Noodles & Company (Nasdaq: NDLS) today announced financial
results for its second quarter ended June 28, 2022.
Key highlights for the second quarter of
2022 versus the second quarter of 2021 include:
- Total revenue increased 4.3% to
$131.1 million from $125.6 million in the second quarter of
2021.
- Comparable restaurant sales
increased 5.1% system-wide, comprised of a 5.1% increase at
company-owned restaurants and a 5.3% increase at franchise
restaurants.
- Company Average Unit Volumes
(“AUV”) of $1.42 million represented a 5.3% increase compared to
the second quarter of 2021 and an 18.3% increase versus the second
quarter of 2019.
- Net income was $1.3 million, or
$0.03 per diluted share, compared to $5.7 million, or $0.12 per
diluted share in the second quarter of 2021.
- Operating margin was 1.4% compared
to 4.9% in the second quarter of 2021.
- Restaurant contribution margin(1)
was 15.5% compared to 18.9% in the second quarter of 2021, which
was inclusive of an approximately 300 bps increase in cost of goods
sold.
- Adjusted EBITDA(1) was $11.2
million, a decrease of $2.6 million compared to the second quarter
of 2021.
- Adjusted net income(1) was $2.4
million, or $0.05 per diluted share compared to adjusted net income
of $6.0 million, or $0.13 per diluted share, in the second quarter
of 2021.
- Three new company-owned restaurants
opened in the second quarter of 2022.
_____________________(1) Restaurant
contribution margin, EBITDA, adjusted EBITDA, and adjusted net
income (loss) are non-GAAP measures. Reconciliations of operating
income (loss) to restaurant contribution margin, net income (loss)
to EBITDA and adjusted EBITDA and net income (loss) to adjusted net
income (loss) are included in the accompanying financial data. See
“Non-GAAP Financial Measures.”
“We are pleased with our second quarter results,
which were highlighted by record level average unit volumes of
$1.42 million, reflecting 5.3% growth over 2021 and an 18.3%
increase over the pre-COVID second quarter of 2019,” said Dave
Boennighausen, Chief Executive Officer of Noodles & Company.
“In addition to strong AUV growth in the second quarter, we
launched Leanguini, which offers 56% less net carbs and 44% more
protein than traditional wheat pasta, and identified multiple
initiatives to yield significant cost of goods savings going
forward. Despite a challenging near-term development environment,
we are targeting to have open 21 to 23 new locations in 2022 and
also continued to make significant progress towards a strong 2023
pipeline that could allow for upside to our 10% annual unit growth
rate target beginning next year.”
Boennighausen continued, “Our second quarter
highlights how strongly Noodles & Company resonates with
today’s consumer. From our recently introduced Leanguini offering
to our zucchini noodle to our artisanal sauces, our menu offers
great variety that is not easy to replicate at home or at other
restaurant competitors. Additionally, our attractive entry level
price point of $7 for multiple dishes and our recently launched
Uncommon Goodness marketing platform showcase the differentiation
of the concept and our strong value proposition, supported by a
robust digital ecosystem, which continues to account for over 50%
of sales and allows us to drive direct consumer engagement.”
Boennighausen concluded, “In addition to our
unit growth goals, we remain confident in our accelerated growth
objectives as AUVs are fast approaching the $1.5 million target and
we can see a clear pathway and progress to a 20% margin by 2024. We
have recently seen key commodity prices such as chicken decline
substantially from record highs, we are implementing important
efficiency initiatives, and our new unit development pipeline is
strengthening with many high-quality opportunities. Finally, our
growth strategy will also be supported by our recently refinanced
credit facility, which allows the Company increased flexibility to
pursue our objectives.”
Second Quarter 2022 Financial
Results
Total revenue grew 4.3% to $131.1 million in the
second quarter of 2022, compared to $125.6 million in the second
quarter of 2021. This growth was due to an increase in system-wide
comparable restaurant sales as well as new restaurant openings,
partially offset by previous restaurant closures and the
refranchising of 15 company-owned restaurants. Refranchising
equated to an approximate $4.1 million decline in sales in the
second quarter of 2022.
In the second quarter of 2022, system-wide
comparable restaurant sales increased 5.1%, comprised of a 5.1%
increase at company-owned restaurants and a 5.3% increase at
franchise restaurants. Comparable restaurant sales reflect
continued momentum in our in-person channels, in addition to price
increases in our core menu. Digital sales during the second quarter
accounted for 51.7% of total revenue. Company average unit volumes
were $1.42 million and increased 5.3% over the second quarter of
2021 and 18.3% compared to the second quarter of 2019.
Operating margin decreased to 1.4% in the second
quarter of 2022 from 4.9% in the second quarter of 2021, primarily
due to increased inflation costs associated with both food and
wages.
Restaurant contribution margin decreased to
15.5% in the second quarter of 2022, compared to 18.9% in the
second quarter of 2021. This decrease was primarily due to an
approximately 300 bps increase in costs of goods sold, due to
overall higher food and ingredient commodity pricing, particularly
with our protein costs, offset slightly by supply chain savings
initiatives.
There were three company-owned restaurant
openings during the second quarter of 2022 and we did not close any
company-owned restaurants. There were 456 restaurants system-wide
at the end of the second quarter 2022, comprised of 363
company-owned restaurants and 93 franchise restaurants.
For the second quarter of 2022, the Company
reported net income of $1.3 million, or $0.03 per diluted share,
compared with net income of $5.7 million in the second quarter of
2021, or $0.12 per diluted share. Income from operations for the
second quarter of 2022 was $1.9 million, compared to income from
operations of $6.2 million in the second quarter of 2021.
Adjusted net income was $2.4 million, or $0.05
per diluted share, in the second quarter of 2022, compared to
adjusted net income of $6.0 million, or $0.13 per diluted share, in
the second quarter of 2021. Adjusted EBITDA decreased 19.0%, or
$2.6 million, to $11.2 million in the second quarter of 2022
compared to the year-earlier period, primarily due to the impact of
inflation on our cost of food and wages.
Credit Facility Amendment:
Subsequent to the end of the second quarter, on
July 27, 2022, the Company amended and restated its Credit
Agreement. Among other things, the amendment upsized the credit
facility from $100.0 million to $125.0 million, eliminated the Term
Loan and principal amortization components of the credit facility,
lowered the spread within the Company’s cost of borrowing, and
enhanced flexibility for certain covenants and restrictions to
further support our accelerated growth objectives.
Liquidity Update:
As of June 28, 2022, the Company had $1.8
million of cash on hand and outstanding debt of $32.2 million under
its Credit Agreement. The amount available for future borrowings
under the Second Amended Credit Facility was $60.9 million. As of
July 27, 2022, the amount available for future borrowings under the
newly amended Credit Agreement was $89.8 million. The Company has
no principal payments due through the 2027 maturity of the newly
amended Credit Agreement.
Business Outlook:
The Company is providing the following
expectations for the fiscal year 2022:
- Third quarter 2022 total revenue of
$125.5 million to $128.5 million;
- Third quarter 2022 comparable
restaurant sales in the low-single digits;
- Third quarter 2022 restaurant level
contribution margin of 15.0% to 15.5%;
- Full year 2022 unit growth of
approximately 5%, versus previous expectations of 8%; and
- Full year 2022 capital expenditures
of $30 to $33 million in 2022, versus a previous range of $30 to
$34 million.
Based on the Company’s strategic framework and
underlying momentum, the Company is reiterating its accelerated
growth objectives. These accelerated growth objectives include the
following:
- System-wide unit growth of at least
10% annually beginning in 2023 on a targeted path to at least 1,500
units;
- Average unit volumes of $1.50
million by 2024; and
- Restaurant contribution margin of
20% by 2024.
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 Volumes —
represent the average annualized sales of all company-owned
restaurants for a given time period. AUVs are 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. Based on this calculation, temporarily
closed restaurants are excluded from the definition of AUV, however
restaurants with temporarily reduced operating hours are included.
This measurement allows management to assess changes in consumer
traffic and per person spending patterns at our restaurants. In
addition to the factors that impact comparable restaurant sales,
AUVs can be further impacted by effective real estate site
selection and maturity and trends within new markets.
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. Restaurants that
were temporarily closed or operating at reduced hours or dining
capacity due to the COVID-19 pandemic remained in comparable
restaurant sales.
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 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 second quarter financial results on Wednesday,
July 27, 2022 at 4:30 PM Eastern Time. The conference call can
be accessed live by registering here. While not required, it is
recommended that you join 10 minutes prior to the event start time.
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
the same location on the corporate website shortly after the call
has concluded.
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, net debt,
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; 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 over 450
restaurants and approximately 9,000 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 expectations with respect to unit growth and
planned restaurant opening, projected capital expenditures, and
potential volatility through 2022 due to the current staffing and
supply chain environment, including the potential impact of
commodity and wage inflation. Our actual results may differ
materially from those anticipated in these forward-looking
statements due to reasons including, but not limited to, our
ability to sustain our overall growth, in particular, our digital
sales growth; our ability to open new restaurants on schedule and
cause those newly opened restaurants to be successful; 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 success of our
marketing efforts, including our ability to successfully introduce
new products; current economic conditions including any impact from
inflation or an economic recession; price and availability of
commodities and other supply chain challenges; our ability to
adequately staff our restaurants; changes in labor costs; the
impact of the COVID-19 pandemic, including on our revenue and
balance sheets; other conditions beyond our control such as
weather, natural disasters, disease outbreaks, epidemics or
pandemics impacting our customers or food supplies; and consumer
reaction to industry related public health issues and health
pandemics, including perceptions of food safety. 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 most recently filed Annual
Report on Form 10-K, and, from time to time, in our subsequently
filed Quarterly Reports on Form 10-Q. 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 &
CompanyCondensed Consolidated Statements of
Operations(in thousands, except share and per
share data, unaudited)
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
June 28,2022 |
|
June 29,2021 |
|
June 28,2022 |
|
June 29,2021 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant revenue |
|
$ |
128,274 |
|
|
$ |
123,715 |
|
|
$ |
238,235 |
|
|
$ |
231,459 |
|
Franchising royalties and fees, and other |
|
|
2,793 |
|
|
|
1,934 |
|
|
|
5,394 |
|
|
|
3,767 |
|
Total revenue |
|
|
131,067 |
|
|
|
125,649 |
|
|
|
243,629 |
|
|
|
235,226 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): |
|
|
|
|
|
|
|
|
Cost of sales |
|
|
35,664 |
|
|
|
30,805 |
|
|
|
66,435 |
|
|
|
57,782 |
|
Labor |
|
|
38,828 |
|
|
|
36,926 |
|
|
|
74,321 |
|
|
|
71,232 |
|
Occupancy |
|
|
11,074 |
|
|
|
11,519 |
|
|
|
22,223 |
|
|
|
23,168 |
|
Other restaurant operating costs |
|
|
22,792 |
|
|
|
21,082 |
|
|
|
44,658 |
|
|
|
41,287 |
|
General and administrative |
|
|
12,744 |
|
|
|
12,978 |
|
|
|
24,584 |
|
|
|
23,907 |
|
Depreciation and amortization |
|
|
5,763 |
|
|
|
5,576 |
|
|
|
11,484 |
|
|
|
11,163 |
|
Pre-opening |
|
|
353 |
|
|
|
163 |
|
|
|
761 |
|
|
|
221 |
|
Restaurant impairments, closure costs and asset disposals |
|
|
1,971 |
|
|
|
390 |
|
|
|
3,360 |
|
|
|
1,621 |
|
Total costs and expenses |
|
|
129,189 |
|
|
|
119,439 |
|
|
|
247,826 |
|
|
|
230,381 |
|
Income (loss) from
operations |
|
|
1,878 |
|
|
|
6,210 |
|
|
|
(4,197 |
) |
|
|
4,845 |
|
Interest expense, net |
|
|
489 |
|
|
|
498 |
|
|
|
926 |
|
|
|
1,120 |
|
Income (loss) before
taxes |
|
|
1,389 |
|
|
|
5,712 |
|
|
|
(5,123 |
) |
|
|
3,725 |
|
Provision for (benefit from)
income taxes |
|
|
44 |
|
|
|
29 |
|
|
|
(39 |
) |
|
|
19 |
|
Net income (loss) |
|
$ |
1,345 |
|
|
$ |
5,683 |
|
|
$ |
(5,084 |
) |
|
$ |
3,706 |
|
Earnings (loss) per
Class A and Class B common stock, combined |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.03 |
|
|
$ |
0.12 |
|
|
$ |
(0.11 |
) |
|
$ |
0.08 |
|
Diluted |
|
$ |
0.03 |
|
|
$ |
0.12 |
|
|
$ |
(0.11 |
) |
|
$ |
0.08 |
|
Weighted average shares of
Class A and Class B common stock outstanding,
combined: |
|
|
|
|
|
|
|
|
Basic |
|
|
45,881,354 |
|
|
|
45,506,476 |
|
|
|
45,803,927 |
|
|
|
45,303,160 |
|
Diluted |
|
|
46,108,720 |
|
|
|
46,246,169 |
|
|
|
45,803,927 |
|
|
|
45,992,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noodles &
CompanyCondensed Consolidated Statements of
Operations as a Percentage of
Revenue(unaudited)
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
June 28,2022 |
|
June 29,2021 |
|
June 28,2022 |
|
June 29,2021 |
Revenue: |
|
|
|
|
|
|
|
|
Restaurant revenue |
|
97.9 |
% |
|
98.5 |
% |
|
97.8 |
% |
|
98.4 |
% |
Franchising royalties and fees, and other |
|
2.1 |
% |
|
1.5 |
% |
|
2.2 |
% |
|
1.6 |
% |
Total revenue |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
Costs and expenses: |
|
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below):(1) |
|
|
|
|
|
|
|
|
Cost of sales |
|
27.8 |
% |
|
24.9 |
% |
|
27.9 |
% |
|
25.0 |
% |
Labor |
|
30.3 |
% |
|
29.8 |
% |
|
31.2 |
% |
|
30.8 |
% |
Occupancy |
|
8.6 |
% |
|
9.3 |
% |
|
9.3 |
% |
|
10.0 |
% |
Other restaurant operating costs |
|
17.8 |
% |
|
17.0 |
% |
|
18.7 |
% |
|
17.8 |
% |
General and administrative |
|
9.7 |
% |
|
10.3 |
% |
|
10.1 |
% |
|
10.2 |
% |
Depreciation and amortization |
|
4.4 |
% |
|
4.4 |
% |
|
4.7 |
% |
|
4.7 |
% |
Pre-opening |
|
0.3 |
% |
|
0.1 |
% |
|
0.3 |
% |
|
0.1 |
% |
Restaurant impairments, closure costs and asset disposals |
|
1.5 |
% |
|
0.3 |
% |
|
1.4 |
% |
|
0.7 |
% |
Total costs and expenses |
|
98.6 |
% |
|
95.1 |
% |
|
101.7 |
% |
|
97.9 |
% |
Income (loss) from
operations |
|
1.4 |
% |
|
4.9 |
% |
|
(1.7 |
)% |
|
2.1 |
% |
Interest expense, net |
|
0.4 |
% |
|
0.4 |
% |
|
0.4 |
% |
|
0.5 |
% |
Income (loss) before
taxes |
|
1.1 |
% |
|
4.5 |
% |
|
(2.1 |
)% |
|
1.6 |
% |
Provision for (benefit from)
income taxes |
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
Net income (loss) |
|
1.0 |
% |
|
4.5 |
% |
|
(2.1 |
)% |
|
1.6 |
% |
_______________________(1) As a percentage of
restaurant revenue.
Noodles &
CompanyConsolidated Selected Balance Sheet Data
and Selected Operating Data(in thousands, except
restaurant activity, unaudited)
|
|
As of |
|
|
June 28,2022 |
|
December 28,2021 |
Balance Sheet
Data |
|
|
Total current assets |
|
$ |
20,495 |
|
|
$ |
22,562 |
|
Total assets |
|
|
338,581 |
|
|
|
341,459 |
|
Total current liabilities |
|
|
69,967 |
|
|
|
76,582 |
|
Total long-term debt |
|
|
31,142 |
|
|
|
18,931 |
|
Total liabilities |
|
|
303,694 |
|
|
|
303,826 |
|
Total stockholders’
equity |
|
|
34,887 |
|
|
|
37,633 |
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended |
|
|
June 28,2022 |
|
March 29,2022 |
|
December 28,2021 |
|
September 29,2021 |
|
June 29,2021 |
Selected Operating
Data |
|
|
Restaurant Activity: |
|
|
|
|
|
|
|
|
|
|
Company-owned restaurants at end of period |
|
|
363 |
|
|
|
360 |
|
|
|
372 |
|
|
|
374 |
|
|
|
374 |
|
Franchise restaurants at end of period |
|
|
93 |
|
|
|
93 |
|
|
|
76 |
|
|
|
76 |
|
|
|
77 |
|
Revenue Data: |
|
|
|
|
|
|
|
|
|
|
Company-owned average unit volume |
|
$ |
1,421 |
|
|
$ |
1,249 |
|
|
$ |
1,310 |
|
|
$ |
1,377 |
|
|
$ |
1,350 |
|
Franchise average unit volume |
|
$ |
1,276 |
|
|
$ |
1,225 |
|
|
$ |
1,320 |
|
|
$ |
1,347 |
|
|
$ |
1,240 |
|
Company-owned comparable restaurant sales |
|
|
5.1 |
% |
|
|
5.3 |
% |
|
|
9.5 |
% |
|
|
15.3 |
% |
|
|
55.7 |
% |
Franchise comparable restaurant sales |
|
|
5.3 |
% |
|
|
11.9 |
% |
|
|
20.8 |
% |
|
|
21.0 |
% |
|
|
63.8 |
% |
System-wide comparable restaurant sales |
|
|
5.1 |
% |
|
|
6.4 |
% |
|
|
11.2 |
% |
|
|
16.3 |
% |
|
|
56.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of Non-GAAP Measurements
to GAAP Results
Noodles &
CompanyReconciliation of Net
Income (Loss) to EBITDA and Adjusted
EBITDA(in thousands, unaudited)
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
June 28,2022 |
|
June 29,2021 |
|
June 28,2022 |
|
June 29,2021 |
Net income (loss) |
|
$ |
1,345 |
|
|
$ |
5,683 |
|
|
$ |
(5,084 |
) |
|
$ |
3,706 |
|
Depreciation and
amortization |
|
|
5,763 |
|
|
|
5,576 |
|
|
|
11,484 |
|
|
|
11,163 |
|
Interest expense, net |
|
|
489 |
|
|
|
498 |
|
|
|
926 |
|
|
|
1,120 |
|
Provision for (benefit from)
income taxes |
|
|
44 |
|
|
|
29 |
|
|
|
(39 |
) |
|
|
19 |
|
EBITDA |
|
$ |
7,641 |
|
|
$ |
11,786 |
|
|
$ |
7,287 |
|
|
$ |
16,008 |
|
Restaurant impairments,
closure costs and asset disposals |
|
|
1,971 |
|
|
|
390 |
|
|
|
3,360 |
|
|
|
1,621 |
|
Stock-based compensation
expense |
|
|
1,499 |
|
|
|
1,611 |
|
|
|
2,668 |
|
|
|
2,413 |
|
Fees and costs related to
transactions and other acquisition/disposition costs |
|
|
63 |
|
|
|
— |
|
|
|
63 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
11,174 |
|
|
$ |
13,787 |
|
|
$ |
13,378 |
|
|
$ |
20,042 |
|
______________________________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 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 &
CompanyReconciliation 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 |
|
|
June 28,2022 |
|
June 29,2021 |
|
June 28,2022 |
|
June 29,2021 |
Net income (loss) |
|
$ |
1,345 |
|
|
$ |
5,683 |
|
|
$ |
(5,084 |
) |
|
$ |
3,706 |
|
Restaurant impairments,
divestitures and closure costs(a) |
|
|
1,009 |
|
|
|
349 |
|
|
|
1,633 |
|
|
|
1,288 |
|
Fees and costs related to
transactions and other acquisition/disposition costs(b) |
|
|
63 |
|
|
|
— |
|
|
|
63 |
|
|
|
— |
|
Tax impact of adjustments
above(c) |
|
|
(5 |
) |
|
|
(1 |
) |
|
|
(5 |
) |
|
|
(6 |
) |
Adjusted net income
(loss) |
|
$ |
2,412 |
|
|
$ |
6,031 |
|
|
$ |
(3,393 |
) |
|
$ |
4,988 |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
Class A and Class B common stock, combined |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.03 |
|
|
$ |
0.12 |
|
|
$ |
(0.11 |
) |
|
$ |
0.08 |
|
Diluted |
|
$ |
0.03 |
|
|
$ |
0.12 |
|
|
$ |
(0.11 |
) |
|
$ |
0.08 |
|
Adjusted earnings (loss) per
Class A and Class B common stock, combined(d) |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.05 |
|
|
$ |
0.13 |
|
|
$ |
(0.07 |
) |
|
$ |
0.11 |
|
Diluted |
|
$ |
0.05 |
|
|
$ |
0.13 |
|
|
$ |
(0.07 |
) |
|
$ |
0.11 |
|
Weighted average Class A and
Class B common stock outstanding, combined(d) |
|
|
|
|
|
|
|
|
Basic |
|
|
45,881,354 |
|
|
|
45,506,476 |
|
|
|
45,803,927 |
|
|
|
45,303,160 |
|
Diluted |
|
|
46,108,720 |
|
|
|
46,246,169 |
|
|
|
45,803,927 |
|
|
|
45,992,119 |
|
_____________________________Adjusted net income
(loss) is a supplemental measure of financial performance that is
not required by or presented in accordance with GAAP. We define
adjusted net income (loss) as net income (loss) plus the impact of
adjustments and the tax effects of such adjustments. Adjusted net
income (loss) is presented because management believes it helps
convey supplemental information to investors regarding our
performance, excluding the impact of special items that affect the
comparability of results in past quarters to expected results in
future quarters. Adjusted net income (loss) as presented may not be
comparable to other similarly-titled measures of other companies,
and our presentation of adjusted net income (loss) should not be
construed as an inference that our future results will be
unaffected by excluded or unusual items. Our management uses this
non-GAAP financial measure to analyze changes in our underlying
business from quarter to quarter based on comparable financial
results.
(a) Reflects the adjustment to eliminate
the impact of impairing restaurants, divestiture costs and ongoing
closure costs recognized during the first two quarters of 2022 and
2021. 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 adjustments to eliminate
the expenses related to certain corporate transactions.
(c) Reflects the tax impact of the other
adjustments discussed in (a) and (b) above using the estimated
annual effective tax rate. Note that the amounts in 2021 have been
adjusted to reflect the respective effective tax rate.
(d) Adjusted per share amounts are
calculated by dividing adjusted net income (loss) by the basic and
diluted weighted average shares outstanding.
Noodles &
CompanyReconciliation of
Operating Income (Loss) to Restaurant
Contribution (in thousands,
unaudited)
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
|
June 28,2022 |
|
June 29,2021 |
|
June 28,2022 |
|
June 29,2021 |
Income (loss) from operations |
|
$ |
1,878 |
|
|
$ |
6,210 |
|
|
$ |
(4,197 |
) |
|
$ |
4,845 |
|
Less: Franchising royalties
and fees, and other |
|
|
2,793 |
|
|
|
1,934 |
|
|
|
5,394 |
|
|
|
3,767 |
|
Plus: General and
administrative |
|
|
12,744 |
|
|
|
12,978 |
|
|
|
24,584 |
|
|
|
23,907 |
|
Depreciation and amortization |
|
|
5,763 |
|
|
|
5,576 |
|
|
|
11,484 |
|
|
|
11,163 |
|
Pre-opening |
|
|
353 |
|
|
|
163 |
|
|
|
761 |
|
|
|
221 |
|
Restaurant impairments, closure costs and asset disposals |
|
|
1,971 |
|
|
|
390 |
|
|
|
3,360 |
|
|
|
1,621 |
|
Restaurant contribution |
|
$ |
19,916 |
|
|
$ |
23,383 |
|
|
$ |
30,598 |
|
|
$ |
37,990 |
|
|
|
|
|
|
|
|
|
|
Restaurant contribution
margin |
|
|
15.5 |
% |
|
|
18.9 |
% |
|
|
12.8 |
% |
|
|
16.4 |
% |
_____________________________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
Moorepress@noodles.comSource: Noodles & Company
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