Chipotle Mexican Grill, Inc. Reports First Quarter 2006 Results; Comparable Restaurant Sales Increase 19.7%.DENVER Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. -- Chipotle Mexican Grill Chipotle Mexican Grill (NYSE: CMG) is a Denver, Colorado-based chain of Fresh Mex restaurants specializing in San Francisco burritos and tacos. Founded by Steve Ells in 1993, the restaurant is known for its chunky guacamole and large burritos. , Inc. (NYSE NYSE See: New York Stock Exchange : CMG CMG Coastal & Marine Geology (USGS) CMG Chipotle Mexican Grill, Inc. (stock symbol) CMG Companion (of the Order Of) St Michael and St George CMG Computer Measurement Group ) today reported financial results for its first quarter ended March 31, 2006. Highlights for the first quarter of 2006 as compared to the first quarter of 2005 include: --Revenues increased 40.2% to $187.0 million --Comparable restaurant sales increased 19.7% --Restaurant-level operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased 310 basis points to 20.2% --Income from operations increased nearly threefold to $12.7 million --Diluted earnings per share increased to $0.26 from $0.10 "We were very pleased with our results for the first quarter which saw significant increases in sales and profitability. We credit improving restaurant level execution, IPO-related publicity and mild weather for our performance," Chipotle chi·pot·le n. A ripe jalapeño pepper that has been dried and smoked for use in cooking. [American Spanish, from Nahuatl xipotli.] Noun 1. Founder, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Steve Ells Steve Ells is the founder, CEO, and Chairman of Chipotle Mexican Grill. Steve attended the Culinary Institute of America in Hyde Park, NY. commented. "However, we also believe that with each quarter that passes more customers become aware of our Food with Integrity initiative, which strengthens our relationship with our loyal fans. We believe that our focus on Food with Integrity and sustainability will continue to differentiate differentiate /dif·fer·en·ti·ate/ (dif?er-en´she-at) 1. to distinguish, on the basis of differences. 2. to develop specialized form, character, or function differing from that surrounding it or from the original. our restaurants and change the way people think about, and eat fast food." Monty (programming, abuse) monty - /mon'tee/ Any program with a ludicrously complex user interface that performs a trivial task. An example would be a menu-driven, button clicking, pulldown, pop-up windows program for listing directories. Moran Moran equitable councillor to King Feredach. [Irish Hist.: Brewer Dictionary, 728] See : Justice , President and COO (Cell Of Origin) See mobile positioning. added, "At the restaurant level, Chipotle had a great first quarter as our entire team continues to focus on increasing throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. and developing our people. As the result of another strong quarterly increase in comps, our average restaurant sales have surpassed $1.5 million for the first time." Moran concluded, "Our ability to continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. improve the economic model, as evidenced by this quarter's results, will depend on maintaining a company culture that revolves around great food, the advancement A gift of money or property made by a person while alive to his or her child or other legally recognized heir, the value of which the person intends to be deducted from the child's or heir's eventual share in the estate after the giver's death. of our people, and the importance of the work itself. We believe these principles have directly led to our past success and will be critical to attracting the future leaders Future Leaders is a UK schools-led charitable organisation that aims to widen the pool of talented leaders especially for urban challenging secondary schools. It was founded in March 2006 by Nat Wei, a former founder of Teach First. of this organization." First Quarter 2006 Results Revenues for the first quarter of 2006 increased 40.2% to $187.0 million from $133.4 million in the first quarter of 2005. This growth in revenues is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a 19.7% increase in comparable restaurant sales in the first quarter and an increase in revenues from restaurants not yet in the comparable base. A large majority of the comparable restaurant sales growth was due to an increase in the number of transactions. Chipotle opened 15 company-owned restaurants during the first quarter of 2006, including 12 restaurants in existing markets and 3 restaurants in new markets. Higher average restaurant sales helped to increase restaurant level operating margins to 20.2% in the first quarter of 2006 from 17.1% in the first quarter of 2005. Also contributing to this increase were menu price increases in some markets related to the addition of naturally raised chicken or naturally raised beef in several markets in late 2005 as part of our Food with Integrity initiative. General and administrative expenses were $15.3 million in the first quarter of 2006, or 8.2% of revenues, compared to $11.2 million in the first quarter of 2005, or 8.4% of revenues. General and administrative expenses as a percentage of revenues decreased primarily due to the effect of economies of scale made possible by higher sales. Income from operations increased to $12.7 million in the first quarter of 2006, compared to $4.4 million in the first quarter of 2005. Net income for the first quarter of 2006 was $8.0 million compared to $2.6 million in the first quarter of 2005. "Our exceptional sales results, combined with increased operational efficiencies led to significant profitability growth for the quarter," commented Jack Hartung, Chief Financial and Development Officer. "We also benefited from a comparison to soft comparable restaurant sales in the first quarter of 2005. Though we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about continuing the strong overall sales and profit momentum, the comparable restaurant sales comparisons will become increasingly more challenging each quarter. That said, as our unit economics continue to improve, Chipotle has never been better positioned from a long term development perspective. Since our IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. , customer awareness of our brand continues to grow and combined with our strong balance sheet, we are well positioned to open 80-90 new restaurants this year and deliver solid returns for our shareholders over the coming years." Outlook Management now expects full year 2006 comparable restaurant sales increases in the high-single digits, with quarterly comparable restaurant sales increases decelerating throughout the year as sequential One after the other in some consecutive order such as by name or number. comparisons become more difficult. Management is also assuming the following for 2006: --Opening 80-90 new restaurants, back-loaded to the last half of the year and including the 15 restaurants opened during the first quarter --Non-cash stock compensation expense of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $4.0 million --An effective tax rate between 41% and 42% --Diluted common shares outstanding of approximately 32.5 million to 33.0 million --Approximately $1 million in non-recurring legal, audit, printing and other fees in the second quarter associated with McDonald's McDonald’s fast-food restaurant chain throughout the world; recognized by golden arches. [Am. Culture: Misc.] See : Ubiquity announced plan to sell shares of Chipotle common stock in the next two months Longer-term, management remains comfortable with Chipotle's ability to grow income from operations at an annual rate of approximately 25%. Definitions The following definitions apply to these terms as used throughout this release: Comparable restaurant sales increases include company-owned restaurants only and represent the change in period-over-period sales for the comparable restaurant base. A restaurant becomes comparable in its 13th month of operation. Average restaurant sales refer to the average trailing 12-month sales for company-owned restaurants in operation for at least 12 full months. Restaurant-level operating margin represents total revenue less restaurant operating costs operating costs npl → gastos mpl operacionales , which do not include depreciation and amortization, expressed as a percent of total revenue. Conference Call The Company will host a conference call to discuss first quarter 2006 financial results today at 5:00 PM Eastern Time. Hosting the call will be Steve Ells, Chairman and Chief Executive Officer, Montgomery Montgomery, city, United States Montgomery, city (1990 pop. 187,106), state capital and seat of Montgomery co., E central Ala., near the head of navigation on the Alabama River just below the confluence of the Coosa and Tallapoosa rivers, and in the rich Moran, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , and Jack Hartung, Chief Financial and Development Officer. The conference call can be accessed live over the phone by dialing 1-888-802-2280, or for international callers by dialing 1-913-312-1266. A replay will be available one hour after the call and can be accessed by dialing 1-888-203-1112 or 1-719-457-0820 for international callers; the password A secret word or code used to serve as a security measure against unauthorized access to data. It is normally managed by the operating system or DBMS. However, the computer can only verify the legitimacy of the password, not the legitimacy of the user. See NCSC. 4904435. The replay will be available until May 15, 2006. The call will be webcast live from the Company's website at www.chipotle.com under the investor relations Investor relations The process by which the corporation communicates with its investors. section. About Chipotle Chipotle Mexican Grill offers a simple menu of burritos, tacos, burrito bols
Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements in this press release, including the statements under the heading "Outlook" relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our projected financial performance for fiscal 2006 and beyond, the number of restaurants we intend to open, certain expected expenses and our expected effective tax rate, are forward-looking statements as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. We use words such as "anticipate", "believe", "could", "should", "estimate", "expect", "intend", "may", "predict", "project", "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 information available to us as of the date any such statements are made 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. These risks and uncertainties include, but are not limited to, the following: factors that could affect our ability to achieve and manage our planned expansion, such as the availability of qualified employees and the availability of a sufficient number of suitable new restaurant sites; risks relating to our relationship with McDonald's, our principal shareholder; changes in the availability and costs of food; potential fluctuation Fluctuation A price or interest rate change. in our quarterly operating results due to seasonality and other factors; the continued service of key management personnel; our ability to protect our name and logo and other proprietary information; changes in consumer preferences, general economic conditions or consumer discretionary spending; health concerns about our food products; the impact of federal, state or local government regulations relating to our employees and the sale of food or alcoholic beverages
When a person begins a civil lawsuit, the person enters into a process called litigation. ; the potential effects of inclement in·clem·ent adj. 1. Stormy: inclement weather. 2. Showing no clemency; unmerciful. in·clem weather or terrorist attacks; the effect of competition in the restaurant industry; cost and availability of capital; and other risk factors described from time to time in our SEC reports, including our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2005.
Chipotle Mexican Grill, Inc.
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Three months ended March 31,
------------------------------
2006 2005
------------------------------
Revenue:
Restaurant sales $186,411 99.7% $132,917 99.6%
Franchise royalties and fees 604 0.3 499 0.4
-------------------------------
Total revenue 187,015 100.0 133,416 100.0
-------------------------------
Restaurant operating costs:
Food, beverage and packaging 59,232 31.7 43,062 32.3
Labor 52,937 28.3 39,663 29.7
Occupancy 13,872 7.4 10,545 7.9
Other operating costs 23,238 12.4 17,314 13.0
General and administrative expenses 15,267 8.2 11,218 8.4
Depreciation and amortization 8,003 4.3 6,457 4.8
Pre-opening costs 1,110 0.6 450 0.3
Loss on disposal of assets 623 0.3 268 0.2
-------------------------------
174,282 93.2 128,977 96.7
-------------------------------
Income from operations 12,733 6.8 4,439 3.3
Interest income 970 0.5 23 --
Interest expense (64) -- (79) (0.1)
-------------------------------
Income before income taxes 13,639 7.3 4,383 3.3
Provision for income taxes (5,651) (3.0) (1,757) (1.3)
-------------------------------
Net income $ 7,988 4.3% $ 2,626 2.0%
===============================
Earnings per common share:
Basic $ 0.26 $ 0.10
========= =========
Diluted $ 0.26 $ 0.10
========= =========
Weighted average common shares
outstanding:
Basic 30,683 26,281
========= =========
Diluted 31,078 26,316
========= =========
Chipotle Mexican Grill, Inc.
Condensed Consolidated Balance Sheet Data
(in thousands)
(unaudited)
As of
---------
March 31, 2006 December 31, 2005
-------------------- -----------------
Total current assets $147,312 $17,824
Total assets $513,588 $392,495
Total current liabilities $44,028 $41,982
Total liabilities $105,708 $83,141
Total shareholders' equity $407,880 $309,354
Chipotle Mexican Grill, Inc.
Condensed Consolidated Statement of Cash Flows Data
(in thousands)
(unaudited)
Three months ended March 31,
--------------------------------
2006 2005
--------- ---------
Cash provided by operating activities $23,194 $11,007
Cash used in investing activities ($14,200) ($18,622)
Cash provided by financing activities $124,409 $9,788
Chipotle Mexican Grill, Inc.
Supplemental Financial Data
(dollars in thousands)
(unaudited)
Q106 Q405 Q305 Q205 Q105
----- ----- ----- ----- -----
Comparable restaurant sales growth 19.7% 14.3% 11.5% 9.6% 4.1%
Number of restaurants opened 15 28 17 17 18
Average restaurant sales $1,502
Chipotle Mexican Grill, Inc.
For the quarter ended
(unaudited)
March 31, June 30, Sept. 30, Dec. 31,
2005 2005 2005 2005
----------------------------------------
(in thousands, except share data)
Revenue:
Restaurant sales $132,917 $155,712 $163,964 $172,484
Franchise royalties and fees 499 584 706 829
--------- --------- --------- ---------
Total revenue 133,416 156,296 164,670 173,313
----------------------------------------
Restaurant operating costs:
Food, beverage and packaging 43,062 50,394 53,407 55,425
Labor 39,663 43,542 46,473 49,043
Occupancy 10,545 11,838 12,134 13,119
Other operating costs 17,314 19,482 22,612 23,568
General and administrative
expenses 11,218 13,726 12,268 14,752
Depreciation and amortization 6,457 6,729 7,206 7,634
Pre-opening costs 450 416 381 724
Loss on disposal of assets 268 848 690 1,313
--------- --------- --------- ---------
128,977 146,975 155,171 165,578
--------- --------- --------- ---------
Income from operations 4,439 9,321 9,499 7,735
Interest income 23 - - 13
Interest expense (79) (336) (248) (127)
--------- --------- --------- ---------
Income before income taxes 4,383 8,985 9,251 7,621
Benefit (provision) for
income taxes (1,757) 16,740 (4,168) (3,359)
--------- --------- --------- ---------
Net income $ 2,626 $ 25,725 $ 5,083 $ 4,262
========= ========= ========= =========
Earnings per common share:
Basic $ 0.10 $ 0.98 $ 0.19 $ 0.16
========= ========= ========= =========
Diluted $ 0.10 $ 0.98 $ 0.19 $ 0.16
========= ========= ========= =========
Weighted average common
shares outstanding:
Basic 26,281 26,281 26,281 26,281
========= ========= ========= =========
Diluted 26,316 26,319 26,344 26,367
========= ========= ========= =========
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