8-K
JACK IN THE BOX INC (JACK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 21, 2023
| JACK IN THE BOX INC. |
|---|
| (Exact name of registrant as specified in its charter) |
| Delaware | 1-9390 | 95-2698708 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>Identification Number) |
| 9357 Spectrum Center Blvd,<br> San Diego, CA 92123 | ||
| --- | ||
| (Address of principal executive offices) (Zip Code) | ||
| (858) 571-2121 | ||
| (Registrant’s telephone number, including area code) | ||
| Not Applicable | ||
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | JACK | The NASDAQ Stock Market LLC<br><br> <br>(NASDAQ Global Select Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
On November 21, 2023, Jack in the Box Inc. issued a press release announcing its fourth quarter fiscal 2023 financial results and disclosing other information.
A copy of the press release is attached as Exhibit 99.1.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
| Exhibit | |
|---|---|
| No. | Description |
| 99.1 | Press Release of Jack in the Box Inc.<br> dated November 21, 2023 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| JACK IN THE BOX INC. | |
|---|---|
| Date: November 21, 2023 | /s/ Brian Scott |
| Brian Scott | |
| Executive Vice President, Chief Financial Officer | |
| Exhibit 99.1 | |
| --- |
Jack in the Box Inc. Reports Fourth Quarter and Full-Year 2023 Earnings
Jack in the Box same-store sales of +3.9% in Q4 2023, +7.3% for FY 2023
Del Taco same-store sales of -1.5% in Q4 2023, +1.7%^(1)^for FY 2023
Jack in the Box and Del Taco opened 34 restaurants in FY 2023, including net positive unit growth and a growing development pipeline for both brands
Del Taco completed the refranchising of 111 restaurants in FY 2023, which included development commitments for 109 new restaurants
Jack in the Box opened its first-ever restaurant in Louisville, with stronger-than-expected sales performance
Since opening, all new market locations for Jack in the Box (Salt Lake City and Louisville) averaging over $100,000 in weekly sales per restaurant
SAN DIEGO--(BUSINESS WIRE)--November 21, 2023--Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco segments in the fourth quarter, ended October 1, 2023.
“We achieved several important milestones for our business in 2023 including positive unit growth, successful new market openings, accelerated Del Taco refranchising, strong same stores sales performance and improvements in restaurant-level profitability,” said Darin Harris, Jack in the Box chief executive officer. “Despite some industry headwinds, we are excited about our opportunity in 2024 to expand both brands into new markets and continue driving our transformational growth strategy.”
Jack in the Box Performance
Same-store sales increased 3.9% in the fourth quarter of 2023, comprised of an increase in company-operated same-store sales of 4.4% and an increase in franchise same-store sales of 3.8%. Sales performance was driven by pricing, which was partially offset by decreases in transactions and menu mix. Systemwide sales^(2)^ for the fourth quarter increased 4.3%.
Jack in the Box had 6 new restaurant openings and 11 restaurant closures during the fourth quarter. For fiscal year 2023, Jack in the Box opened 20 new restaurants, with an additional 6 openings since the start of fiscal year 2024. As of the end of the fourth quarter, and since the launch of the development program in mid-2021, the company has signed 90 agreements for a total of 389 restaurants, with 38 already opened and 351 in place for future development. During the fourth quarter, Jack in the Box opened its first-ever location in Louisville — and, when combined with Salt Lake City, all four of the new-market restaurants opened throughout 2023 have averaged over $100,000 in weekly sales per restaurant.
Restaurant-Level Margin^(3)^, was 20.7% for the fourth quarter, an increase from 16.2% in the prior year period. The increase was driven by menu price increases as well as a change in the mix of restaurants, partially offset by inflationary increases in wages, food and packaging costs and utilities. Commodity costs increased in the quarter by 3.4%. Franchise-Level Margin^(3)^, was 39.9% for the fourth quarter, a decrease from 42.4% a year ago, driven by higher early termination fees in the prior year and higher franchise costs in the current year, partially offset by franchise same-store sales growth.
Jack in the Box Same-Store Sales:
| 12 Weeks Ended | 52 Weeks Ended | |||
|---|---|---|---|---|
| October 1, 2023 | October 2, 2022 | October 1, 2023 | October 2, 2022 | |
| Company | 4.4% | 11.4% | 8.8% | 3.7% |
| Franchise | 3.8% | 3.2% | 7.1% | 0.6% |
| System SSS | 3.9% | 4.0% | 7.3% | 0.9% |
Jack in the Box Restaurant Counts:
| 2023 | 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Company | Franchise | Total | Company | Franchise | Total | |||||||
| Store count at beginning of FY | 146 | 2,035 | 2,181 | 163 | 2,055 | 2,218 | ||||||
| New | 2 | 18 | 20 | — | 17 | 17 | ||||||
| Acquired from franchisees | — | — | — | 13 | (13 | ) | — | |||||
| Refranchised | (5 | ) | 5 | — | (15 | ) | 15 | — | ||||
| Closed | (1 | ) | (14 | ) | (15 | ) | (15 | ) | (39 | ) | (54 | ) |
| Store count at end of Q4 | 142 | 2,044 | 2,186 | 146 | 2,035 | 2,181 | ||||||
| Net Unit Increase/ (Decrease) | (4 | ) | 9 | 5 | ||||||||
| Q4 2023 vs. Q4 2022 Unit % Decrease | (2.7 | )% | 0.4 | % | 0.2 | % |
Del Taco Performance^(1)^
Same-store sales decreased 1.5% in the fourth quarter of 2023, comprised of franchise same-store sales decline of 1.5% and company-operated same-store sales decline of 1.4%. Sales performance was primarily driven by decreases in transactions and menu mix, partially offset by increases in pricing. Systemwide sales^(2)^ for the fourth quarter of 2023 decreased 0.6%.
Del Taco had 7 new restaurant openings and 9 restaurant closures during the fourth quarter. For fiscal year 2023, Del Taco opened 14 new restaurants, and was net positive one restaurant. Del Taco signed 138 total restaurant commitments in fiscal year 2023, with 109 commitments directly resulting from refranchising transactions.
Restaurant-Level Margin^(3)^, was 14.8% for the fourth quarter, a decrease from 15.9% in the prior year period. This decrease was primarily driven by wage inflation and higher utility and property insurance costs, partially offset by lower food and packaging costs as a percentage of revenue. Franchise-Level Margin^(3)^, was 32.5% for the fourth quarter, a decrease from 42.5% one year ago. The decrease was driven by the impact of refranchising transactions with pass through rent and advertising.
Del Taco Same-Store Sales^(1)^:
| 12 Weeks Ended | 52 Weeks Ended ^(1)^ | |||
|---|---|---|---|---|
| October 1, 2023 | October 2, 2022 | October 1, 2023 | October 2, 2022 | |
| Company | (1.4)% | 4.1% | 2.0% | 2.9% |
| Franchise | (1.5)% | 6.4% | 1.4% | 5.0% |
| System | (1.5)% | 5.2% | 1.7% | 3.9% |
Del Taco Restaurant Counts^(1)^:
| 2023 | 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Company | Franchise | Total | Company | Franchise | Total | |||||||
| Restaurant count at beginning of FY | 290 | 301 | 591 | 296 | 306 | 602 | ||||||
| New | — | 14 | 14 | 1 | 2 | 3 | ||||||
| Refranchised | (111 | ) | 111 | — | — | — | — | |||||
| Closed | (8 | ) | (5 | ) | (13 | ) | (7 | ) | (7 | ) | (14 | ) |
| Restaurant count at end of Q4 | 171 | 421 | 592 | 290 | 301 | 591 | ||||||
| Net Restaurant Increase/ (Decrease) | (119 | ) | 120 | 1 | ||||||||
| Q4 2023 vs. Q4 2022 Restaurant % Decrease | (41.0 | )% | 39.9 | % | 0.2 | % |
Company-Wide Performance
Total revenues decreased 7.5% in the fourth quarter of 2023 to $372.5 million, as compared to $402.8 million in the prior year fourth quarter.
SG&A expense for the fourth quarter of 2023 was $43.7 million, an increase of $6.2 million compared to the prior year fourth quarter, driven primarily by higher incentive compensation and litigation accruals.
Adjusted EBITDA^(5)^, was $68.4 million in the fourth quarter of fiscal 2023 compared with $81.9 million for the prior year quarter.
Net earnings decreased to $21.9 million for the fourth quarter of 2023, compared with $45.9 million for the prior year fourth quarter.
Diluted earnings per share was $1.08 for the fourth quarter of 2023 as compared with $2.17 in the prior year fourth quarter. Operating Earnings Per Share^(4)^ was $1.09 in the fourth quarter compared with $1.33 in the prior year fourth quarter.
(1) Del Taco prior year comparisons are pro forma and based on the time period of Jack in the Box’s full 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.
\(2\) Systemwide sales include company and franchised restaurant sales.
\(3\) 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."
\(4\) Operating Earnings Per Share represents diluted earnings per share on a GAAP basis excluding certain amounts. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may not add due to rounding.
\(5\) Adjusted EBITDA represents net earnings on a GAAP basis excluding certain amounts. See "Reconciliation of Non-GAAP Measurements to GAAP Results."
Capital Allocation
The company repurchased 0.4 million shares of common stock in the fourth quarter of 2023. For the full year 2023, the company repurchased 1.1 million shares, for an aggregate cost of $90.7 million, including excise tax. On November 16, 2023, upon expiration of the previous share repurchase authorization, the Board of Directors authorized a share repurchase program for up to $250.0 million of the company’s common stock.
On November 16, 2023, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on December 28, 2023, to shareholders of record as of the close of business on December 14, 2023. Future dividends will be subject to approval by our Board of Directors.
Guidance & Outlook
The following guidance and underlying assumptions reflect the company’s current expectations for the fiscal year ending September 29, 2024:
FY 2024 Company-wide Guidance
- CapEx & Other Investments of $110-$120 million
- Other investments include franchise tenant improvement allowances and incentives (cash flows from operating activities)
- SG&A Guidance of $165-$175 million
- SG&A guidance excludes net COLI gains/losses, and any impact from future Del Taco refranchising
- G&A, excluding selling and advertising, is expected to be 2.3-2.5% of systemwide sales
- Company-owned Commodity Costs higher by 1-3% vs. 2023
- Company-owned Wage Rates higher by 10-12% vs. 2023
- Without impact of California restaurants affected by AB1228, wage rates would be 3-5% vs. 2023
- Depreciation & Amortization of $61-$63 million
- Adjusted/Operating EPS Tax Rate of ~27%
- Share Repurchases of $70-$80 million
- Adjusted EBITDA of $325-$335 million
- Operating EPS of $6.25-$6.50
- Excludes any dilutive impact from refranchising Del Taco restaurants
FY 2024 Jack in the Box Segment Guidance
- Same Store Sales growth of Low-to-Mid Single Digits
- 25-35 gross openings, with net positive unit growth for the full year
- Company-Owned Restaurant Level Margin of 21-23%
- Includes price increases of 6-8%
- Without impact of California restaurants affected by AB1228, price increases would be 3-4% vs. 2023
- Franchise Level Margin of 40-42%
FY 2024 Del Taco Segment Guidance
- Same Store Sales growth of Low-to-Mid Single Digits
- 10-15 gross openings, with net positive unit growth for the full year
- Company-Owned Restaurant Level Margin of 14-16%
- Includes price increases of 6-8%
- Without impact of California restaurants affected by AB1228, price increases would be 4-5% vs. 2023
- Franchise Level Margin of 29-31%
Conference Call
The company will host a conference call for analysts and investors on Tuesday, November 21, 2023, 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<br><br> <br>CONSOLIDATED STATEMENTS OF EARNINGS<br><br> <br>(In thousands, except per share data)<br><br> <br>(Unaudited) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12 Weeks Ended | 52 Weeks Ended | |||||||||||
| October 1, <br><br> 2023 | October 2, <br><br> 2022 | October 1, <br><br> 2023 | October 2, <br><br> 2022 | |||||||||
| Revenues: | ||||||||||||
| Company restaurant sales | $ | 174,967 | $ | 214,474 | $ | 846,278 | $ | 701,070 | ||||
| Franchise rental revenues | 85,993 | 80,668 | 364,591 | 340,391 | ||||||||
| Franchise royalties and other | 55,173 | 56,906 | 240,515 | 216,821 | ||||||||
| Franchise contributions for advertising and other services | 56,391 | 50,725 | 240,922 | 209,801 | ||||||||
| 372,524 | 402,773 | 1,692,306 | 1,468,083 | |||||||||
| Operating costs and expenses, net: | ||||||||||||
| Food and packaging | 51,037 | 66,182 | 250,836 | 216,345 | ||||||||
| Payroll and employee benefits | 57,051 | 70,249 | 274,598 | 232,250 | ||||||||
| Occupancy and other | 35,353 | 43,701 | 163,273 | 135,803 | ||||||||
| Franchise occupancy expenses | 55,799 | 51,411 | 229,602 | 215,609 | ||||||||
| Franchise support and other costs | 3,705 | 3,796 | 12,328 | 16,490 | ||||||||
| Franchise advertising and other services expenses | 60,658 | 53,308 | 253,533 | 218,272 | ||||||||
| Selling, general and administrative expenses | 43,708 | 37,549 | 172,872 | 130,823 | ||||||||
| Depreciation and amortization | 13,827 | 15,346 | 62,287 | 56,100 | ||||||||
| Pre-opening costs | 718 | 480 | 1,385 | 1,110 | ||||||||
| Other operating expense (income), net | 5,702 | (21,450 | ) | 10,837 | 889 | |||||||
| Gains on the sale of company-operated restaurants | (7,675 | ) | (2,218 | ) | (17,998 | ) | (3,878 | ) | ||||
| 319,883 | 318,354 | 1,413,553 | 1,219,813 | |||||||||
| Earnings from operations | 52,641 | 84,419 | 278,753 | 248,270 | ||||||||
| Other pension and post-retirement expenses, net | 1,608 | 70 | 6,967 | 303 | ||||||||
| Interest expense, net | 18,279 | 19,704 | 82,446 | 86,075 | ||||||||
| Earnings before income taxes | 32,754 | 64,645 | 189,340 | 161,892 | ||||||||
| Income taxes | 10,857 | 18,787 | 58,514 | 46,111 | ||||||||
| Net earnings | $ | 21,897 | $ | 45,858 | $ | 130,826 | $ | 115,781 | ||||
| Net earnings per share: | ||||||||||||
| Basic | $ | 1.09 | $ | 2.17 | $ | 6.35 | $ | 5.46 | ||||
| Diluted | $ | 1.08 | $ | 2.17 | $ | 6.30 | $ | 5.45 | ||||
| Weighted-average shares outstanding: | ||||||||||||
| Basic | 20,153 | 21,110 | 20,603 | 21,195 | ||||||||
| Diluted | 20,337 | 21,162 | 20,764 | 21,245 | ||||||||
| Cash dividends declared per common share | $ | 0.44 | $ | 0.44 | $ | 1.76 | $ | 1.76 | ||||
| ___________________________ | ||||||||||||
| --- | --- | |||||||||||
| (1) | Earnings per share may not add due to rounding. |
| JACK IN THE BOX INC. AND SUBSIDIARIES <br> CONSOLIDATED BALANCE SHEETS <br> (In thousands, except share and per share data) <br> (Unaudited) | |||||
|---|---|---|---|---|---|
| October 2, <br><br> 2022 | |||||
| ASSETS | |||||
| Current assets: | |||||
| Cash | 157,653 | $ | 108,890 | ||
| Restricted cash | 28,254 | 27,150 | |||
| Accounts and other receivables, net | 99,678 | 103,803 | |||
| Inventories | 3,896 | 5,264 | |||
| Prepaid expenses | 16,911 | 16,095 | |||
| Current assets held for sale | 13,925 | 17,019 | |||
| Other current assets | 5,667 | 4,772 | |||
| Total current assets | 325,984 | 282,993 | |||
| Property and equipment, at cost: | |||||
| Land | 92,007 | 86,134 | |||
| Buildings | 968,221 | 960,984 | |||
| Restaurant and other equipment | 166,714 | 163,527 | |||
| Construction in progress | 31,647 | 18,271 | |||
| 1,258,589 | 1,228,916 | ||||
| Less accumulated depreciation and amortization | (846,559 | ) | (810,752 | ) | |
| Property and equipment, net | 412,030 | 418,164 | |||
| Other assets: | |||||
| Operating lease right-of-use assets | 1,397,555 | 1,332,135 | |||
| Intangible assets, net | 11,330 | 12,324 | |||
| Trademarks | 283,500 | 283,500 | |||
| Goodwill | 329,986 | 366,821 | |||
| Other assets, net | 240,707 | 226,569 | |||
| Total other assets | 2,263,078 | 2,221,349 | |||
| 3,001,092 | $ | 2,922,506 | |||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||
| Current liabilities: | |||||
| Current maturities of long-term debt | 29,964 | $ | 30,169 | ||
| Current operating lease liabilities | 142,518 | 171,311 | |||
| Accounts payable | 84,960 | 66,271 | |||
| Accrued liabilities | 302,178 | 253,932 | |||
| Total current liabilities | 559,620 | 521,683 | |||
| Long-term liabilities: | |||||
| Long-term debt, net of current maturities | 1,724,933 | 1,799,540 | |||
| Long-term operating lease liabilities, net of current portion | 1,265,514 | 1,165,097 | |||
| Deferred tax liabilities | 26,229 | 37,684 | |||
| Other long-term liabilities | 143,123 | 134,694 | |||
| Total long-term liabilities | 3,159,799 | 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, 82,645,814 and 82,580,599 issued, respectively | 826 | 826 | |||
| Capital in excess of par value | 520,076 | 508,323 | |||
| Retained earnings | 1,937,598 | 1,842,947 | |||
| Accumulated other comprehensive loss | (51,790 | ) | (53,982 | ) | |
| Treasury stock, at cost, 62,910,964 and 61,799,221 shares, respectively | (3,125,037 | ) | (3,034,306 | ) | |
| Total stockholders’ deficit | (718,327 | ) | (736,192 | ) | |
| 3,001,092 | $ | 2,922,506 |
All values are in US Dollars.
| JACK IN THE BOX INC. AND SUBSIDIARIES<br><br> <br>CONSOLIDATED STATEMENTS OF CASH FLOWS<br><br> <br>(In thousands) (Unaudited) | ||||||
|---|---|---|---|---|---|---|
| 52 Weeks Ended | ||||||
| October 1, 2023 | October 2, 2022 | |||||
| Cash flows from operating activities: | ||||||
| Net earnings | $ | 130,826 | $ | 115,781 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 62,287 | 56,100 | ||||
| Amortization of franchise tenant improvement allowances and incentives | 4,647 | 4,446 | ||||
| Amortization of debt issuance costs | 5,040 | 5,496 | ||||
| Loss on extinguishment of debt | — | 7,700 | ||||
| Tax deficiency (excess tax benefits) from share-based compensation arrangements | 71 | 123 | ||||
| Deferred income taxes | (11,989 | ) | 7,857 | |||
| Share-based compensation expense | 11,205 | 7,122 | ||||
| Pension and postretirement expense | 6,967 | 303 | ||||
| (Gains) losses on cash surrender value of company-owned life insurance | (7,346 | ) | 12,668 | |||
| Gains on the sale of company-operated restaurants | (17,998 | ) | (3,878 | ) | ||
| Gains on the disposition of property and equipment | (8,171 | ) | (30,533 | ) | ||
| Impairment charges and other | 6,217 | 8,219 | ||||
| Changes in assets and liabilities, excluding acquisitions and dispositions: | ||||||
| Accounts and other receivables | (4,048 | ) | (18,143 | ) | ||
| Inventories | 1,367 | 304 | ||||
| Prepaid expenses and other current assets | (1,422 | ) | (3,275 | ) | ||
| Operating lease right-of-use assets and lease liabilities | 2,364 | 2,593 | ||||
| Accounts payable | (1,692 | ) | 16,243 | |||
| Accrued liabilities | 47,459 | (9,081 | ) | |||
| Pension and postretirement contributions | (6,241 | ) | (6,690 | ) | ||
| Franchise tenant improvement allowance and incentive disbursements | (3,265 | ) | (2,989 | ) | ||
| Other | (1,272 | ) | (7,484 | ) | ||
| Cash flows provided by operating activities | 215,006 | 162,882 | ||||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (74,954 | ) | (46,475 | ) | ||
| Proceeds from the sale and leaseback of assets | 3,673 | 10,768 | ||||
| Acquisition of Del Taco, net of cash acquired | — | (580,793 | ) | |||
| Proceeds from the sale of company-operated restaurants | 85,221 | 6,391 | ||||
| Proceeds from the sale of property and equipment | 25,214 | 31,161 | ||||
| Other | 3,065 | 360 | ||||
| Cash flows provided by (used in) investing activities | 42,219 | (578,588 | ) | |||
| Cash flows from financing activities: | ||||||
| Borrowings on revolving credit facilities | — | 68,000 | ||||
| Repayments of borrowings on revolving credit facilities | (50,000 | ) | (18,000 | ) | ||
| Proceeds from issuance of debt | — | 1,100,000 | ||||
| Principal repayments on debt | (30,109 | ) | (588,064 | ) | ||
| Debt issuance costs | — | (20,599 | ) | |||
| Dividends paid on common stock | (35,890 | ) | (36,987 | ) | ||
| Proceeds from issuance of common stock | 263 | 51 | ||||
| Repurchases of common stock | (90,029 | ) | (25,000 | ) | ||
| Payroll tax payments for equity award issuances | (1,593 | ) | (1,223 | ) | ||
| Cash flows (used in) provided by financing activities | (207,358 | ) | 478,178 | |||
| Net increase in cash and restricted cash | 49,867 | 62,472 | ||||
| Cash and restricted cash at beginning of year | 136,040 | 73,568 | ||||
| Cash and restricted cash at end of year | $ | 185,907 | $ | 136,040 |
| JACK IN THE BOX INC. AND SUBSIDIARIES<br><br> <br>SUPPLEMENTAL INFORMATION | ||||||||
|---|---|---|---|---|---|---|---|---|
| The following table presents certain income and expense items included in our consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated.<br> Percentages may not add due to rounding. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA<br><br> <br>(Unaudited) | ||||||||
| 12 Weeks Ended | 52 Weeks Ended | |||||||
| October 1, <br><br> 2023 | October 2, <br><br> 2022 | October 1, <br><br> 2023 | October 2, <br><br> 2022 | |||||
| Revenues: | ||||||||
| Company restaurant sales | 47.0 | % | 53.2 | % | 50.0 | % | 47.8 | % |
| Franchise rental revenues | 23.1 | % | 20.0 | % | 21.5 | % | 23.2 | % |
| Franchise royalties and other | 14.8 | % | 14.1 | % | 14.2 | % | 14.8 | % |
| Franchise contributions for advertising and other services | 15.1 | % | 12.6 | % | 14.2 | % | 14.3 | % |
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |
| Operating costs and expenses, net: | ||||||||
| Food and packaging (1) | 29.2 | % | 30.9 | % | 29.6 | % | 30.9 | % |
| Payroll and employee benefits (1) | 32.6 | % | 32.8 | % | 32.4 | % | 33.1 | % |
| Occupancy and other (1) | 20.2 | % | 20.4 | % | 19.3 | % | 19.4 | % |
| Franchise occupancy expenses (2) | 64.9 | % | 63.7 | % | 63.0 | % | 63.3 | % |
| Franchise support and other costs (3) | 6.7 | % | 6.7 | % | 5.1 | % | 7.6 | % |
| Franchise advertising and other services expenses (4) | 107.6 | % | 105.1 | % | 105.2 | % | 104.0 | % |
| Selling, general and administrative expenses | 11.7 | % | 9.3 | % | 10.2 | % | 8.9 | % |
| Depreciation and amortization | 3.7 | % | 3.8 | % | 3.7 | % | 3.8 | % |
| Pre-opening costs | — | % | — | % | — | % | — | % |
| Other operating expense (income), net | 1.5 | % | (5.3 | )% | 0.6 | % | 0.1 | % |
| Gains on the sale of company-operated restaurants | (2.1 | )% | (0.6 | )% | (1.1 | )% | (0.3 | )% |
| Earnings from operations | 14.1 | % | 21.0 | % | 16.5 | % | 16.9 | % |
| Income tax rate (5) | 33.1 | % | 29.1 | % | 30.9 | % | 28.5 | % |
| ____________________________ | ||||||||
| --- | --- | |||||||
| (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 system sales (in thousands): | ||||||||
|---|---|---|---|---|---|---|---|---|
| 12 Weeks Ended | 52 Weeks Ended | |||||||
| October 1, <br><br> 2023 | October 2, <br><br> 2022 | October 1, <br><br> 2023 | October 2, <br><br> 2022 | |||||
| Company-operated restaurant sales | $ | 95,297 | $ | 99,020 | $ | 413,748 | $ | 414,225 |
| Franchised restaurant sales (1) | 917,288 | 871,464 | 4,005,985 | 3,696,817 | ||||
| Systemwide sales (1) | $ | 1,012,585 | $ | 970,484 | $ | 4,419,733 | $ | 4,111,042 |
| ____________________________ | ||||||||
| --- | --- | |||||||
| (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<br> 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<br> useful to investors as they have a direct effect on the company's profitability. | |||||||
| Del Taco systemwide sales (in thousands): | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 12 Weeks Ended | 52 Weeks Ended | |||||||
| October 1, <br><br> 2023 | October 2, <br><br> 2022 | October 1, <br><br> 2023 | October 2, <br><br> 2022 (2) | |||||
| Company-operated restaurant sales | $ | 79,670 | $ | 115,454 | $ | 432,530 | $ | 484,347 |
| Franchised restaurant sales (1) | 147,808 | 113,439 | 541,913 | 472,682 | ||||
| Systemwide sales (1) | $ | 227,478 | $ | 228,893 | $ | 974,443 | $ | 957,029 |
| ____________________________ | ||||||||
| --- | --- | |||||||
| (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<br> 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<br> effect on the company's profitability. | |||||||
| (2) | Del Taco has been presented on a pro forma basis and has been derived from unaudited financial information to conform to our fiscal year and is for informational purposes only. |
JACK IN THE BOX INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS (Unaudited)
To supplement the 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 strategic initiatives, COLI losses (gains), net, pension and post-retirement benefit costs, gains on the sale of company-operated restaurants, debt write-offs, gains on the sale of real estate to franchisees 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.
| 12 Weeks Ended | 52 Weeks Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 1, 2023 | October 2, 2022 | October 1, 2023 | October 2, 2022 | |||||||||
| Net income, as reported | $ | 21,897 | $ | 45,858 | $ | 130,826 | $ | 115,781 | ||||
| Acquisition, integration and strategic initiatives (1) | 3,753 | 1,217 | 9,112 | 20,081 | ||||||||
| Net COLI (gains) losses (2) | 1,194 | 2,745 | (5,953 | ) | 9,911 | |||||||
| Pension and post-retirement benefit costs (3) | 1,608 | 70 | 6,967 | 303 | ||||||||
| Gains on the sale of company-operated restaurants | (7,675 | ) | (2,218 | ) | (17,998 | ) | (3,878 | ) | ||||
| Debt write-offs | — | — | — | 7,700 | ||||||||
| Gains on sale of real estate to franchisees | — | (28,876 | ) | (9,467 | ) | (28,876 | ) | |||||
| Tax impact of adjustments (4) | 1,455 | 9,259 | 11,670 | 2,743 | ||||||||
| Non-GAAP Adjusted Net Income | $ | 22,232 | $ | 28,055 | $ | 125,157 | $ | 123,765 | ||||
| Weighted-average shares outstanding - diluted | 20,337 | 21,162 | 20,764 | 21,245 | ||||||||
| Diluted earnings per share – GAAP | $ | 1.08 | $ | 2.17 | $ | 6.30 | $ | 5.45 | ||||
| Acquisition, integration and strategic initiatives (1) | 0.18 | 0.06 | 0.44 | 0.95 | ||||||||
| Net COLI (gains) losses (2) | 0.06 | 0.13 | (0.29 | ) | 0.47 | |||||||
| Pension and post-retirement benefit costs (3) | 0.08 | — | 0.34 | 0.01 | ||||||||
| Gains on the sale of company-operated restaurants | (0.38 | ) | (0.10 | ) | (0.87 | ) | (0.18 | ) | ||||
| Debt write-offs | — | — | — | 0.36 | ||||||||
| Gains on sale of real estate to franchisees | — | (1.36 | ) | (0.46 | ) | (1.36 | ) | |||||
| Tax impact of adjustments (4) | 0.07 | 0.43 | 0.57 | 0.14 | ||||||||
| Operating Earnings Per Share – non-GAAP (5) | $ | 1.09 | $ | 1.33 | $ | 6.03 | $ | 5.84 | ||||
| ____________________ | ||||||||||||
| --- | --- | |||||||||||
| (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<br> that are not expected to recur in the foreseeable future. | |||||||||||
| (2) | Net COLI (gains) losses reflect market-based adjustments on the company-owned life insurance policies which support our non-qualified benefit plans. | |||||||||||
| (3) | Pension and post-retirement benefit costs are the gains and losses relating to our two legacy defined benefit pension plans, as well as our two legacy post-retirement plans. | |||||||||||
| (4) | Tax impacts for the quarter calculated based on the non-GAAP Operating EPS tax rate of 29.7% in the current quarter and 25.4% in the prior year quarter. Tax impacts for the year calculated<br> based on the non-GAAP Operating EPS tax rate of 27.2% in the current fiscal year and 26.0% for the prior fiscal year. | |||||||||||
| (5) | 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 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, COLI losses (gains), net, 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):
| 12 Weeks Ended | 52 Weeks Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 1, 2023 | October 2, 2022 | October 1, 2023 | October 2, 2022 | |||||||||
| Net earnings - GAAP | $ | 21,897 | $ | 45,858 | $ | 130,826 | $ | 115,781 | ||||
| Income taxes | 10,857 | 18,787 | 58,514 | 46,111 | ||||||||
| Interest expense, net | 18,279 | 19,704 | 82,446 | 86,075 | ||||||||
| Gains on the sale of company-operated restaurants | (7,675 | ) | (2,218 | ) | (17,998 | ) | (3,878 | ) | ||||
| Other operating expense (income), net (1) | 5,702 | (21,450 | ) | 10,837 | 889 | |||||||
| Depreciation and amortization | 13,827 | 15,346 | 62,287 | 56,100 | ||||||||
| Amortization of cloud-computing costs (2) | 1,178 | 1,235 | 5,004 | 5,116 | ||||||||
| Amortization of favorable and unfavorable leases and subleases, net | 198 | 435 | 1,633 | 1,120 | ||||||||
| Amortization of franchise tenant improvement allowances and incentives | 1,352 | 1,400 | 4,647 | 4,446 | ||||||||
| Net COLI (gains) losses (3) | 1,194 | 2,745 | (5,953 | ) | 9,911 | |||||||
| Pension and post-retirement benefit costs (4) | 1,608 | 70 | 6,967 | 303 | ||||||||
| Adjusted EBITDA – non-GAAP | $ | 68,417 | $ | 81,912 | $ | 339,210 | $ | 321,974 | ||||
| (1) | Other operating expense (income), net includes: acquisition, integration and strategic initiatives; costs of closed restaurants; operating restaurant impairment charges; accelerated<br> depreciation and gains 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<br> within selling, general and administrative expenses. | |||||||||||
| (3) | Net COLI (gains) losses reflect market-based adjustments on the company-owned life insurance policies which support our non-qualified benefit plans. | |||||||||||
| (4) | Pension and post-retirement benefit costs are the gains and losses 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, pre-opening costs, 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, for the 12-weeks ended (in thousands):
| Jack in the Box | Del Taco | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 1, 2023 | October 2, 2022 | October 1, 2023 | October 2, 2022 | |||||||||
| Earnings from operations - GAAP | $ | 47,490 | $ | 82,563 | $ | 5,152 | $ | 1,856 | ||||
| Franchise rental revenues | (81,006 | ) | (78,868 | ) | (4,987 | ) | (1,801 | ) | ||||
| Franchise royalties and other | (48,092 | ) | (51,395 | ) | (7,082 | ) | (5,511 | ) | ||||
| Franchise contributions for advertising and other services | (48,956 | ) | (45,882 | ) | (7,436 | ) | (4,843 | ) | ||||
| Franchise occupancy expenses | 50,877 | 49,658 | 4,922 | 1,753 | ||||||||
| Franchise support and other costs | 2,986 | 3,461 | 719 | 336 | ||||||||
| Franchise advertising and other services expenses | 53,138 | 48,412 | 7,521 | 4,895 | ||||||||
| Selling, general and administrative expenses | 31,141 | 24,238 | 12,567 | 13,311 | ||||||||
| Other operating expense (income), net | 3,163 | (23,280 | ) | 2,538 | 1,829 | |||||||
| Gains on the sale of company-operated restaurants | (71 | ) | (2,218 | ) | (7,604 | ) | — | |||||
| Pre-opening costs | 684 | 477 | 33 | 3 | ||||||||
| Depreciation and amortization | 8,342 | 8,858 | 5,485 | 6,488 | ||||||||
| Restaurant-Level Margin- Non-GAAP | $ | 19,696 | $ | 16,024 | $ | 11,828 | $ | 18,316 | ||||
| Company restaurant sales | $ | 95,297 | $ | 99,020 | $ | 79,670 | $ | 115,454 | ||||
| Restaurant-Level Margin % - Non-GAAP | 20.7 | % | 16.2 | % | 14.8 | % | 15.9 | % |
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, for the 12-weeks ended (in thousands):
| Jack in the Box | Del Taco | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 1, 2023 | October 2, 2022 | October 1, 2023 | October 2, 2022 | |||||||||
| Earnings from operations - GAAP | $ | 47,490 | $ | 82,563 | $ | 5,152 | $ | 1,856 | ||||
| Company restaurant sales | (95,297 | ) | (99,020 | ) | (79,670 | ) | (115,454 | ) | ||||
| Food and packaging | 29,353 | 32,271 | 21,684 | 33,912 | ||||||||
| Payroll and employee benefits | 29,427 | 32,608 | 27,624 | 37,642 | ||||||||
| Occupancy and other | 16,818 | 18,117 | 18,534 | 25,582 | ||||||||
| Selling, general and administrative expenses | 31,141 | 24,238 | 12,567 | 13,311 | ||||||||
| Other operating expense (income), net | 3,163 | (23,280 | ) | 2,538 | 1,829 | |||||||
| Gains on the sale of company-operated restaurants | (71 | ) | (2,218 | ) | (7,604 | ) | — | |||||
| Pre-opening costs | 684 | 477 | 33 | 3 | ||||||||
| Depreciation and amortization | 8,342 | 8,858 | 5,485 | 6,488 | ||||||||
| Franchise-Level Margin - Non-GAAP | $ | 71,050 | $ | 74,614 | $ | 6,343 | $ | 5,169 | ||||
| Franchise rental revenues | $ | 81,006 | $ | 78,868 | $ | 4,987 | $ | 1,801 | ||||
| Franchise royalties and other | 48,092 | 51,395 | 7,082 | 5,511 | ||||||||
| Franchise contributions for advertising and other services | 48,956 | 45,882 | 7,436 | 4,843 | ||||||||
| Total franchise revenues | $ | 178,054 | $ | 176,145 | $ | 19,505 | $ | 12,155 | ||||
| Franchise-Level Margin % - Non-GAAP | 39.9 | % | 42.4 | % | 32.5 | % | 42.5 | % |
Contacts
Chris Brandon
Vice President, Investor Relations
chris.brandon@jackinthebox.com
619.902.0269