New Zealand markets open in 8 hours 39 minutes
  • NZX 50

    12,050.32
    -135.38 (-1.11%)
     
  • NZD/USD

    0.6622
    -0.0036 (-0.54%)
     
  • ALL ORDS

    7,114.50
    -133.60 (-1.84%)
     
  • OIL

    88.08
    +0.73 (+0.84%)
     
  • GOLD

    1,812.10
    -17.60 (-0.96%)
     

Portillo’s Inc Announces Third Quarter 2021 Financial Results

·20-min read

CHICAGO, Nov. 18, 2021 (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 third quarter ended September 26, 2021.

Financial Highlights for the third quarter ended September 26, 2021 vs. Prior Year period:

  • Total revenue increased 15.3% to $138.0 million

  • Same-restaurant sales increased 6.8%

  • Operating income decreased 8.8% to $17.2 million

  • Net income decreased 19.4% to $6.5 million

  • Adjusted EBITDA* decreased 8.4% to $24.2 million

  • Restaurant-Level Adjusted EBITDA* decreased 1.1% to $34.2 million

  • Cash and cash equivalents on hand were $49.4 million

*Adjusted EBITDA and Restaurant-Level EBITDA are non-GAAP measures. Please see definitions and the reconciliations of these non-GAAP measures accompanying this release.

Michael Osanloo, President and Chief Executive Officer of Portillo’s, said “Our third quarter results demonstrated the resiliency of our brand as we posted solid top line growth and grew our same restaurant sales by almost 7%. In addition, our ability to drive restaurant-level and adjusted EBITDA margins during the quarter, despite the ongoing labor and commodity challenges that have faced our industry, was a testament to our commitment to becoming a world-class, multi-channel restaurant brand focused on high-performance across all of our channels. As we look ahead, our successful IPO has given us the financial flexibility and improved capital structure to capitalize on the massive white space opportunity to grow Portillo’s throughout the country. Our expansion plan will utilize a two-pronged strategy by aiming to expand our presence in our core market across the Midwest as well as targeting major national markets for opportunistic growth. All in all, we are truly excited to have begun our journey as a public company and we look forward to introducing more guests to our unique menu of unrivaled Chicago street food and all-American favorites that has something truly craveable for everyone.”

Initial Public Offering

On October 25, 2021, the Company successfully completed its initial public offering of Class A common stock at $20.00 per share (“IPO”). The Company issued 23,310,810 shares of the Company’s Class A common stock (including 3,040,540 shares sold to the underwriters pursuant to their overallotment option). The Company received net proceeds from the offering of approximately $429.9 million after underwriter discounts and commissions and offering expenses. The net proceeds from the offering were used to pay the redeemable preferred units in full (including the redemption premium) and all of the borrowings outstanding under our Second Lien Credit Agreement (including any prepayment penalties), as well as the purchase of limited liability company units and shares of Class A common stock from certain pre-IPO investors.

Review of Third Quarter 2021 Financial Results

Revenues for the third quarter ended September 26, 2021 were $138.0 million compared to $119.7 million for the quarter ended September 27, 2020, an increase of $18.3 million or 15.3%. The increase in revenues was primarily attributed to an increase in our average check and the opening of two new restaurants in the fourth quarter of 2020 and three new restaurants during the three quarters ended September 26, 2021. Same-restaurant sales increased 6.8% during the third quarter ended September 26, 2021, which was attributable to an increase in average check of 7.9%, partially offset by a decline in traffic. The higher average check was driven by an increase in menu prices, mix of items sold, and more items per order. For the purpose of calculating same-restaurant sales for September 26, 2021, sales for 60 restaurants were included in the Comparable Restaurant Base versus 55 as of the end of the third quarter of 2020.

Operating income for third quarter ended September 26, 2021 was $17.2 million compared to $18.9 million for the quarter ended September 27, 2020, a decrease of $1.7 million or 8.8%. The decrease in operating income was primarily driven by increases in labor, cost of goods sold, excluding depreciation and amortization, occupancy expenses, other operating expenses, and general and administrative expenses, partially offset by the aforementioned increase in revenues and lower depreciation and amortization. The increase in expenses was driven by the opening of two new restaurants in the fourth quarter of 2020 and three new restaurants during the three quarters ended September 26, 2021. Additionally, expenses were comparatively impacted by continued expansion of our dine-in capacity, an increase in commodity prices (primarily beef), and several incremental labor investments to support our team members, including hourly and salary rate increases, training costs and discretionary bonuses. The incremental labor investments were partially offset by lower staffing levels and increased productivity in our restaurants. The decrease in depreciation and amortization expense was primarily attributable to lower amortization expense from an expiring non-compete agreement.

Net income for the third quarter ended September 26, 2021 was $6.5 million compared to $8.1 million for the quarter ended September 27, 2020, a decrease of $1.6 million or 19.4%. The decrease in net income was primarily due to the factors driving the aforementioned decrease in operating income.

Adjusted EBITDA for the third quarter ended September 26, 2021 was $24.2 million compared to $26.4 million for the quarter ended September 27, 2020, a decrease of $2.2 million or 8.4%.

Restaurant-level Adjusted EBITDA for the third quarter ended September 26, 2021 was $34.2 million compared to $34.6 million for the quarter ended September 27, 2020, a decrease of $0.4 million or 1.1%.

A reconciliation of Restaurant-Level Adjusted EBITDA and adjusted EDITDA and the nearest GAAP financial measure is included under “Non-GAAP Measures” in the accompanying financial data below.

Development Highlights

No new Portillo’s restaurants were opened during the third quarter. Subsequent to the end of the quarter, one new restaurant was opened in Westfield, Indiana. To date, four new restaurants were opened during 2021, and we expect one additional restaurant to open in the coming weeks, which will complete the Company’s development plan for 2021 and bring the total restaurant count to 69.

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, which is defined as the number of restaurants open for at least 24 full fiscal periods.

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, included in “Non-GAAP Measures” 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 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. 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 third quarter financial results on Thursday, November 18, 2021, 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 13725004. 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 has grown to include restaurants in more than 67 locations across nine states. Portillo’s is best known for its Chicago-style hot dogs, Italian beef sandwiches, char-grilled burgers, fresh salads and famous chocolate cake. Portillo’s Home Kitchen is the company’s fast-growing catering business. Portillo’s also ships food to all 50 states via its website.

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. 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:

  • continued adverse effects of the COVID-19 pandemic or future pandemics or disease outbreaks on our financial condition and results of operations;

  • our vulnerability to changes in consumer preferences and economic conditions;

  • increases in the cost of our frequently used food items or shortages or disruptions in the supply or delivery of frequently used food items;

  • our inability to open new restaurants in new and existing markets;

  • the number of visitors to areas where our restaurants are located may decline;

  • our inability to generate same-restaurant sales growth;

  • our marketing programs and limited-time or seasonal menu offerings may fail to generate profits;

  • incidents involving food-borne illness and food safety, including food tampering or contamination, which we may be unable to prevent;

  • our inability to compete successfully with other lunch and dinner restaurants; 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 under the heading “Risk Factors” included in our prospectus, dated October 20, 2021, filed pursuant to Rule 424(b)(4) with the SEC on October 22, 2021, relating to our IPO, which is 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:
Fitzhugh Taylor of ICR
Investors@portillos.com

Media Contact:
ICR, Inc.
PortillosPR@icrinc.com

PHD GROUP HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)

Quarter Ended

Three Quarters Ended

September 26, 2021

September 27, 2020

September 26, 2021

September 27, 2020

REVENUE

$

138,003

100.0

%

$

119,700

100.0

%

$

396,044

100.0

%

$

336,960

100.0

%

Restaurant operating expenses:

Cost of goods sold, excluding depreciation and amortization

44,285

32.1

%

36,572

30.6

%

121,465

30.7

%

106,095

31.5

%

Labor

36,921

26.8

%

29,125

24.3

%

102,433

25.9

%

87,205

25.9

%

Occupancy

7,000

5.1

%

6,368

5.3

%

20,890

5.3

%

18,717

5.6

%

Other operating expenses

15,554

11.3

%

13,012

10.9

%

44,187

11.2

%

37,559

11.1

%

Total operating expenses

103,760

75.2

%

85,077

71.1

%

288,975

73.0

%

249,576

74.1

%

General and administrative expenses

11,750

8.5

%

9,706

8.1

%

35,755

9.0

%

27,918

8.3

%

Pre-opening expenses

347

0.3

%

544

0.5

%

2,307

0.6

%

838

0.2

%

Depreciation and amortization

5,516

4.0

%

6,138

5.1

%

18,225

4.6

%

18,404

5.5

%

Net income attributable to equity method investment

(292

)

(0.2

)

%

(121

)

(0.1

)

%

(651

)

(0.2

)

%

(353

)

(0.1

)

%

Other income, net

(292

)

(0.2

)

%

(514

)

(0.4

)

%

(1,095

)

(0.3

)

%

(1,092

)

(0.3

)

%

OPERATING INCOME

17,214

12.5

%

18,870

15.8

%

52,528

13.3

%

41,669

12.4

%

Interest expense

10,683

7.7

%

10,766

9.0

%

32,124

8.1

%

34,298

10.2

%

NET INCOME

$

6,531

4.7

%

$

8,104

6.8

%

$

20,404

5.2

%

$

7,371

2.2

%

Earnings/(loss) per common unit:

Basic

$

0.01

$

0.06

$

0.07

$

(0.15

)

Diluted

$

0.01

$

0.05

$

0.07

$

(0.15

)

Weighted-average common units outstanding:

Basic

51,210,222

51,192,285

51,201,100

51,187,878

Diluted

51,581,685

51,410,002

51,569,034

51,187,878

PHD GROUP HOLDINGS LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except common unit and per common unit data)
(unaudited)

September 26, 2021

December 27, 2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

49,367

$

41,211

Restricted cash

190

221

Accounts receivable

5,727

5,204

Inventory

4,399

5,075

Other current assets

7,445

2,915

Total current assets

67,128

54,626

Property and equipment, net

186,621

174,769

OTHER ASSETS:

Goodwill

394,298

394,298

Intangible assets-net of accumulated amortization

260,541

266,180

Equity method investment

16,278

16,015

Other assets

4,596

4,334

Total other assets

675,713

680,827

TOTAL ASSETS

$

929,462

$

910,222

LIABILITIES, REDEEMABLE PREFERRED UNITS AND COMMON EQUITY

CURRENT LIABILITIES:

Accounts payable

$

21,531

$

21,427

Current portion of long-term debt

3,324

3,324

Current deferred revenue

3,929

6,774

Accrued expenses

33,482

34,827

Total current liabilities

62,266

66,352

LONG-TERM LIABILITIES:

Long-term debt, net of current portion

466,764

466,380

Deferred rent

30,844

26,694

Other long-term liabilities

6,862

9,516

Total long-term liabilities

504,470

502,590

Total liabilities

566,736

568,942

COMMITMENTS AND CONTINGENCIES

REDEEMABLE PREFERRED UNITS

217,549

200,571

COMMON EQUITY:

Common units—51,210,222 and 51,192,434 units authorized, 51,210,222 and 51,192,434 units issued and outstanding as of September 26, 2021 and December 27, 2020

Stock subscription receivable

(499

)

Additional paid-in-capital

141,751

141,208

Retained earnings

3,426

Total common equity

145,177

140,709

TOTAL LIABILITIES, REDEEMABLE PREFERRED UNITS AND COMMON EQUITY

$

929,462

$

910,222

PHD GROUP HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

Three Quarters Ended

September 26,
2021

September 27,
2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

20,404

$

7,371

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

18,225

18,404

Amortization of debt issuance costs and discount

2,877

2,901

Loss on sales of assets

130

19

Unit-based compensation

443

564

Deferred rent and tenant allowance

3,099

2,726

Amortization of deferred lease incentives

(289

)

(241

)

Gift card breakage

(554

)

(556

)

Changes in operating assets and liabilities:

Accounts receivables

(89

)

804

Receivables from related parties

(144

)

204

Inventory

676

83

Other current assets

807

572

Accounts payable

(2,511

)

(881

)

Accrued expenses and other liabilities

(3,634

)

583

Deferred lease incentives

690

1,976

Other assets and liabilities

(239

)

3,576

NET CASH PROVIDED BY OPERATING ACTIVITIES

39,891

38,105

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

(27,687

)

(10,138

)

Purchase of investment securities

(200

)

Proceeds from the sale of property and equipment

123

30

NET CASH USED IN INVESTING ACTIVITIES

(27,764

)

(10,108

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments of short-term debt

(15,000

)

Payments of long-term debt

(2,493

)

(12,493

)

Proceeds from Paycheck Protection Program loan

10,000

Proceeds from issuance of common units

100

25

Repayment of stock subscription receivable

499

250

Payments for in-process equity financings (offering costs)

(2,108

)

NET CASH USED IN FINANCING ACTIVITIES

(4,002

)

(17,218

)

NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

8,125

10,779

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD

41,432

22,629

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD

$

49,557

$

33,408

PHD GROUP HOLDINGS LLC
SELECTED OPERATING DATA
(in thousands)
(unaudited)

Quarter Ended

Three Quarters Ended

September 26, 2021

September 27, 2020

September 26, 2021

September 27, 2020

Total Restaurants(a)

67

62

67

62

AUV (in millions) (a) (b)

N/A

N/A

$

8.0

$

8.0

Change in same-restaurant sales (b)

6.8

%

(2.1

)

%

10.6

%

(7.2

)

%

Adjusted EBITDA (in thousands)

$

24,202

$

26,434

$

75,276

$

64,297

Adjusted EBITDA Margin

17.5

%

22.1

%

19.0

%

19.1

%

Restaurant-Level Adjusted EBITDA (in thousands)

$

34,243

$

34,623

$

107,069

$

87,384

Restaurant-Level Adjusted EBITDA Margin

24.8

%

28.9

%

27.0

%

25.9

%

(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.
(b) Excludes a restaurant that is owned by C&O of which Portillo’s owns 50% of the equity. In the table above, average unit volumes (“AUVs”) for the three quarters ended September 26, 2021 and September 27, 2020 represent AUVs for the Twelve Months Ended September 26, 2021 and September 27, 2020, respectively.

PHD GROUP HOLDINGS LLC
NON-GAAP FINANCIAL MEASURES
(unaudited)

To supplement the consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we use the following non-GAAP financial measures: Adjusted EBITDA and Adjusted EBITDA Margin, Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin. Set forth below is a description of the measures and why we believe that they are useful to investors followed by reconciliations to the most directly comparable GAAP 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 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. Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin are not required by, nor presented in accordance with GAAP. Rather, Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin are supplemental measures of operating performance of our restaurants. You should be aware that Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin are not indicative of overall results for the Company, and 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. In addition, our calculations thereof may not be comparable to similar measures reported by other companies.

We believe that Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin are important measures for evaluating the performance and profitability of our restaurants, individually and in the aggregate. Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin have limitations as analytical tools and should not be considered as a substitute 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 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, included in “Non-GAAP Measures” 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 that are useful to investors because they eliminate the impact of expenses that do not relate to our core operating performance. Adjusted EBITDA and Adjusted EBITDA Margin are supplemental measures of operating performance and our calculations thereof may not be comparable to similar measures reported by other companies. Adjusted EBITDA and Adjusted EBITDA Margin have important limitations as analytical tools and should not be considered in isolation as substitutes for analysis of our results as reported under GAAP.

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

Three Quarters Ended

September 26,
2021

September 27,
2020

September 26,
2021

September 27,
2020

Net income

$

6,531

$

8,104

$

20,404

$

7,371

Depreciation and amortization

5,516

6,138

18,225

18,404

Interest expense

10,683

10,766

32,124

34,298

EBITDA

22,730

25,008

70,753

60,073

Deferred rent(1)

781

738

2,375

2,050

Unit-based compensation and consulting fees(2)

337

687

1,611

2,064

Other income(3)

25

(10

)

157

45

Transaction-related fees & expenses(4)

329

10

380

65

Adjusted EBITDA

$

24,202

$

26,434

$

75,276

$

64,297

Adjusted EBITDA Margin

17.5

%

22.1

%

19.0

%

19.1

%

(1) Represents the difference between cash rent payments and the recognition of straight-line rent expense recognized over the lease term.
(2) Represents unit-based compensation and consulting fees related to our former owner.
(3) Represents loss on disposal of property and equipment.
(4) Represents fees and expenses associated with public company readiness.

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

Three Quarters Ended

September 26,
2021

September 27,
2020

September 26,
2021

September 27,
2020

Operating Income

$

17,214

$

18,870

$

52,528

$

41,669

Plus:

General and administrative expenses

11,750

9,706

35,755

27,918

Depreciation and amortization

5,516

6,138

18,225

18,404

Net income attributable to equity method investment

(292

)

(121

)

(651

)

(353

)

Other income, net

(292

)

(514

)

(1,095

)

(1,092

)

Restaurant-Level Adjusted EBITDA

$

34,243

$

34,623

$

107,069

$

87,384

Restaurant-Level Adjusted EBITDA Margin

24.8

%

28.9

%

27.0

%

25.9

%


Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting