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Jack In The Box Inc. Reports Fourth Quarter Fy 2015 Earnings; Issues Guidance For Fy 2016; Declares Quarterly Cash Dividend

The following excerpt is from the company's SEC filing.

SAN DIEGO--(BUSINESS WIRE)--November 17, 2015--Jack in the Box Inc. (NASDAQ: JACK) today reported earnings from continuing operations of $23.8 million, or $0.65 per diluted share, for the fourth quarter ended September 27, 2015, compared with earnings from continuing operations of $17.4 million, or $0.44 per diluted share, for the fourth quarter of fiscal 2014.

Fiscal 2015 earnings from continuing operations totaled $112.6 million, or $2.95 per diluted share, compared with $94.8 million, or $2.26 per diluted share in fiscal 2014.

Operating earnings per share, a non-GAAP measure which the company defines as diluted earnings per share from continuing operations on a GAAP basis excluding restructuring charges and gains or losses from refranchising, were $0.62 in the fourth quarter of fiscal 2015 compared with $0.54 in the prior year quarter. For fiscal year 2015, operating earnings per share were $3.00 compared with $2.45 last year.

A reconciliation of non-GAAP measurements to GAAP results is provided below, with additional information included in the attachment to this release. Figures may not add due to rounding.

Quarter Ended

Fiscal Year Ended

Sept. 27,

2015

Sept. 28,

2014

Diluted earnings per share from continuing operations – GAAP

0.65

0.44

2.95

2.26

Restructuring charges

0.13

(Gains)/losses from refranchising

(0.02

0.10

0.05

Operating earnings per share – Non-GAAP

0.62

0.54

3.00

2.45

Lenny Comma, chairman and chief executive officer, said, “We’re pleased with our fourth quarter performance, which culminated in a 15 percent increase in operating earnings per share resulting from solid same-store sales growth and margin expansion at both Jack in the Box

and Qdoba

. This performance capped another terrific year, with operating earnings per share up approximately 22 percent, the fourth consecutive year of growth in excess of 20 percent.

“We continued to use our growing free cash flow to return cash to shareholders with a 9 percent reduction in our diluted share count for the fiscal year. Over the last five years, we have repurchased $1 billion in stock. The additional $200 million share repurchase authorization we announced in September coupled with the 50 percent increase in our dividend announced in May underscores the confidence both the management team and our Board of Directors have in our business model and growth plans.”

Increase in same-store sales:

Quarter Ended

Sept. 28, 2014

Fiscal Year Ended

Jack in the Box:

Company

4.1%

3.1%

5.1%

2.0%

Franchise

6.9%

7.0%

System

6.2%

6.5%

Qdoba:

6.1%

7.1%

8.3%

5.7%

7.2%

8.4%

10.4%

6.3%

6.6%

7.7%

9.3%

6.0%

“Jack in the Box system same-store sales increased 6.2 percent for the quarter, and company same-store sales increased 4.1 percent. Transactions grew approximately one percent for the system, while transactions at company restaurants declined approximately one percent as a result of a reduction in discounting as compared to last year. Sales were positive across all dayparts, with breakfast, dinner and late night performing similarly and generating the strongest growth,” Comma said.

Jack in the Box system same-store sales growth for the quarter exceeded that of the QSR sandwich segment by 3.5 percentage points for the comparable period, according to The NPD Group’s SalesTrack® Weekly for the 12-week time period ended September 27, 2015. Included in this segment are 16 of the top QSR sandwich and burger chains in the country.

“Qdoba same-store sales increased 6.6 percent system-wide and 6.1 percent for company restaurants in the fourth quarter, as the simplified menu pricing structure continued to drive average check growth. Our company performance also benefited from another quarter of double-digit growth in catering sales which was partially offset by a 0.3 percent decline in transactions,” Comma said.

Consolidated restaurant operating margin increased by 200 basis points to 20.0 percent of sales in the fourth quarter of 2015, compared with 18.0 percent of sales in the year-ago quarter. Restaurant operating margin for Jack in the Box company restaurants increased 250 basis points to 20.3 percent of sales. The improvement was due primarily to sales leverage, lower food and packaging costs, and the benefit of refranchising. The decrease in food and packaging costs as a percentage of sales resulted from the benefit of price increases, favorable product mix changes and lower discounting, as well as commodity deflation of approximately 0.8 percent in the quarter. Restaurant operating margin for Qdoba company restaurants increased 100 basis points to 19.5 percent of sales, due primarily to sales leverage, including the benefit of the simplified pricing structure introduced in October 2014, and commodity deflation of approximately 1.8 percent, which were partially offset by an increase in labor staffing.

Total franchise costs as a percentage of total franchise revenues improved to 48.6 percent in the fourth quarter from 50.5 percent in the prior year quarter. The improvement was due primarily to higher royalty revenue for both brands and higher rental income from Jack in the Box franchised restaurants resulting from increases in franchise average unit volumes.

SG&A expense for the fourth quarter increased by $3.0 million and was 15.4 percent of revenues as compared to 15.0 percent in the prior year quarter. The increase reflects a $1.2 million increase in pension expense and higher pre-opening costs of $0.9 million resulting from a greater number of Qdoba openings and restaurants under construction in the fourth quarter. Mark-to-market adjustments on investments supporting the company’s non-qualified retirement plans negatively impacted SG&A by $1.1 million in the fourth quarter of 2015 as compared to a negative impact of $1.5 million in the fourth quarter of 2014, resulting in a year-over-year decrease in SG&A of $0.4 million.

Impairment and other charges, net, increased by $1.4 million in the fourth quarter due primarily to charges relating to the replacement of beverage equipment.

Gains on the sale of company-operated restaurants were $1.2 million in the fourth quarter, or approximately $0.02 per diluted share, which resulted from additional proceeds received as a result of the extension of underlying franchise and lease agreements for previously refranchised Jack in the Box restaurants. This compares to a loss of $5.8 million or approximately $0.10 per diluted share in the fourth quarter of 2014 which related primarily to the sale of Jack in the Box restaurants in the Southeast.

Capital Allocation

The company repurchased approximately 797,000 shares of its common stock in the fourth quarter of 2015 at an average price of $82.22 per share for an aggregate cost of $65.5 million. During fiscal year 2015, the company...


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