Shake Shack Q4 Results Top Estimates

(RTTNews) - Burger chain Shake Shack, Inc. (SHAK), which debuted on the NYSE in late January, reported a loss for the fourth quarter compared to a profit last year, despite strong revenue growth, reflecting lower operating margins amid higher expenses. Adjusted loss per share came in narrower than analysts' expectations and quarterly revenues topped their estimates. The company also provided revenue guidance for the full-year 2015, in line with Street view.

"We are pleased with the strength of our fourth quarter results and excited to begin our journey as a public company. Our culture of Enlightened Hospitality has enabled Shake Shack to become a globally beloved brand where all of our stakeholders are rooting for our success," CEO Randy Garutti said in a statement.

The New York-based operator of "roadside" burger stands reported a net loss of $1.43 million or $0.05 per unit for the fourth quarter, compared to a net income of $1.0 million or $0.03 per unit in the prior-year quarter.

Results for the latest quarter include about $0.04 per unit of after-tax expenses incurred in connection with the company's initial public offering. Excluding the expense, adjusted net loss per share for the latest quarter would have been $0.01.

On average, six analysts polled by Thomson Reuters expected the company to report a loss of $0.03 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue, including Shack sales and licensing revenue, for the quarter surged 51.5 percent to $34.77 million from $22.95 million in the same quarter last year, and topped six Wall Street analysts' consensus estimate of $33.08 million.

The results for the latest quarter include the impact of an extra operating week (the 14th week), which contributed about $2.8 million of Shack sales.

Shack sales increased 51.6 percent to $33.05 million, due primarily to the opening of new Shacks, as well as same-shack sales growth of 7.2 percent, excluding sales from the 14th week.

The comparable Shack base includes those restaurants open for 24 months or longer. The comparable Shack base for the quarter was 13 Shacks, compared to eight Shacks last year.

Licensing revenue surged 49.7 percent to $1.72 million, due primarily to the opening of new international licensed Shacks.

Average weekly sales for domestic company-operated Shacks declined 3.4 percent to $85,000 from last year.

Shack-level operating profit margins decreased 40 basis points to 22.3 percent as higher commodity prices, primarily for beef, more than offset improvements in labor, occupancy, and other operating expenses.

As a percentage of total revenue, general and administrative expenses increased 290 basis points to 17.2 percent from last year's 14.3 percent.

During the quarter, the company opened ten system-wide Shack stands, including five domestic company-operated Shacks and five international licensed Shacks.

At the end of the quarter, the company had 63 shacks system-wide, of which, 31 were domestic company-operated, five were domestic licensed and 27 were international licensed.

On February 4, 2015, the company successfully closed its 5.75 million shares IPO at a price to the public of $21.00 per share, and received net proceeds of about $112.3 million after underwriter discounts and commissions. It made its trading debut on the New York Stock Exchange on January 30 following a successful IPO.

Looking ahead to fiscal 2015, the company forecasts total revenue in a range of $159 million to $163 million and same-shack sales growth in the low single digits. Street is currently looking for full-year 2015 revenues of $160.72 million.

"As a result of our successful IPO, we have the financial flexibility to support our robust expansion plans. Near-term, we are targeting at least 10 new domestic company-operated Shacks annually, with the goal of doubling our domestic company-operated store count in three years and tripling our store count in five years. Long-term, we see the potential for at least 450 domestic company-operated Shacks. Our unique and versatile real estate model is built for growth here in the United States and abroad," Garutti added.

SHAK closed Wednesday's regular trading session at $46.90, up $1.12 or 2.45% on a volume of 1.43 million shares. However, the stock lost $2.75 or 5.86% in after-hours trading.