10-QPeriod: Q3 FY2018

CHIPOTLE MEXICAN GRILL INC Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 26, 2018For Securities:CMG

Summary

Chipotle Mexican Grill, Inc. (CMG) reported its third-quarter 2018 financial results, showing a notable increase in revenue and net income compared to the prior year period. Revenue grew by 8.6% to $1.225 billion, driven by a 4.4% increase in comparable restaurant sales and contributions from new restaurant openings. Net income saw a significant rise of 94.8% to $38.2 million, translating to diluted earnings per share of $1.36, up from $0.69 in the prior year. The company is actively managing its restaurant portfolio, with plans to close 55-65 underperforming locations and incur related costs. Concurrently, Chipotle is undergoing a corporate restructuring, including consolidating offices and relocating its headquarters, which is expected to result in significant one-time charges. Despite these restructuring and closure costs, the company continues to invest in its digital platforms and expand its restaurant footprint, with 97 new restaurants opened in the first nine months of the year.

Financial Highlights

46 data points
Beta

Revenue

$1.23B

Net Income

$38.20M

3.1% Net Margin

EPS (Diluted)

$0.03

Total Assets

$2.23B

Cash & Equivalents

$343.03M

Free Cash Flow

$115.58M

Financial Statements
Beta
Revenue$1.23B
Operating Expenses$1.17B
Operating Income$57.99M
Net Income$38.20M
EPS (Basic)$0.03
EPS (Diluted)$0.03
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.40B

Key Highlights

  • 1Revenue increased by 8.6% year-over-year to $1.225 billion for the third quarter of 2018.
  • 2Net income surged by 94.8% to $38.2 million in the third quarter of 2018.
  • 3Diluted Earnings Per Share (EPS) rose to $1.36 in Q3 2018, a substantial increase from $0.69 in Q3 2017.
  • 4Comparable restaurant sales increased by 4.4% in the third quarter, indicating improved customer traffic and/or average check size.
  • 5The company opened 97 new restaurants in the first nine months of 2018, while also planning to close 55-65 underperforming locations.
  • 6Significant restructuring costs are being incurred due to office consolidation and headquarters relocation, impacting expenses but with expected long-term benefits.
  • 7Sales from out-of-restaurant orders increased to 10.2% of revenue for the first nine months of 2018, highlighting the growth of digital ordering and delivery.

Frequently Asked Questions

Chipotle's revenue grew by 8.6% to $1.225 billion in the third quarter of 2018, compared to $1.128 billion in the same period of 2017. This growth was driven by comparable restaurant sales increases and new restaurant openings.

Chipotle's profitability significantly improved in Q3 2018. Net income increased by 94.8% to $38.2 million, and diluted earnings per share rose to $1.36, up from $0.69 in the prior year's third quarter.

Chipotle is undertaking significant corporate restructuring and plans to close 55-65 underperforming restaurants. These actions are expected to result in substantial one-time costs related to severance, lease terminations, and asset write-downs. While these will impact short-term expenses, the company aims to improve operational efficiency and focus on core locations.

Chipotle is seeing growth in its digital and off-premise channels. Sales from out-of-restaurant orders increased to 10.2% of total revenue for the first nine months of 2018, up from 8.3% in the prior year, reflecting an investment in digital platforms and dedicated make-lines for these orders.