- Diluted EPS Increased 72.2% to $0.62
- 28 New Restaurants Opened
- Comparable Restaurant Sales Increased 12.4%
DENVER--(BUSINESS WIRE)--Oct. 30, 2007--Chipotle Mexican Grill,
Inc. (NYSE: CMG and CMG.B) today reported financial results for its
third quarter ended September 30, 2007.
Highlights for the third quarter of 2007 as compared to the third
quarter of 2006 include:
- Revenue increased 35.6% to $286.4 million
- Comparable restaurant sales increased 12.4%
- Restaurant level operating margins increased 150 basis points
to 23.0%
- Income from operations as a percentage of revenue increased
250 basis points to 11.0%
- Net income increased 74.6% to $20.6 million
- Diluted earnings per share increased 72.2% to $0.62
Highlights for the nine months ended September 30, 2007 as
compared to the prior year period include:
- Revenue increased 32.1% to $796.9 million
- Comparable restaurant sales increased 10.9%
- Restaurant level operating margins increased 120 basis points
to 22.4%
- Income from operations as a percentage of revenue increased
240 basis points to 10.1%
- Net income increased 73.4% to $53.0 million
- Diluted earnings per share increased 68.4% to $1.60
"Our strong third quarter results give us confidence that we are
on the right track in pursuing our vision to change the way the world
thinks about and eats fast food," said Chipotle Founder, Chairman and
CEO Steve Ells. "Our customers appreciate our investment in Food With
Integrity. Higher quality ingredients not only mean their food tastes
better, but they can be confident that we will continue to seek
ingredients that are raised with respect for the animals, the farmers,
and the environment. During the quarter, we removed the growth hormone
rBGH from our cheese in 90% of our restaurants. And, in addition to
all of our restaurants already serving 100% naturally raised pork,
about 80% now serve naturally raised chicken and nearly half serve
naturally raised beef."
Monty Moran, President & COO added, "Our commitment to empowering
our managers and crews once again resulted in their collective
contribution to our strong sales and restaurant level margins this
quarter. We credit a significant amount of the continued improvement
in our operating results to our managers' and crews' attention to
detail and delivery of superior customer service. This commitment to
developing great talent at the restaurant level, combined with the
operational excellence demonstrated in our restaurants, will assure
our continued success."
Third Quarter 2007 Results
Revenue for the third quarter of 2007 increased 35.6% to $286.4
million from $211.3 million in the third quarter of 2006. This growth
in revenue was attributable to new restaurants not in the comparable
base and a 12.4% increase in comparable restaurant sales in the third
quarter. Comparable restaurant sales growth was primarily due to an
increase in customer visits. Chipotle opened 28 restaurants during the
third quarter of 2007, including 26 restaurants in existing markets
and two restaurants in new markets.
Restaurant level operating margins increased to 23.0% in the third
quarter of 2007 from 21.5% in the third quarter of 2006, primarily due
to efficiencies in labor, and menu price increases associated with the
addition of naturally raised meats in certain markets which were
partially offset by higher food costs.
General and administrative expenses were $19.3 million in the
third quarter of 2007, or 6.7% of revenue, compared to $15.7 million
in the third quarter of 2006, or 7.4% of revenue. In the third quarter
of 2007, general and administrative expenses declined as a percentage
of revenue primarily due to the effect of economies of scale from
higher restaurant sales.
Income from operations increased to $31.4 million for the third
quarter of 2007, compared to $17.9 million in the third quarter of
2006.
Net income for the third quarter of 2007 was $20.6 million, or
$0.62 per diluted share, compared to $11.8 million, or $0.36 per
diluted share in the third quarter of 2006.
Results for the nine months ended September 30, 2007
Revenue for the nine months ended September 30, 2007 increased
32.1% to $796.9 million from $603.2 million in the prior year period.
This growth in revenue was attributable to new restaurants not in the
comparable base and a 10.9% increase in comparable restaurant sales.
Comparable restaurant sales growth was primarily due to an increase in
customer visits. Chipotle opened 88 restaurants during the period
including 84 restaurants in existing markets and four restaurants in
new markets.
Restaurant level operating margins increased to 22.4% in the
period from 21.2% in the nine months ended September 30, 2006,
primarily due to efficiencies in labor and menu price increases
associated with the addition of naturally raised meats which were
partially offset by higher food costs.
General and administrative expenses were $54.4 million for the
nine months ended September 30, 2007, or 6.8% of revenue, compared to
$48.6 million, or 8.1% of revenue for the prior year period. General
and administrative expenses declined as a percentage of revenue
primarily due to the effect of economies of scale from higher
restaurant sales, and also include a benefit from the removal of the
remaining $1.2 million reserve, or $0.02 per diluted share, associated
with credit card transactions.
Income from operations increased to $80.7 million for the nine
months ended September 30, 2007, compared to $46.5 million a year ago.
Net income for the nine months ended September 30, 2007 was $53.0
million, or $1.60 per diluted share, compared to $30.6 million, or
$0.95 per diluted share in the prior year period.
"We are pleased with our third quarter's double digit comparable
restaurant sales increase, along with our improvement in labor costs,
both of which contributed to the strength of our restaurant level
margins," said Jack Hartung, Chief Finance and Development Officer.
"With nine months of the year behind us, we now expect to achieve our
10th consecutive year of double digit comparable restaurant sales
increases for the full year in 2007. With our strong unit growth
opportunities and restaurant economic model, we remain comfortable
with our ability to grow fully diluted earnings per share at an
average annual rate of at least 25% over the long-term."
Outlook
For the full year 2007, management now expects comparable
restaurant sales increases in the low double digit range.
Management also expects the following for 2007:
- 110 - 120 new restaurant openings, of which 88 have already
opened through September 30, 2007
- Non-cash stock compensation expense of approximately $8.0
million to $8.5 million which includes 10 months of expense
for the 2007 grants
- An effective tax rate of approximately 37.7%
- Diluted weighted average common shares outstanding of
approximately 33.35 million
For the full year 2008, management expects the following:
- Comparable restaurant sales increases in the low to mid single
digit range
- 130 - 140 new restaurant openings
- An effective tax rate of approximately 37.7%
Definitions
The following definitions apply to these terms as used throughout
this release:
Comparable restaurant sales increases include company-operated
restaurants only and represent the change in period-over-period sales
for the comparable restaurant base. A restaurant becomes comparable in
its 13th full calendar month of operation.
Average restaurant sales refers to the average trailing 12-month
sales for company-operated restaurants in operation for at least 12
full calendar months.
Restaurant level operating margin represents total revenue less
restaurant operating costs, expressed as a percent of total revenue.
New markets are defined as markets opened within the calendar
year.
Conference Call
Chipotle will host a conference call to discuss third quarter 2007
financial results today at 5:00 PM Eastern Time. Hosting the call will
be Steve Ells, Founder, Chairman and Chief Executive Officer, Monty
Moran, President and Chief Operating Officer, and Jack Hartung, Chief
Finance and Development Officer.
The conference call can be accessed live over the phone by dialing
1-888-609-5689 or for international callers by dialing 1-913-312-6694.
A replay will be available one hour after the call and can be accessed
by dialing 1-888-203-1112 or 1-719-457-0820 for international callers;
the password is 5275348. The replay will be available until November
6, 2007. The call will be webcast live from the Company's Web site at
www.chipotle.com under the investor relations section. An archived
webcast will be available approximately one hour after the end of the
call.
About Chipotle
Chipotle Mexican Grill offers a focused menu of burritos, tacos,
burrito bowls (a burrito without the tortilla) and salads made from
fresh, high-quality raw ingredients, prepared using classic cooking
methods and served in a distinctive atmosphere. Through our vision of
Food With Integrity, Chipotle is seeking better food not only from
using fresh ingredients, but ingredients that are sustainably grown
and naturally raised with respect for the animals, the land, and the
farmers who produce the food. Chipotle opened its first restaurant in
1993 and currently operates more than 670 restaurants. For more
information, visit www.chipotle.com.
Forward-Looking Statements
Certain statements in this press release, including statements
under the heading "Outlook" and elsewhere in the release related to
our expected comparable restaurant sales increases, our projected
earnings per share growth, the number of restaurants we intend to
open, our expected stock compensation expense, effective tax rate, and
our expected number of diluted common shares, are forward-looking
statements as defined in the Private Securities Litigation Reform Act
of 1995. We use words such as "anticipate", "believe", "could",
"should", "estimate", "expect", "intend", "may", "predict", "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
information available to us as of the date any such statements are
made 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. These risks and uncertainties include,
but are not limited to, the following: factors that could affect our
ability to achieve and manage our planned expansion, such as the
availability of a sufficient number of suitable new restaurant sites
and the availability of qualified employees; the uncertainty of our
ability to achieve targeted levels of comparable restaurant sales
increases; risks relating to our expansion into new markets; the risk
of food-borne illnesses and other health concerns about our food
products; changes in the availability and costs of food; risks
relating to our separation from McDonald's; changes in consumer
preferences, general economic conditions or consumer discretionary
spending; the impact of federal, state or local government regulations
relating to our employees and the sale of food or alcoholic beverages;
the impact of litigation; our ability to protect our name and logo and
other proprietary information; the potential effects of inclement
weather; the effect of competition in the restaurant industry; risks
related to our having two classes of publicly-traded common stock; and
other risk factors described from time to time in our SEC reports,
including our most recent annual report on Form 10-K and subsequent
quarterly reports on Form 10-Q, all of which are available on the
Investor Relations page of our Web site at www.chipotle.com.
Chipotle Mexican Grill, Inc.
Consolidated Statement of Income
(in thousands, except per share data)
(unaudited)
Three months ended September 30,
---------------------------------
2007 2006
---------------- ----------------
Revenue:
Restaurant sales $286,431 100.0% $210,381 99.6%
Franchise royalties and fees -- 0.0 879 0.4
--------- ------ --------- ------
Total revenue 286,431 100.0 211,260 100.0
--------- ------ --------- ------
Restaurant operating costs:
Food, beverage and packaging 92,075 32.1 65,436 31.0
Labor 75,395 26.3 59,629 28.2
Occupancy 19,745 6.9 15,040 7.1
Other operating costs 33,240 11.6 25,744 12.2
General and administrative expenses 19,279 6.7 15,723 7.4
Depreciation and amortization 11,167 3.9 8,676 4.1
Pre-opening costs 2,350 0.8 2,053 1.0
Loss on disposal of assets 1,784 0.6 1,106 0.5
--------- ------ --------- ------
255,035 89.0 193,407 91.5
--------- ------ --------- ------
Income from operations 31,396 11.0 17,853 8.5
Interest income 1,597 0.6 2,015 1.0
Interest expense (74) -- (68) --
--------- ------ --------- ------
Income before income taxes 32,919 11.5 19,800 9.4
Provision for income taxes (12,315) (4.3) (7,998) (3.8)
--------- ------ --------- ------
Net income $ 20,604 7.2% $ 11,802 5.6%
========= ====== ========= ======
Earnings per share:
Basic $ 0.63 $ 0.36
========= =========
Diluted $ 0.62 $ 0.36
========= =========
Weighted average common shares
outstanding:
Basic 32,706 32,499
========= =========
Diluted 33,171 32,885
========= =========
Chipotle Mexican Grill, Inc.
Consolidated Statement of Income
(in thousands, except per share data)
(unaudited)
Nine months ended September,
---------------------------------
2007 2006
---------------- ----------------
Revenue:
Restaurant sales $796,137 99.9% $601,028 99.6%
Franchise royalties and fees 735 0.1 2,183 0.4
--------- ------ --------- ------
Total revenue 796,872 100.0 603,211 100.0
--------- ------ --------- ------
Restaurant operating costs:
Food, beverage and packaging 254,209 31.9 188,009 31.2
Labor 211,965 26.6 169,507 28.1
Occupancy 55,355 6.9 43,250 7.2
Other operating costs 96,663 12.1 74,855 12.4
General and administrative expenses 54,397 6.8 48,633 8.1
Depreciation and amortization 31,907 4.0 24,988 4.1
Pre-opening costs 6,730 0.8 4,668 0.8
Loss on disposal of assets 4,919 0.6 2,845 0.5
--------- ------ --------- ------
716,145 89.9 556,755 92.3
--------- ------ --------- ------
Income from operations 80,727 10.1 46,456 7.7
Interest income 4,617 0.6 4,607 0.8
Interest expense (223) -- (197) --
--------- ------ --------- ------
Income before income taxes 85,121 10.7 50,866 8.4
Provision for income taxes (32,096) (4.0) (20,284) (3.4)
--------- ------ --------- ------
Net income $ 53,025 6.7% $ 30,582 5.1%
========= ====== ========= ======
Earnings per share:
Basic $ 1.63 $ 0.96
========= =========
Diluted $ 1.60 $ 0.95
========= =========
Weighted average common shares
outstanding:
Basic 32,622 31,888
========= =========
Diluted 33,049 32,295
========= =========
Chipotle Mexican Grill, Inc.
Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)
As of
September 30, 2007 December 31, 2006
------------------- --------------------
Total current assets $188,649 $178,837
Total assets $683,367 $604,208
Total current liabilities $70,256 $61,201
Total liabilities $146,600 $130,251
Total shareholders' equity $536,767 $473,957
Chipotle Mexican Grill, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Nine months ended September 30,
2007 2006
--------------- ------------------
Cash provided by operating
activities $105,573 $73,489
Cash used in investing activities $(103,854) $(62,499)
Cash provided by financing
activities $12,296 $146,514
Chipotle Mexican Grill, Inc.
Supplemental Financial Data
(dollars in thousands)
(unaudited)
For the three months ended
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2007 2007 2007 2006 2006
--------- -------- -------- -------- ---------
Number of company-
operated restaurants
opened 28 32 28 35 30
Franchise acquisitions -- 4 4 -- --
Restaurant relocations
or closures -- (1) -- (1) (1)
Number of company-
operated restaurants(*) 668 640 605 573 539
Average restaurant sales $1,708 $1,674 $1,631 $1,611 $1,584
Comparable restaurant
sales increases 12.4% 11.6% 8.3% 10.1% 11.6%
*All restaurants are company-operated as of June 30, 2007.
Excludes four restaurants operated by franchisees as of March 31, 2007
and eight restaurants operated by franchisees for all prior periods.
CONTACT: Chipotle Mexican Grill, Inc.
Investor Relations:
Sandra Curlander, 303-222-2539
or
Media:
Chris Arnold, 303-222-5912
SOURCE: Chipotle Mexican Grill, Inc.
