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Jack in the Box Inc. Reports Fourth Quarter and Full-Year 2023 Earnings

Jack in the Box same-store sales of +3.9% in Q4 2023, +7.3% for FY 2023

Del Taco same-store sales of -1.5% in Q4 2023, +1.7%(1) for FY 2023

Jack in the Box and Del Taco opened 34 restaurants in FY 2023, including net positive unit growth and a growing development pipeline for both brands

Del Taco completed the refranchising of 111 restaurants in FY 2023, which included development commitments for 109 new restaurants

Jack in the Box opened its first-ever restaurant in Louisville, with stronger-than-expected sales performance

Since opening, all new market locations for Jack in the Box (Salt Lake City and Louisville) averaging over $100,000 in weekly sales per restaurant

Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco segments in the fourth quarter, ended October 1, 2023.

“We achieved several important milestones for our business in 2023 including positive unit growth, successful new market openings, accelerated Del Taco refranchising, strong same stores sales performance and improvements in restaurant-level profitability,” said Darin Harris, Jack in the Box chief executive officer. “Despite some industry headwinds, we are excited about our opportunity in 2024 to expand both brands into new markets and continue driving our transformational growth strategy.”

Jack in the Box Performance

Same-store sales increased 3.9% in the fourth quarter of 2023, comprised of an increase in company-operated same-store sales of 4.4% and an increase in franchise same-store sales of 3.8%. Sales performance was driven by pricing, which was partially offset by decreases in transactions and menu mix. Systemwide sales(2) for the fourth quarter increased 4.3%.

Jack in the Box had 6 new restaurant openings and 11 restaurant closures during the fourth quarter. For fiscal year 2023, Jack in the Box opened 20 new restaurants, with an additional 6 openings since the start of fiscal year 2024. As of the end of the fourth quarter, and since the launch of the development program in mid-2021, the company has signed 90 agreements for a total of 389 restaurants, with 38 already opened and 351 in place for future development. During the fourth quarter, Jack in the Box opened its first-ever location in Louisville — and, when combined with Salt Lake City, all four of the new-market restaurants opened throughout 2023 have averaged over $100,000 in weekly sales per restaurant.

Restaurant-Level Margin(3), was 20.7% for the fourth quarter, an increase from 16.2% in the prior year period. The increase was driven by menu price increases as well as a change in the mix of restaurants, partially offset by inflationary increases in wages, food and packaging costs and utilities. Commodity costs increased in the quarter by 3.4%. Franchise-Level Margin(3), was 39.9% for the fourth quarter, a decrease from 42.4% a year ago, driven by higher early termination fees in the prior year and higher franchise costs in the current year, partially offset by franchise same-store sales growth.

Jack in the Box Same-Store Sales:

 

12 Weeks Ended

 

52 Weeks Ended

 

October 1, 2023

 

October 2, 2022

 

October 1, 2023

 

October 2, 2022

Company

4.4%

 

11.4%

 

8.8%

 

3.7%

Franchise

3.8%

 

3.2%

 

7.1%

 

0.6%

System SSS

3.9%

 

4.0%

 

7.3%

 

0.9%

Jack in the Box Restaurant Counts:

 

2023

 

2022

 

Company

 

Franchise

 

Total

 

Company

 

Franchise

 

Total

Store count at beginning of FY

146

 

 

2,035

 

 

2,181

 

 

163

 

 

2,055

 

 

2,218

 

New

2

 

 

18

 

 

20

 

 

 

 

17

 

 

17

 

Acquired from franchisees

 

 

 

 

 

 

13

 

 

(13

)

 

 

Refranchised

(5

)

 

5

 

 

 

 

(15

)

 

15

 

 

 

Closed

(1

)

 

(14

)

 

(15

)

 

(15

)

 

(39

)

 

(54

)

Store count at end of Q4

142

 

 

2,044

 

 

2,186

 

 

146

 

 

2,035

 

 

2,181

 

Net Unit Increase/ (Decrease)

(4

)

 

9

 

 

5

 

 

 

 

 

 

 

Q4 2023 vs. Q4 2022 Unit % Decrease

(2.7

)%

 

0.4

%

 

0.2

%

 

 

 

 

 

 

Del Taco Performance(1)

Same-store sales decreased 1.5% in the fourth quarter of 2023, comprised of franchise same-store sales decline of 1.5% and company-operated same-store sales decline of 1.4%. Sales performance was primarily driven by decreases in transactions and menu mix, partially offset by increases in pricing. Systemwide sales(2) for the fourth quarter of 2023 decreased 0.6%.

Del Taco had 7 new restaurant openings and 9 restaurant closures during the fourth quarter. For fiscal year 2023, Del Taco opened 14 new restaurants, and was net positive one restaurant. Del Taco signed 138 total restaurant commitments in fiscal year 2023, with 109 commitments directly resulting from refranchising transactions.

Restaurant-Level Margin(3), was 14.8% for the fourth quarter, a decrease from 15.9% in the prior year period. This decrease was primarily driven by wage inflation and higher utility and property insurance costs, partially offset by lower food and packaging costs as a percentage of revenue. Franchise-Level Margin(3), was 32.5% for the fourth quarter, a decrease from 42.5% one year ago. The decrease was driven by the impact of refranchising transactions with pass through rent and advertising.

Del Taco Same-Store Sales(1):

 

12 Weeks Ended

 

52 Weeks Ended (1)

 

October 1, 2023

 

October 2, 2022

 

October 1, 2023

 

October 2, 2022

Company

(1.4)%

 

4.1%

 

2.0%

 

2.9%

Franchise

(1.5)%

 

6.4%

 

1.4%

 

5.0%

System

(1.5)%

 

5.2%

 

1.7%

 

3.9%

Del Taco Restaurant Counts(1):

 

2023

 

2022

 

Company

 

Franchise

 

Total

 

Company

 

Franchise

 

Total

Restaurant count at beginning of FY

290

 

 

301

 

 

591

 

 

296

 

 

306

 

 

602

 

New

 

 

14

 

 

14

 

 

1

 

 

2

 

 

3

 

Refranchised

(111

)

 

111

 

 

 

 

 

 

 

 

 

Closed

(8

)

 

(5

)

 

(13

)

 

(7

)

 

(7

)

 

(14

)

Restaurant count at end of Q4

171

 

 

421

 

 

592

 

 

290

 

 

301

 

 

591

 

Net Restaurant Increase/ (Decrease)

(119

)

 

120

 

 

1

 

 

 

 

 

 

 

Q4 2023 vs. Q4 2022 Restaurant % Decrease

(41.0

)%

 

39.9

%

 

0.2

%

 

 

 

 

 

 

Company-Wide Performance

Total revenues decreased 7.5% in the fourth quarter of 2023 to $372.5 million, as compared to $402.8 million in the prior year fourth quarter.

SG&A expense for the fourth quarter of 2023 was $43.7 million, an increase of $6.2 million compared to the prior year fourth quarter, driven primarily by higher incentive compensation and litigation accruals.

Adjusted EBITDA(5), was $68.4 million in the fourth quarter of fiscal 2023 compared with $81.9 million for the prior year quarter.

Net earnings decreased to $21.9 million for the fourth quarter of 2023, compared with $45.9 million for the prior year fourth quarter.

Diluted earnings per share was $1.08 for the fourth quarter of 2023 as compared with $2.17 in the prior year fourth quarter. Operating Earnings Per Share(4) was $1.09 in the fourth quarter compared with $1.33 in the prior year fourth quarter.

(1) Del Taco prior year comparisons are pro forma and based on the time period of Jack in the Box’s full fiscal calendar. We believe Del Taco's information on this time period is useful to investors as they have a direct effect on the company's profitability.

(2) Systemwide sales include company and franchised restaurant sales.

(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."

(4) Operating Earnings Per Share represents diluted earnings per share on a GAAP basis excluding certain amounts. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may not add due to rounding.

(5) Adjusted EBITDA represents net earnings on a GAAP basis excluding certain amounts. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

Capital Allocation

The company repurchased 0.4 million shares of common stock in the fourth quarter of 2023. For the full year 2023, the company repurchased 1.1 million shares, for an aggregate cost of $90.7 million, including excise tax. On November 16, 2023, upon expiration of the previous share repurchase authorization, the Board of Directors authorized a share repurchase program for up to $250.0 million of the company’s common stock.

On November 16, 2023, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on December 28, 2023, to shareholders of record as of the close of business on December 14, 2023. Future dividends will be subject to approval by our Board of Directors.

Guidance & Outlook

The following guidance and underlying assumptions reflect the company’s current expectations for the fiscal year ending September 29, 2024:

FY 2024 Company-wide Guidance

  • CapEx & Other Investments of $110-$120 million
    • Other investments include franchise tenant improvement allowances and incentives (cash flows from operating activities)
  • SG&A Guidance of $165-$175 million
    • SG&A guidance excludes net COLI gains/losses, and any impact from future Del Taco refranchising
    • G&A, excluding selling and advertising, is expected to be 2.3-2.5% of systemwide sales
  • Company-owned Commodity Costs higher by 1-3% vs. 2023
  • Company-owned Wage Rates higher by 10-12% vs. 2023
    • Without impact of California restaurants affected by AB1228, wage rates would be 3-5% vs. 2023
  • Depreciation & Amortization of $61-$63 million
  • Adjusted/Operating EPS Tax Rate of ~27%
  • Share Repurchases of $70-$80 million
  • Adjusted EBITDA of $325-$335 million
  • Operating EPS of $6.25-$6.50
    • Excludes any dilutive impact from refranchising Del Taco restaurants

FY 2024 Jack in the Box Segment Guidance

  • Same Store Sales growth of Low-to-Mid Single Digits
  • 25-35 gross openings, with net positive unit growth for the full year
  • Company-Owned Restaurant Level Margin of 21-23%
    • Includes price increases of 6-8%
    • Without impact of California restaurants affected by AB1228, price increases would be 3-4% vs. 2023
  • Franchise Level Margin of 40-42%

FY 2024 Del Taco Segment Guidance

  • Same Store Sales growth of Low-to-Mid Single Digits
  • 10-15 gross openings, with net positive unit growth for the full year
  • Company-Owned Restaurant Level Margin of 14-16%
    • Includes price increases of 6-8%
    • Without impact of California restaurants affected by AB1228, price increases would be 4-5% vs. 2023
  • Franchise Level Margin of 29-31%

Conference Call

The company will host a conference call for analysts and investors on Tuesday, November 21, 2023, 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) 330-2508 and using ID 4115265.

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 22 states, and Del Taco®, the second largest Mexican-American QSR chain by units in the U.S. with approximately 600 restaurants across 16 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

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 

12 Weeks Ended

 

52 Weeks Ended

 

October 1,

2023

 

October 2,

2022

 

October 1,

2023

 

October 2,

2022

Revenues:

 

 

 

 

 

 

 

Company restaurant sales

$

174,967

 

 

$

214,474

 

 

$

846,278

 

 

$

701,070

 

Franchise rental revenues

 

85,993

 

 

 

80,668

 

 

 

364,591

 

 

 

340,391

 

Franchise royalties and other

 

55,173

 

 

 

56,906

 

 

 

240,515

 

 

 

216,821

 

Franchise contributions for advertising and other services

 

56,391

 

 

 

50,725

 

 

 

240,922

 

 

 

209,801

 

 

 

372,524

 

 

 

402,773

 

 

 

1,692,306

 

 

 

1,468,083

 

Operating costs and expenses, net:

 

 

 

 

 

 

 

Food and packaging

 

51,037

 

 

 

66,182

 

 

 

250,836

 

 

 

216,345

 

Payroll and employee benefits

 

57,051

 

 

 

70,249

 

 

 

274,598

 

 

 

232,250

 

Occupancy and other

 

35,353

 

 

 

43,701

 

 

 

163,273

 

 

 

135,803

 

Franchise occupancy expenses

 

55,799

 

 

 

51,411

 

 

 

229,602

 

 

 

215,609

 

Franchise support and other costs

 

3,705

 

 

 

3,796

 

 

 

12,328

 

 

 

16,490

 

Franchise advertising and other services expenses

 

60,658

 

 

 

53,308

 

 

 

253,533

 

 

 

218,272

 

Selling, general and administrative expenses

 

43,708

 

 

 

37,549

 

 

 

172,872

 

 

 

130,823

 

Depreciation and amortization

 

13,827

 

 

 

15,346

 

 

 

62,287

 

 

 

56,100

 

Pre-opening costs

 

718

 

 

 

480

 

 

 

1,385

 

 

 

1,110

 

Other operating expense (income), net

 

5,702

 

 

 

(21,450

)

 

 

10,837

 

 

 

889

 

Gains on the sale of company-operated restaurants

 

(7,675

)

 

 

(2,218

)

 

 

(17,998

)

 

 

(3,878

)

 

 

319,883

 

 

 

318,354

 

 

 

1,413,553

 

 

 

1,219,813

 

Earnings from operations

 

52,641

 

 

 

84,419

 

 

 

278,753

 

 

 

248,270

 

Other pension and post-retirement expenses, net

 

1,608

 

 

 

70

 

 

 

6,967

 

 

 

303

 

Interest expense, net

 

18,279

 

 

 

19,704

 

 

 

82,446

 

 

 

86,075

 

Earnings before income taxes

 

32,754

 

 

 

64,645

 

 

 

189,340

 

 

 

161,892

 

Income taxes

 

10,857

 

 

 

18,787

 

 

 

58,514

 

 

 

46,111

 

Net earnings

$

21,897

 

 

$

45,858

 

 

$

130,826

 

 

$

115,781

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

Basic

$

1.09

 

 

$

2.17

 

 

$

6.35

 

 

$

5.46

 

Diluted

$

1.08

 

 

$

2.17

 

 

$

6.30

 

 

$

5.45

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

20,153

 

 

 

21,110

 

 

 

20,603

 

 

 

21,195

 

Diluted

 

20,337

 

 

 

21,162

 

 

 

20,764

 

 

 

21,245

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.44

 

 

$

0.44

 

 

$

1.76

 

 

$

1.76

 

___________________________

(1)

Earnings per share may not add due to rounding.

JACK IN THE BOX INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

October 1,

2023

 

October 2,

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash

$

157,653

 

 

$

108,890

 

Restricted cash

 

28,254

 

 

 

27,150

 

Accounts and other receivables, net

 

99,678

 

 

 

103,803

 

Inventories

 

3,896

 

 

 

5,264

 

Prepaid expenses

 

16,911

 

 

 

16,095

 

Current assets held for sale

 

13,925

 

 

 

17,019

 

Other current assets

 

5,667

 

 

 

4,772

 

Total current assets

 

325,984

 

 

 

282,993

 

Property and equipment, at cost:

 

 

 

Land

 

92,007

 

 

 

86,134

 

Buildings

 

968,221

 

 

 

960,984

 

Restaurant and other equipment

 

166,714

 

 

 

163,527

 

Construction in progress

 

31,647

 

 

 

18,271

 

 

 

1,258,589

 

 

 

1,228,916

 

Less accumulated depreciation and amortization

 

(846,559

)

 

 

(810,752

)

Property and equipment, net

 

412,030

 

 

 

418,164

 

Other assets:

 

 

 

Operating lease right-of-use assets

 

1,397,555

 

 

 

1,332,135

 

Intangible assets, net

 

11,330

 

 

 

12,324

 

Trademarks

 

283,500

 

 

 

283,500

 

Goodwill

 

329,986

 

 

 

366,821

 

Other assets, net

 

240,707

 

 

 

226,569

 

Total other assets

 

2,263,078

 

 

 

2,221,349

 

 

$

3,001,092

 

 

$

2,922,506

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

Current liabilities:

 

 

 

Current maturities of long-term debt

$

29,964

 

 

$

30,169

 

Current operating lease liabilities

 

142,518

 

 

 

171,311

 

Accounts payable

 

84,960

 

 

 

66,271

 

Accrued liabilities

 

302,178

 

 

 

253,932

 

Total current liabilities

 

559,620

 

 

 

521,683

 

Long-term liabilities:

 

 

 

Long-term debt, net of current maturities

 

1,724,933

 

 

 

1,799,540

 

Long-term operating lease liabilities, net of current portion

 

1,265,514

 

 

 

1,165,097

 

Deferred tax liabilities

 

26,229

 

 

 

37,684

 

Other long-term liabilities

 

143,123

 

 

 

134,694

 

Total long-term liabilities

 

3,159,799

 

 

 

3,137,015

 

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, 82,645,814 and 82,580,599 issued, respectively

 

826

 

 

 

826

 

Capital in excess of par value

 

520,076

 

 

 

508,323

 

Retained earnings

 

1,937,598

 

 

 

1,842,947

 

Accumulated other comprehensive loss

 

(51,790

)

 

 

(53,982

)

Treasury stock, at cost, 62,910,964 and 61,799,221 shares, respectively

 

(3,125,037

)

 

 

(3,034,306

)

Total stockholders’ deficit

 

(718,327

)

 

 

(736,192

)

 

$

3,001,092

 

 

$

2,922,506

 

JACK IN THE BOX INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

 

52 Weeks Ended

 

October 1, 2023

 

October 2, 2022

Cash flows from operating activities:

 

 

 

Net earnings

$

130,826

 

 

$

115,781

 

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

 

 

 

Depreciation and amortization

 

62,287

 

 

 

56,100

 

Amortization of franchise tenant improvement allowances and incentives

 

4,647

 

 

 

4,446

 

Amortization of debt issuance costs

 

5,040

 

 

 

5,496

 

Loss on extinguishment of debt

 

 

 

 

7,700

 

Tax deficiency (excess tax benefits) from share-based compensation arrangements

 

71

 

 

 

123

 

Deferred income taxes

 

(11,989

)

 

 

7,857

 

Share-based compensation expense

 

11,205

 

 

 

7,122

 

Pension and postretirement expense

 

6,967

 

 

 

303

 

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

 

(7,346

)

 

 

12,668

 

Gains on the sale of company-operated restaurants

 

(17,998

)

 

 

(3,878

)

Gains on the disposition of property and equipment

 

(8,171

)

 

 

(30,533

)

Impairment charges and other

 

6,217

 

 

 

8,219

 

Changes in assets and liabilities, excluding acquisitions and dispositions:

 

 

 

Accounts and other receivables

 

(4,048

)

 

 

(18,143

)

Inventories

 

1,367

 

 

 

304

 

Prepaid expenses and other current assets

 

(1,422

)

 

 

(3,275

)

Operating lease right-of-use assets and lease liabilities

 

2,364

 

 

 

2,593

 

Accounts payable

 

(1,692

)

 

 

16,243

 

Accrued liabilities

 

47,459

 

 

 

(9,081

)

Pension and postretirement contributions

 

(6,241

)

 

 

(6,690

)

Franchise tenant improvement allowance and incentive disbursements

 

(3,265

)

 

 

(2,989

)

Other

 

(1,272

)

 

 

(7,484

)

Cash flows provided by operating activities

 

215,006

 

 

 

162,882

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(74,954

)

 

 

(46,475

)

Proceeds from the sale and leaseback of assets

 

3,673

 

 

 

10,768

 

Acquisition of Del Taco, net of cash acquired

 

 

 

 

(580,793

)

Proceeds from the sale of company-operated restaurants

 

85,221

 

 

 

6,391

 

Proceeds from the sale of property and equipment

 

25,214

 

 

 

31,161

 

Other

 

3,065

 

 

 

360

 

Cash flows provided by (used in) investing activities

 

42,219

 

 

 

(578,588

)

Cash flows from financing activities:

 

 

 

Borrowings on revolving credit facilities

 

 

 

 

68,000

 

Repayments of borrowings on revolving credit facilities

 

(50,000

)

 

 

(18,000

)

Proceeds from issuance of debt

 

 

 

 

1,100,000

 

Principal repayments on debt

 

(30,109

)

 

 

(588,064

)

Debt issuance costs

 

 

 

 

(20,599

)

Dividends paid on common stock

 

(35,890

)

 

 

(36,987

)

Proceeds from issuance of common stock

 

263

 

 

 

51

 

Repurchases of common stock

 

(90,029

)

 

 

(25,000

)

Payroll tax payments for equity award issuances

 

(1,593

)

 

 

(1,223

)

Cash flows (used in) provided by financing activities

 

(207,358

)

 

 

478,178

 

Net increase in cash and restricted cash

 

49,867

 

 

 

62,472

 

Cash and restricted cash at beginning of year

 

136,040

 

 

 

73,568

 

Cash and restricted cash at end of year

$

185,907

 

 

$

136,040

 

JACK IN THE BOX INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

The following table presents certain income and expense items included in our consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA

(Unaudited)

 

12 Weeks Ended

 

52 Weeks Ended

 

October 1,

2023

 

October 2,

2022

 

October 1,

2023

 

October 2,

2022

Revenues:

 

 

 

 

 

 

 

Company restaurant sales

47.0

%

 

53.2

%

 

50.0

%

 

47.8

%

Franchise rental revenues

23.1

%

 

20.0

%

 

21.5

%

 

23.2

%

Franchise royalties and other

14.8

%

 

14.1

%

 

14.2

%

 

14.8

%

Franchise contributions for advertising and other services

15.1

%

 

12.6

%

 

14.2

%

 

14.3

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Operating costs and expenses, net:

 

 

 

 

 

 

 

Food and packaging (1)

29.2

%

 

30.9

%

 

29.6

%

 

30.9

%

Payroll and employee benefits (1)

32.6

%

 

32.8

%

 

32.4

%

 

33.1

%

Occupancy and other (1)

20.2

%

 

20.4

%

 

19.3

%

 

19.4

%

Franchise occupancy expenses (2)

64.9

%

 

63.7

%

 

63.0

%

 

63.3

%

Franchise support and other costs (3)

6.7

%

 

6.7

%

 

5.1

%

 

7.6

%

Franchise advertising and other services expenses (4)

107.6

%

 

105.1

%

 

105.2

%

 

104.0

%

Selling, general and administrative expenses

11.7

%

 

9.3

%

 

10.2

%

 

8.9

%

Depreciation and amortization

3.7

%

 

3.8

%

 

3.7

%

 

3.8

%

Pre-opening costs

%

 

%

 

%

 

%

Other operating expense (income), net

1.5

%

 

(5.3

)%

 

0.6

%

 

0.1

%

Gains on the sale of company-operated restaurants

(2.1

)%

 

(0.6

)%

 

(1.1

)%

 

(0.3

)%

Earnings from operations

14.1

%

 

21.0

%

 

16.5

%

 

16.9

%

Income tax rate (5)

33.1

%

 

29.1

%

 

30.9

%

 

28.5

%

____________________________

(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 system sales (in thousands):

 

12 Weeks Ended

 

52 Weeks Ended

 

October 1,

2023

 

October 2,

2022

 

October 1,

2023

 

October 2,

2022

Company-operated restaurant sales

$

95,297

 

$

99,020

 

$

413,748

 

$

414,225

Franchised restaurant sales (1)

 

917,288

 

 

871,464

 

 

4,005,985

 

 

3,696,817

Systemwide sales (1)

$

1,012,585

 

$

970,484

 

$

4,419,733

 

$

4,111,042

____________________________

(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.

Del Taco systemwide sales (in thousands):

 

12 Weeks Ended

 

52 Weeks Ended

 

October 1,

2023

 

October 2,

2022

 

October 1,

2023

 

October 2,

2022 (2)

Company-operated restaurant sales

$

79,670

 

$

115,454

 

$

432,530

 

$

484,347

Franchised restaurant sales (1)

 

147,808

 

 

113,439

 

 

541,913

 

 

472,682

Systemwide sales (1)

$

227,478

 

$

228,893

 

$

974,443

 

$

957,029

____________________________

(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.

(2)

Del Taco has been presented on a pro forma basis and has been derived from unaudited financial information to conform to our fiscal year and is for informational purposes only.

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 acquisition, integration and strategic initiatives, COLI losses (gains), net, pension and post-retirement benefit costs, gains on the sale of company-operated restaurants, debt write-offs, gains on the sale of real estate to franchisees 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

 

52 Weeks Ended

 

October 1, 2023

 

October 2, 2022

 

October 1, 2023

 

October 2, 2022

Net income, as reported

$

21,897

 

 

$

45,858

 

 

$

130,826

 

 

$

115,781

 

Acquisition, integration and strategic initiatives (1)

 

3,753

 

 

 

1,217

 

 

 

9,112

 

 

 

20,081

 

Net COLI (gains) losses (2)

 

1,194

 

 

 

2,745

 

 

 

(5,953

)

 

 

9,911

 

Pension and post-retirement benefit costs (3)

 

1,608

 

 

 

70

 

 

 

6,967

 

 

 

303

 

Gains on the sale of company-operated restaurants

 

(7,675

)

 

 

(2,218

)

 

 

(17,998

)

 

 

(3,878

)

Debt write-offs

 

 

 

 

 

 

 

 

 

 

7,700

 

Gains on sale of real estate to franchisees

 

 

 

 

(28,876

)

 

 

(9,467

)

 

 

(28,876

)

Tax impact of adjustments (4)

 

1,455

 

 

 

9,259

 

 

 

11,670

 

 

 

2,743

 

Non-GAAP Adjusted Net Income

$

22,232

 

 

$

28,055

 

 

$

125,157

 

 

$

123,765

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding - diluted

 

20,337

 

 

 

21,162

 

 

 

20,764

 

 

 

21,245

 

 

 

 

 

 

 

 

 

Diluted earnings per share – GAAP

$

1.08

 

 

$

2.17

 

 

$

6.30

 

 

$

5.45

 

Acquisition, integration and strategic initiatives (1)

 

0.18

 

 

 

0.06

 

 

 

0.44

 

 

 

0.95

 

Net COLI (gains) losses (2)

 

0.06

 

 

 

0.13

 

 

 

(0.29

)

 

 

0.47

 

Pension and post-retirement benefit costs (3)

 

0.08

 

 

 

 

 

 

0.34

 

 

 

0.01

 

Gains on the sale of company-operated restaurants

 

(0.38

)

 

 

(0.10

)

 

 

(0.87

)

 

 

(0.18

)

Debt write-offs

 

 

 

 

 

 

 

 

 

 

0.36

 

Gains on sale of real estate to franchisees

 

 

 

 

(1.36

)

 

 

(0.46

)

 

 

(1.36

)

Tax impact of adjustments (4)

 

0.07

 

 

 

0.43

 

 

 

0.57

 

 

 

0.14

 

Operating Earnings Per Share – non-GAAP (5)

$

1.09

 

 

$

1.33

 

 

$

6.03

 

 

$

5.84

 

____________________

(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) losses reflect market-based adjustments on the company-owned life insurance policies which support our non-qualified benefit plans.

(3)

Pension and post-retirement benefit costs are the gains and losses relating to our two legacy defined benefit pension plans, as well as our two legacy post-retirement plans.

(4)

Tax impacts for the quarter calculated based on the non-GAAP Operating EPS tax rate of 29.7% in the current quarter and 25.4% in the prior year quarter. Tax impacts for the year calculated based on the non-GAAP Operating EPS tax rate of 27.2% in the current fiscal year and 26.0% for the prior fiscal year.

(5)

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 on the sale of company-operated restaurants, other operating expenses (income), net, depreciation and amortization, amortization of cloud computing costs, amortization of favorable and unfavorable leases and subleases, net, amortization of franchise tenant improvement allowances and incentives, COLI losses (gains), net, 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

 

52 Weeks Ended

 

October 1, 2023

 

October 2, 2022

 

October 1, 2023

 

October 2, 2022

Net earnings - GAAP

$

21,897

 

 

$

45,858

 

 

$

130,826

 

 

$

115,781

 

Income taxes

 

10,857

 

 

 

18,787

 

 

 

58,514

 

 

 

46,111

 

Interest expense, net

 

18,279

 

 

 

19,704

 

 

 

82,446

 

 

 

86,075

 

Gains on the sale of company-operated restaurants

 

(7,675

)

 

 

(2,218

)

 

 

(17,998

)

 

 

(3,878

)

Other operating expense (income), net (1)

 

5,702

 

 

 

(21,450

)

 

 

10,837

 

 

 

889

 

Depreciation and amortization

 

13,827

 

 

 

15,346

 

 

 

62,287

 

 

 

56,100

 

Amortization of cloud-computing costs (2)

 

1,178

 

 

 

1,235

 

 

 

5,004

 

 

 

5,116

 

Amortization of favorable and unfavorable leases and subleases, net

 

198

 

 

 

435

 

 

 

1,633

 

 

 

1,120

 

Amortization of franchise tenant improvement allowances and incentives

 

1,352

 

 

 

1,400

 

 

 

4,647

 

 

 

4,446

 

Net COLI (gains) losses (3)

 

1,194

 

 

 

2,745

 

 

 

(5,953

)

 

 

9,911

 

Pension and post-retirement benefit costs (4)

 

1,608

 

 

 

70

 

 

 

6,967

 

 

 

303

 

Adjusted EBITDA – non-GAAP

$

68,417

 

 

$

81,912

 

 

$

339,210

 

 

$

321,974

 

(1)

Other operating expense (income), net includes: acquisition, integration and strategic initiatives; costs of closed restaurants; operating restaurant impairment charges; accelerated depreciation and gains on disposition of property and equipment, net.

(2)

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.

(3)

Net COLI (gains) losses reflect market-based adjustments on the company-owned life insurance policies which support our non-qualified benefit plans.

(4)

Pension and post-retirement benefit costs are the gains and losses 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 certain costs, such as selling, general, and administrative expenses, depreciation and amortization, pre-opening costs, other operating expenses (income), 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-operated restaurants.

Below is a reconciliation of non-GAAP Restaurant-Level Margin to the most directly comparable GAAP measure, earnings from operations, for the 12-weeks ended (in thousands):

 

 

Jack in the Box

 

Del Taco

 

 

October 1, 2023

 

October 2, 2022

 

October 1, 2023

 

October 2, 2022

Earnings from operations - GAAP

 

$

47,490

 

 

$

82,563

 

 

$

5,152

 

 

$

1,856

 

Franchise rental revenues

 

 

(81,006

)

 

 

(78,868

)

 

 

(4,987

)

 

 

(1,801

)

Franchise royalties and other

 

 

(48,092

)

 

 

(51,395

)

 

 

(7,082

)

 

 

(5,511

)

Franchise contributions for advertising and other services

 

 

(48,956

)

 

 

(45,882

)

 

 

(7,436

)

 

 

(4,843

)

Franchise occupancy expenses

 

 

50,877

 

 

 

49,658

 

 

 

4,922

 

 

 

1,753

 

Franchise support and other costs

 

 

2,986

 

 

 

3,461

 

 

 

719

 

 

 

336

 

Franchise advertising and other services expenses

 

 

53,138

 

 

 

48,412

 

 

 

7,521

 

 

 

4,895

 

Selling, general and administrative expenses

 

 

31,141

 

 

 

24,238

 

 

 

12,567

 

 

 

13,311

 

Other operating expense (income), net

 

 

3,163

 

 

 

(23,280

)

 

 

2,538

 

 

 

1,829

 

Gains on the sale of company-operated restaurants

 

 

(71

)

 

 

(2,218

)

 

 

(7,604

)

 

 

 

Pre-opening costs

 

 

684

 

 

 

477

 

 

 

33

 

 

 

3

 

Depreciation and amortization

 

 

8,342

 

 

 

8,858

 

 

 

5,485

 

 

 

6,488

 

Restaurant-Level Margin- Non-GAAP

 

$

19,696

 

 

$

16,024

 

 

$

11,828

 

 

$

18,316

 

 

 

 

 

 

 

 

 

 

Company restaurant sales

 

$

95,297

 

 

$

99,020

 

 

$

79,670

 

 

$

115,454

 

 

 

 

 

 

 

 

 

 

Restaurant-Level Margin % - Non-GAAP

 

 

20.7

%

 

 

16.2

%

 

 

14.8

%

 

 

15.9

%

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, other operating expenses (income), 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, for the 12-weeks ended (in thousands):

 

 

Jack in the Box

 

Del Taco

 

 

October 1, 2023

 

October 2, 2022

 

October 1, 2023

 

October 2, 2022

Earnings from operations - GAAP

 

$

47,490

 

 

$

82,563

 

 

$

5,152

 

 

$

1,856

 

Company restaurant sales

 

 

(95,297

)

 

 

(99,020

)

 

 

(79,670

)

 

 

(115,454

)

Food and packaging

 

 

29,353

 

 

 

32,271

 

 

 

21,684

 

 

 

33,912

 

Payroll and employee benefits

 

 

29,427

 

 

 

32,608

 

 

 

27,624

 

 

 

37,642

 

Occupancy and other

 

 

16,818

 

 

 

18,117

 

 

 

18,534

 

 

 

25,582

 

Selling, general and administrative expenses

 

 

31,141

 

 

 

24,238

 

 

 

12,567

 

 

 

13,311

 

Other operating expense (income), net

 

 

3,163

 

 

 

(23,280

)

 

 

2,538

 

 

 

1,829

 

Gains on the sale of company-operated restaurants

 

 

(71

)

 

 

(2,218

)

 

 

(7,604

)

 

 

 

Pre-opening costs

 

 

684

 

 

 

477

 

 

 

33

 

 

 

3

 

Depreciation and amortization

 

 

8,342

 

 

 

8,858

 

 

 

5,485

 

 

 

6,488

 

Franchise-Level Margin - Non-GAAP

 

$

71,050

 

 

$

74,614

 

 

$

6,343

 

 

$

5,169

 

 

 

 

 

 

 

 

 

 

Franchise rental revenues

 

$

81,006

 

 

$

78,868

 

 

$

4,987

 

 

$

1,801

 

Franchise royalties and other

 

 

48,092

 

 

 

51,395

 

 

 

7,082

 

 

 

5,511

 

Franchise contributions for advertising and other services

 

 

48,956

 

 

 

45,882

 

 

 

7,436

 

 

 

4,843

 

Total franchise revenues

 

$

178,054

 

 

$

176,145

 

 

$

19,505

 

 

$

12,155

 

 

 

 

 

 

 

 

 

 

Franchise-Level Margin % - Non-GAAP

 

 

39.9

%

 

 

42.4

%

 

 

32.5

%

 

 

42.5

%

 

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