Noodles Shares Down 8% As Q4 Results Miss View, Guides 2014 Revenues In Line

(RTTNews) - Shares of Noodles & Co. (NDLS) plunged nearly eight percent in extended trading on Wednesday after the fast-casual restaurant chain reported results for the fourth quarter that missed analysts' expectations.

However, the company reported a profit for the quarter that increased from last year, reflecting improved margins and double-digit revenue growth. The company also provided revenue guidance for the full-year 2014, in line with Street view.

"We're pleased to have maintained our operating momentum in the fourth quarter with our 18th straight quarter of comparable restaurant sales growth and a 66% increase in our adjusted net income for the quarter," Chairman and CEO Kevin Reddy said in a statement.

The Broomfield, Colorado-based company reported net income of $2.41 million or $0.08 per share for the fourth quarter, higher than $1.56 million or $0.07 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $3.54 million or $0.11 per share, compared to $2.13 million or $0.07 per share in the year-ago quarter.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.12 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter grew 17.4 percent to $91.47 million from $77.93 million in the same quarter last year, but missed nine Wall Street analysts' consensus estimate of $92.52 million by a whisker.

Comparable restaurant sales, representing year-over-year sales comparisons for restaurants open for at least 18 full periods, increased 4.3 percent for company-owned restaurants, and 1.5 percent for franchised restaurants, leading to a system-wide comparable restaurant sales growth of 3.9 percent.

The company-owned comparable restaurant sales increase of 4.3 percent was comprised of a price increase of about 2.5 percent and a combination of traffic and menu mix increases.

Operating margin for the quarter improved 130 basis points to 5.6 percent from last year. However, restaurant contribution margin contracted 30 basis points to 21.0 percent, primarily due to increased operating and occupancy costs, as well as expenses related to the increased number of new restaurants.

During the quarter, the company opened 12 new restaurants system-wide, including 8 company-owned and four franchise restaurants.

For fiscal 2013, the company reported net income of $6.67 million or $0.24 per share, up from $5.16 million or $0.22 per share in the prior year. Excluding items, adjusted net income for the year was $12.14 million or $0.40 per share, compared to $9.28 million or $0.32 per share in the year ago.

Revenue for the full year grew 16.8 percent to $350.92 million from $300.41 million in the previous year. System-wide comparable restaurant sales increased 3.0 percent.

Analysts expected the company to report full-year 2013 earnings of $0.40 per share on annual revenues of $351.58 billion.

Looking ahead to fiscal 2014, Noodles & Co. expects adjusted earnings growth of 25 percent . On projected revenues between $406 million and $412 million, with 2.5 to 3.0 percent comparable restaurant sales growth.

Street is currently looking for full-year 2014 earnings of $0.55 per share, on annual revenues of revenues of $409.48 million.

The company also plans to open 42 to 50 new company-owned restaurants in the year, and franchisees expect to open 10 to 15 new restaurants.

Further, the company noted that it anticipates a roughly 300 to 350 basis points negative impact to revenue and $0.03 impact to diluted earnings per share in the first quarter due to the severe winter weather.

"We have tested and begun implementing a number of initiatives over the past year, centered on our dinner daypart strength, the introduction of catering and improving throughput and operational efficiency, which we believe will continue to move our brand forward," Reddy added.

NDLS closed Thursday's regular trading session at $39.55, up $2.90 or 7.91% on a volume of 0.97 million shares. However, the stock pared all the gains, losing $3.00 or 7.59% in after-hours trading.