NEW YORK--(BUSINESS WIRE)--
Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE:SHAK), today
reported financial results for the fourth quarter and fiscal year ended
December 31, 2014, periods that included 14 and 53 weeks, respectively,
as fiscal year 2014 contained an extra operating week.
Financial Highlights for the Fourth Quarter 2014:
-
Total revenue increased 51.5% to $34.8 million.
-
Shack sales increased 51.6% to $33.1 million.
-
Same-Shack sales increased 7.2%, excluding sales from the 14th week.
-
Shack-level operating profit*, a non-GAAP measure, increased 49.2% to
$7.4 million.
-
Adjusted EBITDA*, a non-GAAP measure, increased 58.5% to $4.8 million.
-
Net loss was $(1.4) million, or ($0.05) per diluted unit, which
included approximately $1.1 million, or $0.04 per diluted unit, of
after-tax expenses associated with the Company’s initial public
offering.
-
10 system-wide Shack openings, including five domestic
company-operated Shacks and five international licensed Shacks.
Financial Highlights for Fiscal Year 2014:
-
Total revenue increased 43.7% to $118.5 million.
-
Shack sales increased 42.6% to $112.0 million.
-
Same-Shack sales increased 4.1%, excluding sales from the 53rd week.
-
Shack-level operating profit*, a non-GAAP measure, increased 31.5% to
$26.9 million.
-
Adjusted EBITDA*, a non-GAAP measure, increased 30.6% to $18.9 million.
-
Net income was $2.1 million, or $0.07 per diluted unit, which included
approximately $2.6 million, or $0.09 per diluted unit, of after-tax
expenses associated with the Company’s initial public offering.
-
23 system-wide Shack openings, including 10 domestic company-operated,
one domestic licensed and 12 international licensed, representing a
57.5% increase in system-wide Shack count.
* Shack-level operating profit and adjusted EBITDA are non-GAAP
measures. Reconciliations of Shack-level operating profit to operating
income (loss) 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."
Randy Garutti
, Chief Executive Officer of Shake Shack, stated, “We are
pleased with the strength of our fourth quarter results and excited to
begin our journey as a public company. Our culture of Enlightened
Hospitality has enabled Shake Shack to become a globally beloved brand
where all of our stakeholders are rooting for our success. We are
witnessing a seismic shift in people’s understanding and expectations of
food and, for the last decade, Shake Shack has helped lead the change in
consumer behavior through our fine casual approach. We will continue to
invest in high quality, premium ingredients that our guests have come to
expect from us, while creating a vibrant community gathering place that
delivers a meaningful guest experience.”
Garutti continued, “As a result of our successful IPO, we have the
financial flexibility to support our robust expansion plans. Near-term,
we are targeting at least 10 new domestic company-operated Shacks
annually, with the goal of doubling our domestic company-operated store
count in three years and tripling our store count in five years.
Long-term, we see the potential for at least 450 domestic
company-operated Shacks. Our unique and versatile real estate model is
built for growth here in the United States and abroad.”
Initial Public Offering
On February 4, 2015, the Company successfully closed its initial public
offering ("IPO") of common stock at a price to the public of $21.00 per
share. The Company issued 5,750,000 shares of Class A common stock,
which included 750,000 shares sold to the underwriters pursuant to their
over-allotment option, and received net proceeds of approximately $112.3
million after underwriter discounts and commissions.
Presentation
This press release presents historical results, for the periods
presented, of SSE Holdings, LLC, the predecessor of Shake Shack Inc. for
financial reporting purposes (together with Shake Shack Inc., referred
to as “Shake Shack” or the “Company”). The financial results of Shake
Shack Inc. have not been included in this press release as it is a newly
incorporated entity and had no material assets or liabilities and no
material business transactions or activities during the periods
presented. Accordingly, these historical results do not purport to
reflect what the results of operations of Shake Shack Inc. would have
been had the IPO and related transactions occurred prior to such
periods. For example, these historical results do not reflect the
attribution of net income to non-controlling interest or the provision
for corporate income taxes on the income attributable to Shake Shack
Inc. that the Company expects to recognize in future periods.
Development Highlights
During the fiscal year, the Company opened 10 domestic company-operated
Shacks, including its first Shack west of the Mississippi River in Las
Vegas, NV and new Shacks in the Chicago, Orlando and Atlanta markets, 12
international licensed Shacks and one domestic licensed Shack.
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Location
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Shack
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Type
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Opening Date
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Jabriya, Kuwait
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Jabriya
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International Licensed
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January 11
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Istanbul, Turkey
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Akasya Mall
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International Licensed
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March 6
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Al Ain, United Arab Emirates
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Bawadi Mall
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International Licensed
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March 22
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Istanbul, Turkey
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Kanyon Mall
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International Licensed
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March 24
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Beirut, Lebanon
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ABC Achrafieh
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International Licensed
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April 6
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Dubai, United Arab Emirates
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Jumeirah Beach Residence
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International Licensed
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April 12
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Brooklyn, NY
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DUMBO
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Domestic Company-Operated
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June 17
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Washington, DC
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Union Station
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Domestic Company-Operated
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June 23
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Queens, NY
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JFK Airport - T4 Gate B23
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Domestic Licensed
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July 5
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Abu Dhabi, United Arab Emirates
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World Trade Center Mall
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International Licensed
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July 29
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Winter Park, FL
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Winter Park
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Domestic Company-Operated
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July 30
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Brooklyn, NY
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Flatbush Ave
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Domestic Company-Operated
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August 10
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McLean, VA
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Tysons Corner
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Domestic Company-Operated
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August 11
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Al-Eqaila, Kuwait
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The Gate Mall
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International Licensed
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September 27
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Atlanta, GA
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Buckhead
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Domestic Company-Operated
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September 30
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Moscow, Russia
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Metropolis Shopping Center
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International Licensed
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October 3
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Chicago, IL
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River North
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Domestic Company-Operated
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November 4
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New York, NY
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600 Third Ave
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Domestic Company-Operated
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November 11
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Paramus, NJ
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Garden State Plaza Mall
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Domestic Company-Operated
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November 21
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Abu Dhabi, United Arab Emirates
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YAS Island Mall
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International Licensed
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November 21
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Dubai, United Arab Emirates
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Souk Al Bahar
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International Licensed
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December 6
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Anjefa, Kuwait
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Arabella
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International Licensed
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December 20
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Las Vegas, NV
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MGM New York, New York
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Domestic Company-Operated
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December 29
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Fourth Quarter 2014 Review
Total revenue, which includes Shack sales and licensing revenue,
increased 51.5% to $34.8 million in the fourth quarter of 2014, from
$23.0 million for the fourth quarter of 2013. Shack sales for the fourth
quarter of 2014 were $33.1 million, an increase of 51.6% versus the same
quarter last year due primarily to the opening of new Shacks, as well as
same-Shack sales growth. Licensing revenue for the fourth quarter was
$1.7 million, an increase of 49.7% from $1.1 million in the same quarter
last year, due primarily to the opening of new international licensed
Shacks. The results for fourth quarter of 2014 include the impact of an
extra operating week (the 14th week), which contributed approximately
$2.8 million of Shack sales.
Same-Shack sales increased 7.2% for the fourth quarter of 2014 versus
6.8% growth in the fourth quarter last year. The comparable Shack base
includes those restaurants open for 24 months or longer. For the fourth
quarter of 2014, the comparable Shack base included 13 Shacks versus
eight Shacks for the fourth quarter of 2013.
Average weekly sales for domestic company-operated Shacks were $85,000
for the fourth quarter of 2014 compared to $88,000 for the same quarter
last year, a 3.4% decrease due primarily to the introduction of Shacks
with target volumes in the $2.8 million to $3.2 million range in the
Shack base. As the Company continues to open new Shacks in that targeted
range, it is expected that the average weekly sales for domestic
company-operated Shacks will continue to decline.
Shack-level operating profit, a non-GAAP measure, increased 49.2% to
$7.4 million for the fourth quarter of 2014 from $5.0 million in the
same quarter last year. As a percentage of Shack sales, Shack-level
operating profit margins decreased 40 basis points to 22.3% as higher
commodity prices, primarily for beef, more than offset improvements in
labor, occupancy, and other operating expenses.
General and administrative expenses increased 82.3% to $6.0 million for
the fourth quarter of 2014 from $3.3 million in the same quarter last
year. As a percentage of total revenue, general and administrative
expenses increased 290 basis points to 17.2% from 14.3% in the fourth
quarter of 2013. Included in general and administrative expenses are
approximately $1.2 million of pre-tax costs associated with the
Company’s initial public offering, representing approximately 3.4% of
total revenue.
Adjusted EBITDA, a non-GAAP measure, increased 58.5% to $4.8 million. As
a percent of total revenue, adjusted EBITDA margins increased
approximately 60 basis points to 13.9% compared to 13.3% for the year
ago period.
Net loss was $(1.4) million, or ($0.05) per diluted unit, for the fourth
quarter of 2014, compared to net income of $1.0 million, or $0.03 per
diluted unit, for the same period last year. The net loss for the fourth
quarter 2014 includes approximately $1.1 million, or $0.04 per diluted
unit, of after-tax expenses incurred in connection with the Company’s
initial public offering.
Fiscal Year 2014 Review
Total revenue, which includes Shack sales and licensing revenue,
increased 43.7% to $118.5 million in the fiscal year 2014, from $82.5
million for the fiscal year 2013. The growth in Shack sales was
primarily driven by the opening of 10 new domestic company-operated
Shacks, as well as same-Shack sales growth. The results for fiscal year
2014 also include the impact of a 53rd week, which contributed
approximately $2.8 million in Shack sales.
Shack sales for the fiscal year 2014 were $112.0 million, an increase of
42.6% from the fiscal year 2013. Licensing revenue for the fiscal year
was $6.5 million, an increase of 67.7% from the prior year. Same-Shack
sales increased 4.1% during fiscal year 2014 versus 5.9% growth in the
prior year. For fiscal year 2014, the comparable Shack base included 13
Shacks, compared to eight Shacks for the fiscal year 2013.
Shack-level operating profit, a non-GAAP measure, increased 31.5% to
$26.9 million for the fiscal year 2014 from $20.4 million for the fiscal
year 2013. As a percentage of Shack sales, Shack-level operating profit
margins decreased roughly 200 basis points to 24.0% due to higher
commodity prices and the introduction of target volume Shacks into the
base.
Adjusted EBITDA, a non-GAAP measure, increased 30.6% to $18.9 million
from $14.5 million for the fiscal year. As a percent of total revenue,
adjusted EBITDA decreased 160 basis points to 15.9% compared to 17.5%
for the year ago period.
Net income was $2.1 million, or $0.07 per diluted unit, for the fiscal
year 2014, compared to a net income of $5.4 million, or $0.18 per
diluted unit, for the same period a year ago. Net income for fiscal year
2014 includes approximately $2.6 million, or $0.09 per diluted unit, of
after-tax expenses incurred in connection with the Company’s initial
public offering.
New Shack Growth
As of December 31, 2014, system-wide, the Company had 63 Shacks, of
which, 31 were domestic company-operated, five were domestic licensed
and 27 were international licensed.
The Company expects that, beginning in fiscal year 2015, it will open at
least 10 domestic company-operated Shacks annually.
Subsequent to the end of the fiscal year, as previously announced, the
Company opened its first Shake Shack in Baltimore, MD and two Shacks in
the Boston, MA area (Legacy Place at Dedham and Newbury Street).
Internationally, the Company entered into an exclusive licensing
agreement with Sazaby League, Ltd., a leading retail and food operator,
for the development of up to 10 new Shacks in Japan over the next five
years. The first Shake Shack in Japan is expected to open in 2016.
2015 Outlook
For the fiscal year ending December 30, 2015, the Company currently
expects the following:
-
Total revenue to be between $159 million and $163 million.
-
Same-Shack sales growth in the low single digits.
-
At least 10 new domestic company-operated Shacks to be opened
throughout the year.
-
At least five international licensed Shacks to be opened under the
Company’s current license agreements in the U.K. and Middle East, all
of which are scheduled to open towards the end of fiscal 2015.
Earnings Conference Call
As previously announced, the Company will host a conference call to
discuss its fourth quarter and fiscal year 2014 financial results today
at 5:00 p.m. EST.
The conference call can be accessed live over the phone by dialing (888)
438-5524 or for international callers by dialing (719) 325-2315. A
replay will be available after the call and can be accessed by dialing
(877) 870-5176 or for international callers by dialing (858) 384-5517;
the passcode is 8980261. The replay will be available until Wednesday,
March 18, 2015.
The conference call will also be webcast live from the Company's
Investor Relations website at http://investor.shakeshack.com.
An archive of the webcast will be available at the same location on the
website shortly after the call has concluded.
Definitions
The following definitions apply to these terms as used in this release:
"Same-Shack sales" means, for any reporting period, sales for the
comparable Shack base, which we define as the number of domestic
company-operated Shacks open for 24 months or longer. Same-Shack sales
for the fourth quarter and fiscal year 2014 exclude sales from the
additional operating week.
"Shack-level operating profit margin" is defined as Shack sales less
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” means, for any reporting period, net income before interest,
taxes, depreciation and amortization.
“Adjusted EBITDA” is defined as net income before depreciation and
amortization, interest expense and provision for income taxes, adjusted
for the impact of certain non-cash and other items that the Company does
not consider in their evaluation of ongoing operating performance. These
items include, among other things, equity-based compensation expense,
non-cash deferred rent charges and pre-opening costs, as well as certain
non-recurring charges.
About Shake Shack
Shake Shack® is a modern day “roadside” burger stand known
for its delicious burgers, hot dogs, frozen custard, crinkle-cut fries,
beer, wine and more. With its fresh, simple, high-quality food at a
great value, Shake Shack is a fun and lively community-gathering place
with widespread appeal. From its premium ingredients and progressive
hiring practices to its environmentally responsible designs and deep
community investment, Shake Shack’s mission is to Stand For Something
Good®. Since the original Shack opened in 2004 in NYC’s
Madison Square Park, the Company has opened additional company-operated
Shacks in New York, New Jersey, Washington, DC, Connecticut, Georgia,
Illinois, Pennsylvania, Florida, Massachusetts, Virginia, and Nevada,
and international licensed Shacks in London, Istanbul, Dubai and more.
Forward-Looking Statements
This press release contains forward-looking statements, as defined in
the Private Securities Litigation Reform Act of 1995, which are subject
to risks and uncertainties. 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
for fiscal year 2015, expected Shack openings, expected same-Shack sales
growth and trends in the Company’s operations. Forward-looking
statements discuss our current expectations and projections relating to
our 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," "outlook," "potential,"
"project," "projection," "plan," "intend," "seek," "may," "could,"
"would," "will," "should," "can," "can have," "likely," the negatives
thereof and other similar expressions. All forward-looking statements
are subject to known and unknown risks, uncertainties and other
important factors that may cause actual results to be materially
different.
While the Company believes that its assumptions are reasonable, it is
very difficult to predict the impact of known factors, and it is
impossible to anticipate all factors that could affect the Company’s
actual results. All forward-looking statements are expressly qualified
in their entirety by these cautionary statements. 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 final
prospectus filed on January 30, 2015, including the sections thereof
captioned "Cautionary Note Regarding Forward-Looking Statements" and
"Risk Factors." These filings and future filings are available online at www.sec.gov,
www.shakeshake.com
or upon request from Shake Shack Inc.
The forward-looking statements included in this press release are made
only as of the date hereof. We undertake no obligation to publicly
update or revise any forward-looking statement as a result of new
information, future events or otherwise, except as otherwise required by
law. If we do update one or more forward-looking statements, no
inference should be made that we will make additional updates with
respect to those or other forward-looking statements. We qualify all of
our forward-looking statements by these cautionary statements.
|
SSE HOLDINGS, LLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(In thousands, except per unit amounts)
|
|
|
|
|
|
|
Fiscal Quarter Ended
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
December 31,
|
|
|
December 25,
|
|
|
December 31,
|
|
|
December 25,
|
|
|
|
|
|
2014¹
|
|
|
2013
|
|
|
2014¹
|
|
|
2013
|
Shack sales
|
|
|
|
|
$
|
33,054
|
|
|
|
95.1
|
%
|
|
|
|
$
|
21,804
|
|
|
95.0
|
%
|
|
|
$
|
112,042
|
|
|
94.5
|
%
|
|
|
$
|
78,587
|
|
|
95.3
|
%
|
Licensing revenue
|
|
|
|
|
|
1,718
|
|
|
|
4.9
|
%
|
|
|
|
$
|
1,148
|
|
|
5.0
|
%
|
|
|
|
6,488
|
|
|
5.5
|
%
|
|
|
|
3,869
|
|
|
4.7
|
%
|
TOTAL REVENUE
|
|
|
|
|
|
34,772
|
|
|
|
100.0
|
%
|
|
|
|
|
22,952
|
|
|
100.0
|
%
|
|
|
|
118,530
|
|
|
100.0
|
%
|
|
|
|
82,456
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shack-level operating expenses2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper costs
|
|
|
|
|
|
10,677
|
|
|
|
32.3
|
%
|
|
|
|
|
6,654
|
|
|
30.5
|
%
|
|
|
|
34,925
|
|
|
31.2
|
%
|
|
|
|
23,865
|
|
|
30.4
|
%
|
Labor and related expenses
|
|
|
|
|
|
8,707
|
|
|
|
26.3
|
%
|
|
|
|
|
5,935
|
|
|
27.2
|
%
|
|
|
|
29,312
|
|
|
26.2
|
%
|
|
|
|
20,096
|
|
|
25.6
|
%
|
Other operating expenses
|
|
|
|
|
|
3,325
|
|
|
|
10.1
|
%
|
|
|
|
|
2,243
|
|
|
10.3
|
%
|
|
|
|
11,191
|
|
|
10.0
|
%
|
|
|
|
7,315
|
|
|
9.3
|
%
|
Occupancy and related expenses
|
|
|
|
|
|
2,959
|
|
|
|
9.0
|
%
|
|
|
|
|
2,021
|
|
|
9.3
|
%
|
|
|
|
9,753
|
|
|
8.7
|
%
|
|
|
|
6,892
|
|
|
8.8
|
%
|
General and administrative expenses
|
|
|
|
|
|
5,995
|
|
|
|
17.2
|
%
|
|
|
|
|
3,289
|
|
|
14.3
|
%
|
|
|
|
18,187
|
|
|
15.3
|
%
|
|
|
|
12,453
|
|
|
15.1
|
%
|
Depreciation expense
|
|
|
|
|
|
1,742
|
|
|
|
5.0
|
%
|
|
|
|
|
1,069
|
|
|
4.7
|
%
|
|
|
|
5,809
|
|
|
4.9
|
%
|
|
|
|
3,541
|
|
|
4.3
|
%
|
Pre-opening costs
|
|
|
|
|
|
2,277
|
|
|
|
6.5
|
%
|
|
|
|
|
629
|
|
|
2.7
|
%
|
|
|
|
6,105
|
|
|
5.2
|
%
|
|
|
|
2,334
|
|
|
2.8
|
%
|
Loss on disposal of property and equipment
|
|
|
|
|
|
77
|
|
|
|
0.2
|
%
|
|
|
|
|
8
|
|
|
0.0
|
%
|
|
|
|
105
|
|
|
0.1
|
%
|
|
|
|
25
|
|
|
0.0
|
%
|
TOTAL EXPENSES
|
|
|
|
|
|
35,759
|
|
|
|
102.8
|
%
|
|
|
|
|
21,848
|
|
|
95.2
|
%
|
|
|
|
115,387
|
|
|
97.3
|
%
|
|
|
|
76,521
|
|
|
92.8
|
%
|
OPERATING INCOME (LOSS)
|
|
|
|
|
|
(987
|
)
|
|
|
-2.8
|
%
|
|
|
|
|
1,104
|
|
|
4.8
|
%
|
|
|
|
3,143
|
|
|
2.7
|
%
|
|
|
|
5,935
|
|
|
7.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
144
|
|
|
|
0.4
|
%
|
|
|
|
|
21
|
|
|
0.1
|
%
|
|
|
|
363
|
|
|
0.3
|
%
|
|
|
|
52
|
|
|
0.1
|
%
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
|
|
|
(1,131
|
)
|
|
|
-3.3
|
%
|
|
|
|
|
1,083
|
|
|
4.7
|
%
|
|
|
|
2,780
|
|
|
2.3
|
%
|
|
|
|
5,883
|
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
|
|
296
|
|
|
|
0.9
|
%
|
|
|
|
|
86
|
|
|
0.4
|
%
|
|
|
|
662
|
|
|
0.6
|
%
|
|
|
|
460
|
|
|
0.6
|
%
|
NET INCOME (LOSS)
|
|
|
|
|
$
|
(1,427
|
)
|
|
|
-4.1
|
%
|
|
|
|
$
|
997
|
|
|
4.3
|
%
|
|
|
$
|
2,118
|
|
|
1.8
|
%
|
|
|
$
|
5,423
|
|
|
6.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma earnings per unit3:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
$
|
0.03
|
|
|
|
|
|
$
|
0.07
|
|
|
|
|
|
$
|
0.18
|
|
|
|
Diluted
|
|
|
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
$
|
0.03
|
|
|
|
|
|
$
|
0.07
|
|
|
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma weighted-average units outstanding3:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
30,002
|
|
|
|
|
|
|
|
|
29,963
|
|
|
|
|
|
|
29,977
|
|
|
|
|
|
|
29,934
|
|
|
|
Diluted
|
|
|
|
|
|
30,002
|
|
|
|
|
|
|
|
|
30,123
|
|
|
|
|
|
|
30,122
|
|
|
|
|
|
|
30,018
|
|
|
|
|
________________________
|
(1)
|
|
The Company operates on a 52/53 week fiscal year that ends on the
last Wednesday of the calendar year. Fiscal year 2014 was a
53-week year. The fourth quarter and fiscal year 2014 each
contained an extra operating week.
|
(2)
|
|
As a percentage of Shack sales.
|
(3)
|
|
The pro forma earnings per unit and pro forma weighted-average
units outstanding have been computed to give effect to the
recapitalization transactions that occurred in connection with the
Company’s initial public offering, including the amendment and
restatement of the second amended and restated limited liability
company agreement of SSE Holdings, LLC to, among other things, (i)
provide for a new single class of common membership ownership
interests and (ii) exchange all of the original members’ existing
membership interests for the newly-created ownership interests.
The computations of pro forma earnings per unit and pro forma
weighted-average units outstanding do not consider the 5,750,000
shares of Class A common stock issued to investors in the
Company’s initial public offering or the 339,306 shares of Class A
common stock issued to participants of the Company’s Unit
Appreciation Rights Plan in settlement of their outstanding awards.
|
|
|
|
|
|
SSE HOLDINGS, LLC
SELECTED BALANCE SHEET AND OPERATING DATA
(UNAUDITED)
(Dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
December 25,
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
SELECTED BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,677
|
|
|
|
|
$
|
13,076
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,962
|
|
|
|
|
|
55,219
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,362
|
|
|
|
|
|
17,832
|
|
Total members' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,600
|
|
|
|
|
|
37,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED OPERATING DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shacks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
|
|
|
40
|
|
Domestic company-operated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
|
|
|
21
|
|
Domestic licensed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
4
|
|
International licensed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
December 25,
|
|
|
|
December 31,
|
|
|
|
December 25,
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
SELECTED OPERATING DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average unit volumes1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic company-operated
|
|
|
|
|
|
|
n/a
|
|
|
|
|
|
|
n/a
|
|
|
|
|
$
|
4,611
|
|
|
|
|
$
|
5,017
|
|
International licensed
|
|
|
|
|
|
|
n/a
|
|
|
|
|
|
|
n/a
|
|
|
|
|
$
|
4,588
|
|
|
|
|
$
|
6,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-Shack sales growth1
|
|
|
|
|
|
|
7.2
|
%
|
|
|
|
|
|
6.8
|
%
|
|
|
|
|
4.1
|
%
|
|
|
|
|
5.9
|
%
|
Shacks in the comparable base
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
8
|
|
|
|
|
|
13
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shack system-wide sales
|
|
|
|
|
|
$
|
61,362
|
|
|
|
|
|
$
|
40,972
|
|
|
|
|
$
|
217,442
|
|
|
|
|
$
|
139,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average weekly sales
|
|
|
|
|
|
$
|
85
|
|
|
|
|
|
$
|
88
|
|
|
|
|
$
|
89
|
|
|
|
|
$
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shack-level operating profit margin
|
|
|
|
|
|
|
22.3
|
%
|
|
|
|
|
|
22.7
|
%
|
|
|
|
|
24.0
|
%
|
|
|
|
|
26.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
$
|
4,823
|
|
|
|
|
|
$
|
3,042
|
|
|
|
|
$
|
18,886
|
|
|
|
|
$
|
14,459
|
|
Adjusted EBITDA as a % of total revenue
|
|
|
|
|
|
|
13.9
|
%
|
|
|
|
|
|
13.3
|
%
|
|
|
|
|
15.9
|
%
|
|
|
|
|
17.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
$
|
10,630
|
|
|
|
|
|
$
|
5,835
|
|
|
|
|
$
|
28,515
|
|
|
|
|
$
|
16,194
|
|
|
________________________
(1) Excludes the impact of the 53rd week
|
|
|
SSE HOLDINGS, LLC
|
NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Dollar amounts in thousands)
|
|
To supplement its consolidated financial statements, which are prepared
and presented in accordance with U.S. generally accepted accounting
principles (“GAAP”), the Company uses the following non-GAAP financial
measures: Shack-level operating profit, EBITDA and adjusted EBITDA
(collectively the "non-GAAP financial measures"). The Company believes
that these non-GAAP financial measures, when used in conjunction with
GAAP financial measures, provide useful information about operating
results, enhance the overall understanding of past financial performance
and future prospects, and allow for greater transparency with respect to
key metrics used by management in its financial and operational decision
making. The presentation of this financial information 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. The non-GAAP measures used by the Company are not necessarily
comparable to similarly titled measures used by other companies due to
different methods of calculation.
Shack-Level Operating Profit
Shack-level operating profit and Shack-level operating profit margin are
not required by, or presented in accordance with, GAAP. Shack-level
operating profit is a supplemental measure of operating performance and
our calculations thereof may not be comparable to similar measures
reported by other companies. Shack-level operating profit margin has
limitations as an analytical tool and should not be considered as a
substitute for analysis of our results as reported under GAAP.
Management believes that Shack-level operating profit and Shack-level
operating profit margin are important measures to evaluate the
performance and profitability of each Shack, individually and in the
aggregate. The Company uses Shack-level operating profit margin
information to benchmark their performance versus their competitors. The
computation of Shack-level operating profit and Shack-level operating
profit margin are set forth below.
|
|
|
|
|
|
Fiscal Quarter Ended
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
December 31,
|
|
|
|
December 25,
|
|
|
|
December 31,
|
|
|
|
December 25,
|
|
|
|
|
|
2014¹
|
|
|
|
2013
|
|
|
|
2014¹
|
|
|
|
2013
|
Shack sales
|
|
|
|
|
$
|
33,054
|
|
|
|
|
$
|
21,804
|
|
|
|
|
$
|
112,042
|
|
|
|
|
$
|
78,587
|
|
Food and paper costs
|
|
|
|
|
|
10,677
|
|
|
|
|
|
6,654
|
|
|
|
|
|
34,925
|
|
|
|
|
|
23,865
|
|
Labor and related expenses
|
|
|
|
|
|
8,707
|
|
|
|
|
|
5,935
|
|
|
|
|
|
29,312
|
|
|
|
|
|
20,096
|
|
Other operating expenses
|
|
|
|
|
|
3,325
|
|
|
|
|
|
2,243
|
|
|
|
|
|
11,191
|
|
|
|
|
|
7,315
|
|
Occupancy and related expenses
|
|
|
|
|
|
2,959
|
|
|
|
|
|
2,021
|
|
|
|
|
|
9,753
|
|
|
|
|
|
6,892
|
|
SHACK-LEVEL OPERATING PROFIT
|
|
|
|
|
$
|
7,386
|
|
|
|
|
$
|
4,951
|
|
|
|
|
$
|
26,861
|
|
|
|
|
$
|
20,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHACK-LEVEL OPERATING PROFIT MARGIN
|
|
|
|
|
|
22.3
|
%
|
|
|
|
|
22.7
|
%
|
|
|
|
|
24.0
|
%
|
|
|
|
|
26.0
|
%
|
|
A reconciliation of Shack-level operating profit to operating income
(loss), the most directly comparable GAAP measure, is set forth below.
|
|
|
|
|
|
Fiscal Quarter Ended
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
December 31,
|
|
|
December 25,
|
|
|
December 31,
|
|
|
December 25,
|
|
|
|
|
|
2014¹
|
|
|
2013
|
|
|
2014¹
|
|
|
2013
|
Shack-level operating profit
|
|
|
|
|
$
|
7,386
|
|
|
|
$
|
4,951
|
|
|
$
|
26,861
|
|
|
$
|
20,419
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licensing revenue
|
|
|
|
|
|
1,718
|
|
|
|
|
1,148
|
|
|
|
6,488
|
|
|
|
3,869
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
|
|
5,995
|
|
|
|
|
3,289
|
|
|
|
18,187
|
|
|
|
12,453
|
Depreciation expense
|
|
|
|
|
|
1,742
|
|
|
|
|
1,069
|
|
|
|
5,809
|
|
|
|
3,541
|
Pre-opening costs
|
|
|
|
|
|
2,277
|
|
|
|
|
629
|
|
|
|
6,105
|
|
|
|
2,334
|
Loss on disposal of property and equipment
|
|
|
|
|
|
77
|
|
|
|
|
8
|
|
|
|
105
|
|
|
|
25
|
INCOME (LOSS) FROM OPERATIONS
|
|
|
|
|
$
|
(987
|
)
|
|
|
$
|
1,104
|
|
|
$
|
3,143
|
|
|
$
|
5,935
|
|
________________________
|
(1)
|
|
The Company operates on a 52/53 week fiscal year that ends on the
last Wednesday of the calendar year. The fiscal fourth quarter
2014 contained an extra operating week.
|
|
|
SSE HOLDINGS, LLC
|
NON-GAAP FINANCIAL MEASURES
|
(Unaudited)
|
(Dollar amounts in thousands)
|
|
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP supplemental measures of
operating performance that do not represent and should not be considered
alternatives to net income (loss) or cash flow from operations, as
determined by GAAP. EBITDA and Adjusted EBITDA are used by management to
measure the operating performance of their business, excluding
specifically identified items that management believes do not directly
reflect their core operations. A reconciliation of EBITDA and Adjusted
EBITDA to net income (loss), the most directly comparable GAAP measure,
is set forth below.
|
|
|
|
|
|
|
Fiscal Quarter Ended
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
December 25,
|
|
|
|
December 31,
|
|
|
|
December 25,
|
|
|
|
|
|
|
2014¹
|
|
|
|
2013
|
|
|
|
2014¹
|
|
|
|
2013
|
Net income (loss)
|
|
|
|
|
|
$
|
(1,427
|
)
|
|
|
|
$
|
997
|
|
|
|
|
$
|
2,118
|
|
|
|
$
|
5,423
|
Depreciation expense
|
|
|
|
|
|
|
1,742
|
|
|
|
|
|
1,069
|
|
|
|
|
|
5,809
|
|
|
|
|
3,541
|
Interest expense, net
|
|
|
|
|
|
|
144
|
|
|
|
|
|
21
|
|
|
|
|
|
363
|
|
|
|
|
52
|
Income tax expense
|
|
|
|
|
|
|
296
|
|
|
|
|
|
86
|
|
|
|
|
|
662
|
|
|
|
|
460
|
EBITDA
|
|
|
|
|
|
|
755
|
|
|
|
|
|
2,173
|
|
|
|
|
|
8,952
|
|
|
|
|
9,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity-based compensation2
|
|
|
|
|
|
|
41
|
|
|
|
|
|
42
|
|
|
|
|
|
165
|
|
|
|
|
93
|
Deferred compensation3
|
|
|
|
|
|
|
—
|
|
|
|
|
|
22
|
|
|
|
|
|
—
|
|
|
|
|
2,054
|
Pre-opening costs4
|
|
|
|
|
|
|
1,764
|
|
|
|
|
|
796
|
|
|
|
|
|
4,024
|
|
|
|
|
1,737
|
Deferred rent5
|
|
|
|
|
|
|
896
|
|
|
|
|
|
(48
|
)
|
|
|
|
|
2,830
|
|
|
|
|
975
|
Loss on disposal of property and equipment6
|
|
|
|
|
|
|
77
|
|
|
|
|
|
8
|
|
|
|
|
|
105
|
|
|
|
|
25
|
IPO-related expenses7
|
|
|
|
|
|
|
1,180
|
|
|
|
|
|
—
|
|
|
|
|
|
2,675
|
|
|
|
|
—
|
Other non-cash items8
|
|
|
|
|
|
|
110
|
|
|
|
|
|
49
|
|
|
|
|
|
135
|
|
|
|
|
99
|
ADJUSTED EBITDA
|
|
|
|
|
|
$
|
4,823
|
|
|
|
|
$
|
3,042
|
|
|
|
|
$
|
18,886
|
|
|
|
$
|
14,459
|
|
________________________
|
(1)
|
|
The Company operates on a 52/53 week fiscal year that ends on the
last Wednesday of the calendar year. Fiscal year 2014 was a 53-week
year. The fourth quarter and fiscal year 2014 each contained an
extra operating week.
|
(2)
|
|
Non-cash charges related to equity-based compensation programs,
which vary from period to period depending on the timing of awards.
|
(3)
|
|
For the periods presented, represents amounts accrued under a bonus
agreement we entered into with an employee pursuant to which we
agreed to a pay a bonus in a future period.
|
(4)
|
|
Non-capital expenditures associated with opening new Shacks
exclusive of deferred rent incurred prior to opening.
|
(5)
|
|
Reflects the extent to which our annual rent expense has been above
or below our cash rent payments.
|
(6)
|
|
Includes the loss on disposal of property and equipment in the
ordinary course of business.
|
(7)
|
|
Costs incurred in connection with our initial public offering,
including legal, accounting and other related expenses.
|
(8)
|
|
For the periods presented, represents non-cash charges related to
certain employee benefits.
|
|
|
SSE HOLDINGS, LLC
|
SELECTED QUARTERLY FINANCIAL INFORMATION
|
(UNAUDITED)
|
(Dollar amounts in thousands)
|
|
The following table sets forth certain unaudited financial and operating
information for each fiscal quarter of fiscal 2014. The unaudited
quarterly information includes all adjustments (consisting of normal
recurring adjustments) that, in the opinion of management, are necessary
for a fair presentation of the information presented. This information
should be read in conjunction with the Company’s consolidated financial
statements and related notes thereto. Operating results for interim
periods are not necessarily indicative of the results that may be
expected for a full fiscal year.
|
|
|
|
|
|
Fiscal Quarter Ended
|
|
|
|
|
|
March 26,
|
|
|
June 25,
|
|
|
September 24,
|
|
|
December 31,
|
|
|
|
|
|
2014
|
|
|
2014
|
|
|
2014
|
|
|
2014¹
|
Shack sales
|
|
|
|
|
$
|
22,640
|
|
|
$
|
26,183
|
|
|
$
|
30,165
|
|
|
$
|
33,054
|
|
Licensing revenue
|
|
|
|
|
|
1,556
|
|
|
|
1,554
|
|
|
|
1,660
|
|
|
|
1,718
|
|
TOTAL REVENUE
|
|
|
|
|
|
24,196
|
|
|
|
27,737
|
|
|
|
31,825
|
|
|
|
34,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shack-level operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper costs
|
|
|
|
|
|
6,913
|
|
|
|
7,995
|
|
|
|
9,340
|
|
|
|
10,677
|
|
Labor and related expenses
|
|
|
|
|
|
6,253
|
|
|
|
6,684
|
|
|
|
7,668
|
|
|
|
8,707
|
|
Other operating expenses
|
|
|
|
|
|
2,376
|
|
|
|
2,585
|
|
|
|
2,905
|
|
|
|
3,325
|
|
Occupancy and related expenses
|
|
|
|
|
|
1,893
|
|
|
|
2,226
|
|
|
|
2,675
|
|
|
|
2,959
|
|
General and administrative expenses
|
|
|
|
|
|
3,363
|
|
|
|
3,629
|
|
|
|
5,200
|
|
|
|
5,995
|
|
Depreciation expense
|
|
|
|
|
|
1,231
|
|
|
|
1,334
|
|
|
|
1,502
|
|
|
|
1,742
|
|
Pre-opening costs
|
|
|
|
|
|
933
|
|
|
|
1,129
|
|
|
|
1,766
|
|
|
|
2,277
|
|
Loss on disposal of property and equipment
|
|
|
|
|
|
5
|
|
|
|
13
|
|
|
|
10
|
|
|
|
77
|
|
TOTAL EXPENSES
|
|
|
|
|
|
22,967
|
|
|
|
25,595
|
|
|
|
31,066
|
|
|
|
35,759
|
|
OPERATING INCOME (LOSS)
|
|
|
|
|
|
1,229
|
|
|
|
2,142
|
|
|
|
759
|
|
|
|
(987
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
35
|
|
|
|
56
|
|
|
|
128
|
|
|
|
144
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
|
|
|
1,194
|
|
|
|
2,086
|
|
|
|
631
|
|
|
|
(1,131
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
|
|
102
|
|
|
|
137
|
|
|
|
127
|
|
|
|
296
|
|
NET INCOME (LOSS)
|
|
|
|
|
$
|
1,092
|
|
|
$
|
1,949
|
|
|
$
|
504
|
|
|
$
|
(1,427
|
)
|
|
________________________
|
(1)
|
|
The Company operates on a 52/53 week fiscal year that ends on the
last Wednesday of the calendar year. The fiscal fourth quarter 2014
contained an extra operating week.
|
|

Source: Shake Shack Inc.