Portillo’s(PTLO) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results Overview Portillo's Inc. reported a 3.6% revenue increase to $188.5 million in Q2 2025, driven by new openings and sales growth, with mixed profitability metrics Performance Highlights Total revenue increased by 3.6% to $188.5 million in Q2 2025, driven by new restaurants and same-restaurant sales, with mixed profitability Second Quarter 2025 Performance Highlights (vs. Second Quarter 2024) | Metric | Q2 2025 (Millions) | Change vs. Q2 2024 (Millions) | Percentage Change | | :----------------------------- | :------------------ | :----------------- | :------------------ | | Total revenue | $188.5 | +$6.6 | +3.6% | | Same-restaurant sales | +0.7% | | | | Operating income | $17.5 | -$0.6 | -3.2% | | Net income | $10.0 | +$1.5 | +17.7% | | Restaurant-Level Adjusted EBITDA | $44.5 | -$0.1 | -0.2% | | Adjusted EBITDA | $30.1 | +$0.2 | +0.7% | CEO Commentary CEO Michael Osanloo emphasized effective margin management and solid earnings amidst traffic challenges, focusing on market refinement and footprint expansion - The team managed restaurant-level margins effectively and drove solid earnings despite a tough traffic environment[3] - Strategic focus includes testing and learning, refining the new market playbook, and continuous improvement[3] - Key objectives are to drive consistent sales, expand the restaurant footprint, and deliver top-tier shareholder returns[3] Second Quarter 2025 Financial and Operating Review This section details Portillo's Q2 2025 financial performance, including revenue growth and rising operating and administrative expenses Revenue Analysis Total revenues grew 3.6% to $188.5 million, driven by new restaurants and a 0.7% increase in same-restaurant sales, primarily from higher average checks Q2 2025 Revenue Breakdown | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Percentage Change | | :---------------------- | :------------------ | :------------------ | :---------------- | :------------------ | | Total Revenues | $188.5 | $181.9 | +$6.6 | +3.6% | | New Restaurants Contribution | $6.1 | | | | | Same-Restaurant Sales | +0.7% | | +$1.1 | | | Average Check Increase | +2.1% | | | | | Transactions Decrease | -1.4% | | | | | Menu Price Increase | ~3.4% | | | | | Product Mix Decrease | -1.3% | | | | - The Company increased select menu prices by approximately 1.0% in April 2025 and 0.7% in June 2025 to address inflationary cost pressures[3] Expense Analysis Total restaurant operating expenses rose 4.9% to $144.0 million due to new openings, commodity prices, and labor, while G&A expenses increased 4.8% Q2 2025 Expense Changes | Expense Category | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Percentage Change | | :----------------------------- | :------------------ | :------------------ | :---------------- | :------------------ | | Total restaurant operating expenses | $144.0 | $137.3 | +$6.7 | +4.9% | | General and administrative expenses | $18.8 | $17.9 | +$0.9 | +4.8% | - Increase in restaurant operating expenses was primarily driven by nine new restaurant openings, a 1.9% increase in commodity prices, and incremental investments in labor[4] - Increase in general and administrative expenses was due to higher professional fees and advertising expenses, partially offset by lower equity-based compensation[5] Profitability Metrics Operating income decreased 3.2% to $17.5 million, while net income increased 17.7% to $10.0 million, driven by tax adjustments and lower interest expense Q2 2025 Profitability Metrics | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Percentage Change | | :----------------------------- | :------------------ | :------------------ | :---------------- | :------------------ | | Operating income | $17.5 | $18.1 | -$0.6 | -3.2% | | Net income | $10.0 | $8.5 | +$1.5 | +17.7% | | Restaurant-Level Adjusted EBITDA | $44.5 | $44.6 | -$0.1 | -0.2% | | Adjusted EBITDA | $30.1 | $29.9 | +$0.2 | +0.7% | - The increase in net income was primarily due to a $1.4 million increase in the tax receivable agreement liability adjustment and a $0.9 million decrease in interest expense[9] - Operating income decrease was partially offset by a $0.4 million decrease in pre-opening expenses[6][8] Development Highlights This section outlines Portillo's recent restaurant openings and strategic plans for future expansion, focusing on new markets and efficient prototypes Restaurant Openings and Future Plans No new restaurants opened in Q2 2025, but one opened post-quarter, bringing the total to 95, with 12 planned for H2 2025 in Sunbelt markets - No new restaurants were opened during the quarter ended June 29, 2025[12] - Subsequent to June 29, 2025, one new restaurant opened in Tomball, Texas, bringing the total restaurant count to 95[12] - The Company plans to open 12 new restaurants in the second half of 2025, focusing on the Sunbelt (Texas, Atlanta) and introducing its first in-line, walk-up restaurant format[13] Financial Outlook Portillo's updated its fiscal 2025 financial targets, revising revenue growth downwards while maintaining other key operational and capital expenditure targets Fiscal 2025 Financial Targets Fiscal 2025 revenue growth revised to 5% to 7% (from 10% to 12%), and Adjusted EBITDA growth to flat to low single digits Fiscal 2025 Financial Targets (Updated) | Metric | Prior Target | Updated Target | | :----------------------------- | :------------------ | :------------------ | | Unit growth | 12 new units | 12 new units | | Same-restaurant sales | 1% to 3% | 1% to 3% | | Revenue growth | 10% to 12% | 5% to 7% | | Commodity inflation | 3% to 5% | 3% to 5% | | Labor inflation | 3% to 4% | 3% to 4% | | Restaurant-level adjusted EBITDA margin | 22.5% to 23% | 22.5% to 23% | | General and administrative expenses (Millions) | $80 - $82 | $78 - $80 | | Pre-opening expenses (Millions) | $11 - $12 | $11 - $12 | | Adjusted EBITDA growth | 5% to 8% | Flat to Low single digits | | Capital expenditures (Millions) | $97 - $100 | $97 - $100 | Long-Term Financial Targets Long-term targets include 12% to 15% annual unit growth, low single-digit same-restaurant sales, mid-teens revenue growth, and low teens Adjusted EBITDA growth Long-Term Financial Targets | Metric | Target | | :-------------------- | :------------- | | Annual unit growth | 12% - 15% | | Same-restaurant sales | Low single digits | | Revenue growth | Mid teens | | Adjusted EBITDA growth | Low teens | Key Performance Indicators and Non-GAAP Definitions This section defines Portillo's key operating metrics and non-GAAP financial measures, including same-restaurant sales, AUV, and EBITDA Definitions of Key Operating Metrics Key operating metrics include 'Change in Same-Restaurant Sales' for existing restaurant performance and 'Average Unit Volume' for assessing consumer spending - Change in Same-Restaurant Sales is the percentage change in year-over-year revenue for restaurants open for at least 24 full fiscal periods (Comparable Restaurant Base)[17] - Average Unit Volume (AUV) is the total revenue recognized in the Comparable Restaurant Base divided by the number of restaurants in that base, used to assess consumer spending and overall restaurant performance[19] Definitions of Non-GAAP Financial Measures Non-GAAP measures, Adjusted EBITDA and Restaurant-Level Adjusted EBITDA, are defined to reflect core operating and restaurant-specific profitability - Adjusted EBITDA represents net income (loss) before depreciation and amortization, interest expense, interest income, and income taxes, adjusted for certain non-cash and other items not considered in ongoing core operating performance[20] - Restaurant-Level Adjusted EBITDA is defined as revenue less restaurant operating expenses (food, beverage, packaging, labor, occupancy, other operating expenses), excluding corporate-level expenses and depreciation/amortization[20] Financial Statements This section presents Portillo's consolidated financial statements, including statements of operations, balance sheets, and cash flows for Q2 2025 and year-to-date Consolidated Statements of Operations Detailed breakdown of revenues, costs, and profitability for Q2 and YTD June 2025, including total revenues, operating income, and net income Consolidated Statements of Operations (Selected Data, in thousands) | Metric | Quarter Ended June 29, 2025 (thousands) | Quarter Ended June 30, 2024 (thousands) | Two Quarters Ended June 29, 2025 (thousands) | Two Quarters Ended June 30, 2024 (thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | REVENUES, NET | $188,456 | $181,862 | $364,893 | $347,693 | | Total restaurant operating expenses | $143,975 | $137,293 | $283,756 | $266,753 | | General and administrative expenses | $18,798 | $17,941 | $37,701 | $36,481 | | OPERATING INCOME | $17,531 | $18,115 | $27,912 | $28,212 | | NET INCOME | $10,043 | $8,530 | $14,033 | $13,874 | | NET INCOME ATTRIBUTABLE TO PORTILLO'S INC. | $8,704 | $6,470 | $12,017 | $11,032 | | Basic Income per common share | $0.13 | $0.10 | $0.18 | $0.19 | | Diluted Income per common share | $0.12 | $0.10 | $0.18 | $0.18 | Consolidated Balance Sheets Presents financial position as of June 29, 2025, detailing assets, liabilities, and stockholders' equity, with increased total assets and liabilities Consolidated Balance Sheets (Selected Data, in thousands) | Metric | June 29, 2025 (thousands) | December 29, 2024 (thousands) | | :------------------------------------ | :-------------- | :---------------- | | TOTAL ASSETS | $1,553,730 | $1,500,086 | | Total current assets | $50,293 | $52,651 | | Property and equipment, net | $384,883 | $358,975 | | Goodwill | $394,298 | $394,298 | | Total liabilities | $1,065,933 | $1,009,983 | | Total current liabilities | $171,268 | $135,569 | | Long-term debt, net of current portion | $240,758 | $275,422 | | Total stockholders' equity | $487,797 | $490,103 | Consolidated Statements of Cash Flows Outlines cash generated and used across operating, investing, and financing activities for YTD June 2025, showing decreased operating cash flow Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | Two Quarters Ended June 29, 2025 (thousands) | Two Quarters Ended June 30, 2024 (thousands) | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net income | $14,033 | $13,874 | | NET CASH PROVIDED BY OPERATING ACTIVITIES | $28,693 | $41,628 | | NET CASH USED IN INVESTING ACTIVITIES | $(33,076) | $(33,828) | | NET CASH USED IN FINANCING ACTIVITIES | $(1,872) | $(5,881) | | NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | $(6,255) | $1,919 | | CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD | $16,621 | $12,357 | Selected Operating Data and Non-GAAP Reconciliations This section provides key operational metrics and reconciliations of non-GAAP financial measures, including Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Selected Operating Data Presents key operational metrics and non-GAAP financial measures for Q2 and YTD June 2025, including total restaurants, AUV, and EBITDA figures Selected Operating Data and Non-GAAP Financial Measures | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Total Restaurants | 94 | 86 | 94 | 86 | | AUV (Millions) | N/A | N/A | $8.7 | $9.0 | | Change in same-restaurant sales | 0.7 % | (0.6)% | 1.2% | (0.9)% | | Adjusted EBITDA (thousands) | $30,064 | $29,866 | $51,274 | $51,643 | | Adjusted EBITDA Margin | 16.0 % | 16.4 % | 14.1% | 14.9% | | Restaurant-Level Adjusted EBITDA (thousands) | $44,481 | $44,569 | $81,137 | $80,940 | | Restaurant-Level Adjusted EBITDA Margin | 23.6 % | 24.5 % | 22.2% | 23.3% | Adjusted EBITDA Reconciliation Reconciles Net Income to Adjusted EBITDA for Q2 and YTD June 2025, detailing adjustments for non-cash and non-recurring items Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q2 2025 (thousands) | Q2 2024 (thousands) | YTD Q2 2025 (thousands) | YTD Q2 2024 (thousands) | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Net income | $10,043 | $8,530 | $14,033 | $13,874 | | Depreciation and amortization | $7,137 | $7,106 | $14,177 | $14,050 | | Interest expense | $5,726 | $6,603 | $11,475 | $13,133 | | Income tax expense | $3,679 | $3,496 | $5,039 | $2,359 | | EBITDA | $26,506 | $25,660 | $44,574 | $43,262 | | Deferred rent | $1,541 | $1,296 | $2,917 | $2,466 | | Equity-based compensation | $2,658 | $2,890 | $4,608 | $5,717 | | Tax Receivable Agreement liability adjustment | $(1,838) | $(439) | $(2,485) | $(1,000) | | Adjusted EBITDA | $30,064 | $29,866 | $51,274 | $51,643 | Restaurant-Level Adjusted EBITDA Reconciliation Reconciles Operating Income to Restaurant-Level Adjusted EBITDA for Q2 and YTD June 2025, detailing adjustments for corporate and non-operational expenses Reconciliation of Operating Income to Restaurant-Level Adjusted EBITDA (in thousands) | Metric | Q2 2025 (thousands) | Q2 2024 (thousands) | YTD Q2 2025 (thousands) | YTD Q2 2024 (thousands) | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Operating income | $17,531 | $18,115 | $27,912 | $28,212 | | General and administrative expenses | $18,798 | $17,941 | $37,701 | $36,481 | | Pre-opening expenses | $1,697 | $2,100 | $2,205 | $3,523 | | Depreciation and amortization | $7,137 | $7,106 | $14,177 | $14,050 | | Restaurant-Level Adjusted EBITDA | $44,481 | $44,569 | $81,137 | $80,940 | Additional Information This section provides background on Portillo's, cautionary notes on forward-looking statements, investor contacts, and earnings call details About Portillo's Portillo's is a unique Chicago-style restaurant brand with over 90 locations across 10 states, focusing on experience-driven dining - Portillo's is a one-of-a-kind brand that originated as a hot dog trailer in Chicago and has grown to over 90 restaurants across 10 states[23] - Known for its menu of Italian beef sandwiches, Chicago-style hot dogs, char-grilled burgers, fresh salads, and chocolate cake[23] - Operates a company-owned model of experience-focused destinations that blend dine-in, drive-thru, takeout, and delivery[23] Cautionary Note Regarding Forward-Looking Statements A cautionary note on forward-looking statements, highlighting inherent uncertainties and risks that may cause actual results to differ materially - All statements other than statements of historical fact are forward-looking statements, discussing current expectations and projections relating to financial position, results of operations, plans, objectives, future performance, and business[24] - Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, which may cause actual results to differ materially[25] - Readers should evaluate all forward-looking statements in the context of risks and uncertainties disclosed in the Company's most recent Annual Report on Form 10-K[26] Investor and Media Contacts Provides contact information for investor relations and media inquiries for stakeholders seeking further information - Investor Contact: Chris Brandon, Vice President of Investor Relations, 312.931.5578, cbrandon@portillos.com[27] - Media Contact: Sara Wirth, Director of Communications & PR, press@portillos.com[27] Earnings Conference Call Details for the Q2 earnings conference call, including date, time, dial-in information, and webcast replay access - The conference call to discuss Q2 financial results was held on Tuesday, August 5, 2025, at 10:00 AM ET[21] - Live access was available by dialing 877-407-3982, with a telephone replay available via 844-512-2921 (passcode 13748477)[21][22] - A webcast replay is available at investors.portillos.com[22]