Potbelly Corporation (NASDAQ:PBPB) Q4 2024 Earnings Conference Call March 6, 2025 5:00 PM ET Company Participants Adiya Dixon – Senior Vice President, Chief Legal Officer and Secretary Bob Wright – President and Chief Executive Officer Steve Cirulis – Senior Vice President and Chief Financial Officer Conference Call Participants Jeremy Hamblin – Craig Hallum Capital Group Alex Sturnieks – Lake Street Capital Markets Todd Brooks – The Benchmark Company Matt Curtis – William Blair Bob Wright Good afternoon, a ...

分组1 - Potbelly reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.06 per share, and showing an increase from $0.02 per share a year ago, resulting in an earnings surprise of 116.67% [1] - The company posted revenues of $116.63 million for the quarter ended December 2024, which was a slight miss compared to the Zacks Consensus Estimate, and a decrease from $125.75 million year-over-year [2] - Potbelly has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] 分组2 - The stock has increased approximately 23.7% since the beginning of the year, contrasting with a -0.7% decline in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.04 on revenues of $114.8 million, and for the current fiscal year, it is $0.27 on revenues of $482.5 million [7] - The Zacks Industry Rank for Retail - Restaurants is in the top 27% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Company Operations - As of December 29, 2024, Potbelly had 442 shops across 29 states and the District of Columbia, with 346 company-operated and 96 franchise-operated locations[18]. - The company employs over 5,000 team members, with a focus on maintaining a positive and inclusive workplace culture[36][37]. - The company’s shops average approximately 2,300 square feet, with a target size of 1,800 to 2,200 square feet for new openings, designed to create a unique customer experience[52]. - Approximately 63% of the company's domestic company-operated shops are located in Illinois, Texas, Michigan, Washington, D.C., and Virginia, with shops in the Chicago metropolitan area comprising about 27%[159]. - In 2024, the company opened five new company-operated shops and closed three, with a focus on franchise shop development expected to drive most growth in 2025[49]. Financial Performance - In fiscal year 2024, the system-wide average check per entree was approximately $11.85, slightly down from $11.87 in 2023[28]. - The average check per entree reflects the company's commitment to providing high-quality food at reasonable prices, contributing to customer value[28]. - The average investment for a new shop is approximately $750,000, with average unit volumes exceeding $1.3 million for fiscal year 2024, aiming for shop-level profit margins in the mid to high teens[50]. - The company has no plans to pay regular cash dividends for the foreseeable future, which may affect the return on investment for shareholders[184]. - Future decisions regarding dividends will depend on the company's financial condition, cash requirements, and other relevant factors[184]. Growth and Expansion - Potbelly's franchise program has 276 commitments for future openings, indicating a focus on expanding franchise growth[27]. - The company has increased its marketing resources, focusing on digital channels to drive traffic growth and brand awareness[57]. - The "Traffic-Driven Profitability" strategic plan includes five pillars aimed at driving profitable growth, focusing on customer experience and digital engagement[22][23]. - The company plans to continue emphasizing mobile and digital ordering, delivery, and catering, although these efforts may face unexpected operational challenges[166]. Supply Chain and Operations - The company sources over 90% of its food supplies through six primary distributors, with meats representing approximately 30% of product purchasing composition[62][64]. - The company relies on a limited number of suppliers, purchasing almost all bread from one supplier and over 90% of meat products from 10 suppliers, which poses a risk to operations if these suppliers fail to meet obligations[119]. - Shortages or interruptions in the supply of fresh food products could negatively impact the availability, quality, and cost of ingredients, affecting operating results[118]. - The company utilizes forward pricing arrangements with suppliers to manage commodity price risks, but these arrangements are generally short-term and may not provide sufficient protection against price fluctuations[116]. Risks and Challenges - The company faces significant competition in the fast-casual restaurant segment, competing on product quality, service, and price against established competitors[67]. - The company faces challenges in attracting and retaining qualified personnel, which could lead to increased labor costs and operational difficulties, potentially affecting financial performance[121]. - Increased commodity and energy costs could decrease shop-level profit margins, with potential impacts from inflation, supply shortages, and geopolitical events such as the Russia-Ukraine conflict[116]. - Negative publicity regarding food quality or public health concerns could materially harm the company's results of operations and brand reputation[162]. - The company is experiencing labor cost inflation, which could significantly increase operational costs and adversely affect financial performance[171]. Legal and Compliance - The company is subject to legal and compliance risks related to data privacy and protection, with potential costs arising from non-compliance or data breaches[127]. - The company is subject to extensive federal, state, and local laws, which can increase compliance costs and complexity[142]. - The company faces risks related to litigation, including class action lawsuits alleging violations of workplace and employment laws, which could result in substantial damages[148]. - The company is required to obtain and maintain various licenses and permits to operate, with failure to do so potentially harming business operations[147]. Corporate Governance and Financial Structure - The company has entered into an equity sales agreement with William Blair & Company, allowing for the issuance and sale of common stock with an aggregate offering price of up to $40 million[182]. - The company has provisions in its bylaws that may discourage or delay changes in control or management, potentially impacting stock price[180]. - Section 203 of the Delaware General Corporation Law may restrict certain business combinations for three years for stockholders owning 15% or more of the voting stock[181]. - Restrictions exist on stockholders' ability to fill board vacancies and call special meetings, which may limit shareholder influence[184]. - The company’s bylaws can only be amended by a two-thirds majority vote of the outstanding shares, which may deter hostile takeovers[184].

Company Information - The company is listed on the NASDAQ under the symbol PBPB[2] Financial Results - Potbelly Corporation issued a press release on January 13, 2025, providing preliminary results for Q4 2024[4] - The report does not include specific financial figures or performance metrics in the provided content[4]

Core Insights - Potbelly Corporation reported significant growth in Q4 2024, with GAAP EPS of $0.15, a 67% increase year-over-year, and adjusted EPS of $0.13, a remarkable 550% increase year-over-year [1] - The company achieved a net income increase of 69% year-over-year and an adjusted EBITDA growth of 30% year-over-year [1] - Potbelly opened eight new shops in Q4 and secured 29 additional franchise commitments, contributing to a total of 727 open and committed shops, representing an 18.8% increase from the previous year [1][9] Financial Performance - Q4 total revenues decreased by $9.1 million or 7.3% to $116.6 million compared to $125.7 million, primarily due to the impact of the previous year's 53-week fiscal period and refranchising activities [6] - For the full year 2024, total revenues decreased by $28.8 million or 5.9% to $462.6 million compared to $491.4 million [6] - Company-operated same-store sales in Q4 increased by 0.3%, a decline from the 6.3% increase in the prior year [6] Profitability Metrics - Adjusted net income for Q4 was $3.9 million compared to $0.7 million in the previous year, while adjusted diluted EPS was $0.13 compared to $0.02 [6] - Adjusted EBITDA for Q4 increased by 30% to $9.7 million compared to $7.5 million [6] - For the full year, adjusted net income was $9.2 million compared to $4.4 million, with adjusted diluted EPS rising to $0.30 from $0.15 [6] Growth Strategy - The company plans to continue driving comparable sales growth through menu innovation and investments in digital assets, with a target of opening at least 38 new shops in 2025 [5][7] - Potbelly aims to enhance its customer loyalty program and modernize its shop footprint to support long-term growth objectives [5] Share Repurchase Program - In Q4, Potbelly repurchased approximately 48,000 shares for about $0.5 million, with $18.6 million remaining under its share repurchase program authorized in May 2024 [10]

Core Points - Potbelly Corporation has launched the Potbelly 50/50 Large Area Developer Incentive Program to reward franchisees for efficient shop development timelines, supporting long-term growth plans [1][2] - The program offers financial benefits such as reduced initial franchise fees, reduced deposit fees, and a 50% discount on royalty fees for franchisees who open at least 15 shops within eight years [2][3] - The company aims to attract existing franchisees from non-competing brands with strong financial backgrounds to help scale the Potbelly brand across various U.S. markets [3] Company Overview - Potbelly Corporation is a neighborhood sandwich concept that has been operating for over 40 years, known for its warm sandwiches, salads, and shakes [5] - The company has more than 440 shops in the U.S., including over 90 franchised locations, and emphasizes fresh, fast, and friendly service [5]

Core Viewpoint - Potbelly Corporation (PBPB) is set to report its fourth-quarter 2024 results on March 6, with expectations of improved earnings per share but a decline in revenue compared to the previous year [1][3]. Earnings Estimates - The Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) is 6 cents, reflecting a 200% increase from 2 cents in the same quarter last year [3]. - Revenue is projected at $116.9 million, indicating a 7% decrease from the previous year's figure [3]. Factors Influencing Performance - Potbelly's fourth-quarter results are anticipated to benefit from menu innovation, digital strategies, and a franchise-led expansion approach [4]. - New menu items, such as the Smokestack Pork & Mac sandwich and the Cubano, along with the $7.99 Everyday Value Combo, are expected to enhance customer engagement and repeat visits [5]. - The Potbelly Perks loyalty program is likely to have improved customer retention through personalized offers and rewards, contributing to increased traffic both in-store and online [6]. Expansion Plans - The company plans to open 9 to 11 new shops in the fourth quarter and a total of 24 to 26 shops throughout 2024, which is expected to support performance [7]. Market Challenges - Potbelly is facing a challenging consumer environment, with economic pressures potentially impacting discretionary spending and same-store sales growth [8]. - Rising operational costs, including labor and occupancy expenses, may affect shop-level profitability [8]. Sales Growth Projections - The company anticipates same-store sales growth to range between negative 2.5% and negative 0.5% for the fourth quarter, with adjusted EBITDA projected between $7 million and $8 million [9]. Earnings Prediction Model - The current model does not predict an earnings beat for Potbelly, as the Earnings ESP stands at 0.00% [10]. - Potbelly holds a Zacks Rank of 2, indicating a "Buy" rating [11].

CHICAGO, Feb. 26, 2025 (GLOBE NEWSWIRE) -- Potbelly Corporation (NASDAQ: PBPB), the iconic neighborhood sandwich shop, is excited to announce a significant expansion in St. Louis, Missouri, with the signing of a new Shop Development Agreement (SDA). Longtime franchisee Todd Stimson, who currently owns and operates three Potbelly locations in the area, has committed to opening an additional seven shops in the St. Louis region, further strengthening the brand's presence and growth in the market. The developme ...

Core Insights - Potbelly Corporation is expanding its presence in Texas by signing two Shop Development Agreements, which will add 11 new locations in the Greater Houston and Austin areas [1][3] - The franchise partners, Dana and Richard Biddy, will open five shops in the Pearland-Galveston region, while Jignesh and Nitin Patel will establish six locations in Austin [2][4] - This expansion aligns with Potbelly's strategic growth plan to partner with multi-unit operators through franchising, aiming to enhance community engagement and dining experiences [2][5] Company Strategy - Potbelly's expansion in Texas is part of a broader commitment to grow in key markets across the United States through franchising [3] - The company is actively seeking passionate franchise operators to join its network in various Texas cities, including Houston, Dallas, and Austin [3] Franchise Partners - Dana and Richard Biddy bring operational experience to the Greater Houston area, while Jignesh and Nitin Patel have a background in managing well-known brands and will leverage their expertise in Austin [4] - The new franchise partners are expected to contribute to local economic growth by creating jobs and providing a new dining option for residents [5] Future Developments - Specific site locations and opening details for the new Potbelly shops will be announced in the coming months [6]

Core Insights - Potbelly Corporation has signed a Shop Development Agreement with Premier Eats LLC to open eight new Potbelly shops in Virginia Beach, Norfolk, and the surrounding South Hampton Roads area, marking a significant expansion in Virginia [1][2] - The partnership emphasizes Potbelly's commitment to growth and collaboration with experienced multi-unit operators to penetrate untapped markets [2][3] - The new shops will offer Potbelly's signature menu, including freshly made sandwiches, sides, and desserts, catering to the local community's dining needs [2][4] Franchise Opportunities - Potbelly is actively seeking passionate franchise partners to expand its presence in Virginia, with prime territories still available [3] Economic Impact - The new Potbelly shops are expected to contribute to local economic growth by creating job opportunities in the South Hampton Roads area [4] Company Background - Potbelly Corporation has been in operation for over 40 years, offering a variety of menu items including sandwiches, salads, and shakes, with a focus on fresh and friendly service [5] - The company has expanded to over 440 shops across the United States, including more than 90 franchised locations [5]