Noodles & pany(US:NDLS)2024-11-06 23:16Financial Performance - System-wide comparable restaurant sales decreased by 3.3% in Q3 2024 compared to Q3 2023, with a 3.4% decrease at company-owned restaurants and a 2.9% decrease at franchise-owned restaurants[63] - Total revenue decreased by $5.1 million, or 4.0%, to $122.8 million in Q3 2024 compared to $127.9 million in Q3 2023[91] - Restaurant revenue declined by $5.0 million, or 4.0%, to $120.2 million in Q3 2024 from $125.2 million in Q3 2023[90] - Net loss for Q3 2024 was $6.8 million, compared to a net income of $0.7 million in Q3 2023[90] - Total revenue decreased by $7.6 million, or 2.0%, to $371.5 million in the first three quarters of 2024 compared to $379.1 million in the same period of 2023[102] Operating Costs - Restaurant operating costs increased to 103.9% of total revenue in Q3 2024, compared to 98.4% in Q3 2023[88] - Labor costs increased to 32.0% of restaurant revenue in Q3 2024, up from 31.3% in Q3 2023[93] - The company incurred significant third-party delivery fees due to high usage of delivery services, impacting overall operating costs[67] - Labor costs decreased by $2.8 million, or 2.4%, as a percentage of restaurant revenue decreased to 31.8%[104] Restaurant Operations - In the first three quarters of 2024, the company opened ten new company-owned restaurants and two new franchise restaurants, while selling six company-owned restaurants to a franchisee[68] - The company expects to close a total of 10 to 15 company-owned restaurants in 2024 due to underperformance[69] - The company opened 3 new company-owned restaurants in Q3 2024, while closing 5, resulting in a total of 377 company-owned restaurants[85] - The company had 377 company-owned restaurants and 94 franchise restaurants in 31 states as of October 1, 2024[68] EBITDA and Expenses - EBITDA for Q3 2024 was $2.448 million, a decrease from $8.660 million in Q3 2023, while adjusted EBITDA was $4.896 million compared to $10.915 million in the same period[83] - General and administrative expenses rose by $1.0 million, or 8.7%, to $12.9 million in Q3 2024, representing 10.5% of total revenue[96] - Interest expense increased by $0.9 million, or 75.5%, in Q3 2024 due to higher average debt balances and interest rates[99] - General and administrative expenses increased by $1.5 million, or 4.0%, as a percentage of revenue increased to 10.6%[107] Cash Flow and Liquidity - Net cash provided by operating activities was $17.5 million, down from $27.3 million in the same period of 2023[114] - As of October 1, 2024, the cash balance was $3.3 million, compared to $3.0 million as of January 2, 2024[121] - The company expects to maintain sufficient cash flows from operations and available borrowings to meet liquidity needs for at least the next twelve months[121] Debt and Interest Rates - As of October 1, 2024, the company had $89.9 million of indebtedness and $3.0 million of letters of credit outstanding under its A&R Credit Agreement[126] - The average interest rate on outstanding borrowings during the first three quarters of 2024 was 8.67%, up from 8.0% during the same period in 2023, reflecting an increase in market base rates[129] - A 1.0% increase or decrease in the effective interest rate would result in a pre-tax interest expense fluctuation of approximately $0.9 million on an annualized basis[129] Inflation and Commodity Prices - Commodity inflation in Q3 2024 was less than 2%, showing improvement from historically high costs in 2022[65] - The company anticipates inflation may affect its results in the near future, with primary inflationary factors being food costs, labor costs, and energy costs[131] - Commodity price volatility is a risk, with potential impacts on restaurant operating costs as a percentage of revenue if menu prices are not adjusted accordingly[130] - The company has implemented risk management techniques in purchasing contracts to minimize price volatility from commodity prices[130] Future Plans - The company plans to introduce a revitalized menu starting late in Q3 2024 and continuing into 2025[64] - Capital expenditures are estimated to be approximately $29.0 million to $31.0 million for fiscal year 2024[119] Financial Ratios - The Consolidated Total Lease Adjusted Leverage Ratio was increased to a maximum of 5.50 to 1.00 for the fiscal quarter ending October 1, 2024, stepping down to 4.50 to 1.00 for the fiscal quarter ending March 30, 2027[124] - The Consolidated Fixed Charge Coverage Ratio was amended to be no less than 1.05 to 1.00 for the fiscal quarter ending October 1, 2024, stepping up to 1.25 to 1.00 for the fiscal quarter ending June 30, 2026[125] Off-Balance Sheet Arrangements - The company had no off-balance sheet arrangements or obligations as of October 1, 2024[127]