NEWPORT BEACH, Calif.,
Oct. 22, 2019 /PRNewswire/ --
Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial
results for its third quarter ended September 30, 2019.
Third quarter highlights, year over year:
- Revenue increased 14.6% to $1.4
billion
- Comparable restaurant sales increased 11.0%, net of 10 bps from
loyalty deferral, and included nearly 7.5% of comparable restaurant
transactions growth
- Digital sales grew 87.9% and accounted for 18.3% of sales for
the quarter
- Restaurant level operating margin was 20.8%, an increase of 210
basis points
- Diluted earnings per share was $3.47, net of a $0.35 after-tax impact from expenses related to
restaurant asset impairment, corporate restructuring, and certain
other costs, a 155.1% increase from $1.36. Adjusted diluted earnings per share
excluding these charges was $3.82, a
76.9% increase from $2.16.1
- Opened 25 new restaurants including one relocation, and closed
one restaurant
1 Adjusted net income and adjusted diluted
earnings per share are non-GAAP financial measures. Reconciliations
to GAAP measures and further information are set forth in the table
at the end of this press release.
"We're pleased with our overall results in the quarter, which
reflects further progress on our key strategic initiatives to
provide a great guest experience and position Chipotle to deliver
above industry growth for many years to come," said Brian Niccol, Chief Executive Officer. "These
strong results reinforce that running great restaurants with a
purpose of cultivating a better world is a compelling
proposition."
Results for the three months ended September 30, 2019:
Revenue in the third quarter increased to $1.4 billion, an increase of 14.6% compared with
the same quarter a year ago. The increase was driven by an 11.0%
increase in comparable restaurant sales, net of a 10 basis points
as a result of deferred revenue from our Chipotle Rewards loyalty
program. Comparable restaurant sales improved due to a nearly
7.5% increase in comparable restaurant transactions and a 3.5%
increase in the average check, which includes a benefit from menu
price increases that were implemented during 2018.
We opened 25 new restaurants during the quarter including one
relocation, and closed one restaurant, bringing the total
restaurant count to 2,546. Based on the early success of
Chipotlanes, we shifted our real estate strategy to seek more sites
that can accommodate a Chipotlane. As a result, of the more than 80
restaurants currently under construction, about half of them will
have a Chipotlane, which will result in a total of about 60
Chipotlanes by the end of 2019. Given the longer construction
timeline associated with Chipotlanes, some of the new openings are
likely to shift from Q4 into early 2020, so we expect our total
openings for 2019 to fall at or slightly below the low end of our
FY 2019 range of 140 to 155 openings. For 2020, we anticipate
opening 150 – 165 new restaurants, with more than half including a
Chipotlane.
Food, beverage and packaging costs were 33.2% of revenue, a
decrease of 20 basis points compared to the third quarter of 2018.
The decrease was primarily due to menu price increases nationwide
at the end of 2018, partially offset by higher costs of several
ingredients.
Restaurant level operating margin was 20.8%, an increase from
18.7% in the third quarter of 2018. The improvement was
driven primarily by leverage from the comparable restaurant sales
increase, partially offset by wage inflation at the crew level,
higher costs of several ingredients, and increased delivery
expenses.
General and administrative expenses for the quarter were
$115.1 million on a GAAP basis, or
$104.8 million on a non-GAAP basis,
excluding $7.6 million for
settlements of several distinct legal matters and $2.7 million related to transformation expenses.
GAAP and non-GAAP general and administrative expenses for the third
quarter of 2019 also include underlying general and administrative
expenses totaling $72.0 million,
$25.1 million related to non-cash
stock compensation, $4.8 million
related to higher bonus accruals from our strong operating
performance and payroll taxes on stock option exercises, and
$2.9 million related to other
expenses, including our upcoming All Manager Conference.
The effective income tax rate for the three months ended
September 30, 2019, was 17.9%, a
decrease from 36.8% for the three months ended September 30, 2018, primarily due to excess tax
benefits for stock-based compensation, a reduction in
non-deductible employee meals, changes in tax position due to
legislative guidance, and a non-recurring prior year tax expense
attributable to tax reform in the comparable period.
Net income was $98.6 million, or
$3.47 per diluted share, an increase
from $38.2 million, or $1.36 per diluted share, in the third quarter of
2018. Excluding the impact of restaurant closure costs, corporate
restructuring, agreements to settle several legal matters, and
certain other costs, adjusted net income was $108.3 million and adjusted diluted earnings per
share was $3.82.
Outlook
For 2019, management is anticipating the following:
- Being at the top end of our prior high single digit comparable
restaurant sales growth guidance
- Being at or slightly below our prior guidance of 140 to 155 new
restaurant openings
- An estimated underlying effective Q4 tax rate in the range of
26% to 29%, before the impact of any stock option exercises
For 2020, management is anticipating the following:
- 150 to 165 new restaurant openings
Definitions
The following definitions apply to these terms as used
throughout this release:
- Comparable restaurant sales, or sales comps, and comparable
restaurant transactions, represent the change in
period-over-period sales or transactions 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 direct restaurant operating costs, expressed as a
percent of total revenue.
Conference Call Details
Chipotle will host a conference call to discuss third
quarter 2019 financial results on Tuesday,
October 22, 2019, at 4:30 PM Eastern
time.
The conference call can be accessed live over the phone by
dialing 1-888-317-6003 or for international callers by dialing
1-412-317-6061 and use code: 8409689. The call will be webcast live
from the company's website on the investor relations page at
ir.chipotle.com/events. An archived webcast will be available
approximately one hour after the end of the call.
About Chipotle
Chipotle Mexican Grill, Inc. (NYSE: CMG) is cultivating a better
world by serving responsibly sourced, classically-cooked, real food
with wholesome ingredients without artificial colors, flavors or
preservatives. Chipotle had approximately 2,500 restaurants as of
September 30, 2019, in the United States, Canada, the United
Kingdom, France and
Germany and is the only restaurant
company of its size that owns and operates all its restaurants.
With more than 80,000 employees passionate about providing a great
guest experience, Chipotle is a longtime leader and innovator in
the food industry. Chipotle is committed to making its food more
accessible to everyone while continuing to be a brand with a
demonstrated purpose as it leads the way in digital, technology and
sustainable business practices. Steve
Ells, founder and executive chairman, first opened Chipotle
with a single restaurant in Denver,
Colorado in 1993. For more information or to place an order
online, visit WWW.CHIPOTLE.COM.
Forward-Looking Statements
Certain statements in this press release, including
statements under the heading "Outlook" about our expected
comparable restaurant sales, effective tax rate and estimated
number of new restaurant openings in 2019 and 2020, 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",
"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, including but 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 actual or rumored food-borne illness incidents or other
negative publicity, the impact of competition, including from
sources outside the restaurant industry, decreased overall consumer
spending, or the 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;
risks associated with our increased focus on our digital business,
delivery orders and catering, including our inability to continue
to grow these business lines and risks arising from our reliance on
third parties to fulfill delivery orders; factors that could affect
our ability to achieve our planned expansion, such as the
availability of suitable new restaurant sites and our ability to
attract and retain qualified employees; the performance of new
restaurants and their impact on existing restaurant sales; the
potential for increased labor costs or difficulty training and
retaining qualified employees, including as a result of market
pressures, enhanced food safety procedures in our restaurants, or
new regulatory requirements; increases in the cost of food
ingredients and other key supplies or higher food costs due to
changes in supply chain protocols or new or increased export
duties, tariffs or trade restrictions; risks related to our
marketing and advertising strategies, which may not be successful
and may expose us to liabilities; risks relating to our
expansion into new markets, including outside the U.S., or
non-traditional restaurant sites; 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 this philosophy; privacy
and cyber security risks associated with our acceptance of
electronic payments or electronic storage and processing of
confidential customer or employee information; 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 the impact of social media, including the rapid
proliferation of information about our restaurants or brand that
may be unfavorable; risks regarding our ability to protect our
brand and reputation; risks associated with our reliance on certain
information technology systems; risks associated with our
dependence on key personnel; 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 Income
|
(unaudited)
|
(in thousands,
except per share data)
|
|
|
Three months ended
September 30,
|
|
2019
|
|
2018
|
Revenue
|
$
|
1,403,697
|
|
100.0
|
%
|
|
$
|
1,225,007
|
|
100.0
|
%
|
Restaurant operating
costs (exclusive of depreciation and amortization shown separately
below):
|
|
|
|
|
|
|
|
|
|
|
|
Food, beverage and
packaging
|
|
466,496
|
|
33.2
|
|
|
|
409,213
|
|
33.4
|
|
Labor
|
|
373,645
|
|
26.6
|
|
|
|
332,865
|
|
27.2
|
|
Occupancy
|
|
91,409
|
|
6.5
|
|
|
|
86,691
|
|
7.1
|
|
Other operating
costs
|
|
180,259
|
|
12.8
|
|
|
|
167,488
|
|
13.7
|
|
General and
administrative expenses
|
|
115,070
|
|
8.2
|
|
|
|
109,524
|
|
8.9
|
|
Depreciation and
amortization
|
|
52,206
|
|
3.7
|
|
|
|
52,654
|
|
4.3
|
|
Pre-opening
costs
|
|
3,064
|
|
0.2
|
|
|
|
2,127
|
|
0.2
|
|
Impairment, closure
costs, and asset disposals
|
|
5,927
|
|
0.4
|
|
|
|
6,454
|
|
0.5
|
|
Total operating
expenses
|
|
1,288,076
|
|
91.8
|
|
|
|
1,167,016
|
|
95.3
|
|
Income from
operations
|
|
115,621
|
|
8.2
|
|
|
|
57,991
|
|
4.7
|
|
Interest and other
income, net
|
|
4,411
|
|
0.3
|
|
|
|
2,493
|
|
0.2
|
|
Income before income
taxes
|
|
120,032
|
|
8.6
|
|
|
|
60,484
|
|
4.9
|
|
Provision for income
taxes
|
|
(21,450)
|
|
(1.5)
|
|
|
|
(22,280)
|
|
(1.8)
|
|
Net income
|
$
|
98,582
|
|
7.0
|
%
|
|
$
|
38,204
|
|
3.1
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
3.55
|
|
|
|
|
$
|
1.37
|
|
|
|
Diluted
|
$
|
3.47
|
|
|
|
|
$
|
1.36
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,775
|
|
|
|
|
|
27,802
|
|
|
|
Diluted
|
|
28,388
|
|
|
|
|
|
28,017
|
|
|
|
Chipotle Mexican
Grill, Inc.
|
Condensed
Consolidated Statement of Income
|
(unaudited)
|
(in thousands,
except per share data)
|
|
|
Nine months ended
September 30,
|
|
2019
|
|
2018
|
Revenue
|
$
|
4,146,145
|
|
100.0
|
%
|
|
$
|
3,639,924
|
|
100.0
|
%
|
Restaurant operating
costs (exclusive of depreciation and amortization shown separately
below):
|
|
|
|
|
|
|
|
|
|
|
|
Food, beverage and
packaging
|
|
1,371,147
|
|
33.1
|
|
|
|
1,194,224
|
|
32.8
|
|
Labor
|
|
1,090,540
|
|
26.3
|
|
|
|
993,570
|
|
27.3
|
|
Occupancy
|
|
270,102
|
|
6.5
|
|
|
|
258,719
|
|
7.1
|
|
Other operating
costs
|
|
548,311
|
|
13.2
|
|
|
|
490,728
|
|
13.5
|
|
General and
administrative expenses
|
|
339,136
|
|
8.2
|
|
|
|
271,740
|
|
7.5
|
|
Depreciation and
amortization
|
|
157,629
|
|
3.8
|
|
|
|
148,762
|
|
4.1
|
|
Pre-opening
costs
|
|
6,122
|
|
0.1
|
|
|
|
6,790
|
|
0.2
|
|
Impairment, closure
costs, and asset disposals
|
|
17,356
|
|
0.4
|
|
|
|
56,635
|
|
1.6
|
|
Total operating
expenses
|
|
3,800,343
|
|
91.7
|
|
|
|
3,421,168
|
|
94.0
|
|
Income from
operations
|
|
345,802
|
|
8.3
|
|
|
|
218,756
|
|
6.0
|
|
Interest and other
income, net
|
|
11,487
|
|
0.3
|
|
|
|
6,210
|
|
0.2
|
|
Income before income
taxes
|
|
357,289
|
|
8.6
|
|
|
|
224,966
|
|
6.2
|
|
Provision for income
taxes
|
|
(79,547)
|
|
(1.9)
|
|
|
|
(80,432)
|
|
(2.2)
|
|
Net income
|
$
|
277,742
|
|
6.7
|
%
|
|
$
|
144,534
|
|
4.0
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
10.02
|
|
|
|
|
$
|
5.19
|
|
|
|
Diluted
|
$
|
9.83
|
|
|
|
|
$
|
5.17
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,730
|
|
|
|
|
|
27,844
|
|
|
|
Diluted
|
|
28,268
|
|
|
|
|
|
27,967
|
|
|
|
Chipotle Mexican
Grill, Inc.
|
Condensed
Consolidated Balance Sheet
|
(in thousands,
except per share data)
|
|
|
September
30,
|
|
December
31,
|
|
2019
|
|
2018
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
386,565
|
|
$
|
249,953
|
Accounts receivable,
net of allowance for doubtful accounts of $81 and $0 as of
September 30, 2019 and December 31, 2018, respectively
|
|
49,489
|
|
|
62,312
|
Inventory
|
|
23,871
|
|
|
21,555
|
Prepaid expenses and
other current assets
|
|
62,211
|
|
|
54,129
|
Income tax
receivable
|
|
3,824
|
|
|
-
|
Investments
|
|
428,796
|
|
|
426,845
|
Total current
assets
|
|
954,756
|
|
|
814,794
|
Leasehold
improvements, property and equipment, net
|
|
1,425,446
|
|
|
1,379,254
|
Restricted
cash
|
|
28,697
|
|
|
30,199
|
Operating lease
assets
|
|
2,479,464
|
|
|
-
|
Deferred income tax
assets
|
|
9,634
|
|
|
-
|
Other
assets
|
|
18,001
|
|
|
19,332
|
Goodwill
|
|
21,939
|
|
|
21,939
|
Total
assets
|
$
|
4,937,937
|
|
$
|
2,265,518
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
118,483
|
|
$
|
113,071
|
Accrued payroll and
benefits
|
|
145,766
|
|
|
113,467
|
Accrued
liabilities
|
|
141,159
|
|
|
147,849
|
Unearned
revenue
|
|
61,809
|
|
|
70,474
|
Current operating
lease liabilities
|
|
166,802
|
|
|
-
|
Income tax
payable
|
|
-
|
|
|
5,129
|
Total current
liabilities
|
|
634,019
|
|
|
449,990
|
Deferred
rent
|
|
-
|
|
|
330,985
|
Long-term operating
lease liabilities
|
|
2,642,737
|
|
|
-
|
Deferred income tax
liabilities
|
|
-
|
|
|
11,566
|
Other
liabilities
|
|
38,734
|
|
|
31,638
|
Total
liabilities
|
|
3,315,490
|
|
|
824,179
|
Shareholders'
equity:
|
|
|
|
|
|
Preferred stock, $0.01
par value, 600,000 shares authorized, no shares issued as of
September 30, 2019 and December 31, 2018, respectively
|
|
-
|
|
|
-
|
Common stock, $0.01
par value, 230,000 shares authorized, 36,320 and 35,973 shares
issued as of September 30, 2019 and December 31, 2018,
respectively
|
|
363
|
|
|
360
|
Additional paid-in
capital
|
|
1,439,811
|
|
|
1,374,154
|
Treasury stock, at
cost, 8,519 and 8,276 common shares at September 30, 2019 and
December 31, 2018, respectively
|
|
(2,660,872)
|
|
|
(2,500,556)
|
Accumulated other
comprehensive loss
|
|
(5,887)
|
|
|
(6,236)
|
Retained
earnings
|
|
2,849,032
|
|
|
2,573,617
|
Total shareholders'
equity
|
|
1,622,447
|
|
|
1,441,339
|
Total liabilities and
shareholders' equity
|
$
|
4,937,937
|
|
$
|
2,265,518
|
Chipotle Mexican
Grill, Inc.
|
Condensed
Consolidated Statement of Cash Flows
|
(unaudited)
|
(in
thousands)
|
|
|
Nine months
ended
|
|
September
30,
|
|
2019
|
|
2018
|
Operating
activities
|
|
|
|
|
|
Net income
|
$
|
277,742
|
|
$
|
144,534
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
157,629
|
|
|
148,762
|
Amortization of
operating lease assets
|
|
117,622
|
|
|
-
|
Deferred income tax
(benefit) provision
|
|
(15,146)
|
|
|
26,424
|
Impairment, closure
costs, and asset disposals
|
|
10,216
|
|
|
56,635
|
Bad debt
allowance
|
|
85
|
|
|
116
|
Stock-based
compensation expense
|
|
65,657
|
|
|
48,219
|
Other
|
|
(3,044)
|
|
|
(1,933)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
19,039
|
|
|
13,442
|
Inventory
|
|
(2,312)
|
|
|
1,562
|
Prepaid expenses and
other current assets
|
|
(17,514)
|
|
|
(5,041)
|
Other
assets
|
|
2,864
|
|
|
1,500
|
Accounts
payable
|
|
(4,162)
|
|
|
18,183
|
Accrued payroll and
benefits
|
|
30,471
|
|
|
45,146
|
Accrued
liabilities
|
|
25,552
|
|
|
13,463
|
Unearned
revenue
|
|
(8,665)
|
|
|
(20,517)
|
Income tax
payable/receivable
|
|
(8,985)
|
|
|
(12,366)
|
Deferred
rent
|
|
-
|
|
|
17,096
|
Operating lease
liabilities
|
|
(112,478)
|
|
|
-
|
Other long-term
liabilities
|
|
472
|
|
|
(2,728)
|
Net cash provided by
operating activities
|
|
535,043
|
|
|
492,497
|
Investing
activities
|
|
|
|
|
|
Purchases of
leasehold improvements, property and equipment
|
|
(237,965)
|
|
|
(209,999)
|
Purchases of
investments
|
|
(328,107)
|
|
|
(297,217)
|
Maturities of
investments
|
|
328,448
|
|
|
295,000
|
Net cash used in
investing activities
|
|
(237,624)
|
|
|
(212,216)
|
Financing
activities
|
|
|
|
|
|
Acquisition of
treasury stock
|
|
(151,621)
|
|
|
(116,401)
|
Tax withholding on
share-based compensation awards
|
|
(10,420)
|
|
|
(4,627)
|
Stock plan
transactions and other financing activities
|
|
(665)
|
|
|
(150)
|
Net cash used in
financing activities
|
|
(162,706)
|
|
|
(121,178)
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
397
|
|
|
(665)
|
Net change in cash,
cash equivalents, and restricted cash
|
|
135,110
|
|
|
158,438
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
|
280,152
|
|
|
214,170
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
|
415,262
|
|
$
|
372,608
|
Supplemental
disclosures of cash flow information
|
|
|
|
|
|
Income taxes
paid
|
$
|
103,439
|
|
$
|
66,091
|
Purchases of
leasehold improvements, property, and equipment accrued in accounts
payable and accrued liabilities
|
$
|
40,250
|
|
$
|
31,063
|
Acquisition of
treasury stock accrued in accounts payable and accrued
liabilities
|
$
|
748
|
|
$
|
600
|
Chipotle Mexican
Grill, Inc.
|
Supplemental
Financial and Other Data
|
(dollars in
thousands)
|
|
|
|
For the three
months ended
|
|
|
Sep.
30,
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Dec.
31,
|
|
Sep.
30,
|
|
|
2019
|
|
2019
|
|
2019
|
|
2018
|
|
2018
|
Number of restaurants
opened
|
|
|
25
|
|
|
20
|
|
|
15
|
|
|
40
|
|
|
28
|
Restaurant
closures
|
|
|
(1)
|
|
|
(1)
|
|
|
(2)
|
|
|
(8)
|
|
|
(32)
|
Restaurant
relocations
|
|
|
(1)
|
|
|
-
|
|
|
-
|
|
|
(4)
|
|
|
-
|
Number of restaurants
at end of period
|
|
|
2,546
|
|
|
2,523
|
|
|
2,504
|
|
|
2,491
|
|
|
2,463
|
Average restaurant
sales
|
|
$
|
2,154
|
|
$
|
2,099
|
|
$
|
2,048
|
|
$
|
2,004
|
|
$
|
1,980
|
Comparable restaurant
sales increase
|
|
|
11.0%
|
|
|
10.0%
|
|
|
9.9%
|
|
|
6.1%
|
|
|
4.4%
|
Chipotle Mexican Grill, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
The following provides a reconciliation of non-GAAP financial
measures presented in the text above to the most directly
comparable financial measures calculated and presented in
accordance with GAAP.
Adjusted net income is net income excluding restaurant asset
impairment, corporate restructuring, distinct legal proceedings,
and certain other costs. Adjusted general and administrative
expense is general and administrative expense excluding distinct
legal proceedings and transformation expenses. We present these
non-GAAP measures in order to facilitate meaningful evaluation of
our operating performance across periods. These adjustments are
intended to provide greater transparency of underlying performance
and to allow investors to evaluate our business on the same basis
as our management, which uses these non-GAAP measures in evaluating
the company's performance. Our adjusted net income, adjusted
diluted earnings per share, and adjusted general and administrative
expenses measures may not be comparable to other companies'
adjusted measures. These adjustments are not necessarily indicative
of what our actual financial performance would have been during the
periods presented and should be viewed in addition to, and not as
an alternative to, our results prepared in accordance with GAAP.
Further details regarding these adjustments are included in the
tables below.
Adjusted Net
Income and Adjusted Diluted Earnings Per Share
|
|
|
|
|
|
|
|
Three months
ended
|
|
September
30,
|
|
2019
|
|
2018
|
Net income
|
$
|
98,582
|
|
$
|
38,204
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Restaurant closure
costs:
|
|
|
|
|
|
Operating lease asset
impairment and other restaurant closure
costs(1)
|
|
182
|
|
|
4,656
|
Accelerated
depreciation(2)
|
|
-
|
|
|
437
|
Duplicate rent
expense(3)
|
|
214
|
|
|
-
|
Corporate
Restructuring:
|
|
|
|
|
|
Operating lease asset
impairment and other office closure costs(4)
|
|
-
|
|
|
(1,076)
|
Accelerated
depreciation(2)
|
|
-
|
|
|
5,543
|
Duplicate rent
expense(3)
|
|
942
|
|
|
953
|
Employee related
restructuring costs(5)
|
|
1,515
|
|
|
14,882
|
Legal
Proceedings(6)
|
|
7,550
|
|
|
-
|
Other
Adjustments(7)
|
|
2,110
|
|
|
644
|
Total non-GAAP
adjustments
|
$
|
12,513
|
|
$
|
26,039
|
Tax effect of
non-GAAP adjustments
|
|
(2,791)
|
|
|
(3,590)
|
After tax impact of
non-GAAP adjustments
|
$
|
9,722
|
|
$
|
22,449
|
Adjusted net
income
|
$
|
108,304
|
|
$
|
60,653
|
|
|
|
|
|
|
Diluted
weighted-average number of common shares outstanding
|
|
28,388
|
|
|
28,017
|
Diluted earnings per
share
|
$
|
3.47
|
|
$
|
1.36
|
Adjusted diluted
earnings per share
|
$
|
3.82
|
|
$
|
2.16
|
|
(1) Operating lease
asset impairment charges, and other closure expenses for restaurant
closures announced in June 2018 due to underperformance.
|
(2) Accelerated
depreciation for restaurant and office closures announced in June
2018 due to underperformance and the corporate
restructuring.
|
(3) Duplicate rent
expense for the corporate headquarter relocation and office
consolidation announced in May 2018 and for closed
restaurants.
|
(4) Operating lease
asset impairment charges and other closure expenses for the
corporate headquarter relocation and office consolidation announced
in May 2018.
|
(5) Costs for
employee severance, stock modifications, transition expenses,
recruitment, relocation costs, third party and other
employee-related costs.
|
(6) For the three
months ended September 30, 2019, charges relate to settlements for
several distinct legal matters. These amounts are expected to
exceed typical costs for these types of legal
proceedings.
|
(7) For the three
months ended September 30, 2019, consists of an asset impairment
charge related to our jet.
|
Chipotle Mexican
Grill, Inc.
|
Reconciliation of
Non-GAAP Financial Measures
|
(in thousands,
except per share amounts)
|
(unaudited)
|
|
|
Three months
ended
|
|
September 30,
2019
|
General and
administrative expenses
|
$
|
115.1
|
Non-GAAP
adjustments:
|
|
|
Legal
Proceedings(1)
|
|
(7.6)
|
Transformation
expenses(2)
|
|
(2.7)
|
Total non-GAAP
adjustments
|
$
|
(10.3)
|
Adjusted general and
administrative expenses
|
$
|
104.8
|
|
(1) Charges relate to
settlements for several distinct legal matters. These amounts are
expected to exceed typical costs for these types of legal
proceedings.
|
(2) Transformation
expenses include duplicate rent expense of $1,156 and employee
related restructuring costs of $1,515 for office and restaurant
closures announced in June 2018 due to the corporate restructuring
and underperformance.
|
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SOURCE Chipotle Mexican Grill