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Noodles & Company Announces Third Quarter 2013 Financial Results

Noodles & Company Announces Third Quarter 2013 Financial Results

BROOMFIELD, Colo., Nov. 6, 2013 (GLOBE NEWSWIRE) -- Noodles & Company
(Nasdaq:NDLS) today announced financial results for the third quarter ended
October 1, 2013.

Key highlights for the third quarter of 2013 compared to the third quarter of
2012 include:

  *GAAP net income increased to $3.3 million, from $0.1 million.
  *Adjusted net income^(1) increased 44.6% to $3.3 million or $0.11 per
    diluted share, from $2.3 million.
  *Adjusted EBITDA^(1) increased 24.0% to $11.3 million, from $9.1 million.
  *Total revenue increased 15.4% to $88.9 million from $77.1 million.
  *Comparable restaurant sales increased 2.4% for company-owned restaurants,
    0.5% for franchise restaurants and 2.1% system-wide.
  *Restaurant contribution margin decreased 30 basis points to 20.7%.
  *20 new restaurants opened system-wide, including 15 company-owned and five
    franchise restaurants.

Key highlights for the first three quarters of 2013 compared to the first
three quarters of 2012 include:

  *GAAP net income increased to $4.3 million, or $0.16 per diluted share,
    from $3.6 million.
  *Adjusted net income^(1) increased 21.4% to $8.6 million, or $0.28 per
    diluted share, from $7.1 million, or $0.24 per diluted share.
  *Adjusted EBITDA^(1) increased 17.9% to $32.0 million, from $27.2 million.
  *Total revenue increased 16.6% to $259.5 million from $222.5 million.
  *Comparable restaurant sales increased 3.1% for company-owned restaurants,
    0.3% for franchise restaurants and 2.7% system-wide.
  *Restaurant contribution margin decreased 60 basis points to 20.6%.
  *42 new restaurants opened system-wide, including 35 company-owned and
    seven franchise restaurants.

(1) Adjusted net income and Adjusted EBITDA are non-GAAP measures. A
reconciliation of US GAAP net income to each of these measures is included in
the accompanying financial data. See "Non-GAAP Financial Measures."

Kevin Reddy, Chairman and Chief Executive Officer of Noodles & Company,
remarked "Our excellent 45% earnings growth in the third quarter despite a
tepid consumer environment is continued evidence of Noodles & Company's
ability to sustain our long track record of strong, consistent growth.
Moreover, our investments in building the brand have us well positioned to
increase our guidance on comparable restaurant sales and new unit growth for
the full year 2013, supporting one of the most attractive growth profiles in
the industry."

Third Quarter 2013 Financial Results

Revenue Growth of 15.4%

Total revenue increased $11.8 million in the third quarter of 2013, or 15.4%,
to $88.9 million, compared with $77.1 million in the third quarter of 2012.
This increase was the result of new restaurants opened system-wide since the
beginning of the third quarter of 2012, in addition to an increase in sales at
our comparable base restaurants.

In the third quarter of 2013, comparable restaurant sales increased 2.4% for
company-owned restaurants, increased 0.5% for franchise restaurants and
increased 2.1%system-wide.

The company-owned comparable restaurant sales increase of 2.4% in the third
quarter 2013 was comprised of a traffic increase of 0.7% and an increase in
per person spend of 1.7%.

Adjusted Net Income^(2)Growth of 44.6%

Net income was $3.3 million in the third quarter of 2013, compared with net
income of $0.1 million in the third quarter of 2012.Adjusted net income
increased 44.6% to $3.3 million, from $2.3 million in the prior period.

Restaurant contribution margin decreased to 20.7% in the third quarter of
2013, compared with 21.0% in the third quarter of 2012. The decrease was
primarily due to increased operating and occupancy costs, resulting from
investment in supplies and smallwares related to our limited-time offering,
repairs and maintenance, as well as expenses related to the increased number
of new restaurants.

In the third quarter of 2013, we changed the manner in which we report
marketing expenses between general and administrative expenses and other
restaurant operating costs to more appropriately reflect only those costs
directly related to restaurant-level marketing in other restaurant operating
costs. Marketing costs previously reported as restaurant operating costs,
that were not directly related to restaurant-level marketing, have been
reclassified to general and administrative expense in all periods presented
with no impact on income from operations. The reclassification by quarter is
included in the accompanying financial data.

First Three Quarters 2013 Financial Results

Revenue Growth of 16.6%

Total revenue increased $37.0 million in the first three quarters of 2013, or
16.6%, to $259.5 million, compared with $222.5 million in the same period of
2012. This increase was the result of new restaurants opened system-wide since
the beginning of the third quarter of 2012, in addition to an increase in
sales at our comparable base restaurants. Comparable restaurant sales
increased 3.1% for company-owned restaurants, increased 0.3% for franchise
restaurants and increased 2.7% system-wide.

Adjusted Net Income^(2) Growth of 21.4%

Net income was $4.3 million for the first three quarters of 2013, compared to
net income of $3.6 million in the same period of 2012.Adjusted net income
increased 21.4% to $8.6 million.

Restaurant contribution margin was 20.6% as a percentage of restaurant revenue
in the first three quarters of 2013, compared with 21.2% in the same period of
2012, due primarily to increases in occupancy and restaurant operating costs
as a percentage of revenue.

Initial Public Offering

On July 2, 2013, the Company successfully completed its initial public
offering of Class A common stock at $18.00 per share. The Company issued
6,160,714 shares, including 803,571 shares sold to the underwriters pursuant
to their over-allotment option. After underwriter discounts and commissions
and offering expenses, the Company received net proceeds from the offering of
$100.2 million. These proceeds were used to repay all but $0.2 million of the
Company's outstanding debt as of July 2, 2013.

(2) Adjusted net income is a non-GAAP measure. A reconciliation of US GAAP net
income to adjusted net income is included in the accompanying financial
data.See "Non-GAAP Financial Measures."

2013 Outlook

Management is affirming their expectation of adjusted diluted net income per
share between $0.39 and $0.41 for the full year of 2013. This compares to
adjusted diluted net income per share of $0.31 in 2012.Mr. Reddy remarked
"Our strong early performance in the fourth quarter has resulted in our
increased guidance of company-owned comparable restaurant sales growth
expected for the full year 2013. Also, our team's continued efforts in
developing the brand through productive new unit growth leads us to anticipate
an increase in new units expected to open this year compared with prior
guidance."The Company's current guidance is based, in part, on the following
assumptions for fiscal year 2013:

  *41 to 42 new company-owned restaurant openings, net of one closure in
    first quarter of 2013
  *Nine to ten new franchise restaurant openings
  *Net revenue of $348 million to $352 million
  *Company-owned comparable restaurant sales growth of approximately 3.25% to
    3.75% for the full year 2013, implying fourth quarter 2013 comparable
    restaurant sales growth of 3.75% to 4.25%
  *An effective full year tax rate of 39.2%
  *Capital expenditures of approximately $46 million to $50 million
  *Annual weighted average adjusted diluted shares outstanding of 31.1
    million to 31.3 million
  *Comparable adjustments to net income as discussed in "Reconciliations of
    Non-GAAP Measurements to US GAAP Results"

Key Definitions:

Comparable Restaurant Sales represent year-over-year sales comparisons for
restaurants open for at least 18 full periods.

Per Person Spend represents restaurant sales divided by traffic. Traffic
represents the approximate number of entrees sold.

Restaurant Contribution Margin represents restaurant revenue less restaurant
operating costs which are costs of sales, labor, occupancy and other
restaurant operating costs.

Adjusted EBITDA represents net income before interest expense, debt
extinguishment expense, provision for income taxes, asset disposals, closure
costs and restaurant impairments, depreciation and amortization, stock-based
compensation, management fees, IPO related expenses and other one time
expenses. Adjusted EBITDA is presented because: (i) management believes it is
a useful measure for investors to assess the operating performance of our
business without the effect of non-cash charges such as depreciation and
amortization expenses and asset disposals, closure costs and restaurant
impairments and (ii) management uses it internally as a benchmark for certain
of our cash incentive plans and to evaluate our operating performance or
compare performance to that of the competitors.See "Non-GAAP Financial
Measures" below.

Adjusted Net Income represents net income plus a net savings in interest
expense as a result of the pay down of debt using IPO proceeds, plus debt
extinguishment expense, IPO related expenses and pre-IPO management fees, less
incremental costs of being a public company and the tax effects of these
adjustments. Adjusted net income is presented because management believes it
helps convey supplemental information to investors regarding the Company's
performance excluding the impact of the IPO and other special items that
affect the comparability of results in past quarters and expected in future
quarters. See "Non-GAAP Financial Measures" below.

Conference Call

Noodles & Company will host a conference call to discuss the third quarter
financial results on Wednesday, November6, 2013 at 4:30 PM Eastern Time.

The conference call can be accessed live over the phone by dialing (877)
303-1298 or for international callers by dialing (253) 237-1032. A replay will
be available after the call and can be accessed by dialing (855) 859-2056 or
for international callers by dialing (404) 537-3406; the passcode is 86968470.
The replay will be available until Wednesday, November 20, 2013. The
conference call will also be webcast live from the Company's corporate website
at investor.noodles.com, under the "Events & Presentations" page.An archive
of the webcast will be available at the same location on the corporate website
shortly after the call has concluded until Wednesday, November 20, 2013.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and
presented in accordance with Generally Accepted Accounting Principles
("GAAP"), the Company uses the following non-GAAP financial measures: adjusted
EBITDA, adjusted net income and adjusted EPS (collectively the "non-GAAP
financial measures"). The presentation of this financial information is not
intended to be considered in isolation or as a substitute for, or superior to,
the financial information prepared and presented in accordance with GAAP. The
Company uses these non-GAAP financial measures for financial and operational
decision making and as a means to evaluate period-to-period comparisons. The
Company believes that they provide useful information about operating results,
enhance the overall understanding of past financial performance and future
prospects, and allow for greater transparency with respect to key metrics used
by management in its financial and operational decision making. Adjusted net
income is presented because management believes it helps convey supplemental
information to investors regarding the Company's performance excluding the
impact of the IPO and other special items that affect the comparability of
results in past quarters and expected in future quarters, such as the
adjustment to eliminate the historical interest expense for all periods
presented that were based upon actual outstanding balances before the
application of the net proceeds from our IPO. The non-GAAP measures used by
the Company in this press release may be different from the methods used by
other companies.

For more information on the non-GAAP financial measures, please see the
Reconciliation of GAAP to non-GAAP Financial Measures tables in this press
release. These accompanying tables have more details on the GAAP financial
measures that are most directly comparable to non-GAAP financial measures and
the related reconciliations between these financial measures.

About Noodles & Company

Founded in 1995, Noodles & Company is a fast-casual restaurant chain that
serves classic noodle and pasta dishes from around the world with 368
locations system-wide in 29 states and the District of Columbia as of Tuesday,
October1, 2013. Known as Your World Kitchen, Noodles & Company's globally
inspired menu consists of more than 25 fresh, customizable noodle bowls,
salads, soups and sandwiches that are prepared quickly using quality
ingredients. From healthy to indulgent, spicy to comforting, the menu provides
favorites for everyone from kids to adults. Popular dishes include the sweet
and spicy Japanese Pan Noodles, zesty Pesto Cavatappi and creamy Wisconsin Mac
& Cheese.

Forward-Looking Statements

This press release contains a number of forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.Words, and
variations of words, such as "believe," "estimate," "anticipate," "expect,"
"intend," "may," "will," "would" and similar expressions are intended to
identify our forward-looking statements. Examples of forward-looking
statements include all matters that are not historical facts, such as
statements regarding 2013 guidance, comparable restaurant sales and operating
margins, new restaurant development, expected public company expense, and our
outlook, in particular, our target and adjusted net income, targeted
restaurant openings and effective tax rate. By their nature, forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from the Company's forward-looking statements. These risks
and uncertainties include: our ability to maintain increases in comparable
restaurant sales and to successfully execute our growth strategy; our ability
to open new restaurants on schedule; current economic conditions; price and
availability of commodities; consumer confidence and spending patterns; the
assumptions used in the adjustment of interest expense and the adjustments for
certain incremental legal, accounting, insurance and other compliance costs
used in the calculation of adjusted net income; changes in consumer tastes and
the level of acceptance of the Company's restaurant concepts (including
consumer acceptance of prices); consumer reaction to public health issues and
perception of food safety; seasonal factors; and weather.For additional
information on these and other factors that could affect the Company's
forward-looking statements, see the Company's risk factors, as they may be
amended from time to time, set forth in its filings with the SEC, including
our final prospectus filed June 28, 2013.The Company disclaims and does not
undertake any obligation to update or revise any forward-looking statement in
this press release, except as may be required by applicable law or regulation.

Noodles& Company
Consolidated Statements of Income
(in thousands, except share and per share data, unaudited)
                                                             
                            Fiscal Quarter Ended  Three Fiscal Quarters Ended
                            October1, October2, October1,    October2,
                            2013       2012       2013          2012
Revenue:                                                      
Restaurant revenue           $87,864  $76,306  $256,744    $220,261
Franchising royalties and    1,072      793        2,711         2,220
fees
Total revenue                88,936     77,099     259,455       222,481
Costs and expenses:                                           
Restaurant operating costs
(exclusive of depreciation                                    
and amortization shown
separately below):
Cost of sales                23,127     20,246     67,524        58,423
Labor                        26,345     23,065     77,464        66,002
Occupancy                    8,870      7,468      25,824        21,669
Other restaurant operating   11,315     9,488      32,962        27,449
costs ^(1)
General and administrative   6,939      7,464      27,808        21,426
^(1) (2)
Depreciation and             5,238      4,334      15,074        12,165
amortization
Pre-opening                  1,183      829        2,873         2,000
Asset disposals, closure
costs and restaurant         339        201        837           663
impairments
Total costs and expenses     83,356     73,095     250,366       209,797
Income from operations       5,580      4,004      9,089         12,684
Debt extinguishment expense  —          2,646      —             2,646
Interest expense             132        1,118      2,199         3,894
Income before income taxes   5,448      240        6,890         6,144
Provision for income taxes   2,183      107        2,633         2,540
Net income                   $3,265   $133     $4,257      $3,604
Earnings per share of
ClassA and ClassB common                                    
stock, combined:
Basic                        $0.11    $0.01    $0.17       $0.16
Diluted                      $0.11    $0.01    $0.16       $0.16
Weighted average shares of
ClassA and ClassB common                                    
stock outstanding, combined:
Basic                        29,399,650 23,238,984 25,382,805    23,238,984
Diluted                      31,063,213 23,388,729 26,528,004    23,250,745

(1) In the third quarter of 2013, we changed the manner in which we report
marketing expenses between general and administrative expenses and other
restaurant operating costs to more appropriately reflect only those costs
directly related to restaurant-level marketing in other restaurant operating
costs. Marketing costs previously reported as restaurant operating costs,
that were not directly related to restaurant-level marketing, have been
reclassified to general and administrative expense. The reclassification is
reflected in all periods presented herein, as well as by historical quarter in
the accompanying selected operating data and did not impact income from
operations.

(2) In the second quarter of 2013, we incurred $5.7 million of IPO related
expenses: $2.0 million of stock-based compensation related to accelerated
vesting of outstanding stock options, $1.2 million of stock-based compensation
related to stock options granted to our Chief Executive Officer and President
and Chief Operating Officer of which 50% were vested at grant, $1.7 million of
transaction bonuses and related payroll taxes and $0.8 million in transaction
payments to our Equity Sponsors.Additionally, the third quarter of 2012 and
the first three quarters of 2013 and 2012 included $250,000, $500,000 and
$750,000, respectively, of management fee expense in accordance with our
management services agreement and through the ClassC common stock dividend
paid to the holder of the one outstanding share of our ClassC common
stock.In connection with our IPO, the management services agreement expired
and the one share of Class C common stock was redeemed.

Noodles& Company
Consolidated Statements of Income as a Percentage of Revenue
(in thousands, unaudited)
                                                             
                            Fiscal Quarter Ended  Three Fiscal Quarters Ended
                            October1, October2, October1,    October2,
                            2013       2012       2013          2012
Revenue:                                                      
Restaurant revenue           98.8%      99.0%      99.0%         99.0%
Franchising royalties and    1.2        1.0       1.0          1.0
fees
Total revenue                100.0     100.0     100.0        100.0
Costs and Expenses:                                           
Restaurant Operating Costs
(exclusive of depreciation                                    
and amortization shown
separately below): ^(1)
Cost of sales                26.3       26.5       26.3          26.5
Labor                        30.0      30.2       30.2          30.0
Occupancy                    10.1       9.8        10.1          9.8
Other restaurant operating  12.9       12.4       12.8          12.5
costs ^(2)
General and administrative   7.8        9.7        10.7          9.6
^(2) (3)
Depreciation and             5.9        5.6        5.8           5.5
amortization
Pre-opening                  1.3        1.1        1.1           0.9
Asset disposals, closure
costs and restaurant         0.4        0.3        0.3           0.3
impairments
Total costs and expenses     93.7       94.8       96.5          94.3
Income from operations       6.3        5.2        3.5           5.7
Debt extinguishment expense  —          3.4        —             1.2
Interest expense             0.1        1.5        0.8           1.8
Income before income taxes   6.1        0.3        2.7           2.8
Provision for income taxes   2.5        0.1        1.0          1.1
Net income                   3.7%       0.2%       1.6%          1.6%

(1) As a percentage of restaurant revenue.

(2) In the third quarter of 2013, we changed the manner in which we report
marketing expenses between general and administrative expenses and other
restaurant operating costs to more appropriately reflect only those costs
directly related to restaurant-level marketing in other restaurant operating
costs. Marketing costs previously reported as restaurant operating costs,
that were not directly related to restaurant-level marketing, have been
reclassified to general and administrative expense. The reclassification is
reflected in all periods presented herein, as well as by historical quarter in
the accompanying selected operating data and did not impact income from
operations.

(3)In the second quarter of 2013, we incurred $5.7 million of IPO related
expenses: $2.0 million of stock-based compensation related to accelerated
vesting of outstanding stock options, $1.2 million of stock-based compensation
related to stock options granted to our Chief Executive Officer and President
and Chief Operating Officer of which 50% were vested at grant, $1.7 million of
transaction bonuses and related payroll taxes and $0.8 million in transaction
payments to our Equity Sponsors.Additionally, the third quarter of 2012 and
the first three quarters of 2013 and 2012 included $250,000, $500,000 and
$750,000, respectively, of management fee expense in accordance with our
management services agreement and through the ClassC common stock dividend
paid to the holder of the one outstanding share of our ClassC common
stock.In connection with our IPO, the management services agreement expired
and the one share of Class C common stock was redeemed.

Noodles& Company
Consolidated Selected Balance Sheet Data and Selected Operating Data
(in thousands, except restaurant activity and comparable restaurant sales,
unaudited)
                                                               
                                                     As of
                                                     October1, January1,
                                                     2013       2013
Balance Sheet Data                                              
Total current assets                                  $18,512  $16,154
Total assets                                          181,810    156,995
Total current liabilities                             27,562     23,760
Total long-term debt                                  1,714      93,731
Total liabilities                                     59,298     142,987
Temporary equity                                      —          3,601
Total stockholders' equity                            122,512    10,407
                                                               
                            Fiscal Quarter Ended
                            October 1, July 2, April 2, January 1, October 2,
                            2013       2013    2013     2013       2012
Selected Operating Data                                         
Restaurant Activity:                                            
Company-owned restaurants at 310        295     284      276        261
end of period
Franchise restaurants at end 58         53      51       51         48
of period
Revenue Data:                                                   
Company-owned average unit   $1,181   1,184   1,180    1,178      1,175
volumes
Franchise average unit       $1,132   1,123   1,121    1,128      1,118
volumes
Company-owned comparable     2.4%       4.7%    2.2%     4.2%       3.4%
restaurant sales
Franchise comparable         0.5%       2.3%    (1.9)%  2.9%       2.9%
restaurant sales
System-wide comparable       2.1%       4.4%    1.5%     4.0%       3.3%
restaurant sales

Reclassification:

In the third quarter of 2013, we changed the manner in which we allocate
marketing expenses between general and administrative expenses and other
restaurant operating costs such that only those costs directly related to
restaurant-level marketing are recorded in other restaurant operating costs.
Marketing costs previously reported as restaurant operating costs, that were
not directly related to restaurant-level marketing, have been reclassified to
general and administrative expense in our consolidated financial statements.
Historical consolidated financial statements have been recast to reflect the
change as presented below:

2013 Previously Reported:

                             Fiscal Quarter Ended
                             July 2,                   April 2,
                             2013                      2013
                             Reported         Revised Reported      Revised
Other restaurant operating    11,575   (1,008) 10,567  11,060   20    11,080
costs
General and administrative    12,646   1,008    13,654  7,235    (20) 7,215

2012 Previously Reported:

              Fiscal Quarter Ended
              January 1,              October 2,              July 3,                 April 3,
              2013                    2012                    2012                    2012
              Reported       Revised Reported       Revised Reported       Revised Reported       Revised
Other
restaurant     9,688    (757) 8,931   10,290   (802) 9,488   9,711    (682) 9,029   9,553    (621) 8,932
operating
costs
General and    6,899    757    7,656   6,662    802    7,464   6,217    682    6,899   6,442    621    7,063
administrative

Reconciliations of Non-GAAP Measurements to US GAAP Results

Noodles& Company
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(in thousands, unaudited)
                                                             
                            Fiscal Quarter Ended  Three Fiscal Quarters Ended
                            October1, October2, October1,    October2,
                            2013       2012       2013          2012
                            (in thousands, unaudited)
Net income                   $3,265   $133     $4,257      $3,604
Depreciation and             5,238      4,334      15,074        12,165
amortization
Interest expense             132        1,118      2,199         3,894
Provision for income taxes   2,183      107        2,633         2,540
EBITDA                       $10,818  $5,692   $24,163     $22,203
Debt extinguishment expense  —          2,646      —             2,646
Asset disposals, closure
costs and restaurant         339        201        837           663
impairment
Management fees^(a)          —          250        500           750
Stock-based compensation     131        315        873           921
expense
IPO related expenses^(b)     —          —          5,667         —
Adjusted EBITDA              $11,288  $9,104   $32,040     $27,183

EBITDA and adjusted EBITDA are supplemental measures of operating performance
that do not represent and should not be considered as alternatives to net
income or cash flow from operations, as determined by USGAAP, and our
calculation thereof may not be comparable to that reported by other companies.
These measures are presented because we believe that investors' understanding
of our performance is enhanced by including these non-GAAP financial measures
as a reasonable basis for evaluating our ongoing results of operations.

EBITDA is calculated as net income before interest expense, provision for
income taxes and depreciation and amortization. Adjusted EBITDA further
adjusts EBITDA to reflect the additions and eliminations described in the
table below.

EBITDA and adjusted EBITDA are presented because: (i)we believe they are
useful measures for investors to assess the operating performance of our
business without the effect of non-cash charges such as depreciation and
amortization expenses and asset disposals, closure costs and restaurant
impairments and (ii)we use adjusted EBITDA internally as a benchmark for
certain of our cash incentive plans and to evaluate our operating performance
or compare our performance to that of our competitors. The use of adjusted
EBITDA as a performance measure permits a comparative assessment of our
operating performance relative to our performance based on our USGAAP
results, while isolating the effects of some items that vary from period to
period without any correlation to core operating performance or that vary
widely among similar companies. Companies within our industry exhibit
significant variations with respect to capital structures and cost of capital
(which affect interest expense and income tax rates) and differences in book
depreciation of property, plant and equipment (which affect relative
depreciation expense), including significant differences in the depreciable
lives of similar assets among various companies. Our management believes that
adjusted EBITDA facilitates company-to-company comparisons within our industry
by eliminating some of these foregoing variations. Adjusted EBITDA as
presented may not be comparable to other similarly-titled measures of other
companies, and our presentation of adjusted EBITDA should not be construed as
an inference that our future results will be unaffected by excluded or unusual
items.

(a) The third quarter of 2012 and the first three quarters of 2013 and 2012
included $250,000, $500,000 and $750,000, respectively, of management fee
expense in accordance with our management services agreement and through the
ClassC common stock dividend paid to the holder of the one outstanding share
of our ClassC common stock.In connection with our IPO, the management
services agreement expired and the one share of Class C common stock was
redeemed.

(b) Reflects certain expenses incurred in conjunction with the closing of our
initial public offering.Amount includes $2.0 million of stock-based
compensation related to accelerated vesting of outstanding stock options, $1.2
million of stock-based compensation related to stock options granted to our
Chief Executive Officer and President and Chief Operations Officer of which
50% were vested at grant, $1.7 million of transaction bonuses and related
payroll tax and $0.8 million in transaction payments to our Equity Sponsors.

Noodles& Company
Reconciliation of Net Income to Adjusted Net Income
(in thousands, except share and per share data, unaudited)
                                                             
                            Fiscal Quarter Ended  Three Fiscal Quarters Ended
                            October1, October2, October1,    October2,
                            2013       2012       2013          2012
                            (in thousands, unaudited)
Net income                   $3,265   $133     $4,257      $3,604
Interest expense as reported —          1,118      2,067         3,894
^(a)
Debt extinguishment expense  —          2,646      —             2,646
^(b)
Adjusted interest expense
using reduced debt balances  —          (162)     (301)        (434)
^(c)
Pre-IPO management fees ^(d) —          250        500           750
IPO related expenses ^(e)    —          —          5,667         —
Estimated incremental public —          (357)     (714)        (1,071)
costs (f)
Tax effect of adjustments    —          (1,370)   (2,830)      (2,267)
^(g)
Adjusted net income          $3,265   $2,258   $8,646      $7,122
                                                             
Adjusted earnings per Class
A and Class B common stock,                                   
combined ^(h)
Basic                        $0.11    $0.08    $0.29       $0.24
Diluted                      $0.11    $0.08    $0.28       $0.24
Pro forma weighted average
Class A and Class B common                                    
stock outstanding, combined
^(h)
Basic                        29,399,650 29,399,698 29,399,698    29,399,698
Diluted                      31,063,213 29,549,443 30,544,897    29,411,459

Adjusted net income is a supplemental measure of financial performance that is
not required by, or presented in accordance with, GAAP. We define adjusted net
income as net income plus a net savings in interest expense as a result of the
pay down of debt using IPO proceeds, plus IPO related expenses and pre-IPO
management fees, less estimated incremental costs of being a public company
and the tax effects of these adjustments. Adjusted net income is presented
because management believes it helps convey supplemental information to
investors regarding our performance excluding the impact of the IPO and other
special items that affect the comparability of results in past quarters and
expected in future quarters. Adjusted net income as presented may not be
comparable to other similarly-titled measures of other companies, and our
presentation of adjusted net income should not be construed as an inference
that our future results will be unaffected by excluded or unusual items. Our
management uses this non-GAAP financial measure in order to have comparable
financial results to analyze changes in our underlying business from quarter
to quarter.

(a) Reflects the adjustment to eliminate the historical interest expense for
all periods presented that were based upon actual outstanding balances before
the application of the net proceeds from our IPO.

(b)Reflects debt extinguishment expense recognized in conjunction with the
amendment to our credit facility in July 2012 to extend the maturity date and
to reduce interest rates on borrowings.

(c) Reflects interest expense assuming no term loan balance and daily balances
outstanding on our revolver adjusted for the repayment of the revolver down to
$0.2 million.This balance reflects $100.2 million repayment of both term and
revolving debt from the net proceeds of our IPO.The interest adjustment is
based on the following assumptions:

  (1) Unused facility fees based on the daily revolver balances; and

  (2) Lower annual amortization of deferred loan costs due to the repayment of
  the term loan.

(d) Reflects the elimination of the management fees and Class C common stock
dividend paid to our sponsors for the periods presented.

(e)Reflects certain expenses incurred in conjunction with the closing of our
initial public offering.Amount includes $2.0 million of stock-based
compensation related to accelerated vesting of outstanding stock options, $1.2
million of stock-based compensation related to stock options granted to our
Chief Executive Officer and President and Chief Operations Officer of which
50% were vested at grant, $1.7 million of transaction bonuses and related
payroll tax and $0.8 million in transaction payments to our Equity Sponsors.

(f) Reflects an adjustment of recurring incremental legal, accounting,
insurance and other compliance costs we expect to incur as a public company.
By its nature, this adjustment involves risks and uncertainties, and the
actual costs incurred could be different than this adjustment.

(g)Reflects the tax expense associated with the adjustments in a through e
above at the normalized tax rate of 39.2%, which reflects our estimated
long-term effective tax rate.

(h)Reflects weighted average shares outstanding as if all shares sold in our
IPO were outstanding as of the first day of our fiscal year.Adjusted per
share amounts are calculated by dividing adjusted net income by the adjusted
basic and diluted weighted average shares outstanding.

CONTACT: Investor Relations
         investorrelations@noodles.com
        
         Media
         Kristina Jorge
         (646) 277-1234
         press@noodles.com

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