Chipotle mexican grill, inc. announces third quarter 2011 results
Denver--(business wire)--chipotle mexican grill, inc. (nyse: cmg) today reported financial results for its third quarter ended september 30, 2011. highlights for the third quarter of 2011 as compared to the third quarter of 2010 include: revenue increased 24.1% to $591.9 million comparable restaurant sales increased 11.3% restaurant level operating margin was 26.7%, a decrease of 100 basis points food costs were 33.1% of sales, an increase of 250 basis points driven by rising commodity costs net income was $60.4 million, an increase of 25.3% diluted earnings per share was $1.90, an increase of 25.0% highlights for the nine months ended september 30, 2011 as compared to the prior year include: revenue increased 23.6% to $1.67 billion comparable restaurant sales increased 11.2% restaurant level operating margin was 25.9%, a decrease of 100 basis points food costs were 32.7% of sales, an increase of 230 basis points driven by rising commodity costs net income was $157.5 million, an increase of 18.8% diluted earnings per share was $4.96, an increase of 18.7% "chipotle’s strong performance in the quarter and throughout the year is the result of our strong food culture, where we are constantly striving for more sustainable sources for all of our ingredients; and our special people culture, where top performers throughout the company are creating an extraordinary dining experience for each customer,” said steve ells, founder, chairman and co-ceo of chipotle. third quarter 2011 results revenue for the quarter was $591.9 million, up 24.1% from the prior year period. the growth in revenue was the result of new restaurants not in the comparable base and an 11.3% increase in comparable restaurant sales. comparable restaurant sales growth was primarily driven by increased traffic in the quarter as well as the impact of menu price increases implemented between march and august. during the quarter we opened 32 new restaurants including our new shophouse southeast asian kitchen, bringing the total restaurant count to 1,163. restaurant level operating margin was 26.7% in the quarter, a decrease of 100 basis points from the prior year period. the decrease was primarily driven by food cost inflation partially offset by leverage from higher restaurant sales. g&a costs were 6.3% of revenue, down 70 basis points from the prior year period. the decrease as a percent of revenue was driven by favorable sales leverage, and an all manager conference held during the third quarter of 2010, partially offset by an increase in non-cash stock-based compensation. net income for the third quarter of 2011 was $60.4 million, or $1.90 per diluted share, compared to $48.2 million, or $1.52 per diluted share, in the third quarter of 2010. results for the nine months ended september 30, 2011 revenue for the first nine months of 2011 was $1.67 billion, up 23.6% from the prior year period. the growth in revenue was the result of new restaurants not in the comparable base and an 11.2% increase in comparable restaurant sales. comparable restaurant sales growth was primarily driven by increased traffic. during the first nine months of the year, we opened 82 new chipotle restaurants as well as shophouse, bringing the total restaurant count to 1,163. restaurant level operating margin was 25.9% for the first nine months, a decrease of 100 basis points from the prior year period. the decrease was primarily driven by increased food costs partially offset by the impact of leverage from higher restaurant sales. g&a costs for the first nine months of 2011 were 6.7% of revenue, up 10 basis points from the prior year period primarily due to higher stock based compensation and partially offset by greater sales leverage. net income for the first nine months of 2011 was $157.5 million, or $4.96 per diluted share, compared to $132.5 million, or $4.18 per diluted share, in the first nine months of 2010. "i’m very pleased with our performance in the third quarter and throughout the year, but i’m even more pleased we’re delivering these strong financial results by advancing our special people culture, where top performers are empowered to deliver high standards in their restaurants. our people culture is the strongest it has ever been, and it’s getting stronger every day, which gives me great confidence that we are well on our way toward our vision to change the way people think about and eat fast food,” commented co-ceo monty moran. outlook for 2011, management expects the following: openings at or above the high end of our 135-145 opening range low double digit comparable restaurant sales growth for the full year an effective tax rate of approximately 38.4% for 2012, management expects the following: 155-165 new restaurant openings low single digit comparable restaurant sales growth an effective tax rate of approximately 39.2% definitions the following definitions apply to these terms as used throughout this release: comparable restaurant sales increases represent the change in period-over-period sales for the comparable restaurant base. a restaurant becomes comparable in its 13th full calendar month of operation. average restaurant sales refers to the average trailing 12-month sales for restaurants in operation for at least 12 full calendar months. restaurant level operating margin represents total revenue less restaurant operating costs, expressed as a percent of total revenue. conference call chipotle will host a conference call to discuss the third quarter 2011 financial results today at 4:30 pm eastern time. the conference call can be accessed live over the phone by dialing 1-888-500-6974 or for international callers by dialing 1-719-457-2707. a replay will be available one hour after the call and can be accessed by dialing 1-877-870-5176 or 1-858-384-5517 for international callers; the password is 4159826. the replay will be available until october 27, 2011. the call will be webcast live from the company's website at chipotle.com under the investor relations section. an archived webcast will be available one hour after the end of the call. about chipotle steve ells, founder, chairman and co-chief executive officer, started chipotle with the idea that food served fast did not have to be a typical fast food experience. today, chipotle continues to offer a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads made from fresh, high-quality raw ingredients, prepared using classic cooking methods and served in a distinctive atmosphere. through our vision of food with integrity, chipotle is seeking better food not only from using fresh ingredients, but ingredients that are sustainably grown and naturally raised with respect for the animals, the land, and the farmers who produce the food. chipotle opened its first restaurant in 1993 and currently operates over 1,100 restaurants. for more information, visit chipotle.com. forward-looking statements certain statements in this press release, including statements under the heading “outlook” of our expected number of new restaurant openings, comparable restaurant sales increases and effective tax rate in 2011 and 2012, are forward-looking statements as defined in the private securities litigation reform act 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 a sufficient number of suitable new restaurant sites and the availability of qualified employees; the uncertainty of our ability to achieve expected levels of comparable restaurant sales increases; the performance of new restaurants and their impact on existing restaurant sales; increases in the cost of food ingredients and other key supplies; the risk of food-borne illnesses and other health concerns about our food; the potential for increased labor costs or difficulty retaining qualified employees, including as a result of immigration enforcement activities; risks relating to our expansion into new markets; the impact of federal, state or local government regulations relating to our employees and the sale of food or alcoholic beverages; risks associated with our food with integrity strategy, including supply shortages; changes in consumer preferences, general economic conditions or consumer discretionary spending; the effect of competition in the restaurant industry; risks related to the ongoing development of our marketing strategy; the effects of continuing economic uncertainty on our business and on our suppliers, landlords and potential developers; risks relating to litigation; risks relating to our insurance coverage and self-insurance; our dependence on key personnel; security risks associated with the acceptance of electronic payment cards; the uncertainty of our ability to protect our name, logo and other proprietary information or the reputation of our brand; the potential effects of inclement weather; risks related to the tax treatment of our separation from mcdonald’s; and other risk factors described from time to time in our sec reports, including our most recent annual report on form 10-k and subsequent quarterly reports on form 10-q, all of which are available on our web site at chipotle.com. (in thousands, except per share data) (exclusive of depreciation and amortization shown separately below): chipotle mexican grill, inc. condensed consolidated statement of income (unaudited) (in thousands, except per share data) nine months ended september 30, (exclusive of depreciation and amortization shown separately below): chipotle mexican grill, inc. condensed consolidated balance sheet (in thousands, except per share data) september30, 2011 december31, 2010 accounts receivable, net of allowance for doubtful accounts of $6 and $102 as of september 30, 2011 and december 31, 2010, respectively preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of september 30, 2011 and december 31, 2010 common stock, $0.01 par value, 230,000 shares authorized, 34,350 and 33,959 shares issued as of september 30, 2011 and december 31, 2010, respectively treasury stock, at cost, 3,038 and 2,885 common shares at september 30, 2011 and december 31, 2010, respectively chipotle mexican grill, inc. condensed consolidated statement of cash flows (unaudited) (in thousands) nine months endedseptember 30, adjustments to reconcile net income to net cash provided by operating activities: loss on disposal of assets purchases of leasehold improvements, property and equipment payments on deemed landlord financing cash equivalents increase in purchases of leasehold improvements, property, and equipment accrued in accounts payable chipotle mexican grill, inc. supplemental financial and other data (dollars in thousands) 2011 2011 2011 2010 2010
