Potbelly (PBPB) Q2 2024 earnings summary

Executive summary

• Q2 2024 systemwide sales reached $142.3 million, with same-store sales up 0.4% and shop-level profit margin improving for the 13th consecutive quarter.

• Net income surged to $34.7 million, driven by a $31.3 million tax benefit from the release of a valuation allowance.

• Adjusted EBITDA grew to $8.5 million (7.1% of revenue), and adjusted net income was $2.5 million, both up year-over-year.

• Digital sales reached 40% of total shop sales, supported by growth in owned channels and the Perks loyalty program.

• Opened 4 new shops in Q2, with 22 new franchise commitments and a robust pipeline of 663 open and committed shops.

Financial highlights

• Q2 2024 revenues were $119.7 million, down 5.5% year-over-year due to refranchising, while franchise revenue rose 117% to $4.2 million.

• Systemwide sales reached $142.3 million; average weekly sales were $26,110, up $160 year-over-year.

• Shop-level profit margin improved to 15.7%, up from 14.4% in Q2 2023.

• Adjusted EBITDA was $8.5 million, up from $8.0 million in Q2 2023.

• Cash and cash equivalents at quarter-end were $8.3 million, with total liquidity of $34.3 million.

Outlook and guidance

• Q3 2024 guidance: same-store sales growth of -3.5% to -1.5%, adjusted EBITDA of $6.5–$8 million.

• Full-year 2024 guidance: same-store sales of -1.5% to +0.5%, adjusted EBITDA of $27–$30 million.

• At least 30 new shop openings expected in 2024, with double-digit franchise unit growth targeted for 2025.