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 22, 2021
| 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 23, 2021, Jack in the Box Inc. issued a press release announcing its fourth quarter fiscal 2021 financial results and disclosing other<br> 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<br> the Box Inc. dated November 23, 2021 |
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 23, 2021 | /s/ Tim Mullany |
| Tim Mullany | |
| Executive Vice President, Chief Financial Officer | |
| Exhibit 99.1 | |
| --- |
Jack in the Box Inc. Reports Fourth Quarter and Full-Year 2021 Earnings
Systemwide sales growth +8.6% in Q4 2021; +13.1% FY 2021
Same store sales growth +0.1% in Q4 2021; +10.3% FY 2021
Diluted EPS +9.8% at $1.80 in Q4 2021; +91.0% at $7.37 FY 2021^(1)^
Net units down -1.0% FY 2021
Management provides annual guidance measures for FY 2022
Management provides restaurant level margin outlook for FY 2022
Management provides company-owned restaurant outlook for 2022 and 2023
SAN DIEGO--(BUSINESS WIRE)--November 23, 2021--Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the fourth quarter ended October 3, 2021, comprised of growth in systemwide sales, same store sales and earnings per share.
"I am very proud of the execution and determination shown by our outstanding franchisees and corporate team members, continuing to deliver for our guests during a challenging operating environment,” said Darin Harris, Jack in the Box Chief Executive Officer. “We closed the year with strong comps on a two-year basis of +12.3% in Q4, leading us to another record-setting year of store-level profitability — a key element in driving results against our growth strategy in the near future. We continue to focus heavily on making significant progress on our strategic pillars, growth objectives, and unlocking substantial value for JACK shareholders."
Systemwide sales for the fourth quarter increased 8.6%, or 0.2% when excluding the 53rd week for the purpose of comparison to the prior year, driven by positive results in same store sales and partially offset by a slight decline in net unit growth. Systemwide sales for full year 2021 increased 13.1%, or 11.0% when excluding the 53rd week.
The company had a fourth quarter net store decline of one store, comprised of four store openings and five closures. The five store closures included one company-owned location and four related to early terminations and an agreement expiration. In the fourth quarter, there were development agreements signed for 47 future restaurants, bringing the year-to-date total to 111 future restaurant commitments.
Company-operated same-store sales declined 4.4% in the fourth quarter, with decreases in traffic partially offset by increases in average check. Franchise same-store sales grew 0.6%, with increases in average check; partially offset by a decrease in traffic.
| (1) Fiscal year 2020 Diluted EPS included non-recurring items, notably a pension settlement charge and the sale of a corporate office building, that affect the comparability to fiscal year<br> 2021 Diluted EPS. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Same-Store Sales: | ||||||||||||
| --- | --- | --- | --- | --- | ||||||||
| 13 Weeks Ended | 12 Weeks Ended | 53 Weeks Ended | 52 Weeks Ended | |||||||||
| October 3, 2021 | September 27, 2020 | October 3, 2021 | September 27, 2020 | |||||||||
| Company | (4.4)% | 9.6% | 6.1% | 3.1% | ||||||||
| Franchise | 0.6% | 12.4% | 10.7% | 4.0% | ||||||||
| System SSS | 0.1% | 12.2% | 10.3% | 4.0% | ||||||||
| Restaurant Counts: | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | |||||||||||
| Company | Franchise | Total | Company | Franchise | Total | |||||||
| Store count at beginning of Q4 | 148 | 2,071 | 2,219 | 144 | 2,100 | 2,244 | ||||||
| New | — | 4 | 4 | — | 7 | 7 | ||||||
| Refranchised | 16 | (16) | — | — | — | — | ||||||
| Closed | (1) | (4) | (5) | — | (10) | (10) | ||||||
| Store count at end of Q4 | 163 | 2,055 | 2,218 | 144 | 2,097 | 2,241 | ||||||
| Q4 Net Unit Increase/(Decrease) | 15 | (16) | (1) | — | (3) | (3) | ||||||
| Q4/FY 2021 vs. Q4/FY 2020 Unit % Increase/(Decrease) | 13.2 | % | (2.0) | % | (1.0) | % | 5.1 | % | (0.4) | % | (0.1) | % |
Fourth quarter diluted earnings per share was $1.80, up 9.8% over the prior year quarter or 2.4% excluding the benefit of the 53rd week. Total revenues increased 9.0% to $278.5 million, compared to $255.4 million in the comparable period ended September 27, 2020, driven by the 53rd week in 2021 and growth in same store sales. Net earnings increased to $38.9 million for the fourth quarter of fiscal 2021, compared with $37.8 million for the fourth quarter of fiscal 2020. Adjusted EBITDA^(1)^, a non-GAAP measure, was $74.3 million in the fourth quarter of fiscal 2021 compared with $78.4 million for the prior year quarter.
Restaurant-Level Margin^(2)^, a non-GAAP measure, was 20.1%, a decrease of 6.9% from the fourth quarter a year ago, primarily driven by the take back of lower-volume franchise restaurants; increases in food and packaging costs; wage inflation of 9.8%; and increases in utilities, and maintenance and repair costs, partially offset by lower incentive compensation and menu price increases. Commodity costs increased in the quarter by approximately 11.8%, primarily due to increases in pork, beef and beverages.
Franchise-Level Margin^(2)^, a non-GAAP measure, increased by $6.1 million, or 8.7% from the fourth quarter a year ago, driven by the benefit of the 53rd week in 2021.
G&A expense for the fourth quarter was $16.7 million, an increase of $6.4 million compared to the prior year quarter, driven primarily by a $3.8 million favorable litigation settlement in the prior year quarter; mark-to-market changes in the cash surrender value of company owned life insurance ("COLI") policies, net of a deferred compensation obligation supported by these policies, resulting in a year-over-year increase of $1.1 million; a $1.1 million increase in incentive compensation; and $1.5 million related to the 53rd week in fiscal 2021. **** G&A for the full-year was $63.1 million. When including selling and advertising expense, SG&A was $82.7 million for fiscal 2021.
| (1) 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, impairment and other<br> charges, net, depreciation and amortization, the amortization of franchise tenant improvement allowances and other, and pension settlement charges. See "Reconciliation of Non-GAAP Measurements to GAAP Results." |
|---|
| (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<br> attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results." |
Capital Allocation
The company repurchased 0.7 million shares of our common stock for an aggregate cost of $70.0 million. As of October 3, 2021, there was no remaining amount under the Board-authorized stock buyback program. On November 19, 2021, the Board of Directors authorized an additional $200.0 million stock buy-back program that expires on November 20, 2023.
On November 19, 2021, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on December 23, 2021 to shareholders of record as of the close of business on December 9, 2021. Future dividends will be subject to approval by our Board of Directors.
2022 Guidance & Outlook
The following guidance and underlying assumptions reflect the company’s current expectations for the current fiscal year ending October 2, 2022:
2022 CapEx & Other Investments Guidance of $65-75 million
- Previously stated at Q3 2021 earnings on August 4, 2021
- Includes:
- Capital expenditures (located within cash flows from investing activities)
- Franchise tenant improvement allowances and incentives (located within cash flows from operating activities)
2022 SG&A Guidance of $92-97 million
- Excludes net COLI gains/losses, and now includes selling/advertising expense
2022 Commodity Guidance up 6-7% compared to 2021
2022 Company-owned Wage Rate Guidance up 8-10% compared to 2021
No change to 3-5 Year Outlook as provided at Investor Day on June 29, 2021
- Same store sales up 2 to 3%
- Unit growth up 1 to 3%
- Systemwide sales up 3 to 5%
2022 Restaurant Level Margin Outlook
- Due to an anticipated unique cost environment, we are providing one-time Company-owned restaurant level margin annual guidance for 2022
- Restaurant Level Margin is expected to be 20-21%, which includes mid-to-high single digit price increases
Company-owned Restaurant Funding Outlook
- 2022: Planning to fund up to 5 company-owned restaurants
- 2023: Planning to fund between 7 and 15 company-owned restaurants
Conference Call
The company will host a conference call for analysts and investors on Tuesday, November 23, 2021, beginning at 7:30 a.m. PT (10:30 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 (833) 513-0565 and using ID 7573711.
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^®^restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam. For more information on Jack in the Box, including franchising opportunities, visit www.jackinthebox.com.
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 potential impacts to our business and operations resulting from the coronavirus COVID-19 pandemic, 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 reduce G&A and operate efficiently; 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, including federal, state and local policies regarding mitigation strategies for controlling the coronavirus COVID-19 pandemic, 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 | ||||||||
|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||
| (In thousands, except per share data) (Unaudited) | ||||||||
| 13 Weeks Ended | 12 Weeks Ended | 53 Weeks Ended | 52 Weeks Ended | |||||
| October 3, <br><br> 2021 | September 27, <br><br> 2020 | October 3, <br><br> 2021 | September 27, <br><br> 2020 | |||||
| Revenues: | ||||||||
| Company restaurant sales | $ | 95,634 | $ | 86,799 | $ | 387,766 | $ | 348,987 |
| Franchise rental revenues | 84,386 | 78,657 | 346,634 | 320,647 | ||||
| Franchise royalties and other | 49,264 | 44,850 | 204,725 | 178,319 | ||||
| Franchise contributions for advertising and other services | 49,170 | 45,095 | 204,545 | 173,553 | ||||
| 278,454 | 255,401 | 1,143,670 | 1,021,506 | |||||
| Operating costs and expenses, net: | ||||||||
| Food and packaging | 29,630 | 24,787 | 113,006 | 102,449 | ||||
| Payroll and employee benefits | 30,306 | 25,304 | 119,033 | 106,540 | ||||
| Occupancy and other | 16,456 | 13,295 | 61,743 | 54,157 | ||||
| Franchise occupancy expenses | 52,016 | 48,568 | 214,913 | 210,038 | ||||
| Franchise support and other costs | 3,716 | 2,720 | 13,052 | 13,059 | ||||
| Franchise advertising and other services expenses | 51,361 | 47,660 | 210,328 | 180,794 | ||||
| Selling, general and administrative expenses | 21,578 | 14,710 | 82,734 | 80,841 | ||||
| Depreciation and amortization | 10,844 | 11,647 | 46,500 | 52,798 | ||||
| Impairment and other (gains) charges, net | (5,080) | 1,344 | (3,382) | (6,493) | ||||
| Gains on the sale of company-operated restaurants | (1,124) | (636) | (4,203) | (3,261) | ||||
| 209,703 | 189,399 | 853,724 | 790,922 | |||||
| Earnings from operations | 68,751 | 66,002 | 289,946 | 230,584 | ||||
| Other pension and post-retirement expenses, net | 203 | 748 | 881 | 41,720 | ||||
| Interest expense, net | 16,338 | 15,692 | 67,458 | 66,743 | ||||
| Earnings from continuing operations and before income taxes | 52,210 | 49,562 | 221,607 | 122,121 | ||||
| Income taxes | 13,276 | 11,704 | 55,852 | 32,727 | ||||
| Earnings from continuing operations | 38,934 | 37,858 | 165,755 | 89,394 | ||||
| (Losses) earnings from discontinued operations, net of income taxes | — | (9) | — | 370 | ||||
| Net earnings | $ | 38,934 | $ | 37,849 | $ | 165,755 | $ | 89,764 |
| Net earnings per share - basic: | ||||||||
| Earnings from continuing operations | $ | 1.81 | $ | 1.65 | $ | 7.40 | $ | 3.87 |
| Earnings (losses) from discontinued operations | — | — | — | 0.02 | ||||
| Net earnings per share ^(1)^ | $ | 1.81 | $ | 1.65 | $ | 7.40 | $ | 3.88 |
| Net earnings per share - diluted: | ||||||||
| Earnings from continuing operations | $ | 1.80 | $ | 1.65 | $ | 7.37 | $ | 3.84 |
| Earnings (losses) from discontinued operations | — | — | — | 0.02 | ||||
| Net earnings per share ^(1)^ | $ | 1.80 | $ | 1.64 | $ | 7.37 | $ | 3.86 |
| Weighted-average shares outstanding: | ||||||||
| Basic | 21,537 | 22,903 | 22,402 | 23,125 | ||||
| Diluted | 21,594 | 23,012 | 22,478 | 23,269 | ||||
| Cash dividends declared per common share | $ | 0.44 | $ | 0.40 | $ | 1.68 | $ | 1.20 |
| ______________________ | ||||||||
| --- | --- | |||||||
| (1) | Earnings per share may not add due to rounding. |
| JACK IN THE BOX INC. AND SUBSIDIARIES | ||||
|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||||
| (In thousands, except share and per share data) (Unaudited) | ||||
| October 3, <br><br> 2021 | September 27, <br><br> 2020 | |||
| ASSETS | ||||
| Current assets: | ||||
| Cash | $ | 55,346 | $ | 199,662 |
| Restricted cash | 18,222 | 37,258 | ||
| Accounts and other receivables, net | 74,335 | 78,417 | ||
| Inventories | 2,335 | 1,808 | ||
| Prepaid expenses | 12,682 | 10,114 | ||
| Current assets held for sale | 1,692 | 4,598 | ||
| Other current assets | 4,346 | 3,724 | ||
| Total current assets | 168,958 | 335,581 | ||
| Property and equipment, at cost: | ||||
| Land | 105,393 | 100,460 | ||
| Buildings | 907,792 | 914,311 | ||
| Restaurant and other equipment | 112,959 | 112,675 | ||
| Construction in progress | 6,894 | 4,984 | ||
| 1,133,038 | 1,132,430 | |||
| Less accumulated depreciation and amortization | (810,124) | (796,448) | ||
| Property and equipment, net | 322,914 | 335,982 | ||
| Other assets: | ||||
| Operating lease right-of-use assets | 934,066 | 904,548 | ||
| Intangible assets, net | 470 | 277 | ||
| Goodwill | 47,774 | 47,161 | ||
| Deferred tax assets | 51,517 | 72,322 | ||
| Other assets, net | 224,438 | 210,623 | ||
| Total other assets | 1,258,265 | 1,234,931 | ||
| $ | 1,750,137 | $ | 1,906,494 | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||
| Current liabilities: | ||||
| Current maturities of long-term debt | $ | 894 | $ | 818 |
| Current operating lease liabilities | 150,636 | 179,000 | ||
| Accounts payable | 29,119 | 31,105 | ||
| Accrued liabilities | 148,417 | 129,431 | ||
| Total current liabilities | 329,066 | 340,354 | ||
| Long-term liabilities: | ||||
| Long-term debt, net of current maturities | 1,273,420 | 1,376,913 | ||
| Long-term operating lease liabilities, net of current portion | 809,191 | 776,094 | ||
| Other long-term liabilities | 156,342 | 206,494 | ||
| Total long-term liabilities | 2,238,953 | 2,359,501 | ||
| 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, 82,536,059 and 82,369,714 issued, respectively | 825 | 824 | ||
| Capital in excess of par value | 500,441 | 489,515 | ||
| Retained earnings | 1,764,412 | 1,636,211 | ||
| Accumulated other comprehensive loss | (74,254) | (110,605) | ||
| Treasury stock, at cost, 61,523,475 and 59,646,773 shares, respectively | (3,009,306) | (2,809,306) | ||
| Total stockholders’ deficit | (817,882) | (793,361) | ||
| $ | 1,750,137 | $ | 1,906,494 |
| JACK IN THE BOX INC. AND SUBSIDIARIES | ||||
|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
| (In thousands) (Unaudited) | ||||
| 53 Weeks Ended | 52 Weeks Ended | |||
| October 3, 2021 | September 27, 2020 | |||
| Cash flows from operating activities: | ||||
| Net earnings | $ | 165,755 | $ | 89,764 |
| Earnings from discontinued operations | — | 370 | ||
| Earnings from continuing operations | 165,755 | 89,394 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||
| Depreciation and amortization | 46,500 | 52,798 | ||
| Amortization of franchise tenant improvement allowances and incentives | 3,450 | 3,028 | ||
| Amortization of debt issuance costs | 5,595 | 5,628 | ||
| Excess tax benefits from share-based compensation arrangements | (1,160) | (449) | ||
| Deferred income taxes | 8,008 | 5,162 | ||
| Share-based compensation expense | 4,048 | 4,394 | ||
| Pension and postretirement expense | 881 | 41,720 | ||
| Gains on cash surrender value of company-owned life insurance | (12,753) | (4,262) | ||
| Gains on the sale of company-operated restaurants | (4,203) | (3,261) | ||
| Gains on the disposition of property and equipment | (6,888) | (9,768) | ||
| Impairment charges and other | 2,889 | 322 | ||
| Changes in assets and liabilities, excluding acquisitions and dispositions: | ||||
| Accounts and other receivables | 5,072 | (27,865) | ||
| Inventories | (269) | 41 | ||
| Prepaid expenses and other current assets | (2,766) | (2,780) | ||
| Operating lease right-of-use assets and lease liabilities | (24,784) | 490 | ||
| Accounts payable | (3,091) | 2,018 | ||
| Accrued liabilities | 28,990 | 4,222 | ||
| Pension and postretirement contributions | (6,084) | (6,243) | ||
| Franchise tenant improvement allowance and incentive disbursements | (8,568) | (10,239) | ||
| Other | 500 | (825) | ||
| Cash flows provided by operating activities | 201,122 | 143,525 | ||
| Cash flows from investing activities: | ||||
| Purchases of property and equipment | (41,008) | (19,528) | ||
| Proceeds from the sale and leaseback of assets | 3,884 | 19,828 | ||
| Proceeds from the sale of company-operated restaurants | 1,827 | 3,395 | ||
| Proceeds from the sale of property and equipment | 11,742 | 22,774 | ||
| Other | 2,626 | 2,654 | ||
| Cash flows (used in) provided by investing activities | (20,929) | 29,123 | ||
| Cash flows from financing activities: | ||||
| Borrowings on revolving credit facilities | — | 114,376 | ||
| Repayments of borrowings on revolving credit facilities | (107,875) | (6,500) | ||
| Principal repayments on debt | (829) | (10,536) | ||
| Debt issuance costs | — | (216) | ||
| Dividends paid on common stock | (37,322) | (27,538) | ||
| Proceeds from issuance of common stock | 6,647 | 4,647 | ||
| Repurchases of common stock | (200,000) | (155,576) | ||
| Payroll tax payments for equity award issuances | (4,166) | (5,946) | ||
| Cash flows used in financing activities | (343,545) | (87,289) | ||
| Net (decrease) increase in cash and restricted cash | (163,352) | 85,359 | ||
| Cash and restricted cash at beginning of year | 236,920 | 151,561 | ||
| Cash and restricted cash at end of year | $ | 73,568 | $ | 236,920 |
JACK IN THE BOX INC. AND SUBSIDIARIES
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. Percentages may not add due to rounding.
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| 13 Weeks Ended | 12 Weeks Ended | 53 Weeks Ended | 52 Weeks Ended | |||||
| October 3, <br><br> 2021 | September 27, <br><br> 2020 | October 3, <br><br> 2021 | September 27, <br><br> 2020 | |||||
| Revenues: | ||||||||
| Company restaurant sales | 34.3 | % | 34.0 | % | 33.9 | % | 34.2 | % |
| Franchise rental revenues | 30.3 | % | 30.8 | % | 30.3 | % | 31.4 | % |
| Franchise royalties and other | 17.7 | % | 17.6 | % | 17.9 | % | 17.5 | % |
| Franchise contributions for advertising and other services | 17.7 | % | 17.7 | % | 17.9 | % | 17.0 | % |
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |
| Operating costs and expenses, net: | ||||||||
| Food and packaging (1) | 31.0 | % | 28.6 | % | 29.1 | % | 29.4 | % |
| Payroll and employee benefits (1) | 31.7 | % | 29.2 | % | 30.7 | % | 30.5 | % |
| Occupancy and other (1) | 17.2 | % | 15.3 | % | 15.9 | % | 15.5 | % |
| Franchise occupancy expenses (2) | 61.6 | % | 61.7 | % | 62.0 | % | 65.5 | % |
| Franchise support and other costs (3) | 7.5 | % | 6.1 | % | 6.4 | % | 7.3 | % |
| Franchise advertising and other services expenses (4) | 104.5 | % | 105.7 | % | 102.8 | % | 104.2 | % |
| Selling, general and administrative expenses | 7.7 | % | 5.8 | % | 7.2 | % | 7.9 | % |
| Depreciation and amortization | 3.9 | % | 4.6 | % | 4.1 | % | 5.2 | % |
| Impairment and other (gains) charges, net | (1.8) | % | 0.5 | % | (0.3) | % | (0.6) | % |
| Gains on the sale of company-operated restaurants | (0.4) | % | (0.2) | % | (0.4) | % | (0.3) | % |
| Earnings from operations | 24.7 | % | 25.8 | % | 25.4 | % | 22.6 | % |
| Income tax rate (5) | 25.4 | % | 23.6 | % | 25.2 | % | 26.8 | % |
| ______________________ | ||||||||
| --- | --- | |||||||
| (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 continuing operations and before income taxes. | |||||||
| Jack in the Box system sales (in thousands): | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 13 Weeks Ended | 12 Weeks Ended | 53 Weeks Ended | 52 Weeks Ended | |||||
| October 3, <br><br> 2021 | September 27, <br><br> 2020 | October 3, <br><br> 2021 | September 27, <br><br> 2020 | |||||
| Company-operated restaurant sales | $ | 95,634 | $ | 86,799 | $ | 387,766 | $ | 348,987 |
| Franchised restaurant sales (1) | 914,828 | 843,683 | 3,767,574 | 3,323,745 | ||||
| Systemwide sales (1) | $ | 1,010,462 | $ | 930,482 | $ | 4,155,340 | $ | 3,672,732 |
| ______________________ | |
|---|---|
| (1) | Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. System 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 system restaurant sales information is useful<br> to investors as they have a direct effect on the company's profitability. |
The following table summarizes the changes in the number and mix of Jack in the Box company and franchise restaurants:
| SUPPLEMENTAL RESTAURANT ACTIVITY INFORMATION | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||||||
| 2021 | 2020 | |||||||||||
| Company | Franchise | Total | Company | Franchise | Total | |||||||
| Beginning of year | 144 | 2,097 | 2,241 | 137 | 2,106 | 2,243 | ||||||
| New | — | 14 | 14 | — | 27 | 27 | ||||||
| Acquired from franchisees | 20 | (20) | — | — | — | — | ||||||
| Closed | (1) | (36) | (37) | (1) | (28) | (29) | ||||||
| End of period | 163 | 2,055 | 2,218 | 144 | 2,097 | 2,241 | ||||||
| % of system | 7 | % | 93 | % | 100 | % | 6 | % | 94 | % | 100 | % |
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: 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.
Adjusted EBITDA
Adjusted EBITDA represents net earnings on a GAAP basis excluding earnings from discontinued operations, income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, impairment and other charges (gains), net, depreciation and amortization, the amortization of franchise tenant improvement allowances and incentives, and pension settlement charges. 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).
| 13 Weeks Ended | 12 Weeks Ended | 53 Weeks Ended | 52 Weeks Ended | |||||
|---|---|---|---|---|---|---|---|---|
| October 3, 2021 | September 27, 2020 | October 3, 2021 | September 27, 2020 | |||||
| Net earnings - GAAP | $ | 38,934 | $ | 37,849 | $ | 165,755 | $ | 89,764 |
| Losses (earnings) from discontinued operations, net of taxes | — | 9 | — | (370) | ||||
| Income taxes | 13,276 | 11,704 | 55,852 | 32,727 | ||||
| Interest expense, net | 16,338 | 15,692 | 67,458 | 66,743 | ||||
| Pension settlement charges | — | 188 | — | 39,218 | ||||
| Gains on the sale of company-operated restaurants | (1,124) | (636) | (4,203) | (3,261) | ||||
| Impairment and other (gains) charges, net | (5,080) | 1,344 | (3,382) | (6,493) | ||||
| Depreciation and amortization | 10,844 | 11,647 | 46,500 | 52,798 | ||||
| Amortization of franchise tenant improvement allowances and incentives | 1,120 | 645 | 3,450 | 3,028 | ||||
| Adjusted EBITDA – non-GAAP | $ | 74,308 | $ | 78,442 | $ | 331,430 | $ | 274,154 |
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, impairment and other (gains) charges, 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-owned restaurants.
Below is a reconciliation of non-GAAP Restaurant-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):
| 13 Weeks Ended | 12 Weeks Ended | 53 Weeks Ended | 52 Weeks Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 3, 2021 | September 27, 2020 | October 3, 2021 | September 27, 2020 | |||||||||
| Earnings from operations - GAAP | $ | 68,751 | $ | 66,002 | $ | 289,946 | $ | 230,584 | ||||
| Franchise rental revenues | (84,386) | (78,657) | (346,634) | (320,647) | ||||||||
| Franchise royalties and other | (49,264) | (44,850) | (204,725) | (178,319) | ||||||||
| Franchise contributions for advertising and other services | (49,170) | (45,095) | (204,545) | (173,553) | ||||||||
| Franchise occupancy expenses | 52,016 | 48,568 | 214,913 | 210,038 | ||||||||
| Franchise support and other costs | 3,716 | 2,720 | 13,052 | 13,059 | ||||||||
| Franchise advertising and other services expenses | 51,361 | 47,660 | 210,328 | 180,794 | ||||||||
| Selling, general and administrative expenses | 21,578 | 14,710 | 82,734 | 80,841 | ||||||||
| Impairment and other (gains) charges, net | (5,080) | 1,344 | (3,382) | (6,493) | ||||||||
| Gains on the sale of company-operated restaurants | (1,124) | (636) | (4,203) | (3,261) | ||||||||
| Depreciation and amortization | 10,844 | 11,647 | 46,500 | 52,798 | ||||||||
| Restaurant-Level Margin- Non-GAAP | $ | 19,242 | $ | 23,413 | $ | 93,984 | $ | 85,841 | ||||
| Company restaurant sales | $ | 95,634 | $ | 86,799 | $ | 387,766 | $ | 348,987 | ||||
| Restaurant-Level Margin % - Non-GAAP | 20.1 | % | 27.0 | % | 24.2 | % | 24.6 | % |
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, impairment and other (gains) charges, 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):
| 13 Weeks Ended | 12 Weeks Ended | 53 Weeks Ended | 52 Weeks Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 3, 2021 | September 27, 2020 | October 3, 2021 | September 27, 2020 | |||||||||
| Earnings from operations - GAAP | $ | 68,751 | $ | 66,002 | $ | 289,946 | $ | 230,584 | ||||
| Company restaurant sales | (95,634) | (86,799) | (387,766) | (348,987) | ||||||||
| Food and packaging | 29,630 | 24,787 | 113,006 | 102,449 | ||||||||
| Payroll and employee benefits | 30,306 | 25,304 | 119,033 | 106,540 | ||||||||
| Occupancy and other | 16,456 | 13,295 | 61,743 | 54,157 | ||||||||
| Selling, general and administrative expenses | 21,578 | 14,710 | 82,734 | 80,841 | ||||||||
| Impairment and other (gains) charges, net | (5,080) | 1,344 | (3,382) | (6,493) | ||||||||
| Gains on the sale of company-operated restaurants | (1,124) | (636) | (4,203) | (3,261) | ||||||||
| Depreciation and amortization | 10,844 | 11,647 | 46,500 | 52,798 | ||||||||
| Franchise-Level Margin - Non-GAAP | $ | 75,727 | $ | 69,654 | $ | 317,611 | $ | 268,628 | ||||
| Franchise rental revenues | $ | 84,386 | $ | 78,657 | $ | 346,634 | $ | 320,647 | ||||
| Franchise royalties and other | 49,264 | 44,850 | 204,725 | 178,319 | ||||||||
| Franchise contributions for advertising and other services | 49,170 | 45,095 | 204,545 | 173,553 | ||||||||
| Total franchise revenues | $ | 182,820 | $ | 168,602 | $ | 755,904 | $ | 672,519 | ||||
| Franchise-Level Margin % - Non-GAAP | 41.4 | % | 41.3 | % | 42.0 | % | 39.9 | % |
Contacts
Chris Brandon
Vice President, Investor Relations
chris.brandon@jackinthebox.com
619.902.0269