Shake Shack(US:SHAK)2024-08-01 11:01Q2 2024 Financial Highlights Shake Shack reported strong Q2 2024 financial results with significant revenue and income growth, alongside continued restaurant expansion Q2 2024 Key Financial Metrics vs. Q2 2023 (in millions) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $316.5M | $271.8M | +16.4% | | Same-Shack Sales | +4.0% | N/A | N/A | | Operating Income | $10.8M | $4.7M | +129.8% | | Net Income | $10.4M | $7.2M | +44.4% | | Adjusted EBITDA | $47.2M | $37.1M | +27.4% | | Diluted EPS | $0.23 | N/A | N/A | | Adjusted Pro Forma Diluted EPS | $0.27 | N/A | N/A | - The company expanded its footprint by opening twelve new Company-operated Shacks, including three drive-thrus, and eleven new licensed Shacks during the second quarter of 20241 Financial Statements This section details Shake Shack's financial position, performance, and cash flows through consolidated statements Condensed Consolidated Balance Sheets As of June 26, 2024, Shake Shack's total assets increased to $1.66 billion from $1.61 billion at the end of 2023, primarily driven by a significant rise in cash and cash equivalents to $301.8 million. Total liabilities also grew to $1.18 billion from $1.14 billion, while total equity increased to $486.4 million from $469.4 million over the same period Balance Sheet Summary (in thousands) | Account | June 26, 2024 | December 27, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $301,838 | $224,653 | | Total Assets | $1,661,758 | $1,605,857 | | Total Liabilities | $1,175,393 | $1,136,487 | | Total Equity | $486,365 | $469,370 | Condensed Consolidated Statements of Income For the thirteen weeks ended June 26, 2024, Shake Shack reported total revenue of $316.5 million, a 16.4% increase year-over-year, driven by growth in Shack sales. Operating income more than doubled to $10.8 million from $4.7 million, and net income rose to $10.4 million from $7.2 million in the prior-year quarter, reflecting improved profitability Income Statement Highlights - Thirteen Weeks Ended (in thousands) | Metric | June 26, 2024 | June 28, 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $316,496 | $271,805 | +16.4% | | Income from Operations | $10,782 | $4,748 | +127.1% | | Net Income | $10,382 | $7,223 | +43.7% | | Net Income Attributable to Shake Shack Inc. | $9,668 | $6,948 | +39.2% | Income Statement Highlights - Twenty-Six Weeks Ended (in thousands) | Metric | June 26, 2024 | June 28, 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $607,000 | $525,083 | +15.6% | | Income from Operations | $10,816 | $1,559 | +593.8% | | Net Income | $12,596 | $5,601 | +124.9% | Condensed Consolidated Statements of Cash Flows For the first twenty-six weeks of 2024, net cash provided by operating activities was $84.2 million, a significant increase from $62.2 million in the same period of 2023. Investing activities provided a small cash inflow of $0.4 million, a major shift from an $85.4 million use of cash in the prior year, largely due to maturities of marketable securities. The company's cash and cash equivalents increased by $77.2 million, ending the period at $301.8 million Cash Flow Summary - Twenty-Six Weeks Ended (in thousands) | Activity | June 26, 2024 | June 28, 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $84,210 | $62,191 | | Net Cash Provided by (Used in) Investing Activities | $428 | ($85,415) | | Net Cash Used in Financing Activities | ($7,452) | ($3,596) | | Increase (Decrease) in Cash | $77,185 | ($26,824) | | Cash and Cash Equivalents at End of Period | $301,838 | $203,697 | Non-GAAP Financial Measures This section reconciles key non-GAAP financial measures to comparable GAAP measures for enhanced comparability Reconciliation of Restaurant-Level Profit The company uses Restaurant-level profit, a non-GAAP measure, to evaluate the profitability of its individual restaurants. For Q2 2024, Restaurant-level profit was $67.1 million with a margin of 22.0% of Shack sales, an improvement from $54.9 million and a 21.0% margin in Q2 2023. This measure is reconciled from the GAAP measure, Income from Operations, by excluding corporate-level expenses - Restaurant-level profit is a key internal metric used for budgeting, forecasting, and assessing performance, defined as Shack sales less direct Shack-level operating expenses (Food and paper, Labor, Other operating, and Occupancy)1819 Restaurant-Level Profit Reconciliation - Thirteen Weeks Ended (in thousands) | Metric | June 26, 2024 | June 28, 2023 | | :--- | :--- | :--- | | Income from operations (GAAP) | $10,782 | $4,748 | | Restaurant-level profit (Non-GAAP) | $67,079 | $54,942 | | Shack sales | $305,480 | $261,810 | | Restaurant-level profit margin | 22.0% | 21.0% | Reconciliation of EBITDA and Adjusted EBITDA Adjusted EBITDA, a key non-GAAP metric used by management, increased 27.4% to $47.2 million in Q2 2024 from $37.1 million in Q2 2023. The Adjusted EBITDA margin expanded to 14.9% from 13.6% year-over-year. These figures are reconciled from the GAAP measure, Net Income, by adding back interest, taxes, D&A, and other specific adjustments like equity-based compensation - Adjusted EBITDA is a key metric used internally for budgets, forecasts, and incentive compensation, as it excludes items not indicative of ongoing core operating performance23 Adjusted EBITDA Reconciliation - Thirteen Weeks Ended (in thousands) | Metric | June 26, 2024 | June 28, 2023 | | :--- | :--- | :--- | | Net income (GAAP) | $10,382 | $7,223 | | EBITDA (Non-GAAP) | $39,446 | $30,100 | | Adjusted EBITDA (Non-GAAP) | $47,209 | $37,050 | | Adjusted EBITDA margin | 14.9% | 13.6% | Reconciliation of Adjusted Pro Forma Net Income and EPS The company reported adjusted pro forma net income of $12.1 million for Q2 2024, up from $7.9 million in the prior-year quarter. This resulted in an adjusted pro forma diluted earnings per share of $0.27, a significant increase from $0.18 in Q2 2023. This non-GAAP measure adjusts Net income attributable to Shake Shack Inc. for non-recurring items and assumes the full exchange of LLC interests to improve comparability - This measure is used to evaluate performance over time and against competitors by creating a comparable corporate and tax structure, assuming the full exchange of all outstanding LLC Interests28 Adjusted Pro Forma Net Income & EPS - Thirteen Weeks Ended (in millions) | Metric | June 26, 2024 | June 28, 2023 | | :--- | :--- | :--- | | Net income attributable to Shake Shack Inc. (GAAP) | $9.7M | $6.9M | | Adjusted pro forma net income (Non-GAAP) | $12.1M | $7.9M | | Earnings per share of Class A common stock—diluted (GAAP) | $0.23 | $0.16 | | Adjusted pro forma earnings per fully exchanged share—diluted (Non-GAAP) | $0.27 | $0.18 |