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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, 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 July 25, 2022, there were 27,764,647 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

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 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,

2022

2021

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

520,933

$

815,374

Accounts receivable, net

83,636

99,599

Inventory

29,456

32,826

Prepaid expenses and other current assets

73,716

78,756

Income tax receivable

97,874

94,064

Investments

240,684

260,945

Total current assets

1,046,299

1,381,564

Leasehold improvements, property and equipment, net

1,813,348

1,769,278

Long-term investments

359,911

274,311

Restricted cash

30,895

30,856

Operating lease assets

3,209,934

3,118,294

Other assets

63,010

56,716

Goodwill

21,939

21,939

Total assets

$

6,545,336

$

6,652,958

Liabilities and shareholders' equity

Current liabilities:

Accounts payable

$

158,581

$

163,161

Accrued payroll and benefits

161,052

162,405

Accrued liabilities

148,614

173,052

Unearned revenue

132,446

156,351

Current operating lease liabilities

230,930

218,713

Total current liabilities

831,623

873,682

Commitments and contingencies (Note 10)

 

 

Long-term operating lease liabilities

3,393,423

3,301,601

Deferred income tax liabilities

126,239

141,765

Other liabilities

39,852

38,536

Total liabilities

4,391,137

4,355,584

Shareholders' equity:

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

-

-

Common stock, $0.01 par value, 230,000 shares authorized, 37,284 and 37,132 shares issued as of June 30, 2022 and December 31, 2021, respectively

373

371

Additional paid-in capital

1,782,303

1,729,312

Treasury stock, at cost, 9,480 and 9,052 common shares as of June 30, 2022 and December 31, 2021, respectively

(3,969,221)

(3,356,102)

Accumulated other comprehensive loss

(6,639)

(5,354)

Retained earnings

4,347,383

3,929,147

Total shareholders' equity

2,154,199

2,297,374

Total liabilities and shareholders' equity

$

6,545,336

$

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

Six months ended

June 30,

June 30,

2022

2021

2022

2021

Food and beverage revenue

$

2,192,802

$

1,869,365

$

4,191,758

$

3,585,355

Delivery service revenue

20,537

23,173

42,120

48,758

Total revenue

2,213,339

1,892,538

4,233,878

3,634,113

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

Food, beverage and packaging

673,928

574,478

1,300,854

1,097,149

Labor

549,926

464,506

1,081,866

898,175

Occupancy

113,919

103,430

225,951

205,199

Other operating costs

317,481

287,242

648,176

581,952

General and administrative expenses

140,820

146,044

288,222

301,147

Depreciation and amortization

69,733

62,082

141,398

125,204

Pre-opening costs

5,253

4,965

10,601

8,386

Impairment, closure costs, and asset disposals

4,681

4,266

8,991

9,934

Total operating expenses

1,875,741

1,647,013

3,706,059

3,227,146

Income from operations

337,598

245,525

527,819

406,967

Interest and other income (expense), net

10,572

851

10,359

(1,317)

Income before income taxes

348,170

246,376

538,178

405,650

Provision for income taxes

(88,228)

(58,402)

(119,942)

(90,575)

Net income

$

259,942

$

187,974

$

418,236

$

315,075

Earnings per share:

Basic

$

9.32

$

6.68

$

14.95

$

11.20

Diluted

$

9.25

$

6.60

$

14.83

$

11.04

Weighted-average common shares outstanding:

Basic

27,905

28,134

27,974

28,130

Diluted

28,092

28,501

28,196

28,542

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

Foreign currency translation adjustments

$

(1,480)

$

305

$

(1,285)

$

42

Comprehensive income

$

258,462

$

188,279

$

416,951

$

315,117

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 

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 tax

-

-

-

-

-

-

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