Jack in the Box Inc. Concludes Review of Strategic and Financing Alternatives; Announces Plans to Pursue Securitization; Reaffirms Long-Term Guidance
STRATEGIC AND FINANCING ALTERNATIVES
The decision to pursue a securitization represents the conclusion of the company’s previously announced exploration of a range of strategic and financing alternatives to maximize shareholder value. The company’s Board of Directors and management team, with the support of legal and financial advisors, conducted a robust and wide-ranging process, which included contacting a broad range of potential strategic and financial buyers, both domestic and international. Simultaneously, the company explored various financing alternatives, and the Board and management team have concluded that implementing a new capital structure in the form of a securitization is the best alternative for driving shareholder value at this time.
“With this evaluation behind us, we are dedicated to moving the
The company intends to replace its existing senior credit facility, which includes a term loan and revolving credit facility, with a securitization. The net proceeds of the new facility would be used for repayment of the existing credit facility, transaction costs associated with the refinancing, and general corporate purposes, including the return of cash to shareholders.
Following the completion of the securitization, the company intends to resume share repurchases through open market transactions, a potential accelerated share repurchase program, or a combination thereof, with a target leverage ratio of approximately 5.0 times EBITDA.
There can be no assurance regarding the timing of a refinancing transaction, the interest rate at which the company’s existing indebtedness would be refinanced, or that a refinancing transaction will be completed.
REAFFIRMS LONG-TERM GUIDANCE (THROUGH FISCAL 2022)
This release includes forward-looking guidance for certain non-GAAP financial measures, including Restaurant-Level Margin, Adjusted EBITDA and free cash flow, which the company defines as cash flow from operations (including tenant improvement allowances) less capital expenditures. The company believes free cash flow is an important liquidity measure for investors because it communicates how much cash flow is available for working capital needs or to be used for repurchasing shares, paying dividends, repaying or refinancing debt, or other uses of cash. The company is unable without unreasonable effort to provide reconciliations of these forward-looking non-GAAP measures.
The guidance below has been updated to reflect the impact of the revenue recognition accounting standard that was adopted in fiscal 2019, but does not reflect the new lease accounting standard that will be adopted in fiscal 2020.
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 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 franchisee development; 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; the company’s ability to obtain additional
financing and increase its debt leverage; 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