Jack in the Box same-store sales of
(2.2%)
Del Taco same-store sales of (3.9%)
Jack in the Box systemwide sales of (1.3%);
Del Taco systemwide sales of (3.2%)
Diluted loss per share of ($6.26), including
a $162.6 million non-cash goodwill impairment charge for Del
Taco
Operating EPS of $1.65
Jack in the Box signed 3 development
agreements with new franchisees for 28 new restaurants
Jack in the Box entering Chicago market with
multiple company-owned openings in FY 2025
Jack in the Box progressing on tech and
digital transformation with nearly 100 restaurants on our new POS
system and our next generation app going live on September
1st
Del Taco's three most recent restaurant
openings, in Florida and Virginia, all set new company records for
first-week sales
Jack in the Box Inc. (NASDAQ: JACK) announced financial
results for the Jack in the Box and Del Taco brands in the third
quarter, ended July 7, 2024.
“I am proud of our teams and how they continue to enhance the
guest experience and deliver operational improvements during a
challenging sales environment for our entire industry,” said Darin
Harris, Jack in the Box Chief Executive Officer. “We continue to
focus on value and ways we can improve transactions with the
low-income guest — while at the same time, doubling down on our
strengths of innovation, variety and late night. We will strive to
finish the year strong with positive momentum heading into 2025,
while continuing to execute against our strategic initiatives to
achieve our long-term growth and profitability ambitions.”
Jack in the Box
Performance
Same-store sales decreased 2.2% in the third quarter, comprised
of franchise same-store sales decline of 2.4% and company-owned
same-store sales increase of 0.1%. Transactions were down from
prior year although slightly improved from last quarter. Systemwide
sales for the third quarter decreased 1.3%.
Restaurant-Level Margin(1), a non-GAAP measure, was $21.1
million, or 21.0%, down from $21.1 million, or 21.8%, a year ago
driven primarily by higher costs for labor and other restaurant
operating costs, partially offset by lower food and packaging
costs. The increase in labor was driven in large part from
implementing California's new minimum wage law.
Franchise-Level Margin(1), a non-GAAP measure, was $74.6
million, or 41.1%, a decrease from $75.3 million, or 41.1%, a year
ago. The decrease was mainly driven by the decline in franchise
sales for the quarter.
Jack in the Box net restaurant count remained flat in the third
quarter, with three restaurant openings and three restaurant
closures. Since the launch of the development program in mid-2021,
the company has 96 signed agreements for a total of 437
restaurants, with 46 restaurants opened to date.
Jack in the Box Same-Store
Sales:
12 Weeks Ended
July 7, 2024
July 9, 2023
Company
0.1%
6.9%
Franchise
(2.4%)
8.0%
System
(2.2%)
7.9%
Jack in the Box Restaurant Counts:
2024
2023
Company
Franchise
Total
Company
Franchise
Total
Restaurant count at Q2'24
144
2,051
2,195
140
2,047
2,187
New
—
3
3
—
6
6
Closed
—
(3
)
(3
)
—
(2
)
(2
)
Restaurant count at end of Q3'24
144
2,051
2,195
140
2,051
2,191
Q3'24 QTD Net Restaurant Increase
—
—
—
YTD Net Restaurant Increase
1.4
%
0.3
%
0.4
%
Del Taco
Performance
Same-store sales decreased 3.9% in the third quarter, comprised
of franchise same-store sales decline of 4.1% and company-operated
same-store sales decline of 3.5%. Sales performance resulted from a
decline in transactions, partially offset by an increase in average
check. Systemwide sales for the fiscal third quarter decreased
3.2%.
Restaurant-Level Margin(1), a non-GAAP measure, was $8.8
million, or 13.4%, down from $17.7 million, or 17.4%, a year ago.
The decrease was due mainly to refranchising restaurants, and the
margin percentage decline was driven by increased costs for labor
and utilities, partially offset by menu price increases. The
increase in labor as a percentage of sales was a result of
implementing California's new minimum wage law and the sales
decline.
Franchise-Level Margin(1), a non-GAAP measure, was $5.8 million,
or 27.1%, compared to $5.5 million, or 36.7%, a year ago. The
decrease in margin percentage was driven by the impact of
refranchising and the associated increase in pass-thru rent and
marketing fees.
Del Taco restaurant count in the third quarter had five
restaurant openings and three restaurant closings. Subsequent to
the quarter, 27 Del Taco restaurants were refranchised, which
included a development agreement for 25 additional restaurants.
Del Taco Same-Store Sales:
12 Weeks Ended
July 7, 2024
July 9, 2023
Company
(3.5%)
1.7%
Franchise
(4.1%)
1.8%
System
(3.9%)
1.7%
Del Taco Restaurant Counts:
2024
2023
Company
Franchise
Total
Company
Franchise
Total
Restaurant count at Q2'24
166
429
595
273
322
595
New
1
4
5
—
2
2
Refranchised
—
—
—
(50
)
50
—
Closed
(2
)
(1
)
(3
)
(2
)
(1
)
(3
)
Restaurant count at end of Q3'24
165
432
597
221
373
594
Q3'24 QTD Net Restaurant Increase
(1
)
3
2
YTD Net Restaurant Increase/(Decrease)
(3.5
)%
2.6
%
0.8
%
Company-Wide
Performance
Third quarter diluted loss per share was ($6.26). Operating
Earnings Per Share(2), a non-GAAP measure, was $1.65 in the third
quarter of fiscal 2024 compared with $1.45 in the prior year
quarter.
Total revenues decreased 7.0% to $369.2 million, compared to
$396.9 million in the prior year quarter. The lower revenue is
primarily the result of the Del Taco refranchising transactions.
Net loss was ($122.3) million for the third quarter of fiscal 2024,
with the loss resulting from the goodwill impairment noted below.
This compared with net earnings of $29.2 million for the third
quarter of fiscal 2023. Adjusted EBITDA(3), a non-GAAP measure, was
$78.9 million in the third quarter of fiscal 2024 compared with
$81.6 million for the prior year quarter.
Company-wide SG&A expense for the third quarter was $29.6
million, a decrease of $10.0 million compared to the prior year
quarter. The decrease was due primarily to lower incentive-based
compensation, a favorable adjustment to our workers compensation
and general liability reserves, and gains on the cash surrender
value of our company-owned life insurance policies. When excluding
net COLI gains, G&A was 2.0% of systemwide sales.
During the third quarter, the Company recognized a goodwill
impairment of $162.6 million to the Del Taco reporting unit. This
is a non-cash charge that does not impact future operations and is
the result of an internal goodwill impairment assessment triggered
by i) a recent negative trend in Del Taco same store sales, ii)
lower margins due in part to wage increases required in California
effective April 1, 2024 under AB 1228, iii) unfavorable changes in
the economic environment impacting our industry, including
inflation and interest rates, and iv) a sustained lower share
price.
The income tax provisions reflect an effective tax rate of
negative 0.1% in the third quarter of 2024, as compared to 32.6% in
the third quarter of fiscal year 2023. The rate for the quarter was
primarily due to the impairment of non-deductible goodwill. The
non-GAAP adjusted tax rate for the third quarter of 2024 was
26.2%.
(1) Restaurant-Level Margin and
Franchise-Level Margin are non-GAAP measures. These non-GAAP
measures are reconciled to earnings from operations, the most
comparable GAAP measure, in the attachment to this release. See
"Reconciliation of Non-GAAP Measurements to GAAP Results."
(2) Operating Earnings Per Share
represents the diluted earnings per share on a GAAP basis,
excluding certain adjustments. See "Reconciliation of Non-GAAP
Measurements to GAAP Results." Operating earnings per share may not
add due to rounding.
(3) Adjusted EBITDA represents net
earnings on a GAAP basis excluding certain adjustments. See
"Reconciliation of Non-GAAP Measurements to GAAP Results."
Capital
Allocation
The Company repurchased 0.3 million shares of our common stock
for an aggregate cost of $15.1 million in the third quarter. As of
the end of the third quarter, there was $195.0 million remaining
under the Board-authorized stock buyback program.
On August 2, 2024, the Board of Directors declared a cash
dividend of $0.44 per share, to be paid on September 19, 2024, to
shareholders of record as of the close of business on August 30,
2024.
Guidance & Outlook
Updates
Based on the year to date actual results and updated assumptions
for the remainder of the year, the company’s updated expectations
for the fiscal year ending September 29, 2024 include the
following:
FY 2024 Company-wide Guidance
- Adjusted EBITDA of $320-$325 million
- Operating EPS of $6.10-$6.25
- SG&A (excluding COLI gains/losses) of approximately $160
million
FY 2024 Jack in the Box Segment
Guidance
- Same Store Sales of approximately (1.0%)
- Company-Owned Restaurant Level Margin of approximately
22%
FY 2024 Del Taco Segment
Guidance
- Same Store Sales of approximately (1.5%)
- Company-Owned Restaurant Level Margin of approximately
14%
Conference Call
The Company will host a conference call for analysts and
investors on Tuesday, August 6, 2024, beginning at 2:00 p.m. PT
(5:00 p.m. ET). The call will be webcast live via the Investors
section of the Jack in the Box company website at
http://investors.jackinthebox.com. A replay of the call will be
available through the Jack in the Box Inc. corporate website for 21
days. The call can be accessed via phone by dialing (888) 596-4144
and using ID 7573961.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), founded and headquartered
in San Diego, California, is a restaurant company that operates and
franchises Jack in the Box®, one of the nation's largest hamburger
chains with approximately 2,200 restaurants across 23 states, and
Del Taco®, the second largest Mexican-American QSR chain by units
in the U.S. with approximately 600 restaurants across 17 states.
For more information on both brands, including franchising
opportunities, visit www.jackinthebox.com and www.deltaco.com.
Category: Earnings
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the federal securities laws. Forward-looking
statements may be identified by words such as “anticipate,”
“believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,”
“intend,” “plan,” “project,” “may,” “will,” “would” and similar
expressions. These statements are based on management’s current
expectations, estimates, forecasts and projections about our
business and the industry in which we operate. These estimates and
assumptions involve known and unknown risks, uncertainties, and
other factors that are in some cases beyond our control. Factors
that may cause our actual results to differ materially from any
forward-looking statements include, but are not limited to: the
success of new products, marketing initiatives and restaurant
remodels and drive-thru enhancements; the impact of competition,
unemployment, trends in consumer spending patterns and commodity
costs; the company’s ability to achieve and manage its planned
growth, which is affected by the availability of a sufficient
number of suitable new restaurant sites, the performance of new
restaurants, risks relating to expansion into new markets and
successful franchise development; the ability to attract, train and
retain top-performing personnel, litigation risks; risks associated
with disagreements with franchisees; supply chain disruption;
food-safety incidents or negative publicity impacting the
reputation of the company's brand; increased regulatory and legal
complexities, risks associated with the amount and terms of the
securitized debt issued by certain of our wholly owned
subsidiaries; and stock market volatility. These and other factors
are discussed in the company’s annual report on Form 10-K and its
periodic reports on Form 10-Q filed with the Securities and
Exchange Commission, which are available online at
http://investors.jackinthebox.com or in hard copy upon request. The
company undertakes no obligation to update or revise any
forward-looking statement, whether as the result of new information
or otherwise.
JACK IN THE BOX INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
(In thousands, except per
share data)
(Unaudited)
12 Weeks Ended
40 Weeks Ended
July 7, 2024
July 9, 2023
July 7, 2024
July 9, 2023
Revenues:
Company restaurant sales
$
166,480
$
198,516
$
557,618
$
671,311
Franchise rental revenues
89,125
86,248
288,147
278,598
Franchise royalties and other
55,293
54,970
183,707
185,342
Franchise contributions for advertising
and other services
58,273
57,208
192,544
184,531
369,171
396,942
1,222,016
1,319,782
Operating costs and expenses, net:
Food and packaging
46,251
58,556
156,297
199,799
Payroll and employee benefits
57,917
63,871
185,025
217,547
Occupancy and other
32,365
37,274
106,773
127,920
Franchise occupancy expenses
57,989
53,930
187,704
173,803
Franchise support and other costs
3,853
4,079
12,907
8,623
Franchise advertising and other services
expenses
60,444
59,569
200,201
192,875
Selling, general and administrative
expenses
29,580
39,617
113,200
129,164
Depreciation and amortization
13,827
14,460
46,206
48,460
Pre-opening costs
851
182
1,918
667
Goodwill impairment
162,624
—
162,624
—
Other operating expenses (income), net
5,641
7,656
16,343
5,135
Losses (gains) on the sale of
company-operated restaurants
65
(5,794
)
1,384
(10,323
)
471,407
333,400
1,190,582
1,093,670
Earnings (loss) from operations
(102,236
)
63,542
31,434
226,112
Other pension and post-retirement
expenses, net
1,579
1,608
5,264
5,359
Interest expense, net
18,402
18,662
61,491
64,167
Earnings (loss) before income taxes
(122,217
)
43,272
(35,321
)
156,586
Income taxes
83
14,104
23,316
47,657
Net earnings (loss)
$
(122,300
)
$
29,168
$
(58,637
)
$
108,929
Net earnings (loss) per share:
Basic
$
(6.29
)
$
1.42
$
(2.98
)
$
5.25
Diluted
$
(6.26
)
$
1.41
$
(2.96
)
$
5.22
Weighted-average shares outstanding:
Basic
19,454
20,487
19,690
20,738
Diluted
19,541
20,649
19,836
20,861
Dividends declared per common share
$
0.44
$
0.44
$
1.32
$
1.32
JACK IN THE BOX INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
(Unaudited)
July 7, 2024
October 1, 2023
ASSETS
Current assets:
Cash
$
21,646
$
157,653
Restricted cash
29,112
28,254
Accounts and other receivables, net
86,228
99,678
Inventories
4,160
3,896
Prepaid expenses
12,121
16,911
Current assets held for sale
29,408
13,925
Other current assets
6,598
5,667
Total current assets
189,273
325,984
Property and equipment:
Property and equipment, at cost
1,271,679
1,258,589
Less accumulated depreciation and
amortization
(851,443
)
(846,559
)
Property and equipment, net
420,236
412,030
Other assets:
Operating lease right-of-use assets
1,425,560
1,397,555
Intangible assets, net
10,873
11,330
Trademarks
283,500
283,500
Goodwill
161,645
329,986
Other assets, net
254,132
240,707
Total other assets
2,135,710
2,263,078
$
2,745,219
$
3,001,092
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Current maturities of long-term debt
$
29,999
$
29,964
Current operating lease liabilities
160,852
142,518
Accounts payable
68,964
84,960
Accrued liabilities
178,686
302,178
Total current liabilities
438,501
559,620
Long-term liabilities:
Long-term debt, net of current
maturities
1,705,927
1,724,933
Long-term operating lease liabilities, net
of current portion
1,284,718
1,265,514
Deferred tax liabilities
19,105
26,229
Other long-term liabilities
142,781
143,123
Total long-term liabilities
3,152,531
3,159,799
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, 82,819,241 and 82,645,814 issued,
respectively
828
826
Capital in excess of par value
531,304
520,076
Retained earnings
1,853,118
1,937,598
Accumulated other comprehensive loss
(50,581
)
(51,790
)
Treasury stock, at cost, 63,694,503 and
62,910,964 shares, respectively
(3,180,482
)
(3,125,037
)
Total stockholders’ deficit
(845,813
)
(718,327
)
$
2,745,219
$
3,001,092
JACK IN THE BOX INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year-to-date
July 7, 2024
July 9, 2023
Cash flows from operating activities:
Net (loss) earnings
$
(58,637
)
$
108,929
Adjustments to reconcile net (loss)
earnings to net cash provided by operating activities:
Depreciation and amortization
46,206
48,460
Amortization of franchise tenant
improvement allowances and incentives
3,967
3,295
Deferred finance cost amortization
3,722
3,915
Excess tax deficiency from share-based
compensation arrangements
5
71
Deferred income taxes
(10,314
)
1,648
Share-based compensation expense
11,018
7,991
Pension and post-retirement expense
5,264
5,359
Gains on cash surrender value of
company-owned life insurance
(11,776
)
(8,331
)
Losses (gains) on the sale of
company-operated restaurants
1,384
(10,323
)
Gains on acquisition of restaurants
(2,357
)
—
Losses (gains) on the disposition of
property and equipment, net
1,675
(9,155
)
Impairment charges and other
163,169
6,232
Changes in assets and liabilities,
excluding acquisitions:
Accounts and other receivables
17,385
12,902
Inventories
(262
)
658
Prepaid expenses and other current
assets
4,141
5,714
Operating lease right-of-use assets and
lease liabilities
6,191
5,357
Accounts payable
(16,720
)
(28,068
)
Accrued liabilities
(114,100
)
32,525
Pension and post-retirement
contributions
(4,784
)
(4,674
)
Franchise tenant improvement allowance and
incentive disbursements
(1,919
)
(2,745
)
Other
(3,995
)
2,311
Cash flows provided by operating
activities
39,263
182,071
Cash flows from investing activities:
Purchases of property and equipment
(85,768
)
(56,669
)
Proceeds from the sale of property and
equipment
10,899
25,174
Proceeds from the sale and leaseback of
assets
4,413
3,673
Proceeds from the sale of company-operated
restaurants
2,168
51,845
Other
—
1,465
Cash flows (used in) provided by investing
activities
(68,288
)
25,488
Cash flows from financing activities:
Repayments of borrowings on revolving
credit facilities
—
(50,000
)
Principal repayments on debt
(22,288
)
(22,620
)
Dividends paid on common stock
(25,633
)
(27,198
)
Proceeds from issuance of common stock
2
263
Repurchases of common stock
(54,999
)
(60,431
)
Payroll tax payments for equity award
issuances
(3,206
)
(1,593
)
Cash flows used in financing
activities
(106,124
)
(161,579
)
Net (decrease) increase in cash and
restricted cash
(135,149
)
45,980
Cash and restricted cash at beginning of
period
185,907
136,040
Cash and restricted cash at end of
period
$
50,758
$
182,020
JACK IN THE BOX INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
The following table presents certain income and expense items
included in our condensed consolidated statements of earnings as a
percentage of total revenues, unless otherwise indicated.
Percentages may not add due to rounding.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS DATA
(Unaudited)
12 Weeks Ended
40 Weeks Ended
July 7, 2024
July 9, 2023
July 7, 2024
July 9, 2023
Revenues:
Company restaurant sales
45.1
%
50.0
%
45.6
%
50.9
%
Franchise rental revenues
24.1
%
21.7
%
23.6
%
21.1
%
Franchise royalties and other
15.0
%
13.8
%
15.0
%
14.0
%
Franchise contributions for advertising
and other services
15.8
%
14.4
%
15.8
%
14.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Operating costs and expenses, net:
Food and packaging (1)
27.8
%
29.5
%
28.0
%
29.8
%
Payroll and employee benefits (1)
34.8
%
32.2
%
33.2
%
32.4
%
Occupancy and other (1)
19.4
%
18.8
%
19.1
%
19.1
%
Franchise occupancy expenses (2)
65.1
%
62.5
%
65.1
%
62.4
%
Franchise support and other costs (3)
7.0
%
7.4
%
7.0
%
4.7
%
Franchise advertising and other services
expenses (4)
103.7
%
104.1
%
104.0
%
104.5
%
Selling, general and administrative
expenses
8.0
%
10.0
%
9.3
%
9.8
%
Depreciation and amortization
3.7
%
3.6
%
3.8
%
3.7
%
Pre-opening costs
0.2
%
0.0
%
0.2
%
0.1
%
Goodwill impairment
44.1
%
—
%
13.3
%
—
%
Other operating expenses (income), net
1.5
%
1.9
%
1.3
%
0.4
%
Losses (gains) on the sale of
company-operated restaurants
—
%
(1.5
)%
0.1
%
(0.8
)%
Earnings from operations
(27.7
)%
16.0
%
2.6
%
17.1
%
Income tax rate (5)
(0.1
)%
32.6
%
(66.0
)%
30.4
%
____________________________
(1)
As a percentage of company restaurant
sales.
(2)
As a percentage of franchise rental
revenues.
(3)
As a percentage of franchise royalties and
other.
(4)
As a percentage of franchise contributions
for advertising and other services.
(5)
As a percentage of earnings from
operations and before income taxes.
Jack in the Box systemwide sales (in
thousands):
12 Weeks Ended
40 Weeks Ended
July 7, 2024
July 9, 2023
July 7, 2024
July 9, 2023
Company-operated restaurant sales
$
100,355
$
96,820
$
331,339
$
318,451
Franchised restaurant sales (1)
931,303
948,457
3,069,318
3,088,697
Systemwide sales (1)
$
1,031,658
$
1,045,277
$
3,400,657
$
3,407,148
Del Taco systemwide sales (in
thousands):
12 Weeks Ended
40 Weeks Ended
July 7, 2024
July 9, 2023
July 7, 2024
July 9, 2023
Company-operated restaurant sales
$
66,125
$
101,696
$
226,279
$
352,860
Franchised restaurant sales (1)
157,231
129,112
510,561
394,105
Systemwide sales (1)
$
223,356
$
230,808
$
736,840
$
746,965
____________________________
(1)
Franchised restaurant sales represent
sales at franchised restaurants and are revenues of our
franchisees. Systemwide sales include company and franchised
restaurant sales. We do not record franchised sales as revenues;
however, our royalty revenues, marketing fees and percentage rent
revenues are calculated based on a percentage of franchised sales.
We believe franchised and systemwide restaurant sales information
is useful to investors as they have a direct effect on the
company's profitability.
JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)
To supplement the condensed consolidated financial statements,
which are presented in accordance with GAAP, the company uses the
following non-GAAP measures: Adjusted Net Income, Operating
Earnings Per Share, Adjusted EBITDA, Restaurant-Level Margin and
Franchise-Level Margin. Management believes that these
measurements, when viewed with the company's results of operations
in accordance with GAAP and the accompanying reconciliations in the
tables below, provide useful information about operating
performance and period-over-period changes, and provide additional
information that is useful for evaluating the operating performance
of the company's core business without regard to potential
distortions.
Operating Earnings Per Share
Operating Earnings Per Share represents diluted earnings per
share on a GAAP basis excluding acquisition, integration and
strategic initiatives, net COLI gains, pension and post-retirement
benefit costs, goodwill impairment, losses (gains) on the sale of
company-operated restaurants, excess tax (benefits) shortfall from
share-based compensation arrangements, and the tax-related impacts
of the above adjustments. Operating Earnings Per Share should be
considered as a supplement to, not as a substitute for, analysis of
results as reported under U.S. GAAP or other similarly titled
measures of other companies. Management believes Operating Earnings
Per Share provides investors with a meaningful supplement of the
company’s operating performance and period-over-period changes
without regard to potential distortions.
Below is a reconciliation of Non-GAAP Adjusted Net Income to the
most directly comparable GAAP measure of net income. Also below is
a reconciliation of Non-GAAP Operating Earnings Per Share to the
most directly comparable GAAP measure, diluted earnings per
share:
12 Weeks Ended
July 7, 2024
July 9, 2023
Net income, as reported
$
(122,300
)
$
29,168
Acquisition, integration, and strategic
initiatives (1)
4,723
2,463
Net COLI gains (2)
(3,223
)
(579
)
Pension and post-retirement benefit costs
(3)
1,579
1,608
Goodwill impairment (4)
162,624
—
Losses (gains) on the sale of
company-operated restaurants (5)
65
(5,794
)
Excess tax (benefits) shortfall from
share-based compensation arrangements
53
(72
)
Tax impact of adjustments (6)
(11,366
)
3,238
Non-GAAP Adjusted Net Income
$
32,155
$
30,032
Weighted-average shares outstanding -
diluted
19,541
20,649
Diluted earnings per share – GAAP
$
(6.26
)
$
1.41
Acquisition, integration, and strategic
initiatives (1)
0.24
0.12
Net COLI gains (2)
(0.16
)
(0.03
)
Pension and post-retirement benefit costs
(3)
0.08
0.08
Goodwill impairment (4)
8.32
—
Losses (gains) on the sale of
company-operated restaurants (5)
0.00
(0.28
)
Excess tax (benefits) shortfall from
share-based compensation arrangements
0.00
(0.00
)
Tax impact of adjustments (6)
(0.58
)
0.15
Operating Earnings Per Share – non-GAAP
(7)
$
1.65
$
1.45
____________________
(1)
Acquisition, integration and strategic
initiatives reflect charges that are not part of our ongoing
operations, including consulting fees for discrete project-based
strategic initiatives that are not expected to recur in the
foreseeable future.
(2)
Net COLI gains reflect market-based
adjustments on the company-owned life insurance policies, net of
changes in our non-qualified deferred compensation obligation
supported by these policies.
(3)
Pension and post-retirement benefit costs
relating to our two legacy defined benefit pension plans, as well
as our two legacy post-retirement plans.
(4)
Represents the impairment taken on the Del
Taco reporting unit goodwill.
(5)
Losses (gains) on the sale of
company-operated restaurants
(6)
Tax impacts for the quarter calculated
based on the non-GAAP Operating EPS tax rate of 26.2% in the
current quarter and 26.8% in the prior year quarter.
(7)
Operating Earnings Per Share may not add
due to rounding.
Adjusted EBITDA
Adjusted EBITDA represents net earnings on a GAAP basis
excluding income taxes, interest expense, net, losses (gains) on
the sale of company-operated restaurants, other operating expenses
(income), net, goodwill impairment, depreciation and amortization,
amortization of cloud computing costs, amortization of favorable
and unfavorable leases and subleases, net, amortization of
franchise tenant improvement allowances and other, net COLI gains,
and pension and post-retirement benefit costs. Adjusted EBITDA
should be considered as a supplement to, not as a substitute for,
analysis of results as reported under U.S. GAAP or other similarly
titled measures of other companies. Management believes Adjusted
EBITDA is useful to investors to gain an understanding of the
factors and trends affecting the company's ongoing cash earnings,
from which capital investments are made and debt is serviced.
Below is a reconciliation of non-GAAP Adjusted EBITDA to the
most directly comparable GAAP measure, net earnings (in
thousands):
12 Weeks Ended
July 7, 2024
July 9, 2023
Net earnings (loss) - GAAP
$
(122,300
)
$
29,168
Income taxes
83
14,104
Interest expense, net
18,402
18,662
Losses (gains) on the sale of
company-operated restaurants
65
(5,794
)
Other operating expenses (income), net
(1)
5,641
7,656
Goodwill impairment (2)
162,624
—
Depreciation and amortization
13,827
14,460
Amortization of cloud-computing costs
(3)
787
1,170
Amortization of favorable and unfavorable
leases and subleases, net (4)
234
127
Amortization of franchise tenant
improvement allowances and other
1,191
1,057
Net COLI gains (5)
(3,223
)
(579
)
Pension and post-retirement benefit costs
(6)
1,579
1,608
Adjusted EBITDA – non-GAAP
$
78,910
$
81,639
(1)
Other operating expense (income), net
includes: acquisition, integration and strategic initiatives; costs
of closed restaurants; operating restaurant impairment charges;
accelerated depreciation and gains/losses on disposition of
property and equipment, net.
(2)
Goodwill impairment charges recognized on
the Del Taco reporting unit in the third quarter of 2024.
(3)
Amortization of cloud computing costs
includes the amounts for the non-cash amortization of capitalized
implementation costs related to cloud-based software arrangements
that are included within selling, general and administrative
expenses.
(4)
Amortization of favorable and unfavorable
leases and subleases, net, which is not already included in the
other operating expense (income), net, noted above.
(5)
Net COLI gains reflect market-based
adjustments on the company-owned life insurance policies, net of
changes in our non-qualified deferred compensation obligation
supported by these policies.
(6)
Pension and post-retirement benefit costs
relating to our two legacy defined benefit pension plans, as well
as the two legacy post-retirement plans.
Restaurant-Level Margin
Restaurant-Level Margin is defined as company restaurant sales
less restaurant operating costs (food and packaging, labor, and
occupancy costs) and is neither required by, nor presented in
accordance with GAAP. Restaurant-Level Margin excludes revenues and
expenses of our franchise operations and selling, general, and
administrative expenses. Certain other costs, such as depreciation
and amortization, goodwill impairment, other operating expenses
(income), net, losses (gains) on the sale of company-operated
restaurants, and other costs that are considered normal operating
costs are excluded as they are considered corporate-level shared
service costs. As such, Restaurant-Level Margin is not indicative
of the overall results of the company and does not accrue directly
to the benefit of shareholders because of the exclusion of
corporate-level expenses. Restaurant-Level Margin should be
considered as a supplement to, not as a substitute for, analysis of
results as reported under GAAP or other similarly titled measures
of other companies. The company is presenting Restaurant-Level
Margin because it believes that it provides a meaningful supplement
to net earnings of the company's core business operating results,
as well as a comparison to those of other similar companies.
Management utilizes Restaurant-Level Margin as a key performance
indicator to evaluate the profitability of company-operated
restaurants.
Below is a reconciliation of non-GAAP Restaurant-Level Margin to
the most directly comparable GAAP measure, earnings from operations
(in thousands):
12 weeks ended July 7,
2024
Jack in the Box
Del Taco
Other (1)
Total (2)
Earnings from operations - GAAP
$
86,580
$
(154,004
)
$
(34,812
)
$
(102,236
)
Franchise rental revenues
(82,154
)
(6,971
)
—
(89,125
)
Franchise royalties and other
(47,822
)
(7,471
)
—
(55,293
)
Franchise contributions for advertising
and other services
(51,419
)
(6,854
)
—
(58,273
)
Franchise occupancy expenses
51,055
6,934
—
57,989
Franchise support and other costs
2,894
959
—
3,853
Franchise advertising and other services
expenses
52,810
7,634
—
60,444
Selling, general and administrative
expenses
7,655
5,662
16,263
29,580
Depreciation and amortization
—
—
13,827
13,827
Pre-opening costs
646
205
—
851
Goodwill impairment
—
162,624
—
162,624
Other operating expenses (income), net
871
48
4,722
5,641
Losses (gains) on the sale of
company-operated restaurants
—
65
—
65
Restaurant-Level Margin - Non-GAAP
$
21,116
$
8,831
$
—
$
29,947
Company restaurant sales
$
100,355
$
66,125
$
—
$
166,480
Restaurant-Level Margin % - Non-GAAP
21.0
%
13.4
%
N/A
18.0
%
12 weeks ended July 9,
2023
Jack in the Box
Del Taco
Other (1)
Total (2)
Earnings from operations - GAAP
$
88,172
$
13,575
$
(38,205
)
$
63,542
Franchise rental revenues
(83,271
)
(2,977
)
—
(86,248
)
Franchise royalties and other
(48,761
)
(6,208
)
—
(54,969
)
Franchise contributions for
advertising and other services
(51,360
)
(5,849
)
—
(57,209
)
Franchise occupancy expenses
51,013
2,918
—
53,931
Franchise support and other
costs
3,526
553
—
4,079
Franchise advertising and other
services expenses
53,519
6,050
—
59,569
Selling, general and
administrative expenses
8,861
9,473
21,283
39,617
Depreciation and amortization
—
—
14,460
14,460
Pre-opening costs
155
27
—
182
Other operating expenses
(income), net
(633
)
5,827
2,462
7,656
Losses (gains) on the sale of
company-operated restaurants
(96
)
(5,698
)
—
(5,794
)
Restaurant-Level Margin - Non-GAAP
$
21,125
$
17,691
$
—
$
38,816
Company restaurant sales
$
96,820
$
101,696
$
—
$
198,516
Restaurant-Level Margin % - Non-GAAP
21.8
%
17.4
%
N/A
19.6
%
(1)
The "Other" category includes shared
services costs and other unallocated costs
(2)
The totals might not agree to consolidated
within the Form 10-Q due to rounding.
Franchise-Level Margin
Franchise-Level Margin is defined as franchise revenues less
franchise operating costs (occupancy expenses, advertising
contributions, and franchise support and other costs) and is
neither required by, nor presented in accordance with GAAP.
Franchise-Level Margin excludes revenue and expenses of our
company-operated restaurants and selling, general, and
administrative expenses. Certain other costs, such as depreciation
and amortization, goodwill impairment, other operating expenses
(income), net, losses (gains) on the sale of company-operated
restaurants, and other costs that are considered normal operating
costs are excluded as they are considered corporate-level shared
service costs. As such, Franchise-Level Margin is not indicative of
the overall results of the company and does not accrue directly to
the benefit of shareholders because of the exclusion of
corporate-level expenses. Franchise-Level Margin should be
considered as a supplement to, not as a substitute for, analysis of
results as reported under GAAP or other similarly titled measures
of other companies. The company is presenting Franchise-Level
Margin because it believes that it provides a meaningful supplement
to net earnings of the company's core business operating results,
as well as a comparison to those of other similar companies.
Management utilizes Franchise-Level Margin as a key performance
indicator to evaluate the profitability of our franchise
operations.
Below is a reconciliation of non-GAAP Franchise-Level Margin to
the most directly comparable GAAP measure, earnings from operations
(in thousands):
12 weeks ended July 7,
2024
Jack in the Box
Del Taco
Other (1)
Total (2)
Earnings from operations - GAAP
$
86,580
$
(154,004
)
$
(34,812
)
$
(102,236
)
Company restaurant sales
(100,355
)
(66,125
)
—
(166,480
)
Food and packaging
29,352
16,898
—
46,250
Payroll and employee benefits
32,421
25,495
—
57,916
Occupancy and other
17,464
14,901
—
32,365
Selling, general and administrative
expenses
7,655
5,662
16,263
29,580
Depreciation and amortization
—
—
13,827
13,827
Pre-opening costs
646
205
—
851
Goodwill impairment
—
162,624
—
162,624
Other operating expenses (income), net
871
48
4,722
5,641
Losses (gains) on the sale of
company-operated restaurants
—
65
—
65
Franchise-Level Margin - Non-GAAP
$
74,634
$
5,769
$
—
$
80,403
Franchise rental revenues
$
82,154
$
6,971
$
—
$
89,125
Franchise royalties and other
47,822
7,471
—
55,293
Franchise contributions for advertising
and other services
51,419
6,854
—
58,273
Total franchise revenues
$
181,395
$
21,296
$
—
$
202,691
Franchise-Level Margin % - Non-GAAP
41.1
%
27.1
%
N/A
39.7
%
12 weeks ended July 9,
2023
Jack in the Box
Del Taco
Other (1)
Total (2)
Earnings from operations - GAAP
$
88,172
$
13,575
$
(38,205
)
$
63,542
Company restaurant sales
(96,820
)
(101,696
)
—
(198,516
)
Food and packaging
30,384
28,171
—
58,555
Payroll and employee benefits
29,292
34,579
—
63,871
Occupancy and other
16,021
21,254
—
37,275
Selling, general and administrative
expenses
8,861
9,473
21,283
39,617
Depreciation and amortization
—
—
14,460
14,460
Pre-opening costs
155
27
—
182
Other operating expenses (income), net
(633
)
5,827
2,462
7,656
Losses (gains) on the sale of
company-operated restaurants
(96
)
(5,698
)
—
(5,794
)
Franchise-Level Margin - Non-GAAP
$
75,336
$
5,512
$
—
$
80,848
Franchise rental revenues
$
83,271
$
2,977
$
—
$
86,248
Franchise royalties and other
48,761
6,208
—
54,969
Franchise contributions for advertising
and other services
51,360
5,849
—
57,209
Total franchise revenues
$
183,392
$
15,034
$
—
$
198,426
Franchise-Level Margin % - Non-GAAP
41.1
%
36.7
%
N/A
40.7
%
(1)
The "Other" category includes shared
services costs and other unallocated costs
(2)
The totals might not agree to consolidated
within the Form 10-Q due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240806338662/en/
Chris Brandon Vice President, Investor Relations
chris.brandon@jackinthebox.com 619.902.0269
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