Business Context and Reporting Period
Company: Noodles & Company
Filing Type: Form 8-K (Current Report)
Date of Report: October 29, 2024
Event: Entry into a Material Definitive Agreement (Second Amendment to Amended and Restated Credit Agreement).
Key Financial Metrics and Debt Terms
This filing details amendments to the Company's credit facility rather than reporting operational financial results (revenue, profit, or cash flow). Key debt-related modifications include:
- Interest Rate Ranges:
- SOFR loans: Increased from 1.75% - 3.00% to 1.75% - 3.75% per annum.
- Base rate loans: Increased from 0.75% - 2.00% to 0.75% - 2.75% per annum.
- Leverage Ratio Cap (Consolidated Total Lease Adjusted Leverage Ratio):
- Increased to 5.50:1.00 for the period from October 1, 2024, through September 30, 2025.
- Stepped down schedule: 5.25:1.00 (Dec 2025), 5.00:1.00 (Mar/Jun 2026), 4.75:1.00 (Sep/Dec 2026), and 4.50:1.00 (Mar 2027 onwards).
- Coverage Ratio Floor (Consolidated Fixed Charge Coverage Ratio):
- Set at 1.05:1.00 for the period from October 1, 2024, through September 30, 2025.
- Stepped up schedule: 1.15:1.00 (Dec 2025/Mar 2026) and 1.25:1.00 (Jun 2026 onwards).
Material Changes and Restrictions
The amendment introduces stricter conditions on financial flexibility and new lease agreements:
- Restricted Payments: Use of the general restricted payment basket is now conditioned on maintaining a leverage ratio of ≤ 4.00:1.00 and a fixed charge coverage ratio of ≥ 1.25:1.00.
- New Lease Restrictions: Entry into new lease agreements is restricted if the Consolidated Total Lease Adjusted Leverage Ratio is ≥ 4.50:1.00.
- Administrative Agent: U.S. Bank National Association continues to serve as Administrative Agent, L/C Issuer, and Swing Line Lender.
Guidance, Outlook, and Risks
Management Commentary: The filing contains no forward-looking guidance regarding revenue, earnings, or operational outlook. The document is strictly a disclosure of the amended credit agreement terms.
Risks and Contingencies: The Company faces increased interest rate exposure due to higher applicable rate ranges. Additionally, the Company must adhere to tighter leverage and coverage covenants to access restricted payments or enter new leases, which may constrain capital allocation strategies if financial metrics deteriorate.
Investor Verification Checklist
- Verify the Company's current Consolidated Total Lease Adjusted Leverage Ratio to ensure compliance with the new 5.50:1.00 cap.
- Confirm the current Consolidated Fixed Charge Coverage Ratio against the new 1.05:1.00 floor.
- Assess the impact of the increased interest rate ranges on future interest expense projections.
- Review the Company's planned capital expenditures or lease expansions to determine if they are restricted by the new 4.50:1.00 leverage threshold.
- Examine the full text of Exhibit 10.1 for specific definitions of "Consolidated Total Lease Adjusted Leverage Ratio" and "Consolidated Fixed Charge Coverage Ratio."