Shake Shack Announces Third Quarter 2021 Financial Results
Shake Shack reported a record revenue of $193.9 million for Q3 2021, marking a 48.7% year-over-year increase. System-wide sales rose 53.1% to approximately $298 million. Same-Shack sales improved 24.8% compared to 2020. However, the company faces margin pressures due to inflation in commodity prices and increased investment in team members. Total digital sales accounted for 42% of Shack sales, retaining nearly 80% of peak digital sales from January 2021. The company anticipates Q4 2021 revenue between $193.5 million and $200 million.
- Total revenue increased 48.7% year-over-year to $193.9 million.
- Shack-level operating profit rose 58.6% to $29.6 million, representing 15.8% of Shack sales.
- Licensing revenue grew 68.3% to $6.9 million.
- Same-Shack sales improved 24.8% in Q3 2021 versus the same period last year.
- Operating loss of $2.6 million, although improved from $6.8 million last year.
- General and administrative expenses increased to $20.5 million from $15 million year-over-year.
-
Total Revenue grew
48.7% year-over-year to , and system-wide sales grew$193.9 million 53.1% to nearly .$299 million -
Third quarter Same-Shack Sales were up
24.8% versus 2020. -
Momentum versus 2019 continued into fiscal October with overall Same-Shack Sales down
1% and suburban Same-Shack Sales up7% . All regions outside of NYC surpassed 2019 levels. -
Retained nearly
80% of digital sales in fiscal September from high in fiscalJanuary 2021 . Acquired14% more first time purchasers through Company-owned digital channels versus the prior quarter.
Financial Highlights for the Third Quarter of 2021:
-
Total revenue in the third quarter of 2021 increased
48.7% to versus the same period last year.$193.9 million -
Shack sales in the third quarter of 2021 increased
48.1% to versus the same period last year.$187.0 million -
Same-Shack sales(1) improved to up
24.8% in the third quarter of 2021 versus the same period last year. -
Licensed revenue in the third quarter of 2021 increased
68.3% to versus the same period last year.$6.9 million -
Shack system-wide sales in the third quarter of 2021 increased
53.1% to versus the same period last year.$298.6 million -
Operating loss in the third quarter of 2021 was
compared to an Operating loss of$2.6 million in the same period last year.$6.8 million -
Shack-level operating profit(2) increased
58.6% in the third quarter of 2021 versus the same period last year, to , or$29.6 million 15.8% of Shack sales. -
Net loss was
and adjusted EBITDA(2) was$2.4 million in the third quarter of 2021, compared to a Net loss of$15.8 million and adjusted EBITDA of$6.1 million in the same period last year.$8.2 million -
Net loss attributable to
Shake Shack Inc. was and adjusted pro forma net loss(2) was$2.2 million , or a loss of$2.0 million per fully exchanged and diluted share in the third quarter of 2021, compared to Net loss attributable to$0.05 Shake Shack Inc. of and adjusted pro forma net loss of$5.6 million , or a loss of$4.4 million per fully exchanged and diluted share, in the same period last year.$0.11 - Net system-wide Shack openings, comprised of five net domestic Company-operated Shacks and six net licensed Shacks.
-
Cash and cash equivalents and marketable securities on hand was
as of$401.5 million September 29, 2021 .
(1) |
In order to compare like-for-like periods for fiscal 2021, Same-Shack sales will compare the 52 weeks from |
(2) |
Shack-level operating profit, adjusted EBITDA and adjusted pro forma net income (loss) are non-GAAP measures. Reconciliations of Shack-level operating profit to Loss from Operations and adjusted EBITDA to Net income (loss), and adjusted pro-forma net income (loss) to Net income (loss) attributable to |
Third Quarter 2021 Review
Total revenue, which includes Shack sales and Licensing revenue, increased
Same-Shack Sales grew
Average weekly sales were
During the third quarter of 2021, total digital sales, including orders placed on the
Licensing revenue for the third quarter of 2021 was
Operating loss for the third quarter of 2021 was
-
General and administrative expenses increased to
in the third quarter of 2021 from$20.5 million in the third quarter of 2020. The third quarter of 2021 includes$15.0 million of equity-based compensation and other non-cash items. This increase was primarily due to the integral investments we are making across the business to support our people, as well as marketing and technology initiatives. We remain committed to leveraging our strong balance sheet to support these long term strategic plans as we move into 2022 and beyond. As a percentage of Total revenue, General and administrative expenses decreased to$2.3 million 10.6% for the third quarter of 2021 from11.5% in the third quarter of 2020.
Development Highlights
During the third quarter of 2021, the Company opened five new domestic Company-operated Shacks and eight new licensed Shacks. These openings were partially offset by the closure of two international licensed Shacks in the third quarter of 2021.
Location |
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Type |
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Opening Date |
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International Licensed |
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Domestic Licensed |
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International Licensed |
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Hwaseong, |
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International Licensed |
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International Licensed |
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International Licensed |
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International Licensed |
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International Licensed |
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In fiscal
Fiscal 2021 Outlook(1)
The Company is providing revenue and sales guidance for the fourth quarter of 2021.
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Current Q4 2021 Outlook |
Total revenue |
|
Shack sales |
|
Licensing revenue |
|
Same-Shack sales versus 2020 |
+ mid to high teens |
Shack-level operating profit margin |
|
Fiscal fourth quarter and fiscal year 2021 guidance is derived from recent trends and does not assume material changes to the current operating environment, inclusive of any potential further COVID impacts. The Company is reaffirming the full year Shack openings and expense guidance provided earlier this year.
|
Current 2021 Outlook |
|
35 to 38 |
Licensed Shack openings (gross) |
Approximately 25 |
Total General and administrative expenses(2) |
|
Equity-based compensation |
approximately |
Depreciation expense |
|
Pre-opening costs |
|
(1) |
The information provided in this section should be reviewed in conjunction with the section titled “Forward-Looking Information” in this release, which form the basis of our assumptions used to prepare this forward-looking information. You should not attribute undue certainty to this guidance, and we undertake no obligation to revise or update any forward-looking information, except as required by law. |
(2) |
Includes approximately |
Earnings Conference Call
As previously announced, the Company will host a conference call to discuss its third quarter 2021 financial results today at
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
The live audio webcast of the conference call will be accessible in the Events & Presentations section on 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.
Definitions
The following definitions apply to these terms as used in this release:
"Shack sales" is defined as the aggregate sales of food, beverages and
"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 days that Shacks were temporarily closed, the comparative prior period was also adjusted.
"Average weekly sales" is calculated by dividing total Shack sales by the number of operating weeks for all Shacks in operation during the period. For Shacks that are not open for the entire period, fractional adjustments are made to the number of operating weeks open such that it corresponds to the period of associated sales.
"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 EBITDA margin,” 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, as a percentage of revenue.
"Adjusted pro forma net income," a non-GAAP measure, represents Net income (loss) attributable to
About
Forward-Looking Statements
This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"), which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different from the statements made herein. All statements other than statements of historical fact included in this press release are forward-looking statements, including, but not limited to, expected financial outlook and operating performance for fiscal 2021, including guidance for the fourth quarter and full year 2021, expected Shack openings, expected Same-Shack sales growth, sales opportunities and trends in the Company’s operations. Forward-looking statements discuss the Company's current expectations and projections relating to its financial position, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "future," "intend," "outlook," "potential," "project," "projection," "plan," "seek," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other similar expressions. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. Some of the factors which could cause results to differ materially from the Company's expectations include the continuing impact of the COVID-19 pandemic, including the potential impact of any COVID-19 variants, the Company's ability to develop and open new Shacks on a timely basis, increased costs or shortages or interruptions in the supply and delivery of our products, increased labor costs or shortages, the Company's management of its digital capabilities and expansion into delivery, our ability to maintain and grow sales at our existing Shacks, and risks relating to the restaurant industry generally. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) (in thousands, except per share amounts) |
|||||||||||||||||||||||||
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|
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Thirteen Weeks Ended |
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Thirty-Nine Weeks Ended |
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|
|
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||||||||||||||||
Shack sales |
$ |
186,972 |
|
96.4 |
% |
|
$ |
126,288 |
|
96.8 |
% |
|
$ |
519,110 |
|
96.7 |
% |
|
$ |
353,855 |
|
96.9 |
% |
||
Licensing revenue |
6,923 |
|
3.6 |
% |
|
4,113 |
|
3.2 |
% |
|
17,527 |
|
3.3 |
% |
|
11,502 |
|
3.1 |
% |
||||||
TOTAL REVENUE |
193,895 |
|
100.0 |
% |
|
130,401 |
|
100.0 |
% |
|
536,637 |
|
100.0 |
% |
|
365,357 |
|
100.0 |
% |
||||||
Shack-level operating expenses(1): |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Food and paper costs |
57,925 |
|
31.0 |
% |
|
37,903 |
|
30.0 |
% |
|
157,472 |
|
30.3 |
% |
|
107,494 |
|
30.4 |
% |
|||||
|
Labor and related expenses |
58,208 |
|
31.1 |
% |
|
37,898 |
|
30.0 |
% |
|
157,221 |
|
30.3 |
% |
|
110,597 |
|
31.3 |
% |
|||||
|
Other operating expenses |
26,613 |
|
14.2 |
% |
|
18,743 |
|
14.8 |
% |
|
74,032 |
|
14.3 |
% |
|
50,826 |
|
14.4 |
% |
|||||
|
Occupancy and related expenses |
14,640 |
|
7.8 |
% |
|
13,093 |
|
10.4 |
% |
|
43,427 |
|
8.4 |
% |
|
37,974 |
|
10.7 |
% |
|||||
General and administrative expenses |
20,504 |
|
10.6 |
% |
|
14,962 |
|
11.5 |
% |
|
60,435 |
|
11.3 |
% |
|
45,170 |
|
12.4 |
% |
||||||
Depreciation and amortization expense |
15,183 |
|
7.8 |
% |
|
12,376 |
|
9.5 |
% |
|
43,381 |
|
8.1 |
% |
|
36,233 |
|
9.9 |
% |
||||||
Pre-opening costs |
2,933 |
|
1.5 |
% |
|
1,822 |
|
1.4 |
% |
|
8,767 |
|
1.6 |
% |
|
5,799 |
|
1.6 |
% |
||||||
Impairment and loss on disposal of assets |
535 |
|
0.3 |
% |
|
402 |
|
0.3 |
% |
|
1,262 |
|
0.2 |
% |
|
2,924 |
|
0.8 |
% |
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TOTAL EXPENSES |
196,541 |
|
101.4 |
% |
|
137,199 |
|
105.2 |
% |
|
545,997 |
|
101.7 |
% |
|
397,017 |
|
108.7 |
% |
||||||
LOSS FROM OPERATIONS |
(2,646) |
|
(1.4) |
% |
|
(6,798) |
|
(5.2) |
% |
|
(9,360) |
|
(1.7) |
% |
|
(31,660) |
|
(8.7) |
% |
||||||
Other income, net |
18 |
|
— |
% |
|
34 |
|
— |
% |
|
157 |
|
— |
% |
|
335 |
|
0.1 |
% |
||||||
Interest expense |
(350) |
|
(0.2) |
% |
|
(143) |
|
(0.1) |
% |
|
(1,224) |
|
(0.2) |
% |
|
(697) |
|
(0.2) |
% |
||||||
LOSS BEFORE INCOME TAXES |
(2,978) |
|
(1.5) |
% |
|
(6,907) |
|
(5.3) |
% |
|
(10,427) |
|
(1.9) |
% |
|
(32,022) |
|
(8.8) |
% |
||||||
Benefit from income taxes |
(576) |
|
(0.3) |
% |
|
(797) |
|
(0.6) |
% |
|
(10,665) |
|
(2.0) |
% |
|
(6,802) |
|
(1.9) |
% |
||||||
NET INCOME (LOSS) |
(2,402) |
|
(1.2) |
% |
|
(6,110) |
|
(4.7) |
% |
|
238 |
|
— |
% |
|
(25,220) |
|
(6.9) |
% |
||||||
Less: Net loss attributable to non-controlling interests |
(224) |
|
(0.1) |
% |
|
(551) |
|
(0.4) |
% |
|
(837) |
|
(0.2) |
% |
|
(2,490) |
|
(0.7) |
% |
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NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC. |
$ |
(2,178) |
|
(1.1) |
% |
|
$ |
(5,559) |
|
(4.3) |
% |
|
$ |
1,075 |
|
0.2 |
% |
|
$ |
(22,730) |
|
(6.2) |
% |
||
Earnings (loss) per share of Class A common stock: |
|
|
|
|
|
|
|
|
|
|
|
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Basic |
$ |
(0.06) |
|
|
|
$ |
(0.15) |
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|
|
$ |
0.03 |
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|
|
$ |
(0.62) |
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|
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|
Diluted |
$ |
(0.06) |
|
|
|
$ |
(0.15) |
|
|
|
$ |
0.01 |
|
|
|
$ |
(0.62) |
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Weighted-average shares of Class A common stock outstanding: |
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|
|
|
|
|
|
|
|
|
|
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|
Basic |
39,137 |
|
|
|
38,251 |
|
|
|
39,066 |
|
|
|
36,668 |
|
|
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|
Diluted |
39,137 |
|
|
|
38,251 |
|
|
|
43,448 |
|
|
|
36,668 |
|
|
_______________ | |
(1) | As a percentage of Shack sales. |
SELECTED BALANCE SHEET DATA AND OPERATING DATA (UNAUDITED) |
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(in thousands) |
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SELECTED BALANCE SHEET DATA: |
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|
|
||||
Cash and cash equivalents |
$ |
321,421 |
|
|
$ |
146,873 |
|
Marketable securities |
$ |
80,082 |
|
|
$ |
36,887 |
|
Total assets |
$ |
1,440,302 |
|
|
$ |
1,145,348 |
|
Total liabilities |
$ |
997,023 |
|
|
$ |
710,855 |
|
Total equity |
$ |
443,279 |
|
|
$ |
434,493 |
|
|
|
Thirteen Weeks Ended |
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Thirty-Nine Weeks Ended |
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(dollar amounts in thousands) |
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SELECTED OPERATING DATA: |
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Same-Shack sales growth (decline) |
24.8 |
% |
|
(31.7) |
% |
|
25.8 |
% |
|
(31.5) |
% |
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Shacks in the comparable base |
143 |
|
|
102 |
|
|
144 |
|
|
102 |
|
|||||
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|
|
|
|
|
|
|
|
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Shack system-wide sales(1) |
$ |
298,629 |
|
|
$ |
195,075 |
|
|
$ |
808,827 |
|
|
$ |
540,445 |
|
|
|
|
|
|
|
|
|
|
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Average weekly sales |
|
|
|
|
|
|
|
|||||||||
|
|
$ |
72 |
|
|
$ |
58 |
|
|
$ |
70 |
|
|
$ |
56 |
|
|
|
|
|
|
|
|
|
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Shack-level operating profit(2) |
$ |
29,586 |
|
|
$ |
18,651 |
|
|
$ |
86,958 |
|
|
$ |
46,964 |
|
|
Shack-level operating profit margin(2) |
15.8 |
% |
|
14.8 |
% |
|
16.8 |
% |
|
13.3 |
% |
|||||
|
|
|
|
|
|
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|
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Adjusted EBITDA(2) |
$ |
15,830 |
|
|
$ |
8,159 |
|
|
$ |
43,609 |
|
|
$ |
13,589 |
|
|
Adjusted EBITDA margin(2) |
8.2 |
% |
|
6.3 |
% |
|
8.1 |
% |
|
3.7 |
% |
|||||
|
|
|
|
|
|
|
|
|
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Capital expenditures |
$ |
24,143 |
|
|
$ |
9,365 |
|
|
$ |
68,852 |
|
|
$ |
47,002 |
|
|
|
|
|
|
|
|
|
|
|
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Shack counts (at end of period): |
|
|
|
|
|
|
|
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|
System-wide |
350 |
|
|
298 |
|
|
350 |
|
|
298 |
|
||||
|
|
205 |
|
|
175 |
|
|
205 |
|
|
175 |
|
||||
|
Domestic licensed |
24 |
|
|
22 |
|
|
24 |
|
|
22 |
|
||||
|
International licensed |
121 |
|
|
101 |
|
|
121 |
|
|
101 |
|
_______________ | |
(1) |
Shack system-wide sales is an operating measure and consists of sales from 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 Shack sales from domestic Company-operated Shacks and 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. |
(2) |
Shack-level operating profit and adjusted EBITDA are non-GAAP measures. Reconciliations of Shack-level operating profit to Loss from Operations and adjusted EBITDA to Net income (loss), the most directly comparable financial measures presented in accordance with GAAP, are set forth in the schedules accompanying this release. See “Non-GAAP Financial Measures.” |
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|
|
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NON-GAAP FINANCIAL MEASURES |
|
(UNAUDITED) |
To supplement the consolidated financial statements, which are prepared and presented in accordance with
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 |
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(dollar amounts in thousands) |
|
|
|
|
|
|
|
|||||||||
Loss from Operations |
$ |
(2,646) |
|
|
$ |
(6,798) |
|
|
$ |
(9,360) |
|
|
$ |
(31,660) |
|
|
Less: |
|
|
|
|
|
|
|
|||||||||
|
Licensing revenue |
6,923 |
|
|
4,113 |
|
|
17,527 |
|
|
11,502 |
|
||||
Add: |
|
|
|
|
|
|
|
|||||||||
|
General and administrative expenses |
20,504 |
|
|
14,962 |
|
|
60,435 |
|
|
45,170 |
|
||||
|
Depreciation and amortization expense |
15,183 |
|
|
12,376 |
|
|
43,381 |
|
|
36,233 |
|
||||
|
Pre-opening costs |
2,933 |
|
|
1,822 |
|
|
8,767 |
|
|
5,799 |
|
||||
|
Impairment and loss on disposal of assets(1) |
535 |
|
|
402 |
|
|
1,262 |
|
|
2,924 |
|
||||
Shack-level operating profit |
$ |
29,586 |
|
|
$ |
18,651 |
|
|
$ |
86,958 |
|
|
$ |
46,964 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue |
$ |
193,895 |
|
|
$ |
130,401 |
|
|
$ |
536,637 |
|
|
$ |
365,357 |
|
|
Less: Licensing revenue |
6,923 |
|
|
4,113 |
|
|
17,527 |
|
|
11,502 |
|
|||||
Shack sales |
$ |
186,972 |
|
|
$ |
126,288 |
|
|
$ |
519,110 |
|
|
$ |
353,855 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Shack-level operating profit margin(2) |
15.8 |
% |
|
14.8 |
% |
|
16.8 |
% |
|
13.3 |
% |
_______________ | |
(1) |
For the thirty-nine weeks ended |
(2) | As a percentage of Shack sales. |
|
|
|
|
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) |
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
$ |
(2,402) |
|
|
$ |
(6,110) |
|
|
$ |
238 |
|
|
$ |
(25,220) |
|
|
Depreciation and amortization expense |
15,183 |
|
|
12,376 |
|
|
43,381 |
|
|
36,233 |
|
|||||
Interest expense, net |
350 |
|
|
143 |
|
|
1,224 |
|
|
697 |
|
|||||
Benefit from income taxes |
(576) |
|
|
(797) |
|
|
(10,665) |
|
|
(6,802) |
|
|||||
EBITDA |
12,555 |
|
|
5,612 |
|
|
34,178 |
|
|
4,908 |
|
|||||
|
|
|
|
|
|
|
|
|
||||||||
Equity-based compensation |
2,324 |
|
|
1,339 |
|
|
5,963 |
|
|
4,058 |
|
|||||
Amortization of cloud-based software implementation costs(1) |
308 |
|
|
458 |
|
|
935 |
|
|
1,086 |
|
|||||
Deferred lease costs(2) |
108 |
|
|
258 |
|
|
237 |
|
|
407 |
|
|||||
Impairment and loss on disposal of assets(3) |
535 |
|
|
402 |
|
|
1,262 |
|
|
2,924 |
|
|||||
Debt offering related costs(4) |
— |
|
|
— |
|
|
236 |
|
|
— |
|
|||||
Legal settlement(5) |
— |
|
|
— |
|
|
619 |
|
|
— |
|
|||||
Executive transition costs(6) |
— |
|
|
82 |
|
|
179 |
|
|
150 |
|
|||||
Project Concrete(7) |
— |
|
|
8 |
|
|
— |
|
|
(229) |
|
|||||
Other(8) |
— |
|
|
— |
|
|
— |
|
|
285 |
|
|||||
Adjusted EBITDA |
$ |
15,830 |
|
|
$ |
8,159 |
|
|
$ |
43,609 |
|
|
$ |
13,589 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA margin(9) |
8.2 |
% |
|
6.3 |
% |
|
8.1 |
% |
|
3.7 |
% |
_________________ | |
(1) |
Represents amortization of capitalized implementation costs related to cloud-based software arrangements that are included within General and administrative expenses. |
(2) |
Reflects the extent to which lease expense is greater than or less than contractual fixed base rent. |
(3) |
Includes losses on disposals of property and equipment in the normal course of business. For the thirty-nine weeks ended |
(4) |
Costs incurred in connection with the Company’s Convertible Notes, issued in |
(5) |
Expense incurred to establish an accrual related to the settlement of a legal matter. |
(6) |
Represents fees paid in connection with the search and hiring of certain executive and key management positions. |
(7) |
Represents consulting and advisory fees related to the Company's enterprise-wide system upgrade initiative called Project Concrete. |
(8) |
Represents incremental expenses incurred related to an inventory adjustment and certain employee-related expenses. |
(9) |
Calculated as a percentage of Total revenue, which was |
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
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
Limitations of the Usefulness of These Measures
Adjusted pro forma net income (loss) and adjusted pro forma earnings (loss) 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 (loss) and adjusted pro forma earnings (loss) per fully exchanged and diluted share should not be considered alternatives to Net income (loss) and earnings (loss) 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 (loss) attributable to
|
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
||||||||||||
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
||||||||||
Numerator: |
|
|
|
|
|
|
|
||||||||||
|
Net income (loss) attributable to |
$ |
(2,178) |
|
|
$ |
(5,559) |
|
|
$ |
1,075 |
|
|
$ |
(22,730) |
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|||||||||
|
|
Reallocation of Net loss attributable to non-controlling interests from the assumed exchange of LLC Interests(1) |
(224) |
|
|
(551) |
|
|
(837) |
|
|
(2,490) |
|
||||
|
|
Executive transition costs(2) |
— |
|
|
82 |
|
|
179 |
|
|
150 |
|
||||
|
|
Project Concrete(3) |
— |
|
|
8 |
|
|
— |
|
|
(229) |
|
||||
|
|
Legal settlement(4) |
— |
|
|
— |
|
|
619 |
|
|
— |
|
||||
|
|
Debt offering related costs(5) |
— |
|
|
— |
|
|
236 |
|
|
— |
|
||||
|
|
Revolving Credit Facility amendments related costs(6) |
— |
|
|
— |
|
|
323 |
|
|
— |
|
||||
|
|
Other(7) |
— |
|
|
— |
|
|
— |
|
|
285 |
|
||||
|
|
Impact to income tax benefit(8) |
392 |
|
|
1,608 |
|
|
528 |
|
|
3,141 |
|
||||
|
Adjusted pro forma net income (loss) |
$ |
(2,010) |
|
|
$ |
(4,412) |
|
|
$ |
2,123 |
|
|
$ |
(21,873) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator: |
|
|
|
|
|
|
|
||||||||||
|
Weighted-average shares of Class A common stock outstanding—diluted |
39,137 |
|
|
38,251 |
|
|
43,448 |
|
|
36,668 |
|
|||||
|
Adjustments: |
|
|
|
|
|
|
|
|||||||||
|
|
Assumed exchange of LLC Interests for shares of Class A common stock(1) |
2,922 |
|
|
3,114 |
|
|
— |
|
|
3,125 |
|
||||
|
Adjusted pro forma fully exchanged weighted-average shares of Class A common stock outstanding—diluted |
42,059 |
|
|
41,365 |
|
|
43,448 |
|
|
39,793 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted pro forma earnings (loss) per fully exchanged share—diluted |
$ |
(0.05) |
|
|
$ |
(0.11) |
|
|
$ |
0.05 |
|
|
$ |
(0.55) |
|
|
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share of Class A common stock—diluted |
$ |
(0.06) |
|
|
$ |
(0.15) |
|
|
$ |
0.01 |
|
|
$ |
(0.62) |
|
||
|
Assumed exchange of LLC Interests for shares of Class A common stock(1) |
— |
|
|
— |
|
|
— |
|
|
(0.01) |
|
|||||
|
Non-GAAP adjustments(9) |
0.01 |
|
|
0.04 |
|
|
0.04 |
|
|
0.08 |
|
|||||
Adjusted pro forma earnings (loss) per fully exchanged share—diluted |
$ |
(0.05) |
|
|
$ |
(0.11) |
|
|
$ |
0.05 |
|
|
$ |
(0.55) |
|
_________________ | |
(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 (loss) attributable to non-controlling interests. |
(2) |
Represents costs incurred in connection with our executive search, including fees paid to an executive recruiting firm. |
(3) |
Represents consulting and advisory fees related to our enterprise-wide system upgrade initiative called Project Concrete. |
(4) |
Expense incurred to establish an accrual related to the settlement of a legal matter. |
(5) |
Costs incurred in connection with the Company’s Convertible Notes, issued in |
(6) |
Expense incurred in connection with the Company's amendments on the Revolving Credit Facility, including the write-off of previously capitalized costs on the Revolving Credit Facility. |
(7) |
Represents incremental expenses incurred related to an inventory adjustment and certain employee-related expenses. |
(8) |
Represents the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of |
(9) |
Represents the per share impact of non-GAAP adjustments for each period. Refer to the reconciliation of Adjusted Pro Forma Net Income (Loss) above, for additional information. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211104006233/en/
Media:
(646) 747-8776
kclark@shakeshack.com
Investor Relations:
(844) SHACK-04 (844-742-2504)
investor@shakeshack.com
Source:
FAQ
What were Shake Shack's total revenues for Q3 2021?
How much did Shake Shack's Same-Shack sales grow in Q3 2021?
What financial challenges did Shake Shack face in Q3 2021?