News

Noodles & Co reports strong Q4, blames weather for 2014's slow start

March 3, 2014

Noodles & Company reported that its total revenue was up 17.4 percent from $77.9 million to $91.5, for the fourth quarter of 2013 compared to the fourth quarter of 2012.

"We're pleased to have maintained our operating momentum in the fourth quarter with our 18th straight quarter of comparable restaurant sales growth and a 66 percent increase in our adjusted net income for the quarter," said Kevin Reddy, chairman and CEO of Noodles & Company. "Our ongoing success is a testament to the hard work of our entire team to deliver our globally inspired menu with an elevated level of service at an exceptional value, which we believe has distinguished Noodles as a 'Category of One' in the restaurant industry."

Other highlights included:

• Adjusted net income increased 65.9 percent to $3.5 million, or $0.11 per diluted share, from $2.1 million.
• GAAP net income increased to $2.4 million, from $1.6 million.
• Adjusted EBITDA increased 31.8 percent to $12.0 million, from $9.1 million.
• Comparable restaurant sales increased 4.3 percent for company-owned restaurants, 1.5 percent for franchise restaurants and 3.9 percent system-wide.
• Restaurant contribution margin decreased 30 basis points to 21.0 percent.
• 12 new restaurants opened system-wide, including eight company-owned and four franchise restaurants.

Key highlights for the fiscal year of 2013 compared to the fiscal year of 2012 included:

• Adjusted net income increased 30.9 percent to $12.1 million, or $0.40 per diluted share, from $9.3 million, or $0.32 per diluted share.
• GAAP net income increased to $6.7 million, or $0.24 per diluted share, from $5.2 million.
• Adjusted EBITDA increased 30.1 percent to $47.2 million, from $36.3 million.
• Total revenue increased 16.8 percent to $350.9 million from $300.4 million.
• Comparable restaurant sales increased 3.4 percent for company-owned restaurants, 0.6 percent for franchise restaurants and 3.0 percent system-wide.
• And 53 net new restaurants opened system-wide, including 42 company-owned and 11 franchise restaurants, resulting in 16.2 percent system-wide unit growth.

Reddy said the weather has slowed down operations for Q1 of 2014, pointing out that nearly 80 percent of the chain's restaurants are located in areas severely impacted by atypical weather, including the Mid-Atlantic, Upper Midwest and Rocky Mountain West.

"In fact, over 30 percent of our operating days thus far have seen either measurable precipitation or temperatures at least 20 degrees below normal," he said. "As a result, in the first quarter we anticipate a roughly 300 to 350 bps negative impact to revenue and $0.03 impact to diluted earnings per share. Still, we remain confident that we can deliver on our 25 percent annual adjusted diluted earnings per share growth goal for 2014."

Reddy said the chain has tested and begun implementing a number of initiatives over the past year, centered on its dinner daypart strength, the introduction of catering and improving throughput and operational efficiency.

"Our development pipeline is in great shape with plans to open 42 to 50 new company-owned restaurants this year, while our franchisees expect to open 10 to 15 new restaurants, representing approximately 16 percent new unit growth system-wide. With a long runway of expansion potential, and a consistent track record of sales and earnings growth, we are excited about 2014 and beyond," he said.