Jack in the Box Inc. Reports Fourth Quarter and Full-Year 2021 Earnings
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Jack in the Box Inc. Reports Fourth Quarter and Full-Year 2021 Earnings

SAN DIEGO - (BUSINESS WIRE) - November 23, 2021 - Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the fourth quarter ended October 3, 2021, comprised of growth in systemwide sales, same store sales and earnings per share.

"I am very proud of the execution and determination shown by our outstanding franchisees and corporate team members, continuing to deliver for our guests during a challenging operating environment,” said Darin Harris, Jack in the Box Chief Executive Officer. “We closed the year with strong comps on a two-year basis of +12.3% in Q4, leading us to another record-setting year of store-level profitability — a key element in driving results against our growth strategy in the near future. We continue to focus heavily on making significant progress on our strategic pillars, growth objectives, and unlocking substantial value for JACK shareholders."

Systemwide sales for the fourth quarter increased 8.6%, or 0.2% when excluding the 53rd week for the purpose of comparison to the prior year, driven by positive results in same store sales and partially offset by a slight decline in net unit growth. Systemwide sales for full year 2021 increased 13.1%, or 11.0% when excluding the 53rd week.

The company had a fourth quarter net store decline of one store, comprised of four store openings and five closures. The five store closures included one company-owned location and four related to early terminations and an agreement expiration. In the fourth quarter, there were development agreements signed for 47 future restaurants, bringing the year-to-date total to 111 future restaurant commitments.

Company-operated same-store sales declined 4.4% in the fourth quarter, with decreases in traffic partially offset by increases in average check. Franchise same-store sales grew 0.6%, with increases in average check; partially offset by a decrease in traffic.

(1) Fiscal year 2020 Diluted EPS included non-recurring items, notably a pension settlement charge and the sale of a corporate office building, that affect the comparability to fiscal year 2021 Diluted EPS.

Same-Store Sales:

               

 

 

13 Weeks Ended

 

12 Weeks Ended

 

53 Weeks Ended

 

52 Weeks Ended

 

 

October 3, 2021

 

September 27, 2020

 

October 3, 2021

 

September 27, 2020

Company

 

(4.4)%

 

9.6%

 

6.1%

 

3.1%

Franchise

 

0.6%

 

12.4%

 

10.7%

 

4.0%

System SSS

 

0.1%

 

12.2%

 

10.3%

 

4.0%

Restaurant Counts:

       

 

 

2021

 

2020

 

 

Company

 

Franchise

 

Total

 

Company

 

Franchise

 

Total

Store count at beginning of Q4

 

148

 

 

2,071

 

 

2,219

 

 

144

 

 

2,100

 

 

2,244

 

New

 

 

 

4

 

 

4

 

 

 

 

7

 

 

7

 

Refranchised

 

16

 

 

(16)

 

 

 

 

 

 

 

 

 

Closed

 

(1)

 

 

(4)

 

 

(5)

 

 

 

 

(10)

 

 

(10)

 

Store count at end of Q4

 

163

 

 

2,055

 

 

2,218

 

 

144

 

 

2,097

 

 

2,241

 

Q4 Net Unit Increase/(Decrease)

 

15

 

 

(16)

 

 

(1)

 

 

 

 

(3)

 

 

(3)

 

Q4/FY 2021 vs. Q4/FY 2020 Unit % Increase/(Decrease)

 

13.2

%

 

(2.0)

%

 

(1.0)

%

 

5.1

%

 

(0.4)

%

 

(0.1)

%

Fourth quarter diluted earnings per share was $1.80, up 9.8% over the prior year quarter or 2.4% excluding the benefit of the 53rd week. Total revenues increased 9.0% to $278.5 million, compared to $255.4 million in the comparable period ended September 27, 2020, driven by the 53rd week in 2021 and growth in same store sales. Net earnings increased to $38.9 million for the fourth quarter of fiscal 2021, compared with $37.8 million for the fourth quarter of fiscal 2020. Adjusted EBITDA(1), a non-GAAP measure, was $74.3 million in the fourth quarter of fiscal 2021 compared with $78.4 million for the prior year quarter.

Restaurant-Level Margin(2), a non-GAAP measure, was 20.1%, a decrease of 6.9% from the fourth quarter a year ago, primarily driven by the take back of lower-volume franchise restaurants; increases in food and packaging costs; wage inflation of 9.8%; and increases in utilities, and maintenance and repair costs, partially offset by lower incentive compensation and menu price increases. Commodity costs increased in the quarter by approximately 11.8%, primarily due to increases in pork, beef and beverages.

Franchise-Level Margin(2), a non-GAAP measure, increased by $6.1 million, or 8.7% from the fourth quarter a year ago, driven by the benefit of the 53rd week in 2021.

G&A expense for the fourth quarter was $16.7 million, an increase of $6.4 million compared to the prior year quarter, driven primarily by a $3.8 million favorable litigation settlement in the prior year quarter; 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 year-over-year increase of $1.1 million; a $1.1 million increase in incentive compensation; and $1.5 million related to the 53rd week in fiscal 2021. G&A for the full-year was $63.1 million. When including selling and advertising expense, SG&A was $82.7 million for fiscal 2021.

(1) 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."

(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."

Capital Allocation

The company repurchased 0.7 million shares of our common stock for an aggregate cost of $70.0 million. As of October 3, 2021, there was no remaining amount under the Board-authorized stock buyback program. On November 19, 2021, the Board of Directors authorized an additional $200.0 million stock buy-back program that expires on November 20, 2023.

On November 19, 2021, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on December 23, 2021 to shareholders of record as of the close of business on December 9, 2021. Future dividends will be subject to approval by our Board of Directors.

2022 Guidance & Outlook

The following guidance and underlying assumptions reflect the company’s current expectations for the current fiscal year ending October 2, 2022:

  • 2022 CapEx & Other Investments Guidance of $65-75 million
    • Previously stated at Q3 2021 earnings on August 4, 2021
    • Includes:
      • Capital expenditures (located within cash flows from investing activities)
      • Franchise tenant improvement allowances and incentives (located within cash flows from operating activities)
  • 2022 SG&A Guidance of $92-97 million
    • Excludes net COLI gains/losses, and now includes selling/advertising expense
  • 2022 Commodity Guidance up 6-7% compared to 2021
  • 2022 Company-owned Wage Rate Guidance up 8-10% compared to 2021
  • No change to 3-5 Year Outlook as provided at Investor Day on June 29, 2021
    • Same store sales up 2 to 3%
    • Unit growth up 1 to 3%
    • Systemwide sales up 3 to 5%

2022 Restaurant Level Margin Outlook

  • Due to an anticipated unique cost environment, we are providing one-time Company-owned restaurant level margin annual guidance for 2022
    • Restaurant Level Margin is expected to be 20-21%, which includes mid-to-high single digit price increases

Company-owned Restaurant Funding Outlook

  • 2022: Planning to fund up to 5 company-owned restaurants
  • 2023: Planning to fund between 7 and 15 company-owned restaurants

Conference Call

The company will host a conference call for analysts and investors on Tuesday, November 23, 2021, beginning at 7:30 a.m. PT (10:30 a.m. ET).

JACK IN THE BOX INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data) (Unaudited)

                 

 

 

13 Weeks Ended

 

12 Weeks Ended

 

53 Weeks Ended

 

52 Weeks Ended

 

 

October 3,
2021

 

September 27,
2020

 

October 3,
2021

 

September 27,
2020

Revenues:

 

 

 

 

 

 

 

 

Company restaurant sales

 

$

95,634

 

 

$

86,799

 

 

$

387,766

 

 

$

348,987

 

Franchise rental revenues

 

84,386

 

 

78,657

 

 

346,634

 

 

320,647

 

Franchise royalties and other

 

49,264

 

 

44,850

 

 

204,725

 

 

178,319

 

Franchise contributions for advertising and other services

 

49,170

 

 

45,095

 

 

204,545

 

 

173,553

 

 

 

278,454

 

 

255,401

 

 

1,143,670

 

 

1,021,506

 

Operating costs and expenses, net:

 

 

 

 

 

 

 

 

Food and packaging

 

29,630

 

 

24,787

 

 

113,006

 

 

102,449

 

Payroll and employee benefits

 

30,306

 

 

25,304

 

 

119,033

 

 

106,540

 

Occupancy and other

 

16,456

 

 

13,295

 

 

61,743

 

 

54,157

 

Franchise occupancy expenses

 

52,016

 

 

48,568

 

 

214,913

 

 

210,038

 

Franchise support and other costs

 

3,716

 

 

2,720

 

 

13,052

 

 

13,059

 

Franchise advertising and other services expenses

 

51,361

 

 

47,660

 

 

210,328

 

 

180,794

 

Selling, general and administrative expenses

 

21,578

 

 

14,710

 

 

82,734

 

 

80,841

 

Depreciation and amortization

 

10,844

 

 

11,647

 

 

46,500

 

 

52,798

 

Impairment and other (gains) charges, net

 

(5,080)

 

 

1,344

 

 

(3,382)

 

 

(6,493)

 

Gains on the sale of company-operated restaurants

 

(1,124)

 

 

(636)

 

 

(4,203)

 

 

(3,261)

 

 

 

209,703

 

 

189,399

 

 

853,724

 

 

790,922

 

Earnings from operations

 

68,751

 

 

66,002

 

 

289,946

 

 

230,584

 

Other pension and post-retirement expenses, net

 

203

 

 

748

 

 

881

 

 

41,720

 

Interest expense, net

 

16,338

 

 

15,692

 

 

67,458

 

 

66,743

 

Earnings from continuing operations and before income taxes

 

52,210

 

 

49,562

 

 

221,607

 

 

122,121

 

Income taxes

 

13,276

 

 

11,704

 

 

55,852

 

 

32,727

 

Earnings from continuing operations

 

38,934

 

 

37,858

 

 

165,755

 

 

89,394

 

(Losses) earnings from discontinued operations, net of income taxes

 

 

 

(9)

 

 

 

 

370

 

Net earnings

 

$

38,934

 

 

$

37,849

 

 

$

165,755

 

 

$

89,764

 

 

 

 

 

 

 

 

 

 

Net earnings per share - basic:

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

1.81

 

 

$

1.65

 

 

$

7.40

 

 

$

3.87

 

Earnings (losses) from discontinued operations

 

 

 

 

 

 

 

0.02

 

Net earnings per share (1)

 

$

1.81

 

 

$

1.65

 

 

$

7.40

 

 

$

3.88

 

Net earnings per share - diluted:

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

1.80

 

 

$

1.65

 

 

$

7.37

 

 

$

3.84

 

Earnings (losses) from discontinued operations

 

 

 

 

 

 

 

0.02

 

Net earnings per share (1)

 

$

1.80

 

 

$

1.64

 

 

$

7.37

 

 

$

3.86

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

21,537

 

 

22,903

 

 

22,402

 

 

23,125

 

Diluted

 

21,594

 

 

23,012

 

 

22,478

 

 

23,269

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.44

 

 

$

0.40

 

 

$

1.68

 

 

$

1.20

 

______________________

(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 3,
2021

 

September 27,
2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash

 

$

55,346

 

 

$

199,662

 

Restricted cash

 

18,222

 

 

37,258

 

Accounts and other receivables, net

 

74,335

 

 

78,417

 

Inventories

 

2,335

 

 

1,808

 

Prepaid expenses

 

12,682

 

 

10,114

 

Current assets held for sale

 

1,692

 

 

4,598

 

Other current assets

 

4,346

 

 

3,724

 

Total current assets

 

168,958

 

 

335,581

 

Property and equipment, at cost:

 

 

 

 

Land

 

105,393

 

 

100,460

 

Buildings

 

907,792

 

 

914,311

 

Restaurant and other equipment

 

112,959

 

 

112,675

 

Construction in progress

 

6,894

 

 

4,984

 

 

 

1,133,038

 

 

1,132,430

 

Less accumulated depreciation and amortization

 

(810,124)

 

 

(796,448)

 

Property and equipment, net

 

322,914

 

 

335,982

 

Other assets:

 

 

 

 

Operating lease right-of-use assets

 

934,066

 

 

904,548

 

Intangible assets, net

 

470

 

 

277

 

Goodwill

 

47,774

 

 

47,161

 

Deferred tax assets

 

51,517

 

 

72,322

 

Other assets, net

 

224,438

 

 

210,623

 

Total other assets

 

1,258,265

 

 

1,234,931

 

 

 

$

1,750,137

 

 

$

1,906,494

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

Current liabilities:

 

 

 

 

Current maturities of long-term debt

 

$

894

 

 

$

818

 

Current operating lease liabilities

 

150,636

 

 

179,000

 

Accounts payable

 

29,119

 

 

31,105

 

Accrued liabilities

 

148,417

 

 

129,431

 

Total current liabilities

 

329,066

 

 

340,354

 

Long-term liabilities:

 

 

 

 

Long-term debt, net of current maturities

 

1,273,420

 

 

1,376,913

 

Long-term operating lease liabilities, net of current portion

 

809,191

 

 

776,094

 

Other long-term liabilities

 

156,342

 

 

206,494

 

Total long-term liabilities

 

2,238,953

 

 

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, 82,536,059 and 82,369,714 issued, respectively

 

825

 

 

824

 

Capital in excess of par value

 

500,441

 

 

489,515

 

Retained earnings

 

1,764,412

 

 

1,636,211

 

Accumulated other comprehensive loss

 

(74,254)

 

 

(110,605)

 

Treasury stock, at cost, 61,523,475 and 59,646,773 shares, respectively

 

(3,009,306)

 

 

(2,809,306)

 

Total stockholders’ deficit

 

(817,882)

 

 

(793,361)

 

 

 

$

1,750,137

 

 

$

1,906,494

 

 

JACK IN THE BOX INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

         

 

 

53 Weeks Ended

 

52 Weeks Ended

 

 

October 3, 2021

 

September 27, 2020

Cash flows from operating activities:

 

 

 

 

Net earnings

 

$

165,755

 

$

89,764

Earnings from discontinued operations

 

 

370

Earnings from continuing operations

 

165,755

 

89,394

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

 

 

 

 

Depreciation and amortization

 

46,500

 

52,798

Amortization of franchise tenant improvement allowances and incentives

 

3,450

 

3,028

Amortization of debt issuance costs

 

5,595

 

5,628

Excess tax benefits from share-based compensation arrangements

 

(1,160)

 

(449)

Deferred income taxes

 

8,008

 

5,162

Share-based compensation expense

 

4,048

 

4,394

Pension and postretirement expense

 

881

 

41,720

Gains on cash surrender value of company-owned life insurance

 

(12,753)

 

(4,262)

Gains on the sale of company-operated restaurants

 

(4,203)

 

(3,261)

Gains on the disposition of property and equipment

 

(6,888)

 

(9,768)

Impairment charges and other

 

2,889

 

322

Changes in assets and liabilities, excluding acquisitions and dispositions:

 

 

 

 

Accounts and other receivables

 

5,072

 

(27,865)

Inventories

 

(269)

 

41

Prepaid expenses and other current assets

 

(2,766)

 

(2,780)

Operating lease right-of-use assets and lease liabilities

 

(24,784)

 

490

Accounts payable

 

(3,091)

 

2,018

Accrued liabilities

 

28,990

 

4,222

Pension and postretirement contributions

 

(6,084)

 

(6,243)

Franchise tenant improvement allowance and incentive disbursements

 

(8,568)

 

(10,239)

Other

 

500

 

(825)

Cash flows provided by operating activities

 

201,122

 

143,525

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

(41,008)

 

(19,528)

Proceeds from the sale and leaseback of assets

 

3,884

 

19,828

Proceeds from the sale of company-operated restaurants

 

1,827

 

3,395

Proceeds from the sale of property and equipment

 

11,742

 

22,774

Other

 

2,626

 

2,654

Cash flows (used in) provided by investing activities

 

(20,929)

 

29,123

Cash flows from financing activities:

 

 

 

 

Borrowings on revolving credit facilities

 

 

114,376

Repayments of borrowings on revolving credit facilities

 

(107,875)

 

(6,500)

Principal repayments on debt

 

(829)

 

(10,536)

Debt issuance costs

 

 

(216)

Dividends paid on common stock

 

(37,322)

 

(27,538)

Proceeds from issuance of common stock

 

6,647

 

4,647

Repurchases of common stock

 

(200,000)

 

(155,576)

Payroll tax payments for equity award issuances

 

(4,166)

 

(5,946)

Cash flows used in financing activities

 

(343,545)

 

(87,289)

Net (decrease) increase in cash and restricted cash

 

(163,352)

 

85,359

Cash and restricted cash at beginning of year

 

236,920

 

151,561

Cash and restricted cash at end of year

 

$

73,568

 

$

236,920

 

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)

                 

 

 

13 Weeks Ended

 

12 Weeks Ended

 

53 Weeks Ended

 

52 Weeks Ended

 

 

October 3,
2021

 

September 27,
2020

 

October 3,
2021

 

September 27,
2020

Revenues:

 

 

 

 

 

 

 

 

Company restaurant sales

 

34.3

%

 

34.0

%

 

33.9

%

 

34.2

%

Franchise rental revenues

 

30.3

%

 

30.8

%

 

30.3

%

 

31.4

%

Franchise royalties and other

 

17.7

%

 

17.6

%

 

17.9

%

 

17.5

%

Franchise contributions for advertising and other services

 

17.7

%

 

17.7

%

 

17.9

%

 

17.0

%

 

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Operating costs and expenses, net:

 

 

 

 

 

 

 

 

Food and packaging (1)

 

31.0

%

 

28.6

%

 

29.1

%

 

29.4

%

Payroll and employee benefits (1)

 

31.7

%

 

29.2

%

 

30.7

%

 

30.5

%

Occupancy and other (1)

 

17.2

%

 

15.3

%

 

15.9

%

 

15.5

%

Franchise occupancy expenses (2)

 

61.6

%

 

61.7

%

 

62.0

%

 

65.5

%

Franchise support and other costs (3)

 

7.5

%

 

6.1

%

 

6.4

%

 

7.3

%

Franchise advertising and other services expenses (4)

 

104.5

%

 

105.7

%

 

102.8

%

 

104.2

%

Selling, general and administrative expenses

 

7.7

%

 

5.8

%

 

7.2

%

 

7.9

%

Depreciation and amortization

 

3.9

%

 

4.6

%

 

4.1

%

 

5.2

%

Impairment and other (gains) charges, net

 

(1.8)

%

 

0.5

%

 

(0.3)

%

 

(0.6)

%

Gains on the sale of company-operated restaurants

 

(0.4)

%

 

(0.2)

%

 

(0.4)

%

 

(0.3)

%

Earnings from operations

 

24.7

%

 

25.8

%

 

25.4

%

 

22.6

%

Income tax rate (5)

 

25.4

%

 

23.6

%

 

25.2

%

 

26.8

%

______________________

(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 continuing operations and before income taxes.

Jack in the Box system sales (in thousands):

               

 

 

13 Weeks Ended

 

12 Weeks Ended

 

53 Weeks Ended

 

52 Weeks Ended

 

 

October 3,
2021

 

September 27,
2020

 

October 3,
2021

 

September 27,
2020

Company-operated restaurant sales

 

$

95,634

 

 

$

86,799

 

 

$

387,766

 

 

$

348,987

 

Franchised restaurant sales (1)

 

914,828

 

 

843,683

 

 

3,767,574

 

 

3,323,745

 

Systemwide sales (1)

 

$

1,010,462

 

 

$

930,482

 

 

$

4,155,340

 

 

$

3,672,732

 

 
______________________

(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 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

 

 

 

14

 

 

14

 

 

 

 

27

 

 

27

 

Acquired from franchisees

 

20

 

 

(20)

 

 

 

 

 

 

 

 

 

Closed

 

(1)

 

 

(36)

 

 

(37)

 

 

(1)

 

 

(28)

 

 

(29)

 

End of period

 

163

 

 

2,055

 

 

2,218

 

 

144

 

 

2,097

 

 

2,241

 

% 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: 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.

Adjusted EBITDA

Adjusted EBITDA represents net earnings on a GAAP basis excluding earnings from discontinued operations, 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 incentives, 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).

 

 

13 Weeks
Ended

 

12 Weeks
Ended

 

53 Weeks
Ended

 

52 Weeks
Ended

 

 

October 3,
2021

 

September 27,
2020

 

October 3,
2021

 

September 27,
2020

Net earnings - GAAP

 

$

38,934

 

 

$

37,849

 

 

$

165,755

 

 

$

89,764

 

Losses (earnings) from discontinued operations, net of taxes

 

 

 

9

 

 

 

 

(370)

 

Income taxes

 

13,276

 

 

11,704

 

 

55,852

 

 

32,727

 

Interest expense, net

 

16,338

 

 

15,692

 

 

67,458

 

 

66,743

 

Pension settlement charges

 

 

 

188

 

 

 

 

39,218

 

Gains on the sale of company-operated restaurants

 

(1,124)

 

 

(636)

 

 

(4,203)

 

 

(3,261)

 

Impairment and other (gains) charges, net

 

(5,080)

 

 

1,344

 

 

(3,382)

 

 

(6,493)

 

Depreciation and amortization

 

10,844

 

 

11,647

 

 

46,500

 

 

52,798

 

Amortization of franchise tenant improvement allowances and incentives

 

1,120

 

 

645

 

 

3,450

 

 

3,028

 

Adjusted EBITDA – non-GAAP

 

$

74,308

 

 

$

78,442

 

 

$

331,430

 

 

$

274,154

 

 

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 (gains) charges, 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):

 

 

13 Weeks
Ended

 

12 Weeks
Ended

 

53 Weeks
Ended

 

52 Weeks
Ended

 

 

October 3,
2021

 

September 27,
2020

 

October 3,
2021

 

September 27,
2020

Earnings from operations - GAAP

 

$

68,751

 

 

$

66,002

 

 

$

289,946

 

 

$

230,584

 

Franchise rental revenues

 

(84,386)

 

 

(78,657)

 

 

(346,634)

 

 

(320,647)

 

Franchise royalties and other

 

(49,264)

 

 

(44,850)

 

 

(204,725)

 

 

(178,319)

 

Franchise contributions for advertising and other services

 

(49,170)

 

 

(45,095)

 

 

(204,545)

 

 

(173,553)

 

Franchise occupancy expenses

 

52,016

 

 

48,568

 

 

214,913

 

 

210,038

 

Franchise support and other costs

 

3,716

 

 

2,720

 

 

13,052

 

 

13,059

 

Franchise advertising and other services expenses

 

51,361

 

 

47,660

 

 

210,328

 

 

180,794

 

Selling, general and administrative expenses

 

21,578

 

 

14,710

 

 

82,734

 

 

80,841

 

Impairment and other (gains) charges, net

 

(5,080)

 

 

1,344

 

 

(3,382)

 

 

(6,493)

 

Gains on the sale of company-operated restaurants

 

(1,124)

 

 

(636)

 

 

(4,203)

 

 

(3,261)

 

Depreciation and amortization

 

10,844

 

 

11,647

 

 

46,500

 

 

52,798

 

Restaurant-Level Margin- Non-GAAP

 

$

19,242

 

 

$

23,413

 

 

$

93,984

 

 

$

85,841

 

 

 

 

 

 

 

 

 

 

Company restaurant sales

 

$

95,634

 

 

$

86,799

 

 

$

387,766

 

 

$

348,987

 

 

 

 

 

 

 

 

 

 

Restaurant-Level Margin % - Non-GAAP

 

20.1

%

 

27.0

%

 

24.2

%

 

24.6

%

 

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 (gains) charges, 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):

 

 

13 Weeks
Ended

 

12 Weeks
Ended

 

53 Weeks
Ended

 

52 Weeks
Ended

 

 

October 3,
2021

 

September 27,
2020

 

October 3,
2021

 

September 27,
2020

Earnings from operations - GAAP

 

$

68,751

 

 

$

66,002

 

 

$

289,946

 

 

$

230,584

 

Company restaurant sales

 

(95,634)

 

 

(86,799)

 

 

(387,766)

 

 

(348,987)

 

Food and packaging

 

29,630

 

 

24,787

 

 

113,006

 

 

102,449

 

Payroll and employee benefits

 

30,306

 

 

25,304

 

 

119,033

 

 

106,540

 

Occupancy and other

 

16,456

 

 

13,295

 

 

61,743

 

 

54,157

 

Selling, general and administrative expenses

 

21,578

 

 

14,710

 

 

82,734

 

 

80,841

 

Impairment and other (gains) charges, net

 

(5,080)

 

 

1,344

 

 

(3,382)

 

 

(6,493)

 

Gains on the sale of company-operated restaurants

 

(1,124)

 

 

(636)

 

 

(4,203)

 

 

(3,261)

 

Depreciation and amortization

 

10,844

 

 

11,647

 

 

46,500

 

 

52,798

 

Franchise-Level Margin - Non-GAAP

 

$

75,727

 

 

$

69,654

 

 

$

317,611

 

 

$

268,628

 

 

 

 

 

 

 

 

 

 

Franchise rental revenues

 

$

84,386

 

 

$

78,657

 

 

$

346,634

 

 

$

320,647

 

Franchise royalties and other

 

49,264

 

 

44,850

 

 

204,725

 

 

178,319

 

Franchise contributions for advertising and other services

 

49,170

 

 

45,095

 

 

204,545

 

 

173,553

 

Total franchise revenues

 

$

182,820

 

 

$

168,602

 

 

$

755,904

 

 

$

672,519

 

 

 

 

 

 

 

 

 

 

Franchise-Level Margin % - Non-GAAP

 

41.4

%

 

41.3

%

 

42.0

%

 

39.9

%

SOURCE Jack in the Box Inc.

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