SAN DIEGO--(BUSINESS WIRE)--May 15, 2019--
Jack in the Box Inc. (NASDAQ: JACK) today announced that it intends to
implement a new capital structure in the form of a securitization.
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 Jack in
the Box brand forward. The Board of Directors unanimously and
wholeheartedly supports chairman and chief executive officer Lenny Comma
and the entire management team as we collectively pursue a strategic
plan focused on value creation as a standalone company,” said David
Goebel, lead director of the Board.
SECURITIZATION
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.
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System-wide sales of approximately $4 billion in fiscal 2022, driven
by low single-digit increases in both annual same-store sales and
system-wide unit growth.
-
Restaurant-Level Margin of approximately 25.0 to 27.0 percent of
company restaurant sales, depending on same-store sales, and labor and
commodity inflation.
-
G&A as a percentage of system-wide sales declining steadily to
approximately 1.7 percent beginning in fiscal 2021, which reflects the
new revenue recognition standards, or 1.9 percent using the prior
methodology.
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Adjusted EBITDA growing to approximately $300 million in fiscal 2022.
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Following implementation of a new capital structure, the company
expects to increase its leverage ratio to approximately 5.0 times
EBITDA.
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Tax rate of approximately 26.0 percent, subject to fluctuations
arising from the impact of excess tax benefits from share-based
compensation arrangements.
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Recurring capital expenditures of approximately $20 to 25 million per
year, including technology and equipment investments. In addition,
capital expenditures of approximately $10 to $15 million per year in
fiscal 2019 through fiscal 2021 for drive-thru enhancements and
remodels at company restaurants.
-
Tenant improvement allowances of approximately $25 to $35 million per
year in fiscal 2019 through fiscal 2021.
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Free cash flow growing to approximately $175 million in 2022.
-
The company expects to return more than $1 billion to shareholders
beginning in the fourth quarter of fiscal 2018 through fiscal 2022, in
the form of share repurchases and dividends.
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. For more information on Jack in the
Box, including franchising opportunities, visit www.jackinthebox.com.
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
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190515005915/en/
Source: Jack in the Box Inc.
Investor Contact:
Carol DiRaimo, (858) 571-2407
Media Contact:
Brian Luscomb, (858) 571-2291