CMG: Chipotle Mexican Grill, Inc. (NYSE: CMG)

Chipotle Mexican Grill, Inc. (NYSE: CMG) recently stated fiscal results for its 3rd-quarter finished September 30, 2k19.

3rd-quarter highlights, year over year:

  • Revenue raised 14.60 percent to $1.40B
  • Comparable restaurant sales raised 11.00 percent, net of 10.0 bps from loyalty deferral, and included nearly 7.50 percent of comparable restaurant transactions growth
  • Digital sales grew 87.90 percent and accounted for 18.30 percent of sales for the quarter
  • Restaurant-level operating margin was 20.80 percent, a boost of 210.0 basis points
  • Diluted earnings for each share was $3.470, net of a $0.350 after-tax impact from costs related to restaurant asset impairment, corporate restructuring, and certain other costs, a 155.10 percent incline from $1.360. Adjusted diluted earnings for each share apart from these charges was $3.820, a 76.90 percent incline from $2.160.1
  • Opened 25 new restaurants counting one relocation, and closed one restaurant

Results for the three months finished September 30, 2k19:

Revenue in the 3rd-quarter raised to $1.40B, a boost of 14.60 percent contrast with the similar quarter a year ago. The incline was driven by an 11.00 percent incline in comparable restaurant sales, net of a 10.0 basis point as a result of deferred revenue from our Chipotle Rewards loyalty program.  Comparable restaurant sales improved because of a nearly 7.50 percent incline in comparable restaurant transactions and a 3.50 percent incline in the average check, which includes a benefit from menu price inclines that were implemented during 2k18.

We opened 25 new restaurants during the quarter counting one relocation, and closed one restaurant, bringing the total restaurant count to 2,546. Based on the early success of Chipotlanes, we shifted our real estate strategy to seek more sites that can accommodate a Chipotlane. As a result, of the more than 80 restaurants presently under construction, about half of them will have a Chipotlane, which will result in a total of about 60 Chipotlanes by the end of 2k19. Given the longer construction timeline associated with Chipotlanes, some of the new openings are likely to shift from Q4 into early 2k20, so we expect our total openings for 2k19 to fall at or slightly below the low end of our FY 2k19 range of 140 to 155 openings. For 2k20, we anticipate opening 150 – 165 new restaurants, with more than half counting a Chipotlane.

Food, beverage and packaging costs were 33.20 percent of revenue, a decline of 20.0 basis points in contrast to the 3rd-quarter of 2k18. The decline was mainly because of menu price inclines nationwide at the end of 2k18, partially offset by higher costs of several ingredients.

Restaurant-level operating margin was 20.80 percent, a boost from 18.70 percent in the 3rd-quarter of 2k18.  The improvement was driven mainly by leverage from the comparable restaurant sales incline, partially offset by wage inflation at the crew level, higher costs of several ingredients, and raised delivery costs.

General and administrative costs for the quarter were $115.10M on a GAAP basis, or $104.80M on a non-GAAP basis, apart from $7.60M for settlements of several distinct legal matters and $2.70M related to transformation costs. GAAP and non-GAAP general and administrative costs for the 3rd-quarter of 2k19 also include underlying general and administrative costs totalling $72.00M, $25.10M related to non-cash stock compensation, $4.80M related to higher bonus accruals from our strong operating performance and payroll taxes on stock option exercises, and $2.90M related to other costs, counting our forthcoming All Manager Conference.

The effective income tax rate for the three months finished September 30, 2k19, was 17.90 percent, a decline from 36.80 percent for the three months finished September 30, 2k18, mainly because of excess tax benefits for stock-based compensation, a reduction in non-deductible employee meals, changes in tax position because of legislative guidance, and a non-recurring prior year tax cost attributable to tax reform in the comparable duration.

Net income was $98.60M, or $3.470 for each diluted share, a boost from $38.20M, or $1.360 for each diluted share, in the 3rd-quarter of 2k18. Apart From the impact of restaurant closure costs, corporate restructuring, agreements to settle several legal matters, and certain other costs, adjusted net income was $108.30M and adjusted diluted earnings for each share was $3.820.

Outlook

For 2k19, the administration is anticipating the following:

  • Being at the top end of our previous high single-digit comparable restaurant sales growth guidance
  • Being at or slightly below our prior guidance of 140 to 155 new restaurant openings
  • An estimated underlying effective Q4 tax rate in the range of 26.00 percent to 29.00 percent, before the impact of any stock option exercises

For 2k20, administration is anticipating the following:

  • 150.00 to 165.00 new restaurant openings