Noodles & Company (NASDAQ: NDLS) reported Q1 EPS of ($0.03), $0.02 better than the analyst estimate of ($0.05). Revenue for the quarter came in at $110 million versus the consensus estimate of $108.83 million.

• Total revenue decreased 0.4% to $110.0 million from $110.5 million, primarily due to the lower restaurant count.
• Comparable restaurant sales increased 3.0% system-wide, comprised of a 3.0% increase at company-owned restaurants and a 2.8% increase at franchise restaurants.
• Net loss was $1.9 million, or $0.04 loss per diluted share, compared to a net loss of $3.6 million, or $0.09 loss per diluted share.
• Adjusted net loss(1) was $1.2 million, or $0.03 per diluted share, compared to an adjusted net loss of $1.8 million, or $0.04 loss per diluted share.
• Restaurant contribution margin(1) decreased 30 basis points to 12.6%.
• Adjusted EBITDA(1) was $5.6 million for both the first quarter of 2019 and 2018.
• One franchise restaurant was acquired by the Company during the first quarter of 2019.

Dave Boennighausen, Chief Executive Officer of the Company remarked, “We are pleased with our results in the first quarter, which included a 3.0% increase in comparable restaurant sales despite the severe weather patterns in many of our major markets. Our performance significantly strengthened during the last portion of the first quarter of 2019 and continues to strengthen to date in the second quarter. Importantly, traffic was positive during the last few weeks of March, and in the second quarter we are seeing further growth across traffic, price, and menu mix initiatives.”

Boennighausen continued, “Our results to date in 2019 validate that our strategic initiatives are working. Our off-premise sales continue to grow significantly, reinforcing that the Noodles brand is uniquely positioned and gives us a competitive advantage in offering convenience and choice for today’s consumer. Off-premise increased to 56% of sales during the first quarter of 2019, led by our digital sales, which, inclusive of delivery, grew 63% over last year and accounted for 22% of sales. Additionally, the zucchini noodle is showing continued growth and meaningful contribution to both product mix and average check growth. Given our recent results and current trends, we are raising our sales and profit guidance for 2019.”

Paul Murphy, Executive Chairman of the Company, added, “Our fourth consecutive quarter of positive comparable sales growth punctuated by the increased momentum that we are observing in the initial weeks of the second quarter is further evidence of the strong trajectory of the business. I am confident that the execution of our strategy surrounding further innovation around plant-based, healthier menu options, enhancements to our digital and off-premise platforms and our intense focus on a high quality guest experience will continue to provide both strong top and bottom line growth for 2019 and years to come.”

GUIDANCE:

Noodles & Company sees FY2019 EPS of $0.08-$0.16, versus the consensus of $0.10. Noodles & Company sees FY2019 revenue of $466-474 million, versus the consensus of $464.07 million.

Boennighausen commented, “Based upon the strengthening performance of the business, we are raising our guidance across a number of key metrics and have also lowered our capital expenditure forecast, based on current expectations of initiative timing.” The Company currently expects the following for the full year 2019:

• Adjusted net income per diluted share of $0.08 to $0.16, up from the prior $0.06 to $0.15 expectation;
• Total revenue of $466.0 million to $474.0 million, up from the prior $462.0 to $470.0 million expectation;
• Comparable restaurant sales of 3.0% to 5.0%, up from the prior 2.0% to 4.0% expectation;
• Restaurant contribution margin of 15.5% to 16.5%, from the prior 15.2% to 16.5% expectation;
• Adjusted EBITDA of $37.0 million to $41.0 million, up from the prior $36.0 million to $40.0 million expectation;
• Approximately five to nine new restaurants system-wide, including four to six company locations; and
• Capital expenditures of $14.5 million to $19.0 million, down from the prior $24.0 million to $30.0 million expectation.

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