pbpb-20240929

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 September 29, 2024


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

______________________________________________

Potbelly Corporation

(Exact name of registrant as specified in its charter)

______________________________________________


Delaware						36-4466837
(State or Other Jurisdiction of Incorporation)						(IRS Employer Identification Number)
111 N. Canal Street, Suite 325 Chicago, Illinois						60606
(Address of Principal Executive Offices)						(Zip Code)

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

______________________________________________

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of October 27, 2024, the registrant had 29,937,090 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

Potbelly Corporation and Subsidiaries

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Operations (Unaudited)	4
	Condensed Consolidated Statements of Equity (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION	35
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
	Signature	37

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Potbelly Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(amounts in thousands, except par value data, unaudited)


	September 29, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	11,200	$	33,788
Accounts receivable, net of allowances of $33 and $26 as of September 29, 2024 and December 31, 2023, respectively	10,045		7,960
Inventories	3,511		3,516
Prepaid expenses and other current assets	7,081		7,828
Total current assets	31,837		53,092

Property and equipment, net	48,490		45,087
Right-of-use assets for operating leases	135,007		144,390
Indefinite-lived intangible assets	3,404		3,404
Goodwill	2,053		2,056
Restricted cash	749		749
Deferred tax assets	31,201		—
Deferred expenses, net and other assets	5,908		3,681
Total assets	$	258,649	$	252,460

Liabilities and equity
Current liabilities
Accounts payable	$	8,255	$	9,927
Accrued expenses	33,664		35,377
Short-term operating lease liabilities	23,494		24,525
Current portion of long-term debt	—		1,250
Total current liabilities	65,413		71,078

Long-term debt, net of current portion	3,000		19,168
Long-term operating lease liabilities	130,441		142,050
Other long-term liabilities	7,269		6,070
Total liabilities	206,123		238,367

Commitments and contingencies (Note 12)

Equity
Common stock, $0.01 par value—authorized 200,000 shares; outstanding 29,935 and 29,364 shares as of September 29, 2024 and December 31, 2023, respectively	398		389
Warrants	1,745		2,219
Additional paid-in-capital	468,685		462,583
Treasury stock, held at cost, 10,392 and 10,077 shares as of September 29, 2024, and December 31, 2023, respectively	(119,839)		(116,701)
Accumulated deficit	(298,117)		(333,797)
Total stockholders’ equity	52,872		14,693
Non-controlling interest	(346)		(600)
Total equity	52,526		14,093

Total liabilities and equity	$	258,649	$	252,460

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

Potbelly Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share data, unaudited)


	For the Quarter Ended				For the Year to Date Ended
	September 29, 2024		September 24, 2023		September 29, 2024		September 24, 2023
Revenues
Sandwich shop sales, net	$	110,769	$	118,340	$	333,882	$	359,995
Franchise royalties, fees and rent income	4,351		2,428		12,088		5,665
Total revenues	115,120		120,768		345,970		365,660

Expenses
Sandwich shop operating expenses, excluding depreciation
Food, beverage and packaging costs	29,469		32,901		90,045		100,424
Labor and related expenses	32,274		34,188		96,840		108,556
Occupancy expenses	11,803		12,653		36,060		39,046
Other operating expenses	20,255		21,277		61,348		62,686
Franchise support, rent and marketing expenses	2,795		1,553		8,333		3,359
General and administrative expenses	10,597		11,894		34,010		33,558
Depreciation expense	3,236		3,044		9,263		8,902
Pre-opening costs	55		59		151		114
Loss on Franchise Growth Acceleration Initiative activities	—		110		161		1,073
Impairment, loss on disposal of property and equipment and shop closures	384		458		1,270		2,161
Total operating expenses	110,868		118,137		337,481		359,879
Income from operations	4,252		2,631		8,489		5,781

Interest expense, net	162		853		707		2,531
Loss on extinguishment of debt	—		—		2,376		239
Income before income taxes	4,090		1,778		5,406		3,011
Income tax expense (benefit)

SEC Form 10-Q filed by Potbelly Corporation