SAN DIEGO--(BUSINESS WIRE)--Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco segments in the first quarter, ended January 22, 2023.
"We are very pleased with our first quarter results, and enthusiastic about the momentum we are building for 2023 and our ongoing transformation story," said Darin Harris, Jack in the Box Chief Executive Officer. "We continue to see our marketing, operations and development strategies take hold which, along with outstanding execution by franchisees and operators, produced strong top-line performance, improved restaurant metrics, and an excellent start to the year. Traffic improvement and robust comps, combined with anticipated positive net unit growth, position us to drive meaningful systemwide sales growth in 2023, and improve franchise profitability in an operating environment that remains challenging."
Jack in the Box Performance
Same-store sales increased 7.8% in the first quarter with franchise same-store sales of 7.4% and company-operated same-store sales of 12.6%. Company-operated restaurants experienced growth in both average check and traffic while franchise restaurants had growth in average check, partially offset by a decline in traffic. Systemwide sales for the first quarter increased 7.9%.
Restaurant-Level Margin(2), a non-GAAP measure, was 19.8%, an increase of 150 bps from a year ago driven by strong sales leverage and change in mix of restaurants.
Franchise-Level Margin(2), a non-GAAP measure, was 44.4%, an increase of 280 bps from a year ago, driven by higher sales and rent contribution, additional revenue from the Hawaii transaction, and lower costs toward bad debt expense. When removing this previously announced Hawaii transaction — which included a one-time payoff of enhanced royalty rates prior to the sale of the market, positively impacting Jack franchise revenues by $6.7 million and Operating EPS by $0.23 — Franchise-Level Margin for the first quarter was 42.8%.
Jack net restaurant count was positive in the first quarter, with six franchise openings and one company-owned closure. As of Q1, and since the launch of the development program in mid-2021, the Company currently has 72 signed agreements for a total of 303 restaurants. Under these agreements, 25 restaurants have opened, leaving 278 remaining for future development. In the first quarter and thereafter, Jack in the Box also completed new franchisee development agreements to enter Arkansas and Florida, as well as additional agreements to expand and further develop the existing St. Louis, Hawaii and Nashville markets. It will be the first time in over 30 years Jack in the Box has had a presence in Florida, and the first time in the brand's history to open in Arkansas.
Jack in the Box Same-Store Sales: |
||||
|
|
16 Weeks Ended |
||
|
|
January 22, 2023 |
|
January 23, 2022 |
Company |
|
12.6% |
|
(0.3)% |
Franchise |
|
7.4% |
|
1.4% |
System |
|
7.8% |
|
1.2% |
| Jack in the Box Restaurant Counts: | ||||||||||||||||||
|
|
|
|
|
||||||||||||||
|
|
2023 |
|
2022 |
||||||||||||||
|
|
Company |
|
Franchise |
|
Total |
|
Company |
|
Franchise |
|
Total |
||||||
Restaurant count at beginning of Q1 |
146 |
|
|
2,035 |
|
|
2,181 |
|
|
163 |
|
|
2,055 |
|
|
2,218 |
|
|
New |
— |
|
|
6 |
|
|
6 |
|
|
— |
|
|
2 |
|
|
2 |
|
|
Acquired from franchisees |
— |
|
|
— |
|
|
— |
|
|
4 |
|
|
(4 |
) |
|
— |
|
|
Refranchised |
(5 |
) |
|
5 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Closed |
(1 |
) |
|
— |
|
|
(1 |
) |
|
(2 |
) |
|
(10 |
) |
|
(12 |
) |
|
Restaurant count at end of Q1 |
140 |
|
|
2,046 |
|
|
2,186 |
|
|
165 |
|
|
2,043 |
|
|
2,208 |
|
|
Q1 Net Restaurant Increase/(Decrease) |
(6 |
) |
|
11 |
|
|
5 |
|
|
|
|
|
|
|
||||
YTD Restaurant % Increase/(Decrease) |
(4.1 |
)% |
|
0.5 |
% |
|
0.2 |
% |
|
|
|
|
|
|
||||
Del Taco Performance(1)
Same-store sales increased 3.0% in the first quarter, comprised of franchise same-store sales growth of 2.8% and Company-operated same-store sales growth of 3.1%. Sales performance was boosted by the 20 Under $2 value platform and menu price, partially offset by changes in menu mix and transaction declines. Systemwide sales for the fiscal first quarter increased 2.9% driven by positive results in both franchise and company-operated same-store sales.
Restaurant-Level Margin, a non-GAAP measure, was 16.1% while Franchise-Level Margin, a non-GAAP measure, was 39.6%.
Del Taco had a first quarter net increase of one restaurant, comprised of two franchise openings and one company-owned closure. The company also refranchised 16 Del Taco restaurants in California during the first quarter to an existing Jack in the Box franchisee, which included a development agreement for 16 new Del Taco restaurants to be built within California in the near future. During Q1, Del Taco signed 2 additional development agreements for 10 new restaurants in North Tampa and Palm Beach, Florida.
Del Taco Same-Store Sales(1): |
||||
|
16 Weeks Ended |
|||
|
January 22, 2023 |
|
January 23, 2022 |
|
Company |
3.1% |
|
3.4% |
|
Franchise |
2.8% |
|
5.4% |
|
System |
3.0% |
|
4.4% |
|
Del Taco Restaurant Counts(1): |
||||||||||||||||||
|
2023 |
|
2022 |
|||||||||||||||
|
Company |
|
Franchise |
|
Total |
|
Company |
|
Franchise |
|
Total |
|||||||
Restaurant count at beginning of Q1 |
290 |
|
|
301 |
|
|
591 |
|
|
296 |
|
|
306 |
|
|
602 |
|
|
New |
— |
|
|
2 |
|
|
2 |
|
|
1 |
|
|
1 |
|
|
2 |
|
|
Refranchised |
(16 |
) |
|
16 |
|
|
— |
|
|
— |
|
|
|
|
— |
|
||
Closed |
(1 |
) |
|
— |
|
|
(1 |
) |
|
(3 |
) |
|
(1 |
) |
|
(4 |
) |
|
Restaurant count at end of Q1 |
273 |
|
|
319 |
|
|
592 |
|
|
294 |
|
|
306 |
|
|
600 |
|
|
Q1 Net Restaurant Increase/(Decrease) |
(17 |
) |
|
18 |
|
|
1 |
|
|
|
|
|
|
|
||||
YTD Net Restaurant % Increase/(Decrease) |
(5.9 |
)% |
|
6.0 |
% |
|
0.2 |
% |
|
|
|
|
|
|
||||
Company-Wide Performance
First quarter diluted earnings per share was $2.54. Operating Earnings Per Share(3), a non-GAAP measure, was $2.01 in the first quarter of fiscal 2023 compared with $1.97 in the prior year quarter. In addition to the $0.23 positive impact from the Hawaii transaction, this also included a one-time negative litigation impact of $0.22.
Total revenues increased 52.9% to $527.1 million, compared to $344.7 million in the prior year quarter. Net earnings increased to $53.3 million for the first quarter of fiscal 2023, compared with $39.3 million for the first quarter of fiscal 2022. Adjusted EBITDA(4), a non-GAAP measure, was $110.6 million in the first quarter of fiscal 2023 compared with $91.2 million for the prior year quarter.
Company-wide SG&A expense for the first quarter was $50.1 million, an increase of $25.1 million compared to the prior year quarter, driven primarily by the litigation impact mentioned above, as well as $17.8 million of SG&A expenses related to Del Taco, and partially offset by mark-to-market changes in the cash surrender value of company owned life insurance ("COLI") policies, net of changes in our deferred compensation obligation supported by these policies, resulting in a year-over-year decrease of $6.2 million. When excluding net COLI gains/losses, G&A was 2.7% of systemwide sales.
The effective tax rate for the first quarter of fiscal year 2023 was 26.7% compared to 26.5% in fiscal year 2022. The major components of the increase in tax rate were non-deductible goodwill decrements in the current year offset by non-taxable COLI gains in the current year as opposed to non-deductible losses in the prior year. The Non-GAAP, Operating EPS tax rate for the first quarter was 26.5%.
(1) |
Del Taco same-store sales on a two-year basis and all prior year comparisons are pro forma and based on the time period of Jack in the Box’s full two-year fiscal calendar. We believe Del Taco's information on this time period is useful to investors as they have a direct effect on the company's profitability. |
|
(2) |
Restaurant-Level Margin and Franchise-Level Margin are non-GAAP measures. These non-GAAP measures are reconciled to earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results." |
|
(3) |
Operating Earnings Per Share represents diluted earnings per share on a GAAP basis of $2.54 excluding acquisition, integration, and restructuring costs of $0.08; COLI (gains) losses, net of ($0.27); pension and post-retirement benefit costs of $0.10; gains on sale of real estate to franchisees of ($0.45); refranchising gains of ($0.18); excess tax shortfall from share-based compensation arrangements of $0.01; and the tax impact of these adjustments of $0.19. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may not add due to rounding. |
|
(4) |
Adjusted EBITDA represents net earnings on a GAAP basis excluding income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, other operating expenses (income), net, depreciation and amortization, the amortization of favorable and unfavorable leases and subleases, net and the amortization of franchise tenant improvement allowances and incentives. See "Reconciliation of Non-GAAP Measurements to GAAP Results." |
|
Capital Allocation
The company repurchased 0.2 million shares of our common stock for an aggregate cost of $15.0 million in the first quarter. As of January 22, 2023, there was $160 million remaining under the Board-authorized stock buyback program. The company is now committed to executing $60 million in share repurchases in FY 2023.
On February 24, 2023, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on March 28, 2023 to shareholders of record as of the close of business on March 15, 2023. Future dividends will be subject to approval by our Board of Directors.
Conference Call
The Company will host a conference call for analysts and investors on Wednesday, March 1, 2023, beginning at 8:00 a.m. PT (11:00 a.m. ET). The call will be webcast live via the Investors section of the Jack in the Box company website at http://investors.jackinthebox.com. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days. The call can be accessed via phone by dialing (888) 330-2508 and using ID 4115265.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), founded and headquartered in San Diego, California, is a restaurant company that operates and franchises Jack in the Box®, one of the nation's largest hamburger chains with more than 2,200 restaurants across 21 states, and Del Taco®, the second largest Mexican-American QSR chain by units in the U.S. with approximately 600 restaurants across 16 states. For more information on both brands, including franchising opportunities, visit www.jackinthebox.com and www.deltaco.com.
Category: Earnings
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,” “intend,” “plan,” “project,” “may,” “will,” “would” and similar expressions. These statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate. These estimates and assumptions involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause our actual results to differ materially from any forward-looking statements include, but are not limited to: the success of new products, marketing initiatives and restaurant remodels and drive-thru enhancements; the impact of competition, unemployment, trends in consumer spending patterns and commodity costs; 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, risks relating to expansion into new markets and successful franchise development; the ability to attract, train and retain top-performing personnel, litigation risks; risks associated with disagreements with franchisees; supply chain disruption; food-safety incidents or negative publicity impacting the reputation of the company's brand; increased regulatory and legal complexities, risks associated with the amount and terms of the securitized debt issued by certain of our wholly owned subsidiaries; 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 |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
||||||||
(In thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
|
|
|
||||||
|
|
16 Weeks Ended |
||||||
|
|
January 22,
|
|
January 23,
|
||||
Revenues: |
|
|
|
|
||||
Company restaurant sales |
|
$ |
270,191 |
|
|
$ |
120,056 |
|
Franchise rental revenues |
|
|
108,830 |
|
|
|
103,099 |
|
Franchise royalties and other |
|
|
76,390 |
|
|
|
60,755 |
|
Franchise contributions for advertising and other services |
|
|
71,685 |
|
|
|
60,801 |
|
|
|
|
527,096 |
|
|
|
344,711 |
|
Operating costs and expenses, net: |
|
|
|
|
||||
Food and packaging |
|
|
81,933 |
|
|
|
37,537 |
|
Payroll and employee benefits |
|
|
88,641 |
|
|
|
39,725 |
|
Occupancy and other |
|
|
51,371 |
|
|
|
20,877 |
|
Franchise occupancy expenses |
|
|
67,224 |
|
|
|
63,983 |
|
Franchise support and other costs |
|
|
1,877 |
|
|
|
3,911 |
|
Franchise advertising and other services expenses |
|
|
74,570 |
|
|
|
63,308 |
|
Selling, general and administrative expenses |
|
|
50,142 |
|
|
|
25,029 |
|
Depreciation and amortization |
|
|
19,402 |
|
|
|
12,496 |
|
Pre-opening costs |
|
|
331 |
|
|
|
310 |
|
Other operating (income) expenses, net |
|
|
(5,501 |
) |
|
|
3,843 |
|
Gains on the sale of company-operated restaurants |
|
|
(3,825 |
) |
|
|
(48 |
) |
|
|
|
426,165 |
|
|
|
270,971 |
|
Earnings from operations |
|
|
100,931 |
|
|
|
73,740 |
|
Other pension and post-retirement expenses, net |
|
|
2,144 |
|
|
|
93 |
|
Interest expense, net |
|
|
26,148 |
|
|
|
20,187 |
|
Earnings before income taxes |
|
|
72,639 |
|
|
|
53,460 |
|
Income taxes |
|
|
19,385 |
|
|
|
14,190 |
|
Net earnings |
|
$ |
53,254 |
|
|
$ |
39,270 |
|
|
|
|
|
|
||||
Net earnings per share: |
|
|
|
|
||||
Basic |
|
$ |
2.55 |
|
|
$ |
1.85 |
|
Diluted |
|
$ |
2.54 |
|
|
$ |
1.85 |
|
|
|
|
|
|
||||
Weighted-average shares outstanding: |
|
|
|
|
||||
Basic |
|
|
20,921 |
|
|
|
21,205 |
|
Diluted |
|
|
21,000 |
|
|
|
21,247 |
|
|
|
|
|
|
||||
Dividends declared per common share |
|
$ |
0.44 |
|
|
$ |
0.44 |
|
| JACK IN THE BOX INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands, except share and per share data) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
January 22,
|
|
October 2,
|
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|||||
Cash |
$ |
153,846 |
|
|
$ |
108,890 |
|
|
Restricted cash |
|
27,772 |
|
|
|
27,150 |
|
|
Accounts and other receivables, net |
|
56,987 |
|
|
|
103,803 |
|
|
Inventories |
|
5,070 |
|
|
|
5,264 |
|
|
Prepaid expenses |
|
11,247 |
|
|
|
16,095 |
|
|
Current assets held for sale |
|
4,600 |
|
|
|
17,019 |
|
|
Other current assets |
|
4,828 |
|
|
|
4,772 |
|
|
Total current assets |
|
264,350 |
|
|
|
282,993 |
|
|
Property and equipment: |
|
|
|
|||||
Property and equipment, at cost |
|
1,251,566 |
|
|
|
1,228,916 |
|
|
Less accumulated depreciation and amortization |
|
(826,928 |
) |
|
|
(810,752 |
) |
|
Property and equipment, net |
|
424,638 |
|
|
|
418,164 |
|
|
Other assets: |
|
|
|
|||||
Operating lease right-of-use assets |
|
1,327,654 |
|
|
|
1,332,135 |
|
|
Intangible assets, net |
|
11,951 |
|
|
|
12,324 |
|
|
Trademarks |
|
283,500 |
|
|
|
283,500 |
|
|
Goodwill |
|
359,511 |
|
|
|
366,821 |
|
|
Other assets, net |
|
235,414 |
|
|
|
226,569 |
|
|
Total other assets |
|
2,218,030 |
|
|
|
2,221,349 |
|
|
|
$ |
2,907,018 |
|
|
$ |
2,922,506 |
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Current maturities of long-term debt |
$ |
30,110 |
|
|
$ |
30,169 |
|
|
Current operating lease liabilities |
|
168,946 |
|
|
|
171,311 |
|
|
Accounts payable |
|
37,519 |
|
|
|
66,271 |
|
|
Accrued liabilities |
|
224,740 |
|
|
|
253,932 |
|
|
Total current liabilities |
|
461,315 |
|
|
|
521,683 |
|
|
Long-term liabilities: |
|
|
|
|||||
Long-term debt, net of current maturities |
|
1,793,395 |
|
|
|
1,799,540 |
|
|
Long-term operating lease liabilities, net of current portion |
|
1,177,309 |
|
|
|
1,165,097 |
|
|
Deferred tax liabilities |
|
42,084 |
|
|
|
37,684 |
|
|
Other long-term liabilities |
|
135,983 |
|
|
|
134,694 |
|
|
Total long-term liabilities |
|
3,148,771 |
|
|
|
3,137,015 |
|
|
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, 82,617,362 and 82,580,599 issued, respectively |
|
826 |
|
|
|
826 |
|
|
Capital in excess of par value |
|
511,924 |
|
|
|
508,323 |
|
|
Retained earnings |
|
1,886,980 |
|
|
|
1,842,947 |
|
|
Accumulated other comprehensive loss |
|
(53,493 |
) |
|
|
(53,982 |
) |
|
Treasury stock, at cost, 62,019,871 and 61,799,221 shares, respectively |
|
(3,049,305 |
) |
|
|
(3,034,306 |
) |
|
Total stockholders’ deficit |
|
(703,068 |
) |
|
|
(736,192 |
) |
|
|
$ |
2,907,018 |
|
|
$ |
2,922,506 |
|
|
| JACK IN THE BOX INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(In thousands) (Unaudited) |
||||||||
|
|
|
||||||
|
|
16 Weeks Ended |
||||||
|
|
January 22,
|
|
January 23,
|
||||
Cash flows from operating activities: |
|
|
|
|||||
Net earnings |
$ |
53,254 |
|
|
$ |
39,270 |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization |
|
19,402 |
|
|
|
12,496 |
|
|
Amortization of franchise tenant improvement allowances and incentives |
|
1,215 |
|
|
|
1,234 |
|
|
Deferred finance cost amortization |
|
1,616 |
|
|
|
1,722 |
|
|
Tax deficiency from share-based compensation arrangements |
|
143 |
|
|
|
38 |
|
|
Deferred income taxes |
|
3,385 |
|
|
|
2,317 |
|
|
Share-based compensation expense |
|
3,534 |
|
|
|
1,018 |
|
|
Pension and post-retirement expense |
|
2,144 |
|
|
|
93 |
|
|
(Gains) losses on cash surrender value of company-owned life insurance |
|
(6,631 |
) |
|
|
579 |
|
|
Gains on the sale of company-operated restaurants |
|
(3,825 |
) |
|
|
(48 |
) |
|
Gains on the disposition of property and equipment, net |
|
(10,009 |
) |
|
|
(617 |
) |
|
Impairment charges and other |
|
483 |
|
|
|
919 |
|
|
Changes in assets and liabilities, excluding acquisitions: |
|
|
|
|||||
Accounts and other receivables |
|
37,813 |
|
|
|
19,910 |
|
|
Inventories |
|
194 |
|
|
|
(351 |
) |
|
Prepaid expenses and other current assets |
|
6,953 |
|
|
|
2,720 |
|
|
Operating lease right-of-use assets and lease liabilities |
|
11,281 |
|
|
|
10,218 |
|
|
Accounts payable |
|
(31,285 |
) |
|
|
(5,218 |
) |
|
Accrued liabilities |
|
(24,677 |
) |
|
|
(47,849 |
) |
|
Pension and post-retirement contributions |
|
(1,688 |
) |
|
|
(2,075 |
) |
|
Franchise tenant improvement allowance and incentive disbursements |
|
(527 |
) |
|
|
(1,166 |
) |
|
Other |
|
(303 |
) |
|
|
(1,159 |
) |
|
Cash flows provided by operating activities |
|
62,472 |
|
|
|
34,051 |
|
|
Cash flows from investing activities: |
|
|
|
|||||
Purchases of property and equipment |
|
(24,028 |
) |
|
|
(9,401 |
) |
|
Proceeds from the sale of property and equipment |
|
22,103 |
|
|
|
2,245 |
|
|
Proceeds from the sale and leaseback of assets |
|
— |
|
|
|
1,576 |
|
|
Proceeds from the sale of company-operated restaurants |
|
17,609 |
|
|
|
48 |
|
|
Other |
|
— |
|
|
|
(1,305 |
) |
|
Cash flows provided by (used in) investing activities |
|
15,684 |
|
|
|
(6,837 |
) |
|
Cash flows from financing activities: |
|
|
|
|||||
Principal repayments on debt |
|
(7,557 |
) |
|
|
(223 |
) |
|
Payment of debt issuance costs |
|
— |
|
|
|
(2,090 |
) |
|
Dividends paid on common stock |
|
(9,154 |
) |
|
|
(9,257 |
) |
|
Proceeds from issuance of common stock |
|
— |
|
|
|
49 |
|
|
Repurchases of common stock |
|
(14,999 |
) |
|
|
— |
|
|
Payroll tax payments for equity award issuances |
|
(868 |
) |
|
|
(795 |
) |
|
Cash flows used in financing activities |
|
(32,578 |
) |
|
|
(12,316 |
) |
|
Net increase in cash and restricted cash |
|
45,578 |
|
|
|
14,898 |
|
|
Cash and restricted cash at beginning of period |
|
136,040 |
|
|
|
73,568 |
|
|
Cash and restricted cash at end of period |
$ |
181,618 |
|
|
$ |
88,466 |
|
|
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) |
||||||
|
|
|
||||
|
|
16 Weeks Ended |
||||
|
|
January 22,
|
|
January 23,
|
||
Revenues: |
|
|
|
|
||
Company restaurant sales |
|
51.3 |
% |
|
34.8 |
% |
Franchise rental revenues |
|
20.6 |
% |
|
29.9 |
% |
Franchise royalties and other |
|
14.5 |
% |
|
17.6 |
% |
Franchise contributions for advertising and other services |
|
13.6 |
% |
|
17.6 |
% |
|
|
100.0 |
% |
|
100.0 |
% |
Operating costs and expenses, net: |
|
|
|
|
||
Food and packaging (1) |
|
30.3 |
% |
|
31.3 |
% |
Payroll and employee benefits (1) |
|
32.8 |
% |
|
33.1 |
% |
Occupancy and other (1) |
|
19.0 |
% |
|
17.4 |
% |
Franchise occupancy expenses (excluding depreciation and amortization) (2) |
|
61.8 |
% |
|
62.1 |
% |
Franchise support and other costs (3) |
|
2.5 |
% |
|
6.4 |
% |
Franchise advertising and other services expenses (4) |
|
104.0 |
% |
|
104.1 |
% |
Selling, general and administrative expenses |
|
9.5 |
% |
|
7.3 |
% |
Depreciation and amortization |
|
3.7 |
% |
|
3.6 |
% |
Pre-opening costs |
|
0.1 |
% |
|
0.1 |
% |
Other operating (income) expenses, net |
|
(1.0 |
)% |
|
1.1 |
% |
Gains on the sale of company-operated restaurants |
|
(0.7 |
)% |
|
— |
% |
Earnings from operations |
|
19.1 |
% |
|
21.4 |
% |
Income tax rate (5) |
|
26.7 |
% |
|
26.5 |
% |
____________________________ |
||
(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 franchise contributions for advertising and other services. |
|
(5) |
As a percentage of earnings from operations and before income taxes. |
|
| Jack in the Box systemwide sales (in thousands): | ||||||||
|
|
16 Weeks Ended |
||||||
|
|
January 22,
|
|
January 23,
|
||||
Company-operated restaurant sales |
|
$ |
126,142 |
|
$ |
120,056 |
||
Franchised restaurant sales (1) |
|
|
1,208,983 |
|
|
|
1,117,676 |
|
Systemwide sales (1) |
|
$ |
1,335,125 |
|
|
$ |
1,237,732 |
|
____________________________ |
||
(1) |
Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. Systemwide sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and systemwide restaurant sales information is useful to investors as they have a direct effect on the company's profitability. |
|
Del Taco systemwide sales (in thousands): |
||||||||
|
|
16 Weeks Ended |
||||||
|
|
January 22,
|
|
January 23,
|
||||
Company-operated restaurant sales |
|
$ |
144,049 |
|
$ |
143,418 |
||
Franchised restaurant sales (2) |
|
$ |
146,098 |
|
|
$ |
138,503 |
|
Systemwide sales (2) |
|
$ |
290,147 |
|
|
$ |
281,921 |
|
____________________________ |
||
(1) |
Del Taco has been presented on a pro forma basis has been derived from unaudited financial information to conform to our fiscal year and is for informational purposes only. |
|
(2) |
Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. Systemwide sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and systemwide restaurant sales information is useful to investors as they have a direct effect on the company's profitability. |
|
JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)
To supplement the condensed consolidated financial statements, which are presented in accordance with GAAP, the company uses the following non-GAAP measures: Operating Earnings Per Share, Adjusted EBITDA, Restaurant-Level Margin and Franchise-Level Margin. Management believes that these measurements, when viewed with the company's results of operations in accordance with GAAP and the accompanying reconciliations in the tables below, provide useful information about operating performance and period-over-period changes, and provide additional information that is useful for evaluating the operating performance of the company's core business without regard to potential distortions.
Operating Earnings Per Share
Operating Earnings Per Share represents diluted earnings per share on a GAAP basis excluding acquisition, integration, and restructuring costs; COLI losses (gains), net; pension and post-retirement benefit costs; gains on sale of real estate to franchisees; and gains on the sale of company-operated restaurants. Operating Earnings Per Share should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Operating Earnings Per Share provides investors with a meaningful supplement of the company’s operating performance and period-over-period changes without regard to potential distortions.
Below is a reconciliation of non-GAAP Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings per share. Figures may not add due to rounding.
|
|
16 Weeks Ended |
||||||
|
|
January 22,
|
|
January 23,
|
||||
Net income, as reported |
|
$ |
53,254 |
|
|
$ |
39,270 |
|
Acquisition, integration, and restructuring costs |
|
|
1,651 |
|
|
|
3,013 |
|
Net COLI (gains) losses |
|
|
(5,724 |
) |
|
|
445 |
|
Pension, post-retirement benefit costs |
|
|
2,144 |
|
|
|
93 |
|
Gains on sale of real estate to franchisees |
|
|
(9,467 |
) |
|
|
— |
|
Refranchising gains |
|
|
(3,825 |
) |
|
|
(48 |
) |
Excess tax shortfall from share-based compensation arrangements |
|
|
143 |
|
|
|
38 |
|
Tax impact of adjustments (1) |
|
|
4,002 |
|
|
|
(873 |
) |
Non-GAAP adjusted net income |
|
$ |
42,178 |
|
|
$ |
41,938 |
|
|
|
|
|
|
||||
Weighted-average shares outstanding - diluted |
|
|
21,000 |
|
|
|
21,247 |
|
Diluted earnings per share – GAAP |
|
$ |
2.54 |
|
|
$ |
1.85 |
|
Acquisition, integration, and restructuring costs |
|
|
0.08 |
|
|
|
0.14 |
|
Net COLI (gains) losses |
|
|
(0.27 |
) |
|
|
0.02 |
|
Pension, post-retirement benefit costs |
|
|
0.10 |
|
|
|
— |
|
Gains on sale of real estate to franchisees |
|
|
(0.45 |
) |
|
|
— |
|
Refranchising gains |
|
|
(0.18 |
) |
|
|
— |
|
Excess tax shortfall from share-based compensation arrangements |
|
|
0.01 |
|
|
|
— |
|
Tax impact of adjustments (1) |
|
|
0.19 |
|
|
|
(0.04 |
) |
Operating Earnings Per Share – non-GAAP (2) |
|
$ |
2.01 |
|
|
$ |
1.97 |
|
____________________ |
||
(1) |
Tax impact calculated using the non-GAAP Operating EPS tax rate of 26.5% in the current year and 26.4% in the prior year. |
|
(2) |
Operating Earnings Per Share may not add due to rounding. |
|
Adjusted EBITDA
Adjusted EBITDA represents net earnings on a GAAP basis excluding income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, other operating expenses (income), net, depreciation and amortization, amortization of favorable and unfavorable leases and subleases, net and the amortization of franchise tenant improvement allowances and other. Adjusted EBITDA should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Adjusted EBITDA is useful to investors to gain an understanding of the factors and trends affecting the company's ongoing cash earnings, from which capital investments are made and debt is serviced.
Below is a reconciliation of non-GAAP Adjusted EBITDA to the most directly comparable GAAP measure, net earnings (in thousands).
|
16 Weeks Ended |
|||||||
|
January 22,
|
|
January 23,
|
|||||
Net earnings - GAAP |
$ |
53,254 |
|
|
$ |
39,270 |
|
|
Income taxes |
|
19,385 |
|
|
|
14,190 |
|
|
Interest expense, net |
|
26,148 |
|
|
|
20,187 |
|
|
Gains on the sale of company-operated restaurants |
|
(3,825 |
) |
|
|
(48 |
) |
|
Other operating (income) expenses, net |
|
(5,501 |
) |
|
|
3,843 |
|
|
Depreciation and amortization |
|
19,402 |
|
|
|
12,496 |
|
|
Amortization of favorable and unfavorable leases and subleases, net |
|
541 |
|
|
|
— |
|
|
Amortization of franchise tenant improvement allowances and other |
|
1,215 |
|
|
|
1,234 |
|
|
Adjusted EBITDA – non-GAAP |
$ |
110,619 |
|
|
$ |
91,172 |
|
|
Restaurant-Level Margin
Restaurant-Level Margin is defined as company restaurant sales less restaurant operating costs (food and packaging, labor, and occupancy costs) and is neither required by, nor presented in accordance with GAAP. Restaurant-Level Margin excludes revenues and expenses of our franchise operations and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, other operating expenses (income), net, gains or losses on the sale of company-operated restaurants, and other costs that are considered normal operating costs. As such, Restaurant-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Restaurant-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Restaurant-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Restaurant-Level Margin as a key performance indicator to evaluate the profitability of company-operated restaurants.
Below is a reconciliation of non-GAAP Restaurant-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):
|
|
Jack in the Box |
|
Del Taco |
||||||||||||
|
|
January 22,
|
|
January 23,
|
|
January 22,
|
|
January 23,
|
||||||||
Earnings from operations - GAAP |
|
$ |
93,775 |
|
|
$ |
73,740 |
|
|
$ |
7,156 |
|
|
$ |
— |
|
Franchise rental revenues |
|
|
(106,096 |
) |
|
|
(103,099 |
) |
|
|
(2,734 |
) |
|
|
— |
|
Franchise royalties and other |
|
|
(69,366 |
) |
|
|
(60,755 |
) |
|
|
(7,024 |
) |
|
|
— |
|
Franchise contributions for advertising and other services |
|
|
(65,313 |
) |
|
|
(60,801 |
) |
|
|
(6,372 |
) |
|
|
— |
|
Franchise occupancy expenses |
|
|
64,555 |
|
|
|
63,983 |
|
|
|
2,669 |
|
|
|
— |
|
Franchise support and other costs |
|
|
1,416 |
|
|
|
3,911 |
|
|
|
461 |
|
|
|
— |
|
Franchise advertising and other services expenses |
|
|
67,958 |
|
|
|
63,308 |
|
|
|
6,612 |
|
|
|
— |
|
Selling, general and administrative expenses |
|
|
32,380 |
|
|
|
25,029 |
|
|
|
17,762 |
|
|
|
— |
|
Depreciation and amortization |
|
|
11,029 |
|
|
|
12,496 |
|
|
|
8,373 |
|
|
|
— |
|
Pre-opening costs |
|
|
281 |
|
|
|
310 |
|
|
|
50 |
|
|
|
||
Other operating (income) expenses, net |
|
|
(6,463 |
) |
|
|
3,843 |
|
|
|
962 |
|
|
|
— |
|
Gains on the sale of company-operated restaurants |
|
|
845 |
|
|
|
(48 |
) |
|
|
(4,670 |
) |
|
|
— |
|
Restaurant-Level Margin- Non-GAAP |
|
$ |
25,001 |
|
|
$ |
21,917 |
|
|
$ |
23,245 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
||||||||
Company restaurant sales |
|
$ |
126,142 |
|
|
$ |
120,056 |
|
|
$ |
144,049 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
||||||||
Restaurant-Level Margin % - Non-GAAP |
19.8 |
% |
18.3 |
% |
16.1 |
% |
|
— |
% |
|||||||
Franchise-Level Margin
Franchise-Level Margin is defined as franchise revenues less franchise operating costs (occupancy expenses, advertising contributions, and franchise support and other costs) and is neither required by, nor presented in accordance with GAAP. Franchise-Level Margin excludes revenue and expenses of our company-operated restaurants and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, other operating expenses (income), net, and other costs that are considered normal operating costs. As such, Franchise-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Franchise-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Franchise-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Franchise-Level Margin as a key performance indicator to evaluate the profitability of our franchise operations.
Below is a reconciliation of non-GAAP Franchise-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):
|
|
Jack in the Box |
|
Del Taco |
||||||||||||
|
|
January 22,
|
|
January 23,
|
|
January 22,
|
|
January 23,
|
||||||||
Earnings from operations - GAAP |
|
$ |
93,775 |
|
|
$ |
73,740 |
|
|
$ |
7,156 |
|
|
$ |
— |
|
Company restaurant sales |
|
|
(126,142 |
) |
|
|
(120,056 |
) |
|
|
(144,049 |
) |
|
|
— |
|
Food and packaging |
|
|
41,326 |
|
|
|
37,537 |
|
|
|
40,607 |
|
|
|
— |
|
Payroll and employee benefits |
|
|
39,438 |
|
|
|
39,725 |
|
|
|
49,203 |
|
|
|
— |
|
Occupancy and other |
|
|
20,377 |
|
|
|
20,877 |
|
|
|
30,993 |
|
|
|
— |
|
Selling, general and administrative expenses |
|
|
32,380 |
|
|
|
25,029 |
|
|
|
17,762 |
|
|
|
— |
|
Depreciation and amortization |
|
|
11,029 |
|
|
|
12,496 |
|
|
|
8,373 |
|
|
|
— |
|
Pre-opening costs |
|
|
281 |
|
|
|
310 |
|
|
|
50 |
|
|
|
— |
|
Other operating (income) expenses, net |
|
|
(6,463 |
) |
|
|
3,843 |
|
|
|
962 |
|
|
|
— |
|
Gains on the sale of company-operated restaurants |
|
|
845 |
|
|
|
(48 |
) |
|
|
(4,670 |
) |
|
|
— |
|
Franchise-Level Margin - Non-GAAP |
|
$ |
106,846 |
|
|
$ |
93,453 |
|
|
$ |
6,387 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
||||||||
Franchise rental revenues |
|
$ |
106,096 |
|
|
$ |
103,099 |
|
|
$ |
2,734 |
|
|
$ |
— |
|
Franchise royalties and other |
|
|
69,366 |
|
|
|
60,755 |
|
|
|
7,024 |
|
|
|
— |
|
Franchise contributions for advertising and other services |
|
|
65,313 |
|
|
|
60,801 |
|
|
|
6,372 |
|
|
|
— |
|
Total franchise revenues |
|
$ |
240,775 |
|
|
$ |
224,655 |
|
|
$ |
16,130 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
||||||||
Franchise-Level Margin % - Non-GAAP |
|
|
44.4 |
% |
|
|
41.6 |
% |
|
|
39.6 |
% |
|
|
— |
% |
