Noodles & Company (NASDAQ:NDLS) today announced financial
results for its second quarter ended July 4, 2017.
Key highlights for the second quarter of
2017 versus the same quarter a year ago include:
- Total revenue decreased 7.1% to $112.8 million from $121.4
million, due primarily to the closure of 55 restaurants during the
first quarter of 2017.
- Net loss was $1.8 million, and net loss attributable to common
stockholders (after giving affect to the accretion of the preferred
stock to its redemption value) was $8.8 million or $0.22 loss per
diluted share for the second quarter of 2017, compared to net loss
of $14.1 million, or $0.51 loss per diluted share in the second
quarter of 2016.
- Results for the second quarter of 2017 included $3.9 million of
charges related to the impairment of nine restaurants and a net
gain of $1.5 million related to adjustments in closure costs for
lease terminations that occurred. Second quarter 2017 results also
included a gain of $0.4 million on an employment-related litigation
settlement due to final settlement being less than what the Company
had previously accrued.
- Adjusted net income(1) was $0.3 million, or $0.01 income
per diluted share, compared to adjusted net loss of $0.8 million,
or $0.03 loss per diluted share in the second quarter of 2016.
- Adjusted EBITDA(1) increased 16% to $8.7 million from $7.5
million in the second quarter of 2016.
- Restaurant level contribution margin increased 130 basis points
to 15.0%.
- Comparable restaurant sales decreased 3.4% system-wide,
decreased 3.9% for company-owned restaurants and decreased 0.4% for
franchise restaurants.
- Five new restaurants opened system-wide in the second quarter
of 2017, including four company-owned restaurants and one franchise
restaurant.
_____________________(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 Executive Officer of
Noodles & Company, stated, “To date in 2017, we have made
meaningful progress in strengthening our foundation, including the
closing of 55 underperforming restaurants to improve our focus on
the core business, successfully completing two private placement
financings with gross proceeds of $50 million to strengthen our
balance sheet and recently welcoming Paul Murphy as our Executive
Chairman to significantly bolster our senior leadership and
operational expertise.”
Boennighausen continued, “During the second
quarter, we began to see the benefits of our actions, as adjusted
EBITDA grew 16% and restaurant level contribution margin expanded
130 basis points relative to the prior year. Building upon this
improved foundation, we will continue to be laser focused on
operational excellence and capitalizing on the brand’s inherent
strengths. For example, given the variety in our menu and family
focused guest base we are uniquely positioned to capitalize on the
growing industry trend around off-premise. Paul and I look forward
to executing our strategy to help achieve the sizable growth
opportunity that is ahead of us.”
Second Quarter 2017 Financial Results
Total revenue decreased $8.6 million in the
second quarter of 2017, or 7.1%, to $112.8 million, compared to
$121.4 million in the second quarter of 2016. This decrease was
primarily due to the impact of closing 55 company-owned restaurants
in the first quarter of 2017. Additionally, average unit volumes
(“AUVs”) for the quarter overall decreased $27,000 compared to the
second quarter of 2016. AUV’s for the trailing twelve months were
$1,065,000.
Five new restaurants opened system-wide in the
second quarter of 2017, including four company-owned restaurants
and one franchise restaurant. The Company had 486 restaurants at
the end of the second quarter, comprised of 413 company-owned and
73 franchise restaurants. In the second quarter of 2017, comparable
restaurant sales decreased 3.4% system-wide, decreased 3.9% for
company-owned restaurants and decreased 0.4% for franchise
restaurants.
Restaurant level contribution margin increased
to 15.0% in the second quarter of 2017, compared to 13.7% in the
second quarter of 2016. This increase was primarily due to the
closure of underperforming restaurants in the first quarter of
2017. Additionally, the implementation of labor savings initiatives
and a reduction in marketing spend contributed to the improved
restaurant contribution margin during the second quarter of
2017.
For the second quarter of 2017, the Company
reported a net loss of $1.8 million, and giving affect to the
accretion of the preferred stock to its redemption value, a net
loss attributable to common stockholders of $8.8 million, or $0.22
loss per diluted share, compared with a net loss of $14.1 million
in the second quarter of 2016. In the second quarter of 2017, the
Company recorded a $3.9 million impairment charge related to nine
restaurants and a net gain of $1.5 million was recognized related
to closures primarily due to adjustments to the liabilities to
landlords as lease terminations occurred for 21 of the 55
restaurants closed during the first quarter of 2017. In the second
quarter of 2017, the Company also recorded a gain of $0.4 million
on an employment-related litigation settlement due to final
settlement being less than what the Company had previously accrued.
In the second quarter of 2016, the Company recorded a $10.2 million
impairment charge related to the impairment of 11 restaurants and
incurred $0.5 million related to ongoing closure costs of the
restaurants closed in the fourth quarter of 2015.
Adjusted net income was $0.3 million in the
second quarter of 2017 compared to adjusted net loss of $0.8
million in the second quarter of 2016. Adjusted EBITDA increased to
$8.7 million in the second quarter of 2017 from $7.5 million in the
second quarter of 2016.
First Two Quarters of 2017 Financial
Results
Total revenue decreased $5.9 million in the
first two quarters of 2017, or 2.5%, to $229.5 million, compared
with $235.4 million in the first two quarters of 2016. This
decrease was primarily due to the impact of closing 55
company-owned restaurants in the first quarter of 2017.
In the first two quarters of 2017, the Company
opened 13 new restaurants system-wide, including 11 company-owned
and 2 franchise restaurants. In the first two quarters of 2017,
comparable restaurant sales decreased 2.7% system-wide, decreased
3.2% for company-owned restaurants, and increased 0.3% for
franchise restaurants.
Restaurant contribution margin was 13.0% in the
first two quarters of 2017, compared with 13.5% in the first two
quarters of 2016.
The Company reported a net loss of $28.7 million
in the first two quarters of 2017, compared with a net loss of
$16.5 million in the first two quarters of 2016. In the first two
quarters of 2017, the Company recorded $18.4 million of charges
related to the 55 restaurants closed during the first quarter of
2017, as well as ongoing costs of restaurants closed in the fourth
quarter of 2015, and $5.7 million of charges related to impairment
of 13 restaurants. In the first two quarters of 2016, the Company
recorded a $10.3 million impairment charge related to 12
restaurants and recorded $1.0 million related to ongoing costs of
the restaurants closed in the fourth quarter of 2015.
Adjusted net loss was $2.2 million for the first
two quarters of 2017 compared to adjusted net loss of $2.5 million
in the first two quarters of 2016. Adjusted EBITDA decreased to
$12.5 million in the first two quarters of 2017 from $12.9 million
in the first two quarters of 2016.
2017 Outlook
With the exception of revisions to the outlook
for restaurant openings and capital expenditures, the Company is
maintaining prior guidance and currently expects the following for
full year 2017:
- Approximately 17 new restaurants system-wide, including 13
company-owned restaurants and four franchised locations;
- Total revenue of $458.0 million to $468.0 million;
- Company-owned comparable restaurant sales decline of
low-single-digits;
- Restaurant level contribution margin of 13.5% to 14.5%;
- Adjusted EBITDA of $31.0 million to $35.0 million;
- Flat adjusted net income; and
- Capital expenditures of $19.0 million to $23.0 million
The Company believes that a quantitative
reconciliation of the Company’s non-GAAP financial measures
guidance, namely adjusted EBITDA and adjusted net income, 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 Level 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, 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 Call
Noodles & Company will host a conference
call to discuss its second quarter financial results on Thursday,
August 10, 2017 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 54541719. The replay will be available until
Thursday, August 17, 2017. 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, August 17, 2017.
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, dead deal or registration statement
costs, 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.
Forward-Looking Statements
This press release contains 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. 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
2017 guidance, including new restaurant development, total revenue,
comparable restaurant sales, 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); and costs associated with our
closure of underperforming restaurants. 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 execute our strategy to refranchise restaurants in
certain of our markets; 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 impact of the closing of 55 of our
restaurants on our financial performance; 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; 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; consumer reaction
to industry related 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 January 3, 2017 filed on March 2,
2017. 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 |
|
Two Fiscal Quarters Ended |
|
|
July 4, 2017 |
|
June 28, 2016 |
|
July 4, 2017 |
|
June 28, 2016 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant revenue |
|
$ |
111,628 |
|
|
$ |
120,204 |
|
|
$ |
227,155 |
|
|
$ |
233,069 |
|
Franchising royalties and fees |
|
1,164 |
|
|
1,203 |
|
|
2,352 |
|
|
2,324 |
|
Total
revenue |
|
112,792 |
|
|
121,407 |
|
|
229,507 |
|
|
235,393 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): |
|
|
|
|
|
|
|
|
Cost of
sales |
|
29,598 |
|
|
32,164 |
|
|
61,685 |
|
|
62,353 |
|
Labor |
|
36,430 |
|
|
39,316 |
|
|
76,024 |
|
|
76,750 |
|
Occupancy |
|
12,630 |
|
|
13,688 |
|
|
26,631 |
|
|
27,002 |
|
Other
restaurant operating costs |
|
16,194 |
|
|
18,596 |
|
|
33,341 |
|
|
35,488 |
|
General
and administrative |
|
9,393 |
|
|
9,840 |
|
|
20,059 |
|
|
19,877 |
|
Depreciation and amortization |
|
6,279 |
|
|
7,071 |
|
|
12,546 |
|
|
13,977 |
|
Pre-opening |
|
246 |
|
|
796 |
|
|
791 |
|
|
1,833 |
|
Restaurant impairments, closure costs and asset disposals |
|
2,830 |
|
|
11,248 |
|
|
24,884 |
|
|
12,264 |
|
Total
costs and expenses |
|
113,600 |
|
|
132,719 |
|
|
255,961 |
|
|
249,544 |
|
Loss from
operations |
|
(808 |
) |
|
(11,312 |
) |
|
(26,454 |
) |
|
(14,151 |
) |
Interest expense,
net |
|
927 |
|
|
598 |
|
|
1,935 |
|
|
1,226 |
|
Loss before income
taxes |
|
(1,735 |
) |
|
(11,910 |
) |
|
(28,389 |
) |
|
(15,377 |
) |
Provision for income
taxes |
|
80 |
|
|
2,177 |
|
|
271 |
|
|
1,083 |
|
Net loss |
|
(1,815 |
) |
|
(14,087 |
) |
|
(28,660 |
) |
|
(16,460 |
) |
Accretion of preferred
stock to redemption value |
|
(7,001 |
) |
|
— |
|
|
(7,967 |
) |
|
— |
|
Net loss attributable
to common stockholders |
|
$ |
(8,816 |
) |
|
$ |
(14,087 |
) |
|
$ |
(36,627 |
) |
|
$ |
(16,460 |
) |
Loss per share of
Class A and Class B common stock, combined: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.22 |
) |
|
$ |
(0.51 |
) |
|
$ |
(1.06 |
) |
|
$ |
(0.59 |
) |
Diluted |
|
$ |
(0.22 |
) |
|
$ |
(0.51 |
) |
|
$ |
(1.06 |
) |
|
$ |
(0.59 |
) |
Weighted average shares
of Class A and Class B common stock outstanding,
combined: |
|
|
|
|
|
|
|
|
Basic |
|
40,779,277 |
|
|
27,776,094 |
|
|
34,404,222 |
|
|
27,754,615 |
|
Diluted |
|
40,779,277 |
|
|
27,776,094 |
|
|
34,404,222 |
|
|
27,754,615 |
|
|
Noodles & Company |
Condensed Consolidated Statements of
Operations as a Percentage of Revenue |
(unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
July 4, 2017 |
|
June 28, 2016 |
|
July 4, 2017 |
|
June 28, 2016 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant revenue |
|
99.0 |
% |
|
99.0 |
% |
|
99.0 |
% |
|
99.0 |
% |
Franchising royalties and fees |
|
1.0 |
% |
|
1.0 |
% |
|
1.0 |
% |
|
1.0 |
% |
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 |
|
26.5 |
% |
|
26.8 |
% |
|
27.2 |
% |
|
26.8 |
% |
Labor |
|
32.6 |
% |
|
32.7 |
% |
|
33.5 |
% |
|
32.9 |
% |
Occupancy |
|
11.3 |
% |
|
11.4 |
% |
|
11.7 |
% |
|
11.6 |
% |
Other
restaurant operating costs |
|
14.5 |
% |
|
15.5 |
% |
|
14.7 |
% |
|
15.2 |
% |
General
and administrative |
|
8.3 |
% |
|
8.1 |
% |
|
8.7 |
% |
|
8.4 |
% |
Depreciation and amortization |
|
5.6 |
% |
|
5.8 |
% |
|
5.5 |
% |
|
5.9 |
% |
Pre-opening |
|
0.2 |
% |
|
0.7 |
% |
|
0.3 |
% |
|
0.8 |
% |
Restaurant impairments, closure costs and asset disposals |
|
2.5 |
% |
|
9.3 |
% |
|
10.8 |
% |
|
5.2 |
% |
Total
costs and expenses |
|
100.7 |
% |
|
109.3 |
% |
|
111.5 |
% |
|
106.0 |
% |
Loss from
operations |
|
(0.7 |
)% |
|
(9.3 |
)% |
|
(11.5 |
)% |
|
(6.0 |
)% |
Interest expense,
net |
|
0.8 |
% |
|
0.5 |
% |
|
0.8 |
% |
|
0.5 |
% |
Loss before income
taxes |
|
(1.5 |
)% |
|
(9.8 |
)% |
|
(12.4 |
)% |
|
(6.5 |
)% |
Provision for income
taxes |
|
0.1 |
% |
|
1.8 |
% |
|
0.1 |
% |
|
0.5 |
% |
Net loss |
|
(1.6 |
)% |
|
(11.6 |
)% |
|
(12.5 |
)% |
|
(7.0 |
)% |
_______________________(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 |
|
|
July 4, 2017 |
|
January 3, 2017 |
Balance Sheet
Data |
|
|
|
|
|
|
|
|
Total current
assets |
|
$ |
23,257 |
|
|
$ |
25,788 |
|
Total assets |
|
197,442 |
|
|
209,461 |
|
Total current
liabilities |
|
42,499 |
|
|
49,033 |
|
Total long-term
debt |
|
60,888 |
|
|
84,676 |
|
Total liabilities |
|
153,510 |
|
|
183,643 |
|
Total stockholders’
equity |
|
43,932 |
|
|
25,818 |
|
|
|
Fiscal Quarter Ended |
|
|
July 4, 2017 |
|
April 4, 2017 |
|
January 3, 2017 |
|
September 27, 2016 |
|
June 28, 2016 |
Selected
Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant
Activity: |
|
|
|
|
|
|
|
|
|
|
Company-owned
restaurants at end of period |
|
413 |
|
|
409 |
|
|
457 |
|
|
455 |
|
|
443 |
|
Franchise
restaurants at end of period |
|
73 |
|
|
73 |
|
|
75 |
|
|
73 |
|
|
71 |
|
Revenue Data: |
|
|
|
|
|
|
|
|
|
|
Company-owned
average unit volumes |
|
$ |
1,065 |
|
|
$ |
1,067 |
|
|
$ |
1,075 |
|
|
$ |
1,087 |
|
|
$ |
1,092 |
|
Franchise
average unit volumes |
|
$ |
1,061 |
|
|
$ |
1,065 |
|
|
$ |
1,066 |
|
|
$ |
1,071 |
|
|
$ |
1,083 |
|
Company-owned
comparable restaurant sales |
|
(3.9 |
)% |
|
(2.5 |
)% |
|
(1.8 |
)% |
|
(0.9 |
)% |
|
(0.9 |
)% |
Franchise
comparable restaurant sales |
|
(0.4 |
)% |
|
1.1 |
% |
|
2.0 |
% |
|
0.6 |
% |
|
(2.1 |
)% |
System-wide
comparable restaurant sales |
|
(3.4 |
)% |
|
(2.0 |
)% |
|
(1.3 |
)% |
|
(0.7 |
)% |
|
(1.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Two Fiscal Quarters Ended |
|
|
July 4, 2017 |
|
June 28, 2016 |
|
July 4, 2017 |
|
June 28, 2016 |
Net loss |
|
$ |
(1,815 |
) |
|
$ |
(14,087 |
) |
|
$ |
(28,660 |
) |
|
$ |
(16,460 |
) |
Depreciation and
amortization |
|
6,279 |
|
|
7,071 |
|
|
12,546 |
|
|
13,977 |
|
Interest expense,
net |
|
927 |
|
|
598 |
|
|
1,935 |
|
|
1,226 |
|
Provision for income
taxes |
|
80 |
|
|
2,177 |
|
|
271 |
|
|
1,083 |
|
EBITDA |
|
$ |
5,471 |
|
|
$ |
(4,241 |
) |
|
$ |
(13,908 |
) |
|
$ |
(174 |
) |
Restaurant impairments,
closure costs and asset disposals |
|
2,830 |
|
|
11,248 |
|
|
24,884 |
|
|
12,264 |
|
Litigation
settlement |
|
(421 |
) |
|
— |
|
|
(421 |
) |
|
— |
|
Fees and costs related
to the registration statement and related transactions |
|
40 |
|
|
— |
|
|
679 |
|
|
— |
|
Severance costs |
|
129 |
|
|
— |
|
|
332 |
|
|
— |
|
Stock-based
compensation expense |
|
647 |
|
|
501 |
|
|
945 |
|
|
849 |
|
Adjusted EBITDA |
|
$ |
8,696 |
|
|
$ |
7,508 |
|
|
$ |
12,511 |
|
|
$ |
12,939 |
|
______________________________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 |
|
Two Fiscal Quarters Ended |
|
|
July 4, 2017 |
|
June 28, 2016 |
|
July 4, 2017 |
|
June 28, 2016 |
Net loss |
|
$ |
(1,815 |
) |
|
$ |
(14,087 |
) |
|
$ |
(28,660 |
) |
|
$ |
(16,460 |
) |
Restaurant impairments
and closure costs (a) |
|
2,445 |
|
|
10,660 |
|
|
24,110 |
|
|
11,326 |
|
Fees and costs related
to the registration statement and related transactions (b) |
|
40 |
|
|
— |
|
|
679 |
|
|
— |
|
Severance costs
(c) |
|
129 |
|
|
— |
|
|
332 |
|
|
— |
|
Litigation settlement
(d) |
|
(421 |
) |
|
— |
|
|
(421 |
) |
|
— |
|
Tax adjustments, net
(e) |
|
(83 |
) |
|
2,659 |
|
|
1,765 |
|
|
2,646 |
|
Adjusted net income
(loss) |
|
$ |
295 |
|
|
$ |
(768 |
) |
|
$ |
(2,195 |
) |
|
$ |
(2,488 |
) |
|
|
|
|
|
|
|
|
|
Loss per share of
Class A and Class B common stock, combined: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.22 |
) |
|
$ |
(0.51 |
) |
|
$ |
(1.06 |
) |
|
$ |
(0.59 |
) |
Diluted |
|
$ |
(0.22 |
) |
|
$ |
(0.51 |
) |
|
$ |
(1.06 |
) |
|
$ |
(0.59 |
) |
Adjusted income (loss)
per Class A and Class B common stock, combined |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.09 |
) |
Diluted |
|
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.09 |
) |
Weighted average Class
A and Class B common stock outstanding, combined |
|
|
|
|
|
|
|
|
Basic |
|
40,779,277 |
|
|
27,776,094 |
|
|
34,404,222 |
|
|
27,754,615 |
|
Diluted |
|
40,779,277 |
|
|
27,776,094 |
|
|
34,404,222 |
|
|
27,754,615 |
|
_____________________________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 closure costs and impairing restaurants during the first
two quarters of 2017 and 2016. The first two quarters of 2017
include the closure costs related to the 55 restaurants closed in
the first quarter of 2017 and the impairment of 13 restaurants. The
first two quarters of 2016 include the impairment of 12
restaurants. All periods include the ongoing closure costs of
restaurants closed in the fourth quarter of 2015. 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
expenses related to the registration statement the Company filed in
the first quarter of 2017, which registration statement was later
withdrawn.
(c) Reflects the adjustment to eliminate the
severance costs from the departure of our former Chief Operations
Officer and department structural changes during the first two
quarters of 2017.
(d) Reflects the adjustment to eliminate the
gain on an employee-related litigation settlement due to final
settlement being less than what the Company had previously
accrued.
(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.
Contacts:
Investor Relations
investorrelations@noodles.com
Media
Danielle Moore
(720) 214-1971
press@noodles.com
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