Jack in the Box Inc. (NASDAQ: JACK) today reported earnings from
continuing operations of $37.1 million, or $1.25 per diluted share,
for the third quarter ended July 9, 2017, compared with $30.8
million, or $0.93 per diluted share, for the third 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 $0.99 in the third quarter
of fiscal 2017 compared with $1.07 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 40 Weeks Ended July 9, 2017
July 3, 2016 July 9, 2017 July 3, 2016
Diluted earnings per share from continuing
operations – GAAP
$ 1.25 $ 0.93 $ 3.46 $ 2.72 Restructuring charges 0.04 0.15 0.12
0.14 Gains from refranchising (0.30 ) (0.01 ) (0.43 ) (0.02 )
Operating earnings per share – Non-GAAP $ 0.99 $ 1.07
$ 3.15 $ 2.84
Restructuring charges of $1.8 million, or approximately $0.04
per diluted share, were recorded during the third quarter of fiscal
2017, including $1.7 million related to the evaluation of potential
alternatives with respect to the Qdoba® brand. These charges are
included in “Impairment and other charges, net” in the accompanying
condensed consolidated statements of earnings.
During the third quarter of fiscal 2017, the company took over
31 franchised Jack in the Box restaurants from an underperforming
franchisee and incurred costs of $4.4 million, or approximately
$0.10 per diluted share, related to these restaurants, which
negatively impacted operating earnings per share. These costs are
reflected in franchise revenue ($1.0 million), G&A ($2.4
million) and impairment ($1.0 million).
Lenny Comma, chairman and chief executive officer, said, “While
same-store sales for both brands improved sequentially, our third
quarter performance was below our expectations. Jack in the Box®
same-store sales and transactions improved as we focused more of
our advertising on value messages, but company restaurant margins
were negatively impacted by higher labor and repairs and
maintenance costs, and the return of commodity inflation. System
same-store sales at Qdoba restaurants turned positive in the
quarter, as guests responded favorably to menu innovation,
including the launch of Fire-Roasted Shrimp. Company restaurant
margins at Qdoba improved sequentially to over 16 percent in the
quarter as we were able to manage labor costs more effectively.
"We continue to make significant progress on our Jack in the Box
refranchising initiative, with the sale of 58 restaurants in the
third quarter and 118 year-to-date. At the end of the quarter, we
had signed non-binding letters of intent with franchisees to sell
63 additional restaurants."
Morgan Stanley & Co. LLC continues to assist the company's
Board of Directors in its evaluation of potential alternatives with
respect to Qdoba, as well as other ways to enhance shareholder
value. There can be no assurance that the evaluation process will
result in any transaction. The company has not set a timetable for
completion of the evaluation process, and it does not intend to
comment further unless a specific transaction is approved by the
Board, the evaluation process is concluded, or it is otherwise
determined that further disclosure is appropriate or required by
law.
Increase/(decrease) in same-store sales*:
12 Weeks Ended 40 Weeks Ended July 9, 2017 *
July 3, 2016 July 9, 2017 * July 3, 2016 Jack in the
Box: Company (1.6 )% (0.2 )% (0.9 )% (0.2 )% Franchise 0.1 % 1.5 %
1.5 % 1.3 % System (0.2 )% 1.1 % 0.9 % 0.9 % Qdoba: Company (1.1 )%
1.0 % (2.7 )% 1.8 % Franchise 2.3 % 0.1 % 0.5 % 1.3 % System 0.5 %
0.6 % (1.2 )% 1.6 %
*Note: Due to the transition from a 53-week to a 52-week fiscal
year, year-over-year fiscal period comparisons are offset by one
week. The change in same-store sales presented in the 2017 columns
uses comparable calendar periods to balance the one-week shift and
to provide a clearer year-over-year comparison.
Jack in the Box system same-store sales decreased 0.2 percent
for the quarter and lagged the QSR sandwich segment by 1.9
percentage points for the comparable period, according to The NPD
Group’s SalesTrack® Weekly for the 12-week time period ended
July 9, 2017. Included in this segment are 16 of the top QSR
sandwich and burger chains in the country. Company same-store sales
decreased 1.6 percent in the third quarter driven by a 4.4 percent
decrease in transactions, partially offset by average check growth
of 2.8 percent.
Qdoba same-store sales increased 0.5 percent system-wide and
decreased 1.1 percent for company restaurants in the third quarter.
Company same-store sales reflected a 2.8 percent decrease in
transactions, partially offset by growth in catering sales and
average check.
Consolidated restaurant operating margin, a non-GAAP measure1,
decreased by 380 basis points to 18.1 percent of sales in the third
quarter of 2017, compared with 21.9 percent of sales in the
year-ago quarter. Restaurant operating margin for Jack in the Box
company restaurants, a non-GAAP measure1, decreased 320 basis
points to 19.3 percent of sales. The decrease was due primarily to
higher labor costs including wage inflation, as well as higher
repairs and maintenance costs, an increase in food and packaging
costs as a percentage of sales, and sales deleverage, which were
partially offset by the benefit of refranchising activities in
2017. The increase in food and packaging costs as a percentage of
sales resulted from commodity inflation of approximately 4.9
percent in the quarter, partially offset by favorable product mix
changes and menu price increases. Restaurant operating margin for
Qdoba company restaurants, a non-GAAP measure1, decreased 420 basis
points to 16.4 percent of sales. The decrease was due primarily to
sales deleverage, the impact of new restaurant openings, an
increase in food and packaging costs, and the impact of wage
inflation, which were partially offset by lower workers’
compensation costs. The increase in food and packaging costs as a
percentage of sales was impacted by unfavorable product mix and
commodity inflation of approximately 2.5 percent in the quarter,
partially offset by a decrease in discounting.
Franchise margin, a non-GAAP measure1, as a percentage of total
franchise revenues improved to 54.0 percent in the third quarter
from 52.8 percent in the prior year quarter. The improvement was
due primarily to higher franchise fees related to the sale of 58
company-operated Jack in the Box restaurants to franchisees in the
third quarter, higher rental revenues and royalties related to the
refranchising of 118 Jack in the Box restaurants in the second and
third quarters of fiscal 2017, and to 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 50 franchise-operated Jack in the Box restaurants in
the second and third quarters of fiscal 2017.
SG&A expense for the third quarter decreased by $4.4 million
and was 10.7 percent of revenues as compared to 11.6 percent in the
prior year quarter. Key items contributing to the decrease were the
impact of the company's restructuring activities, a $3.5 million
decrease in incentive compensation, a $2.1 million decrease in
pension and postretirement benefits, and a $2.0 million decrease in
insurance costs. These decreases were partially offset by a $2.5
million legal settlement benefit recognized in the prior year
related to an oil spill in the Gulf of Mexico in 2010, and $2.4
million of costs incurred while the 31 franchised Jack in the Box
restaurants taken back during the third quarter of 2017 were
closed.
Interest expense, net, increased by $3.8 million in the third
quarter due to increased leverage and a higher effective interest
rate for 2017.
The tax rate for the third quarter of 2017 was 33.2 percent
versus 36.0 percent for the third quarter of 2016. The lower tax
rate was due primarily to state tax credits becoming usable as a
result of overall increases in taxable income, including the impact
of refranchising gains.
____________________________
(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."
Capital Allocation
The company did not repurchase any shares of its common stock in
the third quarter of 2017 due to the evaluation of potential
alternatives with respect to Qdoba. Year-to-date through the third
quarter, the company has repurchased approximately 3,220,000 shares
at an average price of $101.59 per share for an aggregate cost of
$327.2 million. The company currently has approximately $181.0
million remaining under stock buyback programs authorized by the
company's Board of Directors that expire in November 2018.
The company also announced today that on August 3, 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
September 5, 2017, to shareholders of record at the close of
business on August 22, 2017.
Guidance
The following guidance and underlying assumptions reflect the
company’s current expectations for the fourth quarter 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.
Fourth quarter fiscal year 2017
guidance
- Same-store sales of flat to down 2.0
percent at Jack in the Box system restaurants versus a 2.0 percent
increase in same-store sales in the year-ago quarter.
- Same-store sales of flat to down 2.0
percent at Qdoba company restaurants versus a 1.2 percent increase
in the year-ago quarter.
Fiscal year 2017
guidance
- Same-store sales increase of
approximately 0.5 percent at Jack in the Box system
restaurants.
- Same-store sales decrease of
approximately 2.0 to 2.5 percent at Qdoba company restaurants.
- Commodity costs of approximately flat
for both Jack in the Box and Qdoba.
- Consolidated restaurant operating
margin of approximately 18.0 to 18.5 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 45 new Qdoba restaurants
opening system-wide, of which approximately 25 are expected to be
company locations.
- Capital expenditures of approximately
$80 to $90 million.
- Tax rate of approximately 37.0
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 $4.00 to $4.15
(which includes approximately $0.10 of costs related to the 31
franchised Jack in the Box restaurants taken back in the third
quarter).
Conference call
The company will host a conference call for financial analysts
and investors on Thursday, August 10, 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 August 10, 2017.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a
restaurant company that operates and franchises Jack in the Box®
restaurants, one of the nation’s largest hamburger chains, with
more than 2,200 restaurants in 21 states and Guam. Additionally,
through a wholly owned subsidiary, the company operates and
franchises Qdoba Mexican Eats®, a leader in fast-casual dining,
with more than 700 restaurants in 47 states, the District of
Columbia and Canada. For more information on Jack in the Box and
Qdoba, including franchising opportunities, visit
www.jackinthebox.com or www.qdoba.com.
Safe harbor statement
This press release contains forward-looking statements within
the meaning of the federal securities laws. Such statements are
subject to substantial risks and uncertainties. A variety of
factors could cause the company’s actual results to differ
materially from those expressed in the forward-looking statements,
including the following: the success of new products and marketing
initiatives; the impact of competition, unemployment, trends in
consumer spending patterns and commodity costs; the company's
ability to reduce G&A; the company's ability to execute its
refranchising strategy; the company’s ability to achieve and manage
its planned growth, which is affected by the availability of a
sufficient number of suitable new restaurant sites, the performance
of new restaurants, and risks relating to expansion into new
markets; litigation risks; the company's ability to enhance
shareholder value, including through potential alternatives with
respect to Qdoba; food safety incidents or negative publicity
impacting the reputations of the company's brands; and stock market
volatility. These and other factors are discussed in the company’s
annual report on Form 10-K and its periodic reports on Form 10-Q
filed with the Securities and Exchange Commission, which are
available online at http://investors.jackinthebox.com or in hard
copy upon request. The company undertakes no obligation to update
or revise any forward-looking statement, whether as the result of
new information or otherwise.
JACK IN THE BOX INC. AND
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 40 Weeks Ended July 9, 2017
July 3, 2016 July 9, 2017 July 3, 2016
Diluted earnings per share from continuing
operations – GAAP
$ 1.25 $ 0.93 $ 3.46 $ 2.72 Restructuring charges 0.04 0.15 0.12
0.14 Gains from refranchising (0.30 ) (0.01 ) (0.43 ) (0.02 )
Operating earnings per share – Non-GAAP $ 0.99 $ 1.07
$ 3.15 $ 2.84
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
July 9, 2017 July 3, 2016 ($ in thousands) Jack in the Box
Qdoba Consolidated Jack in the Box Qdoba
Consolidated Earnings from operations - GAAP (1) $ 66,981 $
55,705 Other operating expenses: Selling, general and
administrative expenses (38,365 ) (42,768 ) Impairment and other
charges, net (6,212 ) (10,519 ) Gains on the sale of
company-operated restaurants 13,250 409 Total other
operating expenses $ (31,327 ) $ (52,878 ) Company
restaurant operations: Company restaurant sales $ 157,772 $ 107,067
$ 264,839 $ 179,458 $ 99,371 $ 278,829 Food and packaging (46,182 )
(33,977 ) (80,159 ) (51,893 ) (29,932 ) (81,825 ) Payroll and
employee benefits (46,486 ) (28,412 ) (74,898 ) (50,654 ) (26,256 )
(76,910 ) Occupancy and other (34,644 ) (27,072 ) (61,716 ) (36,446
) (22,672 ) (59,118 ) Restaurant operating margin (2) - Non-GAAP $
30,460 $ 17,606 $ 48,066 $ 40,465 $
20,511 $ 60,976 Franchise operations:
Franchise rental revenues $ 52,824 $ 25 $ 52,849 $ 52,849 $ 29 $
52,878 Franchise royalties and other 35,505 4,653 40,158 32,186
5,045 37,231 Franchise occupancy expenses (39,813 ) (24 ) (39,837 )
(38,824 ) (24 ) (38,848 ) Franchise support and other costs (1,952
) (976 ) (2,928 ) (2,515 ) (1,139 ) (3,654 ) Franchise margin (2) -
Non-GAAP $ 46,564 $ 3,678 $ 50,242 $ 43,696
$ 3,911 $ 47,607 Restaurant operating
margin (2) as a % of company restaurant sales 19.3 % 16.4 % 18.1 %
22.5 % 20.6 % 21.9 % Franchise margin (2) as a % of total franchise
revenues 54.0 % 52.8 % ____________________________ (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. 40 Weeks Ended
40 Weeks Ended July 9, 2017 July 3, 2016 ($ in thousands)
Jack in the Box Qdoba Consolidated Jack in the Box
Qdoba Consolidated Earnings from operations - GAAP
(1) $ 205,748 $ 171,005 Other operating expenses:
Selling, general and administrative expenses (129,861 ) (155,535 )
Impairment and other charges, net (15,600 ) (14,598 ) Gains on the
sale of company-operated restaurants 21,166 1,224
Total other operating expenses $ (124,295 ) $ (168,909 )
Company restaurant operations: Company restaurant sales $ 576,618 $
334,558 $ 911,176 $ 595,401 $ 308,441 $ 903,842 Food and packaging
(166,213 ) (105,794 ) (272,007 ) (179,142 ) (93,660 ) (272,802 )
Payroll and employee benefits (171,198 ) (93,380 ) (264,578 )
(167,744 ) (83,210 ) (250,954 ) Occupancy and other (121,723 )
(87,607 ) (209,330 ) (121,522 ) (74,822 ) (196,344 ) Restaurant
operating margin (2) - Non-GAAP $ 117,484 $ 47,777 $
165,261 $ 126,993 $ 56,749 $ 183,742
Franchise operations: Franchise rental revenues $ 175,555 $
84 $ 175,639 $ 175,126 $ 92 $ 175,218 Franchise royalties and other
112,993 15,360 128,353 105,611 16,241 121,852 Franchise occupancy
expenses (129,622 ) (81 ) (129,703 ) (128,400 ) (75 ) (128,475 )
Franchise support and other costs (6,223 ) (3,284 ) (9,507 ) (8,614
) (3,809 ) (12,423 ) Franchise margin (2) - Non-GAAP $ 152,703
$ 12,079 $ 164,782 $ 143,723 $ 12,449
$ 156,172 Restaurant operating margin (2) as a
% of company restaurant sales 20.4 % 14.3 % 18.1 % 21.3 % 18.4 %
20.3 % Franchise margin (2) as a % of total franchise revenues 54.2
% 52.6 % ____________________________ (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 40
Weeks Ended July 9, 2017 July 3,
2016 July 9, 2017 July 3,
2016 Revenues: Company restaurant sales $ 264,839 $ 278,829
$ 911,176 $ 903,842 Franchise rental income 52,849 52,878 175,639
175,218 Franchise royalties and other 40,158 37,231
128,353 121,852 357,846 368,938
1,215,168 1,200,912 Operating costs and expenses,
net: Company restaurant costs: Food and packaging 80,159 81,825
272,007 272,802 Payroll and employee benefits 74,898 76,910 264,578
250,954 Occupancy and other 61,716 59,118 209,330
196,344 Total company restaurant costs 216,773
217,853 745,915 720,100 Franchise occupancy expense 39,837 38,848
129,703 128,475 Franchise support and other costs 2,928 3,654 9,507
12,423 Selling, general and administrative expenses 38,365 42,768
129,861 155,535 Impairment and other charges, net 6,212 10,519
15,600 14,598
Gains on the sale of company-operated
restaurants
(13,250 ) (409 ) (21,166 ) (1,224 ) 290,865 313,233
1,009,420 1,029,907 Earnings from operations 66,981
55,705 205,748 171,005 Interest expense, net 11,433 7,613
35,091 22,699 Earnings from continuing
operations and before income taxes 55,548 48,092 170,657 148,306
Income taxes 18,427 17,308 62,682 54,597
Earnings from continuing operations 37,121 30,784 107,975
93,709 Losses from discontinued operations, net (770 ) (595 )
(2,601 ) (1,617 ) Net earnings $ 36,351 $ 30,189 $
105,374 $ 92,092 Net earnings per share —
basic: Earnings from continuing operations $ 1.26 $ 0.94 $ 3.49 $
2.75 Losses from discontinued operations, net (0.03 ) (0.02 ) (0.08
) (0.05 ) Net earnings per share (1) $ 1.23 $ 0.92 $
3.40 $ 2.70 Net earnings per share — diluted:
Earnings from continuing operations $ 1.25 $ 0.93 $ 3.46 $ 2.72
Losses from discontinued operations, net (0.03 ) (0.02 ) (0.08 )
(0.05 ) Net earnings per share (1) $ 1.22 $ 0.91 $
3.37 $ 2.67 Weighted-average shares outstanding:
Basic 29,474 32,642 30,976 34,073 Diluted 29,718 33,016 31,234
34,469 Dividends declared per common share $ 0.40 $ 0.30 $
1.20 $ 0.90 ____________________________ (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)
July 9, 2017 October
2, 2016 ASSETS Current assets: Cash $ 7,560 $
17,030 Accounts and other receivables, net 56,245 73,360
Inventories 7,418 8,229 Prepaid expenses 52,071 40,398 Assets held
for sale 36,755 14,259 Other current assets 2,656 2,129
Total current assets 162,705 155,405 Property
and equipment, at cost: 1,516,247 1,605,576 Less accumulated
depreciation and amortization (881,240 ) (886,526 ) Property and
equipment, net 635,007 719,050 Intangible assets, net
14,776 14,042 Goodwill 172,963 166,046 Other assets, net 269,768
290,469 $ 1,255,219 $ 1,345,012
LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities:
Current maturities of long-term debt $ 60,115 $ 55,935 Accounts
payable 34,857 40,736 Accrued liabilities 151,580 181,250 Total
current liabilities 246,552 277,921 Long-term debt,
net of current maturities 1,124,798 935,372 Other long-term
liabilities 322,865 348,925 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,
81,835,883 and 81,598,524 issued, respectively 818 816 Capital in
excess of par value 450,830 432,564 Retained earnings 1,467,671
1,399,721 Accumulated other comprehensive loss (167,876 ) (187,021
) Treasury stock, at cost, 52,411,407 and 49,190,992 shares,
respectively (2,190,439 ) (1,863,286 ) Total stockholders’ deficit
(438,996 ) (217,206 ) $ 1,255,219 $ 1,345,012
JACK IN THE BOX INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
40 Weeks Ended July 9,
2017 July 3, 2016 Cash flows
from operating activities: Net earnings $ 105,374 $ 92,092
Adjustments to reconcile net earnings to net cash provided by
operating activities: Depreciation and amortization 69,527 70,314
Deferred finance cost amortization 2,707 2,049 Excess tax benefits
from share-based compensation arrangements (4,133 ) (3,822 )
Deferred income taxes 5,824 15,672 Share-based compensation expense
8,855 9,220 Pension and postretirement expense 3,242 10,374 Gains
on cash surrender value of company-owned life insurance (364 )
(5,008 ) Gains on the sale of company-operated restaurants (21,166
) (1,224 ) Losses on the disposition of property and equipment
2,186 2,295 Impairment charges and other 4,320 2,928 Changes in
assets and liabilities, excluding acquisitions and dispositions:
Accounts and other receivables 6,026 (16,333 ) Inventories 1,000
(557 ) Prepaid expenses and other current assets (8,057 ) (7,677 )
Accounts payable 2,238 (7,466 ) Accrued liabilities (27,485 ) 1,534
Pension and postretirement contributions (4,110 ) (14,700 ) Other
(6,077 ) (2,992 ) Cash flows provided by operating activities
139,907 146,699 Cash flows from investing activities:
Purchases of property and equipment (47,210 ) (74,971 ) Purchases
of assets intended for sale and leaseback (3,248 ) (5,593 )
Proceeds from the sale and leaseback of assets 2,466 7,748 Proceeds
from the sale of company-operated restaurants 62,923 1,434
Collections on notes receivable 1,426 3,237 Acquisition of
franchise-operated restaurants — 324 Proceeds from the sale of
property and equipment 2,898 140 Other (1,713 ) (89 ) Cash flows
provided by (used in) investing activities 17,542 (67,770 )
Cash flows from financing activities: Borrowings on revolving
credit facilities 638,500 576,000 Repayments of borrowings on
revolving credit facilities (400,000 ) (376,000 ) Principal
repayments on debt (43,162 ) (19,651 ) Dividends paid on common
stock (37,194 ) (30,513 ) Proceeds from issuance of common stock
5,166 5,093 Repurchases of common stock (334,361 ) (250,000 )
Excess tax benefits from share-based compensation arrangements
4,133 3,822 Change in book overdraft — 1,213 Cash
flows used in financing activities (166,918 ) (90,036 ) Effect of
exchange rate changes on cash (1 ) 11 Net decrease in cash
(9,470 ) (11,096 ) Cash at beginning of period 17,030 17,743
Cash at end of period $ 7,560 $ 6,647
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 40
Weeks Ended July 9, 2017 July 3,
2016 July 9, 2017 July 3,
2016 Revenues: Company restaurant sales 74.0 % 75.6 % 75.0 %
75.3 % Franchise rental revenues 14.8 % 14.3 % 14.5 % 14.6 %
Franchise royalties and other 11.2 % 10.1 % 10.6 % 10.1 % Total
revenues 100.0 % 100.0 % 100.0 % 100.0 % Operating costs and
expenses, net: Company restaurant costs: Food and packaging (1)
30.3 % 29.3 % 29.9 % 30.2 % Payroll and employee benefits (1) 28.3
% 27.6 % 29.0 % 27.8 % Occupancy and other (1) 23.3 % 21.2 % 23.0 %
21.7 % Total company restaurant costs (1) 81.9 % 78.1 % 81.9 % 79.7
% Franchise occupancy expenses (2) 75.4 % 73.5 % 73.8 % 73.3 %
Franchise support and other costs (3) 7.3 % 9.8 % 7.4 % 10.2 %
Selling, general and administrative expenses 10.7 % 11.6 % 10.7 %
13.0 % Impairment and other charges, net 1.7 % 2.9 % 1.3 % 1.2 %
Gains on the sale of company-operated restaurants (3.7 )% (0.1 )%
(1.7 )% (0.1 )% Earnings from operations 18.7 % 15.1 % 16.9 % 14.2
% Income tax rate (4) 33.2 % 36.0 % 36.7 % 36.8 %
____________________________ (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 40
Weeks Ended July 9, 2017 July 3, 2016
July 9, 2017 July 3, 2016 Jack in the
Box:
Company restaurant sales $ 157,772 $ 179,458 $ 576,618 $ 595,401
Company restaurant costs: Food and packaging 46,182 29.3 % 51,893
28.9 % 166,213 28.8 % 179,142 30.1 % Payroll and employee benefits
46,486 29.5 % 50,654 28.2 % 171,198 29.7 % 167,744 28.2 % Occupancy
and other 34,644 22.0 % 36,446 20.3 % 121,723
21.1 % 121,522 20.4 % Total company restaurant costs 127,312
80.7 % 138,993 77.5 % 459,134 79.6 % 468,408
78.7 % Restaurant operating margin (1) $ 30,460 19.3
% $ 40,465 22.5 % $ 117,484 20.4 % $ 126,993
21.3 %
Qdoba: Company restaurant sales $ 107,067 $ 99,371 $
334,558 $ 308,441 Company restaurant costs: Food and packaging
33,977 31.7 % 29,932 30.1 % 105,794 31.6 % 93,660 30.4 % Payroll
and employee benefits 28,412 26.5 % 26,256 26.4 % 93,380 27.9 %
83,210 27.0 % Occupancy and other 27,072 25.3 % 22,672
22.8 % 87,607 26.2 % 74,822 24.3 % Total
company restaurant costs 89,461 83.6 % 78,860 79.4 %
286,781 85.7 % 251,692 81.6 % Restaurant operating
margin (1) $ 17,606 16.4 % $ 20,511 20.6 % $ 47,777
14.3 % $ 56,749 18.4 %
____________________________ (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 40
Weeks Ended July 9, 2017 July 3,
2016 July 9, 2017 July 3,
2016 Franchise rental revenues $ 52,849 $ 52,878 $ 175,639 $
175,218 Royalties 37,509 36,554 121,638 119,338 Franchise
fees and other 2,649 677 6,715 2,514
Franchise royalties and other 40,158 37,231 128,353
121,852 Total franchise revenues 93,007 90,109
303,992 297,070 Rental expense 32,571
31,595 106,361 103,783 Depreciation and amortization 7,266
7,253 23,342 24,692 Franchise occupancy
expenses 39,837 38,848 129,703 128,475 Franchise support and other
costs 2,928 3,654 9,507 12,423 Total
franchise costs 42,765 42,502 139,210 140,898
Franchise margin (1) $ 50,242 $ 47,607 $
164,782 $ 156,172 Franchise margin (1) as a % of
franchise revenues 54.0 % 52.8 % 54.2 % 52.6 %
____________________________ (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 40
Weeks Ended July 9, 2017 July 3,
2016 July 9, 2017 July 3,
2016 Revenues by segment: Jack in the Box restaurant
operations $ 246,101 $ 264,493 $ 865,166 $ 876,138 Qdoba restaurant
operations 111,745 104,445 350,002 324,774
Consolidated revenues $ 357,846 $ 368,938 $
1,215,168 $ 1,200,912
Earnings from operations by
segment: Jack in the Box restaurant operations $ 59,423 $
69,528 $ 220,485 $ 218,364 Qdoba restaurant operations 11,905
14,172 29,126 33,532 Shared services and unallocated costs (17,597
) (28,404 ) (65,029 ) (82,115 ) Gains on the sale of
company-operated restaurants 13,250 409 21,166
1,224 Consolidated earnings from operations 66,981 55,705
205,748 171,005 Interest expense, net 11,433 7,613
35,091 22,699 Consolidated earnings from continuing
operations and before income taxes $ 55,548 $ 48,092
$ 170,657 $ 148,306
Total depreciation expense by
segment: Jack in the Box restaurant operations $ 13,731 $
14,877 $ 47,503 $ 50,409 Qdoba restaurant operations 4,875 4,536
16,274 14,403 Shared services and unallocated costs 1,608
1,401 5,222 4,936 Consolidated depreciation
expense $ 20,214 $ 20,814 $ 68,999 $ 69,748
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 15 17 2 9 11 Refranchised (118 ) 118 — (1 ) 1 — Acquired from
franchisees 50 (50 ) — 1 (1 ) — Closed (11 ) (6 ) (17 ) — (6
) (6 ) End of period 340 1,915 2,255 415
1,839 2,254 % of JIB system 15 % 85 % 100 % 18
% 82 % 100 %
Qdoba: Beginning of year 367 332 699 322 339
661 New 18 13 31 26 11 37 Closed (4 ) (6 ) (10 ) (4 ) (6 ) (10 )
End of period 381 339 720 344 344
688 % of Qdoba system 53 % 47 % 100 % 50 % 50 % 100 %
Consolidated:
Total system end of period 721 2,254 2,975 759
2,183 2,942 % of consolidated system 24 % 76 %
100 % 26 % 74 % 100 %
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Jack in the Box Inc.Investor Contact:Carol DiRaimo, (858)
571-2407Media Contact:Brian Luscomb, (858) 571-2291
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