Potbelly Corporation (NASDAQ: PBPB),
(“Potbelly” or the
“Company”) the iconic neighborhood sandwich shop concept,
today reported financial results for its first fiscal quarter ended
March 31, 2024.
Key highlights for the quarter ended
March 31, 2024, compared to March 26, 2023:
- Total revenues decreased by 6.0% to $111.2 million compared to
$118.3 million, which included revenue from 33 shops that were
refranchised in 2023.
- Average Weekly Sales (AWS) increased 1.6% to $24,250 and,
inclusive of the impact of refranchising 33 former company
locations in 2023, total company shop sales decreased by 8.0% to
$107.6 million compared to $116.9 million.
- Same-store sales in the first quarter of (0.2)%, with expansion
of traffic share during the quarter.
- GAAP net loss attributable to Potbelly Corporation was $2.8
million compared to $1.3 million. GAAP diluted earnings per share
(EPS) was ($0.09) compared to ($0.05).
- Adjusted net income1 attributable to Potbelly Corporation was
$0.2 million compared to $0.6 million. Adjusted diluted EPS1 was
$0.01 compared to $0.02.
- Adjusted EBITDA1 increased 2.2% to $5.7 million compared to
$5.6 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, “We’re proud of our
solid start to the year across multiple fronts. In terms of
profitability, we successfully managed both restaurant-level and
corporate costs, driving a 150-basis point expansion in shop-level
margins as well as strong corporate profitability with adjusted
EBITDA of $5.7 million. On the development front, our franchise
sales team added 32 additional commitments to our pipeline during
the quarter leading to a 26% increase in open and committed shops
year-over-year. We remain excited by the possibilities of this
unique brand and believe that we continue to put the building
blocks in place to achieve this potential.”
Wright added, “In addition, our board of
directors authorized a $20 million share repurchase program, driven
by their confidence in the sustainability of the momentum in our
business, our strong balance sheet and the increased predictability
of our cash flows due to our ongoing transition to a capital-light,
franchised business model. This confidence is a testament to the
disciplined execution of our team members as we seek to drive
long-term, sustainable growth.”
Financial
Outlook
In addition to the 2Q’24 and 2024 guidance
below, the company reiterates the previously provided long-term
growth ranges.
|
2Q’24 Guidance |
Same Store Sales Growth |
+0.0% to +2.0% |
Adjusted EBITDA (2) |
$7.0M to $8.5M |
|
2024 Guidance |
Same Store Sales % Growth |
Low-Single Digit |
New Unit % Growth |
~10% |
Adjusted EBITDA % Growth (2) |
Mid- to High-Single 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.
Stock Repurchase ProgramThe
Company also announced that its Board of Directors has authorized a
stock repurchase program authorizing the Company to repurchase up
to $20.0 million of its outstanding common stock through
May 7, 2027. The stock repurchase program replaces the stock
repurchase program approved in May 2018. The Company may repurchase
shares of its common stock from time to time through open market
purchases, in privately negotiated transactions, or by other means,
including through the use of trading plans intended to qualify
under Rule 10b5-1 under the Securities Exchange Act of 1934, as
amended, in accordance with applicable securities laws and other
restrictions. The timing and total amount of common stock
repurchases will depend upon business, economic and market
conditions, corporate and regulatory requirements, prevailing stock
prices, and other considerations.
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 Wednesday, May 15,
2024. To access the replay, please call 844-512-2921 (U.S. &
Canada), or 412-317-6671 (International) and enter confirmation
code 10187570. 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 entrée counts 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. In fiscal years that follow a
53-week year, the current period sales are compared to the trailing
52-week sales to compare against the most closely comparable weeks
from the prior calendar year.
- 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) 2Q’24 and full
year 2024 outlook and guidance and (iii) expectations regarding our
new stock repurchase program.
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 |
|
Mar 31, 2024 |
|
% ofRevenue |
|
Mar 26, 2023 |
|
% ofRevenue |
Revenues |
|
|
|
|
|
|
|
|
|
Sandwich shop sales, net |
$ |
107,577 |
|
|
96.8 |
|
% |
|
$ |
116,947 |
|
|
98.9 |
|
% |
Franchise royalties, fees and rent income |
|
3,576 |
|
|
3.2 |
|
|
|
|
1,323 |
|
|
1.1 |
|
|
Total revenues |
|
111,153 |
|
|
100.0 |
|
|
|
|
118,270 |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
(Percentages stated as a percent
of sandwich shop sales, net) |
|
|
|
|
|
|
|
|
|
Sandwich shop operating expenses, excluding depreciation |
|
|
|
|
|
|
|
|
|
Food, beverage and packaging costs |
|
29,270 |
|
|
27.2 |
|
|
|
|
32,620 |
|
|
27.9 |
|
|
Labor and related expenses |
|
32,253 |
|
|
30.0 |
|
|
|
|
36,502 |
|
|
31.2 |
|
|
Occupancy expenses |
|
11,714 |
|
|
10.9 |
|
|
|
|
13,310 |
|
|
11.4 |
|
|
Other operating expenses |
|
19,829 |
|
|
18.4 |
|
|
|
|
20,484 |
|
|
17.5 |
|
|
|
|
|
|
|
|
|
|
|
|
(Percentages stated as a percent
of total revenues) |
|
|
|
|
|
|
|
|
|
Franchise support, rent and marketing expenses |
|
2,537 |
|
|
2.3 |
|
|
|
|
591 |
|
|
0.5 |
|
|
General and administrative expenses |
|
11,547 |
|
|
10.4 |
|
|
|
|
9,969 |
|
|
8.4 |
|
|
Depreciation expense |
|
3,011 |
|
|
2.7 |
|
|
|
|
2,971 |
|
|
2.5 |
|
|
Pre-opening costs |
|
— |
|
|
NM |
|
|
|
|
22 |
|
|
NM |
|
|
Loss on Franchise Growth Acceleration Initiative activities |
|
133 |
|
|
0.1 |
|
|
|
|
949 |
|
|
0.8 |
|
|
Impairment, loss on disposal of property and equipment and shop
closures |
|
741 |
|
|
0.7 |
|
|
|
|
1,045 |
|
|
0.9 |
|
|
Total expenses |
|
111,035 |
|
|
99.9 |
|
|
|
|
118,463 |
|
|
100.2 |
|
|
Income (loss) from operations |
|
118 |
|
|
0.1 |
|
|
|
|
(193 |
) |
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
364 |
|
|
0.3 |
|
|
|
|
667 |
|
|
0.6 |
|
|
Loss on extinguishment of
debt |
|
2,376 |
|
|
2.1 |
|
|
|
|
239 |
|
|
0.2 |
|
|
Loss before income taxes |
|
(2,622 |
) |
|
(2.4 |
) |
|
|
|
(1,099 |
) |
|
(0.9 |
) |
|
Income tax expense |
|
51 |
|
|
NM |
|
|
|
|
105 |
|
|
NM |
|
|
Net loss |
|
(2,673 |
) |
|
(2.4 |
) |
|
|
|
(1,204 |
) |
|
(1.0 |
) |
|
Net income attributable to
non-controlling interest |
|
94 |
|
|
NM |
|
|
|
|
123 |
|
|
0.1 |
|
|
Net loss attributable to
Potbelly Corporation |
$ |
(2,767 |
) |
|
(2.5 |
) |
% |
|
$ |
(1,327 |
) |
|
(1.1 |
) |
% |
|
|
|
|
|
|
|
|
|
|
Net loss per common share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.09 |
) |
|
|
|
|
$ |
(0.05 |
) |
|
|
|
Diluted |
$ |
(0.09 |
) |
|
|
|
|
$ |
(0.05 |
) |
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
29,551 |
|
|
|
|
|
|
28,907 |
|
|
|
|
Diluted |
|
29,551 |
|
|
|
|
|
|
28,907 |
|
|
|
|
_______________________________“NM” - Amount is
not meaningful
Potbelly Corporation |
Consolidated Balance Sheets – Unaudited |
(amounts in thousands, except par value data) |
|
|
Mar 31, 2024 |
|
Dec 31, 2023 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
12,723 |
|
|
$ |
33,788 |
|
Accounts receivable, net of allowances of $21 and $26 as of
March 31, 2024 and December 31, 2023, respectively |
|
8,380 |
|
|
|
7,960 |
|
Inventories |
|
3,556 |
|
|
|
3,516 |
|
Prepaid expenses and other current assets |
|
7,476 |
|
|
|
7,828 |
|
Assets classified as held-for-sale |
|
171 |
|
|
— |
|
Total current assets |
|
32,306 |
|
|
|
53,092 |
|
|
|
|
|
Property and equipment, net |
|
45,608 |
|
|
|
45,087 |
|
Right-of-use assets for operating leases |
|
138,068 |
|
|
|
144,390 |
|
Indefinite-lived intangible assets |
|
3,404 |
|
|
|
3,404 |
|
Goodwill |
|
2,053 |
|
|
|
2,056 |
|
Restricted cash |
|
749 |
|
|
|
749 |
|
Deferred expenses, net and other assets |
|
5,268 |
|
|
|
3,681 |
|
Total assets |
$ |
227,456 |
|
|
$ |
252,460 |
|
|
|
|
|
Liabilities and
equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
9,970 |
|
|
$ |
9,927 |
|
Accrued expenses |
|
32,982 |
|
|
|
35,377 |
|
Short-term operating lease liabilities |
|
24,464 |
|
|
|
24,525 |
|
Current portion of long-term debt |
— |
|
|
|
1,250 |
|
Total current liabilities |
|
67,416 |
|
|
|
71,078 |
|
|
|
|
|
Long-term debt, net of current portion |
|
5,000 |
|
|
|
19,168 |
|
Long-term operating lease liabilities |
|
134,768 |
|
|
|
142,050 |
|
Other long-term liabilities |
|
6,616 |
|
|
|
6,070 |
|
Total liabilities |
|
213,800 |
|
|
|
238,367 |
|
|
|
|
|
Equity |
|
|
|
Common stock, $0.01 par value—authorized 200,000 shares;
outstanding 29,685 and 29,364 shares as of March 31, 2024 and
December 31, 2023, respectively |
|
394 |
|
|
|
389 |
|
Warrants |
|
1,745 |
|
|
|
2,219 |
|
Additional paid-in-capital |
|
466,132 |
|
|
|
462,583 |
|
Treasury stock, held at cost, 10,131 and 10,077 shares as of
March 31, 2024, and December 31, 2023, respectively |
|
(117,366 |
) |
|
|
(116,701 |
) |
Accumulated deficit |
|
(336,564 |
) |
|
|
(333,797 |
) |
Total stockholders’ equity |
|
14,341 |
|
|
|
14,693 |
|
Non-controlling interest |
|
(685 |
) |
|
|
(600 |
) |
Total equity |
|
13,656 |
|
|
|
14,093 |
|
|
|
|
|
Total liabilities and equity |
$ |
227,456 |
|
|
$ |
252,460 |
|
Potbelly Corporation |
Consolidated Statements of Cash Flows -
Unaudited |
(amounts in thousands) |
|
|
For the Quarter to Date Ended |
|
Mar 31, 2024 |
|
Mar 26, 2023 |
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(2,673 |
) |
|
$ |
(1,204 |
) |
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation expense |
|
3,011 |
|
|
|
2,971 |
|
Noncash lease expense |
|
6,191 |
|
|
|
6,127 |
|
Deferred income tax |
|
1 |
|
|
|
1 |
|
Stock-based compensation expense |
|
1,771 |
|
|
|
911 |
|
Asset impairment, loss on disposal of property and equipment and
shop closures |
|
474 |
|
|
|
843 |
|
Loss on Franchise Growth Acceleration Initiative activities |
|
133 |
|
|
|
936 |
|
Loss on extinguishment of debt |
|
2,376 |
|
|
|
224 |
|
Other operating activities |
|
77 |
|
|
|
85 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable, net |
|
(441 |
) |
|
|
(847 |
) |
Inventories |
|
(33 |
) |
|
|
274 |
|
Prepaid expenses and other assets |
|
(515 |
) |
|
|
136 |
|
Accounts payable |
|
(151 |
) |
|
|
(507 |
) |
Operating lease liabilities |
|
(7,254 |
) |
|
|
(6,923 |
) |
Accrued expenses and other liabilities |
|
(2,274 |
) |
|
|
(3,684 |
) |
Net cash provided by
(used in) operating activities: |
|
693 |
|
|
|
(657 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Purchases of property and equipment |
|
(3,963 |
) |
|
|
(3,312 |
) |
Proceeds from sale of refranchised shops and other assets |
|
227 |
|
|
|
96 |
|
Net cash used in
investing activities: |
|
(3,736 |
) |
|
|
(3,216 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Borrowings under Revolving Facility |
|
7,000 |
|
|
— |
|
Borrowings under Term Loan |
— |
|
|
|
25,000 |
|
Borrowings under Former Credit Facility |
— |
|
|
|
14,600 |
|
Repayments under Revolving Facility |
|
(2,000 |
) |
|
— |
|
Repayments under Term Loan |
|
(22,827 |
) |
|
— |
|
Repayments under Former Credit Facility |
— |
|
|
|
(23,150 |
) |
Payment of debt issuance costs |
|
(345 |
) |
|
|
(2,204 |
) |
Proceeds from exercise of warrants |
|
1,309 |
|
|
|
865 |
|
Employee taxes on certain stock-based payment arrangements |
|
(980 |
) |
|
|
(47 |
) |
Distributions to non-controlling interest |
|
(179 |
) |
|
|
(152 |
) |
Principal payments made for Term Loan |
— |
|
|
|
(313 |
) |
Net cash provided by
(used in) financing activities: |
|
(18,022 |
) |
|
|
14,599 |
|
|
|
|
|
Net increase (decrease) in
cash and cash equivalents and restricted cash |
|
(21,065 |
) |
|
|
10,726 |
|
Cash and cash equivalents and
restricted cash at beginning of period |
|
34,537 |
|
|
|
15,619 |
|
Cash and cash equivalents and
restricted cash at end of period |
$ |
13,472 |
|
|
$ |
26,345 |
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
Income taxes paid |
$ |
12 |
|
|
$ |
55 |
|
Interest paid |
$ |
359 |
|
|
$ |
787 |
|
|
|
|
|
Supplemental non-cash
investing and financing activities: |
|
|
|
Unpaid liability for purchases
of property and equipment |
$ |
909 |
|
|
$ |
978 |
|
Unpaid liability for employee
taxes on certain stock-based payment arrangements |
$ |
328 |
|
|
$ |
305 |
|
Potbelly Corporation |
Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures – Unaudited |
(amounts in thousands, except per share data) |
|
|
For the Quarter Ended |
|
Mar 31, 2024 |
|
Mar 26, 2023 |
Net loss attributable to Potbelly Corporation, as reported |
$ |
(2,767 |
) |
|
$ |
(1,327 |
) |
Impairment, loss on disposal of property and equipment and shop
closures(1) |
|
741 |
|
|
|
1,045 |
|
Loss on extinguishment of debt(2) |
|
2,376 |
|
|
|
239 |
|
Loss on Franchise Growth Acceleration Initiative activities(3) |
|
133 |
|
|
|
949 |
|
Total adjustments before income tax |
|
3,250 |
|
|
|
2,233 |
|
Income tax adjustments(4) |
|
(254 |
) |
|
|
(322 |
) |
Total adjustments after income tax |
|
2,996 |
|
|
|
1,911 |
|
Adjusted net income
attributable to Potbelly Corporation |
$ |
229 |
|
|
$ |
584 |
|
|
|
|
|
Adjusted net income
attributable to Potbelly Corporation per share, basic |
$ |
0.01 |
|
|
$ |
0.02 |
|
Adjusted net income
attributable to Potbelly Corporation per share, diluted |
$ |
0.01 |
|
|
$ |
0.02 |
|
|
|
|
|
Shares used in computing
adjusted net income attributable to Potbelly Corporation per
share: |
|
|
|
Basic |
|
29,551 |
|
|
|
28,907 |
|
Diluted |
|
30,812 |
|
|
|
29,662 |
|
|
For the Quarter Ended |
|
Mar 31, 2024 |
|
Mar 26, 2023 |
Net loss attributable to Potbelly Corporation, as reported |
$ |
(2,767 |
) |
|
$ |
(1,327 |
) |
Depreciation expense |
|
3,011 |
|
|
|
2,971 |
|
Interest expense, net |
|
364 |
|
|
|
667 |
|
Income tax expense |
|
51 |
|
|
|
105 |
|
EBITDA |
$ |
659 |
|
|
$ |
2,416 |
|
Impairment, loss on disposal of property and equipment and shop
closures(1) |
|
741 |
|
|
|
1,045 |
|
Stock-based compensation |
|
1,771 |
|
|
|
911 |
|
Loss on extinguishment of debt(2) |
|
2,376 |
|
|
|
239 |
|
Loss on Franchise Growth Acceleration Initiative activities(3) |
|
133 |
|
|
|
949 |
|
Adjusted EBITDA |
$ |
5,680 |
|
|
$ |
5,560 |
|
Potbelly Corporation |
Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures – Unaudited |
(amounts in thousands, except per share data) |
|
|
For the Quarter Ended |
|
Mar 31, 2024 |
|
Mar 26, 2023 |
Income (loss) from operations [A] |
$ |
118 |
|
|
$ |
(193 |
) |
Income (loss) from operations
margin [A÷B] |
|
0.1 |
% |
|
|
(0.2 |
)% |
Less: Franchise royalties, fees and rent income |
|
3,576 |
|
|
|
1,323 |
|
Franchise support, rent and marketing expenses |
|
2,537 |
|
|
|
591 |
|
General and administrative expenses |
|
11,547 |
|
|
|
9,969 |
|
Pre-opening costs |
— |
|
|
|
22 |
|
Loss on Franchise Growth Acceleration Initiative activities(2) |
|
133 |
|
|
|
949 |
|
Depreciation expense |
|
3,011 |
|
|
|
2,971 |
|
Impairment, loss on disposal of property and equipment and shop
closures(1) |
|
741 |
|
|
|
1,045 |
|
Shop-level profit
[C] |
$ |
14,511 |
|
|
$ |
14,031 |
|
Total revenues [B] |
$ |
111,153 |
|
|
$ |
118,270 |
|
Less: Franchise royalties, fees and rent income |
|
3,576 |
|
|
|
1,323 |
|
Sandwich shop sales, net
[D] |
$ |
107,577 |
|
|
$ |
116,947 |
|
Shop-level profit
margin [C÷D] |
|
13.5 |
% |
|
|
12.0 |
% |
Potbelly Corporation |
Selected Operating Data – Unaudited |
(amounts in thousands, except shop counts) |
|
|
For the Quarter Ended |
|
Mar 31, 2024 |
|
Mar 26, 2023 |
Selected Operating
Data |
|
|
|
Shop Activity: |
|
|
|
Company-operated shops, end of period |
345 |
|
|
373 |
|
Franchise shops, end of period |
82 |
|
|
53 |
|
Revenue Data: |
|
|
|
Company-operated comparable store sales |
(0.2 |
%) |
|
22.2 |
% |
|
For the Quarter Ended |
|
Mar 31, 2024 |
|
Mar 26, 2023 |
Sales from company-operated shops, net |
$ |
107,577 |
|
$ |
116,947 |
Sales from franchise shops,
net |
|
26,611 |
|
|
14,732 |
System-wide sales |
$ |
134,188 |
|
$ |
131,679 |
|
|
|
|
|
|
Potbelly
CorporationFootnotes to the Press Release,
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures & Selected Operating Data
(1) This adjustment includes costs related to
impairment of long-lived assets, loss on disposal of property and
equipment and shop closure expenses.
(2) This adjustment includes costs related to the
loss recognized upon the termination of the Company’s term loan and
former credit agreement for 2024 and 2023, respectively.
(3) This adjustment includes costs related to our
plan to grow our franchise units domestically through multi-unit
shop development area agreements, which may include refranchising
certain company-operated shops.
(4) 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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