News

Noodles & Co aiming straight up for 2018

March 20, 2018

Although Noodles & Company reported this week that revenues were down for the fourth quarter in 2017, as well as the full year, the leadership team also pointed out a few bright spots.

"In 2017, we took several significant steps to improve the company's fundamentals -- returning our focus to our core operations, rationalizing our portfolio base and solidifying our leadership team," CEO Dave Boennighausen, said in a company release. "We began to see the positive impact of these actions in the fourth quarter, resulting in improved comparable restaurant sales performance relative to prior quarters, a 26.4 percent increase in our adjusted EBITDA and a 320 basis point improvement in our restaurant contribution margin. These improved results give us confidence that we are gaining traction as we execute our strategic roadmap."

Paul Murphy, executive chairman, said he is confident that the initiatives will continue to drive improved financial results. 

"Our focus on executing an outstanding dining experience, capitalizing on our off-premise strengths and innovating around our menu provide exciting opportunities for Noodles & Company," he said. "We continue to believe that the brand has the ability to exceed the expectations of today's consumers, and the work already done in 2017 and in process this year will position us to win in this competitive environment."

Q4 highlights included:

• Total revenue decreased 12.8 percent to $112.8 million from $129.4 million, due primarily to the closure of 55 restaurants during the first quarter of 2017 and an additional operating week in 2016. 
• Net loss was $0.5 million, or $0.01 loss per diluted share, compared to net loss of $45.4 million, or $1.63 loss per diluted share.
• Adjusted EBITDA increased 26.4 percent to $8.6 million from $6.8 million.
• Restaurant contribution margin increased 320 basis points to 15.1 percent.
• Adjusted net income was $0.3 million, or $0.01 income per diluted share, compared to adjusted net loss of $1.1 million, or $0.04 loss per diluted share.
• Comparable restaurant sales decreased 0.9 percent system-wide, decreased 0.9 percent for company-owned restaurants and decreased 0.9 percent for franchise restaurants.
• One new company-owned restaurant opened in the fourth quarter of 2017.
• Key highlights for fiscal year 2017 compared to fiscal year 2016 included:
• Total revenue decreased 6.4 percent to $456.5 million from $487.5 million, due primarily to the closure of 55 restaurants during the first quarter of 2017 and an additional operating week in 2016.

Net loss was $37.5 million and net loss attributable to common stockholders (after giving effect to the accretion of the preferred stock to its redemption value) was $45.4 million or $1.20 loss per diluted share, compared to net loss of $71.7 million, or $2.58 loss per diluted share.
Adjusted EBITDA increased 18.1 percent to $30.6 million from $25.9 million.

Restaurant contribution margin increased 140 basis points to 14.2 percent. Adjusted net loss was $0.9 million, or $0.02 loss per diluted share, compared to adjusted net loss of $4.8 million, or $0.17 loss per diluted share. Comparable restaurant sales decreased 2.4 percent system-wide, decreased 2.7 percent for company-owned restaurants and decreased 0.5 percent for franchise restaurants. 15 restaurants opened system-wide in fiscal year 2017, including 12 company-owned and three franchise restaurants.

2018 outlook
For 2018, management expects the following:Opening one to five restaurants system-wide, including one to four company-owned restaurants.

• Total revenue of $440 million to $450 million.
• Modestly positive comparable restaurant sales.
• Restaurant contribution margin of 14.5 percent to 15 percent.
• Adjusted EBITDA of $31 million to $33 million.
• Adjusted diluted EPS of ($0.01) to $0.03.
• Capital expenditures of approximately $10 million

"As we implement important initiatives in coming months, we anticipate continued improvement in our top-line trends throughout the year, resulting in modestly positive comparable sales and adjusted EBITDA growth," Boennighausen said. "We believe that as momentum builds and we continue to execute on cost savings initiatives, we will be able to offset anticipated inflationary pressure and make important investments to position the brand for sustained growth in the years ahead."