• Portillo’s Inc. Announces Fourth Quarter and Fiscal Year 2023 Financial Results

    Источник: Nasdaq GlobeNewswire / 27 фев 2024 08:00:01   America/New_York

    CHICAGO, Feb. 27, 2024 (GLOBE NEWSWIRE) -- 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 fourth quarter and fiscal year ended December 31, 2023.

    Michael Osanloo, President and Chief Executive Officer of Portillo’s, said “Portillo’s has been a beloved brand for 60 years, and we only continue to get better. In 2023, we grew revenue and adjusted EBITDA by double-digits. We generated record operating cash flow. We opened 12 new restaurants. We ended the year with positive traffic and multi-year highs in guest satisfaction. We do this by building on what makes us great — impeccable operations and an excellent value proposition. This is our playbook. It’s how we drive the kind of results you saw from us in 2023. And we’re just getting started.”

    Financial Highlights for the Fourth Quarter 2023 (14 weeks)* vs. Prior Year (13 weeks)*:

    • Total revenue increased 24.5% or $37.0 million to $187.9 million;
    • Same-restaurant sales** increased 4.4%;
    • Operating income increased $8.0 million to $14.5 million;
    • Net income increased $7.0 million to $9.6 million;
    • Restaurant-Level Adjusted EBITDA**** increased $13.7 million to $45.7 million; and
    • Adjusted EBITDA**** increased $8.1 million to $26.1 million.

    Financial Highlights for Fiscal Year 2023 (53 weeks)* vs. Prior Year (52 weeks)*:

    • Total revenue increased 15.8% or $92.8 million to $679.9 million;
    • Same-restaurant sales*** increased 5.7%;
    • Operating income increased $14.2 million to $55.4 million;
    • Net income increased $7.7 million to $24.8 million;
    • Restaurant-Level Adjusted EBITDA**** increased $32.7 million to $165.2 million; and
    • Adjusted EBITDA**** increased $17.3 million to $102.3 million.

    *We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31. Fourth quarter 2023 and fiscal 2023 consisted of 14 weeks and 53 weeks, respectively, and fourth quarter 2022 and fiscal 2022 consisted of 13 weeks and 52 weeks, respectively. The additional week (the “53rd week”) in the fourth quarter 2023 and fiscal 2023 included Christmas day, resulting in six operating days.
    **For the fourth quarter 2023, same-restaurant sales compares the 14 weeks from September 25, 2023 through December 31, 2023 to the 14 weeks from September 26, 2022 through January 1, 2023. In order to compare like-for-like periods for the fourth quarter 2024, same-restaurant sales will compare the 13 weeks from September 30, 2024 through December 29, 2024 to the 13 weeks from October 2, 2023 through December 31, 2023.
    ***For fiscal 2023, same-restaurant sales compares the 53 weeks from December 26, 2022 through December 31, 2023 to the 53 weeks from December 27, 2021 through January 1, 2023. In order to compare like-for-like periods for fiscal 2024, same-restaurant sales will compare the 52 weeks from January 1, 2024 through December 29, 2024 to the 52 weeks from January 2, 2023 through December 31, 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.

    53rd Week Impact

    We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31. The fourth quarter 2023 and fiscal year 2023 results include the favorable impact of a 53rd operating week, which affects all fourth quarter and full year comparisons to fiscal 2022. The additional week in the fourth quarter 2023 included Christmas Day, resulting in six operating days. The 53rd week resulted in the following impacts in 2023:

    • Total revenue includes an impact of approximately $13.9 million in both the fourth quarter 2023 and fiscal year 2023.
    • Operating income includes an impact of approximately $1.6 million in both the fourth quarter 2023 and fiscal year 2023.
    • Net income includes an impact of approximately $1.2 million in the fourth quarter 2023 and fiscal year 2023.
    • Restaurant-Level Adjusted EBITDA includes an impact of approximately $3.5 million in both the fourth quarter 2023 and fiscal year 2023.
    • Adjusted EBITDA includes an impact of approximately $2.4 million in both the fourth quarter 2023 and fiscal year 2023.

    Recent Developments and Trends

    In the year ended December 31, 2023, we saw continued revenue growth and same-restaurant sales growth. Total revenue grew 15.8% during the year ended December 31, 2023. Same-restaurant sales grew 5.7% during the year ended December 31, 2023, compared to 5.4% during the year ended December 25, 2022. During the fourth quarter of 2023, total revenue grew 24.5% and same-restaurant sales increased 4.4% compared to same-restaurant sales growth of 6.0% for the fourth quarter ended December 25, 2022.

    We believe unit growth is a key driver of shareholder value creation. During the quarter and year ended December 31, 2023, we opened six and 12 new restaurants, respectively, bringing our total restaurant count to 84, including a restaurant owned by C&O, of which Portillo's owns 50% of the equity. In fiscal 2023 we opened new restaurants in the Arizona, Florida, Illinois, and Texas markets. We made significant strides in Texas with the opening of four new restaurants in the Dallas-Fort Worth market. The one restaurant opened in the fourth quarter of 2022 and twelve new restaurants opened in fiscal 2023 positively impacted revenues in the fourth quarter ended December 31, 2023 by approximately $16.9 million. The three restaurants opened in fiscal 2022 and twelve restaurants opened in fiscal 2023 positively impacted revenues by approximately $48.4 million in the year ended December 31, 2023.

    In the fourth quarter and for the year ended December 31, 2023, we continued to see commodity inflation stabilize versus 2022 levels. Commodity inflation was 4.4% and 5.5% for the quarter and year ended December 31, 2023, respectively, compared to 14.5% and 15.2% for the quarter and year ended December 25, 2022. For the year ended December 31, 2023, we experienced a decline in labor expenses, as a percentage of revenue, compared to the year ended December 25, 2022 primarily due to increases in revenue, partially offset by higher labor utilization and additional wage investments. We strategically offset these expenses through menu price increases and operational efficiencies.

    In the year ended December 31, 2023, same-restaurant sales, operating income, net income, Restaurant-Level Adjusted EBITDA, and Adjusted EBITDA all improved versus the prior year. We believe this improvement was the result of our ongoing efforts to deploy strategic pricing actions, elevate guest experiences, implement operational efficiencies, and grow our restaurant base.

    In fiscal 2024, we expect our overall commodity inflation to stay consistent with recent trends and are currently estimating commodity inflation in the mid-single digits. Additionally, we do anticipate additional wage investments and are currently estimating mid-single digit wage inflation. We will continue to strategically offset these expense increases through menu price increases and operational efficiencies. During January of 2024, we increased certain menu prices by approximately 1.5%. We will continue to monitor our cost pressures, the competitive landscape as well as consumer sentiment to inform our pricing decisions in the coming quarters.

    We believe the strength of our brand, the consistency of our operations, and the ongoing execution of a disciplined development strategy all support our business model. Further, we intend to continue to develop shareholder value through self-funded restaurant development and an ongoing focus on operational excellence.

    Review of Fourth Quarter 2023 Financial Results

    Revenues for the fourth quarter ended December 31, 2023 were $187.9 million compared to $150.9 million for the fourth quarter ended December 25, 2022, an increase of $37.0 million or 24.5%. The increase is inclusive of the favorable impact of the 53rd week, which resulted in incremental revenue of $13.9 million. The increase in revenues was primarily attributed to the opening of new restaurants, combined with an increase in our same-restaurant sales in the fourth quarter ended December 31, 2023. Twelve new restaurants opened in the year ended December 31, 2023 and one restaurant opened in the fourth quarter of 2022 positively impacted revenues in the fourth quarter ended December 31, 2023 by approximately $16.9 million. Same-restaurant sales increased 4.4% during the fourth quarter ended December 31, 2023, which was attributable to an increase in average check of 3.1% and a 1.3% increase in transactions. The higher average check was driven by an approximate 6.0% increase in certain menu prices partially offset by product mix. For the purpose of calculating same-restaurant sales for December 31, 2023, sales for 68 restaurants were included in the Comparable Restaurant Base (as defined below) as of the end of fiscal 2023.

    Total restaurant operating expenses for the fourth quarter ended December 31, 2023 were $142.1 million compared to $118.8 million for the fourth quarter ended December 25, 2022, an increase of $23.3 million or 19.6%. The increase in restaurant operating expenses was driven by the opening of twelve new restaurants in the year ended December 31, 2023 and one restaurant opened in the fourth quarter of 2022. Additionally, food, beverage and packaging costs were negatively impacted by a 4.4% increase in commodity prices, partially offset by lower third-party delivery commissions. Labor expense increases were also driven by incremental investments to support our team members, including annual rate increases, and higher variable-based compensation. Operating expenses increased due to an increase in credit card fees, cleaning, utilities, and repair and maintenance, partially offset by a decrease in advertising and marketing expenses, operating supplies, and professional fees.

    General and administrative expenses for the fourth quarter ended December 31, 2023 were $21.6 million compared to $17.7 million for the fourth quarter ended December 25, 2022, an increase of $3.8 million or 21.7%. This increase was primarily driven by higher variable-based compensation, higher advertising expenses, increases in salaries, wages and benefits attributable to annual rate increases and the filling of open positions, partially offset by a decrease in equity-based compensation and insurance.

    Operating income for the fourth quarter ended December 31, 2023 was $14.5 million compared to $6.4 million for the fourth quarter ended December 25, 2022, an increase of $8.0 million due to the aforementioned increase in revenues, partially offset by an increase in the aforementioned expenses.

    Net income for the fourth quarter ended December 31, 2023 was $9.6 million compared to $2.7 million for the fourth quarter ended December 25, 2022, an increase of $7.0 million. The increase in net income was primarily due to the factors driving the aforementioned increase in operating income, a decrease in interest expense of $1.4 million, and an increase in interest income of $0.1 million. The increase was partially offset by an increase in income tax expense of $1.3 million and a decrease in the Tax Receivable Agreement liability adjustment of $1.2 million.

    Restaurant-Level Adjusted EBITDA* for the fourth quarter ended December 31, 2023 was $45.7 million compared to $32.0 million for the quarter ended December 25, 2022, an increase of $13.7 million or 42.7%.

    Adjusted EBITDA* for the fourth quarter ended December 31, 2023 was $26.1 million compared to $18.1 million for the quarter ended December 25, 2022, an increase of $8.1 million or 44.5%.

    *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.

    Review of Fiscal Year 2023 Financial Results

    Revenues for the year ended December 31, 2023 were $679.9 million compared to $587.1 million for the year ended December 25, 2022, an increase of $92.8 million or 15.8%. The increase is inclusive of the favorable impact of the 53rd week, which resulted in incremental revenue of $13.9 million. The increase in revenues was primarily attributed to the opening of new restaurants, combined with an increase in our same-restaurant sales. Twelve new restaurants opened in the year ended December 31, 2023 and three restaurants opened in 2022 positively impacting revenues in the year ended December 31, 2023 by approximately $48.4 million. Same-restaurant sales increased 5.7% during the year ended December 31, 2023, which was attributable to an increase in average check of 6.1%, partially offset by a 0.4% decline in transactions. The higher average check was driven by an approximate 8.5% increase in menu prices partially offset by product mix. For the purpose of calculating same-restaurant sales as of December 31, 2023, sales for 68 restaurants were included in the Comparable Restaurant Base (as defined below) as of the end of fiscal 2023.

    Total restaurant operating expenses for the year ended December 31, 2023 were $514.7 million compared to $454.6 million for the year ended December 25, 2022, an increase of $60.1 million or 13.2%. The increase in restaurant operating expenses was driven by the opening of twelve new restaurants during the year ended December 31, 2023, and the opening of three restaurants in 2022. Additionally, food, beverage and packaging costs was negatively impacted by a 5.5% increase in commodity prices, partially offset by lower third-party delivery commissions.. Labor expense increases were also driven by incremental investments to support our team members, including rate increases, and higher variable-based compensation. Other operating expenses increased due to an increase in credit card fees, utilities, repair and maintenance expenses, and insurance, partially offset by a decrease in professional fees.

    General and administrative expenses for the year ended December 31, 2023 were $78.8 million compared to $66.9 million for the year ended December 25, 2022, an increase of $11.9 million or 17.9%. This increase was primarily driven by higher variable-based compensation, increases in salaries, wages and benefits attributable to annual rate increases and the filling of open positions, higher advertising and software licensing fees, partially offset by a decrease in insurance expenses and lower equity-based compensation expense.

    Operating income for the year ended December 31, 2023 was $55.4 million compared to $41.3 million for the year ended December 25, 2022, an increase of $14.2 million due to the aforementioned increase in revenues, partially offset by an increase in the aforementioned expenses.

    Net income for the year ended December 31, 2023 was $24.8 million compared to $17.2 million for the year ended December 25, 2022, an increase of $7.7 million. The increase in net income was primarily due to the factors driving the aforementioned increase in operating income, a decrease in interest expense of $0.2 million, and an increase in interest income of $0.2 million, partially offset by the absence of a loss on debt extinguishment in the year ended December 25, 2022, a decrease in the Tax Receivable Agreement liability adjustment of $2.0 million, and an increase in income tax expense of $1.4 million.

    Restaurant-Level Adjusted EBITDA* for the year ended December 31, 2023 was $165.2 million compared to $132.5 million for the year ended December 25, 2022, an increase of $32.7 million or 24.7%.

    Adjusted EBITDA* for the year ended December 31, 2023 was $102.3 million compared to $85.0 million for the year ended December 25, 2022, an increase of $17.3 million or 20.4%.

    *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

    In fiscal 2023, we opened a total of twelve new restaurants in the Arizona, Florida, Illinois, and Texas markets. Below are the twelve restaurants opened since the beginning of fiscal 2023 along with their opening dates.

    Location Opening DateFiscal Quarter Opened
    Kissimmee, FloridaDecember 2022*Q1 2023
    The Colony, TexasJanuary 2023Q1 2023
    Tucson, ArizonaFebruary 2023Q1 2023
    Gilbert, ArizonaMarch 2023Q2 2023
    Queen Creek, ArizonaAugust 2023Q3 2023
    Allen, TexasAugust 2023Q3 2023
    Cicero, IllinoisOctober 2023Q4 2023
    Arlington, TexasNovember 2023Q4 2023
    Algonquin, IllinoisNovember 2023Q4 2023
    Rosemont, IllinoisDecember 2023Q4 2023
    Fort Worth, TexasDecember 2023Q4 2023
    Clermont, FloridaDecember 2023Q4 2023

    * Fiscal 2023 began on December 26, 2022.

    In fiscal 2024, we are planning to open at least nine new restaurants. In 2025, we are targeting at least 12% new restaurant growth, and our long-term outlook is approximately 12% - 15% annual new restaurant growth. Our near-term restaurant growth strategy is focused on leveraging our proven unit economic model primarily in markets outside Chicagoland with favorable macro-economic tailwinds where we already have a presence. Particularly, our short-term focus continues to be in the Sunbelt, with growth across markets in Arizona, Texas, and Florida. Simultaneously, we will continue to fill-in Chicagoland and adjacent markets as opportunities come available.

    Fiscal 2024 and Long-Term Outlook

    For fiscal 2024, the Company is anticipating the following:

    • At least nine new restaurant openings
    • Commodity inflation ranging from 4% to 6%;
    • General and administrative expenses ranging from $85 million - $87 million;
    • Pre-opening expenses between $8.0 million - $9.0 million;
    • Capital expenditures between $90 million - $93 million.

    The following long-term outlook does not constitute specific earnings guidance, but the Company believes these ranges to be achievable over the long term:

    • Restaurant unit growth ranging from 12% to 15%;
    • Same-restaurant sales growth in the low single digits;
    • Total revenue growth in the mid teens;
    • Adjusted EBITDA growth in the low teens*.

    * A reconciliation of Adjusted EBITDA outlook cannot be provided without unreasonable effort. See "Non-GAAP Financial Measures" below for more information.

    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 years ended December 31, 2023 and December 25, 2022, there were 68 and 62 restaurants in our Comparable Restaurant Base, respectively.

    A change in same-restaurant sales growth 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 same-restaurant sales growth 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 fiscal year ended December 31, 2023 on Tuesday, February 27, 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 13741633. 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 and fluctuating interest rates or other factors;
    • the impact of unionization activities of our restaurant workers 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


    PORTILLO’S INC
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except common share and per common share data)
        
     Quarter Ended Fiscal Years Ended
     December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022
    REVENUES, NET$187,858  100.0% $150,878  100.0% $679,905  100.0% $587,104  100.0%
                    
    COST AND EXPENSES:               
    Restaurant operating expenses:               
    Food, beverage and packaging costs 65,462  34.8%  52,823  35.0%  230,869  34.0%  204,237  34.8%
    Labor 47,668  25.4%  40,040  26.5%  173,868  25.6%  154,392  26.3%
    Occupancy 8,460  4.5%  7,879  5.2%  33,358  4.9%  30,657  5.2%
    Other operating expenses 20,532  10.9%  18,087  12.0%  76,639  11.3%  65,312  11.1%
    Total restaurant operating expenses 142,122  75.7%  118,829  78.8%  514,734  75.7%  454,598  77.4%
                    
    General and administrative expenses 21,550  11.5%  17,707  11.7%  78,835  11.6%  66,892  11.4%
    Pre-opening expenses 3,990  2.1%  2,945  2.0%  9,019  1.3%  4,715  0.8%
    Depreciation and amortization 6,525  3.5%  5,104  3.4%  24,313  3.6%  20,907  3.6%
    Net income attributable to equity method investment (391) (0.2)%  (276) (0.2)%  (1,401) (0.2)%  (1,083) (0.2)%
    Other (income) loss, net (405) (0.2)%  129  0.1%  (1,035) (0.2)%  (204) %
    OPERATING INCOME 14,467  7.7%  6,440  4.3%  55,440  8.2%  41,279  7.0%
    Interest expense 6,931  3.7%  8,358  5.5%  27,470  4.0%  27,644  4.7%
    Interest income (96) (0.1)%    %  (212) %    %
    Tax Receivable Agreement Liability adjustment (1,658) (0.9)%  (2,883) (1.9)%  (3,349) (0.5)%  (5,345) (0.9)%
    Loss on debt extinguishment   %    %  3,465  0.5%    %
    INCOME BEFORE INCOME TAXES 9,290  4.9%  965  0.6%  28,066  4.1%  18,980  3.2%
    Income tax (benefit) expense (357) (0.2)%  (1,688) (1.1)%  3,248  0.5%  1,823  0.3%
    NET INCOME 9,647  5.1%  2,653  1.8%  24,818  3.7%  17,157  2.9%
    Net income (loss) attributable to non-controlling interests 1,858  1.0%  (1,301) (0.9)%  6,394  0.9%  6,306  1.1%
    NET INCOME ATTRIBUTABLE TO PORTILLO'S INC.$7,789  4.1% $3,954  2.6% $18,424  2.7% $10,851  1.8%
                    
    Income per common share attributable to Portillo’s Inc.:               
    Basic$0.14    $0.09    $0.34    $0.28   
    Diluted$0.13    $0.08    $0.32    $0.25   
                    
    Weighted-average common shares outstanding:               
    Basic 55,409,702     44,911,414     53,806,570     38,902,259   
    Diluted 58,635,214     48,438,054     57,307,784     42,715,977   

    Note: We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31. Fourth quarter 2023 and fiscal 2023 consisted of 14 weeks and 53 weeks, respectively, and fourth quarter 2022 and fiscal 2022 consisted of 13 weeks and 52 weeks, respectively. The additional week in the fourth quarter 2023 and fiscal 2023 included Christmas day, resulting in six operating days.


    PORTILLO’S INC.
    CONSOLIDATED BALANCE SHEETS
    (in thousands, except common share and per common share data)
       
     December 31, 2023 December 25, 2022
    ASSETS   
    CURRENT ASSETS:   
    Cash and cash equivalents and restricted cash$10,438 $44,427 
    Accounts and tenant improvement receivables 14,183  8,590 
    Inventory 8,733  7,387 
    Prepaid expenses 8,565  4,922 
    Total current assets 41,919  65,326 
    Property and equipment, net 295,793  227,036 
    Operating lease assets 193,825  166,808 
    Goodwill 394,298  394,298 
    Trade names 223,925  223,925 
    Other intangible assets, net 28,911  31,800 
    Equity method investment 16,684  16,274 
    Deferred tax assets 184,701  150,497 
    Other assets 5,485  4,119 
    Total other assets 854,004  820,913 
    TOTAL ASSETS$1,385,541 $1,280,083 
        
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    CURRENT LIABILITIES:   
    Accounts payable$33,189 $30,273 
    Current portion of long-term debt 7,500  4,155 
    Short-term debt 15,000   
    Current portion of Tax Receivable Agreement liability 4,428  813 
    Current deferred revenue 7,180  7,292 
    Short-term lease liability 5,577  4,849 
    Accrued expenses 32,039  29,915 
    Total current liabilities 104,913  77,297 
    LONG-TERM LIABILITIES:   
    Long-term debt, net of current portion 283,923  314,425 
    Tax Receivable Agreement liability 295,390  252,003 
    Long-term lease liability 238,414  200,166 
    Other long-term liabilities 2,791  3,291 
    Total long-term liabilities 820,518  769,885 
    Total liabilities 925,431  847,182 
        
    COMMITMENTS AND CONTINGENCIES   
    STOCKHOLDER’S EQUITY:   
    Preferred stock, $0.01 par value per share, 10,000,000 shares authorized, 0.00 issued and outstanding    
    Class A common stock, $0.01 par value per share, 380,000,000 shares authorized, and 55,502,375 and 48,420,723 shares issued and outstanding as of December 31, 2023 and December 25, 2022, respectively 555  484 
    Class B common stock, $0.00001 par value per share, 50,000,000 shares authorized, and 17,472,926 and 23,837,162 shares issued and outstanding as of December 31, 2023 and December 25, 2022, respectively    
    Additional paid-in-capital 308,212  260,664 
    Retained earnings (accumulated deficit) 13,612  (4,812)
    Total stockholders' equity attributable to Portillo's Inc. 322,379  256,336 
    Non-controlling interest 137,731  176,565 
    Total stockholders' equity 460,110  432,901 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,385,541 $1,280,083 



    PORTILLO’S INC
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands)
      
     Fiscal Years Ended
     December 31, 2023 December 25, 2022
    CASH FLOWS FROM OPERATING ACTIVITIES:   
    Net income$24,818  $17,157 
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Depreciation and amortization 24,313   20,907 
    Amortization of debt issuance costs and discount 1,001   2,751 
    Loss on sales of assets 592   398 
    Equity-based compensation 15,542   16,137 
    Deferred income tax provision 3,249   1,820 
    Tax Receivable Agreement liability adjustment (3,349)  (5,345)
    Gift card breakage (917)  (798)
    Loss on debt extinguishment 3,465    
    Changes in operating assets and liabilities:   
    Accounts receivables (679)  191 
    Receivables from related parties (82)  96 
    Inventory (1,346)  (1,309)
    Other current assets (3,643)  914 
    Operating lease asset 7,402   6,793 
    Accounts payable 209   (3,621)
    Accrued expenses and other liabilities 3,021   1,587 
    Operating lease liability (2,033)  (2,426)
    Deferred lease incentives 1,501   1,651 
    Other assets and liabilities (2,283)  (14)
    NET CASH PROVIDED BY OPERATING ACTIVITIES 70,781   56,889 
    CASH FLOWS FROM INVESTING ACTIVITIES:   
    Purchase of property and equipment (87,918)  (47,061)
    Proceeds from the sale of property and equipment 81   44 
    NET CASH USED IN INVESTING ACTIVITIES (87,837)  (47,017)
    CASH FLOWS FROM FINANCING ACTIVITIES:   
    Proceeds from short-term debt, net 15,000    
    Proceeds from long-term debt 300,000    
    Payments of long-term debt (328,053)  (3,324)
    Proceeds from equity offering, net of underwriting discounts 179,306   364,956 
    Repurchase of outstanding equity / Portillo's OpCo units (179,306)  (364,956)
    Distributions paid to non-controlling interest holders (399)   
    Proceeds from stock option exercises 1,879   1,890 
    Employee withholding taxes related to net settled equity awards (1,505)  (2,632)
    Proceeds from Employee Stock Purchase Plan purchases 527   129 
    Payments of Tax Receivable Agreement liability (813)   
    Payment of deferred financing costs (3,569)   
    Payment of initial public offering issuance costs    (771)
    NET CASH USED IN FINANCING ACTIVITIES (16,933)  (4,708)
    NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH (33,989)  5,164 
    CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD 44,427   39,263 
    CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD$10,438  $44,427 

    Note: We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31. Fiscal 2023 consisted of 53 weeks and fiscal 2022 consisted of 52 weeks. The 53rd week in fiscal 2023 included Christmas day, resulting in six operating days.


    PORTILLO’S INC
    KEY PERFORMANCE INDICATORS AND NON-GAAP FINANCIAL MEASURES
        
     Quarter Ended Fiscal Years Ended
     December 31,
    2023
     December 25,
    2022
     December 31,
    2023
     December 25,
    2022
    Total Restaurants (a) 84   72   84   72 
    AUV (in millions) (a)N/A  N/A  $9.1  $8.5 
    Change in same-restaurant sales (b)(c) 4.4%  6.0%  5.7%  5.4%
    Adjusted EBITDA (in thousands) (b)$26,142  $18,092  $102,282  $84,955 
    Adjusted EBITDA Margin (b) 13.9%  12.0%  15.0%  14.5%
    Restaurant-Level Adjusted EBITDA (in thousands) (b)$45,736  $32,049  $165,171  $132,506 
    Restaurant-Level Adjusted EBITDA Margin (b) 24.3%  21.2%  24.3%  22.6%

    Note: We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31. Fourth quarter 2023 and fiscal 2023 consisted of 14 weeks and 53 weeks, respectively, and fourth quarter 2022 and fiscal 2022 consisted of 13 weeks and 52 weeks, respectively. The additional week in the fourth quarter 2023 and fiscal 2023 included Christmas day, resulting in six operating days.
    (a) Includes a restaurant that is owned by C&O Chicago, L.L.C. ("C&O") of which Portillo’s owns 50% of the equity. Total restaurants indicated are as of a point in time. AUV for fiscal 2023 and fiscal 2022 consist of 53 weeks and 52 weeks, respectively.
    (b) Excludes a restaurant that is owned by C&O of which Portillo’s owns 50% of the equity.
    (c) For the fourth quarter 2023, same-restaurant sales compares the 14 weeks from September 25, 2023 through December 31, 2023 to the 14 weeks from September 26, 2022 through January 1, 2023. In order to compare like-for-like periods for the fourth quarter 2024, same-restaurant sales will compare the 13 weeks from September 30, 2024 through December 29, 2024 to the 13 weeks from October 2, 2023 through December 31, 2023. For fiscal 2023, same-restaurant sales compares the 53 weeks from December 26, 2022 through December 31, 2023 to the 53 weeks from December 27, 2021 through January 1, 2023. In order to compare like-for-like periods for fiscal 2024, same-restaurant sales will compare the 52 weeks from January 1, 2024 through December 29, 2024 to the 52 weeks from January 2, 2023 through December 31, 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 Fiscal Years Ended
     December 31,
    2023
     December 25,
    2022
     December 31,
    2023
     December 25,
    2022
    Net income$9,647  $2,653  $24,818  $17,157 
    Depreciation and amortization 6,525   5,104   24,313   20,907 
    Interest expense 6,931   8,358   27,470   27,644 
    Interest income (96)     (212)   
    Loss on debt extinguishment       3,465    
    Income tax (benefit) expense (357)  (1,688)  3,248   1,823 
    EBITDA 22,650   14,427   83,102   67,531 
    Deferred rent (1) 1,315   999   5,096   3,998 
    Equity-based compensation 3,498   4,790   15,542   16,137 
    ERP implementation costs (2) 252      401    
    Other income (3) 79   159   590   397 
    Transaction-related fees & expenses (4) 6   600   900   2,237 
    Tax Receivable Agreement liability adjustment (5) (1,658)  (2,883)  (3,349)  (5,345)
    Adjusted EBITDA$26,142  $18,092  $102,282  $84,955 
    Adjusted EBITDA Margin (6) 13.9%  12.0%  15.0%  14.5%

    Note: We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31. Fourth quarter 2023 and fiscal 2023 consisted of 14 weeks and 53 weeks, respectively, and fourth quarter 2022 and fiscal 2022 consisted of 13 weeks and 52 weeks, respectively. The additional week in the fourth quarter 2023 and fiscal 2023 included Christmas day, resulting in six operating days.
    (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 the exclusion of 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 Fiscal Years Ended
     December 31,
    2023
     December 25,
    2022
     December 31,
    2023
     December 25,
    2022
    Operating income$14,467  $6,440  $55,440  $41,279 
    Plus:       
    General and administrative expenses 21,550   17,707   78,835   66,892 
    Pre-opening expenses 3,990   2,945   9,019   4,715 
    Depreciation and amortization 6,525   5,104   24,313   20,907 
    Net income attributable to equity method investment (391)  (276)  (1,401)  (1,083)
    Other (income) loss, net (405)  129   (1,035)  (204)
    Restaurant-Level Adjusted EBITDA$45,736  $32,049  $165,171  $132,506 
    Restaurant-Level Adjusted EBITDA Margin 24.3%  21.2%  24.3%  22.6%

    Note: We use a 52- or 53-week fiscal year ending on the Sunday on or prior to December 31. Fourth quarter 2023 and fiscal 2023 consisted of 14 weeks and 53 weeks, respectively, and fourth quarter 2022 and fiscal 2022 consisted of 13 weeks and 52 weeks, respectively. The additional week in the fourth quarter 2023 and fiscal 2023 included Christmas day, resulting in six operating days.


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