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Chipotle Mexican Grill Inc (CMG) SEC Filing 8-K Material Event for the period ending Tuesday, February 8, 2022

Chipotle Mexican Grill Inc

CIK: 1058090 Ticker: CMG

 

Exhibit 99.1



 

Picture 1

EARNINGS RELEASE

PR Contact: Laurie Schalow

(949) 524-4035

MediaRelations@chipotle.com

 

IR Contact: Ashish Kohli, CFA

(949) 524-4132

Akohli@chipotle.com



Chipotle ANNOUNCES FOURTH QUARTER AND FULL YEAR 2021 RESULTS

FY21 Total revenue increased 26.1% YEAR-OVER-YEAR to $7.5 BILLION

TOTAL NORTH AMERICAN OPPORTUNITY EXPANDED TO 7,000 REStAURANTS WITH annual unit growth of 8% to 10%



NEWPORT BEACH, Calf. – February 8, 2022 – Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its fourth quarter and fiscal year ended December 31, 2021.

Fourth quarter highlights, year over year:

·

Total revenue increased 22.0% to $2.0 billion

·

Comparable restaurant sales increased 15.2% 

·

Digital sales grew 3.8% and accounted for 41.6% of sales

·

Operating margin was 8.1%, an increase from 7.3%

·

Restaurant level operating margin was 20.2%1, an increase of 70 basis points 

·

Diluted earnings per share was $4.69,  compared to $6.69. The fourth quarter of 2020 included an income tax benefit of $3.77. Adjusted diluted earnings per share, which excluded an $0.89 after-tax impact from expenses related to certain legal proceedings, the 2018 performance share (“PSU”) COVID-19 related modification, corporate restructuring, and restaurant asset impairment and closure costswas $5.58, a 60.3% increase from $3.48.1

·

Opened 78 new restaurants

Full year 2021 highlights, year over year:

·

Total revenue increased 26.1% to $7.5 billion

·

Comparable restaurant sales increased 19.3%

·

Digital sales grew 24.7% and accounted for 45.6% of sales

·

Operating margin was 10.7%, an increase from 4.8%

·

Restaurant level operating margin was 22.6%1,  an increase of 520  basis points

·

Diluted earnings per share was $22.90, an 82.9%  increase from $12.52. Adjusted diluted earnings per share, which excluded a $2.52 after-tax impact from expenses related to the 2018 PSU COVID-19 related modification, certain legal proceedings, corporate restructuring, restaurant asset impairment and closure costs, and certain other costs, was $25.42, a 136.9%  increase from $10.73.1  

·

Opened 215 new restaurants

1 Restaurant level operating margin, 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.

 


 

 

“2021 was an outstanding year for Chipotle, highlighting the strength and resiliency of our brand. Together, we accomplished many incredible things as our passionate employees remained dedicated to delivering excellent guest experiences, aligned with our purpose and values,” said Brian Niccol, Chairman and Chief Executive Officer, Chipotle. “Moving forward,  we believe expanding access and convenience through our digital ecosystem, accelerating unit growth, and continuing to develop and support our restaurant employees, will put us in a much stronger competitive position.”

Development Update:

Based on the success of small-town locations that are delivering unit economics at or better than traditional Chipotle locations, we provide the following update to our long-term development opportunity:

·

Over time, we believe there can be at least 7,000 Chipotle restaurants in North America, up from the prior goal of 6,000 restaurants.

·

Given the healthy and improving cash on cash returns, we are building a real estate pipeline that will allow us to accelerate unit growth to be in the range of 8% to 10% per year, with greater than 80% of new restaurants having a Chipotlane.

COVID-19 and Liquidity Update:

Given the resurgence in COVID-19 cases during the fourth quarter due to the Omicron variant, the health and well-being of our employees and guests remains our top priority. Beyond the investments made in our people, restaurants, and supply chain, we are closely following the recommendations of the CDC and local health departments. We have implemented and enhanced numerous protocols that give our employees and guests confidence that Chipotle remains steadfast in our commitment to keep them safe as in-restaurant ordering and dining increases.

As of December 31, 2021, Chipotle continues to maintain a strong financial position with $1.4 billion in cash, investments and restricted cash, and no debt. We also have access to a $500 million untapped credit facility. Our financial strength gives us the opportunity to make on-going strategic investments in our people, business, and communities, which we believe will benefit us for years to come.

Results for the three months ended December 31, 2021:

Total revenue in the fourth quarter was $2.0 billion, an increase of 22.0% compared to the fourth quarter of 2020. The increase in total revenue was driven by a 15.2% increase in comparable restaurant sales and new restaurant openings. Comparable restaurant sales were fairly consistent in each month of the fourth quarter due to a combination of factors including healthy demand for Smoked Brisket, strength in digital sales, and the benefit of menu price increases. Comparable restaurant sales began to moderate in the back half of December as the number of Omicron cases spiked. This trend intensified through January 2022, which also included challenging weather across the country. Assuming the effects of the pandemic continue to subside, we expect first quarter 2022 comparable restaurant sales to be in the mid to high single digits range.

Digital sales grew 3.8% year over year to $811.3 million and represented 41.6% of sales. About half of the digital sales were from order ahead transactions as guests appreciate both the convenience and value offered by this channel, as well as the added convenience of more Chipotlanes.

We opened 78 new restaurants during the fourth quarter with 67 (or 86%) including a 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.

Food, beverage and packaging costs in the fourth quarter were 31.6% of total revenue, an increase of 60 basis points compared to the fourth quarter of 2020. The increase was due primarily to elevated inflation on beef and freight, and to a lesser extent, avocado costs that more than offset the leverage from menu price increases.

Restaurant level operating margin was 20.2%, an increase from 19.5% in the fourth quarter of 2020. The improvement was driven primarily by leverage from comparable restaurant sales and menu price increases, partially offset by wage inflation and higher commodity costs largely due to beef and freight.  

 


 

 

General and administrative expenses for the fourth quarter were $159.8 million on a GAAP basis, or $132.8 million2 on a non-GAAP basis, excluding $18.0 million related to the proposed settlement of legal matters, $7.6 million for a COVID-19 related modification made in December 2020 to the 2018 performance shares, and $1.3 million related to transformation expenses, restaurant closure costs and certain other costs. GAAP and non-GAAP general and administrative expenses for the fourth quarter of 2021 also include $99.9 million of underlying general and administrative expenses, $29.7 million of non-cash stock compensation$1.8 million related to higher bonus accruals as well as payroll taxes on equity vesting and stock option exercises, and $1.4 million related to the upcoming all-manager conference.

The GAAP effective income tax rate was 20.3% in the fourth quarter of 2021, compared to negative 62.2% in the fourth quarter of 2020. The increase in the tax rate was primarily due to the tax benefit recorded last year for the 2020 federal net operating loss generated and carried back to prior years. This was partially offset by a net reduction in tax expense mostly related to the write-off of uncertain tax position reserves and more equity vesting and exercises in the fourth quarter of 2021. On a non-GAAP basis, the 2021 fourth quarter effective income tax rate was 18.7%2

Net income for the fourth quarter of 2021 was $133.5 million, or $4.69 per diluted share, a decrease from $191.0 million, or $6.69 per diluted share, which included an income tax benefit of $3.77 per diluted share, in the fourth quarter of 2020.  Excluding the impact of legal expenses, modification expenses related to our 2018 PSUs, corporate restructuring, and restaurant asset impairment, adjusted net income for the fourth quarter 2021 was $159.1 million and adjusted diluted earnings per share was $5.58. 

During the quarter, our Board of Directors approved the investment of up to an additional $200.0 million, exclusive of commissions, to repurchase shares of our common stock, subject to market conditions. Including this repurchase authorization, $240.9 million was available as of December 31, 2021. The repurchase authorization may be modified, suspended, or discontinued at any time. We repurchased $168.9 million of stock at an average price per share of $1,750 during the fourth quarter.

Results for the full year ended December 31, 2021:

Total revenue for 2021 was $7.5 billion, an increase of 26.1% compared to 2020. The increase in total revenue was driven by a 19.3% increase in comparable restaurant sales and new restaurant openings.

Digital sales grew 24.7% year over year to $3.4 billion and represented 45.6% of sales. About half of the digital sales were from order ahead transactions as guests better understand the value offered by this channel, as well as the added convenience of more Chipotlanes.

We opened 215 new restaurants during the year, bringing the total restaurant count at year-end to 2,966. Of the 215 new restaurants opened during the year, 174 (or 81%) included a Chipotlane. We had a total of 355 Chipotlanes as of year-end.

Food, beverage and packaging costs were 30.6% of total revenue, a decrease of 170 basis points compared to 2020. The decrease was largely driven by leverage from menu price increases, which was partially offset by higher freight and beef costs.

Restaurant level operating margin was 22.6%, an increase from 17.4% in 2020. The improvement was driven primarily by leverage from comparable restaurant sales and menu price increases, partially offset by wage inflation, higher commodity inflation primarily from freight and beef, as well as increased delivery expenses.

General and administrative expenses were $606.9 million on a GAAP basis, or $518.0 million2 on a non-GAAP basis, excluding $63.1 million for a COVID-19 related modification made in December 2020 to the 2018 performance shares, $20.1 million related to various legal matters,  and $5.6 million related to transformation expenses, restaurant closure costs and certain other costs. GAAP and non-GAAP general and administrative expenses for full year 2021 also include $380.8 million of underlying general and administrative expenses, $109.5 million of non-cash stock compensation, $24.9 million related to higher bonus accruals as well as payroll taxes on equity vesting and stock option exercises, and $2.9 million related to the upcoming all-manager conference.

The GAAP effective income tax rate was 19.7% in 2021, compared to negative 21.1% in 2020. The increase in the tax rate was primarily due to the tax benefit booked last year for the 2020 federal net operating loss generated and carried back to prior years, as well as the proportionality of the excess tax benefits from equity vesting and exercises relative to profit before tax in each respective year. This was partially offset by a net reduction in tax expense mostly related to the write-off of uncertain tax position reserves in 2021. On a non-GAAP basis, the 2021 full year effective income tax rate was 20.0%.

2 Non-GAAP general and administrative expenses and non-GAAP effective income tax rate are non-GAAP measures. Reconciliations to GAAP measures and further information are set forth in the table at the end of this press release.

 


 

 

Net income for 2021 was $653.0 million, or $22.90 per diluted share, compared to net income of $355.8 million, or $12.52 per diluted share for 2020. Excluding the impact of modification expenses related to our 2018 PSUs, legal expenses, corporate restructuring, restaurant asset impairment, and certain other costs, adjusted net income for 2021 was $724.8 million and adjusted diluted earnings per share was $25.42.

More information will be available in our Annual Report on Form 10-K, which we expect to file with the SEC by February 11, 2022.  

Outlook

For 2022, management is anticipating the following:

·

First quarter comparable restaurant sales growth in the mid to high single digits range

·

Between 235 to 250 new restaurant openings (including 5 to 10 relocations to add a Chipotlane), which assumes construction and permit delays related to COVID-19 don’t worsen

·

An estimated underlying effective full year tax rate between 25% and 27% before discrete items

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 total revenue or transactions for restaurants in operation for at least 13 full calendar months.

·

Average restaurant sales refer to the average trailing 12-month food and beverage revenue 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.

·

Digital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators. Digital sales exclude revenue deferrals associated with Chipotle Rewards.

Conference Call Details

Chipotle will host a conference call on Tuesday, February 8, 2022, at 4:30 PM Eastern time to discuss fourth quarter and full year 2021 financial results, as well as provide a business update for the 2022 first quarter to date.

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: 7541344. 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 2,950 restaurants as of December 31, 2021, 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. Chipotle is ranked on the Fortune 500 and is recognized on the 2021 lists for Forbes’ America’s Best Employers and Fortune’s Most Admired Companies. With nearly 100,000 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. 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 goals for number of Chipotle restaurants, restaurants with Chipotlanes and rate of expansion, first quarter 2022 comparable restaurant sales, estimated tax rates, future cash flow, and future long-term prospects. We use words such as “anticipate”, “believe”, “could”, “should”, “may”, “approximately”, “estimate”, “expect”, “potential”, “intend”, “project”, “encouraged”, “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: uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic and its ultimate impact on our business, including supply chain disruptions and difficulties in acquiring restaurant equipment, impact on guest traffic, restaurant sales and operating costs and the ability of our third-party suppliers and business partners to fulfill their responsibilities and commitments; increasing wage inflation and the increasingly competitive labor market, which impacts our ability to attract and retain qualified employees and has resulted in occasional staffing shortages; increasing supply costs, including beef and freight and to a lesser extent, avocados; 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, including through our digital app; the impact of competition, including from sources outside the restaurant industry; the financial impact of increasing our national average hourly wage to $15.00; the impact of federal, state or local government regulations relating to our employees, employment practices, 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 and the availability of construction materials and contractors; 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 COVID-19), 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; 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

(in thousands, except per share data)

(unaudited)







 

 

 

 

 

 

 

 

 

 

 



Three months ended December 31,



2021

 

2020

Food and beverage revenue

$

1,939,405 

 

98.9 

%

 

$

1,586,905 

 

98.7 

%

Delivery service revenue

 

21,228 

 

1.1 

 

 

 

20,805 

 

1.3 

 

Total revenue

 

1,960,633 

 

100.0 

 

 

 

1,607,710 

 

100.0 

 

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

 

 

 

 

 

 

 

 

 

 

 

Food, beverage and packaging

 

620,150 

 

31.6 

 

 

 

498,450 

 

31.0 

 

Labor

 

516,829 

 

26.4 

 

 

 

408,364 

 

25.4 

 

Occupancy

 

107,184 

 

5.5 

 

 

 

99,213 

 

6.2 

 

Other operating costs

 

320,452 

 

16.3 

 

 

 

288,456 

 

17.9 

 

General and administrative expenses

 

159,777 

 

8.1 

 

 

 

124,024 

 

7.7 

 

Depreciation and amortization

 

66,262 

 

3.4 

 

 

 

59,956 

 

3.7 

 

Pre-opening costs

 

6,984 

 

0.4 

 

 

 

4,497 

 

0.3 

 

Impairment, closure costs, and asset disposals

 

4,699 

 

0.2 

 

 

 

7,864 

 

0.5 

 

Total operating expenses

 

1,802,337 

 

91.9 

 

 

 

1,490,824 

 

92.7 

 

Income from operations

 

158,296 

 

8.1 

 

 

 

116,886 

 

7.3 

 

Interest and other income, net

 

9,263 

 

0.5 

 

 

 

846 

 

0.1 

 

Income before income taxes

 

167,559 

 

8.5 

 

 

 

117,732 

 

7.3 

 

Benefit/(Provision) for income taxes

 

(34,084)

 

(1.7)

 

 

 

73,227 

 

4.6 

 

Net income

$

133,475 

 

6.8 

%

 

$

190,959 

 

11.9 

%

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

4.75 

 

 

 

 

$

6.82 

 

 

 

Diluted

$

4.69 

 

 

 

 

$

6.69 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

28,119 

 

 

 

 

 

27,992 

 

 

 

Diluted

 

28,485 

 

 

 

 

 

28,552 

 

 

 



 


 

 

CHIPOTLE MEXICAN GRILL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Year ended December 31,



2021

 

2020



(unaudited)

 

 

 

 

 

 

 

 

 

Food and beverage revenue

$

7,457,169 

 

98.8 

%

 

$

5,920,545 

 

98.9 

%

Delivery service revenue

 

89,892 

 

1.2 

 

 

 

64,089 

 

1.1 

 

Total revenue

 

7,547,061 

 

100.0 

 

 

 

5,984,634 

 

100.0 

 

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

 

 

 

 

 

 

 

 

 

 

 

Food, beverage and packaging

 

2,308,631 

 

30.6 

 

 

 

1,932,766 

 

32.3 

 

Labor

 

1,917,761 

 

25.4 

 

 

 

1,593,013 

 

26.6 

 

Occupancy

 

416,606 

 

5.5 

 

 

 

387,762 

 

6.5 

 

Other operating costs

 

1,197,054 

 

15.9 

 

 

 

1,030,012 

 

17.2 

 

General and administrative expenses

 

606,854 

 

8.0 

 

 

 

466,291 

 

7.8 

 

Depreciation and amortization

 

254,657 

 

3.4 

 

 

 

238,534 

 

4.0 

 

Pre-opening costs

 

21,264 

 

0.3 

 

 

 

15,515 

 

0.3 

 

Impairment, closure costs, and asset disposals

 

19,291 

 

0.3 

 

 

 

30,577 

 

0.5 

 

Total operating expenses

 

6,742,118 

 

89.3 

 

 

 

5,694,470 

 

95.2 

 

Income from operations

 

804,943 

 

10.7 

 

 

 

290,164 

 

4.8 

 

Interest and other income, net

 

7,820 

 

0.1 

 

 

 

3,617 

 

0.1 

 

Income before income taxes

 

812,763 

 

10.8 

 

 

 

293,781 

 

4.9 

 

Benefit/(Provision) for income taxes

 

(159,779)

 

(2.1)

 

 

 

61,985 

 

1.0 

 

Net income

$

652,984 

 

8.7 

%

 

$

355,766 

 

5.9 

%

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

23.21 

 

 

 

 

$

12.74 

 

 

 

Diluted

$

22.90 

 

 

 

 

$

12.52 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

28,132 

 

 

 

 

 

27,917 

 

 

 

Diluted

 

28,511 

 

 

 

 

 

28,416 

 

 

 









 


 

 

CHIPOTLE MEXICAN GRILL, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)









 

 

 

 

 



 

 

 

 

 



December 31,



2021

 

2020



(unaudited)

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

815,374 

 

$

607,987 

Accounts receivable, net

 

99,599 

 

 

104,500 

Inventory

 

32,826 

 

 

26,445 

Prepaid expenses and other current assets

 

78,756 

 

 

54,906 

Income tax receivable

 

94,064 

 

 

282,783 

Investments

 

260,945 

 

 

343,616 

Total current assets

 

1,381,564 

 

 

1,420,237 

Leasehold improvements, property and equipment, net

 

1,769,278 

 

 

1,584,311 

Long-term investments

 

274,311 

 

 

102,328 

Restricted cash

 

30,856 

 

 

27,849 

Operating lease assets

 

3,118,294 

 

 

2,767,185 

Other assets

 

56,716 

 

 

59,047 

Goodwill

 

21,939 

 

 

21,939 

Total assets

$

6,652,958 

 

$

5,982,896 

Liabilities and shareholders' equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

163,161 

 

$

121,990 

Accrued payroll and benefits

 

162,405 

 

 

203,054 

Accrued liabilities

 

173,052 

 

 

164,649 

Unearned revenue

 

156,351 

 

 

127,750 

Current operating lease liabilities

 

218,713 

 

 

204,756 

Total current liabilities

 

873,682 

 

 

822,199 

Long-term operating lease liabilities

 

3,301,601 

 

 

2,952,296 

Deferred income tax liabilities

 

141,765 

 

 

149,422 

Other liabilities

 

38,536 

 

 

38,844 

Total liabilities

 

4,355,584 

 

 

3,962,761 

Shareholders' equity:

 

 

 

 

 

Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of December 31, 2021 and 2020, respectively

 

 -

 

 

 -

Common stock, $0.01 par value, 230,000 shares authorized, 37,132 and 36,704 shares issued as of December 31, 2021 and 2020, respectively

 

371 

 

 

367 

Additional paid-in capital

 

1,729,312 

 

 

1,549,909 

Treasury stock, at cost, 9,052 and 8,703 common shares as of December 31, 2021 and 2020, respectively

 

(3,356,102)

 

 

(2,802,075)

Accumulated other comprehensive loss

 

(5,354)

 

 

(4,229)

Retained earnings

 

3,929,147 

 

 

3,276,163 

Total shareholders' equity

 

2,297,374 

 

 

2,020,135 

Total liabilities and shareholders' equity

$

6,652,958 

 

$

5,982,896 



 


 

 

CHIPOTLE MEXICAN GRILL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)









 

 

 

 

 



 

 

 

 

 



Year ended December 31,



2021

 

2020



(unaudited)

 

 

Operating activities

 

 

 

 

 

Net income

$

652,984 

 

$

355,766 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

254,657 

 

 

238,534 

Deferred income tax provision

 

(12,357)

 

 

108,350 

Impairment, closure costs, and asset disposals

 

17,086 

 

 

28,874 

Provision for credit losses

 

493 

 

 

164 

Stock-based compensation expense

 

176,392 

 

 

82,626 

Other

 

(4,599)

 

 

3,643 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(1,687)

 

 

3,010 

Inventory

 

(6,392)

 

 

(394)

Prepaid expenses and other current assets

 

(26,826)

 

 

(11,442)

Operating lease assets

 

223,837 

 

 

184,538 

Other assets

 

3,993 

 

 

(26,577)

Accounts payable

 

21,440 

 

 

(3,859)

Accrued payroll and benefits

 

(44,555)

 

 

76,683 

Accrued liabilities

 

10,997 

 

 

5,596 

Unearned revenue

 

34,387 

 

 

36,958 

Income tax payable/receivable

 

193,379 

 

 

(255,251)

Operating lease liabilities

 

(207,164)

 

 

(165,154)

Other long-term liabilities

 

(3,984)

 

 

1,782 

Net cash provided by operating activities

 

1,282,081 

 

 

663,847 

Investing activities

 

 

 

 

 

Purchases of leasehold improvements, property and equipment

 

(442,475)

 

 

(373,352)

Purchases of investments

 

(429,350)

 

 

(468,418)

Maturities of investments

 

345,748 

 

 

419,078 

Proceeds from sale of equipment

 

4,035 

 

 

 -

Acquisitions of equity method investments

 

 -

 

 

(10,025)

Net cash used in investing activities

 

(522,042)

 

 

(432,717)

Financing activities

 

 

 

 

 

Acquisition of treasury stock

 

(466,462)

 

 

(54,401)

Tax withholding on stock-based compensation awards

 

(79,870)

 

 

(48,555)

Other financing activities

 

(2,274)

 

 

(1,895)

Net cash used in financing activities

 

(548,606)

 

 

(104,851)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(1,039)

 

 

1,076 

Net change in cash, cash equivalents, and restricted cash

 

210,394 

 

 

127,355 

Cash, cash equivalents, and restricted cash at beginning of period

 

635,836 

 

 

508,481 

Cash, cash equivalents, and restricted cash at end of period

$

846,230 

 

$

635,836 

Supplemental disclosures of cash flow information

 

 

 

 

 

Income taxes paid (refunded)

$

(17,831)

 

$

85,010 

Purchases of leasehold improvements, property, and equipment accrued in accounts payable and accrued liabilities

$

63,802 

 

$

46,975 

Acquisition of treasury stock accrued in accounts payable and accrued liabilities

$

7,695 

 

$

 -



 


 

 



CHIPOTLE MEXICAN GRILL, INC.

SUPPLEMENTAL FINANCIAL AND OTHER DATA

(dollars in thousands)

(unaudited)





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the three months ended



 

Dec. 31,

 

Sep. 30,

 

Jun. 30,

 

Mar. 31,

 

Dec. 31,



 

2021

 

2021

 

2021

 

2021

 

2020

Number of restaurants opened

 

 

78 

 

 

41 

 

 

56 

 

 

40 

 

 

61 

Restaurant closures

 

 

 -

 

 

 -

 

 

(5)

 

 

(5)

 

 

(1)

Restaurant relocations

 

 

(4)

 

 

(2)

 

 

(1)

 

 

 -

 

 

(2)

Number of restaurants at end of period

 

 

2,966 

 

 

2,892 

 

 

2,853 

 

 

2,803 

 

 

2,768 

Average restaurant sales

 

$

2,641 

 

$

2,554 

 

$

2,466 

 

$

2,313 

 

$

2,223 

Average restaurant sales, excluding delivery MPD(1)

 

$

2,562 

 

$

2,479 

 

$

2,405 

 

$

2,273 

 

$

2,200 

Comparable restaurant sales increase

 

 

15.2% 

 

 

15.1% 

 

 

31.2% 

 

 

17.2% 

 

 

5.7% 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Average restaurant sales, excluding delivery menu price differential ("MPD") represents average restaurant sales, as defined above, adjusted to remove the differential of delivery menu prices. This is intended to illustrate our underlying food and beverage sales per restaurant.



 


 

 

CHIPOTLE MEXICAN GRILL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The following tables provide 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 expenses related to restaurant asset impairment, corporate restructuring, legal proceedings, stock-based compensation modification expense, and certain other costs. Adjusted general and administrative expense is general and administrative expense excluding transformation expenses, legal proceedings, stock-based compensation modification expense, and certain other costs. The adjusted effective income tax rate is the effective income tax rate adjusted to reflect the after tax impact of non-GAAP adjustments. Restaurant Level Operating Margin, a non-GAAP financial measure, is equal to the revenues generated by our restaurants less their direct operating costs which consist of food, beverage and packaging, labor, occupancy and other operating costs. This performance measure primarily includes the costs that restaurant level managers can directly control and excludes other operating costs that are essential to conduct our business. Management uses restaurant level operating margin as a measure of restaurant performance. Management believes restaurant level operating margin is useful to investors in that it highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures. 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, adjusted general and administrative expenses, adjusted effective income tax rate and restaurant level operating margin 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.

 


 

 

CHIPOTLE MEXICAN GRILL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted Net Income and Adjusted Diluted Earnings per Share

(in thousands, except per share amounts)

(unaudited)







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Three months ended

 

Year ended



December 31,

 

December 31,



2021

 

2020

 

2021

 

2020

Net income

$

133,475 

 

$

190,959 

 

$

652,984 

 

$

355,766 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

Restaurant costs:

 

 

 

 

 

 

 

 

 

 

 

Operating lease asset impairment and other restaurant costs(1)

 

1,090 

 

 

3,587 

 

 

3,722 

 

 

14,802 

Duplicate rent expense(2)

 

12 

 

 

69 

 

 

152 

 

 

329 

Corporate Restructuring:

 

 

 

 

 

 

 

 

 

 

 

Operating lease asset impairment and other office closure costs(3)

 

 -

 

 

 -

 

 

332 

 

 

 -

Duplicate rent expense(2)

 

1,237 

 

 

1,496 

 

 

4,964 

 

 

5,301 

Employee related restructuring costs(4)

 

54 

 

 

138 

 

 

449 

 

 

1,097 

Legal proceedings(5)

 

18,025 

 

 

6,778 

 

 

20,117 

 

 

35,478 

Stock-based compensation modification expense(6)

 

7,619 

 

 

466 

 

 

63,077 

 

 

1,951 

Other adjustments(7)

 

 -

 

 

1,499 

 

 

897 

 

 

7,214 

Total non-GAAP adjustments

$

28,037 

 

$

14,033 

 

$

93,710 

 

$

66,172 

Tax effect of non-GAAP adjustments above

 

(2,434)

 

 

2,063 

 

 

(6,492)

 

 

(9,229)

Other tax non-GAAP adjustments(8)

 

 -

 

 

(107,728)

 

 

(15,423)

 

 

(107,728)

After tax impact of non-GAAP adjustments

$

25,603 

 

$

(91,632)

 

$

71,795 

 

$

(50,785)

Adjusted net income

$

159,078 

 

$

99,327 

 

$

724,779 

 

$

304,981 



 

 

 

 

 

 

 

 

 

 

 

Diluted weighted-average number of common shares outstanding

 

28,485 

 

 

28,552 

 

 

28,511 

 

 

28,416 

Diluted earnings per share

$

4.69 

 

$

6.69 

 

$

22.90 

 

$

12.52 

Adjusted diluted earnings per share

$

5.58 

 

$

3.48 

 

$

25.42 

 

$

10.73 



 

 

 

 

 

 

 

 

 

 

 

(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 announced in June 2018.

(3) Asset impairment charges and other closure expenses for the corporate headquarter relocation and office consolidation announced in May 2018.

(4) Costs for recruitment, relocation costs, third party and other employee-related costs.

(5) Charges relate to estimated settlements for distinct legal matters that exceeded or are expected to exceed typical costs for these types of legal proceedings.

(6) For the three months ended December 31, 2021 and 2020, and year ended December 31, 2021, stock-based compensation consists of a COVID-19 related modification made in December 2020 to our 2018 performance shares. For the year ended December 31, 2020, stock-based compensation consists of a March 2020 modification associated with the departure of our former Executive Chairman primarily related to his 2017 agreement of $1,485, and costs of a COVID-19 related modification made in December 2020 to our 2018 performance shares of $466.

(7) For the three months ended December 31, 2020, other adjustments consist of an asset impairment charge related to digital technology of $833 and consulting fees of $666 for assistance with the calculation of our non-recurring tax benefit. For the year ended December 31, 2021, other adjustments consist of asset impairment charges for equipment related to a discontinued restaurant initiative and certain corporate equipment of $850 and consulting fees associated with the calculation of our non-recurring tax benefit of $47. For the year ended December 31, 2020, other adjustments consist of charges associated with the departure of our former Executive Chairman of $3,840, an asset impairment charge related to digital technology of $2,708, and consulting fees of $666 for the assistance with the calculation of our non-recurring tax benefit.

(8) Primarily relates to the tax benefit from the federal net operating loss generated on our federal income tax return and carried back to prior years. The tax benefit is due to the federal income tax rate differential between the 2021 and 2020 rate of 21% and the 2015-2017 rate of 35%.



 


 

 

CHIPOTLE MEXICAN GRILL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted General and Administrative Expenses

(in thousands)

(unaudited)





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Three months ended

 

Year ended



December 31,

 

December 31,



2021

 

2020

 

2021

 

2020

General and administrative expenses

$

159,777 

 

$

124,024 

 

$

606,854 

 

$

466,291 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

Transformation expenses(1)

 

(1,303)

 

 

(1,703)

 

 

(5,565)

 

 

(6,727)

Legal proceedings(2)

 

(18,025)

 

 

(6,778)

 

 

(20,117)

 

 

(35,478)

Stock-based compensation modification expense(3)

 

(7,619)

 

 

(466)

 

 

(63,077)

 

 

(1,951)

Other adjustments(4)

 

 -

 

 

(666)

 

 

(47)

 

 

(4,506)

Total non-GAAP adjustments

$

(26,947)

 

$

(9,613)

 

$

(88,806)

 

$

(48,662)

Adjusted general and administrative expenses

$

132,830 

 

$

114,411 

 

$

518,048 

 

$

417,629 



 

 

 

 

 

 

 

 

 

 

 

(1) Transformation expenses include duplicate rent expense for office and restaurant closures announced in June 2018 due to the corporate restructuring and underperformance of $1,249 and $5,116 for the three months and year ended December 31, 2021, respectively, and employee related restructuring costs of $54 and $449 for the three months and year ended December 31, 2021, respectively.

(2) Charges relate to estimated settlements for distinct legal matters that exceeded or are expected to exceed typical costs for these types of legal proceedings.

(3) For the three months ended December 31, 2021 and 2020, and year ended December 31, 2021, stock-based compensation consists of a COVID-19 related modification made in December 2020 to our 2018 performance shares. For the year ended December 31, 2020, stock-based compensation consists of a March 2020 modification associated with the departure of our former Executive Chairman primarily related to his 2017 agreement, and costs of a COVID-19 related modification made in December 2020 to our 2018 performance shares.

(4) Other adjustments consist of consulting fees associated with the calculation of our non-recurring tax benefit.











 


 

 





CHIPOTLE MEXICAN GRILL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted Effective Income Tax Rate

(unaudited)



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Three months ended

 

Year ended



December 31,

 

December 31,



2021

 

2020

 

2021

 

2020

Effective income tax rate

20.3 

%

 

(62.2)

%

 

19.7 

%

 

(21.1)

%

Tax impact of non-GAAP adjustments

(1.6)

 

 

86.8 

 

 

0.3 

 

 

36.4 

 

Adjusted effective income tax rate

18.7 

%

 

24.6 

%

 

20.0 

%

 

15.3 

%



 


 

 

CHIPOTLE MEXICAN GRILL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Restaurant Level Operating Margin

(in thousands)

(unaudited)



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Three months ended December 31,



2021

 

Percent of total revenue

 

2020

 

Percent of total revenue

Income from operations

$

158,296 

 

8.1 

%

 

$

116,886 

 

7.3 

%

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

159,777 

 

8.1 

 

 

 

124,024 

 

7.7 

 

Depreciation and amortization

 

66,262 

 

3.4 

 

 

 

59,956 

 

3.7 

 

Pre-opening costs

 

6,984 

 

0.4 

 

 

 

4,497 

 

0.3 

 

Impairment, closure costs, and asset disposals

 

4,699 

 

0.2 

 

 

 

7,864 

 

0.5 

 

Total Non-GAAP Adjustments

$

237,722 

 

12.1 

%

 

$

196,341 

 

12.2 

%

Restaurant level operating margin

$

396,018 

 

20.2 

%

 

$

313,227 

 

19.5 

%









 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Year ended December 31,



2021

 

Percent of total revenue

 

2020

 

Percent of total revenue

Income from operations

$

804,943 

 

10.7 

%

 

$

290,164 

 

4.8 

%

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

606,854 

 

8.0 

 

 

 

466,291 

 

7.8 

 

Depreciation and amortization

 

254,657 

 

3.4 

 

 

 

238,534 

 

4.0 

 

Pre-opening costs

 

21,264 

 

0.3 

 

 

 

15,515 

 

0.3 

 

Impairment, closure costs, and asset disposals

 

19,291 

 

0.3 

 

 

 

30,577 

 

0.5 

 

Total Non-GAAP Adjustments

$

902,066 

 

12.0 

%

 

$

750,917 

 

12.5 

%

Restaurant level operating margin

$

1,707,009 

 

22.6 

%

 

$

1,041,081 

 

17.4 

%













 


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Ticker: CMG
CIK: 1058090
Form Type: 8-K Corporate News
Accession Number: 0001058090-22-000005
Submitted to the SEC: Tue Feb 08 2022 4:11:17 PM EST
Accepted by the SEC: Tue Feb 08 2022
Period: Tuesday, February 8, 2022
Industry: Retail Eating Places
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Other Events

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