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01/15 08:43
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: financial performance is stable with improved margins and adjusted net income, but revenue is down. The share repurchase program is positive, yet supply chain and competitive pressures pose challenges. Q&A insights reveal stable new unit performance and strong underlying demand, but uncertainties remain with menu innovation and cost pressures. Overall, the sentiment is neutral, with no strong catalysts for significant stock movement.
System-wide sales $142.6 million, a decrease of 3.3% year-over-year; excluding the impact of the 53rd operating week in 2023, sales increased 1.9%.
Total revenue $116.6 million, 7.3% lower year-over-year; driven by the impact of the 53rd week and refranchising, but flat excluding these items.
Company operated shop revenue $112.3 million, 8% lower year-over-year; decreased only 0.9% when excluding the impact of the 53rd week and refranchising.
Franchise revenue $4.3 million, up 24% year-over-year; driven by a 22% increase in franchise units.
Average weekly sales Approximately $25,230.
Company operated same store sales Up 0.3% in the quarter; attributable to a 2.2% increase in average check, partially offset by a 1.9% decrease in transactions.
Food, beverage and packaging costs 26.7% of shop sales, a 50 basis point improvement year-over-year; driven by slight commodity deflation.
Labor expenses 28.9% of sales, a 5 basis point increase year-over-year; due to increases in employee group insurance.
Occupancy costs 10.8% of sales, a 25 basis point increase year-over-year; due to increases in common area maintenance and variable rent charges.
Other operating expenses 17.6% of sales, a 10 basis point decrease year-over-year; due to numerous small scale offsets.
Top level margins 16.0%, an increase of 30 basis points year-over-year.
General and administrative expenses 9.1% of system wide sales, a decrease of 100 basis points year-over-year; driven by corporate expense management and lower bonus accrual.
Net income $4.6 million for the quarter.
Adjusted net income $3.9 million, a $3.2 million increase year-over-year.
Adjusted EBITDA $9.7 million or 8.3% of total revenue, a 30% growth year-over-year; driven by improvement in shop level margin and disciplined management of G&A.
Share repurchase Approximately 48,000 shares for $450,000 in Q4; approximately 164,000 shares totaling $1.4 million for the year.
Menu Innovation: Introduced two new signature sandwiches made with slow cooked pulled pork, including the Cubano, and two new proprietary sauces: Hot Pepper Ranch and Sweet Heat Barbecue.
Beverage Offering: Rolled out Potbelly Craft Refreshers system-wide, offering organic and non-GMO options to enhance beverage selection.
Unit Growth: Opened 23 new shops across 10 states in 2024, with 115 new shop commitments, bringing total to 727 open and committed shops.
Franchise Development: Active pipeline of new franchise candidates, with a program to incentivize larger franchisees to build more shops faster.
Digital Sales: Digital business represented over 40% of total shop sales, up 100 basis points year-over-year.
Cost Management: General and administrative expenses decreased by 100 basis points due to corporate expense management.
Growth Strategy: Focus on menu innovation, digital investments, and prudent cost controls to drive comp sales growth and unit expansion.
Company Shop Development: Plans to open up to 20 company-operated shops annually, in addition to franchise growth.
Weather Impacts: The company has been affected by unusual weather impacts, which have negatively influenced sales and customer traffic, particularly in January and February.
Legal Accrual: A legal accrual of $1.8 million is expected to settle a class action lawsuit in Washington state, which poses a financial risk to the company.
Regulatory Issues: The company mentioned potential risks related to regulatory compliance, particularly in relation to their filings with the Securities and Exchange Commission.
Economic Factors: The company anticipates challenges in same store sales growth due to economic conditions, projecting a negative growth range of -1.5% to -0.5% for the first quarter of 2025.
Supply Chain Challenges: There are ongoing supply chain challenges that could impact the availability of menu items and overall operational efficiency.
Competitive Pressures: The company faces competitive pressures in the market, necessitating continued investment in digital assets and menu innovation to maintain market share.
Unit Growth: In 2024, Potbelly opened 23 new shops and added 115 units to the open and committed shop total, bringing the total to 727. For 2025, the company expects to open at least 38 new units.
Menu Innovation: Potbelly introduced new signature sandwiches and sauces to enhance customer experience and drive sales. The focus is on expanding appeal through menu innovation.
Digital Investments: The company plans to invest in consumer-facing digital assets and data analytics to enhance customer engagement and drive sales.
Franchise Development: Potbelly is seeing an active pipeline of franchise candidates and plans to incentivize larger franchisees to accelerate shop openings.
Cost Management: The company aims to exercise prudent cost controls to achieve balanced growth and improve corporate earnings.
2025 Same Store Sales Growth: Potbelly anticipates same store sales growth of 1.5% to 2.5% for the full year 2025.
2025 Unit Growth: The company expects unit growth of at least 38 openings in 2025.
2025 Adjusted EBITDA: Potbelly projects adjusted EBITDA of approximately $33 million to $34 million for 2025.
Q1 2025 Same Store Sales Growth: For Q1 2025, the company anticipates same store sales growth of negative 1.5% to negative 0.5%, impacted by weather.
Q1 2025 Adjusted EBITDA: Adjusted EBITDA for Q1 2025 is expected to be between $3.5 million to $4.5 million, including weather impacts.
Share Repurchase Program: During the fourth quarter, Potbelly Corporation purchased approximately 48,000 shares of common stock for a total of approximately $450,000. For the year, they repurchased approximately 164,000 shares totaling approximately $1.4 million. They anticipate repurchases throughout their three-year program approved in 2024.
The earnings call reveals strong financial performance with a 13% revenue growth, improved margins, and increased same-store sales. The Q&A highlights a solid pipeline for franchise expansion and confidence in future sales growth driven by digital and menu innovations. While there is some pressure on low-income consumers, the overall sentiment is positive, supported by strategic initiatives and a share buyback program. The lack of specific guidance for 2026 is a minor concern but does not overshadow the positive outlook.
The earnings call presents a mixed sentiment. Financial performance shows modest growth, but there are concerns with negative same-store sales growth and decreased adjusted EBITDA. Positive factors include menu innovation, strong franchise growth, and digital investments. The share repurchase program is a positive shareholder return plan, but the Q&A reveals some uncertainties, such as unclear metrics on digital orders and franchise incentives. Overall, the sentiment is neutral, with balanced positive and negative factors influencing potential stock price movement.
The earnings call presents a mixed picture. While EPS exceeded expectations and there was a strong adjusted EBITDA growth, revenue and same-store sales guidance are negative, indicating potential challenges. Competitive pressures and supply chain concerns further complicate the outlook. The share repurchase program and franchise revenue growth are positives, but they are offset by cautious guidance and lack of clarity in management's responses. The stock price is likely to remain stable over the next two weeks due to these balanced factors, resulting in a neutral prediction.
The earnings call presents a mixed picture: financial performance is stable with improved margins and adjusted net income, but revenue is down. The share repurchase program is positive, yet supply chain and competitive pressures pose challenges. Q&A insights reveal stable new unit performance and strong underlying demand, but uncertainties remain with menu innovation and cost pressures. Overall, the sentiment is neutral, with no strong catalysts for significant stock movement.
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