Chipotle Posted Catastrophic Numbers; Guidance is Even Worse

Chipotle is losing money and rapidly decelerating in terms of sales and margins. Comps are down 29% and the company has resorted to giving away burritos to increase foot traffic. The lunacy of it all lies in the decisions put forth by management. They intend to open 220-235 new restaurants in 2016, effectively leveraging a broken model.

The stock is down 4.5% in the after-hours, continuing a harrowing decline that began when the company started to poison people with their food several month’s ago.

These numbers are much worse than anyone had expected. Shareholders should expect scathing reports tomorrow morning and significant pressure on shares throughout 2016. In my opinion, CMG doesn’t deserve any premium valuation and should fall in value down to $250.

Via Briefing.com

• Reports Q1 (Mar) loss of $0.88 per share, $0.17 better than the Capital IQ Consensus of ($1.05); revenues fell 23.4% year/year to $834.5 mln vs the $863.24 mln Capital IQ Consensus.
• Warned on March 15: Lowered EPS to ($1.00) or worse from break even; updated comps through 2nd week of March.
  • The decrease in revenue was driven by a 29.7% decrease in comparable restaurant sales (estimates near down 28.5%), partially offset by sales from new restaurant openings. Comparable restaurant sales declined primarily as a result of a decrease in the number of transactions in our restaurants, and to a lesser extent by a decline in average check, including an impact from sales promotions.
• Comparable restaurant sales decreased 29.7%, Comparable restaurant transactions decreased 21.1%.
• Restaurant level operating margin was 6.8%, a decrease from 27.5%. The decrease was primarily driven by unfavorable sales leverage, and to a lesser extent by higher than usual marketing and promotional costs, and food testing and waste costs.
• For 2016, management expects the following:
  • 220 – 235 new restaurant openings
  • An effective full year tax rate of approximately 38.4%

• CMG says that it began to see some recovery in comps in the second half of the first quarter. In January, comps were running at about -34%. It improved to about -22% in the first few weeks of April, with Easter adding about 4%. Wet, cold weather also negatively affected comps in early April.
• The company says the recovery has been uneven throughout the country. The west coast and northeast for example — where the health concerns were most acute — have struggled the most. In these geographies, it has only recovered about a third of visits.
• The company believes that consumer perceptions are improving, based on in-depth research work done. That said, it still needs to see improvements in certain areas. For instance, customer admiration has slipped to 61% from 70%. Likely to revisit is at 43%. These are up from earlier, but, still not where CMG wants to see them.
• In regards to marketing, it is implementing its largest marketing program through the end of June. Throughout the year, the company plans to be more aggressive with marketing (possible buy one, get one promo), and will launch a new limited time frequency program this summer. Also, it will add new menu items to invite customers back.
• Its free burrito program this past winter was very successful, with a 67% redemption rate on the mobile offer. This helped provide a boost to comps.
• In terms of expansion, the company still sees a very significant opportunity past this year.
• CMG says it is not prepared to give EPS guidance for Q2, saying that it is really dependent on sales. At comps stay at current levels, going to be difficult to deliver a healthier EPS. CMG gives an example that if comps stay at current levels, restaurant level margins should improve to low double digits.
• Shares of CMG are trading about 6% lower in after hours.

Let’s keep this clean and to the point. Tim Cook is still gay and actively seeking a life partner, who may or may not relieve himself inside of the ladies bathroom. Okay? Aside from that, S. Jobs is fucking rolling over in his grave, haunting Tim at night, throwing candelabras at him –because of what he’s done to his baby.

Apple reported a very bad quarter, with both earnings and revenues coming in light. Margins were less than expected and iPhone and Mac sales were disappointing.

Additionally, the company issued downside guidance, with sharply lower margin guidance, indicative of a company struggling to maintain share. The board has authorized share buybacks to the tune of $175 billion.

Why not just toss said dollars into a flaming barrel of trash?

Via briefing

• Reports Q2 (Mar) earnings of $1.90 per share, $0.10 worse than the Capital IQ Consensus of $2.00; revenues fell 12.8% year/year to $50.56 bln vs the $51.98 bln Capital IQ Consensus; gross margins of 39.4% vs 39.6% ests vs 40.8% last year (guidance 39-40%).
• iPhones 51.2 mln vs 51.5 mln ests vs 61.2 mln last year.
  • iPads 10.2 mln vs 9.9 mln ests vs 12.6 mln last year.
  • Macs 4.0 mln vs 4.6 mln ests vs 4.5 mln last year.
• Co issues downside guidance for Q3, sees Q3 revs of $41-43 bln vs. $47.35 bln Capital IQ Consensus; gross margin 37.5-38.0% vs 39.2% ests vs 39.7% last year
• The Board has increased its share repurchase authorization to $175 billion from the $140 billion level announced last year. The Company also expects to continue to net-share-settle vesting restricted stock units.
• The Board has approved an increase of 10% to the Company’s quarterly dividend, and has declared a dividend of $0.57 per share, payable on May 12, 2016 to shareholders of record as of the close of business on May 9, 2016.
  • 2.3% dividend yield at after hours price of $99/share.

The stock is lower by 7% in the after-hours, dragging with it a sundry of tech names, such as SWKS -4.0%, QRVO -3.9%. CRUS -3.0% (also reported its own earnings), AVGO -2.2%, NXPI-2.0%, QCOM -1.1%, INVN -0.9%, TXN -0.6%,

Call me superficial. The Buffalo Wild Wing corporation just opened a store in Princeton. Upon seeing it, I had a feeling  the stock had peaked. Upon dining in it, I knew it was heading lower. The service and food are of the catastrophic varietal. They had one job to do, which was to make me some quality chicken wings. They failed. As such, the shares are inexorably lower by 12% in the after-hours blood session.

Via Briefing

• Total revenue increased 15.4% to $508.3 million
• Company–owned restaurant sales increased 16.6% to $483.9 million
• Same–store sales decreased 1.7% at company–owned restaurants and 2.4% at franchised restaurants
• Net earnings increased 12.8% to $32.8 million from $29.0 million, and earnings per diluted share increased 13.5% to $1.73 from $1.52

Sally Smith, President and Chief Executive Officer, commented, “Our total revenue in the first quarter increased 15.4%, when compared to the prior year, resulting from continued unit development and franchise acquisitions over the last 12 months. We are dissatisfied to report a same-store sales decline and we’re undertaking several sales-driving initiatives to regain momentum. We were able to manage costs and improve our restaurant-level margin, and earnings per diluted share increased 13.5% year-over-year to $1.73.”

Total revenue increased 15.4% to $508.3 million in the first quarter, compared to $440.6 million in the first quarter of 2015. Company–owned restaurant sales for the quarter increased 16.6% over the same period in 2015, to $483.9 million, driven by 100 additional Buffalo Wild Wings® restaurants at the end of the first quarter of 2016, partially offset by a same-store sales decrease of 1.7%. Franchise royalties and fees decreased 5.0% to $24.3 million for the quarter, versus $25.6 million in the first quarter of 2015. This decrease is attributed to seven fewer franchised Buffalo Wild Wings locations and a same-store sales decrease of 2.4% at franchised Buffalo Wild Wings restaurants in operation at the end of the period, compared to the same period in 2015.

Average weekly sales for company-owned Buffalo Wild Wings restaurants were $62,829 for the first quarter of 2016, compared to $64,851 for the same quarter last year, a 3.1% decrease. Franchised Buffalo Wild Wings restaurants in the United States averaged $65,636 for the period, versus $67,075 in the first quarter a year ago, a 2.1% decrease.

Other income in 2016 consisted primarily of a gain related to the valuation of contingent consideration for a franchise acquisition of $1.1 million, partially offset by interest expense of $0.9 million.

Under the previously announced share repurchase authorization, 173,892 shares were repurchased during the first quarter of 2016 for a total of $25 million.

For the first quarter, net earnings increased 12.8% to $32.8 million, versus $29.0 million in the first quarter of 2015. Earnings per diluted share were $1.73, compared to first quarter 2015 earnings per diluted share of $1.52.

2016 Outlook

Ms. Smith remarked, “We are focused on sales-driving initiatives to regain momentum in 2016. To strengthen our FastBreak™ lunch program, we’re piloting a speed of service guarantee. We’re promoting Wing Tuesdays® while evaluating different pricing and bundling options for this value day. Soccer is a growing sport in the United States and we’ll be the place to watch all the action on the pitch for the major tournaments this summer.”

Ms. Smith concluded, “The Buffalo Wild Wings brand remains strong and poised to deliver long-term earnings growth. In 2016, we’re continuing our development of new company-owned and franchised Buffalo Wild Wings restaurants in the United States and we are aggressively remodeling locations. Given our recent sales trends and an increasing outlook for the cost of traditional chicken wings, we believe earnings per diluted share in 2016 should be $5.65 to $5.85.”

For 2016, the company expects the following new unit development:

• Approximately 40 company-owned Buffalo Wild Wings restaurants
• 30 to 35 franchised Buffalo Wild Wings locations in the United States
• 12 to 15 franchised Buffalo Wild Wing locations internationally
• 6 company-owned and 4 franchised R Taco restaurants
• Continued unit expansion by PizzaRev

For 2016, the company expects the following:

• Improving same-store sales
• Deflationary food costs, excluding traditional chicken wings
• Depreciation and amortization expense of $150 to $155 million
• Share repurchase activity of approximately $100 million
• Earnings per diluted share of $5.65 to $5.85
• Capital expenditures of approximately $190 million, excluding additional franchise acquisitions or emerging brand investments

The company reported 310 million monthly users vs the consensus of 308 million. Both revenues and earnings, going forward, will be an abomination. As such, shares of TWTR are knifing lower in the after-hours, off by 10%.

Twitter sees Q2 revs $590-610 mln vs $677.39 mln Capital IQ Consensus Estimate; EBITDA $145-155 mln

I am ignoring what the company is saying in the after-hours, trying to stem the flow of sellers out of the stock. This company has done nothing but disappoint since coming public.

This company is being grossly mismanaged. Fire Jack now.

Via briefing
Reports Q1 (Mar) earnings of $0.15 per share, $0.05 better than the Capital IQ Consensus of $0.10; revenues rose 36.5% year/year to $595 mln vs the $607.55 mln Capital IQ Consensus.
MAUs comes in at 310 mln, street expectations were for 308 mln
Advertising revenue totaled $531 million, an increase of 37% year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased 39%.
Mobile advertising revenue was 88% of total advertising revenue.
Data licensing and other revenue totaled $64 million, an increase of 34% year-over-year.
U.S. revenue totaled $390 million, an increase of 35% year-over-year.
International revenue totaled $204 million, an increase of 39% year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, international revenue would have increased 46%.
Co issues downside guidance for Q2, sees Q2 revs of $590-610 mln vs. $677.39 mln Capital IQ Consensus Estimate; Adjusted EBITDA is expected to be in the range of $145-155 mln.
Co reaffirms FY16 Capital expenditures guidance to be $300 to $425 million; Adjusted EBITDA margin in the range of 25-27%.

This is equal to watching a NY Mets game, seeing the opposition constantly increase their lead, and feeling increasingly better about the specter of a Mets win. ‘Tis is the case with the U.S. economy. People have gone fucking apeshit mad, sopping up secondary offerings and greasy oil stocks, amidst BILLIONS in write-downs. The Atlanta Fed is forecasting a 0.4% growth rate for Q1, yet the level of fear is virtually non-existent, judging by recent polls and the VIX tits index.

Markets don’t give a shit. Share buybacks and firings will keep this economy humming along just fine. Let’s see what Apple has to see, due to report earnings after the bell.

I’m not going to pretend to know what’s at stake here, especially with kids who are cursed with muscular dystrophy. But the FDA advisory panel voted against approval for a drug that was, apparently, being tested without the full benefits of science. Critics argue the trials were too small–because parents didn’t want to sign kids to a trial that potentionally would give them a placebo instead of an active drug.

It’d be the equivalent to signing a death warrant for your child, all for the love of science.

Shares have risen like a Phoenix since the lows set this morning, based upon the belief that the FDA will cave into political pressures and approve the drug, in spite of the board advising otherwise.

Really? Has everyone gone mad?

S&P slashed Exxon’s credit rating to AA+, based on the fact that the company is being run by a bunch of asshats.

Let me explain the ways this company has shot itself in the foot.

Their oil fields are dying. Last year they only replaced 67% of lost oil production. Peak Exxon.

The company bought natural gas producer XTO Energy for $40 billion in 2009, the peak of natural gas. That company would be worth nothing today.

Retarded joint venture with Russian driller that resulted in a $1 billion loss.

And then there’s this: the company has wasted $54 billion in stock buybacks since 2012, as the companies debt more than doubled.

“The company’s debt level has more than doubled in recent years, reflecting high capital spending on major projects in a high commodity price environment and dividends and share repurchases that substantially exceeded internally generated cash flow,” S&P wrote in the note.

Exxon now has $34 billion in debt, declining production due to old wells, and a management team who thinks the best way to spend $54 billion is to buy its own stock.

Lazy fuckers.

The only two American companies left with a AAA rating is JNJ and MSFT.

Thanks to the latest housing and durable goods data, the Atlanta Fed’s GDPNow model is forecasting red hot economic growth for the first quarter of 2016 of 0.4%, up from a paltry 0.3%

No wonder why the Fed is so worried about rapid runaway inflation.

Giddy up!

Pioneer Resources is sharply higher today on better than expected results. What’s interesting to note is that cheap crude has not deterred them from producing oil. Moreover, they fully intend to deploy additional resources at $50 crude, as stated in today’s call.

Via Briefing.com

The co hit record production again, Q1 2016, 222,000 barrels of oil equivalent per day, 55% oil so co is well along in its movement from 52% to 56% oil (Above Pioneer’s guidance range of 211 MBOEPD to 216 MBOEPD)

Oil production is up 10,000 oils a barrel per day or 9% versus Q4, obviously driven by the growth of the Spraberry/Wolfcamp horizontal drilling program

Increase of 7 MBOEPD, or 3%, vs. Q4 2015
Placed 55 horizontal wells on production in the Spraberry/Wolfcamp during Q1

All wells benefited from completion optimization
Continuing to realize significant capital efficiency gains in the Spraberry/Wolfcamp

Co has increased oil and gas derivative coverage for 2017
2016 Outlook:
Pioneer plans to maintain 12 horizontal rigs in the northern
Spraberry/Wolfcamp based on favorable well returns in this area
Currently operating 12 horizontal rigs in the northern Spraberry/Wolfcamp and 2 horizontal rigs in the southern Wolfcamp JV (both will be terminatedby the end of June)
This activity level is expected to deliver production growth of 12%+ in 2016 compared to 10%+ previously and will allow the Company to continue to progress its completion optimization program

The higher forecasted growth rate reflects improving Spraberry/Wolfcamp well productivity

Planned capital expenditures for drilling activity and vertical integration spending continue to be $2.0 B for 2016

Pioneer expects to add 5 to 10 horizontal rigs when the price of oil recovers to ~$50 per barrel and the outlook for oil supply/demand fundamentals is positive

Strong commodity derivatives position helps protect the Company’s cash flow

Oil derivative coverage of ~85% for 2016 and ~50% for 2017
Gas derivative coverage of ~70% for 2016 and ~25% for 2017
Strong investment grade balance sheet coupled with forecasted cash flow enables Company to grow production and fund its expected capital program through 2017 without increasing debt

It’s becoming abndantly clear who is benefitting from this rout in crude. All of the marginal, highly leveraged, producers are getting crushed, while the larger operators continue to drill and acquire assets like it’s business as usual. This had nothing to do with supply/demand dynamics.

As oil continues to March higher, producers like PXD are shining up their rigs, getting ready to deploy them back into the field, as crude stair-steps back towards $100 for no discernible reason, other than the fact that it’s business as usual.

This is the nightmare that keeps repeating. No one is talking about this yet. But, come summer, if a deal isn’t hammered out yet, this is going to become an issue for markets and the EU.

Because of differences of opinion, the Greeks, and the other people in Europe footing their bills, bailout talks have been delayed for months. The IMF and the EU want more draconian cuts to provide them with a 3.5% surplus. The Greeks are having an issue complying. Therein lies the issue.

The government has used between roughly nine billion euros ($10 billion) and 10 billion through repurchase agreements since last year, most of which has been rolled over, officials said.
“The situation is not pleasant but not as dramatic as last year,” said one government official, who declined to be named. “But the more time passes without concluding the review, we could find ourselves with our backs against the wall.”

“The cash earned an annual 3.7 percent on average in the second half of last year and the return during the first half of 2016 is similar, better than what the entities would have been earning from commercial banks,” a second official said.
No one at the finance ministry was immediately available to comment.

A third bailout deal of up to 86 billion euros was agreed last summer but a review of compliance with the terms of the agreement was expected to be completed late last year and Athens is still scrambling to conclude those requirements.
Greece needs the funds, more than 5 billion euros, to repay European Central Bank and IMF loans due in June and July.

Talks between Athens, European Union institutions and the International Monetary Fund (IMF) have been snagged by disagreements over whether Greece’s cutbacks are enough to reach a primary surplus target of 3.5 percent by 2018.

“It has been a bumpy road since mid April but Greece can make it and not go bust until the end of May or early June by also using pension funds cash reserves and piling up state arrears if needed,” a senior government official told Reuters.

Don’t worry. If the Greeks keep this up, the EU will simply appoint a new leader to rule Greece, one who will obey their demands without terms.