Shake Shack Inc. ( SHAK Quick Quote SHAK - Free Report) reported second-quarter fiscal 2022 results, wherein earnings beat the Zacks Consensus Estimate and revenues missed the same. Following the results, the company’s shares declined 6.2% on Aug 4. Investor sentiment was hurt as the company’s second-quarter revenues missed the consensus estimate and the third-quarter guidance also came in below the street estimates. Earnings & Revenues Details
During the quarter, the company reported break-even earnings, beating the Zacks Consensus Estimate of a loss of 2 cents. In the prior-year quarter, the company had reported adjusted earnings per share of 5 cents.
Quarterly revenues of $230.7 million lagged the Zacks Consensus Estimate of $238 million. The top line increased 23.1% on a year-over-year basis. Shack sales during the quarter rose 22.1% to $223.1 million, whereas licensing revenues increased 28.5% to $7.7 million year over year. Shack system-wide sales in second-quarter fiscal 2022 soared 24.8% year over year to $351.7 million. Comps Discussion
Same-Shack sales rose 10.1% in second-quarter fiscal 2022, primarily driven by 7.8% traffic growth. Urban same shack sales rose 19% compared to 2021.
During the first quarter of fiscal 2022, its average weekly sales came in at $76,000, up 12% sequentially. Operating Highlights
During the reported quarter, the company’s operating loss totaled $0.8 million. Shack-level operating profit margin came in at 18.8% compared to 19.2% in the prior-year quarter.
Total expenses (as a percentage of company revenues) increased 220 basis points (bps) year over year. Food and paper costs (as a percentage of company revenues) increased 70 basis points (bps) year over year. Labor and related expenses declined 50 bps year over year to 29.5%. Adjusted EBITDA for the reported quarter amounted to $22.1 million compared to $20.6 million reported in the year-ago quarter. Adjusted EBITDA margin contracted 140 bps to 9.6%. Balance Sheet
As of Jun 29, 2022, cash and cash equivalent totaled $278.3 million compared with $302.4 million as of Dec 29, 2021. Total long-term debt at the end of the quarter increased to $244.1 million compared with $243.5 million at the end of Dec 29, 2021.
Q3 & 2022 Outlook
For third-quarter fiscal 2022, the company expects total revenues between $221 million and $226.5 million. The Zacks Consensus Estimate for revenues is pegged at $245.2 million. Shack sales are anticipated in the range of $213-$218 million. The company’s licensing revenue expectation is between $8 million and $8.5 million for third-quarter fiscal 2022.
For third-quarter fiscal 2022, Shack-Level operating profit is projected in the range of 16-18%. Depreciation expense for 2022 is expected in the range of $70-$75 million. The company currently has a Zacks Rank #3 (Hold). Key Picks
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