Chipotle Mexican Grill (NYSE: CMG) reported Q1 EPS of $3.08, $0.18 better than the analyst estimate of $2.90. Revenue for the quarter came in at $1.4 billion versus the consensus estimate of $1.42 billion.

• Comparable restaurant sales increased 3.3% with a 1.4% decrease in transactions including a 1.3% leap day benefit
  • Through the end of February, comparable restaurant sales increased 14.4% with 10.7% transactions growth including a 2.1% leap day benefit and a restaurant level operating margin of 21.8%
  • Comparable restaurant sales during the month of March were negatively impacted by the impact of COVID-19, resulting in a decline of 16.0%
• Digital sales grew 80.8% and accounted for 26.3% of sales for the quarter

"I am grateful to all our employees for their commitment and efforts in providing guests access to our safe, delicious, high-quality food made from real ingredients during this unprecedented time," said Brian Niccol, Chairman and CEO, Chipotle. "Investing in digital over the last several years has allowed us to quickly pivot our business with Q1 digital sales reaching our highest ever quarterly level of $372 million. Our strong brand, business model and balance sheet give us the confidence to not only weather this downturn but continue to judiciously invest in key areas so that when we come out the other side, we will emerge even stronger."

GUIDANCE:

Given the level of volatility and uncertainty surrounding the future impact of COVID-19 on the broader US economy and any specific impact to our company, we are withdrawing our previous fiscal 2020 guidance related to comparable restaurant sales growth, new restaurant openings, and effective full year tax rate.

COVID-19 and Liquidity Update:

Chipotle remains focused on the safety and well-being of our employees, guests, and our food as we navigate the challenges presented by COVID-19. We are dedicated to keeping our restaurants stocked with gloves, hand sanitizers, masks, and a tamper evident packaging seal for contactless mobile pickup and delivery orders. Our industry leading food safety protocols result in a culture of continuous improvement to ensure that our customers have consistently excellent experiences. In response to COVID-19, we quickly made critical decisions including: eliminated non-essential travel, implemented work from home, significantly expanded employee benefits, increased sanitization of high touch, high traffic areas, and increased the frequency of personal hygiene practices. All of these initiatives give our employees and customers confidence that Chipotle remains steadfast in our commitment to keeping them safe.

Chipotle has a strong financial position with $909.2 million in cash, restricted cash, and short-term investments as of March 31, 2020 and no debt. In addition, while the Company doesn\'t intend to utilize the Paycheck Protection Program (PPP) loan provision of the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act, we expect to see a liquidity benefit of about $100 million primarily from deferring social security tax payments and accelerating tax depreciation in previous returns as allowed by the CARES Act.

As sales fell quickly from the impact of COVID-19, we proactively implemented a number of actions to reduce cash outlays and expenses, including the suspension of our stock buyback program. As a result of these efforts and our solid balance sheet as well as the added liquidity from CARES tax deferrals, we believe we have enough cash to sustain us for well over a year. However, if the recovery takes longer than expected, we have the ability to make additional adjustments as needed.

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