Financial Data and Key Metrics Changes - Same restaurant sales increased by 0.4% in Q4 2024, while full-year comparable sales were down 0.6% [8][9] - Total revenue for Q4 2024 was $184.6 million, a decrease of $3.2 million or 1.7% year-over-year, but grew 6.1% when excluding the impact of an additional operating week in Q4 2023 [26][27] - Restaurant-level adjusted EBITDA for Q4 2024 was $45.2 million, with a margin of 24.5%, compared to $26.1 million in Q4 2023 [9][36][39] Business Line Data and Key Metrics Changes - Revenue growth in Q4 was driven by non-comparable restaurants contributing $8.6 million, while same restaurant sales growth contributed approximately $600,000 [27] - Average check increased by 4.1%, driven by a 4.7% increase in certain menu prices, partially offset by a 3.7% decrease in transactions [28] Market Data and Key Metrics Changes - The company plans to open twelve new restaurants in 2025, focusing on Texas and Georgia, with a new compact restaurant format expected to lower build costs significantly [14][15][134] - The advertising campaign launched in Dallas-Fort Worth aims to increase brand awareness in Texas, targeting a market with previously low recognition [16][88] Company Strategy and Development Direction - The company is focusing on four key traffic-driving strategies: expanding kiosk usage, advertising beyond Chicagoland, launching the Portillo's Perks loyalty program, and improving operational efficiency [12] - The new compact restaurant format aims to reduce average build costs by over a million dollars, with expectations for strong returns [13][134] Management's Comments on Operating Environment and Future Outlook - Management acknowledged industry headwinds, including weather impacts in February, but expressed confidence in the underlying strength of the business and anticipated improvements in the latter half of 2025 [11][50] - The company expects revenue growth to continue driven by new restaurant openings and modest same-store sales growth in the range of flat to 2% [30] Other Important Information - Commodity inflation is estimated at 3% to 5% for 2025, with significant pressures expected from beef [33][78] - The company has reduced its term loan from $300 million to $250 million, increasing financial flexibility to support growth strategies [40][41] Q&A Session Summary Question: Weather impact on Q1 performance - Management has not quantified the weather impact but remains confident in achieving full-year guidance of 0% to 2% growth despite early challenges [48][50] Question: Drive-through speed improvements - Every thirty seconds of improved throughput in the drive-through is equivalent to one point of comp, and management is optimistic about deploying improvements quickly if tests continue to perform well [52][54] Question: Restaurant of the Future prototype performance - Initial performance of the new restaurant format is promising, with expectations for improved operational efficiency and capital returns [57][60] Question: Menu streamlining effects - Streamlining the menu has reduced complexity and improved throughput, with positive feedback from customers on key items being reintroduced [62][64] Question: Traffic growth expectations - Management anticipates steady improvement in traffic throughout the year, with a conservative approach to pricing and mix [110][112] Question: New restaurant openings in Atlanta - The new restaurant in Atlanta is expected to open in the back half of 2025, with uncertain volume predictions due to being a first-in-market location [115][116] Question: Loyalty program rollout - The loyalty program is in soft launch and expected to fully launch in March, with anticipated positive impacts on traffic in Q2 [122] Question: New store maturity in Texas - New restaurants in Texas are performing more consistently with mature market expectations, with a focus on achieving density for effective marketing [128][131] Question: Non-traditional restaurant formats - The company is fine-tuning the drive-through only format and exploring additional locations, including walk-up options [96][98]

Financial Performance - Portillo's reported revenue of $184.6 million for the fourth quarter, reflecting a year-over-year decrease of 1.7%, but this was due to a shorter reporting period compared to the previous year [2] - The company achieved a net income of $12.4 million, marking a 29% increase, resulting in adjusted earnings per share (EPS) of $0.17, significantly above analysts' consensus estimates of $0.07 [2] - Same-store sales increased by 0.4% year over year, reversing a trend of declines over the past three quarters [3] Operational Insights - Restaurant-level earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased by 1.1% to $45.2 million, influenced by the shorter quarter [3] - Portillo's added six new locations in the fourth quarter, indicating continued measured expansion [3] Market Context - The restaurant industry, including Portillo's, has faced challenges from historically high inflation, high commodity prices, and rising labor costs, impacting operations and consumer spending [4] - Despite these challenges, Portillo's experienced an increase in average check size, although this was partially offset by fewer transactions [5] - The increase in same-store sales reflects the company's strategy of maintaining low prices to foster customer loyalty [5] - Portillo's outperformed its peers in average unit volume, generating sales of $9.1 million per location, surpassing competitors in the fast-food sector [5] Strategic Focus - The company is concentrating on fundamental operations to position itself for future success once inflationary pressures subside [6]

Core Viewpoint - Portillo's Inc. reported quarterly earnings of $0.17 per share, significantly exceeding the Zacks Consensus Estimate of $0.07 per share, marking an earnings surprise of 142.86% [1][2] Financial Performance - The company achieved revenues of $184.61 million for the quarter ended December 2024, slightly surpassing the Zacks Consensus Estimate by 0.01%, although this represents a decline from $187.86 million in the same quarter last year [2] - Over the last four quarters, Portillo's has exceeded consensus EPS estimates three times and topped revenue estimates only once [2] Stock Performance - Portillo's shares have increased approximately 44.4% since the beginning of the year, outperforming the S&P 500's gain of 1.7% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for it to outperform the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.05 on revenues of $183.27 million, and for the current fiscal year, it is $0.34 on revenues of $794.06 million [7] - The trend of estimate revisions for Portillo's is favorable, which is a positive indicator for future stock performance [6] Industry Context - The Retail - Restaurants industry, to which Portillo's belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Financial Performance - Total revenues for the fiscal year ended December 29, 2024, increased to $710,554,000, up 4.9% from $679,905,000 in the previous year[356]. - Net income attributable to Portillo's Inc. for the fiscal year 2024 was $29,517,000, representing a 60.1% increase from $18,424,000 in 2023[356]. - Basic earnings per share increased to $0.48 in 2024, compared to $0.34 in 2023, reflecting a 41.2% growth[356]. - For the fiscal year ended December 29, 2024, Portillo's reported a net income of $35,076,000, an increase of 41.3% compared to $24,818,000 in 2023[362]. - The total income tax expense for the fiscal year ended December 29, 2024 was $6.8 million, up from $3.2 million in 2023, indicating a 109.0% increase[508]. - The effective income tax rate for the year ended December 29, 2024 was 16.2%, compared to 11.5% in 2023, primarily due to an increase in the Company's ownership interest in Portillo's OpCo[508]. - The weighted-average number of common shares outstanding for basic earnings per share increased to 61.1 million in 2024 from 53.8 million in 2023, a growth of 13.5%[522]. Assets and Liabilities - Total current assets rose to $52,651,000 in 2024, a 25.7% increase from $41,919,000 in 2023[355]. - Total liabilities increased to $1,009,983,000 in 2024, up 9.1% from $925,431,000 in 2023[355]. - Total stockholders' equity attributable to Portillo's Inc. grew to $401,061,000 in 2024, a 24.4% increase from $322,379,000 in 2023[355]. - Long-term debt, net of current portion, decreased to $275,422,000 in 2024 from $283,923,000 in 2023, a decline of 3.0%[355]. - The Company reported total equity of $490,103,000 as of December 29, 2024, compared to $460,110,000 as of December 31, 2023, indicating an increase of 6.5%[360]. - The total debt as of December 29, 2024, was $311,672 thousand, which includes $288,750 thousand from the 2023 Term Loan and $25,000 thousand from the 2023 Revolver Facility[449]. Cash Flow and Expenditures - The company generated net cash provided by operating activities of $98,040,000 in 2024, up from $70,781,000 in 2023, reflecting a 38.5% increase[362]. - Portillo's incurred capital expenditures of $88,191,000 in 2024, slightly higher than $87,918,000 in 2023[362]. - Cash and cash equivalents increased significantly to $22,876,000 in 2024, compared to $10,438,000 in 2023, marking a 119.1% rise[355]. - Interest paid by the company in 2024 was $19,445,000, a decrease from $28,282,000 in 2023[363]. Tax and Agreements - The company has entered into a Tax Receivable Agreement (TRA) requiring it to pay 85% of cash savings from tax benefits realized post-IPO[348]. - The Company made payments of $4.4 million under the Tax Receivable Agreement (TRA) during the year ended December 29, 2024, with an estimated future obligation of $324.6 million[520]. - The TRA liability calculation involves significant future events and assumptions, making it complex and requiring auditor judgment[351]. Operational Metrics - As of December 29, 2024, Portillo's operated 93 restaurants, an increase from 83 restaurants as of December 31, 2023, representing a growth of 12.0%[366]. - The Company operates fast-casual restaurants in the United States and has two food production commissaries in Illinois[526]. - The Company has one operating segment and one reportable segment[526]. Risk Management - The company utilizes various risk management strategies to mitigate commodity price risks, including purchasing contracts and pricing arrangements[332]. - The company employs strategies to combat inflation, including operational efficiencies and strategic menu price increases[335]. - Labor costs are impacted by increases in minimum wage and competitive market pressures, which may adversely affect overall labor expenses[338]. Stock and Compensation - Approximately 7.1 million shares of Class A common stock were authorized for awards under the 2021 Equity Incentive Plan[490]. - The total unrecognized compensation cost related to unvested RSUs was $7.0 million, expected to vest over a weighted-average period of 2.0 years[491]. - The total equity-based compensation expense for the fiscal year ended December 29, 2024, was $11.151 million, a decrease from $15.542 million in the previous year[505]. Accounting and Compliance - The company’s financial statements have been audited and present a fair view of its financial position as of December 29, 2024[343]. - The Company is currently evaluating the effect of adopting recently issued accounting standards, including ASU 2023-09 and ASU 2024-03[421][423]. - The Company was in compliance with all covenants in the 2023 Credit Agreement as of December 29, 2024[469].

Core Insights - Portillo's Inc. reported financial results for the fourth quarter and fiscal year ended December 29, 2024, highlighting solid momentum and strategic initiatives for long-term growth [1][2]. Financial Highlights for Fourth Quarter 2024 - Total revenue decreased by 1.7% to $184.6 million compared to $187.9 million in the prior year [11]. - Same-restaurant sales increased by 0.4%, attributed to a 4.1% rise in average check, despite a 3.7% decrease in transactions [11]. - Operating income fell by $0.6 million to $13.8 million, while net income rose by $2.8 million to $12.4 million [15][16]. - Restaurant-Level Adjusted EBITDA decreased by $0.5 million to $45.2 million, and Adjusted EBITDA decreased by $0.9 million to $25.2 million [17]. Financial Highlights for Fiscal Year 2024 - Total revenue increased by 4.5% to $710.6 million, driven by the opening of new restaurants [19]. - Same-restaurant sales decreased by 0.6%, with a 3.2% drop in transactions offset by a 2.6% increase in average check [19]. - Operating income rose by $2.6 million to $58.0 million, and net income increased by $10.3 million to $35.1 million [22][23]. - Restaurant-Level Adjusted EBITDA increased by $2.9 million to $168.1 million, and Adjusted EBITDA grew by $2.5 million to $104.8 million [24]. Recent Developments and Trends - The company opened 10 new restaurants in fiscal 2024, expanding its footprint in various states [10]. - Commodity inflation stabilized, with rates of 1.8% in Q4 2024 and 4.2% for the fiscal year, compared to higher rates in the previous year [9]. - Labor expenses as a percentage of revenue decreased by 0.1% due to higher average checks and lower variable compensation [9]. Fiscal 2025 Financial Targets - The company aims to open 12 new units, with same-restaurant sales projected to be flat to +2% and revenue growth targeted at 11% to 12% [26]. - Commodity inflation is expected to range from 3% to 5%, and labor inflation is projected at 3% to 4% [26]. Long-Term Financial Targets - Annual unit growth is targeted at 12% to 15%, with revenue growth anticipated in the mid-teens [27].

Technical Analysis - Portillo's Inc. (PTLO) has reached a significant support level, indicating a potential investment opportunity from a technical perspective [1] - PTLO's 50-day simple moving average has recently crossed above its 200-day moving average, forming a "golden cross," which is a bullish signal [1] Golden Cross Characteristics - A golden cross consists of three stages: a downtrend that bottoms out, a shorter moving average crossing above a longer moving average, and a subsequent upward price movement [2] - This pattern is contrasted with a death cross, which signals potential bearish price movement [2] Recent Performance and Outlook - PTLO shares have increased by 31.2% over the past four weeks, indicating strong upward momentum [3] - The company holds a 2 (Buy) rating on the Zacks Rank, suggesting it may be positioned for further breakout [3] - Positive earnings outlook is supported by no earnings estimate cuts and five upward revisions in the past 60 days, with the Zacks Consensus Estimate also increasing [3][4]

Core Points - Portillo's Inc. will report its fourth quarter 2024 financial results on February 25, 2025, before market opens [1] - A live audio webcast will be hosted by the CEO and CFO at 10:00 AM ET on the same day [1] - The company has grown to over 90 restaurants across 10 states since its founding in 1963 [3] Company Overview - Portillo's was founded in 1963 by Dick Portillo with an initial investment of $1,100 [3] - The restaurant is known for its Chicago-style hot dogs, Italian beef sandwiches, char-grilled burgers, fresh salads, and chocolate cake [3] - Portillo's offers food shipping to all 50 states via its website [3]

Group 1 - Portillo's Inc. (PTLO) shares increased by 7.2% to close at $13.39, with a notable 39.1% gain over the past four weeks, supported by strong trading volume [1] - The stock rally is attributed to the company's innovative technology use, including self-service kiosks, targeted advertising campaigns, and strategic expansion into key markets like Houston [2] - The company is expected to report quarterly earnings of $0.06 per share, reflecting a year-over-year decline of 53.9%, with revenues projected at $184.35 million, down 1.9% from the previous year [3] Group 2 - The consensus EPS estimate for Portillo's has been revised down by 9.5% over the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not lead to price appreciation [4] - Portillo's Inc. holds a Zacks Rank of 2 (Buy), indicating a favorable outlook within the Zacks Retail - Restaurants industry [4] - Darden Restaurants (DRI), a peer in the same industry, has a consensus EPS estimate of $2.82, reflecting a 7.6% increase from the previous year, and also holds a Zacks Rank of 2 (Buy) [5]

Core Viewpoint - Portillo's Inc. (PTLO) has shown a significant price increase of 30.4% over the past four weeks, with a mean price target of $15.10 indicating a potential upside of 28.1% from the current price of $11.79 [1] Price Target Analysis - The average of 10 short-term price targets ranges from a low of $11 to a high of $21, with a standard deviation of $2.88, indicating variability among analysts' estimates [2] - The lowest estimate suggests a decline of 6.7%, while the highest points to a potential upside of 78.1% [2] - A low standard deviation signifies a higher agreement among analysts regarding the stock's price movement [7] Earnings Estimates and Analyst Sentiment - Analysts have shown increasing optimism about PTLO's earnings prospects, with a strong consensus in revising EPS estimates higher, which correlates with potential stock price increases [9] - Over the last 30 days, the Zacks Consensus Estimate for the current year has risen by 4.4%, with three estimates moving higher and no negative revisions [10] - PTLO holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [11] Caution on Price Targets - Solely relying on consensus price targets for investment decisions may not be prudent, as analysts' ability to set unbiased targets has been questioned [3][5] - Analysts often set optimistic price targets due to business incentives, which can lead to inflated estimates [6] - While price targets should not be ignored, they should be approached with skepticism, as they may not accurately predict stock price movements [8]

Financial Performance - Preliminary revenue of $184 6 million for the quarter slightly exceeded analysts' expectations of $184 4 million [1] - Full-year preliminary revenue of $710 6 million increased 4 5% year over year, just below the $710 9 million expected by analysts [1] - Same-store sales increased 0 3% year over year, significantly outperforming analysts' consensus estimates of a 1 1% drop and management's guidance of a 0 8% decline [5] Market Reaction - Shares of Portillo's surged as much as 18 9% on Tuesday morning and remained up 13 3% by early afternoon [3] - The stock's rise was driven by surprisingly robust preliminary financial results [3] Industry Context - The restaurant industry has faced significant challenges due to historically high inflation, which has increased food prices and labor costs [6] - Restaurant traffic in the third quarter was down 3% year over year and 17% below Q3 2019 levels, according to CREST Research [6] - Despite these challenges, Portillo's outperformed its peers with a slight increase in same-store sales, which was a rare positive in the industry [2] Future Outlook - Management forecasts same-store sales to increase roughly 1% year over year at the midpoint of its 2025 guidance [4] - Revenue growth is expected to be approximately 11%, with adjusted EBITDA increasing by about 7% in 2025 [4] Valuation - Portillo's is trading at 24 times earnings, which is considered an intriguing multiple given its outperformance relative to peers [2]