Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CHIPOTLE MEXICAN GRILL INC | d337149d8k.htm |
Exhibit 99.1
PRESS RELEASE
Investor Relations:
Alex Spong
303-222-2552
Chipotle Mexican Grill, Inc. Announces First Quarter 2012 Results
Denver, Colorado – (Business Wire) – April 19, 2012 – Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its first quarter ended March 31, 2012.
Highlights for the first quarter of 2012 as compared to the first quarter of 2011 include:
| • | Revenue increased 25.8% to $640.6 million |
| • | Comparable restaurant sales increased 12.7% |
| • | Restaurant level operating margin was 27.4%, an increase of 220 basis points |
| • | Net income was $62.7 million, an increase of 35.1% |
| • | Diluted earnings per share was $1.97, an increase of 34.9% |
“We’re delighted that our continuing efforts to serve the very best food made from high quality ingredients raised with respect for the animals, the environment, and the farmers are resonating with our customers, allowing us to deliver double digit comps and record earnings during the quarter,” said Steve Ells, Founder, Chairman and co-CEO of Chipotle.
First quarter 2012 results
Revenue for the quarter was $640.6 million, up 25.8% from the prior year period. The growth in revenue was the result of new restaurants not in the comparable base and a 12.7% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by increased traffic in the quarter as well as the impact of menu price increases implemented last year.
During the quarter we opened 32 new restaurants including one in Toronto, Canada, bringing the total restaurant count to 1,262.
Restaurant level operating margin was 27.4% in the quarter, an increase of 220 basis points from the prior year period. The increase was primarily driven by the impact of comparable restaurant sales growth and lower promotional costs which was partially offset by higher food costs.
G&A costs were 7.7% of revenue, up 140 basis points from the prior year period. This includes a one-time catch-up adjustment of $5.6 million related to performance shares issued in 2010.
Net income for the first quarter of 2012 was $62.7 million, or $1.97 per diluted share, compared to $46.4 million, or $1.46 per diluted share, in the first quarter of 2011.
“Our strong people culture continues to drive our success in attracting loyal customers and delivering exceptional results. Our restaurant teams are ambitious, passionate, and dedicated to delivering the best dining experience possible. Our efforts to hire and develop top performing crews will continue to lead to stronger future leaders running our restaurants, and ensure our customers will enjoy the best customer service possible,” said Monty Moran, co-CEO.
Outlook
For the full year 2012, management expects the following:
| • | 155-165 new restaurant openings |
| • | Mid-single digit comparable restaurant sales growth |
| • | Food inflation of mid-single digits |
| • | An effective tax rate of approximately 39.0% |
Definitions
The following definitions apply to these terms as used throughout this release:
Comparable restaurant sales increases represent the change in period-over-period sales for the comparable restaurant base. A restaurant becomes comparable in its 13 th full calendar month of operation.
Average restaurant sales refers to the average trailing 12-month sales for restaurants in operation for at least 12 full calendar months.
Restaurant level operating margin represents total revenue less restaurant operating costs, expressed as a percent of total revenue.
Conference Call
Chipotle will host a conference call to discuss the first quarter 2012 financial results today at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing 1-800-946-0744 or for international callers by dialing 1-719-325-2170. A replay will be available one hour after the call and can be accessed by dialing 1-877-870-5176 or 1-858-384-5517 for international callers; the password is 4538293. The replay will be available until April 26, 2012. The call will be webcast live from the Company’s website at chipotle.com under the investor relations section. An archived webcast will be available one hour after the end of the call.
About Chipotle
Steve Ells, Founder, Chairman and Co-Chief Executive Officer, started Chipotle with the idea that food served fast did not have to be a typical fast food experience. Today, Chipotle continues to offer a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads made from fresh, high-quality raw ingredients, prepared using classic cooking methods and served in a distinctive atmosphere. Through our vision of Food With Integrity, Chipotle is seeking better food from using ingredients that are not only fresh, but that where possible are sustainably grown and naturally raised with respect for the animals, the land, and the farmers who produce the food. A similarly focused people culture, with an emphasis on identifying and empowering top performing employees, enables us to develop future leaders from within. Chipotle opened its first restaurant in 1993 and currently operates over 1,250 restaurants. For more information, visit chipotle.com.
Forward-Looking Statements
Certain statements in this press release, including statements under the heading “Outlook” of our expected number of new restaurant openings, comparable restaurant sales increases, food inflation, and effective tax rate in 2012, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We use words such as “anticipate”, “believe”, “could”, “should”, “estimate”, “expect”, “intend”, “may”, “predict”, “project”, “target”, and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: factors that could affect our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified employees; the uncertainty of our ability to achieve expected levels of comparable restaurant sales increases; the performance of new restaurants and their impact on existing restaurant sales; increases in the cost of food ingredients and other key
supplies; the risk of food-borne illnesses and other health concerns about our food; the potential for increased labor costs or difficulty retaining qualified employees, including as a result of immigration enforcement activities; risks relating to our expansion into new markets; the impact of federal, state or local government regulations relating to our employees and the sale of food or alcoholic beverages; risks associated with our Food With Integrity strategy, including supply shortages; changes in consumer preferences, general economic conditions or consumer discretionary spending; the effect of competition in the restaurant industry; the effects of continuing economic uncertainty on our business and on our suppliers, landlords and potential developers; the impact of increasing general and administrative expenses due to higher non-cash stock-based compensation expense and other increased expenses; risks relating to litigation; risks relating to our insurance coverage and self-insurance; our dependence on key personnel; security risks associated with the acceptance of electronic payment cards; the uncertainty of our ability to protect our name, logo and other proprietary information or the reputation of our brand; the potential effects of inclement weather; risks related to the tax treatment of our separation from McDonald’s; and other risk factors described from time to time in our SEC reports, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, all of which are available on our Investor Relations page of our Web site at chipotle.com.
Chipotle Mexican Grill, Inc.
Condensed Consolidated Statement of Income and Comprehensive Income
(in thousands, except per share data)
(unaudited)
| Three months ended March 31, | ||||||||||||||||
| 2012 | 2011 | |||||||||||||||
| Revenue |
$ | 640,603 | 100.0 | % | $ | 509,384 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Restaurant operating costs |
||||||||||||||||
| (Exclusive of depreciation and amortization shown separately below): |
||||||||||||||||
| Food, beverage and packaging |
206,590 | 32.2 | 162,908 | 32.0 | ||||||||||||
| Labor |
151,985 | 23.7 | 125,288 | 24.6 | ||||||||||||
| Occupancy |
40,509 | 6.3 | 35,315 | 6.9 | ||||||||||||
| Other operating costs |
66,179 | 10.3 | 57,385 | 11.3 | ||||||||||||
| General and administrative expenses |
49,334 | 7.7 | 32,216 | 6.3 | ||||||||||||
| Depreciation and amortization |
20,084 | 3.1 | 18,494 | 3.6 | ||||||||||||
| Pre-opening costs |
2,448 | 0.4 | 1,296 | 0.3 | ||||||||||||
| Loss on disposal of assets |
1,250 | 0.2 | 1,661 | 0.3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
538,379 | 84.0 | 434,563 | 85.3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from operations |
102,224 | 16.0 | 74,821 | 14.7 | ||||||||||||
| Interest and other income, net |
434 | 0.1 | 287 | 0.1 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income before income taxes |
102,658 | 16.0 | 75,108 | 14.7 | ||||||||||||
| Provision for income taxes |
(39,994 | ) | (6.2 | ) | (28,726 | ) | (5.6 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 62,664 | 9.8 | % | $ | 46,382 | 9.1 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings per share: |
||||||||||||||||
| Basic |
$ | 2.00 | $ | 1.49 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Diluted |
$ | 1.97 | $ | 1.46 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
31,410 | 31,082 | ||||||||||||||
|
|
|
|
|
|||||||||||||
| Diluted |
31,846 | 31,717 | ||||||||||||||
|
|
|
|
|
|||||||||||||
| Comprehensive Income |
$ | 63,347 | $ | 47,000 | ||||||||||||
|
|
|
|
|
|||||||||||||
Chipotle Mexican Grill, Inc.
Condensed Consolidated Balance Sheet
(in thousands, except per share data)
| March 31, 2012 |
December 31, 2011 |
|||||||
| (unaudited) | ||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 370,191 | $ | 401,243 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $200 and $208 as of March 31, 2012 and December 31, 2011 respectively |
9,087 | 8,389 | ||||||
| Inventory |
10,017 | 8,913 | ||||||
| Current deferred tax asset |
6,662 | 6,238 | ||||||
| Prepaid expenses and other current assets |
26,159 | 21,404 | ||||||
| Income tax receivable |
34,891 | — | ||||||
| Investments |
94,480 | 55,005 | ||||||
|
|
|
|
|
|||||
| Total current assets |
551,487 | 501,192 | ||||||
| Leasehold improvements, property and equipment, net |
773,116 | 751,951 | ||||||
| Long term investments |
149,072 | 128,241 | ||||||
| Other assets |
31,954 | 21,985 | ||||||
| Goodwill |
21,939 | 21,939 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 1,527,568 | $ | 1,425,308 | ||||
|
|
|
|
|
|||||
| Liabilities and shareholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 49,154 | $ | 46,382 | ||||
| Accrued payroll and benefits |
37,160 | 60,241 | ||||||
| Accrued liabilities |
38,098 | 46,456 | ||||||
| Current portion of deemed landlord financing |
135 | 133 | ||||||
| Income tax payable |
— | 4,241 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
124,547 | 157,453 | ||||||
| Deferred rent |
148,421 | 143,284 | ||||||
| Deemed landlord financing |
3,494 | 3,529 | ||||||
| Deferred income tax liability |
66,606 | 64,381 | ||||||
| Other liabilities |
14,705 | 12,435 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
357,773 | 381,082 | ||||||
|
|
|
|
|
|||||
| Shareholders’ equity: |
||||||||
| Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of March 31, 2012 and December 31, 2011 |
— | — | ||||||
| Common stock, $0.01 par value, 230,000 shares authorized, 34,859 and 34,357 shares issued as of March 31, 2012 and December 31, 2011, respectively |
349 | 344 | ||||||
| Additional paid-in capital |
765,880 | 676,652 | ||||||
| Treasury stock, at cost, 3,177 and 3,105 common shares at March 31, 2012 and December 31, 2011, respectively |
(331,437 | ) | (304,426 | ) | ||||
| Accumulated other comprehensive income |
880 | 197 | ||||||
| Retained earnings |
734,123 | 671,459 | ||||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
1,169,795 | 1,044,226 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
$ | 1,527,568 | $ | 1,425,308 | ||||
|
|
|
|
|
|||||
Chipotle Mexican Grill, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
| Three months ended March 31, |
||||||||
| 2012 | 2011 | |||||||
| Operating activities |
||||||||
| Net income |
$ | 62,664 | $ | 46,382 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
20,084 | 18,494 | ||||||
| Deferred income tax provision |
1,803 | 2,703 | ||||||
| Loss on disposal of assets |
1,250 | 1,661 | ||||||
| Bad debt allowance |
12 | 3 | ||||||
| Stock-based compensation expense |
20,240 | 8,923 | ||||||
| Excess tax benefit on stock-based compensation |
(68,392 | ) | (8,700 | ) | ||||
| Other |
78 | 115 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(710 | ) | (1,968 | ) | ||||
| Inventory |
(1,102 | ) | (1,639 | ) | ||||
| Prepaid expenses and other current assets |
(4,738 | ) | (4,297 | ) | ||||
| Other assets |
(9,946 | ) | 456 | |||||
| Accounts payable |
2,909 | 2,501 | ||||||
| Accrued liabilities |
(31,435 | ) | (25,941 | ) | ||||
| Income tax payable/receivable |
29,260 | 24,383 | ||||||
| Deferred rent |
5,130 | 3,713 | ||||||
| Other long-term liabilities |
2,269 | 1,516 | ||||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
29,376 | 68,305 | ||||||
|
|
|
|
|
|||||
| Investing activities |
||||||||
| Purchases of leasehold improvements, property and equipment |
(41,864 | ) | (26,438 | ) | ||||
| Purchase of investments |
(60,382 | ) | (59,452 | ) | ||||
| Maturities of investments |
— | 79,766 | ||||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(102,246 | ) | (6,124 | ) | ||||
|
|
|
|
|
|||||
| Financing activities |
||||||||
| Acquisition of treasury stock |
(27,011 | ) | (13,523 | ) | ||||
| Proceeds from option exercises |
81 | 372 | ||||||
| Excess tax benefit on stock-based compensation |
68,392 | 8,700 | ||||||
| Payments on deemed landlord financing |
(33 | ) | (29 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by (used in) financing activities |
41,429 | (4,480 | ) | |||||
|
|
|
|
|
|||||
| Effect of exchange rate changes on cash and cash equivalents |
389 | 400 | ||||||
| Net change in cash and cash equivalents |
(31,052 | ) | 58,101 | |||||
| Cash and cash equivalents at beginning of year |
401,243 | 224,838 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents at end of year |
$ | 370,191 | 282,939 | |||||
|
|
|
|
|
|||||
| Supplemental disclosures of cash flow information |
||||||||
| Decrease in purchases of leasehold improvements, property, and equipment accrued in accounts payable |
$ | (149 | ) | $ | (286 | ) | ||
|
|
|
|
|
|||||
Chipotle Mexican Grill, Inc.
Supplemental Financial and Other Data
(dollars in thousands)
(unaudited)
| For the three months ended | ||||||||||||||||||||
| Mar. 31, 2012 |
Dec. 31, 2011 |
Sep. 30, 2011 |
Jun. 30, 2011 |
Mar 31, 2011 |
||||||||||||||||
| Number of restaurants opened |
32 | 67 | 32 | 39 | 12 | |||||||||||||||
| Restaurant relocations or closures |
— | — | — | (3 | ) | (1 | ) | |||||||||||||
| Number of restaurants at end of period |
1,262 | 1,230 | 1,163 | 1,131 | 1,095 | |||||||||||||||
| Average restaurant sales |
$ | 2,072 | $ | 2,013 | $ | 1,973 | $ | 1,927 | $ | 1,885 | ||||||||||
| Comparable restaurant sales increases |
12.7 | % | 11.1 | % | 11.3 | % | 10.0 | % | 12.4 | % | ||||||||||