Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported
financial results for its first quarter ended March 31, 2017.
Overview for the first quarter of 2017 as compared to the
first quarter of 2016:
- Revenue increased 28.1% to $1.07
billion
- Comparable restaurant sales increased
17.8% (including 0.6% from recognized revenue previously deferred
related to Chiptopia)
- Restaurant level operating margin
increased to 17.7% from 6.8%
- Net income was $46.1 million, improved
from a net loss of $26.4 million
- Diluted earnings per share was $1.60,
improved from a diluted net loss per share of $0.88
- Opened 57 new restaurants
“2017 is off to a strong start, as our restaurant managers and
teams are energized by our renewed focus on the customer,” said
Steve Ells, Founder, Chairman and CEO of Chipotle. “By simplifying
the focus in our restaurants to only those elements that lead to a
great guest experience, our operations have improved every single
month, which gives us confidence that we are on our way to achieve
our mission to ensure that great food made with whole unprocessed
ingredients is accessible to everyone.”
First quarter 2017 results
Revenue for the quarter was $1.07 billion, up 28.1% from the
first quarter of 2016. The increase in revenue was driven by
comparable restaurant sales increases and to a lesser extent by new
restaurant openings. Comparable restaurant sales increased due to
improved customer traffic, reduced promotional activity, and
increased average check. Comparable restaurant sales increased
17.8%, which included a benefit of 0.6% due to previously deferred
revenue related to Chiptopia recognized during the quarter. We
opened 57 new restaurants during the quarter and closed 15
ShopHouse Southeast Asian Kitchen restaurants and one Chipotle
restaurant. Our total restaurant count as of the end of the quarter
was 2,291.
Food costs were 33.8% of revenue, a decrease of 150 basis points
compared to the first quarter of 2016. The decrease was primarily
driven by lower food waste and testing costs, and bringing the
preparation of lettuce and bell peppers back to our restaurants.
This decrease was partially offset by higher avocado prices.
Restaurant level operating margin was 17.7% in the quarter, an
increase from 6.8% in the first quarter of 2016. The increase was
primarily driven by sales leverage, lower marketing and promotional
spend, efficiencies in labor, and lower food costs. The restaurant
level operating margin also benefited by 0.15% from sales leverage
related to recognizing revenue previously deferred from Chiptopia,
slightly offset by free catering discounts for Chiptopia.
General and administrative expenses were 6.5% of revenue for the
first quarter of 2017, a decrease of 90 basis points from the first
quarter of 2016. In dollar terms, general and administrative
expenses increased $7.4 million compared to the first quarter of
2016 due to increased non-cash stock based compensation and bonus
expense, partially offset by lower legal and travel costs.
Excluding stock based compensation, general and administrative
expenses during the quarter were flat in dollar terms compared to
last year. Stock compensation expense was higher during the first
quarter of 2017 because the first quarter of 2016 included a
reduction in expense for performance awards that were no longer
expected to vest against performance criteria. Without this
reduction, stock compensation expense was consistent in both
years.
Net income for the first quarter of 2017 was $46.1 million, or
$1.60 per diluted share, compared to net loss of $26.4 million, or
a loss of $0.88 per diluted share, in the first quarter of
2016.
Outlook
For the full year of 2017, management is targeting the
following:
- Comparable restaurant sales increases
in the high-single digits
- 195 - 210 new restaurant openings
- An estimated effective full year tax
rate of approximately 39.0%
Definitions
The following definitions apply to these terms as used
throughout this release:
Comparable restaurant sales, or sales comps, represent
the change in period-over-period sales for restaurants in operation
for at least 13 full calendar months.
Comparable restaurant transactions represent the change
in period-over-period transactions, including transactions with no
sales dollars due to promotional discounts, for restaurants in
operation for at least 13 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 2017 financial results on Tuesday, April 25, 2017 at 4:30
PM Eastern time.
The conference call can be accessed live over the phone by
dialing 1-877-451-6152 or for international callers by dialing
1-201-389-0879. The call will be webcast live from the company's
website on the investor relations page at ir.chipotle.com. An
archived webcast will be available approximately one hour after the
end of the call.
About Chipotle
Steve Ells, founder, chairman and 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, and salads made from fresh,
high-quality raw ingredients, prepared using classic cooking
methods and served in an interactive style allowing people to get
exactly what they want. Chipotle seeks out extraordinary
ingredients that are not only fresh, but that are raised
responsibly, with respect for the animals, the land, and the people
who produce them. Chipotle prepares its food without the use of
added colors, flavors or preservatives typically found in fast
food. Chipotle opened with a single restaurant in Denver in 1993
and operates more than 2,300 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 comparable restaurant
sales increases, number of new restaurant openings, and effective
tax rate for 2017 are forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. We use words such
as “anticipate,” “believe,” “could,” “continue,” “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
due to factors such as changes in consumers’ perceptions of our
brand, including as a result of food-borne illness incidents
beginning in late 2015, the impact of competition, including from
sources outside the restaurant industry, decreased overall consumer
spending, or our possible inability to increase menu prices or
realize the benefits of menu price increases; the risk of
food-borne illnesses and other health concerns about our food or
dining out generally; 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 or
higher food costs due to new supply chain protocols; the potential
for increased labor costs or difficulty retaining qualified
employees, including as a result of market pressures, enhanced food
safety procedures in our restaurants, or new regulatory
requirements; risks related to our marketing and advertising
strategies, which may not be successful and may expose us to
liabilities; security risks associated with the acceptance of
electronic payment cards or electronic storage and processing of
confidential customer or employee information; 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 philosophy, including
supply shortages and potential liabilities from advertising claims
and other marketing activities related to Food With Integrity;
risks relating to litigation, including possible governmental
actions related to food-borne illness incidents, as well as class
action litigation regarding employment laws, advertising claims or
other matters; risks relating to our insurance coverage and
self-insurance; our dependence on key personnel and uncertainties
arising from recent changes in our leadership; risks regarding our
ability to protect our brand and reputation; risks associated with
our ability to effectively manage our growth; 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 website at ir.chipotle.com.
Chipotle Mexican Grill, Inc. Condensed Consolidated
Statement of Operations and Comprehensive Income (Loss)
(unaudited) (in thousands, except per share data)
Three months ended March 31,
2017 2016 Revenue $ 1,068,829
100.0
%
$ 834,459
100.0
%
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below): Food, beverage and packaging
361,795 33.8 294,166 35.3 Labor 287,851 26.9 257,681 30.9 Occupancy
78,962 7.4 70,592 8.5 Other operating costs 150,609 14.1 155,189
18.6 General and administrative expenses 69,441 6.5 62,010 7.4
Depreciation and amortization 39,279 3.7 34,788 4.2 Pre-opening
costs 4,069 0.4 4,421 0.5 Loss on disposal and impairment of assets
3,650 0.3 2,216 0.3 Total
operating expenses 995,656 93.2 881,063
105.6 Income (loss) from operations 73,173 6.8
(46,604 ) (5.6 ) Interest and other income, net 1,188
0.1 2,126 0.3 Income (loss) before
income taxes 74,361 7.0 (44,478 ) (5.3 ) Benefit (provision) for
income taxes (28,241 ) (2.6 ) 18,046 2.2
Net income (loss) $ 46,120
4.3
%
$ (26,432 )
(3.2
)%
Other comprehensive income (loss), net of income taxes: Foreign
currency translation adjustments 675 1,929 Unrealized gain (loss)
on investments, net of tax benefit (expense) of $94 and ($1,182)
(182 ) 1,893 Other comprehensive income
(loss), net of income taxes 493 3,822
Comprehensive income (loss) $ 46,613 $ (22,610 ) Earnings
(loss) per share: Basic $ 1.60 $ (0.88 ) Diluted $ 1.60
$ (0.88 ) Weighted average common shares outstanding: Basic
28,750 29,893 Diluted 28,850
29,893
Chipotle Mexican
Grill, Inc. Condensed Consolidated Balance Sheet (in
thousands, except per share data)
March 31, December 31,
2017 2016 (unaudited) Assets Current
assets: Cash and cash equivalents $ 122,413 $ 87,880 Accounts
receivable, net of allowance for doubtful accounts of $40 and $259
as of March 31, 2017 and December 31, 2016, respectively 21,582
40,451 Inventory 18,319 15,019 Prepaid expenses and other current
assets 47,023 44,080 Income tax receivable - 5,108 Investments
454,627 329,836 Total current assets
663,964 522,374 Leasehold improvements, property and equipment, net
1,322,622 1,303,558 Long term investments - 125,055 Other assets
53,737 53,177 Goodwill 21,939 21,939
Total assets $ 2,062,262 $ 2,026,103
Liabilities
and shareholders' equity Current liabilities: Accounts payable
$ 83,840 $ 78,363 Accrued payroll and benefits 96,730 76,301
Accrued liabilities 101,114 127,129 Income tax payable
24,639 - Total current liabilities 306,323
281,793 Deferred rent 297,843 288,927 Deferred income tax liability
15,741 18,944 Other liabilities 34,633 33,946
Total liabilities 654,540 623,610
Shareholders' equity: Preferred stock, $0.01 par value,
600,000 shares authorized, no shares issued as of March 31, 2017
and December 31, 2016, respectively - - Common stock $0.01 par
value, 230,000 shares authorized, and 35,838 and 35,833 shares
issued as of March 31, 2017 and December 31, 2016, respectively 358
358 Additional paid-in capital 1,255,528 1,238,875 Treasury stock,
at cost, 7,160 and 7,019 common shares at March 31, 2017 and
December 31, 2016, respectively (2,107,426 ) (2,049,389 )
Accumulated other comprehensive income (loss) (7,669 ) (8,162 )
Retained earnings 2,266,931 2,220,811
Total shareholders' equity 1,407,722 1,402,493
Total liabilities and shareholders' equity $ 2,062,262
$ 2,026,103
Chipotle Mexican Grill,
Inc. Condensed Consolidated Statement of Cash Flows
(unaudited) (in thousands)
Three months ended March 31, 2017
2016 Operating activities Net income (loss) $ 46,120
$ (26,432 ) Adjustments to reconcile net income (loss) to net cash
provided by operating activities: Depreciation and amortization
39,279 34,788 Deferred income tax (benefit) provision (3,107 )
2,259 Loss on disposal and impairment of assets 3,650 2,216 Bad
debt allowance 180 (40 ) Stock-based compensation expense 16,456
10,505 Excess tax benefit on stock-based compensation - (680 )
Other (8 ) (174 ) Changes in operating assets and liabilities:
Accounts receivable 18,693 14,642 Inventory (3,737 ) (1,833 )
Prepaid expenses and other current assets (2,928 ) (8,337 ) Other
assets (412 ) 1,468 Accounts payable 708 (8,852 ) Accrued
liabilities (3,693 ) 10,397 Income tax payable/receivable 29,751
23,796 Deferred rent 8,882 8,569 Other long-term liabilities 745
(613 ) Net cash provided by operating activities 150,579
61,679
Investing activities Purchases of
leasehold improvements, property and equipment (57,088 ) (62,921 )
Maturities of investments - 45,000 Proceeds from sale of
investments - 540,648 Net cash provided by (used in)
investing activities (57,088 ) 522,727
Financing
activities Acquisition of treasury stock (59,137 ) (583,802 )
Excess tax benefit on stock-based compensation - 680 Stock plan
transactions and other financing activities 6 (10 ) Net cash
used in financing activities (59,131 ) (583,132 ) Effect of
exchange rate changes on cash and cash equivalents 173 1,526 Net
change in cash and cash equivalents 34,533 2,800 Cash and cash
equivalents at beginning of period 87,880 248,005
Cash and cash equivalents at end of period $ 122,413 $
250,805
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, 2017
2016 2016 2016 2016 Number of
restaurants opened 57 72 55 58 58 Restaurant relocations/closures
(16 ) - (1 ) - (2 ) Number of restaurants at end of period 2,291
2,250 2,178 2,124 2,066 Average restaurant sales $ 1,931 $ 1,868 $
1,914 $ 2,067 $ 2,230 Comparable restaurant sales increase
(decrease) 17.8 % (4.8 %) (21.9 %) (23.6 %) (29.7 %)
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170425006668/en/
Chipotle Mexican Grill, Inc.Mark Alexee,
303-605-1042malexee@chipotle.com
Chipotle Mexican Grill (NYSE:CMG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Chipotle Mexican Grill (NYSE:CMG)
Historical Stock Chart
From Apr 2023 to Apr 2024