-
Diluted EPS increased 48.6% to $1.10
-
24 New Restaurants Opened
-
Comparable Restaurant Sales increased 1.7%
Chipotle Mexican Grill, Inc. (NYSE: CMG and CMG.B) today reported
financial results for its second quarter ended June 30, 2009.
Highlights for the second quarter of 2009 as compared to the second
quarter of 2008 include:
-
Revenue increased 14.1% to $388.8 million
-
Comparable restaurant sales increased 1.7%
-
Restaurant level operating margin was 26.0%, an increase of 360 basis
points
-
Net income was $35.4 million, an increase of 44.7%
-
Diluted earnings per share was $1.10, an increase of 48.6%
Highlights for the six months ended June 30, 2009 as compared to the
prior year period include:
-
Revenue increased 15.0% to $743.3 million
-
Comparable restaurant sales increased 1.9%
-
Restaurant level operating margin was 24.8%, an increase of 290 basis
points
-
Net income was $60.8 million, an increase of 45.6%
-
Diluted earnings per share was $1.88, an increase of 50.4%
“We are pleased with our financial results in the second quarter, as we
were able to produce industry leading margins that were the highest
Chipotle has ever achieved,” said Founder, Chairman and Co-CEO Steve
Ells. “But I’m even more pleased with the recent increased interest in
how food in this country is raised, with the release of the critically
acclaimed documentary ‘Food, Inc.’, continuing media attention to
related issues, and pending legislation that would ban the
sub-therapeutic use of antibiotics in livestock. Chipotle continues to
be a leader on these issues, and we believe that greater curiosity and
transparency about how food is raised will result in consumers becoming
more discerning and more demanding about the food they eat, which
ultimately will result in a greater appreciation for our Food With
Integrity efforts.”
Second quarter 2009 results
Revenue for the second quarter of 2009 increased 14.1% to $388.8 million
from $340.8 million in the second quarter of 2008. This growth in
revenue was attributable to new restaurants not in the comparable base
and a 1.7% increase in comparable restaurant sales in the second
quarter. Comparable restaurant sales growth was due to the impact of
menu price increases partially offset by a decline in customer visits.
Chipotle opened 24 new restaurants during the second quarter of 2009.
Restaurant level operating margins increased to 26.0% in the second
quarter of 2009 from 22.4% in the second quarter of 2008, primarily due
to menu price increases, more efficient labor staffing, and a
decrease in marketing and promotional spend. We expect marketing and
promotional spend as a percentage of revenue for the full year 2009 to
remain consistent with 2008.
General and administrative expenses were $25.8 million in the second
quarter of 2009, or 6.6% of revenue, compared to $20.7 million in the
second quarter of 2008, or 6.1% of revenue. The increase as a percentage
of revenue resulted from higher performance based bonus accruals in 2009
and a reversal during the second quarter of 2008 of bonus accruals from
the first quarter, partially offset by menu price increases.
Net income for the second quarter of 2009 was $35.4 million, or $1.10
per diluted share, compared to $24.5 million, or $0.74 per diluted share
in the second quarter of 2008.
Results for the six months ended June 30, 2009
Revenue for the six months ended June 30, 2009 increased 15.0% to $743.3
million from $646.1 million in the prior year period. This growth in
revenue was attributable to new restaurants not in the comparable base
and a 1.9% increase in comparable restaurant sales. Comparable
restaurant sales growth was due to the impact of menu price increases
partially offset by a decline in customer visits.
Chipotle opened 50 new restaurants during the six months ended June 30,
2009 and as of June 30th operated 886 restaurants.
Restaurant level operating margins increased to 24.8% in the period,
versus 21.9% in the six months ended June 30, 2008 primarily due to menu
price increases and a decrease in marketing and promotional spend.
General and administrative expenses were $49.5 million for six months
ended June 30, 2009, or 6.7% of revenue, compared to $42.2 million, or
6.5% of revenue, for the prior year period. General and administrative
expenses increased as a percentage of revenue primarily due to the
higher performance-based bonus accruals for 2009 partially offset by the
impact of menu price increases.
Net income for the six months ended June 30, 2009 was $60.8 million, or
$1.88 per diluted share, compared to $41.8 million, or $1.25 per diluted
share in the prior year period.
“At a time when we need to work harder than ever to earn each customer’s
visit, our managers and crews are rising to the occasion,” said Monty
Moran, Co-CEO of Chipotle. “Our teams are better than ever, and this is
leading to better food, better service, and better restaurant level
margins.”
Outlook
For 2009, management expects the following:
-
Full year comparable restaurant sales increases in the low single
digits
-
120-130 new restaurant openings
-
An effective tax rate of approximately 38.4%
-
Diluted weighted average common shares outstanding of approximately
32.2 million
Definitions
The following definitions apply to these terms as used throughout this
release:
Comparable restaurant sales increases include company-operated
restaurants only and represent the change in period-over-period sales
for the comparable restaurant base. A restaurant becomes comparable in
its 13th full calendar month of operation.
Average restaurant sales refers to the average trailing 12-month
sales for company-operated 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 second quarter 2009
financial results today at 5:00 PM Eastern Time. Hosting the call will
be Steve Ells, Founder, Chairman and Co-Chief Executive Officer, Monty
Moran, Co-Chief Executive Officer, and Jack Hartung, Chief Financial
Officer.
The conference call can be accessed live over the phone by dialing
1-888-220-8639 or 1-913-905-3164 for international callers. A replay
will be available one hour after the call and can be accessed by dialing
1-888-203-1112 or 1-719-457-0820 for international callers. The password
is 8814456. The replay will be available until July 29, 2009. The call
will be webcast live from the Company's Web site at Chipotle.com under
the Investor Relations section. An archived webcast will be available
approximately 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 not only from using fresh ingredients, but
ingredients that are sustainably grown and naturally raised with respect
for the animals, the land, and the farmers who produce the food.
Chipotle opened its first restaurant in 1993 and currently operates
nearly 900 restaurants. For more information, visit Chipotle.com.
Forward-Looking Statements
Certain statements in this press release, including our expectations
for marketing and promotional spend during 2009 as well as statements
under the heading “Outlook” and elsewhere in the release related to our
expected comparable restaurant sales increases, the number of
restaurants we intend to open, our expected effective tax rate, and
expected number of common shares outstanding, 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: the
uncertainty of our ability to achieve expected levels of comparable
restaurant sales increases; 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; changes in consumer preferences, general
economic conditions or consumer discretionary spending; changes in the
availability and costs of food; risks relating to our expansion into new
markets; the risk of food-borne illnesses and other health concerns
about our food products; the impact of federal, state or local
government regulations relating to our employees and the sale of food or
alcoholic beverages; the impact of litigation; risks related to our
implementation of a new marketing strategy; our ability to protect our
name and logo and other proprietary information; the potential effects
of inclement weather; the effect of competition in the restaurant
industry; risks related to our separation from McDonald’s and our having
two classes of publicly-traded common stock; 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 the Investor Relations page of
our Web site at Chipotle.com.
|
Chipotle Mexican Grill, Inc.
|
|
Consolidated Statement of Income
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
388,836
|
|
|
100.0
|
%
|
|
$
|
340,754
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant operating costs:
|
|
|
|
|
|
|
|
|
|
Food, beverage and packaging
|
|
|
120,207
|
|
|
30.9
|
|
|
|
109,697
|
|
|
32.2
|
|
|
Labor
|
|
|
95,389
|
|
|
24.5
|
|
|
|
88,278
|
|
|
25.9
|
|
|
Occupancy
|
|
|
28,167
|
|
|
7.2
|
|
|
|
23,404
|
|
|
6.9
|
|
|
Other operating costs
|
|
|
43,845
|
|
|
11.3
|
|
|
|
42,897
|
|
|
12.6
|
|
|
General and administrative expenses
|
|
|
25,797
|
|
|
6.6
|
|
|
|
20,684
|
|
|
6.1
|
|
|
Depreciation and amortization
|
|
|
15,197
|
|
|
3.9
|
|
|
|
12,707
|
|
|
3.7
|
|
|
Pre-opening costs
|
|
|
1,568
|
|
|
0.4
|
|
|
|
3,403
|
|
|
1.0
|
|
|
Loss on disposal of assets
|
|
|
1,344
|
|
|
0.3
|
|
|
|
1,370
|
|
|
0.4
|
|
|
|
|
|
331,514
|
|
|
85.3
|
|
|
|
302,440
|
|
|
88.8
|
|
|
Income from operations
|
|
|
57,322
|
|
|
14.7
|
|
|
|
38,314
|
|
|
11.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
293
|
|
|
0.1
|
|
|
|
925
|
|
|
0.3
|
|
|
Interest and other expense
|
|
|
(186
|
)
|
|
0.0
|
|
|
|
(75
|
)
|
|
--
|
|
|
Income before income taxes
|
|
|
57,429
|
|
|
14.8
|
|
|
|
39,164
|
|
|
11.5
|
|
|
Provision for income taxes
|
|
|
(22,036
|
)
|
|
(5.7
|
)
|
|
|
(14,696
|
)
|
|
(4.3
|
)
|
|
Net income
|
|
$
|
35,393
|
|
|
9.1
|
%
|
|
$
|
24,468
|
|
|
7.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.11
|
|
|
|
|
$
|
0.74
|
|
|
|
|
Diluted
|
|
$
|
1.10
|
|
|
|
|
$
|
0.74
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
31,856
|
|
|
|
|
|
32,856
|
|
|
|
|
Diluted
|
|
|
32,195
|
|
|
|
|
|
33,284
|
|
|
|
|
Chipotle Mexican Grill, Inc.
|
|
Consolidated Statement of Income
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
743,292
|
|
|
100.0
|
%
|
|
$
|
646,081
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant operating costs:
|
|
|
|
|
|
|
|
|
|
Food, beverage and packaging
|
|
|
230,091
|
|
|
31.0
|
|
|
|
208,591
|
|
|
32.3
|
|
|
Labor
|
|
|
188,956
|
|
|
25.4
|
|
|
|
169,688
|
|
|
26.3
|
|
|
Occupancy
|
|
|
55,124
|
|
|
7.4
|
|
|
|
45,237
|
|
|
7.0
|
|
|
Other operating costs
|
|
|
84,508
|
|
|
11.4
|
|
|
|
81,270
|
|
|
12.6
|
|
|
General and administrative expenses
|
|
|
49,516
|
|
|
6.7
|
|
|
|
42,244
|
|
|
6.5
|
|
|
Depreciation and amortization
|
|
|
29,917
|
|
|
4.0
|
|
|
|
24,877
|
|
|
3.9
|
|
|
Pre-opening costs
|
|
|
3,461
|
|
|
0.5
|
|
|
|
6,234
|
|
|
1.0
|
|
|
Loss on disposal of assets
|
|
|
3,208
|
|
|
0.4
|
|
|
|
2,833
|
|
|
0.4
|
|
|
|
|
|
644,781
|
|
|
86.7
|
|
|
|
580,974
|
|
|
89.9
|
|
|
Income from operations
|
|
|
98,511
|
|
|
13.3
|
|
|
|
65,107
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
491
|
|
|
0.1
|
|
|
|
2,268
|
|
|
0.4
|
|
|
Interest and other expense
|
|
|
(259
|
)
|
|
0.0
|
|
|
|
(149
|
)
|
|
0.0
|
|
|
Income before income taxes
|
|
|
98,743
|
|
|
13.3
|
|
|
|
67,226
|
|
|
10.4
|
|
|
Provision for income taxes
|
|
|
(37,958
|
)
|
|
(5.1
|
)
|
|
|
(25,474
|
)
|
|
(3.9
|
)
|
|
Net income
|
|
$
|
60,785
|
|
|
8.2
|
%
|
|
$
|
41,752
|
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.90
|
|
|
|
|
$
|
1.27
|
|
|
|
|
Diluted
|
|
$
|
1.88
|
|
|
|
|
$
|
1.25
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
31,929
|
|
|
|
|
|
32,832
|
|
|
|
|
Diluted
|
|
|
32,278
|
|
|
|
|
|
33,307
|
|
|
|
|
Chipotle Mexican Grill, Inc.
Consolidated Balance Sheet
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
June 30,
2009
|
|
December 31, 2008
|
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
208,299
|
|
|
$
|
88,044
|
|
|
Accounts receivable, net of allowance for doubtful accounts of
$366 and $608 as of June 30, 2009 and December 31, 2008,
respectively
|
|
|
3,217
|
|
|
|
3,643
|
|
|
Inventory
|
|
|
5,715
|
|
|
|
4,789
|
|
|
Current deferred tax asset
|
|
|
3,214
|
|
|
|
2,557
|
|
|
Prepaid expenses
|
|
|
13,033
|
|
|
|
11,764
|
|
|
Income tax receivable
|
|
|
5,819
|
|
|
|
285
|
|
|
Available-for-sale securities
|
|
|
—
|
|
|
|
99,990
|
|
|
Total current assets
|
|
|
239,297
|
|
|
|
211,072
|
|
|
Leasehold improvements, property and equipment, net
|
|
|
605,631
|
|
|
|
585,899
|
|
|
Other assets
|
|
|
6,472
|
|
|
|
6,075
|
|
|
Goodwill
|
|
|
21,939
|
|
|
|
21,939
|
|
|
Total assets
|
|
$
|
873,339
|
|
|
$
|
824,985
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
24,666
|
|
|
$
|
23,890
|
|
|
Accrued payroll and benefits
|
|
|
29,355
|
|
|
|
24,469
|
|
|
Accrued liabilities
|
|
|
26,836
|
|
|
|
28,347
|
|
|
Current portion of deemed landlord financing
|
|
|
85
|
|
|
|
82
|
|
|
Total current liabilities
|
|
|
80,942
|
|
|
|
76,788
|
|
|
Deferred rent
|
|
|
94,679
|
|
|
|
87,009
|
|
|
Deemed landlord financing
|
|
|
3,835
|
|
|
|
3,878
|
|
|
Deferred income tax liability
|
|
|
38,832
|
|
|
|
29,863
|
|
|
Other liabilities
|
|
|
5,991
|
|
|
|
4,857
|
|
|
Total liabilities
|
|
|
224,279
|
|
|
|
202,395
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
Preferred stock, $0.01 par value, 600,000 shares authorized, no
shares issued as of June 30, 2009 and December 31, 2008
|
|
|
—
|
|
|
|
—
|
|
|
Class A common stock, $0.01 par value, 200,000 shares authorized,
and 14,884 and 14,453 shares issued as of June 30, 2009 and December
31, 2008, respectively
|
|
|
149
|
|
|
|
145
|
|
|
Class B common stock, $0.01 par value, 30,000 shares authorized,
18,425 shares issued as of June 30, 2009 and December 31, 2008
|
|
|
184
|
|
|
|
184
|
|
|
Additional paid-in capital
|
|
|
525,023
|
|
|
|
501,993
|
|
|
Treasury stock, at cost, 1,656 and 692 class B common shares at June
30, 2009 and December 31, 2008, respectively
|
|
|
(87,744
|
)
|
|
|
(30,227
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(25
|
)
|
|
|
(193
|
)
|
|
Retained earnings
|
|
|
211,473
|
|
|
|
150,688
|
|
|
Total shareholders' equity
|
|
|
649,060
|
|
|
|
622,590
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
873,339
|
|
|
$
|
824,985
|
|
|
Chipotle Mexican Grill, Inc.
Consolidated Statement of Cash Flows
(unaudited)
(in thousands)
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
Net income
|
|
$
|
60,785
|
|
|
$
|
41,752
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
29,917
|
|
|
|
24,877
|
|
|
Deferred income tax provision
|
|
|
8,312
|
|
|
|
7,628
|
|
|
Loss on disposal of assets
|
|
|
3,208
|
|
|
|
2,833
|
|
|
Bad debt allowance
|
|
|
(245
|
)
|
|
|
304
|
|
|
Stock-based compensation
|
|
|
7,711
|
|
|
|
4,791
|
|
|
Other
|
|
|
168
|
|
|
|
(33
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
|
671
|
|
|
|
(305
|
)
|
|
Inventory
|
|
|
(926
|
)
|
|
|
(819
|
)
|
|
Prepaid expenses
|
|
|
(1,269
|
)
|
|
|
(2,426
|
)
|
|
Other assets
|
|
|
(397
|
)
|
|
|
(1,737
|
)
|
|
Accounts payable
|
|
|
82
|
|
|
|
5,143
|
|
|
Accrued liabilities
|
|
|
3,375
|
|
|
|
(9,061
|
)
|
|
Income tax receivable/payable
|
|
|
(5,534
|
)
|
|
|
10,902
|
|
|
Deferred rent
|
|
|
7,670
|
|
|
|
10,633
|
|
|
Other long-term liabilities
|
|
|
1,134
|
|
|
|
1,157
|
|
|
Net cash provided by operating activities
|
|
|
114,662
|
|
|
|
95,639
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
Purchases of leasehold improvements, property and equipment, net
|
|
|
(51,809
|
)
|
|
|
(71,266
|
)
|
|
Maturity of available-for-sale securities
|
|
|
99,990
|
|
|
|
20,000
|
|
|
Net cash provided by (used in) investing activities
|
|
|
48,181
|
|
|
|
(51,266
|
)
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
Proceeds from option exercises
|
|
|
8,173
|
|
|
|
41
|
|
|
Excess tax benefit on stock-based compensation
|
|
|
6,796
|
|
|
|
64
|
|
|
Payments on deemed landlord financing
|
|
|
(40
|
)
|
|
|
(37
|
)
|
|
Acquisition of treasury stock
|
|
|
(57,517
|
)
|
|
|
—
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(42,588
|
)
|
|
|
68
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
120,255
|
|
|
|
44,441
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
88,044
|
|
|
|
151,176
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
208,299
|
|
|
$
|
195,617
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
Increase/(decrease) in purchases of leasehold improvements, property
and equipment accrued in accounts payable
|
|
$
|
694
|
|
|
$
|
(542
|
)
|
|
Chipotle Mexican Grill, Inc.
Supplemental Financial Data
(dollars in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
June 30,
|
|
Mar. 31,
|
|
Dec. 31,
|
|
Sept. 30,
|
|
June 30,
|
|
|
|
2009
|
|
2009
|
|
2008
|
|
2008
|
|
2008
|
|
Number of restaurants opened
|
|
24
|
|
26
|
|
39
|
|
20
|
|
49
|
|
Restaurant relocations or closures
|
|
--
|
|
(1)
|
|
--
|
|
--
|
|
(1)
|
|
Number of restaurants at end of period
|
|
886
|
|
862
|
|
837
|
|
798
|
|
778
|
|
Average restaurant sales
|
|
$1,734
|
|
$1,755
|
|
$1,763
|
|
$1,768
|
|
$1,774
|
|
Comparable restaurant sales increases
|
|
1.7%
|
|
2.2%
|
|
3.5%
|
|
3.1%
|
|
7.1%
|
Chipotle Mexican Grill, Inc.
Investor Relations:
Kate
Giha, 614-508-1303
or
Media:
Chris
Arnold, 303-222-5912
