SAN DIEGO - (BUSINESS WIRE) - Nov. 18, 2014 - Jack in the Box Inc. (NASDAQ: JACK) today reported earnings from continuing operations of $17.4 million, or $0.44 per diluted share, for the fourth quarter ended September 28, 2014, compared with earnings from continuing operations of $24.1 million, or $0.54 per diluted share, for the fourth quarter of fiscal 2013.
Fiscal 2014 earnings from continuing operations totaled $94.8 million, or $2.26 per diluted share, compared with $82.6 million, or $1.84 per diluted share in fiscal 2013.
Operating earnings per share, a non-GAAP measure which the company defines as diluted earnings per share from continuing operations on a GAAP basis excluding restructuring charges and gains or losses from refranchising, were $0.54 in the fourth quarter of fiscal 2014 compared with $0.45 in the prior year quarter. For fiscal year 2014, operating earnings per share were $2.45 compared with $1.82 last year.
A reconciliation of non-GAAP measurements to GAAP results is provided below, with additional information included in the attachment to this release. Figures may not add due to rounding.
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Lenny Comma, chairman and chief executive officer, said, "Operating earnings per share for the fourth quarter increased 20 percent, driven by better than expected same-store sales growth at Qdoba Mexican Grill® and Jack in the Box®, margin expansion, and a 10 percent reduction in our diluted share count as we continued to use our growing free cash flow to return cash to shareholders. This performance capped a terrific year, with operating earnings per share up approximately 35 percent, the third consecutive year of growth in excess of 30 percent."
Increase (decrease) in same-store sales:
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"Jack in the Box company same-store sales increased 3.1 percent for the quarter, above our expectations," Comma said. "The increase was driven primarily by growth in our breakfast and late-night dayparts."
Jack in the Box system same-store sales growth for the quarter exceeded that of the QSR sandwich segment by 3.3 percentage points for the comparable period, according to The NPD Group’s SalesTrack® Weekly for the 12-week time period ended September 28, 2014. Included in this segment are 16 of the top QSR sandwich and burger chains in the country.
"Qdoba’s same-store sales in the fourth quarter increased 7.1 percent for company restaurants and 7.7 percent system-wide, our third consecutive quarter of growth above 7 percent. The top-line momentum continued with the conclusion of our Mango Mojo campaign, followed by the return of our popular Queso Diablo as a permanent menu item. In addition, the performance of our Qdoba company restaurants reflected less discounting, as well as double-digit growth in catering sales," Comma said.
Consolidated restaurant operating margin increased 190 basis points to 18.0 percent of sales in the fourth quarter of 2014, compared with 16.1 percent of sales in the year-ago quarter. Restaurant operating margin for Jack in the Box restaurants increased 210 basis points to 17.8 percent of sales. The improvement was due primarily to lower food and packaging costs and the benefit of refranchising, which were partially offset by higher labor costs resulting from an increase in the California minimum wage during the quarter. The decrease in food and packaging costs as a percentage of sales resulted from the benefit of price increases and favorable product mix changes, which were partially offset by commodity inflation of approximately 3.2 percent in the quarter. Restaurant operating margin for Qdoba restaurants increased 130 basis points to 18.5 percent of sales. The benefits of sales leverage, price increases and less discounting at Qdoba were partially offset by commodity inflation of approximately 4.0 percent, higher incentive compensation for restaurant managers and beverage equipment rental costs.
SG&A expense for the fourth quarter increased by $2.2 million and was 15.0 percent of revenues as compared to 14.6 percent in the prior year quarter. Mark-to-market adjustments on investments supporting the company’s non-qualified retirement plans negatively impacted SG&A by $1.5 million in the fourth quarter of 2014 as compared to a positive impact of $2.0 million in the fourth quarter of 2013, resulting in a year-over-year increase in SG&A of $3.5 million. In addition, the increase reflects a $2.0 million increase in incentive and share-based compensation. These increases were partially offset by a $4.0 million reduction in pension expense.
The company is continuing its efforts to improve its cost structure and identify opportunities to reduce G&A as well as improve restaurant profitability across both brands. Restructuring charges of $0.3 million relating primarily to severance costs were recorded during the fourth quarter of 2014, as compared to $2.2 million, or approximately $0.03 per diluted share, during the fourth quarter of 2013. These charges are included in "Impairment and other charges, net" in the accompanying consolidated statements of earnings.
Losses on the sale of company-operated restaurants were $5.8 million in the fourth quarter, or approximately $0.10 per diluted share, related primarily to the sale of 23 Jack in the Box restaurants in two markets in the Southeast during the quarter and the expected sale of the remaining Jack in the Box market in the Southeast for which the company has received a signed letter of intent. This loss was partially offset by additional proceeds received as a result of the extension of underlying franchise and lease agreements for previously refranchised Jack in the Box restaurants of $0.6 million. This compares to a gain of $7.8 million, or approximately $0.13 per diluted share, in the prior year quarter.
The tax rate for the fourth quarter of 2014 was 32.7 percent versus 28.0 percent for the fourth quarter of 2013, and 35.3 percent in fiscal 2014 as compared to 32.8 percent in fiscal 2013. The tax rate for fiscal 2014 was slightly lower than the company’s most recent guidance due to the benefit of a change in the California tax law which was partially offset by the market performance of insurance investment products used to fund certain non-qualified retirement plans. Changes in the cash value of the insurance products are not deductible or taxable.
In the third quarter of 2013, 62 company-operated Qdoba restaurants were closed, and the results of operations, impairment charges, lease obligations and other exit costs for these restaurants are included in discontinued operations in the accompanying consolidated statements of earnings for all periods presented. Discontinued operations for the fourth quarter of fiscal 2014 include after-tax charges related to the Qdoba restaurant closures of approximately $0.03 per diluted share, as compared to $0.02 per diluted share for the fourth quarter of fiscal 2013. In addition, discontinued operations for the fourth quarter of fiscal 2013 included approximately $0.01 per diluted share related to the outsourcing of the company’s distribution business which was completed in fiscal 2013.
The company repurchased approximately 697,000 shares of its common stock in the fourth quarter of 2014 at an average price of $61.19 per share for an aggregate cost of $42.7 million. During fiscal year 2014, the company repurchased approximately 5,645,000 shares at an average price of $56.63 per share, for an aggregate cost of $319.7 million. This leaves $117.1 million remaining under two stock-buyback programs authorized by the company’s Board of Directors that expire in November 2015. In November 2014, the company’s Board of Directors authorized an additional $100 million stock-buyback program that expires in November 2016.
The company also announced today that on November 13, 2014, its Board of Directors declared a quarterly cash dividend of $0.20 per share on the company’s common stock. The dividend is payable on December 12, 2014, to shareholders of record at the close of business on December 1, 2014.
The following guidance and underlying assumptions reflect the company’s current expectations for the first quarter and fiscal year ending September 27, 2015. Fiscal 2015 is a 52-week year, with 16 weeks in the first quarter, and 12 weeks in each of the second, third and fourth quarters.
The company today provided long-term goals for fiscal 2016 to 2018. The company expects:
The company will host a conference call for financial analysts and investors on Wednesday, November 19, 2014, 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 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 11:30 a.m. PT on November 19.
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. 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 47 states, the District of Columbia and Canada. For more information on Jack in the Box and Qdoba, including franchising opportunities, visit www.jackinthebox.com or www.qdoba.com.
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 following: the success of new products and marketing initiatives; 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, and risks relating to expansion into new markets; 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.
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SOURCE Jack in the Box Inc.
Carol DiRaimo
Jack in the Box Inc.
Investor Contact:
(858) 571-2407
Brian Luscomb
Media Relations
Jack in the Box Inc
(858) 571-2291
Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box® restaurants.