SAN DIEGO--(BUSINESS WIRE)--Jack in the Box Inc. (NASDAQ: JACK) today reported net earnings of $12.0 million, or $0.27 per diluted share, for the first quarter ended January 22, 2012, compared with net earnings of $32.4 million, or $0.61 per diluted share, for the first quarter of fiscal 2011.
Operating earnings per share, a non-GAAP measure which the company defines as diluted earnings per share on a GAAP basis less gains from refranchising, were $0.25 per diluted share compared with $0.27 per diluted share in the prior year quarter. A reconciliation of non-GAAP measurements to GAAP results is attached to this release. Included in operating earnings per share were re-image incentive payments of $5.7 million, or approximately $0.08 per share in the first quarter of 2012 as compared to $1.3 million, or approximately $0.02 per share in the prior year quarter.
Gains from refranchising contributed approximately $0.02 per diluted share for the quarter as compared with approximately $0.34 per diluted share in the prior year quarter.
Increase in same-store sales:
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Linda A. Lang, chairman, chief executive officer and president, said, "Jack in the Box company same-store sales increased 5.3 percent in the first quarter, driven by a combination of traffic growth as well as an increase in average check. On a two-year cumulative basis, this represented a 500 basis point acceleration from the fourth quarter of 2011 and our sixth consecutive quarter of sequentially improving company same-store sales trends. We believe these results have been largely driven by the investments we have made to enhance the entire guest experience at the Jack in the Box brand, including the substantial completion of our system-wide re-image program during the quarter.
"Qdoba's same-store sales in the first quarter increased 3.8 percent system-wide, representing the fourth consecutive quarter that two-year cumulative same-store sales have been greater than 9 percent," Lang said.
Consolidated restaurant operating margin was 13.5 percent of sales in the first quarter of 2012, compared with 12.6 percent of sales in the year-ago quarter.
Food and packaging costs in the quarter were 110 basis points higher than prior year. Overall commodity costs were approximately 8 percent higher in the quarter, driven by higher costs for most commodities other than produce and consistent with the company's expectations.
Payroll and employee benefits costs were 120 basis points lower than the year-ago quarter, reflecting the leverage from same-store sales increases and the benefits of refranchising. These decreases were offset by increases in unemployment taxes in several states and higher levels of incentive compensation.
Occupancy and other costs decreased 80 basis points in the first quarter due primarily to the leverage from same-store sales increases and the benefits of refranchising. These decreases were partially offset by higher rent expense as a percentage of sales due to the greater proportion of company-operated Qdoba restaurants versus the prior year, higher depreciation expense related to the Jack in the Box re-image program and higher debit card fees.
SG&A expense for the first quarter decreased by $1.2 million and was 10.1 percent of revenues in both the current and prior year quarter. The decrease in SG&A was attributable primarily to lower advertising and overhead costs resulting from the company's refranchising strategy which were partially offset by increased G&A related to Qdoba growth, higher pension, pre-opening and insurance costs as well as restaurant technology spending. Mark-to-market adjustments on investments supporting the company's non-qualified retirement plans positively impacted SG&A by $3.2 million in the first quarter as compared to a positive impact of $3.1 million in last year's first quarter, resulting in a year-over-year decrease in SG&A of $0.1 million.
Gains on the sale of company-operated Jack in the Box restaurants were $1.1 million in the 2012 quarter, or approximately $0.02 per diluted share, which primarily represented additional proceeds received as a result of the extension of underlying franchise and lease agreements for a previously sold restaurant. This compares to gains of $27.9 million, or approximately $0.34 per diluted share, in the year-ago quarter from the sale of 88 restaurants.
Impairment and other charges increased slightly in the quarter to $4.4 million from $3.6 million a year ago. This increase relates primarily to the impairment of two underperforming Jack in the Box restaurants in 2012 and an increase in costs associated with closed restaurants. These increases were partially offset by a decrease in accelerated depreciation related to the company's re-image program as it nears completion.
The company acquired 11 franchised Qdoba restaurants in two markets during the first quarter of 2012 for $6.2 million, and subsequent to the end of the quarter, acquired 25 franchised Qdoba restaurants in two additional markets for $33.0 million. These acquisitions are expected to be accretive to fiscal 2012 restaurant operating margin and earnings per share.
The company repurchased approximately 327,000 shares of its common stock in the first quarter of 2012 at an average price of $19.43 per share for an aggregate cost of $6.4 million, completing the $100 million authorized by the company's board of directors in May 2011. In November 2011, the company's board of directors authorized an additional $100 million stock-buyback program that expires in November 2013, none of which was utilized during the first quarter.
Restaurant openings
Sixteen new Jack in the Box restaurants opened in the first quarter, including 11 franchised locations, compared with 8 new restaurants opened system-wide during the same quarter last year, of which 3 were franchised.
In the first quarter, 15 Qdoba restaurants opened, including 9 franchised locations, versus 20 new restaurants in the year-ago quarter, of which 14 were franchised.
At January 22, 2012, the company's system total comprised 2,236 Jack in the Box restaurants, including 1,602 franchised locations, and 597 Qdoba restaurants, including 335 franchised locations.
Guidance
The following guidance and underlying assumptions reflect the company's current expectations for the second quarter ending April 15, 2012, and the fiscal year ending September 30, 2012. Fiscal 2012 is a 52-week year, with 16 weeks in the first quarter, and 12 weeks in each of the second, third and fourth quarters.
Second quarter fiscal year 2012 guidance
Fiscal year 2012 guidance
Conference call
The company will host a conference call for financial analysts and investors on Thursday, February 23, 2012, beginning at 8:30 a.m. PT (11:30 a.m. ET). The conference call will be broadcast live over the Internet via the Jack in the Box 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 11:30 a.m. PT on February 23.
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 20 states. Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Grill®, a leader in fast-casual dining, with more than 600 restaurants in 42 states and the District of Columbia. For more information, visit www.jackinthebox.com.
Safe harbor statement
This press release contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to substantial risks and uncertainties. A variety of factors could cause the company's actual results to differ materially from those expressed in the forward-looking statements, including the success of new products and marketing initiatives, the impact of competition, unemployment, trends in consumer spending patterns, commodity costs, the timing of sales of Jack in the Box restaurants to franchisees, 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 www.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.
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Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box® restaurants.