Jack in the Box Inc. (NASDAQ: JACK) today reported financial
results for the fourth quarter and fiscal year ended
September 30, 2018.
The company completed the sale of Qdoba Restaurant Corporation
("Qdoba") on March 21, 2018. Qdoba results are included in
discontinued operations for all periods presented.
Earnings from continuing operations were $18.3 million, or $0.68
per diluted share, for the fourth quarter of fiscal 2018 compared
with $31.3 million, or $1.05 per diluted share, for the fourth
quarter of fiscal 2017. Fiscal 2018 earnings from continuing
operations totaled $104.3 million, or $3.62 per diluted share,
compared with $128.6 million, or $4.16 per diluted share in fiscal
2017.
Operating Earnings Per Share(1), a non-GAAP measure, were $0.77
in the fourth quarter of fiscal 2018 compared with $0.73 in the
prior year quarter. A reconciliation of non-GAAP Operating Earnings
Per Share to GAAP results is provided below, with additional
information included in the attachment to this release. For fiscal
year 2018, operating earnings per share were $3.79 compared with
$3.46 last year. Figures may not add due to rounding.
____________________________ (1) Operating Earnings Per Share
represents diluted earnings per share from continuing operations on
a GAAP basis excluding gains on the sale of company-operated
restaurants, restructuring charges, the non-cash impact of the Tax
Cuts and Jobs Act, and the excess tax benefits from share-based
compensation arrangements which are now recorded as a component of
income tax expense versus equity previously. See "Reconciliation of
Non-GAAP Measurements to GAAP Results."
12 Weeks Ended
52 Weeks Ended
September 30,
2018
October 1,
2017
September 30,
2018
October 1,
2017
Diluted earnings per share from continuing
operations – GAAP
$ 0.68 $ 1.05 $ 3.62 $ 4.16 Gains on the sale of company-operated
restaurants (0.09 ) (0.35 ) (1.16 ) (0.78 ) Restructuring charges
0.17 0.03 0.27 0.07 Non-cash impact of the Tax Cuts and Jobs Act
0.02 — 1.13 — Excess tax benefits from share-based compensation
arrangements (0.00 ) — (0.07 ) —
Operating Earnings Per Share – non-GAAP $ 0.77 $ 0.73
$ 3.79 $ 3.46
Adjusted EBITDA(2), a non-GAAP measure, was $54.0 million in the
fourth quarter of fiscal 2018 compared with $62.2 million for the
prior year quarter. For fiscal year 2018, Adjusted EBITDA was
$264.2 million compared with $284.7 million in fiscal year
2017.
Lenny Comma, chairman and chief executive officer, said,
“Same-store sales were positive in the fourth quarter, although we
experienced a slowdown in September along with the rest of the
category. The competitive environment remains extremely aggressive,
but we continue to avoid deep discounting which we believe is not
in the best interests of the long-term health of the brand.
“We completed our refranchising initiative during the quarter
with the sale of 8 Jack in the Box® restaurants, and our franchise
mix now stands at approximately 94 percent.
“We remain firmly committed to returning cash to shareholders
with the purchase of $140 million of stock in the quarter and $340
million during the year. Following the completion of our
longer-term financing plans, we plan to increase our leverage up to
5.0 times EBITDA and expect to return more than $1 billion through
fiscal year 2022 to our shareholders in the form of share
repurchases and dividends.
“Our long-term goals are centered around meeting evolving
consumer needs, with emphasis on improving operations consistency
and targeted investments designed to maximize our returns. We
remain focused on balancing the interests of all our
stakeholders, including our franchisees, customers, employees and
shareholders.”
_____________________________ (2) Adjusted EBITDA represents net
earnings on a GAAP basis excluding earnings from discontinued
operations, income taxes, interest expense, net, gains on the sale
of company-operated restaurants, impairment and other charges, net,
depreciation and amortization, and the amortization of franchise
tenant improvement allowances. See "Reconciliation of Non-GAAP
Measurements to GAAP Results."
Increase/(decrease) in same-store sales:
12 Weeks Ended 52 Weeks Ended
September 30,
2018
October 1,
2017*
September 30,
2018
October 1,
2017*
Company 0.8% (2.0)% 0.6% (1.1)% Franchise 0.4% (0.7)% 0.1% 0.9%
System 0.5% (1.0)% 0.1% 0.5% ____________________________ *Note:
Due to the transition from a 53-week year in fiscal 2016 to a
52-week year in fiscal 2017, 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 from fiscal 2016 and to provide a
clearer year-over-year comparison.
Jack in the Box system same-store sales increased 0.5 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
September 30, 2018. Included in this segment are 16 of the top
QSR sandwich and burger chains in the country. Company same-store
sales increased 0.8 percent in the fourth quarter driven by average
check growth of 2.8 percent, partially offset by a 2.0 percent
decrease in transactions.
Restaurant-Level EBITDA(3), a non-GAAP measure, increased by 300
basis points to 26.1 percent of company restaurant sales in the
fourth quarter of fiscal 2018 from 23.1 percent a year ago. The
increase was due primarily to the benefit of refranchising,
partially offset by wage inflation, higher costs for food and
packaging and higher maintenance and repairs expenses. Food and
packaging costs, as a percentage of company restaurant sales,
increased in the quarter due primarily to unfavorable product mix
and higher costs for ingredients, partially offset by menu price
increases. Commodity costs increased 1.3 percent in the quarter as
compared with the prior year. Restaurant Operating Margin(3), a
non-GAAP measure, increased to 22.5 percent of company restaurant
sales in the fourth quarter of fiscal 2018 from 19.2 percent in the
prior year quarter.
Franchise EBITDA(3), a non-GAAP measure, as a percentage of
total franchise revenues decreased to 58.6 percent in the fourth
quarter of fiscal 2018 from 60.3 percent in the prior year quarter.
The decrease was due primarily to a decrease in franchise fees
resulting from a decrease in the number of restaurants sold to
franchisees, an increase in costs associated with franchisee
restaurant remodels, and incremental costs incurred in 2018 related
to the implementation of a mystery guest program. Franchise
Margin(3), a non-GAAP measure, decreased to 50.0 percent of total
franchise revenues in the fourth quarter of fiscal 2018 compared
with 52.1 percent in the fourth quarter of fiscal 2017.
_____________________________ (3) Restaurant Operating Margin,
Restaurant-Level EBITDA, Franchise Margin, and Franchise EBITDA 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."
SG&A expenses for the fourth quarter of fiscal 2018
decreased by $1.0 million and were 14.0 percent of revenues
compared with 11.2 percent in the prior year quarter. Advertising
costs, which are included in SG&A, were $6.8 million in the
fourth quarter compared with $7.2 million in the prior year
quarter. The $0.4 million decrease in advertising costs was due to
a $3.2 million decrease resulting from refranchising, which was
partially offset by an incremental $2.8 million of spending in the
quarter. The $0.6 million decrease in G&A excluding advertising
was primarily driven by $3.2 million in transition services income
resulting from the sale of Qdoba, which was reflected as a
reduction to SG&A. The decrease was further attributable to a
$1.1 million decrease in share-based compensation, a $0.9 million
decrease due primarily to workforce reductions related to
refranchising, and a $0.4 million decrease in pension and
postretirement benefits. These decreases were partially offset by a
$4.0 million increase in bonus due to higher levels of performance
in 2018 versus the prior year as compared to target bonus levels
and mark-to-market adjustments on investments supporting the
company's non-qualified retirement plans resulting in a $0.8
million year-over-year increase in SG&A. As a percentage of
system-wide sales, G&A excluding advertising was 2.3 percent in
the fourth quarter of fiscal 2018 compared with 2.4 percent in the
2017 quarter.
In fiscal 2018, the company began presenting depreciation and
amortization as a separate line item in its consolidated statements
of earnings to better align with similar presentation made by many
of its peers and to provide additional disclosure that is
meaningful for investors. The prior year consolidated statement of
earnings was adjusted to conform with this new presentation.
Depreciation and amortization was previously presented within
company restaurant costs, franchise occupancy expenses, selling,
general and administrative expenses, and impairment and other
charges, net, in the company's consolidated statements of
earnings.
Restructuring charges of $5.8 million, or approximately $0.17
per diluted share, were recorded during the fourth quarter of
fiscal 2018, primarily relating to severance costs, compared with
$1.4 million, or $0.03 per diluted share, in the prior year
quarter. Restructuring charges are included in "Impairment and
other charges, net" in the accompanying consolidated statements of
earnings. Including these charges, impairment and other charges,
net, increased in the fourth quarter to $8.0 million from $4.3
million in the year ago quarter.
Interest expense, net, increased by $2.2 million in the fourth
quarter due primarily to a higher effective interest rate for 2018
and higher debt levels.
The Tax Cuts and Jobs Act (the "Tax Act"), enacted into law on
December 22, 2017, reduced the federal statutory rate from 35
percent to 21 percent as of January 1, 2018. As a company with a
fiscal year-end of September 30, the tax rate reduction was phased
in, resulting in a blended statutory federal tax rate of 24.5
percent for the fiscal year ended September 30, 2018. In addition,
the Tax Act resulted in a non-cash increase to the provision for
income taxes of $0.5 million, or $0.02 per diluted share, for the
fourth quarter of fiscal 2018, and $32.5 million, or $1.13 per
diluted share, for fiscal year 2018, related primarily to the
revaluation of deferred tax assets and liabilities at the new lower
rates. This revaluation was based upon estimates and
interpretations of the Tax Act which may be refined as further
guidance is issued.
In the first quarter of fiscal 2018, the company adopted
Accounting Standards Update No. 2016-09, Compensation-Stock
Compensation: Improvements to Employee Share-Based Payment
Accounting (“ASU 2016-09”). As required by the updated accounting
standard, excess tax benefits or deficiencies are now recorded to
the provision for income taxes in the consolidated statement of
earnings, on a prospective basis, instead of additional paid-in
capital in the consolidated balance sheet. The adoption resulted in
an increase to the provision for income taxes of $0.1 million, or
less than $0.01 per diluted share, for the fourth quarter of fiscal
2018, and a reduction to the provision for income taxes of $2.0
million, or $0.07 per diluted share, for fiscal year 2018, but had
no additional impact on cash paid for income taxes. Excess tax
benefits will vary in future periods, as such amounts are dependent
on the number of shares released related to employee stock
compensation arrangements and fluctuations in the company’s stock
price.
Qdoba Discontinued Operations
In the first quarter of fiscal 2018, the company entered into a
definitive agreement to sell Qdoba, a wholly owned subsidiary of
the company, to certain funds managed by affiliates of Apollo
Global Management, LLC. The transaction closed on March 21, 2018,
and operating results for Qdoba are included in discontinued
operations for all periods presented. However, the company did not
allocate any general and administrative shared services expenses to
discontinued operations prior to the sale.
Capital Allocation
The company repurchased approximately 1.6 million shares of its
common stock in the fourth quarter of fiscal 2018 at an average
price of $87.78 per share for an aggregate cost of $140.0 million.
During fiscal year 2018, the company repurchased approximately 3.9
million shares at an average price of $86.86 per share for an
aggregate cost of $340.0 million. This leaves approximately $41.0
million remaining under a stock-buyback program authorized by its
Board of Directors that expires in November 2019. On November 15,
2018, the Company's Board of Directors authorized an additional $60
million stock-buyback program that also expires in November
2019.
The company also announced today that on November 15, 2018, its
Board of Directors declared a cash dividend of $0.40 per share on
the company's common stock. The dividend is payable on December
18, 2018, to shareholders of record at the close of business
on December 5, 2018.
Guidance
This release includes forward-looking guidance for certain
non-GAAP financial measures, including Restaurant-Level EBITDA and
Adjusted EBITDA. The company is unable without unreasonable effort
to provide reconciliations of these forward-looking non-GAAP
measures.
Effective fiscal 2019, the company adopted the new US GAAP
revenue standard (Topic 606) using the cumulative effect transition
method, and therefore no prior periods will be restated. The
company expects the new revenue standard to primarily result in an
increase to franchise revenues and a corresponding increase to
franchise expenses related to the reclassification of marketing
fees received from franchisees. In addition, certain amounts
previously classified as general and administrative expense will be
reflected as franchise expenses. The impact of the new revenue
standard has been included within the fiscal 2019 guidance provided
below.
Fiscal Year 2019 Guidance
The following guidance and underlying assumptions reflect the
company’s current expectations for the fiscal year ending
September 29, 2019. Fiscal 2019 and fiscal 2018 are 52-week
years, with 16 weeks in the first quarter, and 12 weeks in each of
the second, third and fourth quarters.
- System same-store sales of
approximately flat to up 2.0 percent.
- Commodity cost inflation of
approximately 2.0 percent.
- Restaurant-Level EBITDA of
approximately 26.0 to 27.0 percent of company restaurant
sales.
- SG&A as a percentage of revenues of
approximately 8.5 to 9.0 percent, which reflects the new revenue
recognition standards, or 11.5 to 12.0 percent using the prior
methodology.
- G&A as a percentage of system-wide
sales of approximately 1.8 to 2.0 percent, which reflects the new
revenue recognition standards, or 2.0 to 2.2 percent using the
prior methodology.
- Approximately 25 to 35 new restaurants
opening system-wide, the majority of which will be franchise
locations.
- Capital expenditures of approximately
$30 to $35 million.
- Tenant improvement allowances of
approximately $25 million.
- Tax rate of approximately 26.0 to 27.0
percent, subject to fluctuations arising from the impact of excess
tax benefits from share-based compensation arrangements.
- Adjusted EBITDA of approximately $260
to $270 million.
- Following implementation of a new
capital structure in the first half of fiscal 2019, the company
expects to increase its leverage ratio to approximately 5.0 times
EBITDA.
Conference Call
The company will host a conference call for financial analysts
and investors on Tuesday, November 20, 2018, 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 November 20, 2018.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a
restaurant company that operates and franchises Jack in the Box®
restaurants, one of the nation’s largest hamburger chains, with
more than 2,200 restaurants in 21 states and Guam. For more
information on Jack in the Box, including franchising
opportunities, visit www.jackinthebox.com.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the federal securities laws. Forward-looking
statements may be identified by words such as “anticipate,”
“believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,”
“intend,” “plan,” “project,” “may,” “will,” “would” and similar
expressions. These statements are based on management’s current
expectations, estimates, forecasts and projections about our
business and the industry in which we operate. These estimates and
assumptions involve known and unknown risks, uncertainties, and
other factors that are in some cases beyond our control. Factors
that may cause our actual results to differ materially from any
forward-looking statements include, but are not limited to: the
success of new products, marketing initiatives and restaurant
remodels and drive-thru enhancements; the impact of competition,
unemployment, trends in consumer spending patterns and commodity
costs; the company's ability to reduce G&A and operate
efficiently; the company’s ability to achieve and manage its
planned growth, which is affected by the availability of a
sufficient number of suitable new restaurant sites, the performance
of new restaurants, risks relating to expansion into new markets
and successful franchisee development; litigation risks; the
company's ability to enhance shareholder value; supply chain
disruption; food-safety incidents or negative publicity impacting
the reputation of the company's brand; the company’s ability to
obtain additional financing and increase our debt leverage; and
stock market volatility. These and other factors are discussed in
the company’s annual report on Form 10-K and its periodic reports
on Form 10-Q filed with the Securities and Exchange Commission,
which are available online at http://investors.jackinthebox.com or
in hard copy upon request. The company undertakes no obligation to
update or revise any forward-looking statement, whether as the
result of new information or otherwise.
JACK IN THE BOX INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF EARNINGS(In
thousands, except per share data)(Unaudited)
12 Weeks Ended 52 Weeks
Ended
September 30, 2018
October 1, 2017 September 30,
2018 October 1, 2017 Revenues: Company
restaurant sales $ 76,909 $ 139,303 $ 448,058 $ 715,921 Franchise
rental revenues 62,365 56,023 259,047 231,578 Franchise royalties
and other 38,198 36,799 162,585 149,792
177,472 232,125 869,690 1,097,291
Operating costs and expenses, net: Company restaurant costs(1):
Food and packaging 22,499 40,440 128,947 206,653 Payroll and
employee benefits 22,178 40,413 129,089 211,611 Occupancy and other
12,195 26,296 71,803 124,367 Total
company restaurant costs(1) 56,872 107,149 329,839 542,631
Franchise occupancy expenses(1) 38,332 34,342 158,319 140,623
Franchise support and other costs 3,699 2,588 11,593 8,811 Selling,
general and administrative expenses(1) 24,913 25,896 106,649
120,640 Depreciation and amortization(1) 13,116 14,677 59,422
67,398 Impairment and other charges, net(1) 7,969 4,275 18,418
13,169 Gains on the sale of company-operated restaurants (3,076 )
(16,868 ) (46,164 ) (38,034 ) 141,825 172,059 638,076
855,238 Earnings from operations 35,647 60,066
231,614 242,053 Interest expense, net 11,481 9,320
45,547 38,148 Earnings from continuing operations and
before income taxes 24,166 50,746 186,067 203,905 Income taxes
5,830 19,404 81,728 75,332 Earnings
from continuing operations 18,336 31,342 104,339 128,573 (Losses)
earnings from discontinued operations, net of taxes (2,067 ) (1,384
) 17,032 6,759 Net earnings $ 16,269 $ 29,958
$ 121,371 $ 135,332 Net earnings per
share - basic: Earnings from continuing operations $ 0.68 $ 1.06 $
3.66 $ 4.20 (Losses) earnings from discontinued operations (0.08 )
(0.05 ) 0.60 0.22 Net earnings per share (2) - basic
$ 0.61 $ 1.02 $ 4.26 $ 4.42 Net
earnings per share - diluted: Earnings from continuing operations $
0.68 $ 1.05 $ 3.62 $ 4.16 (Losses) earnings from discontinued
operations (0.08 ) (0.05 ) 0.59 0.22 Net earnings per
share (2) - diluted $ 0.60 $ 1.01 $ 4.21 $
4.38 Weighted-average shares outstanding: Basic 26,866
29,478 28,499 30,630 Diluted 27,148 29,753 28,807 30,914
Dividends declared per common share $ 0.40 $ 0.40 $ 1.60 $ 1.60
___________________________
(1) In 2018, the company began presenting depreciation and
amortization as a separate line item in its consolidated statements
of earnings to better align with similar presentation made by many
of its peers and to provide additional disclosure that is
meaningful for investors. The prior year consolidated statement of
earnings was adjusted to conform with this new presentation. (2)
Earnings per share may not add due to rounding.
JACK IN THE BOX INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands,
except share and per share data)(Unaudited)
September 30, 2018
October 1, 2017 ASSETS Current assets: Cash $
2,705 $ 4,467 Accounts and other receivables, net 57,422 59,609
Inventories 1,858 3,445 Prepaid expenses 14,443 27,532 Current
assets held for sale 13,947 42,732 Other current assets 4,598
1,493 Total current assets 94,973 139,278
Property and equipment: Land 105,155 112,509 Buildings
934,360 958,841 Restaurant and other equipment 129,701 173,980
Construction in progress 20,815 16,787 Property and
equipment, at cost 1,190,031 1,262,117 Less accumulated
depreciation and amortization (770,362 ) (777,841 ) Property and
equipment, net 419,669 484,276 Other Assets:
Intangible assets, net 600 1,413 Goodwill 46,749 51,412 Non-current
assets held for sale — 280,796 Other assets, net 261,406
277,570 Total other assets 308,755 611,191 $
823,397 $ 1,234,745
LIABILITIES AND STOCKHOLDERS’
DEFICIT Current liabilities: Current maturities of long-term
debt $ 31,828 $ 64,225 Accounts payable 44,970 28,366 Accrued
liabilities 106,922 135,054 Current liabilities held for sale —
34,345 Total current liabilities 183,720
261,990 Long-term liabilities: Long-term debt, net of
current maturities 1,037,927 1,079,982 Non-current liabilities held
for sale — 32,078 Other long-term liabilities 193,449
248,825 Total long-term liabilities 1,231,376
1,360,885 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, 82,061,661 and
81,843,483 issued, respectively 821 818 Capital in excess of par
value 470,826 453,432 Retained earnings 1,561,353 1,485,820
Accumulated other comprehensive loss (94,260 ) (137,761 ) Treasury
stock, at cost, 56,325,632 and 52,411,407 shares, respectively
(2,530,439 ) (2,190,439 ) Total stockholders’ deficit (591,699 )
(388,130 ) $ 823,397 $ 1,234,745
JACK IN THE BOX INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited)
52 Weeks Ended September 30, 2018
October 1, 2017 Cash flows from operating
activities: Net earnings $ 121,371 $ 135,332 Earnings from
discontinued operations 17,032 6,759
Earnings from continuing operations
104,339 128,573 Adjustments to reconcile net earnings to net cash
provided by operating activities: Depreciation and amortization
59,422 67,398 Franchise tenant improvement allowance amortization
862 121 Deferred finance cost amortization 2,803 3,487 Excess tax
benefits from share-based compensation arrangements (2,031 ) (4,232
) Deferred income taxes
25,352
(16,074 ) Share-based compensation expense 9,146 10,637 Pension and
postretirement expense 2,324 4,215 Gains on cash surrender value of
company-owned life insurance (2,280 ) (2,424 ) Gains on the sale of
company-operated restaurants (46,164 ) (38,034 ) Losses on the
disposition of property and equipment, net 1,627 2,891 Impairment
charges and other 2,505 1,815
Changes in assets and liabilities,
excluding acquisitions and dispositions:
Accounts and other receivables 24,220 (1,868 ) Inventories 1,587
1,839 Prepaid expenses and other current assets
(9,432
) 12,718 Accounts payable 4,890 (3,359 ) Accrued liabilities
(38,329 ) (16,654 ) Pension and postretirement contributions (5,467
) (5,363 ) Franchise tenant improvement allowance disbursements
(14,893 ) — Other (16,426 ) (11,997 ) Cash flows provided by
operating activities 104,055 133,689
Cash flows
from investing activities: Purchases of property and equipment
(32,345 ) (33,284 ) Purchases of assets intended for sale and
leaseback (5,497 ) (5,686 ) Proceeds from the sale and leaseback of
assets 9,336 6,057 Proceeds from the sale of company-operated
restaurants 26,486 99,591 Collections on notes receivable 54,453
1,500 Proceeds from the sale of property and equipment 10,259 2,921
Other 2,969 (3,729 ) Cash flows provided by investing
activities 65,661 67,370
Cash flows from financing
activities: Borrowings on revolving credit facilities 757,100
747,900 Repayments of borrowings on revolving credit facilities
(523,700 ) (533,300 ) Principal repayments on debt (304,607 )
(57,266 ) Debt issuance costs (1,366 ) — Dividends paid on common
stock (45,412 ) (48,925 ) Proceeds from issuance of common stock
7,959 5,165 Repurchases of common stock (325,634 ) (334,361 )
Excess tax benefits from share-based compensation arrangements —
4,232 Payroll tax payments for equity award issuances (7,719 )
(9,240 ) Change in book overdraft (2,150 ) 2,151 Cash flows
used in financing activities (445,529 ) (223,644 ) Cash flows used
in continuing operations (275,813 ) (22,585 ) Net cash provided by
operating activities of discontinued operations 4,823 47,388 Net
cash provided by (used in) investing activities of discontinued
operations 266,125 (34,031 ) Net cash used in financing activities
of discontinued operations (78 ) (138 ) Net cash provided by
discontinued operations 270,870 13,219 Effect of exchange rate
changes on cash 6 (22 ) Cash at beginning of period, including
discontinued operations cash 7,642 17,030 Cash at end
of period, including discontinued operations cash $ 2,705 $
7,642
JACK IN THE BOX INC. AND
SUBSIDIARIESSUPPLEMENTAL INFORMATION
The following table presents certain income and expense items
included in our consolidated statements of earnings as a percentage
of total revenues, unless otherwise indicated. Percentages may not
add due to rounding.
CONSOLIDATED STATEMENTS OF EARNINGS
DATA(Unaudited)
12 Weeks Ended 52 Weeks
Ended September 30, 2018 October 1,
2017 September 30, 2018 October
1, 2017 Revenues: Company restaurant sales 43.3 % 60.0 %
51.5 % 65.2 % Franchise rental revenues 35.1 % 24.1 % 29.8 % 21.1 %
Franchise royalties and other 21.5 % 15.9 % 18.7 % 13.7 % Total
revenues 100.0 % 100.0 % 100.0 % 100.0 % Operating costs and
expenses, net: Company restaurant costs: Food and packaging (1)
29.3 % 29.0 % 28.8 % 28.9 % Payroll and employee benefits (1) 28.8
% 29.0 % 28.8 % 29.6 % Occupancy and other (1) 15.9 % 18.9 % 16.0 %
17.4 % Total company restaurant costs (1) 73.9 % 76.9 % 73.6 % 75.8
% Franchise occupancy expenses (2) 61.5 % 61.3 % 61.1 % 60.7 %
Franchise support and other costs (3) 9.7 % 7.0 % 7.1 % 5.9 %
Selling, general and administrative expenses 14.0 % 11.2 % 12.3 %
11.0 % Depreciation and amortization 7.4 % 6.3 % 6.8 % 6.1 %
Impairment and other charges, net 4.5 % 1.8 % 2.1 % 1.2 % Gains on
the sale of company-operated restaurants (1.7 )% (7.3 )% (5.3 )%
(3.5 )% Earnings from operations 20.1 % 25.9 % 26.6 % 22.1 % Income
tax rate (4) 24.1 % 38.2 % 43.9 % 36.9 %
____________________________
(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.
Jack in the Box system sales (dollars
in thousands):
12 Weeks Ended
52 Weeks Ended
September 30,2018
October 1,2017
September 30,2018
October 1,2017
Company-owned restaurant sales $ 76,909 $ 139,303 $ 448,058 $
715,921 Franchised restaurant sales (1) 717,036 656,389
3,018,067 2,753,295 System sales (1) $ 793,945
$ 795,692 $ 3,466,125 $ 3,469,216
____________________________
(1) Franchised restaurant sales represent sales at
franchised restaurants and are revenues of our franchisees. System
sales include company and franchised restaurant sales. We do not
record franchised sales as revenues; however, our royalty revenues
and percentage rent revenues are calculated based on a percentage
of franchised sales. We believe franchised and system restaurant
sales information is useful to investors as they have a direct
effect on the company's profitability.
The following table summarizes the year-to-date changes in the
number and mix of Jack in the Box company and franchise
restaurants:
SUPPLEMENTAL RESTAURANT ACTIVITY
INFORMATION(Unaudited)
2018 2017 Company
Franchise Total Company
Franchise Total Beginning of year 276
1,975 2,251 417 1,838 2,255 New 1 11 12 2 18 20 Refranchised (135 )
135 — (178 ) 178 — Acquired from franchisees — — — 50 (50 ) —
Closed (5 ) (21 ) (26 ) (15 ) (9 ) (24 ) End of period 137
2,100 2,237 276 1,975 2,251 % of
system 6 % 94 % 100 % 12 % 88 % 100 %
JACK IN THE BOX INC. AND
SUBSIDIARIESRECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP
RESULTS(Unaudited)
Within this release, the company makes reference to Operating
Earnings Per Share, Adjusted EBITDA, Restaurant Operating Margin,
Restaurant-Level EBITDA, Franchise Margin and Franchise EBITDA,
which are non-GAAP financial measures. Operating Earnings Per Share
represents diluted earnings per share from continuing operations on
a GAAP basis excluding gains or losses on the sale of
company-operated restaurants, restructuring charges, the non-cash
impact of the Tax Act, and the excess tax benefits from share-based
compensation arrangements which are now recorded as a component of
income tax expense versus equity previously. Adjusted EBITDA
represents net earnings on a GAAP basis excluding gains or losses
from discontinued operations, income taxes, interest expense, net,
gains or losses on the sale of company-operated restaurants,
impairment and other charges, depreciation and amortization, and
the amortization of franchise tenant improvement allowances.
Restaurant-Level EBITDA and Franchise EBITDA represent earnings
from operations on a GAAP basis adjusted to exclude depreciation
and amortization allocated to company restaurant operations and
franchise operations, the amortization of franchise tenant
improvement allowances, and other operating expenses, such as
general and administrative expenses, which include the costs of
functions such as accounting, finance and human resources, and
other costs such as pension expense, share-based compensation,
impairment and other charges, net, and gains or losses on the sale
of company-operated restaurants. Restaurant Operating Margin and
Franchise Margin are derived from Restaurant-Level EBITDA and
Franchise EBITDA, respectively, plus depreciation and amortization
and the amortization of franchise tenant improvement
allowances.
The company is presenting Operating Earnings Per Share, Adjusted
EBITDA, Restaurant Operating Margin, Restaurant-Level EBITDA,
Franchise Margin and Franchise EBITDA because it believes that they
provide 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 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. Additionally, management believes that Adjusted
EBITDA, Restaurant-Level EBITDA and Franchise EBITDA permit
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.
However, Operating Earnings Per Share, Adjusted EBITDA,
Restaurant Operating Margin, Restaurant-Level EBITDA, Franchise
Margin and Franchise EBITDA are not measures of financial
performance or liquidity under GAAP and, accordingly, should not be
considered as alternatives to net earnings, earnings from
operations or cash flow from operating activities as indicators of
operating performance or liquidity. The company encourages
investors to rely upon its GAAP numbers but includes these non-GAAP
financial measures as supplemental metrics to assist investors.
These non-GAAP financial measures should not be considered as a
substitute for, or superior to, financial measures calculated 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 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
52 Weeks Ended
September 30,2018
October 1,2017
September 30,2018
October 1,2017
Diluted earnings per share from continuing
operations – GAAP
$ 0.68 $ 1.05 $ 3.62 $ 4.16 Gains on the sale of company-operated
restaurants (0.09 ) (0.35 ) (1.16 ) (0.78 ) Restructuring charges
0.17 0.03 0.27 0.07 Non-cash impact of the Tax Cuts and Jobs Act
0.02 — 1.13 — Excess tax benefits from share-based compensation
arrangements (0.00 ) — (0.07 ) — Operating Earnings
Per Share – non-GAAP $ 0.77 $ 0.73 $ 3.79 $
3.46
Below is a reconciliation of non-GAAP Adjusted EBITDA to the
most directly comparable GAAP measure, net earnings (in
thousands).
12 Weeks Ended
52 Weeks Ended
September 30,2018
October 1,2017
September 30,2018
October 1,2017
Net earnings - GAAP $ 16,269 $ 29,958 $ 121,371 $ 135,332 Losses
(earnings) from discontinued operations, net of taxes 2,067 1,384
(17,032 ) (6,759 ) Income taxes 5,830 19,404 81,728 75,332 Interest
expense, net 11,481 9,320 45,547 38,148
Earnings from operations 35,647 60,066 231,614 242,053 Gains on the
sale of company-operated restaurants (3,076 ) (16,868 ) (46,164 )
(38,034 ) Impairment and other charges, net 7,969 4,275 18,418
13,169 Depreciation and amortization 13,116 14,677 59,422 67,398
Amortization of franchise tenant improvement allowances 365
47 862 121 Adjusted EBITDA – non-GAAP $ 54,021
$ 62,197 $ 264,152 $ 284,707
Below is a reconciliation of non-GAAP Restaurant Operating
Margin, Restaurant-Level EBITDA, Franchise Margin and Franchise
EBITDA to the most directly comparable GAAP measure, earnings from
operations (in thousands).
12 Weeks Ended
52 Weeks Ended
September 30,2018
October 1,2017
September 30,2018
October 1,2017
Earnings from operations (1) - GAAP $ 35,647 $ 60,066
$ 231,614 $ 242,053 Other operating expenses,
net: Selling, general and administrative expenses $ (24,913 ) $
(25,896 ) $ (106,649 ) $ (120,640 ) Impairment and other charges,
net (7,969 ) (4,275 ) (18,418 ) (13,169 ) Gains on the sale of
company-operated restaurants 3,076 16,868 46,164
38,034 Total other operating income (expenses), net $
(29,806 ) $ (13,303 ) $ (78,903 ) $ (95,775 ) Franchise
operations: Franchise rental revenues $ 62,365 $ 56,023 $ 259,047 $
231,578 Franchise royalties and other 38,198 36,799
162,585 149,792 Total franchise revenues 100,563
92,822 421,632 381,370 Franchise occupancy expenses (38,332 )
(34,342 ) (158,319 ) (140,623 ) Franchise support and other costs
(3,699 ) (2,588 ) (11,593 ) (8,811 ) Amortization of franchise
tenant improvement allowances 365 47
862 121 Franchise EBITDA - non-GAAP(2)
58,897 58.6 % 55,939 60.3 % 252,582 59.9 % 232,057 60.8 %
Depreciation and amortization(2) (8,216 ) 8.2 % (7,524 ) 8.1 %
(34,332 ) 8.1 % (30,860 ) 8.1 % Amortization of franchise tenant
improvement allowances(2) (365 ) 0.4 % (47 ) 0.1 % (862 ) 0.2 %
(121 ) — % Franchise Margin - non-GAAP(2) $ 50,316 50.0 % $
48,368 52.1 % $ 217,388 51.6 % $ 201,076 52.7
% Company restaurant operations: Company restaurant sales $
76,909 $ 139,303 $ 448,058 $ 715,921 Food and packaging(3) (22,499
) 29.3 % (40,440 ) 29.0 % (128,947 ) 28.8 % (206,653 ) 28.9 %
Payroll and employee benefits(3) (22,178 ) 28.8 % (40,413 ) 29.0 %
(129,089 ) 28.8 % (211,611 ) 29.6 % Occupancy and other(3) (12,195
) 15.9 % (26,296 ) 18.9 % (71,803 ) 16.0 % (124,367 ) 17.4 %
Restaurant-Level EBITDA - non-GAAP(3) 20,037 26.1 % 32,154 23.1 %
118,219 26.4 % 173,290 24.2 % Depreciation and amortization(3)
(2,753 ) 3.6 % (5,431 ) 3.9 % (16,458 ) 3.7 % (29,084 ) 4.1 %
Restaurant Operating Margin - non-GAAP(3) $ 17,284 22.5 % $
26,723 19.2 % $ 101,761 22.7 % $ 144,206 20.1
% Depreciation and amortization: Company restaurant
occupancy and other $ (2,753 ) $ (5,431 ) $ (16,458 ) $ (29,084 )
Franchise occupancy expenses (8,216 ) (7,524 ) (34,332 ) (30,860 )
Impairment and other charges, net (215 ) (9 ) (235 ) (51 ) Selling,
general and administrative expenses (1,932 ) (1,713 ) (8,397 )
(7,403 ) Total depreciation and amortization $ (13,116 ) $ (14,677
) $ (59,422 ) $ (67,398 )
____________________________
(1) Earnings from operations is the sum of total other
operating expenses, net, Franchise EBITDA, Restaurant-Level EBITDA,
and depreciation and amortization, plus the amortization of
franchise tenant improvement allowances. (2) Percentages are
calculated based on a percentage of total franchise revenues. (3)
Percentages are calculated based on a percentage of company
restaurant sales.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181119005781/en/
Investor Contact:Carol DiRaimo, (858) 571-2407
Media Contact:Brian Luscomb, (858) 571-2291
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