Noodles & Company (Nasdaq: NDLS) today announced financial
results for its second quarter ended June 30, 2020.
“Our second quarter saw a consistent sales
recovery led by the strength and evolution of our digital and
off-premise business, and I’m pleased to report that the recovery
has continued into the third quarter,” said Dave Boennighausen,
Chief Executive Officer of Noodles & Company. “In addition,
average unit volumes, normalized for the impact of temporary
closures, were nearly flat year-over-year during the recently
completed July fiscal period. This continued improvement,
coupled with the potential to utilize a smaller, off-premise
focused footprint to take advantage of a more favorable real estate
environment, gives me great confidence in the Company’s ability to
continue to gain momentum through the balance of 2020 and
accelerate new unit growth in the years to come.”
Boennighausen added, “I am extremely proud of
all of our team members and partners for the progress we have made
since the onset of the COVID-19 pandemic. The Company’s competitive
strengths in our people, off-premise resonance and the variety
inherent in our menu - from our world famous Mac & Cheese to
healthy Zoodle and Caulifloodle offerings - have positioned Noodles
& Company to successfully navigate this challenging environment
and thrive in the coming years.”
The cadence of comparable restaurant sales and
average unit volumes during the second quarter and third quarter
to-date are as set forth below. Company-owned restaurants were
closed July 4th and 5th 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 Ended April 28, 2020 |
4 Weeks Ended May 26, 2020 |
5 Weeks Ended June 30, 2020 |
2 Weeks Ended July 14, 2020 (1) |
2 Weeks Ended July 28, 2020 |
Company-owned |
(47.0)% |
(28.9)% |
(17.7)% |
(13.9)% |
(3.8)% |
Franchise |
(55.5)% |
(37.3)% |
(18.1)% |
(7.5)% |
(7.8)% |
System-wide |
(48.2)% |
(30.1)% |
(17.8)% |
(13.0)% |
(4.4)% |
Average Unit Volumes
(000’s) |
$685 |
$901 |
$1,044 |
$1,168 |
$1,181 |
_____________________
(1) Company-owned restaurants were closed
July 4 and July 5, 2020.
Key highlights for the second quarter of
2020 versus the second quarter of 2019 include:
- Total revenue was $80.2 million compared to $120.2
million.
- Comparable restaurant sales decreased 30.9% system-wide,
comprised of a 30.1% decrease at company-owned restaurants and a
35.4% decrease at franchise restaurants.
- Digital sales grew 135% and accounted for 74% of sales.
- Net loss was $13.5 million, or $0.30 per diluted share,
compared to net income of $0.4 million, or $0.01 per diluted
share.
- Adjusted net loss(2) was $8.1 million, or $0.18 per diluted
share, compared to an adjusted net income of $2.1 million, or $0.05
per diluted share.
- EBITDA(2) was $(7.1) million compared to $6.9 million for the
second quarter of 2019.
- Adjusted EBITDA(2) was $(3.3) million compared to $10.9 million
for the second quarter of 2019.
_____________________
(2) Adjusted net (loss) income, EBITDA
and adjusted EBITDA are a non-GAAP measures. Reconciliations of net
(loss) income to adjusted net (loss) income, EBITDA and adjusted
EBITDA are included in the accompanying financial data. See
“Non-GAAP Financial Measures.”
Second Quarter 2020 Financial Results
Total revenue decreased to $80.2 million in the
second quarter of 2020, compared to $120.2 million in the second
quarter of 2019. This decrease was primarily due to a decline in
traffic related to the impact of COVID-19 during the quarter, as
well as the refranchising of 14 total restaurants since January
2019.
In the second quarter of 2020, system-wide
comparable restaurant sales declined 30.9%, comprised of a 30.1%
decrease at company-owned restaurants and a 35.4% decrease at
franchise restaurants. Comparable restaurant sales improved
throughout the quarter and that improvement has continued into the
third quarter. During the last two weeks of the July fiscal period,
comparable sales declined only 3.8% at company-owned
restaurants.
Average Unit Volumes, which normalizes for the
impact of temporary restaurant closures, declined 0.5% during the
fiscal period ending July 28, 2020.
Digital sales during the second quarter grew
135% relative to prior year and accounted for 74% of total sales.
Digital sales have continued to grow rapidly relative to the prior
year thus far in the third quarter even as on-premise dining
resumes in many restaurants, with 148% growth during the fiscal
period ending July 28th, 2020.
As of the end of the second quarter, 40% of
company-owned restaurants and 100% of franchised restaurants
offered seating either in-restaurant or patio seating. On-premise
dining continues to re-open, and as of August 5th, the Company now
has 92% of company locations and 100% of franchise locations
offering either in-dining room or patio seating.
In the second quarter of 2020, the Company
closed one restaurant and franchisees closed one restaurant. There
were 456 Noodles & Co. restaurants at the end of the second
quarter 2020, comprised of 380 company-owned restaurants and 76
franchise restaurants. During the second quarter, the six new
restaurants not in the Company’s comparable restaurant base, many
of which offer order ahead drive-thru pick-up windows, achieved
sales volumes 14% above the Company average and combined for
restaurant level margin of 19.4%. The Company anticipates three
additional company openings during the balance of 2020 with a more
rapid acceleration of unit growth beginning in 2021.
For the second quarter of 2020, the Company
reported a net loss of $13.5 million, or $0.30 per diluted share,
compared with net income of $0.4 million in the second quarter of
2019, or $0.01 per diluted share. Loss from operations for the
second quarter of 2020 was $12.5 million, compared to income of
$1.2 million in the second quarter of 2019. Closure costs in the
second quarter of 2020 included ongoing costs as well as
adjustments to liabilities as lease terminations occur.
Restaurant contribution margin decreased to 6.7%
in the second quarter of 2020, compared to 17.1% in the second
quarter of 2019. This decrease was primarily due to decreased sales
volumes, increased costs related to COVID-19 and increased
third-party delivery fees associated with higher delivery
sales.
Adjusted net loss was $8.1 million, or $0.18 per
diluted share, in the second quarter of 2020, compared to adjusted
net income of $2.1 million, or $0.05 per diluted share, in the
second quarter of 2019. Adjusted EBITDA decreased to $(3.3) million
in the second quarter of 2020 from $10.9 million in the second
quarter of 2019.
Liquidity Update and Outlook:
As of June 30, 2020, the Company continues to
maintain a strong financial position with $62.1 million in cash on
hand, compared with $50.5 million at the end of the first fiscal
quarter. Long-term debt increased from $85.4 million at the end of
the first quarter to $93.0 million as of the end of the second
quarter The Company anticipates using its cash on hand to pay down
a portion of its debt revolver in upcoming months.
The Company’s strengthening financial position
reflects our continued discipline around capital investments and
non-essential costs. Assuming we continue to see comparable sales
improvement, we have increased confidence on our ability to
generate positive cash flow for the rest of 2020 and support
strategic investments.
Given the ongoing uncertainty surrounding the
impact of COVID-19 on the economy and any specific impact to the
Company, we do not have any further updates on our fiscal year 2020
expectations following the withdrawal of our financial guidance on
March 16, 2020.
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 second quarter financial results on Thursday,
August 6, 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 1599041. The replay will be available until
Thursday, August 13, 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 Thursday,
August 13, 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 crisis,
projected capital expenditures, the revenue and balance sheet
impact of the COVID-19 crisis, estimated costs associated with our
closure of underperforming restaurants, the implementation and
results of strategic initiatives and our future financial
performance. 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 crisis; governmental and guest response to the
COVID-19 crisis; 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 crisis 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. 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 30, 2020 |
|
July 2, 2019 |
|
June 30, 2020 |
|
July 2, 2019 |
Revenue: |
|
|
|
|
|
|
|
Restaurant revenue |
$ |
80,021 |
|
|
$ |
118,858 |
|
|
$ |
178,737 |
|
|
$ |
227,623 |
|
Franchising royalties and fees, and other |
136 |
|
|
1,332 |
|
|
1,768 |
|
|
2,613 |
|
Total revenue |
80,157 |
|
|
120,190 |
|
|
180,505 |
|
|
230,236 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): |
|
|
|
|
|
|
|
Cost of sales |
20,020 |
|
|
30,448 |
|
|
45,224 |
|
|
59,539 |
|
Labor |
27,137 |
|
|
38,877 |
|
|
61,368 |
|
|
75,969 |
|
Occupancy |
11,676 |
|
|
12,311 |
|
|
23,736 |
|
|
24,741 |
|
Other restaurant operating costs |
15,789 |
|
|
16,858 |
|
|
32,478 |
|
|
33,314 |
|
General and administrative |
10,034 |
|
|
11,848 |
|
|
20,588 |
|
|
21,988 |
|
Depreciation and amortization |
5,397 |
|
|
5,661 |
|
|
10,732 |
|
|
11,168 |
|
Pre-opening |
71 |
|
|
65 |
|
|
144 |
|
|
65 |
|
Restaurant impairments, closure costs and asset disposals |
2,558 |
|
|
2,884 |
|
|
3,614 |
|
|
3,304 |
|
Total costs and expenses |
92,682 |
|
|
118,952 |
|
|
197,884 |
|
|
230,088 |
|
(Loss) income from
operations |
(12,525 |
) |
|
1,238 |
|
|
(17,379 |
) |
|
148 |
|
Interest expense, net |
920 |
|
|
800 |
|
|
1,888 |
|
|
1,561 |
|
(Loss) income before
taxes |
(13,445 |
) |
|
438 |
|
|
(19,267 |
) |
|
(1,413 |
) |
Provision for income
taxes |
33 |
|
|
— |
|
|
46 |
|
|
— |
|
Net (loss) income |
$ |
(13,478 |
) |
|
$ |
438 |
|
|
$ |
(19,313 |
) |
|
$ |
(1,413 |
) |
(Loss) earnings per
Class A and Class B common stock, combined |
|
|
|
|
|
|
|
Basic |
$ |
(0.30 |
) |
|
$ |
0.01 |
|
|
$ |
(0.44 |
) |
|
$ |
(0.03 |
) |
Diluted |
$ |
(0.30 |
) |
|
$ |
0.01 |
|
|
$ |
(0.44 |
) |
|
$ |
(0.03 |
) |
Weighted average shares of
Class A and Class B common stock outstanding,
combined: |
|
|
|
|
|
|
|
Basic |
44,212,751 |
|
|
43,964,175 |
|
|
44,177,648 |
|
|
43,955,580 |
|
Diluted |
44,212,751 |
|
|
45,075,888 |
|
|
44,177,648 |
|
|
43,955,580 |
|
Noodles &
CompanyCondensed Consolidated Statements of
Operations as a Percentage of
Revenue(unaudited)
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
June 30, 2020 |
|
July 2, 2019 |
|
June 30, 2020 |
|
July 2, 2019 |
Revenue: |
|
|
|
|
|
|
|
Restaurant revenue |
99.8 |
% |
|
98.9 |
% |
|
99.0 |
% |
|
98.9 |
% |
Franchising royalties and fees, and other |
0.2 |
% |
|
1.1 |
% |
|
1.0 |
% |
|
1.1 |
% |
Total revenue |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
Costs and expenses: |
|
|
|
|
|
|
|
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): (1) |
|
|
|
|
|
|
|
Cost of sales |
25.0 |
% |
|
25.6 |
% |
|
25.3 |
% |
|
26.2 |
% |
Labor |
33.9 |
% |
|
32.7 |
% |
|
34.3 |
% |
|
33.4 |
% |
Occupancy |
14.6 |
% |
|
10.4 |
% |
|
13.3 |
% |
|
10.9 |
% |
Other restaurant operating costs |
19.7 |
% |
|
14.2 |
% |
|
18.2 |
% |
|
14.6 |
% |
General and administrative |
12.5 |
% |
|
9.9 |
% |
|
11.4 |
% |
|
9.6 |
% |
Depreciation and amortization |
6.7 |
% |
|
4.7 |
% |
|
5.9 |
% |
|
4.9 |
% |
Pre-opening |
0.1 |
% |
|
0.1 |
% |
|
0.1 |
% |
|
— |
% |
Restaurant impairments, closure costs and asset disposals |
3.2 |
% |
|
2.4 |
% |
|
2.0 |
% |
|
1.4 |
% |
Total costs and expenses |
115.6 |
% |
|
99.0 |
% |
|
109.6 |
% |
|
99.9 |
% |
(Loss) income from
operations |
(15.6 |
)% |
|
1.0 |
% |
|
(9.6 |
)% |
|
0.1 |
% |
Interest expense, net |
1.1 |
% |
|
0.7 |
% |
|
1.0 |
% |
|
0.7 |
% |
(Loss) income before
taxes |
(16.8 |
)% |
|
0.4 |
% |
|
(10.7 |
)% |
|
(0.6 |
)% |
Provision for income
taxes |
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
Net (loss) income |
(16.8 |
)% |
|
0.4 |
% |
|
(10.7 |
)% |
|
(0.6 |
)% |
_______________________(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 30, 2020 |
|
December 31, 2019 |
Balance Sheet Data |
|
|
|
|
|
Total current assets |
$ |
77,734 |
|
$ |
29,322 |
Total assets |
422,395 |
|
378,519 |
Total current liabilities |
60,974 |
|
58,034 |
Total long-term debt |
93,040 |
|
40,497 |
Total liabilities |
390,119 |
|
327,948 |
Total stockholders’
equity |
32,276 |
|
50,571 |
|
Fiscal Quarter Ended |
|
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019 |
|
October 1, 2019 |
|
July 2, 2019 |
Selected Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant Activity: |
|
|
|
|
|
|
|
|
|
Company-owned restaurants at end of period |
380 |
|
|
381 |
|
|
389 |
|
|
391 |
|
|
395 |
|
Franchise restaurants at end of period |
76 |
|
|
77 |
|
|
68 |
|
|
67 |
|
|
62 |
|
Revenue Data: |
|
|
|
|
|
|
|
|
|
Company-owned average unit volume |
$ |
891 |
|
|
$ |
1,036 |
|
|
$ |
1,171 |
|
|
$ |
1,188 |
|
|
$ |
1,201 |
|
Franchise average unit volume |
$ |
781 |
|
|
$ |
994 |
|
|
$ |
1,186 |
|
|
$ |
1,184 |
|
|
$ |
1,191 |
|
Company-owned comparable restaurant sales |
(30.1 |
)% |
|
(7.0 |
)% |
|
1.4 |
% |
|
2.2 |
% |
|
4.8 |
% |
Franchise comparable restaurant sales |
(35.4 |
)% |
|
(8.9 |
)% |
|
1.8 |
% |
|
1.6 |
% |
|
3.7 |
% |
System-wide comparable restaurant sales |
(30.9 |
)% |
|
(7.2 |
)% |
|
1.5 |
% |
|
2.1 |
% |
|
4.6 |
% |
Reconciliations of Non-GAAP Measurements
to GAAP Results
Noodles &
CompanyReconciliation of Net (Loss) Income to
EBITDA and Adjusted EBITDA(in thousands,
unaudited)
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
June 30, 2020 |
|
July 2, 2019 |
|
June 30, 2020 |
|
July 2, 2019 |
Net (loss) income |
$ |
(13,478 |
) |
|
$ |
438 |
|
|
$ |
(19,313 |
) |
|
$ |
(1,413 |
) |
Depreciation and
amortization |
5,397 |
|
|
5,661 |
|
|
10,732 |
|
|
11,168 |
|
Interest expense, net |
920 |
|
|
800 |
|
|
1,888 |
|
|
1,561 |
|
Provision for income
taxes |
33 |
|
|
— |
|
|
46 |
|
|
— |
|
EBITDA |
$ |
(7,128 |
) |
|
$ |
6,899 |
|
|
$ |
(6,647 |
) |
|
$ |
11,316 |
|
Restaurant impairments,
closure costs and asset disposals |
2,558 |
|
|
2,884 |
|
|
3,614 |
|
|
3,304 |
|
Stock-based compensation
expense |
1,094 |
|
|
1,155 |
|
|
1,253 |
|
|
1,881 |
|
Fees and costs related to
transactions and other acquisition/disposition costs |
73 |
|
|
— |
|
|
162 |
|
|
36 |
|
Severance costs |
89 |
|
|
— |
|
|
89 |
|
|
— |
|
Adjusted EBITDA |
$ |
(3,314 |
) |
|
$ |
10,938 |
|
|
$ |
(1,529 |
) |
|
$ |
16,537 |
|
______________________________
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 (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 &
CompanyReconciliation of Net (Loss) Income to
Adjusted Net (Loss) Income(in thousands, except
share and per share data, unaudited)
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
June 30, 2020 |
|
July 2, 2019 |
|
June 30, 2020 |
|
July 2, 2019 |
Net (loss) income |
$ |
(13,478 |
) |
|
$ |
438 |
|
|
$ |
(19,313 |
) |
|
$ |
(1,413 |
) |
Restaurant impairments,
divestitures and closure costs (a) |
2,267 |
|
|
2,429 |
|
|
2,707 |
|
|
2,700 |
|
Fees and costs related to
transactions and other acquisition/disposition costs (b) |
73 |
|
|
— |
|
|
162 |
|
|
— |
|
Severance costs |
89 |
|
|
— |
|
|
89 |
|
|
— |
|
Tax adjustments, net (c) |
2,948 |
|
|
(759 |
) |
|
4,362 |
|
|
(341 |
) |
Adjusted net (loss)
income |
$ |
(8,101 |
) |
|
$ |
2,108 |
|
|
$ |
(11,993 |
) |
|
$ |
946 |
|
|
|
|
|
|
|
|
|
(Loss) earnings per
Class A and Class B common stock, combined |
|
|
|
|
|
|
|
Basic |
$ |
(0.30 |
) |
|
$ |
0.01 |
|
|
$ |
(0.44 |
) |
|
$ |
(0.03 |
) |
Diluted |
$ |
(0.30 |
) |
|
$ |
0.01 |
|
|
$ |
(0.44 |
) |
|
$ |
(0.03 |
) |
Adjusted (loss) income per
Class A and Class B common stock, combined (d) |
|
|
|
|
|
|
|
Basic |
$ |
(0.18 |
) |
|
$ |
0.05 |
|
|
$ |
(0.27 |
) |
|
$ |
0.02 |
|
Diluted |
$ |
(0.18 |
) |
|
$ |
0.05 |
|
|
$ |
(0.27 |
) |
|
$ |
0.02 |
|
Weighted average Class A and
Class B common stock outstanding, combined (d) |
|
|
|
|
|
|
|
Basic |
44,212,751 |
|
|
43,964,175 |
|
|
44,177,648 |
|
|
43,955,580 |
|
Diluted |
44,212,751 |
|
|
45,075,888 |
|
|
44,177,648 |
|
|
45,056,026 |
|
_____________________________
Adjusted net (loss) income is a supplemental
measure of financial performance that is not required by or
presented in accordance with GAAP. We define adjusted net (loss)
income as net (loss) income plus the impact of adjustments and the
tax effects of such adjustments. Adjusted net (loss) income 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
(loss) income as presented may not be comparable to other
similarly-titled measures of other companies, and our presentation
of adjusted net (loss) income 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 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 two quarters of 2020. |
|
|
|
(c) |
|
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. |
|
|
|
(d) |
|
Adjusted per
share amounts are calculated by dividing adjusted net income by the
basic and diluted weighted average shares outstanding. |
Noodles &
CompanyReconciliation of Operating Loss to
Restaurant Contribution(in thousands,
unaudited)
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
June 30, 2020 |
|
July 2, 2019 |
|
June 30, 2020 |
|
July 2, 2019 |
(Loss) income from operations |
$ |
(12,525 |
) |
|
$ |
1,238 |
|
|
$ |
(17,379 |
) |
|
$ |
148 |
|
Less: Franchising royalties
and fees, and other |
136 |
|
|
1,332 |
|
|
1,768 |
|
|
2,613 |
|
Plus: General and
administrative |
10,034 |
|
|
11,848 |
|
|
20,588 |
|
|
21,988 |
|
Depreciation and amortization |
5,397 |
|
|
5,661 |
|
|
10,732 |
|
|
11,168 |
|
Pre-opening |
71 |
|
|
65 |
|
|
144 |
|
|
65 |
|
Restaurant impairments, closure costs and asset disposals |
2,558 |
|
|
2,884 |
|
|
3,614 |
|
|
3,304 |
|
Restaurant contribution |
$ |
5,399 |
|
|
$ |
20,364 |
|
|
$ |
15,931 |
|
|
$ |
34,060 |
|
|
|
|
|
|
|
|
|
Restaurant contribution
margin |
6.7 |
% |
|
17.1 |
% |
|
8.9 |
% |
|
15.0 |
% |
_____________________________
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
MediaBrian
Anderson720-214-1927press@noodles.com
Source: Noodles & Company
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