10-Q 1 cmg-20210930x10q.htm 10-Q cmg-20210930x10q
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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 September 30, 2021

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 1400 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 October 22, 2021, there were 28,135,406 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 Policy

5

Note 2 - Recently Issued Accounting Standards

5

Note 3 - Revenue Recognition

5

Note 4 - Fair Value of Financial Instruments

6

Note 5 - Shareholders' Equity

8

Note 6 - Stock-Based Compensation

8

Note 7 - Income Taxes

9

Note 8 - Leases

9

Note 9 - Earnings Per Share

10

Note 10 - Commitments and Contingencies

10

Note 11 - Debt

11

Note 12 - 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 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)

September 30,

December 31,

2021

2020

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

721,109

$

607,987

Accounts receivable, net

76,099

104,500

Inventory

28,450

26,445

Prepaid expenses and other current assets

72,821

54,906

Income tax receivable

318,593

282,783

Investments

301,534

343,616

Total current assets

1,518,606

1,420,237

Leasehold improvements, property and equipment, net

1,719,224

1,584,311

Long-term investments

188,344

102,328

Restricted cash

27,891

27,849

Operating lease assets

3,094,045

2,767,185

Other assets

57,518

59,047

Goodwill

21,939

21,939

Total assets

$

6,627,567

$

5,982,896

Liabilities and shareholders' equity

Current liabilities:

Accounts payable

$

171,712

$

121,990

Accrued payroll and benefits

190,912

203,054

Accrued liabilities

153,233

164,649

Unearned revenue

120,423

127,750

Current operating lease liabilities

214,684

204,756

Total current liabilities

850,964

822,199

Commitments and contingencies (Note 10)

 

 

Long-term operating lease liabilities

3,274,875

2,952,296

Deferred income tax liabilities

148,395

149,422

Other liabilities

42,425

38,844

Total liabilities

4,316,659

3,962,761

Shareholders' equity:

Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of September 30, 2021 and December 31, 2020, respectively

-

-

Common stock, $0.01 par value, 230,000 shares authorized, 37,102 and 36,704 shares issued as of September 30, 2021 and December 31, 2020, respectively

371

367

Additional paid-in capital

1,690,806

1,549,909

Treasury stock, at cost, 8,947 and 8,703 common shares as of September 30, 2021 and December 31, 2020, respectively

(3,170,798)

(2,802,075)

Accumulated other comprehensive loss

(5,143)

(4,229)

Retained earnings

3,795,672

3,276,163

Total shareholders' equity

2,310,908

2,020,135

Total liabilities and shareholders' equity

$

6,627,567

$

5,982,896

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

Nine months ended

September 30,

September 30,

2021

2020

2021

2020

Food and beverage revenue

$

1,932,409

$

1,581,335

$

5,517,764

$

4,333,640

Delivery service revenue

19,906

20,079

68,664

43,284

Total revenue

1,952,315

1,601,414

5,586,428

4,376,924

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

Food, beverage and packaging

591,332

517,261

1,688,481

1,434,316

Labor

502,757

405,818

1,400,932

1,184,649

Occupancy

104,223

97,694

309,422

288,549

Other operating costs

294,650

268,416

876,602

741,556

General and administrative expenses

145,930

133,150

447,077

342,267

Depreciation and amortization

63,191

60,180

188,395

178,578

Pre-opening costs

5,894

3,808

14,280

11,018

Impairment, closure costs, and asset disposals

4,658

7,991

14,592

22,713

Total operating expenses

1,712,635

1,494,318

4,939,781

4,203,646

Income from operations

239,680

107,096

646,647

173,278

Interest and other income (expense), net

(126)

(595)

(1,443)

2,771

Income before income taxes

239,554

106,501

645,204

176,049

Provision for income taxes

(35,120)

(26,257)

(125,695)

(11,242)

Net income

$

204,434

$

80,244

$

519,509

$

164,807

Earnings per share:

Basic

$

7.26

$

2.87

$

18.46

$

5.91

Diluted

$

7.18

$

2.82

$

18.22

$

5.81

Weighted-average common shares outstanding:

Basic

28,150

27,973

28,137

27,892

Diluted

28,475

28,454

28,520

28,370

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

Foreign currency translation adjustments

$

(956)

$

705

$

(914)

$

(81)

Comprehensive income

$

203,478

$

80,949

$

518,595

$

164,726

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 Income (Loss)

Total

Balance, December 31, 2019

36,323 

$

363 

$

1,465,697 

8,568 

$

(2,699,119)

$

2,921,448 

$

(5,363)

$

1,683,026 

Adoption of ASU No. 2016-13, Financial Instrument-Credit Losses (Topic 326)

-

-

-

-

-

(1,051)

-

(1,051)

Stock-based compensation

-

-

17,708 

-

-

-

-

17,708 

Stock plan transactions and other

194 

2 

(181)

-

-

-

-

(179)

Acquisition of treasury stock

-

-

-

134 

(102,031)

-

-

(102,031)

Net income

-

-

-

-

-

76,388 

-

76,388 

Other comprehensive income (loss), net of income tax

-

-

-

-

-

-

(1,841)

(1,841)

Balance, March 31, 2020

36,517 

$

365 

$

1,483,224 

8,702 

$

(2,801,150)

$

2,996,785 

$

(7,204)

$

1,672,020 

Stock-based compensation

-

-

23,676 

-

-

-

-

23,676 

Stock plan transactions and other

150 

2 

(115)

-

-

-

-

(113)

Acquisition of treasury stock

-

-

-

1 

(317)

-

-

(317)

Net income

-

-

-

-

-

8,175 

-

8,175 

Other comprehensive income (loss), net of income tax

-

-

-

-

-

-

1,055 

1,055 

Balance, June 30, 2020

36,667 

$

367 

$

1,506,785 

8,703 

$

(2,801,467)

$

3,004,960 

$

(6,149)

$

1,704,496 

Stock-based compensation

-

-

20,128 

-

-

-

-

20,128 

Stock plan transactions and other

15 

-

42 

-

-

-

-

42 

Acquisition of treasury stock

-

-

-

-

(29)

-

-

(29)

Net income

-

-

-

-

-

80,244 

-

80,244 

Other comprehensive income (loss), net of income tax

-

-

-

-

-

-

705 

705 

Balance, September 30, 2020

36,682 

$

367 

$

1,526,955 

8,703 

$

(2,801,496)

$

3,085,204 

$

(5,444)

$

1,805,586 

Balance, December 31, 2020

36,704 

$

367 

$

1,549,909 

8,703 

$

(2,802,075)

$

3,276,163 

$

(4,229)

$

2,020,135 

Stock-based compensation

-

-

55,960 

-

-

-

-

55,960 

Stock plan transactions and other

232