Chipotle Mexican Grill, Inc. Reports Second Quarter 2006 Results; Comparable Restaurant Sales Increase 14.5%.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 second quarter ended June June: see month. 30, 2006. Highlights for the second quarter of 2006 as compared to the second quarter of 2005 include: --Revenue increased 31.1% to $204.9 million --Comparable restaurant sales increased 14.5% --Restaurant level operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased 180 basis points to 21.7% --Income from operations increased 70.3% to $15.9 million --Diluted earnings per share were $0.33 as compared to $0.98 in the prior year, or $0.21 in the prior year on an adjusted basis*, excluding a non-recurring $0.77 tax benefit Highlights for the six months ended June 30, 2006 versus the prior year period include: --Revenue increased 35.3% to $392.0 million --Comparable restaurant sales increased 16.9% --Restaurant level operating margins increased 240 basis points to 21.0% --Income from operations more than doubled to $28.6 million --Diluted earnings per share were $0.59 as compared to $1.08 in the prior year, or $0.31 in the prior year on an adjusted basis*, excluding a non-recurring $0.77 tax benefit 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, "This was another very good quarter for us, helping to deliver outstanding year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. results. This strong performance continues to show the strength of our brand and the relevance of the Chipotle experience in the eyes of so many customers." Ells continued, "The core of our success has always been our food, our commitment to service and a unique atmosphere, and we continue to improve upon all of these things "These Things" is an EP by She Wants Revenge, released in 2005 by Perfect Kiss, a subsidiary of Geffen Records. Music Video The music video stars Shirley Manson, lead singer of the band Garbage. Track Listing 1. "These Things [Radio Edit]" - 3:17 2. . In addition to our progress in providing 'Food with Integrity' - with naturally raised chicken added in our restaurants in Cincinnati Cincinnati (sĭnsənăt`ē, –năt`ə), city (1990 pop. 364,040), seat of Hamilton co., extreme SW Ohio, on the Ohio River opposite Newport and Covington, Ky.; inc. as a city 1819. and Dayton Dayton, city (1990 pop. 182,044), seat of Montgomery co., SW Ohio, on the Great Miami River where it is joined by the Stillwater River; inc. 1805. It is the trade center for a fertile farm area, but is best known for its involvement with industry, invention, and - we continue to explore ways to improve our food and the restaurant experience we provide. We're we're Contraction of we are. we're we are deeply committed to this ongoing effort and believe our success will always be based on the unique relationship Chipotle has with its customers." 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, "We were pleased to see improvement in our restaurant level margins, which were 21.7% for the quarter. Our profitability stems from continuing strong comparable restaurant sales, successful new restaurant openings, and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. commodity costs. Going forward, we'll we'll Contraction of we will. we'll we will or we shall we'll will ~shall focus on execution and utilize our promote-from-within philosophy to continue to improve performance in our restaurants. In addition, we'll look at all aspects of our business with the singular SINGULAR, construction. In grammar the singular is used to express only one, not plural. Johnson. 2. In law, the singular frequently includes the plural. goal of making Chipotle better. To that end, we are stressing quality of service, the development of our people, and continued improvements to all facets of our business. We are progressing in each of these areas and are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we will continue to produce solid results." Second Quarter 2006 Results Revenue for the second quarter of 2006 increased 31.1% to $204.9 million from $156.3 million in the second quarter of 2005. This growth in revenue was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a 14.5% increase in comparable restaurant sales in the second quarter and an increase in revenue 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 14 company-owned restaurants during the second quarter of 2006, including 12 restaurants in existing markets and two restaurants in new markets. Restaurant level operating margins increased to 21.7% in the second quarter of 2006 from 19.9% in the second quarter of 2005, due to lower commodity costs, primarily avocados, and menu price increases in some markets related to the addition of naturally raised chicken or naturally raised beef as part of our Food with Integrity initiative. General and administrative expenses were $17.6 million in the second quarter of 2006, or 8.6% of revenue, compared to $13.7 million in the second quarter of 2005, or 8.8% of revenues. General and administrative expenses as a percentage of revenue decreased primarily due to the effect of economies of scale from higher restaurant sales. This was partially offset by increases in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs and stock-based compensation expenses, and $0.6 million in expenses in the quarter related to the recently completed secondary offering by certain Chipotle shareholders. Income from operations increased to $15.9 million in the second quarter of 2006, compared to $9.3 million in the second quarter of 2005. Net income for the second quarter of 2006 was $10.8 million, compared to $25.7 million in the second quarter of 2005 or $5.4 million on an adjusted basis* in the second quarter of 2005, excluding a non-recurring $20.3 million tax benefit. Results for the six months ended June 30, 2006 Revenue for the six months ended June 30, 2006 increased 35.3% to $392.0 million from $289.7 million in the prior year period. This growth in revenue was attributable to a 16.9% increase in comparable restaurant sales and an increase in revenue 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 29 company-owned restaurants during the period, including 24 restaurants in existing markets and five restaurants in two new markets. Higher average restaurant sales helped to increase restaurant level operating margins to 21.0% for the period from 18.6% in the six months ended June 30, 2005. Also contributing to this increase were lower commodity costs, primarily avocados, and menu price increases in some markets related to the addition of naturally raised chicken or naturally raised beef as part of our Food with Integrity initiative. General and administrative expenses were $32.9 million for the six months ended June 30, 2006, or 8.4% of revenues, compared to $24.9 million in the prior year period, or 8.6% of revenues. General and administrative expenses as a percentage of revenues decreased primarily due to the effect of economies of scale from higher restaurant sales. This was partially offset during the period by increases in severance costs and stock-based compensation expenses, and $0.6 million in expenses related to the recently completed secondary offering by certain Chipotle shareholders. Income from operations increased to $28.6 million in the six months ended June 30, 2006, compared to $13.8 million a year ago. Net income for the six months ended June 30, 2006 was $18.8 million, compared to $28.4 million in the prior year period or $8.0 million on an adjusted basis* in the prior year period, excluding a non-recurring $20.3 million tax benefit. Jack Hartung, Chief Financial and Development Officer stated, "Second quarter and year-to-date results reflect our ability to simultaneously drive top-line sales and execute our development plan. We are confident that we remain on track to meet our 2006 restaurant opening guidance of 80 to 90 new restaurants, with openings back-loaded in the second half of the year. Going forward, we'll primarily use cash from operations to fund expansion while continuing to focus on serving great food in our unique Chipotle environment to create value for our shareholders." *A reconciliation of net income and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of to adjusted net income and diluted earnings per share can be found in the supplemental information attached to this press release. Outlook Management expects full year 2006 comparable restaurant sales increases in the low double-digits, with quarterly comparable restaurant sales increases continuing to decline throughout the year as sequential One after the other in some consecutive order such as by name or number. comparisons become more difficult. Management also expects the following for 2006: --Opening 80-90 new restaurants, back-loaded to the last half of the year --Non-cash stock compensation expense of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $5.0 million --An effective tax rate of approximately 40% --Diluted common shares outstanding of approximately 32.5 million to 33.0 million --Up to $1.5 million in legal, audit, printing and other fees for the second half of fiscal 2006 associated with McDonald's McDonald’s fast-food restaurant chain throughout the world; recognized by golden arches. [Am. Culture: Misc.] See : Ubiquity previously announced plan to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose all of its remaining interest in Chipotle through a tax-free exchange tax-free exchange An exchange of assets between taxpayers in which any gain or loss is not recognized in the period during which the exchange takes place. Rather, taxpayers are required to adjust the basis of assets exchanged. offer to its shareholders by the end of October October: see month. , subject to market conditions. 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 full 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 , expressed as a percent of total revenue. Conference Call The Company will host a conference call to discuss second 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 1-800-819-9193, or for international callers by dialing 1-913-981-4911. A replay can be accessed, when available, 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. is 7023431. The replay will be available until August 7, 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 focused 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, our expected effective tax rate and our expected number of diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common shares, 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 the expected termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of 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. Additional Information In connection with the proposed separation of Chipotle from McDonald's, Chipotle will file with the Securities and Exchange Commission a registration statement on Form S-4 that will include a prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. describing McDonald's proposed exchange of its interest in Chipotle for shares of McDonald's common stock. The prospectus will contain important information about the exchange offer and related matters. Investors and security holders are urged to read the prospectus, and other related documents filed with the SEC, when they become available and before making any investment decision. You will be able to obtain a free copy of the prospectus (when available) and other related documents filed with the SEC by McDonald's and Chipotle at the SEC's website at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. , and those documents may also be obtained for free, as applicable, from McDonald's at www.investor.mcdonalds.com or Chipotle at www.chipotle.com. Neither McDonald's, Chipotle nor any of their respective directors or officers or any dealer manager appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. with respect to the exchange offer makes any recommendation as to whether you should participate in the exchange offer.
Chipotle Mexican Grill, Inc.
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Three months ended June 30,
---------------------------------
2006 2005
---------------------------------
Revenue:
Restaurant sales $204,236 99.7% $155,712 99.6%
Franchise royalties and fees 700 0.3 584 0.4
---------------------------------
Total revenue 204,936 100.0 156,296 100.0
---------------------------------
Restaurant operating costs:
Food, beverage and packaging 63,341 30.9 50,394 32.2
Labor 56,941 27.8 43,542 27.9
Occupancy 14,338 7.0 11,838 7.6
Other operating costs 25,873 12.6 19,482 12.5
General and administrative expenses 17,643 8.6 13,726 8.8
Depreciation and amortization 8,309 4.1 6,729 4.3
Pre-opening costs 1,505 0.7 416 0.3
Loss on disposal of assets 1,116 0.5 848 0.5
---------------------------------
189,066 92.3 146,975 94.0
---------------------------------
Income from operations 15,870 7.7 9,321 6.0
Interest income 1,622 0.8 -- --
Interest expense (65) -- (336) (0.2)
---------------------------------
Income before income taxes 17,427 8.5 8,985 5.7
Benefit (provision) for income taxes (6,635) (3.2) 16,740 10.7
---------------------------------
Net income $10,792 5.3% $25,725 16.5%
=================================
Earnings per common share:
Basic $0.33 $0.98
========= ==========
Diluted $0.33 $0.98
========= ==========
Weighted average common shares
outstanding:
Basic 32,462 26,281
========= ==========
Diluted 32,903 26,319
========= ==========
Chipotle Mexican Grill, Inc.
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Six months ended June 30,
---------------------------------
2006 2005
---------------------------------
Revenue:
Restaurant sales $390,647 99.7% $288,629 99.6%
Franchise royalties and fees 1,304 0.3 1,083 0.4
---------------------------------
Total revenue 391,951 100.0 289,712 100.0
---------------------------------
Restaurant operating costs:
Food, beverage and packaging 122,573 31.3 93,456 32.3
Labor 109,878 28.0 83,205 28.7
Occupancy 28,210 7.2 22,383 7.7
Other operating costs 49,111 12.5 36,796 12.7
General and administrative expenses 32,910 8.4 24,944 8.6
Depreciation and amortization 16,312 4.2 13,186 4.6
Pre-opening costs 2,615 0.7 866 0.3
Loss on disposal of assets 1,739 0.4 1,116 0.4
---------------------------------
363,348 92.7 275,952 95.3
---------------------------------
Income from operations 28,603 7.3 13,760 4.7
Interest income 2,592 0.7 23 --
Interest expense (129) -- (415) (0.1)
---------------------------------
Income before income taxes 31,066 7.9 13,368 4.6
Benefit (provision) for income taxes (12,286) (3.1) 14,983 5.2
---------------------------------
Net income $18,780 4.8% $28,351 9.8%
=================================
Earnings per common share:
Basic $0.59 $1.08
========= ==========
Diluted $0.59 $1.08
========= ==========
Weighted average common shares
outstanding:
Basic 31,577 26,281
========= ==========
Diluted 31,986 26,303
========= ==========
Reconciliation of Net Income and Earnings Per Common Share
to adjusted measures
(in thousands except share data)
(unaudited)
For the three For the six
months ended months ended
June 30, June 30,
2006 2005 2006 2005
----------------------------------
Net income, as reported $10,792 $25,725 $18,780 $28,351
Tax benefit from valuation allowance
reversal -- (20,343) -- (20,343)
----------------------------------
Net income, adjusted $10,792 $5,382 $18,780 $8,008
==================================
Diluted EPS, as reported $0.33 $0.98 $0.59 $1.08
Tax benefit from valuation allowance
reversal impact on EPS -- (0.77) -- (0.77)
----------------------------------
Diluted EPS, adjusted $0.33 $0.21 $0.59 $0.31
==================================
Diluted, weighted average common
shares 32,903 26,319 31,986 26,303
We believe these adjusted measures are useful to investors because the tax benefit was a non-recurring event that had no cash impact. As such, it is not indicative indicative: see mood. of the performance of our restaurants for the periods presented or our expected operating results for future periods.
Chipotle Mexican Grill, Inc.
Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)
As of
June 30, 2006 December 31, 2005
---------------------------------
Total current assets $155,060 $17,824
Total assets $535,053 $392,495
Total current liabilities $43,914 $41,982
Total liabilities $105,400 $83,141
Total shareholders' equity $429,653 $309,354
Chipotle Mexican Grill, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Six months ended June 30,
2006 2005
-------------------------
Cash provided by operating
activities $45,070 $26,908
Cash used in investing activities ($37,005) ($38,532)
Cash provided by financing
activities $133,918 $17,781
Chipotle Mexican Grill, Inc.
Supplemental Financial Data
(dollars in thousands)
(unaudited)
For the three months ended
June Mar. Dec. Sept. June
30, 31, 31, 30, 30,
2006 2006 2005 2005 2005
----------------------------------------
Comparable restaurant sales
growth 14.5% 19.7% 14.3% 11.5% 9.6%
Number of restaurants opened 14 15 28 17 17
Average restaurant sales $1,545 $1,502 $1,440 $1,406 $1,384
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion