What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-03 compared with 2023-11-03 · 145 added, 239 removed, 305 unchanged (56% of the section changed)

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● our ability to compete successfully with other quick-service and fast casual restaurants;

● vulnerability to changes in political and economic conditions and consumer preferences;

● our vulnerability to changes in political and economic conditions and consumer preferences;

● our ability to attract, develop, assimilate and retain employees;

● vulnerability to conditions in the greater Los Angeles area and to natural disasters given the geographic concentration and real estate intensive nature of our business;

● the impacts of the uncertainty regarding a potential resurgence of COVID-19 or another pandemic, epidemic or infectious disease outbreak on our company, our employees, our customers, our partners, our industry and the

economy as a whole, as well as our franchisees’ ability to operate their individual restaurants without disruption;

● our vulnerability to conditions in the greater Los Angeles area and to natural disasters given the geographic concentration and real estate intensive nature of our business;

● the possibility that we may continue to incur significant impairment of certain of our assets, in particular in our new markets;

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● adverse changes in the economic environment, including inflation and increased labor and supply costs, which may affect our franchisees, with adverse consequences to us;

● the impacts of the uncertainty regarding pandemics, epidemics or infectious disease outbreaks (such as the recent COVID-19 pandemic) on our company, our employees, our customers, our partners, our industry and the economy as a whole, as well as our franchisees’ ability to operate their individual restaurants without disruption;

● our limited control over our franchisees and potential deterioration of our relations with existing or potential franchisees;

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We strive to offer food that integrates the culinary traditions of Mexico with the healthier lifestyle.” Our distinctive menu features our signature product--citrus-marinated fire-grilled chicken--and a variety of Mexican and LA-inspired entrees that we create from our chicken.

We serve individual and family-sized chicken meals, a variety of Mexican and LA-inspired entrees, and sides, and, throughout the year, on a limited-time basis, additional proteins like beef.

We serve individual and family-sized chicken meals, a variety of Mexican and LA-inspired entrees, and sides, and, throughout the year, on a limited-time basis, additional proteins like beef and shrimp.

Our entrees include favorites such as our Chicken Avocado Burrito, Pollo Fit entrees, chicken tostada salads, and Pollo Bowls.

Our famous Creamy Cilantro dressings and salsas are prepared fresh daily, allowing our customers to create their favorite flavor profiles to enhance their culinary experience.

Our famous Creamy Cilantro dressings and salsas are

prepared fresh daily, allowing our customers to create their favorite flavor profiles to enhance their culinary experience.

We believe that our distinctive menu with better for you and more affordable alternatives appeals to consumers across a wide variety of socio-economic backgrounds and drives our balanced composition of sales throughout the day (our “day-part mix”), including at lunch and dinner.

Market Trends and Uncertainties

On September 28, 2023, Governor Newsom signed AB 1228 into law, which will repeal and replace the Fast Food Accountability and Standards Recovery Act (FAST Act) on January 1, 2024 if a referendum seeking repeal of the FAST Act is withdrawn prior to that date.

The FAST Act was previously signed into law in September 2022 and would have, among other things, established a council to set minimum wage standards for industry workers in California.

In connection with the adoption of AB 1228, the proponents of the referendum seeking repeal of the FAST Act indicated their agreement to withdraw the referendum.

If AB 1228 becomes effective January 1, 2024, the minimum wage at fast food restaurants that are part of brands which have more than 60 establishments nationwide will rise to $20 an hour on April 1, 2024, and a Fast Food Council created by AB 1228 will have limited power to approve annual wage increases until 2029.

On September 28, 2023, Governor Newsom signed AB 1228 into law, which repealed and replaced the Fast Food Accountability and Standards Recovery Act (“FAST Act”) on January 1, 2024.

Pursuant to AB 1228, the minimum wage at fast food restaurants that are part of brands which have more than 60 establishments nationwide was increased to $20 an hour on April 1, 2024, and a Fast Food Council created by AB 1228 will have limited power to approve annual wage increases until 2029.

Under the law, the Fast Food Council will also have the power to develop and propose minimum standards for fast food workers, including standards for working hours, working conditions, and health and safety.

As a result of AB 1228, we expect our labor and regulatory compliance costs will increase beginning in fiscal 2024 and that our results of operations and profitability will be adversely affected if we are not able to implement other measures to counter these increased costs.

We have experienced inflationary pressures affecting our operations in certain areas such as food cost, labor costs, construction costs and utility costs.

We have also experienced temporary shortages in food, equipment and other goods, as well as an increase in freights costs, due in part to supply chain impacts of overall economic conditions in the markets in which we operate.

As a result of AB 1228, we expect our labor and regulatory compliance costs will increase during the remainder of fiscal 2024 and that our results of operations and profitability will be adversely affected if we are not able to implement other measures to counter these increased costs.

Additionally, we have experienced inflationary pressures affecting our operations in certain areas such as food cost, labor costs, construction costs and other restaurant operating costs.

We have been able to substantially offset these inflationary and other cost pressures through various actions, such as increasing menu prices, managing menu mix, and productivity improvements.

However, we expect these inflationary and other cost pressures to continue throughout the remainder of fiscal year 2023 and we may not be able to offset cost increases in the future.

However, we expect these inflationary and other cost pressures to continue into the remainder of fiscal 2024 and we may not be able to offset cost increases in the future.

Seasonal factors and the timing of holidays cause our revenue to fluctuate from quarter to quarter.

Our revenue per restaurant is typically lower in the first and fourth quarters due to reduced January and December traffic and higher in the second and third quarters.

As a result of seasonality, our quarterly and annual results of operations and our key performance indicators described below, such as company-operated restaurant revenue and comparable restaurant sales, may fluctuate.

Growth Strategies and Outlook

As of September 27, 2023, we had 492 locations in seven states.

In fiscal 2022, we opened four new company-operated restaurants, two in Nevada and two in California, and our franchisees opened nine new restaurants, seven in California, one in Colorado and one in Utah.

For the thirty-nine weeks ended September 27, 2023, we opened one new company-operated in Nevada and our franchisees opened one new restaurant in California.

We plan to continue to expand our business, drive restaurant sales growth, and enhance our competitive positioning, by executing the following strategies:

● embed our unique El Pollo Loco culture ;

● build awareness and own our lane;

● deliver exceptional service – profitably;

● accelerate development.

As of March 27, 2024, we had 495 locations in seven states.

In fiscal 2023, we opened two new company-operated restaurants in Nevada, and our franchisees opened three new restaurants, one in California, one in Colorado and one in Utah.

Additionally, during fiscal 2023, we completed the sale of 18 restaurants within California, Utah and Texas to existing franchisees.

We plan to continue to expand our business, drive restaurant sales growth, and enhance our competitive positioning, by executing the following five key strategies:

● Brand That Wins;

● Hospitality Mindset;

● Digital First;

● Winning Unit Economics;

● New Unit Growth.

To increase comparable restaurant sales, we plan to increase customer frequency, attract new customers, and improve per-person spend.

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Comparable Restaurant Sales

For the thirteen weeks ended September 27, 2023, system-wide comparable restaurant sales increased by 0.8% from the comparable period in the prior year.

For the thirty-nine weeks ended September 27, 2023, system-wide comparable restaurant sales decreased by 0.7% from the comparable period in the prior year.

For company-operated restaurants, comparable restaurant sales for the thirteen and thirty-nine weeks ended September 27, 2023 increased by 0.3% and 0.5%, respectively.

For company-operated restaurants, the quarter’s change in comparable restaurant sales consisted of a 1.3% increase in average check size, partially offset by a 0.9% decrease in transactions, and the year-to-date change in comparable restaurant sales consisted of a 3.2% increase in average check size, partially offset by a 2.6% decrease in transactions .

For franchised restaurants, comparable restaurant sales increased 1.1% and decreased 1.4% for the thirteen and thirty-nine weeks ended September 27, 2023, respectively.

For the thirteen weeks ended March 27, 2024, system-wide comparable restaurant sales increased by 5.1% from the comparable period in the prior year.

For company-operated restaurants, comparable restaurant sales for the thirteen weeks ended March 27, 2024 increased by 3.8%.

For company-operated restaurants, the quarter’s change in comparable restaurant sales consisted of a 2.5% increase in average check size and a 1.2% increase in transactions.

For franchised restaurants, comparable restaurant sales increased 5.9% for the thirteen weeks ended March 27, 2024, respectively.

Refer to Comparable Restaurant Sales definition in “Key Performance Indicators” section below.

Restaurant Development

Our restaurant counts at the beginning and end of each of the last three fiscal years and the thirty-nine weeks ended September 27, 2023, were as follows:

Thirty-Nine Weeks Ended

Our restaurant counts at the beginning and end of each of the last three fiscal years and the thirteen weeks ended March 27, 2024, were as follows:

Thirteen Weeks Ended

Fiscal Year Ended

September 27, 2023

March 27, 2024

Company-operated restaurant activity:

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Restaurant Remodeling

During the thirty-nine weeks ended September 27, 2023, we completed 12 company-operated restaurant remodels and 21 franchise remodels.

In fiscal 2023, we plan to continue our standard practices for remodels, which includes completing a total of 14-15 company and 28-32 franchise remodels.

During the thirteen weeks ended March 27, 2024, we completed three company-operated restaurant remodels and 11 franchise remodels.

The cost of our restaurant remodels varies depending on the scope of the work required, but on average the investment is $0.3 million to $0.4 million per restaurant.

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As points are available for redemption past the quarter earned, a portion of the revenue associated with the earned points will be deferred until redemption or expiration.

As of September 27, 2023 and December 28, 2022, the revenue allocated to loyalty points that had not been redeemed was $0.6 million and $0.5 million , respectively, which is reflected in our accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.

We had over 3.6 million loyalty program members as of September 27, 2023.

As of both March 27, 2024 and December 27, 2023, the revenue allocated to

loyalty points that had not been redeemed was $0.7 million, which is reflected in our accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities.

We had over 3.8 million loyalty program members as of March 27, 2024.

Critical Accounting Policies and Use of Estimates

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generally accepted accounting principles (“GAAP”) requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenue, and expenses, and related disclosures of contingent assets and liabilities.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances in

making judgments about the carrying value of assets and liabilities that are not readily available from other sources.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances in making judgments about the carrying value of assets and liabilities that are not readily available from other sources.

We evaluate our estimates on an on-going basis.

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Comparison of Results of Operations

Our operating results for the thirteen weeks ended September 27, 2023 and September 28, 2022 and expressed as percentages of total revenue, with the exception of cost of operations and company restaurant expenses, which are expressed as percentages of company-operated restaurant revenue, are compared in the tables below.

Our operating results for the thirteen weeks ended March 27, 2024 and March 29, 2023 and expressed as percentages of total revenue, with the exception of cost of operations and company restaurant expenses, which are expressed as percentages of company-operated restaurant revenue, are compared in the tables below.

Thirteen Weeks Ended

September 27, 2023

September 28, 2022

Increase / (Decrease)

Statements of Income Data

Company-operated restaurant revenue

Franchise revenue

Franchise advertising fee revenue

Total revenue

Cost of operations

Food and paper costs (1)

Labor and related expenses (1)

Occupancy and other operating expenses (1)

Company restaurant expenses (1)

General and administrative expenses

Franchise expenses

Depreciation and amortization

Loss on disposal of assets

Gain on disposition of restaurants

Impairment and closed-store reserves

Total expenses

Income from operations

Interest expense, net of interest income

Income tax receivable agreement expense (income)

Income before provision for income taxes

Provision for income taxes

(1) Percentages for line items relating to cost of operations and company restaurant expenses are calculated with company-operated restaurant revenue as the denominator.

All other percentages use total revenue.

Our operating results for the thirty-nine weeks ended September 27, 2023 and September 28, 2022 and expressed as percentages of total revenue, with the exception of cost of operations and company restaurant expenses, which are expressed as a percentage of company-operated restaurant revenue, are compared below.

Thirty-Nine Weeks Ended

September 27, 2023

September 28, 2022

March 27, 2024

March 29, 2023

Increase / (Decrease)

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Depreciation and amortization

(Gain) loss on disposal of assets

Loss on disposal of assets

Gain on recovery of insurance proceeds, property, equipment and expenses

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Company-Operated Restaurant Revenue

For the quarter ended September 27, 2023, company-operated restaurant revenue decreased $0.5 million, or 0.5%, from the comparable period in the prior year.

The decrease in company-operated restaurant revenue was mainly due to a $1.6 million decrease in revenue primarily from the four company-operated restaurants sold by the Company to existing franchisees during the prior quarters and a $0.2 million decrease in revenue recognized for our loyalty points program .

This company-operated restaurant revenue decrease was partially offset by $1.0 million of additional sales from restaurants opened during or after the third quarter of 2022 as well as an increase in company-operated comparable restaurant revenue of $0.3 million, or 0.3%.

The company-operated comparable restaurant sales increase consisted of a 1.3% increase in average check size due to increases in menu prices, partially offset by an approximately 0.9% decrease in transactions.

Year-to-date, company-operated restaurant revenue increased $0.9 million, or 0.3%, from the comparable period in the prior year.

The increase in company-operated restaurant revenue was primarily due to $3.8 million of additional sales from restaurants opened during or after the first quarter of 2022.

In addition, the increase in company-operated restaurant sales was due to an increase in company-operated comparable restaurant revenue of $1.4 million, or 0.5%.

The company-operated comparable restaurant sales increase consisted of an approximately 3.2% increase in average check size due to increases in menu prices, partially offset by a 2.6% decrease in transactions.

This company-operated

restaurant revenue increase was offset by a $4.2 million decrease in revenue primarily from the four company-operated restaurants sold by the Company to existing franchisees during the prior quarters.

For the quarter ended March 27, 2024, company-operated restaurant revenue decreased $0.7 million, or 0.7%, from the comparable period in the prior year.

The decrease in company-operated restaurant revenue was mainly due to a $5.0 million decrease in revenue primarily from the 18 company-operated restaurants sold by the Company to existing franchisees during the prior quarters and a $0.1 million decrease in revenue recognized for our loyalty points program .

This company-operated restaurant revenue decrease was partially offset by $0.8 million of additional sales from restaurants opened during or after the first quarter of 2023 as well as an increase in company-operated comparable restaurant revenue of $3.5 million, or 3.8%.

The company-operated comparable restaurant sales increase consisted of a 2.5% increase in average check size due to increases in menu prices and an approximately 1.2% increase in transactions.

Franchise Revenue

For the quarter ended September 27, 2023, franchise revenue increased $0.7 million, or 7.5%, from the comparable period in the prior year.

This increase was primarily due to a franchise comparable restaurant sales increase of 1.1%, seven franchise-operated restaurant openings and four company-operated restaurants sold by the Company to existing franchisees in each case, during the prior quarters.

Year-to-date, franchise revenue increased $1.2 million, or 4.1%, from the comparable period in the prior year.

This increase was primarily due to ten franchise-operated restaurant openings and four company-operated restaurants sold by the Company to existing franchisees during the prior quarters.

This franchise revenue increase was partially offset by a franchise comparable restaurant sales decrease of 1.4% and the closure of one franchise location during or subsequent to the first quarter of 2022.

For the quarter ended March 27, 2024, franchise revenue increased $1.7 million, or 17.3%, from the comparable period in the prior year.

This increase was primarily due to a franchise comparable restaurant sales increase of 5.9%, three franchise-operated restaurant openings and 18 company-operated restaurants sold by the Company to existing franchisees in each case, during the prior quarters.

Franchise Advertising Fee Revenue

For the quarter ended September 27, 2023, franchise advertising fee revenue increased $0.3 million, or 3.9%, from the comparable period in the prior year.

Year-to-date, franchise advertising fee revenue increased $0.3 million, or 1.4%, from the comparable period in the prior year.

As advertising fee revenue is a percentage of franchisees’ revenue, both the quarter and year-to-date period fluctuations were due to the increases and decreases noted in franchise revenue above.

For the quarter ended March 27, 2024, franchise advertising fee revenue increased $0.7 million, or 9.6%, from the comparable period in the prior year.

As advertising fee revenue is a percentage of franchisees’ revenue, the quarter-to-date period fluctuations were due to the increases and decreases noted in franchise revenue above.

Food and Paper Costs

For the quarter ended September 27, 2023, food and paper costs decreased $2.6 million, or 8.7%.

Year-to-date, food and paper costs decreased $6.7 million, or 7.4%, from the comparable period in the prior year.

The decrease in food and paper costs for the quarter and year-to-date resulted primarily due to lower transactions, partially offset by commodity inflation.

For the quarter ended March 27, 2024, food and paper costs decreased $1.3 million, or 4.8%.

The decrease in food and paper costs for the quarter resulted primarily due to a $1.5 million reduction related to the sale of 18 company-operated locations to franchisees, partially offset by commodity inflation.

For the quarter, food and paper costs as a percentage of company-operated restaurant revenue were 26.4%, down from 27.5% in the comparable period of the prior year.

Year-to-date, food and paper costs as a percentage of company-operated restaurant revenue were 27.2%, down from 29.5% in the comparable period of the prior year.

The percentage decrease for both the quarter and year-to-date period was primarily due to an increase in pricing, partially offset by commodity inflation.

The percentage decrease for the quarter was primarily due to an increase in pricing, partially offset by commodity inflation.

Labor and Related Expenses

For the quarter ended September 27, 2023, labor and related expenses decreased $0.2 million, or 0.6%, from the comparable period in the prior year.

The decrease in labor and related expenses for the quarter was primarily due to a $0.8 million decrease related to the 0.9% decrease in quarter-over-quarter sales transactions and a $0.6 million decrease in overtime pay due to improvements in operational execution.

The decrease in labor and related expenses for the quarter was partially offset by a $0.7 million increase primarily related to higher wage rates from minimum wage increases in California during fiscal 2023 and 2022 and other labor wage increases as a result of competitive pressure and a $0.6 million increase in worker’s compensation expenses.

Year-to-date, labor and related expenses decreased $2.1 million, or 2.1%, from the comparable period in the prior year.

The decrease for the year-to-date period was due to a $2.9 million decrease related to the 2.6% decrease in year-over-year sales transactions, a $2.7 million decrease in overtime pay due to improvements in operational execution and a $1.5 million decrease related to COVID-19 sick pay.

The decrease in labor and related expenses for the year was partially offset by a $3.1 million increase primarily related to higher wage rates from minimum wage increases in California during fiscal 2023 and 2022 and other labor wage increases as a result of competitive pressure and a $1.8 million increase in labor related costs related to improved management staffing.

For the quarter ended September 27, 2023, labor and related expenses as a percentage of company-operated restaurant revenue were 32.2%, down from 32.3% in the comparable period in the prior year.

The percentage change for the quarter was impacted by the cost increases highlighted above, partially offset by an increase in pricing .

Year-to-date labor and related expenses as a percentage of company-operated restaurant revenue were 31.8%, down from 32.6% in the

comparable period in the prior year primarily d ue to the increase in pricing, and overtime and sick pay decreases, partially offset by the cost increases highlighted above .

For the quarter ended March 27, 2024, labor and related expenses decreased $1.0 million, or 3.0%, from the comparable period in the prior year.

The decrease in labor and related expenses for the quarter was primarily due to a $2.0 reduction in labor related costs resulting from the 18 company-operated restaurants sold by the Company to existing franchisees during the prior quarters.

The decrease in labor and related expenses for the quarter was partially offset by a $1.1 million increase primarily related to higher wage rates during fiscal 2024 and 2023 and other labor wage increases as a result of competitive pressure and legislated increases in the California minimum wage.

For the quarter ended March 27, 2024, labor and related expenses as a percentage of company-operated restaurant revenue were 31.5%, down from 32.2% in the comparable period in the prior year.

The percentage change for the quarter was driven by higher menu prices, partially offset by the cost increases highlighted above.

Occupancy and Other Operating Expenses

For the quarter ended September 27, 2023, occupancy and other operating expenses increased $0.4 million, or 1.4%, from the comparable period in the prior year.

The increase was primarily due to a $0.3 million increase in occupancy costs as well as $0.1 million increase in higher utility costs.

Year-to-date, occupancy and other operating expenses increased $1.2 million, or 1.5%, from the comparable period in the prior year.

The increase was primarily due to a $1.0 million increase in occupancy costs, a $0.5 million increase in other operating services and supplies and a $0.2 million increase in repairs and maintenance.

The year-to-date increase in occupancy and other operating expenses was partially offset by a $0.5 million decrease in utilities.

For the quarter ended September 27, 2023, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 26.6%, up from 26.1% in the comparable period .

Year-to-date, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 25.5%, up from 25.2% in the comparable period of the prior year.

Both the quarter and year-to-date period increases resulted from the cost increases highlighted above.

Gain on Recovery of Insurance Proceeds

In September 2022, one of our restaurants incurred damage resulting from a fire.

In 2022, we disposed of less than $0.1 million of assets related to the fire.

The restaurant was reopened for business on October 27, 2022.

In fiscal 2023, we incurred costs directly related to the fire of less than $0.1 million.

We recognized gains of $0.2 million related to the reimbursement of property and equipment and expenses incurred and $0.2 million related to the reimbursement of lost profits.

The gain on recovery of insurance proceeds and reimbursement of lost profits, net of the related costs is included in the accompanying condensed consolidated statements of income, for the thirty-nine weeks ended September 27, 2023, as a reduction of company restaurant expenses.

We received from the insurance company cash of $0.4 million, net of the insurance deductible, during fiscal 2023.

For the quarter ended March 27, 2024, occupancy and other operating expenses decreased $1.0 million, or 4.1%, from the comparable period in the prior year.

The decrease was primarily due to a $0.5 million decrease in occupancy costs, a $0.2 million decrease in utility costs and a $0.2 million decrease in repairs and maintenance costs primarily driven by the sale of 18 company-operated locations to existing franchisees, partially offset by the two new company restaurant openings and increases in other operating expenses.

For the quarter ended March 27, 2024, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 24.6%, down from 25.4% in the comparable period in the prior year .

The decrease resulted from the cost decreases highlighted above.

General and Administrative Expenses

For the quarter ended September 27, 2023, general and administrative expenses decreased $0.7 million, or 7.2%, from the comparable period in the prior year.

The decrease for the quarter was primarily due to a $0.9 million decrease in labor related costs, primarily related to a decrease in estimated management bonus expense and a $0.1 million decrease in stock compensation expense partially offset by a $0.3 million increase in other legal related costs pertaining to an adoption of a Shareholder Rights Agreement (see Note 12, “Shareholder Rights Agreement” for further details on the Shareholder Rights Agreement ).

Year-to-date, general and administrative expenses increased $2.0 million, or 6.7%, from the comparable period in the prior year.

The increase for the year-to-date period was due primarily to a $0.5 million increase in labor related costs, primarily related to an increase in estimated management bonus expense, a $1.1 million increase in restructuring costs related to certain positions in the organization, a $0.3 million increase in special costs related to the share distribution on March 28, 2023 and a $0.3 million increase in other legal related costs pertaining to the adoption of the Shareholder Rights Agreement (see Note 9, “Related Party Transactions” and Note 12, “Shareholder Rights Agreement” for further details on the share distribution and the Shareholder Rights Agreement, respectively ).

The increase in general and administrative expenses for the year was partially offset by a $0.2 million decrease in professional fees.

For the quarter ended September 27, 2023, general and administrative expenses as a percentage of total revenue were 7.6%, down from 8.2% in the comparable period of the prior year.

The percentage decrease for the quarterly period is primarily due to the cost decreases noted above.

Year-to-date, general and administrative expenses as a percentage of total revenue were 8.8%, up from 8.3% in the comparable period of the prior year.

The percentage increase for the year-to-date period is primarily due to the cost increases discussed above.

For the quarter ended March 27, 2024, general and administrative expenses increased $0.7 million, or 6.5%, from the comparable period in the prior year.

The increase for the quarter was primarily due to a $0.5 million increase in restructuring costs related to certain positions in the organization and a $0.6 million increase in executive transition costs.

The increase in general and administrative expenses for the quarter was offset by a $0.3 million decrease in legal fees.

For the quarter ended March 27, 2024, general and administrative expenses as a percentage of total revenue were 10.3%, up from 9.8% in the comparable period of the prior year.

The percentage increase for the quarterly period is primarily due to the cost increases noted above.

Gain on Disposition of Restaurants

During the thirteen and thirty-nine weeks ended September 27, 2023, we completed the sale of 17 and 18 restaurants, respectively, within California, Utah and Texas to existing franchisees.

We determined that these restaurant dispositions represent multiple element arrangements, and as a result, the cash consideration received was allocated to the separate elements based on their relative standalone selling price.

Cash proceeds included upfront consideration for the sale of the restaurants and franchise fees.

The cash consideration per restaurant related to franchise fees is consistent with the amounts stated in the related franchise agreements, which are charged for separate standalone arrangements.

During the thirteen weeks ended March 29, 2023, we completed the sale of one restaurant within California to an existing franchisee.

We determined that this restaurant disposition represents multiple element arrangements, and as a result, the cash consideration received was allocated to the separate elements based on its relative standalone selling price.

Cash proceeds included upfront consideration for the sale of the restaurant and franchise fees.

consideration per restaurant related to franchise fees is consistent with the amounts stated in the related franchise agreements, which are charged for separate standalone arrangements.

We initially defer and subsequently recognize the franchise fees over the term of the franchise agreement.

During the thirteen and thirty-nine weeks ended September 27, 2023, these sales resulted in cash proceeds of $7.5 million and $7.7 million, respectively, and a net gain on sale of restaurant of $4.9 million and $5.0 million, respectively .

Since the date of their sale, these restaurants are now included in the total number of franchised El Pollo Loco restaurants.

This sale resulted in cash proceeds of $0.2 million and a net gain on sale of restaurant of $0.1 million for the thirteen weeks ended March 29, 2023.

Since the date of their sale, this restaurant is now included in the total number of franchised El Pollo Loco restaurants.

Impairment and Closed-Store Reserves

During both the thirteen and thirty-nine weeks ended September 27, 2023, we recorded non-cash impairment charges of $1.0 million, primarily related to the carrying value of the ROU assets of one restaurant in California and the carrying value of the long-lived assets of one restaurant in Nevada .

During the thirteen and thirty-nine weeks ended September 28, 2022, we recorded non-cash impairment charges of $0.1 million and $0.4 million, respectively, primarily related to the long-lived assets of one restaurant in California .

During the thirteen weeks ended March 27, 2024, we did not record any non-cash impairment charges.

During the thirteen weeks ended March 29, 2023, we recorded non-cash impairment charges of less than $0.1 million, primarily related to the carrying value of the ROU assets of one restaurant in California .

Given the inherent uncertainty in projecting results for newer restaurants in newer markets we are monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis.

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Additionally, any property tax and CAM payments relating to closed restaurants are included within closed-store expense.

During both the thirteen and thirty-nine weeks ended September 27, 2023, we recognized $0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for our closed locations.

During the thirteen and thirty-nine weeks ended September 28, 2022, we recognized $0.1 million and $0.2 million, respectively, of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for our closed locations.

During both the thirteen weeks ended March 27, 2024 and March 29, 2023, we recognized less than $0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM payments for our closed locations.

Interest Expense, Net

For the quarter ended September 27, 2023, interest expense, net, increased $1.3 million from t he comparable period in the prior year.

For the year-to-date period, interest expense, net, increased $2.4 million from the comparable period in the prior year.

Both the quarter and year-to-date period increase in interest expense was primarily related to the higher outstanding balances on our 2022 Revolver (as defined below) as well as the higher interest rates in the fiscal 2023 periods versus t he comparable periods in the prior year .

This increase was partially offset by the unwinding of our interest rate swap and the corresponding payout that was recognized as part of interest income during the thirty-nine weeks ended September 27, 2023.

For the quarter ended March 27, 2024, interest expense, net, increased $0.6 million from t he comparable period in the prior year.

The increase in interest expense was primarily related to the higher outstanding balances on our 2022 Revolver (as defined below) as well as the higher interest rates in the fiscal 2024 periods versus t he comparable periods in the prior year .

Income Tax Receivable Agreement

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The TRA calls for us to pay to our pre-IPO stockholders 85% of the savings in cash that we realize in our taxes as a result of utilizing our net operating losses (“NOLs”) and other tax attributes attributable to preceding periods.

For both the thirteen and thirty-nine weeks ended September 27, 2023, we recorded income tax receivable agreement expense of $0.1 million and for the thirteen and thirty-nine weeks ended September 28, 2022 we recorded income tax receivable agreement income of less than $0.1 million and $0.3 million, respectively .

For the thirteen weeks ended March 27, 2024, we did not record any income tax receivable agreement income or expense, and for the thirteen weeks ended March 29, 2023 we recorded income tax receivable agreement income of $0.1 million .

Provision for Income Taxes

For the quarter ended September 27, 2023, we recorded an income tax provision of $3.0 million, reflecting an estimated effective tax rate of 24.4%.

For the quarter ended September 28, 2022, we recorded an income tax provision of $1.8 million, reflecting an estimated effective tax rate of approximately 26.2%.

For the year-to-date period ended

September 27, 2023, we recorded an income tax provision of $7.7 million, reflecting an estimated effective tax rate of approximately 26.5%.

For the year-to-date period ended September 28, 2022, we recorded an income tax provision of $5.7 million, reflecting an estimated effective tax rate of approximately 28.7%.

The difference between the 21.0% statutory rate and our effective tax rate of 26.5% for the year-to-date period ended September 27, 2023 is primarily a result of state taxes , a non-deductible executive compensation, partially offset by a Work Opportunity Tax Credit benefit .

For the quarter ended March 27, 2024, we recorded an income tax provision of $2.2 million, reflecting an estimated effective tax rate of 27.1%.

For the quarter ended March 29, 2023, we recorded an income tax provision of $2.0 million, reflecting an estimated effective tax rate of approximately 28.4%.

The difference between the 21.0% statutory rate and our effective tax rate of 27.1% for the quarter ended March 27, 2024 is primarily a result of state taxes , a non-deductible executive compensation, partially offset by a Work Opportunity Tax Credit benefit .

Key Performance Indicators

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System-wide sales are the sum of company-operated restaurant revenue and sales from franchised restaurants.

Our total revenue in our condensed consolidated statements of income is limited to company-operated restaurant revenue and franchise revenue from our franchisees.

Our total revenue in our condensed

consolidated statements of income is limited to company-operated restaurant revenue and franchise revenue from our franchisees.

Accordingly, system-wide sales should not be considered in isolation or as a substitute for our results as reported under GAAP.

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The following table reconciles system-wide sales to company-operated restaurant revenue and total revenue:

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

Thirteen Weeks

(Dollar amounts in thousands)

September 27, 2023

September 28, 2022

September 27, 2023

September 28, 2022

March 27, 2024

March 29, 2023

Company-operated restaurant revenue

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Company-operated restaurant revenue in any period is directly influenced by the number of operating weeks in such period, the number of open restaurants, and comparable restaurant sales.

Seasonal factors and the timing of holidays cause our revenue to fluctuate from quarter to quarter.

Our revenue per restaurant is typically lower in the first and fourth quarters due to reduced January and December traffic and higher in the second and third quarters.

As a result of seasonality, our quarterly and annual results of operations and key performance indicators such as company-operated restaurant revenue and comparable restaurant sales may fluctuate.

Comparable Restaurant Sales

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Comparable restaurant sales exclude restaurants closed during the applicable period.

At September 27, 2023 and September 28, 2022, there were 470 and 466 comparable restaurants, 181 and 184 company-operated restaurants and 289 and 282 franchised restaurants, respectively.

At March 27, 2024 and March 29, 2023, there were 478 and 468 comparable restaurants, 168 and 181 company-operated restaurants and 310 and 287 franchised restaurants, respectively.

Comparable restaurant sales indicate the performance of existing restaurants, since new restaurants are excluded.

Because other companies may calculate this measure differently than we do, comparable restaurant sales as presented herein may not be comparable to similarly

titled measures reported by other companies.

Management believes that comparable restaurant sales is a valuable metric for investors to evaluate the performance of our store base, excluding the impact of new stores and closed stores.

Comparable restaurant sales growth can be generated by an increase in the number of meals sold and/or by increases in the average check amount, resulting from a shift in menu mix and/or higher prices resulting from new products or price increases.

Because other companies may calculate this measure differently than we do, comparable restaurant sales as presented herein may not be comparable to similarly titled measures reported by other companies.

Management believes that comparable restaurant sales is a valuable metric for investors to evaluate the performance of our store base, excluding the impact of new stores and closed stores.

Restaurant Contribution and Restaurant Contribution Margin

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Restaurant contribution and restaurant contribution margin have limitations as analytical tools, and you should not consider them in isolation, or superior to, or as substitutes for the analysis of our results as reported under GAAP.

Management uses restaurant contribution and restaurant contribution margin as a supplemental measure of restaurant performance.

Management uses restaurant contribution and restaurant contribution margin as key metrics to evaluate the profitability of incremental sales

at our restaurants, to evaluate our restaurant performance across periods, and to evaluate our restaurant financial performance compared with our competitors.

Management believes that restaurant contribution and restaurant contribution margin are important tools for investors, because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance.

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Thirteen Weeks Ended

Thirty-Nine Weeks Ended

(Dollar amounts in thousands)

September 27, 2023

September 28, 2022

September 27, 2023

September 28, 2022

March 27, 2024

March 29, 2023

Restaurant contribution:

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Depreciation and amortization

Loss (gain) on disposal of assets

Loss on disposal of assets

Gain on recovery of insurance proceeds, property, equipment and expenses

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EBITDA and Adjusted EBITDA

EBITDA represents net income before interest expense, provision for income taxes, depreciation, and amortization.

Adjusted EBITDA represents net income before interest expense, provision for income taxes, depreciation, amortization, and other items that we do not consider representative of normal operating expenses or our on-going operating performance, as identified in the reconciliation table below.

EBITDA represents net income (loss) before interest expense, provision (benefit) for income taxes, depreciation, and amortization.

Adjusted EBITDA represents net income (loss) before interest expense, provision (benefit) for income taxes, depreciation, amortization, and other items that we do not consider representative of on-going operating performance, as identified in the reconciliation table below.

EBITDA and Adjusted EBITDA as presented in this report are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP.

EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income, or any other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating

activities as a measure of our liquidity.

EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income, or

any other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity.

In addition, in evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses or charges such as those added back to calculate EBITDA and Adjusted EBITDA.

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Thirteen Weeks Ended

Thirty-Nine Weeks Ended

(Amounts in thousands)

September 27, 2023

September 28, 2022

September 27, 2023

September 28, 2022

March 27, 2024

March 29, 2023

Non-GAAP adjustments:

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Stock-based compensation expense (a)

Loss (gain) on disposal of assets (b)

Loss on disposal of assets (b)

Impairment and closed-store reserves (c)

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Income tax receivable agreement expense (income) (e)

Securities class action legal expense (f)

Special dividend (g)

Legal settlements (h)

Special legal expenses (i)

Shareholder advisory fees (j)

Gain on recovery of insurance proceeds (k)

Severance (l)

Pre-opening costs (m)

Special dividend (f)

Special legal expenses (g)

Gain on recovery of insurance proceeds (h)

Executive transition costs (i)

Restructuring charges (j)

Pre-opening costs (k)

Adjusted EBITDA

(a) Includes non-cash, stock-based compensation.

(b) Loss (gain) on disposal of assets includes the loss (gain) on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.

During both the thirteen and thirty-nine weeks ended September 27, 2023, we recorded non-cash impairment charges of $1.0 million , primarily related to the carrying value of the ROU assets of one restaurant in California and the carrying value of the long-lived assets of one restaurant in Nevada.

During the thirteen and thirty-nine weeks ended September 28, 2022, we recorded non-cash impairment charges of $0.1 million and $0.4 million, respecti vely, primarily related to the long-lived assets of one restaurant in California.

(d) During the thirteen and thirty-nine weeks ended September 27, 2023, we completed the sale of 17 and 18 restaurants, respectively, within California, Utah and Texas to existing franchisees.

(b) Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.

During the thirteen weeks ended March 27, 2024, we did not record any non-cash impairment charges.

(d) During the thirteen weeks ended March 29, 2023, we completed the sale of one restaurant within California to an existing franchisee.

This sale resulted in cash proceeds of $0.2 million during the thirteen weeks ended March 29, 2023 and a net gain on sale of restaurant of $0.1 million for the thirteen weeks ended March 29, 2023.

(e) On July 30, 2014, we entered into the TRA.

This agreement calls for us to pay to our pre-IPO stockholders 85% of the savings in cash that we realize in our taxes as a result of utilizing our NOLs and other tax attributes attributable to preceding periods.

For the thirteen and thirty-nine weeks ended September 27, 2023 and September 28, 2022, income tax receivable agreement expense (income) consisted of the amortization of interest expense and changes in estimates for actual tax returns filed, related to our total expected TRA payments.

(f) Consists of costs and recoveries related to the defense of securities lawsuits.

(g) Consists of costs related to a special dividend declaration.

For the thirteen weeks ended March 27, 2024, we did not record any income tax receivable agreement income or expense.

For the thirteen weeks ended March 29, 2023, income tax receivable agreement income consisted of the amortization of interest expense and changes in estimates for actual tax returns filed, related to our total expected TRA payments.

(f) During the thirteen weeks ended March 29, 2023, we encountered costs related to a special dividend declaration.

On October 11, 2022, the Board of Directors declared a special dividend of $1.50 per share on the common stock of the Company.

The special dividend was paid on November 9, 2022, to stockholders of record, including holders of restricted stock, at the close of business on October 24, 2022.

(h) Includes $0.5 million received from legal settlements, net of legal expenses.

(i) Consists of legal costs related to the share distribution that occurred on March 28, 2023.

Refer to Note 9, “Related Party Transactions” for further details on the share distribution.

(j) Consists of advisory fees pertaining to a Shareholder Rights Agreement adopted in connection with a shareholder’s accumulation of a significant amount of shares of our common stock.

Refer to Note 12, “Shareholder Rights Agreement” for further details on the Shareholder Rights Agreement.

(k) In September 2022, one of our restaurants incurred damage resulting from a fire.

In 2022, we disposed of less than $0.1 million of assets related to the fire.

The restaurant was reopened for business on October 27, 2022.

(g) Consists of legal costs related to the share distribution by Trimaran Group of substantially all of the Company’s common stock held by Trimaran Group to its investors, members and limited partners, which occurred on March 28, 2023.

(h) During fiscal 2022, one of our restaurants incurred damage resulting from a fire.

In fiscal 2023, we incurred costs directly related to the fire of less than $0.1 million.

We recognized gains of $0.2 million, related to the reimbursement of property and equipment and expenses incurred and $0.2 million related to the reimbursement of lost profits.

The gain on recovery of insurance proceeds and reimbursement of lost profits, net of the related costs is included in the accompanying condensed consolidated statements of income, for fiscal 2023, as a reduction of company restaurant expenses.

The gain on recovery of insurance proceeds and reimbursement of lost profits, net of the related costs is included in the accompanying condensed consolidated statements of income, for the thirteen weeks ended March 29, 2023, as a reduction of company restaurant expenses.

We received from the insurance company cash of $0.4 million, net of the insurance deductible, during fiscal 2023.

(l) On April 13, 2023 the Company made the decision to eliminate and restructure certain positions in the organization, which resulted in one-time costs of approximately $1.1 million.

(m) Pre-opening costs are a component of general and administrative expenses, and consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including management labor costs, staff labor costs during training, food and supplies used during training, marketing costs, and other related pre-opening costs.

(i) Includes costs associated with the transition of our former CEO, such as severance, executive recruiting costs and stock-based compensation costs.

(j) On March 8, 2024, the Company made the decision to eliminate and restructure certain positions in the organization, which resulted in one-time costs of approximately $0.5 million.

(k) Pre-opening costs are a component of general and administrative expenses, and consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including management labor costs, staff labor costs during training, food and supplies used during training, marketing costs, and other related pre-opening costs.

These are generally incurred over the three to five months prior to opening.

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The following table presents summary cash flow information for the periods indicated (in thousands):

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

(Amounts in thousands)

September 27, 2023

September 28, 2022

March 27, 2024

March 29, 2023

Net cash (used in) provided by

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Financing activities

Net decrease in cash

Net (decrease) increase in cash

Operating Activities

For the thirty-nine weeks ended September 27, 2023, net cash from operating activities increased by approximately $10.6 million from the comparable period of the prior year.

For the thirteen weeks ended March 27, 2024, net cash from operating activities increased by approximately $7.3 million from the comparable period of the prior year.

This change was due to favorable working capital fluctuations and higher profitability compared to the same period in the prior year.

Investing Activities

For the thirty-nine weeks ended September 27, 2023, net cash used in investing activities decreased by $5.6 million from the comparable period of the prior year.

This change was due to an increase in purchase of property and equipment mostly related to restaurant remodeling during the thirty-nine weeks ended September 27, 2023 when compared to the prior quarter.

The overall decrease in use of investing activities was partially offset by the cash proceeds of $7.7 million received during the thirty-nine weeks ended September 27, 2023 related to the sale of nine company-operated restaurants within Texas to an existing franchisee, eight company-operated restaurants within California to existing franchisees and one company-operated restaurant in Utah to another existing franchisee.

For the thirteen weeks ended March 27, 2024, net cash used in investing activities decreased by $1.6 million from the comparable period of the prior year.

This change was due to a decrease in purchase of property and equipment mostly related to restaurant remodeling during the thirteen weeks ended March 27, 2024 when compared to the prior quarter.

Financing Activities

For the thirty-nine weeks ended September 27, 2023, net cash used in financing activities increased by $12.1 million from the comparable period of the prior year.

The increase was due primarily to repurchases of common stock of $46.6 million during the thirty-nine weeks ended September 27, 2023.

This increase was partially offset by $14.0 million in net borrowings on the 2022 Revolver during the thirty-nine weeks ended September 27, 2023 compared to the net pay downs of $20.0 million on the 2022 Revolver during the thirty-nine weeks ended September 28, 2022.

This change was further impacted by a $1.2 million cash inflow related to option exercises during the thirty-nine weeks ended September 27, 2023 compared to a $1.6 million cash inflow related to option exercises during thirty-nine weeks ended September 28, 2022.

For the thirteen weeks ended March 27, 2024, net cash used in financing activities decreased by $8.6 million from the comparable period of the prior year.

The change was due primarily to a decrease of $4.7 million in repurchases of common stock coupled with $4.0 million decrease in net pay downs on the 2022 Revolver during the thirteen weeks ended March 27, 2024 compared to the repurchases of common stock and net pay-downs during the thirteen weeks ended March 29, 2023.

Debt and Other Obligations

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Borrowings under the 2022 Revolver may be repaid and reborrowed.

The interest rate range was 6.74% to 6.93% and 5.69% to 8.50% for the thirteen and thirty-nine weeks ended September 27, 2023 under the 2022 Revolver , respectively, and 2.87% to 6.00% and 1.35% to 6.00%

for the thirteen and thirty-nine weeks ended September 28, 2022 , respectively, under the 2022 Revolver and 2018 Revolver.

The 2022 Credit Agreement contains certain financial covenants.

We were in compliance with the financial covenants as of September 27, 2023.

At September 27, 2023, we had $80.0 million in outstanding borrowings under the 2022 Revolver and $9.8 million of letters of credit that further reduce the amount available under the line of credit to $60.2 million in borrowing availability.

The interest rate range under the 2022 Revolver was 6.92% to 6.96% for the thirteen weeks ended March 27, 2024 and 5.69% to 6.30% for the thirteen weeks ended March 29, 2023.

The 2022 Credit Agreement contains certain customary financial covenants, subject to certain exceptions.

We were in compliance with the financial covenants as of March 27, 2024.

At March 27, 2024, we had $80.0 million in outstanding borrowings under the 2022 Revolver and one letter of credit in the amount of $9.8 million outstanding, and as a result, we had $60.2 million in borrowing availability.

During the year ended December 28, 2022, we refinanced and terminated our credit agreement (the “2018 Credit Agreement”) among EPL, as borrower, the Company and Intermediate, as guarantors, Bank of America, N.A., as administrative agent, swingline lender, and letter of credit issuer, the lenders party thereto, and the other parties thereto, which provided for a $150.0 million five-year senior secured revolving credit facility (the “2018 Revolver”) and entered into the 2022 Credit Agreement.

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Material Cash Requirements

Our material cash requirements as of September 27, 2023 have not changed materially since those disclosed under “Material Cash Requirements” in Part II, Item 7 of our annual report on Form 10-K for the year ended December 28, 2022.

Our material cash requirements relate mostly to future (i) debt payments, including expected interest expense, calculated based on current interest rates, (ii) restaurant operating lease payments, (iii) income tax receivable agreement payments, (iv) purchasing commitments for chicken, (v) restaurant finance lease payments, and (vi) capital expenditures .

Our material cash requirements as of March 27, 2024 have not changed materially since those disclosed under “Material Cash Requirements” in Part II, Item 7 of our annual report on Form 10-K for the year ended December 27, 2023.

Our material cash requirements relate mostly to future (i) debt payments, including expected interest expense, calculated based on current interest rates, (ii) restaurant operating lease payments, (iii) purchasing commitments for chicken, (iv) restaurant finance lease payments, and (v) capital expenditures .

Share Repurchase Program

On October 11, 2022, our Board of Directors approved the 2022 Stock Repurchase Agreement under which we were authorized to repurchase up to $20.0 million of shares of our common stock through March 28, 2024.

Under the 2022 Stock Repurchase Plan, we were permitted to repurchase our common stock from time to time, in amounts and at prices that we deemed appropriate, subject to market conditions and other considerations.

Pursuant to the 2022 Stock Repurchase Plan, we were authorized to repurchase shares of our common stock using open market purchases, including pursuant to Rule 10b5-1 trading plans, and/or through privately negotiated transactions.

As of September 27, 2023, the program was completed.

Repurchase Agreement

On August 7, 2023, we entered into a Stock Repurchase Agreement (the “Repurchase Agreement”) with FS Equity Partners V, L.P.

On November 2, 2023, we announced that our Board of Directors approved a share repurchase program (“Share Repurchase Program”) under which we are authorized to repurchase up to $20,000,000 of shares of our common stock.

Under the Share Repurchase Program, we are permitted to repurchase our common stock from time to time, in amounts and at prices that we deemed appropriate, subject to market conditions and other considerations.

Pursuant to the Share Repurchase Program, we are authorized to effect repurchases using open market purchases, including pursuant to Rule 10b5-1 trading plans, and/or through privately negotiated transactions.

The repurchase program does not obligate us to acquire any particular number of shares.

The repurchase program will terminate on March 31, 2025.

Further, on December 4, 2023, we repurchased 1.5 million shares for a total purchase price of $12.6 million under the Stock Repurchase Agreement with FS Equity Partners V, L.P.

and FS Affiliates V, L.P.

(together, the “Sellers”), pursuant to which we agreed to purchase an aggregate of 2,500,000 shares of our common stock from the Sellers at a price of $10.63 per share for a total purchase price of $26.6 million.

The repurchase was completed in August 2023.

Prior to the repurchase, Freeman Spogli & Co.

(“Freeman Spogli”), collectively with the Sellers and certain other funds managed by Freeman Spogli, was our largest stockholder.

In addition, John Roth, a director of the Company until his resignation on August 16, 2023, is a general partner of Freeman Spogli and its chief executive officer.

Following completion of this repurchase, approximately $7.4 million of our common stock remained available for repurchase under the share repurchase program at December 27, 2023.

For the thirteen weeks ended March 27, 2024, we repurchased 136,400 shares of common stock under the Share Repurchase Program, using open market purchases, for total consideration of approximately $1.2 million.

Following completion of these repurchases, approximately $6.2 million of our common stock remained available for repurchase under the Share Repurchase Program at March 27, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis