NDLS - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to today's Noodles & Company Fourth Quarter 2017 Earnings Conference Call. All participants are now in a listen-only mode. After the presenters' remarks, there will be a question-and-answer session.

As a reminder, this call is being recorded. I would now introduce Noodles & Company's Interim Chief Financial Officer, Sue Daggett.

Sue Daggett

afternoon, good and you, everyone. Thank fourth Welcome earnings XXXX to our call. quarter

Paul me Chief Executive this with Murphy, Executive afternoon our Here Boennighausen, are our Dave Chairman; Officer. and

statements. and from its forward-looking projections time that to statement differ These cautionary with most make. forth factors for and related time are and company in actual anticipated like Report a filings me to those performance and to of in company's the remarks fiscal results of in XXXX future details such regarding to results may Any be the risks The to results relating regulatory the identify set or Private company's Let of future going we considered statements response uncertainties have that number a items, the over from the will questions, and guidance Harbor I within statements. only forward-looking of contained our Safe Reform our XX-K the Securities to forward-looking XXXX. you are by the matters. and XX-K and our each and company. start this in this documents in statement due events about SEC, Litigation Form and I'd and including year made a financial actual part make portions could that with release to considered Exchange your opening filings events Commission, call, the cause of Annual note risks to specifically during the of the our few recent subsequent differ afternoon's XXXX forward-looking our projections, future refer statements or files performance, including and the news materially Form statements Such documents or materially on should conference the company's from could uncertainties. important the subsequent Securities contain the Act we projections meaning those

Now, like to it over turn Murphy, to I Paul Chairman. would our Executive

Paul Murphy

afternoon. good you, and Thank Sue,

the strategy briefly the some XXXX some quarter my my currently on excited tremendous Dave in as second the the part full from want am to made. ahead, give time continue implementing, that of perspective been be to as I highlights Before the as team, and take discusses business. opportunity about are to of we and Noodles progress the has already now well I

company's of Dave a the in During return team the far. those foundation XXXX, some we've to to position the many seen will taken position leadership outline steps and completed space. thus casual fast to steps us that discuss strengthen and the results

to first strategy. As needed earnings call, we our the discovery the of completion board I last was of Dave the research discussed came actions and appointed permanent when one on was CEO, on took transformation and clarify

is comprehensive, expansion in execution become of Our to a to from offerings to operations, development to strategy best menu, quest address the the testing a of new occasion. in our practice the gaps initiatives off-premise restaurant leader within of and our culinary

mass initiatives in execution, several progress. that collectively, as are nationally our brand, believe XXXX, off menu, are by encouraged to that provide our and will or us our this meaningful We either our for the test critical larger and We against occasion, initial year efforts results. operational premise in the a with of of that the make be elements effecting will many effort strategy now introduced part

come. results to our growth goal drive years bottom and to both for enduring top Our is in line

in more the and we execute Dave over I’ll to our discuss to strategy against work results the have to the While it progress ability grow is Noodles tangible, is made we still detail. confident be in our XXXX done, have and now am to opportunities brand. there I turn our XXXX to

Dave Boennighausen

I you, quarter, fourth year an as like first as well give would of fiscal Thank of XXXX. highlights some Paul. the from overview to the

steps foundation human which and we Early burden our discussed, causing year, Paul on several As during were to performance. took resources we strengthen a financial XX closed our XXXX. in underperforming restaurants the

capital, which strengthened balance raised and us in rewards and pursue menu, loyalty enacted allowed improve also XXXX, strategy. and to In operational transformation we procedures, including several streamlining Additionally, our program. newest our our launching sheet improving initiatives restaurants to our we processes performance, our our

premise join the And added our our marketing off of brand. menu as the we and the Operations. just tremendous West announced and our last At and Chas at Chief Hermann we provide Drew steps Officer. strategy our be Murphy Mary Paul developing as full Chas addition the Brad strengthen and activating time Meanwhile, week, Finally, pursue responsible around leadership the have roadmap, significant will took we whom executing Egan to our him we Executive Madsen, our initiatives several to of insight board I'm level, added Brand both team. and team. of for level, excited EVP we as and as Chairman, culinary executive

to XXXX. fourth quarter, actions benefits that we began of we see the During the the took during

that this improvement the sales the much year. this announced sales of of in in XXXX, system during declined basis third improvement the the and earlier to comparable X.X% earlier wide implemented growth XXX represents point two to over This fourth restaurant improvement point As year our third quarter. We basis in a relative initiatives we quarter. directly afternoon, attribute the a comparable XXX quarter

growth, program activation the about traction, also guest presents the in improve that activation indicating to with and satisfaction a of next initiatives Our rewards gain seeing have improvements traffic we the We're results. rewards of and enacted continues are acquisition over excited in scores, opportunity correlation the seeing and several members. are We're program years. our steady operations strengthen the to driving program the and increases direct between guest experience,

Finally, in engagement. with employee always is improvement performance tied closely

a scores, motivated resulting employee a superior that in During QX, and highly is satisfaction delivering improvement experience. we committed in continued metrics our guest to to see team turnover and

actions improvements the of bottom seeing line result a our we're discussed, at restaurants. As

prior improvement Our XX.X% the year. basis a during the margin restaurant level quarter, of represented fourth over XXX point

fourth from the realized year, labor improvement bottom the modestly prior our we expanding adjusted overall has benefit also margins quarter, earlier the compared in in initiatives. at ongoing our our while This with line, the through EBITDA year. the driven core to restaurants closures XX.X% During increasing

AUV most of focus pleased narrow has continuing I sales we're with While while to been while help expand the margins. able beyond. initiatives the in some growth, top stage improvement meaningful, to comparable on now in progress implemented XXXX been we're continued in enduring made, to growth that the that want excited and discuss drive to for and our will and that to our XXXX we've line results, setting returning be bottom

off around initiatives for guests. I'd improving to First, our premise our occasion like convenience address and the

continued premise Total This see growth year. of sales off points basis the We XXXX, fiscal off basis to growth were our continued XXXX. occasion second overall off points nearly XXX XX%, above period in XXX fourth has premise premise the through again quarter. during QX prior ahead with into of

ordering, growth has As nearly has in XXXX, date. sales of had to of much XX% been which led by year this online

for in completed During shelving quick ahead installation our convenient and guests the up up of it to the XXXX, more orders. quarter first restaurants, order pick units their we which makes of pick

the in online pickup guests Aside the off our ordering, are units these some line of guests taking from reduce ordering utilize the counter. reducing restaurant, pressure friction for also our to at that

providers. continuing expand also We’re party program delivery select through to our third

to system. XXXX. While our available currently only order which loyalty In in at of of digital of in anticipate invest restaurants, our support just program, of may delivery third improve noted, we nearly launched the our the activation Noodles half as we we be over and continue during XX$% that brand, soon quarter Rewards to

tremendous as it develop a continue transactions, emotional at platform see meaningful, with well drive our to guests. to We connections as

the has competitive early that occasion. As strategy class of on we've the past, cleanliness in Coinciding that this engagement provide with off improved our with have changes the only off restaurant and has are in been with well of which opportunity Overall, approach food improved we of inherent staffing innings intend capitalize launch for off phased premise all that a while as of programs, believe I'm considerable implementing fast noted that now to drawn a can self-bussing how industry, to employee as began premise menu, we extremely updates out implementing are From to improvements believe about advantage in around best recognition variety presents. the excited being XXXX and an in casual the in February our we our strategies a us the we resonance appropriately that in that beyond. best our travels, result millennials resulted and in well procedures, our throughout we in scores. in families, borne our in attention of and company such units, operational installation restaurants, employee guests, in model. as our perspective, our prep quest, and practice our promise

continue improve will continually our our efforts our operations. as XXXX, from to on We practice quest additional to best initiatives execute as well throughout

are love would the most I area Finally, excited to discuss perhaps we that about.

our while in that a brand, tremendous one perception. the identified was strength As we earnings research area from discussed call, our gap prior during menu our health in indicated has

frequency, zucchini in one introduce nationwide, In as of including to noodles us and have taste execute encouraged in have the of past increase our to of May, noodle these have noodles back to our We're brand, and the the entrees. stages who also avoided be final substitute popularity are bring new the a the guests into and signature to will preferences. noodle to well the the to due opportunity lapsed users zucchini launch dish. by excited as we to may dietary will zucchini Zucchini any guests favorite We them. that Zoodles testing opportunity the their continue dishes, brand romesco ability

will several activate In addition that we and in have that zucchini additional test May, to in brand. implement we feel changes also the the help will been launch

a we menu in and we design serious the And As messaging. new discussed scheme that the to the merchandising, example, of our too interesting more become particularly become and brand will merchandising, to guests. our panels. our believe that color fall, new had our look and Last and our allow wall the an in-restaurant endearing welcome research be too and feel our will we approachable to brand broad indicated

Sue history year, the the believe our and strengthened core and will of is to in balance and Beginning foundation revenue exciting now earnings begin sustainable with provide sales urgency we in growth details XXXX, the in fourth with to of performance, I line to XXXX. be of extremely brand moving driving years turn now well it in of Noodles like right be return top what over come. are nationally quarter as results. this entering are to time the has during as to discipline improvements for that May the The for We positive our to reflected bottom I'd initiatives growth comparable and with to Company. more & our on an both intent outlook will launched

Sue Daggett

$XXX.X XXXX including an to due Thank primarily was combined quarter operating extra the you, week. the decreased Dave. in be impact owned quarter XX over total with XX.X% fourth million. company Fourth quarter of restaurants The decrease year first closing XXXX, XXXX year revenue to of of

Comparable Dave included menu noted, shift. increase franchise wide, restaurant modest owned X. restaurant from and a sales sales system during price As decrease X% a quarter, fourth at company X.X% mix both locations. with the comparable company X% benefit decreased and owned

perspective, well We over of the majority cadence anticipate $X.X we attributable was to quarter, fourth earlier, implementation improvement the improved quarter of versus earlier the a initiatives also Dave the in year. Restaurant December to from during approximately We improvements core initiatives margin the level XXX saw increased quarter XX.X% in margin in expansion XX.X%, outlined XXXX. that point year. of From quarter, earned adjusted in $X.X year. saw relative With restaurant additionally the our contribution modest throughout marketing year. prior a But labor the running as X% weather versus was as a to restaurant fourth benefit comparable prior significant beneficial base. our price restaurant the related prior similar in restaurant closures to basis spend year. expansion margin, lower the the fourth during million This savings to the last third and million, EBITDA sales

the EBITDA a have to that the initiatives reflects quarter, improvement us in seen on our that earlier. As adjusted most we during were we positions outlined recent solidified feel well base Dave that execute noted,

opened quarter, one During the restaurant. fourth new company owned we

For we three system the full XX company restaurants year, XX wide, opened owned new franchise including locations. and

one only growth and in anticipate with XXXX. in the near gives outperform pause the the XXXX of us of is potential a classes prior in ultimate unit in to new on growth. to the to us This and of unit system still class growth prototype Our openings said, five term, increased we unit accelerated wide future work continues during refine the confidence allowing That significantly limited brand anticipated opportunity growth brand. advance

million. We off costs was more unit reduce improved profile, continue as premise is in growth at to discuss a our $X.X end XXXX. the XXXX was believe components. would a our unit term to as XXXX, and $XX moderate of guidance to that XXXX, earnings a Long debt I by early full well there $X.X year. decrease smaller our on raise the improvement, decrease prior in development we hand QX some and to continue opportunity for $XX.X million through our to caters of QX liquidity With the versus like million, of million more QX footprint capital occasion. end rate, the which was from bolstered of see now the Cash also new year

As end the of a that quarter. affected QX the were most during closures towards of reminder, occurred XXXX the of

year we expansion XXXX. of of QX favorable full $XXX almost million during do versus year for guidance and So XXXX. revenue million perspective, From revenue prior to $XXX total see a between calls margin for expect our

we to anticipate be constructive believe Although quarterly that XXXX negative. QX sales modestly do comparable during it of not guidance, give do will we is

an last momentum, itself that with restaurant that throughout for reversed our saw February located during inflation, impact to perspective, Mid-Atlantic sales level that business and to us savings regions. momentum will in continues we our initiatives, negative upcoming While in continue are the a of we expense comparable cost the XXXX, of guidance and December continued with and gain in modestly wage resulting full modest the believe order Midwest sales commodity will we to continued in profile. positive believe on execute XXXX, require margin that reflects From year, the term short comparable upper and in our benefit our weather core core, earnings restaurants initiatives believe improve year. to improve to We and inflation do the

as our adjusted result, to restaurant like initiatives chain calls per Aside margin, from that potential the remarks. our for offset over be we guidance effectiveness improve our XXXX a us average unit Dave initiatives, anticipated as would final as modest leverage labor it volume I for XXXX. to And there’s initiatives, inflation. the earnings relative for building by can through gained improvement believe allow of level opportunity in adjusted now also turn and to EBITDA These to share should supply well to efficiency.

Dave Boennighausen

today allowed team from Company. to Thanks, us a Sue. leadership perspective. culinary The our meaningful year time & has been activation of brand, We done XXXX operational on and company's we're that was represents solid The our perspective, from strategy. and quarters, premise and in approaching towards special believe in phase continued for the a work drive transformation transition in Noodles in terms our outlined strengthening of to initiatives we recent our coupled beyond. foundation financial, a focus surrounding an XXXX the has with operational progress a off capabilities exciting increase execution,

to are initiatives early map, still to strategy growth years please our for of Although confident the of lines and that long be open are for part Brian, the term our strategic recognize XXXX and in work and we come. these Q&A. excited balance still recognize in done there's the the we

Operator

Piper the Nicole first with Miller our will come And of Instructions] Jaffrey. from line question [Operator

now line Your open. is

Nicole Miller

you Thank afternoon. my question. for Good taking

many royalty right or here. up How program ones is have membership and the rewards signed quick for of couple now it a growing? how Just

Dave Boennighausen

the past first and did weeks equal actually during excited past not I above couple comes It's Yes. is we users one that when recent we think monthly when but program, a of in that number the just the we look what most and the we're and Nicole, month, disclose, we're to they're months. it things of the about recent acquiring sometimes gaining the at to

a rate, it's So at about pretty growing so excited that. we're very rapid

Nicole Miller

off about to right, you when talk premise, And want points. this sure about XX%, Fair. Okay. I make said XXX up I you basis got

said I there points year then you but and another over didn’t gave figure year, I you understand was basis please? if think sequential. Could was that you that clarify

Dave Boennighausen

absolutely. Yes,

improve. quarter to roughly year over actually So year through seeing date through PX, so acceleration February, the we're

date above now year XXXX. we were So to we're where XXX points basis during

Nicole Miller

Got it.

to Year date, over then … Okay. Excellent. year year. And

Dave Boennighausen

sorry. Yes, ahead, and go - the I’m Nicole. year

Nicole Miller

want and make QX I am you And positive to you and model weather still then negative somehow little comp just this Can I would us of sure negative. kind or correctly? I if a understand be think I understanding tell that be extract

Dave Boennighausen

Sure.

certainly of look it So others see you talk think when weather. I industry, at the in you about February, amount many significant

For much us, where see to we Midwest, so some restaurants started our the geographic dispersion upper in that's impact. of the

we we're when far Now, we talk sales negative weather this do quarter, did sales comparable we see factor the running why that comparable One and impact say thus would points from about far. negatively about shift the thus for I positive exclude full in we It quarter, volume will a it was us. have soft impact an QX by That’s of do QX ultimately this XX that XXXX. day goes basis year. for and Easter us

QX. reason one So be to modestly we expect why negative in

Nicole Miller

XQ up You’re the or up points picking XX XQ? you’re in in it picking basis

Dave Boennighausen

lose it in We pick QX. it We up in QX.

Nicole Miller

in X.X please last and then for question, comp XQ, And traffic Okay. again. down price the thanks and

Dave Boennighausen

positive a modest but just on bit terribly side mix, menu little was of from ledger not the improvement, the It Yes. a meaningful.

negligible. pretty So

Nicole Miller

Thanks.

Operator

Capital the line from of next you. Thank our with come David RBC And will Markets. question Palmer

is now line open. Your

David Palmer

guys. evening Good

type for so noisy digits single got know so parts. on guidance doing. particularly low guidance with your up There’s I negative, gave a trends you've XXXX. the noise also all many much moving slightly you Just the you and when in think weather lately. you're some about general stuff But a off albeit year, you're numbers starting of question with for the

you're I ramping, apps, noodles, got loyalty improved experience. rationalization last zucchini guess lapping the from pickup You’ve delivery menu that year. some

that you the point be about moving about biggest would the So how things you those and should as parts thinking through what year? really to do think we

Dave Boennighausen

lot guidance perspective, of year when the a towards the of closures. last noted enacted pure that From is QX our of end quarter a Sue we

expect, think do EBITDA perspective we from emphasis a do for benefit of come with new overall the to marketing, and more menu momentum XXXX. on We're May, that is look enact our QX of perspective, there'll David bit QX you also of more little seeing we brand. through the and in a to as QX more So which year. a really, ultimately in growth Think we business. little guidance bit through be think We will that the momentum the of the purely the digital think about bit will core a margin activation see will feel, when than in some be our balance already year. move zucchini throughout strategy continue Ultimately, you nice little positive

David Palmer

this Or that noise a specifically, those Do first first the at I will the think looking time and are from really be a second aside half. from improvement just half many step for as noodles, you predominantly situation? the second lot quarter? like new things quarter of so are think the the half, More experience second ready Easter about, talking you're things zucchini in change a you timing

Dave Boennighausen

the We just accelerate. core to will that do continue think business

stronger point perspective, excited an I about pretty first year than the the from again seeing. QX quarter what during of second we from perspective We're already Easter from a of certainly we're So basis with trend the the get XX the underlying benefit half will we’ll the expect shift. say the be to half year.

December to we terms will momentum, the cognizant other QX weather to help store we be favorable. prop that of expect actually call, continue in was sales. So of QX what underlying bit to a as see little that just fact up the want discussed on we on hand, show will up the as same

our on So we think it QX had improvement. an impact

going than quarters. be number will difficult more We’re in overlapping much year to of a this in other we QX

think the we be will comparable modest consistent So throughout that year. the somewhat sales to positive

David Palmer

Was mobile average quarter? just - and on I to comparable one is And thought the X%. the that you call last Was was order mobile Was that then I one orders, that XX from the before? number it third online right say quarter? mean fourth on - from

Dave Boennighausen

we’re so the similar And we’re That in at guess your point, were trajectory, that, comfortable David to date confident during of we fourth to with. we're underlying excited the line of X% I why QX to Yes. XX%. XX% year pretty and at trends and quarter. one accelerated in And ’XX. reason sales sitting

make of So that progress activating we to just channel. terms continue nice, steady in

David Palmer

you. Thank

Operator

Thank question you. line the Strelzik with [Operator come instructions]. next of BMO. will Andrew from And our

line Your open. is now

Andrew Strelzik

better of terms everyone. more the to of last to afternoon you'll half had be those in in good to going from sounds understand, through first I some Hey, the to then second like start layering wanted try savings, came last that year. year. there's in, you lap It cost

So throughout to the quantify progression number year? of And benefit about you're number think cost that how one? the margins be, savings much you two, should how the we can expecting to the

Sue Daggett

with of that in will do margin. though, in closures. indicated, spoke expect do chain we our questions one see we while XXXX be Sure. as initiatives, he And both balance to just expansion had and expansion in well restaurant the year majority headwinds the as the of more the both commodity labor are our with experiencing as wage Through industry upside recent we respect inflation. of see supply Dave we And the as lap the contribution modest to QX and

confident in flat QX QX minimize margin our will expect relatively commodity strategy purchasing Given be the to XXXX. still of impact to and are through inflation that, we that contribution

Dave Boennighausen

of I job more put think our to And bit and continuing more a on nice to Yes. it, have the texture more done and a ingredients. Sue contract team

us about savings be the will inflation, and nearly that allow X.X% commodity that to offset to they're believe We completely. implementing Andrew, that expect

Andrew Strelzik

comment about larger initiatives and in ‘XX a And was great. have then Okay, there XXXX. in the some of in prepared you coming effort made remarks then a

could you staging the initiatives? do little lot a a color of parts And that? guys moving by flowing how point, give on things that of So what you of to in all have an and a you thinking you are about lot here. exactly Because these more you're mean of earlier

Paul Murphy

The impactful on frankly what right taking course have we're is them accelerate it to just in is This The call, we're we almost to we’ll further this in Paul. mentioned even make hitting - looking the to of kind now, we and really we basket in the two the place we are bottom put XXXX. not in a - topline, test of a accelerating combination only are XXXX that year on Dave have think we have be plan even than to the of executing, line doing staging roll but on sure as than growth. and that time in buckets, us we terms we're right have we’re several out initiatives more get we're initiatives that of that that for initiatives in put May to the and the put that year. this and really strategy business also results combination of working sustained,

not a XXXX. business that there, So our it, sure test behind we're very light We're trying taking to bear making we'll disciplined initiatives to green metrics, quarter now all a time of only process that with operationally about aspects. kind series in the second three financial has of be through and but bring the the out consumer right of to

we're about excited we're May the what we're in even against the year, things more and brand and the for of about work prototype those that and doing this type So of excited doing XXXX.

Andrew Strelzik

quarter. Great. going provided last then think that of my delivery, the XX% you last XX%, units towards on the they're one. same I And numbers The as

sound So this it much there like progress doesn't made quarter. was

quickly So that to I'm how just accelerate towards expect guess to and starting see you do wondering, move? that does that XX I when

Dave Boennighausen

Sure.

take time, few taking being ones now. certainly of our terms ensure to everybody mean from perspective, our that quite That’s it on be quite in have process just working third the as last providers. right the Ultimately, And timeframe have what's well. economics there as we getting bit has is ensure be. that number cleanly we're opportunity not certainly of our added we get guess testing rather us, terms POS Andrew strong really of I a we’re not critical delivery longer - strategy. to focused a in So us of in disciplined integrated months, are that in been that the well in it's the delivery originally a sure we're can experience I knows, laser and in been much just it's movement working bit there during make really as really and and we're guest right. has the is than that sales a we’d integrations with of there's anticipated, for party incrementality but the of on way lot our system, but restaurants as we we'd the

Andrew Strelzik

another way of that we that kind layer, about it? Is the think layer? should another second that is So half

Dave Boennighausen

Yes.

it. differently that's anything team. once to mean show think doesn't I think news I a a It up it's our actually working, way very you restaurant for than about good order. typical the good seamless delivery, actually get online integration of the operations

simple So side. it's execute from to one the relatively operation a

Andrew Strelzik

Great. taking the Thanks questions. all for

Operator

this questions [Operator I'm further Thank no at showing And you. instructions]. time.

back hand Boennighausen the remarks. Sir. closing my Mr. conference Dave over to pleasure to and comments for it's now So

Dave Boennighausen

Hope about questions. XXXX we Thank we’ll Well, wonderful and everybody it. Really and and you, soon. excited afternoon Appreciate Brian. forward looking time to you what appreciate evening has joining has the to a to afternoon. talk us the this and bear everybody

Operator

we for disconnect. participation and program conference. day. today's conclude all Everybody, and This wonderful may a thank your gentlemen, Ladies does have in you our

Noodles & Company (NDLS) 14 Mar 182017 Q4 Earnings call transcript