News Details

SAN DIEGO--(BUSINESS WIRE)--Feb. 17, 2015-- Jack in the Box Inc. (NASDAQ: JACK) today reported earnings from continuing operations of $37.1 million, or $0.94 per diluted share, for the first quarter ended January 18, 2015, compared with earnings from continuing operations of $33.0 million, or $0.75 per diluted share, for the first quarter of fiscal 2014.

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 $0.93 in the first quarter of fiscal 2015 compared with $0.75 in the prior year quarter.

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.

Lenny Comma, chairman and chief executive officer, said, “We had a great first quarter, with a 24 percent increase in operating earnings per share resulting from better than expected same-store sales growth at both Jack in the Box® and Qdoba Mexican Grill®, margin expansion and a 10 percent reduction in our diluted share count as we continued to use our growing free cash flow to return cash to shareholders.”

Increase in same-store sales:

“Jack in the Box company same-store sales increased 3.9 percent for the quarter, as we experienced a significant acceleration in trends in the last half of the quarter. Transactions were positive, and sales increased across all dayparts, with breakfast and late night remaining the strongest,” Comma said.

Jack in the Box system same-store sales growth for the quarter of 4.4 percent exceeded that of the QSR sandwich segment by 3.4 percentage points for the comparable period, according to The NPD Group’s SalesTrack® Weekly for the 16-week time period ended January 18, 2015. Included in this segment are 16 of the top QSR sandwich and burger chains in the country.

“Qdoba same-store sales in the first quarter increased 12.9 percent for company restaurants and 14.0 percent system-wide, as the implementation of our new simplified menu pricing structure was well received by our guests. In addition, company same-store sales reflected positive traffic, less discounting and double-digit growth in catering sales,” Comma concluded.

Consolidated restaurant operating margin increased by 100 basis points to 19.3 percent of sales in the first quarter of 2015, compared with 18.3 percent of sales in the year-ago quarter. Restaurant operating margin for Jack in the Box restaurants increased 30 basis points to 19.4 percent of sales. The improvement was due primarily to sales leverage and the benefit of refranchising, which were partially offset by commodity inflation of approximately 3.9 percent and the impact of the increase in the California minimum wage in July 2014. Restaurant operating margin for Qdoba restaurants increased 290 basis points to 19.3 percent of sales, due primarily to sales leverage, including the benefit of the new menu pricing structure, which was partially offset by commodity inflation of approximately 6.2 percent.

SG&A expense for the first quarter increased by $3.9 million and was 13.5 percent of revenues as compared to 13.1 percent in the prior year quarter. The increase reflects a $1.5 million increase in pension expense resulting from lower discount rates. Advertising costs were also $1.0 million higher at Qdoba due to changes in the timing of advertising activities. Mark-to-market adjustments on investments supporting the company’s non-qualified retirement plans negatively impacted SG&A by $0.2 million in the first quarter of 2015, compared to a positive impact of $1.4 million in the first quarter of 2014, resulting in a year-over-year increase in SG&A of $1.6 million.

Gains from refranchising were $0.9 million in the first quarter of 2015, or approximately $0.01 per diluted share, compared with $0.5 million, or approximately $0.01 per diluted share, in the prior year quarter. Amounts in both years represent additional proceeds received as a result of the extension of underlying franchise and lease agreements for previously refranchised Jack in the Box restaurants, and the sale of one restaurant in the first quarter of 2015.

The tax rate for the first quarter of 2015 was 36.1 percent versus 37.3 percent for the first quarter of 2014. The lower tax rate in the first quarter of fiscal 2015 was due primarily to legislation that retroactively reinstated Work Opportunity Tax Credits for calendar year 2014.

In the third quarter of 2013, following the completion of the company’s previously disclosed review of market performance for its Qdoba brand, 62 company-operated Qdoba restaurants were closed, and the results of operations, impairment charges, lease obligations and other exit costs for these restaurants are included in discontinued operations in the accompanying consolidated statements of earnings for all periods presented. Discontinued operations for the first quarter of fiscal 2015 include after-tax charges related to the Qdoba restaurant closures of approximately $0.03 per diluted share, as compared to $0.01 for the first quarter of fiscal 2014.

Capital Allocation

The company repurchased approximately 1,307,000 shares of its common stock in the first quarter of 2015 at an average price of $77.70 per share for an aggregate cost of $101.6 million. This leaves $115.5 million remaining under two stock-buyback programs authorized by the company’s Board of Directors, of which $15.5 million expires in November 2015 and $100 million expires in November 2016.

The company also announced today that on February 12, 2015, its Board of Directors declared a quarterly cash dividend of $0.20 per share on the company’s common stock. The dividend is payable on March 19, 2015, to shareholders of record at the close of business on March 6, 2015.

Guidance

The following guidance and underlying assumptions reflect the company’s current expectations for the second quarter ending April 12, 2015, and the fiscal year ending September 27, 2015. Fiscal 2015 is a 52-week year, with 16 weeks in the first quarter, and 12 weeks in each of the second, third and fourth quarters.

Second quarter fiscal year 2015 guidance

• Same-store sales increase of approximately 5.0 to 7.0 percent at Jack in the Box company restaurants versus a 0.9 percent increase in the year-ago quarter.
• Same-store sales increase of approximately 7.0 to 9.0 percent at Qdoba company restaurants versus a 7.2 percent increase in the year-ago quarter.

Fiscal year 2015 guidance

• Same-store sales increase of approximately 3.5 to 4.5 percent at Jack in the Box company restaurants.
• Same-store sales increase of approximately 7.5 to 9.5 percent at Qdoba company restaurants.
• Overall commodity cost inflation of approximately 3 percent for the full year.
• Restaurant operating margin of approximately 19.1 to 19.9 percent, depending on same-store sales and commodity inflation.
• SG&A as a percentage of revenue of approximately 13.5 to 14.0 percent as compared to 13.9 percent in fiscal 2014, and reflects $5.0 million of higher pension expense in fiscal 2015. G&A as a percentage of system-wide sales declining to approximately 3.7 percent in fiscal 2015 from 3.8 percent in fiscal 2014.
• Impairment and other charges as a percentage of revenue of approximately 60 basis points, excluding restructuring charges.
• Approximately 10 to 15 new Jack in the Box restaurants opening system-wide.
• Approximately 50 to 60 new Qdoba restaurants opening, approximately half of which will be company locations.
• Capital expenditures of $90 to $100 million.
• Tax rate of approximately 37 percent.
• Operating earnings per share, 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, ranging from $2.85 to $2.97 in fiscal 2015 as compared to operating earnings per share of $2.45 in fiscal 2014.

Conference call

The company will host a conference call for financial analysts and investors on Wednesday, February 18, 2015, 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 February 18.

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 Grill^®, a leader in fast-casual dining, with more than 600 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 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; 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.

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