Slide 1: Fourth Quarter 2018 Supplemental Earnings Slides
SHAKE = SHACK FOURTH QUARTER 2018 SUPPLEMENTAL EARNINGS SLIDES FEBRUARY 25, 2019 ; ,
Slide 2: Q4 2018 Highlights
Q4 2018 Highlights +2.3% $124M $179M Growth in Same-Shack Total Revenue Shack System-wide Sales1 Sales2 +27% YoY New Innovation +29% 20 $27.2M Kitchen YoY Total Revenue Growth Company-Operated Shack-Level Items and Licensed Shacks Operating Profit3 opened in Q4 1. "Same-Shack Sales" represents Shack
Slide 3: FY 2018 Highlights
FY 2018 Highlights +1.0% $459M $672M Growth in Total Revenue Shack System-wide Same-Shack +28% YoY Sales Sales1 +26% YoY2 One of two US Burger chains +14% 208 Operating in to receive an “A” for our antibiotic A YoY growth in Adjusted Licensed & Domestic Shacks 13 5 free policy3 EBITDA4 Worldwide 5 C
Slide 4: We are relentlessly focused on excellence, experience and hospitality
We are relentlessly focused on excellence, experience and hospitality 2019 Strategic Commitments : Commit to excellence in our people Cultivate a loyal and connected community Deliver a Innovate consistently our business great experience for growth Stand for Something Good
Slide 5: Committing to excellence in our people
Committing to excellence in our people 1,151 2,000 Internal Jobs created in Promotions the US in 2018 in 2018 Promotions GMs Leadership Receiving equity Development in Q1 '19, first time Remains a top since IPO priority in 2019 5
Slide 6: Company-operated domestic development continues with largest class of Shacks in 2019
Company-operated domestic development continues with largest class of Shacks in 2019 Domestic Company-Operated Shacks 200 36 40 to 5 6 to NYC New Shacks New markets Other in 2019 in including Salt Lake multi-formats City and New Orleans 160 - 164 >80% of our company- 43% operated Shacks outside of N
Slide 7: Licensed business growing with focus on Asia
Licensed business growing with focus on Asia Licensed Shacks 16 18 to 3 Middle East, Turkey, Russia 120 Net new licensed New countries include UK Japan, Korea, Hong Kong US 100 - 102 openings planned in 2019 1 Mexico, Singapore, and the Philippines Shack in Shanghai, Mainland China 44% 84 opened in
Slide 8: Digital innovation focused on guest experience and expanded convenience
Digital innovation focused on guest experience and expanded convenience App Refreshed app Delivery experience, Testing Delivery reducing friction in through In-Shack the path to ongoing pilots purchase and with multiple Constantly adding guest- partners innovating in- centric functionality Shack gue
Slide 9: Innovating around our core menu
Innovating around our core menu Moving to monthly Shake Chick’n Bites launched program to drive excitement nationally as a and frequency Limited Time Offering Commitment to Stand for Something Good by Exciting slate of collaborations removing plastic straws and and partnerships lined up eliminating
Slide 10: Consistent, strong performance
Consistent, strong performance Total Revenue ($M) Cash Flow from Operations ($M) CAGR 40% CAGR 57% $459 $85 $359 $71 $268 $54 $191 $41 $119 $14 '14 '15 '16 '17 '18 '14 '15 '16 '17 '18 Shack System-wide Sales1 ($M) System-wide Shack Count CAGR 33% CAGR 35% $672 208 $532 159 $403 114 $217 $295 84 63 '
Slide 11: Back-weighted Q4 Shack openings amplified costs, which level out over time
Back-weighted Q4 Shack openings amplified costs, which level out over time Company-operated Shack Openings by Quarter, FY 2018 • 50% of 2018 new Shacks were opened in the fourth quarter with 17 7 of those opening in the last 2 weeks of the year 7 • New Shacks typically 5 carry a higher labor 107 rat
Slide 12: Key markets face significant ongoing labor headwinds
Key markets face significant ongoing labor headwinds New York City Fast Food Workers Minimum Wage Trend District of Columbia Minimum Wage Trend +26% • Ongoing development in +43% $15.00 $13.25 markets with high wage $13.50 $12.50 inflation and increasing $12.00 $11.50 levels of regulation $10.50 $10
Slide 13: Real estate leases: Impact of new accounting standard
Real estate leases: Impact of new accounting standard Current Treatment New Standard • Under the new lease accounting standard (ASC 842), effective in 2019, we will recognize all real estate leases on the balance sheet Lease Type “Build-to-Suit” Leases Operating Leases Operating Leases • Our existin
Slide 14: Overall impact of new accounting standard
Overall impact of new accounting standard Balance Sheet changes Net resulting Balance Sheet impact Right-of-use asset & lease liabilities • Net increase to total assets of $207 to $217 million Landlord funded assets & deemed landlord financing liabilities • Net increase to total liabilities of $202
Slide 15: Fiscal Year 2019 Guidance
Fiscal Year 2019 Guidance FY 2019 Guidance FY 2020 Targets Total Revenue $570M to $576M $700M+ Licensed Revenue $15M to $16M Same-Shack Sales growth 0% to 1% Average Unit Volume $4.0M to $4.1M (includes all domestic company-operated Shacks) Domestic company-operated openings 36 to 40 200+ Shack Coun
Slide 16: Appendix including GAAP & non-GAAP measures
APPENDIX INCLUDING GAAP & NON-GAAP MEASURES 16
Slide 17: Definitions
Definitions Fourth Quarter & Fiscal Year 2018 “Adjusted EBITDA,” a non-GAAP measure, is defined as EBITDA excluding equity-based compensation expense, deferred rent expense, losses on the disposal of property and equipment, as well as certain non-recurring items that the Company does not believe dir
Slide 18: Income Statement
Income Statement Fourth Quarter & Fiscal Year 2018 Fiscal Quarter Ended Fiscal Year Ended December 26, 2018 December 27, 2017 December 26, 2018 December 27, 2017 Shack sales $ 120,720 97.1% $ 93,130 96.9% $ 445,589 97.0% $ 346,388 96.5% Licensing revenue 3,545 2.9% 3,006 3.1% 13,721 3.0% 12,422 3.5%
Slide 19: Shack-Level Operating Profit Definitions
Shack-Level Operating Profit Definitions Fourth Quarter & Fiscal Year 2018 Shack-Level Operating Profit Shack-level operating profit is defined as Shack sales less Shack-level operating expenses, including food and paper costs, labor and related expenses, other operating expenses and occupancy and r
Slide 20: Shack-Level Operating Profit
Shack-Level Operating Profit Fourth Quarter & Fiscal Year 2018 Fiscal Quarter Ended Fiscal Year Ended (dollar amounts in thousands) December 26, 2018 December 27, 2017 December 26, 2018 December 27, 2017 Operating income $ 2,836 $ 5,838 $ 31,711 $ 33,813 Less: Licensing revenue 3,545 3,006 13,721 12
Slide 21: Adjusted EBITDA Definitions
Adjusted EBITDA Definitions Fourth Quarter & Fiscal Year 2018 EBITDA and Adjusted EBITDA EBITDA is defined as net income before interest expense (net of interest income), income tax expense and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA (as defined above) excluding e
Slide 22: Adjusted EBITDA
Adjusted EBITDA Fourth Quarter & Fiscal Year 2018 Fiscal Quarter Ended Fiscal Year Ended (in thousands) December 26, 2018 December 27, 2017 December 26, 2018 December 27, 2017 Net income (loss) $ (548) $ (11,032) $ 21,948 $ 8,884 Depreciation expense 8,095 6,094 29,000 21,704 Interest expense, net 6
Slide 23: Adjusted Pro Forma Effective Tax Rate
Adjusted Pro Forma Effective Tax Rate Fourth Quarter & Fiscal Year 2018 December 26, 2018 Fiscal Quarter Ended Fiscal Year Ended Income Tax Income Before Effective Income Tax Income Before Effective Expense Income Taxes Tax Rate Expense Income Taxes Tax Rate As reported $ 3,183 $ 2,635 120.8% $ 8,86
Slide 24: Investor Contact / Media Contact
Investor Contact: Melissa Calandruccio, ICR Michelle Michalski, ICR (844) Shack-04 (844-742-2504) investor@shakeshack.com Media Contact: Kristyn Clark, Shake Shack 646-747-8776 kclark@shakeshack.com 24