Noodles & Company (NASDAQ:NDLS) Q3 2019 Earnings Conference Call November 7, 2019 4:30 PM ET Company Participants Ken Kuick - Chief Financial Officer Dave Boennighausen - Chief Executive Officer Conference Call Participants Spencer Hanus - Citi Jake Bartlett - Suntrust Andy Barish - Jefferies Andrew Strelzik - BMO Capital Markets Operator Good afternoon and welcome to today's Noodles & Company’s Third Quarter 2019 Earnings Conference Call. All participants are now in a listen-only mode. After the presenters ...

Table of Contents 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 Large accelerated filer ☐ Accelerated Filer ☒ Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 _____________________________________________________________ FORM 10-Q _____________________________________________________________ ☒ QUARTE ...

Financial Data and Key Metrics Changes - For Q2 2019, the company reported net income of $400,000, or $0.01 per diluted share, compared to a net loss of $5.9 million, or $0.14 per diluted share in Q2 2018 [21] - Revenue for the quarter was $120.2 million, a 2.4% increase year-over-year, driven by strong comparable sales growth [21][22] - Adjusted EBITDA increased by 20.5% to $10.9 million, while adjusted earnings per diluted share rose to $0.05 from $0.01 in the previous year [26] Business Line Data and Key Metrics Changes - Company-wide comparable sales grew by 4.8%, with a two-year growth of 9.8%, marking the best performance in six years [8][10] - Off-premise sales represented over 56% of total sales, with digital ordering growing by 47% year-over-year [13] - Restaurant-level margin improved by 160 basis points to 17.1%, the highest since Q2 2015, driven by higher average unit volume and lower marketing spend [23] Market Data and Key Metrics Changes - System-wide comparable sales increased by 4.6%, with a 4.8% increase at company-owned restaurants and a 3.7% increase at franchise locations [21] - Delivery sales grew to 6.6% of total sales during Q2, indicating a growing trend in off-premise dining [15] - The company anticipates a continued focus on digital sales and delivery, with plans to test third-party delivery directly from its website and app [15] Company Strategy and Development Direction - The company aims for disciplined unit growth, targeting 5% unit growth system-wide beginning in 2021, with potential acceleration to 7% in subsequent years [16] - The introduction of new menu items, such as cauliflower-infused rigatoni, is part of the strategy to meet consumer demand for healthier options [12] - The company is also focusing on enhancing its digital platform and rewards program to improve customer engagement and streamline the ordering process [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain growth, citing strong performance in Q2 and the potential for new product launches [28] - The management team highlighted the importance of culinary innovation and operational efficiency in driving future success [10][11] - There is optimism regarding the company's ability to expand its unit count and improve the economic model for franchising [18][19] Other Important Information - The company plans to open six new restaurants in the latter half of 2019, including five company-owned and one franchise location [16] - Long-term debt decreased to $46.1 million, reflecting strong operating results, and cash on hand was $3.3 million [27] - The anticipated effective tax rate for the full year is between 1% and 4% [27] Q&A Session Summary Question: Why wasn't guidance raised despite stronger-than-expected results? - Management indicated that the previous guidance reflected confidence in the balance of the year and that the second quarter performed as expected [32] Question: How did the composition of comparable sales change with the launch of Zoodles? - Management noted that the check size remained strong, and the new menu board contributed positively to sales [35] Question: What is the expected growth strategy regarding company-led versus franchise-led units? - Initially, growth is expected to be more company-driven as the new kitchen design is tested, with franchising becoming a more significant part of the strategy over time [37][38] Question: What testing has been done around the cauliflower rigatoni? - Initial tests showed strong acceptance and repurchase intent, with a pricing strategy that is competitive but not as premium as Zoodles [42] Question: What are the plans for marketing and pricing strategies moving forward? - Marketing expenses are expected to remain around 1% of sales, with a focus on targeted promotions related to the new rewards program [47][48] Question: What insights have been gained from customer research regarding the rewards program? - Customization and relevance of offers were highlighted as key areas for improvement, with plans to enhance targeting and engagement [51][52]

Table of Contents 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, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2019 was $110 million, roughly flat compared to the prior year, as comparable sales growth was offset by restaurant closures in 2018 [17] - Comparable restaurant sales increased by 3%, with a 3% increase at company-owned restaurants and a 2.8% increase at franchise locations [17] - Adjusted EBITDA remained flat at $5.6 million compared to the prior year, while adjusted diluted loss per share improved from a loss of $0.04 to a loss of $0.03 [22] Business Line Data and Key Metrics Changes - Off-premise sales grew to 56% of total sales during Q1, a 500 basis point increase from Q1 2018, driven by a 63% increase in digital ordering, which accounted for 22% of total sales [11][12] - Digital ordering sales, excluding delivery, increased by 32% from the prior year, accounting for 17% of sales [12] - The introduction of new menu items, including zucchini and asparagus dishes, is expected to enhance the better-for-you platform [9][10] Market Data and Key Metrics Changes - The company experienced modestly negative traffic for the full quarter but returned to positive traffic growth during the last few weeks of Q1 and continued this trend into Q2 [8][18] - The company anticipates continued growth in delivery and digital sales, with a focus on improving the customer experience [12][46] Company Strategy and Development Direction - The company is focused on holistic initiatives to redefine the Noodles brand and position it for sustained growth, emphasizing culinary innovation and customer choice [8][9] - A new personalized nutrition calculator was launched to enhance customer engagement and cater to various dietary preferences [10] - The company plans to relaunch its digital platform in Q4 2019 to improve the ordering process and rewards program [12][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain top-tier performance in the restaurant industry, citing the right team and strategy in place [16] - The company updated its full-year guidance, expecting total revenue between $466 million and $474 million, with comparable restaurant sales of 3% to 5% [24] - Management acknowledged the challenges posed by delivery fees but remains optimistic about the overall growth potential [14][54] Other Important Information - Long-term debt at the end of Q1 stood at $49.3 million, with cash on hand at $1.8 million, indicating a strong balance sheet [23] - The company reduced its capital expenditure guidance for 2019 to a range of $14.5 million to $19 million, down from $24 million to $30 million [22] Q&A Session Summary Question: Can you break out same-store sales by month in Q1? - Management noted that due to the Easter shift, it is challenging to provide a detailed breakdown, but traffic turned positive in the last few weeks of Q1 and has continued into Q2 [29][30] Question: How confident are you in maintaining positive sales as you lap the launch of Zoodles? - Management expressed strong confidence in the business momentum and positive trajectory, despite the challenges of lapping the Zoodles launch [32][33] Question: What is the expected commodity inflation for the year? - Management expects commodity inflation to be modest, roughly flat to slightly positive, with improvements anticipated in the COGS line later in the year [34][35] Question: Are the five stores expected to close company stores? - Management indicated that the closures are company locations and that a normal run rate would be one to two restaurants every three to six months [36][37] Question: What areas are being focused on to improve the customer experience with the App and rewards program? - Management aims to create a best-in-class guest engagement platform, enhancing the online experience and data targeting capabilities [42][43] Question: What updates are there on the back of the house efficiency improvements? - Management is working on sourcing new equipment to improve kitchen efficiency, with changes expected to be implemented in Q4 2019 [48][49] Question: Why was there no change in the high-end margin guidance despite raised comps? - Management attributed this to the impact of delivery fees, which affect margin flow-through, and indicated that it is too early to incorporate potential pricing strategies into guidance [53][54]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION | --- | --- | --- | |-------|--------------------------|---------------------------------------------------------------| | | WASHINGTON, DC 20549 | _____________________________________________________________ | | | FORM 10-Q | | x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 2, 2019 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANG ...

Noodles & Company (NASDAQ:NDLS) Q4 2018 Earnings Conference Call March 14, 2019 4:30 PM ET Company Participants Paul Murphy - Executive Chairman Dave Boennighausen - Chief Executive Officer Ken Kuick - CFO Conference Call Participants Nicole Miller Regan - Piper Jaffray Andy Barish - Jefferies LLC Kevin Robinson - SunTrust Robinson Humphrey, Inc. Andrew Strelzik - BMO Capital Markets Dennis Geiger - UBS Operator Good afternoon and welcome to today's Noodles & Company Fourth Quarter 2018 Earnings Conference ...