Noodles, Webroot prepping IPOs; Pharmaca waits for more growth

While Niwot-based Crocs Inc. and Longmont-based Boulder Specialty Brands Inc. are the only two local companies currently seeking an initial public offering, two other firms in Boulder have hinted that they too are considering the IPO route.

Officials with Noodles & Co. and Webroot Software Inc. said that they are preparing their companies to go public, if the right conditions present themselves. Meanwhile, another Boulder-based company, Pharmaca Integrative Pharmacy Inc., said it will focus on more growth before considering an IPO.

Filing for an IPO is just one of several options for Noodles to grow its business and allow for a return on investment to the company’s original investors, said Aaron Kennedy, founder and chief executive.

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The company could raise money through an IPO or through private venues such as private equity, venture capital or wealthy individual investments, Kennedy said.

Both Noodles and Webroot have sold private securities in the past. The companies don’t have to report the details to the public as long as those total shares are worth less than $10 million and involve fewer than 500 shareholders, said John Nester with the U.S. Securities and Exchange Commission.

Once a company exceeds those limits, it has to report financial data just like any public company, but it can remain private.

“That wouldn’t be an enormous change for us because, in many ways, we already run Noodles like a public company,” Kennedy said. Noodles has about 340 private shareholders, he said.

Noodles has been exploring the IPO option for more than a year. The 10-year-old company more than tripled its revenues during the past three years, from $28 million in 2001 to $90 million in 2004.

“At some point we need to give our shareholders a return on their investment,” Kennedy said. The remaining capital would go toward expanding the business into more markets across the United States.

“We’re building a new leadership team to take us from 100 restaurants to 500 restaurants in the next five years,” Kennedy said.

That new leadership at Noodles includes people who have an extensive background working with publicly traded restaurants. Noodles recently hired Keith Kinsey, the former operations executive for Chipotle Mexican Grill, as its chief financial officer. And it hired Kevin Reddy, Chipotle’s former chief operating officer, as the new president and chief operating officer.

At Boulder-based Webroot, seeking an IPO for the anti-spyware software company is a strong possibility, Chief Financial Officer Mike Irwin said.

“We are building our planning around an IPO opportunity,” he said. “But the timing is still unknown.”

Irwin said Webroot has been strengthening its management team, expanding its products and services internationally and broadening its customer base to include both consumers and businesses. The company also is increasing its corporate governance to meet Sarbanes-Oxley rules.

Irwin said the other option Webroot can consider is acquisition; however, the IPO route remains the stronger possibility, he said.

Webroot does not release its financials to the public, but Irwin said the company has seen greater than 100 percent increases in revenues per year during the past three years.

In February 2005, Webroot garnered $108 million in private funds from a group of California venture capital firms. It was the first time the eight-year-old Boulder company had accepted an outside investment.

Another up-and-coming local company that has entered the IPO rumor mill is Boulder-based Pharmaca, a chain of 10 pharmacies that focuses on providing traditional prescription services and complementary and natural remedies. However, even though the company is gearing up for considerable growth during the next three years, an IPO is not part of the plan yet, said founder, President and Chief Executive Berry Perzow.

“Before an IPO, we would want to have more of a national presence,” Perzow said. “Currently, we’re on a three-year plan to grow to 33 stores by the of our fiscal year (June) 2008.” That growth would make the $50 million company a $165 million one, he said.

Perzow said the additional stores would likely come to markets where Pharmaca has seen success, such as in the Pacific Northwest, San Francisco Bay area, Los Angeles, New Mexico and along the Front Range. He added that an additional expansion into the East Coast would probably be needed if Pharmaca wanted to consider an IPO.

“At that point, it (an IPO) would be an interesting possibility,” Perzow said.