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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 September 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: (949524-4000

______________________________

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 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 October 18, 2019, there were 27,795,204 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

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)

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

Commitments and contingencies (Note 11)

 

 

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

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

Nine months ended

September 30,

September 30,

2019

2018

2019

2018

Revenue

$

1,403,697

$

1,225,007

$

4,146,145

$

3,639,924

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

Food, beverage and packaging

466,496

409,213

1,371,147

1,194,224

Labor

373,645

332,865

1,090,540

993,570

Occupancy

91,409

86,691

270,102

258,719

Other operating costs

180,259

167,488

548,311

490,728

General and administrative expenses

115,070

109,524

339,136

271,740

Depreciation and amortization

52,206

52,654

157,629

148,762

Pre-opening costs

3,064

2,127

6,122

6,790

Impairment, closure costs, and asset disposals

5,927

6,454

17,356

56,635

Total operating expenses

1,288,076

1,167,016

3,800,343

3,421,168

Income from operations

115,621

57,991

345,802

218,756

Interest and other income, net

4,411

2,493

11,487

6,210

Income before income taxes

120,032

60,484

357,289

224,966

Provision for income taxes

(21,450)

(22,280)

(79,547)

(80,432)

Net income

$

98,582

$

38,204

$

277,742

$

144,534

Earnings per share:

Basic

$

3.55

$

1.37

$

10.02

$

5.19

Diluted

$

3.47

$

1.36

$

9.83

$

5.17

Weighted-average common shares outstanding:

Basic

27,775

27,802

27,730

27,844

Diluted

28,388

28,017

28,268

27,967

 

Condensed Consolidated Statement of Comprehensive Income

(unaudited)

(in thousands)

Three months ended

Nine months ended

September 30,

September 30,

2019

2018

2019

2018

Net income

$

98,582

$

38,204

$

277,742

$

144,534

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

Foreign currency translation adjustments

(631)

249

202

(1,199)

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

5

22

147

3

Other comprehensive income (loss), net of income taxes

(626)

271

349

(1,196)

Comprehensive income

$

97,956

$

38,475

$

278,091

$

143,338

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 

Stock-based compensation

-

-

24,760

-

-

-

-

-

24,760

Stock plan transactions and other

21

1

(178)

-

-

-

-

-

(177)

Acquisition of treasury stock

-

-

-

41

(19,228)

-

-

-

(19,228)

Net income

-

-

-

-

-

38,204

-

-

38,204

Other comprehensive income (loss), net of income tax

-

-

-

-

-

-

22

249

271

Balance, September 30, 2018

35,966

$

360

$

1,353,071

8,174

$

(2,454,337)

$

2,541,598

$

(303)

$

(4,552)

$

1,435,837

Balance, December 31, 2018

35,973 

$

360 

$

1,374,154 

8,276 

$

(2,500,556)

$

2,573,617 

$

(147)