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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, 2023

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 1100 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 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, 2023, there were 27,444,660 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 (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 – Equity Investments

8

Note 6 - Shareholders' Equity

9

Note 7 - Stock-Based Compensation

9

Note 8 - Income Taxes

9

Note 9 - Leases

9

Note 10 - Earnings Per Share

10

Note 11 - Commitments and Contingencies

10

Note 12 - Debt

11

Note 13 - 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


Table of Contents

PART I

ITEM 1.  FINANCIAL STATEMENTS

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

September 30,

December 31,

2023

2022

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

602,307

$

384,000

Accounts receivable, net

71,122

106,880

Inventory

40,177

35,668

Prepaid expenses and other current assets

104,038

86,412

Income tax receivable

-

47,741

Investments

851,699

515,136

Total current assets

1,669,343

1,175,837

Leasehold improvements, property and equipment, net

2,093,011

1,951,147

Long-term investments

473,247

388,055

Restricted cash

25,315

24,966

Operating lease assets

3,555,808

3,302,402

Other assets

72,830

63,158

Goodwill

21,939

21,939

Total assets

$

7,911,493

$

6,927,504

Liabilities and shareholders' equity

Current liabilities:

Accounts payable

$

207,541

$

184,566

Accrued payroll and benefits

155,015

170,456

Accrued liabilities

151,148

147,539

Unearned revenue

156,320

183,071

Current operating lease liabilities

244,994

236,248

Income tax payable

172,689

-

Total current liabilities

1,087,707

921,880

Commitments and contingencies (Note 11)

 

 

Long-term operating lease liabilities

3,773,087

3,495,162

Deferred income tax liabilities

111,089

98,623

Other liabilities

53,296

43,816

Total liabilities

5,025,179

4,559,481

Shareholders' equity:

Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of September 30, 2023 and December 31, 2022, respectively

-

-

Common stock, $0.01 par value, 230,000 shares authorized, 37,467 and 37,320 shares issued as of September 30, 2023 and December 31, 2022, respectively

375

373

Additional paid-in capital

1,917,868

1,829,304

Treasury stock, at cost, 9,982 and 9,693 common shares as of September 30, 2023 and December 31, 2022, respectively

(4,798,748)

(4,282,014)

Accumulated other comprehensive loss

(8,080)

(7,888)

Retained earnings

5,774,899

4,828,248

Total shareholders' equity

2,886,314

2,368,023

Total liabilities and shareholders' equity

$

7,911,493

$

6,927,504

See accompanying notes to condensed consolidated financial statements.

1


Table of Contents

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,

2023

2022

2023

2022

Food and beverage revenue

$

2,456,039

$

2,202,336

$

7,304,557

$

6,394,094

Delivery service revenue

15,909

17,839

50,772

59,959

Total revenue

2,471,948

2,220,175

7,355,329

6,454,053

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

Food, beverage and packaging

734,186

662,540

2,165,409

1,963,394

Labor

616,282

557,178

1,811,754

1,639,044

Occupancy

126,269

115,826

372,097

341,777

Other operating costs

345,368

322,085

1,058,281

970,261

General and administrative expenses

159,501

140,896

464,337

429,118

Depreciation and amortization

78,546

71,416

233,902

212,814

Pre-opening costs

9,605

7,618

23,341

18,219

Impairment, closure costs, and asset disposals

7,241

6,363

31,842

15,354

Total operating expenses

2,076,998

1,883,922

6,160,963

5,589,981

Income from operations

394,950

336,253

1,194,366

864,072

Interest and other income, net

18,392

3,712

43,787

14,071

Income before income taxes

413,342

339,965

1,238,153

878,143

Provision for income taxes

(100,125)

(82,827)

(291,502)

(202,769)

Net income

$

313,217

$

257,138

$

946,651

$

675,374

Earnings per share:

Basic

$

11.37

$

9.26

$

34.31

$

24.20

Diluted

$

11.32

$

9.20

$

34.13

$

24.02

Weighted-average common shares outstanding:

Basic

27,550

27,773

27,593

27,907

Diluted

27,681

27,956

27,739

28,116

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

Foreign currency translation adjustments

$

(1,128)

$

(2,257)

$

(192)

$

(3,542)

Comprehensive income

$

312,089

$

254,881

$

946,459

$

671,832

See accompanying notes to condensed consolidated financial statements.

 

2


Table of Contents

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 Loss

Total

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 taxes

-

-

-

-

-

-

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

-

-

-

198 

(267,198)

-

-

(267,198)

Net income

-

-

-

-

-

259,942 

-

259,942 

Other comprehensive income (loss), net of income taxes

-

-

-

-

-

-

(1,480)

(1,480)

Balance, June 30, 2022

37,284 

$

373 

$

1,782,303 

9,480 

$

(3,969,221)

$

4,347,383 

$

(6,639)

$

2,154,199 

Stock-based compensation

-

-

25,587 

-

-

-

-

25,587 

Stock plan transactions and other

22 

-

48 

-

-

-

-

48 

Acquisition of treasury stock

-

-

-

75 

(107,334)

-

-

(107,334)

Net income

-

-

-

-

-

257,138 

-

257,138 

Other comprehensive income (loss), net of income taxes

-

-

-

-

-

-

(2,257)

(2,257)

Balance, September 30, 2022

37,306 

$

373 

$

1,807,938 

9,555 

$

(4,076,555)

$

4,604,521 

$

(8,896)

$

2,327,381 

Balance, December 31, 2022

37,320 

$

373 

$

1,829,304 

9,693 

$

(4,282,014)

$

4,828,248 

$

(7,888)

$

2,368,023 

Stock-based compensation

-

-

20,670 

-

-

-

-

20,670 

Stock plan transactions and other

99 

1 

(291)

-

-

-