10-Q 1 cmg-20230630x10q.htm 10-Q cmg-20230630x10q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________

FORM 10-Q

______________________________

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

or

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to

Commission File Number: 1-32731

______________________________

CHIPOTLE MEXICAN GRILL, INC.

(Exact name of registrant as specified in its charter)

______________________________

 

Delaware

84-1219301

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

 

610 Newport Center Drive, Suite 1100 Newport Beach, CA

92660

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (949524-4000

______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

CMG

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes       No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

 

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

As of July 24, 2023, there were 27,587,613 shares of the registrant’s common stock, par value of $0.01 per share outstanding.

 

 

TABLE OF CONTENTS

 

PART I

Item 1.

Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Income and Comprehensive Income

2

Condensed Consolidated Statements of Shareholders’ Equity

3

Condensed Consolidated Statements of Cash Flows

4

Notes to Condensed Consolidated Financial Statements

5

Note 1 - Basis of Presentation and Update to Accounting Policies

5

Note 2 - Recently Issued Accounting Standards

5

Note 3 - Revenue Recognition

5

Note 4 - Fair Value of Financial Instruments

6

Note 5 – Equity Investments

8

Note 6 - Shareholders' Equity

9

Note 7 - Stock-Based Compensation

9

Note 8 - Income Taxes

9

Note 9 - Leases

9

Note 10 - Earnings Per Share

10

Note 11 - Commitments and Contingencies

10

Note 12 - Debt

11

Note 13 - Related Party Transactions

11

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

18

Item 4.

Controls and Procedures

18

PART II

Item 1.

Legal Proceedings

18

Item 1A.

Risk Factors

19

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

19

Item 3

Defaults upon Senior Securities

19

Item 4

Mine Safety Disclosures

19

Item 5

Other Information

19

Item 6.

Exhibits

20

 

Signatures

21

PART I

ITEM 1.  FINANCIAL STATEMENTS

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

June 30,

December 31,

2023

2022

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

504,866

$

384,000

Accounts receivable, net

60,985

106,880

Inventory

36,004

35,668

Prepaid expenses and other current assets

103,422

86,412

Income tax receivable

-

47,741

Investments

851,142

515,136

Total current assets

1,556,419

1,175,837

Leasehold improvements, property and equipment, net

2,021,964

1,951,147

Long-term investments

430,762

388,055

Restricted cash

25,106

24,966

Operating lease assets

3,433,719

3,302,402

Other assets

62,526

63,158

Goodwill

21,939

21,939

Total assets

$

7,552,435

$

6,927,504

Liabilities and shareholders' equity

Current liabilities:

Accounts payable

$

162,041

$

184,566

Accrued payroll and benefits

177,475

170,456

Accrued liabilities

141,291

147,539

Unearned revenue

158,959

183,071

Current operating lease liabilities

244,061

236,248

Income tax payable

98,423

-

Total current liabilities

982,250

921,880

Commitments and contingencies (Note 11)

 

 

Long-term operating lease liabilities

3,643,931

3,495,162

Deferred income tax liabilities

106,440

98,623

Other liabilities

52,928

43,816

Total liabilities

4,785,549

4,559,481

Shareholders' equity:

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

-

-

Common stock, $0.01 par value, 230,000 shares authorized, 37,459 and 37,320 shares issued as of June 30, 2023 and December 31, 2022, respectively

375

373

Additional paid-in capital

1,880,933

1,829,304

Treasury stock, at cost, 9,863 and 9,693 common shares as of June 30, 2023 and December 31, 2022, respectively

(4,569,152)

(4,282,014)

Accumulated other comprehensive loss

(6,952)

(7,888)

Retained earnings

5,461,682

4,828,248

Total shareholders' equity

2,766,886

2,368,023

Total liabilities and shareholders' equity

$

7,552,435

$

6,927,504

See accompanying notes to condensed consolidated financial statements.

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

Three months ended

Six months ended

June 30,

June 30,

2023

2022

2023

2022

Food and beverage revenue

$

2,497,509

$

2,192,802

$

4,848,518

$

4,191,758

Delivery service revenue

17,292

20,537

34,863

42,120

Total revenue

2,514,801

2,213,339

4,883,381

4,233,878

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

Food, beverage and packaging

738,664

673,928

1,431,223

1,300,854

Labor

611,678

549,926

1,195,472

1,081,866

Occupancy

123,897

113,919

245,828

225,951

Other operating costs

349,707

317,481

712,913

648,176

General and administrative expenses

156,496

140,820

304,836

288,222

Depreciation and amortization

78,771

69,733

155,356

141,398

Pre-opening costs

7,538

5,253

13,736

10,601

Impairment, closure costs, and asset disposals

16,240

4,681

24,601

8,991

Total operating expenses

2,082,991

1,875,741

4,083,965

3,706,059

Income from operations

431,810

337,598

799,416

527,819

Interest and other income, net

16,446

10,572

25,395

10,359

Income before income taxes

448,256

348,170

824,811

538,178

Provision for income taxes

(106,466)

(88,228)

(191,377)

(119,942)

Net income

$

341,790

$

259,942

$

633,434

$

418,236

Earnings per share:

Basic

$

12.38

$

9.32

$

22.94

$

14.95

Diluted

$

12.32

$

9.25

$

22.81

$

14.83

Weighted-average common shares outstanding:

Basic

27,604

27,905

27,614

27,974

Diluted

27,747

28,092

27,768

28,196

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

Foreign currency translation adjustments

$

479

$

(1,480)

$

936

$

(1,285)

Comprehensive income

$

342,269

$

258,462

$

634,370

$

416,951

See accompanying notes to condensed consolidated financial statements.

 

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

Common Stock

Treasury Stock

Shares

Amount

Additional
Paid-In
Capital

Shares

Amount

Retained
Earnings

Accumulated Other Comprehensive Loss

Total

Balance, December 31, 2021

37,132 

$

371 

$

1,729,312 

9,052 

$

(3,356,102)

$

3,929,147 

$

(5,354)

$

2,297,374 

Stock-based compensation

-

-

24,077 

-

-

-

-

24,077 

Stock plan transactions and other

134 

2 

(61)

-

-

-

-

(59)

Acquisition of treasury stock

-

-

-

230 

(345,921)

-

-

(345,921)

Net income

-

-

-

-

-

158,294 

-

158,294 

Other comprehensive income (loss), net of income taxes

-

-

-

-

-

-

195 

195 

Balance, March 31, 2022

37,266 

$

373 

$

1,753,328 

9,282 

$

(3,702,023)

$

4,087,441 

$

(5,159)

$

2,133,960 

Stock-based compensation

-

-

29,142 

-

-

-

-

29,142 

Stock plan transactions and other

18 

-

(167)

-

-

-

-

(167)

Acquisition of treasury stock

-

-

-

198 

(267,198)

-

-

(267,198)

Net income

-

-

-

-

-

259,942 

-

259,942 

Other comprehensive income (loss), net of income taxes

-

-

-

-

-

-

(1,480)

(1,480)

Balance, June 30, 2022

37,284 

$

373 

$

1,782,303 

9,480 

$

(3,969,221)

$

4,347,383 

$

(6,639)

$

2,154,199 

Balance, December 31, 2022

37,320 

$

373 

$

1,829,304 

9,693 

$

(4,282,014)

$

4,828,248 

$

(7,888)

$

2,368,023 

Stock-based compensation

-

-

20,670 

-

-

-

-

20,670 

Stock plan transactions and other

99 

1 

(291)

-

-

-

-

(290)

Acquisition of treasury stock

-

-

-

125 

(198,819)

-

-

(198,819)

Net income

-

-

-

-

-

291,644 

-

291,644 

Other comprehensive income (loss), net of income taxes

-

-

-

-

-

-

457 

457 

Balance, March 31, 2023

37,419 

$

374 

$

1,849,683 

9,818 

$

(4,480,833)

$

5,119,892 

$

(7,431)

$

2,481,685 

Stock-based compensation

-

-