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

Rhea-AI Summary

Jack in the Box announced Q4 2021 results, showcasing systemwide sales growth of 8.6% and 13.1% for the fiscal year. The diluted EPS rose by 9.8% to $1.80 in Q4, totaling $7.37 for the year, despite a 1.0% decline in net units. Same-store sales were flat in Q4 but increased 10.3% annually. Management provided guidance for FY 2022, highlighting anticipated costs and expectations for restaurant level margins of 20-21%.

Positive

• Systemwide sales up 8.6% in Q4 2021 and 13.1% for FY 2021.
• Diluted EPS increased by 9.8% to $1.80 in Q4; annual EPS rose 91% to $7.37.
• Management expects restaurant level margin of 20-21% for FY 2022.

Negative

• Same-store sales declined 4.4% in Q4 for company-operated stores.
• Net units decreased by 1.0% for FY 2021 with more closures than openings.

Systemwide sales growth +8.6% in Q4 2021; +13.1% FY 2021

Same store sales growth +0.1% in Q4 2021; +10.3% FY 2021

Diluted EPS +9.8% at $1.80 in Q4 2021; +91.0% at $7.37 FY 2021⁽¹⁾

Net units down -1.0% FY 2021

Management provides annual guidance measures for FY 2022

Management provides restaurant level margin outlook for FY 2022

Management provides company-owned restaurant outlook for 2022 and 2023

SAN DIEGO--(BUSINESS WIRE)-- 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). 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 7573711.

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 reduce G&A and operate efficiently; 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
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		%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211123005641/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 Q4 earnings results for 2021?

Jack in the Box reported Q4 earnings with a diluted EPS of $1.80, up 9.8% year-over-year.

How did same-store sales perform in Q4 2021 for Jack in the Box?

Same-store sales growth was flat at 0.1% in Q4 2021.

What is Jack in the Box's outlook for FY 2022?

Management provided guidance for FY 2022, expecting systemwide sales growth of 3-5% and restaurant level margin of 20-21%.

How many franchises does Jack in the Box plan to open in 2022 and 2023?

Jack in the Box signed development agreements for 47 future restaurants in 2021, with plans to fund up to 5 in 2022 and 7-15 in 2023.