Chipotle Mexican Grill, Inc. Announces First Quarter 2015 Results

DENVER - (BUSINESS WIRE) - April 21, 2015 - Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its first quarter ended March 31, 2015.

Highlights for the first quarter of 2015 as compared to the first quarter of 2014 include:

  • Revenue increased 20.4% to $1.09 billion
  • Comparable restaurant sales increased 10.4%
  • Restaurant level operating margin was 27.5%, an increase of 160 basis points
  • Net income was $122.6 million, an increase of 47.6%
  • Diluted earnings per share was $3.88, an increase of 47.0%
  • Opened 49 new restaurants

"We are very proud of our start to 2015, as our average sales volumes reached a record $2.5 million per restaurant. We attribute this success to our unique food culture and people culture, which are the driving forces to create a new fast food model. The quarter was not without its challenges however, as we suspended one of our primary pork suppliers and are exploring options to increase the supply of pork that meets our high standards. But we remain confident that higher quality, Responsibly Raised® ingredients taste better and will continue to resonate with our customers," said Steve Ells, founder, chairman and co-CEO of Chipotle.

First quarter 2015 results

Revenue for the quarter was $1.09 billion, up 20.4% from the first quarter of 2014. The growth in revenue was driven by new restaurants not in the comparable base and a 10.4% increase in comparable restaurant sales. Comparable restaurant sales growth was driven primarily by an increase in average check, which includes the benefit of a nationwide menu price increase that was fully rolled out during the second quarter of 2014, and to a lesser extent by increased traffic.

We opened 49 new restaurants during the quarter, bringing the total restaurant count to 1,831.

Food costs were 33.9% of revenue, a decrease of 60 basis points, as the benefit of our menu price increase were partially offset by increased beef and tortilla costs as compared to the first quarter of 2014.

Restaurant level operating margin was 27.5% in the quarter, an increase of 160 basis points from the first quarter of 2014. The increase was primarily driven by favorable sales leverage.

General and administrative expenses were 5.8% of revenue, a decrease of 160 basis points due to lower non-cash stock based compensation expense.

Net income for the first quarter of 2015 was $122.6 million, or $3.88 per diluted share, compared to $83.1 million, or $2.64 per diluted share, in the first quarter of 2014.

"Our teams of top performers continue to create extraordinary customer experiences in our restaurants, which generates customer loyalty and attracts new customers. We are very pleased with our field leadership's ability to empower restaurant teams and develop new leaders. This competitive advantage is at the heart of our people culture, and we believe will continue to deliver strong business results throughout 2015," said Monty Moran, co-CEO of Chipotle.

Outlook

For 2015, management expects the following:

  • 190-205 new restaurant openings
  • Low-to-mid single digit comparable restaurant sales increases
  • An effective full year tax rate of approximately 38.7%

Definitions

The following definitions apply to these terms as used throughout this release:

Comparable restaurant sales represent the change in period-over-period sales for restaurants in operation for at least 13 full calendar months.

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 2015 financial results on Tuesday, April 21, 2015 at 4:30 PM Eastern time.

The conference call can be accessed live over the phone by dialing 1-888-437-9315 or for international callers by dialing 1-719-325-2418. 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 1376573. The replay will be available until April 28, 2015. 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-CEO, 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 raised responsibly with respect for the animals, the land, and the farmers who produce the food. In order to achieve this vision, we focus on building a special people culture that is centered on creating teams of top performers empowered to achieve high standards. This people culture not only leads to a better dining experience for our customers, it also allows us to develop future leaders from within. Chipotle opened with a single restaurant in 1993 and operates more than 1,800 restaurants, including 19 Chipotle restaurants outside the US, 10 ShopHouse Southeast Asian Kitchen restaurants, and is an investor in a consolidated entity that owns and operates two Pizzeria Locale 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 trends, and effective tax rates in 2015, as well as statements about our ability to achieve future business results, 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 due to factors such as changes in consumer preferences or decreased consumer spending, our possible inability to increase menu prices or realize the benefits of menu price increases, or the impact of competition; 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 performance of new restaurants and their impact on existing restaurant sales; increases in the cost of food ingredients and other key supplies; the potential for increased labor costs or difficulty retaining qualified employees, including as a result of immigration enforcement activities; the risk of food-borne illnesses and other health concerns about our food or dining out generally; risks relating to our expansion into new markets; the impact of federal, state or local government regulations relating to our employees, our restaurant design, or the sale of food or alcoholic beverages; risks associated with our Food With Integrity strategy, including supply shortages and potential liabilities related to advertising claims and other marketing activities related to Food With Integrity; security risks associated with the acceptance of electronic payment cards or electronic storage and processing of confidential customer or employee information; risks relating to litigation; risks relating to our insurance coverage and self-insurance; our dependence on key personnel; risks related to our marketing and advertising strategies and ability to protect our brand and reputation; 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 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

 

 

 

2015

 

 

 

 

2014

 

 

Revenue

 

 

$

1,089,043

 

 

    

100.0

 

%

 

    

 

 904,163

 

 

 

100.0

 

%

Restaurant operating costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Exclusive of depreciation and amortization shown separately below):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food, beverage and packaging

 

 

 

369,026

 

 

 

33.9

 

 

 

 

 

311,792

 

 

 

34.5

 

 

Labor

 

 

 

244,151

 

 

 

22.4

 

 

 

 

 

208,208

 

 

 

23.0

 

 

Occupancy

 

 

 

63,185

 

 

 

5.8

 

 

 

 

 

54,846

 

 

 

6.1

 

 

Other operating costs

 

 

 

113,541

 

 

 

10.4

 

 

 

 

 

95,137

 

 

 

10.5

 

 

General and administrative expenses

 

 

 

63,061

 

 

 

5.8

 

 

 

 

 

66,917

 

 

 

7.4

 

 

Depreciation and amortization

 

 

 

30,643

 

 

 

2.8

 

 

 

 

 

25,754

 

 

 

2.8

 

 

Pre-opening costs

 

 

 

3,435

 

 

 

0.3

 

 

 

 

 

4,300

 

 

 

0.5

 

 

Loss on disposal of assets

 

 

 

4,200

 

 

 

0.4

 

 

 

 

 

1,559

 

 

 

0.2

 

 

Total operating expenses

 

 

 

891,242

 

 

 

81.8

 

 

 

 

 

768,513

 

 

 

85.0

 

 

Income from operations

 

 

 

197,801

 

 

 

18.2

 

 

 

 

 

135,650

 

 

 

15.0

 

 

Interest and other income (expense), net

 

 

 

1,223

 

 

 

0.1

 

 

 

 

 

689

 

 

 

0.1

 

 

Income before income taxes

 

 

 

199,024

 

 

 

18.3

 

 

 

 

 

136,339

 

 

 

15.1

 

 

Provision for income taxes

 

 

 

(76,383

)

 

 

(7.0

)

 

 

 

 

(53,270

)

 

 

(5.9

)

 

Net income

 

 

$

122,641

 

 

 

11.3

 

%

 

 

$

83,069

 

 

 

9.2

 

%

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

3.95

 

 

 

 

 

 

 

$

2.67

 

 

 

 

 

Diluted

 

 

$

3.88

 

 

 

 

 

 

 

$

2.64

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

31,036

 

 

 

 

 

 

 

 

31,061

 

 

 

 

 

Diluted

 

 

 

31,592

 

 

 

 

 

 

 

 

31,486

 

 

 

 

 

Comprehensive income

 

 

$

117,929

 

 

 

 

 

 

 

$

82,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chipotle Mexican Grill, Inc.

Condensed Consolidated Balance Sheet

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

March 31

 

    

December 31

 

 

 

2015

 

 

2014

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

542,957

 

 

 

$

419,465

 

Accounts receivable, net of allowance for doubtful accounts of $1,172 and $1,199 as of
March 31, 2015 and December 31, 2014, respectively

 

 

 

21,480

 

 

 

 

34,839

 

Inventory

 

 

 

16,052

 

 

 

 

15,332

 

Current deferred tax asset

 

 

 

19,377

 

 

 

 

18,968

 

Prepaid expenses and other current assets

 

 

 

37,252

 

 

 

 

34,795

 

Income tax receivable

 

 

 

-

 

 

 

 

16,488

 

Investments

 

 

 

347,577

 

 

 

 

338,592

 

Total current assets

 

 

 

984,695

 

 

 

 

878,479

 

Leasehold improvements, property and equipment, net

 

 

 

1,119,469

 

 

 

 

1,106,984

 

Long term investments

 

 

 

531,082

 

 

 

 

496,106

 

Other assets

 

 

 

46,534

 

 

 

 

42,777

 

Goodwill

 

 

 

21,939

 

 

 

 

21,939

 

Total assets

 

 

$

2,703,719

 

 

 

$

2,546,285

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

$

76,066

 

 

 

$

69,613

 

Accrued payroll and benefits

 

 

 

67,212

 

 

 

 

73,894

 

Accrued liabilities

 

 

 

85,850

 

 

 

 

102,203

 

Income tax payable

 

 

 

47,993

 

 

 

 

-

 

Total current liabilities

 

 

 

277,121

 

 

 

 

245,710

 

Deferred rent

 

 

 

225,897

 

 

 

 

219,414

 

Deferred income tax liability

 

 

 

35,399

 

 

 

 

40,529

 

Other liabilities

 

 

 

30,968

 

 

 

 

28,263

 

Total liabilities

 

 

 

569,385

 

 

 

 

533,916

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of March 31,
2015 and December 31, 2014, respectively

 

 

 

-

 

 

 

 

-

 

Common stock $0.01 par value, 230,000 shares authorized, and 35,453 and 35,394 shares
issued as of March 31, 2015 and December 31, 2014, respectively

 

 

 

355

 

 

 

 

354

 

Additional paid-in capital

 

 

 

1,066,216

 

 

 

 

1,038,932

 

Treasury stock, at cost, 4,401 and 4,367 common shares at March 31, 2015 and December 31,
2014, respectively

 

 

 

(772,008

)

 

 

 

(748,759

)

Accumulated other comprehensive income (loss)

 

 

 

(5,141

)

 

 

 

(429

)

Retained earnings

 

 

 

1,844,912

 

 

 

 

1,722,271

 

Total shareholders' equity

 

 

 

2,134,334

 

 

 

 

2,012,369

 

Total liabilities and shareholders' equity

 

 

$

2,703,719

 

 

 

$

2,546,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chipotle Mexican Grill, Inc.

Condensed Consolidated Statement of Cash Flows

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31

 

 

 

2015

 

 

2014

Operating activities

 

 

 

 

 

 

 

 

Net income

 

 

$

122,641

 

 

 

$

83,069

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

30,643

 

 

 

 

25,754

 

Deferred income tax (benefit) provision

 

 

 

(5,551

)

 

 

 

1,551

 

Loss on disposal of assets

 

 

 

4,200

 

 

 

 

1,559

 

Bad debt allowance

 

 

 

(27

)

 

 

 

(20

)

Stock-based compensation expense

 

 

 

16,986

 

 

 

 

27,359

 

Excess tax benefit on stock-based compensation

 

 

 

(10,827

)

 

 

 

(8,955

)

Other

 

 

 

119

 

 

 

 

64

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

 

13,300

 

 

 

 

7,439

 

Inventory

 

 

 

(737

)

 

 

 

(2,160

)

Prepaid expenses and other current assets

 

 

 

(2,516

)

 

 

 

(4,014

)

Other assets

 

 

 

(3,825

)

 

 

 

(2,365

)

Accounts payable

 

 

 

14,831

 

 

 

 

8,006

 

Accrued liabilities

 

 

 

(21,367

)

 

 

 

(15,159

)

Income tax payable/receivable

 

 

 

75,314

 

 

 

 

48,088

 

Deferred rent

 

 

 

6,780

 

 

 

 

6,764

 

Other long-term liabilities

 

 

 

2,755

 

 

 

 

2,798

 

Net cash provided by operating activities

 

 

 

242,719

 

 

 

 

179,778

 

Investing activities

 

 

 

 

 

 

 

 

Purchases of leasehold improvements, property and equipment

 

 

 

(59,363

)

 

 

 

(47,230

)

Purchases of investments

 

 

 

(139,114

)

 

 

 

(89,782

)

Maturities of investments

 

 

 

95,000

 

 

 

 

49,500

 

Net cash used in investing activities

 

 

 

(103,477

)

 

 

 

(87,512

)

Financing activities

 

 

 

 

 

 

 

 

Acquisition of treasury stock

 

 

 

(23,249

)

 

 

 

(12,736

)

Excess tax benefit on stock-based compensation

 

 

 

10,827

 

 

 

 

8,955

 

Stock plan transactions and other financing activities

 

 

 

(119

)

 

 

 

(56

)

Net cash used in financing activities

 

 

 

(12,541

)

 

 

 

(3,837

)

Effect of exchange rate changes on cash and cash equivalents

 

 

 

(3,209

)

 

 

 

(40

)

Net change in cash and cash equivalents

 

 

 

123,492

 

 

 

 

88,389

 

Cash and cash equivalents at beginning of year

 

 

 

419,465

 

 

 

 

323,203

 

Cash and cash equivalents at end of period

 

 

$

542,957

 

 

 

$

411,592

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

 

Increase (decrease) in purchases of leasehold improvements, property and equipment accrued in
accounts payable and accrued liabilities

 

 

$

(9,946

)

 

 

$

(290

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chipotle Mexican Grill, Inc.

Supplemental Financial and Other Data

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

Sep. 30,

 

 

Jun. 30,

 

 

Mar. 31,

 

 

 

2015

 

 

2014

 

 

2014

 

 

2014

 

 

2014

Number of restaurants opened

 

 

 

49

 

 

 

 

60

 

 

 

 

43

 

 

 

 

45

 

 

 

 

44

 

Restaurant relocations

 

 

 

(1

)

 

 

 

(1

)

 

 

 

-

 

 

 

 

(1

)

 

 

 

(2

)

Number of restaurants at end of period

 

 

 

1,831

 

 

 

 

1,783

 

 

 

 

1,724

 

 

 

 

1,681

 

 

 

 

1,637

 

Average restaurant sales

 

 

$

2,516

 

 

 

$

2,472

 

 

 

$

2,403

 

 

 

$

2,307

 

 

 

$

2,226

 

Comparable restaurant sales increases

 

 

 

10.4

%

 

 

 

16.1

%

 

 

 

19.8

%

 

 

 

17.3

%

 

 

 

13.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SOURCE Chipotle Mexican Grill

Contact:

Mark Alexee
Chipotle Mexican Grill
Investor Relations:
303-605-1042

 

###

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