Noodles & Company (NDLS) Q2 Earnings & Revenues Lag, Fall Y/Y
Noodles & Company NDLS reported tepid fiscal second-quarter 2023 (ended Jul 4, 2023) results, wherein earnings and revenues missed the Zacks Consensus Estimate. Moreover, both metrics declined on a year-over-year basis.
In the quarter, the company witnessed noticeable guest trend softness, which negatively impacted the comparable restaurant sales growth on a year-over-year basis.
Although the quarter’s performance was affected by the aforementioned headwinds, the company is consistently structuring strategies to overcome the same and gain traction in the upcoming periods. Supporting this, Noodles & Company’s Board of Directors authorized a new share repurchase program on Jul 26, 2023, allowing the company to repurchase up to $5.0 million of common stock.
Following the results, NDLS’ shares gained 1.06% in the after-hours trading session, on Aug 9. The investor’s sentiments might have been boosted by the company’s new share repurchase program, which has been introduced to boost shareholder value.
Q2 Earnings & Revenues
In the fiscal second quarter, the company reported an adjusted loss of 2 cents per share, missing the Zacks Consensus Estimate of earnings of 7 cents per share. In the prior-year quarter, the company had reported an adjusted earnings per share of 5 cents.
Noodles & Company Price, Consensus and EPS Surprise
Noodles & Company price-consensus-eps-surprise-chart | Noodles & Company Quote
Furthermore, revenues of $125.2 million missed the consensus estimate of $138 million by 9.4% and decreased 4.5% year over year.
Comps Discussion
Noodles & Company’s system-wide comps decreased 5.5% against the gain of 5.1% in fiscal second-quarter 2022. Company-owned comps notably declined 5.9% against the gain of 5.1% in the prior-year quarter. Also, franchise-restaurant comps declined 3.4% against a gain of 5.3% year over year.
Dismal comps in the quarter were a result of lower guest counts.
Costs & Margins
Total costs and expenses decreased 2.9%, primarily driven by reduced costs of sales, as well as general and administrative costs.
The restaurant contribution margin was 14.8%, compared with 15.5% in the prior-year quarter. In the quarter, adjusted EBITDA declined 16.9% to $9.3 million year over year.
Balance Sheet
Total current assets, as of Jul 4, 2023, amounted to roughly $23.8 million, up from $21.6 million as on Jan 3, 2023. Long-term debt in the quarter amounted to $63.2 million, up from $46.1 million reported in fiscal 2022 end.
Revised 2023 Outlook
For fiscal 2023, the company expects total revenues to be in the range of $500-$510 million, compared with $509.5 million reported in fiscal 2022. Comparable restaurant sales are expected to be in the negative low single digit, compared with 6% reported prior year.
Restaurant-level contribution margins are projected to be in the range of 14.5-15%, compared with the previously expected range of 16-17%.
The company expects adjusted earnings (loss) per share to be between (11) cents to zero cents (including the expected benefit from the new share repurchase program).
Capital expenditure is anticipated to be between $45 million and $50 million, lower than the prior expectation of $53 million to $58 million. Adjusted EBITDA is now expected within $35 million to $40 million, compared with the previous projection of $45 million to $50 million.
Zacks Rank
Noodles & Company currently carries a Zacks Rank #5 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Retail-Wholesale Releases
Restaurant Brands International, Inc. QSR reported impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
The upside was primarily driven by strong global comparable sales, unit growth and a healthy balance of traffic and check. In the quarter, Tim Hortons, Burger King, Popeyes and Firehouse Subs witnessed a rise in system-wide sales. However, this was partially offset by unfavorable FX movements.
Shake Shack Inc. SHAK reported second-quarter fiscal 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. However, both metrics increased year over year. The bottom line beat the consensus estimate for the third straight quarter.
Shack’s system-wide sales soared 21.1% year over year to $426.3 million.
YUM! Brands, Inc. YUM reported mixed second-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. The top and bottom lines increased on a year-over-year basis.
The company’s quarterly results reflect robust same-store sales and unit growth, resulting in an increase in revenues across its operating divisions. Worldwide system sales — excluding foreign currency translation — rose 13% year over year, with Taco Bell, KFC and Pizza Hut rising 7%, 19% and 7% year over year, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Yum! Brands, Inc. (YUM) : Free Stock Analysis Report
Noodles & Company (NDLS) : Free Stock Analysis Report
Restaurant Brands International Inc. (QSR) : Free Stock Analysis Report
Shake Shack, Inc. (SHAK) : Free Stock Analysis Report
