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): August 9, 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 August 9, 2023, Jack in the Box Inc. issued a press release announcing its third 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. dated August 9, 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: August 9, 2023 | /s/ Darin Harris |
| Darin Harris | |
| Executive Vice President, Chief Executive Officer | |
| Exhibit 99.1 | |
| --- |
Jack in the Box Inc. Reports Third Quarter 2023 Earnings
Jack in the Box same-store sales of +7.9%; +17.5% on a three-year basis
Del Taco same-store sales of +1.7%; +12.3% on a three-year basis^(1)^
Jack in the Box systemwide sales growth of +8.0%, Del Taco systemwide sales growth of +1.6%^(1)^
Diluted EPS of $1.41; Operating EPS of $1.45
Jack in the Box now at 77 agreements for 340 restaurants since launch of the development program in mid-2021
Refranchised 73 Del Taco restaurants during and subsequent to Q3, which include accompanying development agreements for 71 Del Taco and Jack in the Box restaurants
Jack in the Box enters first new market in over a decade, with record-breaking Average Weekly Sales at inaugural Salt Lake City restaurant
SAN DIEGO--(BUSINESS WIRE)--August 9, 2023--Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco segments in the third quarter, ended July 9, 2023.
"I am pleased to see strong results to begin the second half of 2023, highlighted by a record-breaking opening in Salt Lake City, as our strategic focus areas are beginning to take shape and sustain," said Darin Harris, chief executive officer. "Relentless focus on execution is supporting our momentum, which includes progress on gross openings and net unit growth, improving restaurant margins and franchise profitability, and outstanding sales performance led by late night. We are also making progress on the integration and refranchising of Del Taco, which is delivering incremental development commitments, as well as further progress toward net new unit growth and an asset-light company."
Jack in the Box Performance
Same-store sales increased 7.9% in the third quarter with franchise same-store sales up 8.0% and company-operated same-store sales up 6.9%. Company-operated restaurants experienced growth in both average check and traffic while franchise restaurants had growth in average check, partially offset by a decline in traffic. Systemwide sales for the third quarter increased 8.0%.
Restaurant-Level Margin^(2)^, a non-GAAP measure, was $21.1 million, or 21.8%, up from $15.9 million, or 15.8%, a year ago driven primarily by strong sales leverage and the sale of two evolving markets.
Franchise-Level Margin^(2)^, a non-GAAP measure, was $75.3 million, or 41.1%, up from $70.8 million, or 41.4%, a year ago, the increase in margin was mainly driven by the flow through of higher sales in the current year.
Jack in the Box net restaurant count was positive in the third quarter, with six new restaurant openings and two franchisee closures. As of Q3, and since the launch of the development program in mid-2021, the company currently has 77 signed agreements for a total of 340 restaurants. Under these agreements, 32 restaurants have opened, leaving 308 remaining for future development. Jack in the Box also opened its first location in Salt Lake City, its first new market in over a decade, with a record-breaking Average Weekly Sales during the first full month.
Jack in the Box Same-Store Sales:
| 12 Weeks Ended | 40 Weeks Ended | |||
|---|---|---|---|---|
| July 9, 2023 | July 10, 2022 | July 9, 2023 | July 10, 2022 | |
| Company | 6.9% | 3.5% | 10.3% | 1.5% |
| Franchise | 8.0% | (1.0)% | 8.2% | (0.1)% |
| System | 7.9% | (0.6)% | 8.4% | 0.0% |
Jack in the Box Restaurant Counts:
| 2023 | 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Company | Franchise | Total | Company | Franchise | Total | |||||||
| Restaurant count at beginning of Q3 | 140 | 2,047 | 2,187 | 172 | 2,035 | 2,207 | ||||||
| New | — | 6 | 6 | — | 3 | 3 | ||||||
| Closed | — | (2 | ) | (2 | ) | (1 | ) | (2 | ) | (3 | ) | |
| Restaurant count at end of Q3 | 140 | 2,051 | 2,191 | 171 | 2,036 | 2,207 | ||||||
| Q3 Net Restaurant Increase/(Decrease) | — | 4 | 4 | |||||||||
| YTD Net Restaurant % Increase/(Decrease) [Q3'23 vs. Q4'22] | (4.1 | )% | 0.8 | % | 0.5 | % |
Del Taco Performance^(1)^
Same-store sales increased 1.7% in the third quarter, comprised of franchise same-store sales growth of 1.8% and Company-operated same-store sales growth of 1.7%. Sales performance included the increases in menu pricing, partially offset by changes in menu mix and transaction declines. Systemwide sales for the fiscal third quarter increased 1.6% driven by positive results in both franchise and company-operated same-store sales.
Restaurant-Level Margin, a non-GAAP measure, was $17.7 million, or 17.4%, down from $20.1 million, or 17.6%, a year ago due to commodity, wage and utility inflation, partially offset by higher sales performance.
Franchise-Level Margin, a non-GAAP measure, was $5.5 million, or 36.7%, up from $5.1 million, or 42.7%, a year ago driven by franchise same-store sales growth, partially offset by higher franchise costs and the impact of refranchising transactions with pass through rent.
Del Taco recorded an impairment charge of $5.4 million in the third quarter, primarily related to underperforming restaurants in the Oklahoma and Atlanta markets.
Del Taco had a third quarter net decrease of one restaurant, comprised of two company-operated restaurant closings and one franchise-operated store closing. This was offset by two franchise openings, including a restaurant in Santa Rosa Beach, FL which experienced the highest average weekly sales in its first two weeks for the system in several years.
During the quarter, the Company refranchised 50 Del Taco restaurants, bringing the FY 2023 total to 66 refranchised restaurants through the end of the third quarter. The 50 units include:
17 previously-announced restaurants in Las Vegas, with development agreements for:
- 4 Del Taco restaurants in Las Vegas
- 6 Del Taco restaurants in Montana and Wyoming
- 6 Jack in the Box restaurants in Montana and Wyoming
18 additional restaurants in Las Vegas, with development agreements for:
- 14 Del Taco restaurants in Orlando, FL
- 3 Del Taco restaurants in Las Vegas
15 restaurants in Los Angeles, with development agreements for:
- 7 Del Taco restaurants in Orlando, FL
- 8 Del Taco restaurants in Houston, TX
Subsequent to the third quarter, the company has refranchised 23 additional restaurants in Los Angeles, with development agreements for 10 Del Taco restaurants in Los Angeles, and 13 Del Taco restaurants in Fresno, CA.
Del Taco Same-Store Sales:
| 12 Weeks Ended | 40 Weeks Ended | |||
|---|---|---|---|---|
| July 9, 2023 | July 10, 2022 | July 9, 2023 | July 10, 2022 | |
| Company | 1.7% | 2.3% | 2.8% | 2.5% |
| Franchise | 1.8% | 4.8% | 2.5% | 4.6% |
| System | 1.7% | 3.5% | 2.6% | 3.5% |
Del Taco Restaurant Counts:
| 2023 | 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Company | Franchise | Total | Company | Franchise | Total | |||||||
| Restaurant count at beginning of Q3 | 273 | 322 | 595 | 293 | 306 | 599 | ||||||
| New | — | 2 | 2 | — | — | — | ||||||
| Refranchised | (50 | ) | 50 | — | — | — | — | |||||
| Closed | (2 | ) | (1 | ) | (3 | ) | (2 | ) | (3 | ) | (5 | ) |
| Restaurant count at end of Q3 | 221 | 373 | 594 | 291 | 303 | 594 | ||||||
| Q3 Net Restaurant Increase/(Decrease) | (52 | ) | 51 | (1 | ) | |||||||
| YTD Net Restaurant % Increase/(Decrease) [Q3'23 vs. Q4'22] | (23.8 | )% | 23.9 | % | 0.5 | % |
Company-Wide Performance
Third quarter diluted earnings per share was $1.41. Operating Earnings Per Share^(3)^, a non-GAAP measure, was $1.45 in the third quarter of fiscal 2023 compared with $1.38 in the prior year quarter. Operating EPS for the third quarter includes a $0.19 negative impact related to the impairment on the Del Taco restaurants noted above.
Total revenues decreased 0.3% to $396.9 million, compared to $398.3 million in the prior year quarter. Net earnings increased to $29.2 million for the third quarter of fiscal 2023, compared with $22.9 million for the third quarter of fiscal 2022. Adjusted EBITDA^(4)^, a non-GAAP measure, was $79.4 million in the third quarter of fiscal 2023 compared with $73.2 million for the prior year quarter.
Company-wide SG&A expense for the third quarter was $39.6 million, a decrease of $0.4 million compared to the prior year quarter, due to lower advertising costs, as well as changes in the cash surrender value of company owned life insurance ("COLI") policies, net of changes in our deferred compensation obligation supported by these policies. These decreases were partially offset by higher incentive compensation. When excluding net COLI gains, our G&A was 2.4% of systemwide sales.
The effective tax rate for the third quarter of fiscal year 2023 was 32.6% compared to 28.8% in the third quarter of fiscal year 2022. The major components of the increase in tax rate were the annual impact of both actual and estimated disposals of non-deductible goodwill attributable to refranchising transactions, partially offset by non-taxable COLI gains in the current year as opposed to non-deductible COLI losses in the prior year and non-deductible transaction costs resulting from the Del Taco acquisition recorded in the prior year. The Non-GAAP Operating EPS tax rate for the third quarter of 2023 was 26.8%.
(1) Del Taco same-store sales on a three-year basis and all prior year comparisons are pro forma and based on the time period of Jack in the Box’s full year fiscal calendar, with the exception of Del Taco's prior year Restaurant-Level Margin and Franchise-Level Margin which are based on a partial quarter time period, March 8 through July 10, 2022.
\(2\) Restaurant-Level Margin and Franchise-Level Margin are non-GAAP measures. These non-GAAP measures are reconciled to earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of
Non-GAAP Measurements to GAAP Results."
\(3\) Operating Earnings Per Share for the second quarter of 2023 represents the diluted earnings per share on a GAAP basis, excluding acquisition, integration, and restructuring costs, COLI \(gains\) losses, net, pension and post-retirement
benefit costs, refranchising gains and the tax impacts of the related adjustments. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may not add due to rounding.
\(4\) Adjusted EBITDA represents net earnings on a GAAP basis excluding income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, other operating expenses \(income\), net, depreciation and amortization, the
amortization of favorable and unfavorable leases and subleases, net and the amortization of franchise tenant improvement allowances and incentives. See "Reconciliation of Non-GAAP Measurements to GAAP Results."
Capital Allocation
The company repurchased 0.3 million shares of our common stock for an aggregate cost of $26.9 million, including the applicable excise tax, in the third quarter. As of August 9, 2023, there was $115.0 million remaining under the Board-authorized stock buyback program. The company is now committed to executing at least $80 million in share repurchases in FY 2023.
On August 4, 2023, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on September 18, 2023, to shareholders of record as of the close of business on September 6, 2023. Future dividends will be subject to approval by our Board of Directors.
Guidance & Outlook Updates
All guidance and outlook provided on May 17, 2023 for the fiscal year ending October 1, 2023 remain the same, with the exception of two items:
- The company now plans to refranchise 90-120 Del Taco restaurants in FY 2023, up from previous guidance of 65-85 restaurants. This will not impact our Operating EPS guidance of $5.90- $6.10 for FY 2023, which remains the same as previously stated.
- The company now plans to execute at least $80 million in share repurchases in FY 2023 (previously $70 million)
Conference Call
The company will host a conference call for analysts and investors on Wednesday, August 9, 2023, beginning at 8:00 a.m. PT (11:00 a.m. ET). The call will be webcast live via the Investors section of the Jack in the Box company website at http://investors.jackinthebox.com. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days. The call can be accessed via phone by dialing (888) 330-2508 and using ID 4115265.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), founded and headquartered in San Diego, California, is a restaurant company that operates and franchises Jack in the Box^®^, one of the nation's largest hamburger chains with approximately 2,200 restaurants across 21 states, and Del Taco^®^, the second largest Mexican-American QSR chain by units in the U.S. with approximately 600 restaurants across 16 states. For more information on both brands, including franchising opportunities, visit www.jackinthebox.com and www.deltaco.com.
Category: Earnings
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,” “intend,” “plan,” “project,” “may,” “will,” “would” and similar expressions. These statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate. These estimates and assumptions involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause our actual results to differ materially from any forward-looking statements include, but are not limited to: the success of new products, marketing initiatives and restaurant remodels and drive-thru enhancements; the impact of competition, unemployment, trends in consumer spending patterns and commodity costs; the company’s ability to achieve and manage its planned growth, which is affected by the availability of a sufficient number of suitable new restaurant sites, the performance of new restaurants, risks relating to expansion into new markets and successful franchise development; the ability to attract, train and retain top-performing personnel, litigation risks; risks associated with disagreements with franchisees; supply chain disruption; food-safety incidents or negative publicity impacting the reputation of the company's brand; increased regulatory and legal complexities, risks associated with the amount and terms of the securitized debt issued by certain of our wholly owned subsidiaries; and stock market volatility. These and other factors are discussed in the company’s annual report on Form 10-K and its periodic reports on Form 10-Q filed with the Securities and Exchange Commission, which are available online at http://investors.jackinthebox.com or in hard copy upon request. The company undertakes no obligation to update or revise any forward-looking statement, whether as the result of new information or otherwise.
| JACK IN THE BOX INC. AND SUBSIDIARIES<br><br> <br>CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS<br><br> <br>(In thousands, except per share data)<br><br> <br>(Unaudited) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12 Weeks Ended | 40 Weeks Ended | |||||||||||
| July 9, 2023 | July 10, 2022 | July 9, 2023 | July 10, 2022 | |||||||||
| Revenues: | ||||||||||||
| Company restaurant sales | $ | 198,516 | $ | 215,231 | $ | 671,311 | $ | 486,596 | ||||
| Franchise rental revenues | 86,248 | 80,068 | 278,598 | 259,723 | ||||||||
| Franchise royalties and other | 54,970 | 52,059 | 185,342 | 159,915 | ||||||||
| Franchise contributions for advertising and other services | 57,208 | 50,947 | 184,531 | 159,076 | ||||||||
| 396,942 | 398,305 | 1,319,782 | 1,065,310 | |||||||||
| Operating costs and expenses, net: | ||||||||||||
| Food and packaging | 58,556 | 65,755 | 199,799 | 150,163 | ||||||||
| Payroll and employee benefits | 63,871 | 71,366 | 217,547 | 162,001 | ||||||||
| Occupancy and other | 37,274 | 42,054 | 127,920 | 92,102 | ||||||||
| Franchise occupancy expenses | 53,930 | 50,971 | 173,803 | 164,198 | ||||||||
| Franchise support and other costs | 4,079 | 3,768 | 8,623 | 12,694 | ||||||||
| Franchise advertising and other services expenses | 59,569 | 52,398 | 192,875 | 164,964 | ||||||||
| Selling, general and administrative expenses | 39,617 | 40,032 | 129,164 | 93,274 | ||||||||
| Depreciation and amortization | 14,460 | 16,713 | 48,460 | 40,754 | ||||||||
| Pre-opening costs | 182 | 54 | 667 | 630 | ||||||||
| Other operating expenses, net | 7,656 | 4,129 | 5,135 | 22,339 | ||||||||
| Gains on the sale of company-operated restaurants | (5,794 | ) | (802 | ) | (10,323 | ) | (1,660 | ) | ||||
| 333,400 | 346,438 | 1,093,670 | 901,459 | |||||||||
| Earnings from operations | 63,542 | 51,867 | 226,112 | 163,851 | ||||||||
| Other pension and post-retirement expenses, net | 1,608 | 70 | 5,359 | 233 | ||||||||
| Interest expense, net | 18,662 | 19,703 | 64,167 | 66,371 | ||||||||
| Earnings before income taxes | 43,272 | 32,094 | 156,586 | 97,247 | ||||||||
| Income taxes | 14,104 | 9,237 | 47,657 | 27,324 | ||||||||
| Net earnings | $ | 29,168 | $ | 22,857 | $ | 108,929 | $ | 69,923 | ||||
| Net earnings per share: | ||||||||||||
| Basic | $ | 1.42 | $ | 1.08 | $ | 5.25 | $ | 3.29 | ||||
| Diluted | $ | 1.41 | $ | 1.08 | $ | 5.22 | $ | 3.29 | ||||
| Weighted-average shares outstanding: | ||||||||||||
| Basic | 20,487 | 21,236 | 20,738 | 21,221 | ||||||||
| Diluted | 20,649 | 21,260 | 20,861 | 21,264 | ||||||||
| Dividends declared per common share | $ | 0.44 | $ | 0.44 | $ | 1.32 | $ | 1.32 |
| JACK IN THE BOX INC. AND SUBSIDIARIES<br> CONDENSED CONSOLIDATED BALANCE SHEETS <br> (In thousands, except share and per share data) <br> (Unaudited) | |||||
|---|---|---|---|---|---|
| October 2,<br><br> <br>2 022 | |||||
| ASSETS | |||||
| Current assets: | |||||
| Cash | 154,073 | $ | 108,890 | ||
| Restricted cash | 27,947 | 27,150 | |||
| Accounts and other receivables, net | 82,776 | 103,803 | |||
| Inventories | 4,606 | 5,264 | |||
| Prepaid expenses | 10,323 | 16,095 | |||
| Current assets held for sale | 10,012 | 17,019 | |||
| Other current assets | 5,799 | 4,772 | |||
| Total current assets | 295,536 | 282,993 | |||
| Property and equipment: | |||||
| Property and equipment, at cost | 1,249,618 | 1,228,916 | |||
| Less accumulated depreciation and amortization | (834,669 | ) | (810,752 | ) | |
| Property and equipment, net | 414,949 | 418,164 | |||
| Other assets: | |||||
| Operating lease right-of-use assets | 1,368,133 | 1,332,135 | |||
| Intangible assets, net | 11,515 | 12,324 | |||
| Trademarks | 283,500 | 283,500 | |||
| Goodwill | 339,389 | 366,821 | |||
| Other assets, net | 238,757 | 226,569 | |||
| Total other assets | 2,241,294 | 2,221,349 | |||
| 2,951,779 | $ | 2,922,506 | |||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||
| Current liabilities: | |||||
| Current maturities of long-term debt | 29,970 | $ | 30,169 | ||
| Current operating lease liabilities | 161,398 | 171,311 | |||
| Accounts payable | 50,885 | 66,271 | |||
| Accrued liabilities | 281,781 | 253,932 | |||
| Total current liabilities | 524,034 | 521,683 | |||
| Long-term liabilities: | |||||
| Long-term debt, net of current maturities | 1,731,406 | 1,799,540 | |||
| Long-term operating lease liabilities, net of current portion | 1,220,968 | 1,165,097 | |||
| Deferred tax liabilities | 41,113 | 37,684 | |||
| Other long-term liabilities | 139,675 | 134,694 | |||
| Total long-term liabilities | 3,133,162 | 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 | 516,789 | 508,323 | |||
| Retained earnings | 1,924,466 | 1,842,947 | |||
| Accumulated other comprehensive loss | (52,761 | ) | (53,982 | ) | |
| Treasury stock, at cost, 62,538,138 and 61,799,221 shares, respectively | (3,094,737 | ) | (3,034,306 | ) | |
| Total stockholders’ deficit | (705,417 | ) | (736,192 | ) | |
| 2,951,779 | $ | 2,922,506 |
All values are in US Dollars.
| JACK IN THE BOX INC. AND SUBSIDIARIES<br> <br>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS<br><br> <br>(In thousands) (Unaudited) | ||||||
|---|---|---|---|---|---|---|
| Year-to-date | ||||||
| July 9, 2023 | July 10, 2022 | |||||
| Cash flows from operating activities: | ||||||
| Net earnings | $ | 108,929 | $ | 69,923 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 48,460 | 40,754 | ||||
| Amortization of franchise tenant improvement allowances and incentives | 3,295 | 3,046 | ||||
| Deferred finance cost amortization | 3,915 | 4,280 | ||||
| Loss on extinguishment of debt | — | 7,700 | ||||
| Tax deficiency from share-based compensation arrangements | 71 | 123 | ||||
| Deferred income taxes | 1,648 | 8,058 | ||||
| Share-based compensation expense | 7,991 | 5,541 | ||||
| Pension and post-retirement expense | 5,359 | 233 | ||||
| (Gains) losses on cash surrender value of company-owned life insurance | (8,331 | ) | 9,024 | |||
| Gains on the sale of company-operated restaurants | (10,323 | ) | (1,660 | ) | ||
| Gains on the disposition of property and equipment, net | (9,155 | ) | (1,746 | ) | ||
| Impairment charges and other | 6,232 | 3,863 | ||||
| Changes in assets and liabilities, excluding acquisitions: | ||||||
| Accounts and other receivables | 12,902 | 571 | ||||
| Inventories | 658 | (137 | ) | |||
| Prepaid expenses and other current assets | 5,714 | (3,261 | ) | |||
| Operating lease right-of-use assets and lease liabilities | 5,357 | 6,074 | ||||
| Accounts payable | (28,068 | ) | 2,627 | |||
| Accrued liabilities | 32,525 | (42,701 | ) | |||
| Pension and post-retirement contributions | (4,674 | ) | (5,109 | ) | ||
| Franchise tenant improvement allowance and incentive disbursements | (2,745 | ) | (2,206 | ) | ||
| Other | 2,311 | (1,185 | ) | |||
| Cash flows provided by operating activities | 182,071 | 103,812 | ||||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (56,669 | ) | (34,349 | ) | ||
| Acquisition of Del Taco, net of cash acquired | — | (580,792 | ) | |||
| Proceeds from the sale of property and equipment | 25,174 | 4,691 | ||||
| Proceeds from the sale and leaseback of assets | 3,673 | 5,968 | ||||
| Proceeds from the sale of company-operated restaurants | 51,845 | 1,402 | ||||
| Other | 1,465 | (1,315 | ) | |||
| Cash flows provided by (used in) investing activities | 25,488 | (604,395 | ) | |||
| 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 the issuance of debt | — | 1,100,000 | ||||
| Principal repayments on debt | (22,620 | ) | (580,518 | ) | ||
| Payment of debt issuance and extinguishment costs | — | (20,599 | ) | |||
| Dividends paid on common stock | (27,198 | ) | (27,789 | ) | ||
| Proceeds from issuance of common stock | 263 | 51 | ||||
| Repurchases of common stock | (60,431 | ) | — | |||
| Payroll tax payments for equity award issuances | (1,593 | ) | (1,215 | ) | ||
| Cash flows (used in) provided by financing activities | (161,579 | ) | 519,930 | |||
| Net increase in cash and restricted cash | 45,980 | 19,347 | ||||
| Cash and restricted cash at beginning of period | 136,040 | 73,568 | ||||
| Cash and restricted cash at end of period | $ | 182,020 | $ | 92,915 |
| JACK IN THE BOX INC. AND SUBSIDIARIES<br> <br>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.<br> Percentages may not add due to rounding. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA<br><br> <br>(Unaudited) | ||||||||
| 12 Weeks Ended | 40 Weeks Ended | |||||||
| July 9,<br><br> <br>2023 | July 10,<br><br> <br>2022 | July 9,<br><br> <br>2 023 | July 10,<br><br> <br>2 022 | |||||
| Revenues: | ||||||||
| Company restaurant sales | 50.0 | % | 54.0 | % | 50.9 | % | 45.7 | % |
| Franchise rental revenues | 21.7 | % | 20.1 | % | 21.1 | % | 24.4 | % |
| Franchise royalties and other | 13.8 | % | 13.1 | % | 14.0 | % | 15.0 | % |
| Franchise contributions for advertising and other services | 14.4 | % | 12.8 | % | 14.0 | % | 14.9 | % |
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |
| Operating costs and expenses, net: | ||||||||
| Food and packaging (1) | 29.5 | % | 30.6 | % | 29.8 | % | 30.9 | % |
| Payroll and employee benefits (1) | 32.2 | % | 33.2 | % | 32.4 | % | 33.3 | % |
| Occupancy and other (1) | 18.8 | % | 19.5 | % | 19.1 | % | 18.9 | % |
| Franchise occupancy expenses (excluding depreciation and amortization) (2) | 62.5 | % | 63.7 | % | 62.4 | % | 63.2 | % |
| Franchise support and other costs (3) | 7.4 | % | 7.2 | % | 4.7 | % | 7.9 | % |
| Franchise advertising and other services expenses (4) | 104.1 | % | 102.8 | % | 104.5 | % | 103.7 | % |
| Selling, general and administrative expenses | 10.0 | % | 10.1 | % | 9.8 | % | 8.8 | % |
| Depreciation and amortization | 3.6 | % | 4.2 | % | 3.7 | % | 3.8 | % |
| Pre-opening costs | — | % | — | % | 0.1 | % | 0.1 | % |
| Other operating expenses, net | 1.9 | % | 1.0 | % | 0.4 | % | 2.1 | % |
| Gains on the sale of company-operated restaurants | (1.5 | )% | (0.2 | )% | (0.8 | )% | (0.2 | )% |
| Earnings from operations | 16.0 | % | 13.0 | % | 17.1 | % | 15.4 | % |
| Income tax rate (5) | 32.6 | % | 28.8 | % | 30.4 | % | 28.1 | % |
| (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): | ||||||||
|---|---|---|---|---|---|---|---|---|
| 12 Weeks Ended | 40 Weeks Ended | |||||||
| July 9, 2023 | July 10, 2022 | July 9, 2023 | July 10, 2022 | |||||
| Company-operated restaurant sales | $ | 96,820 | $ | 100,899 | $ | 318,451 | $ | 315,205 |
| Franchised restaurant sales (1) | 948,457 | 867,210 | 3,088,697 | 2,825,353 | ||||
| Systemwide sales (1) | $ | 1,045,277 | $ | 968,109 | $ | 3,407,148 | $ | 3,140,558 |
| (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 | 40 Weeks Ended | |||||||
| July 9, 2023 | July 10, 2022 | July 9, 2023 | July 10, 2022^(1)^ | |||||
| Company-operated restaurant sales | $ | 101,696 | $ | 114,333 | $ | 352,860 | $ | 368,893 |
| Franchised restaurant sales (2) | 129,112 | 112,774 | 394,105 | 359,243 | ||||
| Systemwide sales (2) | $ | 230,808 | $ | 227,107 | $ | 746,965 | $ | 728,136 |
| (1) | Del Taco has been presented on a pro forma basis has been derived from unaudited financial information to conform to our fiscal year and is for informational purposes only. | |||||||
| --- | --- | |||||||
| (2) | Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. Systemwide sales include company and franchised restaurant sales. We do not record<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. |
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 restructuring costs; COLI (gains) losses, net; pension and post-retirement benefit costs; debt write-off costs; gains on sale of real estate to franchisees; and the tax impacts of the related 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. Figures may not add due to rounding.
| 12 Weeks Ended | ||||||
|---|---|---|---|---|---|---|
| July 9, 2023 | July 10, 2022 | |||||
| Net income, as reported | $ | 29,168 | $ | 22,857 | ||
| Acquisition, integration, and restructuring costs | 2,463 | 2,753 | ||||
| Net COLI (gains) losses | (579 | ) | 4,585 | |||
| Pension, post-retirement benefit costs | 1,608 | 70 | ||||
| Refranchising gains | (5,794 | ) | (802 | ) | ||
| Tax impact of adjustments (1) | 3,166 | (160 | ) | |||
| Non-GAAP Adjusted Net Income | $ | 30,032 | $ | 29,303 | ||
| Weighted-average shares outstanding - diluted | 20,649 | 21,260 | ||||
| Diluted earnings per share – GAAP | $ | 1.41 | $ | 1.08 | ||
| Acquisition, integration, and restructuring costs | 0.12 | 0.13 | ||||
| Net COLI (gains) losses | (0.03 | ) | 0.22 | |||
| Pension, post-retirement benefit costs | 0.08 | — | ||||
| Refranchising gains | (0.28 | ) | (0.04 | ) | ||
| Tax impact of adjustments (1) | 0.15 | (0.01 | ) | |||
| Operating Earnings Per Share – non-GAAP (2) | $ | 1.45 | $ | 1.38 | ||
| (1) | Tax impact calculated based on the non-GAAP Operating EPS tax rate of 26.8% in the current year and 24.3% in the prior year. | |||||
| --- | --- | |||||
| (2) | Operating Earnings Per Share may not add due to rounding. |
Adjusted EBITDA
Adjusted EBITDA represents net earnings on a GAAP basis excluding income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, other operating expenses (income), net, depreciation and amortization, amortization of favorable and unfavorable leases and subleases, net and the amortization of franchise tenant improvement allowances and other. Adjusted EBITDA should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Adjusted EBITDA is useful to investors to gain an understanding of the factors and trends affecting the company's ongoing cash earnings, from which capital investments are made and debt is serviced.
Below is a reconciliation of non-GAAP Adjusted EBITDA to the most directly comparable GAAP measure, net earnings (in thousands).
| 12 Weeks Ended | ||||||
|---|---|---|---|---|---|---|
| July 9, 2023 | July 10, 2022 | |||||
| Net earnings – GAAP | $ | 29,168 | $ | 22,857 | ||
| Income taxes | 14,104 | 9,237 | ||||
| Interest expense, net | 18,662 | 19,703 | ||||
| Gains on the sale of company-operated restaurants | (5,794 | ) | (802 | ) | ||
| Other operating expenses, net | 7,656 | 4,129 | ||||
| Depreciation and amortization | 14,460 | 16,713 | ||||
| Amortization of favorable and unfavorable leases and subleases, net | 83 | 437 | ||||
| Amortization of franchise tenant improvement allowances and other | 1,057 | 919 | ||||
| Adjusted EBITDA – non-GAAP | $ | 79,396 | $ | 73,193 |
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, net, gains or losses on the sale of company-operated restaurants, and other costs that are considered normal operating costs. As such, Restaurant-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Restaurant-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Restaurant-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Restaurant-Level Margin as a key performance indicator to evaluate the profitability of company-operated restaurants.
Below is a reconciliation of non-GAAP Restaurant-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):
| Jack in the Box | Del Taco | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| July 9, 2023 | July 10, 2022 | July 9, 2023 | July 10, 2022 | |||||||||
| Earnings from operations – GAAP | $ | 61,705 | $ | 47,963 | $ | 1,835 | $ | 3,904 | ||||
| Franchise rental revenues | (83,271 | ) | (78,278 | ) | (2,977 | ) | (1,791 | ) | ||||
| Franchise royalties and other | (48,760 | ) | (46,632 | ) | (6,209 | ) | (5,426 | ) | ||||
| Franchise contributions for advertising and other services | (51,360 | ) | (46,168 | ) | (5,848 | ) | (4,780 | ) | ||||
| Franchise occupancy expenses | 51,012 | 49,216 | 2,918 | 1,755 | ||||||||
| Franchise support and other costs | 3,528 | 3,422 | 553 | 346 | ||||||||
| Franchise advertising and other services expenses | 53,519 | 47,622 | 6,050 | 4,776 | ||||||||
| Selling, general and administrative expenses | 26,347 | 26,860 | 13,270 | 13,172 | ||||||||
| Depreciation and amortization | 8,319 | 9,202 | 6,141 | 7,511 | ||||||||
| Pre-opening costs | 155 | 53 | 27 | 1 | ||||||||
| Other operating expenses, net | 27 | 3,461 | 7,629 | 668 | ||||||||
| Gains on the sale of company-operated restaurants | (96 | ) | (802 | ) | (5,698 | ) | — | |||||
| Restaurant-Level Margin – Non-GAAP | $ | 21,125 | $ | 15,919 | $ | 17,691 | $ | 20,136 | ||||
| Company restaurant sales | $ | 96,820 | $ | 100,899 | $ | 101,696 | $ | 114,333 | ||||
| Restaurant-Level Margin % – Non-GAAP | 21.8 | % | 15.8 | % | 17.4 | % | 17.6 | % |
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, other operating expenses, 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 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| July 9, 2023 | July 10, 2022 | July 9, 2023 | July 10, 2022 | |||||||||
| Earnings from operations – GAAP | $ | 61,705 | $ | 47,963 | $ | 1,835 | $ | 3,904 | ||||
| Company restaurant sales | (96,820 | ) | (100,899 | ) | (101,696 | ) | (114,333 | ) | ||||
| Food and packaging | 30,384 | 33,319 | 28,172 | 32,435 | ||||||||
| Payroll and employee benefits | 29,292 | 33,699 | 34,579 | 37,667 | ||||||||
| Occupancy and other | 16,021 | 17,960 | 21,254 | 24,095 | ||||||||
| Selling, general and administrative expenses | 26,347 | 26,860 | 13,270 | 13,172 | ||||||||
| Depreciation and amortization | 8,319 | 9,202 | 6,141 | 7,511 | ||||||||
| Pre-opening costs | 155 | 53 | 27 | 1 | ||||||||
| Other operating expenses, net | 27 | 3,461 | 7,629 | 668 | ||||||||
| Gains on the sale of company-operated restaurants | (96 | ) | (802 | ) | (5,698 | ) | — | |||||
| Franchise-Level Margin – Non-GAAP | $ | 75,334 | $ | 70,816 | $ | 5,513 | $ | 5,120 | ||||
| Franchise rental revenues | $ | 83,271 | $ | 78,278 | $ | 2,977 | $ | 1,791 | ||||
| Franchise royalties and other | 48,760 | 46,632 | 6,209 | 5,426 | ||||||||
| Franchise contributions for advertising and other services | 51,360 | 46,168 | 5,848 | 4,780 | ||||||||
| Total franchise revenues | $ | 183,391 | $ | 171,078 | $ | 15,034 | $ | 11,997 | ||||
| Franchise-Level Margin % – Non-GAAP | 41.1 | % | 41.4 | % | 36.7 | % | 42.7 | % |
Contacts
Chris Brandon
Vice President, Investor Relations
chris.brandon@jackinthebox.com
619.902.0269