FY23 EPS INCREASES OVER 38% AND COMPARABLE SALES INCREASE 7.9% AS MARGINS EXPAND
NEWPORT BEACH, Calif., Feb. 6, 2024 /PRNewswire/ — Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its fourth quarter and fiscal year ended December 31, 2023.
Fourth quarter highlights, year over year:
Total revenue increased 15.4% to $2.5 billion
Comparable restaurant sales increased 8.4%
Operating margin was 14.4%, an increase from 13.6%
Restaurant level operating margin was 25.4%1, an increase of 140 basis points
Diluted earnings per share was $10.21, a 27.3% increase from $8.02. Adjusted diluted earnings per share, which excluded a $0.15 after-tax impact from expenses related to accelerated depreciation, partially offset by a reduction in contingencies related to certain legal proceedings, was $10.361, a 25.0% increase from $8.29.1
Opened 121 new restaurants with 110 locations including a Chipotlane
Full year 2023 highlights, year over year:
Total revenue increased 14.3% to $9.9 billion
Comparable restaurant sales increased 7.9%
Operating margin was 15.8%, an increase from 13.4%
Restaurant level operating margin was 26.2%1, an increase of 230 basis points
Diluted earnings per share was $44.34, a 38.4% increase from $32.04. Adjusted diluted earnings per share, which excluded a $0.52 after-tax impact from expenses related to restaurant and corporate level impairment and closure costs, accelerated depreciation and corporate restructuring, partially offset by a reduction in contingencies related to certain legal proceedings, was $44.861, a 36.9% increase from $32.78.1
Opened 271 new restaurants with 238 locations including a Chipotlane
“2023 was an outstanding year where we delivered strong transaction growth driven by throughput and menu innovation, opened a record number of new restaurants, surpassed $3 million in AUVs and formed our first international partnership,” said Brian Niccol, Chairman and CEO, Chipotle. “I am more confident than ever that we have the right people and the right strategy to achieve our long-term growth goals of reaching 7,000 restaurants in North America, $4 million in AUVs, expanding our industry leading margins and returns and furthering our purpose of Cultivating a Better World globally.”
Results for the three months ended December 31, 2023:
Total revenue in the fourth quarter was $2.5 billion, an increase of 15.4% compared to the fourth quarter of 2022. The increase in total revenue was driven by an 8.4% increase in comparable restaurant sales attributable to higher transactions of 7.4% and an increase in average check of 1.0%, and to a lesser extent, new restaurant openings. Digital sales represented 36.1% of total food and beverage revenue.
We opened 121 new restaurants during the fourth quarter with 110 locations including a Chipotlane. These formats continue to perform well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns.
Food, beverage and packaging costs in the fourth quarter were 29.7% of total revenue, an increase of 40 basis points compared to the fourth quarter of 2022. Food costs increased due to a higher mix of beef as well as inflation across the menu, most notably higher costs for beef, produce, and queso. These increases were partially offset by the benefit of menu price increases and, to a lesser extent, lower paper costs.
Restaurant level operating margin in the fourth quarter was 25.4% compared to 24.0% in the fourth quarter of 2022. The improvement was primarily due to the benefit of sales leverage and, to a lesser extent, lower paper costs. These decreases were partially offset by higher inflation across several food costs and, to a lesser extent, wage inflation.
General and administrative expenses for the fourth quarter were $169.2 million on a GAAP basis, or $170.0 million1 on a non-GAAP basis, excluding a $0.8 million reduction in contingencies related to certain legal proceedings. GAAP and non-GAAP general and administrative expenses for the fourth quarter also include $122.0 million of underlying general and administrative expenses, $35.7 million of non-cash stock compensation, $10.1 million of higher bonus accruals and payroll taxes on equity vesting and exercises and $2.2 million of other costs, primarily related to our upcoming All Managers Conference scheduled for the first quarter of 2024.
The effective income tax rate for the fourth quarter was 26.2% compared to 26.3% in the fourth quarter of 2022. The slight decrease in the tax rate was primarily due to an increase in tax benefits from option exercises and equity vesting, partially offset by an increase in tax reserves and nondeductible expenses.
Net income for the fourth quarter was $282.1 million, or $10.21 per diluted share, compared to $223.7 million, or $8.02 per diluted share, in the fourth quarter of 2022. Excluding a $0.15 after-tax impact from expenses related to accelerated depreciation, partially offset by a reduction in contingencies related to certain legal proceedings, adjusted net income was $286.2 million1 and adjusted diluted earnings per share was $10.361.
During the fourth quarter, our Board of Directors approved the investment of up to an additional $200 million, exclusive of commissions, to repurchase shares of our common stock, subject to market conditions. Including this repurchase authorization, $424.1 million was available as of December 31, 2023. The repurchase authorization may be modified, suspended, or discontinued at any time. We repurchased $144.3 million of stock at an average price per share of $1,935.80 during the fourth quarter.
Results for the full year ended December 31, 2023:
Total revenue for 2023 was $9.9 billion, an increase of 14.3% compared to 2022. The increase in total revenue was driven by a 7.9% increase in comparable restaurant sales attributable to higher transactions of 5.0% and an increase in average check of 2.9% and, to a lesser extent, new restaurant openings. Digital sales represented 37.4% of total food and beverage revenue.
We opened 271 new restaurants during 2023, bringing the total restaurant count at year-end to 3,437. Of the 271 new restaurants opened during the year, 238 locations included a Chipotlane. We had a total of 811 Chipotlanes as of year-end, which includes conversions of existing restaurants.
Food, beverage and packaging costs for 2023 were 29.5% of total revenue, a decrease of 60 basis points compared to 2022. Food costs benefited from menu price increases and, to a lesser extent, lower avocado costs. These benefits were partially offset by inflation across several ingredient costs, most notably beef, tortillas, and queso.
Restaurant level operating margin for 2023 was 26.2% compared to 23.9% in 2022. The improvement was primarily due to the benefit of sales leverage and, to a lesser extent, lower avocado prices. These decreases were partially offset by higher inflation across several food costs and, to a lesser extent, wage inflation.
General and administrative expenses for 2023 were $633.6 million on a GAAP basis, or $629.6 million1 on a non-GAAP basis, excluding $4.8 million of corporate restructuring costs and a $0.8 million reduction in contingencies related to certain legal proceedings. GAAP and non-GAAP General and administrative expenses for full year 2023 also include $478.9 million of underlying general and administrative expenses, $118.5 million of non-cash stock compensation, $25.3 million of higher bonus accruals and payroll taxes on equity vesting and exercises and $6.9 million of other costs, primarily related to our upcoming All Managers Conference scheduled for the first quarter of 2024.
The effective income tax rate for 2023 was 24.2% compared to 23.9% in 2022. The increase in the tax rate was primarily due to fewer tax benefits related to option exercises and equity vesting.
Net income for 2023 was $1.23 billion, or $44.34 per diluted share, compared to net income of $899.1 million, or $32.04 per diluted share for 2022. Excluding a $0.52 after-tax impact from expenses related to restaurant and corporate level impairment and closure costs, accelerated depreciation, corporate restructuring, partially offset by a reduction in contingencies related to certain legal proceedings, adjusted net income for 2023 was $1.24 billion1 and adjusted diluted earnings per share was $44.861.
During 2023 we repurchased a total of $589.8 million of stock at an average price per share of $1,827.46.
More information will be available in our Annual Report on Form 10-K, which will be filed with the SEC in early February 2024.
Outlook
For 2024, management is anticipating the following:
Full year comparable restaurant sales growth in the mid-single digit range
285 to 315 new restaurant openings, which assumes developer, permit, inspection, and utility delays do not worsen
An estimated underlying effective full year tax rate between 25% and 27% before discrete items
Definitions
The following definitions apply to these terms as used throughout this release:
Comparable restaurant sales, or sales comps, and comparable restaurant transactions, represent the change in period-over-period total revenue or transactions for restaurants in operation for at least 13 full calendar months.
Average restaurant sales refer to the average trailing 12-month food and beverage revenue for restaurants in operation for at least 12 full calendar months.
Restaurant level operating margin represents total revenue less direct restaurant operating costs, expressed as a percent of total revenue.
Digital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators. Digital sales include revenue deferrals associated with Chipotle Rewards.
Conference Call Details
Chipotle will host a conference call on Tuesday, February 6, 2024, at 4:30 PM Eastern time to discuss fourth quarter and full year 2023 financial results, as well as provide a business update for the 2024 first quarter.
The conference call can be accessed live over the phone by dialing 1-888-317-6003, or for international callers by dialing 1-412-317-6061, and use code: 2191312. The call will be webcast live from the company’s website on the investor relations page at ir.chipotle.com/events. An archived webcast will be available approximately one hour after the end of the call.
About Chipotle
Chipotle Mexican Grill, Inc. (NYSE: CMG) is cultivating a better world by serving responsibly sourced, classically-cooked, real food with wholesome ingredients without artificial colors, flavors or preservatives. Chipotle had over 3,400 restaurants as of December 31, 2023, in the United States, Canada, the United Kingdom, France and Germany and is the only restaurant company of its size that owns and operates all its restaurants in North America and Europe. Chipotle is ranked on the Fortune 500 and is recognized on Fortune’s Most Admired Companies 2024 list and Time Magazine’s Most Influential Companies. With over 115,000 employees passionate about providing a great guest experience, Chipotle is a longtime leader and innovator in the food industry. Chipotle is committed to making its food more accessible to everyone while continuing to be a brand with a demonstrated purpose as it leads the way in digital, technology and sustainable business practices. For more information or to place an order online, visit WWW.CHIPOTLE.COM.
Forward-Looking Statements
Certain statements in this press release and in the February 6, 2024, conference call are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements under “Outlook” about our anticipated full year 2024 comparable restaurant sales growth, goals for number of new restaurant openings, and estimated underlying effective full year tax rate, as well as statements about first quarter 2024 business results to date, expected restaurants with Chipotlanes and rate of expansion, future labor costs, future general and administrative and other costs, future estimated tax rates and future long-term prospects. We use words such as “anticipate”, “believe”, “could”, “should”, “may”, “approximately”, “estimate”, “expect”, “intend”, “project”, “target”, “goal” 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 currently available operating, financial and competitive information available to us as of the date of this release 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, including but not limited to: increasing wage inflation and the competitive labor market, including as a result of regulations such as California AB 1228, which impacts our ability to attract and retain qualified employees and has resulted in occasional staffing shortages; the impact of any union organizing efforts and our responses to such efforts; increasing supply costs (including beef, tortillas, queso, salsa, beans and rice); risks of food safety incidents and food-borne illnesses; risks associated with our reliance on certain information technology systems and potential material failures or interruptions; privacy and cyber security risks, including risk of breaches, unauthorized access, theft, modification, destruction or ransom of guest or employee personal or confidential information stored on our network or the network of third party providers; the impact of competition, including from sources outside the restaurant industry; the financial impact of increasing our average hourly wages; the impact of federal, state or local government regulations relating to our employees, employment practices, restaurant design and construction, and the sale of food or alcoholic beverages; our ability to achieve our planned growth, such as the costs and availability of suitable new restaurant sites, construction materials and contractors and the expected costs to accelerate our international expansion through franchise restaurants in the Middle East; increases in ingredient and other operating costs due to inflation, global conflicts, climate change, our Food with Integrity philosophy, tariffs or trade restrictions and supply shortages; the uncertainty of our ability to achieve expected levels of comparable restaurant sales due to factors such as changes in guests’ perceptions of our brand, including as a result of actual or rumored food safety concerns or other negative publicity, decreased consumer spending (including as a result of higher inflation, mass layoffs, fear of possible recession and higher energy prices), or the inability to increase menu prices or realize the benefits of menu price increases; risks associated with our digital business, including risks arising from our reliance on third party delivery services; risks relating to litigation, including possible governmental actions and potential class action litigation related to food safety incidents, cybersecurity incidents, employment or privacy laws, advertising claims or other matters; and other risk factors described from time to time in our SEC reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q, all of which are available on the investor relations page of our website at ir.Chipotle.com.
|
1 Restaurant level operating margin, adjusted diluted earnings per share, adjusted net income, non-GAAP general and administrative expenses, adjusted depreciation and amortization, and non-GAAP effective income tax rate are non-GAAP financial measures. Reconciliations to GAAP measures and further information are set forth in the table at the end of this press release. |
|
CHIPOTLE MEXICAN GRILL, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) |
|||||||||||
|
Three months ended December 31, |
|||||||||||
|
2023 |
2022 |
||||||||||
|
Food and beverage revenue |
$ |
2,499,567 |
99.3 |
% |
$ |
2,163,907 |
99.2 |
% |
|||
|
Delivery service revenue |
16,753 |
0.7 |
16,692 |
0.8 |
|||||||
|
Total revenue |
2,516,320 |
100.0 |
2,180,599 |
100.0 |
|||||||
|
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): |
|||||||||||
|
Food, beverage and packaging |
747,155 |
29.7 |
638,851 |
29.3 |
|||||||
|
Labor |
629,228 |
25.0 |
558,914 |
25.6 |
|||||||
|
Occupancy |
131,167 |
5.2 |
118,648 |
5.4 |
|||||||
|
Other operating costs |
370,466 |
14.7 |
341,644 |
15.7 |
|||||||
|
General and administrative expenses |
169,247 |
6.7 |
135,073 |
6.2 |
|||||||
|
Depreciation and amortization |
85,492 |
3.4 |
74,012 |
3.4 |
|||||||
|
Pre-opening costs |
13,590 |
0.5 |
11,341 |
0.5 |
|||||||
|
Impairment, closure costs, and asset disposals |
6,528 |
0.3 |
5,785 |
0.3 |
|||||||
|
Total operating expenses |
2,152,873 |
85.6 |
1,884,268 |
86.4 |
|||||||
|
Income from operations |
363,447 |
14.4 |
296,331 |
13.6 |
|||||||
|
Interest and other income, net |
18,906 |
0.8 |
7,057 |
0.3 |
|||||||
|
Income before income taxes |
382,353 |
15.2 |
303,388 |
13.9 |
|||||||
|
Provision for income taxes |
(100,267) |
(4.0) |
(79,661) |
(3.7) |
|||||||
|
Net income |
$ |
282,086 |
11.2 |
% |
$ |
223,727 |
10.3 |
% |
|||
|
Earnings per share: |
|||||||||||
|
Basic |
$ |
10.28 |
$ |
8.08 |
|||||||
|
Diluted |
$ |
10.21 |
$ |
8.02 |
|||||||
|
Weighted-average common shares outstanding: |
|||||||||||
|
Basic |
27,440 |
27,684 |
|||||||||
|
Diluted |
27,621 |
27,899 |
|||||||||
|
CHIPOTLE MEXICAN GRILL, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) |
|||||||||||
|
Year ended December 31, |
|||||||||||
|
2023 |
2022 |
||||||||||
|
(unaudited) |
|||||||||||
|
Food and beverage revenue |
$ |
9,804,124 |
99.3 |
% |
$ |
8,558,001 |
99.1 |
% |
|||
|
Delivery service revenue |
67,525 |
0.7 |
76,651 |
0.9 |
|||||||
|
Total revenue |
9,871,649 |
100.0 |
8,634,652 |
100.0 |
|||||||
|
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): |
|||||||||||
|
Food, beverage and packaging |
2,912,564 |
29.5 |
2,602,245 |
30.1 |
|||||||
|
Labor |
2,440,982 |
24.7 |
2,197,958 |
25.5 |
|||||||
|
Occupancy |
503,264 |
5.1 |
460,425 |
5.3 |
|||||||
|
Other operating costs |
1,428,747 |
14.5 |
1,311,905 |
15.2 |
|||||||
|
General and administrative expenses |
633,584 |
6.4 |
564,191 |
6.5 |
|||||||
|
Depreciation and amortization |
319,394 |
3.2 |
286,826 |
3.3 |
|||||||
|
Pre-opening costs |
36,931 |
0.4 |
29,560 |
0.3 |
|||||||
|
Impairment, closure costs, and asset disposals |
38,370 |
0.4 |
21,139 |
0.2 |
|||||||
|
Total operating expenses |
8,313,836 |
84.2 |
7,474,249 |
86.6 |
|||||||
|
Income from operations |
1,557,813 |
15.8 |
1,160,403 |
13.4 |
|||||||
|
Interest and other income, net |
62,693 |
0.6 |
21,128 |
0.2 |
|||||||
|
Income before income taxes |
1,620,506 |
16.4 |
1,181,531 |
13.7 |
|||||||
|
Provision for income taxes |
(391,769) |
(4.0) |
(282,430) |
(3.3) |
|||||||
|
Net income |
$ |
1,228,737 |
12.4 |
% |
$ |
899,101 |
10.4 |
% |
|||
|
Earnings per share: |
|||||||||||
|
Basic |
$ |
44.59 |
$ |
32.28 |
|||||||
|
Diluted |
$ |
44.34 |
$ |
32.04 |
|||||||
|
Weighted-average common shares outstanding: |
|||||||||||
|
Basic |
27,555 |
27,851 |
|||||||||
|
Diluted |
27,710 |
28,062 |
|||||||||
|
CHIPOTLE MEXICAN GRILL, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) |
|||||
|
December 31, |
|||||
|
2023 |
2022 |
||||
|
(unaudited) |
|||||
|
Assets |
|||||
|
Current assets: |
|||||
|
Cash and cash equivalents |
$ |
560,609 |
$ |
384,000 |
|
|
Accounts receivable, net |
115,535 |
106,880 |
|||
|
Inventory |
39,309 |
35,668 |
|||
|
Prepaid expenses and other current assets |
117,462 |
86,412 |
|||
|
Income tax receivable |
52,960 |
47,741 |
|||
|
Investments |
734,838 |
515,136 |
|||
|
Total current assets |
1,620,713 |
1,175,837 |
|||
|
Leasehold improvements, property and equipment, net |
2,170,038 |
1,951,147 |
|||
|
Long-term investments |
564,488 |
388,055 |
|||
|
Restricted cash |
25,554 |
24,966 |
|||
|
Operating lease assets |
3,578,548 |
3,302,402 |
|||
|
Other assets |
63,082 |
63,158 |
|||
|
Goodwill |
21,939 |
21,939 |
|||
|
Total assets |
$ |
8,044,362 |
$ |
6,927,504 |
|
|
Liabilities and shareholders’ equity |
|||||
|
Current liabilities: |
|||||
|
Accounts payable |
$ |
197,646 |
$ |
184,566 |
|
|
Accrued payroll and benefits |
227,537 |
170,456 |
|||
|
Accrued liabilities |
147,688 |
147,539 |
|||
|
Unearned revenue |
209,680 |
183,071 |
|||
|
Current operating lease liabilities |
248,074 |
236,248 |
|||
|
Total current liabilities |
1,030,625 |
921,880 |
|||
|
Long-term operating lease liabilities |
3,803,551 |
3,495,162 |
|||
|
Deferred income tax liabilities |
89,109 |
98,623 |
|||
|
Other liabilities |
58,870 |
43,816 |
|||
|
Total liabilities |
4,982,155 |
4,559,481 |
|||
|
Shareholders’ equity: |
|||||
|
Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of December |
– |
– |
|||
|
Common stock, $0.01 par value, 230,000 shares authorized, 37,483 and 37,320 shares issued as |
375 |
373 |
|||
|
Additional paid-in capital |
1,956,160 |
1,829,304 |
|||
|
Treasury stock, at cost, 10,057 and 9,693 common shares as of December 31, 2023 and |
(4,944,656) |
(4,282,014) |
|||
|
Accumulated other comprehensive loss |
(6,657) |
(7,888) |
|||
|
Retained earnings |
6,056,985 |
4,828,248 |
|||
|
Total shareholders’ equity |
3,062,207 |
2,368,023 |
|||
|
Total liabilities and shareholders’ equity |
$ |
8,044,362 |
$ |
6,927,504 |
|
|
CHIPOTLE MEXICAN GRILL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
|||||
|
Year ended December 31, |
|||||
|
2023 |
2022 |
||||
|
(unaudited) |
|||||
|
Operating activities |
|||||
|
Net income |
$ |
1,228,737 |
$ |
899,101 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||
|
Depreciation and amortization |
319,394 |
286,826 |
|||
|
Deferred income tax provision |
(9,505) |
(43,195) |
|||
|
Impairment, closure costs, and asset disposals |
37,025 |
20,738 |
|||
|
Provision for credit losses |
1,570 |
(760) |
|||
|
Stock-based compensation expense |
124,016 |
98,030 |
|||
|
Other |
(13,080) |
(16,202) |
|||
|
Changes in operating assets and liabilities: |
|||||
|
Accounts receivable |
(11,216) |
(14,026) |
|||
|
Inventory |
(3,649) |
(3,011) |
|||
|
Prepaid expenses and other current assets |
(39,211) |
(14,660) |
|||
|
Operating lease assets |
254,241 |
234,273 |
|||
|
Other assets |
4,204 |
(346) |
|||
|
Accounts payable |
5,313 |
18,208 |
|||
|
Accrued payroll and benefits |
57,048 |
9,864 |
|||
|
Accrued liabilities |
3,188 |
(27,964) |
|||
|
Unearned revenue |
35,685 |
33,374 |
|||
|
Income tax payable/receivable |
(5,237) |
46,262 |
|||
|
Operating lease liabilities |
(214,477) |
(207,186) |
|||
|
Other long-term liabilities |
9,431 |
3,853 |
|||
|
Net cash provided by operating activities |
1,783,477 |
1,323,179 |
|||
|
Investing activities |
|||||
|
Purchases of leasehold improvements, property and equipment |
(560,731) |
(479,164) |
|||
|
Purchases of investments |
(1,115,131) |
(614,416) |
|||
|
Maturities of investments |
729,853 |
263,548 |
|||
|
Net cash used in investing activities |
(946,009) |
(830,032) |
|||
|
Financing activities |
|||||
|
Acquisition of treasury stock |
(592,349) |
(830,140) |
|||
|
Tax withholding on stock-based compensation awards |
(69,146) |
(98,970) |
|||
|
Other financing activities |
843 |
(294) |
|||
|
Net cash used in financing activities |
(660,652) |
(929,404) |
|||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
381 |
(1,007) |
|||
|
Net change in cash, cash equivalents, and restricted cash |
177,197 |
(437,264) |
|||
|
Cash, cash equivalents, and restricted cash at beginning of year |
408,966 |
846,230 |
|||
|
Cash, cash equivalents, and restricted cash at end of year |
$ |
586,163 |
$ |
408,966 |
|
|
Supplemental disclosures of cash flow information |
|||||
|
Income taxes paid |
$ |
400,229 |
$ |
275,796 |
|
|
Purchases of leasehold improvements, property and equipment accrued in accounts payable and |
$ |
76,415 |
$ |
72,021 |
|
|
Acquisition of treasury stock accrued in accounts payable and accrued liabilities |
$ |
5,643 |
$ |
4,497 |
|
|
CHIPOTLE MEXICAN GRILL, INC. SUPPLEMENTAL FINANCIAL AND OTHER DATA (dollars in thousands) (unaudited) |
|||||||||||||||
|
For the three months ended |
|||||||||||||||
|
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
|||||||||||
|
2023 |
2023 |
2023 |
2023 |
2022 |
|||||||||||
|
Number of restaurants opened |
121 |
62 |
47 |
41 |
100 |
||||||||||
|
Chipotle permanent closures |
(2) |
(1) |
– |
– |
– |
||||||||||
|
Chipotle relocations |
(3) |
(2) |
(3) |
(4) |
(3) |
||||||||||
|
Non-Chipotle permanent closures |
– |
(6) |
– |
– |
– |
||||||||||
|
Number of restaurants at end of period |
3,437 |
3,321 |
3,268 |
3,224 |
3,187 |
||||||||||
|
Average restaurant sales |
$ |
3,018 |
$ |
2,972 |
$ |
2,941 |
$ |
2,892 |
$ |
2,824 |
|||||
|
Comparable restaurant sales increase |
8.4 % |
5.0 % |
7.4 % |
10.9 % |
5.6 % |
||||||||||
CHIPOTLE MEXICAN GRILL, INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
The following tables provide a reconciliation of non-GAAP financial measures presented in the text above to the most directly comparable financial measures calculated and presented in accordance with GAAP.
Adjusted net income is net income excluding expenses related to restaurant and corporate asset impairment, corporate restructuring, certain legal proceedings, stock-based compensation modification expense, unrealized gains on equity investments, separation costs, accelerated depreciation and certain other costs. Adjusted general and administrative expense is general and administrative expense excluding corporate restructuring expenses, certain legal proceedings, stock-based compensation modification expense, separation costs, and certain other costs. Adjusted depreciation and amortization is depreciation and amortization expense excluding certain accelerated depreciation expense. The adjusted effective income tax rate is the effective income tax rate adjusted to reflect the after tax impact of non-GAAP adjustments. Restaurant Level Operating Margin, a non-GAAP financial measure, is equal to the revenues generated by our restaurants less their direct operating costs which consist of food, beverage and packaging, labor, occupancy and other operating costs. This performance measure primarily includes the costs that restaurant level managers can directly control and excludes other costs that are essential to conduct our business. Management uses restaurant level operating margin as a measure of restaurant performance. Management believes restaurant level operating margin is useful to investors in that it highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures. We present these non-GAAP measures in order to facilitate meaningful evaluation of our operating performance across periods. These adjustments are intended to provide greater transparency of underlying performance and to allow investors to evaluate our business on the same basis as our management, which uses these non-GAAP measures in evaluating the company’s performance. Our adjusted net income, adjusted diluted earnings per share, adjusted general and administrative expenses, adjusted effective income tax rate and restaurant level operating margin measures may not be comparable to other companies’ adjusted measures. These adjustments are not necessarily indicative of what our actual financial performance would have been during the periods presented and should be viewed in addition to, and not as an alternative to, our results prepared in accordance with GAAP. Further details regarding these adjustments are included in the tables below.
|
CHIPOTLE MEXICAN GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Net Income and Adjusted Diluted Earnings per Share (in thousands, except per share amounts) (unaudited) |
|||||||||||
|
Three months ended |
Year ended |
||||||||||
|
December 31, |
December 31, |
||||||||||
|
2023 |
2022 |
2023 |
2022 |
||||||||
|
Net income |
$ |
282,086 |
$ |
223,727 |
$ |
1,228,737 |
$ |
899,101 |
|||
|
Non-GAAP adjustments: |
|||||||||||
|
Impairment and exit costs: |
|||||||||||
|
Restaurant asset impairment and other restaurant exit costs(1) |
– |
– |
4,765 |
1,738 |
|||||||
|
Corporate asset impairment(2) |
– |
– |
3,735 |
961 |
|||||||
|
Corporate Restructuring: |
|||||||||||
|
Duplicate rent expense(3) |
– |
881 |
– |
3,937 |
|||||||
|
Employee related and other restructuring costs(4) |
– |
– |
4,829 |
– |
|||||||
|
Legal proceedings(5) |
(797) |
3,718 |
(797) |
9,516 |
|||||||
|
Stock-based compensation modification expense(6) |
– |
1,117 |
– |
7,411 |
|||||||
|
Unrealized gain on equity investments(7) |
– |
– |
– |
(10,410) |
|||||||
|
Separation costs(8) |
– |
– |
– |
3,538 |
|||||||
|
Accelerated depreciation(9) |
6,388 |
– |
6,388 |
– |
|||||||
|
Total non-GAAP adjustments |
$ |
5,591 |
$ |
5,716 |
$ |
18,920 |
$ |
16,691 |
|||
|
Tax effect of non-GAAP adjustments above(10) |
(1,495) |
1,951 |
(4,607) |
4,003 |
|||||||
|
After tax impact of non-GAAP adjustments |
$ |
4,096 |
$ |
7,667 |
$ |
14,313 |
$ |
20,694 |
|||
|
Adjusted net income |
$ |
286,182 |
$ |
231,394 |
$ |
1,243,050 |
$ |
919,795 |
|||
|
Diluted weighted-average number of common shares outstanding |
27,621 |
27,899 |
27,710 |
28,062 |
|||||||
|
Diluted earnings per share |
$ |
10.21 |
$ |
8.02 |
$ |
44.34 |
$ |
32.04 |
|||
|
Adjusted diluted earnings per share |
$ |
10.36 |
$ |
8.29 |
$ |
44.86 |
$ |
32.78 |
|||
|
(1) Operating lease asset and leasehold improvements, property, plant and equipment impairment charges and other expenses for |
|||||||||||
|
(2) Operating lease asset and leasehold improvements, property, plant and equipment impairment charges and other expenses for |
|||||||||||
|
(3) Duplicate rent expense for the corporate headquarter relocation and office consolidation announced in May 2018. |
|||||||||||
|
(4) Charges for third-party vendors, stock-based compensation, and employee severance related to the May 2023 optimization of |
|||||||||||
|
(5) Charges/(reduction) for estimated settlements for distinct legal matters that exceeded or are expected to exceed typical costs for |
|||||||||||
|
(6) Charges for a COVID-19 related modification made in December 2020 to our 2018 performance shares. |
|||||||||||
|
(7) Unrealized gain on equity investments based on a subsequent investment by an unrelated party in one of our investees, which |
|||||||||||
|
(8) Expenses related to an employee separation, which consist of incremental compensation costs net of forfeitures of stock-based |
|||||||||||
|
(9) Accelerated depreciation due to a reduction of the estimated useful lives for certain leasehold improvements. |
|||||||||||
|
(10) Adjustments relate to the tax effect of non-GAAP adjustments, which were determined based on the nature of the underlying |
|||||||||||
|
CHIPOTLE MEXICAN GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted General and Administrative Expenses (in thousands) (unaudited) |
|||||||||||
|
Three months ended |
Year ended |
||||||||||
|
December 31, |
December 31, |
||||||||||
|
2023 |
2022 |
2023 |
2022 |
||||||||
|
General and administrative expenses |
$ |
169,247 |
$ |
135,073 |
$ |
633,584 |
$ |
564,191 |
|||
|
Non-GAAP adjustments: |
|||||||||||
|
Restructuring expense(1) |
– |
(881) |
(4,829) |
(3,937) |
|||||||
|
Legal proceedings(2) |
797 |
(3,718) |
797 |
(9,516) |
|||||||
|
Stock-based compensation modification expense(3) |
– |
(1,117) |
– |
(7,411) |
|||||||
|
Separation costs(4) |
– |
– |
– |
(3,538) |
|||||||
|
Total non-GAAP adjustments |
$ |
797 |
$ |
(5,716) |
$ |
(4,032) |
$ |
(24,402) |
|||
|
Adjusted general and administrative expenses |
$ |
170,044 |
$ |
129,357 |
$ |
629,552 |
$ |
539,789 |
|||
|
(1) For the year ended December 31, 2023, third-party vendor expense, stock-based compensation, and employee severance related to |
|||||||||||
|
(2) Charges/(reduction) for estimated settlements for distinct legal matters that exceeded or are expected to exceed typical costs for these |
|||||||||||
|
(3) Charges for a COVID-19 related modification made in December 2020 to our 2018 performance shares. |
|||||||||||
|
(4) Expenses related to an employee separation, which consisted of incremental compensation costs net of forfeitures of stock-based |
|||||||||||
|
CHIPOTLE MEXICAN GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Depreciation and Amortization (in thousands) (unaudited) |
|||||||||||
|
Three months ended |
Year ended |
||||||||||
|
December 31, |
December 31, |
||||||||||
|
2023 |
2022 |
2023 |
2022 |
||||||||
|
Depreciation and amortization |
$ |
85,492 |
$ |
74,012 |
$ |
319,394 |
$ |
286,826 |
|||
|
Non-GAAP adjustments: |
|||||||||||
|
Accelerated depreciation(1) |
(6,388) |
– |
(6,388) |
– |
|||||||
|
Total non-GAAP adjustments |
$ |
(6,388) |
$ |
– |
$ |
(6,388) |
$ |
– |
|||
|
Adjusted depreciation and amortization |
$ |
79,104 |
$ |
74,012 |
$ |
313,006 |
$ |
286,826 |
|||
|
Adjusted depreciation and amortization as a percent of total revenue |
3.1 % |
3.4 % |
3.2 % |
3.3 % |
|||||||
|
(1) Accelerated depreciation due to a reduction of the estimated useful lives for certain leasehold improvements. |
|||||||||||
|
CHIPOTLE MEXICAN GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Effective Income Tax Rate (unaudited) |
|||||||||||
|
Three months ended |
Year ended |
||||||||||
|
December 31, |
December 31, |
||||||||||
|
2023 |
2022 |
2023 |
2022 |
||||||||
|
Effective income tax rate |
26.2 |
% |
26.3 |
% |
24.2 |
% |
23.9 |
% |
|||
|
Tax impact of non-GAAP adjustments(1) |
– |
(1.2) |
– |
(0.7) |
|||||||
|
Adjusted effective income tax rate |
26.2 |
% |
25.1 |
% |
24.2 |
% |
23.2 |
% |
|||
|
(1) Adjustments related to the tax effect of non-GAAP adjustments, which were determined based on the nature of the underlying non- |
|||||||||||
|
CHIPOTLE MEXICAN GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Restaurant Level Operating Margin (in thousands) (unaudited) |
|||||||||||
|
Three months ended December 31, |
|||||||||||
|
2023 |
Percent of |
2022 |
Percent of |
||||||||
|
Income from operations |
$ |
363,447 |
14.4 |
% |
$ |
296,331 |
13.6 |
% |
|||
|
Non-GAAP Adjustments: |
|||||||||||
|
General and administrative expenses |
169,247 |
6.7 |
135,073 |
6.2 |
|||||||
|
Depreciation and amortization |
85,492 |
3.4 |
74,012 |
3.4 |
|||||||
|
Pre-opening costs |
13,590 |
0.5 |
11,341 |
0.5 |
|||||||
|
Impairment, closure costs, and asset disposals |
6,528 |
0.3 |
5,785 |
0.3 |
|||||||
|
Total non-GAAP Adjustments |
$ |
274,857 |
10.9 |
% |
$ |
226,211 |
10.4 |
% |
|||
|
Restaurant level operating margin |
$ |
638,304 |
25.4 |
% |
$ |
522,542 |
24.0 |
% |
|||
|
Year ended December 31, |
|||||||||||
|
2023 |
Percent of |
2022 |
Percent of |
||||||||
|
Income from operations |
$ |
1,557,813 |
15.8 |
% |
$ |
1,160,403 |
13.4 |
% |
|||
|
Non-GAAP Adjustments: |
|||||||||||
|
General and administrative expenses |
633,584 |
6.4 |
564,191 |
6.5 |
|||||||
|
Depreciation and amortization |
319,394 |
3.2 |
286,826 |
3.3 |
|||||||
|
Pre-opening costs |
36,931 |
0.4 |
29,560 |
0.3 |
|||||||
|
Impairment, closure costs, and asset disposals |
38,370 |
0.4 |
21,139 |
0.2 |
|||||||
|
Total non-GAAP Adjustments |
$ |
1,028,279 |
10.4 |
% |
$ |
901,716 |
10.4 |
% |
|||
|
Restaurant level operating margin |
$ |
2,586,092 |
26.2 |
% |
$ |
2,062,119 |
23.9 |
% |
|||
SOURCE Chipotle Mexican Grill, Inc.