Jack in the Box Inc. (NASDAQ: JACK) today reported earnings from
continuing operations of $33.8 million, or $1.09 per diluted share,
for the second quarter ended April 16, 2017, compared with
$29.0 million, or $0.85 per diluted share, for the second quarter
of 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 $0.98 in the second
quarter of fiscal 2017 compared with $0.85 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.
12 Weeks Ended 28 Weeks Ended
April 16,2017
April 10,2016
April 16,2017
April 10,2016
Diluted earnings per share from continuing
operations – GAAP
$ 1.09 $ 0.85 $ 2.22 $ 1.78 Restructuring charges 0.04 — 0.08 —
Gains from refranchising (0.15 ) — (0.15 )
(0.01 ) Operating earnings per share – Non-GAAP $ 0.98
$ 0.85 $ 2.15 $ 1.77
During fiscal 2016, the company announced plans to reduce
general and administrative costs. A comprehensive review of its
organizational structure identified cost savings from workforce
reductions, relocation and consolidation of the Qdoba corporate
support center, refranchising initiatives, and information
technology synergies across both brands. As a result, restructuring
charges of $2.2 million, or approximately $0.04 per diluted share,
were recorded during the second quarter of fiscal 2017. Charges
consist primarily of facility closing and employee relocation
costs. These charges are included in “Impairment and other charges,
net” in the accompanying condensed consolidated statements of
earnings.
Lenny Comma, chairman and chief executive officer, said, “While
operating earnings per share increased 15 percent versus last year,
driven primarily by lower G&A, our second quarter performance
was below our expectations. After a sluggish start to the quarter,
which we believe was attributable to delayed tax refunds and record
rainfall in California, Jack in the Box® system same-store sales
improved to positive territory as these transitory issues passed
and we pivoted our advertising towards value messages. However,
same-store sales at Qdoba® company restaurants worsened in the
latter two months of the quarter, as we lapped more aggressive
discounting in last year's second quarter. While margins at Qdoba
were still disappointing, they improved to over 16 percent in the
final month of the quarter as we were able to manage labor and food
costs more effectively than in the first quarter, despite the
larger decline in same-store sales. We are also encouraged that
Qdoba company same-store sales have improved thus far in the third
quarter.
“At our investor meeting last May, we said one of the factors
that would cause us to reconsider our strategy with respect to
Qdoba was valuation. It has become more apparent since then that
the overall valuation of the company is being impacted by having
two different business models. As a result, we've retained Morgan
Stanley & Co. LLC to assist the Board in its evaluation of
potential alternatives with respect to Qdoba, as well as other ways
to enhance shareholder value.
“Lastly, we continue to make good progress on our Jack in the
Box refranchising initiative, with the sale of 60 restaurants in
the second quarter. In addition, as of today, we have signed
non-binding letters of intent with franchisees to sell
approximately 70 additional restaurants.”
Increase/(decrease) in same-store
sales*:
12 Weeks Ended 28 Weeks
Ended
April 16,2017 *
April 10,2016
April 16,2017 *
April 10,2016
Jack in the Box: Company (2.4)% (1.0)% (0.7)% (0.2)% Franchise
(0.4)% 0.3% 2.0% 1.1% System (0.8)% 0.0% 1.4% 0.8% Qdoba: Company
(5.9)% 3.1% (3.4)% 2.2% Franchise (0.3)% 1.2% (0.3)% 1.8% System
(3.2)% 2.1% (1.9)% 2.0%
*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 column 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 0.8 percent
for the quarter and lagged the QSR sandwich segment by 1.5
percentage points for the comparable period, according to The NPD
Group’s SalesTrack® Weekly for the 12-week time period ended
April 16, 2017. Included in this segment are 16 of the top QSR
sandwich and burger chains in the country. Company same-store sales
decreased 2.4 percent in the second quarter driven by a 7.1 percent
decrease in transactions, partially offset by average check growth
of 4.7 percent.
Qdoba same-store sales decreased 3.2 percent system-wide and 5.9
percent for company restaurants in the second quarter. Company
same-store sales reflected an 8.2 percent decrease in transactions,
partially offset by growth in average check and catering sales.
Consolidated restaurant operating margin, a non-GAAP measure1,
decreased by 240 basis points to 17.5 percent of sales in the
second quarter of 2017, compared with 19.9 percent of sales in the
year-ago quarter. Restaurant operating margin for Jack in the Box
company restaurants, a non-GAAP measure1, decreased 100 basis
points to 19.7 percent of sales. The decrease was due primarily to
higher labor costs related to wage inflation, higher repairs and
maintenance costs, and sales deleverage, which were partially
offset by a decrease in food and packaging costs. The decrease in
food and packaging costs as a percentage of sales resulted from the
benefit of menu price increases, favorable product mix and
commodity deflation of approximately 0.3 percent in the quarter.
Restaurant operating margin for Qdoba company restaurants, a
non-GAAP measure1, decreased 480 basis points to 13.5 percent of
sales. The decrease was due primarily to sales deleverage, the
impact of new restaurant openings over the last 12 months, an
increase in food and packaging costs and the impact of wage
inflation. The increase in food and packaging costs as a percentage
of sales was impacted by unfavorable product mix, which was
partially offset by a decrease in discounting. Commodity costs at
Qdoba were flat in the quarter compared to the prior year.
Franchise margin, a non-GAAP measure1, as a percentage of total
franchise revenues improved to 54.4 percent in the second quarter
from 53.8 percent in the prior year quarter. The improvement was
due primarily to higher franchise fees related to the sale of 60
company-operated Jack in the Box restaurants to franchisees in the
second quarter, lower depreciation and a decrease in franchise
support and other costs. These increases were partially offset by
decreases in rental revenues and royalties resulting from the
acquisition of 19 franchise-operated Jack in the Box restaurants at
the beginning of the quarter which the company intends to
refranchise, and an increase in occupancy expenses due primarily to
a decrease in favorable lease commitment adjustments related to
previously refranchised markets.
____________________________ (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."
SG&A expense for the second quarter decreased by $11.1
million and was 9.7 percent of revenues as compared to 13.0 percent
in the prior year quarter. Key items contributing to the decrease
were the impact of the company's restructuring activities, a $3.3
million decrease in incentive compensation, a $2.6 million decrease
in advertising, a $2.1 million decrease in pension and
postretirement benefits, as well as a $2.0 million decrease in
insurance costs. These decreases were partially offset by
mark-to-market adjustments on investments supporting the company's
non-qualified retirement plans, which resulted in a $1.5 million
year-over-year increase in SG&A.
Interest expense, net, increased by $4.0 million in the second
quarter due to increased leverage and a higher effective interest
rate for 2017.
The tax rate for the second quarter of 2017 was 38.2 percent
versus 36.7 percent for the second quarter of 2016. The higher tax
rate was due primarily to a decrease in work opportunity tax
credits in the second quarter of 2017, and favorable mark-to-market
adjustments on investments supporting the company's non-qualified
retirement plans in the second quarter of 2016.
Capital Allocation
The company repurchased approximately 2,229,000 shares of its
common stock in the second quarter of 2017 at an average price of
$98.27 per share for an aggregate cost of $219.0 million.
On May 11, 2017, the Board of Directors authorized an additional
$100.0 million stock buyback program. This leaves approximately
$181.0 million remaining under stock buyback programs authorized by
the company's Board of Directors that expire in November 2018.
The company also announced today that on May 11, 2017, its Board
of Directors declared a quarterly cash dividend of $0.40 per share
on the company’s common stock. The dividend is payable on June 12,
2017, to shareholders of record at the close of business on May 30,
2017.
Guidance
The following guidance and underlying assumptions reflect the
company’s current expectations for the third quarter ending
July 9, 2017, and fiscal year ending October 1, 2017.
Fiscal 2017 is a 52-week year, with 16 weeks in the first quarter,
and 12 weeks in each of the second, third and fourth quarters.
Fiscal 2016 was a 53-week year, with the additional week occurring
in the fourth quarter.
Third quarter fiscal year 2017
guidance
- Same-store sales of up 1.0 to down 1.0
percent at Jack in the Box system restaurants versus a 1.1 percent
increase in same-store sales in the year-ago quarter.
- Same-store sales of up 1.0 to down 1.0
percent at Qdoba company restaurants versus a 1.0 percent increase
in the year-ago quarter.
Fiscal year 2017
guidance
- Same-store sales increase of
approximately 1.0 percent at Jack in the Box system
restaurants.
- Same-store sales decrease of
approximately 1.0 to 2.0 percent at Qdoba company restaurants.
- Commodity costs of approximately flat
for both Jack in the Box and Qdoba.
- Consolidated restaurant operating
margin of approximately 19.0 percent, depending on the timing of
refranchising transactions and the margins associated with the
restaurants sold.
- SG&A as a percentage of revenues of
approximately 11.0 percent as compared to 12.7 percent in fiscal
2016.
- Impairment and other charges as a
percentage of revenues of approximately 70 basis points, excluding
restructuring charges.
- Approximately 20 to 25 new Jack in the
Box restaurants opening system-wide, the majority of which will be
franchise locations.
- Approximately 50 to 60 new Qdoba
restaurants, of which approximately 30 are expected to be company
locations.
- Capital expenditures of approximately
$100 million.
- Tax rate of approximately 38.0 to 39.0
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 $4.10 to
$4.30.
Conference call
The company will host a conference call for financial analysts
and investors on Wednesday, May 17, 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 May 17, 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; 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
SUBSIDIARIESRECONCILIATION 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 28 Weeks Ended
April 16,2017
April 10,2016
April 16,2017
April 10,2016
Diluted earnings per share from continuing
operations – GAAP
$ 1.09 $ 0.85 $ 2.22 $ 1.78 Restructuring charges 0.04 — 0.08 —
Gains from refranchising (0.15 ) — (0.15 )
(0.01 ) Operating earnings per share – Non-GAAP $ 0.98
$ 0.85 $ 2.15 $ 1.77
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 12 Weeks Ended
April 16, 2017 April 10, 2016 ($ in thousands) Jack in the Box
Qdoba Consolidated Jack in the Box
Qdoba Consolidated Earnings from
operations - GAAP (1) $ 65,650 $ 52,786
Other operating expenses:
Selling, general and administrative expenses (35,788 ) (46,895 )
Impairment and other charges, net (4,331 ) (2,422 ) Gains (losses)
on the sale of company-operated restaurants 7,779 (3 ) Total
other operating expenses $ (32,340 ) $ (49,320 )
Company restaurant operations:
Company restaurant sales $ 180,275 $ 98,792 $ 279,067 $ 179,664 $
92,128 $ 271,792 Food and packaging (52,042 ) (30,870 ) (82,912 )
(54,116 ) (27,950 ) (82,066 ) Payroll and employee benefits (54,529
) (28,230 ) (82,759 ) (51,401 ) (24,736 ) (76,137 ) Occupancy and
other (38,229 ) (26,341 ) (64,570 ) (36,905 ) (22,622 ) (59,527 )
Restaurant operating margin (2) -
Non-GAAP
$ 35,475 $ 13,351 $ 48,826 $ 37,242 $
16,820 $ 54,062
Franchise operations:
Franchise rental revenues $ 51,295 $ 26 $ 51,321 $ 52,577 $ 25 $
52,602 Franchise royalties and other 34,314 4,687 39,001 31,821
4,936 36,757 Franchise occupancy expenses (38,393 ) (24 ) (38,417 )
(37,385 ) (23 ) (37,408 ) Franchise support and other costs (1,734
) (1,007 ) (2,741 ) (2,761 ) (1,146 ) (3,907 )
Franchise margin (2) - Non-GAAP
$ 45,482 $ 3,682 $ 49,164 $ 44,252 $
3,792 $ 48,044
Restaurant operating margin (2) as a % of
company restaurant sales
19.7 % 13.5 % 17.5 % 20.7 % 18.3 % 19.9 %
Franchise margin (2) as a % of total
franchise revenues
54.4 % 53.8 %
(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.
28 Weeks Ended 28 Weeks Ended
April 16, 2017 April 10, 2016 ($ in thousands) Jack in the Box
Qdoba Consolidated Jack in the Box
Qdoba Consolidated Earnings from
operations - GAAP (1) $ 138,767 $ 115,300
Other operating expenses:
Selling, general and administrative expenses (91,496 ) (112,767 )
Impairment and other charges, net (9,388 ) (4,079 ) Gains (losses)
on the sale of company-operated restaurants 7,916 815
Total other operating expenses $ (92,968 ) $ (116,031 )
Company restaurant operations:
Company restaurant sales $ 418,846 $ 227,491 $ 646,337 $ 415,943 $
209,070 $ 625,013 Food and packaging (120,031 ) (71,817 ) (191,848
) (127,249 ) (63,728 ) (190,977 ) Payroll and employee benefits
(124,712 ) (64,968 ) (189,680 ) (117,090 ) (56,954 ) (174,044 )
Occupancy and other (87,079 ) (60,535 ) (147,614 ) (85,076 )
(52,150 ) (137,226 )
Restaurant operating margin (2) -
Non-GAAP
$ 87,024 $ 30,171 $ 117,195 $ 86,528 $
36,238 $ 122,766
Franchise operations:
Franchise rental revenues $ 122,731 $ 59 $ 122,790 $ 122,277 $ 63 $
122,340 Franchise royalties and other 77,488 10,707 88,195 73,425
11,196 84,621 Franchise occupancy expenses (89,809 ) (57 ) (89,866
) (89,576 ) (51 ) (89,627 ) Franchise support and other costs
(4,271 ) (2,308 ) (6,579 ) (6,099 ) (2,670 ) (8,769 )
Franchise margin (2) - Non-GAAP
$ 106,139 $ 8,401 $ 114,540 $ 100,027 $
8,538 $ 108,565
Restaurant operating margin (2) as a % of
company restaurant sales
20.8 % 13.3 % 18.1 % 20.8 % 17.3 % 19.6 %
Franchise margin (2) as a % of total
franchise revenues
54.3 % 52.5 %
(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
CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS
(In thousands, except per share
data)
(Unaudited)
12 Weeks Ended 28 Weeks Ended
April 16,2017
April 10,2016
April 16,2017
April 10,2016
Revenues: Company restaurant sales $ 279,067 $ 271,792 $ 646,337 $
625,013 Franchise rental revenues 51,321 52,602 122,790 122,340
Franchise royalties and other 39,001 36,757 88,195
84,621 369,389 361,151 857,322
831,974 Operating costs and expenses, net: Company
restaurant costs: Food and packaging 82,912 82,066 191,848 190,977
Payroll and employee benefits 82,759 76,137 189,680 174,044
Occupancy and other 64,570 59,527 147,614
137,226 Total company restaurant costs 230,241 217,730
529,142 502,247 Franchise occupancy expenses 38,417 37,408 89,866
89,627 Franchise support and other costs 2,741 3,907 6,579 8,769
Selling, general and administrative expenses 35,788 46,895 91,496
112,767 Impairment and other charges, net 4,331 2,422 9,388 4,079
(Gains) losses on the sale of company-operated restaurants (7,779 )
3 (7,916 ) (815 ) 303,739 308,365 718,555
716,674 Earnings from operations 65,650 52,786
138,767 115,300 Interest expense, net 10,941 6,911
23,658 15,086 Earnings from continuing operations and
before income taxes 54,709 45,875 115,109 100,214 Income taxes
20,889 16,847 44,255 37,289 Earnings
from continuing operations 33,820 29,028 70,854 62,925 Losses from
discontinued operations, net of income tax benefit (726 ) (346 )
(1,831 ) (1,022 ) Net earnings $ 33,094 $ 28,682 $
69,023 $ 61,903 Net earnings per share -
basic: Earnings from continuing operations $ 1.09 $ 0.86 $ 2.24 $
1.81 Losses from discontinued operations (0.02 ) (0.01 ) (0.06 )
(0.03 ) Net earnings per share (1) $ 1.07 $ 0.85 $
2.18 $ 1.78 Net earnings per share - diluted:
Earnings from continuing operations $ 1.09 $ 0.85 $ 2.22 $ 1.78
Losses from discontinued operations (0.02 ) (0.01 ) (0.06 ) (0.03 )
Net earnings per share (1) $ 1.06 $ 0.84 $ 2.16
$ 1.76 Weighted-average shares outstanding:
Basic 30,895 33,656 31,622 34,686 Diluted 31,126 34,177 31,883
35,256 Cash dividends declared per common share $ 0.40 $
0.30 $ 0.80 $ 0.60
(1) Earnings per share may not add due to rounding.
JACK IN THE BOX INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share and per
share data)
(Unaudited)
April 16,2017
October 2,2016
ASSETS Current assets: Cash $ 6,358 $ 17,030 Accounts and other
receivables, net 39,657 73,360 Inventories 7,769 8,229 Prepaid
expenses 20,782 40,398 Assets held for sale 35,224 14,259 Other
current assets 2,350 2,129 Total current assets
112,140 155,405 Property and equipment, at cost
1,537,344 1,605,576 Less accumulated depreciation and amortization
(883,109 ) (886,526 ) Property and equipment, net 654,235
719,050 Intangible assets, net 14,161 14,042 Goodwill
175,525 166,046 Other assets, net 274,838 290,469 $
1,230,899 $ 1,345,012 LIABILITIES AND
STOCKHOLDERS’ DEFICIT Current liabilities: Current maturities of
long-term debt $ 55,762 $ 55,935 Accounts payable 42,232 40,736
Accrued liabilities 140,579 181,250 Total current
liabilities 238,573 277,921 Long-term debt, net of
current maturities 1,135,287 935,372 Other long-term liabilities
326,455 348,925 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, 81,828,835 and
81,598,524 issued, respectively 818 816 Capital in excess of par
value 448,246 432,564 Retained earnings 1,443,131 1,399,721
Accumulated other comprehensive loss (171,172 ) (187,021 ) Treasury
stock, at cost, 52,411,407 and 49,190,992 shares, respectively
(2,190,439 ) (1,863,286 ) Total stockholders’ deficit (469,416 )
(217,206 ) $ 1,230,899 $ 1,345,012
JACK IN THE BOX INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
28 Weeks Ended
April 16,2017
April 10,2016
Cash flows from operating activities: Net earnings $ 69,023 $
61,903 Adjustments to reconcile net earnings to net cash provided
by operating activities: Depreciation and amortization 49,166
49,331 Deferred finance cost amortization 1,919 1,437 Excess tax
benefits from share-based compensation arrangements (4,034 ) (2,451
) Deferred income taxes 2,385 (1,303 ) Share-based compensation
expense 6,735 7,901 Pension and postretirement expense 2,269 7,261
Gains on cash surrender value of company-owned life insurance (73 )
(2,446 ) Gains on the sale of company-operated restaurants (7,916 )
(815 ) Losses on the disposition of property and equipment 1,234
1,646 Impairment charges and other 2,702 858 Changes in assets and
liabilities: Accounts and other receivables 24,915 (25,875 )
Inventories 460 (497 ) Prepaid expenses and other current assets
23,428 (2,149 ) Accounts payable (1,371 ) (1,847 ) Accrued
liabilities (37,870 ) (3,464 ) Pension and postretirement
contributions (2,773 ) (8,255 ) Other (4,045 ) (782 ) Cash flows
provided by operating activities 126,154 80,453 Cash
flows from investing activities: Purchases of property and
equipment (33,415 ) (51,298 ) Purchases of assets intended for sale
and leaseback (1,805 ) (5,581 ) Proceeds from the sale and
leaseback of assets 2,466 7,748 Proceeds from the sale of
company-operated restaurants 31,389 1,021 Collections on notes
receivable 1,204 2,614 Acquisition of franchise-operated
restaurants — 324 Proceeds from the sale of property and equipment
2,082 — Other (172 ) 14 Cash flows provided by (used in)
investing activities 1,749 (45,158 ) Cash flows from
financing activities: Borrowings on revolving credit facilities
534,500 497,000 Repayments of borrowings on revolving credit
facilities (305,000 ) (264,000 ) Principal repayments on debt
(28,800 ) (13,065 ) Dividends paid on common stock (25,462 )
(20,765 ) Proceeds from issuance of common stock 4,840 1,432
Repurchases of common stock (322,687 ) (250,000 ) Excess tax
benefits from share-based compensation arrangements 4,034 2,451
Change in book overdraft — 2,695 Cash flows used in
financing activities (138,575 ) (44,252 ) Effect of exchange rate
changes on cash — 13 Net decrease in cash (10,672 )
(8,944 ) Cash at beginning of period 17,030 17,743
Cash at end of period $ 6,358 $ 8,799
JACK IN THE BOX INC. AND
SUBSIDIARIESSUPPLEMENTAL 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
28 Weeks Ended
April 16,2017
April 10,2016
April 16,2017
April 10,2016
Revenues: Company restaurant sales 75.5 % 75.3 % 75.4 % 75.1 %
Franchise rental revenues 13.9 % 14.6 % 14.3 % 14.7 % Franchise
royalties and other 10.6 % 10.2 % 10.3 % 10.2 % Total revenues
100.0 % 100.0 % 100.0 % 100.0 % Operating costs and expenses, net:
Company restaurant costs: Food and packaging (1) 29.7 % 30.2 % 29.7
% 30.6 % Payroll and employee benefits (1) 29.7 % 28.0 % 29.3 %
27.8 % Occupancy and other (1) 23.1 % 21.9 % 22.8 % 22.0 % Total
company restaurant costs (1) 82.5 % 80.1 % 81.9 % 80.4 % Franchise
occupancy expenses (2) 74.9 % 71.1 % 73.2 % 73.3 % Franchise
support and other costs (3) 7.0 % 10.6 % 7.5 % 10.4 % Selling,
general and administrative expenses 9.7 % 13.0 % 10.7 % 13.6 %
Impairment and other charges, net 1.2 % 0.7 % 1.1 % 0.5 % Gains on
the sale of company-operated restaurants (2.1 )% — % (0.9 )% (0.1
)% Earnings from operations 17.8 % 14.6 % 16.2 % 13.9 % Income tax
rate (4) 38.2 % 36.7 % 38.4 % 37.2 %
(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 28
Weeks Ended April 16, 2017 April 10,
2016 April 16, 2017 April 10, 2016
Jack in the Box:
Company restaurant sales
$ 180,275 $ 179,664 $ 418,846 $ 415,943 Company restaurant costs:
Food and packaging 52,042 28.9 % 54,116 30.1 % 120,031 28.7 %
127,249 30.6 % Payroll and employee benefits 54,529 30.2 % 51,401
28.6 % 124,712 29.8 % 117,090 28.2 % Occupancy and other 38,229
21.2 % 36,905 20.5 % 87,079 20.8 % 85,076
20.5 % Total company restaurant costs 144,800 80.3 %
142,422 79.3 % 331,822 79.2 % 329,415 79.2 %
Restaurant operating margin (1)
$ 35,475 19.7 % $ 37,242 20.7 % $ 87,024 20.8
% $ 86,528 20.8 %
Qdoba: Company restaurant sales $
98,792 $ 92,128 $ 227,491 $ 209,070 Company restaurant costs: Food
and packaging 30,870 31.2 % 27,950 30.3 % 71,817 31.6 % 63,728 30.5
% Payroll and employee benefits 28,230 28.6 % 24,736 26.8 % 64,968
28.6 % 56,954 27.2 % Occupancy and other 26,341 26.7 %
22,622 24.6 % 60,535 26.6 % 52,150 24.9 %
Total company restaurant costs 85,441 86.5 % 75,308
81.7 % 197,320 86.7 % 172,832 82.7 %
Restaurant operating margin (1)
$ 13,351 13.5 % $ 16,820 18.3 % $ 30,171 13.3
% $ 36,238 17.3 %
(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
28 Weeks Ended
April 16,2017
April 10,2016
April 16,2017
April 10,2016
Franchise rental revenues $ 51,321 $ 52,602 $ 122,790 $ 122,340
Royalties 36,110 36,122 84,129 82,784 Franchise fees and
other 2,891 635 4,066 1,837 Franchise
royalties and other 39,001 36,757 88,195
84,621 Total franchise revenues 90,322 89,359
210,985 206,961 Rental expense 31,567 30,016
73,790 72,188 Depreciation and amortization 6,850 7,392
16,076 17,439 Franchise occupancy expenses
38,417 37,408 89,866 89,627 Franchise support and other costs 2,741
3,907 6,579 8,769 Total franchise costs
41,158 41,315 96,445 98,396
Franchise margin (1)
$ 49,164 $ 48,044 $ 114,540 $ 108,565
Franchise margin (1) as a % of franchise
revenues
54.4 % 53.8 % 54.3 % 52.5 %
(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
28 Weeks Ended
April 16,2017
April 10,2016
April 16,2017
April 10,2016
Revenues by segment: Jack in the Box restaurant operations $
265,884 $ 264,062 $ 619,065 $ 611,645 Qdoba restaurant operations
103,505 97,089 238,257 220,329
Consolidated revenues
$ 369,389 $ 361,151 $ 857,322 $ 831,974
Earnings from operations by segment: Jack in the Box
restaurant operations $ 68,658 $ 63,146 $ 161,062 $ 148,836 Qdoba
restaurant operations 8,489 10,623 17,221 19,360 Shared services
and unallocated costs (19,276 ) (20,980 ) (47,432 ) (53,711 )
Gains (losses) on the sale of
company-operated restaurants
7,779 (3 ) 7,916 815 Consolidated earnings
from operations 65,650 52,786 138,767 115,300 Interest expense, net
10,941 6,911 23,658 15,086 Consolidated
earnings from continuing operations and before income taxes $
54,709 $ 45,875 $ 115,109 $ 100,214
Total depreciation expense by segment: Jack in the Box
restaurant operations $ 14,483 $ 15,059 $ 33,772 $ 35,532 Qdoba
restaurant operations 4,907 4,279 11,399 9,867 Shared services and
unallocated costs 1,640 1,310 3,614 3,535
Consolidated depreciation expense $ 21,030 $ 20,648
$ 48,785 $ 48,934
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 13
15 — 5 5 Refranchised (60 ) 60 — (1 ) 1 — Acquired from franchisees
19 (19 ) — 1 (1 ) — Closed (7 ) (3 ) (10 ) — (3 ) (3 ) End
of period 371 1,889 2,260 413 1,838
2,251 % of JIB system 16 % 84 % 100 % 18 % 82 % 100 %
Qdoba: Beginning of year 367 332 699 322 339 661 New 13 12
25 19 10 29 Closed (3 ) (4 ) (7 ) (3 ) (4 ) (7 ) End of period 377
340 717 338 345 683 % of
Qdoba system 53 % 47 % 100 % 49 % 51 % 100 %
Consolidated:
Total system end of
period 748 2,229 2,977 751 2,183
2,934 % of consolidated system 25 % 75 % 100 % 26 % 74 % 100
%
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version on businesswire.com: http://www.businesswire.com/news/home/20170516006678/en/
Jack in the Box Inc.Investor Contact:Carol DiRaimo, (858)
571-2407orMedia Contact:Brian Luscomb, (858) 571-2291
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