Financial Highlights for the Fourth Quarter 2022:
Financial Highlights for the Fiscal Year 2022:
NEW YORK–(BUSINESS WIRE)–Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK) has posted its results for the fourth quarter and the fiscal year ended December 28, 2022 in a Shareholder Letter in the Quarterly Results section of the Company’s Investor Relations website, which can be found here: Q4 2022 Shareholder Letter.
Shake Shack will host a conference call at 8:00 a.m. ET. Hosting the call will be Randy Garutti, Chief Executive Officer, and Katherine Fogertey, Chief Financial Officer. The conference call can be accessed live over the phone by dialing (877) 407-0792, or for international callers by dialing (201) 689-8263. A replay of the call will be available until February 23, 2023 by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671; the passcode is 13734860.
The live audio webcast of the conference call will be accessible in the Events & Presentations section of the Company’s Investor Relations website at investor.shakeshack.com. An archived replay of the webcast will also be available shortly after the live event has concluded.
|
(1) |
Shack-level operating profit, Adjusted EBITDA and Adjusted pro forma net income (loss) are non-GAAP measures. A reconciliation to the most directly comparable financial measures presented in accordance with GAAP is set forth in the schedules accompanying this release. See “Non-GAAP Financial Measures” below. |
About Shake Shack
Shake Shack serves elevated versions of American classics using only the best ingredients. It’s known for its delicious made-to-order Angus beef burgers, crispy chicken, hand-spun milkshakes, house-made lemonades, beer, wine, and more. With its high-quality food at a great value, warm hospitality, and a commitment to crafting uplifting experiences, Shake Shack quickly became a cult-brand with widespread appeal. Shake Shack’s purpose is to Stand For Something Good®, from its premium ingredients and employee development, to its inspiring designs and deep community investment. Since the original Shack opened in 2004 in NYC’s Madison Square Park, the Company has expanded to over 440 locations system-wide, including about 290 in 32 U.S. States and the District of Columbia, and over 150 international locations across London, Hong Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo, Seoul and more.
Skip the line with the Shack App, a mobile ordering app that lets you save time by ordering ahead! Guests can select their location, pick their food, choose a pickup time and their meal will be cooked-to-order and timed to arrival. Available on iOS and Android.
Definitions
The following definitions apply to these terms as used in this release:
“Shack sales” is defined as the aggregate sales of food, beverages, gift card breakage income and Shake Shack branded merchandise at domestic Company-operated Shacks and excludes sales from licensed Shacks.
“System-wide sales” is an operating measure and consists of sales from the Company’s domestic Company-operated Shacks, domestic licensed Shacks and international licensed Shacks. The Company does not recognize the sales from licensed Shacks as revenue. Of these amounts, revenue is limited to licensing revenue based on a percentage of sales from domestic and international licensed Shacks, as well as certain up-front fees, such as territory fees and opening fees.
“Same-Shack sales” represents Shack sales for the comparable Shack base, which is defined as the number of domestic Company-operated Shacks open for 24 full fiscal months or longer. For consecutive days that Shacks were temporarily closed, the comparative period was also adjusted.
“Shack-level operating profit,” a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses.
“Shack-level operating profit margin,” a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses as a percentage of Shack sales.
“EBITDA,” a non-GAAP measure, is defined as Net income (loss) before interest expense (net of interest income), Income tax expense (benefit), and Depreciation and amortization expense.
“Adjusted EBITDA,” a non-GAAP measure, is defined as EBITDA (as defined above), excluding equity-based compensation expense, deferred lease costs, Impairment and loss on disposal of assets, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.
“Adjusted pro forma net income,” a non-GAAP measure, represents Net income (loss) attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests (“LLC Interests”) for shares of Class A common stock, adjusted for certain non-recurring and other items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.
|
SHAKE SHACK INC. |
||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
|
(UNAUDITED) |
||||||
|
(in thousands, except share and per share amounts) |
||||||
|
|
December 28 |
|
December 29 |
|||
|
ASSETS |
|
|
|
|||
|
Current assets |
|
|
|
|||
|
Cash and cash equivalents |
$ |
230,521 |
|
|
$ |
302,406 |
|
Marketable securities |
|
80,707 |
|
|
|
80,000 |
|
Accounts receivable, net |
|
13,877 |
|
|
|
13,657 |
|
Inventories |
|
4,184 |
|
|
|
3,850 |
|
Prepaid expenses and other current assets |
|
14,699 |
|
|
|
9,763 |
|
Total current assets |
|
343,988 |
|
|
|
409,676 |
|
Property and equipment, net of accumulated depreciation of $290,362 and $222,768, respectively |
|
467,031 |
|
|
|
389,386 |
|
Operating lease assets |
|
367,488 |
|
|
|
347,277 |
|
Deferred income taxes, net |
|
300,538 |
|
|
|
298,668 |
|
Other assets |
|
15,817 |
|
|
|
12,563 |
|
TOTAL ASSETS |
$ |
1,494,862 |
|
|
$ |
1,457,570 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|||
|
Current liabilities |
|
|
|
|||
|
Accounts payable |
$ |
20,407 |
|
|
$ |
19,947 |
|
Accrued expenses |
|
47,945 |
|
|
|
36,892 |
|
Accrued wages and related liabilities |
|
17,576 |
|
|
|
14,638 |
|
Operating lease liabilities, current |
|
42,238 |
|
|
|
35,519 |
|
Other current liabilities |
|
19,552 |
|
|
|
14,501 |
|
Total current liabilities |
|
147,718 |
|
|
|
121,497 |
|
Long-term debt |
|
244,589 |
|
|
|
243,542 |
|
Long-term operating lease liabilities |
|
427,227 |
|
|
|
400,113 |
|
Liabilities under tax receivable agreement, net of current portion |
|
234,893 |
|
|
|
234,045 |
|
Other long-term liabilities |
|
20,687 |
|
|
|
22,773 |
|
Total liabilities |
|
1,075,114 |
|
|
|
1,021,970 |
|
Commitments and contingencies |
|
|
|
|||
|
Stockholders’ equity: |
|
|
|
|||
|
Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of December 28, 2022 and December 29, 2021. |
|
— |
|
|
|
— |
|
Class A common stock, $0.001 par value—200,000,000 shares authorized; 39,284,998 and 39,142,397 shares issued and outstanding as of December 28, 2022 and December 29, 2021, respectively. |
|
39 |
|
|
|
39 |
|
Class B common stock, $0.001 par value—35,000,000 shares authorized; 2,869,513 and 2,921,587 shares issued and outstanding as of December 28, 2022 and December 29, 2021, respectively. |
|
3 |
|
|
|
3 |
|
Additional paid-in capital |
|
415,611 |
|
|
|
405,940 |
|
Retained earnings (accumulated deficit) |
|
(20,537 |
) |
|
|
3,554 |
|
Accumulated other comprehensive income |
|
— |
|
|
|
1 |
|
Total stockholders’ equity attributable to Shake Shack Inc. |
|
395,116 |
|
|
|
409,537 |
|
Non-controlling interests |
|
24,632 |
|
|
|
26,063 |
|
Total equity |
|
419,748 |
|
|
|
435,600 |
|
TOTAL LIABILITIES AND MEMBERS’ EQUITY |
$ |
1,494,862 |
|
|
$ |
1,457,570 |
|
SHAKE SHACK INC. |
|||||||||||||||||||||||||||
|
CONSOLIDATED STATEMENTS OF LOSS |
|||||||||||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||||||||||
|
(in thousands, except per share amounts) |
|||||||||||||||||||||||||||
|
|
Fiscal Quarter Ended |
|
Fiscal Year Ended |
||||||||||||||||||||||||
|
|
December 28 |
|
December 29 |
|
December 28 |
|
December 29 |
||||||||||||||||||||
|
Shack sales |
$ |
229,924 |
|
96.4 |
% |
|
$ |
195,879 |
|
96.4 |
% |
|
$ |
869,270 |
|
96.5 |
% |
|
$ |
714,989 |
|
96.6 |
% |
||||
|
Licensing revenue |
|
8,605 |
|
3.6 |
% |
|
|
7,377 |
|
3.6 |
% |
|
|
31,216 |
|
3.5 |
% |
|
|
24,904 |
|
3.4 |
% |
||||
|
TOTAL REVENUE |
|
238,529 |
|
100.0 |
% |
|
|
203,256 |
|
100.0 |
% |
|
|
900,486 |
|
100.0 |
% |
|
|
739,893 |
|
100.0 |
% |
||||
|
Shack-level operating expenses(1): |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Food and paper costs |
|
67,939 |
|
29.5 |
% |
|
|
60,790 |
|
31.0 |
% |
|
|
261,584 |
|
30.1 |
% |
|
|
218,262 |
|
30.5 |
% |
||||
|
Labor and related expenses |
|
66,404 |
|
28.9 |
% |
|
|
57,893 |
|
29.6 |
% |
|
|
257,358 |
|
29.6 |
% |
|
|
215,114 |
|
30.1 |
% |
||||
|
Other operating expenses |
|
34,103 |
|
14.8 |
% |
|
|
29,200 |
|
14.9 |
% |
|
|
130,869 |
|
15.1 |
% |
|
|
103,232 |
|
14.4 |
% |
||||
|
Occupancy and related expenses |
|
18,238 |
|
7.9 |
% |
|
|
15,801 |
|
8.1 |
% |
|
|
68,508 |
|
7.9 |
% |
|
|
59,228 |
|
8.3 |
% |
||||
|
General and administrative expenses |
|
31,750 |
|
13.3 |
% |
|
|
25,561 |
|
12.6 |
% |
|
|
118,790 |
|
13.2 |
% |
|
|
85,996 |
|
11.6 |
% |
||||
|
Depreciation and amortization expense |
|
19,207 |
|
8.1 |
% |
|
|
15,610 |
|
7.7 |
% |
|
|
72,796 |
|
8.1 |
% |
|
|
58,991 |
|
8.0 |
% |
||||
|
Pre-opening costs |
|
6,474 |
|
2.7 |
% |
|
|
4,524 |
|
2.2 |
% |
|
|
15,050 |
|
1.7 |
% |
|
|
13,291 |
|
1.8 |
% |
||||
|
Impairment and loss on disposal of assets |
|
728 |
|
0.3 |
% |
|
|
370 |
|
0.2 |
% |
|
|
2,425 |
|
0.3 |
% |
|
|
1,632 |
|
0.2 |
% |
||||
|
TOTAL EXPENSES |
|
244,843 |
|
102.6 |
% |
|
|
209,749 |
|
103.2 |
% |
|
|
927,380 |
|
103.0 |
% |
|
|
755,746 |
|
102.1 |
% |
||||
|
LOSS FROM OPERATIONS |
|
(6,314 |
) |
(2.6 |
) % |
|
|
(6,493 |
) |
(3.2 |
) % |
|
|
(26,894 |
) |
(3.0 |
) % |
|
|
(15,853 |
) |
(2.1 |
) % |
||||
|
Other income (expense), net |
|
2,396 |
|
1.0 |
% |
|
|
(62 |
) |
— |
% |
|
|
4,127 |
|
0.5 |
% |
|
|
95 |
|
— |
% |
||||
|
Interest expense |
|
(373 |
) |
(0.2 |
) % |
|
|
(353 |
) |
(0.2 |
) % |
|
|
(1,518 |
) |
(0.2 |
) % |
|
|
(1,577 |
) |
(0.2 |
) % |
||||
|
LOSS BEFORE INCOME TAXES |
|
(4,291 |
) |
(1.8 |
) % |
|
|
(6,908 |
) |
(3.4 |
) % |
|
|
(24,285 |
) |
(2.7 |
) % |
|
|
(17,335 |
) |
(2.3 |
) % |
||||
|
Income tax expense (benefit) |
|
6,780 |
|
2.8 |
% |
|
|
3,441 |
|
1.7 |
% |
|
|
1,682 |
|
0.2 |
% |
|
|
(7,224 |
) |
(1.0 |
) % |
||||
|
NET LOSS |
|
(11,071 |
) |
(4.6 |
) % |
|
|
(10,349 |
) |
(5.1 |
) % |
|
|
(25,967 |
) |
(2.9 |
) % |
|
|
(10,111 |
) |
(1.4 |
) % |
||||
|
Less: Net loss attributable to non-controlling interests |
|
(354 |
) |
(0.1 |
) % |
|
|
(619 |
) |
(0.3 |
) % |
|
|
(1,876 |
) |
(0.2 |
) % |
|
|
(1,456 |
) |
(0.2 |
) % |
||||
|
NET LOSS ATTRIBUTABLE TO SHAKE SHACK INC. |
$ |
(10,717 |
) |
(4.5 |
) % |
|
$ |
(9,730 |
) |
(4.8 |
) % |
|
$ |
(24,091 |
) |
(2.7 |
) % |
|
$ |
(8,655 |
) |
(1.2 |
) % |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Loss per share of Class A common stock: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Basic |
$ |
(0.27 |
) |
|
|
$ |
(0.25 |
) |
|
|
$ |
(0.61 |
) |
|
|
$ |
(0.22 |
) |
|
||||||||
|
Diluted |
$ |
(0.27 |
) |
|
|
$ |
(0.25 |
) |
|
|
$ |
(0.61 |
) |
|
|
$ |
(0.22 |
) |
|
||||||||
|
Weighted-average shares of Class A common stock outstanding: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Basic |
|
39,283 |
|
|
|
|
39,141 |
|
|
|
|
39,237 |
|
|
|
|
39,085 |
|
|
||||||||
|
Diluted |
|
39,283 |
|
|
|
|
39,141 |
|
|
|
|
39,237 |
|
|
|
|
39,085 |
|
|
||||||||
| ________________ | ||
|
(1) |
As a percentage of Shack sales. |
|
|
SHAKE SHACK INC. |
|||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
|
(UNAUDITED) |
|||||||
|
(in thousands) |
|||||||
|
|
Fiscal Year Ended |
||||||
|
|
December 28 |
|
December 29 |
||||
|
OPERATING ACTIVITIES |
|
|
|
||||
|
Net loss (including amounts attributable to non-controlling interests) |
$ |
(25,967 |
) |
|
$ |
(10,111 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
|
Depreciation and amortization expense |
|
72,796 |
|
|
|
58,991 |
|
|
Amortization of debt issuance costs |
|
1,047 |
|
|
|
867 |
|
|
Amortization of cloud computing asset |
|
1,500 |
|
|
|
1,245 |
|
|
Non-cash operating lease cost |
|
58,801 |
|
|
|
50,888 |
|
|
Equity-based compensation |
|
13,326 |
|
|
|
8,703 |
|
|
Deferred income taxes |
|
(3,357 |
) |
|
|
(10,379 |
) |
|
Non-cash interest expense |
|
218 |
|
|
|
353 |
|
|
(Gain) loss on sale of marketable securities |
|
— |
|
|
|
5 |
|
|
Impairment and loss on disposal of assets |
|
2,425 |
|
|
|
1,632 |
|
|
Other non-cash expense (income) |
|
(1 |
) |
|
|
(4 |
) |
|
Unrealized loss on equity securities |
|
158 |
|
|
|
277 |
|
|
Changes in operating assets and liabilities: |
|
|
|
||||
|
Accounts receivable |
|
9,139 |
|
|
|
(4,193 |
) |
|
Inventories |
|
(334 |
) |
|
|
(962 |
) |
|
Prepaid expenses and other current assets |
|
(2,473 |
) |
|
|
4,913 |
|
|
Other assets |
|
(8,065 |
) |
|
|
(2,722 |
) |
|
Accounts payable |
|
3,541 |
|
|
|
(6,450 |
) |
|
Accrued expenses |
|
4,707 |
|
|
|
7,175 |
|
|
Accrued wages and related liabilities |
|
2,859 |
|
|
|
4,200 |
|
|
Other current liabilities |
|
8,541 |
|
|
|
(1,166 |
) |
|
Operating lease liabilities |
|
(61,364 |
) |
|
|
(43,417 |
) |
|
Other long-term liabilities |
|
(756 |
) |
|
|
(1,443 |
) |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
76,741 |
|
|
|
58,402 |
|
|
INVESTING ACTIVITIES |
|
|
|
||||
|
Purchases of property and equipment |
|
(142,559 |
) |
|
|
(101,495 |
) |
|
Purchases of marketable securities |
|
(865 |
) |
|
|
(47,399 |
) |
|
Sales of marketable securities |
|
— |
|
|
|
4,004 |
|
|
NET CASH USED IN INVESTING ACTIVITIES |
|
(143,424 |
) |
|
|
(144,890 |
) |
|
FINANCING ACTIVITIES |
|
|
|
||||
|
Proceeds from issuance of convertible notes, net of discount |
|
— |
|
|
|
243,750 |
|
|
Deferred financing costs |
|
— |
|
|
|
(169 |
) |
|
Payments on principal of finance leases |
|
(2,974 |
) |
|
|
(2,694 |
) |
|
Distributions paid to non-controlling interest holders |
|
(410 |
) |
|
|
(968 |
) |
|
Debt issuance costs |
|
— |
|
|
|
(1,075 |
) |
|
Net proceeds from stock option exercises |
|
424 |
|
|
|
6,731 |
|
|
Employee withholding taxes related to net settled equity awards |
|
(2,242 |
) |
|
|
(3,554 |
) |
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
(5,202 |
) |
|
|
242,021 |
|
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
(71,885 |
) |
|
|
155,533 |
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
|
302,406 |
|
|
|
146,873 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
230,521 |
|
|
$ |
302,406 |
|
SHAKE SHACK INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
To supplement the Consolidated Financial Statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the Company uses the following non-GAAP financial measures: Shack-level operating profit, Shack-level operating profit margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted pro forma net loss and adjusted pro forma loss per fully exchanged and diluted share and adjusted pro forma effective tax rate (collectively the “non-GAAP financial measures”).
Shack-Level Operating Profit
Shack-level operating profit is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses.
How This Measure Is Useful
When used in conjunction with GAAP financial measures, Shack-level operating profit and Shack-level operating profit margin are supplemental measures of operating performance that the Company believes are useful measures to evaluate the performance and profitability of its Shacks. Additionally, Shack-level operating profit and Shack-level operating profit margin are key metrics used internally by management to develop internal budgets and forecasts, as well as assess the performance of its Shacks relative to budget and against prior periods. It is also used to evaluate team member compensation as it serves as a metric in certain performance-based team member bonus arrangements. The Company believes presentation of Shack-level operating profit and Shack-level operating profit margin provides investors with a supplemental view of its operating performance that can provide meaningful insights to the underlying operating performance of the Shacks, as these measures depict the operating results that are directly impacted by the Shacks and exclude items that may not be indicative of, or are unrelated to, the ongoing operations of the Shacks. It may also assist investors to evaluate the Company’s performance relative to peers of various sizes and maturities and provides greater transparency with respect to how management evaluates the business, as well as the financial and operational decision-making.
Limitations of the Usefulness of this Measure
Shack-level operating profit and Shack-level operating profit margin may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of Shack-level operating profit and Shack-level operating profit margin is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Shack-level operating profit excludes certain costs, such as General and administrative expenses and Pre-opening costs, which are considered normal, recurring cash operating expenses and are essential to support the operation and development of the Company’s Shacks. Therefore, this measure may not provide a complete understanding of the Company’s operating results as a whole and Shack-level operating profit and Shack-level operating profit margin should be reviewed in conjunction with the Company’s GAAP financial results. A reconciliation of Shack-level operating profit to Loss from operations, the most directly comparable GAAP financial measure, is set forth below.
|
|
Fiscal Quarter Ended |
|
Fiscal Year Ended |
||||||||||||
|
(dollar amounts in thousands) |
December 28 |
|
December 29 |
|
December 28 |
|
December 29 |
||||||||
|
Loss from operations |
$ |
(6,314 |
) |
|
$ |
(6,493 |
) |
|
$ |
(26,894 |
) |
|
$ |
(15,853 |
) |
|
Less: |
|
|
|
|
|
|
|
||||||||
|
Licensing revenue |
|
8,605 |
|
|
|
7,377 |
|
|
|
31,216 |
|
|
|
24,904 |
|
|
Add: |
|
|
|
|
|
|
|
||||||||
|
General and administrative expenses |
|
31,750 |
|
|
|
25,561 |
|
|
|
118,790 |
|
|
|
85,996 |
|
|
Depreciation and amortization expense |
|
19,207 |
|
|
|
15,610 |
|
|
|
72,796 |
|
|
|
58,991 |
|
|
Pre-opening costs |
|
6,474 |
|
|
|
4,524 |
|
|
|
15,050 |
|
|
|
13,291 |
|
|
Impairment and loss on disposal of assets(1) |
|
728 |
|
|
|
370 |
|
|
|
2,425 |
|
|
|
1,632 |
|
|
Shack-level operating profit |
$ |
43,240 |
|
|
$ |
32,195 |
|
|
$ |
150,951 |
|
|
$ |
119,153 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total revenue |
$ |
238,529 |
|
|
$ |
203,256 |
|
|
$ |
900,486 |
|
|
$ |
739,893 |
|
|
Less: Licensing revenue |
|
8,605 |
|
|
|
7,377 |
|
|
|
31,216 |
|
|
|
24,904 |
|
|
Shack sales |
$ |
229,924 |
|
|
$ |
195,879 |
|
|
$ |
869,270 |
|
|
$ |
714,989 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Shack-level operating profit margin(2,3) |
|
18.8 |
% |
|
|
16.4 |
% |
|
|
17.4 |
% |
|
|
16.7 |
% |
| ________________ | ||
|
(1) |
For the fourth quarter and fiscal year ended December 28, 2022, this amount includes a non-cash impairment charge of $0.1 million related to one Shack. |
|
|
(2) |
For the fiscal year ended December 28, 2022, Shack-level operating profit margin includes a $1.3 million cumulative catch-up adjustment for gift card breakage income, recognized in Shack sales. |
|
|
(3) |
As a percentage of Shack sales. |
|
SHAKE SHACK INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
EBITDA and Adjusted EBITDA
EBITDA is defined as Net loss before interest expense (net of interest income), Income tax expense (benefit) and Depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA (as defined above) excluding equity-based compensation expense, deferred lease cost, Impairment loss on the disposal of assets, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.
How These Measures Are Useful
When used in conjunction with GAAP financial measures, EBITDA and adjusted EBITDA are supplemental measures of operating performance that the Company believes are useful measures to facilitate comparisons to historical performance and competitors’ operating results. Adjusted EBITDA is a key metric used internally by management to develop internal budgets and forecasts and also serves as a metric in its performance-based equity incentive programs and certain bonus arrangements. The Company believes presentation of EBITDA and adjusted EBITDA provides investors with a supplemental view of the Company’s operating performance that facilitates analysis and comparisons of its ongoing business operations because they exclude items that may not be indicative of the Company’s ongoing operating performance.
Limitations of the Usefulness of These Measures
EBITDA and adjusted EBITDA may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of EBITDA and adjusted EBITDA is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. EBITDA and adjusted EBITDA exclude certain normal recurring expenses. Therefore, these measures may not provide a complete understanding of the Company’s performance and should be reviewed in conjunction with the GAAP financial measures. A reconciliation of EBITDA and adjusted EBITDA to Net loss, the most directly comparable GAAP measure, is set forth below.
|
|
Fiscal Quarter Ended |
|
Fiscal Year Ended |
||||||||||||
|
(in thousands) |
December 28 |
|
December 29 |
|
December 28 |
|
December 29 |
||||||||
|
Net loss |
$ |
(11,071 |
) |
|
$ |
(10,349 |
) |
|
$ |
(25,967 |
) |
|
$ |
(10,111 |
) |
|
Depreciation and amortization expense |
|
19,207 |
|
|
|
15,610 |
|
|
|
72,796 |
|
|
|
58,991 |
|
|
Interest expense, net |
|
373 |
|
|
|
353 |
|
|
|
1,518 |
|
|
|
1,577 |
|
|
Income tax expense (benefit) |
|
6,780 |
|
|
|
3,441 |
|
|
|
1,682 |
|
|
|
(7,224 |
) |
|
EBITDA |
|
15,289 |
|
|
|
9,055 |
|
|
|
50,029 |
|
|
|
43,233 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Equity-based compensation |
|
3,171 |
|
|
|
2,740 |
|
|
|
13,326 |
|
|
|
8,703 |
|
|
Amortization of cloud-based software implementation costs |
|
420 |
|
|
|
310 |
|
|
|
1,500 |
|
|
|
1,245 |
|
|
Deferred lease costs(1) |
|
(339 |
) |
|
|
8 |
|
|
|
(2,247 |
) |
|
|
245 |
|
|
Impairment and loss on disposal of assets(2) |
|
728 |
|
|
|
370 |
|
|
|
2,425 |
|
|
|
1,632 |
|
|
Legal settlements |
|
(40 |
) |
|
|
(59 |
) |
|
|
6,710 |
|
|
|
560 |
|
|
Gift card breakage cumulative catch-up adjustment |
|
— |
|
|
|
— |
|
|
|
(1,281 |
) |
|
|
— |
|
|
Executive transition costs |
|
34 |
|
|
|
— |
|
|
|
34 |
|
|
|
179 |
|
|
Debt offering related costs(3) |
|
— |
|
|
|
(5 |
) |
|
|
— |
|
|
|
231 |
|
|
Other income related to the adjustment of liabilities under tax receivable agreement |
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
(2 |
) |
|
ADJUSTED EBITDA |
$ |
19,263 |
|
|
$ |
12,417 |
|
|
$ |
70,496 |
|
|
$ |
56,026 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted EBITDA margin(4) |
|
8.1 |
% |
|
|
6.1 |
% |
|
|
7.8 |
% |
|
|
7.6 |
% |
| ________________ | ||
|
(1) |
Reflects the extent to which lease expense is greater than or less than contractual fixed base rent. |
|
|
(2) |
For the fourth quarter and fiscal year ended December 28, 2022, this amount includes a non-cash impairment charge of $0.1 million related to one Shack. |
|
|
(3) |
Costs incurred in connection with the Company’s Convertible Notes, issued in March 2021, including consulting and advisory fees. |
|
|
(4) |
Calculated as a percentage of total revenue, which was $238.5 million and $900.5 million for the fourth quarter and fiscal year ended December 28, 2022, respectively, and $203.3 million and $739.9 million for the fourth quarter and fiscal year ended December 29, 2021, respectively. |
|
SHAKE SHACK INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Adjusted Pro Forma Net Income (Loss) and Adjusted Pro Forma Earnings (Loss) Per Fully Exchanged and Diluted Share
Adjusted pro forma net loss represents Net loss attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests (“LLC Interests”) for shares of Class A common stock, adjusted for certain non-recurring items that the Company does not believe are directly related to its core operations and may not be indicative of recurring business operations.
Contacts
Media:
Meg Davis, Shake Shack
mcastranova@shakeshack.com
Investor Relations:
Melissa Calandruccio, ICR
Michelle Michalski, ICR
(844) SHACK-04 (844-742-2504)
investor@shakeshack.com
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