Shake Shack (SHAK) Q4 2019 earnings summary

Executive summary

• Fiscal 2019 delivered rapid expansion: 73 openings, 275 system-wide Shacks, 29.4% revenue growth and 1.3% same-Shack sales growth.

• COVID-19 sharply disrupted operations after year-end; Shacks were closed or operating with reduced sales, and digital ordering, delivery and curbside pickup became key operating channels.

Financial highlights

• Total revenue rose 29.4% to $594.5M; Shack sales increased 29.0% to $574.6M and licensing revenue rose 45.0% to $19.9M.

• Net income was $24.1M; net income attributable to Shake Shack Inc. was $19.8M, or $0.61 diluted EPS.

• Operating income was $25.7M, or 4.3% of revenue, including $2.4M of one-time costs, primarily for Project Concrete.

• System-wide sales increased 33.2% to $895.3M; operating cash flow was $89.9M versus $85.4M in 2018.

Outlook and guidance

• FY2020 revenue guidance: $712M–$720M, including ~$15M from the 53rd week; licensing revenue $21M–$22M.

• FY2020 same-Shack sales outlook was a low-single-digit decrease, including 1.5%–2.0% menu price increases taken in Dec. 2019 and normalized for the 53rd week.

• Planned FY2020 openings: 40–42 domestic company-operated and 20–25 net licensed; domestic AUV guidance $3.7M–$3.8M.

• FY2020 Shack-level operating profit margin guidance was 22.0%–22.5%; operating profit was expected to increase in absolute terms and margin to begin stabilizing.

• COVID-19 made the financial outlook highly uncertain; future leases, design and construction were paused to protect liquidity, with no reliable pandemic duration or economic impact estimate.