Potbelly Corporation Reports Results for Third Fiscal Quarter 2024

Potbelly Corporation Reports Results for Third Fiscal Quarter 2024

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GAAP EPS of $0.12 +140% y-y and Adjusted EPS of $0.08 +100% y-y

Increased Profitability with Net Income +150% y-y and Adjusted EBITDA +19% y-y

Eight shop openings and 32 additional franchise shop commitments in the third quarter

CHICAGO, Nov. 07, 2024 // GLOBE NEWSWIRE // -- Potbelly Corporation (NASDAQ: PBPB), (“Potbelly” or the “Company”) the iconic neighborhood sandwich shop concept, today reported financial results for its third fiscal quarter ended September 29, 2024.

Key highlights for the quarter ended September 29, 2024, compared to September 24, 2023:

  • Average Weekly Sales (AWS) decreased 1.3% to $24,870 compared to $25,190.
  • Total revenues decreased by 4.7% to $115.1 million compared to $120.8 million.
    • Company-operated sandwich shop sales, net decreased $7.6 million or 6.4% driven by the short-term impact of last year’s refranchising, which included the sale of 26 company shops since Q2 2023.
    • Franchise royalties, fees and rent income increased $1.9 million or 79.2% driven by a 30% increase in franchised units.
  • Company-operated same-store sales in the third quarter decreased 1.8%.
  • GAAP net income attributable to Potbelly Corporation was $3.7 million compared to $1.5 million. GAAP diluted earnings per share (EPS) was $0.12 compared to $0.05.
  • Adjusted net income1 attributable to Potbelly Corporation was $2.5 million compared to $1.1 million. Adjusted diluted EPS1 was $0.08 compared to $0.04.
  • Adjusted EBITDA1 increased 19.0% to $8.7 million compared to $7.3 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, “During the third quarter, our team once again demonstrated the effectiveness of our five-pillar strategic plan amidst a dynamic consumer environment. Our app and Potbelly Perks program drove a positive shift in our comp trajectory and engagement with our brand, while our $7.99 everyday value platform supported sales and traffic; We achieved a 70-basis point year-over-year improvement in our shop profit margins; metered our G&A spend to deliver EBITDA growth; and opened eight new shops with our franchise partners as we further accelerate our unit growth. While I’m thrilled with what we’ve accomplished together to date, I believe the future for Potbelly is even brighter.”

Wright continued, “Starting November 11th, Potbelly customers can enjoy new permanent additions to our core menu, including two new sandwiches made with our slow-cooked pulled pork and they can also uniquely tailor their experience with exciting new sauces and toppings options for every sandwich. In addition, we completed the systemwide rollout of Craft Refreshers at the end of September in partnership with Tractor Beverage Company, capitalizing on the trend toward non-carbonated, cold beverages. Overall, through our craveable, quality food at a great value, a winning digital strategy that continues to drive awareness, connection and traffic, and a strong franchise-led growth pipeline with a clear path to 2,000 units in the US, we are ready to capitalize on the opportunities ahead to take Potbelly to the next level of growth in 2025 and beyond.”

Financial Outlook

The company introduces 4Q’24 and updated 2024 guidance below, while reiterating the previously provided long-term growth ranges.

  4Q’24 Guidance
Same Store Sales % Growth -2.5% to -0.5%
Adjusted EBITDA (2) $7.0M to $8.0M

 

  2024 Guidance
Same Store Sales % Growth -1.2% to -0.5%
New Unit Growth 24-26 shops
Adjusted EBITDA (2) $29.5M to $30.5M

(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.

Development Update

During the third quarter, the Company opened eight Potbelly shops bringing the total number of new shops to 15 through the end of the third quarter and two additional locations so far during the fourth quarter, 2024. The Company now expects to open 9-11 total shops in the fourth quarter for a total of 24-26 shops for the year as Hurricanes Helene and Milton impacted some of its Florida franchisees’ ability to open units in the short term.

In addition, during the third quarter, the Company signed franchise shop commitments, for a total of 32 new Potbelly shops bringing the total number of new franchise shop commitments signed in 2024 to 86. As of September 29, 2024, Potbelly has 695 open and committed shops representing an increase of 28% over the third quarter of 2023.

Share Repurchase Program

As of September 29, 2024, the Company had repurchased approximately 116 thousand shares of its common stock for a total of approximately $0.9 million. As of September 29, 2024, the Company had $19.1 million under its three-year share repurchase program authorized on May 7, 2024.

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 using 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 1-833-630-1088 in the U.S. & Canada, or 1-412-317-1817 internationally.

For those unable to participate, an audio replay will be available following the call through Thursday, November 14, 2024. To access the replay, please call 844-512-2921 (U.S. & Canada), or 412-317-6671 (International) and enter confirmation code 10192439. A web-based archive of the conference call will also be available at the above website.

About Potbelly

Potbelly 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.” Because the Company is not able to estimate the impact of specific line items, which have the potential to significantly impact, favorably or unfavorably, the Company's reported earnings in future periods, the Company is not providing a reconciliation for the 2024 guidance.

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) 3Q’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.

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
  Sep 29,
2024		   % of
Revenues		   Sep 24,
2023		   % of
Revenues		   Sep 29,
2024		   % of
Revenues		   Sep 24,
2023		   % of
Revenues
Revenues                                            
Sandwich shop sales, net $ 110,769       96.2 %   $ 118,340       98.0 %   $ 333,882       96.5   %   $ 359,995       98.5 %
Franchise royalties, fees and rent income   4,351       3.8       2,428       2.0       12,088       3.5         5,665       1.5  
Total revenues   115,120       100.0       120,768       100.0       345,970       100.0         365,660       100.0  
                                             
Expenses                                            
(Percentages stated as a percent of sandwich shop sales, net)                                            
Sandwich shop operating expenses, excluding depreciation                                            
Food, beverage and packaging costs   29,469       26.6       32,901       27.8       90,045       27.0         100,424       27.9  
Labor and related expenses   32,274       29.1       34,188       28.9       96,840       29.0         108,556       30.2  
Occupancy expenses   11,803       10.7       12,653       10.7       36,060       10.8         39,046       10.8  
Other operating expenses   20,255       18.3       21,277       18.0       61,348       18.4         62,686       17.4  
                                             
(Percentages stated as a percent of total revenues)                                            
Franchise support, rent and marketing expenses   2,795       2.4       1,553       1.3       8,333       2.4         3,359       0.9  
General and administrative expenses   10,597       9.2       11,894       9.8       34,010       9.8         33,558       9.2  
Depreciation expense   3,236       2.8       3,044       2.5       9,263       2.7         8,902       2.4  
Pre-opening costs   55       NM       59       NM       151       NM         114       NM  
Loss on Franchise Growth Acceleration Initiative activities   —       NM       110       NM       161       NM         1,073       0.3  
Impairment, loss on disposal of property and equipment and shop closures   384       0.3       458       0.4       1,270       0.4         2,161       0.6  
Total expenses   110,868       96.3       118,137       97.8       337,481       97.5         359,879       98.4  
Income from operations   4,252       3.7       2,631       2.2       8,489       2.5         5,781       1.6  
                                             
Interest expense, net   162       0.1       853       0.7       707       0.2         2,531       0.7  
Loss on extinguishment of debt   —       NM       —       NM       2,376       NM         239       0.1  
Income before income taxes   4,090       3.6       1,778       1.5       5,406       1.6         3,011       0.8  
Income tax expense (benefit)   11       NM       129       0.1       (30,920 )     (8.9 )       186       NM  
Net income   4,079       3.5       1,649       1.4       36,326       10.5         2,825       0.8  
Net income attributable to non-controlling interest   344       0.3       154       0.1       646       0.2         442       0.1  
Net income attributable to Potbelly Corporation $ 3,735       3.2 %   $ 1,495       1.2 %   $ 35,680       10.3   %   $ 2,383       0.7 %
                                             
Net income per common share attributable to common stockholders:                                            
Basic $ 0.12             $ 0.05             $ 1.20           $ 0.08          
Diluted $ 0.12             $ 0.05             $ 1.16           $ 0.08          
Weighted average shares outstanding:                                            
Basic   29,939               29,324               29,805             29,143          
Diluted   30,380               30,028               30,654             29,915          

_______________________________
"NM" - Amount is not meaningful

 

 

Potbelly Corporation
Consolidated Balance Sheets–Unaudited
(amounts in thousands, except par value data)
 
  September 29,
2024		   December 31,
2023
Assets      
Current assets      
Cash and cash equivalents $ 11,200     $ 33,788  
Accounts receivable, net of allowances of $33 and $26 as of September 29, 2024 and December 31,
2023, respectively		   10,045       7,960  
Inventories   3,511       3,516  
Prepaid expenses and other current assets   7,081       7,828  
Assets classified as held-for-sale   —       —  
Total current assets   31,837       53,092  
       
Property and equipment, net   48,490       45,087  
Right-of-use assets for operating leases   135,007       144,390  
Indefinite-lived intangible assets   3,404       3,404  
Goodwill   2,053       2,056  
Restricted cash   749       749  
Deferred tax assets   31,201       —  
Deferred expenses, net and other assets   5,908       3,681  
Total assets $ 258,649     $ 252,460  
       
Liabilities and equity      
Current liabilities      
Accounts payable $ 8,255     $ 9,927  
Accrued expenses   33,664       35,377  
Short-term operating lease liabilities   23,494       24,525  
Current portion of long-term debt   —       1,250  
Total current liabilities   65,413       71,078  
       
Long-term debt, net of current portion   3,000       19,168  
Long-term operating lease liabilities   130,441       142,050  
Other long-term liabilities   7,269       6,070  
Total liabilities   206,123       238,367  
       
Equity      
Common stock, $0.01 par value—authorized 200,000 shares; outstanding 29,935 and 29,364 shares as of September 29, 2024 and December 31, 2023, respectively   398       389  
Warrants   1,745       2,219  
Additional paid-in-capital   468,685       462,583  
Treasury stock, held at cost, 10,392 and 10,077 shares as of September 29, 2024, and December 31, 2023, respectively   (119,839 )     (116,701 )
Accumulated deficit   (298,117 )     (333,797 )
Total stockholders’ equity   52,872       14,693  
Non-controlling interest   (346 )     (600 )
Total equity   52,526       14,093  
       
Total liabilities and equity $ 258,649     $ 252,460  

 

 

Potbelly Corporation
Consolidated Statements of Cash Flows–Unaudited
(amounts inthousands)
 
  For the Year to Date Ended
  September 29,
2024		   September 24,
2023
Cash flows from operating activities:      
Net income $ 36,326     $ 2,825  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation expense   9,263       8,902  
Noncash lease expense   18,632       18,890  
Deferred income tax   (31,476 )     (82 )
Stock-based compensation expense   4,327       3,408  
Asset impairment, loss on disposal of property and equipment and shop closures   759       824  
Loss on Franchise Growth Acceleration Initiative activities   161       1,030  
Loss on extinguishment of debt   2,376       224  
Other operating activities   182       331  
Changes in operating assets and liabilities:      
Accounts receivable, net   (2,107 )     (1,499 )
Inventories   12       227  
Prepaid expenses and other assets   (753 )     (934 )
Accounts payable   (2,312 )     (2,019 )
Operating lease liabilities   (21,234 )     (20,473 )
Accrued expenses and other liabilities   (1,096 )     2,847  
Net cash provided by operating activities:   13,060       14,501  
       
Cash flows from investing activities:      
Purchases of property and equipment   (13,017 )   $ (12,252 )
Proceeds from sale of refranchised shops and other assets   227       1,362  
Other investing activities   (210 )     —  
Net cash used in investing activities:   (13,000 )     (10,890 )
       
Cash flows from financing activities:      
Borrowings under Revolving Facility   9,000       —  
Borrowings under Term Loan   —       25,000  
Borrowings under Former Credit Facility   —       14,600  
Repayments under Revolving Facility   (6,000 )     —  
Repayments under Term Loan   (22,827 )     —  
Repayments under Former Credit Facility   —       (23,150 )
Payment of debt issuance costs   (623 )     (2,204 )
Proceeds from exercise of warrants   1,309       961  
Employee taxes on certain stock-based payment arrangements   (2,178 )     (1,251 )
Contributions from non-controlling interest   303       —  
Distributions to non-controlling interest   (695 )     (560 )
Principal payments made for Term Loan   —       (938 )
Treasury Stock repurchase   (937 )     —  
Net cash (used in) provided by financing activities:   (22,648 )     12,458  
       
Net change in cash and cash equivalents and restricted cash   (22,588 )     16,069  
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 $ 11,949     $ 31,688  
       
Supplemental cash flow information:      
Income taxes paid $ 727     $ 428  
Interest paid $ 569     $ 2,349  
       
Supplemental non-cash investing and financing activities:      
Unpaid liability for purchases of property and equipment $ 1,632     $ 859  
Unpaid liability for employee taxes on certain stock-based payment arrangements $ 40     $ 38  

 

 

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
  September 29, 2024   September 24, 2023   September 29, 2024   September 24, 2023
Net income attributable to Potbelly Corporation, as reported $ 3,735     $ 1,495     $ 35,680     $ 2,383  
Impairment, loss on disposal of property and equipment and shop closures(1)   384       458       1,270       2,161  
Loss on extinguishment of debt(2)   —       —       2,376       239  
Loss on Franchise Growth Acceleration Initiative activities(3)   —       110       161       1,073  
Total adjustments before income tax   384       568       3,807       3,473  
Income tax adjustments(4)   (1,617 )     (983 )     (34,232 )     (2,160 )
Total adjustments after income tax   (1,233 )     (415 )     (30,425 )     1,313  
Adjusted net income attributable to Potbelly Corporation $ 2,502     $ 1,080     $ 5,255     $ 3,696  
               
Adjusted net income attributable to Potbelly Corporation per share, basic $ 0.08     $ 0.04     $ 0.18     $ 0.13  
Adjusted net income attributable to Potbelly Corporation per share, diluted $ 0.08     $ 0.04     $ 0.17     $ 0.12  
               
Shares used in computing adjusted net income attributable to Potbelly Corporation per share:              
Basic   29,939       29,324       29,805       29,143  
Diluted   30,380       30,028       30,654       29,915  

 

  For the Quarter Ended   For the Year to Date Ended
  September 29,
2024		   September 24,
2023		   September 29,
2024		   September 24,
2023
Net income attributable to Potbelly Corporation, as reported $ 3,735     $ 1,495     $ 35,680     $ 2,383  
Depreciation expense   3,236       3,044       9,263       8,902  
Interest expense, net   162       853       707       2,531  
Income tax expense (benefit)   11       129       (30,920 )     186  
EBITDA $ 7,144     $ 5,521     $ 14,730     $ 14,002  
Impairment, loss on disposal of property and equipment and shop closures(1)   384       458       1,270       2,161  
Stock-based compensation expense   1,136       1,192       4,328       3,407  
Loss on extinguishment of debt(2)   —       —       2,376       239  
Loss on Franchise Growth Acceleration Initiative activities(3)   —       110       161       1,073  
Adjusted EBITDA $ 8,664     $ 7,281     $ 22,865     $ 20,882  

 

 

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
  September 29,
2024		   September 24,
2023		   September 29,
2024		   September 24,
2023
Income from operations [A] $ 4,252     $ 2,631     $ 8,489     $ 5,781  
Income from operations margin [A÷B]   3.7 %     2.2 %     2.5 %     1.6 %
Less: Franchise royalties, fees and rent income   4,351       2,428       12,088       5,665  
Franchise support, rent and marketing expenses   2,795       1,553       8,333       3,359  
General and administrative expenses   10,597       11,894       34,010       33,558  
Depreciation expense   3,236       3,044       9,263       8,902  
Pre-opening costs   55       59       151       114  
Loss on Franchise Growth Acceleration Initiative activities(3)   —       110       161       1,073  
Impairment, loss on disposal of property and equipment and shop closures(1)   384       458       1,270       2,161  
Shop-level profit [C] $ 16,968     $ 17,321     $ 49,589     $ 49,283  
Total revenues [B] $ 115,120     $ 120,768     $ 345,970     $ 365,660  
Less: Franchise royalties, fees and rent income   4,351       2,428       12,088       5,665  
Sandwich shop sales, net [D] $ 110,769     $ 118,340     $ 333,882     $ 359,995  
Shop-level profit margin [C÷D]   15.3 %     14.6 %     14.9 %     13.7 %

 

Potbelly Corporation
Selected Operating Data – Unaudited
(amounts in thousands, except shop counts)
 
  For the Quarter Ended   For the Year to Date Ended
  September 29,
2024		   September 24,
2023		   September 29,
2024		   September 24,
2023
Selected Operating Data              
Revenue Data:              
Company-operated comparable store sales   (1.8 )%     8.0 %     (0.6 %)     14.0 %
System-Wide Sales:              
Sales from company-operated shops, net $ 110,769     $ 118,340     $ 333,882     $ 359,995  
Sales from franchise shops, net(5)   28,464       19,863       84,009       52,203  
System-wide sales $ 139,233     $ 138,203     $ 417,891     $ 412,198  

 

  For the Quarter Ended   For the Year to Date Ended
  September 29,
2024		   September 24,
2023		   September 29,
2024		   September 24,
2023
Company-operated shops:              
Beginning of period   345       372       345       384  
Openings   1       1       3       1  
Shops sold to franchise   —       (12 )     (1 )     (20 )
Closures   (1 )     —       (2 )     (4 )
Shops at end of period   345       361       345       361  
Franchised shops:              
Beginning of period   84       55       79       45  
Openings   7       2       12       4  
Shops sold to franchise   —       12       1       20  
Closures   (1 )     —       (2 )     —  
Shops at end of period   90       69       90       69  
System-wide shops:              
Beginning of period   429       427       424       429  
Openings   8       3       15       5  
Closures   (2 )     —       (4 )     (4 )
Shops at end of period   435       430       435       430  

Potbelly Corporation

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) 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.

5) Sales from franchise shops, net for the quarter ended June 30, 2024 was inadvertently understated by $2.2 million. The amounts presented have been adjusted to correctly reflect those sales in the year-to-date period. This error had no impact on any other previously reported GAAP or non-GAAP measures.

SOURCE Potbelly Corporation

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Media Contact:

ICR
PotbellyPR@icrinc.com 

 


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