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 17, 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 May 17, 2023, Jack in the Box Inc. issued a press release announcing its second 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<br><br> <br>No. | Description |
|---|---|
| 99.1 | Press Release of Jack in the Box<br> Inc. dated May 17, 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: May 17, 2023 | /s/ Darin Harris |
| Darin Harris<br><br> <br><br><br> <br>Executive Vice President, Chief Executive Officer |
Exhibit 99.1
Jack in the Box Inc. Reports Second Quarter 2023 Earnings
Jack in the Box same-store sales of +9.5%; +29.3% on a three-year basis
Del Taco same-store sales of +3.2%; +25.5% on a three-year basis^(1)^
Jack in the Box systemwide sales growth of +9.8%, Del Taco systemwide sales growth of +3.2%^(1)^
Diluted EPS of $1.27; Operating EPS of $1.47
Jack in the Box added 4 development agreements for 33 future restaurants in Q2, including development agreement for 22 future restaurants in Mexico, totaling 76 agreements for 335 restaurants since program launch
Refranchised 17 Del Taco restaurants subsequent to Q2, which included development agreements for both Jack in the Box and Del Taco to enter Montana and Wyoming for the first time in each brand's history
Management provides updates to FY 2023 guidance and outlook
SAN DIEGO--(BUSINESS WIRE)--May 17, 2023--Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco segments in the second quarter, ended April 16, 2023.
"The momentum in our business continued throughout the second quarter, reflected in outstanding sales, positive net unit growth, improved margin performance and the signing of a development agreement for expansion into Mexico," said Darin Harris, Jack in the Box Chief Executive Officer. "Over the last year we have been focused on the execution of our strategy, and the results are beginning to show. We look forward to continued strength in the back half of 2023, while remaining focused on what is most important: expanding our reach, offering guests what they want when they want it, and a relentless pursuit to improve restaurant level economics for Jack and Del Taco franchisees."
Jack in the Box Performance
Same-store sales increased 9.5% in the second quarter with franchise same-store sales up 9.4% and company-operated same-store sales up 10.8%. 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 second quarter increased 9.8%.
Restaurant-Level Margin^(2)^, a non-GAAP measure, was 21.4%, an increase of 6.4% from 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 41.2%, an increase of 1.8% from a year ago, driven by flow through from higher franchise sales, and lower bad debt expense.
Jack net restaurant count was positive in the second quarter, with two franchise openings and one franchisee closure. As of Q2, and since the launch of the development program in mid-2021, the company currently has 76 signed agreements for a total of 335 restaurants. Under these agreements, 27 restaurants have opened, leaving 308 remaining for future development. In the second quarter, Jack in the Box also completed a new franchisee development agreement to enter Mexico with 22 restaurant commitments.
| Jack in the Box Same-Store Sales: | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||
| April 16, 2023 | April 17, 2022 | April 16, 2023 | April 17, 2022 | |||||||||
| Company | 10.8 | % | 1.7 | % | 11.8 | % | 0.6 | % | ||||
| Franchise | 9.4 | % | (1.1 | )% | 8.2 | % | 0.3 | % | ||||
| System | 9.5 | % | (0.8 | )% | 8.6 | % | 0.3 | % | ||||
| Jack in the Box Restaurant Counts: | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | |||||||||||
| Company | Franchise | Total | Company | Franchise | Total | |||||||
| Restaurant count at beginning of Q2 | 140 | 2,046 | 2,186 | 165 | 2,043 | 2,208 | ||||||
| New | — | 2 | 2 | — | 5 | 5 | ||||||
| Acquired from franchisees | — | — | — | 9 | (9 | ) | — | |||||
| Closed | — | (1 | ) | (1 | ) | (2 | ) | (4 | ) | (6 | ) | |
| Restaurant count at end of Q2 | 140 | 2,047 | 2,187 | 172 | 2,035 | 2,207 | ||||||
| Q2 Net Restaurant Increase/(Decrease) | — | 1 | 1 | |||||||||
| YTD Net Restaurant % Increase/(Decrease) [Q2'23 vs. Q4'22] | (4.1 | ) % | 0.6 | % | 0.3 | % |
Del Taco Performance^(1)^
Same-store sales increased 3.2% in the second quarter, comprised of franchise same-store sales growth of 2.8% and Company-operated same-store sales growth of 3.5%. Sales performance was boosted by the Jumbo Shrimp and Beer Battered Fish Lent promotions and menu price, partially offset by changes in menu mix and transaction declines. Systemwide sales for the fiscal second quarter increased 3.2% driven by positive results in both franchise and company-operated same-store sales.
Restaurant-Level Margin, a non-GAAP measure, was 17.3%, a decrease of 0.5% from a year ago driven by higher sales, offset by commodity, wage and utility inflation, and other operating costs. Franchise-Level Margin, a non-GAAP measure, was 37.3%, a decrease of 4.4% from a year ago driven by higher franchise costs and the impact of refranchising transactions with pass through rent, partially offset by franchise same-store sales growth.
Del Taco had a second quarter net increase of three restaurants, comprised of three franchise openings. Subsequent to the quarter, the company also refranchised 17 Del Taco restaurants in Las Vegas to an existing Del Taco franchisee, which included development agreements for 10 new Del Taco restaurants to be built in Las Vegas, Wyoming and Montana, as well as 6 Jack in the Box restaurants to be built in Wyoming and Montana.
| Del Taco Same-Store Sales: | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12 Weeks Ended | 28 Weeks Ended | |||||||||||
| April 16, 2023 | April 17, 2022 | April 16, 2023 | April 17, 2022 | |||||||||
| Company | 3.5 | % | 1.6 | % | 3.3 | % | 2.6 | % | ||||
| Franchise | 2.8 | % | 3.4 | % | 2.8 | % | 4.5 | % | ||||
| System | 3.2 | % | 2.5 | % | 3.0 | % | 3.6 | % | ||||
| Del Taco Restaurant Counts: | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | |||||||||||
| Company | Franchise | Total | Company | Franchise | Total | |||||||
| Restaurant count at beginning of Q2 | 273 | 319 | 592 | 294 | 306 | 600 | ||||||
| New | — | 3 | 3 | — | 1 | 1 | ||||||
| Refranchised | — | — | — | — | — | — | ||||||
| Closed | — | — | — | (1 | ) | (1 | ) | (2 | ) | |||
| Restaurant count at end of Q2 | 273 | 322 | 595 | 293 | 306 | 599 | ||||||
| Q2 Net Restaurant Increase/(Decrease) | — | 3 | 3 | |||||||||
| YTD Net Restaurant % Increase/(Decrease) [Q2'23 vs. Q4'22] | (5.9 | ) % | 7.0 | % | 0.7 | % |
Company-Wide Performance
Second quarter diluted earnings per share was $1.27. Operating Earnings Per Share ^(3)^, a non-GAAP measure, was $1.47 in the second quarter of fiscal 2023 compared with $1.16 in the prior year quarter. Both diluted earnings per share and Operating Earnings Per Share included a $0.05 net positive impact as a result of a two litigation matters, both of which are not expected to reoccur.
Total revenues increased 22.8% to $395.7 million, compared to $322.3 million in the prior year quarter. Net earnings increased to $26.5 million for the second quarter of fiscal 2023, compared with $7.8 million for the second quarter of fiscal 2022. Adjusted EBITDA^(4)^, a non-GAAP measure, was $78.8 million in the second quarter of fiscal 2023 compared with $64.4 million for the prior year quarter. This included a $1.4 million net positive impact as a result of two litigation matters, both of which are not expected to reoccur.
Company-wide SG&A expense for the second quarter was $39.4 million, an increase of $11.2 million compared to the prior year quarter, due to Del Taco expenses being included for a full quarter as well as higher incentive compensation and advertising. These increases were partially offset by mark-to-market 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, resulting in a year-over-year decrease of $3.0 million. When excluding net COLI gains, G&A was 2.5% of systemwide sales.
The effective tax rate for the second quarter of fiscal year 2023 was 34.8% compared to 33.3% in fiscal year 2022. The major components of the increase in tax rate were the impact of 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 second quarter of 2023 was 26.7%.
(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 April 17 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 0.2 million shares of our common stock for an aggregate cost of $18.6 million, including the applicable excise tax, in the second quarter. As of May 17, 2023, there was $141.6 million remaining under the Board-authorized stock buyback program. The company is now committed to executing at least $70 million in share repurchases in FY 2023.
During the second quarter, the company paid down the $50 million outstanding balance on its Variable Funding Note, and now has approximately $172 million dollars of total available borrowing capacity under our VFN and Del Taco credit facility.
On May 12, 2023, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on June 13, 2023 to shareholders of record as of the close of business on May 31, 2023. Future dividends will be subject to approval by our Board of Directors.
Guidance & Outlook Updates
The following guidance and underlying assumptions reflect the company’s current expectations for the fiscal year ending October 1, 2023:
Company-wide Guidance
- FY 2023 CapEx & Other Investments Guidance of $75-90 million (unchanged from previous)
- Capital expenditures + franchise tenant improvement allowances and incentives
- FY 2023 SG&A Guidance of $170-180 million (previously $160-170 million)
- Increase is mainly due to higher incentive-based compensation, as well as a year-to-date net legal charge of $5.0 million related to two litigation matters, which are not expected to reoccur
- Includes ~$3 million in savings from refranchising, primarily related to a reduction in selling expense
- Excludes net COLI gains ($6.6 million gain year-to-date)
- Long-term G&A target, without selling/advertising expense, remains 2.3-2.5% of systemwide sales
- FY 2023 Company-owned Commodity Guidance up 8-10% vs. 2022 (previously 9-11%)
- FY 2023 Company-owned Wage Rate Guidance up 3-6% vs. 2022 (unchanged from previous)
- FY 2023 Operating EPS Guidance of $5.90-$6.10 (previously $5.25-5.65)
- Includes the $0.22 negative impact from the legal charge in Q1 2023, which is not expected to reoccur in Q1 2024
- Includes the $0.05 net positive impact from the two litigation matters in Q2 2023, which are not expected to reoccur in Q2 2024
- Includes the $0.23 positive impact from the Hawaii transaction in Q1 2023, which should be noted as a one-time item that will not occur in Q1 2024
- Includes the $0.11 negative impact associated with store-level technology and POS project investments (previously $0.22, lower due to certain projects pushing forward to 2024)
- Includes impact from expected refranchising of 65-85 total Del Taco restaurants in FY 2023
- The company now plans to execute at least $70 million in share repurchases in FY 2023
Brand Segment Guidance
- FY 2023 Same Store Sales of Mid-to-High Single Digits for Jack in the Box (previously Low-Single Digits)
- FY 2023 Same Store Sales of Low-Single Digits for Del Taco (unchanged from previous)
- Jack in the Box expects positive net unit growth in FY 2023, led by 25-30 gross openings (unchanged from previous)
- Del Taco expects positive net unit growth in FY 2023, led by 8-12 gross openings (unchanged from previous)
- FY 2023 Restaurant Level Margin Outlook
- Jack in the Box Restaurant Level Margin is expected to be 19-21%, which includes high single digit price increases and is impacted negatively by 125bps due to the remaining Evolving Markets (previously 18-20%)
- Del Taco Restaurant Level Margin is expected to be 14-16%, which includes high single digit price increases (unchanged from previous), and includes the impact from refranchising
- FY 2023 Franchise Level Margin Outlook
- Jack in the Box Franchise Level Margin is expected to be 41-42% (previously 40-41%)
- Includes negative impact from restaurant-level technology and POS project investments
- As a reminder, the $7.3 million (~90bps) positive impact from the Hawaii transaction was included in both the original FLM guidance provided in November, as well as the current FLM guidance update
- Del Taco Franchise Level Margin is expected to be 37-38% (previously ~41%), and includes the impact from refranchising
- Jack in the Box Franchise Level Margin is expected to be 41-42% (previously 40-41%)
Conference Call
The company will host a conference call for analysts and investors on Wednesday, May 17, 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 | 28 Weeks Ended | |||||||||||
| April 16, 2023 | April 17, 2022 | April 16, 2023 | April 17, 2022 | |||||||||
| Revenues: | ||||||||||||
| Company restaurant sales | $ | 202,604 | $ | 151,309 | $ | 472,795 | $ | 271,365 | ||||
| Franchise rental revenues | 83,520 | 76,556 | 192,350 | 179,655 | ||||||||
| Franchise royalties and other | 53,982 | 47,101 | 130,372 | 107,856 | ||||||||
| Franchise contributions for advertising and other services | 55,638 | 47,328 | 127,323 | 108,129 | ||||||||
| 395,744 | 322,294 | 922,840 | 667,005 | |||||||||
| Operating costs and expenses, net: | ||||||||||||
| Food and packaging | 59,310 | 46,871 | 141,243 | 84,408 | ||||||||
| Payroll and employee benefits | 65,035 | 50,910 | 153,676 | 90,635 | ||||||||
| Occupancy and other | 39,275 | 29,171 | 90,646 | 50,048 | ||||||||
| Franchise occupancy expenses | 52,649 | 49,244 | 119,873 | 113,227 | ||||||||
| Franchise support and other costs | 3,260 | 5,015 | 5,137 | 8,926 | ||||||||
| Franchise advertising and other services expenses | 58,143 | 49,258 | 132,713 | 112,566 | ||||||||
| Selling, general and administrative expenses | 39,405 | 28,213 | 89,547 | 53,242 | ||||||||
| Depreciation and amortization | 14,598 | 11,545 | 34,000 | 24,041 | ||||||||
| Pre-opening costs | 154 | 266 | 485 | 576 | ||||||||
| Other operating expenses (income), net | 2,980 | 14,367 | (2,521 | ) | 18,210 | |||||||
| Gains on the sale of company-operated restaurants | (704 | ) | (810 | ) | (4,529 | ) | (858 | ) | ||||
| 334,105 | 284,050 | 760,270 | 555,021 | |||||||||
| Earnings from operations | 61,639 | 38,244 | 162,570 | 111,984 | ||||||||
| Other pension and post-retirement expenses, net | 1,607 | 70 | 3,751 | 163 | ||||||||
| Interest expense, net | 19,357 | 26,481 | 45,505 | 46,668 | ||||||||
| Earnings before income taxes | 40,675 | 11,693 | 113,314 | 65,153 | ||||||||
| Income taxes | 14,168 | 3,897 | 33,553 | 18,087 | ||||||||
| Net earnings | $ | 26,507 | $ | 7,796 | $ | 79,761 | $ | 47,066 | ||||
| Net earnings per share: | ||||||||||||
| Basic | $ | 1.28 | $ | 0.37 | $ | 3.83 | $ | 2.22 | ||||
| Diluted | $ | 1.27 | $ | 0.37 | $ | 3.81 | $ | 2.21 | ||||
| Weighted-average shares outstanding: | ||||||||||||
| Basic | 20,744 | 21,227 | 20,845 | 21,215 | ||||||||
| Diluted | 20,864 | 21,262 | 20,946 | 21,255 | ||||||||
| Dividends declared per common share | $ | 0.44 | $ | 0.44 | $ | 0.88 | $ | 0.88 |
| 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> 2022 | |||||
| ASSETS | |||||
| Current assets: | |||||
| Cash | 94,911 | $ | 108,890 | ||
| Restricted cash | 27,925 | 27,150 | |||
| Accounts and other receivables, net | 96,657 | 103,803 | |||
| Inventories | 5,287 | 5,264 | |||
| Prepaid expenses | 10,856 | 16,095 | |||
| Current assets held for sale | 9,013 | 17,019 | |||
| Other current assets | 5,340 | 4,772 | |||
| Total current assets | 249,989 | 282,993 | |||
| Property and equipment: | |||||
| Property and equipment, at cost | 1,251,969 | 1,228,916 | |||
| Less accumulated depreciation and amortization | (832,065 | ) | (810,752 | ) | |
| Property and equipment, net | 419,904 | 418,164 | |||
| Other assets: | |||||
| Operating lease right-of-use assets | 1,347,035 | 1,332,135 | |||
| Intangible assets, net | 11,699 | 12,324 | |||
| Trademarks | 283,500 | 283,500 | |||
| Goodwill | 353,611 | 366,821 | |||
| Other assets, net | 237,643 | 226,569 | |||
| Total other assets | 2,233,488 | 2,221,349 | |||
| 2,903,381 | $ | 2,922,506 | |||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||
| Current liabilities: | |||||
| Current maturities of long-term debt | 29,976 | $ | 30,169 | ||
| Current operating lease liabilities | 166,776 | 171,311 | |||
| Accounts payable | 58,476 | 66,271 | |||
| Accrued liabilities | 243,535 | 253,932 | |||
| Total current liabilities | 498,763 | 521,683 | |||
| Long-term liabilities: | |||||
| Long-term debt, net of current maturities | 1,737,032 | 1,799,540 | |||
| Long-term operating lease liabilities, net of current portion | 1,195,644 | 1,165,097 | |||
| Deferred tax liabilities | 40,544 | 37,684 | |||
| Other long-term liabilities | 132,841 | 134,694 | |||
| Total long-term liabilities | 3,106,061 | 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, 82,628,545 and 82,580,599 issued, respectively | 826 | 826 | |||
| Capital in excess of par value | 514,395 | 508,323 | |||
| Retained earnings | 1,904,348 | 1,842,947 | |||
| Accumulated other comprehensive loss | (53,127 | ) | (53,982 | ) | |
| Treasury stock, at cost, 62,230,963 and 61,799,221 shares, respectively | (3,067,885 | ) | (3,034,306 | ) | |
| Total stockholders’ deficit | (701,443 | ) | (736,192 | ) | |
| 2,903,381 | $ | 2,922,506 |
All values are in US Dollars.
| JACK IN THE BOX INC. AND SUBSIDIARIES<br><br> <br>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS<br><br> <br>(In thousands) (Unaudited) | ||
|---|---|---|
| Year-to-date | ||
| April 16, 2023 | April 17, 2022 | |
| Cash flows from operating activities: | ||
| Net earnings | $ 79,761 | $ 47,066 |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
| Depreciation and amortization | 34,000 | 24,041 |
| Amortization of franchise tenant improvement allowances and incentives | 2,237 | 2,127 |
| Deferred finance cost amortization | 2,787 | 3,060 |
| Loss on extinguishment of debt | — | 7,700 |
| Tax deficiency from share-based compensation arrangements | 142 | 49 |
| Deferred income taxes | 1,496 | 5,529 |
| Share-based compensation expense | 5,932 | 3,934 |
| Pension and post-retirement expense | 3,751 | 163 |
| (Gains) losses on cash surrender value of company-owned life insurance | (8,007) | 3,163 |
| Gains on the sale of company-operated restaurants | (4,529) | (858) |
| Gains on the disposition of property and equipment, net | (8,615) | (286) |
| Impairment charges and other | 549 | 1,109 |
| Changes in assets and liabilities, excluding acquisitions: | ||
| Accounts and other receivables | (1,456) | 26,257 |
| Inventories | (23) | (277) |
| Prepaid expenses and other current assets | 6,344 | (6,716) |
| Operating lease right-of-use assets and lease liabilities | 8,561 | 9,155 |
| Accounts payable | (15,994) | 1,297 |
| Accrued liabilities | (7,043) | (52,286) |
| Pension and post-retirement contributions | (3,234) | (3,693) |
| Franchise tenant improvement allowance and incentive disbursements | (2,052) | (1,629) |
| Other | (499) | (1,077) |
| Cash flows provided by operating activities | 94,108 | 67,828 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (37,196) | (20,781) |
| Acquisition of Del Taco, net of cash acquired | — | (580,792) |
| Proceeds from the sale of property and equipment | 23,371 | 2,245 |
| Proceeds from the sale and leaseback of assets | 3,673 | 1,861 |
| Proceeds from the sale of company-operated restaurants | 18,417 | 600 |
| Other | 1,465 | (1,315) |
| Cash flows provided by (used in) investing activities | 9,730 | (598,182) |
| Cash flows from financing activities: | ||
| Borrowings on revolving credit facilities | — | 63,000 |
| Repayments of borrowings on revolving credit facilities | (50,000) | (9,000) |
| Proceeds from the issuance of debt | — | 1,100,000 |
| Principal repayments on debt | (15,088) | (572,958) |
| Payment of debt issuance costs | — | (20,274) |
| Dividends paid on common stock | (18,218) | (18,526) |
| Proceeds from issuance of common stock | — | 51 |
| Repurchases of common stock | (32,621) | — |
| Payroll tax payments for equity award issuances | (1,115) | (874) |
| Cash flows (used in) provided by financing activities | (117,042) | 541,419 |
| Net (decrease) increase in cash and restricted cash | (13,204) | 11,065 |
| Cash and restricted cash at beginning of period | 136,040 | 73,568 |
| Cash and restricted cash at end of period | $ 122,836 | $ 84,633 |
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<br><br> <br>(Unaudited) | ||||||||
|---|---|---|---|---|---|---|---|---|
| 12 Weeks Ended | 28 Weeks Ended | |||||||
| April 16, 2023 | April 17, 2022 | April 16, <br><br> 2023 | April 17, <br><br> 2022 | |||||
| Revenues: | ||||||||
| Company restaurant sales | 51.2 | % | 46.9 | % | 51.2 | % | 40.7 | % |
| Franchise rental revenues | 21.1 | % | 23.8 | % | 20.8 | % | 26.9 | % |
| Franchise royalties and other | 13.6 | % | 14.6 | % | 14.1 | % | 16.2 | % |
| Franchise contributions for advertising and other services | 14.1 | % | 14.7 | % | 13.8 | % | 16.2 | % |
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |
| Operating costs and expenses, net: | ||||||||
| Food and packaging (1) | 29.3 | % | 31.0 | % | 29.9 | % | 31.1 | % |
| Payroll and employee benefits (1) | 32.1 | % | 33.6 | % | 32.5 | % | 33.4 | % |
| Occupancy and other (1) | 19.4 | % | 19.3 | % | 19.2 | % | 18.4 | % |
| Franchise occupancy expenses (excluding depreciation and amortization) (2) | 63.0 | % | 64.3 | % | 62.3 | % | 63.0 | % |
| Franchise support and other costs (3) | 6.0 | % | 10.6 | % | 3.9 | % | 8.3 | % |
| Franchise advertising and other services expenses (4) | 104.5 | % | 104.1 | % | 104.2 | % | 104.1 | % |
| Selling, general and administrative expenses | 10.0 | % | 8.8 | % | 9.7 | % | 8.0 | % |
| Depreciation and amortization | 3.7 | % | 3.6 | % | 3.7 | % | 3.6 | % |
| Pre-opening costs | — | % | 0.1 | % | 0.1 | % | 0.1 | % |
| Other operating expenses (income), net | 0.8 | % | 4.5 | % | (0.3 | ) % | 2.7 | % |
| Gains on the sale of company-operated restaurants | (0.2 | ) % | (0.3 | ) % | (0.5 | ) % | (0.1 | ) % |
| Earnings from operations | 15.6 | % | 11.9 | % | 17.6 | % | 16.8 | % |
| Income tax rate (5) | 34.8 | % | 33.3 | % | 29.6 | % | 27.8 | % |
| ____________________________ | ||||||||
| --- | --- | |||||||
| (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 operations and before income taxes. |
| Jack in the Box systemwide sales (in thousands): | ||||||||
|---|---|---|---|---|---|---|---|---|
| 12 Weeks Ended | 28 Weeks Ended | |||||||
| April 16, 2023 | April 17, 2022 | April 16, 2023 | April 17, 2022 | |||||
| Company-operated restaurant sales | $ | 95,489 | $ | 94,250 | $ | 221,631 | $ | 214,306 |
| Franchised restaurant sales (1) | 931,257 | 840,468 | 2,140,239 | 1,958,144 | ||||
| Systemwide sales (1) | $ | 1,026,746 | $ | 934,718 | $ | 2,361,870 | $ | 2,172,450 |
| ____________________________ | ||||||||
| --- | --- | |||||||
| (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 | 28 Weeks Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| April 16, 2023 | April 17, 2022 | April 16, 2023^(1)^ | April 17, 2022^(1)^ | |||||
| Company-operated restaurant sales | $ | 107,115 | $ | 111,143 | $ | 251,164 | $ | 254,561 |
| Franchised restaurant sales (2) | 118,896 | 107,966 | 264,994 | 246,469 | ||||
| Systemwide sales (2) | $ | 226,011 | $ | 219,109 | $ | 516,158 | $ | 501,030 |
| ____________________________ | ||||||||
| --- | --- | |||||||
| (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 | ||||||
|---|---|---|---|---|---|---|
| April 16, 2023 | April 17, 2022 | |||||
| Net income, as reported | $ | 26,507 | $ | 7,796 | ||
| Acquisition, integration, and restructuring costs | 1,259 | 13,098 | ||||
| Net COLI (gains) losses | (844 | ) | 2,136 | |||
| Pension, post-retirement benefit costs | 1,607 | 70 | ||||
| Debt write-off costs | — | 7,700 | ||||
| Refranchising gains | (704 | ) | (810 | ) | ||
| Tax impact of adjustments (1) | 2,939 | (5,279 | ) | |||
| Non-GAAP Adjusted Net Income | $ | 30,764 | $ | 24,711 | ||
| Weighted-average shares outstanding - diluted | 20,864 | 21,262 | ||||
| Diluted earnings per share – GAAP | $ | 1.27 | $ | 0.37 | ||
| Acquisition, integration, and restructuring costs | 0.06 | 0.62 | ||||
| Net COLI (gains) losses | (0.04 | ) | 0.10 | |||
| Pension, post-retirement benefit costs | 0.08 | — | ||||
| Debt write-off costs | — | 0.36 | ||||
| Refranchising gains | (0.03 | ) | (0.04 | ) | ||
| Tax impact of adjustments (1) | 0.13 | (0.25 | ) | |||
| Operating Earnings Per Share – non-GAAP (2) | $ | 1.47 | $ | 1.16 | ||
| ____________________ | ||||||
| --- | --- | |||||
| (1) | Tax impact calculated based on the non-GAAP Operating EPS tax rate of 26.7% in the current year and 27.1% 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 | ||||||
|---|---|---|---|---|---|---|
| April 16, 2023 | April 17, 2022 | |||||
| Net earnings - GAAP | $ | 26,507 | $ | 7,796 | ||
| Income taxes | 14,168 | 3,897 | ||||
| Interest expense, net | 19,357 | 26,481 | ||||
| Gains on the sale of company-operated restaurants | (704 | ) | (810 | ) | ||
| Other operating expenses (income), net | 2,980 | 14,367 | ||||
| Depreciation and amortization | 14,598 | 11,545 | ||||
| Amortization of favorable and unfavorable leases and subleases, net | 833 | 248 | ||||
| Amortization of franchise tenant improvement allowances and other | 1,022 | 893 | ||||
| Adjusted EBITDA – non-GAAP | $ | 78,761 | $ | 64,417 |
Restaurant-Level Margin
Restaurant-Level Margin is defined as company restaurant sales less restaurant operating costs (food and packaging, labor, and occupancy costs) and is neither required by, nor presented in accordance with GAAP. Restaurant-Level Margin excludes revenues and expenses of our franchise operations and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, other operating expenses (income), net, 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 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| April 16, 2023 | April 17, 2022 | April 16, 2023 | April 17, 2022 | |||||||||
| Earnings from operations - GAAP | $ | 60,313 | $ | 34,660 | $ | 1,327 | $ | 3,584 | ||||
| Franchise rental revenues | (80,910 | ) | (75,692 | ) | (2,609 | ) | (864 | ) | ||||
| Franchise royalties and other | (48,072 | ) | (44,430 | ) | (5,911 | ) | (2,673 | ) | ||||
| Franchise contributions for advertising and other services | (50,361 | ) | (44,965 | ) | (5,277 | ) | (2,361 | ) | ||||
| Franchise occupancy expenses | 50,008 | 48,403 | 2,642 | 841 | ||||||||
| Franchise support and other costs | 2,735 | 4,828 | 525 | 186 | ||||||||
| Franchise advertising and other services expenses | 52,660 | 46,849 | 5,483 | 2,409 | ||||||||
| Selling, general and administrative expenses | 24,883 | 21,636 | 14,521 | 6,577 | ||||||||
| Depreciation and amortization | 8,283 | 9,340 | 6,315 | 2,205 | ||||||||
| Pre-opening costs | 102 | 266 | 52 | — | ||||||||
| Other operating expenses (income), net | 1,711 | 14,087 | 1,269 | 279 | ||||||||
| Gains on the sale of company-operated restaurants | (904 | ) | (810 | ) | 200 | — | ||||||
| Restaurant-Level Margin- Non-GAAP | $ | 20,448 | $ | 14,172 | $ | 18,537 | $ | 10,183 | ||||
| Company restaurant sales | $ | 95,489 | $ | 94,250 | $ | 107,115 | $ | 57,059 | ||||
| Restaurant-Level Margin % - Non-GAAP | 21.4 | % | 15.0 | % | 17.3 | % | 17.8 | % |
Franchise-Level Margin
Franchise-Level Margin is defined as franchise revenues less franchise operating costs (occupancy expenses, advertising contributions, and franchise support and other costs) and is neither required by, nor presented in accordance with GAAP. Franchise-Level Margin excludes revenue and expenses of our company-operated restaurants and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, other operating expenses (income), net, and other costs that are considered normal operating costs. As such, Franchise-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Franchise-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Franchise-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Franchise-Level Margin as a key performance indicator to evaluate the profitability of our franchise operations.
Below is a reconciliation of non-GAAP Franchise-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):
| Jack in the Box | Del Taco | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| April 16, 2023 | April 17, 2022 | April 16, 2023 | April 17, 2022 | |||||||||
| Earnings from operations - GAAP | $ | 60,313 | $ | 34,660 | $ | 1,327 | $ | 3,584 | ||||
| Company restaurant sales | (95,489 | ) | (94,250 | ) | (107,115 | ) | (57,059 | ) | ||||
| Food and packaging | 29,841 | 30,687 | 29,468 | 16,184 | ||||||||
| Payroll and employee benefits | 29,200 | 32,007 | 35,835 | 18,904 | ||||||||
| Occupancy and other | 15,999 | 17,384 | 23,276 | 11,788 | ||||||||
| Selling, general and administrative expenses | 24,883 | 21,636 | 14,521 | 6,577 | ||||||||
| Depreciation and amortization | 8,283 | 9,340 | 6,315 | 2,205 | ||||||||
| Pre-opening costs | 102 | 266 | 52 | — | ||||||||
| Other operating expenses (income), net | 1,711 | 14,087 | 1,269 | 279 | ||||||||
| Gains on the sale of company-operated restaurants | (904 | ) | (810 | ) | 200 | — | ||||||
| Franchise-Level Margin - Non-GAAP | $ | 73,939 | $ | 65,007 | $ | 5,148 | $ | 2,462 | ||||
| Franchise rental revenues | $ | 80,910 | $ | 75,692 | $ | 2,609 | $ | 864 | ||||
| Franchise royalties and other | 48,072 | 44,430 | 5,911 | 2,673 | ||||||||
| Franchise contributions for advertising and other services | 50,361 | 44,965 | 5,277 | 2,361 | ||||||||
| Total franchise revenues | $ | 179,343 | $ | 165,087 | $ | 13,797 | $ | 5,898 | ||||
| Franchise-Level Margin % - Non-GAAP | 41.2 | % | 39.4 | % | 37.3 | % | 41.7 | % |
Contacts
Chris Brandon
Vice President, Investor Relations
chris.brandon@jackinthebox.com
619.902.0269