false 0001195734 0001195734 2021-03-11 2021-03-11

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 11, 2021

 

Potbelly Corporation

(Exact name of registrant as specified in its charter)

 

Delaware	001-36104	36-4466837
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
111 N. Canal Street, Suite 850 Chicago, Illinois		60606
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (312) 951-0600

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value		PBPB		The NASDAQ Stock Market LLC
				(Nasdaq Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

---

 

Item 2.02.

Results of Operations and Financial Condition.

On March 11, 2021, Potbelly Corporation ("Potbelly") issued a press release disclosing earnings and other financial results for its fourth fiscal quarter ended December 27, 2020, and that as previously announced, its management would review these results in a conference call at 5:00 p.m. Eastern Time on March 11, 2021. The full text of the press release is furnished hereto as Exhibit 99.1.

 

Item 9.01.

Financial Statements and Exhibits.

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Potbelly Corporation Press Release dated March 11, 2021
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

---

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: March 11, 2021		Potbelly Corporation
		By:		/s/ Steven Cirulis
		Name:		Steven Cirulis
		Title:		Chief Financial Officer
				(Principal Financial Officer)

 

Exhibit 99.1

Potbelly Corporation Reports Results for Fourth Fiscal Quarter and Full Year 2020

 

Fourth quarter same-store sales resilient and improved 130 basis points sequentially to (19.7%)

Continued to advance new strategic focus on “Traffic-Driven Profitability” to return Potbelly to long-term growth

Strategic initiatives and economic recovery expected to support sequential quarterly improvement in performance and return to positive cash flow and enterprise profitability in second half of 2021

Chicago, IL. March 11, 2021 – Potbelly Corporation (NASDAQ: PBPB), the iconic neighborhood sandwich shop concept, today reported financial results for the fiscal fourth quarter and full year ended December 27, 2020.

 

2020 Strategic Successes

 

Key highlights for the thirteen weeks ended December 27, 2020 compared to September 27, 2020:

1

---

 

Key highlights for the fifty-two weeks ended December 27, 2020 compared to December 29, 2019:

 

Bob Wright, President and Chief Executive Officer of Potbelly Corporation, commented, “While 2020 was an unprecedented year for both our Company and the restaurant sector as a whole, our brand and team proved resilient. I’m extremely proud of the persistence, dedication, and creativity of our entire team and franchisees, who adapted quickly to a rapidly changing environment and served our dedicated customers and their evolving needs. As importantly, we approached last year’s business challenges with strategic intent, and believe we have taken the right steps to emerge from this pandemic with a stronger platform, that’s positioned to grow faster and more profitably than before. We are building a new leadership team that has the talent, skill and experience to make Potbelly the strongest it’s been in years. Potbelly is the sandwich shop with the craveable quality and good vibes of a first-class dive. We have an incredibly strong brand, a streamlined operation and new strategic plan poised to win as business returns to all our shop types and customer experience options continue to open.”

 

Wright concluded, “As we close out 2020 and look to 2021, we have shifted from being reactive and focused on protecting the brand, to being proactive and more deliberate in our efforts to drive profitable growth in our existing business.  Our new ‘Traffic-Driven Profitability’ strategic plan includes a prioritized set of low-cost strategic investments that we believe will deliver strong returns.  These initiatives include improvements to our overall customer experience, a simplified menu and further enhanced Potbelly Perks program.  They also include improvements to our tech stack, such as a better digital customer experience, a new front-end web and app online ordering portal, and backend investments in our payment technology and loyalty programs.  Lastly, we are prioritizing low-cost, high-return traffic driving opportunities, as well as numerous initiatives that are focused on expanding shop level margins. All of these strategic initiatives are in process today, and we’ll share more detail throughout the year.  We look forward to seeing incremental improvement across our business as our country continues to emerge from the pandemic. We have the right team, the right strategy, and importantly, a recently strengthened balance sheet that will support these new strategic initiatives and our future growth.”

 

2021 Outlook

Steve Cirulis, Chief Financial Officer of Potbelly Corporation, commented, “We expect the recovery of our business and shops to track the rate of vaccinations and increased dining room re-openings as pandemic conditions recede. Further, we expect that our strategic initiatives will build momentum throughout the year, and thus we expect to see sequential improvement in our top-line results throughout each quarter of fiscal 2021.  We also anticipate that we will generate the majority of our operating earnings and Adjusted EBITDA during the second half of 2021, which will support both shop-level and enterprise-level profitability, as well as positive cash

2

---

flow, in the back half of the year. In the near-term, we remain focused on furthering a culture of vigilant cost discipline, driving additional operational efficiencies and advancing the five pillars of our new strategy to accelerate Potbelly’s future growth.”

 

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 1-877-407-0784 in the U.S. & Canada, or 1-201-689-8560 internationally, using the confirmation code of 13716835.

 

For those unable to participate, an audio replay will be available from 8:00 p.m. Eastern Time on Thursday, March 11, 2021 through midnight March 18, 2021.  To access the replay, please call 1-844-512-2921 (U.S. & Canada) or 1-412-317-6671 (International) and enter confirmation code 13716835. 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 approximately 400 company-owned shops in the United States. Additionally, Potbelly franchisees operate over 40 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:

 

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.

3

---

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,” “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 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 such as the expected run-rate savings from lease renegotiations, our believe that we will emerge from the pandemic with a stronger platform, the rate of recovery of our business and dining room re-openings, our expectation that our strategic initiatives will build momentum, the expected sequential improvement in top-line growth during 2021 and our expectation that majority of our operating earnings and Adjusted EBITDA will come during the second half of 2021, 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 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.

 

Contact:

 

Ryan Coleman or Lisa Fortuna

Alpha IR Group

312-445-2870

4

---

PBPB@alpha-ir.com

 

5

---

Potbelly Corporation

Consolidated Statements of Operations and Margin Analysis – Unaudited

(Amounts in thousands, except per share data)

 

 

*Amount is less than 0.1%

6

---

Potbelly Corporation

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures – Unaudited

(Amounts in thousands, except per share data)

 

 

 

7

---

 

Potbelly Corporation

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures – Unaudited

(Amounts in thousands, except selected operating data)

 

 

8

---

 

Footnotes to the Press Release, Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

& Selected Operating Data

 

 

9