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Noodles & Company Announces Quarter Financial Results BROOMFIELD, Colo.,

The following excerpt is from the company's SEC filing.

November 5, 2015

(Globe Newswire) - Noodles & Company (NASDAQ: NDLS) today announced financial results for its

quarter ended

September 29, 2015

. The Company also announced the planned closure of 16 restaurants by the end of fiscal year 2015 as part of a strategic review of its real estate portfolio.

Key highlights for the

quarter of

versus the same quarter a year ago include:

Total revenue increased

% to $

117.3 million

from $

106.2 million

Comparable restaurant sales decreased

for company-owned restauran ts, decreased

for franchise restaurants and decreased


Restaurant contribution margin decreased to

new restaurants opened system-wide in the

quarter, including

company-owned and

franchise restaurants.

GAAP net income decreased to a net loss of

$9.8 million

from net income of

$2.9 million

. The Company recorded a

$16.2 million

pre-tax impairment charge related to 25 restaurants.

Adjusted net income

$0.1 million

, from

$3.0 million

, and adjusted earnings per diluted share decreased to

Adjusted EBITDA

$8.7 million

$12.1 million

(1) Adjusted net income and adjusted EBITDA are non-GAAP measures. A reconciliation of GAAP net income to each of these measures is included in the accompanying financial data. See "Non-GAAP Financial Measures."

Kevin Reddy, Chairman and Chief Executive Officer of Noodles & Company, remarked, "The third quarter marked an important period as the Company is taking strong action to improve top line sales trends and improve shareholder returns. During the third quarter we began our media campaign in a few key markets and are seeing measurable improvement in their trendlines. This media investment supports our new 'Made.Different.' brand positioning, which we launched nationwide in early October. We feel this positioning captures the essence of what makes Noodles & Company such a powerful brand for our millions of guests and better connects the brand to millennial parents as we strive to build awareness, deepen our level of engagement and drive profitable sales in our restaurants."

Mr. Reddy continued, "We have also recently announced updates to our continued commitment to quality ingredients, including the removal of all artificial colors, flavors, preservatives, and sweeteners from our core menu, as well as our efforts to provide an entire selection of antibiotic- and hormone-free meat and poultry by 2017. Finally, we have now launched our Kids Meal nationwide, which has been very popular with guests and capitalizes on our strengths with families. While earnings were under significant pressure during the third quarter due to investment in these initiatives, as well as ongoing labor pressures, we are seeing signs of their effectiveness. Importantly, traffic is improving. Company comparable restaurant sales of -1.5% quarter-to-date in the fourth quarter are 80 basis points lower than our results from the third quarter, however we have also overlapped nearly 200 basis points of price from the prior year. While early, this is indicative that we are seeing momentum from our positioning and media efforts."

Mr. Reddy concluded, "As we increase our focus on our culinary, marketing and operational efforts, we have also completed a strategic review of our overall real estate portfolio. We anticipate the closure of 16 restaurants during the fourth quarter of 2015, an action which we feel will improve the Company's performance and better position us to grow the brand."

During the third quarter, the Company incurred a non-cash impairment charge of

related to the impairment of 25 restaurants, several of which will be closing, as part of the Company's quarterly review process. The Company also estimates that it will incur, during the fourth quarter of 2015, additional pre-tax charges of approximately $5.0 million related to cash lease obligations, broker commissions and other direct costs associated with the closures, such as employee severance costs.


Financial Results

$11.1 million

$117.3 million

, compared to

$106.2 million

. This increase was the result of new restaurants opened system-wide since the beginning of the

quarter of 2014 and the acquisition of four franchise restaurants during the past twelve months, offset by a modest decrease in sales at our company-owned comparable base restaurants.


franchise restaurants. There were

restaurants at the end of the third quarter, comprised of

franchise restaurants. In the

, comparable restaurant sales decreased


, compared with

. The decrease was primarily due to increased labor pressures, deleverage on lower average unit volumes and investments in marketing and operational initiatives.

The Company reported a GAAP net loss of

, compared with GAAP net income of

. In the

, the Company recorded a

pre-tax impairment charge related to 25 restaurants upon the Company's current assessment of their expected future cash flows relative to their asset base, based on recent results. Adjusted net income decreased to

. Adjusted EBITDA decreased to

First Three Quarters

$43.1 million

first three quarters

$338.3 million

$295.2 million

quarter of 2014, the acquisition of 20 franchise restaurants in the last fifteen months and a modest increase in sales at our comparable base restaurants.


franchise restaurants. In the

, comparable restaurant sales were flat for company-owned restaurants, declined

for franchise restaurants and were flat system-wide.

. The decrease was primarily due to deleverage on lower average unit volumes due to a higher mix of immature restaurants and increased labor pressures.

$9.5 million

$7.9 million

$22.1 million

pre-tax impairment charge related to 33 restaurants upon the Company's assessment of their expected future cash flows relative to their asset base, based on recent results. Adjusted net income decreased to

$4.0 million

$8.0 million

$30.2 million

$33.1 million


Based upon management's current assessment following

quarter results, the Company has revised guidance and currently expects the following for full year 2015:

Unit growth of between

company locations and between

franchise locations;

Total Revenue of approximately $455 million;

System-wide comparable restaurant sales growth of flat to slightly negative;

Restaurant level contribution margin of

15.5% to 16.0%

Adjusted EBITDA of $37 to $40...