Investor Presentation January 2016

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Transcription:

Investor Presentation January 2016

Disclaimer Forward-Looking Information This presentation contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. All statements other than statements of historical fact included in this presentation are forward-looking statements, including, but not limited to, expected financial outlook for fiscal year 2015, preliminary outlook for fiscal year 2016, target Shack-onomics, expected Shack openings, expected same-shack sales growth and trends in the Company s operations. Forward-looking statements discuss our current expectations and projections relating to our 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," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other similar expressions. All forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. 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 31, 2014 filed with the Securities and Exchange Commission ("SEC") on March 27, 2015, subsequent Quarterly Reports on Form 10-Q, prospectus filed on August 13, 2015 and Registration Statement on Form S-1 filed with the SEC on October 8, 2015. All of the Company's SEC filings are available online at www.sec.gov, www.shakeshake.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. We undertake 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. Non-GAAP Financial Information This presentation contains non-gaap financial measures, including but not limited to, EBITDA, Adjusted EBITDA, Shack-level operating profit and Shack-level operating profit margin. Shacklevel operating profit and Shack-level operating profit margin are not required by, or presented in accordance with, GAAP. Shack-level operating profit is a supplemental measure of operating performance and our calculations thereof may not be comparable to similar measures reported by other companies. Shack-level operating profit margin has limitations as an analytical tool and should not be considered as a substitute for analysis of our results as reported under GAAP. Management believes that Shack-level operating profit and Shack-level operating profit margin are important measures to evaluate the performance and profitability of each Shack, individually and in the aggregate. The Company uses Shack-level operating profit margin information to benchmark their performance versus their competitors. EBITDA and Adjusted EBITDA are non-gaap supplemental measures of operating performance that do not represent and should not be considered alternatives to net income (loss) or cash flow from operations, as determined by GAAP. EBITDA and Adjusted EBITDA are used by management to measure the operating performance of their business, excluding specifically identified items that management believes do not directly reflect their core operations. The Company believes that these non-gaap financial measures, when used in conjunction with GAAP financial measures, provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The non- GAAP measures used by the Company are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation. Reconciliations of the non- GAAP financial measures included in this presentation to the most directly comparable GAAP measure are included in the Financial Appendix. 2

Key Shack Leaders Randy Garutti Chief Executive Officer Jeff Uttz Chief Financial Officer Danny Meyer Founder & Chairman of the Board 3

Where in the world is Shake Shack? Europe (11) Asia (1) Japan (1) UK (4) Moscow (3) US (49) West (3) Midwest (3) Northeast (11) NYC (15) Mid-Atlantic (9) Texas (2) Southeast (6) Istanbul (4) 84 Shacks worldwide (as of Jan 16) 44 domestic company-operated 35 international licensed 5 domestic licensed Middle East (23) Lebanon (2) Saudi Arabia (2) Kuwait (7) Qatar (2) UAE (10) 7

Woodbury Commons, NY

Queens Center, NY

New Oxford Street, London

Cardiff, UK

Riyadh, Saudi Arabia

Tokyo, Japan

Culinary Innovation Chick n Shack ShackMeister Burger Roadside Shack Lockhart Link Burger ParkBurger Surf n Shack 20

Strong Growth Trajectory Total Shacks Total revenue ($mm) Domestic company-operated Domestic licensed International licensed 58% 46% $174 29 90% 27 5 50% 5 15 100% 4 5 41 2 3 31 3 21 2 13 9 5 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Q3 2015 $19 105% $39 46% $57 44% $82 45% $119 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 LTM (9/30/15) 21

Most Recent Quarter Results Q3 2014 Q3 2015 Δ 2014 v 2015 Total revenue $31.8M $53.3M $21.5M Same-Shack sales growth Adjusted EBITDA margin* Shack-level operating profit margin* 1.2% 17.1% 1,590 bps 18.0% 24.5% 650 bps 25.1% 30.4% 530 bps ** Non-GAAP financial measure. See Financial Appendix for a reconciliation of the most directly comparable GAAP measure. 22

New Market Successes Las Vegas, NV Chicago, IL Baltimore, MD Austin, TX Successfully entered two new markets in 2015 Maryland (Baltimore) and Texas (Austin) Strong volume and operating performance in new markets underscore the portability of the concept Plans to enter Los Angeles, CA and Phoenix, AZ in 2016 23

Same Shack Sales Overview Domestic company-operated Shacks open for 24 months or longer* Commentary 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% # of Shacks Line 1 17.1% 12.9% 11.7% 8.2% 7.2% 6.8% 5.9% 4.5% 3.9% 0.8% 1.2% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 5 7 8 8 9 10 12 13 13 16 16 Strong same-shack sales in 3Q 2015 driven by: 8.1% increase in traffic 9.0% increase in ticket (price and mix) 3Q 2015 YTD same-shack sales of 14.3% driven by: 5.2% increase in traffic 9.1% increase in ticket (price and mix) * Excludes 53 rd week in fiscal 2014 24

2015 YTD Key Metrics Revenue System-wide sales* $139,531 $219,754 $83,758 $156,080 3Q' 14 YTD 3Q '15 YTD 3Q '14 YTD 3Q '15 YTD Shack-level operating profit** Adjusted EBITDA** % Shack-level operating profit margin % adjusted EBITDA margin $38,983 $31,256 $19,475 $14,063 24.7% 29.1% 16.8% 22.4% 3Q '14 YTD 3Q '15 YTD 3Q '14 YTD 3Q '15 YTD $ in thousands * System-wide sales represents the combined sales from all of our domestic company-operated Shacks and both our domestic and international licensed Shacks. Our total revenue is limited to Shack sales from our domestic company-operated Shacks and licensing revenue from our domestic and international licensed Shacks. ** Non-GAAP financial measure. See Financial Appendix for a reconciliation of the most directly comparable GAAP measure. 25

2015 Guidance For the fiscal year ending December 30, 2015, the Company provided the following guidance on our Q3 2015 call (Nov 5, 2015): Total revenue between $189 million and $190 million Same-Shack sales growth between 11% and 12% 12 (actual: 13) new domestic company-operated Shacks opened in 2015 which has already been executed At least 6 (actual: 8) international licensed Shacks to be opened under the Company's current license agreements in the U.K., Middle East and Japan. 26

2016 Guidance For the fiscal year ending December 28, 2016, the Company provides the following guidance: Total revenue between $237 million and $242 million (25-28% YoY growth) Same-Shack sales growth between 2.5% and 3.0% At least 14 new domestic (1 opened in late 2015) company-operated Shack openings 8 international (2 opened in late 2015) licensed Shack openings 2016 openings expected to have average annual sales volumes of at least $3.3 million and average Shack-level operating profit margins of at least 22% Long-term guidance for 2017 and beyond remains at $2.8 to 3.2 million and 18% to 22% Shack-level Operating Profit 27

2016 Margin Pressures 2016 COGS: expected to be flat to slightly higher on a sequential quarterly basis Beef Approximately 1/3 of market basket Contract on supply, not price

Labor Outlook Our Philosophy: Invest in our team As of Jan 1 2016, our entire hourly workforce received a raise: Starting wage: $10.50 $12 Major urban markets starting at $12 Expect deleverage on the labor and related expenses line

West Hollywood, CA

Scottsdale, AZ

Phoenix, AZ

Mall of America, MN

Dallas, TX

Houston, TX

Partnership with SPC Group 43 companies 30 brands 6,000+ stores worldwide Development Agreement: 25 Shacks by 2025 First Shack to launch in Seoul end of 2016 Next Stop: South Korea

Non-GAAP Reconciliation Thirteen Weeks Ended September 24, 2014 September 30, 2015 Thirty-Nine Weeks Ended September 24, 2014 September 30, 2015 Shack-level operating profit $ 7,577 $ 15,588 $ 19,475 $ 38,983 Add: Licensing revenue 1,660 1,998 4,770 5,626 Less: Reconciliation of Shack-level Operating Profit to Operating Income General and administrative expense 5,200 5,728 12,192 30,165 Depreciation expense 1,502 2,636 4,067 7,274 Pre-opening costs 1,766 1,401 3,828 4,054 Loss on disposal of property and equipment 10 17 28 17 Operating income $ 759 $ 7,804 $ 4,130 $ 3,099 Total revenue $ 31,825 $ 53,273 $ 83,758 $ 139,531 Less: Licensing revenue 1,660 1,998 4,770 5,626 Shack sales $ 30,165 $ 51,275 $ 78,988 $ 133,905 Shack-level operating profit margin 25.1% 30.4% 24.7% 29.1% 43

Non-GAAP Reconciliation Reconciliation of Adjusted EBITDA to Net Income Thirteen Weeks Ended September 24, 2014 September 30, 2015 Thirty-Nine Weeks Ended September 24, 2014 September 30, 2015 Net income $ 504 $ 6,193 $ 3,545 $ 78 Depreciation expense 1,502 2,636 4,067 7,274 Interest expense, net 128 83 219 245 Income tax expense 127 1,528 366 2,776 EBITDA 2,261 10,440 8,197 10,373 Equity-based compensation (1) 41 1,172 124 3,142 Deferred compensation expense (2) (43) Pre-opening costs (3) 1,039 1,051 2,260 2,933 Deferred rent (4) 924 369 1,934 1,338 Loss on disposal of property and equipment (5) 10 17 28 17 Non-recurring compensation expenses related to the IPO (6) 12,818 IPO-related expenses (7) 1,495 1,495 635 Other non-cash items (8) (11) 25 Adjusted EBITDA $ 5,716 $ 13,049 $ 14,063 $ 31,256 (1) Represents non-cash equity-based compensation expense. For the thirteen and thirty-nine weeks ended September 30, 2015, amounts relate solely to stock options granted in connection with the IPO. (2) Amount relates to a bonus agreement the Company entered into with an employee. (3) Non-capital expenditures associated with opening new Shacks exclusive of deferred rent incurred prior to (1) opening. Represents (4) non-cash Reflects equity-based the extent to compensation which rent expense. For is greater the thirteen than and or thirty-nine less than weeks cash ended rent payments. September 30, (5) 2015, Includes amounts the loss relateonsolely disposal to stock of options property granted and equipment in connectionin with the the ordinary IPO. (2) course Amount of relates business. to a bonus (6) agreement Non-recurring the Company compensation entered into expense with an incurred employee. in (3) connection Non-capitalwith expenditures the IPO, associated including with expense openingrecognized new Shacksin exclusive settlement of deferred of outstanding rent incurred awards prior tounder opening. the (4) Company's Reflects theunit extent Appreciation to which rentrights expense Plan, is greater the than orrelated less than employer cash rentwithholding payments. (5) taxes Includes and the the loss accelerated on disposal vesting of property of outstanding equipmentrestricted in the ordinary Class course B units. of business. (7) Costs (6) Non-recurring incurred connection compensation with expense the Company's incurred in connection IPO, including with the legal, IPO, accounting including expense and other recognized in settlement of outstanding awards under the Company's Unit Appreciation Rights Plan, the related employer withholding taxes and the accelerated vesting of outstanding restricted Class B units. (7) Costs incurred in connection with the related expenses. (8) For periods presented, represents non-cash charges related to certain employee benefits. Company's IPO, including legal, accounting and other related expenses. (8) For periods presented, represents non-cash charges related to certain employee benefits. 44