false0001275158 0001275158 2020-05-11
2020-05-11
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________
FORM
8-K
CURRENT
REPORT PURSUANT
TO SECTION
13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported):
May 11, 2020
NOODLES &
COMPANY
(Exact name
of registrant as specified in its charter)
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Delaware
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001-35987
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84-1303469
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(State or Other Jurisdiction
of
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(Commission File
Number)
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(I.R.S. Employer
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Incorporation)
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Identification
No.)
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520
Zang Street, Suite D
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Broomfield,
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CO
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80021
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(Address of principal
executive offices)
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(Zip Code)
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Registrant’s
Telephone Number, Including Area Code: (720)
214-1900
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Class A common
stock
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NDLS
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Nasdaq Global Select
Market
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Indicate by check
mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§ 240.12b-2 of this chapter).
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. ☐
Item 8.01.
Other Events.
Filing Relief - Form 10-Q for the Fiscal Quarter Ended March 31,
2020
Noodles &
Company (the "Company") is filing this Current Report on Form 8-K
pursuant to the Order of the Securities and Exchange Commission
(the “SEC”), issued on March 4, 2020 and as revised on March 25,
2020 pursuant to Section 36 of the Exchange Act, granting
exemptions from specified provisions of the Exchange Act and
certain rules thereunder (Release No. 34-88465) (the “Order”). In
reliance on the Order, the Company is delaying the filing of its
Form 10-Q for the fiscal quarter ended March 31, 2020, originally
due on May 11, 2020 (the “Form 10-Q”).
The
Company’s business has been significantly disrupted due to the
conditions surrounding the COVID-19 pandemic, including, but not
limited to, the continued closure of all its restaurant dining
rooms (and the related uncertainty regarding the conditions under
which restaurants can reopen) and reductions in the number and
working hours of the Company’s Central Support Office staff. These
conditions have caused significant disruptions to the Company’s
operations and management, including requiring key personnel to
devote considerable time and resources to address emerging issues
impacting the Company’s operations and financial condition. This,
in turn, has caused and will continue to cause delays in the
Company’s ability to complete the Form 10-Q. The Company
expects to file its Form 10-Q for the quarter ended March 31, 2020
with the SEC no later than June 24, 2020 (45 days after the
original filing deadline of the Form 10-Q as allowed by the Order).
Additionally, while the Company was in full compliance with its
financial covenants for the quarter ended March 31, 2020, the
Company has been engaged in discussions with our lenders regarding
amendment to the financial covenant requirements of our amended
credit facility for future quarters in 2020 and 2021.
In light of the
rapidly evolving COVID-19 pandemic, the Company is also filing this
Current Report on Form 8-K for the purpose of supplementing the
risk factors disclosed in Item 1A of its Annual Report on Form 10-K
for the fiscal year ended December 31, 2019, including the risk
factor titled “An outbreak of
disease, epidemic or pandemic, or similar public health threat,
such as the coronavirus, could have a material adverse impact on
the Company’s business, operating results and financial
condition.” Accordingly, the Company’s
risk factor disclosure is hereby updated as follows:
The recent and ongoing COVID-19 pandemic has, and we expect will
continue to materially affect our operations, as well as the
business or operations of third parties with whom we conduct
business such as our suppliers and franchisees.
In
December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a
disease referred to as COVID-19, was reported to have surfaced in
Wuhan, China. Since then, COVID-19 has spread to other countries,
including the United States. In March 2020, the World Health
Organization declared the COVID-19 outbreak a pandemic. Further,
the President of the United States declared the COVID-19 pandemic a
national emergency. Similarly, several states in which we operate
declared states of emergency related to the spread of COVID-19 and
issued executive orders directing individuals to stay at their
place of residence for an indefinite period of time and the vast
majority required the closures of restaurant dining rooms (subject
to certain exceptions to facilitate authorized necessary
activities) to mitigate the impact of the COVID-19
pandemic.
In
response to these public health directives and orders, we have
introduced
direct delivery nationwide through the Noodles app and website,
expanded our third-party delivery service and launched curbside
delivery at all of our restaurants. Despite our
mitigating efforts, the effects of the executive orders and
shelter-in-place orders may materially and adversely
affect our business, the magnitude
of which will depend, in part, on the length and severity of the
restrictions and other limitations on our ability to conduct our
business in the ordinary course. These and similar, and perhaps
more severe, disruptions in our operations could negatively impact
our business, operating results and financial
condition.
Although the
ultimate severity of the COVID-19 pandemic is uncertain at this
time, we expect that the pandemic will continue to adversely impact
the Company's financial condition and results of operations. Such
adverse impacts include, but are not limited to, the
following:
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We
have experienced and we expect we will continue to experience
significant reductions in demand for our products as customers may
not be able to dine at our restaurants due to illness, quarantine
or government or self-imposed restrictions placed on our
restaurants' operations. Substantially all of our restaurant dining
areas are closed and will remain closed until it is appropriate to
reopen and any applicable government restrictions have been lifted.
Additionally, social distancing measures or changes in consumer
spending behaviors due to the COVID-19 pandemic as
customers choose
to avoid public gathering places may continue to
impact traffic in our restaurants after they resume normal
operations and such actions could result in a loss of sales and
profit.
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The impact of a
health pandemic on us might be disproportionately greater than on
other dining concepts that depend less on the gathering of people.
To the extent that a virus or disease is food-borne, or perceived
to be food-borne, future outbreaks may adversely affect the price
and availability of certain food products and cause our customers
to eat less of a product.
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Depending on the
severity and the duration of the COVID-19 pandemic, our franchisees
may not be able to make the franchise royalty fee payments that we
have historically received. We are working with our franchisees to
support their financial liquidity during this period of
uncertainty. We have granted deferral of certain royalties,
information technology support, and marketing fees earned from
franchisees.
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Depending on the
severity and the duration of the COVID-19 pandemic,
our
liquidity may be further negatively impacted and, as a result, we
may be required to pursue additional sources of financing to meet
our financial obligations. Obtaining such financing is not
guaranteed and is largely dependent upon market conditions and
other factors. Further actions may be required to improve our cash
position, including but not limited to, further reductions of
corporate expenses and foregoing additional capital expenditures
and other discretionary expenses.
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For
the quarter ended March 31, 2020, the Company was in full
compliance with its financial covenants related to its revolving
credit facility. While we estimate that we will have sufficient
liquidity to weather the COVID-19 pandemic, we are exploring
financial covenant options for future quarters in 2020 and 2021
with our banks to ensure that we are prepared in the event of a
prolonged downturn.
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As
more business and activities have shifted online due to the
COVID-19 pandemic restrictions on congregating and physical
movements, we have seen an increase in cyber security threats and
attempts to breach our security networks.
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In addition, the
COVID-19 pandemic may have the effect of heightening one or more of
the other risk factors disclosed in Item 1A of our Annual Report on
Form 10-K for the fiscal year ended December 31, 2019.
The
extent of the impact of the COVID-19 pandemic on the Company's
operations and financial results depends on future developments and
is highly uncertain due to the unknown duration and severity of the
outbreak. The situation is changing rapidly and future impacts may
materialize that are not yet known.
Forward-Looking Statements
In addition to
historical information, this press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties such as the
number of restaurants we intend to open, projected capital
expenditures and estimates of our effective tax rates. In some
cases, you can identify forward-looking statements by terms such as
“may,” “might,” “will,” “objective,” “intend,” “should,” “could,”
“can,” “would,” “expect,” “believe,” “design,” “estimate,”
“predict,” “potential,” “plan” or the negative of these terms and
similar expressions intended to identify forward-looking
statements. These statements reflect our current views with respect
to future events and are based on currently available operating,
financial and competitive information. Examples of forward-looking
statements include all matters that are not historical facts, such
as statements regarding our ability to navigate the COVID-19
crisis, projected capital expenditures, the revenue and balance
sheet impact of the COVID-19 crisis, estimated costs associated
with our closure of underperforming restaurants, the implementation
and results of strategic initiatives and our future financial
performance. Our actual results may differ materially from those
anticipated in these forward-looking statements due to reasons
including, but not limited to, the extent, duration and severity of
the COVID-19 crisis; governmental and guest response to the
COVID-19 crisis; other conditions beyond our control such as
weather, natural disasters, disease outbreaks, epidemics or
pandemics impacting our customers or food supplies; consumer
reaction to industry related public health issues and health
pandemics, including the COVID-19 pandemic and perceptions of food
safety; our ability to achieve and maintain increases in comparable
restaurant sales and to successfully execute our business strategy,
including new restaurant initiatives and operational strategies to
improve the performance of our restaurant portfolio; our ability to
maintain compliance with debt covenants and continue to access
financing necessary to execute our business strategy; the success
of our marketing efforts; our ability to open new restaurants on
schedule; current economic conditions; price and availability of
commodities; our ability to adequately staff our restaurants;
changes in labor costs; consumer confidence and spending patterns;
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, included
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 filed on February 26, 2020. 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.
SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Noodles &
Company
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DATE: May 11,
2020
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By:
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/s/ KEN KUICK
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Name:
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Ken Kuick
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Title:
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Chief Financial
Officer
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