NEWPORT BEACH, Calf.,
July 22, 2020 /PRNewswire/ --
Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial
results for its second quarter ended June
30, 2020.
Second quarter highlights, which incorporate the impact of
COVID-19, year over year:
- Revenue decreased 4.8% to $1.4
billion
- Comparable restaurant sales declined 9.8%
- Digital sales grew 216.3% and accounted for 60.7% of sales for
the quarter
- Restaurant level operating margin was 12.2%, a decrease of
8.7%
- Diluted earnings per share was $0.29, net of a $0.11 after-tax impact from expenses related to
restaurant asset impairment and closure costs, as well as corporate
restructuring, a 91.0% decrease from $3.22. Adjusted diluted earnings per share
excluding these charges was $0.40, a
90.0% decrease from $3.99.1
- Opened 37 new restaurants including three relocations and
closed three restaurants during the quarter; and about 30
restaurants remain temporarily closed because of COVID-19, mainly
inside malls and shopping centers
1 Adjusted net income and adjusted diluted earnings
per share are non-GAAP financial measures. Reconciliations to GAAP
measures and further information are set forth in the table at the
end of this press release.
"I want to thank all of our employees for delivering excellent
guest experiences, supporting our restaurants, and supporting each
other during these challenging times," said Brian Niccol, Chairman and CEO, Chipotle. "Our
investment in digital over the past few years has provided our
customers with convenient access to Chipotle how and where they
want it. We'll continue to invest in elevating the digital
experience, including opening more Chipotlanes, while innovating
with new culinary offerings such as cauliflower rice, organic
beverages and quesadillas. I'm confident we will finish 2020 with
good momentum and be well positioned for the long run."
COVID-19 and Liquidity Update:
Chipotle remains steadfast in our commitment to the health and
well-being of our guests and employees while providing our safe,
delicious, high-quality food made from real ingredients. Our top
priorities for the rest of the year include safely running our
restaurants and reopening dining rooms, using best practices to
support alternate restaurant support center working arrangements,
ensuring supply chain consistency, and strengthening our digital
ecosystem. Within our restaurants, we have taken a number of steps
to enhance our robust food safety protocols including the creation
of the steward role which is focused on sanitization in high-touch
and high-traffic areas, providing masks for all employees, and
having a tamper evident packaging seal for all digital orders.
As of June 30, 2020, Chipotle
continues to maintain a strong financial position with $934.6 million in cash, short-term investments
and restricted cash, and no debt, along with a $600 million untapped credit facility with which
to continue to navigate this crisis. This financial position
improved sequentially from $909.2
million in cash, short-term investments and restricted cash,
as of March 31, 2020. Furthermore,
assuming the comparable restaurant sales improvement we are seeing
continues, that gives us greater confidence in our potential to
generate positive cash flow for the rest of this year, which will
help support on-going strategic investments. That being said, our
team remains focused on reducing non-essential controllable costs
and judiciously spending on return generating projects to preserve
liquidity.
Results for the three months ended June 30, 2020:
Revenue in the second quarter was $1.4
billion, a decrease of 4.8% compared to the second quarter
of 2019 and includes a decline of 9.8% in comparable restaurant
sales. Cadence of monthly comparable restaurant sales during the
quarter was:
- April -24.4%
- May -7.0%
- June +2.0%
Comparable restaurant sales in July have continued to improve
and are up 6.4% month to date including about a 1.4% positive
impact from the July 4th
weekend and about a 2.7% negative impact due to under-performing
restaurants in the Northeast and international markets, as well as
restaurant closures due to COVID-19.
Digital sales grew 216.3% year over year to $829.3 million, the Company's highest ever
quarterly level, and represented 60.7% of sales. Driving increased
digital awareness via advertising, new delivery partnerships with
Uber Eats and Grubhub, as well as expanding our digital
capabilities into Canada are
attracting new customers and helping reduce friction while
increasing convenient access. Notably, partnering with all the
major third-party delivery aggregators has led to an increase in
orders, a reduction in delivery time and cancellations, and an
improvement in overall customer ratings. Even with in-restaurant
dining opening back up, our digital sales momentum remains strong
in July with a mix of nearly 50%.
We opened 37 new restaurants including three relocations during
the quarter and closed three restaurants, bringing the total
restaurant count to 2,669. 21 of the 37 new restaurants included a
Chipotlane and we recently announced a milestone with the opening
of our 100th Chipotlane. These formats continue to
perform very well and are helping enhance guest access and
convenience, as well as increase new restaurant sales, margins, and
returns. We remain confident in the long-term opportunity to more
than double the number of Chipotle restaurants in the US. In fact,
our strong financial position, along with less competition for high
quality sites as other businesses pull back, is allowing us to
build a robust new unit development pipeline. As a result, we
expect to see an acceleration in the number of units opened in
2021.
Food, beverage and packaging costs in the second quarter were
33.3% of revenue, a decrease of 40 basis points compared to the
second quarter of 2019. The decrease was primarily due to lower
avocado costs, the benefit of menu price increases in late 2019,
and to a lesser extent, lower waste, freight, and paper costs.
These decreases were partially offset by elevated beef prices, and
increased incidence of steak, bottled beverages and burritos.
Restaurant level operating margin was 12.2%, a decrease from
20.9% in the second quarter of 2019 driven primarily by higher
delivery expense associated with increased delivery sales, sales
deleverage, as well as several temporary investments in our
business as a result of COVID-19 including assistance pay and wage
inflation, partially offset by lower avocado expense and benefits
from menu price increases in late 2019. In addition, we offered
free or discounted delivery throughout the quarter, which also
increased restaurant operating costs.
General and administrative expenses for the second quarter were
$102.6 million on a GAAP basis or
$101.1 million on a non-GAAP basis,
excluding $1.5 million related to
transformation expenses. GAAP and non-GAAP general and
administrative expenses for the second quarter of 2020 also include
underlying general and administrative expenses totaling
$75.6 million, $23.0 million related to non-cash stock
compensation, $2.0 million related to
payroll taxes on stock option exercises, and $0.5 million related to our All Manager
Conference that was postponed due to COVID-19.
The effective income tax rate for the three months ended
June 30, 2020, was a benefit of
289.4%, a change from an effective income tax rate provision of
26.6% for the three months ended June 30,
2019, primarily due to excess tax benefits related to option
exercises in the quarter, along with a decrease in income before
tax.
Net income was $8.2 million, or
$0.29 per diluted share, a decrease
from $91.0 million, or $3.22 per diluted share, in the second quarter of
2019. Excluding the impact of restaurant asset impairment and
closure costs, as well as corporate restructuring, adjusted net
income was $11.4 million and adjusted
diluted earnings per share was $0.40.
More information will be available in our Quarterly Report on
Form 10-Q, which will be filed with the SEC by the end of July.
Outlook
Given on-going uncertainty surrounding the future impact of
COVID-19 on the broader US economy and any specific impact to our
company, we are not providing fiscal 2020 guidance related to
comparable restaurant sales growth, new restaurant openings, and
effective full year tax rate.
Definitions
The following definitions apply to these terms as used
throughout this release:
- Comparable restaurant sales, or sales comps, and comparable
restaurant transactions, represent the change in
period-over-period sales or transactions for restaurants in
operation for at least 13 full calendar months.
- Average restaurant sales refer to the average trailing
12-month sales for restaurants in operation for at least 12 full
calendar months.
- Restaurant level operating margin represents total
revenue less direct restaurant operating costs, expressed as a
percent of total revenue.
Conference Call Details
Chipotle will host a conference call to discuss second
quarter 2020 financial results on Wednesday,
July 22, 2020, at 4:30 PM Eastern
time.
The conference call can be accessed live over the phone by
dialing 1-888-317-6003 or for international callers by dialing
1-412-317-6061 and use code: 8773093. The call will be webcast live
from the company's website on the investor relations page at
ir.chipotle.com/events. An archived webcast will be available
approximately one hour after the end of the call.
About Chipotle
Chipotle Mexican Grill, Inc. (NYSE: CMG) is cultivating a better
world by serving responsibly sourced, classically-cooked, real food
with wholesome ingredients without artificial colors, flavors or
preservatives. Chipotle had over 2,650 restaurants as of
June 30, 2020, in the United States, Canada, the United
Kingdom, France and
Germany and is the only restaurant
company of its size that owns and operates all its restaurants.
With more than 91,000 employees passionate about providing a great
guest experience, Chipotle is a longtime leader and innovator in
the food industry. Chipotle is committed to making its food more
accessible to everyone while continuing to be a brand with a
demonstrated purpose as it leads the way in digital, technology and
sustainable business practices. Steve
Ells, founder and former executive chairman, first opened
Chipotle with a single restaurant in Denver, Colorado in 1993. For more information
or to place an order online, visit WWW.CHIPOTLE.COM.
Forward-Looking Statements
Certain statements in this press release are forward-looking
statements as defined in the Private Securities Litigation Reform
Act of 1995, including statements about our future cash flow, new
restaurant development plans and future long-term prospects. We use
words such as "anticipate", "believe", "could", "should", "may",
"approximately", "estimate", "expect", "potential", "intend",
"project", "target", and similar terms and phrases, including
references to assumptions, to identify forward-looking statements.
The forward-looking statements in this press release are based on
currently available operating, financial and competitive
information available to us as of the date of this release and we
assume no obligation to update these forward-looking statements.
These statements are subject to risks and uncertainties that could
cause actual results to differ materially from those described in
the statements, including but not limited to: the ongoing adverse
effect of the novel coronavirus (COVID-19) pandemic on our guest
traffic, restaurant sales and operating costs as a result of
actions we have taken in response to the coronavirus, including
closing some restaurants, ending dine in service at some
restaurants while continuing to offer only takeout and/or delivery,
modifying work hours at some restaurants, extending enhanced
benefits to employees working during and/or impacted by the
coronavirus, increasing compensation for restaurant employees,
purchasing masks, gloves and additional sanitation supplies and
services and delaying the construction of new restaurant openings;
risks that the impact of the coronavirus pandemic will continue for
a long duration and may require a more drastic response, such as
closing all or most restaurants; risks of food safety and
food-borne illnesses and other health concerns about our food;
risks associated with our reliance on certain information
technology systems and potential failures or interruptions; privacy
and cyber security risks related to our acceptance of electronic
payments or electronic processing of confidential customer or
employee information; the impact of competition, including from
sources outside the restaurant industry; the increasingly
competitive labor market and our ability to attract and retain
qualified employees; the impact of federal, state or local
government regulations relating to our employees, restaurant design
and construction, and the sale of food or alcoholic beverages; our
ability to achieve our planned growth, such as the availability of
suitable new restaurant sites; increases in ingredient and other
operating costs due to our Food With Integrity philosophy, tariffs
or trade restrictions and supply shortages; the uncertainty of our
ability to achieve expected levels of comparable restaurant sales
due to factors such as changes in consumers' perceptions of our
brand, including as a result of actual or rumored food safety
concerns or other negative publicity, decreased overall consumer
spending (including but not limited to the increase in unemployment
caused by the coronavirus pandemic), or the inability to increase
menu prices or realize the benefits of menu price increases; risks
associated with our increased focus on our digital business,
including risks arising from our reliance on third party delivery
services, which are heightened during the pendency of government
restrictions on dine in restaurant services as a result of the
coronavirus pandemic; risks relating to litigation, including
possible governmental actions related to food safety incidents and
potential class action litigation regarding employment laws,
advertising claims or other matters; and other risk factors
described from time to time in our SEC reports, including our
annual report on Form 10-K and quarterly reports on Form 10-Q, all
of which are available on the investor relations page of our
website at ir.Chipotle.com.
CHIPOTLE MEXICAN
GRILL, INC.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(unaudited)
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
2020
|
|
2019
|
Revenue
|
$
|
1,364,738
|
|
100.0
|
%
|
|
$
|
1,434,231
|
|
100.0
|
%
|
Restaurant operating
costs (exclusive of depreciation and amortization shown separately
below):
|
|
|
|
|
|
|
|
|
|
|
|
Food, beverage and
packaging
|
|
454,756
|
|
33.3
|
|
|
|
483,284
|
|
33.7
|
|
Labor
|
|
385,266
|
|
28.2
|
|
|
|
368,053
|
|
25.7
|
|
Occupancy
|
|
95,576
|
|
7.0
|
|
|
|
89,923
|
|
6.3
|
|
Other operating
costs
|
|
262,378
|
|
19.2
|
|
|
|
193,309
|
|
13.5
|
|
General and
administrative expenses
|
|
102,647
|
|
7.5
|
|
|
|
121,395
|
|
8.5
|
|
Depreciation and
amortization
|
|
60,024
|
|
4.4
|
|
|
|
51,642
|
|
3.6
|
|
Pre-opening
costs
|
|
3,644
|
|
0.3
|
|
|
|
2,118
|
|
0.1
|
|
Impairment, closure
costs, and asset disposals
|
|
5,386
|
|
0.4
|
|
|
|
4,487
|
|
0.3
|
|
Total operating
expenses
|
|
1,369,677
|
|
100.4
|
|
|
|
1,314,211
|
|
91.6
|
|
Income (loss) from
operations
|
|
(4,939)
|
|
(0.4)
|
|
|
|
120,020
|
|
8.4
|
|
Interest and other
income, net
|
|
623
|
|
-
|
|
|
|
3,947
|
|
0.3
|
|
Income (loss) before
income taxes
|
|
(4,316)
|
|
(0.3)
|
|
|
|
123,967
|
|
8.6
|
|
Benefit (provision)
for income taxes
|
|
12,491
|
|
0.9
|
|
|
|
(32,939)
|
|
(2.3)
|
|
Net income
|
$
|
8,175
|
|
0.6
|
%
|
|
$
|
91,028
|
|
6.3
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.29
|
|
|
|
|
$
|
3.28
|
|
|
|
Diluted
|
$
|
0.29
|
|
|
|
|
$
|
3.22
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,911
|
|
|
|
|
|
27,720
|
|
|
|
Diluted
|
|
28,333
|
|
|
|
|
|
28,300
|
|
|
|
CHIPOTLE MEXICAN
GRILL, INC.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(unaudited)
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
|
2020
|
|
2019
|
Revenue
|
$
|
2,775,510
|
|
100.0
|
%
|
|
$
|
2,742,448
|
|
100.0
|
%
|
Restaurant operating
costs (exclusive of depreciation and amortization shown separately
below):
|
|
|
|
|
|
|
|
|
|
|
|
Food, beverage and
packaging
|
|
917,055
|
|
33.0
|
|
|
|
904,651
|
|
33.0
|
|
Labor
|
|
778,831
|
|
28.1
|
|
|
|
716,895
|
|
26.1
|
|
Occupancy
|
|
190,855
|
|
6.9
|
|
|
|
178,693
|
|
6.5
|
|
Other operating
costs
|
|
473,140
|
|
17.0
|
|
|
|
368,052
|
|
13.4
|
|
General and
administrative expenses
|
|
209,117
|
|
7.5
|
|
|
|
224,066
|
|
8.2
|
|
Depreciation and
amortization
|
|
118,398
|
|
4.3
|
|
|
|
105,423
|
|
3.8
|
|
Pre-opening
costs
|
|
7,210
|
|
0.3
|
|
|
|
3,058
|
|
0.1
|
|
Impairment, closure
costs, and asset disposals
|
|
14,722
|
|
0.5
|
|
|
|
11,429
|
|
0.4
|
|
Total operating
expenses
|
|
2,709,328
|
|
97.6
|
|
|
|
2,512,267
|
|
91.6
|
|
Income from
operations
|
|
66,182
|
|
2.4
|
|
|
|
230,181
|
|
8.4
|
|
Interest and other
income, net
|
|
3,366
|
|
0.1
|
|
|
|
7,076
|
|
0.3
|
|
Income before income
taxes
|
|
69,548
|
|
2.5
|
|
|
|
237,257
|
|
8.7
|
|
Benefit (provision)
for income taxes
|
|
15,015
|
|
0.5
|
|
|
|
(58,097)
|
|
(2.1)
|
|
Net income
|
$
|
84,563
|
|
3.0
|
%
|
|
$
|
179,160
|
|
6.5
|
%
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
3.04
|
|
|
|
|
$
|
6.47
|
|
|
|
Diluted
|
$
|
2.99
|
|
|
|
|
$
|
6.35
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,851
|
|
|
|
|
|
27,708
|
|
|
|
Diluted
|
|
28,328
|
|
|
|
|
|
28,209
|
|
|
|
CHIPOTLE MEXICAN
GRILL, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
2020
|
|
2019
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
605,622
|
|
$
|
480,626
|
Accounts receivable,
net
|
|
68,006
|
|
|
80,545
|
Inventory
|
|
24,178
|
|
|
26,096
|
Prepaid expenses and
other current assets
|
|
53,656
|
|
|
57,076
|
Income tax
receivable
|
|
97,840
|
|
|
27,705
|
Investments
|
|
301,041
|
|
|
400,156
|
Total current
assets
|
|
1,150,343
|
|
|
1,072,204
|
Leasehold
improvements, property and equipment, net
|
|
1,498,048
|
|
|
1,458,690
|
Restricted
cash
|
|
27,979
|
|
|
27,855
|
Operating lease
assets
|
|
2,634,165
|
|
|
2,505,466
|
Other
assets
|
|
37,655
|
|
|
18,450
|
Goodwill
|
|
21,939
|
|
|
21,939
|
Total
assets
|
$
|
5,370,129
|
|
$
|
5,104,604
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
160,523
|
|
$
|
115,816
|
Accrued payroll and
benefits
|
|
130,306
|
|
|
126,600
|
Accrued
liabilities
|
|
146,229
|
|
|
155,843
|
Unearned
revenue
|
|
88,924
|
|
|
95,195
|
Current operating
lease liabilities
|
|
197,196
|
|
|
173,139
|
Total current
liabilities
|
|
723,178
|
|
|
666,593
|
Long-term operating
lease liabilities
|
|
2,809,178
|
|
|
2,678,374
|
Deferred income tax
liabilities
|
|
96,502
|
|
|
37,814
|
Other
liabilities
|
|
36,775
|
|
|
38,797
|
Total
liabilities
|
|
3,665,633
|
|
|
3,421,578
|
Shareholders'
equity:
|
|
|
|
|
|
Preferred stock, $0.01
par value, 600,000 shares authorized, no shares issued as of June
30, 2020 and December 31, 2019, respectively
|
|
-
|
|
|
-
|
Common stock, $0.01
par value, 230,000 shares authorized, 36,667 and 36,323 shares
issued as of June 30, 2020 and December 31, 2019,
respectively
|
|
367
|
|
|
363
|
Additional paid-in
capital
|
|
1,506,785
|
|
|
1,465,697
|
Treasury stock, at
cost, 8,703 and 8,568 common shares as of June 30, 2020 and
December 31, 2019, respectively
|
|
(2,801,467)
|
|
|
(2,699,119)
|
Accumulated other
comprehensive loss
|
|
(6,149)
|
|
|
(5,363)
|
Retained
earnings
|
|
3,004,960
|
|
|
2,921,448
|
Total shareholders'
equity
|
|
1,704,496
|
|
|
1,683,026
|
Total liabilities and
shareholders' equity
|
$
|
5,370,129
|
|
$
|
5,104,604
|
CHIPOTLE MEXICAN
GRILL, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(in
thousands)
|
|
|
|
|
|
|
|
Six months
ended
|
|
June
30,
|
|
2020
|
|
2019
|
Operating
activities
|
|
|
|
|
|
Net income
|
$
|
84,563
|
|
$
|
179,160
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
118,398
|
|
|
105,423
|
Amortization of
operating lease assets
|
|
88,139
|
|
|
77,438
|
Deferred income tax
provision
|
|
55,122
|
|
|
(6,349)
|
Impairment, closure
costs, and asset disposals
|
|
13,747
|
|
|
4,944
|
Provision for credit
losses
|
|
82
|
|
|
85
|
Stock-based
compensation expense
|
|
40,762
|
|
|
40,321
|
Other
|
|
1,670
|
|
|
(2,588)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
22,598
|
|
|
18,275
|
Inventory
|
|
2,029
|
|
|
421
|
Prepaid expenses and
other current assets
|
|
(6,250)
|
|
|
(13,617)
|
Other
assets
|
|
(8,574)
|
|
|
2,907
|
Accounts
payable
|
|
40,530
|
|
|
(10,319)
|
Accrued payroll and
benefits
|
|
3,264
|
|
|
(16,526)
|
Accrued
liabilities
|
|
(8,120)
|
|
|
7,659
|
Unearned
revenue
|
|
(4,027)
|
|
|
(8,681)
|
Income tax
payable/receivable
|
|
(70,119)
|
|
|
(4,593)
|
Operating lease
liabilities
|
|
(69,468)
|
|
|
(74,346)
|
Other long-term
liabilities
|
|
587
|
|
|
901
|
Net cash provided by
operating activities
|
|
304,933
|
|
|
300,515
|
Investing
activities
|
|
|
|
|
|
Purchases of
leasehold improvements, property and equipment
|
|
(165,455)
|
|
|
(142,002)
|
Purchases of
investments
|
|
(101,104)
|
|
|
(208,253)
|
Maturities of
investments
|
|
198,578
|
|
|
220,000
|
Acquisitions of
equity method investments
|
|
(7,525)
|
|
|
-
|
Net cash used in
investing activities
|
|
(75,506)
|
|
|
(130,255)
|
Financing
activities
|
|
|
|
|
|
Acquisition of
treasury stock
|
|
(54,401)
|
|
|
(111,542)
|
Tax withholding on
stock-based compensation awards
|
|
(47,947)
|
|
|
(10,398)
|
Other financing
activities
|
|
(1,855)
|
|
|
(510)
|
Net cash used in
financing activities
|
|
(104,203)
|
|
|
(122,450)
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
(104)
|
|
|
494
|
Net change in cash,
cash equivalents, and restricted cash
|
|
125,120
|
|
|
48,304
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
|
508,481
|
|
|
280,152
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
|
633,601
|
|
$
|
328,456
|
Supplemental
disclosures of cash flow information
|
|
|
|
|
|
Income taxes
paid
|
$
|
657
|
|
$
|
69,075
|
Purchases of
leasehold improvements, property, and equipment accrued in accounts
payable and accrued liabilities
|
$
|
41,504
|
|
$
|
27,119
|
Acquisition of
treasury stock accrued in accounts payable and accrued
liabilities
|
$
|
-
|
|
$
|
1,900
|
CHIPOTLE MEXICAN
GRILL, INC.
|
SUPPLEMENTAL
FINANCIAL AND OTHER DATA
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Dec.
31,
|
|
Sep.
30,
|
|
Jun.
30,
|
|
|
2020
|
|
2020
|
|
2019
|
|
2019
|
|
2019
|
Number of restaurants
opened
|
|
|
37
|
|
|
19
|
|
|
80
|
|
|
25
|
|
|
20
|
Restaurant
closures
|
|
|
(3)
|
|
|
(2)
|
|
|
(3)
|
|
|
(1)
|
|
|
(1)
|
Restaurant
relocations
|
|
|
(3)
|
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
-
|
Number of restaurants
at end of period
|
|
|
2,669
|
|
|
2,638
|
|
|
2,622
|
|
|
2,546
|
|
|
2,523
|
Average restaurant
sales
|
|
$
|
2,177
|
|
$
|
2,239
|
|
$
|
2,221
|
|
$
|
2,154
|
|
$
|
2,099
|
Comparable restaurant
sales increase (decrease)
|
|
|
(9.8%)
|
|
|
3.3%
|
|
|
13.4%
|
|
|
11.0%
|
|
|
10.0%
|
CHIPOTLE MEXICAN GRILL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts)
(unaudited)
The following provides a reconciliation of non-GAAP financial
measures presented in the text above to the most directly
comparable financial measures calculated and presented in
accordance with GAAP.
Adjusted net income is net income excluding restaurant asset
impairment, corporate restructuring, and certain other costs.
Adjusted general and administrative expense is general and
administrative expense excluding certain other costs and
transformation expenses. We present these non-GAAP measures in
order to facilitate meaningful evaluation of our operating
performance across periods. These adjustments are intended to
provide greater transparency of underlying performance and to allow
investors to evaluate our business on the same basis as our
management, which uses these non-GAAP measures in evaluating the
company's performance. Our adjusted net income, adjusted diluted
earnings per share, and adjusted general and administrative
expenses measures may not be comparable to other companies'
adjusted measures. These adjustments are not necessarily indicative
of what our actual financial performance would have been during the
periods presented and should be viewed in addition to, and not as
an alternative to, our results prepared in accordance with GAAP.
Further details regarding these adjustments are included in the
tables below.
Adjusted Net
Income and Adjusted Diluted Earnings Per Share
|
|
|
|
|
|
|
|
Three months
ended
|
|
June
30,
|
|
2020
|
|
2019
|
Net income
|
$
|
8,175
|
|
$
|
91,028
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Restaurant
costs:
|
|
|
|
|
|
Operating lease asset
impairment and other restaurant costs(1)
|
|
2,107
|
|
|
480
|
Duplicate rent
expense(2)
|
|
80
|
|
|
305
|
Corporate
Restructuring:
|
|
|
|
|
|
Operating lease asset
impairment and other office closure costs(3)
|
|
-
|
|
|
325
|
Accelerated
depreciation(4)
|
|
-
|
|
|
27
|
Duplicate rent
expense(2)
|
|
1,216
|
|
|
961
|
Employee related
restructuring costs(5)
|
|
295
|
|
|
2,638
|
Legal expenses,
net
|
|
-
|
|
|
19,600
|
Total non-GAAP
adjustments
|
$
|
3,698
|
|
$
|
24,336
|
Tax effect of
non-GAAP adjustments(6)
|
|
(425)
|
|
|
(2,514)
|
After tax impact of
non-GAAP adjustments
|
$
|
3,273
|
|
$
|
21,822
|
Adjusted net
income
|
$
|
11,448
|
|
$
|
112,850
|
|
|
|
|
|
|
Diluted
weighted-average number of common shares outstanding
|
|
28,333
|
|
|
28,300
|
Diluted earnings per
share
|
$
|
0.29
|
|
$
|
3.22
|
Adjusted diluted
earnings per share
|
$
|
0.40
|
|
$
|
3.99
|
|
|
|
|
|
|
(1) Operating lease
asset impairment charges, and other expenses for restaurants due to
underperformance.
|
(2) Duplicate rent
expense for the corporate headquarter relocation and office
consolidation announced in May 2018 and rent expense for closed
restaurants for the announced restaurant closures in June
2018.
|
(3) Asset impairment
charges and other closure expenses for the corporate headquarter
relocation and office consolidation announced in May
2018.
|
(4) Accelerated
depreciation for restaurant and office closures announced in June
2018 due to underperformance and the corporate
restructuring.
|
(5) Costs for
employee severance, stock modifications, transition expenses,
recruitment, relocation costs, third party and other
employee-related costs.
|
(6) For the three
months ended June 30, 2019, includes a $3,843 adjustment for
non-tax deductible costs related to litigation matters.
|
CHIPOTLE MEXICAN
GRILL, INC.
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
Three months
ended
|
|
June
30,
|
|
2020
|
|
2019
|
General and
administrative expenses
|
$
|
102,647
|
|
$
|
121,395
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Legal
Proceedings(1)
|
|
-
|
|
|
(19,600)
|
Transformation
expenses(2)
|
|
(1,591)
|
|
|
(3,904)
|
Total non-GAAP
adjustments
|
$
|
(1,591)
|
|
$
|
(23,504)
|
Adjusted general and
administrative expenses
|
$
|
101,056
|
|
$
|
97,891
|
|
|
|
|
|
|
(1) The three months
ended June 30, 2019 relates to estimated costs for several existing
legal proceedings. These amounts are expected to exceed
typical costs for these types of legal proceedings.
|
(2) Transformation
expenses include duplicate rent expense for office and restaurant
closures announced in June 2018 due to the corporate restructuring
and underperformance of $1,296 and $1,266 for the three months
ended June 30, 2020 and 2019, respectively, and employee related
restructuring costs of $295 and $2,638 for the three months ended
June 30, 2020 and 2019, respectively.
|
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SOURCE Chipotle Mexican Grill