Financial News

Shake Shack Announces First Quarter 2023 Financial Results

  • Total revenue of $253.3 million, up 24.5% versus 2022, including $244.3 million of Shack sales and $9.0 million of Licensing revenue.
  • System-wide sales of $394.7 million, up 27.5% versus 2022.
  • Same-Shack sales up 10.3% versus 2022.
  • Operating loss of $3.2 million.
    • Shack-level operating profit(1) of $44.7 million, or 18.3% of Shack sales.
  • Net loss of $1.6 million.
    • Adjusted EBITDA(1) of $27.6 million.
  • Net loss attributable to Shake Shack Inc. of $1.5 million, or a loss of $0.04 per share.
    • Adjusted pro forma net loss(1) of $0.3 million, or a loss of $0.01 per fully exchanged and diluted share.
  • Opened six new domestic Company-operated Shacks. Opened seven new licensed Shacks, including locations in Mexico and China.

Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK) has posted its results for the first quarter of 2023 in a Shareholder Letter in the Quarterly Results section of the Company's Investor Relations website, which can be found here: Q1 2023 Shake Shack Shareholder Letter

Shake Shack will host a conference call at 8:00 a.m. ET. Hosting the call will be Randy Garutti, Chief Executive Officer, and Katherine Fogertey, Chief Financial Officer. The conference call can be accessed live over the phone by dialing (877) 407-0792, or for international callers by dialing (201) 689-8263. A replay of the call will be available until May 11, 2023 by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671; the passcode is 13736805.

The live audio webcast of the conference call will be accessible in the Events & Presentations section of the Company's Investor Relations website at investor.shakeshack.com. An archived replay of the webcast will also be available shortly after the live event has concluded.

(1)

 

Shack-level operating profit, Adjusted EBITDA and Adjusted pro forma net income (loss) are non-GAAP measures. A reconciliation to the most directly comparable financial measures presented in accordance with GAAP is set forth in the schedules accompanying this release. See “Non-GAAP Financial Measures” below.

About Shake Shack

Shake Shack serves elevated versions of American classics using only the best ingredients. It’s known for its delicious made-to-order Angus beef burgers, crispy chicken, hand-spun milkshakes, house-made lemonades, beer, wine, and more. With its high-quality food at a great value, warm hospitality, and a commitment to crafting uplifting experiences, Shake Shack quickly became a cult-brand with widespread appeal. Shake Shack’s purpose is to Stand For Something Good®, from its premium ingredients and employee development, to its inspiring designs and deep community investment. Since the original Shack opened in 2004 in NYC’s Madison Square Park, the Company has expanded to nearly 460 locations system-wide, including approximately 300 in 32 U.S. States and the District of Columbia, and approximately 160 international locations across London, Hong Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo, Seoul and more.

Skip the line with the Shack App, a mobile ordering app that lets you save time by ordering ahead! Guests can select their location, pick their food, choose a pickup time and their meal will be cooked-to-order and timed to arrival. Available on iOS and Android.

Definitions

The following definitions apply to these terms as used in this release:

"Shack sales" is defined as the aggregate sales of food, beverages, gift card breakage income and Shake Shack branded merchandise at domestic Company-operated Shacks and excludes sales from licensed Shacks.

“System-wide sales” is an operating measure and consists of sales from the Company's domestic Company-operated Shacks, domestic licensed Shacks and international licensed Shacks. The Company does not recognize the sales from licensed Shacks as revenue. Of these amounts, revenue is limited to licensing revenue based on a percentage of sales from domestic and international licensed Shacks, as well as certain up-front fees, such as territory fees and opening fees.

"Same-Shack sales" represents Shack sales for the comparable Shack base, which is defined as the number of domestic Company-operated Shacks open for 24 full fiscal months or longer. For consecutive days that Shacks were temporarily closed, the comparative period was also adjusted.

"Shack-level operating profit," a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses.

"Shack-level operating profit margin," a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses as a percentage of Shack sales.

“EBITDA,” a non-GAAP measure, is defined as Net income (loss) before interest expense (net of interest income), Income tax expense (benefit), and Depreciation and amortization expense.

“Adjusted EBITDA,” a non-GAAP measure, is defined as EBITDA (as defined above), excluding equity-based compensation expense, Impairment and loss on disposal of assets, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company's recurring business operations.

"Adjusted pro forma net income," a non-GAAP measure, represents Net income (loss) attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests ("LLC Interests") for shares of Class A common stock, adjusted for certain non-recurring and other items that the Company does not believe directly reflect its core operations and may not be indicative of the Company's recurring business operations.

SHAKE SHACK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share amounts)

     

 

 

March 29

2023

 

December 28

2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

293,430

 

 

$

230,521

 

Marketable securities

 

 

 

 

 

80,707

 

Accounts receivable, net

 

 

14,175

 

 

 

13,877

 

Inventories

 

 

4,394

 

 

 

4,184

 

Prepaid expenses and other current assets

 

 

18,075

 

 

 

14,699

 

Total current assets

 

 

330,074

 

 

 

343,988

 

Property and equipment, net of accumulated depreciation of $310,939 and $290,362, respectively

 

 

479,617

 

 

 

467,031

 

Operating lease assets

 

 

379,475

 

 

 

367,488

 

Deferred income taxes, net

 

 

301,538

 

 

 

300,538

 

Other assets

 

 

16,211

 

 

 

15,817

 

TOTAL ASSETS

 

$

1,506,915

 

 

$

1,494,862

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

16,002

 

 

$

20,407

 

Accrued expenses

 

 

45,677

 

 

 

47,945

 

Accrued wages and related liabilities

 

 

18,678

 

 

 

17,576

 

Operating lease liabilities, current

 

 

44,578

 

 

 

42,238

 

Other current liabilities

 

 

18,117

 

 

 

19,552

 

Total current liabilities

 

 

143,052

 

 

 

147,718

 

Long-term debt

 

 

244,851

 

 

 

244,589

 

Long-term operating lease liabilities

 

 

441,554

 

 

 

427,227

 

Liabilities under tax receivable agreement, net of current portion

 

 

235,361

 

 

 

234,893

 

Other long-term liabilities

 

 

22,192

 

 

 

20,687

 

Total liabilities

 

 

1,087,010

 

 

 

1,075,114

 

Commitments and contingencies

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of March 29, 2023 and December 28, 2022.

 

 

 

 

 

 

Class A common stock, $0.001 par value—200,000,000 shares authorized; 39,404,905 and 39,284,998 shares issued and outstanding as of March 29, 2023 and December 28, 2022, respectively.

 

 

39

 

 

 

39

 

Class B common stock, $0.001 par value—35,000,000 shares authorized; 2,844,513 and 2,869,513 shares issued and outstanding as of March 29, 2023 and December 28, 2022, respectively.

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

417,451

 

 

 

415,611

 

Accumulated deficit

 

 

(22,071

)

 

 

(20,537

)

Accumulated other comprehensive loss

 

 

(4

)

 

 

 

Total stockholders' equity attributable to Shake Shack Inc.

 

 

395,418

 

 

 

395,116

 

Non-controlling interests

 

 

24,487

 

 

 

24,632

 

Total equity

 

 

419,905

 

 

 

419,748

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

1,506,915

 

 

$

1,494,862

 

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF LOSS

(UNAUDITED)

(in thousands, except per share amounts)

 

 

 

Thirteen Weeks Ended

 

 

March 29

2023

 

March 30

2022

Shack sales

 

$

244,254

 

 

96.4

%

 

$

196,791

 

 

96.8

%

Licensing revenue

 

 

9,024

 

 

3.6

%

 

 

6,600

 

 

3.2

%

TOTAL REVENUE

 

 

253,278

 

 

100.0

%

 

 

203,391

 

 

100.0

%

Shack-level operating expenses(1):

 

 

 

 

 

 

 

 

Food and paper costs

 

 

71,772

 

 

29.4

%

 

 

59,884

 

 

30.4

%

Labor and related expenses

 

 

74,264

 

 

30.4

%

 

 

60,465

 

 

30.7

%

Other operating expenses(2)

 

 

34,936

 

 

14.3

%

 

 

30,171

 

 

15.3

%

Occupancy and related expenses

 

 

18,583

 

 

7.6

%

 

 

16,276

 

 

8.3

%

General and administrative expenses(2)

 

 

31,311

 

 

12.4

%

 

 

31,386

 

 

15.4

%

Depreciation and amortization expense

 

 

21,322

 

 

8.4

%

 

 

16,855

 

 

8.3

%

Pre-opening costs

 

 

3,557

 

 

1.4

%

 

 

2,712

 

 

1.3

%

Impairment and loss on disposal of assets

 

 

722

 

 

0.3

%

 

 

577

 

 

0.3

%

TOTAL EXPENSES

 

 

256,467

 

 

101.3

%

 

 

218,326

 

 

107.3

%

LOSS FROM OPERATIONS

 

 

(3,189

)

 

(1.3

) %

 

 

(14,935

)

 

(7.3

) %

Other income (expense), net

 

 

2,837

 

 

1.1

%

 

 

(289

)

 

(0.1

) %

Interest expense

 

 

(403

)

 

(0.2

) %

 

 

(355

)

 

(0.2

) %

LOSS BEFORE INCOME TAXES

 

 

(755

)

 

(0.3

) %

 

 

(15,579

)

 

(7.7

) %

Income tax expense (benefit)

 

 

867

 

 

0.3

%

 

 

(4,297

)

 

(2.1

) %

NET LOSS

 

 

(1,622

)

 

(0.6

) %

 

 

(11,282

)

 

(5.5

) %

Less: Net loss attributable to non-controlling interests

 

 

(88

)

 

%

 

 

(1,120

)

 

(0.6

) %

NET LOSS ATTRIBUTABLE TO SHAKE SHACK INC.

 

$

(1,534

)

 

(0.6

) %

 

$

(10,162

)

 

(5.0

) %

Loss per share of Class A common stock:

 

 

 

 

 

 

 

 

Basic

 

$

(0.04

)

 

 

 

$

(0.26

)

 

 

Diluted

 

$

(0.04

)

 

 

 

$

(0.26

)

 

 

Weighted average shares of Class A common stock outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

39,332

 

 

 

 

 

39,163

 

 

 

Diluted

 

 

39,332

 

 

 

 

 

39,163

 

 

 

_____________________

(1)

 

As a percentage of Shack sales.

(2)

 

The Company has elected to reclassify certain marketing expenses from Other operating expenses to General and administrative expenses for the thirteen weeks ended March 29, 2023. The prior period has been updated to conform with the current year presentation. The reclassification does not have a material impact on our results.

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

Thirteen Weeks Ended

 

 

March 29

2023

 

March 30

2022

OPERATING ACTIVITIES

 

 

 

 

Net loss (including amounts attributable to non-controlling interests)

 

$

(1,622

)

 

$

(11,282

)

Adjustments to reconcile net loss to net cash provided by operating activities

 

 

 

 

Depreciation and amortization expense

 

 

21,322

 

 

 

16,855

 

Amortization of debt issuance costs

 

 

262

 

 

 

262

 

Amortization of cloud computing asset

 

 

439

 

 

 

332

 

Non-cash operating lease cost

 

 

16,075

 

 

 

13,681

 

Equity-based compensation

 

 

3,802

 

 

 

3,188

 

Deferred income taxes

 

 

1,917

 

 

 

5,719

 

Non-cash interest expense

 

 

58

 

 

 

5

 

Gain on sale of equity securities

 

 

(81

)

 

 

 

Impairment and loss on disposal of assets

 

 

722

 

 

 

577

 

Unrealized loss on equity securities

 

 

 

 

 

400

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

3,354

 

 

 

1,902

 

Inventories

 

 

(210

)

 

 

70

 

Prepaid expenses and other current assets

 

 

(1,580

)

 

 

(2,392

)

Other assets

 

 

(1,218

)

 

 

(2,111

)

Accounts payable

 

 

(5,799

)

 

 

(2,862

)

Accrued expenses

 

 

(2,018

)

 

 

(10,369

)

Accrued wages and related liabilities

 

 

1,068

 

 

 

1,394

 

Other current liabilities

 

 

(2,389

)

 

 

5,312

 

Operating lease liabilities

 

 

(16,830

)

 

 

(11,726

)

Other long-term liabilities

 

 

2,548

 

 

 

(985

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

19,820

 

 

 

7,970

 

INVESTING ACTIVITIES

 

 

 

 

Purchases of property and equipment

 

 

(34,326

)

 

 

(27,974

)

Purchases of marketable securities

 

 

(690

)

 

 

(77

)

Sales of marketable securities

 

 

81,478

 

 

 

 

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

 

46,462

 

 

 

(28,051

)

FINANCING ACTIVITIES

 

 

 

 

Payments on principal of finance leases

 

 

(807

)

 

 

(747

)

Distributions paid to non-controlling interest holders

 

 

(49

)

 

 

(302

)

Proceeds from stock option exercises

 

 

113

 

 

 

84

 

Employee withholding taxes related to net settled equity awards

 

 

(2,626

)

 

 

(2,108

)

NET CASH USED IN FINANCING ACTIVITIES

 

 

(3,369

)

 

 

(3,073

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(4

)

 

 

(1

)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

62,909

 

 

 

(23,155

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

230,521

 

 

 

302,406

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

293,430

 

 

$

279,251

 

SHAKE SHACK INC.

NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

To supplement the consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses the following non-GAAP financial measures: Shack-level operating profit, Shack-level operating profit margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted pro forma net loss and adjusted pro forma loss per fully exchanged and diluted share (collectively the "non-GAAP financial measures").

Shack-Level Operating Profit

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.

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

(dollar amounts in thousands)

 

March 29

2023

 

March 30

2022

Loss from operations

 

$

(3,189

)

 

$

(14,935

)

Less:

 

 

 

 

Licensing revenue

 

 

9,024

 

 

 

6,600

 

Add:

 

 

 

 

General and administrative expenses(1)

 

 

31,311

 

 

 

31,386

 

Depreciation and amortization expense

 

 

21,322

 

 

 

16,855

 

Pre-opening costs

 

 

3,557

 

 

 

2,712

 

Impairment and loss on disposal of assets

 

 

722

 

 

 

577

 

Shack-level operating profit

 

$

44,699

 

 

$

29,995

 

 

 

 

 

 

Total revenue

 

$

253,278

 

 

$

203,391

 

Less: Licensing revenue

 

 

9,024

 

 

 

6,600

 

Shack sales

 

$

244,254

 

 

$

196,791

 

 

 

 

 

 

Shack-level operating profit margin(2,3)

 

 

18.3

%

 

 

15.2

%

_____________________

(1)

 

Certain marketing expenses have been reclassified from Other operating expenses to General and administrative expenses in the prior year to conform with the current year presentation. The reclassification does not have a material impact on our results.

(2)

 

For the thirteen weeks ended March 30, 2022, Shack-level operating profit margin includes a $1,281 cumulative catch-up adjustment for gift card breakage income, recognized in Shack sales.

(3)

 

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.

During the thirteen weeks ended March 29, 2023, the Company revised its definition of Adjusted EBITDA to exclude deferred lease costs and executive transition costs as adjustments to the measure. The Company believes excluding both of these items improves the usefulness of Adjusted EBITDA as these items are characteristic of the Company’s ongoing operations and such presentation is consistent with other companies in the restaurant industry. Previously reported periods have been revised to conform to the current period presentation.

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 set forth below.

 

 

Thirteen Weeks Ended

(dollar amounts in thousands)

 

March 29

2023

 

March 30

2022

Net loss

 

$

(1,622

)

 

$

(11,282

)

Depreciation and amortization expense

 

 

21,322

 

 

 

16,855

 

Interest expense, net

 

 

403

 

 

 

355

 

Income tax expense (benefit)

 

 

867

 

 

 

(4,297

)

EBITDA

 

$

20,970

 

 

$

1,631

 

 

 

 

 

 

Equity-based compensation

 

 

3,802

 

 

 

3,188

 

Amortization of cloud-based software implementation costs

 

 

439

 

 

 

332

 

Impairment and loss on disposal of assets

 

 

722

 

 

 

577

 

Legal settlements

 

 

1,004

 

 

 

6,000

 

Gift card breakage cumulative catch-up adjustment

 

 

 

 

 

(1,281

)

Other(1)

 

 

628

 

 

 

 

ADJUSTED EBITDA

 

$

27,565

 

 

$

10,447

 

 

 

 

 

 

Adjusted EBITDA margin(2)

 

 

10.9

%

 

 

5.1

%

_____________________

(1)

 

Related to professional fees for a non-recurring matter.

(2)

 

Calculated as a percentage of Total revenue, which was $253.3 million and $203.4 million for the thirteen weeks ended March 29, 2023 and March 30, 2022, respectively.

SHAKE SHACK INC.

NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

Adjusted Pro Forma Net Loss and Adjusted Pro Forma Loss Per Fully Exchanged and Diluted Share

Adjusted pro forma net loss represents Net loss attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests ("LLC Interests") for shares of Class A common stock, adjusted for certain non-recurring items that the Company does not believe are directly related to its core operations and may not be indicative of recurring business operations. Adjusted pro forma loss per fully exchanged and diluted share is calculated by dividing adjusted pro forma net loss by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Interests, after giving effect to the dilutive effect of outstanding equity-based awards.

During the thirteen weeks ended March 29, 2023, the Company revised its definition of Adjusted Pro Forma Net Income to exclude executive transition costs as an adjustment to the measure. Previously reported periods have been revised to conform to the current period presentation. See "EBITDA and Adjusted EBITDA" above for additional information.

How These Measures Are Useful

When used in conjunction with GAAP financial measures, adjusted pro forma net loss and adjusted pro forma 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 loss 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 loss and adjusted pro forma 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 loss and adjusted pro forma loss per fully exchanged and diluted share should not be considered alternatives to Net loss and 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 loss attributable to Shake Shack Inc. Adjusted pro forma net loss and adjusted pro forma loss per fully exchanged and diluted share should be evaluated in conjunction with GAAP financial results.

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

 

 

Thirteen Weeks Ended

(in thousands, except per share amounts)

 

March 29

2023

 

March 30

2022

Numerator:

 

 

 

Net loss attributable to Shake Shack Inc

 

$

             (1,534

)

 

$

           (10,162

)

Adjustments:

 

 

 

 

Reallocation of Net loss attributable to non-controlling interests from the assumed exchange of LLC Interests(1)

 

 

(88

)

 

 

(1,120

)

Legal settlements

 

 

1,004

 

 

 

6,000

 

Gift card breakage cumulative catch-up adjustment

 

 

 

 

 

(1,281

)

Other(2)

 

 

628

 

 

 

 

Tax impact of above adjustments(3)

 

 

(300

)

 

 

(1,595

)

Adjusted pro forma net loss

 

$

                (290

)

 

$

             (8,158

)

 

 

 

 

 

Denominator:

 

 

 

 

Weighted-average shares of Class A common stock outstanding—diluted

 

 

39,332

 

 

 

39,163

 

Adjustments:

 

 

 

 

Assumed exchange of LLC Interests for shares of Class A common stock(1)

 

 

2,852

 

 

 

2,920

 

Adjusted pro forma fully exchanged weighted-average shares of Class A common stock outstanding—diluted

 

 

42,184

 

 

 

42,083

 

 

 

 

 

 

Adjusted pro forma loss per fully exchanged share—diluted

 

$

               (0.01

)

 

$

               (0.19

)

 

 

 

 

 

 

Thirteen Weeks Ended

 

 

March 29

2023

 

March 30

2022

Loss per share of Class A common stock—diluted

 

$

               (0.04

)

 

$

               (0.26

)

Assumed exchange of LLC Interests for shares of Class A common stock(1)

 

 

 

 

 

(0.01

)

Non-GAAP adjustments(4)

 

 

0.03

 

 

 

0.08

 

Adjusted pro forma loss per fully exchanged share—diluted

 

$

               (0.01

)

 

$

               (0.19

)

_____________________

(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 loss attributable to non-controlling interests.

(2)

 

Related to professional fees for a non-recurring matter.

(3)

 

Represents the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of 133.1% and 24.9% for the thirteen weeks ended March 29, 2023 and March 30, 2022, 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.

(4)

 

Represents the per share impact of non-GAAP adjustments for each period. Refer to the reconciliation of Adjusted Pro Forma Net Loss above for additional information.

 

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