Jack in the Box Inc. Reports First Quarter 2022 Earnings

Rhea-AI Summary

Jack in the Box reported a 1.8% increase in total revenues to $344.7 million for Q1 2022, with net earnings dropping to $39.3 million, down from $50.9 million a year prior. Systemwide sales grew 0.6%, driven by a 1.2% same-store sales increase, despite a 10.9% increase in wage inflation and 10.5% rise in commodity costs. The company signed 26 development agreements for 98 new restaurants, totaling 201 commitments, but experienced a net restaurant decline of 10. Diluted EPS was $1.85.

Positive

• Total revenues rose by 1.8% to $344.7 million.
• Same-store sales increased by 1.2% compared to the same quarter last year.
• Signed 26 development agreements for 98 future restaurants, resulting in a total of 201 commitments.

Negative

• Net earnings decreased to $39.3 million from $50.9 million year-over-year.
• Wage inflation increased by 10.9%, impacting margins.
• Commodity costs rose approximately 10.5%, affecting profitability.
• Net restaurant count declined by 10, with more closures than openings.

Systemwide sales growth of +0.6%

Same store sales growth of +1.2% for Q1 2022, +13.7% on a two-year basis

26 development agreements signed for 98 restaurants, bringing total restaurants in the development pipeline to 201

SAN DIEGO--(BUSINESS WIRE)-- Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the first quarter ended January 23, 2022, comprised of growth in systemwide sales and same-store sales.

“We began fiscal 2022 with solid results, including comps on a two-year basis of +13.7%, despite a challenging operating environment for the entire industry,” said Darin Harris, Jack in the Box Chief Executive Officer. “I am proud of the resilience demonstrated by our franchisees, operators and corporate team members in delivering for our guests during a difficult period. We remain highly focused on fundamentals, franchisee health and showing progress on our long-term restaurant growth goals.”

Systemwide sales for the first quarter increased 0.6% driven by positive results in same store sales and partially offset by a slight decline in net restaurants.

System same-store sales increased 1.2%, comprised of franchise same-store sales of 1.4%, with increases in average check partially offset by a decrease in traffic; and Company-operated same-store sales, which declined 0.3% in the first quarter, with decreases in traffic partially offset by increases in average check.

In the first quarter, there were 26 development agreements signed for 98 future restaurants, bringing total agreements to 50 and future restaurant commitments to 201 since the franchise development program launched in mid-2021 — the highest level of restaurant commitments in company history. The company had a first quarter net restaurant decline of ten restaurants, comprised of two openings and twelve closures. The twelve restaurant closures included two company-operated, six related to early terminations and four agreement expirations.

Same-Store Sales:
		16 Weeks Ended
		January 23, 2022		January 17, 2021
Company		(0.3)%		7.5%
Franchise		1.4%		13.0%
System		1.2%		12.5%

Restaurant Counts:
		2022						2021
		Company		Franchise		Total		Company		Franchise		Total
Restaurant count at beginning of Q1		163		2,055		2,218		144		2,097		2,241
New		—		2		2		—		3		3
Acquired from franchisees		4		(4)		—		4		(4)		—
Closed		(2)		(10)		(12)		—		(7)		(7)
Restaurant count at end of Q1		165		2,043		2,208		148		2,089		2,237
Q1 Net Restaurant Increase/(Decrease)		2		(12)		(10)
Q1 2022 vs. Q1 2021 Restaurant % Increase/(Decrease)		11.5%		(2.2)%		(1.3)%

First quarter diluted earnings per share was $1.85. Operating Earnings Per Share ⁽¹⁾, a non-GAAP measure, was $1.97 in the first quarter of fiscal 2021 compared with $1.98 in the prior year quarter. Total revenues increased 1.8% to $344.7 million, compared to $338.5 million in the prior year quarter. Net earnings decreased to $39.3 million for the first quarter of fiscal 2022, compared with $50.9 million for the first quarter of fiscal 2021. Adjusted EBITDA⁽²⁾, a non-GAAP measure, was $91.2 million in the first quarter of fiscal 2022 compared with $102.4 million for the prior year quarter.

Restaurant-Level Margin⁽³⁾, a non-GAAP measure, was 18.3%, driven by increases in food and packaging costs; wage inflation of 10.9%; and increases in utilities and maintenance and repair costs, partially offset by lower incentive-based compensation and menu price increases. Commodity costs increased in the quarter by approximately 10.5%, primarily due to increases in the price of beef, pork, sauces and oil.

Additionally, restaurants the company has reacquired from franchisees during the last 24 months, referred to as our 'Evolving Markets' further described below, negatively impacted restaurant-level margin by 2.3 percentage points.

The 'Evolving Markets' consist of 30 Company-operated restaurants located in the Oregon, Oklahoma City, and Kansas City areas which we reacquired with the intent to refranchise. Subsequent to the first quarter, we have also reacquired 9 franchise restaurants in the Nashville area. We anticipate these ‘Evolving Markets’ will have a 2 to 2.5 percentage points temporary drag on overall company-owned restaurant level margin until they are refranchised. As a reminder, company-operated locations make up 9.7% of the company's total systemwide sales.

Franchise-Level Margin⁽³⁾, a non-GAAP measure, increased by $0.3 million, or 0.4% from the first quarter a year ago, driven by higher sales.

SG&A expense for the first quarter was $25.3 million, an increase of $4.8 million compared to the prior year quarter, driven primarily 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 increase of $5.2 million; partially offset by a decrease in incentive compensation.

(1) Operating Earnings Per Share represents diluted earnings per share on a GAAP basis of $1.85 excluding acquisition, integration, and restructuring costs of $0.11; COLI (losses) gains, net of $0.02; gains on the sale of company-operated restaurants; and the excess tax benefit or tax deficiency from share-based compensation arrangements. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may not add due to rounding.

(2) 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, and the amortization of franchise tenant improvement allowances and incentives. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

(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."

Capital Allocation

On November 19, 2021, the Board of Directors authorized a $200.0 million stock buy-back program that expires on November 20, 2023. The Company did not repurchase any shares in the first quarter of 2022.

On February 18, 2022, the Board of Directors declared a cash dividend of $0.44 per common share, to be paid on March 22, 2022, to shareholders of record as of the close of business on March 9, 2022.

On February 14, 2022, subsequent to the end of the first quarter, Jack in the Box announced the completion of a $1.1 billion financing facility through the sale of $550 million of Series 2022-1 3.445% Fixed Rate Senior Secured Notes, Class A-2-I and $550 million of Series 2022-1 4.136% Fixed Rate Senior Secured Notes, Class A-2-II (together, the “2022 Notes”). The net proceeds of the sale of the 2022 Notes were used to repay in full the Company’s existing Series 2019-1 3.982% Fixed Rate Senior Secured Notes, Class A-2-I and to fund a portion of Jack in the Box’s acquisition of Del Taco Restaurants, Inc.

Conference Call

The company will host a conference call for analysts and investors on Wednesday, February 23, 2022, beginning at 7:30 a.m. PT (10:30 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 (833) 513-0565 and using ID 4376117.

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^® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam. For more information on Jack in the Box, including franchising opportunities, visit www.jackinthebox.com.

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 potential impacts to our business and operations resulting from the coronavirus COVID-19 pandemic, 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, including federal, state and local policies regarding mitigation strategies for controlling the coronavirus COVID-19 pandemic, 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 23, 2022				January 17, 2021
Revenues:
Company restaurant sales		$	120,056			$	114,278
Franchise rental revenues			103,099				103,749
Franchise royalties and other			60,755				59,648
Franchise contributions for advertising and other services			60,801				60,866
			344,711				338,541
Operating costs and expenses, net:
Food and packaging			37,537				32,377
Payroll and employee benefits			39,725				34,931
Occupancy and other			20,877				17,835
Franchise occupancy expenses			63,983				65,169
Franchise support and other costs			3,911				3,273
Franchise advertising and other services expenses			63,308				62,695
Selling, general and administrative expenses			25,339				20,499
Depreciation and amortization			12,496				14,571
Other operating expenses (income), net			3,843				(452	)
Gains on the sale of company-operated restaurants			(48	)			(1,283	)
			270,971				249,615
Earnings from operations			73,740				88,926
Other pension and post-retirement expenses, net			93				271
Interest expense, net			20,187				20,735
Earnings before income taxes			53,460				67,920
Income taxes			14,190				17,061
Net earnings		$	39,270			$	50,859
Net earnings per share:
Basic		$	1.85			$	2.21
Diluted		$	1.85			$	2.21
Weighted-average shares outstanding:
Basic			21,205				22,968
Diluted			21,247				23,029
Dividends declared per common share		$	0.44			$	0.40

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
		January 23, 2022				October 3, 2021
ASSETS
Current assets:
Cash		$	70,207			$	55,346
Restricted cash			18,259				18,222
Accounts and other receivables, net			55,220				74,335
Inventories			2,686				2,335
Prepaid expenses			10,073				12,682
Current assets held for sale			1,881				1,692
Other current assets			4,230				4,346
Total current assets			162,556				168,958
Property and equipment:
Property and equipment, at cost			1,127,989				1,133,038
Less accumulated depreciation and amortization			(813,346	)			(810,124	)
Property and equipment, net			314,643				322,914
Other assets:
Operating lease right-of-use assets			956,068				934,066
Intangible assets, net			403				470
Goodwill			48,047				47,774
Deferred tax assets			48,339				51,517
Other assets, net			228,540				224,438
Total other assets			1,281,397				1,258,265
		$	1,758,596			$	1,750,137
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt		$	914			$	894
Current operating lease liabilities			150,089				150,636
Accounts payable			22,461				29,119
Accrued liabilities			104,450				148,417
Total current liabilities			277,914				329,066
Long-term liabilities:
Long-term debt, net of current maturities			1,274,772				1,273,420
Long-term operating lease liabilities, net of current portion			841,957				809,191
Other long-term liabilities			150,017				156,342
Total long-term liabilities			2,266,746				2,238,953
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, 82,563,579 and 82,536,059 issued, respectively			826				825
Capital in excess of par value			501,570				500,441
Retained earnings			1,794,362				1,764,412
Accumulated other comprehensive loss			(73,516	)			(74,254	)
Treasury stock, at cost, 61,523,475 shares			(3,009,306	)			(3,009,306	)
Total stockholders’ deficit			(786,064	)			(817,882	)
		$	1,758,596			$	1,750,137

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
		16 Weeks Ended
		January 23, 2022				January 17, 2021
Cash flows from operating activities:
Net earnings		$	39,270			$	50,859
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			12,496				14,571
Amortization of franchise tenant improvement allowances and incentives			1,234				861
Deferred finance cost amortization			1,722				1,722
(Excess tax benefit) tax deficiency from share-based compensation arrangements			38				(58	)
Deferred income taxes			2,317				2,452
Share-based compensation expense			1,018				1,231
Pension and post-retirement expense			93				271
Losses (gains) on cash surrender value of company-owned life insurance			579				(7,042	)
Gains on the sale of company-operated restaurants			(48	)			(1,283	)
Gains on the disposition of property and equipment, net			(617	)			(2,160	)
Impairment charges and other			919				546
Changes in assets and liabilities, excluding acquisitions:
Accounts and other receivables			19,910				24,805
Inventories			(351	)			(133	)
Prepaid expenses and other current assets			2,720				2,595
Operating lease right-of-use assets and lease liabilities			10,218				(14,441	)
Accounts payable			(5,218	)			(15,078	)
Accrued liabilities			(47,849	)			8,791
Pension and post-retirement contributions			(2,075	)			(2,061	)
Franchise tenant improvement allowance and incentive disbursements			(1,166	)			(813	)
Other			(1,159	)			(3,384	)
Cash flows provided by operating activities			34,051				62,251
Cash flows from investing activities:
Purchases of property and equipment			(9,401	)			(7,076	)
Proceeds from the sale of property and equipment			2,245				3,629
Proceeds from the sale and leaseback of assets			1,576				—
Proceeds from the sale of company-operated restaurants			48				133
Other			(1,305	)			2,677
Cash flows used in investing activities			(6,837	)			(637	)
Cash flows from financing activities:
Principal repayments on debt			(223	)			(211	)
Debt issuance costs			(2,090	)			—
Dividends paid on common stock			(9,257	)			(9,089	)
Proceeds from issuance of common stock			49				114
Payroll tax payments for equity award issuances			(795	)			(773	)
Cash flows used in financing activities			(12,316	)			(9,959	)
Net increase in cash and restricted cash			14,898				51,655
Cash and restricted cash at beginning of period			73,568				236,920
Cash and restricted cash at end of period		$	88,466			$	288,575

JACK IN THE BOX INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION

The following table presents certain income and expense items included in our condensed 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)
		16 Weeks Ended
		January 23, 2022			January 17, 2021
Revenues:
Company restaurant sales		34.8	%		33.8	%
Franchise rental revenues		29.9	%		30.6	%
Franchise royalties and other		17.6	%		17.6	%
Franchise contributions for advertising and other services		17.6	%		18.0	%
		100.0	%		100.0	%
Operating costs and expenses, net:
Food and packaging (1)		31.3	%		28.3	%
Payroll and employee benefits (1)		33.1	%		30.6	%
Occupancy and other (1)		17.4	%		15.6	%
Franchise occupancy expenses (excluding depreciation and amortization) (2)		62.1	%		62.8	%
Franchise support and other costs (3)		6.4	%		5.5	%
Franchise advertising and other services expenses (4)		104.1	%		103.0	%
Selling, general and administrative expenses		7.4	%		6.1	%
Depreciation and amortization		3.6	%		4.3	%
Other operating expenses (income), net		1.1	%		(0.1	)%
Gains on the sale of company-operated restaurants		—	%		(0.4	)%
Earnings from operations		21.4	%		26.3	%
Income tax rate (5)		26.5	%		25.1	%

____________________________
(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 systemwide sales (in thousands):
		16 Weeks Ended
		January 23, 2022			January 17, 2021
Company-operated restaurant sales		$	120,056		$	114,278
Franchised restaurant sales (1)			1,117,676			1,115,826
Systemwide sales (1)		$	1,237,732		$	1,230,104

____________________________
(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.

The following table summarizes the year-to-date changes in the number and mix of Jack in the Box company and franchise restaurants:

SUPPLEMENTAL RESTAURANT ACTIVITY INFORMATION
(Unaudited)
		2022									2021
		Company			Franchise			Total			Company			Franchise			Total
Beginning of year		163			2,055			2,218			144			2,097			2,241
New		—			2			2			—			3			3
Acquired from franchisees		4			(4	)		—			4			(4	)		—
Closed		(2	)		(10	)		(12	)		—			(7	)		(7	)
End of period		165			2,043			2,208			148			2,089			2,237
% of system		7	%		93	%		100	%		7	%		93	%		100	%

JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)

To supplement the condensed 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 restructuring costs; COLI losses (gains), net; gains on the sale of company-operated restaurants; and the excess tax benefit or tax deficiency from share-based compensation arrangements. 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 Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings per share. Figures may not add due to rounding.

		16 Weeks Ended
		January 23, 2022			January 17, 2021 (2)
Diluted earnings per share – GAAP		$	1.85		$	2.21
Acquisition, integration, and restructuring costs			0.11			—
Net COLI losses (gains)			0.02			(0.19	)
Gains on the sale of company-operated restaurants			—			(0.04	)
Excess tax benefits from share-based compensation arrangements			—			—
Operating Earnings Per Share – non-GAAP (1)		$	1.97		$	1.98

____________________
(1)		Operating Earnings Per Share may not add due to rounding.
(2)		Beginning in the first quarter of 2022, we exclude gains and losses driven by mark-to-market changes in the cash surrender value of COLI policies, net of a deferred compensation obligation supported by these policies. The prior period has been recast to conform to the current year presentation.

Adjusted EBITDA

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, and the amortization of franchise tenant improvement allowances and other. 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).

		16 Weeks Ended
		January 23, 2022				January 17, 2021
Net earnings - GAAP		$	39,270			$	50,859
Income taxes			14,190				17,061
Interest expense, net			20,187				20,735
Gains on the sale of company-operated restaurants			(48	)			(1,283	)
Other operating expenses (income), net			3,843				(452	)
Depreciation and amortization			12,496				14,571
Amortization of franchise tenant improvement allowances and other			1,234				861
Adjusted EBITDA – non-GAAP		$	91,172			$	102,352

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, 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 (in thousands):

		16 Weeks Ended
		January 23, 2022				January 17, 2021
Earnings from operations - GAAP		$	73,740			$	88,926
Franchise rental revenues			(103,099	)			(103,749	)
Franchise royalties and other			(60,755	)			(59,648	)
Franchise contributions for advertising and other services			(60,801	)			(60,866	)
Franchise occupancy expenses			63,983				65,169
Franchise support and other costs			3,911				3,273
Franchise advertising and other services expenses			63,308				62,695
Selling, general and administrative expenses			25,339				20,499
Other operating expenses (income), net			3,843				(452	)
Gains on the sale of company-operated restaurants			(48	)			(1,283	)
Depreciation and amortization			12,496				14,571
Restaurant-Level Margin- Non-GAAP		$	21,917			$	29,135
Company restaurant sales		$	120,056			$	114,278
Restaurant-Level Margin % - Non-GAAP			18.3	%			25.5	%

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 (in thousands):

		16 Weeks Ended
		January 23, 2022				January 17, 2021
Earnings from operations - GAAP		$	73,740			$	88,926
Company restaurant sales			(120,056	)			(114,278	)
Food and packaging			37,537				32,377
Payroll and employee benefits			39,725				34,931
Occupancy and other			20,877				17,835
Selling, general and administrative expenses			25,339				20,499
Other operating expenses (income), net			3,843				(452	)
Gains on the sale of company-operated restaurants			(48	)			(1,283	)
Depreciation and amortization			12,496				14,571
Franchise-Level Margin - Non-GAAP		$	93,453			$	93,126
Franchise rental revenues		$	103,099			$	103,749
Franchise royalties and other			60,755				59,648
Franchise contributions for advertising and other services			60,801				60,866
Total franchise revenues		$	224,655			$	224,263
Franchise-Level Margin % - Non-GAAP			41.6	%			41.5	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220223005544/en/

Chris Brandon

Vice President, Investor Relations

chris.brandon@jackinthebox.com

619.902.0269

Source: Jack in the Box Inc.

FAQ

What were Jack in the Box's Q1 2022 earnings results?

For Q1 2022, Jack in the Box reported a net earnings of $39.3 million and diluted EPS of $1.85.

How much did total revenue increase for Jack in the Box in Q1 2022?

Total revenue for Q1 2022 increased by 1.8% to $344.7 million.

What were the same-store sales growth figures for Jack in the Box in Q1 2022?

Same-store sales for Jack in the Box grew by 1.2% in Q1 2022.

How many new restaurants were announced for the Jack in the Box development pipeline?

Jack in the Box signed 26 development agreements for 98 new restaurants, bringing total commitments to 201.

What challenges did Jack in the Box face in Q1 2022?

Jack in the Box faced wage inflation of 10.9% and commodity cost increases of 10.5%, impacting profitability.