cmg-20220630x10q

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, 2022

¨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 1100 Newport Beach, CA	92660
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 524-4000

______________________________

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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):


 Large accelerated filer	 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 25, 2022, there were 27,764,647 shares of the registrant’s common stock, par value of $0.01 per share outstanding.

PART I

ITEM 1. FINANCIAL STATEMENTS

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)



	June 30,		December 31,
	2022		2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	520,933	$	815,374
Accounts receivable, net		83,636		99,599
Inventory		29,456		32,826
Prepaid expenses and other current assets		73,716		78,756
Income tax receivable		97,874		94,064
Investments		240,684		260,945
Total current assets		1,046,299		1,381,564
Leasehold improvements, property and equipment, net		1,813,348		1,769,278
Long-term investments		359,911		274,311
Restricted cash		30,895		30,856
Operating lease assets		3,209,934		3,118,294
Other assets		63,010		56,716
Goodwill		21,939		21,939
Total assets	$	6,545,336	$	6,652,958
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	158,581	$	163,161
Accrued payroll and benefits		161,052		162,405
Accrued liabilities		148,614		173,052
Unearned revenue		132,446		156,351
Current operating lease liabilities		230,930		218,713
Total current liabilities		831,623		873,682
Commitments and contingencies (Note 10)
Long-term operating lease liabilities		3,393,423		3,301,601
Deferred income tax liabilities		126,239		141,765
Other liabilities		39,852		38,536
Total liabilities		4,391,137		4,355,584
Shareholders' equity:
Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of June 30, 2022 and December 31, 2021, respectively		-		-
Common stock, $0.01 par value, 230,000 shares authorized, 37,284 and 37,132 shares issued as of June 30, 2022 and December 31, 2021, respectively		373		371
Additional paid-in capital		1,782,303		1,729,312
Treasury stock, at cost, 9,480 and 9,052 common shares as of June 30, 2022 and December 31, 2021, respectively		(3,969,221)		(3,356,102)
Accumulated other comprehensive loss		(6,639)		(5,354)
Retained earnings		4,347,383		3,929,147
Total shareholders' equity		2,154,199		2,297,374
Total liabilities and shareholders' equity	$	6,545,336	$	6,652,958

See accompanying notes to condensed consolidated financial statements.

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)



	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Food and beverage revenue	$	2,192,802	$	1,869,365	$	4,191,758	$	3,585,355
Delivery service revenue		20,537		23,173		42,120		48,758
Total revenue		2,213,339		1,892,538		4,233,878		3,634,113
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Food, beverage and packaging		673,928		574,478		1,300,854		1,097,149
Labor		549,926		464,506		1,081,866		898,175
Occupancy		113,919		103,430		225,951		205,199
Other operating costs		317,481		287,242		648,176		581,952
General and administrative expenses		140,820		146,044		288,222		301,147
Depreciation and amortization		69,733		62,082		141,398		125,204
Pre-opening costs		5,253		4,965		10,601		8,386
Impairment, closure costs, and asset disposals		4,681		4,266		8,991		9,934
Total operating expenses		1,875,741		1,647,013		3,706,059		3,227,146
Income from operations		337,598		245,525		527,819		406,967
Interest and other income (expense), net		10,572		851		10,359		(1,317)
Income before income taxes		348,170		246,376		538,178		405,650
Provision for income taxes		(88,228)		(58,402)		(119,942)		(90,575)
Net income	$	259,942	$	187,974	$	418,236	$	315,075
Earnings per share:
Basic	$	9.32	$	6.68	$	14.95	$	11.20
Diluted	$	9.25	$	6.60	$	14.83	$	11.04
Weighted-average common shares outstanding:
Basic		27,905		28,134		27,974		28,130
Diluted		28,092		28,501		28,196		28,542
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments	$	(1,480)	$	305	$	(1,285)	$	42
Comprehensive income	$	258,462	$	188,279	$	416,951	$	315,117

See accompanying notes to condensed consolidated financial statements.

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock					Treasury Stock
	Shares	Amount		Additional ‎Paid-In ‎Capital		Shares	Amount		Retained ‎Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance, December 31, 2020	36,704	$	367	$	1,549,909	8,703	$	(2,802,075)	$	3,276,163	$	(4,229)	$	2,020,135
Stock-based compensation	-		-		55,960	-		-		-		-		55,960
Stock plan transactions and other	232		2		632	-		-		-		-		634
Acquisition of treasury stock	-		-		-	74		(106,036)		-		-		(106,036)
Net income	-		-		-	-		-		127,101		-		127,101
Other comprehensive income (loss), net of income tax	-		-		-	-		-		-		(263)		(263)
Balance, March 31, 2021	36,936	$	369	$	1,606,501	8,777	$	(2,908,111)	$	3,403,264	$	(4,492)	$	2,097,531
Stock-based compensation	-		-		47,670	-		-		-		-		47,670
Stock plan transactions and other	52		1		24	-		-		-		-		25
Acquisition of treasury stock	-		-		-	113		(159,347)		-		-		(159,347)
Net income	-		-		-	-		-		187,974		-		187,974
Other comprehensive income (loss), net of income tax	-		-		-	-		-		-		305		305
Balance, June 30, 2021	36,988	$	370	$	1,654,195	8,890	$	(3,067,458)	$	3,591,238	$	(4,187)	$	2,174,158

Balance, December 31, 2021	37,132	$	371	$	1,729,312	9,052	$	(3,356,102)	$	3,929,147	$	(5,354)	$	2,297,374
Stock-based compensation	-		-		24,077	-		-		-		-		24,077
Stock plan transactions and other	134		2		(61)	-		-		-		-		(59)
Acquisition of treasury stock	-		-		-	230		(345,921)		-		-		(345,921)
Net income	-		-		-	-		-		158,294		-		158,294
Other comprehensive income (loss), net of income tax	-		-		-	-		-		-		195		195
Balance, March 31, 2022	37,266	$	373	$	1,753,328	9,282	$	(3,702,023)	$	4,087,441	$	(5,159)	$	2,133,960
Stock-based compensation	-		-		29,142	-		-		-		-		29,142
Stock plan transactions and other	18		-		(167)	-		-		-		-		(167)
Acquisition of treasury stock	-		-



	PART I
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income and Comprehensive Income	2
	Condensed Consolidated Statements of Shareholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
	Note 1 - Basis of Presentation and Update to Accounting Policies	5
	Note 2 - Recently Issued Accounting Standards	5
	Note 3 - Revenue Recognition	5
	Note 4 - Fair Value of Financial Instruments	6
	Note 5 - Shareholders' Equity	8
	Note 6 - Stock-Based Compensation	9
	Note 7 - Income Taxes	9
	Note 8 - Leases	10
	Note 9 - Earnings Per Share	10
	Note 10 - Commitments and Contingencies	10
	Note 11 - Debt	11
	Note 12 - Related Party Transactions	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18
	PART II
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3	Defaults upon Senior Securities	19
Item 4	Mine Safety Disclosures	19
Item 5	Other Information	19
Item 6.	Exhibits	20
	Signatures	21