0001620533-20-000070.txt : 20200731 0001620533-20-000070.hdr.sgml : 20200731 20200731160730 ACCESSION NUMBER: 0001620533-20-000070 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 88 CONFORMED PERIOD OF REPORT: 20200624 FILED AS OF DATE: 20200731 DATE AS OF CHANGE: 20200731 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Shake Shack Inc. CENTRAL INDEX KEY: 0001620533 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING & DRINKING PLACES [5810] IRS NUMBER: 471941186 FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36823 FILM NUMBER: 201066033 BUSINESS ADDRESS: STREET 1: 225 VARICK STREET STREET 2: SUITE 301 CITY: NEW YORK STATE: NY ZIP: 10014 BUSINESS PHONE: (646) 747-7200 MAIL ADDRESS: STREET 1: 225 VARICK STREET STREET 2: SUITE 301 CITY: NEW YORK STATE: NY ZIP: 10014 10-Q 1 shak-20200624.htm 10-Q shak-20200624
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 24, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ______
Commission file number: 001-36823
shak-20200624_g1.jpg
SHAKE SHACK INC.
(Exact name of registrant as specified in its charter)
Delaware47-1941186
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
225 Varick Street
Suite 301
New York,New York10014
(Address of principal executive offices)(Zip Code)
(646) 747-7200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
Title of each class Trading symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001SHAKNew York Stock Exchange

Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule-405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer  
Non-accelerated filer  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
As of July 22, 2020, there were 38,237,019 shares of Class A common stock outstanding and 3,117,002 shares of Class B common stock outstanding.



SHAKE SHACK INC.
TABLE OF CONTENTS



Cautionary Note Regarding Forward-Looking Information
This Quarterly Report on Form 10-Q ("Form 10-Q") contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"), which are subject to known and unknown risks, including risks related to the COVID-19 outbreak, uncertainties and other important factors that may cause actual results to be materially different. All statements other than statements of historical fact are forward-looking statements. Many of the forward-looking statements are located in Part I, Item 2 of this Form 10-Q under the heading "Management's Discussion and Analysis of Financial Condition and Results of 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.
While we believe that our assumptions are reasonable, it is very difficult to predict the impact of known factors, and it is impossible to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this Form 10-Q in the context of the risks and uncertainties disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 25, 2019 filed with the U.S. Securities and Exchange Commission (the "SEC") under the heading "Risk Factors" and in Part II, Item 1A of this Quarterly Report on Form 10-Q for the quarterly period ended June 24, 2020.
The forward-looking statements included in this Form 10-Q 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.
Shake Shack Inc. shak-20200624_g2.jpg Form 10-Q | 1

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
2 | Shake Shack Inc. shak-20200624_g2.jpg Form 10-Q

SHAKE SHACK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share amounts)
June 24
2020
December 25
2019
ASSETS
Current assets:
Cash and cash equivalents$173,984  $37,099  
Marketable securities16,833  36,508  
Accounts receivable8,291  9,970  
Inventories, net2,346  2,221  
Prepaid expenses and other current assets2,622  1,877  
Total current assets204,076  87,675  
Property and equipment, net322,162  314,862  
Operating lease assets298,602  274,426  
Deferred income taxes, net286,887  279,817  
Other assets12,208  11,488  
TOTAL ASSETS$1,123,935  $968,268  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$20,735  $14,300  
Accrued expenses19,807  24,140  
Accrued wages and related liabilities7,649  11,451  
Operating lease liabilities, current37,082  30,002  
Other current liabilities11,400  19,499  
Total current liabilities96,673  99,392  
Long-term operating lease liabilities332,751  304,914  
Liabilities under tax receivable agreement, net of current portion228,096  226,649  
Other long-term liabilities15,130  15,328  
Total liabilities672,650  646,283  
Commitments and contingencies (Note 15)
Stockholders' equity:
Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of June 24, 2020 and December 25, 2019.    
Class A common stock, $0.001 par value—200,000,000 shares authorized; 38,236,538 and 34,417,302 shares issued and outstanding as of June 24, 2020 and December 25, 2019, respectively.38  35  
Class B common stock, $0.001 par value—35,000,000 shares authorized; 3,117,002 and 3,145,197 shares issued and outstanding as of June 24, 2020 and December 25, 2019, respectively.3  3  
Additional paid-in capital384,338  244,410  
Retained earnings37,196  54,367  
Accumulated other comprehensive income3  2  
Total stockholders' equity attributable to Shake Shack Inc.421,578  298,817  
Non-controlling interests29,707  23,168  
Total equity451,285  321,985  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,123,935  $968,268  
See accompanying Notes to Condensed Consolidated Financial Statements.
Shake Shack Inc. shak-20200624_g2.jpg Form 10-Q | 3

SHAKE SHACK INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in thousands, except per share amounts)
Thirteen Weeks EndedTwenty-Six Weeks Ended
June 24
2020
June 26
2019
June 24
2020
June 26
2019
Shack sales$89,519  $147,876  $227,567  $276,445  
Licensing revenue2,267  4,837  7,389  8,877  
TOTAL REVENUE91,786  152,713  234,956  285,322  
Shack-level operating expenses:
Food and paper costs30,027  42,899  69,591  80,890  
Labor and related expenses30,933  40,197  72,699  77,290  
Other operating expenses14,304  16,755  32,083  32,323  
Occupancy and related expenses12,323  11,873  24,881  22,772  
General and administrative expenses14,017  15,393  30,208  29,330  
Depreciation expense12,089  9,799  23,857  18,765  
Pre-opening costs1,734  3,549  3,977  6,191  
Impairment and loss on disposal of assets434  377  2,522  728  
TOTAL EXPENSES115,861  140,842  259,818  268,289  
OPERATING INCOME (LOSS)(24,075) 11,871  (24,862) 17,033  
Other income (loss), net394  447  301  1,011  
Interest expense(442) (97) (554) (169) 
INCOME (LOSS) BEFORE INCOME TAXES(24,123) 12,221  (25,115) 17,875  
Income tax expense (benefit)(6,092) 1,050  (6,005) 3,097  
NET INCOME (LOSS)(18,031) 11,171  (19,110) 14,778  
Less: net income (loss) attributable to non-controlling interests(1,820) 2,141  (1,939) 3,202  
NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.$(16,211) $9,030  $(17,171) $11,576  
Earnings (loss) per share of Class A common stock:
Basic$(0.43) $0.30  $(0.48) $0.39  
Diluted$(0.43) $0.29  $(0.48) $0.38  
Weighted-average shares of Class A common stock outstanding:
Basic37,309  30,122  35,876  29,842  
Diluted37,309  31,015  35,876  30,703  
See accompanying Notes to Condensed Consolidated Financial Statements.



4 | Shake Shack Inc. shak-20200624_g2.jpg Form 10-Q

SHAKE SHACK INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in thousands)
Thirteen Weeks EndedTwenty-Six Weeks Ended
June 24
2020
June 26
2019
June 24
2020
June 26
2019
Net income (loss)$(18,031) $11,171  $(19,110) $14,778  
Other comprehensive income, net of tax(1):
Change in foreign currency translation adjustment    1    
Net change    1    
OTHER COMPREHENSIVE INCOME    1    
COMPREHENSIVE INCOME (LOSS)(18,031) 11,171  (19,109) 14,778  
Less: comprehensive income (loss) attributable to non-controlling interest(1,820) 2,141  (1,939) 3,202  
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.$(16,211) $9,030  $(17,170) $11,576  
(1) Net of tax expense of $0 for the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019.
See accompanying Notes to Condensed Consolidated Financial Statements.
Shake Shack Inc. shak-20200624_g2.jpg Form 10-Q | 5

SHAKE SHACK INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(in thousands, except share amounts)
For the Thirteen Weeks Ended June 24, 2020 and June 26, 2019
Class A
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
Retained EarningsAccumulated Other Comprehensive IncomeNon-
Controlling
Interest
Total
Equity
SharesAmountSharesAmount
BALANCE, MARCH 25, 202034,523,400  $35  3,117,002  $3  $246,970  $53,407  $3  $22,188  $322,606  
Net loss (16,211) (1,820) (18,031) 
Other comprehensive income:
Net change in foreign currency translation adjustment  
Equity-based compensation1,429  1,429  
Activity under stock compensation plans63,601  —  (164) 72  (92) 
Redemption of LLC Interests—  —  —  —    
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis385  385  
Issuance of Class A common stock sold in equity offerings, net of underwriting discounts, commissions and offering costs3,649,537  3  135,718  9,276  144,997  
Distributions paid to non-controlling interest holders(9) (9) 
BALANCE, JUNE 24, 202038,236,538  $38  3,117,002  $3  $384,338  $37,196  $3  $29,707  $451,285  
BALANCE, MARCH 27, 201929,698,228  $31  7,453,515  $7  $199,315  $37,086  $  $49,299  $285,738  
Net income 9,030  2,141  11,171  
Equity-based compensation2,263  2,263  
Activity under stock compensation plans137,151  (43) 657  614  
Redemption of LLC Interests722,306  (722,306) 4,886  (4,886)   
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis2,445  2,445  
Distributions paid to non-controlling interest holders(1,558) (1,558) 
BALANCE, JUNE 26, 201930,557,685  $31  6,731,209  $7  $208,866  $46,116  $  $45,653  $300,673  





6 | Shake Shack Inc. shak-20200624_g2.jpg Form 10-Q


For the Twenty-Six Weeks Ended June 24, 2020 and June 26, 2019
Class A
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
Retained EarningsAccumulated Other Comprehensive IncomeNon-
Controlling
Interest
Total
Equity
SharesAmountSharesAmount
BALANCE, DECEMBER 25, 201934,417,302  $35  3,145,197  $3  $244,410  $54,367  $2  $23,168  $321,985  
Net loss (17,171) (1,939) (19,110) 
Other comprehensive income:
Net change in foreign currency translation adjustment1  1  
Equity-based compensation2,742  2,742  
Activity under stock compensation plans141,504    260  (289) (29) 
Redemption of LLC Interests28,195    (28,195) —  195  (195)   
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis1,013  1,013  
Issuance of Class A common stock sold in equity offerings, net of underwriting discounts, commissions and offering costs3,649,537  3  135,718  9,276  144,997  
Distributions paid to non-controlling interest holders(314) (314) 
BALANCE, JUNE 24, 202038,236,538  $38  3,117,002  $3  $384,338  $37,196  $3  $29,707  $451,285  
BALANCE, DECEMBER 26, 201829,520,833  $30  7,557,347  $8  $195,633  $30,404  $  $47,380  $273,455  
Cumulative effect of accounting changes4,136  1,059  5,195  
Net income 11,576  3,202  14,778  
Equity-based compensation4,010  4,010  
Activity under stock compensation plans210,714    932  1,159  2,091  
Redemption of LLC Interests826,138  1  (826,138) (1) 5,480  (5,480)   
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis2,811  2,811  
Distributions paid to non-controlling interest holders(1,667) (1,667) 
BALANCE, JUNE 26, 201930,557,685  $31  6,731,209  $7  $208,866  $46,116  $  $45,653  $300,673  
See accompanying Notes to Condensed Consolidated Financial Statements.

Shake Shack Inc. shak-20200624_g2.jpg Form 10-Q | 7

SHAKE SHACK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Twenty-Six Weeks Ended
June 24
2020
June 26
2019
OPERATING ACTIVITIES
Net income (loss) (including amounts attributable to non-controlling interests)$(19,110) $14,778  
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation expense23,857  18,765  
Amortization of cloud computing asset628    
Non-cash operating lease cost22,220  18,765  
Equity-based compensation2,719  3,872  
Deferred income taxes11,225  317  
Non-cash interest expense16    
Gain on sale of marketable securities(79) (22) 
Impairment and loss on disposal of assets2,522  728  
Unrealized (gain) loss on available-for-sale securities22  (231) 
Other non-cash expense897  2  
Changes in operating assets and liabilities:
Accounts receivable1,679  7,252  
Inventories(125) 57  
Prepaid expenses and other current assets(745) (3,908) 
Other assets(1,542) (5,354) 
Accounts payable5,802  (5,202) 
Accrued expenses(15,179) 3,870  
Accrued wages and related liabilities(3,802) (1,271)