Shake Shack Inc. (SHAK) 10-Q Quarterly Report May 2020

NEW YORK, NY (Business Wire) — May 4, 2020 — Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK) today reported its financial results for the first quarter ended March 25, 2020, a period that included 13 weeks.

Randy Garutti, Chief Executive Officer of Shake Shack, stated, “I've had the privilege of leading this company through many challenging and incredible moments, but I think we'd all agree that this has been an unprecedented test for our world, and for our teams. Our message across the company has been consistent—to lead with hope, while acting on reality, and to make the necessary choices today to ensure our strength and growth continue for many years to come. Our Shack teams have been heroic, continuing to adapt our operating models and business strategy in true entrepreneurial spirit. By doubling down on our digital strategies and with increasing engagement through both our own, and third-party delivery channels, we have continued to see week-over-week improvement in sales in all regions, since the lowest point at the end of March. I am incredibly proud of how hard our team members are working to support our communities and guests during a time when providing hospitality is more important than ever."

Garutti concluded, “We continue to make disciplined adjustments to our cost structure based on reduced operations, but we’re remaining flexible and have started the rehiring process for some of our furloughed team members as our business slowly improves. It’s difficult to predict when and how quickly we will fully rebound once stay-at-home regulations are lifted, but our first priority will continue to be to keep our teams and our guests safe, as we carefully re-open Shacks. While we've paused development during this cash conservation moment, we have a number of Shacks across various levels of design and construction completion and plan to resume development as the operating and construction environment continues to stabilize. Given the actions we’ve taken to bolster our balance sheet, we are in a strong position to resume execution of our long-term strategic growth plan as we continue to come through the other side of COVID-19. You can bet that when the day comes where friends, families, coworkers, travelers and everyone in our community chooses to gather again, Shake Shack will remain a place they choose to do so."

Financial Highlights for the First Quarter 2020 compared to the First Quarter 2019:


▪	Total revenue increased 8.0% to $143.2 million.


▪	Shack sales increased 7.4% to $138.0 million.


▪	Same-Shack sales decreased 12.8%, with approximately 2% decrease in fiscal February year-to-date, and approximately 29% decrease in fiscal March.


▪	Licensed revenue increased 26.8% to $5.1 million.


▪	Shack system-wide sales increased 13.5% to $221.6 million.


▪	Operating loss of $0.8 million, which included a non-cash asset impairment charge of $1.1 million, compared to operating income of $5.2 million in the prior year first quarter.


▪	Shack-level operating profit*, a non-GAAP measure, decreased 2.4% to $26.4 million, or 19.1% of Shack sales.


▪	Net loss was $1.1 million and adjusted EBITDA*, a non-GAAP measure, decreased 20.1% to $14.3 million.


▪	Net loss attributable to Shake Shack Inc. was $1.0 million and adjusted pro forma net income*, a non-GAAP measure, was $0.8 million, or $0.02 per fully exchanged and diluted share.


▪	Twelve net system-wide Shack openings, comprised of four domestic company-operated Shacks and eight net licensed Shacks.

* Shack-level operating profit, adjusted EBITDA and adjusted pro forma net income 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.”

The following information was filed by Shake Shack Inc. (SHAK) on Monday, May 4, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Shake Shack Inc.'s 10-Q Quarterly Report:

Revenue - Product Highlight
We used the proceeds from the sale of equity securities to purchase newly-issued LLC Interests and intend to cause SSE Holdings to use the net proceeds to strengthen our balance sheet, which would include use for general corporate purposes, and to further enhance our ability to resume execution of our long-term strategic growth plan.

Financial - Expense Highlight
Form 10-Q Table of Contents Pre-opening costs consist primarily of: (i) rent; (ii) managers' salaries; (iii) training costs; (iv) employee payroll and related expenses; (iv) all costs to relocate and compensate Shack management teams prior to an opening; (v) wages, travel and lodging costs for our opening training team and other support team members; (vi) marketing costs; (vii) attorney fees; and (viii) permits and licensing.
Financial - Income Highlight
(dollar amounts in thousands) Other income (loss), net $ (93 ) $ 564 Percentage of total revenue (0.1 )% 0.4 % Dollar change compared to prior year $ (657 ) Percentage change compared to prior year (116.5 )% Table of Contents The decrease in other income (loss), net for the thirteen weeks ended March 25, 2020 was primarily due to unrealized losses related to our investments in marketable securities and a decrease in dividend income.
Other - Other Highlight
When used in conjunction with GAAP financial measures, EBITDA and adjusted EBITDA are supplemental measures of operating performance that we believe are useful measures to facilitate comparisons to historical performance and competitors' operating results.
Financial - Earnings Highlight
When used in conjunction with GAAP financial measures, adjusted pro forma net income (loss) and adjusted pro forma earnings (loss) per fully exchanged and diluted share are supplemental measures of operating performance that we believe are useful measures to evaluate our performance period over period and relative to our competitors.
Financial - Earnings
When used in conjunction with...Read more
Financial - Earnings
Adjusted pro forma earnings (loss)...Read more
Financial - Earnings
To supplement the consolidated financial...Read more
Financial - Expense
Depreciation expense consists of the...Read more
Financial - Expense
Employee-related expenses include accelerated personal...Read more
Financial - Expense
Employee-related expenses include accelerated personal...Read more
Financial - Expense
Pre-opening costs can fluctuate significantly...Read more
Other - Other
For the thirteen weeks ended...Read more
Other - Other
EBITDA and adjusted EBITDA may...Read more
Other - Other
The First Amendment requires us...Read more
Revenue - Product
? Same-Shack sales decreased 12.8%,...Read more
Financial - Earnings
Reconciliations of Shack-level operating profit...Read more
Financial - Expense
To date, we have not...Read more
Revenue - Product
Our results for the first...Read more
Revenue - Product
The increase in licensing revenue...Read more
Financial - Earnings
? Shack-level operating profit*, a...Read more
Other - Other
This increase is primarily due...Read more
Financial - Earnings
A reconciliation of adjusted pro...Read more
Other - Other
Effective March 16, 2020, we...Read more
Other - Other
Therefore, these measures may not...Read more
Revenue - Product
Forward-looking statements provide current expectations...Read more
Other - Other
Presentation of EBITDA and adjusted...Read more
Financial - Shares
As our ownership interest in...Read more
Other - Other
The Revolving Credit Facility will...Read more
Financial - Expense
As we expect with other...Read more
Revenue - Product
Net loss attributable to Shake...Read more
Other - Other
Borrowings under the Revolving Credit...Read more
Financial - Expense
To further improve our liquidity,...Read more
Financial - Earnings
A reconciliation of EBITDA and...Read more
Other - Other
Variances in the estimates or...Read more
Other - Other
? Net loss was $1.1...Read more
Financial - Earnings
Additionally, Shack-level operating profit and...Read more
Financial - Expense
The decrease in pre-opening costs...Read more
Revenue - Product
Total revenue increased 8.0% to...Read more
Revenue - Product
? Licensed revenue increased 26.8%...Read more
Financial - Expense
The increase in other operating...Read more
Financial - Cash Flow
The payments that we are...Read more
Other - Other
This legislation was enacted before...Read more
Revenue - Geography
Additionally, domestic company-operated Shack openings...Read more
Other - Other
It may also assist investors...Read more
Financial - Income
Other income (loss) consists of...Read more
Revenue - Product
Domestic company-operated Shacks experienced steady...Read more
Financial - Expense
Labor and related expenses include...Read more
Financial - Earnings
Shack-level operating profit and Shack-level...Read more
Financial - Income
Any taxable income or loss...Read more
Other - Other
We are currently evaluating the...Read more
Financial - Earnings
Table of Contents Adjusted pro...Read more
Financial - Earnings
Form 10-Q Table of Contents...Read more
Financial - Income
(6) Represents the tax effect...Read more
Financial - Income
Our effective income tax rate...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Shake Shack Inc. provided additional information to their SEC Filing as exhibits

Exhibit 10.3: Material Contract

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32: Section 1350 Certification

Ticker: SHAK
CIK: 1620533
Form Type: 10-Q Quarterly Report
Accession Number: 0001620533-20-000029
Submitted to the SEC: Mon May 04 2020 4:32:00 PM EST
Accepted by the SEC: Mon May 04 2020
Period: Wednesday, March 25, 2020
Industry: Retail Eating And Drinking Places