Jack in the Box Inc. Reports Third Quarter 2023 Earnings

August 9, 2023

Jack in the Box same-store sales of +7.9%; +17.5% on a three-year basis

Del Taco same-store sales of +1.7%; +12.3% on a three-year basis (1)

Jack in the Box systemwide sales growth of +8.0%, Del Taco systemwide sales growth of +1.6% (1)

Diluted EPS of $1.41; Operating EPS of $1.45

Jack in the Box now at 77 agreements for 340 restaurants since launch of the development program in mid-2021

Refranchised 73 Del Taco restaurants during and subsequent to Q3, which include accompanying development agreements for 71 Del Taco and Jack in the Box restaurants

Jack in the Box enters first new market in over a decade, with record-breaking Average Weekly Sales at inaugural Salt Lake City restaurant

Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco segments in the third quarter, ended July 9, 2023.

"I am pleased to see strong results to begin the second half of 2023, highlighted by a record-breaking opening in Salt Lake City, as our strategic focus areas are beginning to take shape and sustain," said Darin Harris, chief executive officer. "Relentless focus on execution is supporting our momentum, which includes progress on gross openings and net unit growth, improving restaurant margins and franchise profitability, and outstanding sales performance led by late night. We are also making progress on the integration and refranchising of Del Taco, which is delivering incremental development commitments, as well as further progress toward net new unit growth and an asset-light company."

Jack in the Box Performance

Same-store sales increased 7.9% in the third quarter with franchise same-store sales up 8.0% and company-operated same-store sales up 6.9%. Company-operated restaurants experienced growth in both average check and traffic while franchise restaurants had growth in average check, partially offset by a decline in traffic. Systemwide sales for the third quarter increased 8.0%.

Restaurant-Level Margin(2), a non-GAAP measure, was $21.1 million, or 21.8%, up from $15.9 million, or 15.8%, a year ago driven primarily by strong sales leverage and the sale of two evolving markets.

Franchise-Level Margin(2), a non-GAAP measure, was $75.3 million, or 41.1%, up from $70.8 million, or 41.4%, a year ago, the increase in margin was mainly driven by the flow through of higher sales in the current year.

Jack in the Box net restaurant count was positive in the third quarter, with six new restaurant openings and two franchisee closures. As of Q3, and since the launch of the development program in mid-2021, the company currently has 77 signed agreements for a total of 340 restaurants. Under these agreements, 32 restaurants have opened, leaving 308 remaining for future development. Jack in the Box also opened its first location in Salt Lake City, its first new market in over a decade, with a record-breaking Average Weekly Sales during the first full month.

Jack in the Box Same-Store Sales:

 

12 Weeks Ended

 

40 Weeks Ended

 

July 9, 2023

 

July 10, 2022

 

July 9, 2023

 

July 10, 2022

Company

6.9%

 

3.5%

 

10.3%

 

1.5%

Franchise

8.0%

 

(1.0)%

 

8.2%

 

(0.1)%

System

7.9%

 

(0.6)%

 

8.4%

 

0.0%

Jack in the Box Restaurant Counts:

 

2023

 

 

 

 

2022

 

 

 

 

Company

 

Franchise

 

Total

 

Company

 

Franchise

 

Total

Restaurant count at beginning of Q3

140

 

 

2,047

 

 

2,187

 

 

172

 

 

2,035

 

 

2,207

 

New

 

 

6

 

 

6

 

 

 

 

3

 

 

3

 

Closed

 

 

(2

)

 

(2

)

 

(1

)

 

(2

)

 

(3

)

Restaurant count at end of Q3

140

 

 

2,051

 

 

2,191

 

 

171

 

 

2,036

 

 

2,207

 

Q3 Net Restaurant Increase/(Decrease)

 

 

4

 

 

4

 

 

 

 

 

 

 

YTD Net Restaurant % Increase/(Decrease) [Q3'23 vs. Q4'22]

(4.1

)%

 

0.8

%

 

0.5

%

 

 

 

 

 

 

Del Taco Performance (1)

Same-store sales increased 1.7% in the third quarter, comprised of franchise same-store sales growth of 1.8% and Company-operated same-store sales growth of 1.7%. Sales performance included the increases in menu pricing, partially offset by changes in menu mix and transaction declines. Systemwide sales for the fiscal third quarter increased 1.6% driven by positive results in both franchise and company-operated same-store sales.

Restaurant-Level Margin, a non-GAAP measure, was $17.7 million, or 17.4%, down from $20.1 million, or 17.6%, a year ago due to commodity, wage and utility inflation, partially offset by higher sales performance.

Franchise-Level Margin, a non-GAAP measure, was $5.5 million, or 36.7%, up from $5.1 million, or 42.7%, a year ago driven by franchise same-store sales growth, partially offset by higher franchise costs and the impact of refranchising transactions with pass through rent.

Del Taco recorded an impairment charge of $5.4 million in the third quarter, primarily related to underperforming restaurants in the Oklahoma and Atlanta markets.

Del Taco had a third quarter net decrease of one restaurant, comprised of two company-operated restaurant closings and one franchise-operated store closing. This was offset by two franchise openings, including a restaurant in Santa Rosa Beach, FL which experienced the highest average weekly sales in its first two weeks for the system in several years.

During the quarter, the Company refranchised 50 Del Taco restaurants, bringing the FY 2023 total to 66 refranchised restaurants through the end of the third quarter. The 50 units include:

  • 17 previously-announced restaurants in Las Vegas, with development agreements for:
    • 4 Del Taco restaurants in Las Vegas
    • 6 Del Taco restaurants in Montana and Wyoming
    • 6 Jack in the Box restaurants in Montana and Wyoming
  • 18 additional restaurants in Las Vegas, with development agreements for:
    • 14 Del Taco restaurants in Orlando, FL
    • 3 Del Taco restaurants in Las Vegas
  • 15 restaurants in Los Angeles, with development agreements for:
    • 7 Del Taco restaurants in Orlando, FL
    • 8 Del Taco restaurants in Houston, TX

Subsequent to the third quarter, the company has refranchised 23 additional restaurants in Los Angeles, with development agreements for 10 Del Taco restaurants in Los Angeles, and 13 Del Taco restaurants in Fresno, CA.

Del Taco Same-Store Sales:

 

12 Weeks Ended

 

40 Weeks Ended

 

July 9, 2023

 

July 10, 2022

 

July 9, 2023

 

July 10, 2022

Company

1.7%

 

2.3%

 

2.8%

 

2.5%

Franchise

1.8%

 

4.8%

 

2.5%

 

4.6%

System

1.7%

 

3.5%

 

2.6%

 

3.5%

Del Taco Restaurant Counts:

 

2023

 

 

 

 

2022

 

 

 

 

Company

 

Franchise

 

Total

 

Company

 

Franchise

 

Total

Restaurant count at beginning of Q3

273

 

 

322

 

 

595

 

 

293

 

 

306

 

 

599

 

New

 

 

2

 

 

2

 

 

 

 

 

 

 

Refranchised

(50

)

 

50

 

 

 

 

 

 

 

 

 

Closed

(2

)

 

(1

)

 

(3

)

 

(2

)

 

(3

)

 

(5

)

Restaurant count at end of Q3

221

 

 

373

 

 

594

 

 

291

 

 

303

 

 

594

 

Q3 Net Restaurant Increase/(Decrease)

(52

)

 

51

 

 

(1

)

 

 

 

 

 

 

YTD Net Restaurant % Increase/(Decrease) [Q3'23 vs. Q4'22]

(23.8

)%

 

23.9

%

 

0.5

%

 

 

 

 

 

 

Company-Wide Performance

Third quarter diluted earnings per share was $1.41. Operating Earnings Per Share(3), a non-GAAP measure, was $1.45 in the third quarter of fiscal 2023 compared with $1.38 in the prior year quarter. Operating EPS for the third quarter includes a $0.19 negative impact related to the impairment on the Del Taco restaurants noted above.

Total revenues decreased 0.3% to $396.9 million, compared to $398.3 million in the prior year quarter. Net earnings increased to $29.2 million for the third quarter of fiscal 2023, compared with $22.9 million for the third quarter of fiscal 2022. Adjusted EBITDA(4), a non-GAAP measure, was $79.4 million in the third quarter of fiscal 2023 compared with $73.2 million for the prior year quarter.

Company-wide SG&A expense for the third quarter was $39.6 million, a decrease of $0.4 million compared to the prior year quarter, due to lower advertising costs, as well as changes in the cash surrender value of company owned life insurance ("COLI") policies, net of changes in our deferred compensation obligation supported by these policies. These decreases were partially offset by higher incentive compensation. When excluding net COLI gains, our G&A was 2.4% of systemwide sales.

The effective tax rate for the third quarter of fiscal year 2023 was 32.6% compared to 28.8% in the third quarter of fiscal year 2022. The major components of the increase in tax rate were the annual impact of both actual and estimated disposals of non-deductible goodwill attributable to refranchising transactions, partially offset by non-taxable COLI gains in the current year as opposed to non-deductible COLI losses in the prior year and non-deductible transaction costs resulting from the Del Taco acquisition recorded in the prior year. The Non-GAAP Operating EPS tax rate for the third quarter of 2023 was 26.8%.

(1) Del Taco same-store sales on a three-year basis and all prior year comparisons are pro forma and based on the time period of Jack in the Box’s full year fiscal calendar, with the exception of Del Taco's prior year Restaurant-Level Margin and Franchise-Level Margin which are based on a partial quarter time period, March 8 through July 10, 2022.
(2) 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."
(3) Operating Earnings Per Share for the second quarter of 2023 represents the diluted earnings per share on a GAAP basis, excluding acquisition, integration, and restructuring costs, COLI (gains) losses, net, pension and post-retirement benefit costs, refranchising gains and the tax impacts of the related adjustments. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may not add due to rounding.
(4) Adjusted EBITDA represents net earnings on a GAAP basis excluding income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, other operating expenses (income), net, depreciation and amortization, the amortization of favorable and unfavorable leases and subleases, net and the amortization of franchise tenant improvement allowances and incentives. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

Capital Allocation

The company repurchased 0.3 million shares of our common stock for an aggregate cost of $26.9 million, including the applicable excise tax, in the third quarter. As of August 9, 2023, there was $115.0 million remaining under the Board-authorized stock buyback program. The company is now committed to executing at least $80 million in share repurchases in FY 2023.

On August 4, 2023, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on September 18, 2023, to shareholders of record as of the close of business on September 6, 2023. Future dividends will be subject to approval by our Board of Directors.

Guidance & Outlook Updates

All guidance and outlook provided on May 17, 2023 for the fiscal year ending October 1, 2023 remain the same, with the exception of two items:

  • The company now plans to refranchise 90-120 Del Taco restaurants in FY 2023, up from previous guidance of 65-85 restaurants. This will not impact our Operating EPS guidance of $5.90- $6.10 for FY 2023, which remains the same as previously stated.
  • The company now plans to execute at least $80 million in share repurchases in FY 2023 (previously $70 million)

Conference Call

The company will host a conference call for analysts and investors on Wednesday, August 9, 2023, beginning at 8:00 a.m. PT (11:00 a.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 21 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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 

 

12 Weeks Ended

 

40 Weeks Ended

 

July 9, 2023

 

July 10, 2022

 

July 9, 2023

 

July 10, 2022

Revenues:

 

 

 

 

 

 

 

Company restaurant sales

$

198,516

 

 

$

215,231

 

 

$

671,311

 

 

$

486,596

 

Franchise rental revenues

 

86,248

 

 

 

80,068

 

 

 

278,598

 

 

 

259,723

 

Franchise royalties and other

 

54,970

 

 

 

52,059

 

 

 

185,342

 

 

 

159,915

 

Franchise contributions for advertising and other services

 

57,208

 

 

 

50,947

 

 

 

184,531

 

 

 

159,076

 

 

 

396,942

 

 

 

398,305

 

 

 

1,319,782

 

 

 

1,065,310

 

Operating costs and expenses, net:

 

 

 

 

 

 

 

Food and packaging

 

58,556

 

 

 

65,755

 

 

 

199,799

 

 

 

150,163

 

Payroll and employee benefits

 

63,871

 

 

 

71,366

 

 

 

217,547

 

 

 

162,001

 

Occupancy and other

 

37,274

 

 

 

42,054

 

 

 

127,920

 

 

 

92,102

 

Franchise occupancy expenses

 

53,930

 

 

 

50,971

 

 

 

173,803

 

 

 

164,198

 

Franchise support and other costs

 

4,079

 

 

 

3,768

 

 

 

8,623

 

 

 

12,694

 

Franchise advertising and other services expenses

 

59,569

 

 

 

52,398

 

 

 

192,875

 

 

 

164,964

 

Selling, general and administrative expenses

 

39,617

 

 

 

40,032

 

 

 

129,164

 

 

 

93,274

 

Depreciation and amortization

 

14,460

 

 

 

16,713

 

 

 

48,460

 

 

 

40,754

 

Pre-opening costs

 

182

 

 

 

54

 

 

 

667

 

 

 

630

 

Other operating expenses, net

 

7,656

 

 

 

4,129

 

 

 

5,135

 

 

 

22,339

 

Gains on the sale of company-operated restaurants

 

(5,794

)

 

 

(802

)

 

 

(10,323

)

 

 

(1,660

)

 

 

333,400

 

 

 

346,438

 

 

 

1,093,670

 

 

 

901,459

 

Earnings from operations

 

63,542

 

 

 

51,867

 

 

 

226,112

 

 

 

163,851

 

Other pension and post-retirement expenses, net

 

1,608

 

 

 

70

 

 

 

5,359

 

 

 

233

 

Interest expense, net

 

18,662

 

 

 

19,703

 

 

 

64,167

 

 

 

66,371

 

Earnings before income taxes

 

43,272

 

 

 

32,094

 

 

 

156,586

 

 

 

97,247

 

Income taxes

 

14,104

 

 

 

9,237

 

 

 

47,657

 

 

 

27,324

 

Net earnings

$

29,168

 

 

$

22,857

 

 

$

108,929

 

 

$

69,923

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

Basic

$

1.42

 

 

$

1.08

 

 

$

5.25

 

 

$

3.29

 

Diluted

$

1.41

 

 

$

1.08

 

 

$

5.22

 

 

$

3.29

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

20,487

 

 

 

21,236

 

 

 

20,738

 

 

 

21,221

 

Diluted

 

20,649

 

 

 

21,260

 

 

 

20,861

 

 

 

21,264

 

 

 

 

 

 

 

 

 

Dividends declared per common share

$

0.44

 

 

$

0.44

 

 

$

1.32

 

 

$

1.32

 

 
JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

July 9,

2 023

 

October 2,

2 022

ASSETS

 

 

 

Current assets:

 

 

 

Cash

$

154,073

 

 

$

108,890

 

Restricted cash

 

27,947

 

 

 

27,150

 

Accounts and other receivables, net

 

82,776

 

 

 

103,803

 

Inventories

 

4,606

 

 

 

5,264

 

Prepaid expenses

 

10,323

 

 

 

16,095

 

Current assets held for sale

 

10,012

 

 

 

17,019

 

Other current assets

 

5,799

 

 

 

4,772

 

Total current assets

 

295,536

 

 

 

282,993

 

Property and equipment:

 

 

 

Property and equipment, at cost

 

1,249,618

 

 

 

1,228,916

 

Less accumulated depreciation and amortization

 

(834,669

)

 

 

(810,752

)

Property and equipment, net

 

414,949

 

 

 

418,164

 

Other assets:

 

 

 

Operating lease right-of-use assets

 

1,368,133

 

 

 

1,332,135

 

Intangible assets, net

 

11,515

 

 

 

12,324

 

Trademarks

 

283,500

 

 

 

283,500

 

Goodwill

 

339,389

 

 

 

366,821

 

Other assets, net

 

238,757

 

 

 

226,569

 

Total other assets

 

2,241,294

 

 

 

2,221,349

 

 

$

2,951,779

 

 

$

2,922,506

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

Current liabilities:

 

 

 

Current maturities of long-term debt

$

29,970

 

 

$

30,169

 

Current operating lease liabilities

 

161,398

 

 

 

171,311

 

Accounts payable

 

50,885

 

 

 

66,271

 

Accrued liabilities

 

281,781

 

 

 

253,932

 

Total current liabilities

 

524,034

 

 

 

521,683

 

Long-term liabilities:

 

 

 

Long-term debt, net of current maturities

 

1,731,406

 

 

 

1,799,540

 

Long-term operating lease liabilities, net of current portion

 

1,220,968

 

 

 

1,165,097

 

Deferred tax liabilities

 

41,113

 

 

 

37,684

 

Other long-term liabilities

 

139,675

 

 

 

134,694

 

Total long-term liabilities

 

3,133,162

 

 

 

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

 

516,789

 

 

 

508,323

 

Retained earnings

 

1,924,466

 

 

 

1,842,947

 

Accumulated other comprehensive loss

 

(52,761

)

 

 

(53,982

)

Treasury stock, at cost, 62,538,138 and 61,799,221 shares, respectively

 

(3,094,737

)

 

 

(3,034,306

)

Total stockholders’ deficit

 

(705,417

)

 

 

(736,192

)

 

$

2,951,779

 

 

$

2,922,506

 

 
JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

 

 

Year-to-date

 

July 9, 2023

 

July 10, 2022

Cash flows from operating activities:

 

 

 

Net earnings

$

108,929

 

 

$

69,923

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

48,460

 

 

 

40,754

 

Amortization of franchise tenant improvement allowances and incentives

 

3,295

 

 

 

3,046

 

Deferred finance cost amortization

 

3,915

 

 

 

4,280

 

Loss on extinguishment of debt

 

 

 

 

7,700

 

Tax deficiency from share-based compensation arrangements

 

71

 

 

 

123

 

Deferred income taxes

 

1,648

 

 

 

8,058

 

Share-based compensation expense

 

7,991

 

 

 

5,541

 

Pension and post-retirement expense

 

5,359

 

 

 

233

 

(Gains) losses on cash surrender value of company-owned life insurance

 

(8,331

)

 

 

9,024

 

Gains on the sale of company-operated restaurants

 

(10,323

)

 

 

(1,660

)

Gains on the disposition of property and equipment, net

 

(9,155

)

 

 

(1,746

)

Impairment charges and other

 

6,232

 

 

 

3,863

 

Changes in assets and liabilities, excluding acquisitions:

 

 

 

Accounts and other receivables

 

12,902

 

 

 

571

 

Inventories

 

658

 

 

 

(137

)

Prepaid expenses and other current assets

 

5,714

 

 

 

(3,261

)

Operating lease right-of-use assets and lease liabilities

 

5,357

 

 

 

6,074

 

Accounts payable

 

(28,068

)

 

 

2,627

 

Accrued liabilities

 

32,525

 

 

 

(42,701

)

Pension and post-retirement contributions

 

(4,674

)

 

 

(5,109

)

Franchise tenant improvement allowance and incentive disbursements

 

(2,745

)

 

 

(2,206

)

Other

 

2,311

 

 

 

(1,185

)

Cash flows provided by operating activities

 

182,071

 

 

 

103,812

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(56,669

)

 

 

(34,349

)

Acquisition of Del Taco, net of cash acquired

 

 

 

 

(580,792

)

Proceeds from the sale of property and equipment

 

25,174

 

 

 

4,691

 

Proceeds from the sale and leaseback of assets

 

3,673

 

 

 

5,968

 

Proceeds from the sale of company-operated restaurants

 

51,845

 

 

 

1,402

 

Other

 

1,465

 

 

 

(1,315

)

Cash flows provided by (used in) investing activities

 

25,488

 

 

 

(604,395

)

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 the issuance of debt

 

 

 

 

1,100,000

 

Principal repayments on debt

 

(22,620

)

 

 

(580,518

)

Payment of debt issuance and extinguishment costs

 

 

 

 

(20,599

)

Dividends paid on common stock

 

(27,198

)

 

 

(27,789

)

Proceeds from issuance of common stock

 

263

 

 

 

51

 

Repurchases of common stock

 

(60,431

)

 

 

 

Payroll tax payments for equity award issuances

 

(1,593

)

 

 

(1,215

)

Cash flows (used in) provided by financing activities

 

(161,579

)

 

 

519,930

 

Net increase in cash and restricted cash

 

45,980

 

 

 

19,347

 

Cash and restricted cash at beginning of period

 

136,040

 

 

 

73,568

 

Cash and restricted cash at end of period

$

182,020

 

 

$

92,915

 

 
JACK IN THE BOX INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

 

The following table presents certain income and expense items included in our condensed 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

 

40 Weeks Ended

 

July 9,

2023

 

July 10,

2022

 

July 9,

2 023

 

July 10,

2 022

Revenues:

 

 

 

 

 

 

 

Company restaurant sales

50.0

%

 

54.0

%

 

50.9

%

 

45.7

%

Franchise rental revenues

21.7

%

 

20.1

%

 

21.1

%

 

24.4

%

Franchise royalties and other

13.8

%

 

13.1

%

 

14.0

%

 

15.0

%

Franchise contributions for advertising and other services

14.4

%

 

12.8

%

 

14.0

%

 

14.9

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Operating costs and expenses, net:

 

 

 

 

 

 

 

Food and packaging (1)

29.5

%

 

30.6

%

 

29.8

%

 

30.9

%

Payroll and employee benefits (1)

32.2

%

 

33.2

%

 

32.4

%

 

33.3

%

Occupancy and other (1)

18.8

%

 

19.5

%

 

19.1

%

 

18.9

%

Franchise occupancy expenses (excluding depreciation and amortization) (2)

62.5

%

 

63.7

%

 

62.4

%

 

63.2

%

Franchise support and other costs (3)

7.4

%

 

7.2

%

 

4.7

%

 

7.9

%

Franchise advertising and other services expenses (4)

104.1

%

 

102.8

%

 

104.5

%

 

103.7

%

Selling, general and administrative expenses

10.0

%

 

10.1

%

 

9.8

%

 

8.8

%

Depreciation and amortization

3.6

%

 

4.2

%

 

3.7

%

 

3.8

%

Pre-opening costs

%

 

%

 

0.1

%

 

0.1

%

Other operating expenses, net

1.9

%

 

1.0

%

 

0.4

%

 

2.1

%

Gains on the sale of company-operated restaurants

(1.5

)%

 

(0.2

)%

 

(0.8

)%

 

(0.2

)%

Earnings from operations

16.0

%

 

13.0

%

 

17.1

%

 

15.4

%

Income tax rate (5)

32.6

%

 

28.8

%

 

30.4

%

 

28.1

%

 

(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 systemwide sales (in thousands):
 

 

12 Weeks Ended

 

40 Weeks Ended

 

July 9, 2023

 

July 10, 2022

 

July 9, 2023

 

July 10, 2022

Company-operated restaurant sales

$

96,820

 

$

100,899

 

$

318,451

 

$

315,205

Franchised restaurant sales (1)

 

948,457

 

 

 

867,210

 

 

 

3,088,697

 

 

 

2,825,353

 

Systemwide sales (1)

$

1,045,277

 

 

$

968,109

 

 

$

3,407,148

 

 

$

3,140,558

 

 

(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

 

40 Weeks Ended

 

July 9, 2023

 

July 10, 2022

 

July 9, 2023

 

July 10, 2022 (1)

Company-operated restaurant sales

$

101,696

 

$

114,333

 

$

352,860

 

$

368,893

Franchised restaurant sales (2)

 

129,112

 

 

 

112,774

 

 

 

394,105

 

 

 

359,243

 

Systemwide sales (2)

$

230,808

 

 

$

227,107

 

 

$

746,965

 

 

$

728,136

 

(1)

 

Del Taco has been presented on a pro forma basis has been derived from unaudited financial information to conform to our fiscal year and is for informational purposes only.

(2)

 

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.

 

JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)

To supplement the condensed consolidated financial statements, which are presented in accordance with GAAP, the company uses the following non-GAAP measures: Adjusted Net Income, 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 restructuring costs; COLI (gains) losses, net; pension and post-retirement benefit costs; debt write-off costs; gains on sale of real estate to franchisees; and the tax impacts of the related 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. Figures may not add due to rounding.

 

 

12 Weeks Ended

 

 

July 9, 2023

 

July 10, 2022

Net income, as reported

 

$

29,168

 

 

$

22,857

 

Acquisition, integration, and restructuring costs

 

 

2,463

 

 

 

2,753

 

Net COLI (gains) losses

 

 

(579

)

 

 

4,585

 

Pension, post-retirement benefit costs

 

 

1,608

 

 

 

70

 

Refranchising gains

 

 

(5,794

)

 

 

(802

)

Tax impact of adjustments (1)

 

 

3,166

 

 

 

(160

)

Non-GAAP Adjusted Net Income

 

$

30,032

 

 

$

29,303

 

 

 

 

 

 

Weighted-average shares outstanding - diluted

 

 

20,649

 

 

 

21,260

 

 

 

 

 

 

Diluted earnings per share – GAAP

 

$

1.41

 

 

$

1.08

 

Acquisition, integration, and restructuring costs

 

 

0.12

 

 

 

0.13

 

Net COLI (gains) losses

 

 

(0.03

)

 

 

0.22

 

Pension, post-retirement benefit costs

 

 

0.08

 

 

 

 

Refranchising gains

 

 

(0.28

)

 

 

(0.04

)

Tax impact of adjustments (1)

 

 

0.15

 

 

 

(0.01

)

Operating Earnings Per Share – non-GAAP (2)

 

$

1.45

 

 

$

1.38

 

 

 

 

 

 

(1)

 

Tax impact calculated based on the non-GAAP Operating EPS tax rate of 26.8% in the current year and 24.3% in the prior year.

(2)

 

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 or losses on the sale of company-operated restaurants, other operating expenses (income), net, depreciation and amortization, amortization of favorable and unfavorable leases and subleases, net and the amortization of franchise tenant improvement allowances and other. 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

 

July 9, 2023

 

July 10, 2022

Net earnings – GAAP

$

29,168

 

 

$

22,857

 

Income taxes

 

14,104

 

 

 

9,237

 

Interest expense, net

 

18,662

 

 

 

19,703

 

Gains on the sale of company-operated restaurants

 

(5,794

)

 

 

(802

)

Other operating expenses, net

 

7,656

 

 

 

4,129

 

Depreciation and amortization

 

14,460

 

 

 

16,713

 

Amortization of favorable and unfavorable leases and subleases, net

 

83

 

 

 

437

 

Amortization of franchise tenant improvement allowances and other

 

1,057

 

 

 

919

 

Adjusted EBITDA – non-GAAP

$

79,396

 

 

$

73,193

 

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, other operating expenses, 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 (in thousands):

 

 

Jack in the Box

 

Del Taco

 

 

July 9, 2023

 

July 10, 2022

 

July 9, 2023

 

July 10, 2022

Earnings from operations – GAAP

 

$

61,705

 

 

$

47,963

 

 

$

1,835

 

 

$

3,904

 

Franchise rental revenues

 

 

(83,271

)

 

 

(78,278

)

 

 

(2,977

)

 

 

(1,791

)

Franchise royalties and other

 

 

(48,760

)

 

 

(46,632

)

 

 

(6,209

)

 

 

(5,426

)

Franchise contributions for advertising and other services

 

 

(51,360

)

 

 

(46,168

)

 

 

(5,848

)

 

 

(4,780

)

Franchise occupancy expenses

 

 

51,012

 

 

 

49,216

 

 

 

2,918

 

 

 

1,755

 

Franchise support and other costs

 

 

3,528

 

 

 

3,422

 

 

 

553

 

 

 

346

 

Franchise advertising and other services expenses

 

 

53,519

 

 

 

47,622

 

 

 

6,050

 

 

 

4,776

 

Selling, general and administrative expenses

 

 

26,347

 

 

 

26,860

 

 

 

13,270

 

 

 

13,172

 

Depreciation and amortization

 

 

8,319

 

 

 

9,202

 

 

 

6,141

 

 

 

7,511

 

Pre-opening costs

 

 

155

 

 

 

53

 

 

 

27

 

 

 

1

 

Other operating expenses, net

 

 

27

 

 

 

3,461

 

 

 

7,629

 

 

 

668

 

Gains on the sale of company-operated restaurants

 

 

(96

)

 

 

(802

)

 

 

(5,698

)

 

 

 

Restaurant-Level Margin – Non-GAAP

 

$

21,125

 

 

$

15,919

 

 

$

17,691

 

 

$

20,136

 

 

 

 

 

 

 

 

 

 

Company restaurant sales

 

$

96,820

 

 

$

100,899

 

 

$

101,696

 

 

$

114,333

 

 

 

 

 

 

 

 

 

 

Restaurant-Level Margin % – Non-GAAP

 

 

21.8

%

 

 

15.8

%

 

 

17.4

%

 

 

 

17.6

 

%

 

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, 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 (in thousands):

 

 

Jack in the Box

 

Del Taco

 

 

July 9, 2023

 

July 10, 2022

 

July 9, 2023

 

July 10, 2022

Earnings from operations – GAAP

 

$

61,705

 

 

$

47,963

 

 

$

1,835

 

 

$

3,904

 

Company restaurant sales

 

 

(96,820

)

 

 

(100,899

)

 

 

(101,696

)

 

 

(114,333

)

Food and packaging

 

 

30,384

 

 

 

33,319

 

 

 

28,172

 

 

 

32,435

 

Payroll and employee benefits

 

 

29,292

 

 

 

33,699

 

 

 

34,579

 

 

 

37,667

 

Occupancy and other

 

 

16,021

 

 

 

17,960

 

 

 

21,254

 

 

 

24,095

 

Selling, general and administrative expenses

 

 

26,347

 

 

 

26,860

 

 

 

13,270

 

 

 

13,172

 

Depreciation and amortization

 

 

8,319

 

 

 

9,202

 

 

 

6,141

 

 

 

7,511

 

Pre-opening costs

 

 

155

 

 

 

53

 

 

 

27

 

 

 

1

 

Other operating expenses, net

 

 

27

 

 

 

3,461

 

 

 

7,629

 

 

 

668

 

Gains on the sale of company-operated restaurants

 

 

(96

)

 

 

(802

)

 

 

(5,698

)

 

 

 

Franchise-Level Margin – Non-GAAP

 

$

75,334

 

 

$

70,816

 

 

$

5,513

 

 

$

5,120

 

 

 

 

 

 

 

 

 

 

Franchise rental revenues

 

$

83,271

 

 

$

78,278

 

 

$

2,977

 

 

$

1,791

 

Franchise royalties and other

 

 

48,760

 

 

 

46,632

 

 

 

6,209

 

 

 

5,426

 

Franchise contributions for advertising and other services

 

 

51,360

 

 

 

46,168

 

 

 

5,848

 

 

 

4,780

 

Total franchise revenues

 

$

183,391

 

 

$

171,078

 

 

$

15,034

 

 

$

11,997

 

 

 

 

 

 

 

 

 

 

Franchise-Level Margin % – Non-GAAP

 

 

41.1

%

 

 

41.4

%

 

 

36.7

%

 

 

42.7

%

 

Chris Brandon
Vice President, Investor Relations
chris.brandon@jackinthebox.com
619.902.0269

Source: Jack in the Box Inc.