Exhibit 99.1
IMMEDIATE RELEASE
Investor Relations:
Kate Giha
614-508-1303
Media:
Chris Arnold
303-222-5912
Chipotle Mexican Grill, Inc. Announces Fourth Quarter and Full Year 2010 Results
Denver, Colorado – (Business Wire) – February 10, 2011 – Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its fourth quarter and full year ended December 31, 2010.
Highlights for the fourth quarter of 2010 as compared to the fourth quarter of 2009 include:
• | Revenue increased 24.5% to $482.5 million |
• | Comparable restaurant sales increased 12.6% |
• | Restaurant level operating margin was 25.9%, an increase of 140 basis points |
• | Net income was $46.4 million, an increase of 47.0% |
• | Diluted earnings per share was $1.47, an increase of 48.5% |
Highlights for the twelve months ended December 31, 2010 as compared to the prior year include:
• | Revenue increased 20.9% to $1.84 billion |
• | Comparable restaurant sales increased 9.4% |
• | Restaurant level operating margin was 26.7%, an increase of 180 basis points |
• | Net income was $ 179.0 million, an increase of 41.1% |
• | Diluted earnings per share was $5.64, an increase of 42.8% |
“Our accomplishments in 2010 were many—opening our first restaurant in London, hitting the 1,000 restaurant milestone, and serving naturally raised barbacoa in all of our restaurants—just to name a few. All of our accomplishments were made possible by remaining focused on our vision to change the way the world thinks about and eats fast food,” said Founder, Chairman, and Co-CEO Steve Ells.
Results for the fourth quarter 2010
Revenue for the quarter was $482.5 million, up 24.5% from the prior year period. The growth in revenue was the result of new restaurants not in the comparable base and a 12.6% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by increased traffic in the quarter.
During the quarter Chipotle opened 62 new restaurants, bringing the total restaurant count to 1,084.
Restaurant level operating margin was 25.9% in the quarter, an increase of 140 basis points over the prior year period. The increase was primarily driven by the impact of comparable restaurant sales growth which was partially offset by increased food costs.
G&A costs were 6.0% of revenue, down 50 basis points from the prior year period. The decrease as a percent of revenue was driven by the impact of comparable restaurant sales growth.
Net income for the fourth quarter of 2010 was $46.4 million, or $1.47 per diluted share, compared to $31.6 million, or $0.99 per diluted share, in the fourth quarter of 2009.
Results for the full year ended December 31, 2010
Revenue for the full year of 2010 was $1.84 billion, up 20.9% from the prior year. The growth in revenue was the result of new restaurants not in the comparable base and a 9.4% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by increased traffic during the year.
For the full year, Chipotle opened 129 restaurants, including one restaurant in London and one in Toronto, Canada.
Restaurant level operating margin was 26.7% for the full year of 2010, an increase of 180 basis points over the prior year period. The increase was primarily driven by the impact of comparable restaurant sales growth.
G&A costs for the full year of 2010 were 6.5% of revenue, which was flat from the prior period. The benefit of comparable restaurant sales growth was offset by increased stock based compensation expense, the biennial All Managers’ Conference, and hiring more employees as we grew.
Net income for the full year of 2010 was $179.0 million, or $5.64 per diluted share, compared to $126.8 million, or $3.95 per diluted share for 2009.
“Top performers, along with a culture of empowerment and striving to reach high standards come together naturally to produce great results. Our top performers demonstrate that they can run better restaurants, cook and serve better food, provide better service, increase throughput in their peak times and operate an efficient business. And our managers do all this while hiring and developing our future leaders. So of course we’re pleased with the great results our high performing teams generate, but it’s even more pleasing to know that it’s our special people culture that’s enabling these results,” commented Monty Moran, Co-CEO.
Outlook
For 2011, management expects the following:
• | 135-145 new restaurant openings |
• | Low single digit comparable restaurant sales growth |
• | An effective tax rate of approximately 38.3% |
Definitions
The following definitions apply to these terms as used throughout this release:
Comparable restaurant sales increases 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 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.
Conference Call
Chipotle will host a conference call to discuss fourth quarter and full year 2010 financial results today at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing 1-877-723-9523 or 1-719-325-4830 for international callers. A replay will be available one hour after the call and can be accessed by dialing 1-877-870-5176 or 1-858-384-5517 for international callers. The password is 1431566. The replay will be available until February 17, 2011. The call will be webcast live from the Company’s website at chipotle.com under the Investor Relations section. An archived webcast will be available approximately one hour after the end of the call.
About Chipotle
Steve Ells, Founder, Chairman and Co-Chief Executive Officer, started Chipotle with the idea that food served fast did not have to be a typical fast food experience. Today, Chipotle continues to offer 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 over 1,000 restaurants. For more information, visit chipotle.com.
Forward-Looking Statements
Certain statements in this press release, including statements under the heading “Outlook” of our expected number of new restaurant openings, comparable restaurant sales increases and effective tax rate in 2011, 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 expected levels of comparable restaurant sales increases; the performance of new restaurants and their impact on existing restaurant sales; increases in the cost of food ingredients and other key supplies; the risk of food-borne illnesses and other health concerns about our food; the potential for increased labor costs or difficulty retaining qualified employees, including as a result of immigration enforcement activities; risks relating to our expansion into new markets; the impact of federal, state or local government regulations relating to our employees and the sale of food or alcoholic beverages; risks associated with our Food With Integrity strategy, including supply shortages; changes in consumer preferences, general economic conditions or consumer discretionary spending; the effect of competition in the restaurant industry; risks related to the ongoing development of our marketing strategy; the effects of continuing economic uncertainty on our business and on our suppliers, landlords and potential developers; risks relating to litigation; risks relating to our insurance coverage and self-insurance; our dependence on key personnel; security risks associated with the acceptance of electronic payment cards; the uncertainty of our ability to protect our name, logo and other proprietary information or the reputation of our brand; the potential effects of inclement weather; risks related to the tax treatment of our separation from McDonald’s; 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 chipotle.com.
Chipotle Mexican Grill, Inc.
Consolidated Statement of Income
(in thousands, except per share data)
(unaudited)
Three months ended December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Revenue | $ | 482,521 | 100.0 | % | $ | 387,544 | 100.0 | % | ||||||||
Restaurant operating costs: | ||||||||||||||||
Food, beverage and packaging | 149,589 | 31.0 | 116,463 | 30.1 | ||||||||||||
Labor | 119,532 | 24.8 | 99,697 | 25.7 | ||||||||||||
Occupancy | 33,977 | 7.0 | 30,417 | 7.8 | ||||||||||||
Other operating costs | 54,281 | 11.2 | 45,955 | 11.9 | ||||||||||||
General and administrative expenses | 28,733 | 6.0 | 25,078 | 6.5 | ||||||||||||
Depreciation and amortization | 17,815 | 3.7 | 15,940 | 4.1 | ||||||||||||
Pre-opening costs | 2,598 | 0.5 | 2,405 | 0.6 | ||||||||||||
Loss on disposal of assets | 2,004 | 0.4 | 1,204 | 0.3 | ||||||||||||
Total operating expenses | 408,529 | 84.7 | 337,159 | 87.0 | ||||||||||||
Income from operations | 73,992 | 15.3 | 50,385 | 13.0 | ||||||||||||
Interest and other income | 402 | 0.1 | 302 | 0.1 | ||||||||||||
Interest and other expense | (91 | ) | 0.0 | (72 | ) | 0.0 | ||||||||||
Income before income taxes | 74,303 | 15.4 | 50,615 | 13.1 | ||||||||||||
Provision for income taxes | (27,858 | ) | (5.8 | ) | (19,019 | ) | (4.9 | ) | ||||||||
Net income | $ | 46,445 | 9.6 | % | $ | 31,596 | 8.2 | % | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 1.50 | $ | 1.00 | ||||||||||||
Diluted | $ | 1.47 | $ | 0.99 | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 31,054 | 31,585 | ||||||||||||||
Diluted | 31,702 | 31,904 | ||||||||||||||
Chipotle Mexican Grill, Inc.
Consolidated Statement of Income
(in thousands, except per share data)
Year ended December 31, | ||||||||||||||||
2010 (unaudited) | 2009 | |||||||||||||||
Revenue | $ | 1,835,922 | 100.0 | % | $ | 1,518,417 | 100.0 | % | ||||||||
Restaurant operating costs: | ||||||||||||||||
Food, beverage and packaging | 561,107 | 30.6 | 466,027 | 30.7 | ||||||||||||
Labor | 453,573 | 24.7 | 385,072 | 25.4 | ||||||||||||
Occupancy | 128,933 | 7.0 | 114,218 | 7.5 | ||||||||||||
Other operating costs | 202,904 | 11.1 | 174,581 | 11.5 | ||||||||||||
General and administrative expenses | 118,590 | 6.5 | 99,149 | 6.5 | ||||||||||||
Depreciation and amortization | 68,921 | 3.8 | 61,308 | 4.0 | ||||||||||||
Pre-opening costs | 7,767 | 0.4 | 8,401 | 0.6 | ||||||||||||
Loss on disposal of assets | 6,296 | 0.3 | 5,956 | 0.4 | ||||||||||||
Total operating expenses | 1,548,091 | 84.3 | 1,314,712 | 86.6 | ||||||||||||
Income from operations | 287,831 | 15.7 | 203,705 | 13.4 | ||||||||||||
Interest and other income | 1,499 | 0.1 | 925 | 0.1 | ||||||||||||
Interest and other expense | (269 | ) | 0.0 | (405 | ) | 0.0 | ||||||||||
Income before income taxes | 289,061 | 15.7 | 204,225 | 13.4 | ||||||||||||
Provision for income taxes | (110,080 | ) | (6.0 | ) | (77,380 | ) | (5.1 | ) | ||||||||
Net income | $ | 178,981 | 9.7 | % | $ | 126,845 | 8.4 | % | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 5.73 | $ | 3.99 | ||||||||||||
Diluted | $ | 5.64 | $ | 3.95 | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 31,234 | 31,766 | ||||||||||||||
Diluted | 31,735 | 32,102 | ||||||||||||||
Chipotle Mexican Grill, Inc.
Consolidated Balance Sheet
(in thousands, except per share data)
December 31, 2010 | December 31, 2009 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 224,838 | $ | 219,566 | ||||
Accounts receivable, net of allowance for doubtful accounts of $102 and $339 as of December 31, 2010 and December 31, 2009, respectively | 5,658 | 4,763 | ||||||
Inventory | 7,098 | 5,614 | ||||||
Current deferred tax asset | 4,317 | 3,134 | ||||||
Prepaid expenses and other current assets | 16,016 | 14,377 | ||||||
Income tax receivable | 23,528 | — | ||||||
Investments | 124,766 | 50,000 | ||||||
Total current assets | 406,221 | 297,454 | ||||||
Leasehold improvements, property and equipment, net | 676,881 | 636,411 | ||||||
Other assets | 16,564 | 5,701 | ||||||
Goodwill | 21,939 | 21,939 | ||||||
Total assets | $ | 1,121,605 | $ | 961,505 | ||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 33,705 | $ | 25,230 | ||||
Accrued payroll and benefits | 50,336 | 41,404 | ||||||
Accrued liabilities | 38,892 | 31,216 | ||||||
Current portion of deemed landlord financing | 121 | 96 | ||||||
Income tax payable | — | 4,207 | ||||||
Total current liabilities | 123,054 | 102,153 | ||||||
Deferred rent | 123,667 | 106,395 | ||||||
Deemed landlord financing | 3,661 | 3,782 | ||||||
Deferred income tax liability | 50,525 | 38,863 | ||||||
Other liabilities | 9,825 | 6,851 | ||||||
Total liabilities | 310,732 | 258,044 | ||||||
Shareholders’ equity: | ||||||||
Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of December 31, 2010 and December 31, 2009 | — | — | ||||||
Common stock, $0.01 par value, 230,000 shares authorized, 33,959 and 33,473 shares issued as of December 31, 2010 and December 31, 2009, respectively | 340 | 335 | ||||||
Additional paid-in capital | 594,331 | 539,880 | ||||||
Treasury stock, at cost, 2,885 and 1,990 shares at December 31, 2010 and December 31, 2009, respectively | (240,918 | ) | (114,316 | ) | ||||
Accumulated other comprehensive income | 606 | 29 | ||||||
Retained earnings | 456,514 | 277,533 | ||||||
Total shareholders’ equity | 810,873 | 703,461 | ||||||
Total liabilities and shareholders’ equity | $ | 1,121,605 | $ | 961,505 | ||||
Chipotle Mexican Grill, Inc.
Consolidated Statement of Cash Flows
(in thousands)
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
(unaudited) | ||||||||
Operating activities | ||||||||
Net income | $ | 178,981 | $ | 126,845 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 68,921 | 61,308 | ||||||
Deferred income tax provision | 10,479 | 8,282 | ||||||
Change in valuation allowance | — | 141 | ||||||
Loss on disposal of assets | 6,296 | 5,956 | ||||||
Bad debt allowance | (151 | ) | (245 | ) | ||||
Stock-based compensation | 21,381 | 14,992 | ||||||
Excess tax benefit on stock-based compensation | (14,526 | ) | (10,435 | ) | ||||
Other | — | 222 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (743 | ) | (875 | ) | ||||
Inventory | (1,481 | ) | (825 | ) | ||||
Prepaid expenses and other current assets | (1,632 | ) | (2,613 | ) | ||||
Other assets | (8,956 | ) | 374 | |||||
Accounts payable | 6,989 | 1,435 | ||||||
Accrued liabilities | 16,607 | 19,804 | ||||||
Income tax receivable/payable | (13,209 | ) | 14,927 | |||||
Deferred rent | 17,261 | 19,386 | ||||||
Other long-term liabilities | 2,974 | 1,994 | ||||||
Net cash provided by operating activities | 289,191 | 260,673 | ||||||
Investing activities | ||||||||
Purchases of leasehold improvements, property and equipment, net | (113,215 | ) | (117,198 | ) | ||||
Purchase of equity method investments | (1,900 | ) | — | |||||
Purchases of investments | (125,000 | ) | (50,000 | ) | ||||
Maturities of investments | 50,234 | 99,990 | ||||||
Net cash used in investing activities | (189,881 | ) | (67,208 | ) | ||||
Financing activities | ||||||||
Proceeds from option exercises | 17,650 | 11,793 | ||||||
Excess tax benefit on stock-based compensation | 14,526 | 10,435 | ||||||
Payments on deemed landlord financing | (96 | ) | (82 | ) | ||||
Acquisition of treasury stock | (126,602 | ) | (84,089 | ) | ||||
Net cash used in financing activities | (94,522 | ) | (61,943 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 484 | — | ||||||
Net change in cash and cash equivalents | 5,272 | 131,522 | ||||||
Cash and cash equivalents at beginning of period | 219,566 | 88,044 | ||||||
Cash and cash equivalents at end of period | $ | 224,838 | $ | 219,566 | ||||
Supplemental disclosures of cash flow information | ||||||||
(Increase) decrease in purchases of leasehold improvements, property and equipment accrued in accounts payable | ($ | 1,480 | ) | $ | 95 | |||
Chipotle Mexican Grill, Inc.
Supplemental Financial and Other Data
(dollars in thousands)
(unaudited)
For the three months ended | ||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2009 | ||||||||||||||||
Number of restaurants opened | 62 | 22 | 25 | 20 | 45 | |||||||||||||||
Restaurant relocations or closures | (1 | ) | — | — | — | — | ||||||||||||||
Number of restaurants at end of period | 1,084 | 1,023 | 1,001 | 976 | 956 | |||||||||||||||
Average restaurant sales | $ | 1,840 | $ | 1,806 | $ | 1,763 | $ | 1,736 | $ | 1,728 | ||||||||||
Comparable restaurant sales increases | 12.6 | % | 11.4 | % | 8.7 | % | 4.3 | % | 2.0 | % |