$Shake Shack (SHAK.US)$ shares are trading higher after reporting second-quarter results. The company reported adjusted earnings per share of 27 cents, which is in line with the street view. Quarterly sales of $316.50 million (+16.4%) topped the analyst consensus of $314.20 million.
System-wide sales reached $483.7 million, marking a 13.5% increase compared to 2023. Same-Shack sales grew by 4.0% year-over-year. Operating income rose to $10.8 million, up from $4.7 million in the year-ago period.
Restaurant-level profit was $67.1 million, representing 22.0% of Shack sales. The restaurant-level profit margin was 22.0%, 100 bps higher than last year and the highest quarterly result since 2019.
Net income increased to $10.4 million, compared to $7.2 million the previous year. Adjusted EBITDA surged by 27.4% to $47.2 million in the quarter year over year.
Wedbush analyst Nick Setyan reiterates Shake Shack with a Neutral and a $90 price target.
The company opened twelve new company-operated Shacks, including three drive-thrus. It also opened eleven new licensed Shacks.
Shake Shack exited the quarter with cash and equivalents worth $304.4 million. Inventories as of quarter end totaled $5.194 million.
"We remain on track to meet our financial targets for FY2024, including growing Total revenue by 14% – 15% and Adjusted EBITDA by more than 25% year-over year, as well as expanding Restaurant-level profit margins by 70 – 110 bps," said Chief Financial Officer, Katie Fogertey.
"With these drivers and lowering both pre-opening expenses per Shack by at least 10% per Shack and our total cost to build by approximately 10% year-over-year, we expect to achieve positive free cash flow for FY2024– a first since 2017," Fogerty added.
Shake Shack currently expects FY24 revenues of $1.24 billion-$1.25 billion versus $1.249 billion estimate.
Revenues are expected to be between $311.6 million and $317.0 million in the third quarter, compared to the $315.89 million estimate.
SHAK shares are trading higher by 18.7% to $104.00 at last check Thursday.
