pbpb-8k_20170214.htm

 

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): February 14, 2017

 

Potbelly Corporation

(Exact name of registrant as specified in its charter)

 

Commission File Number: 001-36104

 

 

 

 

Delaware

 

36-4466837

(State or other jurisdiction

of incorporation)

 

(IRS Employer

Identification No.)

111 N. Canal Street, Suite 850

Chicago, Illinois 60606

(Address of principal executive offices, including zip code)

(312) 951-0600

(Registrant's telephone number, including area code)

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))

 

 

 


Item 2.02.

Results of Operations and Financial Condition.

On February 14, 2017, Potbelly Corporation ("Potbelly") issued a press release disclosing earnings and other financial results for its fourth fiscal quarter and full fiscal year ended December 25, 2016, and that as previously announced, its management would review these results in a conference call at 5:00 p.m. Eastern time on February 14, 2017. The full text of the press release is furnished hereto as Exhibit 99.1.

The information furnished with this report, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

 

 

Item 9.01.

Financial Statements and Exhibits.

(d)

Exhibits.

 

Exhibit
No.

  

Description

 

 

99.1

 

Potbelly Corporation Press Release dated February 14, 2017


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: February 14, 2017

 

Potbelly Corporation

 

 

 

 

 

 

 

By:

 

/s/ Michael Coyne

 

 

Name:

 

Michael Coyne

 

 

Title:

 

Senior Vice President and Chief Financial Officer


EXHIBIT INDEX

 

Exhibit
No.

  

Description

 

 

99.1

 

Potbelly Corporation Press Release dated February 14, 2017

 

pbpb-ex991_133.htm

Exhibit 99.1

POTBELLY CORPORATION REPORTS RESULTS

FOR FOURTH FISCAL QUARTER AND FULL FISCAL YEAR 2016

Chicago, IL, February 14, 2017 – Potbelly Corporation (NASDAQ: PBPB) today reported financial results for the fourth quarter and full fiscal year ended December 25, 2016.

Key highlights for the thirteen weeks ended December 25, 2016 compared to the thirteen weeks ended December 27, 2015 include:

 

Total revenues increased 7.6% to $102.4 million from $95.1 million.

 

Company-operated comparable store sales increased 0.1%.

 

Twenty-eight new shops opened, including twenty-five company-operated shops and three franchised shops.

 

GAAP net income attributable to Potbelly Corporation increased 58.4% to $2.0 million from net income of $1.2 million. GAAP diluted EPS increased 60.0% to $0.08 from $0.05.

 

Adjusted net income1 attributable to Potbelly Corporation increased 64.6% to $3.8 million from adjusted net income of $2.3 million. Adjusted diluted EPS increased 87.5% to $0.15 from $0.08.

 

EBITDA1 increased 12.7% to $8.4 million from $7.5 million.

 

Adjusted EBITDA1 increased 23.9% to $13.4 million from $10.8 million.

Key highlights for the fifty-two weeks ended December 25, 2016 compared to the fifty-two weeks ended December 27, 2015 include:

 

Total revenues increased 9.2% to $407.1 million from $372.8 million.

 

Company-operated comparable store sales increased 1.4%.

 

Fifty new shops opened, including forty company-operated shops and ten franchised shops.

 

GAAP net income attributable to Potbelly Corporation increased 45.9% to $8.2 million from net income of $5.6 million. GAAP diluted EPS increased 55.0% to $0.31 from $0.20.

 

Adjusted net income1 attributable to Potbelly Corporation increased 44.0% to $11.9 million from adjusted net income of $8.2 million. Adjusted diluted EPS increased 55.2% to $0.45 from $0.29.

 

EBITDA1 increased 15.4% to $35.5 million from $30.8 million.

 

Adjusted EBITDA1 increased 15.3% to $48.0 million from $41.6 million.

 

Aylwin Lewis, Chairman and Chief Executive Officer of Potbelly Corporation commented, “During the fourth quarter, we delivered revenue growth of 8% and adjusted net income growth of 65%. For the full year, we achieved revenue growth of 9% and adjusted net income growth of 44%. Given the challenging operating environment, our full year comparable store sales growth of 1.4% fell short of our original expectations. However, we are proud of the combined effort of the men and women across the Potbelly Nation, which allowed us to deliver on our revised sales growth outlook, while protecting margins and growing earnings."

 

Lewis continued, "Our outlook for 2017 contemplates a continuation of the traffic trends that we saw at the end of the fourth quarter. Given current industry trends, it is imperative that we continue to explore opportunities to drive growth, while managing costs and


optimizing our capital spend. Our current development plan includes an increased mix of franchise shops and moderated growth in company-operated shops. We believe the Potbelly brand is strong, and we will navigate these headwinds on the strength of our execution, innovation and culture. We are confident in the fundamentals of our business and remain committed to our long term goals.”

 

 

2017 Outlook

For the full fiscal year of 2017, management currently expects:

 

45-60 total new shop openings, including 30-40 company-operated shop openings;

 

Flat Company-operated comparable store sales growth;

 

An effective tax rate that is expected to range from 36% to 38%;

 

Adjusted net income growth flat to 5%;

 

Full year adjusted diluted earnings per share to range from $0.45 to $0.47; and

 

Comparable categories of adjustments to net income as discussed in the “Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures.”

 

Projected adjusted net income growth and adjusted diluted earnings per share set forth above are measures not recognized under GAAP.  Please see “Non-GAAP Financial Measures” below.

 

In January 2017 the City of Chicago's Department of Aviation preliminarily awarded the Midway International Airport dining concessions to a development group whose proposal does not include an extension of our lease at the airport. The winning bidders must still sign a contract which is subject to final approval by the Chicago City Council. We are currently advocating to city officials to retain our shop at Midway; we can give no assurance that we will succeed. The 2017 Outlook provided above does not give effect to any adverse impact on our financial results caused from a loss of our shop at Midway.

Conference Call

A conference call and audio webcast has been scheduled for 5:00 p.m. Eastern time today to discuss these results. Details of the conference call are as follows:

 

 

 

 

Date:

 

Tuesday, February 14, 2017

Time:

 

5:00 p.m. Eastern time

Dial-In #:

 

877-407-0784 U.S. & Canada

 

 

201-689-8560 International

Confirmation code:

 

13653469

Alternatively, the conference call will be webcast at www.potbelly.com on the “Investor Relations” webpage. For those unable to participate, an audio replay will be available from 8:00 p.m. Eastern time on Tuesday, February 14, 2017 through midnight Tuesday, February 21, 2017. To access the replay, please call 844-512-2921 (U.S. & Canada) or 412-317-6671 (International) and enter confirmation code 13653469. A web-based archive of the conference call will also be available at the above website.

About Potbelly

Potbelly Corporation is a fast-growing neighborhood sandwich concept offering toasty warm sandwiches, signature salads and other fresh menu items served by engaging people in an environment that reflects the Potbelly brand. Our Vision is for our customers to feel that we are their “Neighborhood Sandwich Shop” and to tell others about their great experience. Our Mission is to make people really happy and to improve every day. Our Passion is to be “The Best Place for Lunch.” The Company owns and operates over 400 shops in the United States and our franchisees operate over 40 shops domestically, in the Middle East, the United Kingdom and Canada. 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:

2


 

Revenues – represent net company-operated sandwich shop sales and our franchise operations. Net company-operated shop sales consist of food and beverage sales, net of promotional allowances and employee meals. Franchise royalties and fees consist of an initial franchise fee, a franchise development agreement fee and royalty income from the franchisee.

 

Company-operated comparable store sales – represents the change in year-over-year sales for the comparable company-operated store base open for 15 months or longer.

 

EBITDA – represents net income before depreciation and amortization expense, interest expense and provision for income taxes.

 

Adjusted EBITDA – represents net income before depreciation and amortization expense, interest expense, provision for income taxes and pre-opening costs, adjusted to eliminate the impact of other items, including certain non-cash as well as certain other items that we do not consider representative of our on-going operating performance.

 

Adjusted net income – represents net income, excluding impairment, gain or loss on disposal of property and equipment and store closure expense as well as costs associated with moving our corporate headquarters.

 

Shop-level profit – represents income from operations less franchise royalties and fees, general and administrative expenses, depreciation expense, pre-opening costs and impairment and loss on disposal of property and equipment.

 

Shop-level profit margin – represents shop-level profit expressed as a percentage of net company-operated sandwich shop sales.

 

Adjusted diluted earnings per share – represents net income, excluding impairment, gain or loss on disposal of property and equipment and store closure expense as well as costs associated with moving our corporate headquarters, on a per fully diluted share basis.

1 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 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 and adjusted net income to evaluate the Company’s performance excluding the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters, are expected in future quarters and in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. 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 (“SEC”). 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.”

This release includes certain non-GAAP forward-looking information (including but not limited to under the heading “—2016 Outlook”), namely adjusted net income and adjusted diluted earnings per share.  The Company believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of these non-GAAP financial measures would require the Company to predict the timing and likelihood of outcomes that determine future impairments and the tax benefit of any such future impairments. Neither of these measures, nor their probable significance, can be reliably quantified due to the inability to forecast future impairments.

 

Forward-Looking Statements

Except for the historical information contained in this press release, the matters addressed are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as

3


amended. 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” and similar expressions are intended to identify forward-looking statements. 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. 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, all of which are available on our website at www.potbelly.com.

# # #

 

 

 

 

Contact:

 

Investor Relations

 

 

 

 

Investors@Potbelly.com

 

 

 

 

312-428-2950

4


Potbelly Corporation

Consolidated Statements of Operations and Margin Analysis – Unaudited

(Amounts in thousands, except share and per share data)

 

 

  

 

For the 13 Weeks Ended

 

 

For the 52 Weeks Ended

 

 

 

December 25,

 

 

December 27,

 

 

December 25,

 

 

December 27,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sandwich shop sales, net

 

$

101,758

 

 

 

99.4

%

 

$

94,427

 

 

 

99.3

%

 

$

404,874

 

 

 

99.4

%

 

$

370,954

 

 

 

99.5

%

Franchise royalties and fees

 

 

600

 

 

 

0.6

 

 

 

666

 

 

 

0.7

 

 

 

2,257

 

 

 

0.6

 

 

 

1,895

 

 

 

0.5

 

Total revenues

 

 

102,358

 

 

 

100.0

 

 

 

95,093

 

 

 

100.0

 

 

 

407,131

 

 

 

100.0

 

 

 

372,849

 

 

 

100.0

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sandwich shop operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold, excluding

   depreciation

 

 

27,802

 

 

 

27.2

 

 

 

26,760

 

 

 

28.1

 

 

 

111,026

 

 

 

27.3

 

 

 

105,614

 

 

 

28.3

 

Labor and related expenses

 

 

29,578

 

 

 

28.9

 

 

 

27,213

 

 

 

28.6

 

 

 

117,838

 

 

 

28.9

 

 

 

106,628

 

 

 

28.6

 

Occupancy expenses

 

 

13,402

 

 

 

13.1

 

 

 

12,021

 

 

 

12.6

 

 

 

52,444

 

 

 

12.9

 

 

 

46,762

 

 

 

12.5

 

Other operating expenses

 

 

11,168

 

 

 

10.9

 

 

 

9,741

 

 

 

10.2

 

 

 

43,738

 

 

 

10.7

 

 

 

39,869

 

 

 

10.7

 

General and administrative

   expenses

 

 

9,584

 

 

 

9.4

 

 

 

9,616

 

 

 

10.1

 

 

 

40,411

 

 

 

9.9

 

 

 

37,322

 

 

 

10.0

 

Depreciation expense

 

 

5,738

 

 

 

5.6

 

 

 

5,527

 

 

 

5.8

 

 

 

22,734

 

 

 

5.6

 

 

 

21,476

 

 

 

5.8

 

Pre-opening costs

 

 

1,055

 

 

 

1.0

 

 

 

573

 

 

 

0.6

 

 

 

1,786

 

 

 

0.4

 

 

 

2,160

 

 

 

0.6

 

Impairment and loss on disposal of

   property and equipment

 

 

1,261

 

 

 

1.2

 

 

 

1,624

 

 

 

1.7

 

 

 

4,141

 

 

 

1.0

 

 

 

3,589

 

 

 

1.0

 

Total expenses

 

 

99,588

 

 

 

97.3

 

 

 

93,075

 

 

 

97.9

 

 

 

394,118

 

 

 

96.8

 

 

 

363,420

 

 

 

97.5

 

Income from operations

 

 

2,770

 

 

 

2.7

 

 

 

2,018

 

 

 

2.1

 

 

 

13,013

 

 

 

3.2

 

 

 

9,429

 

 

 

2.5

 

Interest expense, net

 

 

32

 

 

 

0.0

 

 

 

41

 

 

 

0.0

 

 

 

134

 

 

 

0.0

 

 

 

221

 

 

 

0.1

 

Income before income taxes

 

 

2,738

 

 

 

2.7

 

 

 

1,977

 

 

 

2.1

 

 

 

12,879

 

 

 

3.2

 

 

 

9,208

 

 

 

2.5

 

Income tax expense

 

 

711

 

 

 

0.7

 

 

 

686

 

 

 

0.7

 

 

 

4,443

 

 

 

1.1

 

 

 

3,466

 

 

 

0.9

 

Net income

 

 

2,027

 

 

 

2.0

 

 

 

1,291

 

 

 

1.4

 

 

 

8,436

 

 

 

2.1

 

 

 

5,742

 

 

 

1.5

 

Net income attributable to

   non-controlling interests

 

 

71

 

 

 

0.1

 

 

 

56

 

 

 

0.1

 

 

 

224

 

 

 

0.1

 

 

 

114

 

 

 

0.0

 

Net income attributable to

   Potbelly Corporation

 

$

1,956

 

 

 

1.9

%

 

$

1,235

 

 

 

1.3

%

 

$

8,212

 

 

 

2.0

%

 

$

5,628

 

 

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

 

 

 

 

 

$

0.05

 

 

 

 

 

 

$

0.32

 

 

 

 

 

 

$

0.20

 

 

 

 

 

Diluted

 

$

0.08

 

 

 

 

 

 

$

0.05

 

 

 

 

 

 

$

0.31

 

 

 

 

 

 

$

0.20

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

25,176,699

 

 

 

 

 

 

 

26,657,828

 

 

 

 

 

 

 

25,623,809

 

 

 

 

 

 

 

28,002,005

 

 

 

 

 

Diluted

 

 

25,901,080

 

 

 

 

 

 

 

27,121,492

 

 

 

 

 

 

 

26,231,367

 

 

 

 

 

 

 

28,634,396

 

 

 

 

 

5


Potbelly Corporation

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

(Amounts in thousands, except share and per share data)

 

 

 

For the 13 Weeks Ended

 

 

For the 52 Weeks Ended

 

 

 

December 25,

 

 

December 27,

 

 

December 25,

 

 

December 27,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net income attributable to Potbelly Corporation, as

     reported

 

$

1,956

 

 

$

1,235

 

 

$

8,212

 

 

$

5,628

 

Impairment and closures(1)

 

 

1,368

 

 

 

1,659

 

 

 

4,265

 

 

 

4,176

 

Tax benefit of impairment and closures(2)

 

 

(405

)

 

 

(603

)

 

 

(1,471

)

 

 

(1,570

)

Legal settlement(3)

 

 

1,300

 

 

 

 

 

 

1,300

 

 

 

 

Tax benefit of legal settlement(2)

 

 

(449

)

 

 

 

 

 

(449

)

 

 

 

Adjusted net income attributable to Potbelly

     Corporation

 

$

3,770

 

 

$

2,291

 

 

$

11,857

 

 

$

8,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Potbelly Corporation per

     share, basic

 

$

0.08

 

 

$

0.05

 

 

$

0.32

 

 

$

0.20

 

Net income attributable to Potbelly Corporation per

     share, diluted

 

$

0.08

 

 

$

0.05

 

 

$

0.31

 

 

$

0.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income attributable to Potbelly

     Corporation per share, basic

 

$

0.15

 

 

$

0.09

 

 

$

0.46

 

 

$

0.29

 

Adjusted net income attributable to Potbelly

     Corporation per share, diluted

 

$

0.15

 

 

$

0.08

 

 

$

0.45

 

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing adjusted net income

     attributable to Potbelly Corporation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

25,176,699

 

 

 

26,657,828

 

 

 

25,623,809

 

 

 

28,002,005

 

Diluted

 

 

25,901,080

 

 

 

27,121,492

 

 

 

26,231,367

 

 

 

28,634,396

 

 

 

 

 

For the 13 Weeks Ended

 

 

For the 52 Weeks Ended

 

 

 

December 25,

 

 

December 27,

 

 

December 25,

 

 

December 27,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net income attributable to Potbelly Corporation, as

     reported

 

$

1,956

 

 

$

1,235

 

 

$

8,212

 

 

$

5,628

 

Depreciation expense

 

 

5,738

 

 

 

5,527

 

 

 

22,734

 

 

 

21,476

 

Interest expense, net

 

 

32

 

 

 

41

 

 

 

134

 

 

 

221

 

Income tax expense

 

 

711

 

 

 

686

 

 

 

4,443

 

 

 

3,466

 

EBITDA

 

$

8,437

 

 

$

7,489

 

 

 

35,523

 

 

$

30,791

 

Impairment and closures(4)

 

 

1,368

 

 

 

1,659

 

 

 

4,265

 

 

 

4,006

 

Pre-opening costs(5)

 

 

1,055

 

 

 

573

 

 

 

1,786

 

 

 

2,160

 

Stock-based compensation

 

 

791

 

 

 

604

 

 

 

3,057

 

 

 

2,399

 

Legal settlement(3)

 

 

1,300

 

 

 

 

 

 

1,300

 

 

 

 

Public company costs(6)

 

 

452

 

 

 

489

 

 

 

2,069

 

 

 

2,281

 

Adjusted EBITDA

 

$

13,403

 

 

$

10,814

 

 

$

48,000

 

 

$

41,637

 

6


Potbelly Corporation

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

(Amounts in thousands, except selected operating data)

 

 

 

 

For the 13 Weeks Ended

 

 

For the 52 Weeks Ended

 

 

 

December 25,

 

 

December 27,

 

 

December 25,

 

 

December 27,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Income from operations

 

$

2,770

 

 

$

2,018

 

 

$

13,013

 

 

$

9,429

 

Less: Franchise royalties and fees

 

 

600

 

 

 

666

 

 

 

2,257

 

 

 

1,895

 

General and administrative expenses

 

 

9,584

 

 

 

9,616

 

 

 

40,411

 

 

 

37,322

 

Depreciation expense

 

 

5,738

 

 

 

5,527

 

 

 

22,734

 

 

 

21,476

 

Pre-opening costs

 

 

1,055

 

 

 

573

 

 

 

1,786

 

 

 

2,160

 

Impairment and loss on disposal of property and

     equipment

 

 

1,261

 

 

 

1,624

 

 

 

4,141

 

 

 

3,589

 

Shop-level profit [Y]

 

$

19,808

 

 

$

18,692

 

 

$

79,828

 

 

$

72,081

 

Total revenues

 

$

102,358

 

 

$

95,093

 

 

$

407,131

 

 

$

372,849

 

Less: Franchise royalties and fees

 

 

600

 

 

 

666

 

 

 

2,257

 

 

 

1,895

 

Sandwich shop sales, net [X]

 

$

101,758

 

 

$

94,427

 

 

$

404,874

 

 

$

370,954

 

Shop-level profit margin [Y÷X]

 

 

19.5

%

 

 

19.8

%

 

 

19.7

%

 

 

19.4

%

 

 

 

 

 

For the 13 Weeks Ended

 

 

For the 52 Weeks Ended

 

 

 

December 25,

 

 

December 27,

 

 

December 25,

 

 

December 27,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Selected Operating Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shop Activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company-operated shops, end of period

 

411

 

 

372

 

 

411

 

 

372

 

Franchise shops, end of period

 

43

 

 

36

 

 

43

 

 

36

 

Revenue Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company-operated comparable store sales

 

 

0.1%

 

 

 

3.7%

 

 

 

1.4%

 

 

 

4.4%

 

7


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, gain or loss on disposal of property and equipment and shop closure expenses. Shop closure expenses are recorded in general and administrative expenses in the consolidated statement of operations. Additionally, the fifty-two weeks ended December 27, 2015 include costs associated with the Company moving its corporate headquarters, which are recorded in the consolidated statement of operations in general and administrative expenses, as well as pre-opening for the occupancy-related costs.

(2)

For the thirteen weeks ended December 25, 2016 and December 27, 2015, the tax benefit associated with impairment and closures is based on effective tax rates of 29.6% and 36.3%, respectively. For the fifty-two weeks ended December 25, 2016 and December 27, 2015, the tax benefit associated with impairment and closures is based on effective tax rates of 34.5% and 37.6%, respectively. For the thirteen and fifty-two weeks ended December 25, 2016, the tax benefit associated with the legal settlement is based on an effective tax rate of 34.5%.

(3)

This adjustment relates to a one-time, non-recurring legal expense incurred to establish an accrual related to a Fair Labor Standards claim.

(4)

This adjustment includes costs related to impairment of long-lived assets, gain or loss on disposal of property and equipment and shop closure expenses. Shop closure expenses are recorded in general and administrative expenses in the consolidated statement of operations. Additionally, the fifty-two weeks ended December 27, 2015 include costs associated with the Company moving its corporate headquarters, which are recorded in the consolidated statement of operations in general and administrative expenses.

(5)

Pre-opening costs are expensed as incurred and primarily consist of travel, employee payroll and training costs incurred prior to the opening of a shop, as well as occupancy costs incurred from the date the Company takes site possession to shop opening. Additionally, the fifty-two weeks ended December 27, 2015 includes pre-opening rent for the new corporate office location of $0.2 million.

(6)

This adjustment includes on-going public company costs, which primarily consist of legal and accounting fees.

 

8