8-K: Noodles & Co. Implements 1-for-8 Reverse Stock Split

Noodles & Company will execute a 1-for-8 reverse stock split on February 18, 2026, to meet Nasdaq's minimum bid price requirement.

Summary

• Noodles & Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to effect a 1-for-8 reverse stock split of its Class A Common Stock.
• The reverse stock split will become effective at 12:01 a.m. Eastern Time on February 18, 2026.
• The Company's Common Stock will begin trading on The Nasdaq Global Select Market on a reverse split-adjusted basis on February 18, 2026, under the existing trading symbol NDLS.
• The primary objective of the reverse stock split is to bring the Company into compliance with the $1.00 minimum bid price requirement for maintaining its listing on the Nasdaq Global Select Market.
• Each eight pre-split shares of Common Stock outstanding or held as treasury stock will automatically combine and convert into one new share of Common Stock.
• No fractional shares will be issued; instead, holders who would otherwise receive fractional shares will automatically receive an additional fraction to round up to the next whole share.
• The par value of the Common Stock will not change as a result of the split.
• Equity awards granted under the Company's equity plans, including exercise prices and number of shares, will be proportionally adjusted to maintain their economic value.
• The total number of shares of Common Stock available for future grants under equity plans will be proportionately decreased.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a necessary but negative development, reflecting the Company's struggle to maintain its stock price above Nasdaq's minimum bid requirement, indicating underlying performance issues.

Positives

• The reverse stock split aims to bring the Company into compliance with Nasdaq's $1.00 minimum bid price requirement, potentially preventing delisting and preserving market access for shareholders.
• Fractional shares will be rounded up to the next whole share, which is a shareholder-friendly approach for holders of odd lots.

Negatives

• The necessity of a reverse stock split often indicates a sustained low share price, which can signal underlying financial or operational challenges within the Company.
• While intended for compliance, a reverse split does not inherently improve the Company's fundamental business performance or guarantee sustained stock price appreciation.
• The action may be perceived negatively by investors, potentially leading to further selling pressure or reduced investor confidence.

Risks

• Risks related to the Company's ability to successfully implement the Reverse Stock Split.
• Risks concerning the Company's ability to regain and maintain compliance with Nasdaq's continued listing requirements.
• The potential impact of any delisting of the Common Stock from The Nasdaq Global Select Market.
• Other risks set forth in the Company's filings with the Securities and Exchange Commission.

Future Outlook

The Company aims for the reverse stock split to bring it into compliance with Nasdaq's $1.00 minimum bid price requirement, with trading on a split-adjusted basis commencing February 18, 2026. However, there are inherent risks regarding the Company's ability to maintain this compliance and avoid potential delisting, as well as other risks detailed in its SEC filings.

Management Comments

• "The Reverse Stock Split is being implemented with the goal of bringing the Company into compliance with the $1.00 minimum bid price requirement for maintaining its listing on the Nasdaq Global Select Market."

Industry Context

StockSavvy.ai notes that reverse stock splits are often utilized by companies, particularly in the restaurant or fast-casual dining sector, when their stock price has fallen significantly, risking delisting from major exchanges like Nasdaq. While a necessary step for compliance, it typically signals underlying challenges rather than robust growth, contrasting with companies that perform well enough to avoid such measures.

Comparison to Industry Standards

• Reverse stock splits are not uncommon for companies facing delisting threats due to low share prices, particularly in mature or competitive industries like fast-casual dining. For example, companies such as Red Robin Gourmet Burgers (RRGB) or Denny's (DENN) have faced similar pressures in the past, though not all have resorted to reverse splits.
• The 1-for-8 ratio is within the typical range for such actions, often seen as a balance between achieving compliance and avoiding an excessively high post-split price that could deter liquidity.
• The rounding up of fractional shares is a shareholder-friendly approach, contrasting with some reverse splits that pay cash for fractional shares, which can be less favorable for small shareholders.

Corporate Governance

Stakeholder Impact

• Shareholders: Will own fewer shares, but each share will represent a proportionally larger ownership interest. Fractional shares are rounded up. The goal is to maintain Nasdaq listing, which benefits shareholders by preserving liquidity and market access.
• Employees (with equity awards): Equity awards (options, RSUs, PSUs) will be proportionally adjusted to maintain their economic value. The total number of shares available for future grants under equity plans will decrease.

Next Steps

• The Reverse Stock Split will become effective at 12:01 a.m. Eastern Time on February 18, 2026.
• Common Stock will open for trading on The Nasdaq Global Select Market on a reverse split-adjusted basis on February 18, 2026.
• The Company will need to maintain compliance with Nasdaq's continued listing requirements post-split to avoid future delisting concerns.

Key Dates

Recommendation

The reverse stock split is a defensive maneuver to maintain Nasdaq listing, indicating significant share price underperformance. While it addresses a critical compliance issue, it does not inherently improve the Company's fundamentals. Investors should hold to observe post-split trading behavior and await further operational and financial updates before making new investment decisions, as the underlying reasons for the low share price likely persist.

Keywords

Noodles & Company, NDLS, Reverse Stock Split, Nasdaq Compliance, Stock Split, Corporate Action, Equity, Share Price, Delisting Risk, Restaurant Industry