Jack in the Box same-store sales of +3.9% in
Q4 2023, +7.3% for FY 2023
Del Taco same-store sales of -1.5% in Q4
2023, +1.7%(1) for FY 2023
Jack in the Box and Del Taco opened 34
restaurants in FY 2023, including net positive unit growth and a
growing development pipeline for both brands
Del Taco completed the refranchising of 111
restaurants in FY 2023, which included development commitments for
109 new restaurants
Jack in the Box opened its first-ever
restaurant in Louisville, with stronger-than-expected sales
performance
Since opening, all new market locations for
Jack in the Box (Salt Lake City and Louisville) averaging over
$100,000 in weekly sales per restaurant
Jack in the Box Inc. (NASDAQ: JACK) announced financial
results for the Jack in the Box and Del Taco segments in the fourth
quarter, ended October 1, 2023.
“We achieved several important milestones for our business in
2023 including positive unit growth, successful new market
openings, accelerated Del Taco refranchising, strong same stores
sales performance and improvements in restaurant-level
profitability,” said Darin Harris, Jack in the Box chief executive
officer. “Despite some industry headwinds, we are excited about our
opportunity in 2024 to expand both brands into new markets and
continue driving our transformational growth strategy.”
Jack in the Box Performance
Same-store sales increased 3.9% in the fourth quarter of 2023,
comprised of an increase in company-operated same-store sales of
4.4% and an increase in franchise same-store sales of 3.8%. Sales
performance was driven by pricing, which was partially offset by
decreases in transactions and menu mix. Systemwide sales(2) for the
fourth quarter increased 4.3%.
Jack in the Box had 6 new restaurant openings and 11 restaurant
closures during the fourth quarter. For fiscal year 2023, Jack in
the Box opened 20 new restaurants, with an additional 6 openings
since the start of fiscal year 2024. As of the end of the fourth
quarter, and since the launch of the development program in
mid-2021, the company has signed 90 agreements for a total of 389
restaurants, with 38 already opened and 351 in place for future
development. During the fourth quarter, Jack in the Box opened its
first-ever location in Louisville — and, when combined with Salt
Lake City, all four of the new-market restaurants opened throughout
2023 have averaged over $100,000 in weekly sales per
restaurant.
Restaurant-Level Margin(3), was 20.7% for the fourth quarter, an
increase from 16.2% in the prior year period. The increase was
driven by menu price increases as well as a change in the mix of
restaurants, partially offset by inflationary increases in wages,
food and packaging costs and utilities. Commodity costs increased
in the quarter by 3.4%. Franchise-Level Margin(3), was 39.9% for
the fourth quarter, a decrease from 42.4% a year ago, driven by
higher early termination fees in the prior year and higher
franchise costs in the current year, partially offset by franchise
same-store sales growth.
Jack in the Box Same-Store Sales:
12 Weeks Ended
52 Weeks Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Company
4.4%
11.4%
8.8%
3.7%
Franchise
3.8%
3.2%
7.1%
0.6%
System SSS
3.9%
4.0%
7.3%
0.9%
Jack in the Box Restaurant Counts:
2023
2022
Company
Franchise
Total
Company
Franchise
Total
Store count at beginning of FY
146
2,035
2,181
163
2,055
2,218
New
2
18
20
—
17
17
Acquired from franchisees
—
—
—
13
(13
)
—
Refranchised
(5
)
5
—
(15
)
15
—
Closed
(1
)
(14
)
(15
)
(15
)
(39
)
(54
)
Store count at end of Q4
142
2,044
2,186
146
2,035
2,181
Net Unit Increase/ (Decrease)
(4
)
9
5
Q4 2023 vs. Q4 2022 Unit % Decrease
(2.7
)%
0.4
%
0.2
%
Del Taco Performance(1)
Same-store sales decreased 1.5% in the fourth quarter of 2023,
comprised of franchise same-store sales decline of 1.5% and
company-operated same-store sales decline of 1.4%. Sales
performance was primarily driven by decreases in transactions and
menu mix, partially offset by increases in pricing. Systemwide
sales(2) for the fourth quarter of 2023 decreased 0.6%.
Del Taco had 7 new restaurant openings and 9 restaurant closures
during the fourth quarter. For fiscal year 2023, Del Taco opened 14
new restaurants, and was net positive one restaurant. Del Taco
signed 138 total restaurant commitments in fiscal year 2023, with
109 commitments directly resulting from refranchising
transactions.
Restaurant-Level Margin(3), was 14.8% for the fourth quarter, a
decrease from 15.9% in the prior year period. This decrease was
primarily driven by wage inflation and higher utility and property
insurance costs, partially offset by lower food and packaging costs
as a percentage of revenue. Franchise-Level Margin(3), was 32.5%
for the fourth quarter, a decrease from 42.5% one year ago. The
decrease was driven by the impact of refranchising transactions
with pass through rent and advertising.
Del Taco Same-Store Sales(1):
12 Weeks Ended
52 Weeks Ended (1)
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Company
(1.4)%
4.1%
2.0%
2.9%
Franchise
(1.5)%
6.4%
1.4%
5.0%
System
(1.5)%
5.2%
1.7%
3.9%
Del Taco Restaurant Counts(1):
2023
2022
Company
Franchise
Total
Company
Franchise
Total
Restaurant count at beginning of FY
290
301
591
296
306
602
New
—
14
14
1
2
3
Refranchised
(111
)
111
—
—
—
—
Closed
(8
)
(5
)
(13
)
(7
)
(7
)
(14
)
Restaurant count at end of Q4
171
421
592
290
301
591
Net Restaurant Increase/ (Decrease)
(119
)
120
1
Q4 2023 vs. Q4 2022 Restaurant %
Decrease
(41.0
)%
39.9
%
0.2
%
Company-Wide Performance
Total revenues decreased 7.5% in the fourth quarter of 2023 to
$372.5 million, as compared to $402.8 million in the prior year
fourth quarter.
SG&A expense for the fourth quarter of 2023 was $43.7
million, an increase of $6.2 million compared to the prior year
fourth quarter, driven primarily by higher incentive compensation
and litigation accruals.
Adjusted EBITDA(5), was $68.4 million in the fourth quarter of
fiscal 2023 compared with $81.9 million for the prior year
quarter.
Net earnings decreased to $21.9 million for the fourth quarter
of 2023, compared with $45.9 million for the prior year fourth
quarter.
Diluted earnings per share was $1.08 for the fourth quarter of
2023 as compared with $2.17 in the prior year fourth quarter.
Operating Earnings Per Share(4) was $1.09 in the fourth quarter
compared with $1.33 in the prior year fourth quarter.
(1) Del Taco prior year comparisons are pro forma and based on
the time period of Jack in the Box’s full fiscal calendar. We
believe Del Taco's information on this time period is useful to
investors as they have a direct effect on the company's
profitability. (2) Systemwide sales include company and franchised
restaurant sales. (3) Restaurant-Level Margin and Franchise-Level
Margin are non-GAAP measures. These non-GAAP measures are
reconciled to earnings from operations, the most comparable GAAP
measure, in the attachment to this release. See "Reconciliation of
Non-GAAP Measurements to GAAP Results." (4) Operating Earnings Per
Share represents diluted earnings per share on a GAAP basis
excluding certain amounts. See "Reconciliation of Non-GAAP
Measurements to GAAP Results." Operating earnings per share may not
add due to rounding. (5) Adjusted EBITDA represents net earnings on
a GAAP basis excluding certain amounts. See "Reconciliation of
Non-GAAP Measurements to GAAP Results."
Capital Allocation
The company repurchased 0.4 million shares of common stock in
the fourth quarter of 2023. For the full year 2023, the company
repurchased 1.1 million shares, for an aggregate cost of $90.7
million, including excise tax. On November 16, 2023, upon
expiration of the previous share repurchase authorization, the
Board of Directors authorized a share repurchase program for up to
$250.0 million of the company’s common stock.
On November 16, 2023, the Board of Directors declared a cash
dividend of $0.44 per share, to be paid on December 28, 2023, to
shareholders of record as of the close of business on December 14,
2023. Future dividends will be subject to approval by our Board of
Directors.
Guidance & Outlook
The following guidance and underlying assumptions reflect the
company’s current expectations for the fiscal year ending September
29, 2024:
FY 2024 Company-wide
Guidance
- CapEx & Other Investments of $110-$120 million
- Other investments include franchise tenant improvement
allowances and incentives (cash flows from operating
activities)
- SG&A Guidance of $165-$175 million
- SG&A guidance excludes net COLI gains/losses, and any
impact from future Del Taco refranchising
- G&A, excluding selling and advertising, is expected to be
2.3-2.5% of systemwide sales
- Company-owned Commodity Costs higher by 1-3% vs.
2023
- Company-owned Wage Rates higher by 10-12% vs. 2023
- Without impact of California restaurants affected by AB1228,
wage rates would be 3-5% vs. 2023
- Depreciation & Amortization of $61-$63 million
- Adjusted/Operating EPS Tax Rate of ~27%
- Share Repurchases of $70-$80 million
- Adjusted EBITDA of $325-$335 million
- Operating EPS of $6.25-$6.50
- Excludes any dilutive impact from refranchising Del Taco
restaurants
FY 2024 Jack in the Box
Segment Guidance
- Same Store Sales growth of Low-to-Mid Single Digits
- 25-35 gross openings, with net positive unit growth for the
full year
- Company-Owned Restaurant Level Margin of 21-23%
- Includes price increases of 6-8%
- Without impact of California restaurants affected by AB1228,
price increases would be 3-4% vs. 2023
- Franchise Level Margin of 40-42%
FY 2024 Del Taco Segment
Guidance
- Same Store Sales growth of Low-to-Mid Single Digits
- 10-15 gross openings, with net positive unit growth for the
full year
- Company-Owned Restaurant Level Margin of 14-16%
- Includes price increases of 6-8%
- Without impact of California restaurants affected by AB1228,
price increases would be 4-5% vs. 2023
- Franchise Level Margin of 29-31%
Conference Call
The company will host a conference call for analysts and
investors on Tuesday, November 21, 2023, beginning at 2:00 p.m. PT
(5:00 p.m. ET). The call will be webcast live via the Investors
section of the Jack in the Box company website at
http://investors.jackinthebox.com. A replay of the call will be
available through the Jack in the Box Inc. corporate website for 21
days. The call can be accessed via phone by dialing (888) 330-2508
and using ID 4115265.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), founded and headquartered
in San Diego, California, is a restaurant company that operates and
franchises Jack in the Box®, one of the nation's largest hamburger
chains with approximately 2,200 restaurants across 22 states, and
Del Taco®, the second largest Mexican-American QSR chain by units
in the U.S. with approximately 600 restaurants across 16 states.
For more information on both brands, including franchising
opportunities, visit www.jackinthebox.com and www.deltaco.com.
Category: Earnings
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the federal securities laws. Forward-looking
statements may be identified by words such as “anticipate,”
“believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,”
“intend,” “plan,” “project,” “may,” “will,” “would” and similar
expressions. These statements are based on management’s current
expectations, estimates, forecasts and projections about our
business and the industry in which we operate. These estimates and
assumptions involve known and unknown risks, uncertainties, and
other factors that are in some cases beyond our control. Factors
that may cause our actual results to differ materially from any
forward-looking statements include, but are not limited to: the
success of new products, marketing initiatives and restaurant
remodels and drive-thru enhancements; the impact of competition,
unemployment, trends in consumer spending patterns and commodity
costs; the company’s ability to achieve and manage its planned
growth, which is affected by the availability of a sufficient
number of suitable new restaurant sites, the performance of new
restaurants, risks relating to expansion into new markets and
successful franchise development; the ability to attract, train and
retain top-performing personnel, litigation risks; risks associated
with disagreements with franchisees; supply chain disruption;
food-safety incidents or negative publicity impacting the
reputation of the company's brand; increased regulatory and legal
complexities, risks associated with the amount and terms of the
securitized debt issued by certain of our wholly owned
subsidiaries; and stock market volatility. These and other factors
are discussed in the company’s annual report on Form 10-K and its
periodic reports on Form 10-Q filed with the Securities and
Exchange Commission, which are available online at
http://investors.jackinthebox.com or in hard copy upon request. The
company undertakes no obligation to update or revise any
forward-looking statement, whether as the result of new information
or otherwise.
JACK IN THE BOX INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS
(In thousands, except per
share data)
(Unaudited)
12 Weeks Ended
52 Weeks Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Revenues:
Company restaurant sales
$
174,967
$
214,474
$
846,278
$
701,070
Franchise rental revenues
85,993
80,668
364,591
340,391
Franchise royalties and other
55,173
56,906
240,515
216,821
Franchise contributions for advertising
and other services
56,391
50,725
240,922
209,801
372,524
402,773
1,692,306
1,468,083
Operating costs and expenses, net:
Food and packaging
51,037
66,182
250,836
216,345
Payroll and employee benefits
57,051
70,249
274,598
232,250
Occupancy and other
35,353
43,701
163,273
135,803
Franchise occupancy expenses
55,799
51,411
229,602
215,609
Franchise support and other costs
3,705
3,796
12,328
16,490
Franchise advertising and other services
expenses
60,658
53,308
253,533
218,272
Selling, general and administrative
expenses
43,708
37,549
172,872
130,823
Depreciation and amortization
13,827
15,346
62,287
56,100
Pre-opening costs
718
480
1,385
1,110
Other operating expense (income), net
5,702
(21,450
)
10,837
889
Gains on the sale of company-operated
restaurants
(7,675
)
(2,218
)
(17,998
)
(3,878
)
319,883
318,354
1,413,553
1,219,813
Earnings from operations
52,641
84,419
278,753
248,270
Other pension and post-retirement
expenses, net
1,608
70
6,967
303
Interest expense, net
18,279
19,704
82,446
86,075
Earnings before income taxes
32,754
64,645
189,340
161,892
Income taxes
10,857
18,787
58,514
46,111
Net earnings
$
21,897
$
45,858
$
130,826
$
115,781
Net earnings per share:
Basic
$
1.09
$
2.17
$
6.35
$
5.46
Diluted
$
1.08
$
2.17
$
6.30
$
5.45
Weighted-average shares outstanding:
Basic
20,153
21,110
20,603
21,195
Diluted
20,337
21,162
20,764
21,245
Cash dividends declared per common
share
$
0.44
$
0.44
$
1.76
$
1.76
___________________________
(1)
Earnings per share may not add due to
rounding.
JACK IN THE BOX INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
(Unaudited)
October 1, 2023
October 2, 2022
ASSETS
Current assets:
Cash
$
157,653
$
108,890
Restricted cash
28,254
27,150
Accounts and other receivables, net
99,678
103,803
Inventories
3,896
5,264
Prepaid expenses
16,911
16,095
Current assets held for sale
13,925
17,019
Other current assets
5,667
4,772
Total current assets
325,984
282,993
Property and equipment, at cost:
Land
92,007
86,134
Buildings
968,221
960,984
Restaurant and other equipment
166,714
163,527
Construction in progress
31,647
18,271
1,258,589
1,228,916
Less accumulated depreciation and
amortization
(846,559
)
(810,752
)
Property and equipment, net
412,030
418,164
Other assets:
Operating lease right-of-use assets
1,397,555
1,332,135
Intangible assets, net
11,330
12,324
Trademarks
283,500
283,500
Goodwill
329,986
366,821
Other assets, net
240,707
226,569
Total other assets
2,263,078
2,221,349
$
3,001,092
$
2,922,506
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Current maturities of long-term debt
$
29,964
$
30,169
Current operating lease liabilities
142,518
171,311
Accounts payable
84,960
66,271
Accrued liabilities
302,178
253,932
Total current liabilities
559,620
521,683
Long-term liabilities:
Long-term debt, net of current
maturities
1,724,933
1,799,540
Long-term operating lease liabilities, net
of current portion
1,265,514
1,165,097
Deferred tax liabilities
26,229
37,684
Other long-term liabilities
143,123
134,694
Total long-term liabilities
3,159,799
3,137,015
Stockholders’ deficit:
Preferred stock $0.01 par value,
15,000,000 shares authorized, none issued
—
—
Common stock $0.01 par value, 175,000,000
shares authorized, 82,645,814 and 82,580,599 issued,
respectively
826
826
Capital in excess of par value
520,076
508,323
Retained earnings
1,937,598
1,842,947
Accumulated other comprehensive loss
(51,790
)
(53,982
)
Treasury stock, at cost, 62,910,964 and
61,799,221 shares, respectively
(3,125,037
)
(3,034,306
)
Total stockholders’ deficit
(718,327
)
(736,192
)
$
3,001,092
$
2,922,506
JACK IN THE BOX INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
52 Weeks Ended
October 1, 2023
October 2, 2022
Cash flows from operating activities:
Net earnings
$
130,826
$
115,781
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
62,287
56,100
Amortization of franchise tenant
improvement allowances and incentives
4,647
4,446
Amortization of debt issuance costs
5,040
5,496
Loss on extinguishment of debt
—
7,700
Tax deficiency (excess tax benefits) from
share-based compensation arrangements
71
123
Deferred income taxes
(11,989
)
7,857
Share-based compensation expense
11,205
7,122
Pension and postretirement expense
6,967
303
(Gains) losses on cash surrender value of
company-owned life insurance
(7,346
)
12,668
Gains on the sale of company-operated
restaurants
(17,998
)
(3,878
)
Gains on the disposition of property and
equipment
(8,171
)
(30,533
)
Impairment charges and other
6,217
8,219
Changes in assets and liabilities,
excluding acquisitions and dispositions:
Accounts and other receivables
(4,048
)
(18,143
)
Inventories
1,367
304
Prepaid expenses and other current
assets
(1,422
)
(3,275
)
Operating lease right-of-use assets and
lease liabilities
2,364
2,593
Accounts payable
(1,692
)
16,243
Accrued liabilities
47,459
(9,081
)
Pension and postretirement
contributions
(6,241
)
(6,690
)
Franchise tenant improvement allowance and
incentive disbursements
(3,265
)
(2,989
)
Other
(1,272
)
(7,484
)
Cash flows provided by operating
activities
215,006
162,882
Cash flows from investing activities:
Purchases of property and equipment
(74,954
)
(46,475
)
Proceeds from the sale and leaseback of
assets
3,673
10,768
Acquisition of Del Taco, net of cash
acquired
—
(580,793
)
Proceeds from the sale of company-operated
restaurants
85,221
6,391
Proceeds from the sale of property and
equipment
25,214
31,161
Other
3,065
360
Cash flows provided by (used in) investing
activities
42,219
(578,588
)
Cash flows from financing activities:
Borrowings on revolving credit
facilities
—
68,000
Repayments of borrowings on revolving
credit facilities
(50,000
)
(18,000
)
Proceeds from issuance of debt
—
1,100,000
Principal repayments on debt
(30,109
)
(588,064
)
Debt issuance costs
—
(20,599
)
Dividends paid on common stock
(35,890
)
(36,987
)
Proceeds from issuance of common stock
263
51
Repurchases of common stock
(90,029
)
(25,000
)
Payroll tax payments for equity award
issuances
(1,593
)
(1,223
)
Cash flows (used in) provided by financing
activities
(207,358
)
478,178
Net increase in cash and restricted
cash
49,867
62,472
Cash and restricted cash at beginning of
year
136,040
73,568
Cash and restricted cash at end of
year
$
185,907
$
136,040
JACK IN THE BOX INC. AND
SUBSIDIARIES
SUPPLEMENTAL
INFORMATION
The following table presents certain income and expense items
included in our consolidated statements of earnings as a percentage
of total revenues, unless otherwise indicated. Percentages may not
add due to rounding.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS DATA
(Unaudited)
12 Weeks Ended
52 Weeks Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Revenues:
Company restaurant sales
47.0
%
53.2
%
50.0
%
47.8
%
Franchise rental revenues
23.1
%
20.0
%
21.5
%
23.2
%
Franchise royalties and other
14.8
%
14.1
%
14.2
%
14.8
%
Franchise contributions for advertising
and other services
15.1
%
12.6
%
14.2
%
14.3
%
100.0
%
100.0
%
100.0
%
100.0
%
Operating costs and expenses, net:
Food and packaging (1)
29.2
%
30.9
%
29.6
%
30.9
%
Payroll and employee benefits (1)
32.6
%
32.8
%
32.4
%
33.1
%
Occupancy and other (1)
20.2
%
20.4
%
19.3
%
19.4
%
Franchise occupancy expenses (2)
64.9
%
63.7
%
63.0
%
63.3
%
Franchise support and other costs (3)
6.7
%
6.7
%
5.1
%
7.6
%
Franchise advertising and other services
expenses (4)
107.6
%
105.1
%
105.2
%
104.0
%
Selling, general and administrative
expenses
11.7
%
9.3
%
10.2
%
8.9
%
Depreciation and amortization
3.7
%
3.8
%
3.7
%
3.8
%
Pre-opening costs
—
%
—
%
—
%
—
%
Other operating expense (income), net
1.5
%
(5.3
)%
0.6
%
0.1
%
Gains on the sale of company-operated
restaurants
(2.1
)%
(0.6
)%
(1.1
)%
(0.3
)%
Earnings from operations
14.1
%
21.0
%
16.5
%
16.9
%
Income tax rate (5)
33.1
%
29.1
%
30.9
%
28.5
%
____________________________
(1)
As a percentage of company restaurant
sales.
(2)
As a percentage of franchise rental
revenues.
(3)
As a percentage of franchise royalties and
other.
(4)
As a percentage of franchise contributions
for advertising and other services.
(5)
As a percentage of earnings from
operations and before income taxes.
Jack in the Box system sales (in
thousands):
12 Weeks Ended
52 Weeks Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Company-operated restaurant sales
$
95,297
$
99,020
$
413,748
$
414,225
Franchised restaurant sales (1)
917,288
871,464
4,005,985
3,696,817
Systemwide sales (1)
$
1,012,585
$
970,484
$
4,419,733
$
4,111,042
____________________________
(1)
Franchised restaurant sales represent
sales at franchised restaurants and are revenues of our
franchisees. Systemwide sales include company and franchised
restaurant sales. We do not record 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 useful to investors as they have a direct effect on the
company's profitability.
Del Taco systemwide sales (in
thousands):
12 Weeks Ended
52 Weeks Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
(2)
Company-operated restaurant sales
$
79,670
$
115,454
$
432,530
$
484,347
Franchised restaurant sales (1)
147,808
113,439
541,913
472,682
Systemwide sales (1)
$
227,478
$
228,893
$
974,443
$
957,029
____________________________
(1)
Franchised restaurant sales represent sales at franchised
restaurants and are revenues of our franchisees. Systemwide sales
include company and franchised restaurant sales. We do not record
franchised sales as revenues; however, our royalty revenues,
marketing fees and percentage rent revenues are calculated based on
a percentage of franchised sales. We believe franchised and
systemwide restaurant sales information is useful to investors as
they have a direct effect on the company's profitability.
(2)
Del Taco has been presented on a pro forma basis and has been
derived from unaudited financial information to conform to our
fiscal year and is for informational purposes only.
JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)
To supplement the consolidated financial statements, which are
presented in accordance with GAAP, the company uses the following
non-GAAP measures: Operating Earnings Per Share, Adjusted EBITDA,
Restaurant-Level Margin and Franchise-Level Margin.
Management believes that these measurements, when viewed with
the company's results of operations in accordance with GAAP and the
accompanying reconciliations in the tables below, provide useful
information about operating performance and period-over-period
changes, and provide additional information that is useful for
evaluating the operating performance of the company's core business
without regard to potential distortions.
Operating Earnings Per Share
Operating Earnings Per Share represents diluted earnings per
share on a GAAP basis excluding acquisition, integration and
strategic initiatives, COLI losses (gains), net, pension and
post-retirement benefit costs, gains on the sale of
company-operated restaurants, debt write-offs, gains on the sale of
real estate to franchisees and the tax-related impacts of the above
adjustments.
Operating Earnings Per Share should be considered as a
supplement to, not as a substitute for, analysis of results as
reported under U.S. GAAP or other similarly titled measures of
other companies. Management believes Operating Earnings Per Share
provides investors with a meaningful supplement of the company’s
operating performance and period-over-period changes without regard
to potential distortions.
Below is a reconciliation of Non-GAAP Adjusted Net Income to the
most directly comparable GAAP measure of net income. Also below is
a reconciliation of Non-GAAP Operating Earnings Per Share to the
most directly comparable GAAP measure, diluted earnings per
share.
12 Weeks Ended
52 Weeks Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Net income, as reported
$
21,897
$
45,858
$
130,826
$
115,781
Acquisition, integration and strategic
initiatives (1)
3,753
1,217
9,112
20,081
Net COLI (gains) losses (2)
1,194
2,745
(5,953
)
9,911
Pension and post-retirement benefit costs
(3)
1,608
70
6,967
303
Gains on the sale of company-operated
restaurants
(7,675
)
(2,218
)
(17,998
)
(3,878
)
Debt write-offs
—
—
—
7,700
Gains on sale of real estate to
franchisees
—
(28,876
)
(9,467
)
(28,876
)
Tax impact of adjustments (4)
1,455
9,259
11,670
2,743
Non-GAAP Adjusted Net Income
$
22,232
$
28,055
$
125,157
$
123,765
Weighted-average shares outstanding -
diluted
20,337
21,162
20,764
21,245
Diluted earnings per share – GAAP
$
1.08
$
2.17
$
6.30
$
5.45
Acquisition, integration and strategic
initiatives (1)
0.18
0.06
0.44
0.95
Net COLI (gains) losses (2)
0.06
0.13
(0.29
)
0.47
Pension and post-retirement benefit costs
(3)
0.08
—
0.34
0.01
Gains on the sale of company-operated
restaurants
(0.38
)
(0.10
)
(0.87
)
(0.18
)
Debt write-offs
—
—
—
0.36
Gains on sale of real estate to
franchisees
—
(1.36
)
(0.46
)
(1.36
)
Tax impact of adjustments (4)
0.07
0.43
0.57
0.14
Operating Earnings Per Share – non-GAAP
(5)
$
1.09
$
1.33
$
6.03
$
5.84
____________________
(1)
Acquisition, integration and strategic
initiatives reflect charges that are not part of our ongoing
operations, including consulting fees for discrete project-based
strategic initiatives that are not expected to recur in the
foreseeable future.
(2)
Net COLI (gains) losses reflect
market-based adjustments on the company-owned life insurance
policies which support our non-qualified benefit plans.
(3)
Pension and post-retirement benefit costs
are the gains and losses relating to our two legacy defined benefit
pension plans, as well as our two legacy post-retirement plans.
(4)
Tax impacts for the quarter calculated
based on the non-GAAP Operating EPS tax rate of 29.7% in the
current quarter and 25.4% in the prior year quarter. Tax impacts
for the year calculated based on the non-GAAP Operating EPS tax
rate of 27.2% in the current fiscal year and 26.0% for the prior
fiscal year.
(5)
Operating Earnings Per Share may not add
due to rounding.
Adjusted EBITDA
Adjusted EBITDA represents net earnings on a GAAP basis
excluding income taxes, interest expense, net, gains on the sale of
company-operated restaurants, other operating expenses (income),
net, depreciation and amortization, amortization of cloud computing
costs, amortization of favorable and unfavorable leases and
subleases, net, amortization of franchise tenant improvement
allowances and incentives, COLI losses (gains), net, and pension
and post-retirement benefit costs.
Adjusted EBITDA should be considered as a supplement to, not as
a substitute for, analysis of results as reported under U.S. GAAP
or other similarly titled measures of other companies. Management
believes Adjusted EBITDA is useful to investors to gain an
understanding of the factors and trends affecting the company's
ongoing cash earnings, from which capital investments are made and
debt is serviced.
Below is a reconciliation of non-GAAP Adjusted EBITDA to the
most directly comparable GAAP measure, net earnings (in
thousands):
12 Weeks Ended
52 Weeks Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Net earnings - GAAP
$
21,897
$
45,858
$
130,826
$
115,781
Income taxes
10,857
18,787
58,514
46,111
Interest expense, net
18,279
19,704
82,446
86,075
Gains on the sale of company-operated
restaurants
(7,675
)
(2,218
)
(17,998
)
(3,878
)
Other operating expense (income), net
(1)
5,702
(21,450
)
10,837
889
Depreciation and amortization
13,827
15,346
62,287
56,100
Amortization of cloud-computing costs
(2)
1,178
1,235
5,004
5,116
Amortization of favorable and unfavorable
leases and subleases, net
198
435
1,633
1,120
Amortization of franchise tenant
improvement allowances and incentives
1,352
1,400
4,647
4,446
Net COLI (gains) losses (3)
1,194
2,745
(5,953
)
9,911
Pension and post-retirement benefit costs
(4)
1,608
70
6,967
303
Adjusted EBITDA – non-GAAP
$
68,417
$
81,912
$
339,210
$
321,974
(1)
Other operating expense (income), net
includes: acquisition, integration and strategic initiatives; costs
of closed restaurants; operating restaurant impairment charges;
accelerated depreciation and gains on disposition of property and
equipment, net.
(2)
Amortization of cloud computing costs
includes the amounts for the non-cash amortization of capitalized
implementation costs related to cloud-based software arrangements
that are included within selling, general and administrative
expenses.
(3)
Net COLI (gains) losses reflect
market-based adjustments on the company-owned life insurance
policies which support our non-qualified benefit plans.
(4)
Pension and post-retirement benefit costs
are the gains and losses relating to our two legacy defined benefit
pension plans, as well as the two legacy post-retirement plans.
Restaurant-Level Margin
Restaurant-Level Margin is defined as company restaurant sales
less restaurant operating costs (food and packaging, labor, and
occupancy costs) and is neither required by, nor presented in
accordance with GAAP. Restaurant-Level Margin excludes revenues and
expenses of our franchise operations and certain costs, such as
selling, general, and administrative expenses, depreciation and
amortization, pre-opening costs, other operating expenses (income),
net, gains or losses on the sale of company-operated restaurants,
and other costs that are considered normal operating costs. As
such, Restaurant-Level Margin is not indicative of the overall
results of the company and does not accrue directly to the benefit
of shareholders because of the exclusion of corporate-level
expenses. Restaurant-Level Margin should be considered as a
supplement to, not as a substitute for, analysis of results as
reported under GAAP or other similarly titled measures of other
companies. The company is presenting Restaurant-Level Margin
because it believes that it provides a meaningful supplement to net
earnings of the company's core business operating results, as well
as a comparison to those of other similar companies. Management
utilizes Restaurant-Level Margin as a key performance indicator to
evaluate the profitability of company-operated restaurants.
Below is a reconciliation of non-GAAP Restaurant-Level Margin to
the most directly comparable GAAP measure, earnings from
operations, for the 12-weeks ended (in thousands):
Jack in the Box
Del Taco
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Earnings from operations - GAAP
$
47,490
$
82,563
$
5,152
$
1,856
Franchise rental revenues
(81,006
)
(78,868
)
(4,987
)
(1,801
)
Franchise royalties and other
(48,092
)
(51,395
)
(7,082
)
(5,511
)
Franchise contributions for advertising
and other services
(48,956
)
(45,882
)
(7,436
)
(4,843
)
Franchise occupancy expenses
50,877
49,658
4,922
1,753
Franchise support and other costs
2,986
3,461
719
336
Franchise advertising and other services
expenses
53,138
48,412
7,521
4,895
Selling, general and administrative
expenses
31,141
24,238
12,567
13,311
Other operating expense (income), net
3,163
(23,280
)
2,538
1,829
Gains on the sale of company-operated
restaurants
(71
)
(2,218
)
(7,604
)
—
Pre-opening costs
684
477
33
3
Depreciation and amortization
8,342
8,858
5,485
6,488
Restaurant-Level Margin- Non-GAAP
$
19,696
$
16,024
$
11,828
$
18,316
Company restaurant sales
$
95,297
$
99,020
$
79,670
$
115,454
Restaurant-Level Margin % - Non-GAAP
20.7
%
16.2
%
14.8
%
15.9
%
Franchise-Level Margin
Franchise-Level Margin is defined as franchise revenues less
franchise operating costs (occupancy expenses, advertising
contributions, and franchise support and other costs) and is
neither required by, nor presented in accordance with GAAP.
Franchise-Level Margin excludes revenue and expenses of our
company-operated restaurants and certain costs, such as selling,
general, and administrative expenses, depreciation and
amortization, other operating expenses (income), net, and other
costs that are considered normal operating costs. As such,
Franchise-Level Margin is not indicative of the overall results of
the company and does not accrue directly to the benefit of
shareholders because of the exclusion of corporate-level expenses.
Franchise-Level Margin should be considered as a supplement to, not
as a substitute for, analysis of results as reported under GAAP or
other similarly titled measures of other companies. The company is
presenting Franchise-Level Margin because it believes that it
provides a meaningful supplement to net earnings of the company's
core business operating results, as well as a comparison to those
of other similar companies. Management utilizes Franchise-Level
Margin as a key performance indicator to evaluate the profitability
of our franchise operations.
Below is a reconciliation of non-GAAP Franchise-Level Margin to
the most directly comparable GAAP measure, earnings from
operations, for the 12-weeks ended (in thousands):
Jack in the Box
Del Taco
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Earnings from operations - GAAP
$
47,490
$
82,563
$
5,152
$
1,856
Company restaurant sales
(95,297
)
(99,020
)
(79,670
)
(115,454
)
Food and packaging
29,353
32,271
21,684
33,912
Payroll and employee benefits
29,427
32,608
27,624
37,642
Occupancy and other
16,818
18,117
18,534
25,582
Selling, general and administrative
expenses
31,141
24,238
12,567
13,311
Other operating expense (income), net
3,163
(23,280
)
2,538
1,829
Gains on the sale of company-operated
restaurants
(71
)
(2,218
)
(7,604
)
—
Pre-opening costs
684
477
33
3
Depreciation and amortization
8,342
8,858
5,485
6,488
Franchise-Level Margin - Non-GAAP
$
71,050
$
74,614
$
6,343
$
5,169
Franchise rental revenues
$
81,006
$
78,868
$
4,987
$
1,801
Franchise royalties and other
48,092
51,395
7,082
5,511
Franchise contributions for advertising
and other services
48,956
45,882
7,436
4,843
Total franchise revenues
$
178,054
$
176,145
$
19,505
$
12,155
Franchise-Level Margin % - Non-GAAP
39.9
%
42.4
%
32.5
%
42.5
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231121863382/en/
Chris Brandon Vice President, Investor Relations
chris.brandon@jackinthebox.com 619.902.0269
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