ptlo-20220310
FALSE000187150900018715092022-03-102022-03-10

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 10, 2022

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PORTILLO'S INC.
(Exact name of registrant as specified in its charter)
Delaware 001-4095187-1104304
(State or other jurisdiction of incorporation or organization)(Commission File Number)(I.R.S. Employer Identification No.)
2001 Spring Road, Suite 400, Oak Brook, Illinois 60523
(Address of principal executive offices)
(630)-954-3773
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, $0.01 par value per sharePTLONasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.




Item 2.02 Results of Operations and Financial Condition.

On March 10, 2022, Portillo’s Inc. (NASDAQ: PTLO) issued a press release reporting results for the fiscal year ended December 26, 2021. A copy of the earnings press release is attached hereto as Exhibit 99.1.

The information furnished in this Current Report on Form 8-K and Exhibit 99.1 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.
Exhibit NumberDescription
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 
  Portillo's Inc.
(Registrant)
Date: March 10, 2022By:/s/ Michelle Hook
  Michelle Hook
  Chief Financial Officer and Treasurer
(Principal Financial Officer)


Document


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Portillo’s Inc. Announces Fourth Quarter and Fiscal Year 2021 Financial Results

Chicago, IL— March 10, 2022—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 26, 2021.

Michael Osanloo, President and Chief Executive Officer of Portillo’s, said “This past year was a milestone year for Portillo’s, highlighting our ongoing commitment to greatness, even in the face of continued industry-wide challenges. Although we did feel some impact from the Omicron variant, we still delivered solid top-line growth and restaurant-level profitability in the fourth quarter. We did this by focusing on high performance across our multiple channels, and our dedication to creating memorable experiences for our guests and our own team members. Our full-year results reflect the strength of the Portillo’s brand, the resilience of our Team Members, and the impact of our accomplishments in 2021. As we look ahead, we’re excited about our future, especially our growth strategy that will bring Portillo’s unrivaled Chicago street food to even more fans across the Midwest and Sunbelt. We’re excited to continue our journey as a newly public company and we look forward to delivering excellent guest experiences any way fans want to experience Portillo’s.”

Financial Highlights for the Fourth Quarter 2021 vs. Prior Year:

Total revenue increased 17.2% or $20.4 million to $138.9 million;
Same-restaurant sales increased 10.3%;
Operating income decreased $38.1 million to an operating loss of $22.5 million;
Net income decreased $38.7 million to a net loss of $33.8 million;
Restaurant-Level Adjusted EBITDA* increased $0.5 million to $35.0 million; and
Adjusted EBITDA* decreased $0.3 million to $23.2 million.

Financial Highlights for Fiscal Year 2021 vs. Prior Year:

Total revenue increased 17.5% or $79.5 million to $535.0 million;
Same-restaurant sales increased 10.5%;
Operating income decreased $27.3 million to $30.0 million;
Net income decreased $25.7 million to a net loss of $13.4 million;
Restaurant-Level Adjusted EBITDA* increased $20.1 million to $142.1 million; and
Adjusted EBITDA* increased $10.7 million to $98.5 million.

*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.

Initial Public Offering

On October 25, 2021, the Company successfully completed an initial public offering ("IPO") of 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) at an offering price of $20.00 per share. The Company received aggregate net proceeds of approximately $430.0 million (after deducting underwriting discounts and commissions and offering expenses). The net proceeds and cash on hand were used as follows:

to repay the redeemable preferred units in full (including the redemption premium) of $221.7 million;
to repay all of the borrowings outstanding under the Second Lien Credit Agreement (including any prepayment penalties) of $158.1 million; and
to purchase LLC Units or shares of Class A common stock from certain pre-IPO LLC members of $57.0 million.

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Recent Developments and Trends

As the COVID-19 pandemic continues and new variants emerge, such as Omicron in late 2021, the Company’s priority has been ensuring the health and safety of team members and guests, and compliance with the applicable safety regulations. The Omicron variant began quickly spreading during the end of the fourth quarter 2021 and sales, particularly seasonal catering sales, were negatively impacted during the last few weeks of the fourth quarter. Impacts also included staffing shortages that carried into the first several weeks of fiscal 2022. However, the Company did see improvements in sales trends and staffing levels beginning in mid-January 2022. Same-restaurant sales during period one of 2022 were 9.2% and improved to 13.6% in period two of 2022. The Company estimates same-restaurant sales for the first quarter of 2022 to be in the range of 7.5% to 8.5%.

The Company anticipates additional wage investments, along with increased supply chain and commodity costs, will have an impact to Restaurant-Level Adjusted EBITDA Margin in fiscal 2022. The Company plans to partially offset these expense increases through menu price increases and operational efficiencies. The Company increased certain menu prices during the fourth quarter of 2021 by approximately 3.0%. During the first quarter of 2022, the Company increased certain prices to reflect an approximate 1.5% increase to menu prices. The Company remains confident in the strength of the brand to deliver on its long-term outlook.

Review of Fourth Quarter 2021 Financial Results

Revenues for the fourth quarter ended December 26, 2021 were $138.9 million compared to $118.5 million for the fourth quarter ended December 27, 2020, an increase of $20.4 million or 17.2%. The increase in revenues was primarily attributed to an increase in our average check, increased transactions, and the opening of two new restaurants in the fourth quarter of 2020 and five new restaurants in 2021. Same-restaurant sales increased 10.3% during the fourth quarter ended December 26, 2021, which was attributable to a 9.5% increase in average check and a 0.8% increase in transactions. The higher average check was driven by an increase in menu prices and mix of items sold. For the purpose of calculating same-restaurant sales for December 26, 2021, sales for 61 restaurants were included in the Comparable Restaurant Base as of the end of fiscal 2021.

Total restaurant operating expenses for the fourth quarter ended December 26, 2021 were $103.9 million compared to $84.0 million for the fourth quarter ended December 27, 2020, an increase of $19.9 million. The increases in restaurant level operating expenses were driven by the opening of seven new restaurants since the beginning of the fourth quarter of 2020. Additionally, expenses were impacted by an increase in commodity prices (primarily beef, chicken and pork), several incremental labor investments to support our team members, including hourly and salary rate increases, training costs and discretionary bonuses, and the expansion of our dine-in capacity in 2021.

General and administrative expenses for the fourth quarter ended December 26, 2021 were $51.3 million compared to $11.9 million for the fourth quarter ended December 27, 2020, an increase of $39.4 million. The increase in general and administrative expenses were primarily driven by an increase in equity-based stock compensation of $29.3 million, an option holder payment in connection with the IPO of $6.6 million, an increase in costs associated with being a public company of $2.9 million, and increases in salaries and wages from rate increases and filling open positions.

Operating loss for the fourth quarter ended December 26, 2021 was $22.5 million compared to operating income of $15.6 million for the quarter ended December 27, 2020, a decrease of $38.1 million due to the aforementioned increase in expenses, partially offset by the aforementioned increase in revenues and lower depreciation and amortization.

Net loss for the fourth quarter ended December 26, 2021 was $33.8 million compared to net income of $4.9 million for the quarter ended December 27, 2020, a decrease of $38.7 million. The decrease in net loss was primarily due to the factors driving the aforementioned decrease in operating income combined with a $7.3 million loss on debt extinguishment. The decrease was partially offset by lower interest expense of $3.2 million and an income tax benefit of $3.5 million.

Restaurant-Level Adjusted EBITDA* for the fourth quarter ended December 26, 2021 was $35.0 million compared to $34.6 million for the quarter ended December 27, 2020, an increase of $0.5 million or 1.3%.

Adjusted EBITDA* for the fourth quarter ended December 26, 2021 was $23.2 million compared to $23.5 million for the quarter ended December 27, 2020, a decrease of $0.3 million or 1.2%.

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*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 2021 Financial Results

Revenues for the year ended December 26, 2021 were $535.0 million compared to $455.5 million for the year ended December 27, 2020, an increase of $79.5 million or 17.5%. The increase in revenues was primarily attributed to an increase in our average check, an increase in transactions and the opening of two new restaurants in the fourth quarter of 2020 and five new restaurants in 2021. Same-restaurant sales increased 10.5% during the year ended December 26, 2021, which was attributable to a 2.7% increase in transactions and a 7.8% increase in average check. The higher average check was driven by an increase in menu prices, more items per order, and mix of items sold. For the purpose of calculating same-restaurant sales for December 26, 2021, sales for 61 restaurants were included in the Comparable Restaurant Base as of the end of fiscal 2021.

Total restaurant operating expenses for the year ended December 26, 2021 were $392.9 million compared to $333.5 million for the year ended December 27, 2020, an increase of $59.3 million. The increases in restaurant level operating expenses were driven by the opening of seven new restaurants since the beginning of the fourth quarter of 2020. Additionally, expenses were impacted by an increase in commodity prices (primarily beef), several incremental labor investments to support our team members, including hourly and salary rate increases, training costs and discretionary bonuses and the expansion of our dine-in capacity in 2021.

General and administrative expenses for the year ended December 26, 2021 were $87.1 million compared to $39.9 million the year ended December 27, 2020, an increase of $47.2 million. The increase in general and administrative expenses were primarily driven by an increase in equity-based stock compensation of $29.2 million, an option holder payment in connection with the IPO of $6.6 million, an increase in costs associated with being a public company of $3.2 million, and increases in salaries and wages from rate increases and filling open positions.

Operating income for the year ended December 26, 2021 was $30.0 million compared to $57.3 million for the year ended December 27, 2020, a decrease of $27.3 million due to the aforementioned increase in expenses, partially offset by the aforementioned increase in revenues and lower depreciation and amortization.

Net loss for the year ended December 26, 2021 was $13.4 million compared to net income of $12.3 million for the year ended December 27, 2020, a decrease of $29.2 million. The increase in net loss was primarily due to the factors driving the aforementioned decrease in operating income combined with a $7.3 million loss on debt extinguishment. The decrease was partially offset by lower interest expense of $5.3 million and an income tax benefit of $3.5 million.

Restaurant-Level Adjusted EBITDA* for the year ended December 26, 2021 was $142.1 million compared to $121.9 million for the year ended December 27, 2020, an increase of $20.1 million or 16.5%.

Adjusted EBITDA* for the year ended December 26, 2021 was $98.5 million compared to $87.8 million for the year ended December 27, 2020, an increase of $10.7 million or 12.2%.

*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

Two new Portillo’s restaurants were opened during the fourth quarter ending December 26, 2021. The opening of these restaurants completed the Company’s development plan for 2021 and brings the total restaurant count to 69 as of December 26, 2021. Subsequently, on February 1, 2022, we opened our first off-premise only restaurant, located in Joliet, Illinois, featuring three drive-thru lanes, including one specifically for pickup of advanced orders placed on our app or website, and a pick-up area inside the restaurant for third-party delivery
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drivers. Below are the restaurants opened since the beginning of fiscal 2021:
Location Opening Date
Sterling Heights, MichiganMarch 2021
Orlando, FloridaApril 2021
Glendale, ArizonaMay 2021
Westfield, IndianaNovember 2021
Madison, WisconsinNovember 2021
Joliet, IllinoisFebruary 2022

Going forward, we plan to increase our number of restaurants by approximately 10% annually. Our near-term restaurant growth strategy is focused on leveraging our proven unit economic model primarily in adjacent and national markets outside Chicagoland with favorable macroeconomic tailwinds where we already have a presence and brand awareness.

2022 and Long-Term Outlook

For 2022, the Company is anticipating the following:

Seven new restaurant openings;
Commodity costs up 13%-15%;
General and administrative expenses ranging from $70 million - $75 million;
Pre-opening expenses between $6.0 million - $6.5 million;
Capital expenditures between $60 million - $65 million.

At the end of 2021, the Company began to record the difference in higher third-party delivery menu prices, versus regular menu prices, in revenues. This markup was previously recorded in cost of goods sold, excluding depreciation and amortization. As a result, we anticipate this change to positively impact our same-restaurant sales growth by 2%-3% in each quarter in 2022 and for the full fiscal year 2022, with a corresponding increase to costs of goods sold, excluding depreciation and amortization. This change will not impact anticipated operating income or Restaurant-Level Adjusted EBITDA.

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 of 10%;
Same-restaurant sales growth in the low single digits;
Total revenue growth in the high single to low double-digit range;
Adjusted EBITDA growth in the low teens.

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
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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 financial results for the fiscal year ended December 26, 2021 on Thursday, March 10, 2022, 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 13727174. 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.” As of March 10, 2022, Portillo’s has grown to include restaurants in 70 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.


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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:

the potential future impact of COVID-19 (including any variant) on our results of operations, supply chain or liquidity;
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 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;
our ability to achieve our growth strategy, such as the availability of suitable new restaurant sites in existing and new markets;
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 Form 10-K for the fiscal year ended December 26, 2021, filed with the SEC on March 10, 2022. 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:
Fitzhugh Taylor of ICR
Investors@portillos.com

Media Contact:
ICR, Inc.
PortillosPR@icrinc.com
###
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PORTILLO’S INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except common share and per common share data)






Quarter EndedFiscal Years Ended
December 26, 2021December 27, 2020December 26, 2021December 27, 2020
REVENUES, NET$138,908 100.0 %$118,511 100.0 %$534,952 100.0 %$455,471 100.0 %
COST AND EXPENSES:
Restaurant operating expenses:
Cost of goods sold, excluding depreciation and amortization45,299 32.6 %36,351 30.7 %166,764 31.2 %142,446 31.3 %
Labor36,355 26.2 %28,786 24.3 %138,788 25.9 %115,991 25.5 %
Occupancy7,170 5.2 %6,203 5.2 %28,060 5.2 %24,920 5.5 %
Other operating expenses15,071 10.8 %12,610 10.6 %59,258 11.1 %50,169 11.0 %
Total restaurant operating expenses103,895 74.8 %83,950 70.8 %392,870 73.4 %333,526 73.2 %
General and administrative expenses51,334 37.0 %11,936 10.1 %87,089 16.3 %39,854 8.8 %
Pre-opening expenses1,258 0.9 %1,371 1.2 %3,565 0.7 %2,209 0.5 %
Depreciation and amortization5,087 3.7 %6,180 5.2 %23,312 4.4 %24,584 5.4 %
Net income attributable to equity method investment(146)(0.1)%(106)(0.1)%(797)(0.1)%(459)(0.1)%
Other income, net(4)— %(445)(0.4)%(1,099)(0.2)%(1,537)(0.3)%
OPERATING (LOSS) INCOME(22,516)(16.2)%15,625 13.2 %30,012 5.6 %57,294 12.6 %
Interest expense7,570 5.4 %10,733 9.1 %39,694 7.4 %45,031 9.9 %
Loss on debt extinguishment7,265 5.2 %— — %7,265 1.4 %— — %
(LOSS) INCOME BEFORE INCOME TAXES(37,351)(26.9)%4,892 4.1 %(16,947)(3.2)%12,263 2.7 %
Income tax benefit(3,531)(2.5)%— — %(3,531)(0.7)%— — %
NET (LOSS) INCOME(33,820)(24.3)%4,892 4.1 %(13,416)(2.5)%12,263 2.7 %
Less: Redeemable preferred units accretion(4,198)(3.0)%(5,284)(4.5)%(21,176)(4.0)%(20,524)(4.5)%
NET LOSS ATTRIBUTABLE TO COMMON HOLDERS(38,018)(27.4)%(392)(0.3)%(34,592)(6.5)%(8,261)(1.8)%
Net loss attributable to non-controlling interests(19,408)(14.0)%— — %(19,408)(3.6)%— — %
NET LOSS ATTRIBUTABLE TO PORTILLO'S INC.$(18,610)(13.4)%$(392)(0.3)%$(15,184)(2.8)%$(8,261)(1.8)%
Loss per common share attributable to Portillo’s Inc.:
Basic$(0.52)$(0.01)$(0.42)$(0.16)
Diluted$(0.52)$(0.01)$(0.42)$(0.16)
Weighted-average common shares outstanding:
Basic35,807,171 51,192,433 35,807,171 51,189,017 
Diluted35,807,171 51,192,433 35,807,171 51,189,017 
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PORTILLO’S INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except common share and per common share data)
December 26, 2021December 27, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents and restricted cash$39,263 $41,432 
Accounts receivable7,840 5,204 
Inventory6,078 5,075 
Prepaid expenses5,836 2,915 
Total current assets59,017 54,626 
Property and equipment, net190,834 174,769 
OTHER ASSETS:
Goodwill394,298 394,298 
Trade names223,925 223,925 
Other intangible assets, net35,832 42,255 
Equity method investment16,170 16,015 
Deferred tax asset74,455 — 
Other assets5,042 4,334 
Total other assets749,722 680,827 
TOTAL ASSETS$999,573 $910,222 
LIABILITIES, REDEEMABLE PREFERRED UNITS AND COMMON EQUITY
CURRENT LIABILITIES:
Accounts payable$27,249 $21,427 
Current portion of long-term debt3,324 3,324 
Current deferred revenue6,893 6,774 
Accrued expenses29,472 34,827 
Total current liabilities66,938 66,352 
LONG-TERM LIABILITIES:
Long-term debt, net of current portion315,829 466,380 
Deferred rent32,174 26,694 
Tax receivable agreement liability156,638 — 
Other long-term liabilities4,588 9,516 
Total long-term liabilities509,229 502,590 
Total liabilities576,167 568,942 
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED UNITS, — and 100,000 units authorized, issued and outstanding as of December 26 2021 and December 27, 2020, respectively (preferred liquidation amount 101%)
— 200,571 
STOCKHOLDER’S EQUITY:
Member's Equity— 140,709 
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized, — issued and outstanding
— — 
Class A common stock, $0.01 par value per share, 380,000,000 shares authorized, and 35,807,171 shares issued and outstanding
358 — 
Class B common stock, $0.00001 par value per share, 50,000,000 shares authorized, and 35,673,321 shares issued and outstanding
— — 
Additional paid-in-capital186,856 — 
Accumulated deficit(15,950)— 
Total stockholders' equity attributable to Portillo's Inc.171,264 140,709 
Non-controlling interest252,142 — 
Total stockholders' equity423,406 140,709 
TOTAL LIABILITIES, REDEEMABLE PREFERRED UNITS AND STOCKHOLDERS' EQUITY$999,573 $910,222 
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PORTILLO’S INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)



Fiscal Years Ended
December 26, 2021December 27, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income$(13,416)$12,263 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization23,312 24,584 
Amortization of debt issuance costs and discount3,607 3,863 
Loss on sales of assets256 98 
Equity-based compensation29,389 960 
Deferred rent and tenant allowance4,120 3,888 
Deferred income tax (benefit) provision(3,532)— 
Amortization of deferred lease incentives(388)(330)
Gift card breakage(715)(700)
Loss on debt extinguishment7,265 — 
Changes in operating assets and liabilities:
Accounts receivables(777)(753)
Receivables from related parties(152)280 
Inventory(1,003)(1,180)
Other current assets(2,921)(416)
Accounts payable1,788 1,354 
Accrued expenses and other liabilities(4,521)6,573 
Deferred lease incentives690 2,314 
Other assets and liabilities(128)5,473 
NET CASH PROVIDED BY OPERATING ACTIVITIES42,874 58,271 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment(36,183)(21,452)
Purchase of investment securities(200)— 
Proceeds from the sale of property and equipment123 32 
NET CASH USED IN INVESTING ACTIVITIES(36,260)(21,420)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of short-term debt— (15,000)
Payments of long-term debt(158,324)(13,324)
Proceeds from Paycheck Protection Program loan— 10,000 
Payment of long-term debts prepayment penalty(3,100)— 
Proceeds from equity offering, net of underwriting discounts437,078 — 
Repurchase of outstanding equity / Portillo's OpCo units(57,010)— 
Payment of preferred units and preferred units liquidation(221,747)— 
Payment of IPO issuance costs(6,279)— 
Proceeds from issuance of common units100 26 
Repayment of stock subscription receivable499 250 
NET CASH USED IN FINANCING ACTIVITIES(8,783)(18,048)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH(2,169)18,803 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD41,432 22,629 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD$39,263 $41,432 

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PORTILLO’S INC
SELECTED OPERATING DATA AND NON-GAAP FINANCIAL MEASURES


Quarter EndedFiscal Years Ended
December 26, 2021December 27, 2020December 26, 2021December 27, 2020
Total Restaurants (a)69646964
AUV (in millions) (a)N/AN/A$8.2 $7.7 
Change in same-restaurant sales (b)10.3 %(8.9)%10.5 %(7.7)%
Adjusted EBITDA (in thousands)$23,220 $23,507 $98,497 $87,804 
Adjusted EBITDA Margin16.7 %19.8 %18.4 %19.3 %
Restaurant-Level Adjusted EBITDA (in thousands)$35,013 $34,561 $142,082 $121,945 
Restaurant-Level Adjusted EBITDA Margin25.2 %29.2 %26.6 %26.8 %

(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.
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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 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.


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See below for a reconciliation of net income, the most directly comparable GAAP measure, to Adjusted EBITDA and Adjusted EBITDA Margin (in thousands):
Quarter EndedFiscal Years Ended
December 26, 2021December 27, 2020December 26, 2021December 27, 2020
Net (loss) income$(33,820)$4,892 $(13,416)$12,263 
Depreciation and amortization5,087 6,180 23,312 24,584 
Interest expense7,570 10,733 39,694 45,031 
Loss on debt extinguishment7,265 — 7,265 — 
Income tax benefit(3,531)— (3,531)— 
EBITDA(17,429)21,805 53,324 81,878 
Deferred rent (1)786 721 3,161 2,771 
Equity-based compensation30,264 396 30,708 960 
Option holder payment and consulting fees (2)6,578 500 7,744 2,000 
Other income (3)134 85 292 130 
Transaction-related fees & expenses (4)2,887 — 3,268 65 
Adjusted EBITDA$23,220 $23,507 $98,497 $87,804 
Adjusted EBITDA Margin16.7 %19.8 %18.4 %19.3 %
(1) Represents the difference between cash rent payments and the recognition of straight-line rent expense recognized over the lease term.
(2) Represents an option holder payment in connection with the IPO 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 EndedFiscal Years Ended
December 26, 2021December 27, 2020December 26, 2021December 27, 2020
Operating Income$(22,516)$15,625 $30,012 $57,294 
Plus:
General and administrative expenses51,334 11,936 87,089 39,854 
Pre-opening expenses1,258 1,371 3,565 2,209 
Depreciation and amortization5,087 6,180 23,312 24,584 
Net income attributable to equity method investment(146)(106)(797)(459)
Other income, net(4)(445)(1,099)(1,537)
Restaurant-Level Adjusted EBITDA$35,013 $34,561 $142,082 $121,945 
Restaurant-Level Adjusted EBITDA Margin25.2 %29.2 %26.6 %26.8 %


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