Chipotle's fourth quarter earnings release is out.
The company reported earnings of $1.95 per share, right in line with expectations.
Revenues came in at $699.2 million, also right in line.
Same-store sales also matched expectations, up 3.8 percent in the fourth quarter.
Remember – Chipotle pre-announced these results in mid-January, so they shouldn't come as a surprise.
The company says it sees 2013 sales growth unchanged or in low single digits.
Shares are up over 5 percent in after-hours trading.
Below is the full text from the release:
DENVER--(BUSINESS WIRE)--Chipotle Mexican Grill, Inc. (CMG) today reported financial results for its fourth quarter and full year ended December 31, 2012.
Highlights for the fourth quarter of 2012 as compared to the fourth quarter of 2011 include:
- Revenue increased 17.2% to $699.2 million
- Comparable restaurant sales increased 3.8%
- Restaurant level operating margin was 24.6%, a decrease of 150 basis points
- Net income was $61.4 million, an increase of 6.8%
- Diluted earnings per share was $1.95, an increase of 7.7%
- Opened 60 new restaurants
Highlights for the twelve months ended December 31, 2012 as compared to the prior year include:
- Revenue increased 20.3% to $2.73 billion
- Comparable restaurant sales increased 7.1%
- Restaurant level operating margin was 27.1%, an increase of 110 basis points
- Net income was $278.0 million, an increase of 29.3%
- Diluted earnings per share was $8.75, an increase of 29.4%
- Opened 183 new restaurants
“During 2012, we remained focused on our mission to change the way people think about and eat fast food. We're rewriting the fast food rules, sourcing more and more sustainably raised ingredients and respecting farmers, the environment, animals, and ultimately our customers. Our food culture has always set us apart from other fast food restaurants by using great quality ingredients and preparing food using classic cooking techniques in open kitchens on display for all to see. People appreciate these things and we’ll continue to stay focused on them,” said Steve Ells, Founder, Chairman and Co-CEO of Chipotle.
Results for the fourth quarter 2012
Revenue for the quarter was $699.2 million, up 17.2% from the prior year period. The growth in revenue was the result of new restaurants not in the comparable base and a 3.8% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by the impact of increased traffic.
During the quarter we opened 60 new restaurants, bringing the total restaurant count to 1,410.
Food costs were 33.5% of revenue, an increase of 130 basis points driven by higher commodity costs. Higher commodity costs were primarily driven by increases in beef costs including steak and barbacoa, and to a lesser extent by increases in the cost of salsa ingredients and dairy.
Restaurant level operating margin was 24.6% in the quarter, a decrease of 150 basis points from the prior year period. The decrease was primarily driven by higher food costs.
G&A costs were 6.2% of revenue, down 20 basis points from the prior year period due to favorable sales leverage. Net income for the fourth quarter of 2012 was $61.4 million, or $1.95 per diluted share, compared to $57.5 million, or $1.81 per diluted share, in the fourth quarter of 2011.
Results for the full year ended December 31, 2012
Revenue for the full year of 2012 was $2.73 billion, up 20.3% from the prior year period. The growth in revenue was the result of new restaurants not in the comparable base and a 7.1% 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 full year, we opened 183 new Chipotle restaurants, bringing the total restaurant count to 1,410.
Restaurant level operating margin was 27.1% for the full year 2012, an increase of 110 basis points from the prior year. The increase was primarily driven by the impact of leverage from higher restaurant sales partially offset by higher food costs.
G&A costs for the full year 2012 were 6.7% of revenue, 10 basis points higher than the prior year. The increase as a percent of revenue was driven by higher non-cash 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 full year 2012 was $278.0 million, or $8.75 per diluted share, compared to $214.9 million, or $6.76 per diluted share for 2011.
Our Board of Directors has also approved the investment of up to an additional $100 million, exclusive of commissions, to repurchase shares of our common stock. This repurchase authorization, in addition to up to approximately $80 million available as of February 5th for repurchases under previously announced repurchase authorizations, may be modified, suspended, or discontinued at any time.
“Our empowered restaurant teams once again were able to attract more people into our restaurants, creating positive comparable sales at Chipotle despite a sluggish economy and the roll off of our price increase. We feel confident in our continued ability to drive sales growth in 2013 through a combination of new restaurant growth and our top performing, empowered restaurant teams creating an extraordinary dining experience for our customers,” said Monty Moran, co-CEO of Chipotle.
For 2013, management expects the following:
- 165 – 180 new restaurant openings
- Flat to low single digit comparable restaurant sales excluding additional menu price increases
- An effective full year tax rate of approximately 38.5%
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 13th 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.
Chipotle will host a conference call to discuss complete fourth quarter and full year 2012 financial results on Tuesday, February 5, 2013 at 4:30 PM Eastern time. A press release with final, fourth quarter and full year 2012 financial results will be issued at approximately 4:00 PM Eastern time that same day.
The conference call can be accessed live over the phone by dialing 1-888-378-0346 or for international callers by dialing 1-719-325-2126. 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 8955490. The replay will be available until February 12, 2013. 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.
ORIGINAL: Minutes away from Chipotle Mexican Grill's fourth-quarter 2012 earnings report, expected out just after the closing bell at 4 PM ET.
Analysts expect the fast-food chain to report earnings of $1.95 per share (matching company guidance) down from $2.30 in Q3.
Sales are expected to come in at $699 million, down slightly from $700.5 million in Q3 and just below company guidance of $699.2 million.
Chipotle pre-announced this release in mid-January, which is where the guidance numbers above come from. The stock fell 5 percent on the news, but has since rallied 3 percent above the level it was trading at before the pre-announcement.
BofA Merrill Lynch analyst Joseph Buckley, Andrew Charles, and Gregory Francfort say this is because Chipotle faces short-term headwinds but has a relatively brighter long-term outlook. In a note to clients, they write:
Sentiment has shifted more positively, in our view, just two weeks after the pre-announcement of disappointing 4Q 2012 results. The pre- release seemed to clarify near term issues and enable investors to focus on the company’s long term growth metrics. Near term results are likely to remain challenging until Chipotle raise prices to deal with higher food costs. Management acknowledged a greater probability of raising menu prices in mid-2013 following the margin/cost driven 4Q disappointment.
Chipotle’s appealing long term attributes include low-to-mid teen percentage unit growth with the ability to more than triple the domestic core brand restaurant count, outstanding new unit economics, and two promising nascent businesses in ShopHouse and the international business. We also think more aggressive share repurchases in 4Q (473,000 shares at an average cost of $284 per share) is reassuring to investors.
On same-store sales figures, Deutsche Bank analysts Jason West and Justin Marshall say buy-side investors are a bit more bullish than the sell side. In a note to clients, they write:
Our buy side survey of CMG SSS suggests the buy side is slightly above the sell side on 2013 comps, though the gap is marginal. Our survey (~20 responses) avg’d +2.3% for 1Q13, +3.9% for 2Q13, +5.0% for 3Q13, and +5.3% for 4Q13.
~40bps above Consensus Metrix on avg. (+1.3%, +3.6%, +4.8%, +5.0% for 1Q-4Q13) Both forecasts seem to assume modest (~2%) menu pricing in 2H13, consistent w/ our expectation. These forecasts also embed a gradual decline in 2-yr. comp trends over the course of 2013.
We will have Chipotle's full Q4 2012 earnings release at 4 PM ET. Click here to refresh for LIVE updates >
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