NOODLES & Co 10-Q for FY2024 Q2

NOODLES & Co (NDLS)

10-Q 2024-08-08 For: 2024-07-02

Added on April 10, 2026

About this 10-Q

NOODLES & Co filed this 10-Q on August 8, 2024, covering the quarter ended July 2, 2024 (FY2024 Q2).

Headline figures

Quarter ended July 2, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $127.35M; up 1.8% from $125.15M a year earlier
Net loss: $13.63M; compared with a net loss of $1.3M a year earlier
Diluted EPS: -$0.30; compared with -$0.03 a year earlier

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Delaware						84-1303469
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


520 Zang Street, Suite D
Broomfield, CO						80021
(Address of principal executive offices)						(Zip Code)


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	NDLS	Nasdaq Global Select Market


Class						Outstanding at August 2, 2024
Class A Common Stock, $0.01 par value per share						45,636,789 shares


			Page
PART I
	Item 1.	Financial Statements (unaudited)	2
		Condensed Consolidated Balance Sheets	2
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Stockholders’ Equity	4
		Condensed Consolidated Statements of Cash Flows	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
	Item 4.	Controls and Procedures	25
PART II
	Item 1.	Legal Proceedings	26
	Item 1A.	Risk Factors	26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 3.	Defaults Upon Senior Securities	26
	Item 4.	Mine Safety Disclosures	26
	Item 5.	Other Information	26
	Item 6.	Exhibits	27
SIGNATURES			28


	July 2, 2024		January 2, 2024
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,806	$	3,013
Accounts receivable	3,956		5,144
Inventories	10,421		10,251
Prepaid expenses and other assets	5,944		3,879
Income tax receivable	362		337
Total current assets	22,489		22,624
Property and equipment, net	139,985		152,176
Operating lease assets, net	174,362		183,857
Goodwill	7,154		7,154
Intangibles, net	515		538
Other assets, net	1,788		1,746
Total long-term assets	323,804		345,471
Total assets	$	346,293	$	368,095
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	17,900	$	16,691
Accrued payroll and benefits	8,194		7,769
Accrued expenses and other current liabilities	13,844		12,950
Current operating lease liabilities	31,390		30,104

Total current liabilities	71,328		67,514
Long-term debt, net	84,780		80,218
Long-term operating lease liabilities, net	174,626		186,285
Deferred tax liabilities, net	430		255
Other long-term liabilities	5,486		6,663
Total liabilities	336,650		340,935

Stockholders’ equity:
Preferred stock—$0.01 par value, 1,000,000 shares authorized and undesignated as of July 2, 2024 and January 2, 2024; no shares issued or outstanding	—		—
Common stock—$0.01 par value, 180,000,000 shares authorized as of July 2, 2024 and January 2, 2024; 48,047,131 issued and 45,623,260 outstanding as of July 2, 2024 and 47,413,585 issued and 44,989,714 outstanding as of January 2, 2024	480		474
Treasury stock, at cost, 2,423,871 shares as of July 2, 2024 and January 2, 2024	(35,000)		(35,000)
Additional paid-in capital	212,172		209,930
Accumulated deficit	(168,009)		(148,244)
Total stockholders’ equity	9,643		27,160
Total liabilities and stockholders’ equity	$	346,293	$	368,095


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 2, 2024		July 4, 2023		July 2, 2024		July 4, 2023
Revenue:
Restaurant revenue	$	124,732	$	122,394	$	243,734	$	245,621
Franchising royalties and fees, and other	2,620		2,760		5,012		5,610
Total revenue	127,352		125,154		248,746		251,231
Costs and expenses:
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Cost of sales	30,858		30,700		60,558		61,725
Labor	38,951		39,657		77,368		79,487
Occupancy	11,613		11,365		23,442		22,851
Other restaurant operating costs	23,925		22,594		47,389		46,605
General and administrative	13,568		12,463		26,611		26,104
Depreciation and amortization	7,367		6,437		14,737		12,687
Pre-opening	531		609		969		1,101
Restaurant impairments, closure costs and asset disposals	12,057		1,609		13,286		3,178
Total costs and expenses	138,870		125,434		264,360		253,738
Loss from operations	(11,518)		(280)		(15,614)		(2,507)

Interest expense, net	1,997		1,054		3,976		2,015
Loss before taxes	(13,515)		(1,334)		(19,590)		(4,522)
Provision for (benefit from) income taxes	110		(30)		175		(103)
Net loss	$	(13,625)	$	(1,304)	$	(19,765)	$	(4,419)
Loss per Class A and Class B common stock, combined
Basic	$	(0.30)	$	(0.03)	$	(0.44)	$	(0.10)
Diluted	$	(0.30)	$	(0.03)	$	(0.44)	$	(0.10)
Weighted average shares of Class A and Class B common stock outstanding, combined:
Basic	45,450,949		46,363,208		45,265,152		46,239,357
Diluted	45,450,949		46,363,208		45,265,152		46,239,357


	Fiscal Quarter Ended
	Common Stock(1)			Treasury			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance—April 2, 2024	47,770,220	$	478	2,423,871	$	(35,000)	$	210,810	$	(154,384)	$	21,904
Stock plan transactions and other	276,911	2		—	—		8		—		10

Stock-based compensation expense	—	—		—	—		1,354		—		1,354
Net loss	—	—		—	—		—		(13,625)		(13,625)
Balance—July 2, 2024	48,047,131	$	480	2,423,871	$	(35,000)	$	212,172	$	(168,009)	$	9,643

Balance—April 4, 2023	48,781,701	$	488	2,423,871	$	(35,000)	$	211,946	$	(141,503)	$	35,931
Stock plan transactions and other	71,344	1		—	—		(45)		—		(44)
Stock-based compensation expense	—	—		—	—		1,497		—		1,497
Net loss	—	—		—	—		—		(1,304)		(1,304)
Balance—July 4, 2023	48,853,045	$	489	2,423,871	$	(35,000)	$	213,398	$	(142,807)	$	36,080

	Two Fiscal Quarters Ended
	Common Stock(1)			Treasury			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance—January 2, 2024	47,413,585	$	474	2,423,871	$	(35,000)	$	209,930	$	(148,244)	$	27,160
Stock plan transactions and other	633,546	6		—	—		(257)		—		(251)

Stock-based compensation expense	—	—		—	—		2,499		—		2,499
Net loss	—	—		—	—		—		(19,765)		(19,765)
Balance—July 2, 2024	48,047,131	$	480	2,423,871	$	(35,000)	$	212,172	$	(168,009)	$	9,643

Balance—January 3, 2023	48,464,298	$	485	2,423,871	$	(35,000)	$	211,267	$	(138,388)	$	38,364
Stock plan transactions and other	388,747	4		—	—		(689)		—		(685)
Stock-based compensation expense	—	—		—	—		2,820		—		2,820
Net loss	—	—		—	—		—		(4,419)		(4,419)
Balance—July 4, 2023	48,853,045	$	489	2,423,871	$	(35,000)	$	213,398	$	(142,807)	$	36,080


	July 2, 2024		January 2, 2024
Delivery program receivables	$	1,629	$	1,869
Vendor rebate receivables	658		779
Franchise receivables	1,005		1,043
Other receivables	664		1,453
Accounts receivable	$	3,956	$	5,144


	July 2, 2024		January 2, 2024
Prepaid insurance	$	1,862	$	928
Prepaid occupancy related costs	812		800

Prepaid expenses	3,246		2,127
Other current assets	24		24
Prepaid expenses and other assets	$	5,944	$	3,879


	July 2, 2024		January 2, 2024
Leasehold improvements	$	224,112	$	232,060
Furniture, fixtures and equipment	174,866		176,872
Construction in progress	7,125		6,426
	406,103		415,358
Accumulated depreciation and amortization	(266,118)		(263,182)
Property and equipment, net	$	139,985	$	152,176


	July 2, 2024		January 2, 2024
Accrued payroll and related liabilities	$	5,054	$	5,205
Accrued bonus	1,368		698
Insurance liabilities	1,772		1,866
Accrued payroll and benefits	$	8,194	$	7,769


	July 2, 2024		January 2, 2024
Gift card liability	$	1,919	$	2,222
Occupancy related	1,823		1,066
Utilities	1,353		1,311
Current portion of finance lease liability	1,900		2,337

Other restaurant expense accruals	1,154		1,466
Other corporate expense accruals	5,695		4,548
Accrued expenses and other current liabilities	$	13,844	$	12,950


Classification		July 2, 2024		January 2, 2024
Assets
Operating	Operating lease assets, net	$	174,362	$	183,857
Finance	Property and equipment	2,381		3,440
Total leased assets		$	176,743	$	187,297
Liabilities
Current lease liabilities
Operating	Current operating lease liabilities	$	31,390	$	30,104
Finance	Accrued expenses and other current liabilities	1,900		2,337
Long-term lease liabilities
Operating	Long-term operating lease liabilities	174,626		186,285
Finance	Other long-term liabilities	769		1,469
Total lease liabilities		$	208,685	$	220,195


	July 2, 2024		July 4, 2023
Interest paid (net of amounts capitalized)	$	3,588	$	1,594
Income taxes paid	25		132
Purchases of property and equipment accrued in accounts payable	2,293		5,609


	Fiscal Quarter Ended		Two Fiscal Quarters Ended
	July 2, 2024	July 4, 2023	July 2, 2024	July 4, 2023
Company-Owned Restaurant Activity
Beginning of period	380	369	380	368
Openings	5	6	7	9
Closures	—	(2)	(2)	(4)
Divestitures(1)	(6)	—	(6)	—
Restaurants at end of period	379	373	379	373
Franchise Restaurant Activity
Beginning of period	89	92	90	93
Openings	—	—	1	—
Acquisitions(1)	6	—	6	—
Closures	(1)	—	(3)	(1)
Restaurants at end of period	94	92	94	92
Total restaurants	473	465	473	465


Exhibit Number						Description of Exhibit
10.1*						F orm of 2024 Restricted Stock Unit Agreement
10.2*						F orm of 202 4 Performance Restricted Stock Unit Agr eement
10.3						F orm of 2024 Restrict ed Stock Unit Ag reement for Non-Employee Directors
10.4*						Employ ment Agreement, dated June 10 , 2024, between Noodles & Company and Scott Davis
10.5						Support Agreement dated June 6, 2024, between Noo dles & Company and Hoak & Co, J ames M. Hoa k, J r., J. Hale Hoak, Hoak Public Equities, L.P ., Zierk F amily 2 010 Irrevocable Trust and Hoak Fund Management, L.P. and Britain Pea kes (filed as Exhibit 10.1 with the Registrant’s 8-K filed on June 11, 2024, File No. 001-35987)
31.1						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104.0						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


NOODLES & COMPANY
By:			/s/ MIKE HYNES
			Mike Hynes Chief Financial Officer (principal financial officer and duly authorized signatory for the registrant)
Date			August 8, 2024


Highest VWAP			Percentage of Target Number of Shares that Become Earned PSUs
Less than $4.50			0%
$4.50 ("Threshold Amount")			50%
$6.50 ("Target Amount")			100%
$8.50 ("Maximum Amount") or more			150%


	Fiscal Quarter Ended(1)				Two Fiscal Quarters Ended(1)
	July 2, 2024		July 4, 2023		July 2, 2024		July 4, 2023
	(in thousands, unaudited)
Net loss	$	(13,625)	$	(1,304)	$	(19,765)	$	(4,419)
Depreciation and amortization	7,367		6,437		14,737		12,687
Interest expense, net	1,997		1,054		3,976		2,015
Provision for (benefit from) income taxes	110		(30)		175		(103)
EBITDA	$	(4,151)	$	6,157	$	(877)	$	10,180
Restaurant impairments(2)	10,933		423		11,104		509
Loss on disposal of assets	551		379		1,277		757
Lease exit costs, net	331		13		—		316
Gain on sale from refranchising transactions	(490)		—		(490)		—
Severance and executive transition costs	674		—		1,147		—
Stock-based compensation expense	1,347		1,496		2,534		2,887
Adjusted EBITDA	$	9,195	$	8,468	$	14,695	$	14,649


	Fiscal Quarter Ended						Increase / (Decrease)
	July 2, 2024			July 4, 2023			$		%

	(in thousands, unaudited)
Revenue:
Restaurant revenue	$	124,732		$	122,394		$	2,338	1.9	%
Franchising royalties and fees, and other	2,620			2,760			(140)		(5.1)	%
Total revenue	127,352			125,154			2,198		1.8	%
Costs and expenses:
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Cost of sales	30,858			30,700			158		0.5	%
Labor	38,951			39,657			(706)		(1.8)	%
Occupancy	11,613			11,365			248		2.2	%
Other restaurant operating costs	23,925			22,594			1,331		5.9	%
General and administrative	13,568			12,463			1,105		8.9	%
Depreciation and amortization	7,367			6,437			930		14.4	%
Pre-opening	531			609			(78)		(12.8)	%
Restaurant impairments, closure costs and asset disposals	12,057			1,609			10,448		*
Total costs and expenses	138,870			125,434			13,436		10.7	%
Loss from operations	(11,518)			(280)			(11,238)		*

Interest expense, net	1,997			1,054			943		89.5	%
Loss before taxes	(13,515)			(1,334)			(12,181)		*
Provision for (benefit from) income taxes	110			(30)			140		*
Net loss	$	(13,625)		$	(1,304)		$	(12,321)	*
Company-owned:
Average unit volume	$	1,322		$	1,327		$	(5)	(0.4)	%
Comparable restaurant sales	1.3		%	(5.9)		%


			(a)			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;


			(b)			Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


			(c)			Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


			(d)			Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


			(a)			All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


			(b)			Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


			/s/ DREW MADSEN
			Drew Madsen
			Chief Executive Officer (Principal Executive Officer)


			/s/ MIKE HYNES
			Mike Hynes
			Chief Financial Officer
			(Principal Financial Officer)


			By:						/s/ DREW MADSEN
			Name:						Drew Madsen
			Title:						Chief Executive Officer