Chipotle Mexican Grill Inc 8-K, filed Oct 21, 2021

Chipotle Mexican Grill Inc (CMG)

8-K 2021-10-21 For: 2021-10-21

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Added on April 08, 2026

About this 8-K

Chipotle Mexican Grill Inc filed this 8-K on October 21, 2021.

Items reported

Item 2.02: Financial results
Item 8.01: Other events
Item 9.01: Financial statements and exhibits

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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

Exhibit Number		Exhibit Description
99.1		Chipotle Mexican Grill, Inc. Press Release, dated October 21, 2021
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


	Chipotle Mexican Grill, Inc.

October 21, 2021	By:	/s/ John R. Hartung
		Name: John R. Hartung
		Title: Chief Financial Officer


	EARNINGS RELEASE
	PR Contact: Laurie Schalow
	(949) 524-4035
	MediaRelations@chipotle.com IR Contact: Ashish Kohli, CFA (949) 524-4132 Akohli@chipotle.com


	Three months ended September 30,
	2021				2020
Food and beverage revenue	$	1,932,409	99.0	%	$	1,581,335	98.7	%
Delivery service revenue		19,906	1.0			20,079	1.3
Total revenue		1,952,315	100.0			1,601,414	100.0
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Food, beverage and packaging		591,332	30.3			517,261	32.3
Labor		502,757	25.8			405,818	25.3
Occupancy		104,223	5.3			97,694	6.1
Other operating costs		294,650	15.1			268,416	16.8
General and administrative expenses		145,930	7.5			133,150	8.3
Depreciation and amortization		63,191	3.2			60,180	3.8
Pre-opening costs		5,894	0.3			3,808	0.2
Impairment, closure costs, and asset disposals		4,658	0.2			7,991	0.5
Total operating expenses		1,712,635	87.7			1,494,318	93.3
Income from operations		239,680	12.3			107,096	6.7
Interest and other income (expense), net		(126)	-			(595)	-
Income before income taxes		239,554	12.3			106,501	6.7
Provision for income taxes		(35,120)	(1.8)			(26,257)	(1.6)
Net income	$	204,434	10.5	%	$	80,244	5.0	%
Earnings per share:
Basic	$	7.26			$	2.87
Diluted	$	7.18			$	2.82
Weighted-average common shares outstanding:
Basic		28,150				27,973
Diluted		28,475				28,454



Delaware ‎(State or other ‎jurisdiction of ‎incorporation)	1-32731 ‎(Commission File Number)	84-1219301 ‎(I.R.S. Employer ‎Identification No.)


	Nine months ended September 30,
	2021				2020
Food and beverage revenue	$	5,517,764	98.8	%	$	4,333,640	99.0	%
Delivery service revenue		68,664	1.2			43,284	1.0
Total revenue		5,586,428	100.0			4,376,924	100.0
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Food, beverage and packaging		1,688,481	30.2			1,434,316	32.8
Labor		1,400,932	25.1			1,184,649	27.1
Occupancy		309,422	5.5			288,549	6.6
Other operating costs		876,602	15.7			741,556	16.9
General and administrative expenses		447,077	8.0			342,267	7.8
Depreciation and amortization		188,395	3.4			178,578	4.1
Pre-opening costs		14,280	0.3			11,018	0.3
Impairment, closure costs, and asset disposals		14,592	0.3			22,713	0.5
Total operating expenses		4,939,781	88.4			4,203,646	96.0
Income from operations		646,647	11.6			173,278	4.0
Interest and other income (expense), net		(1,443)	-			2,771	0.1
Income before income taxes		645,204	11.5			176,049	4.0
Provision for income taxes		(125,695)	(2.3)			(11,242)	(0.3)
Net income	$	519,509	9.3	%	$	164,807	3.8	%
Earnings per share:
Basic	$	18.46			$	5.91
Diluted	$	18.22			$	5.81
Weighted-average common shares outstanding:
Basic		28,137				27,892
Diluted		28,520				28,370



	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
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



	Nine months ended
	September 30,
	2021		2020
Operating activities
Net income	$	519,509	$	164,807
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		188,395		178,578
Deferred income tax provision		(1,024)		53,857
Impairment, closure costs, and asset disposals		12,483		21,198
Provision for credit losses		733		(143)
Stock-based compensation expense		138,741		60,579
Other		2,534		2,450
Changes in operating assets and liabilities:
Accounts receivable		21,882		29,233
Inventory		(1,996)		614
Prepaid expenses and other current assets		(19,343)		(6,015)
Operating lease assets		151,628		136,052
Other assets		1,901		(21,754)
Accounts payable		28,712		5,776
Accrued payroll and benefits		(13,193)		68,514
Accrued liabilities		(7,407)		1,965
Unearned revenue		(2,978)		(593)
Income tax payable/receivable		(35,850)		(32,677)
Operating lease liabilities		(141,540)		(115,069)
Other long-term liabilities		474		1,351
Net cash provided by operating activities		843,661		548,723
Investing activities
Purchases of leasehold improvements, property and equipment		(320,569)		(246,758)
Purchases of investments		(288,899)		(325,069)
Maturities of investments		243,441		318,505
Proceeds from sale of equipment		2,885		-
Acquisitions of equity method investments		-		(10,025)
Net cash used in investing activities		(363,142)		(263,347)
Financing activities
Acquisition of treasury stock		(300,733)		(54,401)
Tax withholding on stock-based compensation awards		(63,492)		(47,976)
Other financing activities		(2,342)		(1,865)
Net cash used in financing activities		(366,567)		(104,242)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(788)		377
Net change in cash, cash equivalents, and restricted cash		113,164		181,511
Cash, cash equivalents, and restricted cash at beginning of period		635,836		508,481
Cash, cash equivalents, and restricted cash at end of period	$	749,000	$	689,992
Supplemental disclosures of cash flow information
Income taxes paid (refunded)	$	163,069	$	(8,987)
Purchases of leasehold improvements, property, and equipment accrued in accounts payable and accrued liabilities	$	65,311	$	72,860
Acquisition of treasury stock accrued in accounts payable and accrued liabilities	$	4,498	$	-


	For the three months ended
	Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,
	2021		2021		2021		2020		2020
Number of restaurants opened		41		56		40		61		44
Restaurant closures		-		(5)		(5)		(1)		(3)
Restaurant relocations		(2)		(1)		-		(2)		-
Number of restaurants at end of period		2,892		2,853		2,803		2,768		2,710
Average restaurant sales(1)	$	2,554	$	2,466	$	2,313	$	2,223	$	2,199
Average restaurant sales, excluding delivery MPI(2)	$	2,479	$	2,405	$	2,273	$	2,200	$	2,192
Comparable restaurant sales increase		15.1%		31.2%		17.2%		5.7%		8.3%

(1) Beginning in Q3 2020, we revised the definition of average restaurant sales to exclude delivery service revenues (refer to Definitions section above). We made this change to more closely align with how management views the business and given the increase in the delivery business. Average restaurant sales in all comparative periods presented has been updated to conform with the new definition. Average restaurant sales is a trailing 12-month measure.
(2) In Q3 2020, we began implementing delivery menu-price increases ("MPI") to partially offset the increased cost of delivery. "Average restaurant sales, excluding delivery MPI" represents average restaurant sales, as defined above, adjusted to remove the impact of delivery menu price increases. This is intended to illustrate our underlying food and beverage sales per restaurant.



	Three months ended
	September 30,
	2021		2020
Net income	$	204,434	$	80,244
Non-GAAP adjustments:
Restaurant costs:
Operating lease asset impairment and other restaurant costs(1)		218		2,954
Duplicate rent expense(2)		33		74
Corporate Restructuring:
Duplicate rent expense(2)		1,313		1,638
Employee related restructuring costs(3)		113		275
Legal proceedings(4)		-		28,700
Stock-based compensation modification expense(5)		7,619		132
Other adjustments(6)		47		1,875
Total non-GAAP adjustments	$	9,343	$	35,648
Tax effect of non-GAAP adjustments above		1,462		(8,844)
Other tax non-GAAP adjustments(7)		(15,423)		-
After tax impact of non-GAAP adjustments	$	(4,618)	$	26,804
Adjusted net income	$	199,816	$	107,048

Diluted weighted-average number of common shares outstanding		28,475		28,454
Diluted earnings per share	$	7.18	$	2.82
Adjusted diluted earnings per share	$	7.02	$	3.76

(1) Operating lease asset impairment charges, and other expenses for restaurants due to underperformance.
(2) Duplicate rent expense for the corporate headquarter relocation and office consolidation announced in May 2018 and rent expense for closed restaurants announced in June 2018.
(3) Costs for recruitment, relocation costs, third party and other employee-related costs.
(4) Charges relate to estimated settlements for distinct legal matters that exceeded or are expected to exceed typical costs for these types of legal proceedings.
(5) For the three months ended September 30, 2021, stock-based compensation consists of a COVID-19 related modification made in December 2020 to our 2018 performance shares. For the three months ended September 30, 2020, stock-based compensation consists of a March 2020 modification associated with the departure of our former Executive Chairman primarily related to his 2017 agreement.
(6) For the three months ended September 30, 2021, other adjustments consist of consulting fees associated with the calculation of our non-recurring tax benefit. For the three months ended September 30, 2020, other adjustments consist of asset impairment charge related to digital technology.
(7) For the tax benefit from the federal net operating loss generated on our 2020 federal income tax return and carried back to prior years. The tax benefit is due to the federal income tax rate differential between the 2020 rate of 21% and the 2017 rate of 35%.