 |
|
|
|
Fiscal Quarter Ended |
|
|
September 27, 2016 |
|
June 28, 2016 |
|
March 29, 2016 |
|
December 29, 2015 |
|
September 29, 2015 |
Selected
Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant
Activity: |
|
|
|
|
|
|
|
|
|
|
Company-owned restaurants at end of period |
|
455 |
|
|
443 |
|
|
436 |
|
|
422 |
|
|
424 |
|
Franchise
restaurants at end of period |
|
73 |
|
|
71 |
|
|
71 |
|
|
70 |
|
|
64 |
|
Revenue Data: |
|
|
|
|
|
|
|
|
|
|
Company-owned average unit volumes |
|
$ |
1,087 |
|
|
$ |
1,092 |
|
|
$ |
1,101 |
|
|
$ |
1,103 |
|
|
$ |
1,111 |
|
Franchise
average unit volumes |
|
$ |
1,071 |
|
|
$ |
1,083 |
|
|
$ |
1,105 |
|
|
$ |
1,121 |
|
|
$ |
1,128 |
|
Company-owned comparable restaurant sales |
|
(0.9 |
)% |
|
(0.9 |
)% |
|
— |
% |
|
(0.9 |
)% |
|
(0.7 |
)% |
Franchise
comparable restaurant sales |
|
0.6 |
% |
|
(2.1 |
)% |
|
(0.5 |
)% |
|
(2.1 |
)% |
|
(1.9 |
)% |
System-wide comparable restaurant sales |
|
(0.7 |
)% |
|
(1.0 |
)% |
|
(0.1 |
)% |
|
(1.1 |
)% |
|
(0.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of Non-GAAP Measurements
to GAAP Results
|
|
Noodles & Company |
Reconciliation of Net Income (Loss) to EBITDA
and Adjusted EBITDA |
(in thousands, unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Three Fiscal Quarters Ended |
|
|
September 27, 2016 |
|
September 29, 2015 |
|
September 27, 2016 |
|
September 29, 2015 |
Net loss |
|
$ |
(9,841 |
) |
|
$ |
(9,821 |
) |
|
$ |
(26,301 |
) |
|
$ |
(9,511 |
) |
Depreciation and
amortization |
|
7,006 |
|
|
7,117 |
|
|
20,983 |
|
|
20,959 |
|
Interest expense,
net |
|
738 |
|
|
391 |
|
|
1,964 |
|
|
818 |
|
Provision (benefit) for
income taxes |
|
41 |
|
|
(5,872 |
) |
|
1,124 |
|
|
(5,911 |
) |
EBITDA |
|
$ |
(2,056 |
) |
|
$ |
(8,185 |
) |
|
$ |
(2,230 |
) |
|
$ |
6,355 |
|
Restaurant impairments,
closure costs and asset disposals |
|
2,283 |
|
|
16,479 |
|
|
14,547 |
|
|
22,815 |
|
Litigation
settlement |
|
3,000 |
|
|
— |
|
|
3,000 |
|
|
— |
|
Severance costs |
|
1,740 |
|
|
— |
|
|
1,740 |
|
|
— |
|
Stock-based
compensation expense |
|
1,219 |
|
|
411 |
|
|
2,192 |
|
|
1,036 |
|
Adjusted EBITDA |
|
$ |
6,186 |
|
|
$ |
8,705 |
|
|
$ |
19,249 |
|
|
$ |
30,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
______________________________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, 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 & Company |
Reconciliation of Net Income (Loss) to
Adjusted Net Income (Loss) |
(in thousands, except share and per share
data, unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Three Fiscal Quarters Ended |
|
|
September 27, 2016 |
|
September 29, 2015 |
|
September 27, 2016 |
|
September 29, 2015 |
Net loss |
|
$ |
(9,841 |
) |
|
$ |
(9,821 |
) |
|
$ |
(26,301 |
) |
|
$ |
(9,511 |
) |
Restaurant impairments
and closure costs(a) |
|
714 |
|
|
16,186 |
|
|
12,040 |
|
|
22,093 |
|
Litigation settlement
(b) |
|
3,000 |
|
|
— |
|
|
3,000 |
|
|
— |
|
Severance costs,
including related stock-based compensation expense (c) |
|
2,467 |
|
|
— |
|
|
2,467 |
|
|
— |
|
Lease termination
payments and certain other expenses associated with reduced new
restaurant development (d) |
|
1,770 |
|
|
— |
|
|
1,770 |
|
|
— |
|
Tax adjustments, net
(e) |
|
742 |
|
|
(6,267 |
) |
|
3,387 |
|
|
(8,555 |
) |
Adjusted net (loss)
income |
|
$ |
(1,148 |
) |
|
$ |
98 |
|
|
$ |
(3,637 |
) |
|
$ |
4,027 |
|
|
|
|
|
|
|
|
|
|
Loss per share of
Class A and Class B common stock, combined: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.35 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.95 |
) |
|
$ |
(0.32 |
) |
Diluted |
|
$ |
(0.35 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.95 |
) |
|
$ |
(0.32 |
) |
Adjusted (loss)
earnings per Class A and Class B common stock, combined |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.04 |
) |
|
$ |
— |
|
|
$ |
(0.13 |
) |
|
$ |
0.14 |
|
Diluted |
|
$ |
(0.04 |
) |
|
$ |
— |
|
|
$ |
(0.13 |
) |
|
$ |
0.13 |
|
Weighted average Class
A and Class B common stock outstanding, combined (f) |
|
|
|
|
|
|
|
|
Basic |
|
27,802,020 |
|
|
28,253,859 |
|
|
27,786,827 |
|
|
29,349,061 |
|
Diluted |
|
27,802,020 |
|
|
28,754,193 |
|
|
27,786,827 |
|
|
30,127,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________________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 impairing 12 restaurants during the first three quarters
of 2016, as well as eliminating the impact of ongoing costs related
to restaurants closed in the fourth quarter of 2015. Twenty-five
and 33 restaurants were impaired in the third quarter of 2015 and
during the first three quarters of 2015, respectively. These
expenses are included in the “Restaurant impairments, closure costs
and asset disposals” line in the Condensed Consolidated Statements
of Operations.
(b) Reflects the adjustment to eliminate the
charge booked in the third quarter of 2016 related to the
settlement of an employment-related claim.
(c) Reflects the adjustment to eliminate the
severance costs charged to general and administrative expense
during the third quarter of 2016, including the stock-based
compensation expense related to a stock option modification.
(d) Reflects the adjustment to eliminate the
lease termination payments and certain other costs associated with
our decision in the third quarter of 2016 to reduce new restaurant
development.
(e) Reflects the adjustment to normalize the
impact of the valuation allowance that affects our annual effective
tax rate and the tax impact of the other adjustments discussed in
(a) through (d) above.
(f) Adjusted per share amounts are calculated by dividing
adjusted net income (loss) by the basic and diluted weighted
average shares outstanding.
Contacts:
Investor Relations
investorrelations@noodles.com
Media
Erin Murphy
press@noodles.com
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