cmg-20220930x10q

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, 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 October 24, 2022, there were 27,721,112 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)



	September 30,		December 31,
	2022		2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	366,623	$	815,374
Accounts receivable, net		71,276		99,599
Inventory		33,752		32,826
Prepaid expenses and other current assets		76,439		78,756
Income tax receivable		112,064		94,064
Investments		417,278		260,945
Total current assets		1,077,432		1,381,564
Leasehold improvements, property and equipment, net		1,871,623		1,769,278
Long-term investments		442,620		274,311
Restricted cash		30,974		30,856
Operating lease assets		3,309,051		3,118,294
Other assets		63,798		56,716
Goodwill		21,939		21,939
Total assets	$	6,817,437	$	6,652,958
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	167,842	$	163,161
Accrued payroll and benefits		128,495		162,405
Accrued liabilities		156,455		173,052
Unearned revenue		133,118		156,351
Current operating lease liabilities		231,947		218,713
Total current liabilities		817,857		873,682
Commitments and contingencies (Note 10)
Long-term operating lease liabilities		3,497,221		3,301,601
Deferred income tax liabilities		133,255		141,765
Other liabilities		41,723		38,536
Total liabilities		4,490,056		4,355,584
Shareholders' equity:
Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of September 30, 2022 and December 31, 2021, respectively		-		-
Common stock, $0.01 par value, 230,000 shares authorized, 37,306 and 37,132 shares issued as of September 30, 2022 and December 31, 2021, respectively		373		371
Additional paid-in capital		1,807,938		1,729,312
Treasury stock, at cost, 9,555 and 9,052 common shares as of September 30, 2022 and December 31, 2021, respectively		(4,076,555)		(3,356,102)
Accumulated other comprehensive loss		(8,896)		(5,354)
Retained earnings		4,604,521		3,929,147
Total shareholders' equity		2,327,381		2,297,374
Total liabilities and shareholders' equity	$	6,817,437	$	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				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Food and beverage revenue	$	2,202,336	$	1,932,409	$	6,394,094	$	5,517,764
Delivery service revenue		17,839		19,906		59,959		68,664
Total revenue		2,220,175		1,952,315		6,454,053		5,586,428
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Food, beverage and packaging		662,540		591,332		1,963,394		1,688,481
Labor		557,178		502,757		1,639,044		1,400,932
Occupancy		115,826		104,223		341,777		309,422
Other operating costs		322,085		294,650		970,261		876,602
General and administrative expenses		140,896		145,930		429,118		447,077
Depreciation and amortization		71,416		63,191		212,814		188,395
Pre-opening costs		7,618		5,894		18,219		14,280
Impairment, closure costs, and asset disposals		6,363		4,658		15,354		14,592
Total operating expenses		1,883,922		1,712,635		5,589,981		4,939,781
Income from operations		336,253		239,680		864,072		646,647
Interest and other income (expense), net		3,712		(126)		14,071		(1,443)
Income before income taxes		339,965		239,554		878,143		645,204
Provision for income taxes		(82,827)		(35,120)		(202,769)		(125,695)
Net income	$	257,138	$	204,434	$	675,374	$	519,509
Earnings per share:
Basic	$	9.26	$	7.26	$	24.20	$	18.46
Diluted	$	9.20	$	7.18	$	24.02	$	18.22
Weighted-average common shares outstanding:
Basic		27,773		28,150		27,907		28,137
Diluted		27,956		28,475		28,116		28,520
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments	$	(2,257)	$	(956)	$	(3,542)	$	(914)
Comprehensive income	$	254,881	$	203,478	$	671,832	$	518,595

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
Stock-based compensation	-		-		36,693	-		-		-		-		36,693
Stock plan transactions and other	114		1		(82)	-		-		-		-		(81)
Acquisition of treasury stock	-		-		-	57		(103,340)		-		-		(103,340)
Net income	-		-		-	-		-		204,434		-		204,434
Other comprehensive income (loss), net of income tax	-		-		-	-		-		-		(956)		(956)
Balance, September 30, 2021	37,102	$	371	$	1,690,806	8,947	$	(3,170,798)	$	3,795,672	$	(5,143)	$	2,310,908

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)



	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	11
	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	19
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	20
Item 6.	Exhibits	21
	Signatures	22