SAN DIEGO--(BUSINESS WIRE)--Jack in the Box Inc. (NASDAQ: JACK) today reported earnings from continuing operations of $33.8 million, or $1.09 per diluted share, for the second quarter ended April 16, 2017, compared with $29.0 million, or $0.85 per diluted share, for the second quarter of fiscal 2016.
Operating earnings per share, a non-GAAP measure which the company defines as diluted earnings per share from continuing operations on a GAAP basis excluding restructuring charges and gains or losses from refranchising, were $0.98 in the second quarter of fiscal 2017 compared with $0.85 in the prior year quarter.
A reconciliation of non-GAAP measurements to GAAP results is provided below, with additional information included in the attachment to this release. Figures may not add due to rounding.
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||||||||||
|
April 16, |
April 10, |
April 16, |
April 10, |
|||||||||||||||||
|
Diluted earnings per share from continuing operations – GAAP |
$ | 1.09 | $ | 0.85 | $ | 2.22 | $ | 1.78 | ||||||||||||
| Restructuring charges | 0.04 | — | 0.08 | — | ||||||||||||||||
| Gains from refranchising | (0.15 | ) | — | (0.15 | ) | (0.01 | ) | |||||||||||||
| Operating earnings per share – Non-GAAP | $ | 0.98 | $ | 0.85 | $ | 2.15 | $ | 1.77 | ||||||||||||
During fiscal 2016, the company announced plans to reduce general and administrative costs. A comprehensive review of its organizational structure identified cost savings from workforce reductions, relocation and consolidation of the Qdoba corporate support center, refranchising initiatives, and information technology synergies across both brands. As a result, restructuring charges of $2.2 million, or approximately $0.04 per diluted share, were recorded during the second quarter of fiscal 2017. Charges consist primarily of facility closing and employee relocation costs. These charges are included in “Impairment and other charges, net” in the accompanying condensed consolidated statements of earnings.
Lenny Comma, chairman and chief executive officer, said, “While operating earnings per share increased 15 percent versus last year, driven primarily by lower G&A, our second quarter performance was below our expectations. After a sluggish start to the quarter, which we believe was attributable to delayed tax refunds and record rainfall in California, Jack in the Box® system same-store sales improved to positive territory as these transitory issues passed and we pivoted our advertising towards value messages. However, same-store sales at Qdoba® company restaurants worsened in the latter two months of the quarter, as we lapped more aggressive discounting in last year's second quarter. While margins at Qdoba were still disappointing, they improved to over 16 percent in the final month of the quarter as we were able to manage labor and food costs more effectively than in the first quarter, despite the larger decline in same-store sales. We are also encouraged that Qdoba company same-store sales have improved thus far in the third quarter.
“At our investor meeting last May, we said one of the factors that would cause us to reconsider our strategy with respect to Qdoba was valuation. It has become more apparent since then that the overall valuation of the company is being impacted by having two different business models. As a result, we've retained Morgan Stanley & Co. LLC to assist the Board in its evaluation of potential alternatives with respect to Qdoba, as well as other ways to enhance shareholder value.
“Lastly, we continue to make good progress on our Jack in the Box refranchising initiative, with the sale of 60 restaurants in the second quarter. In addition, as of today, we have signed non-binding letters of intent with franchisees to sell approximately 70 additional restaurants.”
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Increase/(decrease) in same-store sales*: |
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| 12 Weeks Ended | 28 Weeks Ended | ||||||||||||
|
April 16, |
April 10, |
April 16, |
April 10, |
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| Jack in the Box: | |||||||||||||
| Company | (2.4)% | (1.0)% | (0.7)% | (0.2)% | |||||||||
| Franchise | (0.4)% | 0.3% | 2.0% | 1.1% | |||||||||
| System | (0.8)% | 0.0% | 1.4% | 0.8% | |||||||||
| Qdoba: | |||||||||||||
| Company | (5.9)% | 3.1% | (3.4)% | 2.2% | |||||||||
| Franchise | (0.3)% | 1.2% | (0.3)% | 1.8% | |||||||||
| System | (3.2)% | 2.1% | (1.9)% | 2.0% | |||||||||
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*Note: Due to the transition from a 53-week to a 52-week fiscal year, year-over-year fiscal period comparisons are offset by one week. The change in same-store sales presented in the 2017 column uses comparable calendar periods to balance the one-week shift and to provide a clearer year-over-year comparison. |
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Jack in the Box system same-store sales decreased 0.8 percent for the quarter and lagged the QSR sandwich segment by 1.5 percentage points for the comparable period, according to The NPD Group’s SalesTrack® Weekly for the 12-week time period ended April 16, 2017. Included in this segment are 16 of the top QSR sandwich and burger chains in the country. Company same-store sales decreased 2.4 percent in the second quarter driven by a 7.1 percent decrease in transactions, partially offset by average check growth of 4.7 percent.
Qdoba same-store sales decreased 3.2 percent system-wide and 5.9 percent for company restaurants in the second quarter. Company same-store sales reflected an 8.2 percent decrease in transactions, partially offset by growth in average check and catering sales.
Consolidated restaurant operating margin, a non-GAAP measure1, decreased by 240 basis points to 17.5 percent of sales in the second quarter of 2017, compared with 19.9 percent of sales in the year-ago quarter. Restaurant operating margin for Jack in the Box company restaurants, a non-GAAP measure1, decreased 100 basis points to 19.7 percent of sales. The decrease was due primarily to higher labor costs related to wage inflation, higher repairs and maintenance costs, and sales deleverage, which were partially offset by a decrease in food and packaging costs. The decrease in food and packaging costs as a percentage of sales resulted from the benefit of menu price increases, favorable product mix and commodity deflation of approximately 0.3 percent in the quarter. Restaurant operating margin for Qdoba company restaurants, a non-GAAP measure1, decreased 480 basis points to 13.5 percent of sales. The decrease was due primarily to sales deleverage, the impact of new restaurant openings over the last 12 months, an increase in food and packaging costs and the impact of wage inflation. The increase in food and packaging costs as a percentage of sales was impacted by unfavorable product mix, which was partially offset by a decrease in discounting. Commodity costs at Qdoba were flat in the quarter compared to the prior year.
Franchise margin, a non-GAAP measure1, as a percentage of total franchise revenues improved to 54.4 percent in the second quarter from 53.8 percent in the prior year quarter. The improvement was due primarily to higher franchise fees related to the sale of 60 company-operated Jack in the Box restaurants to franchisees in the second quarter, lower depreciation and a decrease in franchise support and other costs. These increases were partially offset by decreases in rental revenues and royalties resulting from the acquisition of 19 franchise-operated Jack in the Box restaurants at the beginning of the quarter which the company intends to refranchise, and an increase in occupancy expenses due primarily to a decrease in favorable lease commitment adjustments related to previously refranchised markets.
| ____________________________ |
| (1) Restaurant operating margin and franchise margin are non-GAAP measures. These non-GAAP measures are reconciled to consolidated earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results." |
SG&A expense for the second quarter decreased by $11.1 million and was 9.7 percent of revenues as compared to 13.0 percent in the prior year quarter. Key items contributing to the decrease were the impact of the company's restructuring activities, a $3.3 million decrease in incentive compensation, a $2.6 million decrease in advertising, a $2.1 million decrease in pension and postretirement benefits, as well as a $2.0 million decrease in insurance costs. These decreases were partially offset by mark-to-market adjustments on investments supporting the company's non-qualified retirement plans, which resulted in a $1.5 million year-over-year increase in SG&A.
Interest expense, net, increased by $4.0 million in the second quarter due to increased leverage and a higher effective interest rate for 2017.
The tax rate for the second quarter of 2017 was 38.2 percent versus 36.7 percent for the second quarter of 2016. The higher tax rate was due primarily to a decrease in work opportunity tax credits in the second quarter of 2017, and favorable mark-to-market adjustments on investments supporting the company's non-qualified retirement plans in the second quarter of 2016.
Capital Allocation
The company repurchased approximately 2,229,000 shares of its common stock in the second quarter of 2017 at an average price of $98.27 per share for an aggregate cost of $219.0 million.
On May 11, 2017, the Board of Directors authorized an additional $100.0 million stock buyback program. This leaves approximately $181.0 million remaining under stock buyback programs authorized by the company's Board of Directors that expire in November 2018.
The company also announced today that on May 11, 2017, its Board of Directors declared a quarterly cash dividend of $0.40 per share on the company’s common stock. The dividend is payable on June 12, 2017, to shareholders of record at the close of business on May 30, 2017.
Guidance
The following guidance and underlying assumptions reflect the company’s current expectations for the third quarter ending July 9, 2017, and fiscal year ending October 1, 2017. Fiscal 2017 is a 52-week year, with 16 weeks in the first quarter, and 12 weeks in each of the second, third and fourth quarters. Fiscal 2016 was a 53-week year, with the additional week occurring in the fourth quarter.
Third quarter fiscal year 2017 guidance
- Same-store sales of up 1.0 to down 1.0 percent at Jack in the Box system restaurants versus a 1.1 percent increase in same-store sales in the year-ago quarter.
- Same-store sales of up 1.0 to down 1.0 percent at Qdoba company restaurants versus a 1.0 percent increase in the year-ago quarter.
Fiscal year 2017 guidance
- Same-store sales increase of approximately 1.0 percent at Jack in the Box system restaurants.
- Same-store sales decrease of approximately 1.0 to 2.0 percent at Qdoba company restaurants.
- Commodity costs of approximately flat for both Jack in the Box and Qdoba.
- Consolidated restaurant operating margin of approximately 19.0 percent, depending on the timing of refranchising transactions and the margins associated with the restaurants sold.
- SG&A as a percentage of revenues of approximately 11.0 percent as compared to 12.7 percent in fiscal 2016.
- Impairment and other charges as a percentage of revenues of approximately 70 basis points, excluding restructuring charges.
- Approximately 20 to 25 new Jack in the Box restaurants opening system-wide, the majority of which will be franchise locations.
- Approximately 50 to 60 new Qdoba restaurants, of which approximately 30 are expected to be company locations.
- Capital expenditures of approximately $100 million.
- Tax rate of approximately 38.0 to 39.0 percent.
- Operating earnings per share, which the company defines as diluted earnings per share from continuing operations on a GAAP basis excluding restructuring charges and gains or losses from refranchising, ranging from $4.10 to $4.30.
Conference call
The company will host a conference call for financial analysts and investors on Wednesday, May 17, 2017, beginning at 8:30 a.m. PT (11:30 a.m. ET). The conference call will be broadcast live over the Internet via the Jack in the Box Inc. corporate website. To access the live call through the Internet, log onto the Investors section of the Jack in the Box Inc. website at http://investors.jackinthebox.com at least 15 minutes prior to the event in order to download and install any necessary audio software. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days, beginning at approximately 11:30 a.m. PT on May 17, 2017.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam. Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Eats®, a leader in fast-casual dining, with more than 700 restaurants in 47 states, the District of Columbia and Canada. For more information on Jack in the Box and Qdoba, including franchising opportunities, visit www.jackinthebox.com or www.qdoba.com.
Safe harbor statement
This press release contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to substantial risks and uncertainties. A variety of factors could cause the company’s actual results to differ materially from those expressed in the forward-looking statements, including the following: the success of new products and marketing initiatives; the impact of competition, unemployment, trends in consumer spending patterns and commodity costs; the company's ability to reduce G&A; the company's ability to execute its refranchising strategy; the company’s ability to achieve and manage its planned growth, which is affected by the availability of a sufficient number of suitable new restaurant sites, the performance of new restaurants, and risks relating to expansion into new markets; litigation risks; food safety incidents or negative publicity impacting the reputations of the company's brands; and stock market volatility. These and other factors are discussed in the company’s annual report on Form 10-K and its periodic reports on Form 10-Q filed with the Securities and Exchange Commission, which are available online at http://investors.jackinthebox.com or in hard copy upon request. The company undertakes no obligation to update or revise any forward-looking statement, whether as the result of new information or otherwise.
JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)
Operating earnings per share, a non-GAAP measure, is defined by the company as diluted earnings per share from continuing operations on a GAAP basis excluding restructuring charges and gains or losses from refranchising. Management believes this non-GAAP financial measure provides important supplemental information to assist investors in analyzing the performance of the company’s core business. In addition, the company uses operating earnings per share in establishing performance goals for purposes of executive compensation. The company encourages investors to rely upon its GAAP numbers but includes this non-GAAP financial measure as a supplemental metric to assist investors. This non-GAAP financial measure should not be considered as a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, this non-GAAP financial measure used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Below is a reconciliation of non-GAAP operating earnings per share to the most directly comparable GAAP measure, diluted earnings per share from continuing operations. Figures may not add due to rounding.
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||||||||||
|
April 16, |
April 10, |
April 16, |
April 10, |
|||||||||||||||||
|
Diluted earnings per share from continuing operations – GAAP |
$ | 1.09 | $ | 0.85 | $ | 2.22 | $ | 1.78 | ||||||||||||
| Restructuring charges | 0.04 | — | 0.08 | — | ||||||||||||||||
| Gains from refranchising | (0.15 | ) | — | (0.15 | ) | (0.01 | ) | |||||||||||||
| Operating earnings per share – Non-GAAP | $ | 0.98 | $ | 0.85 | $ | 2.15 | $ | 1.77 | ||||||||||||
Restaurant operating margin and franchise margin are non-GAAP measures presented in the reconciliations below. These non-GAAP measures do not include an allocation of other operating expenses, such as selling, general and administrative expenses which include the costs of shared service functions such as accounting, finance and human resources, and other unallocated costs such as pension expense, share-based compensation and restructuring expense. As such, restaurant operating margin and franchise margin are not indicative of the overall results of the company and are considered non-GAAP financial measures. Management believes these non-GAAP financial measures provide important supplemental information to assist investors in understanding and analyzing the performance of the company's core business and operating results. The company encourages investors to rely upon its GAAP numbers, but includes these non-GAAP financial measures as a supplement to, not as a substitute for, earnings from operations, net earnings or other financial measures prepared in accordance with GAAP. In addition, these non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Below are the reconciliations of non-GAAP restaurant operating margin and franchise margin to the most directly comparable GAAP measure, consolidated earnings from operations.
| 12 Weeks Ended | 12 Weeks Ended | ||||||||||||||||||||||||||||||
| April 16, 2017 | April 10, 2016 | ||||||||||||||||||||||||||||||
| ($ in thousands) | Jack in the Box | Qdoba | Consolidated | Jack in the Box | Qdoba | Consolidated | |||||||||||||||||||||||||
| Earnings from operations - GAAP (1) | $ | 65,650 | $ | 52,786 | |||||||||||||||||||||||||||
|
Other operating expenses: |
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| Selling, general and administrative expenses | (35,788 | ) | (46,895 | ) | |||||||||||||||||||||||||||
| Impairment and other charges, net | (4,331 | ) | (2,422 | ) | |||||||||||||||||||||||||||
| Gains (losses) on the sale of company-operated restaurants | 7,779 | (3 | ) | ||||||||||||||||||||||||||||
| Total other operating expenses | $ | (32,340 | ) | $ | (49,320 | ) | |||||||||||||||||||||||||
|
Company restaurant operations: |
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| Company restaurant sales | $ | 180,275 | $ | 98,792 | $ | 279,067 | $ | 179,664 | $ | 92,128 | $ | 271,792 | |||||||||||||||||||
| Food and packaging | (52,042 | ) | (30,870 | ) | (82,912 | ) | (54,116 | ) | (27,950 | ) | (82,066 | ) | |||||||||||||||||||
| Payroll and employee benefits | (54,529 | ) | (28,230 | ) | (82,759 | ) | (51,401 | ) | (24,736 | ) | (76,137 | ) | |||||||||||||||||||
| Occupancy and other | (38,229 | ) | (26,341 | ) | (64,570 | ) | (36,905 | ) | (22,622 | ) | (59,527 | ) | |||||||||||||||||||
|
Restaurant operating margin (2) - Non-GAAP |
$ | 35,475 | $ | 13,351 | $ | 48,826 | $ | 37,242 | $ | 16,820 | $ | 54,062 | |||||||||||||||||||
|
Franchise operations: |
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| Franchise rental revenues | $ | 51,295 | $ | 26 | $ | 51,321 | $ | 52,577 | $ | 25 | $ | 52,602 | |||||||||||||||||||
| Franchise royalties and other | 34,314 | 4,687 | 39,001 | 31,821 | 4,936 | 36,757 | |||||||||||||||||||||||||
| Franchise occupancy expenses | (38,393 | ) | (24 | ) | (38,417 | ) | (37,385 | ) | (23 | ) | (37,408 | ) | |||||||||||||||||||
| Franchise support and other costs | (1,734 | ) | (1,007 | ) | (2,741 | ) | (2,761 | ) | (1,146 | ) | (3,907 | ) | |||||||||||||||||||
|
Franchise margin (2) - Non-GAAP |
$ | 45,482 | $ | 3,682 | $ | 49,164 | $ | 44,252 | $ | 3,792 | $ | 48,044 | |||||||||||||||||||
|
Restaurant operating margin (2) as a % of company restaurant sales |
19.7 | % | 13.5 | % | 17.5 | % | 20.7 | % | 18.3 | % | 19.9 | % | |||||||||||||||||||
|
Franchise margin (2) as a % of total franchise revenues |
54.4 | % | 53.8 | % | |||||||||||||||||||||||||||
(1) Earnings from operations is the sum of total other operating expenses, restaurant operating margin and franchise margin.
(2) Restaurant operating margin and franchise margin are non-GAAP measures. Refer to discussion regarding these non-GAAP measures above.
| 28 Weeks Ended | 28 Weeks Ended | ||||||||||||||||||||||||||||||
| April 16, 2017 | April 10, 2016 | ||||||||||||||||||||||||||||||
| ($ in thousands) | Jack in the Box | Qdoba | Consolidated | Jack in the Box | Qdoba | Consolidated | |||||||||||||||||||||||||
| Earnings from operations - GAAP (1) | $ | 138,767 | $ | 115,300 | |||||||||||||||||||||||||||
|
Other operating expenses: |
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| Selling, general and administrative expenses | (91,496 | ) | (112,767 | ) | |||||||||||||||||||||||||||
| Impairment and other charges, net | (9,388 | ) | (4,079 | ) | |||||||||||||||||||||||||||
| Gains (losses) on the sale of company-operated restaurants | 7,916 | 815 | |||||||||||||||||||||||||||||
| Total other operating expenses | $ | (92,968 | ) | $ | (116,031 | ) | |||||||||||||||||||||||||
|
Company restaurant operations: |
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| Company restaurant sales | $ | 418,846 | $ | 227,491 | $ | 646,337 | $ | 415,943 | $ | 209,070 | $ | 625,013 | |||||||||||||||||||
| Food and packaging | (120,031 | ) | (71,817 | ) | (191,848 | ) | (127,249 | ) | (63,728 | ) | (190,977 | ) | |||||||||||||||||||
| Payroll and employee benefits | (124,712 | ) | (64,968 | ) | (189,680 | ) | (117,090 | ) | (56,954 | ) | (174,044 | ) | |||||||||||||||||||
| Occupancy and other | (87,079 | ) | (60,535 | ) | (147,614 | ) | (85,076 | ) | (52,150 | ) | (137,226 | ) | |||||||||||||||||||
|
Restaurant operating margin (2) - Non-GAAP |
$ | 87,024 | $ | 30,171 | $ | 117,195 | $ | 86,528 | $ | 36,238 | $ | 122,766 | |||||||||||||||||||
|
Franchise operations: |
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| Franchise rental revenues | $ | 122,731 | $ | 59 | $ | 122,790 | $ | 122,277 | $ | 63 | $ | 122,340 | |||||||||||||||||||
| Franchise royalties and other | 77,488 | 10,707 | 88,195 | 73,425 | 11,196 | 84,621 | |||||||||||||||||||||||||
| Franchise occupancy expenses | (89,809 | ) | (57 | ) | (89,866 | ) | (89,576 | ) | (51 | ) | (89,627 | ) | |||||||||||||||||||
| Franchise support and other costs | (4,271 | ) | (2,308 | ) | (6,579 | ) | (6,099 | ) | (2,670 | ) | (8,769 | ) | |||||||||||||||||||
|
Franchise margin (2) - Non-GAAP |
$ | 106,139 | $ | 8,401 | $ | 114,540 | $ | 100,027 | $ | 8,538 | $ | 108,565 | |||||||||||||||||||
|
Restaurant operating margin (2) as a % of company restaurant sales |
20.8 | % | 13.3 | % | 18.1 | % | 20.8 | % | 17.3 | % | 19.6 | % | |||||||||||||||||||
|
Franchise margin (2) as a % of total franchise revenues |
54.3 | % | 52.5 | % | |||||||||||||||||||||||||||
(1) Earnings from operations is the sum of total other operating expenses, restaurant operating margin and franchise margin.
(2) Restaurant operating margin and franchise margin are non-GAAP measures. Refer to discussion regarding these non-GAAP measures above.
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JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited) |
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| 12 Weeks Ended | 28 Weeks Ended | |||||||||||||||||||||||
|
April 16, |
April 10, |
April 16, |
April 10, |
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| Revenues: | ||||||||||||||||||||||||
| Company restaurant sales | $ | 279,067 | $ | 271,792 | $ | 646,337 | $ | 625,013 | ||||||||||||||||
| Franchise rental revenues | 51,321 | 52,602 | 122,790 | 122,340 | ||||||||||||||||||||
| Franchise royalties and other | 39,001 | 36,757 | 88,195 | 84,621 | ||||||||||||||||||||
| 369,389 | 361,151 | 857,322 | 831,974 | |||||||||||||||||||||
| Operating costs and expenses, net: | ||||||||||||||||||||||||
| Company restaurant costs: | ||||||||||||||||||||||||
| Food and packaging | 82,912 | 82,066 | 191,848 | 190,977 | ||||||||||||||||||||
| Payroll and employee benefits | 82,759 | 76,137 | 189,680 | 174,044 | ||||||||||||||||||||
| Occupancy and other | 64,570 | 59,527 | 147,614 | 137,226 | ||||||||||||||||||||
| Total company restaurant costs | 230,241 | 217,730 | 529,142 | 502,247 | ||||||||||||||||||||
| Franchise occupancy expenses | 38,417 | 37,408 | 89,866 | 89,627 | ||||||||||||||||||||
| Franchise support and other costs | 2,741 | 3,907 | 6,579 | 8,769 | ||||||||||||||||||||
| Selling, general and administrative expenses | 35,788 | 46,895 | 91,496 | 112,767 | ||||||||||||||||||||
| Impairment and other charges, net | 4,331 | 2,422 | 9,388 | 4,079 | ||||||||||||||||||||
| (Gains) losses on the sale of company-operated restaurants | (7,779 | ) | 3 | (7,916 | ) | (815 | ) | |||||||||||||||||
| 303,739 | 308,365 | 718,555 | 716,674 | |||||||||||||||||||||
| Earnings from operations | 65,650 | 52,786 | 138,767 | 115,300 | ||||||||||||||||||||
| Interest expense, net | 10,941 | 6,911 | 23,658 | 15,086 | ||||||||||||||||||||
| Earnings from continuing operations and before income taxes | 54,709 | 45,875 | 115,109 | 100,214 | ||||||||||||||||||||
| Income taxes | 20,889 | 16,847 | 44,255 | 37,289 | ||||||||||||||||||||
| Earnings from continuing operations | 33,820 | 29,028 | 70,854 | 62,925 | ||||||||||||||||||||
| Losses from discontinued operations, net of income tax benefit | (726 | ) | (346 | ) | (1,831 | ) | (1,022 | ) | ||||||||||||||||
| Net earnings | $ | 33,094 | $ | 28,682 | $ | 69,023 | $ | 61,903 | ||||||||||||||||
| Net earnings per share - basic: | ||||||||||||||||||||||||
| Earnings from continuing operations | $ | 1.09 | $ | 0.86 | $ | 2.24 | $ | 1.81 | ||||||||||||||||
| Losses from discontinued operations | (0.02 | ) | (0.01 | ) | (0.06 | ) | (0.03 | ) | ||||||||||||||||
| Net earnings per share (1) | $ | 1.07 | $ | 0.85 | $ | 2.18 | $ | 1.78 | ||||||||||||||||
| Net earnings per share - diluted: | ||||||||||||||||||||||||
| Earnings from continuing operations | $ | 1.09 | $ | 0.85 | $ | 2.22 | $ | 1.78 | ||||||||||||||||
| Losses from discontinued operations | (0.02 | ) | (0.01 | ) | (0.06 | ) | (0.03 | ) | ||||||||||||||||
| Net earnings per share (1) | $ | 1.06 | $ | 0.84 | $ | 2.16 | $ | 1.76 | ||||||||||||||||
| Weighted-average shares outstanding: | ||||||||||||||||||||||||
| Basic | 30,895 | 33,656 | 31,622 | 34,686 | ||||||||||||||||||||
| Diluted | 31,126 | 34,177 | 31,883 | 35,256 | ||||||||||||||||||||
| Cash dividends declared per common share | $ | 0.40 | $ | 0.30 | $ | 0.80 | $ | 0.60 | ||||||||||||||||
(1) Earnings per share may not add due to rounding.
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JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) (Unaudited) |
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|
April 16, |
October 2, |
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| ASSETS | ||||||||||||||||||
| Current assets: | ||||||||||||||||||
| Cash | $ | 6,358 | $ | 17,030 | ||||||||||||||
| Accounts and other receivables, net | 39,657 | 73,360 | ||||||||||||||||
| Inventories | 7,769 | 8,229 | ||||||||||||||||
| Prepaid expenses | 20,782 | 40,398 | ||||||||||||||||
| Assets held for sale | 35,224 | 14,259 | ||||||||||||||||
| Other current assets | 2,350 | 2,129 | ||||||||||||||||
| Total current assets | 112,140 | 155,405 | ||||||||||||||||
| Property and equipment, at cost | 1,537,344 | 1,605,576 | ||||||||||||||||
| Less accumulated depreciation and amortization | (883,109 | ) | (886,526 | ) | ||||||||||||||
| Property and equipment, net | 654,235 | 719,050 | ||||||||||||||||
| Intangible assets, net | 14,161 | 14,042 | ||||||||||||||||
| Goodwill | 175,525 | 166,046 | ||||||||||||||||
| Other assets, net | 274,838 | 290,469 | ||||||||||||||||
| $ | 1,230,899 | $ | 1,345,012 | |||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||||||
| Current liabilities: | ||||||||||||||||||
| Current maturities of long-term debt | $ | 55,762 | $ | 55,935 | ||||||||||||||
| Accounts payable | 42,232 | 40,736 | ||||||||||||||||
| Accrued liabilities | 140,579 | 181,250 | ||||||||||||||||
| Total current liabilities | 238,573 | 277,921 | ||||||||||||||||
| Long-term debt, net of current maturities | 1,135,287 | 935,372 | ||||||||||||||||
| Other long-term liabilities | 326,455 | 348,925 | ||||||||||||||||
| Stockholders’ deficit: | ||||||||||||||||||
| Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued | — | — | ||||||||||||||||
| Common stock $0.01 par value, 175,000,000 shares authorized, 81,828,835 and 81,598,524 issued, respectively | 818 | 816 | ||||||||||||||||
| Capital in excess of par value | 448,246 | 432,564 | ||||||||||||||||
| Retained earnings | 1,443,131 | 1,399,721 | ||||||||||||||||
| Accumulated other comprehensive loss | (171,172 | ) | (187,021 | ) | ||||||||||||||
| Treasury stock, at cost, 52,411,407 and 49,190,992 shares, respectively | (2,190,439 | ) | (1,863,286 | ) | ||||||||||||||
| Total stockholders’ deficit | (469,416 | ) | (217,206 | ) | ||||||||||||||
| $ | 1,230,899 | $ | 1,345,012 | |||||||||||||||
|
JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||||||||||||
| 28 Weeks Ended | ||||||||||||||||||
|
April 16, |
April 10, |
|||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||
| Net earnings | $ | 69,023 | $ | 61,903 | ||||||||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||||||
| Depreciation and amortization | 49,166 | 49,331 | ||||||||||||||||
| Deferred finance cost amortization | 1,919 | 1,437 | ||||||||||||||||
| Excess tax benefits from share-based compensation arrangements | (4,034 | ) | (2,451 | ) | ||||||||||||||
| Deferred income taxes | 2,385 | (1,303 | ) | |||||||||||||||
| Share-based compensation expense | 6,735 | 7,901 | ||||||||||||||||
| Pension and postretirement expense | 2,269 | 7,261 | ||||||||||||||||
| Gains on cash surrender value of company-owned life insurance | (73 | ) | (2,446 | ) | ||||||||||||||
| Gains on the sale of company-operated restaurants | (7,916 | ) | (815 | ) | ||||||||||||||
| Losses on the disposition of property and equipment | 1,234 | 1,646 | ||||||||||||||||
| Impairment charges and other | 2,702 | 858 | ||||||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||||
| Accounts and other receivables | 24,915 | (25,875 | ) | |||||||||||||||
| Inventories | 460 | (497 | ) | |||||||||||||||
| Prepaid expenses and other current assets | 23,428 | (2,149 | ) | |||||||||||||||
| Accounts payable | (1,371 | ) | (1,847 | ) | ||||||||||||||
| Accrued liabilities | (37,870 | ) | (3,464 | ) | ||||||||||||||
| Pension and postretirement contributions | (2,773 | ) | (8,255 | ) | ||||||||||||||
| Other | (4,045 | ) | (782 | ) | ||||||||||||||
| Cash flows provided by operating activities | 126,154 | 80,453 | ||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||
| Purchases of property and equipment | (33,415 | ) | (51,298 | ) | ||||||||||||||
| Purchases of assets intended for sale and leaseback | (1,805 | ) | (5,581 | ) | ||||||||||||||
| Proceeds from the sale and leaseback of assets | 2,466 | 7,748 | ||||||||||||||||
| Proceeds from the sale of company-operated restaurants | 31,389 | 1,021 | ||||||||||||||||
| Collections on notes receivable | 1,204 | 2,614 | ||||||||||||||||
| Acquisition of franchise-operated restaurants | — | 324 | ||||||||||||||||
| Proceeds from the sale of property and equipment | 2,082 | — | ||||||||||||||||
| Other | (172 | ) | 14 | |||||||||||||||
| Cash flows provided by (used in) investing activities | 1,749 | (45,158 | ) | |||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||
| Borrowings on revolving credit facilities | 534,500 | 497,000 | ||||||||||||||||
| Repayments of borrowings on revolving credit facilities | (305,000 | ) | (264,000 | ) | ||||||||||||||
| Principal repayments on debt | (28,800 | ) | (13,065 | ) | ||||||||||||||
| Dividends paid on common stock | (25,462 | ) | (20,765 | ) | ||||||||||||||
| Proceeds from issuance of common stock | 4,840 | 1,432 | ||||||||||||||||
| Repurchases of common stock | (322,687 | ) | (250,000 | ) | ||||||||||||||
| Excess tax benefits from share-based compensation arrangements | 4,034 | 2,451 | ||||||||||||||||
| Change in book overdraft | — | 2,695 | ||||||||||||||||
| Cash flows used in financing activities | (138,575 | ) | (44,252 | ) | ||||||||||||||
| Effect of exchange rate changes on cash | — | 13 | ||||||||||||||||
| Net decrease in cash | (10,672 | ) | (8,944 | ) | ||||||||||||||
| Cash at beginning of period | 17,030 | 17,743 | ||||||||||||||||
| Cash at end of period | $ | 6,358 | $ | 8,799 | ||||||||||||||
JACK IN THE BOX INC. AND SUBSIDIARIES
SUPPLEMENTAL
INFORMATION
The following table presents certain income and expense items included in our condensed consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding.
|
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA (Unaudited) |
||||||||||||||||||||
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||||||||||
|
April 16, |
April 10, |
April 16, |
April 10, |
|||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Company restaurant sales | 75.5 | % | 75.3 | % | 75.4 | % | 75.1 | % | ||||||||||||
| Franchise rental revenues | 13.9 | % | 14.6 | % | 14.3 | % | 14.7 | % | ||||||||||||
| Franchise royalties and other | 10.6 | % | 10.2 | % | 10.3 | % | 10.2 | % | ||||||||||||
| Total revenues | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
| Operating costs and expenses, net: | ||||||||||||||||||||
| Company restaurant costs: | ||||||||||||||||||||
| Food and packaging (1) | 29.7 | % | 30.2 | % | 29.7 | % | 30.6 | % | ||||||||||||
| Payroll and employee benefits (1) | 29.7 | % | 28.0 | % | 29.3 | % | 27.8 | % | ||||||||||||
| Occupancy and other (1) | 23.1 | % | 21.9 | % | 22.8 | % | 22.0 | % | ||||||||||||
| Total company restaurant costs (1) | 82.5 | % | 80.1 | % | 81.9 | % | 80.4 | % | ||||||||||||
| Franchise occupancy expenses (2) | 74.9 | % | 71.1 | % | 73.2 | % | 73.3 | % | ||||||||||||
| Franchise support and other costs (3) | 7.0 | % | 10.6 | % | 7.5 | % | 10.4 | % | ||||||||||||
| Selling, general and administrative expenses | 9.7 | % | 13.0 | % | 10.7 | % | 13.6 | % | ||||||||||||
| Impairment and other charges, net | 1.2 | % | 0.7 | % | 1.1 | % | 0.5 | % | ||||||||||||
| Gains on the sale of company-operated restaurants | (2.1 | )% | — | % | (0.9 | )% | (0.1 | )% | ||||||||||||
| Earnings from operations | 17.8 | % | 14.6 | % | 16.2 | % | 13.9 | % | ||||||||||||
| Income tax rate (4) | 38.2 | % | 36.7 | % | 38.4 | % | 37.2 | % | ||||||||||||
(1) As a percentage of company restaurant sales.
(2) As a
percentage of franchise rental revenues.
(3) As a percentage of
franchise royalties and other.
(4) As a percentage of earnings from
continuing operations and before income taxes.
The following table presents Jack in the Box and Qdoba company restaurant sales, costs and margin, and restaurant costs and margin as a percentage of the related sales. Percentages may not add due to rounding.
|
SUPPLEMENTAL COMPANY RESTAURANT OPERATIONS DATA (Dollars in thousands) (Unaudited) |
|||||||||||||||||||||||||||||||||||||
| 12 Weeks Ended | 28 Weeks Ended | ||||||||||||||||||||||||||||||||||||
| April 16, 2017 | April 10, 2016 | April 16, 2017 | April 10, 2016 | ||||||||||||||||||||||||||||||||||
| Jack in the Box: | |||||||||||||||||||||||||||||||||||||
| Company restaurant sales | $ | 180,275 | $ | 179,664 | $ | 418,846 | $ | 415,943 | |||||||||||||||||||||||||||||
| Company restaurant costs: | |||||||||||||||||||||||||||||||||||||
| Food and packaging | 52,042 | 28.9 | % | 54,116 | 30.1 | % | 120,031 | 28.7 | % | 127,249 | 30.6 | % | |||||||||||||||||||||||||
| Payroll and employee benefits | 54,529 | 30.2 | % | 51,401 | 28.6 | % | 124,712 | 29.8 | % | 117,090 | 28.2 | % | |||||||||||||||||||||||||
| Occupancy and other | 38,229 | 21.2 | % | 36,905 | 20.5 | % | 87,079 | 20.8 | % | 85,076 | 20.5 | % | |||||||||||||||||||||||||
| Total company restaurant costs | 144,800 | 80.3 | % | 142,422 | 79.3 | % | 331,822 | 79.2 | % | 329,415 | 79.2 | % | |||||||||||||||||||||||||
|
Restaurant operating margin (1) |
$ | 35,475 | 19.7 | % | $ | 37,242 | 20.7 | % | $ | 87,024 | 20.8 | % | $ | 86,528 | 20.8 | % | |||||||||||||||||||||
| Qdoba: | |||||||||||||||||||||||||||||||||||||
| Company restaurant sales | $ | 98,792 | $ | 92,128 | $ | 227,491 | $ | 209,070 | |||||||||||||||||||||||||||||
| Company restaurant costs: | |||||||||||||||||||||||||||||||||||||
| Food and packaging | 30,870 | 31.2 | % | 27,950 | 30.3 | % | 71,817 | 31.6 | % | 63,728 | 30.5 | % | |||||||||||||||||||||||||
| Payroll and employee benefits | 28,230 | 28.6 | % | 24,736 | 26.8 | % | 64,968 | 28.6 | % | 56,954 | 27.2 | % | |||||||||||||||||||||||||
| Occupancy and other | 26,341 | 26.7 | % | 22,622 | 24.6 | % | 60,535 | 26.6 | % | 52,150 | 24.9 | % | |||||||||||||||||||||||||
| Total company restaurant costs | 85,441 | 86.5 | % | 75,308 | 81.7 | % | 197,320 | 86.7 | % | 172,832 | 82.7 | % | |||||||||||||||||||||||||
|
Restaurant operating margin (1) |
$ | 13,351 | 13.5 | % | $ | 16,820 | 18.3 | % | $ | 30,171 | 13.3 | % | $ | 36,238 | 17.3 | % | |||||||||||||||||||||
(1) Restaurant operating margin is a non-GAAP measure. This non-GAAP measure is reconciled to consolidated earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results."
The following table presents franchise revenues, costs and margin in each period:
|
SUPPLEMENTAL FRANCHISE OPERATIONS DATA (Dollars in thousands) (Unaudited) |
||||||||||||||||||||||||
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||||||||||||||
|
April 16, |
April 10, |
April 16, |
April 10, |
|||||||||||||||||||||
| Franchise rental revenues | $ | 51,321 | $ | 52,602 | $ | 122,790 | $ | 122,340 | ||||||||||||||||
| Royalties | 36,110 | 36,122 | 84,129 | 82,784 | ||||||||||||||||||||
| Franchise fees and other | 2,891 | 635 | 4,066 | 1,837 | ||||||||||||||||||||
| Franchise royalties and other | 39,001 | 36,757 | 88,195 | 84,621 | ||||||||||||||||||||
| Total franchise revenues | 90,322 | 89,359 | 210,985 | 206,961 | ||||||||||||||||||||
| Rental expense | 31,567 | 30,016 | 73,790 | 72,188 | ||||||||||||||||||||
| Depreciation and amortization | 6,850 | 7,392 | 16,076 | 17,439 | ||||||||||||||||||||
| Franchise occupancy expenses | 38,417 | 37,408 | 89,866 | 89,627 | ||||||||||||||||||||
| Franchise support and other costs | 2,741 | 3,907 | 6,579 | 8,769 | ||||||||||||||||||||
| Total franchise costs | 41,158 | 41,315 | 96,445 | 98,396 | ||||||||||||||||||||
|
Franchise margin (1) |
$ | 49,164 | $ | 48,044 | $ | 114,540 | $ | 108,565 | ||||||||||||||||
|
Franchise margin (1) as a % of franchise revenues |
54.4 | % | 53.8 | % | 54.3 | % | 52.5 | % | ||||||||||||||||
(1) Franchise margin is a non-GAAP measure. This non-GAAP measure is reconciled to consolidated earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results."
The following table provides information related to our operating segments in each period:
|
SUPPLEMENTAL SEGMENT REPORTING INFORMATION (In thousands) (Unaudited) |
||||||||||||||||||||||||
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||||||||||||||
|
April 16, |
April 10, |
April 16, |
April 10, |
|||||||||||||||||||||
| Revenues by segment: | ||||||||||||||||||||||||
| Jack in the Box restaurant operations | $ | 265,884 | $ | 264,062 | $ | 619,065 | $ | 611,645 | ||||||||||||||||
| Qdoba restaurant operations | 103,505 | 97,089 | 238,257 | 220,329 | ||||||||||||||||||||
|
Consolidated revenues |
$ | 369,389 | $ | 361,151 | $ | 857,322 | $ | 831,974 | ||||||||||||||||
| Earnings from operations by segment: | ||||||||||||||||||||||||
| Jack in the Box restaurant operations | $ | 68,658 | $ | 63,146 | $ | 161,062 | $ | 148,836 | ||||||||||||||||
| Qdoba restaurant operations | 8,489 | 10,623 | 17,221 | 19,360 | ||||||||||||||||||||
| Shared services and unallocated costs | (19,276 | ) | (20,980 | ) | (47,432 | ) | (53,711 | ) | ||||||||||||||||
|
Gains (losses) on the sale of company-operated restaurants |
7,779 | (3 | ) | 7,916 | 815 | |||||||||||||||||||
| Consolidated earnings from operations | 65,650 | 52,786 | 138,767 | 115,300 | ||||||||||||||||||||
| Interest expense, net | 10,941 | 6,911 | 23,658 | 15,086 | ||||||||||||||||||||
| Consolidated earnings from continuing operations and before income taxes | $ | 54,709 | $ | 45,875 | $ | 115,109 | $ | 100,214 | ||||||||||||||||
| Total depreciation expense by segment: | ||||||||||||||||||||||||
| Jack in the Box restaurant operations | $ | 14,483 | $ | 15,059 | $ | 33,772 | $ | 35,532 | ||||||||||||||||
| Qdoba restaurant operations | 4,907 | 4,279 | 11,399 | 9,867 | ||||||||||||||||||||
| Shared services and unallocated costs | 1,640 | 1,310 | 3,614 | 3,535 | ||||||||||||||||||||
| Consolidated depreciation expense | $ | 21,030 | $ | 20,648 | $ | 48,785 | $ | 48,934 | ||||||||||||||||
The following table summarizes the year-to-date changes in the number and mix of Jack in the Box ("JIB") and Qdoba company and franchise restaurants:
|
SUPPLEMENTAL RESTAURANT ACTIVITY INFORMATION (Unaudited) |
||||||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||||
| Company | Franchise | Total | Company | Franchise | Total | |||||||||||||||||||||||||
| Jack in the Box: | ||||||||||||||||||||||||||||||
| Beginning of year | 417 | 1,838 | 2,255 | 413 | 1,836 | 2,249 | ||||||||||||||||||||||||
| New | 2 | 13 | 15 | — | 5 | 5 | ||||||||||||||||||||||||
| Refranchised | (60 | ) | 60 | — | (1 | ) | 1 | — | ||||||||||||||||||||||
| Acquired from franchisees | 19 | (19 | ) | — | 1 | (1 | ) | — | ||||||||||||||||||||||
| Closed | (7 | ) | (3 | ) | (10 | ) | — | (3 | ) | (3 | ) | |||||||||||||||||||
| End of period | 371 | 1,889 | 2,260 | 413 | 1,838 | 2,251 | ||||||||||||||||||||||||
| % of JIB system | 16 | % | 84 | % | 100 | % | 18 | % | 82 | % | 100 | % | ||||||||||||||||||
| Qdoba: | ||||||||||||||||||||||||||||||
| Beginning of year | 367 | 332 | 699 | 322 | 339 | 661 | ||||||||||||||||||||||||
| New | 13 | 12 | 25 | 19 | 10 | 29 | ||||||||||||||||||||||||
| Closed | (3 | ) | (4 | ) | (7 | ) | (3 | ) | (4 | ) | (7 | ) | ||||||||||||||||||
| End of period | 377 | 340 | 717 | 338 | 345 | 683 | ||||||||||||||||||||||||
| % of Qdoba system | 53 | % | 47 | % | 100 | % | 49 | % | 51 | % | 100 | % | ||||||||||||||||||
| Consolidated: | ||||||||||||||||||||||||||||||
| Total system end of period | 748 | 2,229 | 2,977 | 751 | 2,183 | 2,934 | ||||||||||||||||||||||||
| % of consolidated system | 25 | % | 75 | % | 100 | % | 26 | % | 74 | % | 100 | % | ||||||||||||||||||
