CHIPOTLE MEXICAN GRILL INC Quarterly Report for Q2 Ended Jun 30, 2012

Summary

Chipotle Mexican Grill, Inc. (CMG) reported strong financial performance for the second quarter and the first six months of 2012, demonstrating robust revenue growth driven by new restaurant openings and comparable restaurant sales increases. Net income saw a significant rise, with diluted earnings per share reaching $2.56 for the quarter and $4.53 for the year-to-date period. The company continues to expand its footprint, opening 87 new restaurants in the first half of the year, and anticipates further growth, projecting 155-165 openings for the full year. Despite some cost pressures, such as inflation on beef and chicken, Chipotle effectively managed its operating expenses. Food, beverage, and packaging costs as a percentage of revenue saw a slight decrease, as did labor and occupancy costs, largely due to higher average restaurant sales. The company also maintained a strong liquidity position with substantial cash and investment balances, supporting its growth initiatives and share repurchase program. However, the company faces ongoing legal proceedings, particularly related to employee work authorization and ADA compliance, which could present future financial risks.

Key Highlights

• 1Revenue increased by 20.9% to $690.9 million for the three months ended June 30, 2012, and by 23.2% to $1,331.5 million for the six months ended June 30, 2012, compared to the prior year periods.
• 2Net income for the second quarter of 2012 was $81.7 million, a significant increase from $50.7 million in the same period of 2011. Year-to-date net income was $144.3 million, up from $97.0 million in the prior year.
• 3Diluted earnings per share (EPS) were $2.56 for the quarter and $4.53 for the six months ended June 30, 2012, up from $1.59 and $3.06, respectively, in the comparable prior year periods.
• 4Comparable restaurant sales increased by 8.0% for the second quarter and 10.2% for the first six months of 2012, driven by customer visits and menu price increases.
• 5The company opened 55 new restaurants in the second quarter and 87 in the first half of 2012, bringing the total to 1,316 restaurants as of June 30, 2012. Expansion plans include opening 155-165 restaurants in 2012.
• 6Food, beverage, and packaging costs as a percentage of revenue decreased slightly to 32.1% for the quarter and 32.2% for the year-to-date period, benefiting from menu price increases and favorable commodity prices for certain items.
• 7The company repurchased approximately $28.9 million of its common stock during the first six months of 2012 under its authorized share repurchase program.

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