Financial Highlights for the Fourth Quarter 2022 vs. Prior Year:
- Total revenue increased 8.6% or
$12.0 million to$150.9 million ; - Same-restaurant sales increased 6.0%;
- Operating income increased
$29.0 million to$6.4 million ; - Net income increased
$36.5 million to$2.7 million ; - Restaurant-Level Adjusted EBITDA* decreased
$3.0 million to$32.0 million ; and - Adjusted EBITDA* decreased
$5.1 million to$18.1 million .
Financial Highlights for Fiscal Year 2022 vs. Prior Year:
- Total revenue increased 9.7% or
$52.2 million to$587.1 million ; - Same-restaurant sales increased 5.4%;
- Operating income increased
$11.3 million to$41.3 million ; - Net income increased
$30.6 million to$17.2 million ; - Restaurant-Level Adjusted EBITDA* decreased
$9.6 million to$132.5 million ; and - Adjusted EBITDA* decreased
$13.5 million to$85.0 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.
Secondary Offering
In the fourth quarter of 2022, the Company completed a secondary offering of 8,000,000 shares of the Company's Class A common stock at an offering price of
New Credit Agreement
On
Recent Developments and Trends
We continue to see revenue growth due to our new restaurant openings, as well as same-restaurant sales growth. Total revenue grew 9.7% during the year ended
During the year ended
In fiscal 2023, we expect our overall commodity inflation to ease and are currently estimating commodity inflation in the mid single digits. Additionally, we do anticipate additional wage investments. We will continue to strategically offset these expense increases through menu price increases and operational efficiencies. During mid-January of 2023, we increased certain menu prices by approximately 2.0%. Absent global economic disruptions, and based on the current trend of our business operations and our continued focus on strategic initiatives that will grow our restaurant count, improve the operating model, enhance the menu, and improve our career pathing and compensation models, we believe in the strength of our brand and that our focus on our strategic priorities will deliver consistent growth.
Review of Fourth Quarter 2022 Financial Results
Revenues for the fourth quarter ended
Total restaurant operating expenses for the fourth quarter ended
General and administrative expenses for the fourth quarter ended
Operating income for the fourth quarter ended
Net income for the fourth quarter ended
Restaurant-Level Adjusted EBITDA* for the fourth quarter ended
Adjusted EBITDA* for the fourth quarter ended
*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 2022 Financial Results
Revenues for the year ended
Total restaurant operating expenses for the year ended
General and administrative expenses for the year ended
Operating income for the year ended
Net income for the year ended
Restaurant-Level Adjusted EBITDA* for the year ended
Adjusted EBITDA* for the year ended
*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
In 2022, we targeted opening seven new restaurants ("Class of 2022"). During the year ended
Location | Opening Date |
The | |
Long term, we aim 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 markets outside Chicagoland with favorable macro-economic tailwinds where we already have a presence and brand awareness. We will also add select new restaurants in the Chicagoland market. For fiscal 2023, we are targeting opening nine new restaurants ("Class of 2023"). Our development pipeline for the Class of 2023 will focus on growing across the Sunbelt (
Fiscal 2023 and Long-Term Outlook
For fiscal 2023, the Company is anticipating the following:
- Four new restaurants openings in the “Class of 2022”;
- Nine new restaurant openings in the “Class of 2023”;
- Commodity inflation in the mid single digits;
- General and administrative expenses ranging from
$72 million -$77 million ; - Pre-opening expenses between
$7.5 million -$8.0 million ; - Capital expenditures between
$70 million -$75 million .
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% annually;
- 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*.
* A reconciliation of Adjusted EBITDA outlook cannot be provided without unreasonable effort. See "Non-GAAP Financial Measures" below for more information.
The following definitions apply to these terms as used in this release:
Change in 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. For the years ended
A change in same-restaurant sales growth is the result of a change in restaurant transactions, average guest check, or a combination of the two. We gather daily sales data and regularly analyze the guest transaction counts and the mix of menu items sold to strategically evaluate menu pricing and demand. Measuring our same-restaurant sales growth allows management to evaluate the performance of our existing restaurant base. We believe this measure provides a consistent comparison of restaurant sales results and trends across periods within our core, established restaurant base, unaffected by results of restaurant openings and enables investors to better understand and evaluate the Company’s historical and prospective operating performance.
Average Unit Volume – AUV is the total revenue (excluding gift card breakage) recognized in the Comparable Restaurant Base, including C&O, divided by the number of restaurants in the Comparable Restaurant Base, including C&O, by period.
This key performance indicator allows management to assess changes in consumer spending patterns at our restaurants and the overall performance of our restaurant base.
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 financial results for the fiscal year ended
About Portillo’s
In 1963,
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 and opening of new restaurants at the anticipated rate and on the anticipated timeline;
- 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 most recent Annual Report on Form 10-K, filed with the
Investor Contact:
investors@portillos.com
Media Contact:
portillosPR@icrinc.com
PORTILLO’S INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except common share and per common share data)
Quarter Ended | Fiscal Years Ended | |||||||||||||||||||||||||||
REVENUES, NET | $ | 150,878 | 100.0 | % | $ | 138,908 | 100.0 | % | $ | 587,104 | 100.0 | % | $ | 534,952 | 100.0 | % | ||||||||||||
COST AND EXPENSES: | ||||||||||||||||||||||||||||
Restaurant operating expenses: | ||||||||||||||||||||||||||||
Cost of goods sold, excluding depreciation and amortization | 52,823 | 35.0 | % | 45,299 | 32.6 | % | 204,237 | 34.8 | % | 166,764 | 31.2 | % | ||||||||||||||||
Labor | 40,040 | 26.5 | % | 36,355 | 26.2 | % | 154,392 | 26.3 | % | 138,788 | 25.9 | % | ||||||||||||||||
Occupancy | 7,879 | 5.2 | % | 7,170 | 5.2 | % | 30,657 | 5.2 | % | 28,060 | 5.2 | % | ||||||||||||||||
Other operating expenses | 18,087 | 12.0 | % | 15,071 | 10.8 | % | 65,312 | 11.1 | % | 59,258 | 11.1 | % | ||||||||||||||||
Total restaurant operating expenses | 118,829 | 78.8 | % | 103,895 | 74.8 | % | 454,598 | 77.4 | % | 392,870 | 73.4 | % | ||||||||||||||||
General and administrative expenses | 17,707 | 11.7 | % | 51,334 | 37.0 | % | 66,892 | 11.4 | % | 87,089 | 16.3 | % | ||||||||||||||||
Pre-opening expenses | 2,945 | 2.0 | % | 1,258 | 0.9 | % | 4,715 | 0.8 | % | 3,565 | 0.7 | % | ||||||||||||||||
Depreciation and amortization | 5,104 | 3.4 | % | 5,087 | 3.7 | % | 20,907 | 3.6 | % | 23,312 | 4.4 | % | ||||||||||||||||
Net income attributable to equity method investment | (276 | ) | (0.2 | )% | (146 | ) | (0.1 | )% | (1,083 | ) | (0.2 | )% | (797 | ) | (0.1 | )% | ||||||||||||
Other expense (income), net | 129 | 0.1 | % | (4 | ) | — | % | (204 | ) | — | % | (1,099 | ) | (0.2 | )% | |||||||||||||
OPERATING INCOME (LOSS) | 6,440 | 4.3 | % | (22,516 | ) | (16.2 | )% | 41,279 | 7.0 | % | 30,012 | 5.6 | % | |||||||||||||||
Interest expense | 8,358 | 5.5 | % | 7,570 | 5.4 | % | 27,644 | 4.7 | % | 39,694 | 7.4 | % | ||||||||||||||||
Tax Receivable Agreement Liability adjustment | (2,883 | ) | (1.9 | )% | — | — | % | (5,345 | ) | (0.9 | )% | — | — | % | ||||||||||||||
Loss on debt extinguishment | — | — | % | 7,265 | 5.2 | % | — | — | % | 7,265 | 1.4 | % | ||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 965 | 0.6 | % | (37,351 | ) | (26.9 | )% | 18,980 | 3.2 | % | (16,947 | ) | (3.2 | )% | ||||||||||||||
Income tax (benefit) expense | (1,688 | ) | (1.1 | )% | (3,531 | ) | (2.5 | )% | 1,823 | 0.3 | % | (3,531 | ) | (0.7 | )% | |||||||||||||
NET INCOME (LOSS) | 2,653 | 1.8 | % | (33,820 | ) | (24.3 | )% | 17,157 | 2.9 | % | (13,416 | ) | (2.5 | )% | ||||||||||||||
Less: Redeemable preferred units accretion | — | — | % | (4,198 | ) | (3.0 | )% | — | — | % | (21,176 | ) | (4.0 | )% | ||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON HOLDERS | 2,653 | 1.8 | % | (38,018 | ) | (27.4 | )% | 17,157 | 2.9 | % | (34,592 | ) | (6.5 | )% | ||||||||||||||
Net (loss) income attributable to non-controlling interests | (1,301 | ) | (0.9 | )% | (19,408 | ) | (14.0 | )% | 6,306 | 1.1 | % | (19,408 | ) | (3.6 | )% | |||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO PORTILLO'S INC. | $ | 3,954 | 2.6 | % | $ | (18,610 | ) | (13.4) | % | $ | 10,851 | 1.8 | % | $ | (15,184 | ) | (2.8 | )% | ||||||||||
Income (loss) per common share attributable to Portillo’s Inc.: | ||||||||||||||||||||||||||||
Basic | $ | 0.09 | $ | (0.52 | ) | $ | 0.28 | $ | (0.42 | ) | ||||||||||||||||||
Diluted | $ | 0.08 | $ | (0.52 | ) | $ | 0.25 | $ | (0.42 | ) | ||||||||||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||||||||||||||
Basic | 44,911,414 | 35,807,171 | 38,902,259 | 35,807,171 | ||||||||||||||||||||||||
Diluted | 48,438,054 | 35,807,171 | 42,715,977 | 35,807,171 |
PORTILLO’S INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except common share and per common share data)
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents and restricted cash | $ | 44,427 | $ | 39,263 | ||||
Accounts receivable | 8,590 | 7,840 | ||||||
Inventory | 7,387 | 6,078 | ||||||
Prepaid expenses | 4,922 | 5,836 | ||||||
Total current assets | 65,326 | 59,017 | ||||||
Property and equipment, net | 227,036 | 190,834 | ||||||
Operating lease assets | 166,808 | — | ||||||
394,298 | 394,298 | |||||||
Trade names | 223,925 | 223,925 | ||||||
Other intangible assets, net | 31,800 | 35,832 | ||||||
Equity method investment | 16,274 | 16,170 | ||||||
Deferred tax assets | 150,497 | 74,455 | ||||||
Other assets | 4,119 | 5,042 | ||||||
Total other assets | 820,913 | 749,722 | ||||||
TOTAL ASSETS | $ | 1,280,083 | $ | 999,573 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 30,273 | $ | 27,249 | ||||
Current portion of long-term debt | 4,155 | 3,324 | ||||||
Current portion of Tax Receivable Agreement liability | 813 | — | ||||||
Current deferred revenue | 7,292 | 6,893 | ||||||
Short-term lease liability | 4,849 | — | ||||||
Accrued expenses | 29,915 | 29,472 | ||||||
Total current liabilities | 77,297 | 66,938 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Long-term debt, net of current portion | 314,425 | 315,829 | ||||||
Deferred rent | — | 32,174 | ||||||
Tax Receivable Agreement liability | 252,003 | 156,638 | ||||||
Long-term lease liability | 200,166 | — | ||||||
Other long-term liabilities | 3,291 | 4,588 | ||||||
Total long-term liabilities | 769,885 | 509,229 | ||||||
Total liabilities | 847,182 | 576,167 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDER’S EQUITY: | ||||||||
Preferred stock, | — | — | ||||||
Class A common stock, | 484 | 358 | ||||||
Class B common stock, | — | — | ||||||
Additional paid-in-capital | 260,664 | 186,856 | ||||||
Accumulated deficit | (4,812 | ) | (15,950 | ) | ||||
Total stockholders' equity attributable to Portillo's Inc. | 256,336 | 171,264 | ||||||
Non-controlling interest | 176,565 | 252,142 | ||||||
Total stockholders' equity | 432,901 | 423,406 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,280,083 | $ | 999,573 |
PORTILLO’S INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Fiscal Years Ended | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | 17,157 | $ | (13,416 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 20,907 | 23,312 | ||||||
Amortization of debt issuance costs and discount | 2,751 | 3,607 | ||||||
Loss on sales of assets | 398 | 256 | ||||||
Equity-based compensation | 16,137 | 29,389 | ||||||
Deferred rent and tenant allowance | — | 4,120 | ||||||
Deferred income tax provision (benefit) | 1,820 | (3,532 | ) | |||||
Tax Receivable Agreement liability adjustment | (5,345 | ) | — | |||||
Amortization of deferred lease incentives | — | (388 | ) | |||||
Gift card breakage | (798 | ) | (715 | ) | ||||
Loss on debt extinguishment | — | 7,265 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivables | 191 | (777 | ) | |||||
Receivables from related parties | 96 | (152 | ) | |||||
Inventory | (1,309 | ) | (1,003 | ) | ||||
Other current assets | 914 | (2,921 | ) | |||||
Operating lease asset | 6,793 | — | ||||||
Accounts payable | (3,621 | ) | 1,788 | |||||
Accrued expenses and other liabilities | 1,587 | (4,521 | ) | |||||
Operating lease liability | (2,426 | ) | — | |||||
Deferred lease incentives | 1,651 | 690 | ||||||
Other assets and liabilities | (14 | ) | (128 | ) | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 56,889 | 42,874 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (47,061 | ) | (36,183 | ) | ||||
Purchase of investment securities | — | (200 | ) | |||||
Proceeds from the sale of property and equipment | 44 | 123 | ||||||
(47,017 | ) | (36,260 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Payments of long-term debt | (3,324 | ) | (158,324 | ) | ||||
Payment of long-term debts prepayment penalty | — | (3,100 | ) | |||||
Proceeds from equity offering, net of underwriting discounts | 364,956 | 437,078 | ||||||
Repurchase of outstanding equity / Portillo's OpCo units | (364,956 | ) | (57,010 | ) | ||||
Payment of preferred units and preferred units liquidation | — | (221,747 | ) | |||||
Payment of IPO issuance costs | (771 | ) | (6,279 | ) | ||||
Proceeds from stock option exercises | 1,890 | — | ||||||
Employee withholding taxes related to net settled equity awards | (2,632 | ) | — | |||||
Proceeds from Employee Stock Purchase Plan purchases | 129 | — | ||||||
Proceeds from issuance of common units | — | 100 | ||||||
Repayment of stock subscription receivable | — | 499 | ||||||
(4,708 | ) | (8,783 | ) | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | 5,164 | (2,169 | ) | |||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD | 39,263 | 41,432 | ||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD | $ | 44,427 | $ | 39,263 |
PORTILLO’S INC
KEY PERFORMANCE INDICATORS AND NON-GAAP FINANCIAL MEASURES
Quarter Ended | Fiscal Years Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
72 | 69 | 72 | 69 | |||||||||||||
AUV (in millions) (a) | N/A | N/A | $ | 8.5 | $ | 8.2 | ||||||||||
Change in same-restaurant sales (b) | 6.0 | % | 10.3 | % | 5.4 | % | 10.5 | % | ||||||||
Adjusted EBITDA (in thousands) (b) | $ | 18,092 | $ | 23,220 | $ | 84,955 | $ | 98,497 | ||||||||
Adjusted EBITDA Margin (b) | 12.0 | % | 16.7 | % | 14.5 | % | 18.4 | % | ||||||||
Restaurant-Level Adjusted EBITDA (in thousands) (b) | $ | 32,049 | $ | 35,013 | $ | 132,506 | $ | 142,082 | ||||||||
Restaurant-Level Adjusted EBITDA Margin (b) | 21.2 | % | 25.2 | % | 22.6 | % | 26.6 | % | ||||||||
(a) Includes a restaurant that is owned by
(b) Excludes a restaurant that is owned by C&O of which Portillo’s owns 50% of the equity.
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
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.
See below for a reconciliation of net income (loss), the most directly comparable GAAP measure, to Adjusted EBITDA and Adjusted EBITDA Margin (in thousands):
Quarter Ended | Fiscal Years Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income (loss) | $ | 2,653 | $ | (33,820 | ) | $ | 17,157 | $ | (13,416 | ) | ||||||
Depreciation and amortization | 5,104 | 5,087 | 20,907 | 23,312 | ||||||||||||
Interest expense | 8,358 | 7,570 | 27,644 | 39,694 | ||||||||||||
Loss on debt extinguishment | — | 7,265 | — | 7,265 | ||||||||||||
Income tax (benefit) expense | (1,688 | ) | (3,531 | ) | 1,823 | (3,531 | ) | |||||||||
EBITDA | 14,427 | (17,429 | ) | 67,531 | 53,324 | |||||||||||
Deferred rent (1) | 999 | 786 | 3,998 | 3,161 | ||||||||||||
Equity-based compensation | 4,790 | 30,264 | 16,137 | 30,708 | ||||||||||||
Option holder payment and consulting fees (2) | — | 6,578 | — | 7,744 | ||||||||||||
Other income (3) | 159 | 134 | 397 | 292 | ||||||||||||
Transaction-related fees & expenses (4) | 600 | 2,887 | 2,237 | 3,268 | ||||||||||||
Tax Receivable Agreement liability adjustment (5) | (2,883 | ) | — | (5,345 | ) | — | ||||||||||
Adjusted EBITDA | $ | 18,092 | $ | 23,220 | $ | 84,955 | $ | 98,497 | ||||||||
Adjusted EBITDA Margin | 12.0 | % | 16.7 | % | 14.5 | % | 18.4 | % | ||||||||
(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 the exclusion of certain expenses that management believes are not indicative of ongoing operations, consisting primarily of certain professional fees.
(5) Represents remeasurement of the Tax Receivable Agreement liability.
See below for a reconciliation of operating income (loss), the most directly comparable GAAP measure, to Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin (in thousands):
Quarter Ended | Fiscal Years Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Operating income (loss) | $ | 6,440 | $ | (22,516 | ) | $ | 41,279 | $ | 30,012 | |||||||
Plus: | ||||||||||||||||
General and administrative expenses | 17,707 | 51,334 | 66,892 | 87,089 | ||||||||||||
Pre-opening expenses | 2,945 | 1,258 | 4,715 | 3,565 | ||||||||||||
Depreciation and amortization | 5,104 | 5,087 | 20,907 | 23,312 | ||||||||||||
Net income attributable to equity method investment | (276 | ) | (146 | ) | (1,083 | ) | (797 | ) | ||||||||
Other loss (income), net | 129 | (4 | ) | (204 | ) | (1,099 | ) | |||||||||
Restaurant-Level Adjusted EBITDA | $ | 32,049 | $ | 35,013 | $ | 132,506 | $ | 142,082 | ||||||||
Restaurant-Level Adjusted EBITDA Margin | 21.2 | % | 25.2 | % | 22.6 | % | 26.6 | % |
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