NEW YORK–(BUSINESS WIRE)–Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK) has posted its results for the third quarter of 2022 in a Shareholder Letter in the Quarterly Results section of the Company’s Investor Relations website, which can be found here: Q3 2022 Shake Shack 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 November 10, 2022 by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671; the passcode is 13732788.
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 400 locations system-wide, including over 260 in 32 U.S. States and the District of Columbia, and over 140 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.
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SHAKE SHACK INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
|
(UNAUDITED) |
|||||||
|
(in thousands, except share and per share amounts) |
|||||||
|
|
September 28 |
December 29 |
|||||
|
ASSETS |
|
|
|||||
|
Current assets: |
|
|
|||||
|
Cash and cash equivalents |
$ |
256,998 |
|
$ |
302,406 |
||
|
Marketable securities |
|
80,015 |
|
|
80,000 |
||
|
Accounts receivable, net |
|
11,800 |
|
|
13,657 |
||
|
Inventories |
|
3,996 |
|
|
3,850 |
||
|
Prepaid expenses and other current assets |
|
14,246 |
|
|
9,763 |
||
|
Total current assets |
|
367,055 |
|
|
409,676 |
||
|
Property and equipment, net of accumulated depreciation of $271,938 and $222,768, respectively |
|
441,870 |
|
|
389,386 |
||
|
Operating lease assets |
|
370,536 |
|
|
347,277 |
||
|
Deferred income taxes, net |
|
306,976 |
|
|
298,668 |
||
|
Other assets |
|
15,330 |
|
|
12,563 |
||
|
TOTAL ASSETS |
$ |
1,501,767 |
|
$ |
1,457,570 |
||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|||||
|
Current liabilities: |
|
|
|||||
|
Accounts payable |
$ |
17,210 |
|
$ |
19,947 |
||
|
Accrued expenses |
|
49,387 |
|
|
36,892 |
||
|
Accrued wages and related liabilities |
|
17,758 |
|
|
14,638 |
||
|
Operating lease liabilities, current |
|
40,690 |
|
|
35,519 |
||
|
Other current liabilities |
|
19,497 |
|
|
14,501 |
||
|
Total current liabilities |
|
144,542 |
|
|
121,497 |
||
|
Long-term debt |
|
244,328 |
|
|
243,542 |
||
|
Long-term operating lease liabilities |
|
429,165 |
|
|
400,113 |
||
|
Liabilities under tax receivable agreement, net of current portion |
|
234,892 |
|
|
234,045 |
||
|
Other long-term liabilities |
|
20,588 |
|
|
22,773 |
||
|
Total liabilities |
|
1,073,515 |
|
|
1,021,970 |
||
|
Commitments and contingencies |
|
|
|||||
|
Stockholders’ equity: |
|
|
|||||
|
Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of September 28, 2022 and December 29, 2021. |
|
— |
|
|
— |
||
|
Class A common stock, $0.001 par value—200,000,000 shares authorized; 39,279,699 and 39,142,397 shares issued and outstanding as of September 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 September 28, 2022 and December 29, 2021, respectively. |
|
3 |
|
|
3 |
||
|
Additional paid-in capital |
|
413,274 |
|
|
405,940 |
||
|
Retained earnings (accumulated deficit) |
|
(9,820 |
) |
|
3,554 |
||
|
Accumulated other comprehensive income (loss) |
|
(1 |
) |
|
1 |
||
|
Total stockholders’ equity attributable to Shake Shack Inc. |
|
403,495 |
|
|
409,537 |
||
|
Non-controlling interests |
|
24,757 |
|
|
26,063 |
||
|
Total equity |
|
428,252 |
|
|
435,600 |
||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
1,501,767 |
|
$ |
1,457,570 |
||
|
SHAKE SHACK INC. |
||||||||||||||||||||||||||||
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CONSOLIDATED STATEMENTS OF INCOME (LOSS) |
||||||||||||||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||||||||||||||
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(in thousands, except per share amounts) |
||||||||||||||||||||||||||||
|
|
Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
||||||||||||||||||||||||||
|
|
September 28 |
September 29 |
September 28 |
September 29 |
||||||||||||||||||||||||
|
Shack sales |
$ |
219,501 |
|
96.4 |
% |
$ |
186,972 |
|
96.4 |
% |
$ |
639,346 |
|
96.6 |
% |
$ |
519,110 |
|
96.7 |
% |
||||||||
|
Licensing revenue |
|
8,313 |
|
3.6 |
% |
|
6,923 |
|
3.6 |
% |
|
22,611 |
|
3.4 |
% |
|
17,527 |
|
3.3 |
% |
||||||||
|
TOTAL REVENUE |
|
227,814 |
|
100.0 |
% |
|
193,895 |
|
100.0 |
% |
|
661,957 |
|
100.0 |
% |
|
536,637 |
|
100.0 |
% |
||||||||
|
Shack-level operating expenses(1): |
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Food and paper costs |
|
67,774 |
|
30.9 |
% |
|
57,925 |
|
31.0 |
% |
|
193,645 |
|
30.3 |
% |
|
157,472 |
|
30.3 |
% |
||||||||
|
Labor and related expenses |
|
64,638 |
|
29.4 |
% |
|
58,208 |
|
31.1 |
% |
|
190,954 |
|
29.9 |
% |
|
157,221 |
|
30.3 |
% |
||||||||
|
Other operating expenses |
|
33,966 |
|
15.5 |
% |
|
26,613 |
|
14.2 |
% |
|
96,766 |
|
15.1 |
% |
|
74,032 |
|
14.3 |
% |
||||||||
|
Occupancy and related expenses |
|
17,337 |
|
7.9 |
% |
|
14,640 |
|
7.8 |
% |
|
50,270 |
|
7.9 |
% |
|
43,427 |
|
8.4 |
% |
||||||||
|
General and administrative expenses |
|
26,645 |
|
11.7 |
% |
|
20,504 |
|
10.6 |
% |
|
87,040 |
|
13.1 |
% |
|
60,435 |
|
11.3 |
% |
||||||||
|
Depreciation and amortization expense |
|
18,647 |
|
8.2 |
% |
|
15,183 |
|
7.8 |
% |
|
53,589 |
|
8.1 |
% |
|
43,381 |
|
8.1 |
% |
||||||||
|
Pre-opening costs |
|
3,041 |
|
1.3 |
% |
|
2,933 |
|
1.5 |
% |
|
8,576 |
|
1.3 |
% |
|
8,767 |
|
1.6 |
% |
||||||||
|
Impairment and loss on disposal of assets |
|
592 |
|
0.3 |
% |
|
535 |
|
0.3 |
% |
|
1,697 |
|
0.3 |
% |
|
1,262 |
|
0.2 |
% |
||||||||
|
TOTAL EXPENSES |
|
232,640 |
|
102.1 |
% |
|
196,541 |
|
101.4 |
% |
|
682,537 |
|
103.1 |
% |
|
545,997 |
|
101.7 |
% |
||||||||
|
LOSS FROM OPERATIONS |
|
(4,826 |
) |
(2.1 |
)% |
|
(2,646 |
) |
(1.4 |
)% |
|
(20,580 |
) |
(3.1 |
)% |
|
(9,360 |
) |
(1.7 |
)% |
||||||||
|
Other income, net |
|
1,482 |
|
0.7 |
% |
|
18 |
|
— |
% |
|
1,731 |
|
0.3 |
% |
|
157 |
|
— |
% |
||||||||
|
Interest expense |
|
(475 |
) |
(0.2 |
)% |
|
(350 |
) |
(0.2 |
)% |
|
(1,145 |
) |
(0.2 |
)% |
|
(1,224 |
) |
(0.2 |
)% |
||||||||
|
LOSS BEFORE INCOME TAXES |
|
(3,819 |
) |
(1.7 |
)% |
|
(2,978 |
) |
(1.5 |
)% |
|
(19,994 |
) |
(3.0 |
)% |
|
(10,427 |
) |
(1.9 |
)% |
||||||||
|
Benefit from income taxes |
|
(1,508 |
) |
(0.7 |
)% |
|
(576 |
) |
(0.3 |
)% |
|
(5,098 |
) |
(0.8 |
)% |
|
(10,665 |
) |
(2.0 |
)% |
||||||||
|
NET INCOME (LOSS) |
|
(2,311 |
) |
(1.0 |
)% |
|
(2,402 |
) |
(1.2 |
)% |
|
(14,896 |
) |
(2.3 |
)% |
|
238 |
|
— |
% |
||||||||
|
Less: Net loss attributable to non-controlling interests |
|
(287 |
) |
(0.1 |
)% |
|
(224 |
) |
(0.1 |
)% |
|
(1,522 |
) |
(0.2 |
)% |
|
(837 |
) |
(0.2 |
)% |
||||||||
|
NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC. |
$ |
(2,024 |
) |
(0.9 |
)% |
$ |
(2,178 |
) |
(1.1 |
)% |
$ |
(13,374 |
) |
(2.0 |
)% |
$ |
1,075 |
|
0.2 |
% |
||||||||
|
Earnings (loss) per share of Class A common stock: |
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Basic |
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.34 |
) |
|
$ |
0.03 |
|
|
||||||||||||
|
Diluted |
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.34 |
) |
|
$ |
0.01 |
|
|
||||||||||||
|
Weighted average shares of Class A common stock outstanding: |
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Basic |
|
39,274 |
|
|
|
39,137 |
|
|
|
39,221 |
|
|
|
39,066 |
|
|
||||||||||||
|
Diluted |
|
39,274 |
|
|
|
39,137 |
|
|
|
39,221 |
|
|
|
43,448 |
|
|
||||||||||||
| ___________________ | ||
|
(1) |
As a percentage of Shack sales. |
|
|
SHAKE SHACK INC. |
||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
|
(UNAUDITED) |
||||||||
|
(in thousands) |
||||||||
|
|
Thirty-Nine Weeks Ended |
|||||||
|
|
September 28 |
September 29 |
||||||
|
OPERATING ACTIVITIES |
|
|
||||||
|
Net income (loss) (including amounts attributable to non-controlling interests) |
$ |
(14,896 |
) |
$ |
238 |
|
||
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities |
|
|
||||||
|
Depreciation and amortization expense |
|
53,589 |
|
|
43,381 |
|
||
|
Amortization of debt issuance costs |
|
786 |
|
|
605 |
|
||
|
Amortization of cloud computing asset |
|
1,080 |
|
|
935 |
|
||
|
Non-cash operating lease cost |
|
43,159 |
|
|
37,213 |
|
||
|
Equity-based compensation |
|
10,155 |
|
|
5,963 |
|
||
|
Deferred income taxes |
|
12,215 |
|
|
9,708 |
|
||
|
Loss on sale of marketable securities |
|
— |
|
|
5 |
|
||
|
Non-cash interest expense |
|
181 |
|
|
348 |
|
||
|
Impairment and loss on disposal of assets |
|
1,697 |
|
|
1,262 |
|
||
|
Unrealized loss on equity securities |
|
400 |
|
|
117 |
|
||
|
Other non-cash income |
|
(2 |
) |
|
(2 |
) |
||
|
Changes in operating assets and liabilities: |
|
|
||||||
|
Accounts receivable |
|
1,840 |
|
|
(1,847 |
) |
||
|
Inventories |
|
(146 |
) |
|
(637 |
) |
||
|
Prepaid expenses and other current assets |
|
(4,767 |
) |
|
4,233 |
|
||
|
Other assets |
|
(5,966 |
) |
|
(767 |
) |
||
|
Accounts payable |
|
(2,069 |
) |
|
(6,780 |
) |
||
|
Accrued expenses |
|
(17,783 |
) |
|
(18,682 |
) |
||
|
Accrued wages and related liabilities |
|
3,052 |
|
|
3,709 |
|
||
|
Other current liabilities |
|
4,376 |
|
|
(2,202 |
) |
||
|
Long-term operating lease liabilities |
|
(32,558 |
) |
|
(31,886 |
) |
||
|
Other long-term liabilities |
|
(10 |
) |
|
(1,174 |
) |
||
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
54,333 |
|
|
43,740 |
|
||
|
INVESTING ACTIVITIES |
|
|
||||||
|
Purchases of property and equipment |
|
(94,797 |
) |
|
(68,852 |
) |
||
|
Purchases of marketable securities |
|
(415 |
) |
|
(47,321 |
) |
||
|
Sales of marketable securities |
|
— |
|
|
4,004 |
|
||
|
NET CASH USED IN INVESTING ACTIVITIES |
|
(95,212 |
) |
|
(112,169 |
) |
||
|
FINANCING ACTIVITIES |
|
|
||||||
|
Proceeds from issuance of convertible notes, net of discount |
|
— |
|
|
243,750 |
|
||
|
Deferred financing costs |
|
— |
|
|
(123 |
) |
||
|
Payments on principal of finance leases |
|
(2,260 |
) |
|
(1,982 |
) |
||
|
Distributions paid to non-controlling interest holders |
|
(389 |
) |
|
(878 |
) |
||
|
Debt issuance costs |
|
— |
|
|
(968 |
) |
||
|
Proceeds from stock option exercises |
|
334 |
|
|
6,688 |
|
||
|
Employee withholding taxes related to net settled equity awards |
|
(2,214 |
) |
|
(3,510 |
) |
||
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
(4,529 |
) |
|
242,977 |
|
||
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
(45,408 |
) |
|
174,548 |
|
||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
|
302,406 |
|
|
146,873 |
|
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
256,998 |
|
$ |
321,421 |
|
||
SHAKE SHACK INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
To supplement the consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“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 income (loss) and adjusted pro forma earnings (loss) per fully exchanged and diluted share (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 employee compensation as it serves as a metric in certain performance-based employee 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.
|
|
Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
||||||||||||||
|
(dollar amounts in thousands) |
September 28 |
September 29 |
September 28 |
September 29 |
||||||||||||
|
Loss from operations |
$ |
(4,826 |
) |
$ |
(2,646 |
) |
$ |
(20,580 |
) |
$ |
(9,360 |
) |
||||
|
Less: |
|
|
|
|
||||||||||||
|
Licensing revenue |
|
8,313 |
|
|
6,923 |
|
|
22,611 |
|
|
17,527 |
|
||||
|
Add: |
|
|
|
|
||||||||||||
|
General and administrative expenses |
|
26,645 |
|
|
20,504 |
|
|
87,040 |
|
|
60,435 |
|
||||
|
Depreciation and amortization expense |
|
18,647 |
|
|
15,183 |
|
|
53,589 |
|
|
43,381 |
|
||||
|
Pre-opening costs |
|
3,041 |
|
|
2,933 |
|
|
8,576 |
|
|
8,767 |
|
||||
|
Impairment and loss on disposal of assets |
|
592 |
|
|
535 |
|
|
1,697 |
|
|
1,262 |
|
||||
|
Shack-level operating profit |
$ |
35,786 |
|
$ |
29,586 |
|
$ |
107,711 |
|
$ |
86,958 |
|
||||
|
|
|
|
|
|
||||||||||||
|
Total revenue |
$ |
227,814 |
|
$ |
193,895 |
|
$ |
661,957 |
|
$ |
536,637 |
|
||||
|
Less: Licensing revenue |
|
8,313 |
|
|
6,923 |
|
|
22,611 |
|
|
17,527 |
|
||||
|
Shack sales |
$ |
219,501 |
|
$ |
186,972 |
|
$ |
639,346 |
|
$ |
519,110 |
|
||||
|
|
|
|
|
|
||||||||||||
|
Shack-level operating profit margin(1,2) |
|
16.3 |
% |
|
15.8 |
% |
|
16.8 |
% |
|
16.8 |
% |
||||
| ___________________ | ||
|
(1) |
As a percentage of Shack sales. |
|
|
(2) |
For the thirty-nine weeks ended September 28, 2022, Shack-level operating profit margin includes the $1,281 cumulative catch-up adjustment for gift card breakage income, recognized in Shack sales. |
|
SHAKE SHACK INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
EBITDA and Adjusted EBITDA
EBITDA is defined as Net income (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 costs, Impairment and 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 income (loss) the most directly comparable GAAP measure, is as follows.
|
|
Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
||||||||||||||
|
(dollar amounts in thousands) |
September 28 |
September 29 |
September 28 |
September 29 |
||||||||||||
|
Net income (loss) |
$ |
(2,311 |
) |
$ |
(2,402 |
) |
$ |
(14,896 |
) |
$ |
238 |
|
||||
|
Depreciation and amortization expense |
|
18,647 |
|
|
15,183 |
|
|
53,589 |
|
|
43,381 |
|
||||
|
Interest expense, net |
|
475 |
|
|
350 |
|
|
1,145 |
|
|
1,224 |
|
||||
|
Benefit from income taxes |
|
(1,508 |
) |
|
(576 |
) |
|
(5,098 |
) |
|
(10,665 |
) |
||||
|
EBITDA |
|
15,303 |
|
|
12,555 |
|
|
34,740 |
|
|
34,178 |
|
||||
|
|
|
|
|
|
||||||||||||
|
Equity-based compensation |
|
3,515 |
|
|
2,324 |
|
|
10,155 |
|
|
5,963 |
|
||||
|
Amortization of cloud-based software implementation costs |
|
397 |
|
|
308 |
|
|
1,080 |
|
|
935 |
|
||||
|
Deferred lease costs(1) |
|
(258 |
) |
|
108 |
|
|
(1,908 |
) |
|
237 |
|
||||
|
Impairment and loss on disposal of assets |
|
592 |
|
|
535 |
|
|
1,697 |
|
|
1,262 |
|
||||
|
Legal matters |
|
— |
|
|
— |
|
|
6,750 |
|
|
619 |
|
||||
|
Gift card breakage cumulative catch-up adjustment |
|
— |
|
|
— |
|
|
(1,281 |
) |
|
— |
|
||||
|
Debt offering related costs(2) |
|
— |
|
|
— |
|
|
— |
|
|
236 |
|
||||
|
Executive transition costs |
|
— |
|
|
— |
|
|
— |
|
|
179 |
|
||||
|
Adjusted EBITDA |
$ |
19,549 |
|
$ |
15,830 |
|
$ |
51,233 |
|
$ |
43,609 |
|
||||
|
|
|
|
|
|
||||||||||||
|
Adjusted EBITDA margin(3) |
|
8.6 |
% |
|
8.2 |
% |
|
7.7 |
% |
|
8.1 |
% |
||||
| ___________________ | ||
|
(1) |
Reflects the extent to which lease expense is greater than or less than contractual fixed base rent. |
|
|
(2) |
Costs incurred in connection with the Company’s Convertible Notes, issued in March 2021, including consulting and advisory fees. |
|
|
(3) |
Calculated as a percentage of Total revenue, which was $227.8 million and $662.0 million for the thirteen and thirty-nine weeks ended September 28, 2022, respectively, and $193.9 million and $536.6 million for the thirteen and thirty-nine weeks ended September 29, 2021, respectively. |
|
Adjusted Pro Forma Net Income (Loss) and Adjusted Pro Forma Earnings (Loss) Per Fully Exchanged and Diluted Share
Adjusted pro forma net income (loss) 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 items that the Company does not believe are directly related to its core operations and may not be indicative of recurring business operations. Adjusted pro forma earnings (loss) per fully exchanged and diluted share is calculated by dividing adjusted pro forma net income (loss) by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Interests, after giving effect to the dilutive effect of outstanding equity-based awards.
How These Measures Are Useful
When used in conjunction with GAAP financial measures, adjusted pro forma net income (loss) and adjusted pro forma earnings (loss) per fully exchanged and diluted share are supplemental measures of operating performance that the Company believes are useful measures to evaluate performance period over period and relative to its competitors. By assuming the full exchange of all outstanding LLC Interests, the Company believes these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in Net income (loss) attributable to Shake Shack Inc.
Contacts
Media:
Kristyn Clark, Shake Shack
(646) 747-8776
kclark@shakeshack.com
Investor Relations:
Melissa Calandruccio, ICR
Michelle Michalski, ICR
(844) SHACK-04 (844-742-2504)
investor@shakeshack.com
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