Potbelly is the sandwich shop with the craveable quality and good vibes of a first-class dive. First Quarter 2022 Earnings Presentation -- May 5, 2022 -- Cautionary Statements Forward-Looking Statements In addition to historical information, this presentation 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 st ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________________________________________ FORM 10-Q ______________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 27, 2022 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ____to ____ Commission File Number: 001-36104 ___________ ...

PART I [Business](index=6&type=section&id=Item%201.%20Business) Potbelly Corporation operates 443 sandwich shops guided by its five-pillar "Traffic-Driven Profitability" strategy Shop Count as of December 26, 2021 | Shop Type | Count | | :--- | :--- | | Company-Operated | 397 | | Franchise-Operated | 46 | | **Total** | **443** | - The company's "Traffic-Driven Profitability" strategy is centered on five key pillars[23](index=23&type=chunk)[24](index=24&type=chunk) - Craveable Quality Food at a Great Value, People Creating Good Vibes, Customer Experiences that Drive Traffic Growth, Digitally Driven Awareness, Connection and Traffic, and Franchise Focused Development[24](index=24&type=chunk) - The system-wide average check per entree increased to approximately **$9.81** in fiscal 2021, up from $9.08 in 2020[30](index=30&type=chunk) - The company contracts with Distribution Market Advantage, Inc (DMA), which supplies **over 85%** of its food supplies through six primary distributors[59](index=59&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, industry competition, and operational challenges - **COVID-19 Pandemic Risks:** The pandemic has adversely affected and could continue to impact customer traffic, staffing, supply chains, and cause shop closures[78](index=78&type=chunk) - **Business and Industry Risks:** The company faces intense competition, risks of food-borne illness, and challenges related to its growing digital and third-party delivery business[85](index=85&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk)[91](index=91&type=chunk) - **Labor and Supply Chain Risks:** Profitability is sensitive to changes in commodity prices and labor costs, with reliance on a limited number of suppliers and distributors[98](index=98&type=chunk)[101](index=101&type=chunk) - **IT and Cybersecurity Risks:** Failures or security breaches of IT systems could interrupt operations, damage reputation, and lead to legal liabilities[120](index=120&type=chunk)[121](index=121&type=chunk) - **Debt-Related Risks:** The Revolving Credit Facility imposes business limitations, and there is uncertainty regarding the forgiveness of its **$10.0 million** Paycheck Protection Program (PPP) loan[143](index=143&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk) [Unresolved Staff Comments](index=31&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[177](index=177&type=chunk) [Properties](index=32&type=section&id=Item%202.%20Properties) The company leases all 397 of its company-operated shops, with a high concentration in Illinois and Texas Top 5 States/Districts by Number of Company-Operated Shops (as of Dec 26, 2021) | Location | Number of Shops | | :--- | :--- | | Illinois | 111 | | Texas | 62 | | Michigan | 30 | | Maryland | 28 | | District of Columbia | 22 | - The company does not own any real property; all company-operated shops are in leased premises[179](index=179&type=chunk) - Initial lease terms are typically ten years, with two additional five-year renewal options[179](index=179&type=chunk) - The corporate headquarters in Chicago, Illinois, occupies approximately 15,000 square feet under a lease through March 31, 2027[180](index=180&type=chunk) [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) The company faces ordinary course legal proceedings, which are not expected to have a material adverse impact - The company is subject to legal proceedings and claims arising in the ordinary course of business, which are generally covered by insurance[182](index=182&type=chunk) - Management does not expect the ultimate liability from these proceedings to have a material adverse impact on the company's financial condition or operations[182](index=182&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[183](index=183&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ, with no dividends planned or shares repurchased in fiscal 2021 - The company's common stock is listed on the NASDAQ under the symbol "PBPB"[184](index=184&type=chunk) - The company does not anticipate paying cash dividends in the foreseeable future, as it plans to retain funds for business development and growth[185](index=185&type=chunk) - There were no purchases of the company's common stock by or on behalf of Potbelly Corporation during the year ended December 26, 2021[186](index=186&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2021 revenue grew 30.5% to $380.1 million, with an improved net loss and recovering shop-level profit margins Fiscal Year 2021 vs. 2020 Performance | Metric | FY 2021 | FY 2020 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $380.1M | $291.3M | +30.5% | | Comparable Store Sales | +30.3% | -24.7% | N/A | | Net Loss Attributable to Potbelly | ($23.8M) | ($65.4M) | +63.6% | | Shop-Level Profit Margin | 8.5% | (1.4)% | +9.9pp | | Adjusted EBITDA | $0.5M | ($32.7M) | N/A | - The increase in revenue was primarily driven by the easing of COVID-19 restrictions and the national rollout of a new menu, which increased traffic and average check[225](index=225&type=chunk) - Food, beverage, and packaging costs as a percentage of sales decreased to **27.8%** from 28.4% due to menu price increases, partially offset by commodity inflation[228](index=228&type=chunk) - Labor and related expenses as a percentage of sales decreased to **33.7%** from 36.4% due to sales leverage, despite higher wage rates from labor availability challenges[230](index=230&type=chunk) - The company ended fiscal 2021 with a cash balance of **$14.4 million** and total liquidity of **$28.8 million**[253](index=253&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to market risks from variable interest rates and commodity price volatility - **Interest Rate Risk:** The company is subject to interest rate risk from its variable-rate credit facility, with **$9.9 million** outstanding as of December 26, 2021[282](index=282&type=chunk) - **Commodity Price Risk:** The company is exposed to price fluctuations for food commodities and manages this risk through pricing agreements with suppliers but does not use derivative instruments[283](index=283&type=chunk) [Financial Statements and Supplementary Data](index=51&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements and the independent auditor's report Consolidated Balance Sheet Highlights (as of Dec 26, 2021) | Account | Amount (in thousands) | | :--- | :--- | | Total Current Assets | $28,054 | | Total Assets | $253,237 | | Total Current Liabilities | $69,880 | | Total Liabilities | $255,654 | | Total Equity (Deficit) | ($2,417) | Consolidated Statement of Operations Highlights (FY 2021) | Account | Amount (in thousands) | | :--- | :--- | | Total Revenues | $380,052 | | Loss from Operations | ($22,488) | | Net Loss | ($23,623) | | Net Loss Attributable to Potbelly | ($23,784) | | Diluted Loss Per Share | ($0.86) | - The independent auditor, Deloitte & Touche LLP, issued an **unqualified opinion** on the financial statements and the company's internal control over financial reporting[286](index=286&type=chunk)[287](index=287&type=chunk) - The critical audit matter identified was the **evaluation of long-lived shop asset impairment**, due to the high degree of judgment required in forecasting individual shop cash flows[292](index=292&type=chunk) [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=76&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[397](index=397&type=chunk) [Controls and Procedures](index=76&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal controls over financial reporting were effective - Management concluded that as of December 26, 2021, the company's disclosure controls and procedures were **effective**[398](index=398&type=chunk) - Based on an assessment using the COSO framework, management concluded that the company's internal control over financial reporting was **effective** as of December 26, 2021[401](index=401&type=chunk) - There were **no changes** in internal control over financial reporting during the fourth quarter that materially affected, or are reasonably likely to materially affect, these controls[402](index=402&type=chunk) [Other Information](index=78&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[411](index=411&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=79&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Required information is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement[413](index=413&type=chunk) [Executive Compensation](index=79&type=section&id=Item%2011.%20Executive%20Compensation) Required information is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement[415](index=415&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=79&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference, with details provided on equity compensation plans Equity Compensation Plan Information (as of Dec 26, 2021) | Plan Category | Securities to be issued upon exercise (thousands) | Weighted-average exercise price | Securities remaining available for future issuance (thousands) | | :--- | :--- | :--- | :--- | | Approved by security holders | 538 | $12.03 | 1,568 | | Not approved by security holders | — | — | — | | **Total** | **538** | **$12.03** | **1,568** | [Certain Relationships and Related Transactions, and Director Independence](index=79&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Required information is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement[418](index=418&type=chunk) [Principal Accountant Fees and Services](index=79&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Required information is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's 2022 Annual Meeting Proxy Statement[419](index=419&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=80&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed as part of the Annual Report on Form 10-K - This section contains the list of financial statements filed with the report[420](index=420&type=chunk) - An Exhibit Index is provided, listing all exhibits filed as part of the Annual Report[421](index=421&type=chunk) - No financial statement schedules are provided because the required information is not applicable or is included elsewhere in the financial statements or notes[422](index=422&type=chunk)

Financial Data and Key Metrics Changes - In Q4 2021, total revenues reached $102.8 million, a 37% increase compared to Q4 2020, with same-store sales rising approximately 34% [10][25] - For the full year 2021, revenues totaled $380 million, up 30% from 2020, with same-store sales increasing over 30% [10][35] - The company reported positive adjusted EBITDA of $2.6 million in Q4 2021, a significant improvement from an adjusted EBITDA loss of $6.9 million in the prior year [26] - Shop level margins improved to 11.2% in Q4 2021, compared to negative 0.6% in Q4 2020 [27] Business Line Data and Key Metrics Changes - Digital sales accounted for approximately 36% of total sales for the full year, growing by about 11% year-over-year [16] - The annualized average unit volume (AUV) reached $1.05 million in Q4 2021, marking the second consecutive quarter at this level [14] Market Data and Key Metrics Changes - Significant recovery was noted across all shop types, particularly in airport, CBD, and university locations, which had previously lagged [15][40] - Same-store sales for CBD locations showed improvement, with expectations for continued recovery as businesses return to offices [43] Company Strategy and Development Direction - The company is focused on executing its five-pillar strategy to drive traffic and profitability, with an emphasis on digital marketing and customer engagement [17][48] - A long-term growth plan aims for AUVs of $1.3 million by 2024, with a target of at least 10% annual unit growth through franchising [59][67] - The company plans to refranchise approximately 25% of its company-operated shops over the next three years to spur growth [69] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, expecting record AUVs and double-digit growth in same-store sales despite ongoing inflationary pressures [49][50] - The company is proactively addressing labor market challenges with competitive wages and retention programs [21][30] Other Important Information - The company ended Q4 2021 with total liquidity of $28.8 million, including $14.4 million in cash [33] - G&A expenses were $9.0 million in Q4 2021, slightly decreasing as a percentage of total revenue due to higher sales volume [27] Q&A Session Summary Question: What are the top priorities to achieve the $1.3 million AUV target? - Management highlighted recovery in shop types, incrementality of digital business, and market penetration through refranchising as key priorities [74][76] Question: How much of the gap to $1.3 million can be filled by CBD recovery? - Management indicated that while CBD recovery will contribute, it is not solely dependent on it, as overall recovery is expected to drive AUV growth [80] Question: What are the projections for food and labor inflation in 2022? - The company anticipates continued inflation pressures, with COGS inflation around 7.4% for Q4 and labor inflation over 11% [81][82] Question: What is the composition of the 2,000 unit goal? - The majority of new units are expected to be suburban and drive-through locations, with continued support for CBD locations [85][86]

Financial Performance Highlights - Q4 2021 revenue reached $102.8 million, a 37% increase compared to Q4 2020[7, 13] - Full Year 2021 revenue totaled $380.1 million, up 30% from the previous year[7, 16] - Q4 2021 saw a Same Store Sales (SSS) increase of 33.8%[7, 14] - Full Year 2021 SSS increased by 30.3%[7, 17] - Adjusted EBITDA for Q4 2021 was $2.6 million, a $9.4 million increase compared to Q4 2020[7, 8, 14] - Adjusted EBITDA for Full Year 2021 was $0.5 million, a $33.2 million increase compared to Full Year 2020[7, 8, 17] Strategic Initiatives and Future Outlook - The company aims for AUVs of $1.3 million through continued recovery, increased marketing, and food innovation[39] - The company plans to refranchise approximately 25% of its shops to accelerate franchise unit growth[39] - The company is targeting franchise unit growth of 10%[39] - Q1 2022 sales are projected to be between $95.0 million and $98.0 million, with shop-level margins between 3.5% and 5.5%[28]

Third Quarter 2021 Earnings Presentation November 4, 2021 Cautionary Statements 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 concer ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 26, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number: 001-36104 (IRS Employer Identification Number) Registrant's Telephone Number, Including Area Code: (312) 951-0600 Securities registered pu ...

Potbelly Corporation (NASDAQ:PBPB) Q3 2021 Earnings Conference Call November 4, 2021 8:00 AM ET Company Participants Adiya Dixon - Chief Legal Officer Robert Wright - President and CEO Steven Cirulis - SVP and CFO Conference Call Participants Matt Curtis - William Blair Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machi ...

Financial Data and Key Metrics Changes - Revenues totaled $97.5 million, an increase of 24.9% compared to Q1 2021, with same-store sales increasing by 70% compared to Q2 2020 [10][25] - EBITDA improved significantly to positive $1.0 million from a loss of negative $10.0 million in Q1 2021, and adjusted EBITDA was $1.9 million for Q2 2021, a substantial improvement compared to negative $6.6 million in Q1 2021 [27] - The balance sheet strengthened with a net cash increase of $2 million, ending the quarter with $11.8 million of cash on hand [15][32] Business Line Data and Key Metrics Changes - All shop types gained sales growth momentum, with suburban and drive-thru locations showing significant strength, while CBD and airport locations lagged but are trending positively [11][33] - Average Unit Volume (AUV) rebounded nicely, up 23.8% compared to Q1 2021, and same-store sales continued to trend positively at 34.4% in July [13][22] Market Data and Key Metrics Changes - The recovery across all shop types is evident, with drive-thru, suburban, urban, and university locations trending above pre-pandemic levels [33] - Catering sales nearly doubled in the quarter, indicating a rebound in the catering business [35] Company Strategy and Development Direction - The company is focused on a Traffic-Driven Profitability strategy, with significant progress on initiatives such as a new simplified menu and a refreshed tech stack [17][38] - The priorities for the second half of the year include strengthening unit-level economics and accelerating shop-level profitability [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future, expecting continued positive cash flow and profitability in the second half of 2021 [40][92] - The company aims to open 3 to 5 new franchise shops in 2021, with new locations already opened in Tampa, Florida, and Cary, North Carolina [41][54] Other Important Information - The company appointed Larry Strain as Chief Development Officer, bringing over 25 years of experience in real estate and franchise development [16] - The new Tech Stack launched in July includes a mobile app, website, and loyalty program integration, enhancing customer experience [19][48] Q&A Session Summary Question: Update on human capital initiatives supporting the Simplified Menu and Tech Stack - Management highlighted the importance of human capital and reported success in staffing locations, with new training materials developed for the new menu [56][58] Question: Thoughts on the appointment of Larry Strain and franchising process - Management expressed excitement about Larry's experience and emphasized the importance of unit-level economics for successful franchising [61][63] Question: Context on underlying cost inflation and visibility for the back half of the year - Management indicated that 90% of the cost basket is locked, mitigating the impact of inflation, and emphasized effective labor management strategies [66][69] Question: Real estate optimization plan and temporarily closed stores - Management confirmed that the bulk of the optimization work was completed last year, with only a few temporary closures remaining [70][72] Question: Expectations for G&A run rate in the second half - Management aims to manage G&A to a sub 9% of sales level, with costs expected to move with business growth [74] Question: Menu pricing strategy heading into the second half - Management discussed a careful approach to pricing, focusing on check growth rather than traditional price increases, aligning with customer expectations [78][82] Question: Marketing plans for the upcoming menu launch - Management outlined an integrated marketing plan leveraging digital channels and the Perks program to promote the new menu [84][88]

Financial Performance - Revenue for Q2 2021 reached $97.5 million[6], while the operating loss was ($3.5) million[6] and the net loss was ($3.9) million[6] - Adjusted EBITDA for Q2 2021 was $1.9 million[6] - Same-store sales (SSS) increased by 70% in Q2 2021 compared to 2020[6], approaching 2019 levels with a decrease of only 0.7%[7] - Average Unit Volume (AUV) increased by approximately 24% sequentially[7] - The company expanded its net cash position by approximately $2 million[9] Strategic Initiatives & Future Outlook - The company launched a new tech stack including a new mobile app, website, digital order integration, and Perks loyalty program[6, 12] - The company expects continued comparable sales growth for Q3 and Q4 2021[27] - The company anticipates generating the majority of Adjusted EBITDA during the second half of 2021 and expects enterprise-level profitability[27] - The company is executing a franchise growth plan with 3-5 franchise openings[27] Performance by Shop Type & Service Mode - Suburban and Drive-thru shops continue to show strength, while CBD and airport locations are yet to fully recover[7] - There's a recent mix shift to Dine-In, with In-Shop accounting for 55% of the service mode mix in Q2 2021[23]