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Shake Shack's (SHAK) CEO Randall Garutti on Q2 2015 Results - Earnings Call Transcript


Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Shake Shack second quarter 2015 earnings conference call. [Operator Instructions] On the call today, we have Randy Garutti, Chief Executive Officer of Shake Shack; and Jeff Uttz, Chief Financial Officer. And now, I'd like to turn the conference over to Mr. Jeff Uttz. Please go ahead.

Jeffrey Uttz - Chief Financial Officer

Thank you, operator, and good afternoon, everybody. By now you all should have access to our second quarter 2015 earnings release. If not, it can be found at in the Investor Relation section.

Before we begin our formal remarks, I need to remind everyone that our discussions today will include forward-looking statements. These forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them.

Actual results may differ materially from those indicated by these forward-looking statements due to a number of risks and uncertainties, including those discussed in the risk factor section of our Annual Report on Form 10-K, which was filed with the SEC on March 27, 2015, our Quarterly Report on Form 10-Q for the quarter ended April 1, 2015, which was filed with the SEC on May 15 and in our Registration Statement on Form S-1 as amended, which was originally filed with the SEC on July 20, 2015.

Additionally, any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change.

During today's call we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and reconciliations to comparable GAAP measures are available on our earnings release.

Today, we filed an amended registration statement with the SEC. Our comments on today's call shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the Securities Laws of any such state or jurisdiction. We refer all of you to our SEC filings regarding that matter.

With that, I would like to turn the call over to Randy.

Randall Garutti - Chief Executive Officer

Thank you, Jeff, and good afternoon, everyone. In the second quarter our team has continued to execute on our plan, and we have delivered another strong quarter of outstanding operational results. We are excited to be sharing these results with you today as well as discuss what they mean for the full year outlook.

I would like to highlight a few notes from the second quarter. Total revenue grew 74.7% to $48.5 million, including a 12.9% increase in same same-Shack sales on a calendar basis. Shack-level operating profit, a non-GAAP measure, increased 110.9% to $14.1 million, a 30.3% Shack-level operating profit margin.

Adjusted EBITDA, a non-GAAP measure, increased 136.5% to $11.2 million. On an adjusted pro forma basis, we are $0.09 per share for the quarter, ahead of our internal expectations, driven in large part by our much stronger than expected same-Shack sales growth and strong performance across Shacks nationwide.

Similar to last quarter, we attribute our stronger than anticipated performance to a number of factors, including, menu price increases taken in September 2014 and January 2015 to offset commodity cost pressures; a continued drift in sales due to the return of crinkle cut fries; a positive mix shift from our limited time offering of the ShackMeister Burger and our January custard calendar change, which added a Shake of the Week option to our seasonal custard offerings; and the extraordinary amount of press surrounding our IPO, which has cultivated newer Shack fans and an even stronger brand awareness.