Potbelly Corporation (NASDAQ: PBPB),
(“Potbelly” or the
“Company”) the iconic neighborhood sandwich shop concept,
today reported financial results for its 14-week fourth fiscal
quarter and 53-week full year ended December 31, 2023. The
comparable period-year periods in 2022 included 13 and 52 weeks,
respectively.
Key highlights for the quarter ended
December 31, 2023, compared to December 25, 2022:
- Total revenues
increased by 4.7% to $125.7 million compared to $120.2
million.
- Average Weekly
Sales (AWS) increased 3.4% to $24,960 and, inclusive of
refranchising and the 53rd week, total company shop sales increased
by 2.7% to $122.3 million compared to $119.0 million.
- Positive same-store
sales for the eleventh-consecutive quarter, ending the fourth
quarter at +6.3%, with traffic growth as a major driver and
expansion of traffic share during each period of the quarter.
- GAAP net income
attributable to Potbelly Corporation was $2.7 million compared to
$2.7 million. GAAP diluted earnings per share (EPS) was $0.09
compared to $0.09.
- Adjusted net
income1 attributable to Potbelly Corporation was $0.7 million
compared to $2.6 million. Adjusted diluted EPS1 was $0.02 compared
to $0.09.
- Adjusted
EBITDA1 was $7.5 million compared to $7.5 million.
Key highlights for the year ended
December 31, 2023, compared to December 25, 2022:
- Total revenues
increased by 8.7% to $491.4 million compared to $452.0
million.
- Average Weekly
Sales (AWS) increased 11.2% to $24,990 and, inclusive of
refranchising and the 53rd week, total company shop sales increased
by 7.7% to $482.2 million compared to $447.9 million.
- Same-store sales of
+12.0%, with traffic growth as a major driver.
- GAAP net income
attributable to Potbelly Corporation was $5.1 million compared to
$4.3 million. GAAP diluted earnings per share (EPS) was $0.17
compared to $0.15.
- Adjusted net
income1 attributable to Potbelly Corporation was $4.4 million
compared to a loss of $0.1 million. Adjusted diluted EPS1 was $0.15
compared to $0.00.
- Adjusted
EBITDA1 increased 80.0% to $28.3 million compared to $15.7
million.
(1) |
Adjusted net
income, adjusted diluted EPS and adjusted EBITDA are non-GAAP
measures. For reconciliations of these measures to the most
directly comparable GAAP measure, see the accompanying financial
tables. For a discussion of why we consider them useful, see
“Non-GAAP Financial Measures” below. |
Bob Wright, President and Chief Executive
Officer of Potbelly Corporation, commented, “I am very proud of
what our team accomplished in the 4th quarter and full year 2023.
Our Five-Pillar Strategy maintains our focus on what matters most
to our customers and associates while growing our brand to the
benefit of our franchisees and shareholders. Traffic driven sales,
shop level and company profitability and unit growth development
efforts headlined our success.”
Wright added, “Our strong quarter capped an
outstanding year where we strengthened the Potbelly brand with
increased systemwide sales, driven by 12.0% same store sales and
improved profitability with a 370-basis point improvement to shop
margin achieving 14.2% for the year. We made significant progress
with our Franchise Growth Acceleration Initiative and ended 2023
with 612 open and committed shops. We’re excited to have delivered
another quarter and full year performance in support of our
long-term sustainable growth.”
Financial
Outlook
|
1Q’24 Guidance |
2024 Guidance |
Long-Term Growth Ranges |
Same Store Sales |
(0.25%) to +0.5% |
Low- to Mid-Single Digit |
Low- to Mid-Single Digit |
New Unit Growth |
-- |
~10% |
Low-Double Digit |
Adjusted EBITDA (2) |
$4.4M to $5.2M |
High-Single to Low-Double Digit |
Low- to Mid-Double Digit |
(2) |
Quarterly and
full-year guidance set forth above reflect the impact of
refranchising 33 former company locations in 2023; the 53rd week in
2023, which will not recur in 2024; increased costs associated with
the Company’s investment in development efforts to support
sustained franchise growth and a $1.1 million settlement gain in
the first quarter 2024 with a third-party software provider. The
effect of 2023 refranchising is most pronounced in the first three
quarters of 2024. |
Conference Call
A conference call and audio webcast has been scheduled for 5:00
p.m. Eastern Time today to discuss these results. Investors,
analysts, and members of the media interested in listening to the
live presentation are encouraged to join a webcast of the call with
accompanying presentation slides, available on the investor
relations portion of the Company's website at www.potbelly.com. For
those that cannot join the webcast, you can participate by dialing
1-844-825-9789 in the U.S. & Canada, or 1-412-317-5180
internationally.
For those unable to participate, an audio replay will be
available following the call through Thursday, March 14, 2024. To
access the replay, please call 844-512-2921 (U.S. & Canada), or
412-317-6671 (International) and enter confirmation code 10186182.
A web-based archive of the conference call will also be available
at the above website.
About PotbellyPotbelly Corporation is a
neighborhood sandwich concept that has been feeding customers’
smiles with warm, toasty sandwiches, signature salads, hand-dipped
shakes and other fresh menu items, customized just the way
customers want them, for more than 40 years. Potbelly promises
Fresh, Fast & Friendly service in an environment that reflects
the local neighborhood. Since opening its first shop in Chicago in
1977, Potbelly has expanded to neighborhoods across the country -
with more than 425 shops in the United States including more than
80 franchised shops in the United States. For more information,
please visit our website at www.potbelly.com.
Definitions
The following definitions apply to these terms as used
throughout this press release:
-
Revenues – represents net company-operated
sandwich shop sales and our franchise royalties and fees. Net
company-operated shop sales consist of food and beverage sales, net
of promotional allowances and employee meals. Franchise royalties
and fees consist of royalty income, franchise fee, and other fees
collected from franchisees including advertising and rent.
-
Company-operated comparable store sales or same-store
traffic – an operating measure that represents the change
in year-over-year sales or transactions for the comparable
company-operated store base open for 15 months or longer. In fiscal
years that include a 53rd week, the last week of the fourth quarter
and fiscal year is excluded from the year-over-year comparisons so
that the time periods are consistent.
- Average
Weekly Sales (AWS) – an operating measure that represents
the average weekly sales of all company-operated shops which
reported sales during the associated time period.
- Average
Unit Volume (AUV) – an operating measure that represents
the average annual sales of all company-operated shops which
reported sales during the associated time period.
- System-wide
sales – an operating measure that represents the sum of
sales generated by company-operated shops and sales generated by
franchised shops, net of all promotional allowances, discounts, and
employee meals. Net sales from franchised shops are not included in
total revenues. Rather, revenues are limited to the royalties, fees
and other income collected from franchisees.
-
EBITDA – a non-GAAP measure that represents income
before depreciation and amortization expense, interest expense and
the provision for income taxes.
- Adjusted
EBITDA – a non-GAAP measure that represents income before
depreciation and amortization expense, interest expense and the
provision for income taxes, adjusted to eliminate the impact of
other items, including certain non-cash and other items that we do
not consider reflective of underlying business performance.
- Shop-level
profit (loss) – a non-GAAP measure that represents income
(loss) from operations excluding franchise royalties and fees,
franchise support, marketing and rent expenses, general and
administrative expenses, depreciation expense, pre-opening costs,
restructuring costs, loss on Franchise Growth Acceleration
Initiative activities and impairment, loss on the disposal of
property and equipment and shop closures.
- Shop-level
profit (loss) margin – a non-GAAP measure that represents
shop-level profit expressed as a percentage of net company-operated
sandwich shop sales.
- Adjusted
net income (loss) – a non-GAAP measure that represents net
income (loss), adjusted to eliminate the impact of restructuring
costs, impairment, loss on the disposal of property and equipment,
shop closures, and other items we do not consider representative of
our ongoing operating performance, including the income tax effects
of those adjustments and the change in our income tax valuation
allowance.
- Adjusted
diluted EPS – a non-GAAP measure that represents adjusted
net income (loss) divided by the weighted average number of fully
dilutive common shares outstanding.
- Shop
commitments – an operating measure that represents the
number of company and franchise shops that are committed to be
developed. For franchise shops, a shop development area agreement
(SDAA) or standalone franchise agreement represents a commitment.
For company shops, a commitment is made through a good faith
combination of business decision-making and capital allocation
needed to develop and operate a new shop location.
Non-GAAP Financial Measures
We prepare our financial statements in accordance with Generally
Accepted Accounting Principles (“GAAP”). Within this press release,
we make reference to EBITDA, adjusted EBITDA, adjusted diluted EPS,
adjusted net income, shop-level profit, and shop-level profit
margin, which are non-GAAP financial measures. The Company includes
these non-GAAP financial measures because management believes they
are useful to investors in that they provide for greater
transparency with respect to supplemental information used by
management in its financial and operational decision making.
Management uses adjusted EBITDA, adjusted net income and
adjusted diluted EPS to evaluate the Company’s performance and in
order to have comparable financial results to analyze changes in
our underlying business from quarter to quarter. Adjusted EBITDA,
adjusted net income and adjusted diluted EPS exclude the impact of
certain non-cash charges and other items that affect the
comparability of results in past quarters and which we do not
believe are reflective of underlying business performance.
Management uses shop-level profit and shop-level profit margin as
key metrics to evaluate the profitability of incremental sales at
our shops, to evaluate our shop performance across periods and to
evaluate our shop financial performance against our
competitors.
Accordingly, the Company believes the presentation of these
non-GAAP financial measures, when used in conjunction with GAAP
financial measures, is a useful financial analysis tool that can
assist investors in assessing the Company’s operating performance
and underlying prospects. This analysis should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. This analysis, as well as the other
information in this press release, should be read in conjunction
with the Company’s financial statements and footnotes contained in
the documents that the Company files with the U.S. Securities and
Exchange Commission. The non-GAAP financial measures used by the
Company in this press release may be different from the methods
used by other companies. For more information on the non-GAAP
financial measures, please refer to the table, “Reconciliation of
Non-GAAP Financial Measures to GAAP Financial Measures.”
Forward-Looking Statements
In addition to historical information, this press release
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended and the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements, written, oral or otherwise made, represent the
Company’s expectation or belief concerning future events. Without
limiting the foregoing, the words “believes,” “expects,” “may,”
“might,” “will,” “should,” “seeks,” “intends,” “plans,” “strives,”
“goal,” “estimates,” “forecasts,” “projects” or “anticipates” or
the negative of these terms and similar expressions are intended to
identify forward-looking statements. Forward-looking statements
included in this press release may include, among others,
statements relating to our (i) future financial position and
results of operations, (ii) business strategy, including our
five-pillar strategic plan and our short- and long-term goals,
(iii) growth potential, including franchise unit growth, (iv)
ability to sustain progress made towards our profitability targets
and long-term strategic growth, (v) intentions to leverage sales
and control costs, (vi) expectation that we will make meaningful
progress in Potbelly’s next phase of growth, (vii) anticipated
revenue and profitability growth in 2023, (viii) expectations and
plans for new shop development deals and new shop openings in 2024;
(ix) expectations regarding digital business growth and
opportunities for digital innovation; and (x) plans for food and
marketing innovations, including our marketing initiatives; (xi)
ability to drive demand and value for our customers; (xii) fiscal
year 2024 outlook including our projections regarding AWSs, AUVs,
same-store sales growth, shop-level margin, adjusted EBITDA and
unit growth; (xiii) expectations for a 2,000 unit system; (xiv)
expectations regarding wages, and (xv) expectations regarding our
new reporting framework.
By nature, forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those projected or implied by the forward-looking statement,
due to reasons including, but not limited to, risks related to the
COVID-19 outbreak; compliance with our Credit Agreement covenants;
competition; general economic conditions; our ability to
successfully implement our business strategy; the success of our
initiatives to increase sales and traffic; changes in commodity,
energy and other costs; our ability to attract and retain
management and employees; consumer reaction to industry-related
public health issues and perceptions of food safety; our ability to
manage our growth; reputational and brand issues; price and
availability of commodities; consumer confidence and spending
patterns; and weather conditions. In addition, there may be other
factors of which we are presently unaware or that we currently deem
immaterial that could cause our actual results to be materially
different from the results referenced in the forward-looking
statements. All forward-looking statements contained in this press
release are qualified in their entirety by this cautionary
statement. Although we believe that our plans, intentions and
expectations are reasonable, we may not achieve our plans,
intentions or expectations. Forward-looking statements are based on
current expectations and assumptions and currently available data
and are neither predictions nor guarantees of future events or
performance. You should not place undue reliance on forward-looking
statements, which speak only as of the date hereof. See “Risk
Factors” and “Cautionary Statement on Forward-Looking Statements”
included in the Company’s filings with the U.S. Securities and
Exchange Commission, including the Company’s most recent annual
report on Form 10-K and other risk factors described from time to
time in subsequent quarterly reports on Form 10-Q or other
subsequent filings, all of which are available on our website at
www.potbelly.com. The Company undertakes no obligation to publicly
update or revise any forward-looking statement as a result of new
information, future events or otherwise, except as otherwise
required by law.
Investor Contact: Jeff
PriesterICRinvestor@potbelly.com
Media Contact:ICRPotbellyPR@icrinc.com
Potbelly
Corporation |
Consolidated
Statements of Operations and Margin Analysis –
Unaudited |
(Amounts in
thousands, except per share data) |
|
|
For the Quarter Ended |
|
For the Year to Date Ended |
|
Dec 31,2023 |
|
% ofRevenue |
|
Dec 25,2022 |
|
% ofRevenue |
|
Dec 31,2023 |
|
% ofRevenue |
|
Dec 25,2022 |
|
% ofRevenue |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sandwich shop sales, net |
$ |
122,251 |
|
|
97.2 |
% |
|
$ |
119,029 |
|
99.1 |
% |
|
$ |
482,246 |
|
|
98.1 |
% |
|
$ |
447,901 |
|
|
99.1 |
% |
Franchise royalties, fees and rent income |
|
3,498 |
|
|
2.8 |
|
|
|
1,122 |
|
0.9 |
|
|
|
9,163 |
|
|
1.9 |
|
|
|
4,072 |
|
|
0.9 |
|
Total revenues |
|
125,749 |
|
|
100.0 |
|
|
|
120,151 |
|
100.0 |
|
|
|
491,409 |
|
|
100.0 |
|
|
|
451,973 |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Percentages stated as a percent of sandwich shop sales, net) |
|
|
|
|
|
|
|
|
|
|
|
|
Sandwich shop operating expenses, excluding depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food, beverage and packaging costs |
|
33,302 |
|
|
27.2 |
|
|
|
34,199 |
|
28.7 |
|
|
|
133,726 |
|
|
27.7 |
|
|
|
129,151 |
|
|
28.8 |
|
Labor and related expenses |
|
35,188 |
|
|
28.8 |
|
|
|
36,690 |
|
30.8 |
|
|
|
143,744 |
|
|
29.8 |
|
|
|
142,095 |
|
|
31.7 |
|
Occupancy expenses |
|
12,839 |
|
|
10.5 |
|
|
|
13,327 |
|
11.2 |
|
|
|
51,885 |
|
|
10.8 |
|
|
|
54,536 |
|
|
12.2 |
|
Other operating expenses |
|
21,677 |
|
|
17.7 |
|
|
|
17,940 |
|
15.1 |
|
|
|
84,363 |
|
|
17.5 |
|
|
|
74,916 |
|
|
16.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Percentages stated as a percent
of total revenues) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise support, rent and marketing expenses |
|
2,382 |
|
|
1.9 |
|
|
|
333 |
|
0.3 |
|
|
|
5,741 |
|
|
1.2 |
|
|
|
694 |
|
|
0.2 |
|
General and administrative expenses |
|
14,938 |
|
|
11.9 |
|
|
|
10,842 |
|
9.0 |
|
|
|
48,496 |
|
|
9.9 |
|
|
|
37,741 |
|
|
8.4 |
|
Depreciation expense |
|
3,236 |
|
|
2.6 |
|
|
|
2,802 |
|
2.3 |
|
|
|
12,138 |
|
|
2.5 |
|
|
|
11,890 |
|
|
2.6 |
|
Pre-opening costs |
|
1 |
|
|
NM |
|
|
|
- |
|
NM |
|
|
|
115 |
|
|
NM |
|
|
|
- |
|
|
NM |
|
Gain on Franchise Growth Acceleration Initiative activities |
|
(3,215 |
) |
|
(2.6 |
) |
|
|
- |
|
NM |
|
|
|
(2,142 |
) |
|
(0.4 |
) |
|
|
- |
|
|
NM |
|
Impairment, loss on disposal of property and equipment and shop
closures |
|
1,177 |
|
|
0.9 |
|
|
|
775 |
|
0.6 |
|
|
|
3,338 |
|
|
0.7 |
|
|
|
4,754 |
|
|
1.1 |
|
Total expenses |
|
121,524 |
|
|
96.6 |
|
|
|
116,908 |
|
97.3 |
|
|
|
481,403 |
|
|
98.0 |
|
|
|
455,777 |
|
|
100.8 |
|
Income (loss) from operations |
|
4,225 |
|
|
3.4 |
|
|
|
3,243 |
|
2.7 |
|
|
|
10,006 |
|
|
2.0 |
|
|
|
(3,804 |
) |
|
(0.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
750 |
|
|
0.6 |
|
|
|
311 |
|
0.3 |
|
|
|
3,281 |
|
|
0.7 |
|
|
|
1,349 |
|
|
0.3 |
|
Loss/(Gain) on extinguishment of
debt |
|
— |
|
|
NM |
|
|
|
— |
|
NM |
|
|
|
239 |
|
|
NM |
|
|
|
(10,191 |
) |
|
(2.3 |
) |
Income before income taxes |
|
3,475 |
|
|
2.8 |
|
|
|
2,932 |
|
2.4 |
|
|
|
6,486 |
|
|
1.3 |
|
|
|
5,038 |
|
|
1.1 |
|
Income tax expense |
|
723 |
|
|
0.6 |
|
|
|
178 |
|
0.1 |
|
|
|
909 |
|
|
0.2 |
|
|
|
327 |
|
|
NM |
|
Net income |
|
2,752 |
|
|
2.2 |
|
|
|
2,754 |
|
2.3 |
|
|
|
5,577 |
|
|
1.1 |
|
|
|
4,711 |
|
|
1.0 |
|
Net income attributable to
non-controlling interest |
|
16 |
|
|
NM |
|
|
|
99 |
|
NM |
|
|
|
458 |
|
|
NM |
|
|
|
366 |
|
|
NM |
|
Net income attributable
to Potbelly Corporation |
$ |
2,736 |
|
|
2.2 |
% |
|
$ |
2,655 |
|
2.2 |
% |
|
$ |
5,119 |
|
|
1.0 |
% |
|
$ |
4,345 |
|
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.09 |
|
|
|
|
$ |
0.09 |
|
|
|
$ |
0.18 |
|
|
|
|
$ |
0.15 |
|
|
|
Diluted |
$ |
0.09 |
|
|
|
|
$ |
0.09 |
|
|
|
$ |
0.17 |
|
|
|
|
$ |
0.15 |
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
29,360 |
|
|
|
|
|
28,812 |
|
|
|
|
29,201 |
|
|
|
|
|
28,625 |
|
|
|
Diluted |
|
30,191 |
|
|
|
|
|
28,939 |
|
|
|
|
30,088 |
|
|
|
|
|
29,065 |
|
|
|
_______________________________ |
"NM" - Amount is not meaningful |
Potbelly Corporation |
Consolidated Balance Sheets - Unaudited |
(amounts in thousands, except par value data) |
|
|
Dec 31, 2023 |
|
Dec 25, 2022 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
33,788 |
|
|
$ |
15,619 |
|
Accounts receivable, net of allowances of $26 and $16 as of
December 31, 2023 and December 25, 2022,
respectively |
|
7,960 |
|
|
|
6,420 |
|
Inventories |
|
3,516 |
|
|
|
3,990 |
|
Prepaid expenses and other current assets |
|
7,828 |
|
|
|
4,501 |
|
Total current assets |
|
53,092 |
|
|
|
30,530 |
|
|
|
|
|
Property and equipment, net |
|
45,087 |
|
|
|
44,477 |
|
Right-of-use assets for operating leases |
|
144,390 |
|
|
|
160,891 |
|
Indefinite-lived intangible assets |
|
3,404 |
|
|
|
3,404 |
|
Goodwill |
|
2,056 |
|
|
|
2,222 |
|
Restricted cash |
|
749 |
|
|
|
— |
|
Deferred expenses, net and other assets |
|
3,681 |
|
|
|
3,647 |
|
Total assets |
$ |
252,460 |
|
|
$ |
245,171 |
|
|
|
|
|
Liabilities and
equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
9,927 |
|
|
$ |
10,718 |
|
Accrued expenses |
|
35,377 |
|
|
|
30,826 |
|
Short-term operating lease liabilities |
|
24,525 |
|
|
|
27,395 |
|
Current portion of long-term debt |
|
1,250 |
|
|
|
— |
|
Total current liabilities |
|
71,078 |
|
|
|
68,939 |
|
|
|
|
|
Long-term debt |
|
19,168 |
|
|
|
8,550 |
|
Long-term operating lease liabilities |
|
142,050 |
|
|
|
160,968 |
|
Other long-term liabilities |
|
6,070 |
|
|
|
2,441 |
|
Total liabilities |
|
238,367 |
|
|
|
240,898 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Equity |
|
|
|
Common stock, $0.01 par value—authorized 200,000 shares;
outstanding 29,364 and 28,819 shares as of December 31, 2023
and December 25, 2022, respectively |
|
389 |
|
|
|
384 |
|
Warrants |
|
2,219 |
|
|
|
2,566 |
|
Additional paid-in-capital |
|
462,583 |
|
|
|
455,831 |
|
Treasury stock, held at cost, 10,077 and 9,924 shares as of
December 31, 2023, and December 25, 2022,
respectively |
|
(116,701 |
) |
|
|
(115,388 |
) |
Accumulated deficit |
|
(333,797 |
) |
|
|
(338,916 |
) |
Total stockholders’ equity |
|
14,693 |
|
|
|
4,477 |
|
Non-controlling interest |
|
(600 |
) |
|
|
(204 |
) |
Total equity |
|
14,093 |
|
|
|
4,273 |
|
|
|
|
|
Total liabilities and equity |
$ |
252,460 |
|
|
$ |
245,171 |
|
|
Potbelly Corporation |
Consolidated Statements of Cash Flows -
Unaudited |
(amounts in thousands) |
|
|
Fiscal Year |
|
2023 |
|
2022 |
|
2021 |
Cash flows from
operating activities: |
|
|
|
|
|
Net income (loss) |
$ |
5,577 |
|
|
$ |
4,711 |
|
|
$ |
(23,623 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
Depreciation expense |
|
12,138 |
|
|
|
11,890 |
|
|
|
15,909 |
|
Noncash lease expense |
|
25,814 |
|
|
|
25,792 |
|
|
|
25,856 |
|
Deferred income tax |
|
— |
|
|
|
18 |
|
|
|
18 |
|
Stock-based compensation expense |
|
5,450 |
|
|
|
3,265 |
|
|
|
2,137 |
|
Asset impairment, store closure and disposal of property and
equipment |
|
1,058 |
|
|
|
3,651 |
|
|
|
4,572 |
|
Gain on Franchise Growth Acceleration Initiative activities |
|
(2,202 |
) |
|
|
— |
|
|
|
— |
|
Loss/(gain) on extinguishment of debt |
|
224 |
|
|
|
(10,191 |
) |
|
|
— |
|
Amortization of debt issuance costs |
|
482 |
|
|
|
270 |
|
|
|
305 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
Accounts receivable, net |
|
(1,580 |
) |
|
|
(387 |
) |
|
|
(1,677 |
) |
Inventories |
|
177 |
|
|
|
(499 |
) |
|
|
(502 |
) |
Prepaid expenses and other assets |
|
(3,989 |
) |
|
|
(520 |
) |
|
|
1,083 |
|
Accounts payable |
|
(1,025 |
) |
|
|
2,239 |
|
|
|
326 |
|
Operating lease liabilities |
|
(30,721 |
) |
|
|
(27,984 |
) |
|
|
(32,932 |
) |
Accrued expenses and other liabilities |
|
8,086 |
|
|
|
221 |
|
|
|
3,655 |
|
Net cash provided by
(used in) operating activities |
|
19,488 |
|
|
|
12,476 |
|
|
|
(4,873 |
) |
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
Purchases of property and equipment |
|
(17,053 |
) |
|
|
(8,426 |
) |
|
|
(9,048 |
) |
Proceeds from sales of refranchised shops |
|
6,282 |
|
|
|
— |
|
|
|
— |
|
Net cash used in
investing activities |
|
(10,771 |
) |
|
|
(8,426 |
) |
|
|
(9,048 |
) |
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
Borrowings under Term Loan |
|
25,000 |
|
|
|
— |
|
|
|
— |
|
Principal payments made for Term Loan |
|
(2,838 |
) |
|
|
— |
|
|
|
— |
|
Borrowings under revolving credit facility |
|
14,600 |
|
|
|
39,050 |
|
|
|
38,000 |
|
Repayments under revolving credit facility |
|
(23,150 |
) |
|
|
(40,350 |
) |
|
|
(34,436 |
) |
Payment of debt issuance costs |
|
(2,205 |
) |
|
|
(196 |
) |
|
|
(195 |
) |
Proceeds from issuance of common shares and warrants, net of
fees |
|
961 |
|
|
|
— |
|
|
|
14,839 |
|
Proceeds from exercise of stock options |
|
— |
|
|
|
— |
|
|
|
219 |
|
Employee taxes on certain stock-based payment arrangements |
|
(1,312 |
) |
|
|
(813 |
) |
|
|
(1,298 |
) |
Distributions to non-controlling interest |
|
(854 |
) |
|
|
(475 |
) |
|
|
(189 |
) |
Contributions from non-controlling interest |
|
— |
|
|
|
— |
|
|
|
208 |
|
Net cash provided by
(used in) financing activities |
|
10,202 |
|
|
|
(2,784 |
) |
|
|
17,148 |
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents |
|
18,918 |
|
|
|
1,266 |
|
|
|
3,227 |
|
Cash and cash equivalents and
restricted cash at beginning of period |
|
15,619 |
|
|
|
14,353 |
|
|
|
11,126 |
|
Cash and cash equivalents and
restricted cash at end of period |
$ |
34,537 |
|
|
$ |
15,619 |
|
|
$ |
14,353 |
|
|
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
|
|
Income taxes paid |
|
278 |
|
|
|
139 |
|
|
|
185 |
|
Interest paid |
|
3,483 |
|
|
|
936 |
|
|
|
608 |
|
Supplemental non-cash
investing and financing activities: |
|
|
|
|
|
(Loss)/gain on extinguishment
of debt and accrued interest |
$ |
(224 |
) |
|
$ |
10,191 |
|
|
$ |
— |
|
Unpaid liability for purchases
of property and equipment |
|
1,008 |
|
|
|
778 |
|
|
|
460 |
|
Unpaid liability for employee
taxes on certain stock-based payment arrangements |
|
13 |
|
|
|
15 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Potbelly
Corporation |
Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures – Unaudited |
(Amounts in
thousands, except per share data) |
|
|
|
|
|
For the Quarter Ended |
|
For the Year to Date Ended |
|
Dec 31, 2023 |
|
Dec 25, 2022 |
|
Dec 31, 2023 |
|
Dec 25, 2022 |
Net income attributable to Potbelly Corporation, as reported |
$ |
2,736 |
|
|
$ |
2,655 |
|
|
$ |
5,119 |
|
|
$ |
4,345 |
|
Impairment, loss on disposal of property and equipment and shop
closures |
|
1,177 |
|
|
|
775 |
|
|
|
3,338 |
|
|
|
4,754 |
|
Loss/(gain) on extinguishment of debt(1) |
|
— |
|
|
|
— |
|
|
|
239 |
|
|
|
(10,191 |
) |
Gain on Franchise Growth Acceleration Initiative activities(2) |
|
(3,215 |
) |
|
|
— |
|
|
|
(2,142 |
) |
|
|
— |
|
Total adjustments before income tax |
|
(2,037 |
) |
|
|
775 |
|
|
|
1,435 |
|
|
|
(5,437 |
) |
Income tax adjustments(3) |
|
25 |
|
|
|
(802 |
) |
|
|
(2,135 |
) |
|
|
1,024 |
|
Total adjustments after income tax |
|
(2,012 |
) |
|
|
(27 |
) |
|
|
(700 |
) |
|
|
(4,413 |
) |
Adjusted net income (loss)
attributable to Potbelly Corporation |
$ |
724 |
|
|
$ |
2,628 |
|
|
$ |
4,420 |
|
|
$ |
(68 |
) |
Adjusted net income (loss)
attributable to Potbelly Corporation per share, basic |
$ |
0.02 |
|
|
$ |
0.09 |
|
|
$ |
0.15 |
|
|
$ |
(0.00 |
) |
Adjusted net income (loss)
attributable to Potbelly Corporation per share, diluted |
$ |
0.02 |
|
|
$ |
0.09 |
|
|
$ |
0.15 |
|
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
Shares used in computing
adjusted net income (loss) attributable to Potbelly Corporation per
share: |
|
|
|
|
|
|
|
Basic |
|
29,360 |
|
|
|
28,812 |
|
|
|
29,201 |
|
|
|
28,625 |
|
Diluted |
|
30,191 |
|
|
|
28,939 |
|
|
|
30,088 |
|
|
|
29,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Year to Date Ended |
|
Dec 31,2023 |
|
Dec 25,2022 |
|
Dec 31,2023 |
|
Dec 25,2022 |
Net income attributable to Potbelly Corporation, as reported |
$ |
2,736 |
|
|
$ |
2,655 |
|
$ |
5,119 |
|
|
$ |
4,345 |
|
Depreciation expense |
|
3,236 |
|
|
|
2,802 |
|
|
12,138 |
|
|
|
11,890 |
|
Interest expense, net |
|
750 |
|
|
|
311 |
|
|
3,281 |
|
|
|
1,349 |
|
Income tax expense |
|
723 |
|
|
|
178 |
|
|
909 |
|
|
|
327 |
|
EBITDA |
|
7,445 |
|
|
|
5,946 |
|
|
21,447 |
|
|
|
17,911 |
|
Impairment, loss on disposal of property and equipment and shop
closures |
|
1,177 |
|
|
|
775 |
|
|
3,338 |
|
|
|
4,754 |
|
Stock-based compensation |
|
2,042 |
|
|
|
819 |
|
|
5,449 |
|
|
|
3,265 |
|
Loss/(gain) on extinguishment of debt(1) |
|
- |
|
|
|
- |
|
|
239 |
|
|
|
(10,191 |
) |
Gain on Franchise Growth Acceleration Initiative activities(2) |
|
(3,215 |
) |
|
|
- |
|
|
(2,142 |
) |
|
|
- |
|
Adjusted EBITDA |
$ |
7,450 |
|
|
$ |
7,540 |
|
$ |
28,331 |
|
|
$ |
15,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potbelly
Corporation |
Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures – Unaudited |
(Amounts in
thousands, except per share data) |
|
|
|
|
|
For the Quarter Ended |
|
For the Year to Date Ended |
|
Dec 31, 2023 |
|
Dec 25, 2022 |
|
Dec 31, 2023 |
|
Dec 25, 2022 |
Income (loss) from operations [A] |
$ |
4,225 |
|
|
$ |
3,243 |
|
|
$ |
10,006 |
|
|
$ |
(3,804 |
) |
Income (loss) from operations margin [A÷B] |
|
3.4% |
|
|
|
2.7% |
|
|
|
2.0% |
|
|
|
(0.8)% |
|
Less: Franchise royalties, fees and rent income |
|
3,498 |
|
|
|
1,122 |
|
|
|
9,163 |
|
|
|
4,072 |
|
Franchise support, rent and marketing expenses |
|
2,382 |
|
|
|
333 |
|
|
|
5,741 |
|
|
|
694 |
|
General and administrative expenses |
|
14,938 |
|
|
|
10,842 |
|
|
|
48,496 |
|
|
|
37,741 |
|
Depreciation expense |
|
3,236 |
|
|
|
2,802 |
|
|
|
12,138 |
|
|
|
11,890 |
|
Pre-opening costs |
|
1 |
|
|
|
— |
|
|
|
115 |
|
|
|
— |
|
Gain on Franchise Growth Acceleration Initiative activities(2) |
|
(3,215 |
) |
|
|
— |
|
|
|
(2,142 |
) |
|
|
— |
|
Impairment, loss on disposal of property and equipment and shop
closures |
|
1,177 |
|
|
|
775 |
|
|
|
3,338 |
|
|
|
4,754 |
|
Shop-level profit [C] |
$ |
19,245 |
|
|
$ |
16,873 |
|
|
$ |
68,528 |
|
|
$ |
47,203 |
|
Total revenues [B] |
$ |
125,749 |
|
|
$ |
120,151 |
|
|
$ |
491,409 |
|
|
$ |
451,973 |
|
Less: Franchise royalties, fees and rent income |
|
3,498 |
|
|
|
1,122 |
|
|
|
9,163 |
|
|
|
4,072 |
|
Sandwich shop sales, net
[D] |
$ |
122,251 |
|
|
$ |
119,029 |
|
|
$ |
482,246 |
|
|
$ |
447,901 |
|
Shop-level profit margin
[C÷D] |
|
15.7% |
|
|
|
14.2% |
|
|
|
14.2% |
|
|
|
10.5% |
|
|
|
|
|
|
|
|
|
Potbelly
Corporation |
Selected
Operating Data – Unaudited |
(Amounts in
thousands, except shop counts) |
|
|
|
|
|
For the Quarter Ended |
|
For the Year to Date Ended |
|
Dec 31,2023 |
|
Dec 25,2022 |
|
Dec 31,2023 |
|
Dec 25,2022 |
Selected Operating
Data |
|
|
|
|
|
|
|
Shop Activity: |
|
|
|
|
|
|
|
Company-operated shops, end of period |
345 |
|
|
384 |
|
|
345 |
|
|
384 |
|
Franchise shops, end of period |
79 |
|
|
45 |
|
|
79 |
|
|
45 |
|
Revenue Data: |
|
|
|
|
|
|
|
Company-operated comparable store sales |
6.3% |
|
|
18.9% |
|
|
12.0% |
|
|
18.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Year to Date Ended |
|
Dec 31,2023 |
|
Dec 25,2022 |
|
Dec 31,2023 |
|
Dec 25,2022 |
Sales from company-operated shops, net |
$ |
122,251 |
|
$ |
119,029 |
|
$ |
482,246 |
|
$ |
447,901 |
Sales from franchise shops,
net |
|
25,238 |
|
|
13,380 |
|
|
77,443 |
|
|
49,332 |
System-wide sales |
$ |
147,489 |
|
$ |
132,409 |
|
$ |
559,688 |
|
$ |
497,233 |
|
|
|
|
|
|
|
|
|
|
|
|
Potbelly
Corporation |
Footnotes to
the Press Release, Reconciliation of Non-GAAP Financial Measures to
GAAP Financial Measures & Selected |
Operating
Data |
|
1) |
This
adjustment relates to the loss recognized upon termination of the
Company’s former credit agreement which was completed during the
first quarter of 2023. |
|
|
2) |
This adjustment includes net gains recognized during the period
which relate to the Company’s Franchise Growth Acceleration
Initiative, including net gains and losses on the sale of assets
and fair value adjustments for assets classified as
held-for-sale. |
|
|
3) |
This adjustment includes the tax impacts of the other
adjustments listed above based on the Company’s effective tax rate
and the change in the Company’s income tax valuation allowance
during the period. |
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