CHICAGO – Potbelly (NASDAQ:) Corporation (: PBPB), the well-known sandwich shop chain, has secured a new $30 million revolving credit facility with a significantly reduced interest rate, the company announced today. The new credit arrangement, which matures on February 7, 2027, is provided by Wintrust Bank and marks a 600-basis point decrease in the interest rate margin compared to the company’s previous term loan.
The current interest rate for the new facility is set at SOFR + 325 basis points, a reduction from the previous SOFR + 925 basis points. Depending on the company’s achievement of certain leverage ratios, the rate could vary from SOFR + 375 to SOFR + 275 basis points. This arrangement is expected to result in annual net cash interest savings of approximately $2 million for Potbelly.
Steve Cirulis, Chief Financial Officer of Potbelly, expressed confidence in the new financial arrangement, stating that it enhances the company’s financial position and reflects the progress made over the past three years. He also emphasized the facility’s role in supporting Potbelly’s growth ambitions outlined in its Five-Pillar Strategy and the benefit of reduced annual interest expenses.
The new credit facility is part of Potbelly’s broader business strategy and financial management efforts.
Potbelly Corporation, which began in Chicago in 1977, has grown to operate approximately 426 shops across the United States, including around 81 franchised locations. The company prides itself on offering a variety of sandwiches, salads, shakes, and other menu items in a friendly, neighborhood-focused environment.
This announcement is based on a press release statement from Potbelly Corporation.
InvestingPro Insights
As Potbelly Corporation (NASDAQ: PBPB) secures a new credit facility with a reduced interest rate, it’s important to look at the company’s financial health and market performance to better understand the potential impact of this development. Here are a few key metrics and insights from InvestingPro that offer a snapshot of Potbelly’s current standing:
InvestingPro Data:
- Market Cap (Adjusted): 364.34M USD
- P/E Ratio (Adjusted) as of Q3 2023: 48.19
- Revenue Growth as of Q3 2023: 11.78%
The adjusted P/E ratio suggests that Potbelly is trading at a higher earnings multiple, which could indicate investor confidence in the company’s future earnings potential. Additionally, the healthy revenue growth rate of nearly 12% in the last twelve months as of Q3 2023 reflects Potbelly’s ability to increase sales, which may be a positive sign for the company’s growth trajectory.
InvestingPro Tips:
1. Potbelly is trading at a low PEG ratio as of Q3 2023, at just 0.1, which suggests that the company’s earnings growth is not fully reflected in its current price, potentially offering an attractive opportunity for investors.
2. Analysts predict that Potbelly will be profitable this year, providing a strong foundation for the company’s growth strategy and financial management efforts.
For investors seeking a more comprehensive analysis, there are 11 additional InvestingPro Tips available, which can provide deeper insights into Potbelly’s valuation, financial health, and market performance. Be sure to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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