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Jack in the Box Inc. Reports First Quarter 2024 Earnings

Jack in the Box same-store sales of +0.8%; Del Taco same-store sales of +2.2%

Jack in the Box systemwide sales growth of +1.8%; Del Taco systemwide sales growth of +0.1%

Diluted EPS of $1.93; Operating EPS of $1.95

Jack in the Box restaurant level margin of 23.1%, up 3.3% from prior year

Jack in the Box signed development agreements with new franchisees to expand in Florida and enter Michigan

New Smashed Jack burger sold out in less than 3 weeks during Q1 soft launch

Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco brands in the first quarter, ended January 21, 2024.

“The first quarter included notable progress on our long-term strategy and objectives we laid out at our recent Investor Day,” said Darin Harris, Jack in the Box Chief Executive Officer. “We were also pleased with the sales rebound for Del Taco, the outperformance of Jack in the Box restaurant level margin, and the completion of development agreements with new franchisees to open new markets. These results are a reflection of our compelling brands, as well as our initiatives to maximize four-wall economics and franchise profitability, which will continue to fuel our growth plan.”

Jack in the Box Performance

Same-store sales increased 0.8% in the first quarter, comprised of franchise same-store sales growth of 0.7% and company-owned same-store sales growth of 2.0%. Both franchise and company-owned restaurants experienced growth in average check, declines in transactions, and notable negative weather impact toward the end of the quarter. Systemwide sales for the first quarter increased 1.8%.

Restaurant-Level Margin(1), a non-GAAP measure, was $30.4 million, or 23.1%, up from $25.0 million, or 19.8%, a year ago driven primarily by commodity deflation and sales leverage.

Franchise-Level Margin(1), a non-GAAP measure, was $97.5 million, or 41.2%, a decrease from $106.8 million, or 44.4%, a year ago. The decrease was mainly driven by the lap of a prior year Hawaii transaction royalty buyout which had a $7.3 million, or 1.7%, positive impact on franchise level margin in the first quarter of 2023.

Jack in the Box grew net restaurant count by six in the first quarter, with seven restaurant openings and one restaurant closure. As of the first quarter, and since the launch of the development program in mid-2021, the company currently has 91 signed agreements for a total of 399 restaurants. Under these agreements, 41 restaurants have opened, leaving 358 remaining for future development.

Jack in the Box Same-Store Sales:

16 Weeks Ended

 

January 21, 2024

 

January 22, 2023

Company

2.0

%

 

12.6

%

Franchise

0.7

%

 

7.4

%

System

0.8

%

 

7.8

%

Jack in the Box Restaurant Counts:

 

2024

 

2023

 

Company

 

Franchise

 

Total

 

Company

 

Franchise

Total

Restaurant count at beginning of Q1

142

 

 

2,044

 

 

2,186

 

 

146

 

 

2,035

 

2,181

 

New

2

 

 

5

 

 

7

 

 

 

 

6

 

6

 

Refranchised

 

 

 

 

 

 

(5

)

 

5

 

0

 

Closed

 

 

(1

)

 

(1

)

 

(1

)

 

 

(1

)

Restaurant count at end of Q1

144

 

 

2,048

 

 

2,192

 

 

140

 

 

2,046

 

2,186

 

Q1 Net Restaurant Increase/(Decrease)

2

 

 

4

 

 

6

 

 

 

 

 

 

 

YTD Net Restaurant % Increase/(Decrease) [Q1'24 vs. Q4'23]

1.4

%

 

0.2

%

 

0.3

%

 

 

 

 

 

 

Del Taco Performance

Same-store sales increased 2.2% in the first quarter, comprised of franchise same-store sales growth of 2.4% and company-operated same-store sales growth of 1.8%. Sales performance included increases in average check via menu pricing, partially offset by changes in menu mix and transaction declines. Systemwide sales for the fiscal first quarter increased 0.1%, which was negatively impacted by a calendar shift due to aligning Del Taco's reporting calendar to Jack in the Box, as well as a temporary 12-week closure of a restaurant undergoing a fresh flex rebuild during the first quarter.

Restaurant-Level Margin(1), a non-GAAP measure, was $14.4 million, or 15.6%, down from $23.2 million, or 16.1%, a year ago. The dollar decrease was primarily a function of refranchising over 100 restaurants during the prior fiscal year. The margin decrease was due mainly to wage and utility inflation as well as a change in the mix of restaurants, partially offset by commodity deflation.

Franchise-Level Margin(1), a non-GAAP measure, was $8.0 million, or 29.3%, up from $6.4 million, or 39.6%, a year ago. The decrease in margin percentage was driven by higher franchise costs and the impact of a higher franchise mix with pass-through rent and advertising, partially offset by growth in franchise same-store sales.

Del Taco had no change in total restaurant count in the first quarter, with three restaurant openings and three restaurant closings. Restaurant count at the end of the first quarter also reflects the Company's acquisition of 9 franchise restaurants primarily in the Detroit market, which the company will now own and operate with the purpose of improving performance and refranchising thereafter.

Del Taco Same-Store Sales:

16 Weeks Ended

 

January 21, 2024

 

January 22, 2023

Company

1.8

%

 

3.1

%

Franchise

2.4

%

 

2.8

%

System

2.2

%

 

3.0

%

Del Taco Restaurant Counts:

 

2024

 

2023

 

Company

 

Franchise

 

Total

 

Company

 

Franchise

 

Total

Restaurant count at beginning of Q1

171

 

 

421

 

 

592

 

 

290

 

 

301

 

591

 

New

 

 

3

 

 

3

 

 

 

 

2

 

2

 

Acquired from franchisees

9

 

 

(9

)

 

0

 

 

 

 

 

 

Refranchised

 

 

 

 

 

 

(16

)

 

16

 

0

 

Closed

(1

)

 

(2

)

 

(3

)

 

(1

)

 

 

(1

)

Restaurant count at end of Q1

179

 

 

413

 

 

592

 

 

273

 

 

319

 

592

 

Q1 Net Restaurant Increase/(Decrease)

8

 

 

(8

)

 

0

 

 

 

 

 

 

 

YTD Net Restaurant % Increase/(Decrease) [Q1'24 vs. Q4'23]

4.7

%

 

(1.9

)%

 

%

 

 

 

 

 

 

Company-Wide Performance

First quarter diluted earnings per share was $1.93. Operating Earnings Per Share(2), a non-GAAP measure, was $1.95 in the first quarter of fiscal 2024 compared with $2.01 in the prior year quarter.

Total revenues decreased 7.5% to $487.5 million, compared to $527.1 million in the prior year quarter. The lower reported revenue is primarily the result of the Del Taco refranchising efforts. Net earnings decreased to $38.7 million for the first quarter of fiscal 2024, compared with $53.3 million for the first quarter of fiscal 2023. Adjusted EBITDA(3), a non-GAAP measure, was $101.8 million in the first quarter of fiscal 2024 compared with $108.6 million for the prior year quarter.

Company-wide SG&A expense for the first quarter was $46.4 million, a decrease of $3.8 million compared to the prior year quarter, due primarily to a prior year legal accrual along with lower advertising costs from the Del Taco refranchising. These decreases were partially offset by higher stock compensation as well as changes in the net cash surrender value of company owned life insurance ("COLI") policies. When excluding net COLI gains, our G&A was 2.5% of systemwide sales.

The income tax provisions reflect a year-to-date effective tax rate of 26.9% in 2024, as compared to 26.7% in fiscal year 2023. The Non-GAAP Operating EPS tax rate for the first quarter of 2024 was 27.2%.

(1) 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.”

(2) Operating Earnings Per Share represents the diluted earnings per share on a GAAP basis, excluding certain adjustments. See “Reconciliation of Non-GAAP Measurements to GAAP Results.” Operating earnings per share may not add due to rounding.

(3) Adjusted EBITDA represents net earnings on a GAAP basis excluding certain adjustments. See “Reconciliation of Non-GAAP Measurements to GAAP Results.”

Capital Allocation

The Company repurchased 0.3 million shares of our common stock for an aggregate cost of $25.2 million in the first quarter. As of the end of the first quarter, there was $225.0 million remaining under the Board-authorized stock buyback program.

On February 16, 2024, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on March 27, 2024, to shareholders of record as of the close of business on March 15, 2024. Future dividends will be subject to approval by the Board of Directors.

Guidance & Outlook Updates

All guidance and outlook provided on November 21, 2023, for the fiscal year ending September 29, 2024, remain the same as previously disclosed.

Conference Call

The Company will host a conference call for analysts and investors on Wednesday, February 21, 2024, beginning at 2:00 p.m. PT (5:00 p.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 approximately 2,200 restaurants across 22 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 21, 2024

 

January 22, 2023

Revenues:

 

 

 

Company restaurant sales

$

224,040

 

$

270,191

 

Franchise rental revenues

 

113,196

 

 

108,830

 

Franchise royalties and other

 

73,330

 

 

76,390

 

Franchise contributions for advertising and other services

 

76,932

 

 

71,685

 

 

 

487,498

 

 

527,096

 

Operating costs and expenses, net:

 

 

 

Food and packaging

 

64,132

 

 

81,933

 

Payroll and employee benefits

 

73,054

 

 

88,641

 

Occupancy and other

 

42,053

 

 

51,371

 

Franchise occupancy expenses

 

72,624

 

 

67,224

 

Franchise support and other costs

 

5,194

 

 

1,877

 

Franchise advertising and other services expenses

 

80,234

 

 

74,570

 

Selling, general and administrative expenses

 

46,365

 

 

50,142

 

Depreciation and amortization

 

18,473

 

 

19,402

 

Pre-opening costs

 

465

 

 

331

 

Other operating expenses (income), net

 

5,170

 

 

(5,501

)

Losses (gains) on the sale of company-operated restaurants

 

254

 

 

(3,825

)

 

 

408,018

 

 

426,165

 

Earnings from operations

 

79,480

 

 

100,931

 

Other pension and post-retirement expenses, net

 

2,106

 

 

2,144

 

Interest expense, net

 

24,486

 

 

26,148

 

Earnings before income taxes

 

52,888

 

 

72,639

 

Income taxes

 

14,205

 

 

19,385

 

Net earnings

$

38,683

 

$

53,254

 

 

 

 

 

Net earnings per share:

 

 

 

Basic

$

1.94

 

$

2.55

 

Diluted

$

1.93

 

$

2.54

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

Basic

 

19,893

 

 

20,921

 

Diluted

 

20,051

 

 

21,000

 

 

 

 

 

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 21, 2024

 

October 1, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash

$

53,975

 

 

$

157,653

 

Restricted cash

 

28,559

 

 

 

28,254

 

Accounts and other receivables, net

 

63,251

 

 

 

99,678

 

Inventories

 

4,381

 

 

 

3,896

 

Prepaid expenses

 

8,982

 

 

 

16,911

 

Current assets held for sale

 

23,656

 

 

 

13,925

 

Other current assets

 

6,109

 

 

 

5,667

 

Total current assets

 

188,913

 

 

 

325,984

 

Property and equipment:

 

 

 

Property and equipment, at cost

 

1,261,323

 

 

 

1,258,589

 

Less accumulated depreciation and amortization

 

(845,375

)

 

 

(846,559

)

Property and equipment, net

 

415,948

 

 

 

412,030

 

Other assets:

 

 

 

Operating lease right-of-use assets

 

1,411,019

 

 

 

1,397,555

 

Intangible assets, net

 

11,251

 

 

 

11,330

 

Trademarks

 

283,500

 

 

 

283,500

 

Goodwill

 

329,583

 

 

 

329,986

 

Other assets, net

 

247,048

 

 

 

240,707

 

Total other assets

 

2,282,401

 

 

 

2,263,078

 

 

$

2,887,262

 

 

$

3,001,092

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

Current liabilities:

 

 

 

Current maturities of long-term debt

$

29,941

 

 

$

29,964

 

Current operating lease liabilities

 

159,045

 

 

 

142,518

 

Accounts payable

 

70,135

 

 

 

84,960

 

Accrued liabilities

 

167,788

 

 

 

302,178

 

Total current liabilities

 

426,909

 

 

 

559,620

 

Long-term liabilities:

 

 

 

Long-term debt, net of current maturities

 

1,718,813

 

 

 

1,724,933

 

Long-term operating lease liabilities, net of current portion

 

1,277,947

 

 

 

1,265,514

 

Deferred tax liabilities

 

27,878

 

 

 

26,229

 

Other long-term liabilities

 

143,872

 

 

 

143,123

 

Total long-term liabilities

 

3,168,510

 

 

 

3,159,799

 

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, 82,752,989 and 82,645,814 issued, respectively

 

827

 

 

 

826

 

Capital in excess of par value

 

524,970

 

 

 

520,076

 

Retained earnings

 

1,967,555

 

 

 

1,937,598

 

Accumulated other comprehensive loss

 

(51,306

)

 

 

(51,790

)

Treasury stock, at cost, 63,218,724 and 62,910,964 shares, respectively

 

(3,150,203

)

 

 

(3,125,037

)

Total stockholders’ deficit

 

(708,157

)

 

 

(718,327

)

 

$

2,887,262

 

 

$

3,001,092

 

JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

 

Sixteen Weeks Ended

 

January 21, 2024

 

January 22, 2023

Cash flows from operating activities:

 

 

 

Net earnings

$

38,683

 

 

$

53,254

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

18,473

 

 

 

19,402

 

Amortization of franchise tenant improvement allowances and incentives

 

1,418

 

 

 

1,215

 

Deferred finance cost amortization

 

1,493

 

 

 

1,616

 

Excess tax (benefits) deficiency from share-based compensation arrangements

 

(9

)

 

 

143

 

Deferred income taxes

 

(719

)

 

 

3,385

 

Share-based compensation expense

 

4,820

 

 

 

3,534

 

Pension and post-retirement expense

 

2,106

 

 

 

2,144

 

Gains on cash surrender value of company-owned life insurance

 

(6,161

)

 

 

(6,631

)

Losses (gains) on the sale of company-operated restaurants

 

254

 

 

 

(3,825

)

Gains on acquisition of restaurants

 

(2,357

)

 

 

 

Losses (gains) on the disposition of property and equipment, net

 

1,011

 

 

 

(10,009

)

Impairment charges and other

 

28

 

 

 

483

 

Changes in assets and liabilities, excluding acquisitions:

 

 

 

Accounts and other receivables

 

40,139

 

 

 

37,813

 

Inventories

 

(484

)

 

 

194

 

Prepaid expenses and other current assets

 

9,587

 

 

 

6,953

 

Operating lease right-of-use assets and lease liabilities

 

12,208

 

 

 

11,281

 

Accounts payable

 

(13,826

)

 

 

(31,285

)

Accrued liabilities

 

(125,861

)

 

 

(24,677

)

Pension and post-retirement contributions

 

(1,698

)

 

 

(1,688

)

Franchise tenant improvement allowance and incentive disbursements

 

(523

)

 

 

(527

)

Other

 

(1,257

)

 

 

(303

)

Cash flows (used in) provided by operating activities

 

(22,675

)

 

 

62,472

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(38,829

)

 

 

(24,028

)

Proceeds from the sale of property and equipment

 

516

 

 

 

22,103

 

Proceeds from the sale of company-operated restaurants

 

1,739

 

 

 

17,609

 

Cash flows (used in) provided by investing activities

 

(36,574

)

 

 

15,684

 

Cash flows from financing activities:

 

 

 

Principal repayments on debt

 

(7,481

)

 

 

(7,557

)

Dividends paid on common stock

 

(8,652

)

 

 

(9,154

)

Proceeds from issuance of common stock

 

1

 

 

 

 

Repurchases of common stock

 

(25,000

)

 

 

(14,999

)

Payroll tax payments for equity award issuances

 

(2,992

)

 

 

(868

)

Cash flows used in financing activities

 

(44,124

)

 

 

(32,578

)

Net (decrease) increase in cash and restricted cash

 

(103,373

)

 

 

45,578

 

Cash and restricted cash at beginning of period

 

185,907

 

 

 

136,040

 

Cash and restricted cash at end of period

$

82,534

 

 

$

181,618

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 21, 2024

 

January 22, 2023

Revenues:

 

 

 

Company restaurant sales

46.0

%

 

51.3

%

Franchise rental revenues

23.2

%

 

20.6

%

Franchise royalties and other

15.0

%

 

14.5

%

Franchise contributions for advertising and other services

15.8

%

 

13.6

%

 

100.0

%

 

100.0

%

Operating costs and expenses, net:

 

 

 

Food and packaging (1)

28.6

%

 

30.3

%

Payroll and employee benefits (1)

32.6

%

 

32.8

%

Occupancy and other (1)

18.8

%

 

19.0

%

Franchise occupancy expenses (excluding depreciation and amortization) (2)

64.2

%

 

61.8

%

Franchise support and other costs (3)

7.1

%

 

2.5

%

Franchise advertising and other services expenses (4)

104.3

%

 

104.0

%

Selling, general and administrative expenses

9.5

%

 

9.5

%

Depreciation and amortization

3.8

%

 

3.7

%

Pre-opening costs

0.1

%

 

0.1

%

Other operating expenses (income), net

1.1

%

 

(1.0

)%

Losses (gains) on the sale of company-operated restaurants

0.1

%

 

(0.7

)%

Earnings from operations

16.3

%

 

19.1

%

Income tax rate (5)

26.9

%

 

26.7

%

____________________________

(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 21, 2024

 

January 22, 2023

Company-operated restaurant sales

$

132,057

 

$

126,142

Franchised restaurant sales (1)

 

1,226,750

 

 

1,208,983

Systemwide sales (1)

$

1,358,807

 

$

1,335,125

____________________________

(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 21, 2024

 

January 22, 2023

Company-operated restaurant sales

$

91,983

 

$

144,049

Franchised restaurant sales (1)

 

198,476

 

 

146,098

Systemwide sales (1)

$

290,459

 

$

290,147

____________________________

(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.

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: Adjusted Net Income, 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 strategic initiatives, net COLI gains, pension and post-retirement benefit costs, losses (gains) on the sale of company-operated restaurants, losses (gains) on the sale of real estate to franchisees, gains on acquisition of restaurants and the tax-related impacts of the above adjustments.

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 Adjusted Net Income to the most directly comparable GAAP measure of net income. Also below is a reconciliation of Non-GAAP Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings per share:

 

 

16 Weeks Ended

 

 

January 21, 2024

 

January 22, 2023

Net income, as reported

 

$

38,683

 

 

$

53,254

 

Acquisition, integration, and strategic initiatives (1)

 

 

5,621

 

 

 

1,651

 

Net COLI gains (2)

 

 

(4,834

)

 

 

(5,724

)

Pension and post-retirement benefit costs (3)

 

 

2,106

 

 

 

2,144

 

Losses (gains) on the sale of company-operated restaurants

 

 

254

 

 

 

(3,825

)

Losses (gains) on the sale of real estate to franchisees

 

 

1

 

 

 

(9,467

)

Gains on acquisition of restaurants (4)

 

 

(2,357

)

 

 

 

Excess tax (benefits) shortfall from share-based compensation arrangements

 

 

(10

)

 

 

143

 

Tax impact of adjustments (5)

 

 

(371

)

 

 

4,002

 

Non-GAAP Adjusted Net Income

 

$

39,093

 

 

$

42,178

 

 

 

 

 

 

Weighted-average shares outstanding - diluted

 

 

20,051

 

 

 

21,000

 

 

 

 

 

 

Diluted earnings per share – GAAP

 

$

1.93

 

 

$

2.54

 

Acquisition, integration, and strategic initiatives (1)

 

 

0.28

 

 

 

0.08

 

Net COLI gains (2)

 

 

(0.24

)

 

 

(0.27

)

Pension and post-retirement benefit costs (3)

 

 

0.11

 

 

 

0.10

 

Losses (gains) on the sale of company-operated restaurants

 

 

0.01

 

 

 

(0.18

)

Losses (gains) on the sale of real estate to franchisees

 

 

0.00

 

 

 

(0.45

)

Gains on acquisition of restaurants (4)

 

 

(0.12

)

 

 

 

Excess tax (benefits) shortfall from share-based compensation arrangements

 

 

0.00

 

 

 

0.01

 

Tax impact of adjustments (5)

 

 

(0.02

)

 

 

0.19

 

Operating Earnings Per Share – non-GAAP (6)

 

$

1.95

 

 

$

2.01

 

____________________________

(1)

 

Acquisition, integration and strategic initiatives reflect charges that are not part of our ongoing operations, including consulting fees for discrete project-based strategic initiatives that are not expected to recur in the foreseeable future.

(2)

 

Net COLI gains reflect market-based adjustments on the company-owned life insurance policies, net of changes in our non-qualified deferred compensation obligation supported by these policies.

(3)

 

Pension and post-retirement benefit costs relating to our two legacy defined benefit pension plans, as well as our two legacy post-retirement plans.

(4)

 

Relates to the gains on acquisition of 9 Del Taco restaurants.

(5)

 

Tax impacts for the quarter calculated based on the non-GAAP Operating EPS tax rate of 27.2% in the current quarter and 26.5% in the prior year quarter.

(6)

 

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, losses (gains) on the sale of company-operated restaurants, other operating expenses (income), net, depreciation and amortization, amortization of cloud computing costs, amortization of favorable and unfavorable leases and subleases, net, amortization of franchise tenant improvement allowances and incentives, net COLI gains, and pension and post-retirement benefit costs.

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 21, 2024

 

January 22, 2023

Net earnings - GAAP

 

$

38,683

 

 

$

53,254

 

Income taxes

 

 

14,205

 

 

 

19,385

 

Interest expense, net

 

 

24,486

 

 

 

26,148

 

Losses (gains) on the sale of company-operated restaurants

 

 

254

 

 

 

(3,825

)

Other operating expenses (income), net (1)

 

 

5,170

 

 

 

(5,501

)

Depreciation and amortization

 

 

18,473

 

 

 

19,402

 

Amortization of cloud-computing costs (2)

 

 

1,606

 

 

 

1,562

 

Amortization of favorable and unfavorable leases and subleases, net

 

 

124

 

 

 

533

 

Amortization of franchise tenant improvement allowances and other

 

 

1,511

 

 

 

1,216

 

Net COLI gains (3)

 

$

(4,834

)

 

 

(5,724

)

Pension and post-retirement benefit costs (4)

 

$

2,106

 

 

 

2,144

 

Adjusted EBITDA – non-GAAP

 

$

101,784

 

 

$

108,594

 

____________________________

(1)

 

Other operating expense (income), net includes: acquisition, integration and strategic initiatives; costs of closed restaurants; operating restaurant impairment charges; accelerated depreciation and gains/losses on disposition of property and equipment, net.

(2)

 

Amortization of cloud computing costs includes the amounts for the non-cash amortization of capitalized implementation costs related to cloud-based software arrangements that are included within selling, general and administrative expenses.

(3)

 

Net COLI gains reflect market-based adjustments on the company-owned life insurance policies, net of changes in our non-qualified deferred compensation obligation supported by these policies.

(4)

 

Pension and post-retirement benefit costs relating to our two legacy defined benefit pension plans, as well as the two legacy post-retirement plans.

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, losses (gains) 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 21, 2024

 

January 22, 2023

 

January 21, 2024

 

January 22, 2023

Earnings from operations - GAAP

 

$

78,685

 

 

$

93,775

 

 

$

795

 

 

$

7,156

 

Franchise rental revenues

 

 

(105,578

)

 

 

(106,095

)

 

 

(7,618

)

 

 

(2,734

)

Franchise royalties and other

 

 

(63,343

)

 

 

(69,366

)

 

 

(9,987

)

 

 

(7,024

)

Franchise contributions for advertising and other services

 

 

(67,362

)

 

 

(65,313

)

 

 

(9,569

)

 

 

(6,373

)

Franchise occupancy expenses

 

 

65,188

 

 

 

64,555

 

 

 

7,436

 

 

 

2,669

 

Franchise support and other costs

 

 

3,747

 

 

 

1,119

 

 

 

1,446

 

 

 

462

 

Franchise advertising and other services expenses

 

 

69,893

 

 

 

68,254

 

 

 

10,341

 

 

 

6,612

 

Selling, general and administrative expenses

 

 

33,895

 

 

 

32,380

 

 

 

12,469

 

 

 

17,762

 

Depreciation and amortization

 

 

11,356

 

 

 

11,029

 

 

 

7,117

 

 

 

8,373

 

Pre-opening costs

 

 

343

 

 

 

280

 

 

 

122

 

 

 

50

 

Other operating expenses (income), net

 

 

5,279

 

 

 

(6,463

)

 

 

(109

)

 

 

962

 

Losses (gains) on the sale of company-operated restaurants

 

 

(1,655

)

 

 

845

 

 

 

1,909

 

 

 

(4,670

)

Restaurant-Level Margin- Non-GAAP

 

$

30,448

 

 

$

25,000

 

 

$

14,352

 

 

$

23,245

 

 

 

 

 

 

 

 

 

 

Company restaurant sales

 

$

132,057

 

 

$

126,142

 

 

$

91,983

 

 

$

144,049

 

 

 

 

 

 

 

 

 

 

Restaurant-Level Margin % - Non-GAAP

 

 

23.1

%

 

 

19.8

%

 

 

15.6

%

 

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 21, 2024

 

January 22, 2023

 

January 21, 2024

 

January 22, 2023

Earnings from operations - GAAP

 

$

78,685

 

 

$

93,775

 

 

$

795

 

 

$

7,156

 

Company restaurant sales

 

 

(132,057

)

 

 

(126,142

)

 

 

(91,983

)

 

 

(144,049

)

Food and packaging

 

 

39,261

 

 

 

41,326

 

 

 

24,872

 

 

 

40,607

 

Payroll and employee benefits

 

 

40,689

 

 

 

39,438

 

 

 

32,365

 

 

 

49,203

 

Occupancy and other

 

 

21,659

 

 

 

20,377

 

 

 

20,394

 

 

 

30,993

 

Selling, general and administrative expenses

 

 

33,895

 

 

 

32,380

 

 

 

12,469

 

 

 

17,762

 

Depreciation and amortization

 

 

11,356

 

 

 

11,029

 

 

 

7,117

 

 

 

8,373

 

Pre-opening costs

 

 

343

 

 

 

280

 

 

 

122

 

 

 

50

 

Other operating expenses (income), net

 

 

5,279

 

 

 

(6,463

)

 

 

(109

)

 

 

962

 

Losses (gains) on the sale of company-operated restaurants

 

 

(1,655

)

 

 

845

 

 

 

1,909

 

 

 

(4,670

)

Franchise-Level Margin - Non-GAAP

 

$

97,455

 

 

$

106,845

 

 

$

7,951

 

 

$

6,387

 

 

 

 

 

 

 

 

 

 

Franchise rental revenues

 

$

105,578

 

 

$

106,095

 

 

$

7,618

 

 

$

2,734

 

Franchise royalties and other

 

 

63,343

 

 

 

69,366

 

 

 

9,987

 

 

 

7,024

 

Franchise contributions for advertising and other services

 

 

67,362

 

 

 

65,313

 

 

 

9,569

 

 

 

6,373

 

Total franchise revenues

 

$

236,283

 

 

$

240,774

 

 

$

27,174

 

 

$

16,131

 

 

 

 

 

 

 

 

 

 

Franchise-Level Margin % - Non-GAAP

 

 

41.2

%

 

 

44.4

%

 

 

29.3

%

 

 

39.6

%

 

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