Shake Shack, Inc. · NYSE:SHAK
Shake Shack — Q4 2019 Earnings Presentation
29 slides from Shake Shack's earnings presentation, Feb 25, 2020
Slide 1: Fourth Quarter 2019 Earnings Supplemental
FOURTH QUARTER 2019 EARNINGS SUPPLEMENTAL CORRECTED COPY FEBRUARY 24, 2020
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD - LOOKING STATEMENTS This presentation contains forward - looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results t
Slide 3: Full-Year 2019 Highlights
1. "Same - Shack sales" represents Shack sales for the comparable Shack base, which is defined as the number of domestic company - oper ated Shacks open for 24 full fiscal months or longer. 2. “Shack system - wide sales” is an operating measure and consists of sales from the Company's domestic compa
Slide 4: Q4 2019 Financial Highlights
Q4 2019 FINANCIAL HIGHLIGHTS 25 New Domestic Company - Operated and Licensed Shacks opened in Q4 $29.7M Shack - Level Operating Profit 4 +9% YoY +31% Shack System - wide Sales 2 $235.0M +22% Total Revenue $151.4M 4 Adjusted EBITDA 3 +2% YoY $14.8M YoY YoY - 3.6% Decrease in Same - Shack Sales 1 1. "
Slide 5: Total Revenue, System-wide Sales, Shack Count and Cash Flow
2016 2015 $191 $359 $268 $595 2017 $459 2018 2019 Total Revenue $595 Million System - wide Sales 1 $895 Million System - wide Shack Count 275 as of the end of the period Cash Flow from Operations $90 Million $532 $672 $403 $295 $895 275 114 84 159 208 $85 $71 $41 $54 $90 1. “Shack system - wide sale
Slide 6: Continued Innovation & Expansion of Shack Formats
CONTINUED INNOVATION & EXPANSION OF SHACK FORMATS FREE STANDING PAD EVENTS AIRPORTS DIGITAL FOCUSED FOOD TRUCK TRANSIT CENTER URBAN STADIUM SHOPPING CENTER ROADSIDE FOOD COURT MALL 6
Slide 7: Significant Expansion Within Existing Markets
19 20 19 8 10 8 8 8 13 6 5 19 16 2 5 10 9 California 24 Texas 18 17 Northeast 32 NYC 26 Mid - Atlantic Southeast 27 13 Midwest 26 Pacific Northwest 2 Southwest SIGNIFICANT EXPANSION WITHIN EXISTING MARKETS BUILDING ON GROWING BRAND AWARENESS 7 Aggressively expanding our footprint in existing markets
Slide 8: Early Stage of Domestic Expansion Plan: Age of Shack Base
EARLY STAGE OF DOMESTIC EXPANSION PLAN AGE OF DOMESTIC COMPANY - OPERATED SHACK BASE 24% 21% 16% 12% 27% Less than or equal to 12 months Greater than 48 months 13 to 24 months 25 to 36 months 37 to 48 months average age of company - operated Shacks 60% of Shacks are < 3 years old 2.9 years 8 The abo
Slide 9: Early Stage of Domestic Expansion Plan: Regional Footprint
EARLY STAGE OF DOMESTIC EXPANSION PLAN REGIONAL FOOTPRINT states with less than 5 Shacks states with 5 or more Shacks Only 9 states across the country with 5 or more Shacks; significant opportunity to expand footprint in existing markets The above includes domestic company - operated shacks as of th
Slide 10: 2020 Domestic Development Focused on Existing Markets
~90% of 2020 openings planned for within existing markets Opening third Shack in Seattle, second location in Nashville and continuing to grow the Los Angeles market with an opening in Santa Monica later this year Testing new kitchen flows in select new Shacks with goal of labor reduction, improved a
Slide 11: Licensed Business Delivering Strong Results
Long - term opportunity for growth in China is material with only three shacks in Shanghai, six Shacks in Hong Kong, and planned entrance into Beijing market later this year Anticipating coronavirus to have significant impact on business across Asia through much of 2020 Mexico City, Singapore and th
Slide 12: Strengthening Our Brand by Creating Buzz & Connecting With Communities
12 STRENGTHENING OUR BRAND BY CREATING BUZZ & CONNECTING WITH OUR COMMUNITIES
Slide 13: Continued Investment in Our Team
13 CONTINUED INVESTMENT IN OUR TEAM Promoted over 1,600 individuals around the company, of whom almost 60% were women Recognized by the Human Rights Campaign and awarded a 100% score on HRC Equality Index for corporate policies and practices Continued investment in additional programs throughout 202
Slide 14: 2019 Menu Development Focused on Chick'n Bites Launch
2019 MENU DEVELOPMENT FOCUSED ON CHICK’N BITES LAUNCH; INCREASING INNOVATION IN 2020 2019 focused on the successful launch of Chick’n Bites which was moved onto the core menu in early 2020, while continuing to assess guest feedback 2020 will see increased levels of menu innovation with buzz - worthy
Slide 15: Investing to Improve Digital Experience Across All Channels
©2004 - 2020 SHAKE SHACK. ALL RIGHTS RESERVED. INVESTING TO IMPROVE DIGITAL EXPERIENCE ACROSS ALL OUR CHANNELS Deploying app, kiosk and web enhancements adding loyalty - driving functionality to drive acquisition and frequency Building an integrated digital and data ecosystem, working towards a sing
Slide 16: Delivery Update
DELIVERY UPDATE Decision to pursue a single partner strategy for marketed and integrated delivery (with GrubHub) was announced in August 2019 POS technology integration with Grubhub completed early in the Fourth Quarter although majority of Shacks were still integrated with multiple partners at year
Slide 17: Shack Design Evolving for the Digital Journey
17 ©2004 - 2020 SHAKE SHACK. ALL RIGHTS RESERVED. SHACK DESIGN EVOLVING FOR THE DIGITAL JOURNEY Digital and in - Shack experiences converging with expansion of digital channels and pick - up in Shack Front of house flow increasingly separating order - ahead channels to minimize friction in pick - up
Slide 18: 2020 Guidance
2020 GUIDANCE 1. Includes approximately $15 million sales impact from a 53rd week. 2. Includes approximately 1.5% to 2.0% of menu price increases taken in December 2019 3. Normalized for the 53 rd week 4. Includes only domestic company - operated shacks 5. Shack - level operating profit margin is a
Slide 19: Appendix Including GAAP & Non-GAAP Measures
APPENDIX INCLUDING GAAP & NON - GAAP MEASURES 19
Slide 20: Impact of New Lease Accounting Standard
Right - of - use asset & lease liabilities Landlord funded assets & deemed landlord financing liabilities Deferred rent liabilities Occupancy and related expenses Other operating expenses Interest expense • Net increase to total assets of $218 million • Net increase to total liabilities of $213 mill
Slide 21: Adjusted EBITDA Definitions
“Adjusted EBITDA,” a non - GAAP measure” , is defined as EBITDA (as defined above), excluding equity - based compensation expense, deferred lease costs, losses on the disposal of property and equipment, amortization of cloud - based software implementation assets, as well as certain non - recurring
Slide 22: Income Statement
INCOME STATEMENT 22 (1) As a percentage of Shack sales. (dollar amount in thousands) Shack sales $ 145,814 96.3% $ 120,720 97.1% $ 574,625 96.7% $ 445,589 97.0% Licensing revenue 5,621 3.7% 3,545 2.9% 19,894 3.3% 13,721 3.0% TOTAL REVENUE 151,435 100.0% 124,265 100.0% 594,519 100.0% 459,310 100.0% S
Slide 23: Shack-Level Operating Profit
Shack - Level Operating Profit Shack - level operating profit is defined as Shack sales less Shack - level operating expenses, including food and paper costs, labor and related expenses, other operating expenses and occupancy and related expenses. How This Measure Is Useful When used in conjunction
Slide 24: Shack-Level Operating Profit Reconciliation
SHACK - LEVEL OPERATING PROFIT 24 (dollar amount in thousands) December 25, 2019 December 26, 2018 December 25, 2019 December 26, 2018 Operating income 488$ 2,836$ 25,685$ 31,711$ Less: Licensing revenue 5,621 3,545 19,894 13,721 Add: General and administrative expenses 19,229 15,173 65,649 52,720 D
Slide 25: EBITDA and Adjusted EBITDA
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 equity - based compensation expense, deferred lease cost, losse
Slide 26: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA 26 (1) Represents amortization of capitalized implementation costs related to cloud - based software arrangements that are included withi n general and administrative expenses. (2) Reflects the extent to which lease expense is greater than or less than cash lease payments. As a resul
Slide 27: 2019 Adjusted Pro Forma Effective Tax Rate
2019 ADJUSTED PRO FORMA EFFECTIVE TAX RATE 27 (dollar amounts in thousands) Income Tax Expense Income Before Income Taxes Effective Tax Rate Income Tax Expense Income Before Income Taxes Effective Tax Rate Income Tax Expense Income Before Income Taxes Effective Tax Rate Income Tax Expense Income Bef
Slide 28: 2018 Adjusted Pro Forma Effective Tax Rate
2018 ADJUSTED PRO FORMA EFFECTIVE TAX RATE 28 (dollar amounts in thousands) Income Tax Expense Income Before Income Taxes Effective Tax Rate Income Tax Expense Income Before Income Taxes Effective Tax Rate Income Tax Expense Income Before Income Taxes Effective Tax Rate Income Tax Expense Income Bef
Slide 29: Contact Information
CONTACT INFORMATION 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 29