Jack in the Box Inc. Reports Second Quarter 2024 Earnings

Rhea-AI Summary

Jack in the Box (NASDAQ: JACK) reported Q2 2024 earnings with mixed results. Same-store sales for Jack in the Box decreased by 2.5%, and for Del Taco by 1.4%. Systemwide sales fell by 1.6% for Jack in the Box and 1.3% for Del Taco. However, diluted EPS was $1.26, and operating EPS was $1.46. Jack in the Box's restaurant-level margin improved by 2.2% to 23.6%, while Del Taco's decreased slightly to 16.8%.

Jack in the Box signed franchise agreements to enter Tallahassee and expand in Orlando, adding 31 new commitments in Florida. Del Taco also signed deals for new restaurants in Greensboro and Atlanta. New-market Jack in the Box restaurants opened in the last 12 months are averaging $100k in weekly AUV. Total revenues decreased by 7.7% to $365.3 million, primarily due to Del Taco refranchising. The company repurchased 0.2 million shares worth $15 million and declared a $0.44 per-share dividend.

Positive

• Diluted EPS of $1.26 and operating EPS of $1.46.
• Jack in the Box's restaurant-level margin increased by 2.2% to 23.6%.
• Jack in the Box signed franchise agreements totaling 31 new commitments in Florida.
• Three new restaurants opened for both Jack in the Box and Del Taco.
• Jack in the Box new-market restaurants averaging $100k in weekly AUV.
• Repurchased 0.2 million shares at a cost of $15 million.
• Declared a $0.44 per-share dividend.

Negative

• Same-store sales for Jack in the Box decreased by 2.5%.
• Same-store sales for Del Taco decreased by 1.4%.
• Systemwide sales for Jack in the Box decreased by 1.6%.
• Systemwide sales for Del Taco decreased by 1.3%.
• Total revenues decreased by 7.7% to $365.3 million.
• Del Taco's restaurant-level margin decreased to 16.8%.
• Lower adjusted EBITDA of $75.7 million, compared to $80.6 million last year.
• Updated FY 2024 guidance with reduced ranges for Adjusted EBITDA and Operating EPS.

Insights

Financial Analyst

Earnings Report Analysis: The earnings report for Jack in the Box Inc. indicates a notable decline in same-store sales for both Jack in the Box and Del Taco, down 2.5% and 1.4% respectively. This decline is primarily attributed to decreased transactions, though partially offset by an increase in average check size. Despite the drop in sales, Jack in the Box saw an improvement in restaurant-level margin at 23.6%, an increase of 2.2% from the previous year. This is indicative of effective cost management and possibly favorable commodity prices.

Systemwide Sales and Revenue: A 7.7% decrease in total revenues, largely due to Del Taco's refranchising efforts, is another significant point. Systemwide sales for both brands also showed a decline, hinting at a broader issue in consumer behavior or market conditions. For potential investors, this signals caution as the company's top-line performance is under pressure.

Operating and Net Income: Diluted EPS stands at $1.26 while Operating EPS is slightly higher at $1.46. The net earnings of $25.0 million reflect a minor drop compared to the previous year's $26.5 million. Adjusted EBITDA, a critical measure of operational efficiency, declined to $75.7 million from $80.6 million last year.

Investment Activity: The company repurchased $15.0 million worth of shares, which should be viewed positively as it indicates confidence in the company's long-term prospects. The remaining $210 million under the buyback program is also substantial and worth noting.

Overall, while the management appears confident in their long-term strategy, the short-term indicators suggest a cautious outlook, particularly with the downgrades in sales growth projections. Investors should watch for how the company navigates these headwinds in the upcoming quarters.

Market Research Analyst

Consumer Behavior Shifts: The decline in same-store sales highlights a shift in consumer behavior, likely driven by macroeconomic factors such as inflation and the implementation of California's minimum wage legislation. This has particularly affected low-income consumers, who are likely significant patrons of both Jack in the Box and Del Taco.

Geographic Expansion and Franchising: The signing of franchise development agreements to enter new markets like Tallahassee and Greensboro is a positive step, indicating potential future growth. However, the success of these new ventures will depend on how well the company can adapt to local market conditions and consumer preferences.

Marketing and Product Launches: The delay in the Smashed Jack launch impacted top-line performance, but its subsequent introduction appears to have mitigated some of the losses. The company's plan to regain sales traction through a strong marketing calendar and expanded value menu should be monitored closely, as effective execution in these areas is important for reversing the sales decline.

In summary, while the short-term outlook is mixed, the company's efforts in market expansion and product innovation could yield positive results in the long term, provided they are effectively managed.

Jack in the Box same-store sales of (2.5%); Del Taco same-store sales of (1.4%)

Jack in the Box systemwide sales of (1.6%); Del Taco systemwide sales of (1.3%)

Diluted EPS of $1.26; Operating EPS of $1.46

Jack in the Box restaurant level margin of 23.6%, up 2.2% from prior year

Jack in the Box signed franchise development agreements in Q2 to enter Tallahassee and expand in Orlando; now has 31 restaurant commitments in Florida

Del Taco signed franchisee development agreements in Q2 for 3 restaurants to enter Greensboro, NC, and 10 additional restaurants in Atlanta

Jack in the Box new-market restaurants opened in the past 12 months, which now includes Mexico, averaging almost $100k weekly AUV

SAN DIEGO--(BUSINESS WIRE)-- Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco brands in the second quarter, ended April 14, 2024.

"I am proud of the execution by our Jack and Del Taco teams, delivering better-than-expected earnings and margin performance while navigating through increasing macro headwinds, pressure on low-income consumers and the implementation of California's minimum wage legislation," said Darin Harris, Jack in the Box Chief Executive Officer. "Top-line performance was impacted by the shift in consumer behavior and an unexpected delay in our Smashed Jack launch, but sales have improved since its introduction in mid-March. We have a clear plan to regain same store sales traction through a strong marketing calendar, new LTO's, and an expanded value menu throughout the remainder of 2024. I remain confident in our long-term strategy to drive sales, margin expansion, and new unit and market openings — as do our franchisees, who continue to grow our development pipeline and invest in the expansion of our brands."

Jack in the Box Performance

Same-store sales decreased 2.5% in the second quarter, comprised of franchise same-store sales decline of 2.6% and company-owned same-store sales decline of 0.6%. Both franchise and company-owned restaurants experienced declines in transactions, partially offset by a lift in average check. Systemwide sales for the second quarter decreased 1.6%.

Restaurant-Level Margin⁽¹⁾, a non-GAAP measure, was $23.3 million, or 23.6%, up from $20.4 million, or 21.4%, a year ago driven primarily by additional company-owned restaurants and commodity deflation.

Franchise-Level Margin⁽¹⁾, a non-GAAP measure, was $71.7 million, or 40.4%, a decrease from $73.9 million, or 41.2%, a year ago. The decrease was mainly driven by the decline in sales for the quarter and the resulting decrease in rent and royalty revenue.

Jack in the Box net restaurant count increased in the second quarter, with three restaurant openings and no restaurant closures. As of the second quarter, and since the launch of the development program in mid-2021, the company currently has 93 signed agreements for a total of 409 restaurants. Under these agreements, 44 restaurants have opened, leaving 365 remaining for future development.

Jack in the Box Same-Store Sales:		12 Weeks Ended
		April 14, 2024			April 16, 2023
Company		(0.6	%)		10.8	%
Franchise		(2.6	%)		9.4	%
System		(2.5	%)		9.5	%

Jack in the Box Restaurant Counts:

		2024									2023
		Company			Franchise			Total			Company		Franchise			Total
Restaurant count at Q1'24		144			2,048			2,192			140		2,046			2,186
New		—			3			3			—		2			2
Closed		—			—			—			—		(1	)		(1	)
Restaurant count at end of Q2'24		144			2,051			2,195			140		2,047			2,187
Q2 Net Restaurant Increase		—			3			3
YTD Net Restaurant Increase		1.4	%		0.3	%		0.4	%

Del Taco Performance

Same-store sales decreased 1.4% in the second quarter, comprised of franchise same-store sales decline of 1.1% and company-operated same-store sales decline of 1.8%. Sales performance included declines in transactions, partially offset by a lift in average check. Systemwide sales for the fiscal second quarter decreased 1.3%.

Restaurant-Level Margin⁽¹⁾, a non-GAAP measure, was $11.4 million, or 16.8%, down from $18.5 million, or 17.3%, a year ago. The decrease in margin dollars was due mainly to refranchising restaurants, while the decrease in margin percentage was due to increased costs for labor and utilities, partially offset by price increases and commodity deflation.

Franchise-Level Margin⁽¹⁾, a non-GAAP measure, was $6.1 million, or 28.9%, compared to $5.1 million, or 37.3%, a year ago. The decrease in margin percentage was driven by the impact of a higher franchise mix and the impact of the pass-thru rent and marketing fees.

Del Taco expanded the restaurant count in the second quarter, with three restaurant openings and no restaurant closings.

Del Taco Same-Store Sales:		12 Weeks Ended
		April 14, 2024			April 16, 2023
Company		(1.8	%)		3.5	%
Franchise		(1.1	%)		2.8	%
System		(1.4	%)		3.2	%

Del Taco Restaurant Counts:

		2024									2023
		Company			Franchise			Total			Company		Franchise		Total
Restaurant count at Q4'23		179			413			592			273		319		592
New		—			3			3			—		3		3
Refranchised		(13	)		13			—			—		—		—
Restaurant count at end of Q2		166			429			595			273		322		595
Q2 Net Restaurant Increase/(Decrease)		(13	)		16			3
YTD Net Restaurant Increase/(Decrease)		(2.9	)%		1.9	%		0.5	%

Company-Wide Performance

Second quarter diluted earnings per share was $1.26. Operating Earnings Per Share⁽²⁾, a non-GAAP measure, was $1.46 in the second quarter of fiscal 2024 compared with $1.47 in the prior year quarter.

Total revenues decreased 7.7% to $365.3 million, compared to $395.7 million in the prior year quarter. The lower revenue is primarily the result of the Del Taco refranchising efforts. Net earnings was $25.0 million for the second quarter of fiscal 2024, compared with $26.5 million for the second quarter of fiscal 2023. Adjusted EBITDA⁽³⁾, a non-GAAP measure, was $75.7 million in the second quarter of fiscal 2024 compared with $80.6 million for the prior year quarter.

Company-wide SG&A expense for the second quarter was $37.5 million, a decrease of $1.9 million compared to the prior year quarter. The decrease was due primarily to lower incentive-based compensation and lower advertising due to fewer company-owned restaurants, partially offset by higher share-based compensation, legal and technology costs. When excluding net COLI gains, G&A was 2.5% of systemwide sales.

The income tax provisions reflect an effective tax rate of 26.5% in the second quarter of 2024, as compared to 34.8% in the second quarter of fiscal year 2023. The Non-GAAP Operating EPS tax rate for the second quarter of 2024 was 27.1%.

(1) 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."
(2) Operating Earnings Per Share represents the diluted earnings per share on a GAAP basis, excluding certain adjustments. See "Reconciliation of Non-GAAP Measurements to GAAP Results." Operating earnings per share may not add due to rounding.
(3) Adjusted EBITDA represents net earnings on a GAAP basis excluding certain adjustments. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

Capital Allocation

The Company repurchased 0.2 million shares of our common stock for an aggregate cost of $15.0 million in the second quarter. As of the end of the second quarter, there was $210.0 million remaining under the Board-authorized stock buyback program.

On May 10, 2024, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on June 25, 2024, to shareholders of record as of the close of business on June 6, 2024. Future dividends will be subject to approval by the Board of Directors.

Guidance & Outlook Updates

The following guidance and underlying assumptions reflect the company’s current expectations for the fiscal year ending September 29, 2024. Any guidance measures not listed below remain the same as provided on November 21, 2023.

FY 2024 Company-wide Guidance

• Adjusted EBITDA of $325-$330 million (previously $325-$335 million)
• Operating EPS of $6.25-$6.40 (previously $6.25-$6.50)
• Depreciation & Amortization of $60-$62 million (previously $61-$63 million)

FY 2024 Jack in the Box Segment Guidance

• Same Store Sales growth of Flat-to-Low Single Digits (previously Low-to-Mid Single Digits)
• Company-Owned Restaurant Level Margin of 22-23% (previously 21-23%)

FY 2024 Del Taco Segment Guidance

• Same Store Sales growth of Flat-to-Low Single Digits (previously Low-to-Mid Single Digits)
• Franchise Level Margin of 27-29% (previously 29-31%)

Conference Call

The Company will host a conference call for analysts and investors on Tuesday, May 14, 2024, beginning at 8:00 a.m. PT (11:00 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 (800) 715-9871 and using ID 4115265.

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^®, one of the nation's largest hamburger chains with approximately 2,200 restaurants across 22 states, and Del Taco^®, the second largest Mexican-American QSR chain by units in the U.S. with approximately 600 restaurants across 16 states. For more information on both brands, including franchising opportunities, visit www.jackinthebox.com and www.deltaco.com.

Category: Earnings

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 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, 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)
		12 Weeks Ended							28 Weeks Ended
		April 14, 2024			April 16, 2023				April 14, 2024			April 16, 2023
Revenues:
Company restaurant sales		$	167,098		$	202,604			$	391,138		$	472,795
Franchise rental revenues			85,826			83,520				199,022			192,350
Franchise royalties and other			55,084			53,982				128,414			130,372
Franchise contributions for advertising and other services			57,339			55,638				134,271			127,323
			365,347			395,744				852,845			922,840
Operating costs and expenses, net:
Food and packaging			45,914			59,310				110,046			141,243
Payroll and employee benefits			54,054			65,035				127,108			153,676
Occupancy and other			32,355			39,275				74,408			90,646
Franchise occupancy expenses			57,091			52,649				129,715			119,873
Franchise support and other costs			3,860			3,260				9,054			5,137
Franchise advertising and other services expenses			59,523			58,143				139,757			132,713
Selling, general and administrative expenses			37,520			39,405				83,885			89,547
Depreciation and amortization			13,906			14,598				32,379			34,000
Pre-opening costs			602			154				1,067			485
Other operating expenses (income), net			5,267			2,980				10,437			(2,521	)
Losses (gains) on the sale of company-operated restaurants			1,065			(704	)			1,319			(4,529	)
			311,157			334,105				719,175			760,270
Earnings from operations			54,190			61,639				133,670			162,570
Other pension and post-retirement expenses, net			1,579			1,607				3,685			3,751
Interest expense, net			18,603			19,357				43,089			45,505
Earnings before income taxes			34,008			40,675				86,896			113,314
Income taxes			9,028			14,168				23,233			33,553
Net earnings		$	24,980		$	26,507			$	63,663		$	79,761
Net earnings per share:
Basic		$	1.27		$	1.28			$	3.22		$	3.83
Diluted		$	1.26		$	1.27			$	3.19		$	3.81
Weighted-average shares outstanding:
Basic			19,653			20,744				19,790			20,845
Diluted			19,785			20,864				19,949			20,946
Dividends declared per common share		$	0.44		$	0.44			$	0.88		$	0.88

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
		April 14, 2024				October 1, 2023
ASSETS
Current assets:
Cash		$	20,197			$	157,653
Restricted cash			28,780				28,254
Accounts and other receivables, net			102,664				99,678
Inventories			4,067				3,896
Prepaid expenses			8,020				16,911
Current assets held for sale			24,970				13,925
Other current assets			5,609				5,667
Total current assets			194,307				325,984
Property and equipment:
Property and equipment, at cost			1,267,469				1,258,589
Less accumulated depreciation and amortization			(850,333	)			(846,559	)
Property and equipment, net			417,136				412,030
Other assets:
Operating lease right-of-use assets			1,414,559				1,397,555
Intangible assets, net			11,254				11,330
Trademarks			283,500				283,500
Goodwill			329,583				329,986
Other assets, net			248,636				240,707
Total other assets			2,287,532				2,263,078
		$	2,898,975			$	3,001,092
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt		$	30,049			$	29,964
Current operating lease liabilities			158,326				142,518
Accounts payable			82,336				84,960
Accrued liabilities			168,973				302,178
Total current liabilities			439,684				559,620
Long-term liabilities:
Long-term debt, net of current maturities			1,712,360				1,724,933
Long-term operating lease liabilities, net of current portion			1,279,443				1,265,514
Deferred tax liabilities			26,808				26,229
Other long-term liabilities			143,301				143,123
Total long-term liabilities			3,161,912				3,159,799
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, 82,776,086 and 82,645,814 issued, respectively			828				826
Capital in excess of par value			528,887				520,076
Retained earnings			1,983,944				1,937,598
Accumulated other comprehensive loss			(50,944	)			(51,790	)
Treasury stock, at cost, 63,422,351 and 62,910,964 shares, respectively			(3,165,336	)			(3,125,037	)
Total stockholders’ deficit			(702,621	)			(718,327	)
		$	2,898,975			$	3,001,092

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
		Year-to-date
		April 14, 2024				April 16, 2023
Cash flows from operating activities:
Net earnings		$	63,663			$	79,761
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization			32,379				34,000
Amortization of franchise tenant improvement allowances and incentives			2,538				2,237
Deferred finance cost amortization			2,610				2,787
Excess tax (benefits) deficiency from share-based compensation arrangements			(49	)			142
Deferred income taxes			(2,326	)			1,496
Share-based compensation expense			8,661				5,932
Pension and post-retirement expense			3,685				3,751
Gains on cash surrender value of company-owned life insurance			(7,949	)			(8,007	)
Losses (gains) on the sale of company-operated restaurants			1,319				(4,529	)
Gains on acquisition of restaurants			(2,357	)			—
Losses (gains) on the disposition of property and equipment, net			1,148				(8,615	)
Impairment charges and other			1,580				549
Changes in assets and liabilities, excluding acquisitions:
Accounts and other receivables			815				(1,456	)
Inventories			(170	)			(23	)
Prepaid expenses and other current assets			9,299				6,344
Operating lease right-of-use assets and lease liabilities			9,392				8,561
Accounts payable			(396	)			(15,994	)
Accrued liabilities			(123,532	)			(7,043	)
Pension and post-retirement contributions			(3,288	)			(3,234	)
Franchise tenant improvement allowance and incentive disbursements			(1,460	)			(2,052	)
Other			(1,583	)			(499	)
Cash flows (used in) provided by operating activities			(6,021	)			94,108
Cash flows from investing activities:
Purchases of property and equipment			(61,071	)			(37,196	)
Proceeds from the sale of property and equipment			1,500				23,371
Proceeds from the sale and leaseback of assets			1,728				3,673
Proceeds from the sale of company-operated restaurants			1,989				18,417
Other			—				1,465
Cash flows (used in) provided by investing activities			(55,854	)			9,730
Cash flows from financing activities:
Repayments of borrowings on revolving credit facilities			—				(50,000	)
Principal repayments on debt			(14,818	)			(15,088	)
Dividends paid on common stock			(17,167	)			(18,218	)
Proceeds from issuance of common stock			2				—
Repurchases of common stock			(40,000	)			(32,621	)
Payroll tax payments for equity award issuances			(3,072	)			(1,115	)
Cash flows used in financing activities			(75,055	)			(117,042	)
Net decrease in cash and restricted cash			(136,930	)			(13,204	)
Cash and restricted cash at beginning of period			185,907				136,040
Cash and restricted cash at end of period		$	48,977			$	122,836

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)
		12 Weeks Ended						28 Weeks Ended
		April 14, 2024			April 16, 2023			April 14, 2024			April 16, 2023
Revenues:
Company restaurant sales		45.7	%		51.2	%		45.9	%		51.2	%
Franchise rental revenues		23.5	%		21.1	%		23.3	%		20.8	%
Franchise royalties and other		15.1	%		13.6	%		15.1	%		14.1	%
Franchise contributions for advertising and other services		15.7	%		14.1	%		15.7	%		13.8	%
		100.0	%		100.0	%		100.0	%		100.0	%
Operating costs and expenses, net:
Food and packaging (1)		27.5	%		29.3	%		28.1	%		29.9	%
Payroll and employee benefits (1)		32.3	%		32.1	%		32.5	%		32.5	%
Occupancy and other (1)		19.4	%		19.4	%		19.0	%		19.2	%
Franchise occupancy expenses (2)		66.5	%		63.0	%		65.2	%		62.3	%
Franchise support and other costs (3)		7.0	%		6.0	%		7.1	%		3.9	%
Franchise advertising and other services expenses (4)		103.8	%		104.5	%		104.1	%		104.2	%
Selling, general and administrative expenses		10.3	%		10.0	%		9.8	%		9.7	%
Depreciation and amortization		3.8	%		3.7	%		3.8	%		3.7	%
Pre-opening costs		0.2	%		0.0	%		0.1	%		0.1	%
Other operating expenses (income), net		1.4	%		0.8	%		1.2	%		(0.3	)%
Losses (gains) on the sale of company-operated restaurants		0.3	%		(0.2	)%		0.2	%		(0.5	)%
Earnings from operations		14.8	%		15.6	%		15.7	%		17.6	%
Income tax rate (5)		26.5	%		34.8	%		26.7	%		29.6	%

____________________________
(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):		12 Weeks Ended						28 Weeks Ended
		April 14, 2024			April 16, 2023			April 14, 2024			April 16, 2023
Company-operated restaurant sales		$	98,927		$	95,489		$	230,984		$	221,631
Franchised restaurant sales (1)			911,265			931,257			2,138,015			2,140,239
Systemwide sales (1)		$	1,010,192		$	1,026,746		$	2,368,999		$	2,361,870

Del Taco systemwide sales (in thousands):		12 Weeks Ended						28 Weeks Ended
		April 14, 2024			April 16, 2023			April 14, 2024			April 16, 2023
Company-operated restaurant sales		$	68,171		$	107,115		$	160,154		$	251,164
Franchised restaurant sales (1)			154,854			118,896			353,330			264,994
Systemwide sales (1)		$	223,025		$	226,011		$	513,484		$	516,158

____________________________
(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.

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: Adjusted Net Income, 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 strategic initiatives, net COLI gains, pension and post-retirement benefit costs, losses (gains) on the sale of company-operated restaurants, excess tax (benefits) shortfall from share-based compensation arrangements, and the tax-related impacts of the above adjustments.

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 Adjusted Net Income to the most directly comparable GAAP measure of net income. Also below is a reconciliation of Non-GAAP Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings per share:

		12 Weeks Ended
		April 14, 2024				April 16, 2023
Net income, as reported		$	24,980			$	26,507
Acquisition, integration, and strategic initiatives (1)			4,268				1,259
Net COLI gains (2)			(1,232	)			(844	)
Pension and post-retirement benefit costs (3)			1,579				1,607
Losses (gains) on the sale of company-operated restaurants (4)			1,065				(704	)
Excess tax (benefits) shortfall from share-based compensation arrangements			(38	)			—
Tax impact of adjustments (5)			(1,700	)			2,940
Non-GAAP Adjusted Net Income		$	28,922			$	30,765
Weighted-average shares outstanding - diluted			19,785				20,864
Diluted earnings per share – GAAP		$	1.26			$	1.27
Acquisition, integration, and strategic initiatives (1)			0.22				0.06
Net COLI gains (2)			(0.06	)			(0.04	)
Pension and post-retirement benefit costs (3)			0.08				0.08
Losses (gains) on the sale of company-operated restaurants			0.05				(0.03	)
Excess tax (benefits) shortfall from share-based compensation arrangements			0.00				—
Tax impact of adjustments (4)			(0.09	)			0.13
Operating Earnings Per Share – non-GAAP (5)		$	1.46			$	1.47

____________________
(1)		Acquisition, integration and strategic initiatives reflect charges that are not part of our ongoing operations, including consulting fees for discrete project-based strategic initiatives that are not expected to recur in the foreseeable future.
(2)		Net COLI gains reflect market-based adjustments on the company-owned life insurance policies, net of changes in our non-qualified deferred compensation obligation supported by these policies.
(3)		Pension and post-retirement benefit costs relating to our two legacy defined benefit pension plans, as well as our two legacy post-retirement plans.
(4)		Tax impacts for the quarter calculated based on the non-GAAP Operating EPS tax rate of 27.1% in the current quarter and 26.7% in the prior year quarter.
(5)		Operating Earnings Per Share may not add due to rounding.

Adjusted EBITDA

Adjusted EBITDA represents net earnings on a GAAP basis excluding income taxes, interest expense, net, losses (gains) on the sale of company-operated restaurants, other operating expenses (income), net, depreciation and amortization, amortization of cloud computing costs, amortization of favorable and unfavorable leases and subleases, net, amortization of franchise tenant improvement allowances and other, net COLI gains, and pension and post-retirement benefit costs.

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):

		12 Weeks Ended
		April 14, 2024				April 16, 2023
Net earnings - GAAP		$	24,980			$	26,507
Income taxes			9,028				14,168
Interest expense, net			18,603				19,357
Losses (gains) on the sale of company-operated restaurants			1,065				(704	)
Other operating expenses (income), net (1)			5,267				2,980
Depreciation and amortization			13,906				14,598
Amortization of cloud-computing costs (2)			1,274				1,094
Amortization of favorable and unfavorable leases and subleases, net			107				826
Amortization of franchise tenant improvement allowances and other			1,127				1,022
Net COLI gains (3)			(1,232	)			(844	)
Pension and post-retirement benefit costs (4)			1,579				1,607
Adjusted EBITDA – non-GAAP		$	75,704			$	80,611

(1)		Other operating expense (income), net includes: acquisition, integration and strategic initiatives; costs of closed restaurants; operating restaurant impairment charges; accelerated depreciation and gains/losses on disposition of property and equipment, net.
(2)		Amortization of cloud computing costs includes the amounts for the non-cash amortization of capitalized implementation costs related to cloud-based software arrangements that are included within selling, general and administrative expenses.
(3)		Net COLI gains reflect market-based adjustments on the company-owned life insurance policies, net of changes in our non-qualified deferred compensation obligation supported by these policies.
(4)		Pension and post-retirement benefit costs relating to our two legacy defined benefit pension plans, as well as the two legacy post-retirement plans.

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 selling, general, and administrative expenses. Certain other costs, such as depreciation and amortization, other operating expenses (income), net, losses (gains) on the sale of company-operated restaurants, and other costs that are considered normal operating costs are excluded as they are considered corporate-level shared service 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):

		12 weeks ended April 14, 2024
		Jack in the Box				Del Taco				Other (1)				Total
Earnings from operations - GAAP		$	84,980			$	9,039			$	(39,829	)		$	54,190
Franchise rental revenues			(79,618	)			(6,208	)			—				(85,826	)
Franchise royalties and other			(47,537	)			(7,547	)			—				(55,084	)
Franchise contributions for advertising and other services			(50,179	)			(7,160	)			—				(57,339	)
Franchise occupancy expenses			50,849				6,242				—				57,091
Franchise support and other costs			2,757				1,103				—				3,860
Franchise advertising and other services expenses			52,003				7,520				—				59,523
Selling, general and administrative expenses			9,752				7,112				20,656				37,520
Depreciation and amortization			—				—				13,906				13,906
Pre-opening costs			322				280				—				602
Other operating expenses (income), net			—				—				5,267				5,267
Losses (gains) on the sale of company-operated restaurants			—				1,065				—				1,065
Restaurant-Level Margin - Non-GAAP		$	23,329			$	11,446			$	—			$	34,775
Company restaurant sales		$	98,927			$	68,171			$	—			$	167,098
Restaurant-Level Margin % - Non-GAAP			23.6	%			16.8	%			N/A				20.8	%

		12 weeks ended April 16, 2023
		Jack in the Box				Del Taco				Other (1)				Total
Earnings from operations - GAAP		$	86,231			$	12,286			$	(36,878	)		$	61,639
Franchise rental revenues			(80,910	)			(2,610	)			—				(83,520	)
Franchise royalties and other			(48,071	)			(5,911	)			—				(53,982	)
Franchise contributions for advertising and other services			(50,361	)			(5,277	)			—				(55,638	)
Franchise occupancy expenses			50,007				2,642				—				52,649
Franchise support and other costs			2,735				525				—				3,260
Franchise advertising and other services expenses			52,660				5,483				—				58,143
Selling, general and administrative expenses			8,959				11,146				19,300				39,405
Depreciation and amortization			—				—				14,598				14,598
Pre-opening costs			102				52				—				154
Other operating expenses (income), net			—				—				2,980				2,980
Losses (gains) on the sale of company-operated restaurants			(904	)			200				—				(704	)
Restaurant-Level Margin - Non-GAAP		$	20,448			$	18,536			$	—			$	38,984
Company restaurant sales		$	95,489			$	107,115			$	—			$	202,604
Restaurant-Level Margin % - Non-GAAP			21.4	%			17.3	%			N/A				19.2	%

(1) The "Other" category includes shared services costs and other unallocated costs

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 selling, general, and administrative expenses. Certain other costs, such as depreciation and amortization, other operating expenses (income), net, losses (gains) on the sale of company-operated restaurants, and other costs that are considered normal operating costs are excluded as they are considered corporate-level shared service 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):

		12 weeks ended April 14, 2024
		Jack in the Box				Del Taco				Other (1)				Total
Earnings from operations - GAAP		$	84,980			$	9,039			$	(39,829	)		$	54,190
Company restaurant sales			(98,927	)			(68,171	)			—				(167,098	)
Food and packaging			28,486				17,428				—				45,914
Payroll and employee benefits			30,294				23,760				—				54,054
Occupancy and other			16,818				15,537				—				32,355
Selling, general and administrative expenses			9,752				7,112				20,656				37,520
Depreciation and amortization			—				—				13,906				13,906
Pre-opening costs			322				280				—				602
Other operating expenses (income), net			—				—				5,267				5,267
Losses (gains) on the sale of company-operated restaurants			—				1,065				—				1,065
Franchise-Level Margin - Non-GAAP		$	71,725			$	6,050			$	—			$	77,775
Franchise rental revenues		$	79,618			$	6,208			$	—			$	85,826
Franchise royalties and other			47,537				7,547				—				55,084
Franchise contributions for advertising and other services			50,179				7,160				—				57,339
Total franchise revenues		$	177,334			$	20,915			$	—			$	198,249
Franchise-Level Margin % - Non-GAAP			40.4	%			28.9	%			N/A				39.2	%

		12 weeks ended April 16, 2023
		Jack in the Box				Del Taco				Other (1)				Total
Earnings from operations - GAAP		$	86,231			$	12,286			$	(36,878	)		$	61,639
Company restaurant sales			(95,489	)			(107,115	)			—				(202,604	)
Food and packaging			29,841				29,468				—				59,309
Payroll and employee benefits			29,200				35,835				—				65,035
Occupancy and other			15,999				23,276				—				39,275
Selling, general and administrative expenses			8,959				11,146				19,300				39,405
Depreciation and amortization			—				—				14,598				14,598
Pre-opening costs			102				52				—				154
Other operating expenses (income), net			—				—				2,980				2,980
Losses (gains) on the sale of company-operated restaurants			(904	)			200				—				(704	)
Franchise-Level Margin - Non-GAAP		$	73,939			$	5,148			$	—			$	79,087
Franchise rental revenues		$	80,910			$	2,610			$	—			$	83,520
Franchise royalties and other			48,071				5,911				—				53,982
Franchise contributions for advertising and other services			50,361				5,277				—				55,638
Total franchise revenues		$	179,342			$	13,798			$	—			$	193,140
Franchise-Level Margin % - Non-GAAP			41.2	%			37.3	%			N/A				40.9	%

(1) The "Other" category includes shared services costs and other unallocated costs

View source version on businesswire.com: https://www.businesswire.com/news/home/20240514302540/en/

Chris Brandon

Vice President, Investor Relations

chris.brandon@jackinthebox.com

619.902.0269

Source: Jack in the Box Inc.

FAQ

What were the Q2 2024 earnings for Jack in the Box?

Jack in the Box reported diluted EPS of $1.26 and operating EPS of $1.46 for Q2 2024.

What was the systemwide sales change for Jack in the Box in Q2 2024?

Systemwide sales for Jack in the Box decreased by 1.6% in Q2 2024.

How did Del Taco perform in Q2 2024?

Del Taco's same-store sales decreased by 1.4%, and its systemwide sales fell by 1.3% in Q2 2024.

What is the new franchise development for Jack in the Box?

Jack in the Box signed franchise agreements to enter Tallahassee and expand in Orlando, adding 31 new commitments in Florida.

How much revenue did Jack in the Box generate in Q2 2024?

Jack in the Box generated $365.3 million in revenue for Q2 2024, a 7.7% decrease from the previous year.

What is the restaurant-level margin for Jack in the Box in Q2 2024?

The restaurant-level margin for Jack in the Box was 23.6%, up by 2.2% from the previous year.

Did Jack in the Box repurchase any shares in Q2 2024?

Yes, Jack in the Box repurchased 0.2 million shares at a cost of $15 million in Q2 2024.

What is the dividend declared by Jack in the Box for Q2 2024?

Jack in the Box declared a cash dividend of $0.44 per share for Q2 2024.

What is the updated FY 2024 guidance for Jack in the Box?

The updated FY 2024 guidance includes Adjusted EBITDA of $325-$330 million and Operating EPS of $6.25-$6.40.