Shake Shack Announces Second Quarter 2024 Financial Results

Rhea-AI Summary

Shake Shack (NYSE: SHAK) reported strong financial results for Q2 2024, with total revenue up 16.4% to $316.5 million. The company saw system-wide sales increase by 13.5% to $483.7 million, and same-Shack sales grow by 4.0% compared to 2023. Operating income more than doubled to $10.8 million, while net income rose to $10.4 million. Adjusted EBITDA showed significant growth, increasing 27.4% to $47.2 million. The company's expansion continued with the opening of twelve new Company-operated Shacks, including three drive-thrus, and eleven new licensed Shacks. Earnings per diluted share reached $0.23, with adjusted pro forma earnings of $0.27 per fully exchanged and diluted share.

Positive

• Total revenue increased 16.4% to $316.5 million
• System-wide sales grew 13.5% to $483.7 million
• Same-Shack sales up 4.0% versus 2023
• Operating income more than doubled to $10.8 million
• Net income increased to $10.4 million from $7.2 million in 2023
• Adjusted EBITDA grew 27.4% to $47.2 million
• Opened twelve new Company-operated Shacks and eleven new licensed Shacks

Negative

• None.

Financial Analyst

Shake Shack's Q2 2024 results demonstrate robust growth and operational efficiency. The 16.4% year-over-year revenue increase to $316.5 million is impressive, driven by both Shack sales and licensing revenue. The 4.0% same-Shack sales growth indicates strong consumer demand and effective pricing strategies.

Particularly noteworthy is the substantial improvement in profitability. Operating income more than doubled from $4.7 million to $10.8 million, while net income jumped 44.4% to $10.4 million. The restaurant-level profit margin of 22.0% suggests effective cost management at the unit level.

The 27.4% increase in Adjusted EBITDA to $47.2 million is a strong indicator of the company's improving operational efficiency and scalability. This, coupled with the expansion of 23 new Shacks (12 company-operated and 11 licensed), points to a well-executed growth strategy.

However, investors should note the discrepancy between net income ($10.4 million) and adjusted pro forma net income ($12.1 million). While the adjusted figure provides a clearer picture of ongoing operations, the difference highlights the importance of understanding non-GAAP adjustments in evaluating true profitability.

Overall, these results suggest Shake Shack is successfully navigating inflationary pressures and consumer spending shifts, positioning itself for continued growth in the competitive fast-casual dining sector.

Market Research Analyst

Shake Shack's Q2 2024 performance offers valuable insights into consumer behavior and market trends in the fast-casual dining sector. The 13.5% increase in system-wide sales to $483.7 million indicates strong brand resonance and effective market penetration strategies.

The 4.0% same-Shack sales growth is particularly telling. In a period where many consumers are tightening their belts due to economic pressures, this growth suggests Shake Shack is successfully positioning itself as an affordable luxury. The company seems to be striking a balance between value perception and premium positioning, a important factor in the current economic climate.

The expansion of 23 new Shacks, including three drive-thrus, demonstrates the company's adaptability to changing consumer preferences. The focus on drive-thru locations is a strategic move, catering to the increased demand for convenience and contactless options post-pandemic.

The growth in licensing revenue ($11.0 million) points to successful brand extension and partnership strategies. This diversification of revenue streams could provide resilience against potential downturns in company-operated locations.

However, it's important to note that while these results are strong, they come against a backdrop of ongoing inflationary pressures and potential shifts in consumer spending. Shake Shack's ability to maintain this growth trajectory will depend on its continued innovation in menu offerings, digital capabilities and operational efficiencies to stay ahead in a highly competitive market.

• Total revenue of $316.5 million, up 16.4% versus 2023, including $305.5 million of Shack sales and $11.0 million of Licensing revenue.
• System-wide sales of $483.7 million, up 13.5% versus 2023.
• Same-Shack sales up 4.0% versus 2023.
• Operating income of $10.8 million versus $4.7 million in 2023.
  • Restaurant-level profit⁽¹⁾ of $67.1 million, or 22.0% of Shack sales.
• Net income of $10.4 million versus $7.2 million in 2023.
  • Adjusted EBITDA⁽¹⁾ of $47.2 million, up 27.4% versus 2023.
• Net income attributable to Shake Shack Inc. of $9.7 million, or earnings of $0.23 per diluted share.
  • Adjusted pro forma net income⁽¹⁾ of $12.1 million, or earnings of $0.27 per fully exchanged and diluted share.
• Opened twelve new Company-operated Shacks, including three drive-thrus. Opened eleven new licensed Shacks.

NEW YORK--(BUSINESS WIRE)-- Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK) has posted its results for the second quarter of 2024 in a Shareholder Letter in the Quarterly Results section of the Company's Investor Relations website, which can be found here: Q2 2024 Shake Shack Shareholder Letter.

Shake Shack will host a conference call at 8:00 a.m. ET. Hosting the call will be Robert Lynch, 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 August 08, 2024 by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671; the passcode is 13746900.

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)

Restaurant-level 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 540 locations system-wide, including over 350 in 33 U.S. States and the District of Columbia, and 190 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 Company-operated Shacks and excludes sales from licensed Shacks.

“System-wide sales” is an operating measure and consists of sales from Company-operated Shacks and 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 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 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.

"Restaurant-level profit," a non-GAAP measure, also formerly referred to as 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.

"Restaurant-level profit margin," a non-GAAP measure, also formerly referred to as Shack-level operating profit margin, 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, 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 items that the Company does not believe are directly reflected to its core operations and may not be indicative of its recurring business operations.

SHAKE SHACK INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share amounts)
	June 26 2024				December 27 2023
ASSETS
Current assets:
Cash and cash equivalents	$	301,838			$	224,653
Marketable securities		2,574				68,561
Accounts receivable, net		15,914				16,847
Inventories		5,194				5,404
Prepaid expenses and other current assets		20,160				18,967
Total current assets		345,680				334,432
Property and equipment, net of accumulated depreciation of $425,428 and $376,760, respectively		545,225				530,995
Operating lease assets		419,527				398,296
Deferred income taxes, net		338,538				326,208
Other assets		12,788				15,926
TOTAL ASSETS	$	1,661,758			$	1,605,857
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	18,576			$	22,273
Accrued expenses		56,376				54,742
Accrued wages and related liabilities		22,584				20,945
Operating lease liabilities, current		53,140				49,004
Other current liabilities		17,412				17,103
Total current liabilities		168,088				164,067
Long-term debt		246,160				245,636
Long-term operating lease liabilities		487,600				464,533
Liabilities under tax receivable agreement, net of current portion		246,878				235,613
Other long-term liabilities		26,667				26,638
Total liabilities		1,175,393				1,136,487
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of June 26, 2024 and December 27, 2023.		—				—
Class A common stock, $0.001 par value—200,000,000 shares authorized; 39,966,973 and 39,474,315 shares issued and outstanding as of June 26, 2024 and December 27, 2023, respectively.		40				39
Class B common stock, $0.001 par value—35,000,000 shares authorized; 2,487,936 and 2,834,513 shares issued and outstanding as of June 26, 2024 and December 27, 2023, respectively.		2				3
Additional paid-in capital		433,877				426,601
Retained earnings		28,485				16,777
Accumulated other comprehensive loss		(4	)			(3	)
Total stockholders' equity attributable to Shake Shack Inc.		462,400				443,417
Non-controlling interests		23,965				25,953
Total equity		486,365				469,370
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,661,758			$	1,605,857

SHAKE SHACK INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share amounts)
	Thirteen Weeks Ended														Twenty-Six Weeks Ended
	June 26 2024							June 28 2023							June 26 2024							June 28 2023
Shack sales	$	305,480			96.5	%		$	261,810			96.3	%		$	586,032			96.5	%		$	506,064			96.4	%
Licensing revenue		11,016			3.5	%			9,995			3.7	%			20,968			3.5	%			19,019			3.6	%
TOTAL REVENUE		316,496			100.0	%			271,805			100.0	%			607,000			100.0	%			525,083			100.0	%
Shack-level operating expenses(1):
Food and paper costs		85,053			27.8	%			75,800			29.0	%			165,306			28.2	%			147,572			29.2	%
Labor and related expenses		86,614			28.4	%			75,158			28.7	%			168,123			28.7	%			149,422			29.5	%
Other operating expenses		43,953			14.4	%			36,109			13.8	%			85,809			14.6	%			71,045			14.0	%
Occupancy and related expenses		23,226			7.6	%			19,801			7.6	%			45,414			7.7	%			38,384			7.6	%
General and administrative expenses		36,313			11.5	%			31,476			11.6	%			72,257			11.9	%			62,787			12.0	%
Depreciation and amortization expense		25,496			8.1	%			22,252			8.2	%			50,937			8.4	%			43,574			8.3	%
Pre-opening costs		4,014			1.3	%			5,577			2.1	%			6,767			1.1	%			9,134			1.7	%
Impairment and loss on disposal of assets		1,045			0.3	%			884			0.3	%			1,571			0.3	%			1,606			0.3	%
TOTAL EXPENSES		305,714			96.6	%			267,057			98.3	%			596,184			98.2	%			523,524			99.7	%
INCOME FROM OPERATIONS		10,782			3.4	%			4,748			1.7	%			10,816			1.8	%			1,559			0.3	%
Other income, net		3,300			1.0	%			3,227			1.2	%			6,506			1.1	%			6,064			1.2	%
Interest expense		(527	)		(0.2	)%			(405	)		(0.1	)%			(1,035	)		(0.2	)%			(808	)		(0.2	)%
INCOME BEFORE INCOME TAXES		13,555			4.3	%			7,570			2.8	%			16,287			2.7	%			6,815			1.3	%
Income tax expense		3,173			1.0	%			347			0.1	%			3,691			0.6	%			1,214			0.2	%
NET INCOME		10,382			3.3	%			7,223			2.7	%			12,596			2.1	%			5,601			1.1	%
Less: Net income attributable to non-controlling interests		714			0.2	%			275			0.1	%			888			0.1	%			187			—	%
NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC.	$	9,668			3.1	%		$	6,948			2.6	%		$	11,708			1.9	%		$	5,414			1.0	%
Earnings per share of Class A common stock:
Basic	$	0.24						$	0.18						$	0.30						$	0.14
Diluted	$	0.23						$	0.16						$	0.28						$	0.13
Weighted-average shares of Class A common stock outstanding:
Basic		39,750							39,416							39,632							39,374
Diluted		41,480							43,886							41,369							43,837

__________________

(1)

As a percentage of Shack sales.

SHAKE SHACK INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
	Twenty-Six Weeks Ended
	June 26 2024				June 28 2023
OPERATING ACTIVITIES
Net income (including amounts attributable to non-controlling interests)	$	12,596			$	5,601
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		50,937				43,574
Amortization of debt issuance costs		524				524
Amortization of cloud computing assets		1,048				880
Non-cash operating lease cost		37,655				32,598
Equity-based compensation		7,381				7,734
Deferred income taxes		1,311				2,733
Non-cash interest		(128	)			99
Gain on sale of equity securities		—				(81	)
Net amortization of discount on held-to-maturity securities		(434	)			(89	)
Impairment and loss on disposal of assets		1,571				1,606
Changes in operating assets and liabilities:
Accounts receivable		933				(455	)
Inventories		210				(490	)
Prepaid expenses and other current assets		(864	)			(519	)
Other assets		(1,219	)			(3,217	)
Accounts payable		(1,084	)			(3,939	)
Accrued expenses		4,409				39
Accrued wages and related liabilities		1,639				592
Other current liabilities		(732	)			(2,081	)
Operating lease liabilities		(32,553	)			(25,584	)
Other long-term liabilities		1,010				2,666
NET CASH PROVIDED BY OPERATING ACTIVITIES		84,210				62,191
INVESTING ACTIVITIES
Purchases of property and equipment		(65,992	)			(74,755	)
Purchases of held-to-maturity securities		—				(91,448	)
Maturities of held-to-maturity marketable securities		66,420				—
Purchases of equity securities		—				(690	)
Sales of equity securities		—				81,478
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		428				(85,415	)
FINANCING ACTIVITIES
Payments on principal of finance leases		(1,918	)			(1,504	)
Distributions paid to non-controlling interest holders		(145	)			(52	)
Net proceeds from stock option exercises		552				630
Employee withholding taxes related to net settled equity awards		(5,941	)			(2,670	)
NET CASH USED IN FINANCING ACTIVITIES		(7,452	)			(3,596	)
Effect of exchange rate changes on cash and cash equivalents		(1	)			(4	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		77,185				(26,824	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		224,653				230,521
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	301,838			$	203,697

SHAKE SHACK INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)

To supplement the condensed 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: Restaurant-level profit, Restaurant-level profit margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share (collectively the "non-GAAP financial measures").

Restaurant-Level Profit

Restaurant-level profit, also formerly referred to as 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, Restaurant-level profit and Restaurant-level 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, Restaurant-level profit and Restaurant-level 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 Restaurant-level profit and Restaurant-level 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

Restaurant-level profit and Restaurant-level profit margin may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of Restaurant-level profit and Restaurant-level 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. Restaurant-level 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 Restaurant-level profit and Restaurant-level profit margin should be reviewed in conjunction with the Company's GAAP financial results. A reconciliation of Restaurant-level profit to Loss from Operations, the most directly comparable GAAP financial measure, is set forth below.

	Thirteen Weeks Ended								Twenty-Six Weeks Ended
(dollar amounts in thousands)	June 26 2024				June 28 2023				June 26 2024				June 28 2023
Income from operations	$	10,782			$	4,748			$	10,816			$	1,559
Less:
Licensing revenue		11,016				9,995				20,968				19,019
Add:
General and administrative expenses		36,313				31,476				72,257				62,787
Depreciation and amortization expense		25,496				22,252				50,937				43,574
Pre-opening costs		4,014				5,577				6,767				9,134
Impairment and loss on disposal of assets		1,045				884				1,571				1,606
Adjustment:
Employee benefit charges(1)		445				—				445				—
Restaurant-level profit	$	67,079			$	54,942			$	121,825			$	99,641
Total revenue	$	316,496			$	271,805			$	607,000			$	525,083
Less: Licensing revenue		11,016				9,995				20,968				19,019
Shack sales	$	305,480			$	261,810			$	586,032			$	506,064
Restaurant-level profit margin(2)		22.0	%			21.0	%			20.8	%			19.7	%

(1)		Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses.
(2)		As a percentage of Shack sales.

SHAKE SHACK INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)

EBITDA and Adjusted EBITDA

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, 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, the most directly comparable GAAP measure, is set forth below.

	Thirteen Weeks Ended								Twenty-Six Weeks Ended
(dollar amounts in thousands)	June 26 2024				June 28 2023				June 26 2024				June 28 2023
Net income	$	10,382			$	7,223			$	12,596			$	5,601
Depreciation and amortization expense		25,496				22,252				50,937				43,574
Interest expense, net		395				278				368				681
Income tax expense		3,173				347				3,691				1,214
EBITDA	$	39,446			$	30,100			$	67,592			$	51,070
Equity-based compensation		3,739				3,932				7,381				7,734
Amortization of cloud-based software implementation costs		530				441				1,048				880
Impairment and loss on disposal of assets		1,045				884				1,571				1,606
Restatement costs(1)		208				—				1,599				—
CEO transition costs		109				—				588				—
Employee benefit charges(2)		445				—				445				—
Legal settlements(3)		—				—				—				1,004
Other(4)		1,687				1,693				2,870				2,321
Adjusted EBITDA	$	47,209			$	37,050			$	83,094			$	64,615
Adjusted EBITDA margin(5)		14.9	%			13.6	%			13.7	%			12.3	%

(1)		Expenses incurred related to the restatement of prior periods in the 2023 Form 10-K.
(2)		Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses.
(3)		Expenses incurred to establish accruals related to the settlements of legal matters.
(4)		Expenses incurred for professional fees related to non-recurring matters.
(5)		Calculated as a percentage of Total revenue, which was $316.5 million and $607.0 million for the thirteen and twenty-six weeks ended June 26, 2024, respectively, and $271.8 million and $525.1 million for the thirteen and twenty-six weeks ended June 28, 2023, respectively.

SHAKE SHACK INC.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)

Adjusted Pro Forma Net Income and Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share

Adjusted pro forma net income represents Net income 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 per fully exchanged and diluted share is calculated by dividing adjusted pro forma net income 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 and adjusted pro forma earnings 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 attributable to Shake Shack Inc. driven by increases in its ownership of SSE Holdings, which are unrelated to the Company's operating performance, and excludes items that are non-recurring or may not be indicative of ongoing operating performance.

Limitations of the Usefulness of These Measures

Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should not be considered alternatives to Net income and earnings per share, as determined under GAAP. While these measures are useful in evaluating the Company's performance, it does not account for the earnings attributable to the non-controlling interest holders and therefore does not provide a complete understanding of the Net income attributable to Shake Shack Inc. Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should be evaluated in conjunction with GAAP financial results.

A reconciliation of adjusted pro forma net income to Net income attributable to Shake Shack Inc., the most directly comparable GAAP measure, and the computation of adjusted pro forma earnings per fully exchanged and diluted share are set forth below.

	Thirteen Weeks Ended								Twenty-Six Weeks Ended
(in thousands, except per share amounts)	June 26 2024				June 28 2023				June 26 2024				June 28 2023
Numerator:
Net income attributable to Shake Shack Inc.	$	9,668			$	6,948			$	11,708			$	5,414
Adjustments:
Reallocation of Net income attributable to non-controlling interests from the assumed exchange of LLC Interests(1)		714				275				888				187
Restatement costs(2)		208				—				1,599				—
CEO transition costs		109				—				588				—
Employee benefit charges(3)		445				—				445				—
Legal settlements		—				—				—				1,004
Other(4)		1,687				1,693				2,870				2,321
Tax impact of above adjustments(5)		(685	)			(1,036	)			(329	)			(1,336	)
Adjusted pro forma net income	$	12,146			$	7,880			$	17,769			$	7,590
Denominator:
Weighted average shares of Class A common stock outstanding—diluted		41,480				43,886				41,369				43,837
Adjustments:
Assumed exchange of LLC Interests for shares of Class A common stock(1)		2,693				—				2,761				—
Adjusted pro forma fully exchanged weighted average shares of Class A common stock outstanding—diluted		44,173				43,886				44,130				43,837
Adjusted pro forma earnings per fully exchanged share—diluted	$	0.27			$	0.18			$	0.40			$	0.17

	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	June 26 2024			June 28 2023			June 26 2024			June 28 2023
Earnings per share of Class A common stock—diluted	$	0.23		$	0.16		$	0.28		$	0.13
Assumed exchange of LLC Interests for shares of Class A common stock(1)		0.01			—			0.01			—
Non-GAAP adjustments(6)		0.03			0.02			0.11			0.04
Adjusted pro forma earnings per fully exchanged share—diluted	$	0.27		$	0.18		$	0.40		$	0.17

(1)		Assumes the exchange of all outstanding LLC Interests for shares of Class A common stock, resulting in the elimination of the non-controlling interest and recognition of the net income attributable to non-controlling interests.
(2)		Expenses incurred related to the restatement of prior periods in the 2023 Form 10-K.
(3)		Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses.
(4)		Expenses incurred for professional fees related to non-recurring matters.
(5)		Represents the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of 24.1% and 18.4% for the thirteen and twenty-six weeks ended June 26, 2024, respectively, and 14.9% and 25.1% for the thirteen and twenty-six weeks ended June 28, 2023, respectively. Amounts include provisions for U.S. federal income taxes, certain LLC entity-level taxes and foreign withholding taxes, assuming the highest statutory rates apportioned to each applicable state, local and foreign jurisdiction.
(6)		Represents the per share impact of non-GAAP adjustments for each period. Refer to the reconciliation of Adjusted pro forma net income above, for additional information.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731238082/en/

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

Source: Shake Shack Inc.

FAQ

What was Shake Shack's (SHAK) total revenue in Q2 2024?

Shake Shack's total revenue in Q2 2024 was $316.5 million, up 16.4% compared to the same period in 2023.

How much did Shake Shack's (SHAK) same-Shack sales grow in Q2 2024?

Shake Shack's same-Shack sales increased by 4.0% in Q2 2024 compared to the same quarter in 2023.

What was Shake Shack's (SHAK) net income for Q2 2024?

Shake Shack reported a net income of $10.4 million for Q2 2024, up from $7.2 million in the same quarter of 2023.

How many new Shacks did Shake Shack (SHAK) open in Q2 2024?

Shake Shack opened twelve new Company-operated Shacks, including three drive-thrus, and eleven new licensed Shacks in Q2 2024.

What was Shake Shack's (SHAK) earnings per diluted share in Q2 2024?

Shake Shack's earnings per diluted share were $0.23 in Q2 2024, with adjusted pro forma earnings of $0.27 per fully exchanged and diluted share.