ndls-20220628

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_____________________________________________________________

FORM 10-Q

_____________________________________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 28, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35987

___________________________________________________________

NOODLES & COMPANY

(Exact name of registrant as specified in its charter)

_____________________________________________________________


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)

(720) 214-1900

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act.


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at July 25, 2022
Class A Common Stock, $0.01 par value per share						45,701,280 shares

Table of Contents

TABLE OF CONTENTS


			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	14
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4.	Controls and Procedures	26
PART II
	Item 1.	Legal Proceedings	28
	Item 1A.	Risk Factors	28
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
	Item 3.	Defaults Upon Senior Securities	28
	Item 4.	Mine Safety Disclosures	28
	Item 5.	Other Information	28
	Item 6.	Exhibits	29
SIGNATURES			30

Table of Contents

PART I

Item 1. Financial Statements

Noodles & Company

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	June 28, 2022		December 28, 2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,789	$	2,255
Accounts receivable	3,967		3,958
Inventories	9,930		9,404
Prepaid expenses and other assets	4,598		6,837
Income tax receivable	211		108
Total current assets	20,495		22,562
Property and equipment, net	124,034		119,276
Operating lease assets, net	184,947		188,440
Goodwill	7,154		7,154
Intangibles, net	640		668
Other assets, net	1,311		3,359
Total long-term assets	318,086		318,897
Total assets	$	338,581	$	341,459
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	15,279	$	15,543
Accrued payroll and benefits	14,772		18,600
Accrued expenses and other current liabilities	12,398		13,791
Current operating lease liabilities	27,518		26,617
Current portion of long-term debt	—		2,031
Total current liabilities	69,967		76,582
Long-term debt, net	31,142		18,931
Long-term operating lease liabilities, net	194,197		200,243
Deferred tax liabilities, net	229		269
Other long-term liabilities	8,159		7,801
Total liabilities	303,694		303,826

Stockholders’ equity:
Preferred stock—$0.01 par value, 1,000,000 shares authorized and undesignated as of June 28, 2022 and December 28, 2021; no shares issued or outstanding	—		—
Common stock—$0.01 par value, 180,000,000 shares authorized as of June 28, 2022 and December 28, 2021; 48,384,193 issued and 45,960,322 outstanding as of June 28, 2022 and 48,125,151 issued and 45,701,280 outstanding as of December 28, 2021	484		481
Treasury stock, at cost, 2,423,871 shares as of June 28, 2022 and December 28, 2021	(35,000)		(35,000)
Additional paid-in capital	209,561		207,226
Accumulated deficit	(140,158)		(135,074)
Total stockholders’ equity	34,887		37,633
Total liabilities and stockholders’ equity	$	338,581	$	341,459

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Noodles & Company

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data, unaudited)


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	June 28, 2022		June 29, 2021		June 28, 2022		June 29, 2021
Revenue:
Restaurant revenue	$	128,274	$	123,715	$	238,235	$	231,459
Franchising royalties and fees, and other	2,793		1,934		5,394		3,767
Total revenue	131,067		125,649		243,629		235,226
Costs and expenses:
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Cost of sales	35,664		30,805		66,435		57,782
Labor	38,828		36,926		74,321		71,232
Occupancy	11,074		11,519		22,223		23,168
Other restaurant operating costs	22,792		21,082		44,658		41,287
General and administrative	12,744		12,978		24,584		23,907
Depreciation and amortization	5,763		5,576		11,484		11,163
Pre-opening	353		163		761		221
Restaurant impairments, closure costs and asset disposals	1,971		390		3,360		1,621
Total costs and expenses	129,189		119,439		247,826		230,381
Income (loss) from operations	1,878		6,210		(4,197)		4,845

Interest expense, net	489		498		926		1,120
Income (loss) before taxes	1,389		5,712		(5,123)		3,725
Provision for (benefit from) income taxes	44		29		(39)		19
Net income (loss)	$	1,345	$	5,683	$	(5,084)	$	3,706
Earnings (loss) per Class A and Class B common stock, combined
Basic	$	0.03	$	0.12	$	(0.11)	$	0.08
Diluted	$	0.03	$	0.12	$	(0.11)	$	0.08
Weighted average shares of Class A and Class B common stock outstanding, combined:
Basic	45,881,354		45,506,476		45,803,927		45,303,160
Diluted	46,108,720		46,246,169		45,803,927		45,992,119

See accompanying notes to condensed consolidated financial statements.

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Noodles & Company

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data, unaudited)


	Fiscal Quarter Ended
	Common Stock(1)			Treasury			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance—March 29, 2022	48,258,594	$	483	2,423,871	$	(35,000)	$	208,065	$	(141,503)	$	32,045
Stock plan transactions and other	125,599	1		—	—		(19)		—		(18)
Stock-based compensation expense	—	—		—	—		1,515		—		1,515
Net income	—	—		—	—		—		1,345		1,345
Balance—June 28, 2022	48,384,193	$	484	2,423,871	$	(35,000)	$	209,561	$	(140,158)	$	34,887

Balance—March 30, 2021	47,890,488	$	479	2,423,871	$	(35,000)	$	203,362	$	(140,716)	$	28,125
Stock plan transactions and other	121,273	1		—	—		55		—		56
Stock-based compensation expense	—	—		—	—		1,579		—		1,579
Net income	—	—		—	—		—		5,683

SEC Form 10-Q filed by Noodles & Company