Summary
Chipotle Mexican Grill, Inc. (CMG) reported its second-quarter and first-half financial results for the period ending June 29, 2013. The company demonstrated continued growth in revenue, driven by both new restaurant openings and an increase in comparable restaurant sales. Despite facing inflationary pressures on food costs, particularly for salsa ingredients and dairy, Chipotle managed to improve its operating margin due to higher average restaurant sales and better labor cost control. The company also highlighted its commitment to "Food With Integrity," although acknowledging ongoing challenges in sourcing all ingredients to meet its high standards. Financially, CMG showed a solid increase in net income and earnings per share compared to the prior year. The balance sheet reflects growth in total assets, primarily driven by investments and property and equipment. The company maintained a strong cash position and generated significant cash flow from operations, which it intends to use for continued expansion, share repurchases, and general corporate purposes. However, investors should note the ongoing legal proceedings related to employee work authorization and shareholder derivative actions, though the company believes its practices are compliant and does not anticipate a material adverse effect.
Financial Highlights
42 data points| Operating Expenses | $670.37M |
| Operating Income | $146.42M |
| Net Income | $87.85M |
| EPS (Basic) | $0.06 |
| EPS (Diluted) | $0.06 |
| Shares Outstanding (Basic) | 1.55B |
| Shares Outstanding (Diluted) | 1.56B |
Key Highlights
- 1Revenue increased by 18.2% year-over-year for the second quarter of 2013, reaching $816.8 million, and by 15.9% for the first six months to $1,543.5 million.
- 2Comparable restaurant sales grew by 5.5% in Q2 2013 and 3.4% for the first six months, primarily driven by an increase in customer visits.
- 3Net income rose to $87.9 million in Q2 2013 ($2.82 diluted EPS) and $164.4 million for the first six months ($5.27 diluted EPS), up from $81.7 million and $144.3 million, respectively, in the prior year.
- 4Food, beverage, and packaging costs as a percentage of revenue increased to 33.1% in Q2 2013 (33.0% YTD) from 32.1% (32.2% YTD) due to inflation and supply constraints, particularly for salsa ingredients.
- 5Labor costs as a percentage of revenue decreased slightly due to higher average sales and improved staffing efficiencies.
- 6The company opened 92 new restaurants in the first six months of 2013, bringing the total to 1,502, and expects to open 165-180 in the full year.
- 7Chipotle repurchased $80.6 million of its common stock in the first six months of 2013, with $119.6 million remaining under its repurchase authorization.