How did Noodles & Company calculate the effect of dilutive securities?

According to Noodles & Company's 2025 Franchise Disclosure Document, the company calculates the effect of dilutive securities using the treasury stock method and average market prices during the relevant period. Dilutive securities are those that could potentially increase the number of outstanding shares, thereby decreasing earnings per share. These securities include stock options and restricted common stock.

Noodles & Company excludes potential common shares from the diluted earnings per share calculation if their effect would be anti-dilutive, meaning their inclusion would increase earnings per share or decrease loss per share. For the years 2024, 2023 and 2022, shares issuable on the vesting or exercise of share-based awards or exercise of outstanding warrants were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive. The amounts excluded totaled 3,770,218 in 2024, 3,458,622 in 2023 and 2,402,238 in 2022.

For a prospective Noodles & Company franchisee, understanding how dilutive securities are handled can provide insight into the company's financial reporting practices and potential impacts on earnings per share. This is particularly relevant if the franchisee is considering investing in Noodles & Company stock or evaluating the company's overall financial health. The exclusion of anti-dilutive securities is a standard accounting practice, but the specific number of shares affected can indicate the extent of potential dilution and the company's reliance on equity-based compensation.