Jack in the Box Inc. Reports First Quarter 2023 Earnings

Jack in the Box same-store sales of +7.8%, +9.0% on a two-year basis

Del Taco same-store sales of +3.0%, +7.4% on a two-year basis⁽¹⁾

Jack in the Box systemwide sales growth of +7.9%, Del Taco systemwide sales growth of +2.9%⁽¹⁾

Diluted EPS of $2.54; Operating EPS of $2.01

6 New Restaurant Openings, 1 Restaurant Closure for Jack in the Box

Jack in the Box added 4 development agreements for 36 future restaurants in Q1, now totaling 72 agreements for 303 restaurants since program launch

Jack in the Box completes new-franchisee development agreements for entry into Florida and Arkansas

SAN DIEGO, March 01, 2023--(BUSINESS WIRE)--Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco segments in the first quarter, ended January 22, 2023.

"We are very pleased with our first quarter results, and enthusiastic about the momentum we are building for 2023 and our ongoing transformation story," said Darin Harris, Jack in the Box Chief Executive Officer. "We continue to see our marketing, operations and development strategies take hold which, along with outstanding execution by franchisees and operators, produced strong top-line performance, improved restaurant metrics, and an excellent start to the year. Traffic improvement and robust comps, combined with anticipated positive net unit growth, position us to drive meaningful systemwide sales growth in 2023, and improve franchise profitability in an operating environment that remains challenging."

Jack in the Box Performance

Same-store sales increased 7.8% in the first quarter with franchise same-store sales of 7.4% and company-operated same-store sales of 12.6%. Company-operated restaurants experienced growth in both average check and traffic while franchise restaurants had growth in average check, partially offset by a decline in traffic. Systemwide sales for the first quarter increased 7.9%.

Restaurant-Level Margin⁽²⁾, a non-GAAP measure, was 19.8%, an increase of 150 bps from a year ago driven by strong sales leverage and change in mix of restaurants.

Franchise-Level Margin⁽²⁾, a non-GAAP measure, was 44.4%, an increase of 280 bps from a year ago, driven by higher sales and rent contribution, additional revenue from the Hawaii transaction, and lower costs toward bad debt expense. When removing this previously announced Hawaii transaction — which included a one-time payoff of enhanced royalty rates prior to the sale of the market, positively impacting Jack franchise revenues by $6.7 million and Operating EPS by $0.23 — Franchise-Level Margin for the first quarter was 42.8%.

Jack net restaurant count was positive in the first quarter, with six franchise openings and one company-owned closure. As of Q1, and since the launch of the development program in mid-2021, the Company currently has 72 signed agreements for a total of 303 restaurants. Under these agreements, 25 restaurants have opened, leaving 278 remaining for future development. In the first quarter and thereafter, Jack in the Box also completed new franchisee development agreements to enter Arkansas and Florida, as well as additional agreements to expand and further develop the existing St. Louis, Hawaii and Nashville markets. It will be the first time in over 30 years Jack in the Box has had a presence in Florida, and the first time in the brand's history to open in Arkansas.

Jack in the Box Same-Store Sales:
		16 Weeks Ended
		January 22, 2023		January 23, 2022
Company		12.6%		(0.3)%
Franchise		7.4%		1.4%
System		7.8%		1.2%

Jack in the Box Restaurant Counts:
		2023									2022
		Company			Franchise			Total			Company			Franchise			Total
Restaurant count at beginning of Q1		146			2,035			2,181			163			2,055			2,218
New		—			6			6			—			2			2
Acquired from franchisees		—			—			—			4			(4	)		—
Refranchised		(5	)		5			—			—			—			—
Closed		(1	)		—			(1	)		(2	)		(10	)		(12	)
Restaurant count at end of Q1		140			2,046			2,186			165			2,043			2,208
Q1 Net Restaurant Increase/(Decrease)		(6	)		11			5
YTD Restaurant % Increase/(Decrease)		(4.1	)%		0.5	%		0.2	%

Del Taco Performance⁽¹⁾

Same-store sales increased 3.0% in the first quarter, comprised of franchise same-store sales growth of 2.8% and Company-operated same-store sales growth of 3.1%. Sales performance was boosted by the 20 Under $2 value platform and menu price, partially offset by changes in menu mix and transaction declines. Systemwide sales for the fiscal first quarter increased 2.9% driven by positive results in both franchise and company-operated same-store sales.

Restaurant-Level Margin, a non-GAAP measure, was 16.1% while Franchise-Level Margin, a non-GAAP measure, was 39.6%.

Del Taco had a first quarter net increase of one restaurant, comprised of two franchise openings and one company-owned closure. The company also refranchised 16 Del Taco restaurants in California during the first quarter to an existing Jack in the Box franchisee, which included a development agreement for 16 new Del Taco restaurants to be built within California in the near future. During Q1, Del Taco signed 2 additional development agreements for 10 new restaurants in North Tampa and Palm Beach, Florida.

Del Taco Same-Store Sales(1):
		16 Weeks Ended
		January 22, 2023		January 23, 2022
Company		3.1%		3.4%
Franchise		2.8%		5.4%
System		3.0%		4.4%

Del Taco Restaurant Counts(1):
		2023									2022
		Company			Franchise			Total			Company			Franchise			Total
Restaurant count at beginning of Q1		290			301			591			296			306			602
New		—			2			2			1			1			2
Refranchised		(16	)		16			—			—						—
Closed		(1	)		—			(1	)		(3	)		(1	)		(4	)
Restaurant count at end of Q1		273			319			592			294			306			600
Q1 Net Restaurant Increase/(Decrease)		(17	)		18			1
YTD Net Restaurant % Increase/(Decrease)		(5.9	)%		6.0	%		0.2	%

Company-Wide Performance

First quarter diluted earnings per share was $2.54. Operating Earnings Per Share⁽³⁾, a non-GAAP measure, was $2.01 in the first quarter of fiscal 2023 compared with $1.97 in the prior year quarter. In addition to the $0.23 positive impact from the Hawaii transaction, this also included a one-time negative litigation impact of $0.22.

Total revenues increased 52.9% to $527.1 million, compared to $344.7 million in the prior year quarter. Net earnings increased to $53.3 million for the first quarter of fiscal 2023, compared with $39.3 million for the first quarter of fiscal 2022. Adjusted EBITDA⁽⁴⁾, a non-GAAP measure, was $110.6 million in the first quarter of fiscal 2023 compared with $91.2 million for the prior year quarter.

Company-wide SG&A expense for the first quarter was $50.1 million, an increase of $25.1 million compared to the prior year quarter, driven primarily by the litigation impact mentioned above, as well as $17.8 million of SG&A expenses related to Del Taco, and partially offset by mark-to-market changes in the cash surrender value of company owned life insurance ("COLI") policies, net of changes in our deferred compensation obligation supported by these policies, resulting in a year-over-year decrease of $6.2 million. When excluding net COLI gains/losses, G&A was 2.7% of systemwide sales.

The effective tax rate for the first quarter of fiscal year 2023 was 26.7% compared to 26.5% in fiscal year 2022. The major components of the increase in tax rate were non-deductible goodwill decrements in the current year offset by non-taxable COLI gains in the current year as opposed to non-deductible losses in the prior year. The Non-GAAP, Operating EPS tax rate for the first quarter was 26.5%.

(1)		Del Taco same-store sales on a two-year basis and all prior year comparisons are pro forma and based on the time period of Jack in the Box’s full two-year 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)		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."
(3)		Operating Earnings Per Share represents diluted earnings per share on a GAAP basis of $2.54 excluding acquisition, integration, and restructuring costs of $0.08; COLI (gains) losses, net of ($0.27); pension and post-retirement benefit costs of $0.10; gains on sale of real estate to franchisees of ($0.45); refranchising gains of ($0.18); excess tax shortfall from share-based compensation arrangements of $0.01; and the tax impact of these adjustments of $0.19. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may not add due to rounding.
(4)		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, other operating expenses (income), net, depreciation and amortization, the amortization of favorable and unfavorable leases and subleases, net and the amortization of franchise tenant improvement allowances and incentives. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

Capital Allocation

The company repurchased 0.2 million shares of our common stock for an aggregate cost of $15.0 million in the first quarter. As of January 22, 2023, there was $160 million remaining under the Board-authorized stock buyback program. The company is now committed to executing $60 million in share repurchases in FY 2023.

On February 24, 2023, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on March 28, 2023 to shareholders of record as of the close of business on March 15, 2023. Future dividends will be subject to approval by our Board of Directors.

Conference Call

The Company will host a conference call for analysts and investors on Wednesday, March 1, 2023, beginning at 8:00 a.m. PT (11:00 a.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 more than 2,200 restaurants across 21 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
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
		16 Weeks Ended
		January 22, 2023				January 23, 2022
Revenues:
Company restaurant sales		$	270,191			$	120,056
Franchise rental revenues			108,830				103,099
Franchise royalties and other			76,390				60,755
Franchise contributions for advertising and other services			71,685				60,801
			527,096				344,711
Operating costs and expenses, net:
Food and packaging			81,933				37,537
Payroll and employee benefits			88,641				39,725
Occupancy and other			51,371				20,877
Franchise occupancy expenses			67,224				63,983
Franchise support and other costs			1,877				3,911
Franchise advertising and other services expenses			74,570				63,308
Selling, general and administrative expenses			50,142				25,029
Depreciation and amortization			19,402				12,496
Pre-opening costs			331				310
Other operating (income) expenses, net			(5,501	)			3,843
Gains on the sale of company-operated restaurants			(3,825	)			(48	)
			426,165				270,971
Earnings from operations			100,931				73,740
Other pension and post-retirement expenses, net			2,144				93
Interest expense, net			26,148				20,187
Earnings before income taxes			72,639				53,460
Income taxes			19,385				14,190
Net earnings		$	53,254			$	39,270
Net earnings per share:
Basic		$	2.55			$	1.85
Diluted		$	2.54			$	1.85
Weighted-average shares outstanding:
Basic			20,921				21,205
Diluted			21,000				21,247
Dividends declared per common share		$	0.44			$	0.44

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
		January 22, 2023				October 2, 2022
ASSETS
Current assets:
Cash		$	153,846			$	108,890
Restricted cash			27,772				27,150
Accounts and other receivables, net			56,987				103,803
Inventories			5,070				5,264
Prepaid expenses			11,247				16,095
Current assets held for sale			4,600				17,019
Other current assets			4,828				4,772
Total current assets			264,350				282,993
Property and equipment:
Property and equipment, at cost			1,251,566				1,228,916
Less accumulated depreciation and amortization			(826,928	)			(810,752	)
Property and equipment, net			424,638				418,164
Other assets:
Operating lease right-of-use assets			1,327,654				1,332,135
Intangible assets, net			11,951				12,324
Trademarks			283,500				283,500
Goodwill			359,511				366,821
Other assets, net			235,414				226,569
Total other assets			2,218,030				2,221,349
		$	2,907,018			$	2,922,506
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt		$	30,110			$	30,169
Current operating lease liabilities			168,946				171,311
Accounts payable			37,519				66,271
Accrued liabilities			224,740				253,932
Total current liabilities			461,315				521,683
Long-term liabilities:
Long-term debt, net of current maturities			1,793,395				1,799,540
Long-term operating lease liabilities, net of current portion			1,177,309				1,165,097
Deferred tax liabilities			42,084				37,684
Other long-term liabilities			135,983				134,694
Total long-term liabilities			3,148,771				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, 82,617,362 and 82,580,599 issued, respectively			826				826
Capital in excess of par value			511,924				508,323
Retained earnings			1,886,980				1,842,947
Accumulated other comprehensive loss			(53,493	)			(53,982	)
Treasury stock, at cost, 62,019,871 and 61,799,221 shares, respectively			(3,049,305	)			(3,034,306	)
Total stockholders’ deficit			(703,068	)			(736,192	)
		$	2,907,018			$	2,922,506

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
		16 Weeks Ended
		January 22, 2023				January 23, 2022
Cash flows from operating activities:
Net earnings		$	53,254			$	39,270
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			19,402				12,496
Amortization of franchise tenant improvement allowances and incentives			1,215				1,234
Deferred finance cost amortization			1,616				1,722
Tax deficiency from share-based compensation arrangements			143				38
Deferred income taxes			3,385				2,317
Share-based compensation expense			3,534				1,018
Pension and post-retirement expense			2,144				93
(Gains) losses on cash surrender value of company-owned life insurance			(6,631	)			579
Gains on the sale of company-operated restaurants			(3,825	)			(48	)
Gains on the disposition of property and equipment, net			(10,009	)			(617	)
Impairment charges and other			483				919
Changes in assets and liabilities, excluding acquisitions:
Accounts and other receivables			37,813				19,910
Inventories			194				(351	)
Prepaid expenses and other current assets			6,953				2,720
Operating lease right-of-use assets and lease liabilities			11,281				10,218
Accounts payable			(31,285	)			(5,218	)
Accrued liabilities			(24,677	)			(47,849	)
Pension and post-retirement contributions			(1,688	)			(2,075	)
Franchise tenant improvement allowance and incentive disbursements			(527	)			(1,166	)
Other		...