Portillo’s Inc. (“Portillo’s” or the “Company”) (NASDAQ: PTLO), the
fast-casual restaurant concept known for its menu of Chicago-style
favorites, today reported financial results for the first
quarter ended March 31, 2024.
Michael Osanloo, President and Chief Executive
Officer of Portillo’s, said “It’s an exciting time at Portillo’s.
We’re proud of how we exited the quarter and will continue to build
top-line momentum through disciplined sales-driving initiatives and
new unit development. Today we revealed Portillo’s four strategic
pillars, which will guide our 2024 goals and serve as the
foundation for quality growth. Running world class operations,
innovating and amplifying the Portillo’s Experience, building
restaurants with industry-leading returns, and taking great care of
our teams are the primary drivers of value creation at
Portillo’s.”
Financial Highlights for the First
Quarter 2024 vs. First Quarter 2023:
- Total revenue increased 6.3% or $9.8
million to $165.8 million;
- Same-restaurant sales* decreased
1.2%;
- Operating income increased $1.6
million to $10.1 million;
- Net income increased $6.6 million to
$5.3 million;
- Restaurant-Level Adjusted EBITDA**
increased $1.6 million to $36.4 million; and
- Adjusted EBITDA** increased $2.1
million to $21.8 million.
*For the quarter ended March 31,
2024, same-restaurant sales compares the 13 weeks from January 1,
2024 through March 31, 2024 to the 13 weeks from January 2, 2023
through April 2, 2023. **Adjusted EBITDA and Restaurant-Level
Adjusted EBITDA are non-GAAP measures. Please see definitions and
the reconciliations of these non-GAAP measures accompanying this
release.
Secondary Offering
In the first quarter of 2024, the Company completed
a secondary offering of 8,000,000 shares of the Company's Class A
common stock at an offering price of $14.37 per share ("Q1 2024
Secondary Offering"). The net proceeds from this offering were used
to purchase LLC Units or shares of Class A common stock, as
applicable, of the selling stockholders in a “synthetic secondary”
transaction, at a price per LLC Unit or share of Class A common
stock. Accordingly, the Company did not receive any proceeds from
this offering.
Recent Developments and Trends
In the quarter ended March 31, 2024 total revenue
grew 6.3% or $9.8 million. Same-restaurant sales declined 1.2%
during the quarter ended March 31, 2024, compared to 9.1%
same-restaurant sales growth during the same quarter in 2023.
During the quarter ended March 31, 2024, we opened
one new restaurant in Denton, Texas for a total of 85 restaurants,
including a restaurant owned by C&O Chicago, L.L.C.
("C&O"), of which Portillo's owns 50% of the equity. The twelve
restaurants opened in 2023 and one restaurant opened during the
quarter ended March 31, 2024 positively impacted revenues by
approximately $14.4 million in the quarter ended March 31,
2024. We opened one restaurant subsequent to March 31, 2024 and
plan to open at least seven additional restaurants during the
remainder of 2024.
In the quarter ended March 31, 2024, commodity
inflation was 4.8%, compared to 8.9% for the quarter ended March
26, 2023. For the quarter ended March 31, 2024, we experienced an
increase in labor expenses, as a percentage of revenue, compared to
the quarter ended March 26, 2023 primarily due to lower
transactions and incremental wage rate increases to support our
team members, partially offset by increase in our average check and
lower variable-based compensation. We increased certain menu prices
by approximately 1.5% during both January of 2024 and at the end of
March 2024 to offset inflationary cost pressures. We will continue
to monitor cost pressures, the competitive landscape, and consumer
sentiment to inform our pricing decisions in the future
quarters.
In the quarter ended March 31, 2024, operating
income, operating margin, net income, Restaurant-Level Adjusted
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin all improved
versus the prior year. We believe this improvement was the result
of our ongoing efforts to elevate guest experiences, deploy
strategic pricing actions, implement operational efficiencies, and
grow our restaurant base. Further, we intend to continue focusing
our efforts on running world class operations, innovating and
amplifying the Portillo's experience, building restaurants with
industry-leading returns and taking great care of our teams.
We also launched two new salads to our menu in late
March as a result of guest feedback. The Spicy Chicken Chopped
Salad and the Chicken Pecan Salad with Bacon are fresh
made-to-order salads that joined our menus nationwide alongside
other fan-favorite salads, including the Greek Salad, Caesar Salad
and our famous original Chopped Salad. Additionally, to promote our
new salads we will introduce a new brown paper bag with green
stripes for a limited time in May and June. Like our prior bag, the
new bag is also 100% recyclable, does not need to be bleached, and
is made from fibers certified by the Sustainable Forestry
Initiative.
Review of First Quarter
2024 Financial Results
Revenues for the first quarter ended March 31, 2024
were $165.8 million compared to $156.1 million for the first
quarter ended March 26, 2023, an increase of $9.8 million or 6.3%.
The increase in revenues was primarily attributed to the opening of
twelve restaurants in 2023 and one restaurant during the quarter
ended March 31, 2024, partially offset by a decrease in our
same-restaurant sales. New restaurants positively impacted revenues
by approximately $14.4 million in the quarter ended March 31,
2024. Same-restaurant sales decreased 1.2% during the first quarter
ended March 31, 2024, which was attributable to a 3.2% decrease in
transactions, partially offset by an increase in average check of
2.0%. The higher average check was driven by an approximate 5.1%
increase in certain menu prices partially offset by product mix.
For the purpose of calculating same-restaurant sales for March 31,
2024, sales for the 69 restaurants that were open for at least 24
full fiscal periods were included in the Comparable Restaurant Base
(as defined below).
Total restaurant operating expenses for the first
quarter ended March 31, 2024 were $129.5 million compared to $121.2
million for the first quarter ended March 26, 2023, an increase of
$8.2 million or 6.8%. The increase in restaurant operating expenses
was driven by the opening of twelve restaurants in 2023 and one
restaurant during the quarter ended March 31, 2024. Additionally,
food, beverage and packaging costs were negatively impacted by a
4.8% increase in commodity prices. Labor expense increases were
also driven by incremental investments to support our team members,
including annual rate increases, partially offset by lower
variable-based compensation. Operating expenses increased due to an
increase in cleaning expenses, credit card fees and utilities,
partially offset by lower advertising expenses and a decrease in
operating supplies.
General and administrative expenses for the first
quarter ended March 31, 2024 were $18.5 million compared to $18.8
million for the first quarter ended March 26, 2023, a decrease of
$0.2 million or 1.3%. This decrease was primarily driven by lower
equity-based compensation and lower variable-based compensation,
partially offset by an increase in salaries and wages attributable
to annual rate increases, increases in professional fees, and
increases to advertising and marketing expenses.
Operating income for the first quarter ended March
31, 2024 was $10.1 million compared to $8.5 million for the first
quarter ended March 26, 2023, an increase of $1.6 million due to
the aforementioned increase in revenues, partially offset by
increases in the aforementioned expenses.
Net income for the first quarter ended March 31,
2024 was $5.3 million compared to a net loss of $1.3 million for
the first quarter ended March 26, 2023, an increase of $6.6
million. The increase in net income was primarily due the $3.5
million loss on debt extinguishment in the prior year, an increase
in operating income of $1.6 million due to the aforementioned
factors, a decrease in interest expense of $0.9 million, increase
in income tax benefit of $0.6 million, and an increase in interest
income of $0.1 million.
Restaurant-Level Adjusted EBITDA* for the first
quarter ended March 31, 2024 was $36.4 million compared to $34.8
million for the quarter ended March 26, 2023, an increase of $1.6
million or 4.5%.
Adjusted EBITDA* for the first quarter ended March
31, 2024 was $21.8 million compared to $19.6 million for the
quarter ended March 26, 2023, an increase of $2.1 million or
10.9%.
*A reconciliation of Restaurant-Level Adjusted
EBITDA and Adjusted EBITDA and the nearest GAAP financial measure
is included under “Non-GAAP Measures” in the accompanying financial
data below.
Development Highlights
During the quarter ended March 31, 2024, we opened
one restaurant in the Texas market. Subsequent to March 31, 2024,
we opened one additional restaurant, bringing our total restaurant
count to 86, including a restaurant owned by C&O of which
Portillo’s owns 50% of the equity.
Below are the restaurants opened since the
beginning of fiscal 2024:
Location |
Opening Date |
Fiscal Quarter Opened |
Denton, Texas |
March 2024 |
Q1 2024 |
Surprise, Arizona |
May 2024 |
Q2 2024 |
|
|
|
The following definitions apply to these
terms as used in this release:
Change in Same-Restaurant Sales -
The change in same-restaurant sales is the percentage change in
year-over-year revenue (excluding gift card breakage) for the
Comparable Restaurant Base, which is defined as the number of
restaurants open for at least 24 full fiscal periods. For the
quarters ended March 31, 2024 and March 26, 2023, there were 69 and
63 restaurants in our Comparable Restaurant Base, respectively.
A change in same-restaurant sales is the result of
a change in restaurant transactions, average guest check, or a
combination of the two. We gather daily sales data and regularly
analyze the guest transaction counts and the mix of menu items sold
to strategically evaluate menu pricing and demand. Measuring our
change in same-restaurant sales allows management to evaluate the
performance of our existing restaurant base. We believe this
measure provides a consistent comparison of restaurant sales
results and trends across periods within our core, established
restaurant base, unaffected by results of restaurant openings and
enables investors to better understand and evaluate the Company’s
historical and prospective operating performance.
Average Unit Volume - AUV is the
total revenue (excluding gift card breakage) recognized in the
Comparable Restaurant Base, including C&O, divided by the
number of restaurants in the Comparable Restaurant Base, including
C&O, by period.
This key performance indicator allows management to
assess changes in consumer spending patterns at our restaurants and
the overall performance of our restaurant base.
Adjusted EBITDA and Adjusted EBITDA Margin
- Adjusted EBITDA represents net income (loss) before
depreciation and amortization, interest expense, interest income,
and income taxes, adjusted for the impact of certain non-cash and
other items that we do not consider in our evaluation of ongoing
core operating performance as identified in the reconciliation of
net income (loss), the most directly comparable GAAP measure to
Adjusted EBITDA. Adjusted EBITDA Margin represents Adjusted EBITDA
as a percentage of revenues, net. See also “Non-GAAP Financial
Measures.”
Restaurant-Level Adjusted EBITDA and
Restaurant-Level Adjusted EBITDA Margin - Restaurant-Level
Adjusted EBITDA is defined as revenue, less restaurant operating
expenses, which include food, beverage and packaging costs, labor
expenses, occupancy expenses and other operating expenses.
Restaurant-Level Adjusted EBITDA excludes corporate level expenses
and depreciation and amortization on restaurant property and
equipment. Restaurant-Level Adjusted EBITDA Margin represents
Restaurant-Level Adjusted EBITDA as a percentage of revenues, net.
See also “Non-GAAP Financial Measures”.
For more information about the Company’s Non-GAAP
measures, how they are calculated and reconciled and why management
believes that they are useful, see “Non-GAAP Financial Measures”
below.
Earnings Conference Call
The Company will host a conference call to discuss
its financial results for the first quarter ended March 31, 2024 on
Tuesday, May 7, 2024, at 10:00 AM ET. The conference call can be
accessed live over the phone by dialing 201-493-6780. A telephone
replay will be available shortly after the call has concluded and
can be accessed by dialing 412-317-6671; the passcode is 13741634.
The webcast will be available at www.portillos.com under the
investors section and will be archived on the site shortly after
the call has concluded.
About Portillo’s
In 1963, Dick Portillo invested $1,100 into a
small trailer to open the first Portillo’s hot dog stand in Villa
Park, IL, which he called “The Dog House.” Years later, Portillo’s
(NASDAQ: PTLO) has grown to more than 80 restaurants across 10
states. Portillo’s is best known for its Chicago-style hot dogs,
Italian beef sandwiches, char-grilled burgers, fresh salads and
famous chocolate cake.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking
statements, within the meaning of the Private Securities Litigation
Reform Act of 1995 ("PSLRA"). All statements other than statements
of historical fact are forward-looking statements. Forward-looking
statements discuss our current expectations and projections
relating to our financial position, results of operations, plans,
objectives, future performance and business, and are based on
currently available operating, financial and competitive
information which are subject to various risks and uncertainties,
so you should not place undue reliance on forward-looking
statements. You can identify forward-looking statements by the fact
that they do not relate strictly to historical or current facts.
These statements may include words such as "aim," "anticipate,"
"believe," "commit," "estimate," "expect," "forecast," "outlook,"
"potential," "project," "projection," "plan," "intend," "seek,"
"may," "could," "would," "will," "should," "can," "can have,"
"likely," the negatives thereof and other similar expressions.
Forward-looking statements are based on our current
expectations and assumptions regarding our business, the economy
and other future conditions. Because forward-looking statements
relate to the future, by their nature, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. As a result, our actual results may differ
materially from those contemplated by the forward-looking
statements. Important factors that could cause actual results to
differ materially from those in the forward-looking statements
include regional, national or global political, economic, business,
competitive, market and regulatory conditions and the
following:
- risks related to or arising from our
organizational structure;
- risks of food-borne illness and food
safety and other health concerns about our food;
- risks relating to the economy and
financial markets, including inflation, fluctuating interest rates,
stock market activity, or other factors;
- the impact of unionization activities
of our Team Members on our operations and profitability;
- the impact of recent bank failures on
the marketplace, including the ability to access credit;
- risks associated with our reliance on
certain information technology systems and potential failures or
interruptions;
- privacy and cyber security risks
related to our digital ordering and payment platforms for our
delivery business;
- the impact of competition, including
from our competitors in the restaurant industry or our own
restaurants;
- the increasingly competitive labor
market and our ability to attract and retain the best talent and
qualified employees;
- the impact of federal, state or local
government regulations relating to privacy, data protection,
advertising and consumer protection, building and zoning
requirements, costs or ability to open new restaurants, or sale of
food and alcoholic beverage control regulations;
- inability to achieve our growth
strategy, such as the availability of suitable new restaurant sites
in existing and new markets and opening of new restaurants at the
anticipated rate and on the anticipated timeline;
- the impact of consumer sentiment and
other economic factors on our sales;
- increases in food and other operating
costs, tariffs and import taxes, and supply shortages; and
- other risks identified in our filings
with the Securities and Exchange Commission (the “SEC’).
All forward-looking statements are expressly
qualified in their entirety by these cautionary statements. You
should evaluate all forward-looking statements made in this press
release in the context of the risks and uncertainties disclosed in
the Company’s most recent Annual Report on Form 10-K, filed with
the SEC. All of the Company’s SEC filings are available on the
SEC’s website at www.sec.gov. The forward-looking statements
included in this press release are made only as of the date hereof.
The Company undertakes no obligation to publicly update or revise
any forward-looking statement as a result of new information,
future events or otherwise, except as otherwise required by
law.
Investor Contact:Barbara Noverini,
CFA investors@portillos.com
Media Contact:ICR,
Inc.portillosPR@icrinc.com
|
|
|
Quarter Ended |
|
March 31, 2024 |
|
March 26, 2023 |
REVENUES, NET |
$ |
165,831 |
|
|
100.0 |
% |
|
$ |
156,061 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
COST AND EXPENSES: |
|
|
|
|
|
|
|
Restaurant operating expenses: |
|
|
|
|
|
|
|
Food, beverage and packaging costs |
|
56,961 |
|
|
34.3 |
% |
|
|
53,626 |
|
|
34.4 |
% |
Labor |
|
43,302 |
|
|
26.1 |
% |
|
|
40,459 |
|
|
25.9 |
% |
Occupancy |
|
9,340 |
|
|
5.6 |
% |
|
|
8,451 |
|
|
5.4 |
% |
Other operating expenses |
|
19,857 |
|
|
12.0 |
% |
|
|
18,704 |
|
|
12.0 |
% |
Total restaurant operating expenses |
|
129,460 |
|
|
78.1 |
% |
|
|
121,240 |
|
|
77.7 |
% |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
18,540 |
|
|
11.2 |
% |
|
|
18,778 |
|
|
12.0 |
% |
Pre-opening expenses |
|
1,423 |
|
|
0.9 |
% |
|
|
2,344 |
|
|
1.5 |
% |
Depreciation and amortization |
|
6,944 |
|
|
4.2 |
% |
|
|
5,670 |
|
|
3.6 |
% |
Net income attributable to equity method investment |
|
(205 |
) |
|
(0.1) |
% |
|
|
(207 |
) |
|
(0.1) |
% |
Other income, net |
|
(428 |
) |
|
(0.3) |
% |
|
|
(257 |
) |
|
(0.2) |
% |
OPERATING INCOME |
|
10,097 |
|
|
6.1 |
% |
|
|
8,493 |
|
|
5.4 |
% |
Interest expense |
|
6,530 |
|
|
3.9 |
% |
|
|
7,444 |
|
|
4.8 |
% |
Interest income |
|
(79 |
) |
|
— |
% |
|
|
— |
|
|
— |
% |
Tax Receivable Agreement Liability adjustment |
|
(561 |
) |
|
(0.3) |
% |
|
|
(584 |
) |
|
(0.4) |
% |
Loss on debt extinguishment |
|
— |
|
|
— |
% |
|
|
3,465 |
|
|
2.2 |
% |
INCOME (LOSS) BEFORE INCOME TAXES |
|
4,207 |
|
|
2.5 |
% |
|
|
(1,832 |
) |
|
(1.2) |
% |
Income tax benefit |
|
(1,137 |
) |
|
(0.7) |
% |
|
|
(559 |
) |
|
(0.4) |
% |
NET INCOME (LOSS) |
|
5,344 |
|
|
3.2 |
% |
|
|
(1,273 |
) |
|
(0.8) |
% |
Net income (loss) attributable to non-controlling interests |
|
782 |
|
|
0.5 |
% |
|
|
(759 |
) |
|
(0.5) |
% |
NET INCOME (LOSS) ATTRIBUTABLE TO PORTILLO'S
INC. |
$ |
4,562 |
|
|
2.8 |
% |
|
$ |
(514 |
) |
|
(0.3) |
% |
|
|
|
|
|
|
|
|
Income (loss) per common share attributable to Portillo’s
Inc.: |
|
|
|
|
|
|
|
Basic |
$ |
0.08 |
|
|
|
|
$ |
(0.01 |
) |
|
|
Diluted |
$ |
0.08 |
|
|
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
57,437,782 |
|
|
|
|
|
49,599,074 |
|
|
|
Diluted |
|
60,493,958 |
|
|
|
|
|
49,599,074 |
|
|
|
|
|
March 31, 2024 |
|
December 31, 2023 |
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents and restricted cash |
$ |
13,184 |
|
$ |
10,438 |
|
Accounts and tenant improvement receivables |
|
14,447 |
|
|
14,183 |
|
Inventory |
|
8,510 |
|
|
8,733 |
|
Prepaid expenses |
|
6,246 |
|
|
8,565 |
|
Total current assets |
|
42,387 |
|
|
41,919 |
|
Property and equipment, net |
|
306,106 |
|
|
295,793 |
|
Operating lease assets |
|
194,852 |
|
|
193,825 |
|
Goodwill |
|
394,298 |
|
|
394,298 |
|
Trade names |
|
223,925 |
|
|
223,925 |
|
Other intangible assets, net |
|
28,189 |
|
|
28,911 |
|
Equity method investment |
|
16,641 |
|
|
16,684 |
|
Deferred tax assets |
|
203,615 |
|
|
184,701 |
|
Other assets |
|
6,877 |
|
|
5,485 |
|
Total other assets |
|
873,545 |
|
|
854,004 |
|
TOTAL ASSETS |
$ |
1,416,890 |
|
$ |
1,385,541 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable |
$ |
29,323 |
|
$ |
33,189 |
|
Current portion of long-term debt |
|
7,500 |
|
|
7,500 |
|
Short-term debt |
|
32,000 |
|
|
15,000 |
|
Current portion of Tax Receivable Agreement liability |
|
7,191 |
|
|
4,428 |
|
Current deferred revenue |
|
5,193 |
|
|
7,180 |
|
Short-term lease liability |
|
5,773 |
|
|
5,577 |
|
Accrued expenses |
|
29,895 |
|
|
32,039 |
|
Total current liabilities |
|
116,875 |
|
|
104,913 |
|
LONG-TERM LIABILITIES: |
|
|
|
Long-term debt, net of current portion |
|
282,239 |
|
|
283,923 |
|
Tax Receivable Agreement liability |
|
321,328 |
|
|
295,390 |
|
Long-term lease liability |
|
241,433 |
|
|
238,414 |
|
Other long-term liabilities |
|
2,670 |
|
|
2,791 |
|
Total long-term liabilities |
|
847,670 |
|
|
820,518 |
|
Total liabilities |
|
964,545 |
|
|
925,431 |
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
STOCKHOLDER’S EQUITY: |
|
|
|
Preferred stock, $0.01 par value per share, 10,000,000 shares
authorized, none issued and outstanding |
|
— |
|
|
— |
|
Class A common stock, $0.01 par value per share, 380,000,000 shares
authorized, and 61,561,592 and 55,502,375 shares issued and
outstanding as of March 31, 2024 and December 31, 2023,
respectively |
|
615 |
|
|
555 |
|
Class B common stock, $0.00001 par value per share, 50,000,000
shares authorized, and 11,640,555 and 17,472,926 shares issued and
outstanding as of March 31, 2024 and December 31, 2023,
respectively |
|
— |
|
|
— |
|
Additional paid-in-capital |
|
341,750 |
|
|
308,212 |
|
Retained earnings |
|
18,174 |
|
|
13,612 |
|
Total stockholders' equity attributable to Portillo's Inc. |
|
360,539 |
|
|
322,379 |
|
Non-controlling interest |
|
91,806 |
|
|
137,731 |
|
Total stockholders' equity |
|
452,345 |
|
|
460,110 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
1,416,890 |
|
$ |
1,385,541 |
|
|
|
|
Quarter Ended |
|
March 31, 2024 |
|
March 26, 2023 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net income (loss) |
$ |
5,344 |
|
|
$ |
(1,273 |
) |
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
6,944 |
|
|
|
5,670 |
|
Amortization of debt issuance costs and discount |
|
190 |
|
|
|
431 |
|
Loss on sales of assets |
|
76 |
|
|
|
118 |
|
Equity-based compensation |
|
2,827 |
|
|
|
3,537 |
|
Deferred income tax benefit |
|
(1,137 |
) |
|
|
(559 |
) |
Tax Receivable Agreement liability adjustment |
|
(561 |
) |
|
|
(584 |
) |
Gift card breakage |
|
(300 |
) |
|
|
(329 |
) |
Loss on debt extinguishment |
|
— |
|
|
|
3,465 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivables |
|
(179 |
) |
|
|
499 |
|
Receivables from related parties |
|
(37 |
) |
|
|
(101 |
) |
Inventory |
|
223 |
|
|
|
2,128 |
|
Other current assets |
|
1,228 |
|
|
|
(957 |
) |
Operating lease asset |
|
2,213 |
|
|
|
2,081 |
|
Accounts payable |
|
(3,500 |
) |
|
|
(3,160 |
) |
Accrued expenses and other liabilities |
|
(3,792 |
) |
|
|
(4,513 |
) |
Operating lease liabilities |
|
(1,025 |
) |
|
|
(798 |
) |
Deferred lease incentives |
|
942 |
|
|
|
850 |
|
Other assets and liabilities |
|
(379 |
) |
|
|
(19 |
) |
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
9,077 |
|
|
|
6,486 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Purchase of property and equipment |
|
(16,939 |
) |
|
|
(20,216 |
) |
Proceeds from the sale of property and equipment |
|
— |
|
|
|
26 |
|
NET CASH USED IN INVESTING ACTIVITIES |
|
(16,939 |
) |
|
|
(20,190 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Proceeds from short-term debt, net |
|
17,000 |
|
|
|
10,000 |
|
Proceeds from long-term debt |
|
— |
|
|
|
300,000 |
|
Payments of long-term debt |
|
(1,875 |
) |
|
|
(322,428 |
) |
Proceeds from equity offering, net of underwriting discounts |
|
114,960 |
|
|
|
166,400 |
|
Repurchase of outstanding equity / Portillo's OpCo units |
|
(114,960 |
) |
|
|
(166,400 |
) |
Distributions paid to non-controlling interest holders |
|
(838 |
) |
|
|
— |
|
Proceeds from stock option exercises |
|
632 |
|
|
|
590 |
|
Employee withholding taxes related to net settled equity
awards |
|
(12 |
) |
|
|
(19 |
) |
Proceeds from Employee Stock Purchase Plan purchases |
|
130 |
|
|
|
127 |
|
Payments of Tax Receivable Agreement liability |
|
(4,429 |
) |
|
|
(813 |
) |
Payment of deferred financing costs |
|
— |
|
|
|
(3,569 |
) |
NET CASH PROVIDED (USED) IN FINANCING
ACTIVITIES |
|
10,608 |
|
|
|
(16,112 |
) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH |
|
2,746 |
|
|
|
(29,816 |
) |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING
OF THE PERIOD |
|
10,438 |
|
|
|
44,427 |
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE
PERIOD |
$ |
13,184 |
|
|
$ |
14,611 |
|
|
|
|
Quarter Ending |
|
March 31, 2024 |
|
March 26, 2023 |
Total Restaurants (a) |
|
85 |
|
|
|
75 |
|
AUV (in millions) (a) |
$ |
9.0 |
|
|
$ |
8.7 |
|
Change in same-restaurant sales (b)(c) |
|
(1.2 |
)% |
|
|
9.1 |
% |
Adjusted EBITDA (in thousands) (b) |
$ |
21,777 |
|
|
$ |
19,634 |
|
Adjusted EBITDA Margin (b) |
|
13.1 |
% |
|
|
12.6 |
% |
Restaurant-Level Adjusted EBITDA (in thousands) (b) |
$ |
36,371 |
|
|
$ |
34,821 |
|
Restaurant-Level Adjusted EBITDA Margin (b) |
|
21.9 |
% |
|
|
22.3 |
% |
|
(a) Includes a restaurant that is owned by C&O of which
Portillo’s owns 50% of the equity. Total restaurants indicated are
as of a point in time. AUVs for the quarters ended March 31, 2024
and March 26, 2023 represent AUVs for the twelve months ended March
31, 2024 and March 26, 2023, respectively. |
(b) Excludes a restaurant that is owned by C&O of which
Portillo’s owns 50% of the equity. |
(c) For the quarter ended March 31, 2024, same-restaurant sales
compares the 13 weeks from January 1, 2024 through March 31, 2024
to the 13 weeks from January 2, 2023 through April 2, 2023. |
|
PORTILLO’S INC.NON-GAAP
FINANCIAL MEASURES
To supplement the consolidated financial
statements, which are prepared and presented in accordance with
GAAP, we use the following non-GAAP financial measures: Adjusted
EBITDA and Adjusted EBITDA Margin, and Restaurant-Level Adjusted
EBITDA and Restaurant-Level Adjusted EBITDA Margin. Accordingly,
Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted
EBITDA Margin are not required by, nor presented in accordance with
GAAP, but rather are supplemental measures of operating performance
of our restaurants. You should be aware that these measures are not
indicative of overall results for the Company and that
Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted
EBITDA Margin do not accrue directly to the benefit of stockholders
because of corporate-level expenses excluded from such measures.
These measures are supplemental measures of operating performance
and our calculations thereof may not be comparable to similar
measures reported by other companies. These measures are important
measures to evaluate the performance and profitability of our
restaurants, individually and in the aggregate, but also have
important limitations as analytical tools and should not be
considered in isolation as substitutes for analysis of our results
as reported under GAAP.
Adjusted EBITDA and Adjusted EBITDA
Margin
Adjusted EBITDA represents net income (loss) before
depreciation and amortization, interest expense, interest income,
and income taxes, adjusted for the impact of certain non-cash and
other items that we do not consider in our evaluation of ongoing
core operating performance as identified in the reconciliation of
net income (loss), the most directly comparable GAAP measure to
Adjusted EBITDA. Adjusted EBITDA Margin represents Adjusted EBITDA
as a percentage of total revenues.
We use Adjusted EBITDA and Adjusted EBITDA Margin
(i) to evaluate our operating results and the effectiveness of our
business strategies, (ii) internally as benchmarks to compare our
performance to that of our competitors and (iii) as factors in
evaluating management’s performance when determining incentive
compensation.
We believe that Adjusted EBITDA and Adjusted EBITDA
Margin are important measures of operating performance because they
eliminate the impact of expenses that do not relate to our core
operating performance.
We are unable to reconcile the long-term outlook
for Adjusted EBITDA to net income (loss), the corresponding U.S.
GAAP measure, due to variability and difficulty in making accurate
forecasts and projections and because not all information necessary
to prepare the reconciliation is available to us without
unreasonable efforts. For the same reasons, we are unable to
address the probable significance of the unavailable information
because we cannot accurately predict all of the components of the
adjusted calculations and the non-GAAP measure may be materially
different than the GAAP measure.
Restaurant-Level Adjusted EBITDA and
Restaurant-Level Adjusted EBITDA Margin
Restaurant-Level Adjusted EBITDA is defined as
revenue, less restaurant operating expenses, which include cost of
goods sold (excluding depreciation and amortization), labor
expenses, occupancy expenses and other operating expenses.
Restaurant-Level Adjusted EBITDA excludes corporate level expenses
and depreciation and amortization on restaurant property and
equipment. Restaurant-Level Adjusted EBITDA Margin represents
Restaurant-Level Adjusted EBITDA as a percentage of revenue.
We believe that Restaurant-Level Adjusted EBITDA
and Restaurant-Level Adjusted EBITDA Margin are important measures
to evaluate the performance and profitability of our restaurants,
individually and in the aggregate.
See below for a reconciliation of net income, the
most directly comparable GAAP measure, to Adjusted EBITDA and
Adjusted EBITDA Margin (in thousands):
|
Quarter Ended |
|
March 31, 2024 |
|
March 26, 2023 |
Net income (loss) |
$ |
5,344 |
|
|
$ |
(1,273 |
) |
Net income (loss) margin |
|
3.2 |
% |
|
|
(0.8) |
% |
Depreciation and amortization |
|
6,944 |
|
|
|
5,670 |
|
Interest expense |
|
6,530 |
|
|
|
7,444 |
|
Interest income |
|
(79 |
) |
|
|
— |
|
Loss on debt extinguishment |
|
— |
|
|
|
3,465 |
|
Income tax benefit |
|
(1,137 |
) |
|
|
(559 |
) |
EBITDA |
|
17,602 |
|
|
|
14,747 |
|
Deferred rent (1) |
|
1,170 |
|
|
|
1,225 |
|
Equity-based compensation |
|
2,827 |
|
|
|
3,537 |
|
ERP implementation costs (2) |
|
125 |
|
|
|
— |
|
Other income (3) |
|
75 |
|
|
|
117 |
|
Transaction-related fees & expenses (4) |
|
539 |
|
|
|
592 |
|
Tax Receivable Agreement liability adjustment (5) |
|
(561 |
) |
|
|
(584 |
) |
Adjusted EBITDA |
$ |
21,777 |
|
|
$ |
19,634 |
|
Adjusted EBITDA Margin (6) |
|
13.1 |
% |
|
|
12.6 |
% |
(1) Represents the difference between cash rent payments and the
recognition of straight-line rent expense recognized over the lease
term. |
(2) Represents non-capitalized third-party consulting and software
licensing costs incurred in connection with the implementation of a
new ERP system. |
(3) Represents loss on disposal of property and equipment. |
(4) Represents certain expenses that management believes are not
indicative of ongoing operations, consisting primarily of certain
professional fees. |
(5) Represents the Tax Receivable Agreement liability remeasurement
primarily due to activity under equity-based compensation
plans. |
(6) Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by
Revenues, net. |
|
See below for a reconciliation of operating income,
the most directly comparable GAAP measure, to Restaurant-Level
Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin (in
thousands):
|
Quarter Ended |
|
March 31, 2024 |
|
March 26, 2023 |
Operating income |
$ |
10,097 |
|
|
$ |
8,493 |
|
Operating income margin |
|
6.1 |
% |
|
|
5.4 |
% |
Plus: |
|
|
|
General and administrative expenses |
|
18,540 |
|
|
|
18,778 |
|
Pre-opening expenses |
|
1,423 |
|
|
|
2,344 |
|
Depreciation and amortization |
|
6,944 |
|
|
|
5,670 |
|
Net income attributable to equity method investment |
|
(205 |
) |
|
|
(207 |
) |
Other income, net |
|
(428 |
) |
|
|
(257 |
) |
Restaurant-Level Adjusted EBITDA |
$ |
36,371 |
|
|
$ |
34,821 |
|
Restaurant-Level Adjusted EBITDA Margin (1) |
|
21.9 |
% |
|
|
22.3 |
% |
(1) Restaurant-Level Adjusted EBITDA Margin is defined as
Restaurant-Level Adjusted EBITDA divided by Revenues, net |
|
Portillos (NASDAQ:PTLO)
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