Noodles & pany(NDLS)2023-11-07 16:00Restaurant Operations - In the first three quarters of 2023, Noodles & Company opened 13 new company-owned restaurants, bringing the total to 377 company-owned and 91 franchise restaurants across 31 states[63]. - The company permanently closed four company-owned restaurants in the first three quarters of 2023, with no significant closures anticipated in the near future[64]. - The company opened 4 new company-owned restaurants in Q3 2023, bringing the total to 377 at the end of the period[80]. Financial Performance - Revenue for the fiscal quarter ended October 3, 2023, was 18,217,000 for the same quarter in the previous year, reflecting an increase[77]. - Total revenue decreased by 127.9 million in Q3 2023 compared to 6.1 million, or 1.6%, to 373.0 million in the same period of 2022[100]. - Net income for Q3 2023 was 95,000 or 11.9% compared to Q3 2022[86]. Sales and Traffic - The company experienced a decline in restaurant-level traffic and total revenue during the first three quarters of 2023, attributed to consumer response to recent price increases[59]. - Comparable restaurant sales decreased by 3.7% in Q3 2023, with a 4.3% decrease at company-owned restaurants and a 1.2% decrease at franchise-owned restaurants[87]. - Comparable restaurant sales decreased 1.3% at company-owned restaurants and 1.1% system-wide in the first three quarters of 2023, primarily due to a decline in guest traffic[100]. Cost Management - Labor costs have risen due to high competition for restaurant workers, although there was a modest deceleration in wage inflation growth during the first three quarters of 2023[62]. - Restaurant operating costs as a percentage of restaurant revenue decreased to 25.1% in Q3 2023 from 28.1% in Q3 2022, primarily due to lower food and ingredient commodity pricing[88]. - Labor costs increased by 0.4 million, or 3.3%, in Q3 2023, with occupancy costs as a percentage of revenue rising to 9.2% from 8.8%[91]. - General and administrative expenses increased by 8.8 million, or 8.6%, to 25.1% of restaurant revenue in the first three quarters of 2023 compared to 27.9% in the same period of 2022[101]. - Labor costs increased by 1.0 million, or 3.0%, to 9.3% of revenue in the first three quarters of 2023 compared to 9.1% in the same period of 2022[103]. EBITDA and Margins - Adjusted EBITDA for the three quarters ended October 3, 2023, was 23,163,000 in the same period last year[76]. - The restaurant contribution margin improved to 16.4% in the fiscal quarter ended October 3, 2023, compared to 14.4% in the same quarter of the previous year[77]. Cash Flow and Investments - Net cash provided by operating activities was 7.8 million in the same period of 2022[113]. - Net cash used in investing activities increased to 21.0 million in the same period of 2022, primarily due to new restaurant openings[114]. - Capital expenditures are estimated to be approximately 50.0 million for fiscal year 2023, primarily for new restaurant openings and technology investments[117]. Debt and Interest - As of October 3, 2023, the company had 0.5 million in Q3 2023 due to higher interest rates and debt balances[95]. - A 1.0% increase or decrease in the effective interest rate would result in a pre-tax interest expense fluctuation of approximately 5.0 million at an average price of 5.0 million in Class A common stock repurchases[136]. Market Conditions and Risks - The company continues to face risks related to inflation, economic uncertainties, and consumer behavior impacting restaurant traffic and revenue[58]. - Inflationary pressures on food, labor, energy, and construction materials are expected to continue affecting the company's results in the near future[128]. - The cost of food increased in 2022 due to commodity price volatility, but began to improve materially in late 2022 and into the first three quarters of 2023, particularly for chicken[127]. Internal Controls and Legal Matters - The company has not experienced any material changes in its internal control over financial reporting during the most recent fiscal quarter[131]. - There are currently no material legal proceedings involving the company, although it may become involved in ordinary course legal matters[133]. - The company’s disclosure controls and procedures are deemed effective as of October 3, 2023, ensuring timely and accurate reporting[130].