Updates Company-operated footprint target to
at least 1,500 Shacks
4QFY2024 Adjusted EBITDA grew 48%
year-over-year
Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE:
SHAK) announced preliminary unaudited results for the fiscal fourth
quarter and fiscal year ended December 25, 2024 ahead of presenting
at the 27th Annual ICR Conference today in Orlando, Florida. The
Company also provided an updated outlook on its long-term targets,
including now seeing the potential for its Company-operated
footprint to reach at least 1,500 Shacks over time, versus the
prior target of 450 that was provided in conjunction with the
Company's February 2015 initial public offering.
"Since the Company's founding in 2004, Shake Shack has been on a
continuous journey of expanding how we bring Enlightened
Hospitality to our guests and elevate our team members and our
communities. We are proud to announce that we ended FY2024 with 329
Company-operated Shacks with a marked improvement in our
profitability and returns. However, we believe that we are just
getting started, and see an ample runway for growth ahead. We are
committed to bringing the world's best fine casual experience to as
many guests, team members, and communities as possible. In doing
so, we aim to bring pride to everyone in our Company and to deliver
a strong financial benefit for our team members and
shareholders.
"We designed our six 2025 Strategic Priorities to deliver on our
robust opportunity, mission and objective. These are to (1) Build a
culture of leaders, (2) Optimize restaurant operations, (3) Drive
comp sales by increasing guest frequency, (4) Build and operate our
Shacks with best-in-class returns, (5) Accelerate our Licensed
business, and (6) Invest in long-term strategic capabilities.
Leveraging our internal data models, as well as more than 20 years
of opening and operating our Shacks with among industry-leading
returns, we now see our domestic Company-operated footprint to
reach at least 1,500 Shacks," said CEO Rob Lynch.
"We ended 2024 with broad based strength in the business. Our
preliminary unaudited results show that in the fourth quarter
FY2024, we grew same-Shack sales by 4.3%, Total revenue by 14.8%,
expanded our restaurant margins by nearly 300 basis points
year-over-year to 22.7% - the highest fourth quarter level since
2017, and grew Adjusted EBITDA by 48% year-over-year, more than 3x
our Total revenue growth rate and the highest Adjusted EBITDA level
on record. We opened 43 Company-operated Shacks in FY2024, also a
record high for the Company. Our guidance for 2025 and our outlook
for the next three years represents some of the highest growth in
the restaurant industry as we invest and execute against our robust
long-term opportunity ahead. In FY2025, we expect to grow Total
revenue by 16% - 18% year-over-year, continue to expand our
restaurant margins to approximately 22% and grow Adjusted EBITDA by
14% - 20% versus FY2024," said CFO Katie Fogertey.
The presentation at ICR will be held on Monday, January 13, 2025
at 9:00 a.m. Eastern Time. Presenting from the Company will be Rob
Lynch, Chief Executive Officer, and Katie Fogertey, Chief Financial
Officer. The presentation will be webcast live from the Company's
Investor Relations website at investor.shakeshack.com on the Events
& Presentations page.
For more information, please also see the presentation
materials, which will be available on the Company's Investor
Relations website on the Events & Presentations page prior to
the start of the presentation.
Preliminary Unaudited Results for the Fourth Quarter and
Fiscal Year Ended December 25, 2024:(1)
- Total revenue of $328.7 million in 4Q24 and $1.3 billion
in FY24.
- Shack sales of $316.6 million in 4Q24 and $1.2 billion
in FY24.
- Licensing revenue of $12.1 million in 4Q24 and $45.0
million in FY24.
- System-wide sales of $500.7 million in 4Q24 and $1.9
billion in FY24.
- Same-Shack sales up 4.3% versus 2023 in 4Q24 and 3.6%
versus 2023 in FY24.
- Restaurant-level profit margin(2) expected to be
approximately 22.7% of Shack sales in 4Q24 and approximately 21.4%
of Shack sales in FY24.
- Adjusted EBITDA(2) of $46.5 million in 4Q24 and $175.4
million in FY24.
- Opened 43 new Company-operated Shacks in FY24, 19 of which
opened in 4Q24. Opened 33 new licensed Shacks in FY24, nine of
which opened in 4Q24.
Initial 2025 Financial Guidance:
- Total revenue of $1.45 billion - $1.48 billion.
- Licensing revenue of $49.0 million - $51.0 million.
- Same-Shack sales growth of approximately 3%.
- Restaurant-level profit margin(2) to be approximately
22.0% of Shack sales.
- General and administrative expenses to be approximately
11.5% of Total revenue.
- Equity-based compensation to be approximately $22.0
million.
- Depreciation and amortization expense to be $108.0
million - $112.0 million.
- Pre-opening costs to be approximately $17.0
million.
- Net income to be $45.0 million - $60.0 million.
- Adjusted EBITDA(2) to be $200.0 million - $210.0
million.
- Adjusted Pro Forma Tax Rate to be approximately 24.0% -
25.0%.
- Company-operated openings to be approximately 45.
- Licensed openings to be approximately 35 - 40.
We believe that over the long-term we have the potential to
achieve the below targets:
- Total addressable market of 1,500+ Company-operated
Shacks.
- Target unit economics:
- Average unit volume in the range of $2.8 million - $4.0
million.
- Restaurant-level profit margin(2) in the range of 18% -
24%.
- Net build costs in the range of $1.5 million - $3.0
million.
- Cash-on-cash returns in the range of at least 30% -
33%.
- Three-year financial growth targets:
- Total revenue growth low-teens %.
- System-wide unit growth low-teens %.
- Restaurant-level profit margin(2) at least approximately
22%.
- Adjusted EBITDA(2) growth in the range of low to
mid-teens %.
(1)
Estimated results are preliminary
and unaudited and subject to change based upon completion of the
audit and Annual Report on Form 10-K for the fiscal year ended
December 25, 2024.
(2)
Restaurant-level profit margin
and Adjusted EBITDA are non-GAAP measures. See below for full
definitions and discussions of these measures.
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 Company-operated Shacks and excludes sales from
licensed Shacks.
“System-wide sales” is an operating measure and consists of
sales from Company-operated Shacks and 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 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 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.
"Restaurant-level profit," a non-GAAP measure, formerly referred
to as 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.
"Restaurant-level profit margin," a non-GAAP measure, formerly
referred to as Shack-level operating profit margin, 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.
"Average unit volume" is calculated by dividing total Shack
sales by the number of Shacks open during the period. For Shacks
that are not open for the entire period, fractional adjustments are
made to the number of Shacks in the denominator such that it
corresponds to the period of associated sales.
"Adjusted Pro Forma Effective Tax Rate" represents the effective
tax rate assuming the full exchange of all outstanding SSE
Holdings, LLC membership 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 its recurring business operations.
"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,
Impairments, loss on disposal of assets and Shack closures,
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.
The Company is not able to reconcile the expected preliminary
guided non-GAAP estimates to the most directly comparable GAAP
financial measures without unreasonable effort because it is unable
to predict, forecast or determine the probable significance of
various reconciling items with a reasonable degree of accuracy.
Accordingly, the most directly comparable GAAP estimates are not
provided.
When used in conjunction with GAAP financial measures, the
non-GAAP measures included in this press release are supplemental
measures of operating performance that the Company believes are
useful measures to evaluate the performance and profitability of
its Shacks, and 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. The Company believes the presentation of these measures
provides investors with a supplemental view of its operating
performance that can provide meaningful insights to the underlying
operating performance of the Company. These measures may differ
from similarly titled measures used by other companies due to
different methods of calculation, and presentation of these
measures is not intended to be considered in isolation for, or
superior to, the financial information prepared and presented in
accordance with GAAP.
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 to be
materially different from the statements made herein. All
statements other than statements of historical fact included in
this press release are forward-looking statements, including, but
not limited to, statements regarding the Company's long-term
targets, strategic initiatives, preliminary expected financial
results and operating performance for fiscal 2024 and the fourth
quarter of fiscal 2024, expected development targets, including
expected Shack construction and openings, and expected same-Shack
sales growth and trends in the Company’s operations.
Forward-looking statements discuss the Company’s current
expectations, targets and projections relating to its financial
position, results of operations, plans, objectives, future
performance and business. You can identify forward-looking
statements by the fact that they do not relate strictly to
historical or current facts. These statements may include words
such as "aim," "anticipate," "believe," "estimate," "expect,"
"forecast," "future," "intend," "outlook," "potential,"
"preliminary," "project," "projection," "plan," "seek," "target,"
"may," "could," "would," "will," "should," "can," "can have,"
"likely," the negatives thereof and other similar expressions. All
forward-looking statements are expressly qualified in their
entirety by these cautionary statements, and involve risks and
uncertainties that could cause actual results or events to differ
materially from the expectations discussed in this press release.
Some of the factors which could cause results to differ materially
from the Company’s expectations or cause the Company to not meet
its long-term targets include the Company's ability to develop and
open new Shacks on a timely basis, increased costs or shortages or
interruptions in the supply and delivery of the Company's products,
increased labor costs or shortages, inflationary pressures, the
Company's management of its digital capabilities and expansion into
new channels including drive-thru and multiple format investments,
the Company's ability to maintain and grow sales at its existing
Shacks, risks relating to the restaurant industry generally, and
the impact of any material weakness in the Company's internal
controls over financial reporting identified in connection with the
restatement described in the Company's Annual Report on Form 10-K
filed with the SEC on February 29, 2024 or otherwise. You should
evaluate all forward-looking statements made in this press release
in the context of the risks and uncertainties disclosed in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 27, 2023 and the Company's other filings as filed with the
SEC. All of the Company's SEC filings are available online at
www.sec.gov, www.shakeshack.com or upon request from Shake Shack
Inc. The forward-looking statements included in this press release
are made only as of the date hereof and you should not place undue
reliance on these forward-looking statements. There can be no
assurance that the results or developments currently anticipated by
the Company will be realized, or that the Company will achieve its
potential long-term targets as updated and currently in place. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement as a result of new information, future
events or otherwise, except as otherwise required by law. In
addition, the preliminary financial results set forth in this press
release are preliminary and unaudited, and these estimates are
based on information currently available to the Company. While the
Company believes these estimates are meaningful, they could differ
from the actual results that the Company ultimately reports in its
Annual Report on Form 10-K for the fiscal year ended December 25,
2024. The Company assumes no obligation and does not intend to
update these estimates prior to filing its Form 10-K for the fiscal
year ended December 25, 2024.
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 over 550 locations
system-wide, including over 350 in 33 U.S. States and the District
of Columbia, and over 200 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250111140182/en/
Media: Meg Davis, Shake Shack mcastranova@shakeshack.com
Investor Relations: Melissa Calandruccio, ICR Michelle
Michalski, ICR (844) SHACK-04 (844-742-2504)
investor@shakeshack.com
Shake Shack (NYSE:SHAK)
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