CHICAGO, May 06, 2021 // GLOBE NEWSWIRE // - Potbelly Corporation (NASDAQ: PBPB), the iconic neighborhood sandwich shop concept, today reported financial results for the first fiscal quarter ended March 28, 2021.
First Quarter Strategic Successes:
Key highlights for the thirteen weeks ended March 28, 2021 compared to December 27, 2020:
Bob Wright, President and Chief Executive Officer of Potbelly Corporation, commented, “As expected, we are seeing incremental improvement across our business as the nation continues to emerge from the pandemic. We are highly encouraged by our first quarter performance - which exceeded our expectations - and that strength has continued so far in the second quarter. The outperformance was driven by some early benefits from our strategic initiatives, operational efficiencies and improvement in the overall environment as a result of re-openings in our core markets and consumers returning to indoor dining. We achieved shop-level profitability during the quarter and continue to strive towards our stated target of enterprise-level profitability as well as positive cash flow in the second half of the year.”
Wright added, “Our ‘Traffic-Driven Profitability’ strategic plan is building internal momentum, as several of the initiatives are being tested and/or implemented across our platform. We are seeing some success in the early stages of our tech stack upgrades including ‘stickiness’ in our digital business, despite steady improvements in foot traffic and on-premise dining. We are also achieving positive results from our new menu testing, which has now been rolled out to additional locations and are receiving favorable feedback on our digital and social media campaigns. On the operational side, we are seeing improved efficiencies, particularly within labor, which is resulting in better performing shops and improved customer experience. The Perks loyalty program is having great success with growth rates well above the rest of the business. Finally, we continued to strengthen the Potbelly leadership team and have filled another critical role with the addition of Scott Swayne as Chief People Officer.”
Steve Cirulis, Chief Financial Officer, added, “This quarter’s strong momentum further solidified our expectations for 2021, which continue to include: 1) sequential improvement in top-line results throughout each quarter of fiscal 2021, 2) the majority of our operating earnings and Adjusted EBITDA are expected to be generated in the second half of 2021, and 3) we expect to deliver enterprise-level profitability as well as positive cash flow during the second half of the year. Finally, our strong balance sheet, solid liquidity foundation and expectation of positive free cash flow to be generated by improving sales in the second half of the year provides us the flexibility to invest in the business and execute against our strategic initiatives. We will remain disciplined in terms of controlling costs and balanced in terms of investing in our strategic initiatives, with an intent to drive long-term sustainable growth.”
Definitions
The following definitions apply to these terms as used throughout this press release:
1Non-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 loss, 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 special items that affect the comparability of results in past quarters. 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 future financial position and results of operations, business strategy, budgets, projected costs and plans and objectives of management for future operations, our expectations regarding improvements in top-line results throughout each fiscal quarter in 2021, our expectation that the majority of our operating earnings and Adjusted EBITDA will be generated in the second half of 2021, our expectation that we will deliver enterprise-level profitability and positive cash flow during the second half of 2021, the strengthening of our liquidity position throughout 2021 and our intention to stay disciplined in controlling costs and balanced in investing in our strategic initiatives. 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 our 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. 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.
Potbelly Corporation
Consolidated Statements of Operations and Margin Analysis – Unaudited
(Amounts in thousands, except per share data)
Potbelly Corporation
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures – Unaudited
(Amounts in thousands, except per share data)
Potbelly Corporation
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures – Unaudited
(Amounts in thousands, except per share data)
Footnotes 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) The Company incurred certain professional and other costs and associated benefits related to the shareholder proxy matter.
(3) This adjustment includes the tax impacts of the other adjustments listed above based on the Company’s effective tax rate, the change in the Company’s income tax valuation allowance during the period, and the discrete income tax benefit from the carryback of prior year net operating losses and refund of prior year alternative minimum tax credits, offset by the impact of ASU 2016-09.
SOURCE Potbelly Corporation
With a 46-year track record, 1.3M+ Avg. Gross Sales* and flexible footprints, Potbelly is a perfect addition to your portfolio. *Top 25% of franchised Potbelly shops operating during 12-period timeframe in 2022.