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
First quarter 2017 results
Revenue for the quarter was
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
Net income for the first quarter of 2017 was
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
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
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
| 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/
Source:
Chipotle Mexican Grill, Inc.
Mark Alexee, 303-605-1042
malexee@chipotle.com