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01/10 16:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several challenges: net loss, declining margins, and increased costs, despite a slight revenue increase. The Q&A highlights positive loyalty program responses but lacks clarity on ongoing marketing expenses. No share repurchase plan or partnership announcements were made. The guidance for 2025 shows modest growth, but the economic environment and operational risks pose threats. The market may react negatively due to weak financials and unclear future guidance, especially with increased closures and cost pressures.
Total Revenue $123.8 million, a 2% increase year-over-year. The increase was attributed to positive same-store sales performance despite a challenging macroeconomic environment.
Same-store Sales Increased 4.4% system-wide, with a 4.7% increase at company-owned restaurants. This was driven by new menu items, favorable Easter timing, and increased marketing efforts.
Company Average Unit Volumes $1.31 million. This figure reflects the overall sales performance and was positively impacted by the new menu rollout.
Costs as a Percentage of Sales 26.6%, a 160 basis point increase year-over-year, primarily due to higher food costs associated with new menu offerings.
Labor Costs as a Percentage of Sales 32.5%, up 20 basis points year-over-year, mainly due to wage inflation and one-time training expenses for the new menu rollout.
Occupancy Costs $11.5 million, down from $11.8 million in 2024, due to a reduction in company-owned restaurant count.
Other Restaurant Operating Costs 21.1%, an increase of 140 basis points year-over-year, driven by higher third-party delivery fees and increased marketing expenses.
Restaurant-level Contribution Margin 10.3%, down from 13.1% in the first quarter of 2024, reflecting the seasonally low first quarter and increased costs.
G&A Expenses $12.8 million, compared to $13 million in 2024, primarily due to decreases in salary and incentive compensation.
Net Loss $9.1 million, or a loss of $0.20 per diluted share, compared to a net loss of $6.1 million, or a loss of $0.14 per diluted share last year.
Adjusted EBITDA $2.4 million, down from $5.5 million in the first quarter of 2024.
Capital Expenditures $2.9 million, compared to $8.6 million in 2024, reflecting a strategic reduction in capital spending.
Debt Balance $102.7 million, with over $19 million available for future borrowings under the revolving credit facility.
New Menu Items: Introduced five new dishes and four reimagined recipes on March 12, 2025, including Pulled Pork Barbecue Mac & Cheese and Cajun Shrimp Fettuccine.
Menu Transformation: Nearly two-thirds of the menu is new or improved, marking the most comprehensive menu transformation in the company's history.
Same-Store Sales Growth: Achieved a same-store sales increase of 4.7% in company-owned restaurants and 4.4% system-wide.
Brand Awareness: Early stage brand launch PR garnered 450 million impressions, with significant increases in brand awareness and app sessions.
Training Program: Implemented a comprehensive four-week training program for staff to prepare for the new menu launch.
Operational Efficiency: Achieved a 95% training module completion rate for the new menu rollout.
Brand Positioning: Launched a new campaign 'We Know Noodles' to enhance brand relevance and customer engagement.
Cost Management: Strategic reduction in capital spending and emphasis on cost savings, targeting over $5 million in savings for 2025.
Regulatory Risks: The company acknowledges potential risks and uncertainties related to forward-looking statements, which could impact actual results.
Economic Factors: The company is operating in a challenging macroeconomic environment, which has affected consumer sentiment and could impact sales.
Supply Chain Challenges: The company faces potential tariff exposure related to produce sourced from Central America and shrimp sourced from Asia, although most products are sourced from the U.S.
Competitive Pressures: The company is working to increase brand relevance and competitive sales levels, indicating challenges in maintaining market position.
Cost Increases: Higher food costs associated with new menu offerings and labor costs due to wage inflation and training expenses are impacting profitability.
Operational Risks: The company has experienced a net loss in Q1 2025, indicating potential operational challenges that need to be addressed.
New Menu Rollout: The company introduced a comprehensive menu rollout in mid-March 2025, including five new dishes and four reimagined recipes, which has significantly improved sales.
Training Program: A four-week training program was instituted to prepare staff for the new menu, achieving a 95% training module completion rate.
Brand Positioning Campaign: The new campaign 'We Know Noodles' aims to increase brand relevance and customer engagement through new commercials and increased marketing investment.
Cost Savings Initiatives: The company is focusing on smart cost savings, targeting over $5 million in savings for 2025.
Capital Expenditure Reduction: A strategic reduction in capital spending is planned, with total capital expenditures estimated at $11 million to $13 million for 2025.
Total Revenue Guidance: Expected total revenue for 2025 is between $503 million and $512 million.
Restaurant Contribution Margin Guidance: Restaurant contribution margin is expected to be between 12% and 14%.
G&A Expenses Guidance: General and administrative expenses are projected to be between $49 million and $52 million.
Depreciation and Amortization Guidance: Depreciation and amortization expenses are expected to be between $27 million and $29 million.
Interest Expense Guidance: Interest expense is projected to be between $8 million and $10 million.
New Restaurant Openings: The company plans to open two new company-owned restaurants in 2025.
Restaurant Closures: Expected closures include 13 to 17 company-owned and four franchise restaurants in 2025.
Share Repurchase Program: The company has not announced any share repurchase program during the call.
The earnings call presents a mixed picture. Financial performance shows growth in sales and digital engagement, but increased net loss due to impairments and cost pressures from inflation and delivery fees. The Q&A indicates positive reception to new menu items but also highlights uncertainties like strategic alternatives and debt levels. The optimistic guidance and operational improvements provide some upside, but risks and uncertainties balance this out, resulting in a neutral outlook for stock price movement.
The earnings call summary shows mixed results: slight revenue decline, increased costs, and a net loss. While there are positive aspects like menu innovations and digital engagement, challenges such as increased food costs, CEO transition, and negative cash flow guidance weigh heavily. The Q&A section provided no clarity, further clouding outlook. Given these factors, the stock is likely to experience a negative reaction in the short term.
The company's earnings miss and increased food and labor costs indicate financial instability. Despite strong sales growth from new menu items, restaurant-level margins declined. The plan to close multiple restaurants and existing debt levels further highlight operational challenges. Although loyalty engagement is strong, the lack of a share repurchase program and high debt levels are concerning. The absence of specific guidance on ongoing marketing investments adds uncertainty. Overall, the financial risks and operational challenges outweigh the positive sales trends, suggesting a negative stock price movement in the near term.
The earnings call reveals several challenges: net loss, declining margins, and increased costs, despite a slight revenue increase. The Q&A highlights positive loyalty program responses but lacks clarity on ongoing marketing expenses. No share repurchase plan or partnership announcements were made. The guidance for 2025 shows modest growth, but the economic environment and operational risks pose threats. The market may react negatively due to weak financials and unclear future guidance, especially with increased closures and cost pressures.
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