Noodles Profit Rises, Miss Estimates, Cuts FY View; Stock Tanks - Update

(RTTNews) - Noodles and pasta restaurant chain Noodles & Co (NDLS), Wednesday reported a rise in second-quarter profit, aided by a near 12 percent growth in revenue, while the prior year results were hurt by one-time costs. However, both earnings and revenue for the quarter fell short of Wall Street estimates.

The lower-than-expected results partly led the company to slash its financial targets for fiscal year 2014. Investors were dismayed with the announcement, with Noodles shares plunging about 19 percent in after-hours trade on the Nasdaq.

The Broomfield, Colorado-based company posted second-quarter net income of $3.5 million or $0.11 a share. This compares with a profit of $0.1 million a year ago, when it incurred IPO costs of $5.7 million.

Excluding items, adjusted earnings for the quarter were $0.12 a share, compared with $0.13 a share last year.

On average, 10 analysts polled by Thomson Reuters expected earnings of $0.15 a share for the quarter. Analysts' estimates typically exclude special items.

Noodles' second-quarter revenue climbed 11.5% to $99.5 million from $89.2 million in the prior year. Analysts projected revenues of about $103 million for the quarter.

Revenue growth was due to the opening of new restaurants, offset by a decrease in sales at comparable base outlets. There were also some negative impact from the shift of Easter.

Comparable restaurant sales fell 0.6 percent for company-owned restaurants, 1.2 percent for franchise restaurants and 0.7 percent system-wide.

Restaurant contribution margin slid to 20.4 percent from 22.4 percent last year.

For 2014, the company expects flat comparable restaurant sales growth, and flat adjusted earnings per share growth. Noodles had earlier projected comparable restaurant sales growth of 2.5 to 3 percent and adjusted earnings growth of 25 percent.

NDLS closed Wednesday at $25.21, down $0.12 or 0.47%, on a volume of 0.86 million shares on the Nasdaq. In after hours, the stock dropped $4.66 or 18.48%, to trade at $20.55.