Noodles & Company (NASDAQ:NDLS) today announced financial
results for its third quarter ended October 3, 2017.
Key highlights for the third quarter of
2017 versus the same quarter a year ago include:
- Total revenue decreased 6.9% to $114.2 million from $122.7
million, due primarily to the closure of 55 restaurants during the
first quarter of 2017.
- Net loss was $8.3 million, or $0.20 loss per diluted share,
compared to net loss of $9.8 million, or $0.35 loss per diluted
share.
- Adjusted EBITDA(1) increased 52.9% to $9.5 million from $6.2
million.
- Restaurant contribution margin(1) increased 320 basis points to
15.6%.
- Results for the third quarter of 2017 included $8.9 million of
charges related to the impairment of 18 restaurants and $0.8
million of ongoing costs of restaurants closed during the first
quarter of 2017 and fourth quarter of 2015. The results for the
third quarter of 2016 included $7.2 million of charges related to
the initial employment-related litigation settlement, severance
costs, and expenses related to a reduction in new unit
development.
- Adjusted net income(1) was $0.9 million, or $0.02 income per
diluted share, compared to adjusted net loss of $1.1 million, or
$0.04 loss per diluted share.
- Comparable restaurant sales decreased 3.5% system-wide,
decreased 3.8% for company-owned restaurants and decreased 1.6% for
franchise restaurants.
- One new franchise restaurant opened in the third quarter of
2017.
______________________(1) Adjusted EBITDA,
restaurant contribution, restaurant contribution margin, and
adjusted net income (loss) are non-GAAP measures. Reconciliations
of GAAP net income (loss) to adjusted net income (loss) and
adjusted EBITDA and GAAP operating income (loss) to restaurant
contribution are included in the accompanying financial data. See
“Non-GAAP Financial Measures.”
Dave Boennighausen, Chief Executive Officer of
Noodles & Company, stated, “Over the past twelve months we have
taken significant steps to improve the Company’s fundamentals by
solidifying our leadership team and returning our focus to
operations. Additionally we strengthened our financial position,
closing underperforming restaurants and completing two private
placements. We believe these actions have had significant
impact across our organization, resulting in improvement in both
adjusted EBITDA and restaurant margins.”
Paul Murphy, Executive Chairman of Noodles &
Company, added, “The Company is now intensely focused on building
our average unit volumes through the implementation of a
comprehensive strategy to re-energize our brand. Our current
initiatives are designed to improve our menu and our operational
execution, as well as elevate the off-premise dining experience of
our guests, which now represents nearly 50% of sales. As our
efforts shift from strengthening our foundation to building sales
and further improving margins, we are confident that the steps we
are taking will enable the brand to make meaningful progress during
2018 and for many years to come.”
Third Quarter 2017 Financial Results
Total revenue decreased $8.5 million in the
third quarter of 2017, or 6.9%, to $114.2 million, compared to
$122.7 million in the third quarter of 2016. This decrease
was due to the impact of closing 55 company-owned restaurants in
the first quarter of 2017 and the decline in comparable
company-owned restaurant sales, partially offset by additional
restaurant openings since the beginning of the third quarter of
2016. Additionally, average unit volumes (“AUVs”) for the quarter
overall decreased $21,000 compared to the third quarter of 2016.
AUV’s for the trailing twelve months were $1,066,000.
One new franchise restaurant opened and eight
franchise restaurants were closed in the third quarter of 2017. The
Company had 479 restaurants at the end of the third quarter,
comprised of 413 company-owned and 66 franchise restaurants. In the
third quarter of 2017, comparable restaurant sales decreased 3.5%
system-wide, decreased 3.8% for company-owned restaurants and
decreased 1.6% for franchise restaurants.
Loss from operations for the third quarter of
2017 improved 17.4% to $7.5 million, compared to $9.1 million in
the third quarter of 2016.
For the third quarter of 2017, the Company
reported a net loss of $8.3 million, or $0.20 loss per diluted
share, compared with a net loss of $9.8 million in the third
quarter of 2016. In the third quarter of 2017, the Company recorded
an $8.9 million impairment charge related to 18 restaurants and
incurred $0.8 million related to ongoing closure costs of the
restaurants closed in the first quarter of 2017 and fourth quarter
of 2015. In the third quarter of 2016, the Company recorded $7.2
million of charges related to a litigation settlement, severance
costs, and expenses related to the reduction in new unit
development. Additionally, the third quarter of 2016 included $0.6
million related to ongoing closure costs of the restaurants closed
in the fourth quarter of 2015.
Restaurant contribution margin increased to
15.6% in the third quarter of 2017, compared to 12.4% in the third
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 third quarter of 2017.
Marketing spend in the third quarter of 2017 was 0.9% of sales,
compared to 1.6% of sales in the third quarter of 2016.
Adjusted net income was $0.9 million in the
third quarter of 2017 compared to adjusted net loss of $1.1 million
in the third quarter of 2016. Adjusted EBITDA increased to $9.5
million in the third quarter of 2017 from $6.2 million in the third
quarter of 2016.
First Three Quarters of 2017 Financial
Results
Total revenue decreased $14.4 million in the
first three quarters of 2017, or 4.0%, to $343.7 million, compared
with $358.1 million in the first three quarters of 2016. This
decrease was due to the impact of closing 55 company-owned
restaurants in the first quarter of 2017 and the decline in
comparable company-owned restaurant sales, partially offset by
additional restaurant openings since the beginning of 2016.
In the first three quarters of 2017, the Company
opened 14 new restaurants system-wide, including 11 company-owned
and 3 franchise restaurants. In the first three quarters of 2017,
comparable restaurant sales decreased 3.0% system-wide, decreased
3.4% for company-owned restaurants, and decreased 0.3% for
franchise restaurants.
Loss from operations for the first three
quarters of 2017 increased 46.2% to $33.9 million, compared to
$23.2 million in the first three quarters of 2016. The Company
reported a net loss of $37.0 million in the first three quarters of
2017, compared with a net loss of $26.3 million in the first three
quarters of 2016. In the first three quarters of 2017, the Company
recorded $19.2 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 a $14.6
million impairment charge related to 31 restaurants. In the first
three quarters of 2016, the Company recorded a $10.3 million
impairment charge related to 12 restaurants and incurred $1.7
million of ongoing costs related to restaurants closed in the
fourth quarter of 2015.
Restaurant contribution margin was 13.9% in the
first three quarters of 2017, compared with 13.1% in the first
three quarters of 2016.
Adjusted net loss was $1.3 million for the first
three quarters of 2017, compared to adjusted net loss of $3.6
million in the first three quarters of 2016. Adjusted EBITDA
increased to $22.0 million in the first three quarters of 2017 from
$19.2 million in the first three quarters of 2016.
2017 Outlook
Exclusive of restaurant openings and restaurant
contribution margin, the Company has revised guidance and currently
expects the following for full year 2017:
- Approximately 16 new restaurants system-wide, including 13
company-owned restaurants and three franchised locations;
- Total revenue of $452.0 million to $458.0 million;
- Company-owned comparable restaurant sales decline of 3.0% to
3.5%;
- Restaurant contribution margin of 13.5% to 14.5%;
- Adjusted EBITDA of $28.0 million to $30.0 million;
- Adjusted net loss of $1.5 million to $2.0 million; and
- Capital expenditures of $20.0 million to $22.0 million
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 also would
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. 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 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.
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 third quarter financial results on Thursday,
November 9, 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 93442359. The replay will be available until
Thursday, November 16, 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, November 16,
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), 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
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 contribution margin,
adjusted EBITDA and adjusted diluted earnings (loss) per share;
operating margins; 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 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 impact of the closing of 55 of our
restaurants on our financial performance; costs associated with our
data security incident, including losses associated with settling
payment card networks’ expected claims; 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 |
|
Three Fiscal Quarters Ended |
|
|
October 3, 2017 |
|
September 27, 2016 |
|
October 3, 2017 |
|
September 27, 2016 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant revenue |
|
$ |
113,020 |
|
|
$ |
121,442 |
|
|
$ |
340,175 |
|
|
$ |
354,511 |
|
Franchising royalties and fees |
|
1,191 |
|
|
1,239 |
|
|
3,543 |
|
|
3,563 |
|
Total
revenue |
|
114,211 |
|
|
122,681 |
|
|
343,718 |
|
|
358,074 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): |
|
|
|
|
|
|
|
|
Cost of
sales |
|
29,955 |
|
|
33,112 |
|
|
91,640 |
|
|
95,465 |
|
Labor |
|
36,897 |
|
|
40,973 |
|
|
112,921 |
|
|
117,723 |
|
Occupancy |
|
12,709 |
|
|
13,792 |
|
|
39,340 |
|
|
40,794 |
|
Other
restaurant operating costs |
|
15,811 |
|
|
18,470 |
|
|
49,152 |
|
|
53,958 |
|
General
and administrative |
|
9,807 |
|
|
15,251 |
|
|
29,866 |
|
|
35,128 |
|
Depreciation and amortization |
|
6,183 |
|
|
7,006 |
|
|
18,729 |
|
|
20,983 |
|
Pre-opening |
|
69 |
|
|
856 |
|
|
860 |
|
|
2,689 |
|
Restaurant impairments, closure costs and asset disposals |
|
10,263 |
|
|
2,283 |
|
|
35,147 |
|
|
14,547 |
|
Total
costs and expenses |
|
121,694 |
|
|
131,743 |
|
|
377,655 |
|
|
381,287 |
|
Loss from
operations |
|
(7,483 |
) |
|
(9,062 |
) |
|
(33,937 |
) |
|
(23,213 |
) |
Interest expense,
net |
|
893 |
|
|
738 |
|
|
2,828 |
|
|
1,964 |
|
Loss before income
taxes |
|
(8,376 |
) |
|
(9,800 |
) |
|
(36,765 |
) |
|
(25,177 |
) |
(Benefit) provision for
income taxes |
|
(41 |
) |
|
41 |
|
|
230 |
|
|
1,124 |
|
Net loss |
|
(8,335 |
) |
|
(9,841 |
) |
|
(36,995 |
) |
|
(26,301 |
) |
Accretion of preferred
stock to redemption value |
|
— |
|
|
— |
|
|
(7,967 |
) |
|
— |
|
Net loss attributable
to common stockholders |
|
$ |
(8,335 |
) |
|
$ |
(9,841 |
) |
|
$ |
(44,962 |
) |
|
$ |
(26,301 |
) |
Loss per share of
Class A and Class B common stock, combined: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.20 |
) |
|
$ |
(0.35 |
) |
|
$ |
(1.23 |
) |
|
$ |
(0.95 |
) |
Diluted |
|
$ |
(0.20 |
) |
|
$ |
(0.35 |
) |
|
$ |
(1.23 |
) |
|
$ |
(0.95 |
) |
Weighted average shares
of Class A and Class B common stock outstanding,
combined: |
|
|
|
|
|
|
|
|
Basic |
|
41,109,827 |
|
|
27,802,020 |
|
|
36,639,382 |
|
|
27,786,827 |
|
Diluted |
|
41,109,827 |
|
|
27,802,020 |
|
|
36,639,382 |
|
|
27,786,827 |
|
Noodles & Company |
Condensed Consolidated Statements of
Operations as a Percentage of Revenue |
(unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Three Fiscal Quarters Ended |
|
|
October 3, 2017 |
|
September 27, 2016 |
|
October 3, 2017 |
|
September 27, 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 |
% |
|
27.3 |
% |
|
26.9 |
% |
|
26.9 |
% |
Labor |
|
32.6 |
% |
|
33.7 |
% |
|
33.2 |
% |
|
33.2 |
% |
Occupancy |
|
11.2 |
% |
|
11.4 |
% |
|
11.6 |
% |
|
11.5 |
% |
Other
restaurant operating costs |
|
14.0 |
% |
|
15.2 |
% |
|
14.4 |
% |
|
15.2 |
% |
General
and administrative |
|
8.6 |
% |
|
12.4 |
% |
|
8.7 |
% |
|
9.8 |
% |
Depreciation and amortization |
|
5.4 |
% |
|
5.7 |
% |
|
5.4 |
% |
|
5.9 |
% |
Pre-opening |
|
0.1 |
% |
|
0.7 |
% |
|
0.3 |
% |
|
0.8 |
% |
Restaurant impairments, closure costs and asset disposals |
|
9.0 |
% |
|
1.9 |
% |
|
10.2 |
% |
|
4.1 |
% |
Total
costs and expenses |
|
106.6 |
% |
|
107.4 |
% |
|
109.9 |
% |
|
106.5 |
% |
Loss from
operations |
|
(6.6 |
)% |
|
(7.4 |
)% |
|
(9.9 |
)% |
|
(6.5 |
)% |
Interest expense,
net |
|
0.8 |
% |
|
0.6 |
% |
|
0.8 |
% |
|
0.5 |
% |
Loss before income
taxes |
|
(7.3 |
)% |
|
(8.0 |
)% |
|
(10.7 |
)% |
|
(7.0 |
)% |
(Benefit) provision for
income taxes |
|
— |
% |
|
— |
% |
|
0.1 |
% |
|
0.3 |
% |
Net loss |
|
(7.3 |
)% |
|
(8.0 |
)% |
|
(10.8 |
)% |
|
(7.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________
(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 |
|
|
October 3, 2017 |
|
January 3, 2017 |
Balance Sheet
Data |
|
|
|
|
|
|
Total current
assets |
|
$ |
21,757 |
|
$ |
25,788 |
Total assets |
|
187,073 |
|
209,461 |
Total current
liabilities |
|
38,415 |
|
49,033 |
Total long-term
debt |
|
63,861 |
|
84,676 |
Total liabilities |
|
151,177 |
|
183,643 |
Total stockholders’
equity |
|
35,896 |
|
25,818 |
|
|
Fiscal Quarter Ended |
|
|
October 3, 2017 |
|
July 4, 2017 |
|
April 4, 2017 |
|
January 3, 2017 |
|
September 27, 2016 |
Selected
Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant
Activity: |
|
|
|
|
|
|
|
|
|
|
Company-owned restaurants at end of period |
|
413 |
|
|
413 |
|
|
409 |
|
|
457 |
|
|
455 |
|
Franchise
restaurants at end of period |
|
66 |
|
|
73 |
|
|
73 |
|
|
75 |
|
|
73 |
|
Revenue Data: |
|
|
|
|
|
|
|
|
|
|
Company-owned average unit volumes |
|
$ |
1,066 |
|
|
$ |
1,065 |
|
|
$ |
1,067 |
|
|
$ |
1,075 |
|
|
$ |
1,087 |
|
Franchise
average unit volumes |
|
$ |
1,062 |
|
|
$ |
1,061 |
|
|
$ |
1,065 |
|
|
$ |
1,066 |
|
|
$ |
1,071 |
|
Company-owned comparable restaurant sales |
|
(3.8 |
)% |
|
(3.9 |
)% |
|
(2.5 |
)% |
|
(1.8 |
)% |
|
(0.9 |
)% |
Franchise
comparable restaurant sales |
|
(1.6 |
)% |
|
(0.4 |
)% |
|
1.1 |
% |
|
2.0 |
% |
|
0.6 |
% |
System-wide comparable restaurant sales |
|
(3.5 |
)% |
|
(3.4 |
)% |
|
(2.0 |
)% |
|
(1.3 |
)% |
|
(0.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
October 3, 2017 |
|
September 27, 2016 |
|
October 3, 2017 |
|
September 27, 2016 |
Net loss |
|
$ |
(8,335 |
) |
|
$ |
(9,841 |
) |
|
$ |
(36,995 |
) |
|
$ |
(26,301 |
) |
Depreciation and
amortization |
|
6,183 |
|
|
7,006 |
|
|
18,729 |
|
|
20,983 |
|
Interest expense,
net |
|
893 |
|
|
738 |
|
|
2,828 |
|
|
1,964 |
|
(Benefit) provision for
income taxes |
|
(41 |
) |
|
41 |
|
|
230 |
|
|
1,124 |
|
EBITDA |
|
$ |
(1,300 |
) |
|
$ |
(2,056 |
) |
|
$ |
(15,208 |
) |
|
$ |
(2,230 |
) |
Restaurant impairments,
closure costs and asset disposals |
|
10,263 |
|
|
2,283 |
|
|
35,147 |
|
|
14,547 |
|
Litigation
settlement |
|
— |
|
|
3,000 |
|
|
(421 |
) |
|
3,000 |
|
Fees and costs related
to the registration statement and related transactions |
|
— |
|
|
— |
|
|
679 |
|
|
— |
|
Severance costs |
|
248 |
|
|
1,740 |
|
|
580 |
|
|
1,740 |
|
Stock-based
compensation expense |
|
248 |
|
|
1,219 |
|
|
1,193 |
|
|
2,192 |
|
Adjusted EBITDA |
|
$ |
9,459 |
|
|
$ |
6,186 |
|
|
$ |
21,970 |
|
|
$ |
19,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
______________________________
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 |
|
|
October 3, 2017 |
|
September 27, 2016 |
|
October 3, 2017 |
|
September 27, 2016 |
Net loss |
|
$ |
(8,335 |
) |
|
$ |
(9,841 |
) |
|
$ |
(36,995 |
) |
|
$ |
(26,301 |
) |
Restaurant impairments
and closure costs (a) |
|
9,678 |
|
|
714 |
|
|
33,788 |
|
|
12,040 |
|
Fees and costs related
to the registration statement and related transactions (b) |
|
— |
|
|
— |
|
|
679 |
|
|
— |
|
Severance costs,
including related stock-based compensation expense (c) |
|
248 |
|
|
2,467 |
|
|
580 |
|
|
2,467 |
|
Litigation settlement
(d) |
|
— |
|
|
3,000 |
|
|
(421 |
) |
|
3,000 |
|
Lease termination
payments and certain other expenses associated with reduced new
restaurant development (e) |
|
— |
|
|
1,770 |
|
|
— |
|
|
1,770 |
|
Tax adjustments, net
(f) |
|
(651 |
) |
|
742 |
|
|
1,114 |
|
|
3,387 |
|
Adjusted net income
(loss) |
|
$ |
940 |
|
|
$ |
(1,148 |
) |
|
$ |
(1,255 |
) |
|
$ |
(3,637 |
) |
|
|
|
|
|
|
|
|
|
Loss per share of
Class A and Class B common stock, combined: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.20 |
) |
|
$ |
(0.35 |
) |
|
$ |
(1.23 |
) |
|
$ |
(0.95 |
) |
Diluted |
|
$ |
(0.20 |
) |
|
$ |
(0.35 |
) |
|
$ |
(1.23 |
) |
|
$ |
(0.95 |
) |
Adjusted income (loss)
per Class A and Class B common stock, combined |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.02 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.13 |
) |
Diluted |
|
$ |
0.02 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.13 |
) |
Weighted average Class
A and Class B common stock outstanding, combined |
|
|
|
|
|
|
|
|
Basic |
|
41,109,827 |
|
|
27,802,020 |
|
|
36,639,382 |
|
|
27,786,827 |
|
Diluted |
|
41,139,309 |
|
|
27,802,020 |
|
|
36,639,382 |
|
|
27,786,827 |
|
_____________________________
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
three quarters of 2017 and 2016. The third quarter of 2017 includes
the impairment of 18 restaurants, compared to no restaurant
impairments during the third quarter of 2016. The first three
quarters of 2017 include the closure costs related to the 55
restaurants closed in the first quarter of 2017 and the impairment
of 31 restaurants. The first three 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 three
quarters of 2017, and 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
charge booked in the third quarter of 2016 related to the initial
settlement of an employment-related claim and the adjustment to
eliminate the corresponding gain recognized during the first three
quarters of 2017 due to such final settlement being less than what
the Company had previously accrued.
(e) 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.
(f) 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 (e) above.
Noodles & Company |
Reconciliation of Operating Income (Loss) to
Restaurant Contribution |
(in thousands,
unaudited) |
|
|
|
Fiscal Quarter Ended |
|
Three Fiscal Quarters Ended |
|
|
October 3, 2017 |
|
September 27, 2016 |
|
October 3, 2017 |
|
September 27, 2016 |
Loss from
operations |
|
$ |
(7,483 |
) |
|
$ |
(9,062 |
) |
|
$ |
(33,937 |
) |
|
$ |
(23,213 |
) |
Less: Franchising
royalties and fees |
|
1,191 |
|
|
1,239 |
|
|
3,543 |
|
|
3,563 |
|
Plus: General and
administrative |
|
9,807 |
|
|
15,251 |
|
|
29,866 |
|
|
35,128 |
|
Depreciation and amortization |
|
6,183 |
|
|
7,006 |
|
|
18,729 |
|
|
20,983 |
|
Pre-opening |
|
69 |
|
|
856 |
|
|
860 |
|
|
2,689 |
|
Restaurant impairments, closure costs and asset disposals |
|
10,263 |
|
|
2,283 |
|
|
35,147 |
|
|
14,547 |
|
Restaurant
contribution |
|
$ |
17,648 |
|
|
$ |
15,095 |
|
|
$ |
47,122 |
|
|
$ |
46,571 |
|
|
|
|
|
|
|
|
|
|
as a
percentage of restaurant revenue |
|
15.6 |
% |
|
12.4 |
% |
|
13.9 |
% |
|
13.1 |
% |
_____________________________
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
Relationsinvestorrelations@noodles.com
MediaDanielle Moore (720)
214-1971press@noodles.com
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