JACK
$111.36
Jack IN The Box
$1.82
1.66%
Earnings Details
2nd Quarter March 2021
Wednesday, May 12, 2021 4:05:00 PM
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Summary

Jack IN The Box Beats

Jack IN The Box (JACK) reported 2nd Quarter March 2021 earnings of $1.48 per share on revenue of $257.2 million. The consensus earnings estimate was $1.25 per share on revenue of $249.3 million. The Earnings Whisper number was $1.44 per share. Revenue grew 19.0% on a year-over-year basis.

Jack In The Box Inc owns, operates and franchises quick-service restaurants and Qdoba Mexican Grill fast-casual restaurants.

Results
Reported Earnings
$1.48
Earnings Whisper
$1.44
Consensus Estimate
$1.25
Reported Revenue
$257.2 Mil
Revenue Estimate
$249.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Jack in the Box Inc. Reports Second Quarter FY 2021 Earnings; Provides Fiscal 2021 Guidance; Announces 10 Percent Increase in Quarterly Cash Dividend

SAN DIEGO--(BUSINESS WIRE)--Jack in the Box Inc. (NASDAQ: JACK) today reported financial results for the second quarter ended April 11, 2021 and provided fiscal year 2021 financial guidance.

Jack in the Box® total revenues increased 19 percent to $257.2 million, compared to $216.2 million in the comparable period ended April 12, 2020, driven by 20.6 percent growth in system same-store sales. Company same-store sales increased 14.5 percent in the second quarter, reflecting average check growth of 19.9 percent and a 5.4 percent decrease in transactions. Franchise same-store sales increased 21.3 percent.

Increase/(Decrease) in same-store sales:

 

12 Weeks Ended

 

28 Weeks Ended

 

April 11,
2021

 

April 12,
2020

 

April 11,
2021

 

April 12,
2020

Company

14.5%

 

(4.1)%

 

10.4%

 

(0.1)%

Franchise

21.3%

 

(4.2)%

 

16.5%

 

(0.9)%

System

20.6%

 

(4.2)%

 

15.9%

 

(0.8)%

Net earnings more than tripled to $35.9 million, or $1.58 per diluted share, for the second quarter of fiscal 2021, compared with $11.5 million, or $0.50 per diluted share, for the second quarter of fiscal 2020, which was negatively impacted due to the initial onset of COVID-19.

Darin Harris, chief executive officer, said, "Consumers continue to embrace Jack in the Box's iconic all-day menu and continuous menu innovations, driving growth across every day-part. A shift toward our core premium entrees, combined with an increase in items per order reflecting larger parties, fueled a nearly-20 percent increase in average check. Our performance was strong across all regions throughout the quarter, including in Texas where pandemic dine-in restrictions were lifted much earlier than in our other large markets. Stimulus payments also contributed to our strong performance during the last four weeks of the quarter."

Harris continued, “We are off to a good start through the first four weeks of the third quarter, giving us confidence that our key strategies continue to resonate with guests and position us to maintain momentum while we work closely with our franchisees to grow.”

Operating Earnings Per Share(1), a non-GAAP measure, were $1.48 in the second quarter of fiscal 2021 compared with $0.50 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.

 

 

12 Weeks Ended

 

28 Weeks Ended

 

 

April 11,
2021

 

April 12,
2020

 

April 11,
2021

 

April 12,
2020

Diluted earnings per share – GAAP

 

$

1.58

 

 

$

0.50

 

 

$

3.78

 

 

$

0.82

 

Gains on the sale of company-operated restaurants

 

(0.05

)

 

 

 

(0.09

)

 

(0.05

)

Excess tax benefits from share-based compensation arrangements

 

(0.05

)

 

(0.01

)

 

(0.05

)

 

 

Pension settlement charges

 

 

 

0.01

 

 

 

 

1.14

 

Gain on sale of corporate office building

 

 

 

 

 

 

 

(0.32

)

Restructuring charges

 

 

 

 

 

 

 

0.03

 

Operating Earnings Per Share – non-GAAP (1)

 

$

1.48

 

 

$

0.50

 

 

$

3.64

 

 

$

1.62

 

Adjusted EBITDA(2), a non-GAAP measure, was $75.8 million in the second quarter of fiscal 2021 compared with $46.3 million for the prior year quarter.

Restaurant-Level Margin(3), a non-GAAP measure, increased to 25.9 percent of company restaurant sales in the second quarter of fiscal 2021 from 20.6 percent a year ago. The increase is primarily due to sales leverage as well as a decrease in food and packaging costs as a percentage of company restaurant sales. This decrease is primarily driven by favorable changes in product mix and menu price increases, partially offset by higher costs for ingredients. Commodity costs increased in the quarter by approximately 1.7 percent, primarily due to increases in pork and oil, partially offset by a decrease in beef. The decrease in food and packaging costs was partially offset by higher labor costs, resulting from wage inflation of 6.3%, as well as higher incentive compensation costs and higher costs for delivery fees.

Franchise-Level Margin(3), a non-GAAP measure, increased by $17.2 million in the second quarter, primarily driven by higher royalties and rental revenues as a result of higher franchise same-store sales. Franchise-Level Margin(3), as a percentage of total franchise revenues, was 42.0 percent in the second quarter of fiscal 2021 compared with 38.6 percent in the prior year.

In the second quarter of fiscal 2021, SG&A expenses decreased by $5.3 million and were 7.3 percent of revenues compared with 11.2 percent in the prior year quarter. Advertising costs, which are included in SG&A, increased $0.8 million in the second quarter due to higher company restaurant sales and a reduction in the contribution rate in the prior year quarter.

As a percentage of system-wide sales, G&A was 1.6 percent in the second quarter of fiscal 2021 compared with 2.7 percent in the prior year quarter. The $6.1 million decrease in G&A, which excludes advertising, was primarily driven by:

  • Mark-to-market changes in the cash surrender value of company-owned life insurance (“COLI”) policies, net of a deferred compensation obligation supported by these policies, resulting in a $5.9 million year-over-year decrease in G&A;
  • a decrease of $2.1 million in insurance costs; and
  • a decrease of $1.9 million in costs related to litigation matters versus prior year.
  • These decreases were partially offset by a $2.3 million increase in incentive compensation.

The effective tax rate for the second quarter of fiscal 2021 was 27.3 percent compared with 32.3 percent in the prior year quarter. The lower rate in the quarter was primarily due to a decrease in the impact of certain non-deductible expenses and an increase in non-taxable gains related to COLI policies.

Capital Allocation

The company repurchased 0.6 million shares of its common stock in the second quarter of fiscal 2021 for an aggregate cost of $65.0 million. As of April 11, 2021, $135.0 million remained available under share repurchase programs authorized by the Board of Directors, consisting of $35.0 million that expires in November 2021 and $100.0 million that expires in November 2022. During the second quarter of 2021, the Company fully paid down its outstanding borrowings on its Variable Funding Notes. As of April 11, 2021, borrowing availability under the Variable Funding Notes was $110.5 million.

The company also announced today that on May 7, 2021, its Board of Directors declared a cash dividend of $0.44 per share on the company's common stock, representing a 10 percent increase from the prior dividend rate. The dividend is payable on June 11, 2021, to shareholders of record at the close of business on May 26, 2021.

Fiscal Year 2021 Guidance

The following guidance and underlying assumptions reflect the company’s current expectations for the fiscal year ending October 3, 2021, which includes 53 weeks:

  • High single-digit system same-store sales growth
  • G&A as a percentage of system-wide sales of approximately 1.7%, excluding net COLI gains or losses
  • Commodity cost inflation of approximately 3%
  • Labor cost inflation of 5% to 6%
  • Adjusted EBITDA of between approximately $320 million and $330 million, including approximately $6 million to $7 million benefit from the 53rd week.

Conference Call

The company will host a conference call for financial analysts and investors on Wednesday, May 12, 2021, beginning at 2:00 p.m. PT (5:00 p.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 5:00 p.m. PT on May 12, 2021.

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.

__________________

(1) Operating Earnings Per Share represents diluted earnings per share on a GAAP basis excluding gains or losses on the sale of company-operated restaurants, restructuring charges, gain on sale of corporate office building, pension settlement charges, and the excess tax benefit from share-based compensation arrangements. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may not add due to rounding.

(2) Adjusted EBITDA represents net earnings on a GAAP basis excluding income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, impairment and other charges, net, depreciation and amortization, the amortization of franchise tenant improvement allowances and other, and pension settlement charges. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

(3) 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."

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 potential impacts to our business and operations resulting from the coronavirus COVID-19 pandemic, 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 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, including federal, state and local policies regarding mitigation strategies for controlling the coronavirus COVID-19 pandemic, 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

 

28 Weeks Ended

 

April 11,
2021

 

April 12,
2020

 

April 11,
2021

 

April 12,
2020

Revenues:

 

 

 

 

 

 

 

Company restaurant sales

$

85,962

 

 

$

74,380

 

 

$

200,240

 

 

$

179,744

 

Franchise rental revenues

77,901

 

 

69,885

 

 

181,650

 

 

165,969

 

Franchise royalties and other

47,231

 

 

37,764

 

 

106,879

 

 

90,230

 

Franchise contributions for advertising and other services

46,123

 

 

34,128

 

 

106,989

 

 

87,887

 

 

257,217

 

 

216,157

 

 

595,758

 

 

523,830

 

Operating costs and expenses, net:

 

 

 

 

 

 

 

Food and packaging

23,938

 

 

22,237

 

 

56,315

 

 

53,585

 

Payroll and employee benefits

26,440

 

 

24,261

 

 

61,371

 

 

56,151

 

Occupancy and other

13,349

 

 

12,570

 

 

31,184

 

 

28,528

 

Franchise occupancy expenses

48,904

 

 

48,341

 

 

114,073

 

 

112,858

 

Franchise support and other costs

3,341

 

 

2,971

 

 

6,614

 

 

7,647

 

Franchise advertising and other services expenses

47,104

 

 

35,734

 

 

109,799

 

 

90,958

 

Selling, general and administrative expenses

18,861

 

 

24,203

 

 

39,360

 

 

52,451

 

Depreciation and amortization

10,696

 

 

12,282

 

 

25,267

 

 

29,010

 

Impairment and other charges (gains), net

1,228

 

 

716

 

 

776

 

 

(8,575

)

Gains on the sale of company-operated restaurants

(1,532

)

 

 

 

(2,815

)

 

(1,575

)

 

192,329

 

 

183,315

 

 

441,944

 

 

421,038

 

Earnings from operations

64,888

 

 

32,842

 

 

153,814

 

 

102,792

 

Other pension and post-retirement expenses, net

203

 

 

512

 

 

474

 

 

39,490

 

Interest expense, net

15,227

 

 

15,409

 

 

35,962

 

 

35,351

 

Earnings before income taxes

49,458

 

 

16,921

 

 

117,378

 

 

27,951

 

Income taxes

13,524

 

 

5,458

 

 

30,585

 

 

8,591

 

Net earnings

$

35,934

 

 

$

11,463

 

 

$

86,793

 

 

$

19,360

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.58

 

 

$

0.50

 

 

$

3.80

 

 

$

0.83

 

Diluted

$

1.58

 

 

$

0.50

 

 

$

3.78

 

 

$

0.82

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

22,723

 

 

22,803

 

 

22,863

 

 

23,339

 

Diluted

22,784

 

 

22,895

 

 

22,945

 

 

23,490

 

 

 

 

 

 

 

 

 

Dividends declared per common share

$

0.40

 

 

$

0.40

 

 

$

0.80

 

 

$

0.80

 

JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

April 11,
2021

 

September 27,
2020

ASSETS

 

 

 

Current assets:

 

 

 

Cash

$

90,637

 

 

$

199,662

 

Restricted cash

18,137

 

 

37,258

 

Accounts and other receivables, net

86,721

 

 

78,417

 

Inventories

2,158

 

 

1,808

 

Prepaid expenses

6,784

 

 

10,114

 

Current assets held for sale

3,883

 

 

4,598

 

Other current assets

3,703

 

 

3,724

 

Total current assets

212,023

 

 

335,581

 

Property and equipment:

 

 

 

Property and equipment, at cost

1,144,503

 

 

1,132,430

 

Less accumulated depreciation and amortization

(812,489

)

 

(796,448

)

Property and equipment, net

332,014

 

 

335,982

 

Other assets:

 

 

 

Operating lease right-of-use assets

914,010

 

 

904,548

 

Intangible assets, net

262

 

 

277

 

Goodwill

47,161

 

 

47,161

 

Deferred tax assets

71,167

 

 

72,322

 

Other assets, net

214,138

 

 

210,623

 

Total other assets

1,246,738

 

 

1,234,931

 

 

$

1,790,775

 

 

$

1,906,494

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

Current liabilities:

 

 

 

Current maturities of long-term debt

$

850

 

 

$

818

 

Current operating lease liabilities

153,297

 

 

179,000

 

Accounts payable

24,695

 

 

31,105

 

Accrued liabilities

123,550

 

 

129,431

 

Total current liabilities

302,392

 

 

340,354

 

Long-term liabilities:

 

 

 

Long-term debt, net of current maturities

1,271,412

 

 

1,376,913

 

Long-term operating lease liabilities, net of current portion

792,183

 

 

776,094

 

Other long-term liabilities

205,345

 

 

206,494

 

Total long-term liabilities

2,268,940

 

 

2,359,501

 

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, 82,510,007 and 82,369,714 issued, respectively

825

 

 

824

 

Capital in excess of par value

496,798

 

 

489,515

 

Retained earnings

1,704,766

 

 

1,636,211

 

Accumulated other comprehensive loss

(108,640

)

 

(110,605

)

Treasury stock, at cost, 60,287,482 and 59,646,773 shares, respectively

(2,874,306

)

 

(2,809,306

)

Total stockholders’ deficit

(780,557

)

 

(793,361

)

 

$

1,790,775

 

 

$

1,906,494

 

JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

 

 

28 Weeks Ended

 

April 11,
2021

 

April 12,
2020

Cash flows from operating activities:

 

 

 

Net earnings

$

86,793

 

 

$

19,360

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

Depreciation and amortization

25,267

 

 

29,010

 

Amortization of franchise tenant improvement allowances and other

1,534

 

 

1,765

 

Deferred finance cost amortization

3,013

 

 

3,046

 

Excess tax benefit from share-based compensation arrangements

(1,112

)

 

(77

)

Deferred income taxes

(882

)

 

6,783

 

Share-based compensation expense

2,836

 

 

5,865

 

Pension and post-retirement expense

474

 

 

39,490

 

(Gains) losses on cash surrender value of company-owned life insurance

(9,352

)

 

3,150

 

Gains on the sale of company-operated restaurants

(2,815

)

 

(1,575

)

Gains on the disposition of property and equipment, net

(1,931

)

 

(10,170

)

Non-cash operating lease costs

(11,870

)

 

(13,118

)

Impairment charges and other

1,340

 

 

133

 

Changes in assets and liabilities, excluding acquisitions:

 

 

 

Accounts and other receivables

(4,490

)

 

(22,858

)

Inventories

(288

)

 

28

 

Prepaid expenses and other current assets

3,461

 

 

(10,350

)

Accounts payable

(14,614

)

 

20,660

 

Accrued liabilities

6,499

 

 

1,400

 

Pension and post-retirement contributions

(3,577

)

 

(3,582

)

Franchise tenant improvement allowance disbursements

(567

)

 

(5,811

)

Other

(1,175

)

 

(4,222

)

Cash flows provided by operating activities

78,544

 

 

58,927

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

(22,928

)

 

(12,777

)

Proceeds from the sale of property and equipment

3,629

 

 

22,394

 

Proceeds from the sale and leaseback of assets

 

 

17,373

 

Proceeds from the sale of company-operated restaurants

965

 

 

1,575

 

Other

2,616

 

 

1,036

 

Cash flows (used in) provided by investing activities

(15,718

)

 

29,601

 

Cash flows from financing activities:

 

 

 

Borrowings on revolving credit facilities

 

 

111,376

 

Repayments of borrowings on revolving credit facilities

(107,875

)

 

(3,500

)

Principal repayments on debt

(415

)

 

(3,640

)

Debt issuance costs

 

 

(216

)

Dividends paid on common stock

(18,130

)

 

(18,466

)

Proceeds from issuance of common stock

4,340

 

 

3,559

 

Repurchases of common stock

(65,000

)

 

(155,576

)

Payroll tax payments for equity award issuances

(3,892

)

 

(4,442

)

Cash flows used in financing activities

(190,972

)

 

(70,905

)

Net (decrease) increase in cash and restricted cash

(128,146

)

 

17,623

 

Cash and restricted cash at beginning of period

236,920

 

 

151,561

 

Cash and restricted cash at end of period

$

108,774

 

 

$

169,184

 

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

 

28 Weeks Ended

 

April 11,
2021

 

April 12,
2020

 

April 11,
2021

 

April 12,
2020

Revenues:

 

 

 

 

 

 

 

Company restaurant sales

33.4

%

 

34.4

%

 

33.6

%

 

34.3

%

Franchise rental revenues

30.3

%

 

32.3

%

 

30.5

%

 

31.7

%

Franchise royalties and other

18.4

%

 

17.5

%

 

17.9

%

 

17.2

%

Franchise contributions for advertising and other services

17.9

%

 

15.8

%

 

18.0

%

 

16.8

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Operating costs and expenses, net:

 

 

 

 

 

 

 

Food and packaging (1)

27.8

%

 

29.9

%

 

28.1

%

 

29.8

%

Payroll and employee benefits (1)

30.8

%

 

32.6

%

 

30.6

%

 

31.2

%

Occupancy and other (1)

15.5

%

 

16.9

%

 

15.6

%

 

15.9

%

Franchise occupancy expenses (2)

62.8

%

 

69.2

%

 

62.8

%

 

68.0

%

Franchise support and other costs (3)

7.1

%

 

7.9

%

 

6.2

%

 

8.5

%

Franchise advertising and other services expenses (4)

102.1

%

 

104.7

%

 

102.6

%

 

103.5

%

Selling, general and administrative expenses

7.3

%

 

11.2

%

 

6.6

%

 

10.0

%

Depreciation and amortization

4.2

%

 

5.7

%

 

4.2

%

 

5.5

%

Impairment and other charges (gains), net

0.5

%

 

0.3

%

 

0.1

%

 

(1.6

)%

Gains on the sale of company-operated restaurants

(0.6

)%

 

%

 

(0.5

)%

 

(0.3

)%

Earnings from operations

25.2

%

 

15.2

%

 

25.8

%

 

19.6

%

Income tax rate (5)

27.3

%

 

32.3

%

 

26.1

%

 

30.7

%

____________________________

(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 before income taxes.

Jack in the Box system sales (in thousands):
 

 

12 Weeks Ended

 

28 Weeks Ended

 

April 11,
2021

 

April 12,
2020

 

April 11,
2021

 

April 12,
2020

Company-owned restaurant sales

$

85,962

 

 

$

74,380

 

 

$

200,240

 

 

$

179,744

 

Franchised restaurant sales (1)

847,363

 

 

695,926

 

 

1,963,189

 

 

1,675,271

 

System sales (1)

$

933,325

 

 

$

770,306

 

 

$

2,163,429

 

 

$

1,855,015

 

____________________________

(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, marketing fees 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)

 

 

2021

 

2020

 

Company

 

Franchise

 

Total

 

Company

 

Franchise

 

Total

Beginning of year

144

 

 

2,097

 

 

2,241

 

 

137

 

 

2,106

 

 

2,243

 

New

 

 

6

 

 

6

 

 

 

 

16

 

 

16

 

Acquired from franchisees

4

 

 

(4

)

 

 

 

8

 

 

(8

)

 

 

Closed

 

 

(19

)

 

(19

)

 

(1

)

 

(12

)

 

(13

)

End of period

148

 

 

2,080

 

 

2,228

 

 

144

 

 

2,102

 

 

2,246

 

% of system

7

%

 

93

%

 

100

%

 

6

%

 

94

%

 

100

%

JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)

To supplement the consolidated financial statements, which are presented in accordance with GAAP, the company uses the following non-GAAP measures: 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 gains or losses on the sale of company-operated restaurants, restructuring charges, the gain on sale of corporate office building, pension settlement charges, and the excess tax benefit from share-based compensation arrangements. 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 Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings per share. Figures may not add due to rounding.

 

 

12 Weeks Ended

 

28 Weeks Ended

 

 

April 11,
2021

 

April 12,
2020

 

April 11,
2021

 

April 12,
2020

Diluted earnings per share – GAAP

 

$

1.58

 

 

$

0.50

 

 

$

3.78

 

 

$

0.82

 

Gains on the sale of company-operated restaurants

 

(0.05)

 

 

 

 

(0.09)

 

 

(0.05)

 

Excess tax benefits from share-based compensation arrangements

 

(0.05)

 

 

(0.01)

 

 

(0.05)

 

 

 

Pension settlement charges

 

 

 

0.01

 

 

 

 

1.14

 

Gain on sale of corporate office building

 

 

 

 

 

 

 

(0.32)

 

Restructuring charges

 

 

 

 

 

 

 

0.03

 

Operating Earnings Per Share – non-GAAP (1)

 

$

1.48

 

 

$

0.50

 

 

$

3.64

 

 

$

1.62

 

____________________

(1)

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, gains or losses on the sale of company-operated restaurants, impairment and other charges (gains), net, depreciation and amortization, the amortization of franchise tenant improvement allowances and other, and pension settlement charges. 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

 

28 Weeks Ended

 

April 11,
2021

 

April 12,
2020

 

April 11,
2021

 

April 12,
2020

Net earnings - GAAP

$

35,934

 

 

$

11,463

 

 

$

86,793

 

 

$

19,360

 

Income tax expense

13,524

 

 

5,458

 

 

30,585

 

 

8,591

 

Interest expense, net

15,227

 

 

15,409

 

 

35,962

 

 

35,351

 

Pension settlement charges

 

 

321

 

 

 

 

38,927

 

Gains on the sale of company-operated restaurants

(1,532

)

 

 

 

(2,815

)

 

(1,575

)

Impairment and other charges (gains), net

1,228

 

 

716

 

 

776

 

 

(8,575

)

Depreciation and amortization

10,696

 

 

12,282

 

 

25,267

 

 

29,010

 

Amortization of franchise tenant improvement allowances and other

673

 

 

614

 

 

1,534

 

 

1,765

 

Adjusted EBITDA - Non-GAAP

$

75,750

 

 

$

46,263

 

 

$

178,102

 

 

$

122,854

 

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 certain costs, such as selling, general, and administrative expenses, depreciation and amortization, impairment and other charges (gains), net, gains or losses on the sale of company-operated restaurants, and other costs that are considered normal operating 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-owned 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

 

28 Weeks Ended

 

 

April 11,
2021

 

April 12,
2020

 

April 11,
2021

 

April 12,
2020

Earnings from operations - GAAP

 

$

64,888

 

 

$

32,842

 

 

$

153,814

 

 

$

102,792

 

Franchise rental revenues

 

(77,901

)

 

(69,885

)

 

(181,650

)

 

(165,969

)

Franchise royalties and other

 

(47,231

)

 

(37,764

)

 

(106,879

)

 

(90,230

)

Franchise contributions for advertising and other services

 

(46,123

)

 

(34,128

)

 

(106,989

)

 

(87,887

)

Franchise occupancy expenses

 

48,904

 

 

48,341

 

 

114,073

 

 

112,858

 

Franchise support and other costs

 

3,341

 

 

2,971

 

 

6,614

 

 

7,647

 

Franchise advertising and other services expenses

 

47,104

 

 

35,734

 

 

109,799

 

 

90,958

 

Selling, general and administrative expenses

 

18,861

 

 

24,203

 

 

39,360

 

 

52,451

 

Impairment and other charges (gains), net

 

1,228

 

 

716

 

 

776

 

 

(8,575

)

Gains on the sale of company-operated restaurants

 

(1,532

)

 

 

 

(2,815

)

 

(1,575

)

Depreciation and amortization

 

10,696

 

 

12,282

 

 

25,267

 

 

29,010

 

Restaurant-Level Margin- Non-GAAP

 

$

22,235

 

 

$

15,312

 

 

$

51,370

 

 

$

41,480

 

 

 

 

 

 

 

 

 

 

Company restaurant sales

 

$

85,962

 

 

$

74,380

 

 

$

200,240

 

 

$

179,744

 

 

 

 

 

 

 

 

 

 

Restaurant-Level Margin % - Non-GAAP

 

25.9

%

 

20.6

%

 

25.7

%

 

23.1

%

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 certain costs, such as selling, general, and administrative expenses, depreciation and amortization, impairment and other charges (gains), net, and other costs that are considered normal operating 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

 

28 Weeks Ended

 

April 11,
2021

 

April 12,
2020

 

April 11,
2021

 

April 12,
2020

Earnings from operations - GAAP

$

64,888

 

 

$

32,842

 

 

$

153,814

 

 

$

102,792

 

Company restaurant sales

(85,962

)

 

(74,380

)

 

(200,240

)

 

(179,744

)

Food and packaging

23,938

 

 

22,237

 

 

56,315

 

 

53,585

 

Payroll and employee benefits

26,440

 

 

24,261

 

 

61,371

 

 

56,151

 

Occupancy and other

13,349

 

 

12,570

 

 

31,184

 

 

28,528

 

Selling, general and administrative expenses

18,861

 

 

24,203

 

 

39,360

 

 

52,451

 

Impairment and other charges (gains), net

1,228

 

 

716

 

 

776

 

 

(8,575

)

Gains on the sale of company-operated restaurants

(1,532

)

 

 

 

(2,815

)

 

(1,575

)

Depreciation and amortization

10,696

 

 

12,282

 

 

25,267

 

 

29,010

 

Franchise-Level Margin - Non-GAAP

$

71,906

 

 

$

54,731

 

 

$

165,032

 

 

$

132,623

 

 

 

 

 

 

 

 

 

Franchise rental revenues

$

77,901

 

 

$

69,885

 

 

$

181,650

 

 

$

165,969

 

Franchise royalties and other

47,231

 

 

37,764

 

 

106,879

 

 

90,230

 

Franchise contributions for advertising and other services

46,123

 

 

34,128

 

 

106,989

 

 

87,887

 

Total franchise revenues

$

171,255

 

 

$

141,777

 

 

$

395,518

 

 

$

344,086

 

 

 

 

 

 

 

 

 

Franchise-Level Margin % - Non-GAAP

42.0

%

 

38.6

%

 

41.7

%

 

38.5

%

 

Investor Contact:
Maria Hocut
Maria.Hocut@jackinthebox.com

Source: Jack in the Box Inc.