P1MP8Mfalse--12-31Q220190001058090YesLarge Accelerated FilerYesP3YP2YP3YP2YP3Y0001058090us-gaap:OccupancyMember2019-04-012019-06-300001058090us-gaap:OccupancyMember2019-01-012019-06-300001058090cmg:NotPartOfShareRepurchasePlanMember2019-01-012019-06-300001058090us-gaap:GeneralAndAdministrativeExpenseMember2019-04-012019-06-300001058090us-gaap:GeneralAndAdministrativeExpenseMember2019-01-012019-06-300001058090us-gaap:SubsequentEventMember2019-07-230001058090us-gaap:RetainedEarningsMember2019-06-300001058090us-gaap:AdditionalPaidInCapitalMember2019-06-300001058090us-gaap:AccumulatedTranslationAdjustmentMember2019-06-300001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-06-300001058090us-gaap:RetainedEarningsMember2018-12-310001058090us-gaap:AdditionalPaidInCapitalMember2018-12-310001058090us-gaap:AccumulatedTranslationAdjustmentMember2018-12-310001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-12-310001058090us-gaap:RetainedEarningsMember2018-06-300001058090us-gaap:AdditionalPaidInCapitalMember2018-06-300001058090us-gaap:AccumulatedTranslationAdjustmentMember2018-06-300001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-06-300001058090us-gaap:RetainedEarningsMember2018-03-310001058090us-gaap:AdditionalPaidInCapitalMember2018-03-310001058090us-gaap:AccumulatedTranslationAdjustmentMember2018-03-310001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-03-3100010580902018-03-310001058090us-gaap:RetainedEarningsMember2017-12-310001058090us-gaap:AdditionalPaidInCapitalMember2017-12-310001058090us-gaap:AccumulatedTranslationAdjustmentMember2017-12-310001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2017-12-310001058090us-gaap:OtherOperatingIncomeExpenseMember2019-04-012019-06-300001058090us-gaap:OtherOperatingIncomeExpenseMember2019-01-012019-06-300001058090us-gaap:TreasuryStockMember2019-06-300001058090us-gaap:CommonStockMember2019-06-300001058090us-gaap:TreasuryStockMember2018-12-310001058090us-gaap:CommonStockMember2018-12-310001058090us-gaap:TreasuryStockMember2018-06-300001058090us-gaap:CommonStockMember2018-06-300001058090us-gaap:TreasuryStockMember2018-03-310001058090us-gaap:CommonStockMember2018-03-310001058090us-gaap:TreasuryStockMember2017-12-310001058090us-gaap:CommonStockMember2017-12-310001058090cmg:StockOptionsAndStockAppreciationRightsSRSMember2019-01-012019-06-300001058090us-gaap:PerformanceSharesMember2019-01-012019-06-300001058090cmg:PerformanceSharesGrant2Member2019-01-012019-06-300001058090srt:MinimumMemberus-gaap:PerformanceSharesMembercmg:VestingPeriod1Member2019-01-012019-06-300001058090srt:MaximumMemberus-gaap:PerformanceSharesMembercmg:VestingPeriod1Member2019-01-012019-06-300001058090cmg:PerformanceSharesGrant2Membercmg:SecondHalfVestedMember2019-01-012019-06-300001058090cmg:PerformanceSharesGrant2Membercmg:FirstHalfVestedMember2019-01-012019-06-300001058090cmg:StockOptionsAndStockAppreciationRightsSRSMembercmg:VestingPeriod2Member2019-01-012019-06-300001058090cmg:StockOptionsAndStockAppreciationRightsSRSMembercmg:VestingPeriod1Member2019-01-012019-06-300001058090cmg:RestrictedStockUnitsMembercmg:VestingPeriod2Member2019-01-012019-06-300001058090cmg:RestrictedStockUnitsMembercmg:VestingPeriod1Member2019-01-012019-06-300001058090cmg:PerformanceSharesGrant1Member2019-01-012019-06-300001058090us-gaap:OtherRestructuringMember2019-06-300001058090us-gaap:EmployeeSeveranceMember2019-06-300001058090cmg:RecruitmentAndRelocationCostsMember2019-06-300001058090us-gaap:OtherRestructuringMember2018-12-310001058090us-gaap:EmployeeSeveranceMember2018-12-310001058090cmg:RecruitmentAndRelocationCostsMember2018-12-310001058090us-gaap:OtherRestructuringMember2019-04-012019-06-300001058090us-gaap:EmployeeSeveranceMember2019-04-012019-06-300001058090us-gaap:ContractTerminationMember2019-04-012019-06-300001058090cmg:ShareBasedCompensationMember2019-04-012019-06-300001058090cmg:RecruitmentAndRelocationCostsMember2019-04-012019-06-300001058090us-gaap:ContractTerminationMember2019-01-012019-06-300001058090cmg:ShareBasedCompensationMember2019-01-012019-06-300001058090us-gaap:OtherRestructuringMember2018-04-012018-06-300001058090us-gaap:EmployeeSeveranceMember2018-04-012018-06-300001058090us-gaap:ContractTerminationMember2018-04-012018-06-300001058090cmg:ShareBasedCompensationMember2018-04-012018-06-300001058090cmg:RecruitmentAndRelocationCostsMember2018-04-012018-06-300001058090us-gaap:OtherRestructuringMember2018-01-012018-06-300001058090us-gaap:EmployeeSeveranceMember2018-01-012018-06-300001058090us-gaap:ContractTerminationMember2018-01-012018-06-300001058090cmg:ShareBasedCompensationMember2018-01-012018-06-300001058090cmg:RecruitmentAndRelocationCostsMember2018-01-012018-06-300001058090us-gaap:OtherRestructuringMember2019-01-012019-06-300001058090us-gaap:EmployeeSeveranceMember2019-01-012019-06-300001058090cmg:RecruitmentAndRelocationCostsMember2019-01-012019-06-300001058090cmg:OperatingLeaseAssetsMember2019-06-300001058090cmg:LongTermOperatingLeaseLiabilitiesMember2019-06-300001058090cmg:ShortTermOperatingLeaseLiabilitiesMember2019-06-300001058090us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-04-012019-06-300001058090us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-06-300001058090cmg:ChipotleMemberus-gaap:GeographicDistributionForeignMember2019-06-300001058090cmg:ChipotleMembercountry:US2019-06-300001058090cmg:PizzeriaLocaleMember2019-06-300001058090srt:MinimumMember2019-06-300001058090srt:MaximumMember2019-06-300001058090us-gaap:TreasuryStockMember2019-03-310001058090us-gaap:RetainedEarningsMember2019-03-310001058090us-gaap:CommonStockMember2019-03-310001058090us-gaap:AdditionalPaidInCapitalMember2019-03-310001058090us-gaap:AccumulatedTranslationAdjustmentMember2019-03-310001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-03-3100010580902019-03-310001058090cmg:GiftCardMember2019-04-012019-06-300001058090cmg:ChipotleRewardsMember2019-04-012019-06-300001058090cmg:GiftCardMember2019-01-012019-06-300001058090cmg:ChipotleRewardsMember2019-01-012019-06-300001058090cmg:GiftCardMember2018-04-012018-06-300001058090cmg:ChipotleRewardsMember2018-04-012018-06-300001058090cmg:GiftCardMember2018-01-012018-06-300001058090cmg:ChipotleRewardsMember2018-01-012018-06-300001058090cmg:GiftCardMember2019-06-300001058090cmg:ChipotleRewardsMember2019-06-300001058090cmg:GiftCardMember2018-12-310001058090cmg:ChipotleRewardsMember2018-12-3100010580902018-06-3000010580902017-12-310001058090us-gaap:TreasuryStockMember2019-04-012019-06-300001058090us-gaap:RetainedEarningsMember2019-04-012019-06-300001058090us-gaap:CommonStockMember2019-04-012019-06-300001058090us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300001058090us-gaap:AccumulatedTranslationAdjustmentMember2019-04-012019-06-300001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-04-012019-06-300001058090us-gaap:TreasuryStockMember2019-01-012019-03-310001058090us-gaap:RetainedEarningsMember2019-01-012019-03-310001058090us-gaap:CommonStockMember2019-01-012019-03-310001058090us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001058090us-gaap:AccumulatedTranslationAdjustmentMember2019-01-012019-03-310001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-01-012019-03-3100010580902019-01-012019-03-310001058090us-gaap:TreasuryStockMember2018-04-012018-06-300001058090us-gaap:RetainedEarningsMember2018-04-012018-06-300001058090us-gaap:CommonStockMember2018-04-012018-06-300001058090us-gaap:AdditionalPaidInCapitalMember2018-04-012018-06-300001058090us-gaap:AccumulatedTranslationAdjustmentMember2018-04-012018-06-300001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-04-012018-06-300001058090us-gaap:TreasuryStockMember2018-01-012018-03-310001058090us-gaap:RetainedEarningsMember2018-01-012018-03-310001058090us-gaap:CommonStockMember2018-01-012018-03-310001058090us-gaap:AdditionalPaidInCapitalMember2018-01-012018-03-310001058090us-gaap:AccumulatedTranslationAdjustmentMember2018-01-012018-03-310001058090us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-01-012018-03-3100010580902018-01-012018-03-310001058090cmg:DataSecurityIncidentMember2019-06-300001058090srt:ScenarioPreviouslyReportedMemberus-gaap:AccountingStandardsUpdate201602Member2018-12-310001058090srt:RestatementAdjustmentMemberus-gaap:AccountingStandardsUpdate201602Member2018-12-310001058090us-gaap:AccountingStandardsUpdate201602Member2018-12-3100010580902018-12-3100010580902019-07-190001058090cmg:RestrictedStockUnitsMember2019-01-012019-06-3000010580902019-06-3000010580902018-01-012018-12-3100010580902019-04-012019-06-3000010580902018-04-012018-06-300001058090srt:MinimumMember2019-01-012019-06-300001058090srt:MaximumMember2019-01-012019-06-3000010580902019-01-012019-06-3000010580902018-01-012018-06-30cmg:segmentiso4217:USDxbrli:sharesxbrli:purexbrli:sharescmg:itemcmg:regioniso4217:USD

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________

FORM 10-Q

______________________________

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to

Commission File Number: 1-32731

______________________________

CHIPOTLE MEXICAN GRILL INC

(Exact name of registrant as specified in its charter)

______________________________

 

Delaware

84-1219301

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

 

610 Newport Center Drive, Suite 1300 Newport Beach, CA

92660

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (303595-4000

______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

CMG

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes       No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

Large accelerated filer

x

Accelerated filer

¨

Non-accelerated filer

¨ 

Smaller reporting company

¨

Emerging growth company

¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

As of July 19, 2019, there were 27,722,812 shares of the registrant’s common stock, par value of $0.01 per share outstanding.

 

 


Table of Contents

TABLE OF CONTENTS

 

PART I

Item 1.

Financial Statements

1

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

Item 4.

Controls and Procedures

20

PART II

Item 1.

Legal Proceedings

20

Item 1A.

Risk Factors

20

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

20

Item 3.

Defaults Upon Senior Securities

20

Item 4.

Mine Safety Disclosures

20

Item 5.

Other Information

21

Item 6.

Exhibits

22

 

Signatures

23


Table of Contents

PART I

ITEM 1.  FINANCIAL STATEMENTS

Chipotle Mexican Grill, Inc.

Condensed Consolidated Balance Sheet

(in thousands, except per share data)

June 30,

December 31,

2019

2018

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

299,913

$

249,953

Accounts receivable, net of allowance for doubtful accounts of $81 and $0 as of June 30, 2019 and December 31, 2018, respectively

49,362

62,312

Inventory

21,144

21,555

Prepaid expenses and other current assets

44,116

54,129

Investments

417,867

426,845

Total current assets

832,402

814,794

Leasehold improvements, property and equipment, net

1,387,896

1,379,254

Restricted cash

28,543

30,199

Operating lease assets

2,370,710

-

Other assets

17,817

19,332

Goodwill

21,939

21,939

Total assets

$

4,659,307

$

2,265,518

Liabilities and shareholders' equity

Current liabilities:

Accounts payable

$

99,007

$

113,071

Accrued payroll and benefits

98,800

113,467

Accrued liabilities

126,879

147,849

Unearned revenue

61,794

70,474

Current operating lease liabilities

161,253

-

Income tax payable

535

5,129

Total current liabilities

548,268

449,990

Commitments and contingencies (Note 11)

 

 

Deferred rent

-

330,985

Long-term operating lease liabilities

2,534,769

-

Deferred income tax liabilities

4,407

11,566

Other liabilities

33,814

31,638

Total liabilities

3,121,258

824,179

Shareholders' equity:

Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of June 30, 2019 and December 31, 2018, respectively

-

-

Common stock, $0.01 par value, 230,000 shares authorized, 36,193 and 35,973 shares issued as of June 30, 2019 and December 31, 2018, respectively

362

360

Additional paid-in capital

1,414,420

1,374,154

Treasury stock, at cost, 8,469 and 8,276 common shares at June 30, 2019 and December 31, 2018, respectively

(2,621,922)

(2,500,556)

Accumulated other comprehensive loss

(5,261)

(6,236)

Retained earnings

2,750,450

2,573,617

Total shareholders' equity

1,538,049

1,441,339

Total liabilities and shareholders' equity

$

4,659,307

$

2,265,518

See accompanying notes to condensed consolidated financial statements.

 

1


Table of Contents

Chipotle Mexican Grill, Inc.

Condensed Consolidated Statement of Income

(unaudited)

(in thousands, except per share data)

Three months ended

Six months ended

June 30,

June 30,

2019

2018

2019

2018

Revenue

$

1,434,231

$

1,266,520

$

2,742,448

$

2,414,917

Restaurant operating costs (exclusive of depreciation and amortization shown separately below):

Food, beverage and packaging

483,284

413,096

904,651

785,011

Labor

368,053

341,842

716,895

660,705

Occupancy

89,923

86,772

178,693

172,028

Other operating costs

193,309

175,171

368,052

323,240

General and administrative expenses

121,395

85,153

224,066

162,216

Depreciation and amortization

51,642

49,193

105,423

96,108

Pre-opening costs

2,118

2,014

3,058

4,663

Impairment, closure costs, and asset disposals

4,487

45,322

11,429

50,181

Total operating expenses

1,314,211

1,198,563

2,512,267

2,254,152

Income from operations

120,020

67,957

230,181

160,765

Interest and other income, net

3,947

2,323

7,076

3,717

Income before income taxes

123,967

70,280

237,257

164,482

Provision for income taxes

(32,939)

(23,396)

(58,097)

(58,152)

Net income

$

91,028

$

46,884

$

179,160

$

106,330

Earnings per share:

Basic

$

3.28

$

1.69

$

6.47

$

3.82

Diluted

$

3.22

$

1.68

$

6.35

$

3.81

Weighted-average common shares outstanding:

Basic

27,720

27,819

27,708

27,865

Diluted

28,300

27,935

28,209

27,942

 

Condensed Consolidated Statement of Comprehensive Income

(unaudited)

(in thousands)

Three months ended

Six months ended

June 30,

June 30,

2019

2018

2019

2018

Net income

$

91,028

$

46,884

$

179,160

$

106,330

Other comprehensive income (loss), net of income taxes:

Foreign currency translation adjustments

555

(1,580)

833

(1,448)

Unrealized gain (loss) on available-for-sale securities, net of tax

42

82

142

(19)

Other comprehensive income (loss), net of income taxes

597

(1,498)

975

(1,467)

Comprehensive income

$

91,625

$

45,386

$

180,135

$

104,863

See accompanying notes to condensed consolidated financial statements.

2


Table of Contents

Chipotle Mexican Grill, Inc.

Condensed Consolidated Statement of Shareholders’ Equity

(unaudited)

(in thousands)

Common Stock

Treasury Stock

Accumulated Other Comprehensive Income (Loss)

Shares

Amount

Additional
Paid-In
Capital

Shares

Amount

Retained
Earnings

Available-for-Sale Securities

Foreign Currency Translation

Total

Balance, December 31, 2017

35,852 

$

359 

$

1,305,090 

7,826 

$

(2,334,409)

$

2,397,064 

$

(306)

$

(3,353)

$

1,364,445 

Stock-based compensation

-

-

12,376 

-

-

-

-

-

12,376 

Stock plan transactions and other

31 

-

(228)

-

-

-

-

-

(228)

Acquisition of treasury stock

-

-

-

231 

(72,025)

-

-

-

(72,025)

Net income

-

-

-

-

-

59,446 

-

-

59,446 

Other comprehensive income (loss), net of income tax

-

-

-

-

-

-

(101)

132 

31 

Balance, March 31, 2018

35,883 

$

359 

$

1,317,238 

8,057 

$

(2,406,434)

$

2,456,510 

$

(407)

$

(3,221)

$

1,364,045 

Stock-based compensation

-

-

11,660 

-

-

-

-

-

11,660 

Stock plan transactions and other

62 

-

(409)

-

-

-

-

-

(409)

Acquisition of treasury stock

-

-

-

76 

(28,675)

-

-

-

(28,675)

Net income

-

-

-

-

-

46,884 

-

-

46,884 

Other comprehensive income (loss), net of income tax

-

-

-

-

-

-

82 

(1,580)

(1,498)

Balance, June 30, 2018

35,945 

$

359 

$

1,328,489 

8,133 

$

(2,435,109)

$

2,503,394 

$

(325)

$

(4,801)

$

1,392,007 

Balance, December 31, 2018

35,973 

$

360 

$

1,374,154 

8,276 

$

(2,500,556)

$

2,573,617 

$

(147)

$

(6,089)

$

1,441,339 

Adoption of ASU No. 2016-02, Leases (Topic 842)

-

-

-

-

-

(2,327)

-

-

(2,327)

Stock-based compensation

-

-

19,342 

-

-

-

-

-

19,342 

Stock plan transactions and other

135 

1 

(212)

-

-

-

-

-

(211)

Acquisition of treasury stock

-

-

-

110 

(62,854)

-

-

-

(62,854)

Net income

-

-

-

-

-

88,132 

-

-

88,132 

Other comprehensive income, net of income tax

-

-

-

-

-

-

100 

278 

378 

Balance, March 31, 2019

36,108 

$

361 

$

1,393,284 

8,386 

$

(2,563,410)

$

2,659,422 

$

(47)

$

(5,811)

$

1,483,799 

Stock-based compensation

-

-

21,322 

-

-

-

-

-

21,322 

Stock plan transactions and other

85 

1 

(186)

-

-

-

-

-

(185)

Acquisition of treasury stock

-

-

-

83 

(58,512)

-

-

-

(58,512)

Net income

-

-

-

-

-

91,028 

-

-

91,028 

Other comprehensive income, net of income tax

-

-

-

-

-

-

42 

555 

597 

Balance, June 30, 2019

36,193 

$

362 

$

1,414,420 

8,469 

$

(2,621,922)

$

2,750,450 

$

(5)

$

(5,256)

$

1,538,049 

See accompanying notes to condensed consolidated financial statements.

3


Table of Contents

Chipotle Mexican Grill, Inc.

Condensed Consolidated Statement of Cash Flows

(unaudited)

(in thousands)

Six months ended

June 30,

2019

2018

Operating activities

Net income

$