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 ofMarch 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 sharesissued 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 inaccounts
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 %
Chipotle Mexican GrillInvestor Relations:Mark Alexee,
303-605-1042
Chipotle Mexican Grill (NYSE:CMG)
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