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UPDATE: Chipotle earnings were $2.27, below estimates of $2.29 per share.The stock is down more than 13 per cent in after-hours trading.
Revenues also came in below estimates, at $700.5 million versus $703.65 million.
Here are the highlights:
- Revenue increased 18.4% to $700.5 million
- Comparable restaurant sales increased 4.8%
- Opened 36 new restaurants
- Restaurant level operating margin was 27.4%, an increase of 70 basis points
- Net income was $72.3 million, an increase of 19.6%
- Diluted earnings per share was $2.27, an increase of 19.5%
Here are some data on restaurant trends from the statement:
Here is the full text from the release:
Third quarter 2012 results
Underlying sales transaction trends have remained stable over the past two quarters despite an uncertain economy and competitive environment.
Revenue for the quarter was $700.5 million, up 18.4% from the prior year period. The growth in revenue was the result of new restaurants not in the comparable base and a 4.8% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by the impact of increased traffic and to a lesser extent by menu price increases taken in the Pacific Region in 2012. Transaction trends were about the same as the second quarter, but comparable restaurant sales increases were impacted by the loss of 330 basis points from price increases that rolled off during the quarter.
During the quarter we opened 36 new restaurants, including two restaurants in London, England, bringing the total restaurant count to 1,350.
Restaurant level operating margin was 27.4% in the quarter, an increase of 70 basis points from the prior year period. The increase was primarily driven by leverage from higher average restaurant sales.
G&A costs were 6.9% of revenue, up 60 basis points from the prior year period. The increase as a per cent of revenue was driven by the impact of holding the biennial All Managers’ Conference in the third quarter, higher stock based compensation expense, and about $1 million in bad debt expense related to general contractor insolvencies, partially offset by the positive impact of comparable restaurant sales growth. The prior year quarter also benefited from a gain recognised from our deferred compensation plan.
Net income for the third quarter of 2012 was $72.3 million, or $2.27 per diluted share, compared to $60.4 million, or $1.90 per diluted share, in the third quarter of 2011.
Results for the nine months ended September 30, 2012
Revenue for the first nine months of 2012 was $2.03 billion, up 21.5% from the prior year period. The growth in revenue was the result of new restaurants not in the comparable base and an 8.3% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by increased traffic as well as the impact from menu price increases, most of which were taken in 2011.
During the first nine months of the year, we opened 123 new Chipotle restaurants, bringing the total restaurant count to 1,350.
Restaurant level operating margin was 28.0% for the first nine months, an increase of 210 basis points from the prior year period. The increase was primarily driven by the impact of leverage from higher restaurant sales.
G&A costs for the first nine months of 2012 were 6.9% of revenue, or 20 basis points higher than the prior year period. The increase as a per cent of revenue was driven by higher stock based compensation expense and the biennial All Managers’ Conference, partially offset by the positive impact of comparable restaurant sales growth.
Net income for the first nine months of 2012 was $216.6 million, or $6.80 per diluted share, compared to $157.5 million, or $4.96 per diluted share, in the first nine months of 2011.
Our Board of Directors has also approved the investment of up to an additional $100 million to repurchase shares of our common stock exclusive of commissions. This repurchase authorization, in addition to $34.7 million available as of September 30, 2012 for repurchases under previously-announced repurchase authorizations, may be modified, suspended, or discontinued at any time.
“Our strong people culture continues to drive our success in both attracting loyal customers and in delivering exceptional results. Our restaurant teams are ambitious and passionate about developing teams of top performers who have high standards and are dedicated to delivering the best dining experience possible to our guests,” commented Co-CEO Monty Moran.
For 2012, management expects the following:
- New restaurant openings at, or above, the previously announced range of 155-165
- Mid-single digit comparable restaurant sales growth for the full year
- An effective tax rate of approximately 39.0%
For 2013, management expects the following:
- 165-180 new restaurant openings
- Flat to low-single digit comparable restaurant sales
- Approximately the same effective tax rate as 2012
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 per cent of total revenue.
Chipotle will host a conference call to discuss the third quarter 2012 financial results today at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialling 1-877-741-4241 or for international callers by dialling 1-719-325-4933. A replay will be available one hour after the call and can be accessed by dialling 1-877-870-5176 or 1-858-384-5517 for international callers; the password is 8693134. The replay will be available until October 25, 2012. 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.
Steve Ells, Founder, Chairman and Co-Chief Executive Officer, 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 not only from using fresh ingredients, but ingredients that are sustainably grown and naturally raised with respect for the animals, the land, and the farmers who produce the food. A similarly focused people culture, with an emphasis on identifying and empowering top performing employees, enables us to develop future leaders from within. Chipotle opened its first restaurant in 1993 and currently operates over 1,350 restaurants. For more information, visit chipotle.com.
ORIGINAL: Minutes away from Chipotle Mexican Grill’s Q3 earnings release.
A survey of analysts polled by Bloomberg revealed consensus earnings estimates of $2.29 per share.
Revenues are expected to come in at $703.65 million.
We will have the numbers LIVE on Money Game at 4:00 PM ET. Click here for live updates >