NOODLES & COMPANY Key highlights for the third quarter of 2021 versus the third quarter of 2020 include:
Total revenue increased 18.1% to
Comparable restaurant sales increased 16.3% system-wide, comprised of a 15.3% increase at company-owned restaurants and a 21.0% increase at franchise restaurants.
Record Company Average Unit Volumes of
Net income was
Operating margin was 4.3% compared to operating margin of 0.7% in the third quarter of 2020.
Restaurant contribution margin(1) was 18.1% compared to 15.4% in the third quarter of 2020.
Adjusted EBITDA(1) was
Adjusted net income(1) was
Net debt(1) decreased to
(1) Restaurant contribution margin, EBITDA, adjusted EBITDA, adjusted net income and net debt are non-GAAP measures. Reconciliations of operating income (loss) to restaurant contribution margin, net income (loss) to EBITDA and adjusted EBITDA, net income (loss) to adjusted net income and debt to net debt are included in the accompanying financial data. See 'Non-GAAP Financial Measures.'
'We are very pleased to report another quarter of record high average unit volumes, reflecting the continued momentum of the Noodles & Company brand and our ability to remain resilient in volatile market conditions,' said
Boennighausen continued, 'Our business fundamentals remain strong, and we have never been more encouraged by the
Third Quarter 2021 Financial Results
Total revenue grew 18.1% to
In the third quarter of 2021, system-wide comparable restaurant sales increased 16.3%, comprised of a 15.3% increase at company-owned restaurants and a 21.0% increase at franchise restaurants. Comparable restaurant sales reflect continued strength in both digital and in-person channels. Digital sales during the third quarter accounted for 52% of total revenue. Company average unit volumes, which normalize for the impact of temporary restaurant closures, increased 16.0% over the third quarter of 2020 and 15.9% compared to the third quarter of 2019.
Operating margin increased to 4.3% from 0.7% in the third quarter of 2020 primarily due to leverage on increased average unit volumes.
Restaurant contribution margin increased to 18.1% in the third quarter of 2021, compared to 15.4% in the third quarter of 2020. This increase was primarily due to leverage on increased average unit volumes in addition to the benefit of labor efficiency initiatives, partially offset by inflationary pressures on cost of goods and team member appreciation bonuses, particularly in the back half of the quarter.
The safety and well-being of our team members and guests remains our highest priority and we continue to actively monitor and adhere to local and federal mandates as it relates to in-restaurant dining and safety protocols. As of
There were two company-owned restaurant openings during the third quarter of 2021 which included one restaurant that was closed and relocated. In the third quarter of 2021, we closed the aforementioned company-owned restaurant and had one franchise location close due to eminent domain. There were 450 restaurants system-wide at the end of the third quarter 2021, comprised of 374 company-owned restaurants and 76 franchise restaurants. Recent openings that are not in the Company's comparable restaurant base, most offering order ahead drive-thru pick-up windows, continue to perform as a group at the highest sales level of any class of new restaurants in the Company's history.
For the third quarter of 2021, the Company reported net income of
Adjusted net income was
Liquidity Update:
As of
Business Outlook:
Given delays that the Company is encountering with regard to equipment availability and landlord delivery timing, we are providing the following updates to expectations for 2021:
Seven to nine new restaurants system-wide in 2021, from prior outlook of 10 to 15 new restaurants. The revised outlook incorporates the delay of certain new restaurants into early 2022. These delayed restaurant openings are anticipated to be incremental to the Company's prior outlook on unit growth for 2022, and we now anticipate at least 8% system-wide unit growth next year.
Capital expenditures of
Non-GAAP Financial Measures
The Company believes that a quantitative reconciliation of the Company's non-GAAP financial measures guidance 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 provide guidance for various reconciling items that are outside of the Company's control and cannot be reasonably predicted due to the fact that these items could vary significantly from period to period. A reconciliation of certain non-GAAP financial measures would also require the Company to predict the timing and likelihood of outcomes that determine future impairments and the tax benefit thereof. None of these measures, nor their probable significance, can be reliably quantified. The non-GAAP financial measures noted above 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.'
Key Definitions
Average Unit Volume - represents the average annualized sales of all company-owned restaurants for a given time period. Average unit volume is calculated by dividing restaurant revenue by the number of operating days within each time period and multiplying by the number of operating days we have in a typical year. This measurement allows management to assess changes in revenue patterns at our restaurants.
Comparable Restaurant Sales - represents year-over-year sales comparisons for the comparable restaurant base open for at least 18 full periods. This measure highlights performance of existing restaurants, as the impact of new restaurant openings is excluded. Changes in comparable restaurant sales are generated by changes in traffic, which we calculate as the number of entrees sold, or changes in per-person spend, calculated as sales divided by traffic. For fiscal year 2020, restaurants that were temporarily closed or operating at reduced hours or dining capacity due to the COVID-19 pandemic remained in comparable restaurant sales.
Restaurant Contribution and Restaurant Contribution Margin - restaurant contribution represents restaurant revenue less restaurant operating costs, which are costs of sales, labor, occupancy and other restaurant operating items. Restaurant contribution margin represents restaurant contribution as a percentage of restaurant revenue. Restaurant contribution and restaurant contribution margin are presented because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency and performance. Management also uses restaurant contribution and restaurant contribution margin as metrics to evaluate the profitability of incremental sales at our restaurants, restaurant performance across periods, and restaurant financial performance compared with competitors. See 'Non-GAAP Financial Measures' below.
EBITDA and Adjusted EBITDA - EBITDA represents net income (loss) before interest expense, provision (benefit) for income taxes and depreciation and amortization. Adjusted EBITDA represents net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization, restaurant impairments, closure costs and asset disposals, acquisition costs, severance costs and stock-based compensation expense. EBITDA and Adjusted EBITDA are presented because: (i) management believes they are useful measures for investors to assess the operating performance of our business without the effect of non-cash charges such as depreciation and amortization expenses and restaurant impairments, asset disposals and closure costs, and (ii) management uses them internally as a benchmark for certain of our cash incentive plans and to evaluate our operating performance or compare performance to that of competitors. See 'Non-GAAP Financial Measures' below.
Adjusted Net Income (Loss) - represents net income (loss) plus various adjustments and the tax effects of such adjustments. Adjusted net income (loss) is presented because management believes it helps convey supplemental information to investors regarding the Company's performance, excluding the impact of special items that affect the comparability of results in past quarters and expected results in future quarters. See 'Non-GAAP Financial Measures' below.
Net Debt - represents debt (the most comparable GAAP measure, calculated as long-term obligations plus short-term borrowings) minus cash and cash equivalents. Management believes that net debt is an important measure to monitor leverage and evaluate the balance sheet. With respect to net debt, cash and cash equivalents are subtracted from the GAAP measure because they could be used to reduce the Company's debt obligations. A limitation associated with using net debt is that it subtracts cash and cash equivalents and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. Management believes that investors may find it useful to monitor leverage and evaluate the balance sheet. See 'Non-GAAP Financial Measures' below.
Conference Call
Non-GAAP Financial Measures
To supplement its condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in
For more information on the non-GAAP financial measures, please see the 'Reconciliation of Non-GAAP Measurements to GAAP Results' 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
Since 1995,
Forward-Looking Statements
In addition to historical information, this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties such as the number of restaurants we intend to open, projected capital expenditures and estimates of our effective tax rates. In some cases, you can identify forward-looking statements by terms such as 'may,' 'might,' 'will,' 'objective,' 'intend,' 'should,' 'could,' 'can,' 'would,' 'expect,' 'believe,' 'design,' 'estimate,' 'predict,' 'potential,' 'plan' or the negative of these terms and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on currently available operating, financial and competitive information. Examples of forward-looking statements include all matters that are not historical facts, such as statements regarding expectations with respect to unit growth and planned restaurant opening, projected capital expenditures, and potential volatility through the balance of the year due to the current staffing and supply chain environment. Our actual results may differ materially from those anticipated in these forward-looking statements due to reasons including, but not limited to, our ability to sustain our overall growth, in particular, our digital sales growth; our ability to open new restaurants on schedule and cause those newly opened restaurants to be successful; our ability to achieve and maintain increases in comparable restaurant sales and to successfully execute our business strategy, including new restaurant initiatives and operational strategies to improve the performance of our restaurant portfolio; the success of our marketing efforts; price and availability of commodities and other supply chain challenges; our ability to adequately staff our restaurants; changes in labor costs; the extent, duration and severity of the COVID-19 pandemic; governmental and guest response to the COVID-19 pandemic; other conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; and consumer reaction to industry related public health issues and health pandemics, including the COVID-19 pandemic and perceptions of food safety.. 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
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data, unaudited)
Net debt is a non-GAAP financial measure. The most comparable GAAP measure, calculated as long-term obligations plus short-term borrowings minus cash and cash equivalents. Management believes that net debt is an important measure to monitor leverage and evaluate the balance sheet. With respect to net debt, cash and cash equivalents are subtracted from the GAAP measure because they could be used to reduce the Company's debt obligations. A limitation associated with using net debt is that it subtracts cash and cash equivalents and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. Management believes that investors may find it useful to monitor leverage and evaluate the balance sheet.
See more at: https://investor.noodles.com/news-releases/news-release-details/noodles-company-announces-third-quarter-2021-financial-results
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