News

Noodles misses Q1 goals, expects growth

Noodles & Company reported during its earning's call this week that Q1 saw an 18.1-percent growth, increasing revenue to nearly $106 million but still came up short of its estimate of $108.74 million.

May 6, 2015

Noodles & Company reported during its earning's call this week that Q1 saw an 18.1-percent growth, increasing revenue to nearly $106 million but still came up short of its estimate of $108.74 million. Earnings per share also missed the mark, coming in at $0.03, $0.02 worse than the analyst estimateof $0.05.

Despite the lower-than-expected numbers, CEO Kevin Reddy said the chain has continued its track record of consistent top-line and unit growth, opening 16 new restaurants system-wide. It also opened its first restaurants in Arizona and Montana, as well as a third restaurant in the Orlando market.

“We have been extremely pleased with the initial sales in these new markets, as the brand continues to resonate with guests from coast to coast,” Reddy said. 

Reddy also admitted that although the chain has faced recent sales challenges, it will continue its focus on key initiatives, including catering and new marketing investments that will enhance consumer awareness of the brand.

“Moreover, much of the sales challenges we have encountered have been in a few parts of the country,” he said. “Excluding softness that we have seen in markets in three areas - Colorado, the DC Metro Area, and Austin - comparable sales grew 3.2 percent company-wide for the quarter. We are confident that we understand our opportunities in these markets and are aggressively working on returning them to the success that we are seeing in the balance of the country."

“Our initiatives give us confidence that we are on the path to return to our historic comparable sales growth patterns."

Other Q1 highlights included:

• Comparable restaurant sales increased 0.8 percent for company-owned restaurants, 1.4 percent for franchise restaurants and 0.9 percent system-wide.
• Restaurant contribution margin decreased to 16.2 from 17.3 percent.
• GAAP net income decreased to a loss of $2.8 million from net income of $1.4 million. The company recorded a $5.9 million pre-tax impairment charge related to eight restaurants in 2015.
• Adjusted net income decreased to $0.9 million, from $1.4 million, and adjusted earnings per diluted share decreased to $0.03 from $0.05.
• And Adjusted EBITDA increased to $8.8 million from $8.4 million.

2015 Outlook

Based upon management's current assessment following first quarter results, Reddy revised guidance and currently expects the following for full year 2015:

• Unit growth of 12 to 14 percent system-wide.
• Comparable restaurant sales growth in the low single digits.
• Restaurant level contribution margin of 18 to 19 percent
• Adjusted diluted earnings per share growth to be approximately flat.
• And an adjusted effective tax rate between 39 and 40 percent.