First Three Quarters 2013 Financial Results
Revenue Growth of 16.6%
Total revenue increased $37.0 million in the first three quarters of 2013, or 16.6%, to $259.5 million, compared with $222.5 million in the same period of 2012. This increase was the result of new restaurants opened system-wide since the beginning of the third quarter of 2012, in addition to an increase in sales at our comparable base restaurants. Comparable restaurant sales increased 3.1% for company-owned restaurants, increased 0.3% for franchise restaurants and increased 2.7% system-wide.
Adjusted Net Income
(2) Growth of 21.4%
Net income was $4.3 million for the first three quarters of 2013, compared to net income of $3.6 million in the same period of 2012. Adjusted net income increased 21.4% to $8.6 million.
Restaurant contribution margin was 20.6% as a percentage of restaurant revenue in the first three quarters of 2013, compared with 21.2% in the same period of 2012, due primarily to increases in occupancy and restaurant operating costs as a percentage of revenue.
Initial Public Offering
On July 2, 2013, the Company successfully completed its initial public offering of Class A common stock at $18.00 per share. The Company issued 6,160,714 shares, including 803,571 shares sold to the underwriters pursuant to their over-allotment option. After underwriter discounts and commissions and offering expenses, the Company received net proceeds from the offering of $100.2 million. These proceeds were used to repay all but $0.2 million of the Company's outstanding debt as of July 2, 2013.
(2) Adjusted net income is a non-GAAP measure. A reconciliation of US GAAP net income to adjusted net income is included in the accompanying financial data. See "Non-GAAP Financial Measures."
Management is affirming their expectation of adjusted diluted net income per share between $0.39 and $0.41 for the full year of 2013. This compares to adjusted diluted net income per share of $0.31 in 2012. Mr. Reddy remarked "Our strong early performance in the fourth quarter has resulted in our increased guidance of company-owned comparable restaurant sales growth expected for the full year 2013. Also, our team's continued efforts in developing the brand through productive new unit growth leads us to anticipate an increase in new units expected to open this year compared with prior guidance." The Company's current guidance is based, in part, on the following assumptions for fiscal year 2013:
Comparable Restaurant Sales
- 41 to 42 new company-owned restaurant openings, net of one closure in first quarter of 2013
- Nine to ten new franchise restaurant openings
- Net revenue of $348 million to $352 million
- Company-owned comparable restaurant sales growth of approximately 3.25% to 3.75% for the full year 2013, implying fourth quarter 2013 comparable restaurant sales growth of 3.75% to 4.25%
- An effective full year tax rate of 39.2%
- Capital expenditures of approximately $46 million to $50 million
- Annual weighted average adjusted diluted shares outstanding of 31.1 million to 31.3 million
- Comparable adjustments to net income as discussed in "Reconciliations of Non-GAAP Measurements to US GAAP Results"
represent year-over-year sales comparisons for restaurants open for at least 18 full periods.
Per Person Spend
represents restaurant sales divided by traffic. Traffic represents the approximate number of entrees sold.
Restaurant Contribution Margin
represents restaurant revenue less restaurant operating costs which are costs of sales, labor, occupancy and other restaurant operating costs.
represents net income before interest expense, debt extinguishment expense, provision for income taxes, asset disposals, closure costs and restaurant impairments, depreciation and amortization, stock-based compensation, management fees, IPO related expenses and other one time expenses. Adjusted EBITDA is presented because: (i) management believes it is a useful measure for investors to assess the operating performance of our business without the effect of non-cash charges such as depreciation and amortization expenses and asset disposals, closure costs and restaurant impairments and (ii) management uses it internally as a benchmark for certain of our cash incentive plans and to evaluate our operating performance or compare performance to that of the competitors. See "Non-GAAP Financial Measures" below.
Adjusted Net Income
represents net income plus a net savings in interest expense as a result of the pay down of debt using IPO proceeds, plus debt extinguishment expense, IPO related expenses and pre-IPO management fees, less incremental costs of being a public company and the tax effects of these adjustments. Adjusted net income is presented because management believes it helps convey supplemental information to investors regarding the Company's performance excluding the impact of the IPO and other special items that affect the comparability of results in past quarters and expected in future quarters. See "Non-GAAP Financial Measures" below.
Noodles & Company will host a conference call to discuss the third quarter financial results on Wednesday, November 6, 2013 at 4:30 PM Eastern Time.