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): May 12, 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 May 12, 2021, Jack in the Box Inc. issued a press release announcing its second quarter fiscal 2021 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 May 12, 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: May 12, 2021 | /s/ Tim Mullany |
| Tim Mullany | |
| Executive Vice President, Chief Financial Officer | |
| Exhibit 99.1 | |
| --- |
Jack in the Box Inc. Reports Second Quarter FY 2021 Earnings; Provides Fiscal 2021 Guidance; Announces 10 Percent Increase in Quarterly Cash Dividend
SAN DIEGO--(BUSINESS WIRE)--May 12, 2021--Jack in the Box Inc. (NASDAQ: JACK) today reported financial results for the second quarter ended April 11, 2021 and provided fiscal year 2021 financial guidance.
Jack in the Box^®^ total revenues increased 19 percent to $257.2 million, compared to $216.2 million in the comparable period ended April 12, 2020, driven by 20.6 percent growth in system same-store sales. Company same-store sales increased 14.5 percent in the second quarter, reflecting average check growth of 19.9 percent and a 5.4 percent decrease in transactions. Franchise same-store sales increased 21.3 percent.
Increase/(Decrease) in same-store sales:
| 12 Weeks Ended | 28 Weeks Ended | |||
|---|---|---|---|---|
| April 11, 2021 | April 12, 2020 | April 11, 2021 | April 12, 2020 | |
| Company | 14.5% | (4.1)% | 10.4% | (0.1)% |
| Franchise | 21.3% | (4.2)% | 16.5% | (0.9)% |
| System | 20.6% | (4.2)% | 15.9% | (0.8)% |
Net earnings more than tripled to $35.9 million, or $1.58 per diluted share, for the second quarter of fiscal 2021, compared with $11.5 million, or $0.50 per diluted share, for the second quarter of fiscal 2020, which was negatively impacted due to the initial onset of COVID-19.
Darin Harris, chief executive officer, said, "Consumers continue to embrace Jack in the Box's iconic all-day menu and continuous menu innovations, driving growth across every day-part. A shift toward our core premium entrees, combined with an increase in items per order reflecting larger parties, fueled a nearly-20 percent increase in average check. Our performance was strong across all regions throughout the quarter, including in Texas where pandemic dine-in restrictions were lifted much earlier than in our other large markets. Stimulus payments also contributed to our strong performance during the last four weeks of the quarter."
Harris continued, “We are off to a good start through the first four weeks of the third quarter, giving us confidence that our key strategies continue to resonate with guests and position us to maintain momentum while we work closely with our franchisees to grow.”
Operating Earnings Per Share^(1)^, a non-GAAP measure, were $1.48 in the second quarter of fiscal 2021 compared with $0.50 in the prior year quarter. A reconciliation of non-GAAP Operating Earnings Per Share to GAAP results is provided below, with additional information included in the attachment to this release.
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| April 11, 2021 | April 12, 2020 | April 11, 2021 | April 12, 2020 | |||||||||
| Diluted earnings per share – GAAP | $ | 1.58 | $ | 0.50 | $ | 3.78 | $ | 0.82 | ||||
| Gains on the sale of company-operated restaurants | (0.05 | ) | — | (0.09 | ) | (0.05 | ) | |||||
| Excess tax benefits from share-based compensation arrangements | (0.05 | ) | (0.01 | ) | (0.05 | ) | — | |||||
| Pension settlement charges | — | 0.01 | — | 1.14 | ||||||||
| Gain on sale of corporate office building | — | — | — | (0.32 | ) | |||||||
| Restructuring charges | — | — | — | 0.03 | ||||||||
| Operating Earnings Per Share – non-GAAP (1) | $ | 1.48 | $ | 0.50 | $ | 3.64 | $ | 1.62 |
Adjusted EBITDA^(2)^, a non-GAAP measure, was $75.8 million in the second quarter of fiscal 2021 compared with $46.3 million for the prior year quarter.
Restaurant-Level Margin^(3)^, a non-GAAP measure, increased to 25.9 percent of company restaurant sales in the second quarter of fiscal 2021 from 20.6 percent a year ago. The increase is primarily due to sales leverage as well as a decrease in food and packaging costs as a percentage of company restaurant sales. This decrease is primarily driven by favorable changes in product mix and menu price increases, partially offset by higher costs for ingredients. Commodity costs increased in the quarter by approximately 1.7 percent, primarily due to increases in pork and oil, partially offset by a decrease in beef. The decrease in food and packaging costs was partially offset by higher labor costs, resulting from wage inflation of 6.3%, as well as higher incentive compensation costs and higher costs for delivery fees.
Franchise-Level Margin^(3)^, a non-GAAP measure, increased by $17.2 million in the second quarter, primarily driven by higher royalties and rental revenues as a result of higher franchise same-store sales. Franchise-Level Margin^(3)^, as a percentage of total franchise revenues, was 42.0 percent in the second quarter of fiscal 2021 compared with 38.6 percent in the prior year.
In the second quarter of fiscal 2021, SG&A expenses decreased by $5.3 million and were 7.3 percent of revenues compared with 11.2 percent in the prior year quarter. Advertising costs, which are included in SG&A, increased $0.8 million in the second quarter due to higher company restaurant sales and a reduction in the contribution rate in the prior year quarter.
As a percentage of system-wide sales, G&A was 1.6 percent in the second quarter of fiscal 2021 compared with 2.7 percent in the prior year quarter. The $6.1 million decrease in G&A, which excludes advertising, was primarily driven by:
- 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 $5.9 million year-over-year decrease in G&A;
- a decrease of $2.1 million in insurance costs; and
- a decrease of $1.9 million in costs related to litigation matters versus prior year.
- These decreases were partially offset by a $2.3 million increase in incentive compensation.
The effective tax rate for the second quarter of fiscal 2021 was 27.3 percent compared with 32.3 percent in the prior year quarter. The lower rate in the quarter was primarily due to a decrease in the impact of certain non-deductible expenses and an increase in non-taxable gains related to COLI policies.
Capital Allocation
The company repurchased 0.6 million shares of its common stock in the second quarter of fiscal 2021 for an aggregate cost of $65.0 million. As of April 11, 2021, $135.0 million remained available under share repurchase programs authorized by the Board of Directors, consisting of $35.0 million that expires in November 2021 and $100.0 million that expires in November 2022. During the second quarter of 2021, the Company fully paid down its outstanding borrowings on its Variable Funding Notes. As of April 11, 2021, borrowing availability under the Variable Funding Notes was $110.5 million.
The company also announced today that on May 7, 2021, its Board of Directors declared a cash dividend of $0.44 per share on the company's common stock, representing a 10 percent increase from the prior dividend rate. The dividend is payable on June 11, 2021, to shareholders of record at the close of business on May 26, 2021.
Fiscal Year 2021 Guidance
The following guidance and underlying assumptions reflect the company’s current expectations for the fiscal year ending October 3, 2021, which includes 53 weeks:
- High single-digit system same-store sales growth
- G&A as a percentage of system-wide sales of approximately 1.7%, excluding net COLI gains or losses
- Commodity cost inflation of approximately 3%
- Labor cost inflation of 5% to 6%
- Adjusted EBITDA of between approximately $320 million and $330 million, including approximately $6 million to $7 million benefit from the 53rd week.
Conference Call
The company will host a conference call for financial analysts and investors on Wednesday, May 12, 2021, beginning at 2:00 p.m. PT (5:00 p.m. ET). The conference call will be broadcast live over the Internet via the Jack in the Box Inc. corporate website. To access the live call through the Internet, log onto the Investors section of the Jack in the Box Inc. website at http://investors.jackinthebox.com at least 15 minutes prior to the event in order to download and install any necessary audio software. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days, beginning at approximately 5:00 p.m. PT on May 12, 2021.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, 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.
| __________________ |
|---|
| (1) Operating Earnings Per Share represents diluted earnings per share on a GAAP basis excluding gains or losses on the sale of company-operated restaurants, restructuring charges, gain<br> on sale of corporate office building, pension settlement charges, and the excess tax benefit from share-based compensation arrangements. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may<br> not add due to rounding. |
| (2) 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<br> other 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." |
| (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<br> the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results." |
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 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||
| (In thousands, except per share data) | |||||||||||
| (Unaudited) | |||||||||||
| 12 Weeks Ended | 28 Weeks Ended | ||||||||||
| April 11, <br><br> 2021 | April 12, <br><br> 2020 | April 11, <br><br> 2021 | April 12, <br><br> 2020 | ||||||||
| Revenues: | |||||||||||
| Company restaurant sales | $ | 85,962 | $ | 74,380 | $ | 200,240 | $ | 179,744 | |||
| Franchise rental revenues | 77,901 | 69,885 | 181,650 | 165,969 | |||||||
| Franchise royalties and other | 47,231 | 37,764 | 106,879 | 90,230 | |||||||
| Franchise contributions for advertising and other services | 46,123 | 34,128 | 106,989 | 87,887 | |||||||
| 257,217 | 216,157 | 595,758 | 523,830 | ||||||||
| Operating costs and expenses, net: | |||||||||||
| Food and packaging | 23,938 | 22,237 | 56,315 | 53,585 | |||||||
| Payroll and employee benefits | 26,440 | 24,261 | 61,371 | 56,151 | |||||||
| Occupancy and other | 13,349 | 12,570 | 31,184 | 28,528 | |||||||
| Franchise occupancy expenses | 48,904 | 48,341 | 114,073 | 112,858 | |||||||
| Franchise support and other costs | 3,341 | 2,971 | 6,614 | 7,647 | |||||||
| Franchise advertising and other services expenses | 47,104 | 35,734 | 109,799 | 90,958 | |||||||
| Selling, general and administrative expenses | 18,861 | 24,203 | 39,360 | 52,451 | |||||||
| Depreciation and amortization | 10,696 | 12,282 | 25,267 | 29,010 | |||||||
| Impairment and other charges (gains), net | 1,228 | 716 | 776 | (8,575 | ) | ||||||
| Gains on the sale of company-operated restaurants | (1,532 | ) | — | (2,815 | ) | (1,575 | ) | ||||
| 192,329 | 183,315 | 441,944 | 421,038 | ||||||||
| Earnings from operations | 64,888 | 32,842 | 153,814 | 102,792 | |||||||
| Other pension and post-retirement expenses, net | 203 | 512 | 474 | 39,490 | |||||||
| Interest expense, net | 15,227 | 15,409 | 35,962 | 35,351 | |||||||
| Earnings before income taxes | 49,458 | 16,921 | 117,378 | 27,951 | |||||||
| Income taxes | 13,524 | 5,458 | 30,585 | 8,591 | |||||||
| Net earnings | $ | 35,934 | $ | 11,463 | $ | 86,793 | $ | 19,360 | |||
| Earnings per share: | |||||||||||
| Basic | $ | 1.58 | $ | 0.50 | $ | 3.80 | $ | 0.83 | |||
| Diluted | $ | 1.58 | $ | 0.50 | $ | 3.78 | $ | 0.82 | |||
| Weighted-average shares outstanding: | |||||||||||
| Basic | 22,723 | 22,803 | 22,863 | 23,339 | |||||||
| Diluted | 22,784 | 22,895 | 22,945 | 23,490 | |||||||
| Dividends declared per common share | $ | 0.40 | $ | 0.40 | $ | 0.80 | $ | 0.80 |
| JACK IN THE BOX INC. AND SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands, except share and per share data) | ||||||
| (Unaudited) | ||||||
| April 11, <br><br> 2021 | September 27, <br><br> 2020 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash | $ | 90,637 | $ | 199,662 | ||
| Restricted cash | 18,137 | 37,258 | ||||
| Accounts and other receivables, net | 86,721 | 78,417 | ||||
| Inventories | 2,158 | 1,808 | ||||
| Prepaid expenses | 6,784 | 10,114 | ||||
| Current assets held for sale | 3,883 | 4,598 | ||||
| Other current assets | 3,703 | 3,724 | ||||
| Total current assets | 212,023 | 335,581 | ||||
| Property and equipment: | ||||||
| Property and equipment, at cost | 1,144,503 | 1,132,430 | ||||
| Less accumulated depreciation and amortization | (812,489 | ) | (796,448 | ) | ||
| Property and equipment, net | 332,014 | 335,982 | ||||
| Other assets: | ||||||
| Operating lease right-of-use assets | 914,010 | 904,548 | ||||
| Intangible assets, net | 262 | 277 | ||||
| Goodwill | 47,161 | 47,161 | ||||
| Deferred tax assets | 71,167 | 72,322 | ||||
| Other assets, net | 214,138 | 210,623 | ||||
| Total other assets | 1,246,738 | 1,234,931 | ||||
| $ | 1,790,775 | $ | 1,906,494 | |||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||
| Current liabilities: | ||||||
| Current maturities of long-term debt | $ | 850 | $ | 818 | ||
| Current operating lease liabilities | 153,297 | 179,000 | ||||
| Accounts payable | 24,695 | 31,105 | ||||
| Accrued liabilities | 123,550 | 129,431 | ||||
| Total current liabilities | 302,392 | 340,354 | ||||
| Long-term liabilities: | ||||||
| Long-term debt, net of current maturities | 1,271,412 | 1,376,913 | ||||
| Long-term operating lease liabilities, net of current portion | 792,183 | 776,094 | ||||
| Other long-term liabilities | 205,345 | 206,494 | ||||
| Total long-term liabilities | 2,268,940 | 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, 82,510,007 and 82,369,714 issued, respectively | 825 | 824 | ||||
| Capital in excess of par value | 496,798 | 489,515 | ||||
| Retained earnings | 1,704,766 | 1,636,211 | ||||
| Accumulated other comprehensive loss | (108,640 | ) | (110,605 | ) | ||
| Treasury stock, at cost, 60,287,482 and 59,646,773 shares, respectively | (2,874,306 | ) | (2,809,306 | ) | ||
| Total stockholders’ deficit | (780,557 | ) | (793,361 | ) | ||
| $ | 1,790,775 | $ | 1,906,494 |
| JACK IN THE BOX INC. AND SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (In thousands) (Unaudited) | ||||||
| 28 Weeks Ended | ||||||
| April 11, <br><br> 2021 | April 12, <br><br> 2020 | |||||
| Cash flows from operating activities: | ||||||
| Net earnings | $ | 86,793 | $ | 19,360 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 25,267 | 29,010 | ||||
| Amortization of franchise tenant improvement allowances and other | 1,534 | 1,765 | ||||
| Deferred finance cost amortization | 3,013 | 3,046 | ||||
| Excess tax benefit from share-based compensation arrangements | (1,112 | ) | (77 | ) | ||
| Deferred income taxes | (882 | ) | 6,783 | |||
| Share-based compensation expense | 2,836 | 5,865 | ||||
| Pension and post-retirement expense | 474 | 39,490 | ||||
| (Gains) losses on cash surrender value of company-owned life insurance | (9,352 | ) | 3,150 | |||
| Gains on the sale of company-operated restaurants | (2,815 | ) | (1,575 | ) | ||
| Gains on the disposition of property and equipment, net | (1,931 | ) | (10,170 | ) | ||
| Non-cash operating lease costs | (11,870 | ) | (13,118 | ) | ||
| Impairment charges and other | 1,340 | 133 | ||||
| Changes in assets and liabilities, excluding acquisitions: | ||||||
| Accounts and other receivables | (4,490 | ) | (22,858 | ) | ||
| Inventories | (288 | ) | 28 | |||
| Prepaid expenses and other current assets | 3,461 | (10,350 | ) | |||
| Accounts payable | (14,614 | ) | 20,660 | |||
| Accrued liabilities | 6,499 | 1,400 | ||||
| Pension and post-retirement contributions | (3,577 | ) | (3,582 | ) | ||
| Franchise tenant improvement allowance disbursements | (567 | ) | (5,811 | ) | ||
| Other | (1,175 | ) | (4,222 | ) | ||
| Cash flows provided by operating activities | 78,544 | 58,927 | ||||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (22,928 | ) | (12,777 | ) | ||
| Proceeds from the sale of property and equipment | 3,629 | 22,394 | ||||
| Proceeds from the sale and leaseback of assets | — | 17,373 | ||||
| Proceeds from the sale of company-operated restaurants | 965 | 1,575 | ||||
| Other | 2,616 | 1,036 | ||||
| Cash flows (used in) provided by investing activities | (15,718 | ) | 29,601 | |||
| Cash flows from financing activities: | ||||||
| Borrowings on revolving credit facilities | — | 111,376 | ||||
| Repayments of borrowings on revolving credit facilities | (107,875 | ) | (3,500 | ) | ||
| Principal repayments on debt | (415 | ) | (3,640 | ) | ||
| Debt issuance costs | — | (216 | ) | |||
| Dividends paid on common stock | (18,130 | ) | (18,466 | ) | ||
| Proceeds from issuance of common stock | 4,340 | 3,559 | ||||
| Repurchases of common stock | (65,000 | ) | (155,576 | ) | ||
| Payroll tax payments for equity award issuances | (3,892 | ) | (4,442 | ) | ||
| Cash flows used in financing activities | (190,972 | ) | (70,905 | ) | ||
| Net (decrease) increase in cash and restricted cash | (128,146 | ) | 17,623 | |||
| Cash and restricted cash at beginning of period | 236,920 | 151,561 | ||||
| Cash and restricted cash at end of period | $ | 108,774 | $ | 169,184 |
JACK IN THE BOX INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
The following table presents certain income and expense items included in our condensed consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding.
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| 12 Weeks Ended | 28 Weeks Ended | |||||||
| April 11, <br><br> 2021 | April 12, <br><br> 2020 | April 11, <br><br> 2021 | April 12, <br><br> 2020 | |||||
| Revenues: | ||||||||
| Company restaurant sales | 33.4 | % | 34.4 | % | 33.6 | % | 34.3 | % |
| Franchise rental revenues | 30.3 | % | 32.3 | % | 30.5 | % | 31.7 | % |
| Franchise royalties and other | 18.4 | % | 17.5 | % | 17.9 | % | 17.2 | % |
| Franchise contributions for advertising and other services | 17.9 | % | 15.8 | % | 18.0 | % | 16.8 | % |
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |
| Operating costs and expenses, net: | ||||||||
| Food and packaging (1) | 27.8 | % | 29.9 | % | 28.1 | % | 29.8 | % |
| Payroll and employee benefits (1) | 30.8 | % | 32.6 | % | 30.6 | % | 31.2 | % |
| Occupancy and other (1) | 15.5 | % | 16.9 | % | 15.6 | % | 15.9 | % |
| Franchise occupancy expenses (2) | 62.8 | % | 69.2 | % | 62.8 | % | 68.0 | % |
| Franchise support and other costs (3) | 7.1 | % | 7.9 | % | 6.2 | % | 8.5 | % |
| Franchise advertising and other services expenses (4) | 102.1 | % | 104.7 | % | 102.6 | % | 103.5 | % |
| Selling, general and administrative expenses | 7.3 | % | 11.2 | % | 6.6 | % | 10.0 | % |
| Depreciation and amortization | 4.2 | % | 5.7 | % | 4.2 | % | 5.5 | % |
| Impairment and other charges (gains), net | 0.5 | % | 0.3 | % | 0.1 | % | (1.6 | )% |
| Gains on the sale of company-operated restaurants | (0.6 | )% | — | % | (0.5 | )% | (0.3 | )% |
| Earnings from operations | 25.2 | % | 15.2 | % | 25.8 | % | 19.6 | % |
| Income tax rate (5) | 27.3 | % | 32.3 | % | 26.1 | % | 30.7 | % |
| ____________________________ | ||||||||
| --- | --- | |||||||
| (1) | As a percentage of company restaurant sales. | |||||||
| (2) | As a percentage of franchise rental revenues. | |||||||
| (3) | As a percentage of franchise royalties and other. | |||||||
| (4) | As a percentage of franchise contributions for advertising and other services. | |||||||
| (5) | As a percentage of earnings before income taxes. |
| Jack in the Box system sales (in thousands): | ||||||||
|---|---|---|---|---|---|---|---|---|
| 12 Weeks Ended | 28 Weeks Ended | |||||||
| April 11, <br><br> 2021 | April 12, <br><br> 2020 | April 11, <br><br> 2021 | April 12, <br><br> 2020 | |||||
| Company-owned restaurant sales | $ | 85,962 | $ | 74,380 | $ | 200,240 | $ | 179,744 |
| Franchised restaurant sales (1) | 847,363 | 695,926 | 1,963,189 | 1,675,271 | ||||
| System sales (1) | $ | 933,325 | $ | 770,306 | $ | 2,163,429 | $ | 1,855,015 |
| ____________________________ | ||||||||
| --- | --- | |||||||
| (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<br> useful to investors as they have a direct effect on the company's profitability. |
The following table summarizes the year-to-date 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 | — | 6 | 6 | — | 16 | 16 | ||||||
| Acquired from franchisees | 4 | (4 | ) | — | 8 | (8 | ) | — | ||||
| Closed | — | (19 | ) | (19 | ) | (1 | ) | (12 | ) | (13 | ) | |
| End of period | 148 | 2,080 | 2,228 | 144 | 2,102 | 2,246 | ||||||
| % 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: 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 gains or losses on the sale of company-operated restaurants, restructuring charges, the gain on sale of corporate office building, pension settlement charges, and the excess tax benefit from share-based compensation arrangements. Operating Earnings Per Share should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Operating Earnings Per Share provides investors with a meaningful supplement of the company’s operating performance and period-over-period changes without regard to potential distortions.
Below is a reconciliation of non-GAAP Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings per share. Figures may not add due to rounding.
| 12 Weeks Ended | 28 Weeks Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| April 11, <br><br> 2021 | April 12, <br><br> 2020 | April 11, <br><br> 2021 | April 12, <br><br> 2020 | |||||
| Diluted earnings per share – GAAP | $ | 1.58 | $ | 0.50 | $ | 3.78 | $ | 0.82 |
| Gains on the sale of company-operated restaurants | (0.05) | — | (0.09) | (0.05) | ||||
| Excess tax benefits from share-based compensation arrangements | (0.05) | (0.01) | (0.05) | — | ||||
| Pension settlement charges | — | 0.01 | — | 1.14 | ||||
| Gain on sale of corporate office building | — | — | — | (0.32) | ||||
| Restructuring charges | — | — | — | 0.03 | ||||
| Operating Earnings Per Share – non-GAAP (1) | $ | 1.48 | $ | 0.50 | $ | 3.64 | $ | 1.62 |
| ____________________ | ||||||||
| --- | --- | |||||||
| (1) | 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, impairment and other charges (gains), net, depreciation and amortization, the amortization of franchise tenant improvement allowances and other, 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).
| 12 Weeks Ended | 28 Weeks Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| April 11, <br><br> 2021 | April 12, <br><br> 2020 | April 11, <br><br> 2021 | April 12, <br><br> 2020 | ||||||||
| Net earnings - GAAP | $ | 35,934 | $ | 11,463 | $ | 86,793 | $ | 19,360 | |||
| Income tax expense | 13,524 | 5,458 | 30,585 | 8,591 | |||||||
| Interest expense, net | 15,227 | 15,409 | 35,962 | 35,351 | |||||||
| Pension settlement charges | — | 321 | — | 38,927 | |||||||
| Gains on the sale of company-operated restaurants | (1,532 | ) | — | (2,815 | ) | (1,575 | ) | ||||
| Impairment and other charges (gains), net | 1,228 | 716 | 776 | (8,575 | ) | ||||||
| Depreciation and amortization | 10,696 | 12,282 | 25,267 | 29,010 | |||||||
| Amortization of franchise tenant improvement allowances and other | 673 | 614 | 1,534 | 1,765 | |||||||
| Adjusted EBITDA - Non-GAAP | $ | 75,750 | $ | 46,263 | $ | 178,102 | $ | 122,854 |
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 charges (gains), 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):
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| April 11, <br><br> 2021 | April 12, <br><br> 2020 | April 11, <br><br> 2021 | April 12, <br><br> 2020 | |||||||||
| Earnings from operations - GAAP | $ | 64,888 | $ | 32,842 | $ | 153,814 | $ | 102,792 | ||||
| Franchise rental revenues | (77,901 | ) | (69,885 | ) | (181,650 | ) | (165,969 | ) | ||||
| Franchise royalties and other | (47,231 | ) | (37,764 | ) | (106,879 | ) | (90,230 | ) | ||||
| Franchise contributions for advertising and other services | (46,123 | ) | (34,128 | ) | (106,989 | ) | (87,887 | ) | ||||
| Franchise occupancy expenses | 48,904 | 48,341 | 114,073 | 112,858 | ||||||||
| Franchise support and other costs | 3,341 | 2,971 | 6,614 | 7,647 | ||||||||
| Franchise advertising and other services expenses | 47,104 | 35,734 | 109,799 | 90,958 | ||||||||
| Selling, general and administrative expenses | 18,861 | 24,203 | 39,360 | 52,451 | ||||||||
| Impairment and other charges (gains), net | 1,228 | 716 | 776 | (8,575 | ) | |||||||
| Gains on the sale of company-operated restaurants | (1,532 | ) | — | (2,815 | ) | (1,575 | ) | |||||
| Depreciation and amortization | 10,696 | 12,282 | 25,267 | 29,010 | ||||||||
| Restaurant-Level Margin- Non-GAAP | $ | 22,235 | $ | 15,312 | $ | 51,370 | $ | 41,480 | ||||
| Company restaurant sales | $ | 85,962 | $ | 74,380 | $ | 200,240 | $ | 179,744 | ||||
| Restaurant-Level Margin % - Non-GAAP | 25.9 | % | 20.6 | % | 25.7 | % | 23.1 | % |
Franchise-Level Margin
Franchise-Level Margin is defined as franchise revenues less franchise operating costs (occupancy expenses, advertising contributions, and franchise support and other costs) and is neither required by, nor presented in accordance with GAAP. Franchise-Level Margin excludes revenue and expenses of our company-operated restaurants and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, impairment and other charges (gains), 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):
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| April 11, <br><br> 2021 | April 12, <br><br> 2020 | April 11, <br><br> 2021 | April 12, <br><br> 2020 | |||||||||
| Earnings from operations - GAAP | $ | 64,888 | $ | 32,842 | $ | 153,814 | $ | 102,792 | ||||
| Company restaurant sales | (85,962 | ) | (74,380 | ) | (200,240 | ) | (179,744 | ) | ||||
| Food and packaging | 23,938 | 22,237 | 56,315 | 53,585 | ||||||||
| Payroll and employee benefits | 26,440 | 24,261 | 61,371 | 56,151 | ||||||||
| Occupancy and other | 13,349 | 12,570 | 31,184 | 28,528 | ||||||||
| Selling, general and administrative expenses | 18,861 | 24,203 | 39,360 | 52,451 | ||||||||
| Impairment and other charges (gains), net | 1,228 | 716 | 776 | (8,575 | ) | |||||||
| Gains on the sale of company-operated restaurants | (1,532 | ) | — | (2,815 | ) | (1,575 | ) | |||||
| Depreciation and amortization | 10,696 | 12,282 | 25,267 | 29,010 | ||||||||
| Franchise-Level Margin - Non-GAAP | $ | 71,906 | $ | 54,731 | $ | 165,032 | $ | 132,623 | ||||
| Franchise rental revenues | $ | 77,901 | $ | 69,885 | $ | 181,650 | $ | 165,969 | ||||
| Franchise royalties and other | 47,231 | 37,764 | 106,879 | 90,230 | ||||||||
| Franchise contributions for advertising and other services | 46,123 | 34,128 | 106,989 | 87,887 | ||||||||
| Total franchise revenues | $ | 171,255 | $ | 141,777 | $ | 395,518 | $ | 344,086 | ||||
| Franchise-Level Margin % - Non-GAAP | 42.0 | % | 38.6 | % | 41.7 | % | 38.5 | % |
Contacts
Investor Contact:
Maria Hocut
Maria.Hocut@jackinthebox.com