Portillo’s Inc. Announces Second Quarter 2023 Financial Results
- Portillo’s Inc. reported strong Q2 financial results, demonstrating brand durability.
- CEO Michael Osanloo emphasized the company's resilience and positive performance.
- None.
OAK BROOK, Ill., Aug. 03, 2023 (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 second quarter ended June 25, 2023.
Michael Osanloo, President and Chief Executive Officer of Portillo’s, said, “We delivered another quarter of strong results that highlight the durability of our brand. We feel great about our recent new restaurant performance and are also delivering solid results in our core. To sustain this positive trajectory, we continue to focus on quality and execution. Our restaurants are fully-staffed, and we empower our Team Members to prioritize the guest experience by serving delicious, high-quality food in an engaging environment at a great price point. This creates a consistently outstanding experience for both our Team Members and guests.”
Financial Highlights for the Second Quarter 2023 vs. Second Quarter 2022:
- Total revenue increased
12.3% or$18.6 million to$169.2 million ; - Same restaurant sales increased
5.9% ; - Operating income decreased
$0.1 million to$17.4 million ; - Net income decreased
$0.9 million to$9.9 million ; - Restaurant-Level Adjusted EBITDA* increased
$4.3 million to$42.7 million ; and - Adjusted EBITDA* increased
$1.6 million to$29.2 million .
*Adjusted EBITDA and Restaurant-Level Adjusted EBITDA are non-GAAP measures. Please see definitions and the reconciliations of these non-GAAP measures in the accompanying financial information below.
Recent Developments and Trends
We continue to see revenue growth due to our new restaurant openings, as well as same-restaurant sales growth. Total revenue grew
During the quarter ended June 25, 2023, we opened one new restaurant in Gilbert, Arizona for a total of 76 restaurants, including a restaurant owned by C&O, of which Portillo's owns
In the quarter and two quarters ended June 25, 2023, we continued to experience commodity inflation, but to a lesser extent than we saw in 2022. Commodity inflation was
In the quarter ended June 25, 2023, operating income margin and Restaurant-Level Adjusted EBITDA Margin continued to improve since the fourth quarter of 2022. We believe this improvement was the result of our ongoing efforts to deploy strategic pricing actions, elevate guest experiences, and implement operational efficiencies.
Review of Second Quarter 2023 Financial Results
Revenues for the quarter ended June 25, 2023 were
Total restaurant operating expenses for the second quarter ended June 25, 2023 were
General and administrative expenses for the quarter ended June 25, 2023 were
Operating income for the second quarter ended June 25, 2023 and June 26, 2022 was
Net income for the second quarter ended June 25, 2023 was
Restaurant-Level Adjusted EBITDA* for the second quarter ended June 25, 2023 was
Adjusted EBITDA* for the second quarter ended June 25, 2023 was
*A reconciliation of Restaurant-Level Adjusted EBITDA and Adjusted EBITDA and the nearest GAAP financial measure is included under “Non-GAAP Financial Measures” in the accompanying financial information below.
Development Highlights
During the two quarters ended June 25, 2023, we opened the remaining four restaurants that were planned for 2022. The opening of these restaurants brings the total restaurant count to 76, including a restaurant owned by C&O of which Portillo’s owns
Below are the restaurants opened since the beginning of fiscal 2023:
Location | Opening Date |
Kissimmee, Florida | December 2022 |
The Colony, Texas | January 2023 |
Tucson, Arizona | February 2023 |
Gilbert, Arizona | March 2023 |
The following definitions apply to these terms as used in this release:
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, excluding a restaurant that is owned by C&O. The Comparable Restaurant Base is defined as the number of restaurants open for at least 24 full fiscal periods. As of June 25, 2023 and June 26, 2022, there were 66 and 61 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”) - AUV is the total revenue (excluding gift card breakage) recognized in the Comparable Restaurant Base, including a restaurant that is owned by 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 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. 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 revenue. 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 and Development Day
The Company will host a conference call to discuss its financial results for the second quarter ended June 25, 2023 on Thursday, August 3, 2023, at 10:00 AM ET. The conference call can be accessed live over the phone by dialing 1-877-407-3982 (toll-free) or 1-201-493-6780 (international). A telephone replay will be available shortly after the call has concluded and can be accessed by dialing 1-412-317-6671; the passcode is 13735738. 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.
We will also be hosting a Development Day on Tuesday, September 19, 2023 in Dallas-Fort Worth. This event will focus on Portillo's development strategy as a key driver of the Company's future growth.
About Portillo’s
In 1963, Dick Portillo invested
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, so you should not unduly rely on these 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;
- 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;
- increases in food and other operating costs, tariffs and import taxes, and supply shortages;
- the potential future impact of COVID-19 (including any variant) on our results of operations, supply chain or liquidity; 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 STATEMENT OF OPERATIONS (UNAUDITED) (in thousands, except share and per share data) | |||||||||||||||||||||||||||
Quarter Ended | Two Quarters Ended | ||||||||||||||||||||||||||
June 25, 2023 | June 26, 2022 | June 25, 2023 | June 26, 2022 | ||||||||||||||||||||||||
REVENUES, NET | $ | 169,182 | 100.0 | % | $ | 150,623 | 100.0 | % | $ | 325,242 | 100.0 | % | $ | 285,105 | 100.0 | % | |||||||||||
COST AND EXPENSES: | |||||||||||||||||||||||||||
Restaurant operating expenses: | |||||||||||||||||||||||||||
Food, beverage and packaging costs | 56,229 | 33.2 | % | 51,774 | 34.4 | % | 109,856 | 33.8 | % | 98,040 | 34.4 | % | |||||||||||||||
Labor | 43,153 | 25.5 | % | 37,906 | 25.2 | % | 83,612 | 25.7 | % | 75,219 | 26.4 | % | |||||||||||||||
Occupancy | 8,237 | 4.9 | % | 7,379 | 4.9 | % | 16,688 | 5.1 | % | 15,134 | 5.3 | % | |||||||||||||||
Other operating expenses | 18,832 | 11.1 | % | 15,178 | 10.1 | % | 37,536 | 11.5 | % | 30,343 | 10.6 | % | |||||||||||||||
Total restaurant operating expenses | 126,451 | 74.7 | % | 112,237 | 74.5 | % | 247,692 | 76.2 | % | 218,736 | 76.7 | % | |||||||||||||||
General and administrative expenses | 19,609 | 11.6 | % | 15,439 | 10.3 | % | 38,387 | 11.8 | % | 31,126 | 10.9 | % | |||||||||||||||
Pre-opening expenses | 275 | 0.2 | % | 423 | 0.3 | % | 2,619 | 0.8 | % | 979 | 0.3 | % | |||||||||||||||
Depreciation and amortization | 5,941 | 3.5 | % | 5,309 | 3.5 | % | 11,610 | 3.6 | % | 10,514 | 3.7 | % | |||||||||||||||
Net income attributable to equity method investment | (381 | ) | (0.2) | % | (275 | ) | (0.2) | % | (588 | ) | (0.2) | % | (398 | ) | (0.1) | % | |||||||||||
Other (income) loss, net | (97 | ) | (0.1) | % | 51 | — | % | (354 | ) | (0.1) | % | (105 | ) | — | % | ||||||||||||
OPERATING INCOME | 17,384 | 10.3 | % | 17,439 | 11.6 | % | 25,876 | 8.0 | % | 24,253 | 8.5 | % | |||||||||||||||
Interest expense | 6,523 | 3.9 | % | 6,097 | 4.0 | % | 13,966 | 4.3 | % | 12,196 | 4.3 | % | |||||||||||||||
Tax Receivable Agreement liability adjustment | (579 | ) | (0.3) | % | (1,754 | ) | (1.2) | % | (1,163 | ) | (0.4) | % | (1,754 | ) | (0.6) | % | |||||||||||
Loss on debt extinguishment | — | — | % | — | — | % | 3,465 | 1.1 | % | — | — | % | |||||||||||||||
INCOME BEFORE INCOME TAXES | 11,440 | 6.8 | % | 13,096 | 8.7 | % | 9,608 | 3.0 | % | 13,811 | 4.8 | % | |||||||||||||||
Income tax expense | 1,542 | 0.9 | % | 2,340 | 1.6 | % | 983 | 0.3 | % | 2,505 | 0.9 | % | |||||||||||||||
NET INCOME | 9,898 | 5.9 | % | 10,756 | 7.1 | % | 8,625 | 2.7 | % | 11,306 | 4.0 | % | |||||||||||||||
Net income attributable to non-controlling interests | 3,110 | 1.8 | % | 5,645 | 3.7 | % | 2,351 | 0.7 | % | 6,001 | 2.1 | % | |||||||||||||||
NET INCOME ATTRIBUTABLE TO PORTILLO'S INC. | $ | 6,788 | 4.0 | % | $ | 5,111 | 3.4 | % | $ | 6,274 | 1.9 | % | $ | 5,305 | 1.9 | % | |||||||||||
Net income per common share attributable to Portillo's Inc.: | |||||||||||||||||||||||||||
Basic | $ | 0.12 | $ | 0.14 | $ | 0.12 | $ | 0.15 | |||||||||||||||||||
Diluted | $ | 0.12 | $ | 0.13 | $ | 0.11 | $ | 0.13 | |||||||||||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||||||||||
Basic | 54,964,649 | 35,991,079 | 52,252,053 | 35,899,125 | |||||||||||||||||||||||
Diluted | 58,550,057 | 39,687,090 | 55,806,455 | 39,839,292 |
PORTILLO’S INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share data) | ||||||
June 25, 2023 | December 25, 2022 | |||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents and restricted cash | $ | 22,457 | $ | 44,427 | ||
Accounts receivable | 11,496 | 8,590 | ||||
Inventory | 6,493 | 7,387 | ||||
Prepaid expenses | 5,139 | 4,922 | ||||
Total current assets | 45,585 | 65,326 | ||||
Property and equipment, net | 250,443 | 227,036 | ||||
Operating lease assets | 179,449 | 166,808 | ||||
Goodwill | 394,298 | 394,298 | ||||
Trade names | 223,925 | 223,925 | ||||
Other intangible assets, net | 30,356 | 31,800 | ||||
Equity method investment | 16,373 | 16,274 | ||||
Deferred tax assets | 186,997 | 150,497 | ||||
Other assets | 4,061 | 4,119 | ||||
Total other assets | 856,010 | 820,913 | ||||
TOTAL ASSETS | $ | 1,331,487 | $ | 1,280,083 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
CURRENT LIABILITIES: | ||||||
Accounts payable | $ | 24,147 | $ | 30,273 | ||
Current portion of long-term debt | 7,500 | 4,155 | ||||
Current portion of Tax Receivable Agreement liability | 6,309 | 813 | ||||
Short-term debt | 10,000 | — | ||||
Current deferred revenue | 4,696 | 7,292 | ||||
Short-term operating lease liability | 5,053 | 4,849 | ||||
Accrued expenses | 31,322 | 29,915 | ||||
Total current liabilities | 89,027 | 77,297 | ||||
LONG-TERM LIABILITIES: | ||||||
Long-term debt, net of current portion | 289,168 | 314,425 | ||||
Tax Receivable Agreement liability | 295,696 | 252,003 | ||||
Long-term operating lease liability | 217,989 | 200,166 | ||||
Other long-term liabilities | 3,151 | 3,291 | ||||
Total long-term liabilities | 806,004 | 769,885 | ||||
Total liabilities | 895,031 | 847,182 | ||||
COMMITMENTS AND CONTINGENCIES | ||||||
STOCKHOLDER’S EQUITY: | ||||||
Preferred stock, | — | — | ||||
Class A common stock, | 551 | 484 | ||||
Class B common stock, | — | — | ||||
Additional paid-in-capital | 301,622 | 260,664 | ||||
Retained earnings (accumulated deficit) | 1,462 | (4,812 | ) | |||
Total stockholders' equity attributable to Portillo's Inc. | 303,635 | 256,336 | ||||
Non-controlling interest | 132,821 | 176,565 | ||||
Total stockholders' equity | 436,456 | 432,901 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,331,487 | $ | 1,280,083 |
PORTILLO’S INC CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) | |||||||
Two Quarters Ended | |||||||
June 25, 2023 | June 26, 2022 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 8,625 | $ | 11,306 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 11,610 | 10,514 | |||||
Amortization of debt issuance costs and discount | 620 | 1,243 | |||||
Loss on sales of assets | 496 | 107 | |||||
Equity-based compensation | 7,720 | 7,649 | |||||
Deferred rent and tenant allowance | — | 2,112 | |||||
Deferred income tax expense | 983 | 2,505 | |||||
Tax Receivable Agreement liability adjustment | (1,163 | ) | (1,754 | ) | |||
Amortization of deferred lease incentives | — | (166 | ) | ||||
Gift card breakage | (528 | ) | (474 | ) | |||
Loss on debt extinguishment | 3,465 | — | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivables | (906 | ) | (1,089 | ) | |||
Receivables from related parties | (141 | ) | (66 | ) | |||
Inventory | 894 | 439 | |||||
Other current assets | (218 | ) | 754 | ||||
Operating lease assets | 3,880 | — | |||||
Accounts payable | (2,779 | ) | (2,908 | ) | |||
Accrued expenses and other liabilities | (559 | ) | (6,140 | ) | |||
Operating lease liabilities | (1,359 | ) | — | ||||
Deferred lease incentives | 850 | 1,251 | |||||
Other assets and liabilities | (181 | ) | 76 | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 31,309 | 25,359 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchase of property and equipment | (37,359 | ) | (13,940 | ) | |||
Proceeds from the sale of property and equipment | 33 | 30 | |||||
NET CASH USED IN INVESTING ACTIVITIES | (37,326 | ) | (13,910 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from short-term debt, net | 10,000 | — | |||||
Proceeds from long-term debt | 300,000 | — | |||||
Payments of long-term debt | (322,428 | ) | (1,662 | ) | |||
Proceeds from equity offering, net of underwriting discounts | 179,306 | — | |||||
Repurchase of outstanding equity / Portillo's OpCo units | (179,306 | ) | — | ||||
Distributions paid to non-controlling interest holders | (399 | ) | — | ||||
Proceeds from stock option exercises | 1,015 | 1,451 | |||||
Employee withholding taxes related to net settled equity awards | (56 | ) | — | ||||
Proceeds from Employee Stock Purchase Plan purchases | 297 | — | |||||
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 | (15,953 | ) | (982 | ) | |||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | (21,970 | ) | 10,467 | ||||
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 | $ | 22,457 | $ | 49,730 | |||
PORTILLO’S INC SELECTED OPERATING DATA AND NON-GAAP FINANCIAL MEASURES | |||||||||||||||
Quarter Ended | Two Quarters Ended | ||||||||||||||
June 25, 2023 | June 26, 2022 | June 25, 2023 | June 26, 2022 | ||||||||||||
Total Restaurants (a) | 76 | 71 | 76 | 71 | |||||||||||
AUV (in millions) (a) | N/A | N/A | $ | 8.8 | $ | 8.3 | |||||||||
Change in same-restaurant sales (b) | 5.9 | % | 1.9 | % | 7.4 | % | 4.8 | % | |||||||
Adjusted EBITDA (in thousands) (b) | $ | 29,223 | $ | 27,613 | $ | 48,856 | $ | 45,244 | |||||||
Adjusted EBITDA Margin (b) | 17.3 | % | 18.3 | % | 15.0 | % | 15.9 | % | |||||||
Restaurant-Level Adjusted EBITDA (in thousands) (b) | $ | 42,731 | $ | 38,386 | $ | 77,550 | $ | 66,369 | |||||||
Restaurant-Level Adjusted EBITDA Margin (b) | 25.3 | % | 25.5 | % | 23.8 | % | 23.3 | % |
(a) Includes a restaurant that is owned by C&O of which Portillo’s owns
(b) Excludes a restaurant that is owned by C&O of which Portillo’s owns
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, these measures 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 before depreciation and amortization, interest expense 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.
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 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 | Two Quarters Ended | ||||||||||||||
June 25, 2023 | June 26, 2022 | June 25, 2023 | June 26, 2022 | ||||||||||||
Net income | $ | 9,898 | $ | 10,756 | $ | 8,625 | $ | 11,306 | |||||||
Depreciation and amortization | 5,941 | 5,309 | 11,610 | 10,514 | |||||||||||
Interest expense | 6,523 | 6,097 | 13,966 | 12,196 | |||||||||||
Loss on debt extinguishment | — | — | 3,465 | — | |||||||||||
Income tax expense | 1,542 | 2,340 | 983 | 2,505 | |||||||||||
EBITDA | 23,904 | 24,502 | 38,649 | 36,521 | |||||||||||
Deferred rent (1) | 1,169 | 865 | 2,393 | 1,946 | |||||||||||
Equity-based compensation | 4,184 | 3,864 | 7,720 | 7,649 | |||||||||||
Other loss (2) | 377 | 93 | 496 | 125 | |||||||||||
Transaction-related fees & expenses (3) | 168 | 43 | 761 | 757 | |||||||||||
Tax Receivable Agreement liability adjustment (4) | (579 | ) | (1,754 | ) | (1,163 | ) | (1,754 | ) | |||||||
Adjusted EBITDA | $ | 29,223 | $ | 27,613 | $ | 48,856 | $ | 45,244 | |||||||
Adjusted EBITDA Margin (5) | 17.3 | % | 18.3 | % | 15.0 | % | 15.9 | % |
(1) Represents the difference between cash rent payments and the recognition of straight-line rent expense recognized over the lease term.
(2) Represents loss on disposal of property and equipment.
(3) Represents the exclusion of certain expenses that management believes are not indicative of ongoing operations, consisting primarily of certain professional fees.
(4) Represents remeasurement of the Tax Receivable Agreement liability.
(5) 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 | Two Quarters Ended | ||||||||||||||
June 25, 2023 | June 26, 2022 | June 25, 2023 | June 26, 2022 | ||||||||||||
Operating income | $ | 17,384 | $ | 17,439 | $ | 25,876 | $ | 24,253 | |||||||
Plus: | |||||||||||||||
General and administrative expenses | 19,609 | 15,439 | 38,387 | 31,126 | |||||||||||
Pre-opening expenses | 275 | 423 | 2,619 | 979 | |||||||||||
Depreciation and amortization | 5,941 | 5,309 | 11,610 | 10,514 | |||||||||||
Net income attributable to equity method investment | (381 | ) | (275 | ) | (588 | ) | (398 | ) | |||||||
Other (income) loss, net | (97 | ) | 51 | (354 | ) | (105 | ) | ||||||||
Restaurant-Level Adjusted EBITDA | $ | 42,731 | $ | 38,386 | $ | 77,550 | $ | 66,369 | |||||||
Restaurant-Level Adjusted EBITDA Margin (1) | 25.3 | % | 25.5 | % | 23.8 | % | 23.3 | % |
(1) Restaurant-Level Adjusted EBITDA Margin is defined as Restaurant-Level Adjusted EBITDA divided by Revenues, net
FAQ
What did Portillo’s report in their Q2 financial results?
Who is the President and CEO of Portillo’s?
What is Portillo’s known for?