NEWPORT BEACH, Calif.,
Oct. 21, 2021 /PRNewswire/
-- Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported
financial results for its third quarter ended September 30, 2021.
Third quarter highlights, year over year:
- Total revenue increased 21.9% to $2.0
billion
- Comparable restaurant sales increased 15.1%
- Digital sales grew 8.6% and accounted for 42.8% of sales
- Operating margin was 12.3%, an increase from 6.7%
- Restaurant level operating margin was 23.5% 1, an
increase of 400 basis points
- Diluted earnings per share was $7.18, a 154.6% increase from $2.82. Excluding a $0.16 after-tax net impact resulting from a tax
benefit, which was partially offset by certain stock compensation
expenses, corporate restructuring costs, restaurant asset
impairment and closure costs, and certain other expenses, adjusted
diluted earnings per share was $7.02,
an 86.7% increase from $3.76 1
- Opened 41 new restaurants including 2 relocations
1 Restaurant level operating margin,
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.
|
"Chipotle's third quarter results demonstrate strong momentum in
our business fueled by a multi-pronged strategy and a passionate
team that's delighted to welcome more guests back into our
restaurants," said Brian Niccol,
Chairman and CEO, Chipotle. "Our team has proven their ability to
be resilient and successfully execute against macro complexities.
As a result, I believe we are better positioned to drive
sustainable long-term growth than ever before, which makes me
excited about what we can accomplish in the years ahead."
COVID-19 and Liquidity Update:
The health and well-being of our employees and guests continues
to be our top priority. Beyond the investments made in our people,
restaurants, and supply chain, we are closely following the
recommendations of the CDC and local health departments. We have
implemented and enhanced numerous protocols that give our employees
and guests confidence that Chipotle remains steadfast in our
commitment to keep them safe as in-restaurant ordering and dining
increases.
As of September 30, 2021, Chipotle
continues to maintain a strong financial position with $1.2 billion in cash, investments and restricted
cash, and no debt. We also have access to a $500 million untapped credit facility. Our
financial strength gives us the opportunity to make on-going
strategic investments in our people, business, and communities,
which we believe will benefit us for years to come.
Results for the three months ended September 30, 2021:
Revenue in the third quarter was $2.0
billion, an increase of 21.9% compared to the third quarter
of 2020 and includes a 15.1% increase in comparable restaurant
sales. We believe on-going strength in digital sales, the strong
recovery of in-restaurant sales, and positive customer reception to
our new menu items contributed to the strong revenue growth. For
Q4, while uncertainty remains on several fronts including the
potential impact of COVID-19 as well as inflationary and staffing
pressures, we're encouraged by our strong underlying business
momentum and if this trend continues, we expect our comparable
restaurant sales to be in the low to mid double-digits range. This
assumes about 200 basis points less pricing contribution during the
fourth quarter versus the third quarter as we lap some of our
delivery menu price increases, and our brisket limited time offer
will be for a partial quarter this year as compared to the full
quarter of carne asada last year.
Digital sales grew 8.6% year over year to $840.4 million and represented 42.8% of sales. A
little more than half of the digital sales were from order ahead
transactions as guests increasingly appreciate both the convenience
and value offered by this channel, as well as the added convenience
of more Chipotlanes.
We opened 41 new restaurants during the third quarter including
two relocations, bringing the total restaurant count to 2,892.
During the quarter, 36 of the 41 new restaurants included a
Chipotlane. These formats continue to perform very well and are
helping enhance guest access and convenience, as well as increase
new restaurant sales, margins, and returns.
Food, beverage and packaging costs in the third quarter were
30.3% of revenue, a decrease of 200 basis points compared to the
third quarter of 2020. The decrease was due primarily to leverage
from menu price increases, partially offset by higher costs, most
notably beef and freight.
Restaurant level operating margin was 23.5%, an increase from
19.5% in the third quarter of 2020. The improvement was driven
primarily by leverage from comparable restaurant sales including
menu price increases, partially offset by wage inflation and higher
costs associated with beef and freight.
General and administrative expenses for the third quarter were
$146.0 million on a GAAP basis, or
$136.8 million on a non-GAAP basis,
excluding $7.6 million for a COVID-19
related modification made in December
2020 to our 2018 performance shares, $1.5 million of transformation expenses, and
$0.1 million of certain other
expenses. GAAP and non-GAAP general and administrative expenses for
the third quarter of 2021 also include $99.8
million of underlying general and administrative expenses,
$27.8 million of non-cash stock
compensation, $8.5 million related to
higher bonus accruals as well as payroll taxes on equity vesting
and stock option exercises, and $0.6
million related to our upcoming all-manager conference.
The GAAP effective income tax rate for the third quarter was
14.7%, which is lower than our expected effective income tax rate
for the full year 2021, due to elevated excess tax benefits related
to option exercises and equity vesting and a return to provision
tax benefit from a net operating loss generated on our 2020 federal
income tax return and carried back to prior years that
was recorded in the third quarter. On a non-GAAP basis, the
2021 third quarter effective tax rate was 19.7%.
Net income for the third quarter was $204.4 million, or $7.18 per diluted share, an increase from
$80.2 million, or $2.82 per diluted share, in the third quarter of
2020. Excluding the impact of a tax benefit, PSU modification
expenses, corporate restructuring expenses, and restaurant asset
impairment and closure costs, adjusted net income was $199.8 million and adjusted diluted earnings per
share was $7.02.
During the quarter, our Board of Directors approved the
investment of up to an additional $100
million, exclusive of commissions, to repurchase shares of
our common stock, subject to market conditions. Including this
repurchase authorization, $209.8
million was available as of September
30, 2021. The repurchase authorization may be modified,
suspended, or discontinued at any time. We repurchased $98.7 million of stock at an average price per
share of $1,813 during the third
quarter.
More information will be available in our Quarterly Report on
Form 10-Q, which will be filed with the SEC by the end of
October.
Outlook
For 2021, management is anticipating the following:
- Fourth quarter comparable restaurant sales growth in the low to
mid double-digits range
- At or slightly above 200 new restaurant openings
- An estimated underlying effective fourth quarter tax rate
between 25% and 27% before discrete items
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 total revenue or transactions for restaurants in
operation for at least 13 full calendar months.
- Average restaurant sales refer to the average trailing
12-month food and beverage revenue 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.
- Digital sales represent food and beverage revenue
generated through the Chipotle website, Chipotle app or third-party
delivery aggregators. Digital sales exclude revenue deferrals
associated with Chipotle Rewards.
Conference Call Details
Chipotle will host a conference call to discuss third
quarter 2021 financial results on Thursday,
October 21, 2021, 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: 1417737. 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 nearly 2,900 restaurants as of
September 30, 2021, 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.
Chipotle is ranked on the Fortune 500 and is recognized on the 2021
lists for Forbes' America's Best Employers and Fortune's Most
Admired Companies. With nearly 95,000 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. For more information
or to place an order online, visit WWW.CHIPOTLE.COM.
Forward-Looking Statements
Certain statements in this press release are forward-looking
statements as defined in the Private Securities Litigation Reform
Act of 1995, including statements about our future cash flow, new
restaurant development plans and future long-term prospects. We use
words such as "anticipate", "believe", "could", "should", "may",
"approximately", "estimate", "expect", "potential", "intend",
"project", "encouraged", "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 currently available operating, financial and
competitive information available to us as of the date of this
release 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:
uncertainty regarding the duration and severity of the ongoing
COVID-19 pandemic and its ultimate impact on our business,
including on guest traffic, restaurant sales and operating costs
and the ability of our third-party suppliers and business partners
to fulfill their responsibilities and commitments; uncertainty
surrounding wage inflation and increasing supply costs, including
beef and freight; risks associated with our reliance on certain
information technology systems and potential failures or
interruptions; privacy and cyber security risks related to our
acceptance of electronic payments or electronic processing of
confidential customer or employee information, including through
our digital app; the impact of competition, including from sources
outside the restaurant industry; the increasingly competitive labor
market and changes in the availability and cost of labor; the
financial impact of increasing our average hourly wage to
$15.00; the impact of federal, state
or local government regulations relating to our employees,
employment practices, restaurant design and construction, and the
sale of food or alcoholic beverages; our ability to achieve our
planned growth, such as the availability of suitable new restaurant
sites; increases in ingredient and other operating costs due to our
Food With Integrity philosophy, tariffs or trade restrictions and
supply shortages; 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 safety concerns or other negative
publicity, decreased overall consumer spending (including but not
limited to the increase in unemployment caused by COVID-19), or the
inability to increase menu prices or realize the benefits of menu
price increases; risks associated with our increased focus on our
digital business, including risks arising from our reliance on
third party delivery services; risks relating to litigation,
including possible governmental actions related to food safety
incidents and potential class action litigation regarding
employment laws, advertising claims or other matters; and other
risk factors described from time to time in our SEC reports,
including our annual report on Form 10-K and 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 STATEMENTS OF
INCOME (in thousands, except per share
data) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
2021
|
|
2020
|
Food and beverage
revenue
|
$
|
1,932,409
|
|
99.0
|
%
|
|
$
|
1,581,335
|
|
98.7
|
%
|
Delivery service
revenue
|
|
19,906
|
|
1.0
|
|
|
|
20,079
|
|
1.3
|
|
Total
revenue
|
|
1,952,315
|
|
100.0
|
|
|
|
1,601,414
|
|
100.0
|
|
Restaurant operating
costs (exclusive of depreciation and amortization shown separately
below):
|
|
|
|
|
|
|
|
|
|
|
|
Food, beverage and
packaging
|
|
591,332
|
|
30.3
|
|
|
|
517,261
|
|
32.3
|
|
Labor
|
|
502,757
|
|
25.8
|
|
|
|
405,818
|
|
25.3
|
|
Occupancy
|
|
104,223
|
|
5.3
|
|
|
|
97,694
|
|
6.1
|
|
Other operating
costs
|
|
294,650
|
|
15.1
|
|
|
|
268,416
|
|
16.8
|
|
General and
administrative expenses
|
|
145,930
|
|
7.5
|
|
|
|
133,150
|
|
8.3
|
|
Depreciation and
amortization
|
|
63,191
|
|
3.2
|
|
|
|
60,180
|
|
3.8
|
|
Pre-opening
costs
|
|
5,894
|
|
0.3
|
|
|
|
3,808
|
|
0.2
|
|
Impairment, closure
costs, and asset disposals
|
|
4,658
|
|
0.2
|
|
|
|
7,991
|
|
0.5
|
|
Total operating
expenses
|
|
1,712,635
|
|
87.7
|
|
|
|
1,494,318
|
|
93.3
|
|
Income from
operations
|
|
239,680
|
|
12.3
|
|
|
|
107,096
|
|
6.7
|
|
Interest and other
income (expense), net
|
|
(126)
|
|
-
|
|
|
|
(595)
|
|
-
|
|
Income before income
taxes
|
|
239,554
|
|
12.3
|
|
|
|
106,501
|
|
6.7
|
|
Provision for income
taxes
|
|
(35,120)
|
|
(1.8)
|
|
|
|
(26,257)
|
|
(1.6)
|
|
Net income
|
$
|
204,434
|
|
10.5
|
%
|
|
$
|
80,244
|
|
5.0
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
7.26
|
|
|
|
|
$
|
2.87
|
|
|
|
Diluted
|
$
|
7.18
|
|
|
|
|
$
|
2.82
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
28,150
|
|
|
|
|
|
27,973
|
|
|
|
Diluted
|
|
28,475
|
|
|
|
|
|
28,454
|
|
|
|
CHIPOTLE MEXICAN
GRILL, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (in thousands, except per share
data) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
2021
|
|
2020
|
Food and beverage
revenue
|
$
|
5,517,764
|
|
98.8
|
%
|
|
$
|
4,333,640
|
|
99.0
|
%
|
Delivery service
revenue
|
|
68,664
|
|
1.2
|
|
|
|
43,284
|
|
1.0
|
|
Total
revenue
|
|
5,586,428
|
|
100.0
|
|
|
|
4,376,924
|
|
100.0
|
|
Restaurant operating
costs (exclusive of depreciation and amortization shown separately
below):
|
|
|
|
|
|
|
|
|
|
|
|
Food, beverage and
packaging
|
|
1,688,481
|
|
30.2
|
|
|
|
1,434,316
|
|
32.8
|
|
Labor
|
|
1,400,932
|
|
25.1
|
|
|
|
1,184,649
|
|
27.1
|
|
Occupancy
|
|
309,422
|
|
5.5
|
|
|
|
288,549
|
|
6.6
|
|
Other operating
costs
|
|
876,602
|
|
15.7
|
|
|
|
741,556
|
|
16.9
|
|
General and
administrative expenses
|
|
447,077
|
|
8.0
|
|
|
|
342,267
|
|
7.8
|
|
Depreciation and
amortization
|
|
188,395
|
|
3.4
|
|
|
|
178,578
|
|
4.1
|
|
Pre-opening
costs
|
|
14,280
|
|
0.3
|
|
|
|
11,018
|
|
0.3
|
|
Impairment, closure
costs, and asset disposals
|
|
14,592
|
|
0.3
|
|
|
|
22,713
|
|
0.5
|
|
Total operating
expenses
|
|
4,939,781
|
|
88.4
|
|
|
|
4,203,646
|
|
96.0
|
|
Income from
operations
|
|
646,647
|
|
11.6
|
|
|
|
173,278
|
|
4.0
|
|
Interest and other
income (expense), net
|
|
(1,443)
|
|
-
|
|
|
|
2,771
|
|
0.1
|
|
Income before income
taxes
|
|
645,204
|
|
11.5
|
|
|
|
176,049
|
|
4.0
|
|
Provision for income
taxes
|
|
(125,695)
|
|
(2.3)
|
|
|
|
(11,242)
|
|
(0.3)
|
|
Net income
|
$
|
519,509
|
|
9.3
|
%
|
|
$
|
164,807
|
|
3.8
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
18.46
|
|
|
|
|
$
|
5.91
|
|
|
|
Diluted
|
$
|
18.22
|
|
|
|
|
$
|
5.81
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
28,137
|
|
|
|
|
|
27,892
|
|
|
|
Diluted
|
|
28,520
|
|
|
|
|
|
28,370
|
|
|
|
CHIPOTLE MEXICAN
GRILL, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2021
|
|
2020
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
721,109
|
|
$
|
607,987
|
Accounts receivable,
net
|
|
76,099
|
|
|
104,500
|
Inventory
|
|
28,450
|
|
|
26,445
|
Prepaid expenses and
other current assets
|
|
72,821
|
|
|
54,906
|
Income tax
receivable
|
|
318,593
|
|
|
282,783
|
Investments
|
|
301,534
|
|
|
343,616
|
Total current
assets
|
|
1,518,606
|
|
|
1,420,237
|
Leasehold
improvements, property and equipment, net
|
|
1,719,224
|
|
|
1,584,311
|
Long-term
investments
|
|
188,344
|
|
|
102,328
|
Restricted
cash
|
|
27,891
|
|
|
27,849
|
Operating lease
assets
|
|
3,094,045
|
|
|
2,767,185
|
Other
assets
|
|
57,518
|
|
|
59,047
|
Goodwill
|
|
21,939
|
|
|
21,939
|
Total
assets
|
$
|
6,627,567
|
|
$
|
5,982,896
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
171,712
|
|
$
|
121,990
|
Accrued payroll and
benefits
|
|
190,912
|
|
|
203,054
|
Accrued
liabilities
|
|
153,233
|
|
|
164,649
|
Unearned
revenue
|
|
120,423
|
|
|
127,750
|
Current operating
lease liabilities
|
|
214,684
|
|
|
204,756
|
Total current
liabilities
|
|
850,964
|
|
|
822,199
|
Long-term operating
lease liabilities
|
|
3,274,875
|
|
|
2,952,296
|
Deferred income tax
liabilities
|
|
148,395
|
|
|
149,422
|
Other
liabilities
|
|
42,425
|
|
|
38,844
|
Total
liabilities
|
|
4,316,659
|
|
|
3,962,761
|
Shareholders'
equity:
|
|
|
|
|
|
Preferred stock, $0.01
par value, 600,000 shares authorized, no shares issued as of
September 30, 2021 and December 31, 2020, respectively
|
|
-
|
|
|
-
|
Common stock, $0.01
par value, 230,000 shares authorized, 37,102 and 36,704 shares
issued as of September 30, 2021 and December 31, 2020,
respectively
|
|
371
|
|
|
367
|
Additional paid-in
capital
|
|
1,690,806
|
|
|
1,549,909
|
Treasury stock, at
cost, 8,947 and 8,703 common shares as of September 30, 2021 and
December 31, 2020, respectively
|
|
(3,170,798)
|
|
|
(2,802,075)
|
Accumulated other
comprehensive loss
|
|
(5,143)
|
|
|
(4,229)
|
Retained
earnings
|
|
3,795,672
|
|
|
3,276,163
|
Total shareholders'
equity
|
|
2,310,908
|
|
|
2,020,135
|
Total liabilities and
shareholders' equity
|
$
|
6,627,567
|
|
$
|
5,982,896
|
CHIPOTLE MEXICAN
GRILL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (in
thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
|
|
September
30,
|
|
2021
|
|
2020
|
Operating
activities
|
|
|
|
|
|
Net income
|
$
|
519,509
|
|
$
|
164,807
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
188,395
|
|
|
178,578
|
Deferred income tax
provision
|
|
(1,024)
|
|
|
53,857
|
Impairment, closure
costs, and asset disposals
|
|
12,483
|
|
|
21,198
|
Provision for credit
losses
|
|
733
|
|
|
(143)
|
Stock-based
compensation expense
|
|
138,741
|
|
|
60,579
|
Other
|
|
2,534
|
|
|
2,450
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
21,882
|
|
|
29,233
|
Inventory
|
|
(1,996)
|
|
|
614
|
Prepaid expenses and
other current assets
|
|
(19,343)
|
|
|
(6,015)
|
Operating lease
assets
|
|
151,628
|
|
|
136,052
|
Other
assets
|
|
1,901
|
|
|
(21,754)
|
Accounts
payable
|
|
28,712
|
|
|
5,776
|
Accrued payroll and
benefits
|
|
(13,193)
|
|
|
68,514
|
Accrued
liabilities
|
|
(7,407)
|
|
|
1,965
|
Unearned
revenue
|
|
(2,978)
|
|
|
(593)
|
Income tax
payable/receivable
|
|
(35,850)
|
|
|
(32,677)
|
Operating lease
liabilities
|
|
(141,540)
|
|
|
(115,069)
|
Other long-term
liabilities
|
|
474
|
|
|
1,351
|
Net cash provided by
operating activities
|
|
843,661
|
|
|
548,723
|
Investing
activities
|
|
|
|
|
|
Purchases of
leasehold improvements, property and equipment
|
|
(320,569)
|
|
|
(246,758)
|
Purchases of
investments
|
|
(288,899)
|
|
|
(325,069)
|
Maturities of
investments
|
|
243,441
|
|
|
318,505
|
Proceeds from sale of
equipment
|
|
2,885
|
|
|
-
|
Acquisitions of
equity method investments
|
|
-
|
|
|
(10,025)
|
Net cash used in
investing activities
|
|
(363,142)
|
|
|
(263,347)
|
Financing
activities
|
|
|
|
|
|
Acquisition of
treasury stock
|
|
(300,733)
|
|
|
(54,401)
|
Tax withholding on
stock-based compensation awards
|
|
(63,492)
|
|
|
(47,976)
|
Other financing
activities
|
|
(2,342)
|
|
|
(1,865)
|
Net cash used in
financing activities
|
|
(366,567)
|
|
|
(104,242)
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
(788)
|
|
|
377
|
Net change in cash,
cash equivalents, and restricted cash
|
|
113,164
|
|
|
181,511
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
|
635,836
|
|
|
508,481
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
|
749,000
|
|
$
|
689,992
|
Supplemental
disclosures of cash flow information
|
|
|
|
|
|
Income taxes paid
(refunded)
|
$
|
163,069
|
|
$
|
(8,987)
|
Purchases of
leasehold improvements, property, and equipment accrued in accounts
payable and accrued liabilities
|
$
|
65,311
|
|
$
|
72,860
|
Acquisition of
treasury stock accrued in accounts payable and accrued
liabilities
|
$
|
4,498
|
|
$
|
-
|
CHIPOTLE MEXICAN
GRILL, INC. SUPPLEMENTAL FINANCIAL AND OTHER DATA
(dollars in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
Sep.
30,
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Dec.
31,
|
|
Sep.
30,
|
|
|
2021
|
|
2021
|
|
2021
|
|
2020
|
|
2020
|
Number of restaurants
opened
|
|
|
41
|
|
|
56
|
|
|
40
|
|
|
61
|
|
|
44
|
Restaurant
closures
|
|
|
-
|
|
|
(5)
|
|
|
(5)
|
|
|
(1)
|
|
|
(3)
|
Restaurant
relocations
|
|
|
(2)
|
|
|
(1)
|
|
|
-
|
|
|
(2)
|
|
|
-
|
Number of restaurants
at end of period
|
|
|
2,892
|
|
|
2,853
|
|
|
2,803
|
|
|
2,768
|
|
|
2,710
|
Average restaurant
sales(1)
|
|
$
|
2,554
|
|
$
|
2,466
|
|
$
|
2,313
|
|
$
|
2,223
|
|
$
|
2,199
|
Average restaurant
sales, excluding delivery MPI(2)
|
|
$
|
2,479
|
|
$
|
2,405
|
|
$
|
2,273
|
|
$
|
2,200
|
|
$
|
2,192
|
Comparable restaurant
sales increase
|
|
|
15.1%
|
|
|
31.2%
|
|
|
17.2%
|
|
|
5.7%
|
|
|
8.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Beginning in Q3
2020, we revised the definition of average restaurant sales to
exclude delivery service revenues (refer to Definitions section
above). We made this change to more closely align with how
management views the business and given the increase in the
delivery business. Average restaurant sales in all comparative
periods presented has been updated to conform with the new
definition. Average restaurant sales is a trailing 12-month
measure.
|
(2) In Q3 2020, we
began implementing delivery menu-price increases ("MPI") to
partially offset the increased cost of delivery. "Average
restaurant sales, excluding delivery MPI" represents average
restaurant sales, as defined above, adjusted to remove the impact
of delivery menu price increases. This is intended to illustrate
our underlying food and beverage sales per restaurant.
|
CHIPOTLE MEXICAN GRILL,
INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
The following tables provide 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 expenses related to
restaurant asset impairment, corporate restructuring, legal
proceedings, stock-based compensation modification expense, and
certain other costs. Adjusted general and administrative expense is
general and administrative expense excluding transformation
expenses, legal proceedings, stock-based compensation modification
expense, and certain other costs. The non-GAAP effective tax rate
is the effective tax rate adjusted to reflect the after tax impact
of non-GAAP adjustments. Restaurant Level Operating Margin, a
non-GAAP financial measure, is equal to the revenues generated by
our restaurants less their direct operating costs which consist of
food, beverage and packaging, labor, occupancy and other operating
costs. This performance measure primarily includes the costs that
restaurant level managers can directly control and excludes other
operating costs that are essential to conduct our business.
Management uses restaurant level operating margin as a measure of
restaurant performance. Management believes restaurant level
operating margin is useful to investors in that it highlights
trends in our core business that may not otherwise be apparent to
investors when relying solely on GAAP financial measures. 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, adjusted
general and administrative expenses, non-GAAP effective tax rate
and restaurant level operating margin 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.
CHIPOTLE MEXICAN
GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (in thousands, except per share
amounts) (unaudited)
|
|
Adjusted Net
Income and Adjusted Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
September
30,
|
|
2021
|
|
2020
|
Net income
|
$
|
204,434
|
|
$
|
80,244
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Restaurant
costs:
|
|
|
|
|
|
Operating lease asset
impairment and other restaurant costs(1)
|
|
218
|
|
|
2,954
|
Duplicate rent
expense(2)
|
|
33
|
|
|
74
|
Corporate
Restructuring:
|
|
|
|
|
|
Duplicate rent
expense(2)
|
|
1,313
|
|
|
1,638
|
Employee related
restructuring costs(3)
|
|
113
|
|
|
275
|
Legal
proceedings(4)
|
|
-
|
|
|
28,700
|
Stock-based
compensation modification expense(5)
|
|
7,619
|
|
|
132
|
Other
adjustments(6)
|
|
47
|
|
|
1,875
|
Total non-GAAP
adjustments
|
$
|
9,343
|
|
$
|
35,648
|
Tax effect of
non-GAAP adjustments above
|
|
1,462
|
|
|
(8,844)
|
Other tax non-GAAP
adjustments(7)
|
|
(15,423)
|
|
|
-
|
After tax impact of
non-GAAP adjustments
|
$
|
(4,618)
|
|
$
|
26,804
|
Adjusted net
income
|
$
|
199,816
|
|
$
|
107,048
|
|
|
|
|
|
|
Diluted
weighted-average number of common shares outstanding
|
|
28,475
|
|
|
28,454
|
Diluted earnings per
share
|
$
|
7.18
|
|
$
|
2.82
|
Adjusted diluted
earnings per share
|
$
|
7.02
|
|
$
|
3.76
|
|
|
|
|
|
|
(1) Operating lease
asset impairment charges, and other expenses for restaurants due to
underperformance.
|
(2) Duplicate rent
expense for the corporate headquarter relocation and office
consolidation announced in May 2018 and rent expense for closed
restaurants announced in June 2018.
|
(3) Costs for
recruitment, relocation costs, third party and other
employee-related costs.
|
(4) Charges relate to
estimated settlements for distinct legal matters that exceeded or
are expected to exceed typical costs for these types of legal
proceedings.
|
(5) For the three
months ended September 30, 2021, stock-based compensation consists
of a COVID-19 related modification made in December 2020 to our
2018 performance shares. For the three months ended September 30,
2020, stock-based compensation consists of a March 2020
modification associated with the departure of our former Executive
Chairman primarily related to his 2017 agreement.
|
(6) For the three
months ended September 30, 2021, other adjustments consist of
consulting fees associated with the calculation of our
non-recurring tax benefit. For the three months ended September 30,
2020, other adjustments consist of asset impairment charge related
to digital technology.
|
(7) For the tax
benefit from the federal net operating loss generated on our 2020
federal income tax return and carried back to prior years. The tax
benefit is due to the federal income tax rate differential between
the 2020 rate of 21% and the 2017 rate of 35%.
|
CHIPOTLE MEXICAN
GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (in
thousands) (unaudited)
|
|
Adjusted General
and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
September
30,
|
|
2021
|
|
2020
|
General and
administrative expenses
|
$
|
145,930
|
|
$
|
133,150
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Transformation
expenses(1)
|
|
(1,459)
|
|
|
(1,987)
|
Legal
proceedings(2)
|
|
-
|
|
|
(28,700)
|
Stock-based
compensation modification expense(3)
|
|
(7,619)
|
|
|
(132)
|
Other
adjustments(4)
|
|
(47)
|
|
|
-
|
Total non-GAAP
adjustments
|
$
|
(9,125)
|
|
$
|
(30,819)
|
Adjusted general and
administrative expenses
|
$
|
136,805
|
|
$
|
102,331
|
|
|
|
|
|
|
(1) Transformation
expenses include duplicate rent expense for office and restaurant
closures announced in June 2018 due to the corporate restructuring
and underperformance of $1,346 and $1,712 for the three months
ended September 30, 2021 and 2020, respectively, and employee
related restructuring costs of $113 and $275 for the three months
ended September 30, 2021 and 2020, respectively.
|
(2) Charges relate to
estimated settlements for distinct legal matters that exceeded or
are expected to exceed typical costs for these types of legal
proceedings.
|
(3) For the three
months ended September 30, 2021, stock-based compensation consists
of a COVID-19 related modification made in December 2020 to our
2018 performance shares. For the three months ended September 30,
2020, stock-based compensation consists of a March 2020
modification associated with the departure of our former Executive
Chairman primarily related to his 2017 agreement.
|
(4) For the three
months ended September 30, 2021, other adjustments consist of
consulting fees associated with the calculation of our
non-recurring tax benefit.
|
CHIPOTLE MEXICAN
GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (unaudited)
|
|
Non-GAAP Effective
Tax Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
September
30,
|
|
2021
|
|
2020
|
Effective income tax
rate
|
14.7
|
%
|
|
24.7
|
%
|
Tax impact of
non-GAAP adjustments
|
5.0
|
|
|
-
|
|
Adjusted income tax
rate
|
19.7
|
%
|
|
24.7
|
%
|
CHIPOTLE MEXICAN
GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (in
thousands) (unaudited)
|
|
Restaurant Level
Operating Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
2021
|
|
2020
|
Income from
operations
|
$
|
239,680
|
|
12.3
|
%
|
|
$
|
107,096
|
|
6.7
|
%
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
145,930
|
|
7.5
|
|
|
|
133,150
|
|
8.3
|
|
Depreciation and
amortization
|
|
63,191
|
|
3.2
|
|
|
|
60,180
|
|
3.8
|
|
Pre-opening
costs
|
|
5,894
|
|
0.3
|
|
|
|
3,808
|
|
0.2
|
|
Impairment, closure
costs, and asset disposals
|
|
4,658
|
|
0.2
|
|
|
|
7,991
|
|
0.5
|
|
Total Non-GAAP
Adjustments
|
$
|
219,673
|
|
11.3
|
%
|
|
$
|
205,129
|
|
12.8
|
%
|
Restaurant level
operating margin
|
$
|
459,353
|
|
23.5
|
%
|
|
$
|
312,225
|
|
19.5
|
%
|
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SOURCE Chipotle Mexican Grill, Inc.