Engaged Capital Files 13D for Portillo's Inc.

TL;DR

**Engaged Capital goes 13D on Portillo's! Expect activist moves.**

AI Summary

Engaged Capital LLC, a significant shareholder, has filed a Schedule 13D for Portillo's Inc. on August 15, 2024. The filing indicates a change in beneficial ownership, with Engaged Capital now holding a substantial stake in the company. Specific details regarding the exact number of shares and the percentage of ownership are not fully detailed in this excerpt, but the filing signifies active engagement by Engaged Capital with Portillo's Inc.

Why It Matters

This filing signals that Engaged Capital, an activist investor, has taken a significant position in Portillo's Inc., potentially leading to changes in company strategy or management.

Risk Assessment

Risk Level: medium — Activist investor filings can lead to increased volatility and potential strategic shifts within the company.

Key Players & Entities

• Engaged Capital LLC (company) — Filing entity and significant shareholder
• Portillo's Inc. (company) — Subject company
• Glenn W. Welling (person) — Contact person for Engaged Capital
• Ryan Nebel (person) — Contact person for Engaged Capital

FAQ

Key Financial Figures

• $0.01 — (Name of Issuer) Class A Common Stock, $0.01 par value per share (Title of Class o
• $51,974,080 — apital Flagship Master is approximately $51,974,080, including brokerage commissions. The a
• $18,349,708 — Capital Co-Invest XVII is approximately $18,349,708, including brokerage commissions. Item
• $11.7658 — ugust 16, 2027 and a reference price of $11.7658. The Swap Agreement provides Engaged Ca

Filing Documents

• sc13d09455058_08152024.htm (SC 13D) — 169KB
• ex991to13d09455058_08152024.htm (EX-99.1) — 10KB
• 0000921895-24-001846.txt ( ) — 181KB

Security and Issuer

Item 1. Security and Issuer . This statement relates to the Class A Common Stock, $0.01 par value per share (the “Shares”), of Portillo's Inc., a Delaware corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 2001 Spring Road, Suite 400, Oak Brook, Illinois 60523.

Identity and Background

Item 2. Identity and Background . (a) This (i) Engaged Capital Flagship Master Fund, LP, a Cayman Islands exempted limited partnership (“Engaged Capital Flagship Master”), with respect to the Shares directly and beneficially owned by it; (ii) Engaged Capital Co-Invest XVII, LP, a Delaware limited partnership (“Engaged Capital Co-Invest XVII”), with respect to the Shares directly and beneficially owned by it; (iii) Engaged Capital, LLC, a Delaware limited liability company (“Engaged Capital”), as the general partner and investment adviser of each of Engaged Capital Flagship Master and Engaged Capital Co-Invest XVII; (iv) Engaged Capital Holdings, LLC, a Delaware limited liability company (“Engaged Holdings”), as the managing member of Engaged Capital; and (v) Glenn W. Welling, as the Founder and Chief Investment Officer (“CIO”) of Engaged Capital and the sole member of Engaged Holdings. Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing Agreement, as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D. (b) The address of the principal office of Engaged Capital Flagship Master is c/o Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The address of the principal office of each of Engaged Capital Co-Invest XVII, Engaged Capital, Engaged Holdings and Mr. Welling is 610 Newport Center Drive, Suite 950, Newport Beach, California 92660. (c) The principal business of each of Engaged Capital Flagship Master and Engaged Capital Co-Invest XVII is investing in securities. Engaged Capital is a registered investment advisor and serves as the investment adviser and general partner of each of Engaged Capital Flagship

Source and Amount of Funds or Other Consideration

Item 3. Source and Amount of Funds or Other Consideration . The Shares purchased by Engaged Capital Flagship Master and Engaged Capital Co-Invest XVII were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business). The aggregate purchase price of the 4,421,364 Shares beneficially owned by Engaged Capital Flagship Master is approximately $51,974,080, including brokerage commissions. The aggregate purchase price of the 1,693,592 Shares beneficially owned by Engaged Capital Co-Invest XVII is approximately $18,349,708, including brokerage commissions.

Purpose of Transaction

Item 4. Purpose of Transaction . The Reporting Persons purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions including through a trading plan created under Rule 10b5-1(c) or otherwise, on such terms and at such times as the Reporting Persons may deem advisable. The Reporting Persons have engaged, and intend to continue to engage, in communications with the Issuer’s Board of Directors (the “Board”) and management team regarding potential steps to unlock the intrinsic value of the Issuer’s business, including, but not limited to, optimizing restaurant performance, improving restaurant-level cash on cash returns, enhancing corporate governance (including through potential changes to the composition of the Board) and/or exploring a sale of the Issuer. No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, with

Interest in Securities of the Issuer

Item 5. Interest in Securities of the Issuer . (a) The aggregate percentage of Shares reported owned by each person named herein is based upon 61,794,622 Shares outstanding as of July 30, 2024, which is the total number of Shares outstanding as reported in the Issuer’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 6, 2024. As of the date hereof, Engaged Capital Flagship Master directly beneficially owned 4,421,364 Shares, constituting approximately 7.2% of the Shares outstanding. As of the date hereof, Engaged Capital Co-Invest XVII directly beneficially owned 1,693,592 Shares, constituting approximately 2.7% of the Shares outstanding. Engaged Capital, as the general partner and investment adviser of each of Engaged Capital Flagship Master and Engaged Capital Co-Invest XVII, may be deemed to beneficially own the 6,114,956 Shares owned in the aggregate by Engaged Capital Flagship Master and Engaged Capital Co-Invest XVII, constituting approximately 9.9% of the Shares outstanding. Engaged Holdings, as the managing member of Engaged Capital, may be deemed to beneficially own the 6,114,956 Shares owned in the aggregate by Engaged Capital Flagship Master and Engaged Capital Co-Invest XVII, constituting approximately 9.9% of the Shares outstanding. Mr. Welling, as the Founder and CIO of Engaged Capital and sole member of Engaged Holdings, may be deemed to beneficially own the 6,114,956 Shares owned in the aggregate by Engaged Capital Flagship Master and Engaged Capital Co-Invest XVII, constituting approximately 9.9% of the Shares outstanding. The filing of this Schedule 13D shall not be deemed an admission that the Reporting Persons are, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, the beneficial owners of any securities of the Issuer he or it does not directly own. Each of the Reporting Persons specifically disclaims beneficial ownership of the securities reported herein that he

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer . Engaged Capital Flagship Master has entered into a certain cash-settled total return swap agreement with UBS as the counterparty (the “Swap Agreement”). Engaged Capital Flagship Master’s swap with UBS constitutes economic exposure to an aggregate of 903,452 notional Shares, representing approximately 1.5% of the outstanding Shares, which has a maturity date of August 16, 2027 and a reference price of $11.7658. The Swap Agreement provides Engaged Capital Flagship Master with economic results that are comparable to the economic results of ownership but does not provide it with the power to vote or direct the voting or dispose of or direct the disposition of the Shares that are the subject of the Swap Agreement (such shares, the “Subject Shares”). Taking into account the Subject Shares, Engaged Capital Flagship Master has economic exposure to an aggregate of 5,324,816 Shares, representing approximately 8.6% of the outstanding Shares. The Reporting Persons disclaim beneficial ownership of the Subject Shares. The Reporting Persons collectively have economic exposure to an aggregate of 7,018,408 Shares, representing approximately 11.4% of the outstanding Shares. On August 15, 2024, the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing Agreement is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

Material to be Filed as Exhibits

Item 7. Material to be Filed as Exhibits . 99.1 Joint Filing Agreement, dated August 15, 2024. 10 CUSIP No. 73642K106

SIGNATURES

SIGNATURES After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: August 15, 2024 Engaged Capital Flagship Master Fund, LP By: Engaged Capital, LLC General Partner By: /s/ Glenn W. Welling Name: Glenn W. Welling Title: Founder and Chief Investment Officer Engaged Capital Co-Invest XVII, LP By: Engaged Capital, LLC General Partner By: /s/ Glenn W. Welling Name: Glenn W. Welling Title: Founder and Chief Investment Officer Engaged Capital, LLC By: /s/ Glenn W. Welling Name: Glenn W. Welling Title: Founder and Chief Investment Officer Engaged Capital Holdings, LLC By: /s/ Glenn W. Welling Name: Glenn W. Welling Title: Sole Member /s/ Glenn W. Welling Glenn W. Welling 11 CUSIP No. 73642K106 SCHEDULE A Transactions in Securities of the Issuer During the Past 60 Days Nature of the Transaction Securities Purchased/(Sold) Price Per Security($) Date of Purchase/Sale ENGAGED CAPITAL FLAGSHIP MASTER FUND, LP Purchase of Class A Common Stock 265,000 9.8166 08/07/2024 Purchase of Class A Common Stock 300,659 10.2233 08/08/2024 Purchase of Class A Common Stock 300,000 10.5616 08/09/2024 Purchase of Class A Common Stock 308,000 10.8311 08/12/2024 Purchase of Class A Common Stock 288,750 11.0044 08/13/2024 Purchase of Class A Common Stock 198,512 10.9424 08/14/2024 Purchase of Cash-Settled Total Return Swap 903,452 11.7658 08/15/2024 ENGAGED CAPITAL CO-INVEST XVII, LP Purchase of Class A Common Stock 128,854 10.2233 08/08/2024 Purchase of Class A Common Stock 300,000 10.5616 08/09/2024 Purchase of Class A Common Stock 492,000 10.8311 08/12/2024 Purchase of Class A Common Stock 461,250 11.0044 08/13/2024 Purchase of Class A Common Stock 311,488 10.9424 08/14/2024

View Full Filing

View this SC 13D filing on SEC EDGAR