Chipotle Mexican Grill, Inc. Announces Fourth Quarter and Full Year 2013 Results

  Chipotle Mexican Grill, Inc. Announces Fourth Quarter and Full Year 2013
  Results

Business Wire

DENVER -- January 30, 2014

Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for
its fourth quarter and full year ended December 31, 2013.

Highlights for the fourth quarter of 2013 as compared to the fourth quarter of
2012 include:

  *Revenue increased 20.7% to $844.1 million
  *Comparable restaurant sales increased 9.3%
  *Restaurant level operating margin was 25.6%, an increase of 100 basis
    points
  *Net income was $79.6 million, an increase of 29.8%
  *Diluted earnings per share was $2.53, an increase of 29.7%
  *Opened 56 new restaurants

Highlights for the twelve months ended December 31, 2013 as compared to the
prior year include:

  *Revenue increased 17.7% to $3.21 billion
  *Comparable restaurant sales increased 5.6%
  *Restaurant level operating margin was 26.6%, a decrease of 50 basis points
  *Net income was $327.4 million, an increase of 17.8%
  *Diluted earnings per share was $10.47, an increase of 19.7%
  *Opened 185 new restaurants

“We are very proud of our accomplishments during 2013. Over the past 20 years,
we have created a very unique and special restaurant company. Chipotle is a
place that appeals to a diverse customer base throughout the country and
beyond. We offer our customers a range of flavors from a focused selection of
beautiful, top-quality ingredients that are expertly prepared by a passionate
team of extraordinary people. Our focus on our unique people and food cultures
has created an impressive demand for a restaurant experience that is
redefining fast food for the better,” said Steve Ells, Founder, Chairman and
Co-CEO of Chipotle.

Results for the fourth quarter 2013

Revenue for the quarter was $844.1 million, up 20.7% from the prior year
period. The growth in revenue was the result of new restaurants not in the
comparable base and a 9.3% increase in comparable restaurant sales. Comparable
restaurant sales growth was primarily driven by the impact of increased
traffic.

During the quarter we opened 56 new restaurants, bringing the total restaurant
count to 1,595.

Food costs were 33.9% of revenue, an increase of 40 basis points driven mostly
by higher avocado costs and to a lesser extent from tomato and corn salsa
costs, partially offset by lower dairy and steak costs.

Restaurant level operating margin was 25.6% in the quarter, an increase of 100
basis points from the prior year period. The increase was due to favorable
sales leverage and lower marketing costs, partially offset by higher food
costs.

G&A costs were 6.6% of revenue, up 40 basis points from the prior year due to
higher bonus expenses and employee taxes. Net income for the fourth quarter of
2013 was $79.6 million, or $2.53 per diluted share, compared to $61.4 million,
or $1.95 per diluted share, in the fourth quarter of 2012.

Results for the full year ended December 31, 2013

Revenue for the full year of 2013 was $3.21 billion, up 17.7% from the prior
year period. The growth in revenue was the result of new restaurants not in
the comparable base and a 5.6% increase in comparable restaurant sales.
Comparable restaurant sales growth was primarily driven by increased traffic.

During the full year 185 new restaurants were opened, bringing the total
restaurant count to 1,595.

Food costs were 33.4% of revenue, an increase of 80 basis points mostly from
higher salsa, meat, and dairy costs.

Restaurant level operating margin was 26.6% for the full year 2013, a decrease
of 50 basis points from the prior year. The decrease was primarily driven by
higher food costs partially offset by favorable sales leverage from higher
restaurant sales.

G&A costs for the full year 2013 were 6.3% of revenue, 40 basis points lower
than the prior year. The decrease as a percent of revenue was driven by costs
in 2012 from our biennial All Managers' Conference and by the positive impact
of comparable restaurant sales growth.

Net income for the full year 2013 was $327.4 million, or $10.47 per diluted
share, compared to $278.0 million, or $8.75 per diluted share for 2012.

“Our fourth quarter and 2013 results demonstrated our ability to focus on and
run great restaurants. Our empowered restaurant teams continued to delight our
customers and provide an exceptional dining experience to our guests as more
people were attracted to and visited our restaurants than ever before,” said
Monty Moran, co-CEO of Chipotle.

Outlook

For 2014, management expects the following:

  *180 – 195 new restaurant openings
  *Low to mid single digit comparable restaurant sales excluding any menu
    price increases
  *An estimated effective tax rate of 39.2%, which excludes federal work
    opportunity and R&D credits, which have not been renewed for 2014.

Definitions

The following definitions apply to these terms as used throughout this
release:

Comparable restaurant sales represent the change in period-over-period sales
for the comparable restaurant base. A restaurant becomes comparable in its
13^th full calendar month of operation.

Average restaurant sales refers to the average trailing 12-month sales for
restaurants in operation for at least 12 full calendar months.

Restaurant level operating margin represents total revenue less restaurant
operating costs, expressed as a percent of total revenue.

Conference Call

Chipotle will host a conference call to discuss complete fourth quarter and
full year 2013 financial results on Thursday, January 30, 2014 at 4:30 PM
Eastern time.

The conference call can be accessed live over the phone by dialing
1-888-401-4674 or for international callers by dialing 1-719-867-0352. A
replay will be available one hour after the call and can be accessed by
dialing 1-877-870-5176 or 1-858-384-5517 for international callers; the
password is 6767597. The replay will be available until February 6, 2014. The
call will be webcast live from the company's website at chipotle.com under the
investor relations section. An archived webcast will be available one hour
after the end of the call.

About Chipotle

Steve Ells, founder, chairman and co-CEO, started Chipotle with the idea that
food served fast did not have to be a typical fast food experience. Today,
Chipotle continues to offer a focused menu of burritos, tacos, burrito bowls
(a burrito without the tortilla) and salads made from fresh, high-quality raw
ingredients, prepared using classic cooking methods and served in a
distinctive atmosphere. Through our vision of Food With Integrity, Chipotle is
seeking better food from using ingredients that are not only fresh, but
that—where possible—are sustainably grown and Responsibly Raised™ with respect
for the animals, the land, and the farmers who produce the food. In order
toachievethis vision, we focus on building a special people culturethat is
centered on creatingteams of top performers empowered to achieve high
standards. This people culture not only leads to a better dining experience
for our customers, it also allows us to develop future leaders from within.
Chipotle opened with a single restaurant in 1993 and currently operates more
than 1,550 restaurants including six ShopHouse Southeast Asian Kitchen
restaurants, and is an investor in an entity that owns and operates one
Pizzeria Locale. For more information, visit Chipotle.com.

Forward-Looking Statements

Certain statements in this press release, including statements regarding the
appeal of and demand for our restaurant experience, as well as statements
under the heading “Outlook” of our expected number of new restaurant openings,
comparable restaurant sales increases, and effective tax rates in 2014, are
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. We use words such as “anticipate”, “believe”, “could”,
“should”, “estimate”, “expect”, “intend”, “may”, “predict”, “project”,
“target”, 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 information available to us as of the date any such
statements are made 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. These risks and uncertainties include, but are
not limited to, the following: the uncertainty of our ability to achieve
expected levels of comparable restaurant sales increases due to factors such
as decreased consumer spending and economic uncertainty or our failure to
attract customers to our brand or retain our existing customers; our possible
inability to increase menu prices or realize the benefits of menu price
increases, or the impact of competition; factors that could affect our ability
to achieve and manage our planned expansion, such as the availability of a
sufficient number of suitable new restaurant sites and the availability of
qualified employees; the performance of new restaurants and their impact on
existing restaurant sales; increases in the cost of food ingredients and other
key supplies; the potential for increased labor costs or difficulty retaining
qualified employees, including as a result of immigration enforcement
activities; security risks associated with the acceptance of electronic
payment cards or electronic storage of confidential customer or employee
information; the risk of food-borne illnesses and other health concerns about
our food; risks relating to our expansion into international markets; the
impact of federal, state or local government regulations relating to our
employees, our restaurant design, or the sale of food or alcoholic beverages;
risks associated with our Food With Integrity strategy, including supply
shortages; the effect of competition in the restaurant industry; risks
relating to litigation and negative publicity; risks that our investments in
new concepts will not be successful; risks related to our marketing and
advertising strategies; our dependence on key personnel; risks relating to our
insurance coverage and self-insurance; the uncertainty of our ability to
protect our name, logo and other proprietary information or the reputation of
our brand; the potential effects of inclement weather; and other risk factors
described from time to time in our SEC reports, including our most recent
annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, all
of which are available on our website at chipotle.com.

                                                                  
Chipotle Mexican Grill, Inc.
Condensed Consolidated Statement of Income and Comprehensive Income
(unaudited)
(in thousands, except per share data)
                                                                       
                                 Three Months ended December 31
                                 2013                    2012
Revenue                          $ 844,147    100.0 %   $ 699,161    100.0 %
Restaurant operating costs
(Exclusive of depreciation and
amortization shown separately
below):
Food, beverage and packaging       285,912     33.9        234,330     33.5
Labor                              193,818     23.0        167,301     23.9
Occupancy                          52,795      6.3         45,391      6.5
Other operating costs              95,389      11.3        80,350      11.5
General and administrative         55,844      6.6         43,174      6.2
expenses
Depreciation and amortization      24,903      3.0         22,141      3.2
Pre-opening costs                  4,775       0.6         3,383       0.5
Loss on disposal of assets        1,607      0.2       903        0.1   
Total operating expenses          715,043    84.7      596,973    85.4  
Income from operations             129,104     15.3        102,188     14.6
Interest and other income, net    390        -         462        0.1   
Income before income taxes         129,494     15.3        102,650     14.7
Provision for income taxes        (49,872 )   (5.9  )    (41,297 )   (5.9  )
Net income                       $ 79,622     9.4   %   $ 61,353     8.8   %
Other comprehensive income:
Foreign currency translation      222                   242     
adjustments
Comprehensive income             $ 79,844               $ 61,595  
Earnings per share:
Basic                            $ 2.57                 $ 1.96    
Diluted                          $ 2.53                 $ 1.95    
Weighted average common shares
outstanding:
Basic                             31,019                31,303  
Diluted                           31,425                31,486  
                                                                       

Chipotle Mexican Grill, Inc.
Condensed Consolidated Statement of Income and Comprehensive Income
(in thousands, except per share data)
                                                                  
                                                                       
                             Year ended December 31
                             2013                      2012
Revenue                      $ 3,214,591    100.0 %   $ 2,731,224    100.0 %
Restaurant operating costs
(Exclusive of depreciation
and amortization shown
separately below):
Food, beverage and             1,073,514     33.4        891,003       32.6
packaging
Labor                          739,800       23.0        641,836       23.5
Occupancy                      199,107       6.2         171,435       6.3
Other operating costs          347,401       10.8        286,610       10.5
General and administrative     203,733       6.3         183,409       6.7
expenses
Depreciation and               96,054        3.0         84,130        3.1
amortization
Pre-opening costs              15,511        0.5         11,909        0.4
Loss on disposal of assets    6,751        0.2       5,027        0.2   
Total operating expenses      2,681,871    83.4      2,275,359    83.3  
Income from operations         532,720       16.6        455,865       16.7
Interest and other income,    1,751        0.1       1,820        0.1   
net
Income before income taxes     534,471       16.6        457,685       16.8
Provision for income taxes    (207,033  )   (6.4  )    (179,685  )   (6.6  )
Net income                   $ 327,438      10.2  %   $ 278,000      10.2  %
Other comprehensive
income:
Foreign currency              596                     827       
translation adjustments
Comprehensive income         $ 328,034                $ 278,827   
Earnings per share:
Basic                        $ 10.58                  $ 8.82      
Diluted                      $ 10.47                  $ 8.75      
Weighted average common
shares outstanding:
Basic                         30,957                  31,513    
Diluted                       31,281                  31,783    
                                                                       

Chipotle Mexican Grill,Inc.
Condensed Consolidated Balance Sheet
(in thousands, except per share data)
                                                              
                                                 December 31
                                                 2013            2012
                                                                 
Assets
Current assets:
Cash and cash equivalents                        $ 323,203       $ 322,553
Accounts receivable, net of allowance for          24,016          16,800
doubtful accounts of $1,190 and $1,187 as of
December 31, 2013 and 2012, respectively
Inventory                                          13,044          11,096
Current deferred tax asset                         13,212          8,862
Prepaid expenses and other current assets          34,204          27,378
Income tax receivable                              3,657           9,612
Investments                                       254,971       150,306   
Total current assets                               666,307         546,607
Leasehold improvements, property and               963,238         866,703
equipment, net
Long term investments                              313,863         190,868
Other assets                                       43,933          42,550
Goodwill                                          21,939        21,939    
Total assets                                     $ 2,009,280    $ 1,668,667 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable                                 $ 59,022        $ 58,700
Accrued payroll and benefits                       67,195          71,731
Accrued liabilities                               73,011        56,421    
Total current liabilities                          199,228         186,852
Deferred rent                                      192,739         167,057
Deferred income tax liability                      55,434          48,947
Other liabilities                                 23,591        19,885    
Total liabilities                                 470,992       422,741   
Shareholders' equity:
Preferred stock, $0.01 par value, 600,000
shares authorized, no shares issued as of
December 31, 2013 and 2012, respectively           -               -
Common stock $0.01 par value, 230,000 shares
authorized, and 35,245 and 34,912
shares issued as of December 31, 2013 and          352             349
2012, respectively
Additional paid-in capital                         919,840         816,612
Treasury stock, at cost, 4,212 and 3,819
common shares at December 31, 2013
and 2012, respectively                             (660,421  )     (521,518  )
Accumulated other comprehensive income             1,620           1,024
Retained earnings                                 1,276,897     949,459   
Total shareholders' equity                        1,538,288     1,245,926 
Total liabilities and shareholders' equity       $ 2,009,280    $ 1,668,667 
                                                                             

Chipotle Mexican Grill,Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
                                                               
                                                                  
                                                   Years ended December 31
                                                   2013           2012
Operating activities
Net income                                         $ 327,438      $ 278,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                        96,054         84,130
Deferred income tax provision (benefit)              2,103          (18,057  )
Loss on disposal of assets                           6,751          5,027
Bad debt allowance                                   19             1,046
Stock-based compensation expense                     63,657         64,276
Excess tax benefit on stock-based compensation       (38,379  )     (73,210  )
Other                                                507            522
Changes in operating assets and liabilities:
Accounts receivable                                  (7,238   )     (9,438   )
Inventory                                            (1,950   )     (2,180   )
Prepaid expenses and other current assets            (6,806   )     (5,954   )
Other assets                                         (1,354   )     (20,539  )
Accounts payable                                     2,052          7,849
Accrued liabilities                                  12,020         21,307
Income tax payable/receivable                        44,334         59,357
Deferred rent                                        25,715         23,765
Other long-term liabilities                         3,857        4,062    
Net cash provided by operating activities           528,780      419,963  
                                                                  
Investing activities
Purchases of leasehold improvements, property        (199,926 )     (197,037 )
and equipment
Purchases of investments                             (387,639 )     (213,462 )
Maturities of investments                           159,250      55,000   
Net cash used in investing activities               (428,315 )    (355,499 )
                                                                  
Financing activities
Acquisition of treasury stock                        (138,903 )     (217,092 )
Proceeds from employee stock plan transactions       316            481
Excess tax benefit on stock-based compensation       38,379         73,210
Other financing payments                            (143     )    (133     )
Net cash used in financing activities               (100,351 )    (143,534 )
                                                                  
Effect of exchange rate changes on cash and cash     536            380
equivalents
Net change in cash and cash equivalents              650            (78,690  )
Cash and cash equivalents at beginning of period    322,553      401,243  
Cash and cash equivalents at end of period         $ 323,203     $ 322,553  
                                                                  
Supplemental disclosures of cash flow
information
Income taxes paid                                  $ 160,973     $ 138,385  
Increase (decrease) in purchases of leasehold
improvements, property and
equipment accrued in accounts payable              $ (1,736   )   $ 4,455    
                                                                             

Chipotle Mexican Grill,Inc.
Supplemental Financial and Other Data
(dollars in thousands)
                                                               
               For the three months ended
               December 31,   September      June 30,    March 31,   December
                              30,                                    31,
               2013           2013           2013        2013        2012
Number of
restaurants       56             37            44          48          60
opened
Number of
restaurants       1,595          1,539         1,502       1,458       1,410
at end of
period
Average
restaurant     $  2,169       $  2,140       $ 2,119     $ 2,105     $ 2,113
sales
Comparable
restaurant        9.3    %       6.2    %      5.5   %     1.0   %     3.8   %
sales
increases
                                                                     

Contact:

Chipotle Mexican Grill, Inc.
Investor Relations:
Alex Spong, 303-222-2552
 
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