Noodles & Co (NDLS) Reports Decline in Q4 Revenue and Net Loss for Fiscal Year 2023
Total Revenue: Decreased by 8.9% in Q4 and 1.2% for the full fiscal year.
Comparable Restaurant Sales: System-wide decrease of 4.2% in Q4 and 1.9% for the full year.
Net Loss: Reported at $6.1 million in Q4, widening to $9.9 million for the fiscal year.
Operating Margin: Dropped to (3.7)% in Q4 and (1.0)% for the fiscal year.
Restaurant Openings and Closures: 18 new company-owned restaurants opened, 6 closed; 3 franchise restaurants closed in 2023.
Liquidity Update: $3.0 million in cash and cash equivalents, with $82.2 million in outstanding debt as of January 2, 2024.
Business Outlook: 2024 revenue projected between $510 million to $525 million, with flat to +3% comparable restaurant sales growth.
On March 7, 2024, Noodles & Co (NASDAQ:NDLS) released its 8-K filing, detailing the financial results for the fourth quarter and full fiscal year ended January 2, 2024. The company, known for its fast-casual dining experience offering a variety of noodles, pasta, soups, and salads, faced a challenging quarter with a significant decrease in revenue and a net loss.
Financial Performance and Challenges
Noodles & Co reported a total revenue decrease of 8.9% to $124.3 million in the fourth quarter from $136.5 million in the previous year. After adjusting for the extra week in the fourth quarter of 2022, the revenue still decreased by 2.4%. The net loss for the quarter was $6.1 million, or $0.14 loss per diluted share, compared to a net income of $1.0 million, or $0.02 per diluted share in the prior year. The operating margin also declined to (3.7)% from 1.3%. For the full fiscal year, the company saw a total revenue decrease of 1.2% to $503.4 million from $509.5 million. The net loss widened to $9.9 million, or $0.21 loss per diluted share, compared to a net loss of $3.3 million, or $0.07 loss per diluted share in the previous year.
The company's performance is crucial as it reflects the challenges faced in the highly competitive fast-casual dining segment. The decline in comparable restaurant sales, which decreased 4.2% system-wide, indicates struggles in driving customer traffic and sales growth. The net loss and reduced operating margins highlight the financial pressures on the company, including increased costs and potentially reduced consumer spending.
Strategic Priorities and Outlook
Despite the setbacks, CEO Drew Madsen remains optimistic about the brand's potential. In a statement, Madsen emphasized the company's focus on five strategic priorities, including operational excellence, menu transformation, catering business growth, digital capabilities leverage, and financial position fortification.
We believe that focusing on these priorities will allow the brand to resonate with our guests and lead to sustainable long-term, top-line momentum and profitable growth,"
Madsen said.
For the fiscal year 2024, Noodles & Co expects total revenue to be between $510 million and $525 million, with comparable restaurant sales growth ranging from flat to +3%. The company plans to open 10-12 new company-owned restaurants and up to 3 franchise-owned locations, with capital expenditures projected to be between $28 million and $32 million.
Liquidity and Capital Management
As of January 2, 2024, Noodles & Co had $3.0 million in cash and cash equivalents and outstanding debt of $82.2 million. The company had $39.9 million available for future borrowings under its revolving credit facility, indicating a focus on managing liquidity and debt levels.
The company's financial position and strategic initiatives will be key to navigating the competitive landscape and returning to profitable growth. Investors and stakeholders will be closely monitoring Noodles & Co's progress on its strategic priorities and its ability to improve financial performance in the coming year.
For a more detailed look at Noodles & Co's financial results and future outlook, interested parties can access the full earnings release and join the company's conference call scheduled for March 7, 2024, at 4:30 p.m. EST.
Explore the complete 8-K earnings release (here) from Noodles & Co for further details.
This article first appeared on GuruFocus.
