SHAK Shake Shack Inc

• 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.

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