Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended December 29, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 29, 2024 based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company’s internal control over financial reporting was effective as of December 29, 2024.
Our independent registered public accounting firm, Deloitte & Touche LLP , has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 29, 2024, as stated in their report herein.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Portillo’s Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Portillo's Inc. and subsidiaries (the "Company") as of December 29, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 29, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 29, 2024, of the Company and our report dated February 25, 2025, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 25, 2025
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ITEM 9B. OTHER INFORMATION
During the quarter ended December 29, 2024, no director or officer of the Company adopted , modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
See the information in the Company’s 2025 Proxy Statement set forth under the captions “Corporate Governance - ‘Board and Committee Structure,’ ‘Key Areas of Board Oversight – Risk Oversight,’ ‘Corporate Governance,’ and ‘Shareholder Engagement and Communication with the Board’," “Compensation Discussion & Analysis -- Executive Officers,” and “Other Matters -- Delinquent Section 16(a) Reports,” if applicable, which information is incorporated herein by reference.
The Company has adopted insider trading policy policies and procedures that govern the purchase, sale, and/or other dispositions of our securities (and related derivative securities) by directors, officers and employees and other covered persons, which we believe are reasonably designed to promote compliance with insider trading laws, rules and regulations and listing standards applicable to the Company. A copy of the Company’s policies are filed as Exhibit 19.1 to this Annual Report on Form 10-K.
See the information about our code of business conduct and the disclosure of any amendments to or waivers from such code see Part I, Item 1, "Business" of this document, which information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
See the information in the 2025 Proxy Statement set forth under the captions “Compensation Discussion & Analysis”, including the subsection “Compensation Committee Report” and “Corporate Governance – Compensation Interlocks and Insider Participation,” which information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
See the information in the 2025 Proxy Statement set forth under the caption “Other Matters,” including the subsections “Securities Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plans Table,” which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
See the information in the 2025 Proxy Statement set forth under the caption “Certain Relationships and Related Party Transactions” and “Board Composition – Director Independence”, which information is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information about aggregate fees billed to us by our principal accountant, Deloitte & Touche will be presented in the 2025 Proxy Statement set forth under the caption “Fees Paid to Independent Registered Public Accounting Firm” which information is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this report:
(1) Financial Statements
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
37
Consolidated Balance Sheets
39
Consolidated Statements of Operations
40
Consolidated Statements of Stockholders' Equity
41
Consolidated Statements of Cash Flows
43
Notes to Consolidated Financial Statements
45
(2) Financial Statement Schedules
Page
Schedule II: Valuation and Qualifying Accounts
72
All other financial statement schedules are omitted since they are not required or are not applicable, or the required information is included in the Consolidated Financial Statements or notes thereto.
(3) Exhibits
The exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference as part of this report and such Exhibit Index is incorporated herein by reference.
ITEM 16. FORM 10-K SUMMARY
None.
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Exhibit Index
Exhibit Number Description Filed Herewith
3.1
Amended and Restated Certificate of Incorporation of Portillo's Inc. (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).
3.2
Amended and Restated Bylaws of Portillo’s Inc. (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).
4.1
Description of Capital Stock (incorporated by reference to the Company's Form 10-K filed on March 10, 2022).
1 0.1
†
E mployment Agreement between PHD Group Holdings LLC and Su san Shelton, entered into as of August 1 , 2014 (incorporated by reference to the Company's Form 10-Q filed on May 7, 2024).
10.2
†
Derrick Pratt Separation Agreement and Release (incorporated by reference to the Company's Form 10-Q filed on August 6 , 2024).
1 0.5
†
F or m of 2024 Performance Stock Unit Award Agreement under Portillo's Inc. 2021 Equity In centive Plan (incor porated by re ference to the Co mpany's Form 10-Q filed on May 7, 2024 ).
1 0.6
†
F orm of 2024 Stock Option Award Agreeme nt under Portillo's Inc. 2021 Equity Incent ive Plan (incorporated by reference to the Company's Form 10-Q filed on May 7, 2024).
10.7
†
S enior Executive Severance Plan (incorporated by reference to the Company's Form 10-Q filed on May 7, 2024).
10.8
†
Portillo’s Inc. 2021 Equity Incentive Plan (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).
10.9
Registration Rights Agreement, dated as of October 21, 2021, by and among Portillo's Inc. and the other parties hereto (incorporated by reference to the Company's Form 10-K filed on March 10, 2022).
10.10
†
Form of Restricted Stock Unit Award Agreement under Portillo’s Inc. 2021 Equity Incentive Plan (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).
10.11
†
Form of Option Award Agreement under Portillo’s Inc. 2021 Equity Incentive Plan (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).
10.12
Form of 2021 Executive Officer and Director Indemnification Agreement for Portillo’s Inc. (incorporated by reference to the Company’s Registration Statement on Form S-1 filed on October 6, 2021).
10.13
†
Employment Agreement between PHD Group Holdings LLC and Michael Osanloo, entered into as of August 3, 2018 (incorporated by reference to the Company's Registration Statement on Form S-1 filed on September 27, 2021).
10.14
†
Employment Agreement between PHD Group Holdings LLC and Sherri Abruscato, entered into as of August 1, 2014 (incorporated by reference to the Company's Registration Statement on Form S-1 filed on September 27, 2021).
10.15
†
Letter Agreement between PHD Group Holdings LLC and Michelle Hook entered into as of November 14, 2020 (incorporated by reference to the Company's Registration Statement on Form S-1 filed on September 27, 2021).
10.16
†
Letter Agreement between PHD Group Holdings LLC and Jill Waite entered into as of May 22, 2019 (incorporated by reference to the Company's Registration Statement on Form S-1 filed on September 27, 2021).
10.17
Tax Receivable Agreement among Portillo’s Inc. and the Parties named therein (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).
10.18
Second Amended and Restated LLC Agreement of PHD Group Holdings LLC (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).
10.19
† Portillo's Inc. Employee Stock Purchase Plan (incorporated by reference to the Company's Form 10-Q filed on August 4, 2022)
10.20
Form of Stock and Unit Purchase Agreement by and among Portillo’s Inc. and the parties named therein (incorporated by reference to the Company's Registration Statement on S-1 filed on August 8, 2022)
10.21
† Form of Restricted Stock Award Agreement under Portillo’s Inc. 2021 Equity Incentive Plan (incorporated by reference to the Company's Form 10-K filed on March 2, 2023).
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10.22
Credit Agreement, dated as of February 2, 2023, by and among PHD Intermediate LLC, Portillo’s Holdings, LLC, the Subsidiaries of the Borrower Party, Fifth Third Bank, National Association as Administrative Agent, L/C Issuer and Swing Line Lender and the other lenders party thereto (incorporated by reference to the Company's Current Report on Form 8-K filed on February 6, 2023).
1 0. 23
C redit Agreem ent Amendme nt , date d as of J anuary 27, 2025 ( certain schedules om itted as permitted by Item 601(b)(2) of Regulation S-K and will be supp lementally provided to the SEC upon request ) .
*
1 0.24
A mendme nt to Tax Receivable Agreement , dated as of Januar y 24, 2 025 .
*
19.1
Portillo's Inc. Insider Trading Compliance Policy (incorporated by reference to the Company's Form 10-K filed on February 27, 2024).
21
Subsidiaries of Portillo's Inc.
*
23.1
Consent of Independent Registered Public Accounting Firm
*
31.1
Certification of the Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*
31.2
Certification of the Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*
32.1
Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
#
97
† Portillo's Inc. Incentive-Based Compensation Recovery Policy (incorporated by reference to t he Company's For m 10-K filed on February 27, 202 4).
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document *
101.SCH XBRL Taxonomy Extension Schema Document *
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB XBRL Taxonomy Extension Label Linkbase Document *
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document *
104 Cover page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document *
* Filed Herewith
# Furnished Herewith
† Indicates a management contract or compensatory plan or agreement
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Portillo's Inc.
(Registrant)
Date: February 25, 2025
By: /s/ Michelle Hook
Michelle Hook
Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Michael Osanloo President, Chief Executive Officer and Director February 25, 2025
Michael Osanloo (Principal Executive Officer)
/s/ Michelle Hook Chief Financial Officer and Treasurer February 25, 2025
Michelle Hook (Principal Financial Officer and Principal Accounting Officer)
/s/ Michael A. Miles, Jr. Chairman of the Board of Directors February 25, 2025
Michael A. Miles, Jr.
/s/ Ann Bordelon Director February 25, 2025
Ann Bordelon
/s/ Paulette R. Dodson Director February 25, 2025
Paulette R. Dodson
/s/ Noah Glass Director February 25, 2025
Noah Glass
/s/ Gerard J. Hart Director February 25, 2025
Gerard J. Hart
/s/ Jack R. Hartung
Director February 25, 2025
Jack R. Hartung
/s/ Joshua A. Lutzker Director February 25, 2025
Joshua A. Lutzker
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