ndls-20240702

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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 July 2, 2024

☐ 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, a smaller reporting company, or an emerging growth 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 August 2, 2024
Class A Common Stock, $0.01 par value per share						45,636,789 shares

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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	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

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PART I

Item 1. Financial Statements

Noodles & Company

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	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

See accompanying notes to condensed consolidated financial statements.

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Noodles & Company

Condensed Consolidated Statements of Operations

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


	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

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—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

_____________

(1)Unless otherwise noted, activity relates to Class A common stock.

See accompanying notes to condensed consolidated financial statements.

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Noodles & Company

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)


	Two Fiscal Quarters Ended
	July 2, 2024		July 4, 2023
Operating activities
Net loss	$	(19,765)	$	(4,419)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	14,737		12,687
Deferred income taxes	175		(103)
Restaurant impairments, closure costs and asset disposals	10,795		1,092

Amortization of debt issuance costs	274		180
Stock-based compensation	2,466		2,778
Gain on insurance proceeds for property damage	—		(62)
Changes in operating assets and liabilities:
Accounts receivable	1,188		1,425
Inventories	(428)		(215)
Prepaid expenses and other assets	(2,107)		(1,947)
Accounts payable	3,782		(703)
Income taxes	(25)		(132)
Operating lease assets and liabilities	(514)		(394)
Accrued expenses and other liabilities	1,150		199
Net cash provided by operating activities	11,728		10,386
Investing activities
Purchases of property and equipment	(17,827)		(23,913)
Insurance proceeds received for property damage	—		100
Proceeds from refranchising transactions	2,053		—
Net cash used in investing activities	(15,774)		(23,813)
Financing activities
Net (payments) borrowings from swing line loan	(4,212)		3,971
Proceeds from borrowings on long-term debt	8,500		13,000

Payments on finance leases	(1,198)		(1,240)


Stock plan transactions and tax withholding on share-based compensation awards	(251)		(685)
Net cash provided by financing activities	2,839		15,046
Net (decrease) increase in cash and cash equivalents	(1,207)		1,619
Cash and cash equivalents
Beginning of period	3,013		1,523
End of period	$	1,806	$	3,142

See accompanying notes to condensed consolidated financial statements.

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NOODLES & COMPANY

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Business Summary and Basis of Presentation

Business

Noodles & Company (the “Company”), a Delaware corporation, develops and operates fast casual restaurants that serve globally inspired noodle and pasta dishes, soups, salads and appetizers. As of July 2, 2024, the Company had 473 restaurants system-wide in 31 states, comprised of 379 company-owned restaurants and 94 franchise restaurants. The Company operates its business as one operating and reportable segment.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Noodles & Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of the Company, all adjustments considered necessary for the fair presentation of the Company’s results of operations, financial position and cash flows for the periods presented have been included and are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements on Form 10-K have been condensed or omitted. The condensed consolidated balance sheet as of January 2, 2024 was derived from audited financial statements. These financial statements should be read in conjunction with the audited financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 2, 2024.

Fiscal Year

The Company operates on a 52- or 53-week fiscal year ending on the Tuesday closest to December 31. The Company’s fiscal quarters each contain 13 operating weeks, with the exception of the fourth quarter of a 53-week fiscal year, which contains 14 operating weeks. Fiscal year 2024, which ends on December 31, 2024, and fiscal year 2023, which ended on January 2, 2024, each contain 52 weeks. The Company’s fiscal quarter that ended July 2, 2024 is referred to as the second quarter of 2024, and the fiscal quarter ended July 4, 2023 is referred to as the second quarter of 2023.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure.” The ASU updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The ASU is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not expect this to have a significant impact on its consolidated financial statements or related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

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2. Supplemental Financial Information

Accounts receivable consist of the following (in thousands):


	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

Prepaid expenses and other assets consist of the following (in thousands):


	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

Property and equipment, net, consists of the following (in thousands):


	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

Accrued payroll and benefits consist of the following (in thousands):


	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

Accrued expenses and other current liabilities consist of the following (in thousands):


	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

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3. Long-Term Debt

On July 27, 2022, the Company entered into the Amended and Restated Credit Agreement (as further amended, restated, extended, supplemented, modified and otherwise in effect from time to time, the “A&R Credit Agreement”), with each other Loan Party (as defined in the A&R Credit Agreement) party thereto, each lender from time to time party thereto, and U.S. Bank National Association, as Administrative Agent, L/C Issuer and Swing Line Lender (each as defined in the A&R Credit Agreement). The A&R Credit Agreement matures on July 27, 2027. Among other things, the A&R Credit Agreement: (i) increased the credit facility from $100.0 million to $125.0 million; (ii) eliminated the term loan and principal amortization components of the credit facility; (iii) removed the Company’s capital expenditure covenant; (iv) enhanced flexibility for certain covenants and restrictions; and (v) lowered the spread of the Company’s cost of borrowing and transitioned from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (“SOFR”) plus a margin of 1.50% to 2.50% per annum, based upon the consolidated total lease-adjusted leverage ratio. The A&R Credit Agreement is secured by a pledge of stock of substantially all of the Company’s subsidiaries and a lien on substantially all of the personal property assets of the Company and its subsidiaries.

On December 21, 2023, the Company amended its A&R Credit Agreement by entering into that certain First Amendment to Amended and Restated Credit Agreement (the “Amendment”). Among the modifications, the Amendment: (i) increased applicable rate ranges (A) with respect to SOFR loans, from 1.50% - 2.50% per annum to 1.75% - 3.00% per annum and (B) with respect to base rate loans, from 0.50% - 1.50% per annum to 0.75% - 2.00% per annum, in each case as determined by the Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement), (ii) amended the Consolidated Fixed Charge Coverage Ratio (as defined in the A&R Credit Agreement) in order to limit the deduction of capital expenditures to “Non-Growth Capital Expenditures”, (iii) added a defined term for “Non-Growth Capital Expenditures” (along with certain related definitions), (iv) added a new capital expenditures covenant governing entry into new lease agreements and (v) increased the Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement) to be no greater than (x) 4.50 to 1.00 for the period beginning on the last day of the fiscal quarter ending January 2, 2024 until and including the last day of the fiscal quarter ending December 30, 2025 and (y) 4.25 to 1.00 for the period beginning on the last day of the fiscal quarter ending March 31, 2026 until and including the last day of the fiscal quarter ending September 29, 2026.

As of July 2, 2024, the Company had $86.5 million of indebtedness (excluding $1.7 million of unamortized debt issuance costs) and $3.0 million of letters of credit outstanding under the A&R Credit Agreement. As of July 2, 2024, the Company had cash on hand of $1.8 million.

The Company’s revolver, which had a balance of $85.9 million as of July 2, 2024, bore interest at rates between 8.42% and 10.50% during the first two quarters of 2024. The Company’s swingline, which had a balance of $0.6 million as of July 2, 2024, bore interest at 10.50% in the first two quarters of 2024.

The Company also maintains outstanding letters of credit to secure obligations under its workers’ compensation program and certain lease obligations. The Company was in compliance with all of its debt covenants as of July 2, 2024.

4. Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current liabilities approximate their fair values due to their short-term nature. The carrying amounts of borrowings approximate fair value as the line of credit, swingline and borrowings vary with market interest rates and negotiated terms and conditions are consistent with current market rates. The fair value of the Company’s line of credit and borrowings are measured using Level 2 inputs.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets recognized or disclosed at fair value in the condensed consolidated financial statements on a non-recurring basis include items such as leasehold improvements, property and equipment, operating lease assets, goodwill and other intangible assets. These assets are measured at fair value if determined to be impaired.

Adjustments to the fair value of assets measured at fair value on a non-recurring basis as of July 2, 2024 and July 4, 2023 are discussed in Note 7, Restaurant Impairments, Closure Costs and Asset Disposals.

5. Income Taxes

The following table presents the Company’s provision for income taxes (in thousands):

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	Fiscal Quarter Ended						Two Fiscal Quarters Ended
	July 2, 2024			July 4, 2023			July 2, 2024			July 4, 2023
Provision for (benefit from) income taxes	$	110		$	(30)		$	175		$	(103)
Effective tax rate	(0.8)		%	2.2		%	(0.9)		%	2.3		%

The effective tax rate for the second quarter and the first two quarters of 2024 and 2023, respectively, reflects the impact of the previously recorded valuation allowance. For the remainder of fiscal 2024, the Company does not anticipate material income tax expense or benefit as a result of the valuation allowance recorded. The Company will maintain the valuation allowance against deferred tax assets until there is sufficient evidence to support a full or partial reversal. The reversal of a previously recorded valuation allowance will generally result in a benefit from income tax.

6. Stock-Based Compensation

In May of 2023, the Company’s Board of Directors adopted the 2023 Stock Incentive Plan, which was approved at the annual meeting of stockholders on May 16, 2023 (the “2023 Plan”). The 2023 Plan authorizes the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance share units and incentive bonuses to employees, officers, non-employee directors and other service providers, as applicable. The Company’s 2013 Stock Incentive Plan, as amended and restated in May of 2013 was terminated. As of July 2, 2024, approximately 2.6 million share-based awards were available to be granted under the 2023 Plan.

The following table shows total stock-based compensation expense (in thousands):


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 2, 2024		July 4, 2023		July 2, 2024		July 4, 2023
Stock-based compensation expense	$	1,347	$	1,496	$	2,534	$	2,886
Capitalized stock-based compensation expense	$	11	$	20	$	33	$	42

7. Restaurant Impairments, Closure Costs and Asset Disposals

The following table presents restaurant impairments, closure costs and asset disposals (in thousands):


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 2, 2024		July 4, 2023		July 2, 2024		July 4, 2023
Restaurant impairments (1)	$	10,933	$	423	$	11,104	$	509
Closure costs (1)	418		249		262		807
Loss on disposal of assets and other	706		937		1,920		1,862
	$	12,057	$	1,609	$	13,286	$	3,178

_____________________________

(1)Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed. Closure costs in the first two quarters of 2024 include the impact of lease remeasurements related to the six Oregon restaurants sold to a franchisee in April of 2024.

Impairment is based on management’s current assessment of the expected future cash flows of a restaurant based on recent results and other specific market factors. Impairment expense is a Level 3 fair value measure and is determined by comparing the carrying value of restaurant assets to the estimated fair value of the restaurant assets at resale value, if any, and the right-of-use asset based on a discounted cash flow analysis utilizing market lease rates.

During the second quarter and the first two quarters of 2024, the Company recorded fixed asset impairment charges on twelve restaurants and wrote down lease related assets for three and four restaurants, respectively. In the second quarter of 2024, the Company performed a review of underperforming restaurants. Through this review, the Company identified a group of restaurants that the Company will seek to close on or before their next lease renewal dates, and are unlikely to recover the net book value of their assets. In the second quarter of 2023 and the first two quarters of 2023, the Company recognized one restaurant with fixed asset impairment and wrote down lease related assets on two restaurants. All periods include ongoing equipment costs for restaurants previously impaired.

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Closure costs in the second quarter and first two quarters of 2024 include an estimated accrual of $0.6 million on two upcoming early lease terminations, partially offset by gains from lease remeasurements. The Company did not close any restaurants in the second quarter of 2024 and had two restaurant closures during the first two quarters of 2024. Closure costs in the first two quarters of 2023 include early lease termination settlement of $0.5 million, and ongoing costs related to the four restaurant closures in first two quarters of 2023, partially offset by gains from lease remeasurements. Both periods included ongoing expenses from restaurant closures in prior years.

During the second quarter and first two quarters of 2024, loss on disposal of assets and other includes a gain from the sale of six company-owned restaurants to a new franchisee (“DND Sale”) in April 2024. Based on the sales price, there was no write down of assets related to this transaction and a gain on sale of $0.5 million was recorded in the second quarter of 2024. Both periods include asset disposals in the normal course of business and sublease expense related to leases for which the Company remains obligated in connection with the divestiture of company-owned restaurants in previous years.

8. Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”) is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during each period. Diluted EPS is calculated using net income (loss) available to common stockholders divided by diluted weighted-average shares of common stock outstanding during each period. Potentially dilutive securities include shares of common stock underlying stock options, warrants and RSUs. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect.

The following table sets forth the computations of basic and diluted EPS (in thousands, except share and per share data):


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 2, 2024		July 4, 2023		July 2, 2024		July 4, 2023
Net loss	$	(13,625)	$	(1,304)	$	(19,765)	$	(4,419)
Shares:

SEC Form 10-Q filed by Noodles & Company