10-Q 1 cmg-20220930x10q.htm 10-Q cmg-20220930x10q
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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, 2022

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 October 24, 2022, there were 27,721,112 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 - Shareholders' Equity

8

Note 6 - Stock-Based Compensation

9

Note 7 - Income Taxes

9

Note 8 - Leases

10

Note 9 - Earnings Per Share

10

Note 10 - Commitments and Contingencies

11

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

19

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

20

Item 6.

Exhibits

21

 

Signatures

22

PART I

ITEM 1.  FINANCIAL STATEMENTS

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

September 30,

December 31,

2022

2021

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

366,623

$

815,374

Accounts receivable, net

71,276

99,599

Inventory

33,752

32,826

Prepaid expenses and other current assets

76,439

78,756

Income tax receivable

112,064

94,064

Investments

417,278

260,945

Total current assets

1,077,432

1,381,564

Leasehold improvements, property and equipment, net

1,871,623

1,769,278

Long-term investments

442,620

274,311

Restricted cash

30,974

30,856

Operating lease assets

3,309,051

3,118,294

Other assets

63,798

56,716

Goodwill

21,939

21,939

Total assets

$

6,817,437

$

6,652,958

Liabilities and shareholders' equity

Current liabilities:

Accounts payable

$

167,842

$

163,161

Accrued payroll and benefits

128,495

162,405

Accrued liabilities

156,455

173,052

Unearned revenue

133,118

156,351

Current operating lease liabilities

231,947

218,713

Total current liabilities

817,857

873,682

Commitments and contingencies (Note 10)

 

 

Long-term operating lease liabilities

3,497,221

3,301,601

Deferred income tax liabilities

133,255

141,765

Other liabilities

41,723

38,536

Total liabilities

4,490,056

4,355,584

Shareholders' equity:

Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of September 30, 2022 and December 31, 2021, respectively

-

-

Common stock, $0.01 par value, 230,000 shares authorized, 37,306 and 37,132 shares issued as of September 30, 2022 and December 31, 2021, respectively

373

371

Additional paid-in capital

1,807,938

1,729,312

Treasury stock, at cost, 9,555 and 9,052 common shares as of September 30, 2022 and December 31, 2021, respectively

(4,076,555)

(3,356,102)

Accumulated other comprehensive loss

(8,896)

(5,354)

Retained earnings

4,604,521

3,929,147

Total shareholders' equity

2,327,381

2,297,374

Total liabilities and shareholders' equity

$

6,817,437

$

6,652,958

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,

2022

2021

2022

2021

Food and beverage revenue

$

2,202,336

$

1,932,409

$

6,394,094

$

5,517,764

Delivery service revenue

17,839

19,906

59,959

68,664

Total revenue

2,220,175

1,952,315

6,454,053

5,586,428

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

Food, beverage and packaging

662,540

591,332

1,963,394

1,688,481

Labor

557,178

502,757

1,639,044

1,400,932

Occupancy

115,826

104,223

341,777

309,422

Other operating costs

322,085

294,650

970,261

876,602

General and administrative expenses

140,896

145,930

429,118

447,077

Depreciation and amortization

71,416

63,191

212,814

188,395

Pre-opening costs

7,618

5,894

18,219

14,280

Impairment, closure costs, and asset disposals

6,363

4,658

15,354

14,592

Total operating expenses

1,883,922

1,712,635

5,589,981

4,939,781

Income from operations

336,253

239,680

864,072

646,647

Interest and other income (expense), net

3,712

(126)

14,071

(1,443)

Income before income taxes

339,965

239,554

878,143

645,204

Provision for income taxes

(82,827)

(35,120)

(202,769)

(125,695)

Net income

$

257,138

$

204,434

$

675,374

$

519,509

Earnings per share:

Basic

$

9.26

$

7.26

$

24.20

$

18.46

Diluted

$

9.20

$

7.18

$

24.02

$

18.22

Weighted-average common shares outstanding:

Basic

27,773

28,150

27,907

28,137

Diluted

27,956

28,475

28,116

28,520

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

Foreign currency translation adjustments

$

(2,257)

$

(956)

$

(3,542)

$

(914)

Comprehensive income

$

254,881

$

203,478

$

671,832

$

518,595

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, 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 

2 

632 

-

-

-

-

634 

Acquisition of treasury stock

-

-

-

74 

(106,036)

-

-

(106,036)

Net income

-

-

-

-

-

127,101 

-

127,101 

Other comprehensive income (loss), net of income tax

-

-

-

-

-

-

(263)

(263)

Balance, March 31, 2021

36,936 

$

369 

$

1,606,501 

8,777 

$

(2,908,111)

$

3,403,264 

$

(4,492)

$

2,097,531 

Stock-based compensation

-

-

47,670 

-

-

-

-

47,670 

Stock plan transactions and other

52 

1 

24 

-

-

-

-

25 

Acquisition of treasury stock

-

-

-

113 

(159,347)

-

-

(159,347)

Net income

-

-

-

-

-

187,974 

-

187,974 

Other comprehensive income (loss), net of income tax

-

-

-

-

-

-

305 

305 

Balance, June 30, 2021

36,988 

$

370 

$

1,654,195 

8,890 

$

(3,067,458)

$

3,591,238 

$

(4,187)

$

2,174,158 

Stock-based compensation

-

-

36,693 

-

-

-

-

36,693 

Stock plan transactions and other

114 

1 

(82)

-

-

-

-

(81)

Acquisition of treasury stock

-

-

-

57 

(103,340)

-

-

(103,340)

Net income

-

-

-

-

-

204,434 

-

204,434 

Other comprehensive income (loss), net of income tax

-

-

-

-

-

-

(956)

(956)

Balance, September 30, 2021

37,102 

$

371 

$

1,690,806 

8,947 

$

(3,170,798)

$

3,795,672 

$

(5,143)

$

2,310,908 

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

-