El Pollo Loco(LOCO) - 2025 Q2 - Quarterly Results

Financial Performance Overview El Pollo Loco reported Q2 2025 revenue growth and improved adjusted profitability, with a slight decrease in comparable sales and net income Q2 2025 Highlights Q2 2025 revenue reached $125.8 million, with adjusted net income and EBITDA increasing, despite a slight dip in comparable sales and net income Q2 2025 vs Q2 2024 Key Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $125.8 million | $122.2 million | | System-wide Comparable Restaurant Sales | -0.3% | N/A | | Net Income | $7.1 million | $7.6 million | | Diluted EPS | $0.24 | $0.25 | | Adjusted Net Income | $8.2 million | $7.8 million | | Adjusted Diluted EPS | $0.28 | $0.26 | | Adjusted EBITDA | $18.5 million | $17.2 million | Management Commentary CEO Liz Williams highlighted strategic progress, with brand and menu innovations driving customer response and profitability growth - Strategic investments in brand re-launch and menu innovations are showing positive customer response[2] - Achieved a return to positive system-wide traffic growth and saw profitability growth at both restaurant and corporate levels[2] - The company is positioning for national expansion with solid unit growth in 2025 and a growing development pipeline for 2026[2] Detailed Financial Results A detailed analysis of Q2 2025 financial results covers revenue, profitability, expenses, balance sheet, and capital allocation Revenue Analysis Q2 2025 total revenue increased to $125.8 million, boosted by company-operated sales and IT pass-through related franchise revenue Q2 2025 Revenue Breakdown | Revenue Source | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Company-Operated | $104.3 million | $102.3 million | +2.0% | | Franchise | $13.4 million | $11.7 million (approx) | +14.8% | | Total Revenue | $125.8 million | $122.2 million | +2.9% | - Company-operated comparable sales growth of 1.2% was driven by a 1.5% increase in average check, partially offset by a 0.3% decrease in transactions[4] - The significant 14.8% increase in franchise revenue was largely due to a $1.6 million IT pass-through revenue related to a new POS system rollout[5] Profitability and Expense Analysis Income from operations decreased, but restaurant contribution margin improved, while G&A expenses rose due to stock compensation and special fees Q2 Profitability Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Income from Operations | $11.3 million | $12.3 million | | Restaurant Contribution | $19.9 million | $19.1 million | | Restaurant Contribution Margin | 19.1% | 18.6% | - G&A expenses increased by $1.7 million, driven by higher stock compensation ($0.8 million), special legal fees ($0.8 million), and restructuring costs ($0.7 million)[7] - Net income for Q2 2025 was $7.1 million ($0.24/share), down from $7.6 million ($0.25/share) in Q2 2024. Adjusted net income increased to $8.2 million ($0.28/share) from $7.8 million ($0.26/share)[8] Balance Sheet and Capital Allocation Outstanding debt reduced to $69.0 million, cash at $9.0 million, and a share repurchase program terminated in March 2025 - Outstanding debt was reduced to $69.0 million as of quarter-end, with a further reduction to $68.0 million as of July 31, 2025[9][10] - The company held $9.0 million in cash and cash equivalents at the end of Q2 2025[9] - A share repurchase program was active during the quarter, with $0.1 million in buybacks, but the program was terminated on March 31, 2025[9] 2025 Outlook The 2025 outlook provides guidance on new restaurant openings, capital spending, G&A expenses, and the effective income tax rate Full Year 2025 Guidance The company forecasts 10-11 new restaurants, $31.0-$34.0 million capital spending, and $48.0-$51.0 million G&A for 2025 2025 Full Year Outlook | Metric | Guidance | | :--- | :--- | | System-wide Restaurant Openings | 10 to 11 (9-10 franchised, up to 1 company-operated) | | Capital Spending | $31.0 – $34.0 million | | G&A Expense (excluding one-time costs) | $48.0 – $51.0 million | | Effective Income Tax Rate (before discrete items) | 29.0% – 29.5% | Definitions of Non-GAAP and other Key Financial Measures This section defines key performance indicators and non-GAAP financial measures used to evaluate the company's operational and financial performance Key Performance Indicators and Non-GAAP Metrics Key performance indicators and non-GAAP metrics are used to assess brand scale, store performance, and core profitability - System-Wide Sales: Sum of company-operated and franchised restaurant sales, used to evaluate brand scale and market penetration[12] - Comparable Restaurant Sales: Year-over-year sales changes for restaurants open for at least 15 months, indicating performance of the existing store base[14] - Restaurant Contribution: Company-operated revenue less direct restaurant expenses (food, labor, occupancy), used to measure restaurant-level profitability[15] - Adjusted EBITDA & Adjusted Net Income: Net income adjusted for items like interest, taxes, D&A, stock compensation, and other non-recurring costs to facilitate operating performance comparisons[16][21] Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including statements of income, balance sheets, operating data, and restaurant counts Unaudited Condensed Consolidated Statements of Income Q2 2025 total revenues were $125.8 million, with income from operations at $11.3 million and net income at $7.1 million Q2 2025 Income Statement Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $125,834 | $122,176 | | Total Expenses | $114,529 | $109,858 | | Income from Operations | $11,305 | $12,318 | | Net Income | $7,107 | $7,633 | Unaudited Selected Condensed Consolidated Balance Sheets and Operating Data As of June 25, 2025, cash was $9.0 million, total debt $69.0 million, and total assets $596.8 million Selected Balance Sheet Data (in thousands) | Metric | June 25, 2025 | Dec 25, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $8,989 | $2,484 | | Total assets | $596,777 | $592,014 | | Total debt | $69,000 | $71,000 | | Total stockholders' equity | $274,178 | $260,669 | Unaudited Restaurant Counts At Q2 2025 end, the system had 499 restaurants (174 company-operated, 325 franchised), with a net increase of one Restaurant Count as of June 25, 2025 | Restaurant Type | Count | | :--- | :--- | | Company-operated | 174 | | Franchised | 325 | | System-wide Total | 499 | Unaudited Reconciliation Tables This section details reconciliations of non-GAAP financial measures to GAAP, covering EBITDA, Adjusted Net Income, and Restaurant Contribution Reconciliation of Net Income to EBITDA and Adjusted EBITDA Q2 2025 Net Income of $7.1 million was reconciled to Adjusted EBITDA of $18.5 million, with standard non-GAAP adjustments Q2 EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $7,107 | $7,633 | | EBITDA | $15,234 | $16,188 | | Adjusted EBITDA | $18,473 | $17,218 | Reconciliation of Net Income to Adjusted Net Income Q2 2025 Adjusted Net Income of $8.2 million was reconciled from Net Income of $7.1 million, adjusting for special legal fees and restructuring Q2 Adjusted Net Income Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $7,107 | $7,633 | | Adjusted Net Income | $8,223 | $7,805 | | Adjusted Diluted EPS | $0.28 | $0.26 | Reconciliation of Income from Operations to Restaurant Contribution Q2 2025 Income from Operations of $11.3 million was reconciled to Restaurant Contribution of $19.9 million, with a 19.1% margin Q2 Restaurant Contribution Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Income from Operations | $11,305 | $12,318 | | Restaurant Contribution | $19,926 | $19,052 | | Restaurant Contribution Margin | 19.1% | 18.6% |