Noodles & Company (Nasdaq: NDLS) today announced financial
results for its third quarter ended September 29, 2020.
“Noodles & Company’s off-premise
capabilities and digital strength uniquely position the brand to
meet the needs of today’s fast casual environment and take
advantage of long-term consumer trends,” said Dave Boennighausen,
Chief Executive Officer. “While we continue to navigate the current
COVID-19 pandemic, our consistent sales recovery and return to
positive comparable sales during the last month of the third
quarter is evidence of our ability to serve great tasting healthy
food conveniently when and where guests want it. Our operational
strength has been a significant contributor to our sales recovery
and I am proud and thankful for our incredible team members for
their commitment to fulfill our mission to always nourish and
inspire every team member, guest and community we serve.”
Boennighausen concluded, "Although there remains
uncertainty around the duration and severity of COVID-19, we feel
that Noodles & Company’s digital strengths, off-premise
friendly menu, powerful economic model, and the strength of recent
new restaurant openings give us confidence in our opportunity to
thrive and accelerate growth in the years to come."
As previously disclosed on October 1, 2020, the
cadence of comparable restaurant sales during the third quarter are
as set forth below. Company-owned restaurants were closed July 4
and 5, 2020 in appreciation of our teams’ efforts during the
pandemic. All restaurants were open during that time frame in 2019,
negatively impacting comparable restaurant sales during the same
period in 2020.
Comparable Restaurant Sales |
4 Weeks EndedJuly 28, 2020
(1) |
|
4 Weeks EndedAugust 25, 2020 |
|
5 Weeks EndedSeptember 29, 2020 |
Company-owned |
(8.4)% |
|
(4.6)% |
|
1.1% |
Franchise |
(7.2)% |
|
(5.1)% |
|
(3.2)% |
System-wide |
(8.2)% |
|
(4.7)% |
|
0.4% |
Key highlights for the third quarter of
2020 versus the third quarter of 2019 include:
- Total revenue was $106.0 million
compared to $118.3 million.
- Comparable restaurant sales
decreased 3.8% system-wide, comprised of a 3.6% decrease at
company-owned restaurants and a 5.0% decrease at franchise
restaurants.
- Digital sales grew 151% and
accounted for 61% of sales.
- Net loss was $0.1 million, or $0.00
per diluted share, compared to net income of $4.2 million, or $0.09
per diluted share.
- Adjusted net income(2) was $0.5
million, or $0.01 per diluted share, compared to an adjusted net
income of $4.1 million, or $0.09 per diluted share.
- EBITDA(2) was $6.3 million compared
to $10.5 million for the third quarter of 2019.
- Adjusted EBITDA(2) was $7.7 million
compared to $11.0 million for the third quarter of 2019.
- Restaurant contribution margin
decreased 170 bps to 15.4%, as efficiencies throughout the economic
model were offset with delivery fees as a percentage of sales
increasing 390 bps to 5.5% of sales.
_____________________
(1) Company-owned restaurants were closed
July 4th and 5th.
(2) Adjusted net income, EBITDA and
adjusted EBITDA are a non-GAAP measures. Reconciliations of net
income (loss) to adjusted net income, EBITDA and adjusted EBITDA
are included in the accompanying financial data. See “Non-GAAP
Financial Measures.”
Third Quarter 2020
Financial Results
Total revenue decreased to $106.0 million in the
third quarter of 2020, compared to $118.3 million in the third
quarter of 2019. This decrease was primarily due to a decline in
traffic related to the impact of the COVID-19 pandemic during the
quarter, as well as the refranchising of 14 total restaurants since
January 2019 and the July 4th and 5th holiday restaurant closures.
Additionally revenue decreased due to temporary restaurant closures
as a result of the COVID-19 pandemic.
In the third quarter of 2020, system-wide
comparable restaurant sales declined 3.8%, comprised of a 3.6%
decrease at company-owned restaurants and a 5.0% decrease at
franchise restaurants. Comparable restaurant sales improved
throughout each month of the quarter with September being the high
point. Average Unit Volumes, which normalizes for the impact of
temporary restaurant closures, was relatively flat year-over-year
as strong off-premise sales, including digital, offset the COVID-19
pandemic related impacts including having in restaurant dining
closed for a significant portion of the third quarter 2020.
Digital sales during the third quarter grew 151%
relative to the prior year and accounted for 61% of total sales.
Digital sales continued to grow rapidly relative to the prior year
throughout the third quarter, with 152% growth during the fiscal
period ending September 29, 2020.
The safety and well-being of our team members
and guests remains our highest priority and we continue to actively
monitor and adhere to local and federal mandates as it relates to
in restaurant dining. As of October 28th, the Company has 87% of
company-owned locations and 100% of franchise locations offering in
restaurant dining.
In the third quarter of 2020, the Company opened
one company-owned restaurant and closed three company-owned
restaurants. There were 454 Noodles & Co. restaurants at the
end of the third quarter 2020, comprised of 378 company-owned
restaurants and 76 franchise restaurants. Recent openings that are
not in the Company’s comparable restaurant base, many of which
offer order ahead drive-thru pick-up windows, continue to perform
at the highest sales level of any class of new restaurants in the
Company’s history.
In October of 2020, the Company opened two
company-owned restaurants, including one restaurant that has broken
the Company’s record for sales during their initial 7, 14 and 21
days of operation.
For the third quarter of 2020, the Company
reported a net loss of $0.1 million, or $0.00 per diluted share,
compared with net income of $4.2 million in the third quarter of
2019, or $0.09 per diluted share. Loss from operations for the
third quarter of 2020 was $0.7 million, compared to income of $5.0
million in the third quarter of 2019. Closure costs in the third
quarter of 2020 included ongoing costs as well as adjustments to
liabilities as lease terminations occur.
Restaurant contribution margin decreased to
15.4% in the third quarter of 2020, compared to 17.1% in the third
quarter of 2019. This decrease was primarily due to costs related
to increased third-party delivery fees, which increased 390 bps
versus prior year to 5.1% of sales. Restaurant contribution margin
improved throughout the quarter with fiscal September 2020
restaurant level margin of 16.5% being flat compared to the prior
year.
Adjusted net income was $0.5 million, or $0.01
per diluted share, in the third quarter of 2020, compared to
adjusted net income of $4.1 million, or $0.09 per diluted share, in
the third quarter of 2019. Adjusted EBITDA decreased to $7.7
million in the third quarter of 2020 from $11.0 million in the
third quarter of 2019.
Liquidity Update and
Outlook:
During the fiscal third quarter, the Company
paid down a substantial portion of its outstanding revolving credit
facility. As of September 29, 2020, the Company held $8.6 million
of cash on hand and had borrowings of $44.0 million. The Company
currently has $52.3 million available for borrowing under its
revolving credit facility as of September 29, 2020. The Company’s
strengthening financial position reflects our continued discipline
around capital investments and non-essential costs.
As a reminder, Noodles & Company previously
withdrew guidance for fiscal year 2020 due to the ongoing impact
and uncertainty of the COVID-19 pandemic.
Non-GAAP Financial Measures
The Company believes that a quantitative
reconciliation of the Company’s non-GAAP financial measures
guidance to the most comparable financial measures calculated and
presented in accordance with GAAP cannot be made available without
unreasonable efforts. A reconciliation of these non-GAAP
financial measures would require the Company to provide guidance
for various reconciling items that are outside of the Company’s
control and cannot be reasonably predicted due to the fact that
these items could vary significantly from period to period. A
reconciliation of certain non-GAAP financial measures would also
require the Company to predict the timing and likelihood of
outcomes that determine future impairments and the tax benefit
thereof. None of these measures, nor their probable
significance, can be reliably quantified. The non-GAAP financial
measures noted above have limitations as analytical financial
measures, as discussed below in the section entitled “Non-GAAP
Financial Measures.” In addition, the guidance with respect to
non-GAAP financial measures is a forward-looking statement, which
by its nature involves risks and uncertainties that could cause
actual results to differ materially from the Company’s
forward-looking statement, as discussed below in the section
entitled “Forward-Looking Statements.”
Key Definitions
Average Unit Volume —
represents the average annualized sales of all restaurants for a
given time period. AUV is calculated by dividing restaurant revenue
by the number of operating days within each time period and
multiplying by the number of operating days we have in a typical
year. This measurement allows management to assess changes in
revenue patterns at our restaurants.
Comparable Restaurant Sales —
represents year-over-year sales comparisons for the comparable
restaurant base open for at least 18 full periods. This measure
highlights performance of existing restaurants, as the impact of
new restaurant openings is excluded. Changes in comparable
restaurant sales are generated by changes in traffic, which we
calculate as the number of entrées sold, or changes in per-person
spend, calculated as sales divided by traffic.
Restaurant Contribution and Restaurant
Contribution Margin — restaurant contribution represents
restaurant revenue less restaurant operating costs, which are costs
of sales, labor, occupancy and other restaurant operating items.
Restaurant contribution margin represents restaurant contribution
as a percentage of restaurant revenue. Restaurant contribution and
restaurant contribution margin are presented because they are
widely-used metrics within the restaurant industry to evaluate
restaurant-level productivity, efficiency and performance.
Management also uses restaurant contribution and restaurant
contribution margin as metrics to evaluate the profitability of
incremental sales at our restaurants, restaurant performance across
periods, and restaurant financial performance compared with
competitors. See “Non-GAAP Financial Measures” below.
EBITDA and Adjusted EBITDA —
EBITDA represents net income (loss) before interest expense,
provision (benefit) for income taxes and depreciation and
amortization. Adjusted EBITDA represents net income (loss) before
interest expense, provision (benefit) for income taxes,
depreciation and amortization, restaurant impairments, closure
costs and asset disposals, acquisition costs, severance costs and
stock-based compensation expense. EBITDA and Adjusted EBITDA are
presented because: (i) management believes they are useful measures
for investors to assess the operating performance of our business
without the effect of non-cash charges such as depreciation and
amortization expenses and restaurant impairments, asset disposals
and closure costs, and (ii) management uses them internally as a
benchmark for certain of our cash incentive plans and to evaluate
our operating performance or compare performance to that of
competitors. See “Non-GAAP Financial Measures” below.
Adjusted Net Income (Loss) —
represents net income (loss) 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 third quarter financial results on Wednesday,
October 28, 2020 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 2689475. The replay will be available until
Wednesday, November 4, 2020. 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 Wednesday,
November 4, 2020.
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: EBITDA, adjusted EBITDA, adjusted net
income (loss), adjusted earnings (loss) per share, restaurant
contribution and restaurant contribution margin (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; 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; and restaurant contribution and restaurant
contribution margin are not reflective of the underlying
performance of our business because corporate-level expenses are
excluded from these measures. 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
Since 1995, Noodles & Company has been
serving noodles your way, from noodles and flavors that you know
and love, to new ones you’re about to discover for the first time.
From indulgent Wisconsin Mac & Cheese to good-for-you Zoodles,
Noodles serves a world of flavor in every bowl. Made up of more
than 450 restaurants and 10,000 passionate team members, Noodles is
dedicated to nourishing and inspiring every guest who walks through
the door. To learn more or find the location nearest you, visit
www.noodles.com.
Forward-Looking Statements
In addition to historical information, this
press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties such as the number of
restaurants we intend to open, projected capital expenditures and
estimates of our effective tax rates. In some cases, you can
identify forward-looking statements by terms such as “may,”
“might,” “will,” “objective,” “intend,” “should,” “could,” “can,”
“would,” “expect,” “believe,” “design,” “estimate,” “predict,”
“potential,” “plan” or the negative of these terms and similar
expressions intended to identify forward-looking statements. These
statements reflect our current views with respect to future events
and are based on currently available operating, financial and
competitive information. Examples of forward-looking statements
include all matters that are not historical facts, such as
statements regarding our ability to navigate the COVID-19 pandemic,
projected capital expenditures, the revenue and balance sheet
impact of the COVID-19 pandemic, estimated costs associated with
our closure of underperforming restaurants, the implementation and
results of strategic initiatives and investments and our future
financial performance, including comparable sales improvement and
our ability to generate positive cash flow. Our actual results may
differ materially from those anticipated in these forward-looking
statements due to reasons including, but not limited to, the
extent, duration and severity of the COVID-19 pandemic;
governmental and guest response to the COVID-19 pandemic; other
conditions beyond our control such as weather, natural disasters,
disease outbreaks, epidemics or pandemics impacting our customers
or food supplies; consumer reaction to industry related public
health issues and health pandemics, including the COVID-19 pandemic
and perceptions of food safety; 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; our ability to maintain compliance with debt
covenants and continue to access financing necessary to execute our
business 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; 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 31, 2019 filed on February
26, 2020 and in our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2020 filed on June 17, 2020 and for the
quarterly period ended June 30, 2020 filed on August 6, 2020. 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 29, |
|
October 1, |
|
September 29, |
|
October 1, |
2020 |
2019 |
2020 |
2019 |
Revenue: |
|
|
|
|
|
|
|
Restaurant revenue |
$ |
104,413 |
|
|
$ |
116,759 |
|
|
$ |
283,150 |
|
|
$ |
344,382 |
|
Franchising royalties and fees, and other |
1,569 |
|
|
1,545 |
|
|
3,337 |
|
|
4,158 |
|
Total revenue |
105,982 |
|
|
118,304 |
|
|
286,487 |
|
|
348,540 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): |
|
|
|
|
|
|
|
Cost of sales |
25,900 |
|
|
29,544 |
|
|
71,124 |
|
|
89,083 |
|
Labor |
31,264 |
|
|
37,951 |
|
|
92,632 |
|
|
113,920 |
|
Occupancy |
11,737 |
|
|
12,108 |
|
|
35,473 |
|
|
36,849 |
|
Other restaurant operating costs |
19,383 |
|
|
17,161 |
|
|
51,861 |
|
|
50,475 |
|
General and administrative |
10,827 |
|
|
10,436 |
|
|
31,415 |
|
|
32,424 |
|
Depreciation and amortization |
5,541 |
|
|
5,458 |
|
|
16,273 |
|
|
16,626 |
|
Pre-opening |
239 |
|
|
266 |
|
|
383 |
|
|
331 |
|
Restaurant impairments, closure costs and asset disposals |
369 |
|
|
336 |
|
|
3,983 |
|
|
3,640 |
|
Total costs and expenses |
105,260 |
|
|
113,260 |
|
|
303,144 |
|
|
343,348 |
|
Income (loss) from operations |
722 |
|
|
5,044 |
|
|
(16,657 |
) |
|
5,192 |
|
Interest expense, net |
822 |
|
|
737 |
|
|
2,710 |
|
|
2,298 |
|
(Loss) income before taxes |
(100 |
) |
|
4,307 |
|
|
(19,367 |
) |
|
2,894 |
|
Provision for income taxes |
27 |
|
|
64 |
|
|
73 |
|
|
64 |
|
Net (loss) income |
$ |
(127 |
) |
|
$ |
4,243 |
|
|
$ |
(19,440 |
) |
|
$ |
2,830 |
|
(Loss) earnings per Class A and Class B common stock,
combined |
|
|
|
|
|
|
|
Basic |
$ |
— |
|
|
$ |
0.10 |
|
|
$ |
(0.44 |
) |
|
$ |
0.06 |
|
Diluted |
$ |
— |
|
|
$ |
0.09 |
|
|
$ |
(0.44 |
) |
|
$ |
0.06 |
|
Weighted average shares of Class A and Class B common
stock outstanding, combined: |
|
|
|
|
|
|
|
Basic |
44,358,763 |
|
|
43,990,049 |
|
|
44,238,400 |
|
|
44,007,345 |
|
Diluted |
44,358,763 |
|
|
44,899,176 |
|
|
44,238,400 |
|
|
45,078,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noodles & Company |
Condensed Consolidated Statements of Operations as a
Percentage of Revenue |
(unaudited) |
|
|
Fiscal Quarter Ended |
|
Three Fiscal Quarters Ended |
|
September 29, |
|
October 1, |
|
September 29, |
|
October 1, |
2020 |
2019 |
2020 |
2019 |
Revenue: |
|
|
|
|
|
|
|
Restaurant revenue |
98.5 |
% |
|
98.7 |
% |
|
98.8 |
% |
|
98.8 |
% |
Franchising royalties and fees, and other |
1.5 |
% |
|
1.3 |
% |
|
1.2 |
% |
|
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 |
24.8 |
% |
|
25.3 |
% |
|
25.1 |
% |
|
25.9 |
% |
Labor |
29.9 |
% |
|
32.5 |
% |
|
32.7 |
% |
|
33.1 |
% |
Occupancy |
11.2 |
% |
|
10.4 |
% |
|
12.5 |
% |
|
10.7 |
% |
Other restaurant operating costs |
18.6 |
% |
|
14.7 |
% |
|
18.3 |
% |
|
14.7 |
% |
General and administrative |
10.2 |
% |
|
8.8 |
% |
|
11.0 |
% |
|
9.3 |
% |
Depreciation and amortization |
5.2 |
% |
|
4.6 |
% |
|
5.7 |
% |
|
4.8 |
% |
Pre-opening |
0.2 |
% |
|
0.2 |
% |
|
0.1 |
% |
|
0.1 |
% |
Restaurant impairments, closure costs and asset disposals |
0.3 |
% |
|
0.3 |
% |
|
1.4 |
% |
|
1.0 |
% |
Total costs and expenses |
99.3 |
% |
|
95.7 |
% |
|
105.8 |
% |
|
98.5 |
% |
Income (loss) from operations |
0.7 |
% |
|
4.3 |
% |
|
(5.8 |
)% |
|
1.5 |
% |
Interest expense, net |
0.8 |
% |
|
0.6 |
% |
|
0.9 |
% |
|
0.7 |
% |
(Loss) income before taxes |
(0.1 |
)% |
|
3.6 |
% |
|
(6.8 |
)% |
|
0.8 |
% |
Provision for income taxes |
— |
% |
|
0.1 |
% |
|
— |
% |
|
— |
% |
Net (loss) income |
(0.1 |
)% |
|
3.6 |
% |
|
(6.8 |
)% |
|
0.8 |
% |
_______________________
(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 29, |
|
December 31, |
|
2020 |
|
2019 |
Balance Sheet Data |
|
|
|
|
|
|
|
Total current assets |
$ |
25,695 |
|
|
$ |
29,322 |
|
Total assets |
363,170 |
|
|
378,519 |
|
Total current liabilities |
60,944 |
|
|
58,034 |
|
Total long-term debt |
41,213 |
|
|
40,497 |
|
Total liabilities |
330,308 |
|
|
327,948 |
|
Total stockholders’ equity |
32,862 |
|
|
50,571 |
|
|
|
|
|
|
|
|
Fiscal Quarter Ended |
|
September 29, |
|
June 30, |
|
March 31, |
|
December 31, |
|
October 1, |
|
2020 |
|
2020 |
|
2020 |
|
2019 |
|
2019 |
Selected Operating Data |
|
|
|
|
|
|
|
|
|
Restaurant Activity: |
|
|
|
|
|
|
|
|
|
Company-owned restaurants at end of period |
378 |
|
|
380 |
|
|
381 |
|
|
389 |
|
|
391 |
|
Franchise restaurants at end of period |
76 |
|
|
76 |
|
|
77 |
|
|
68 |
|
|
67 |
|
Revenue Data: |
|
|
|
|
|
|
|
|
|
Company-owned average unit volume |
$ |
1,187 |
|
|
$ |
891 |
|
|
$ |
1,036 |
|
|
$ |
1,171 |
|
|
$ |
1,188 |
|
Franchise average unit volume |
$ |
1,102 |
|
|
$ |
781 |
|
|
$ |
994 |
|
|
$ |
1,186 |
|
|
$ |
1,184 |
|
Company-owned comparable restaurant sales |
(3.6 |
)% |
|
(30.1 |
)% |
|
(7.0 |
)% |
|
1.4 |
% |
|
2.2 |
% |
Franchise comparable restaurant sales |
(5.0 |
)% |
|
(35.4 |
)% |
|
(8.9 |
)% |
|
1.8 |
% |
|
1.6 |
% |
System-wide comparable restaurant sales |
(3.8 |
)% |
|
(30.9 |
)% |
|
(7.2 |
)% |
|
1.5 |
% |
|
2.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Three Fiscal Quarters Ended |
|
September 29, |
|
October 1, |
|
September 29, |
|
October 1, |
2020 |
2019 |
2020 |
2019 |
Net (loss) income |
$ |
(127 |
) |
|
$ |
4,243 |
|
|
$ |
(19,440 |
) |
|
$ |
2,830 |
|
Depreciation and amortization |
5,541 |
|
|
5,458 |
|
|
16,273 |
|
|
16,626 |
|
Interest expense, net |
822 |
|
|
737 |
|
|
2,710 |
|
|
2,298 |
|
Provision for income taxes |
27 |
|
|
64 |
|
|
73 |
|
|
64 |
|
EBITDA |
$ |
6,263 |
|
|
$ |
10,502 |
|
|
$ |
(384 |
) |
|
$ |
21,818 |
|
Restaurant impairments, closure costs and asset disposals |
369 |
|
|
336 |
|
|
3,983 |
|
|
3,640 |
|
Stock-based compensation expense |
708 |
|
|
(61 |
) |
|
1,960 |
|
|
1,820 |
|
Fees and costs related to transactions and other
acquisition/disposition costs |
— |
|
|
130 |
|
|
162 |
|
|
166 |
|
Severance costs |
365 |
|
|
112 |
|
|
454 |
|
|
112 |
|
Adjusted EBITDA |
$ |
7,705 |
|
|
$ |
11,019 |
|
|
$ |
6,175 |
|
|
$ |
27,556 |
|
______________________________
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
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 (Loss) Income to Adjusted Net Income
(Loss) |
(in thousands, except share and per share data,
unaudited) |
|
|
Fiscal Quarter Ended |
|
Three Fiscal Quarters Ended |
|
September 29, |
|
October 1, |
|
September 29, |
|
October 1, |
2020 |
2019 |
2020 |
2019 |
Net (loss) income |
$ |
(127 |
) |
|
$ |
4,243 |
|
|
$ |
(19,440 |
) |
|
$ |
2,830 |
|
Restaurant impairments, divestitures and closure costs (a) |
409 |
|
|
1,063 |
|
|
3,116 |
|
|
3,763 |
|
Fees and costs related to transactions and other
acquisition/disposition costs (b) |
— |
|
|
130 |
|
|
162 |
|
|
130 |
|
Severance costs (c) |
365 |
|
|
112 |
|
|
454 |
|
|
112 |
|
Tax adjustments, net (d) |
(151 |
) |
|
(1,421 |
) |
|
4,211 |
|
|
(1,762 |
) |
Adjusted net income (loss) |
$ |
496 |
|
|
$ |
4,127 |
|
|
$ |
(11,497 |
) |
|
$ |
5,073 |
|
|
|
|
|
|
|
|
|
(Loss) earnings per Class A and Class B common stock,
combined |
|
|
|
|
|
|
|
Basic |
$ |
— |
|
|
$ |
0.10 |
|
|
$ |
(0.44 |
) |
|
$ |
0.06 |
|
Diluted |
$ |
— |
|
|
$ |
0.09 |
|
|
$ |
(0.44 |
) |
|
$ |
0.06 |
|
Adjusted earnings (loss) per Class A and Class B common
stock, combined (e) |
|
|
|
|
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
0.09 |
|
|
$ |
(0.26 |
) |
|
$ |
0.12 |
|
Diluted |
$ |
0.01 |
|
|
$ |
0.09 |
|
|
$ |
(0.26 |
) |
|
$ |
0.11 |
|
Weighted average Class A and Class B common stock outstanding,
combined (e) |
|
|
|
|
|
|
|
Basic |
44,358,763 |
|
|
43,990,049 |
|
|
44,238,400 |
|
|
44,007,345 |
|
Diluted |
45,542,617 |
|
|
44,899,176 |
|
|
44,238,400 |
|
|
45,078,539 |
|
_____________________________
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 (loss) income 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
restaurants, divestiture costs and ongoing closure costs recognized
during the first three quarters of 2020 and 2019. Both periods
include ongoing closure costs from restaurants closed in previous
years. 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 expenses related to certain
corporate transactions in the first three quarters of 2020. |
|
(c) |
|
Reflects the adjustment to eliminate severance costs. |
|
(d) |
|
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 (c)
above. |
|
(e) |
|
Adjusted per share amounts are calculated by dividing adjusted net
income (loss) by the basic and diluted weighted average shares
outstanding. |
|
Noodles & Company |
Reconciliation of Operating Income (Loss) to Restaurant
Contribution |
(in thousands, unaudited) |
|
|
Fiscal Quarter Ended |
|
Three Fiscal Quarters Ended |
|
September 29, |
|
October 1, |
|
September 29, |
|
October 1, |
2020 |
2019 |
2020 |
2019 |
Income (loss) from operations |
$ |
722 |
|
|
$ |
5,044 |
|
|
$ |
(16,657 |
) |
|
$ |
5,192 |
|
Less: Franchising royalties and fees, and other |
1,569 |
|
|
1,545 |
|
|
3,337 |
|
|
4,158 |
|
Plus: General and administrative |
10,827 |
|
|
10,436 |
|
|
31,415 |
|
|
32,424 |
|
Depreciation and amortization |
5,541 |
|
|
5,458 |
|
|
16,273 |
|
|
16,626 |
|
Pre-opening |
239 |
|
|
266 |
|
|
383 |
|
|
331 |
|
Restaurant impairments, closure costs and asset disposals |
369 |
|
|
336 |
|
|
3,983 |
|
|
3,640 |
|
Restaurant contribution |
$ |
16,129 |
|
|
$ |
19,995 |
|
|
$ |
32,060 |
|
|
$ |
54,055 |
|
|
|
|
|
|
|
|
|
Restaurant contribution margin |
15.4 |
% |
|
17.1 |
% |
|
11.3 |
% |
|
15.7 |
% |
_____________________________
Restaurant contribution represents restaurant
revenue less restaurant operating costs, which are the cost of
sales, labor, occupancy and other operating items. Restaurant
contribution margin represents restaurant contribution as a
percentage of restaurant revenue. Restaurant contribution and
restaurant contribution margin are non-GAAP measures that are
neither required by, nor presented in accordance with GAAP, and the
calculations thereof may not be comparable to similar measures
reported by other companies. These measures are supplemental
measures of the operating performance of our restaurants and are
not reflective of the underlying performance of our business
because corporate-level expenses are excluded from these
measures.
Restaurant contribution and restaurant
contribution margin have limitations as analytical tools and should
not be considered in isolation or as substitutes for analysis of
our results as reported under GAAP. Management does not consider
these measures in isolation or as an alternative to financial
measures determined in accordance with GAAP. However, management
believes that restaurant contribution and restaurant contribution
margin are important tools for investors and other interested
parties because they are widely-used metrics within the restaurant
industry to evaluate restaurant-level productivity, efficiency and
performance. Management also uses these measures as metrics to
evaluate the profitability of incremental sales at our restaurants,
restaurant performance across periods, and restaurant financial
performance compared with competitors.
Contacts: Investor Relations
investorrelations@noodles.com
MediaDanielle Moore press@noodles.com
Source: Noodles & Company
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