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Jack in the Box Inc. Reports Fourth Quarter FY 2017 Earnings

SAN DIEGO--(BUSINESS WIRE)--Nov. 29, 2017-- Jack in the Box Inc. (NASDAQ: JACK) today reported earnings from continuing operations of $30.3 million, or $1.02 per diluted share, for the fourth quarter ended October 1, 2017, compared with $32.6 million, or $0.98 per diluted share, for the fourth quarter of fiscal 2016. Fiscal 2017 earnings from continuing operations totaled $138.3 million, or $4.47 per diluted share, compared with $126.3 million, or $3.70 per diluted share in fiscal 2016.

Operating earnings per share, a non-GAAP measure which the company defines as diluted earnings per share from continuing operations on a GAAP basis excluding restructuring charges and gains or losses from refranchising, were $0.73 in the fourth quarter of fiscal 2017 compared with $1.03 in the prior year quarter. For fiscal year 2017, operating earnings per share were $3.88 compared with $3.86 last year.

The fourth quarter and fiscal year ended October 1, 2017, included 12 weeks and 52 weeks, respectively, as compared to 13 weeks and 53 weeks in the fourth quarter and fiscal year ended October 2, 2016, respectively. The company estimates that the extra week benefited diluted earnings per share by approximately $0.09 in both the fourth quarter and fiscal 2016.

A reconciliation of non-GAAP measurements to GAAP results is provided below, with additional information included in the attachment to this release. Figures may not add due to rounding.

                                 
       

12 Weeks
Ended

     

13 Weeks
Ended

     

52 Weeks
Ended

     

53 Weeks
Ended

       

October 1,
2017

     

October 2,
2016

     

October 1,
2017

     

October 2,
2016

Diluted earnings per share from continuing operations – GAAP

      $ 1.02         $ 0.98       $ 4.47         $ 3.70  
Restructuring charges         0.06           0.05         0.18           0.19  
Gains from refranchising         (0.35 )                 (0.77 )         (0.02 )
Operating earnings per share – Non-GAAP       $ 0.73         $ 1.03       $ 3.88         $ 3.86  
                                               

Restructuring charges of $2.8 million, or approximately $0.06 per diluted share, were recorded during the fourth quarter of fiscal 2017, as compared with $2.3 million, or approximately $0.05 per diluted share, in the prior year quarter. Total restructuring charges in the fourth quarter of fiscal 2017 included $3.6 million related to the evaluation of potential alternatives with respect to Qdoba®, and also reflected a $0.9 million reduction in future lease commitment costs resulting from the early termination of the lease for the Qdoba corporate support center. Restructuring charges are included in "Impairment and other charges, net" in the accompanying consolidated statements of earnings, which increased in the fourth quarter to $9.5 million from $4.5 million in the year ago quarter. Excluding restructuring charges, the increase was due primarily to charges related to the impairment of three underperforming Qdoba locations, as well as impairment and accelerated depreciation of furniture and equipment resulting from Qdoba design changes and remodels, totaling $3.3 million, or approximately $0.07 per diluted share.

Lenny Comma, chairman and chief executive officer, said, "Our fourth quarter operating results concluded a challenging year for both brands. Our key initiatives in 2018 will be focused on regaining momentum in a highly competitive environment.

"We continue to make significant progress on our Jack in the Box refranchising initiative, with the sale of 60 restaurants in the fourth quarter and 178 during the fiscal year. We currently have signed non-binding letters of intent with franchisees to sell 32 additional restaurants, and now anticipate the Jack in the Box franchise mix to approach the high end of our previous expected range.

"The company returned over $376 million to shareholders in fiscal 2017, including over $327 million in share repurchases and $49 million in dividends. We remain committed to returning cash to shareholders in the future as we adjust our capital structure to reflect a less capital-intensive business model."

The company's Board of Directors, with the assistance of Morgan Stanley & Co. LLC, has made substantial progress in its evaluation of potential alternatives with respect to Qdoba, as well as other ways to enhance shareholder value. There can be no assurance that the evaluation process will result in any transaction or other specific course of action. The company does not intend to comment further until the evaluation process is concluded. The company will provide guidance for fiscal 2018 following the completion of the Qdoba evaluation process.

 

Increase/(decrease) in same-store sales*:

 
       

12 Weeks
Ended

     

13 Weeks
Ended

     

52 Weeks
Ended

     

53 Weeks
Ended

       

October 1,
2017*

     

October 2,
2016

     

October 1,
2017*

     

October 2,
2016

Jack in the Box:                                
Company       (2.0)%       0.5%       (1.1)%       0.0%
Franchise       (0.7)%       2.4%       0.9%       1.6%
System       (1.0)%       2.0%       0.5%       1.2%
Qdoba:                                
Company       (4.0)%       1.2%       (3.0)%       1.7%
Franchise       0.0%       0.4%       0.4%       1.1%
System       (2.1)%       0.8%       (1.4)%       1.4%

*Note: Due to the transition from a 53-week to a 52-week fiscal year, year-over-year fiscal period comparisons are offset by one week. The change in same-store sales presented in the 2017 columns uses comparable calendar periods to balance the one-week shift and to provide a clearer year-over-year comparison.

 

Jack in the Box system same-store sales decreased 1.0 percent for the quarter and lagged the QSR sandwich segment by 2.9 percentage points for the comparable period, according to The NPD Group’s SalesTrack® Weekly for the 12-week time period ended October 1, 2017. Included in this segment are 16 of the top QSR sandwich and burger chains in the country. Company same-store sales decreased 2.0 percent in the fourth quarter driven by a 5.4 percent decrease in transactions, partially offset by average check growth of 3.4 percent. The company estimates that Hurricane Harvey negatively impacted company, franchise and system same-store sales by 40, 20 and 30 basis points, respectively, in the fourth quarter.

Qdoba same-store sales decreased 2.1 percent system-wide and decreased 4.0 percent for company restaurants in the fourth quarter. Company same-store sales reflected a 6.4 percent decrease in transactions, partially offset by growth in average check and catering sales.

Consolidated restaurant operating margin, a non-GAAP measure1, decreased by 390 basis points to 15.8 percent of sales in the fourth quarter of 2017, compared with 19.7 percent of sales in the year-ago quarter. Restaurant operating margin for Jack in the Box company restaurants, a non-GAAP measure1, decreased 180 basis points to 19.2 percent of sales. The decrease was due primarily to sales deleverage, higher repairs and maintenance costs and higher labor costs including wage inflation, which were partially offset by a decrease in food and packaging costs as a percentage of sales and the benefit of refranchising activities in 2017. The decrease in food and packaging costs as a percentage of sales resulted from favorable product mix changes and menu price increases, partially offset by commodity inflation of approximately 3.3 percent in the quarter. Restaurant operating margin for Qdoba company restaurants, a non-GAAP measure1,decreased 610 basis points to 11.2 percent of sales. The decrease was due primarily to the impact of new restaurant openings, an increase in food and packaging costs, sales deleverage, and the impact of wage inflation. The increase in food and packaging costs as a percentage of sales was impacted by unfavorable product mix, operating inefficiencies and commodity inflation of approximately 3.6 percent in the quarter, including a more than 50 percent spike in avocado prices, partially offset by a decrease in discounting.

Franchise margin, a non-GAAP measure1,as a percentage of total franchise revenues decreased to 52.2 percent in the fourth quarter from 53.7 percent in the prior year quarter. The decrease was due primarily to a decrease in rental revenues and royalties related to the 50 franchise-operated Jack in the Box restaurants the company took over in the second and third quarters of fiscal 2017, and an increase in franchise support and other costs. These decreases were partially offset by higher franchise fees related to the sale of 60 company-operated Jack in the Box restaurants to franchisees in the fourth quarter, as well as higher rental revenues and royalties related to the refranchising of 178 Jack in the Box restaurants in the second, third and fourth quarters of fiscal 2017.

SG&A expense for the fourth quarter decreased by $12.4 million and was 10.6 percent of revenues as compared to 12.1 percent in the prior year quarter. Key items contributing to the decrease were the impact of the company's restructuring activities, a $6.4 million decrease in incentive compensation, a $3.0 million decrease related to the 53rd week in the prior year, a $2.1 million decrease in pension and postretirement benefits, and mark-to-market adjustments on investments supporting the company's non-qualified retirement plans resulting in a $0.7 million year-over-year decrease in SG&A.

____________________________

(1) Restaurant operating margin and franchise margin are non-GAAP measures. These non-GAAP measures are reconciled to consolidated earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

 

 

Interest expense, net, increased by $3.0 million in the fourth quarter due to increased leverage and a higher effective interest rate for 2017.

The tax rate for the fourth quarter of 2017 was 38.1 percent versus 35.6 percent for the fourth quarter of 2016. The higher tax rate was due primarily to an increase in state taxes and an overall decrease in tax credits.

Capital Allocation

The company did not repurchase any shares of its common stock in the fourth quarter of 2017 due to the evaluation of potential alternatives with respect to Qdoba. During fiscal year 2017, the company repurchased approximately 3,220,000 shares at an average price of $101.59 per share for an aggregate cost of $327.2 million. The company currently has approximately $181.0 million remaining under stock buyback programs authorized by the company's Board of Directors that expire in November 2018.

Conference Call

The company will host a conference call for financial analysts and investors on Thursday, November 30, 2017, beginning at 8:30 a.m. PT (11:30 a.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 11:30 a.m. PT on November 30, 2017.

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. Additionally, through a wholly owned subsidiary, the company operates and franchises QDOBA MEXICAN EATS®, a leader in fast-casual dining, with more than 700 restaurants in 47 states, the District of Columbia and Canada. For more information on Jack in the Box and QDOBA, including franchising opportunities, visit www.jackinthebox.com or www.qdoba.com.

Safe harbor statement

This press release contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to substantial risks and uncertainties. A variety of factors could cause the company’s actual results to differ materially from those expressed in the forward-looking statements, including the following: the success of new products and marketing initiatives; the impact of competition, unemployment, trends in consumer spending patterns and commodity costs; the company's ability to reduce G&A; the company's ability to execute its refranchising strategy; 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, and risks relating to expansion into new markets; litigation risks; the company's ability to enhance shareholder value, including through potential alternatives with respect to Qdoba; food-safety incidents or negative publicity impacting the reputations of the company's brands; 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
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)

Operating earnings per share, a non-GAAP measure, is defined by the company as diluted earnings per share from continuing operations on a GAAP basis excluding restructuring charges and gains or losses from refranchising. Management believes this non-GAAP financial measure provides important supplemental information to assist investors in analyzing the performance of the company’s core business. In addition, the company uses operating earnings per share in establishing performance goals for purposes of executive compensation. The company encourages investors to rely upon its GAAP numbers but includes this non-GAAP financial measure as a supplemental metric to assist investors. This non-GAAP financial measure should not be considered as a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, this non-GAAP financial measure used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

Below is a reconciliation of non-GAAP operating earnings per share to the most directly comparable GAAP measure, diluted earnings per share from continuing operations. Figures may not add due to rounding.

                                 
       

12 Weeks
Ended

     

13 Weeks
Ended

     

52 Weeks
Ended

     

53 Weeks
Ended

       

October 1,
2017

     

October 2,
2016

     

October 1,
2017

     

October 2,
2016

Diluted earnings per share from continuing operations – GAAP

      $ 1.02         $ 0.98       $ 4.47         $ 3.70  
Restructuring charges         0.06           0.05         0.18           0.19  
Gains from refranchising         (0.35 )                 (0.77 )         (0.02 )
Operating earnings per share – Non-GAAP       $ 0.73         $ 1.03       $ 3.88         $ 3.86  
                                               

Restaurant operating margin and franchise margin are non-GAAP measures presented in the reconciliations below. These non-GAAP measures do not include an allocation of other operating expenses, such as selling, general and administrative expenses which include the costs of shared service functions such as accounting, finance and human resources, and other unallocated costs such as pension expense, share-based compensation and restructuring expense. As such, restaurant operating margin and franchise margin are not indicative of the overall results of the company and are considered non-GAAP financial measures. Management believes these non-GAAP financial measures provide important supplemental information to assist investors in understanding and analyzing the performance of the company's core business and operating results. The company encourages investors to rely upon its GAAP numbers, but includes these non-GAAP financial measures as a supplement to, not as a substitute for, earnings from operations, net earnings or other financial measures prepared in accordance with GAAP. In addition, these non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

Below are the reconciliations of non-GAAP restaurant operating margin and franchise margin to the most directly comparable GAAP measure, consolidated earnings from operations.

                 
        12 Weeks Ended       13 Weeks Ended
        October 1, 2017       October 2, 2016
($ in thousands)       Jack in the Box       Qdoba       Consolidated       Jack in the Box       Qdoba       Consolidated
Earnings from operations - GAAP (1)                       $ 60,393                         $ 58,910  
Other operating expenses:                                                
Selling, general and administrative expenses                       (35,891 )                       (48,281 )
Impairment and other charges, net                       (9,541 )                       (4,459 )
Gains on the sale of company-operated restaurants                       16,868                         6  
Total other operating expenses                       $ (28,564 )                       $ (52,734 )
                                                 
Company restaurant operations:                                                
Company restaurant sales       $ 139,303         $ 102,000         $ 241,303         $ 193,639         $ 107,054         $ 300,693  
Food and packaging       (40,440 )       (34,497 )       (74,937 )       (56,396 )       (33,804 )       (90,200 )
Payroll and employee benefits       (40,413 )       (28,620 )       (69,033 )       (55,275 )       (28,241 )       (83,516 )
Occupancy and other       (31,728 )       (27,488 )       (59,216 )       (41,347 )       (26,467 )       (67,814 )
Restaurant operating margin (2) - Non-GAAP       $ 26,722         $ 11,395         $ 38,117         $ 40,621         $ 18,542         $ 59,163  
                                                 
Franchise operations:                                                
Franchise rental revenues       $ 56,023         $ 25         $ 56,048         $ 57,668         $ 21         $ 57,689  
Franchise royalties and other       36,798         4,597         41,395         34,813         5,224         40,037  
Franchise occupancy expenses       (41,861 )       (27 )       (41,888 )       (41,650 )       (27 )       (41,677 )
Franchise support and other costs       (2,588 )       (2,127 )       (4,715 )       (2,493 )       (1,075 )       (3,568 )
Franchise margin (2) - Non-GAAP       $ 48,372         $ 2,468         $ 50,840         $ 48,338         $ 4,143         $ 52,481  
                                                 
Restaurant operating margin (2) as a % of company restaurant sales       19.2 %       11.2 %       15.8 %       21.0 %       17.3 %       19.7 %
Franchise margin (2) as a % of total franchise revenues                       52.2 %                       53.7 %
                                                     
(1)     Earnings from operations is the sum of total other operating expenses, restaurant operating margin and franchise margin.
(2)     Restaurant operating margin and franchise margin are non-GAAP measures. Refer to discussion regarding these non-GAAP measures above.
       
       

 

                 
        52 Weeks Ended       53 Weeks Ended
        October 1, 2017       October 2, 2016
($ in thousands)       Jack in the Box       Qdoba       Consolidated       Jack in the Box       Qdoba       Consolidated
Earnings from operations - GAAP (1)                       $ 266,141                         $ 229,915  
Other operating expenses:                                                
Selling, general and administrative expenses                       (165,752 )                       (203,816 )
Impairment and other charges, net                       (25,141 )                       (19,057 )
Gains on the sale of company-operated restaurants                       38,034                         1,230  
Total other operating expenses                       $ (152,859 )                       $ (221,643 )
                                                 
Company restaurant operations:                                                
Company restaurant sales       $ 715,921         $ 436,558         $ 1,152,479         $ 789,040         $ 415,495         $ 1,204,535  
Food and packaging       (206,653 )       (140,291 )       (346,944 )       (235,538 )       (127,464 )       (363,002 )
Payroll and employee benefits       (211,611 )       (122,000 )       (333,611 )       (223,019 )       (111,451 )       (334,470 )
Occupancy and other       (153,451 )       (115,095 )       (268,546 )       (162,869 )       (101,289 )       (264,158 )
Restaurant operating margin (2) - Non-GAAP       $ 144,206         $ 59,172         $ 203,378         $ 167,614         $ 75,291         $ 242,905  
                                                 
Franchise operations:                                                
Franchise rental revenues       $ 231,578         $ 109         $ 231,687         $ 232,794         $ 113         $ 232,907  
Franchise royalties and other       149,791         19,957         169,748         140,424         21,465         161,889  
Franchise occupancy expenses       (171,483 )       (108 )       (171,591 )       (170,050 )       (102 )       (170,152 )
Franchise support and other costs       (8,811 )       (5,411 )       (14,222 )       (11,107 )       (4,884 )       (15,991 )
Franchise margin (2) - Non-GAAP       $ 201,075         $ 14,547         $ 215,622         $ 192,061         $ 16,592         $ 208,653  
                                                 
Restaurant operating margin (2) as a % of company restaurant sales       20.1 %       13.6 %       17.6 %       21.2 %       18.1 %       20.2 %
Franchise margin (2) as a % of total franchise revenues                       53.7 %                       52.9 %
                                                     
(1)     Earnings from operations is the sum of total other operating expenses, restaurant operating margin and franchise margin.
(2)     Restaurant operating margin and franchise margin are non-GAAP measures. Refer to discussion regarding these non-GAAP measures above.
       
       

 

                                 

JACK IN THE BOX INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

                                 
       

12 Weeks

Ended

     

13 Weeks

Ended

     

52 Weeks

Ended

     

53 Weeks

Ended

        October 1,
2017
      October 2,
2016
      October 1,
2017
      October 2,
2016
Revenues:                                
Company restaurant sales       $ 241,303         $ 300,693         $ 1,152,479         $ 1,204,535  
Franchise rental revenues       56,048         57,689         231,687         232,907  
Franchise royalties and other       41,395         40,037         169,748         161,889  
        338,746         398,419         1,553,914         1,599,331  
Operating costs and expenses, net:                                
Company restaurant costs:                                
Food and packaging       74,937         90,200         346,944         363,002  
Payroll and employee benefits       69,033         83,516         333,611         334,470  
Occupancy and other       59,216         67,814         268,546         264,158  
Total company restaurant costs       203,186         241,530         949,101         961,630  
Franchise occupancy expenses       41,888         41,677         171,591         170,152  
Franchise support and other costs       4,715         3,568         14,222         15,991  
Selling, general and administrative expenses       35,891         48,281         165,752         203,816  
Impairment and other charges, net       9,541         4,459         25,141         19,057  
Gains on the sale of company-operated restaurants       (16,868 )       (6 )       (38,034 )       (1,230 )
        278,353         339,509         1,287,773         1,369,416  
Earnings from operations       60,393         58,910         266,141         229,915  
Interest expense, net       11,427         8,382         46,518         31,081  
Earnings from continuing operations and before income taxes       48,966         50,528         219,623         198,834  
Income taxes       18,633         17,967         81,315         72,564  
Earnings from continuing operations       30,333         32,561         138,308         126,270  
Losses from discontinued operations, net of income tax benefit       (375 )       (580 )       (2,976 )       (2,197 )
Net earnings       $ 29,958         $ 31,981         $ 135,332         $ 124,073  
                                 
Net earnings per share — basic:                                
Earnings from continuing operations       $ 1.03         $ 1.00         $ 4.52         $ 3.74  
Losses from discontinued operations, net       (0.01 )       (0.02 )       (0.10 )       (0.07 )
Net earnings per share (1)       $ 1.02         $ 0.98         $ 4.42         $ 3.68  
Net earnings per share — diluted:                                
Earnings from continuing operations       $ 1.02         $ 0.98         $ 4.47         $ 3.70  
Losses from discontinued operations, net       (0.01 )       (0.02 )       (0.10 )       (0.06 )
Net earnings per share (1)       $ 1.01         $ 0.97         $ 4.38         $ 3.63  
Weighted-average shares outstanding:                                
Basic       29,478         32,694         30,630         33,735  
Diluted       29,753         33,085         30,914         34,146  
                                 
Dividends declared per common share       $ 0.40         $ 0.30         $ 1.60         $ 1.20  
                                                 
(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,
2017
          October 2,
2016
ASSETS                            
Current assets:                            
Cash               $ 7,642             $ 17,030  
Accounts and other receivables, net               68,694             73,360  
Inventories               6,647             8,229  
Prepaid expenses               29,148             40,398  
Assets held for sale               24,107             14,259  
Other current assets               3,039             2,129  
Total current assets               139,277             155,405  
Property and equipment, at cost:                            
Land               112,509             117,166  
Buildings               1,112,763             1,116,244  
Restaurant and other equipment               265,791             331,644  
Construction in progress               31,558             40,522  
                1,522,621             1,605,576  
Less accumulated depreciation and amortization               (889,630 )           (886,526 )
Property and equipment, net               632,991             719,050  
Intangible assets, net               14,072             14,042  
Goodwill               169,049             166,046  
Other assets, net               273,032             290,469  
                $ 1,228,421             $ 1,345,012  
                                     
LIABILITIES AND STOCKHOLDERS’ DEFICIT                            
Current liabilities:                            
Current maturities of long-term debt               $ 64,383             $ 55,935  
Accounts payable               37,302             40,736  
Accrued liabilities               160,305             181,250  
Total current liabilities               261,990             277,921  
Long-term debt, net of current maturities               1,080,932             935,372  
Other long-term liabilities               273,531             348,925  
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, 81,843,483 and 81,598,524 issued, respectively               818             816  
Capital in excess of par value               453,530             432,564  
Retained earnings               1,485,820             1,399,721  
Accumulated other comprehensive loss               (137,761 )           (187,021 )
Treasury stock, at cost, 52,411,407 and 49,190,992 shares, respectively               (2,190,439 )           (1,863,286 )
Total stockholders’ deficit               (388,032 )           (217,206 )
                $ 1,228,421             $ 1,345,012  
                                     
                                     

 

                           

JACK IN THE BOX INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

                           
             

52 Weeks

Ended

         

53 Weeks

Ended

              October 1,
2017
          October 2,
2016
Cash flows from operating activities:                          
Net earnings             $ 135,332             $ 124,073  
Adjustments to reconcile net earnings to net cash provided by operating activities:                          
Depreciation and amortization             88,939             92,844  
Deferred finance cost amortization             3,487             2,736  
Excess tax benefits from share-based compensation arrangements             (4,232 )           (7,461 )
Deferred income taxes             (12,208 )           34,973  
Share-based compensation expense             11,416             11,455  
Pension and postretirement expense             4,215             13,484  
Gains on cash surrender value of company-owned life insurance             (2,424 )           (5,365 )
Gains on the sale of company-operated restaurants             (38,034 )           (1,230 )
Losses on the disposition of property and equipment             3,635             2,654  
Impairment charges and other             7,940             4,759  
Changes in assets and liabilities, excluding acquisitions and dispositions:                          
Accounts and other receivables             (5,774 )           (28,181 )
Inventories             1,771             (713 )
Prepaid expenses and other current assets             14,831             (15,367 )
Accounts payable             480             2,225  
Accrued liabilities             (20,704 )           8,662  
Pension and postretirement contributions             (5,363 )           (101,052 )
Other             (11,470 )           (4,314 )
Cash flows provided by operating activities             171,837             134,182  
Cash flows from investing activities:                          
Purchases of property and equipment             (67,453 )           (96,615 )
Purchases of assets intended for sale and leaseback             (5,769 )           (9,785 )
Proceeds from the sale and leaseback of assets             6,057             17,123  
Proceeds from the sale of company-operated restaurants             99,591             1,439  
Collections on notes receivable             1,715             3,555  
Acquisition of franchise-operated restaurants             (2,053 )           (19,816 )
Other             1,251             (299 )
Cash flows provided by (used in) investing activities             33,339             (104,398 )
Cash flows from financing activities:                          
Borrowings on revolving credit facilities             747,900             705,000  
Repayments of borrowings on revolving credit facilities             (533,300 )           (817,578 )
Proceeds from issuance of debt                         417,578  
Principal repayments on debt             (57,404 )           (26,154 )
Debt issuance costs                         (2,385 )
Dividends paid on common stock             (48,925 )           (40,295 )
Proceeds from issuance of common stock             5,165             10,564  
Repurchases of common stock             (334,361 )           (284,645 )
Excess tax benefits from share-based compensation arrangements             4,232             7,461  
Change in book overdraft             2,151              
Cash flows used in financing activities             (214,542 )           (30,454 )
Effect of exchange rate changes on cash             (22 )           (43 )
Net decrease in cash             (9,388 )           (713 )
Cash at beginning of period             17,030             17,743  
Cash at end of period             $ 7,642             $ 17,030  
                                   
                                   

 

                                 

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.

                                 

CONSOLIDATED STATEMENTS OF EARNINGS DATA

(Unaudited)

                                 
       

12 Weeks

Ended

     

13 Weeks

Ended

     

52 Weeks

Ended

     

53 Weeks

Ended

        October 1,
2017
      October 2,
2016
      October 1,
2017
      October 2,
2016
Revenues:                                
Company restaurant sales       71.2 %       75.5 %       74.2 %       75.3 %
Franchise rental revenues       16.5 %       14.5 %       14.9 %       14.6 %
Franchise royalties and other       12.2 %       10.0 %       10.9 %       10.1 %
Total revenues       100.0 %       100.0 %       100.0 %       100.0 %
Operating costs and expenses, net:                                
Company restaurant costs:                                
Food and packaging (1)       31.1 %       30.0 %       30.1 %       30.1 %
Payroll and employee benefits (1)       28.6 %       27.8 %       28.9 %       27.8 %
Occupancy and other (1)       24.5 %       22.6 %       23.3 %       21.9 %
Total company restaurant costs (1)       84.2 %       80.3 %       82.4 %       79.8 %
Franchise occupancy expenses (2)       74.7 %       72.2 %       74.1 %       73.1 %
Franchise support and other costs (3)       11.4 %       8.9 %       8.4 %       9.9 %
Selling, general and administrative expenses       10.6 %       12.1 %       10.7 %       12.7 %
Impairment and other charges, net       2.8 %       1.1 %       1.6 %       1.2 %
Gains on the sale of company-operated restaurants       (5.0 )%       %       (2.4 )%       (0.1 )%
Earnings from operations       17.8 %       14.8 %       17.1 %       14.4 %
Income tax rate (4)       38.1 %       35.6 %       37.0 %       36.5 %
                                         
(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 earnings from continuing operations and before income taxes.
       
       

 

The following table presents Jack in the Box and Qdoba company restaurant sales, costs and margin, and restaurant costs and margin as a percentage of the related sales. Percentages may not add due to rounding.

                                 

SUPPLEMENTAL COMPANY RESTAURANT OPERATIONS DATA

(Dollars in thousands)

(Unaudited)

                                 
        12 Weeks Ended       13 Weeks Ended       52 Weeks Ended       53 Weeks Ended
        October 1, 2017       October 2, 2016       October 1, 2017       October 2, 2016
Jack in the Box:                                                                
Company restaurant sales       $ 139,303                 $ 193,639                 $ 715,921                 $ 789,040          
Company restaurant costs:                                                                
Food and packaging       40,440         29.0 %       56,396         29.1 %       206,653         28.9 %       235,538         29.9 %
Payroll and employee benefits       40,413         29.0 %       55,275         28.5 %       211,611         29.6 %       223,019         28.3 %
Occupancy and other       31,728         22.8 %       41,347         21.4 %       153,451         21.4 %       162,869         20.6 %
Total company restaurant costs       112,581         80.8 %       153,018         79.0 %       571,715         79.9 %       621,426         78.8 %
Restaurant operating margin (1)       $ 26,722         19.2 %       $ 40,621         21.0 %       $ 144,206         20.1 %       $ 167,614         21.2 %
Qdoba:                                                                
Company restaurant sales       $ 102,000                 $ 107,054                 $ 436,558                 $ 415,495          
Company restaurant costs:                                                                
Food and packaging       34,497         33.8 %       33,804         31.6 %       140,291         32.1 %       127,464         30.7 %
Payroll and employee benefits       28,620         28.1 %       28,241         26.4 %       122,000         27.9 %       111,451         26.8 %
Occupancy and other       27,488         26.9 %       26,467         24.7 %       115,095         26.4 %       101,289         24.4 %
Total company restaurant costs       90,605         88.8 %       88,512         82.7 %       377,386         86.4 %       340,204         81.9 %
Restaurant operating margin (1)       $ 11,395         11.2 %       $ 18,542         17.3 %       $ 59,172         13.6 %       $ 75,291         18.1 %
                                                                                         
(1)     Restaurant operating margin is a non-GAAP measure. This non-GAAP measure is reconciled to consolidated earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results."
       
       

 

The following table presents franchise revenues, costs and margin in each period:

                                 

SUPPLEMENTAL FRANCHISE OPERATIONS DATA

(Dollars in thousands)

(Unaudited)

                                 
       

12 Weeks

Ended

     

13 Weeks

Ended

     

52 Weeks

Ended

     

53 Weeks

Ended

        October 1,
2017
      October 2,
2016
      October 1,
2017
      October 2,
2016
Franchise rental revenues       $ 56,048         $ 57,689         $ 231,687         $ 232,907  
                                 
Royalties       38,364         39,176         160,002         158,514  
Franchise fees and other       3,031         861         9,746         3,375  
Franchise royalties and other       41,395         40,037         169,748         161,889  
Total franchise revenues       97,443         97,726         401,435         394,796  
                                 
Rental expense       34,370         34,025         140,731         137,808  
Depreciation and amortization       7,518         7,652         30,860         32,344  
Franchise occupancy expenses       41,888         41,677         171,591         170,152  
Franchise support and other costs       4,715         3,568         14,222         15,991  
Total franchise costs       46,603         45,245         185,813         186,143  
Franchise margin (1)       $ 50,840         $ 52,481         $ 215,622         $ 208,653  
Franchise margin (1) as a % of franchise revenues       52.2 %       53.7 %       53.7 %       52.9 %
                                         
(1)     Franchise margin is a non-GAAP measure. This non-GAAP measure is reconciled to consolidated earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results."
       
       

 

The following table provides information related to our operating segments in each period:

                                 

SUPPLEMENTAL SEGMENT REPORTING INFORMATION

(In thousands)

(Unaudited)

                                 
       

12 Weeks

Ended

     

13 Weeks

Ended

     

52 Weeks

Ended

     

53 Weeks

Ended

        October 1,
2017
      October 2,
2016
      October 1,
2017
      October 2,
2016
Revenues by segment:                                
Jack in the Box restaurant operations       $ 232,125         $ 286,120         $ 1,097,291         $ 1,162,258  
Qdoba restaurant operations       106,621         112,299         456,623         437,073  
Consolidated revenues       $ 338,746         $ 398,419         $ 1,553,914         $ 1,599,331  
Earnings from operations by segment:                                
Jack in the Box restaurant operations       $ 59,612         $ 71,982         $ 280,097         $ 290,346  
Qdoba restaurant operations       1,905         13,718         31,031         47,250  
Shared services and unallocated costs       (17,992 )       (26,796 )       (83,021 )       (108,911 )
Gains on the sale of company-operated restaurants       16,868         6         38,034         1,230  

Consolidated earnings from operations

      60,393         58,910         266,141         229,915  
Interest expense, net       11,427         8,382         46,518         31,081  
Consolidated earnings from continuing operations and before income taxes       $ 48,966         $ 50,528         $ 219,623         $ 198,834  
Total depreciation expense by segment:                                
Jack in the Box restaurant operations       $ 13,092         $ 15,878         $ 60,595         $ 66,287  
Qdoba restaurant operations       4,580         4,903         20,854         19,306  
Shared services and unallocated costs       1,539         1,553         6,761         6,489  
Consolidated depreciation expense       $ 19,211         $ 22,334         $ 88,210         $ 92,082  
                                                 
                                                 

 

The following table summarizes the year-to-date changes in the number and mix of Jack in the Box ("JIB") and Qdoba company and franchise restaurants:

                 

SUPPLEMENTAL RESTAURANT ACTIVITY INFORMATION

(Unaudited)

                 
        2017       2016
        Company       Franchise       Total       Company       Franchise       Total
Jack in the Box:                                                
Beginning of year       417         1,838         2,255         413         1,836         2,249  
New       2         18         20         4         12         16  
Refranchised       (178 )       178                 (1 )       1          
Acquired from franchisees       50         (50 )               1         (1 )        
Closed       (15 )       (9 )       (24 )               (10 )       (10 )
End of period       276         1,975         2,251         417         1,838         2,255  
% of JIB system       12 %       88 %       100 %       18 %       82 %       100 %
Qdoba:                                                
Beginning of year       367         332         699         322         339         661  
New       23         19         42         35         18         53  
Acquired from franchisees                               14         (14 )        
Closed       (5 )       (10 )       (15 )       (4 )       (11 )       (15 )
End of period       385         341         726         367         332         699  
% of Qdoba system       53 %       47 %       100 %       53 %       47 %       100 %
Consolidated:                                                
Total system end of period       661         2,316         2,977         784         2,170         2,954  
% of consolidated system       22 %       78 %       100 %       27 %       73 %       100 %
                                                             

 

Source: Jack in the Box Inc.

Jack in the Box Inc.
Investor Contact:
Carol DiRaimo, (858) 571-2407
or
Media Contact:
Brian Luscomb, (858) 571-2291