Noodles & Company announced financial results for its first quarter ended April 4, 2017.
Key highlights for the first quarter of 2017 versus the same quarter a year ago include:
Total revenue increased 2.4 percent to $116.7 million from $114.0 million.
Net loss was $26.8 million for the first quarter of 2017, and net loss attributable to common stockholders (further reduced by the accretion of the preferred stock to its redemption value) was $27.8 million or $0.99 loss per diluted share, compared to net loss of $2.4 million, or $0.09 loss per diluted share in the first quarter of 2016. During the first quarter of 2017, the company recorded $19.9 million of charges related to the closure of 55 restaurants and $1.9 million of charges related to the impairment of four restaurants.
Adjusted net loss was $2.5 million, or $0.08 loss per diluted share, compared to adjusted net loss of $1.7 million, or $0.06 loss per diluted share.
Adjusted EBITDA decreased to $3.8 million from $5.4 million.
Comparable restaurant sales decreased 2 percent system-wide, decreased 2.5 percent for company-owned restaurants and increased 1.1 percent for franchise restaurants.
Eight new restaurants opened system-wide in the first quarter of 2017, including seven company-owned restaurants and one franchise restaurant.
Dave Boennighausen, chief financial officer and interim chief executive officer of Noodles & Company, says, "During the first quarter of 2017 we completed two important steps to allow us to sharpen our focus on improving the performance and profitability of our go-forward portfolio. First, the company completed private placements with L Catterton and Mill Road Capital, resulting in $50 million of gross proceeds. These investments are from firms with strong records in the consumer space and allow us to pursue the steps necessary to complete our transformation plan through the balance of 2017 and beyond."
Boennighausen continues, "Using a portion of the proceeds from these transactions, the company also completed our second important step, the closure of 55 restaurants that had been a persistent burden on the company's human and financial capital. We expect these closures will have a significant benefit on the company's future earnings profile and also give us the opportunity to place more emphasis on our stronger remaining base of restaurants."
First Quarter 2017 Financial Results
Total revenue increased $2.7 million in the first quarter of 2017, or 2.4 percent, to $116.7 million, compared to $114.0 million in the first quarter of 2016. This increase was the result of new restaurants opened system-wide since the beginning of the first quarter of 2016, partially offset by the closure of 39 company-owned restaurants on February 28, 2017. An additional 16 restaurants were closed at the end of the quarter, and accordingly, their closure did not impact the first quarter revenue results. Additionally, average unit volumes ("AUVs") for the quarter overall decreased $34,000 compared to the first quarter of 2016. AUV's for the trailing twelve months were $1,067,000. Excluding restaurants that were closed during the first quarter, AUV's were $1,116,000.
Eight new restaurants opened system-wide in the first quarter of 2017, including seven company-owned restaurants and one franchise restaurant. The Company had 482 restaurants at the end of the first quarter, comprised of 409 company-owned and 73 franchise restaurants. In the first quarter of 2017, comparable restaurant sales decreased 2 percent system-wide, decreased 2.5percent for company-owned restaurants and increased 1.1percent for franchise restaurants.
Restaurant contribution margin decreased to 11 percent in the first quarter of 2017, compared to 13.3 percent in the first quarter of 2016. This decrease was primarily due to deleverage on lower AUVs, increased cost of sales and increased labor costs.
The company reported a net loss of $26.8 million in the first quarter of 2017, compared with a net loss of $2.4 million in 2016. In the first quarter of 2017, the company recorded $19.9 million of charges related to the closure of 55 restaurants, and $1.9 million of charges related to impairment of four restaurants. In the first quarter of 2016, the company recorded $0.5 million related to ongoing closure costs of the restaurants closed in the fourth quarter of 2015 and $0.2 million related to impairment of one restaurant. Adjusted net loss of $2.5 million in the first quarter of 2017 grew from adjusted net loss of $1.7 million in the first quarter of 2016. Adjusted EBITDA decreased to $3.8 million in the first quarter of 2017 from $5.4 million in the first quarter of 2016.
Based upon management's current assessment following first quarter results and reflecting the completion of the closure of 55 company-owned restaurants, the Company has revised guidance and currently expects the following for full year 2017:
Approximately 14 to 17 new restaurants system-wide, including 12 to 15 company-owned restaurants;
Total revenue of $458.0 million to $468.0 million;
Company-owned comparable restaurant sale decline of low-single-digits;
Restaurant level contribution margin of 13.5% to 14.5%;
Adjusted EBITDA of $31.0 million to $35.0 million;
Flat adjusted net income; and
Capital expenditures of $21.0 million to $25.0 million
The company believes that a quantitative reconciliation of the Company's non-GAAP financial measures guidance, namely adjusted EBITDA and adjusted diluted loss per share, 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 predict the timing and likelihood of outcomes that determine future impairments and the tax benefit of any such future impairments. Neither of these measures, nor their probable significance, can be reliably quantified due to the inability to forecast future impairments. These non-GAAP financial measures 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."