Jack in the Box(JACK) - 2025 Q1 - Quarterly Report

Sales Performance - Jack in the Box's same-store sales decreased by 0.4% for the sixteen weeks ended January 19, 2025, compared to an increase of 2.0% in the same period of 2024[89] - Del Taco's same-store sales decreased by 2.5% for the sixteen weeks ended January 19, 2025, compared to an increase of 1.8% in the same period of 2024[89] - Jack in the Box's company-operated restaurant sales increased by $1.7 million, or 1.3%, to$ 133.755 million for the sixteen weeks ended January 19, 2025[91] - Del Taco's company-operated restaurant sales decreased by $24.3 million, or 26.5%, to$ 67.651 million for the sixteen weeks ended January 19, 2025, primarily due to refranchising[102] Franchise Revenue - Franchise rental revenues for Jack in the Box increased by $0.2 million, or 0.2%, to$ 105.781 million for the sixteen weeks ended January 19, 2025[98] - Franchise royalties for Jack in the Box increased by $0.3 million, or 0.4%, to$ 61.825 million for the sixteen weeks ended January 19, 2025[99] - Franchise rental revenues increased by $3.1 million, or 41.3%, compared to the prior year, primarily due to higher rental income from 60 refranchised restaurants[5] - Total franchise revenues rose to$ 30.7 million, an increase of $3.5 million, or 12.9%, compared to the prior year[5] Cost Management - Food and packaging costs for Jack in the Box as a percentage of company restaurant sales decreased by 3.8% compared to the prior year, primarily due to a new beverage contract[95] - Payroll and employee benefit costs for Jack in the Box increased by 2.5% as a percentage of company restaurant sales, driven by wage inflation of approximately 14.7%[96] - Del Taco's food and packaging costs as a percentage of company restaurant sales decreased to 25.1% from 27.0% in the prior year[102] - Menu price increases of approximately 7.6% contributed to a 1.9% decrease in food and packaging costs as a percentage of restaurant sales compared to the prior year[1] - Labor inflation was 15.4% in the quarter, leading to a 2.9% increase in payroll and employee benefit costs as a percentage of restaurant sales compared to the prior year[2] Restaurant Count - The total number of Jack in the Box restaurants decreased by 1 to 2,190, while Del Taco's total number of restaurants decreased by 3 to 589 as of January 19, 2025[89] Financial Performance - Operating cash flows increased by$ 128.3 million compared to a year ago, primarily due to a favorable change in working capital of $132.5 million[122] - Interest expense, net decreased by$ 0.1 million, primarily due to a decrease of $0.4 million in interest expense from lower average borrowings[117] - The effective tax rate increased to 29.8% from 26.9% in the prior fiscal year, driven by higher tax expenses on share-based compensation[118] - Total capital expenditures decreased by$ 3.7 million to $35.1 million, primarily due to a decrease in the number of properties acquired for refranchising[123] Shareholder Returns - The company repurchased 0.1 million shares of common stock for an aggregate cost of$ 5.0 million, with $175.0 million remaining under authorized share repurchase programs[128] - The company declared a cash dividend of$ 0.44 per share, totaling $8.4 million, with an additional dividend declared on February 21, 2025[128][129] Debt and Liquidity - The Company completed the sale of$ 550.0 million of Series 2022-1 Fixed Rate Senior Secured Notes, with anticipated repayment dates in February 2027 and February 2032[130] - As of January 19, 2025, the Company had available borrowing capacity of $95.7 million under its Variable Funding Notes, net of letters of credit issued of$ 54.3 million[131] - The Company had restricted cash of $29.7 million as of January 19, 2025, primarily for payments of interest and commitment fees required for the Class A-1 and A-2 Notes[134] - The Company was in compliance with all debt covenant requirements as of January 19, 2025, and was not subject to any rapid amortization events[135] - Del Taco entered into a syndicated credit facility with an aggregate principal amount of up to$ 75.0 million, maturing on February 28, 2025, with no outstanding borrowings as of January 19, 2025[136] - The Company has had a leverage ratio greater than 5.0x since the issuance of the 2022 Notes, resuming scheduled amortization payments in the second quarter of 2022[133] - The securitized debt instruments issued by certain wholly-owned subsidiaries have restrictive terms, and failure to comply could result in default[142] Business Risks - The Company has significant competition in the food service industry, which could adversely affect its business[140] - The Company faces risks associated with its highly franchised business model, which could negatively impact its operations if franchisees fail to operate successfully[141] - The Company is dependent on information technology and digital service providers, and any material failure could adversely affect its business[141]