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Noodles & Company Announces Third Quarter 2013 Financial Results

Stocks in this article: NDLS

For more information on the non-GAAP financial measures, please see the Reconciliation of GAAP to non-GAAP Financial Measures tables in this press release. These accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

About Noodles & Company

Founded in 1995, Noodles & Company is a fast-casual restaurant chain that serves classic noodle and pasta dishes from around the world with 368 locations system-wide in 29 states and the District of Columbia as of Tuesday, October 1, 2013. Known as Your World Kitchen, Noodles & Company's globally inspired menu consists of more than 25 fresh, customizable noodle bowls, salads, soups and sandwiches that are prepared quickly using quality ingredients. From healthy to indulgent, spicy to comforting, the menu provides favorites for everyone from kids to adults. Popular dishes include the sweet and spicy Japanese Pan Noodles, zesty Pesto Cavatappi and creamy Wisconsin Mac & Cheese.

Forward-Looking Statements

This press release contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words, and variations of words, such as "believe," "estimate," "anticipate," "expect," "intend," "may," "will," "would" and similar expressions are intended to identify our forward-looking statements. Examples of forward-looking statements include all matters that are not historical facts, such as statements regarding 2013 guidance, comparable restaurant sales and operating margins, new restaurant development, expected public company expense, and our outlook, in particular, our target and adjusted net income, targeted restaurant openings and effective tax rate. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the Company's forward-looking statements. These risks and uncertainties include: our ability to maintain increases in comparable restaurant sales and to successfully execute our growth strategy; our ability to open new restaurants on schedule; current economic conditions; price and availability of commodities; consumer confidence and spending patterns; the assumptions used in the adjustment of interest expense and the adjustments for certain incremental legal, accounting, insurance and other compliance costs used in the calculation of adjusted net income; changes in consumer tastes and the level of acceptance of the Company's restaurant concepts (including consumer acceptance of prices); consumer reaction to public health issues and perception of food safety; seasonal factors; and weather.  For additional information on these and other factors that could affect the Company's forward-looking statements, see the Company's risk factors, as they may be amended from time to time, set forth in its filings with the SEC, including our final prospectus filed June 28, 2013.  The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as may be required by applicable law or regulation.

Noodles & Company
Consolidated Statements of Income
(in thousands, except share and per share data, unaudited)
         
  Fiscal Quarter Ended Three Fiscal Quarters Ended
  October 1, October 2, October 1, October 2,
  2013 2012 2013 2012
Revenue:        
Restaurant revenue  $ 87,864  $ 76,306  $ 256,744  $ 220,261
Franchising royalties and fees 1,072 793 2,711 2,220
Total revenue 88,936 77,099 259,455 222,481
Costs and expenses:        
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):        
Cost of sales 23,127 20,246 67,524 58,423
Labor 26,345 23,065 77,464 66,002
Occupancy 8,870 7,468 25,824 21,669
Other restaurant operating costs (1) 11,315 9,488 32,962 27,449
General and administrative (1) (2) 6,939 7,464 27,808 21,426
Depreciation and amortization 5,238 4,334 15,074 12,165
Pre-opening 1,183 829 2,873 2,000
Asset disposals, closure costs and restaurant impairments 339 201 837 663
Total costs and expenses 83,356 73,095 250,366 209,797
Income from operations 5,580 4,004 9,089 12,684
Debt extinguishment expense 2,646 2,646
Interest expense 132 1,118 2,199 3,894
Income before income taxes 5,448 240 6,890 6,144
Provision for income taxes 2,183 107 2,633 2,540
Net income  $ 3,265  $ 133  $ 4,257  $ 3,604
Earnings per share of Class A and Class B common stock, combined:        
Basic  $ 0.11  $ 0.01  $ 0.17  $ 0.16
Diluted  $ 0.11  $ 0.01  $ 0.16  $ 0.16
Weighted average shares of Class A and Class B common stock outstanding, combined:        
Basic 29,399,650 23,238,984 25,382,805 23,238,984
Diluted 31,063,213 23,388,729 26,528,004 23,250,745

(1) In the third quarter of 2013, we changed the manner in which we report marketing expenses between general and administrative expenses and other restaurant operating costs to more appropriately reflect only those costs directly related to restaurant-level marketing in other restaurant operating costs.  Marketing costs previously reported as restaurant operating costs, that were not directly related to restaurant-level marketing, have been reclassified to general and administrative expense.  The reclassification is reflected in all periods presented herein, as well as by historical quarter in the accompanying selected operating data and did not impact income from operations.

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