Jack in the Box Inc. Reports Third Quarter 2024 Earnings

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 [phone] 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 [e-mail] 619.902.0269