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Jack in the Box (JACK) Q1 Earnings & Revenues Top, Shares Up
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Jack in the Box Inc. (JACK - Free Report) reported better-than-expected results in the first quarter of fiscal 2018.
Adjusted earnings of $1.23 per share surpassed the Zacks Consensus Estimate of $1.06 by 16%. The bottom line also increased nearly 15% year over year on margin improvement driven by refranchising.
Revenues of $294.5 million exceeded the Zacks Consensus Estimate of $285.9 million by 3%. However, the top line fell 16.6% on a year-over-year basis owing to lower comps.
Jack In The Box Inc. Price, Consensus and EPS Surprise
Following its earnings release on Feb 21, shares of the company rose 2.2% in after-hours trading. However, Jack in the Box lost 10% in the past year, underperforming the industry’s growth of 10.5%.
Notably, the company’s refranchising strategies are effectively improving margins despite pressure from higher labor and maintenance costs and commodity inflation.
Jack in the Box Comps Discussion
Comps at Jack in the Box company stores increased 0.2%, comparing unfavorably with the prior-year quarter’s rise of 0.6%, but better than last quarter’s decline of 2%. The comps growth was driven by average check growth of 2.6%, partially offset by a 2.4% decline in transactions.
Same-store sales at franchised stores declined 0.3%, comparing unfavorably with a gain of 3.9% in the year-ago quarter, but improved from a loss of 0.7% in the previous quarter. System-wide same-store sales fell 0.2% against a rise of 3.1% in the comparable period last year and the prior-quarter’s comps decline of 1%.
Qdoba Scenario
In the fiscal first quarter, the company signed an agreement to sell Qdoba to Apollo Global Management, LLC. The transaction, however, is expected to close by April 2018. Therefore, the company did not allocate any general and administrative shared services expenses to discontinued operations that incorporate Qdoba’s operating results.
Qdoba generated net loss of $0.6 million in the quarter against net earnings of $1.4 million in the prior-year quarter.
Operating Highlights
The company’s consolidated restaurant operating margin was 22.2%, up 60 basis points (bps) year over year.
Restaurant-level EBITDA increased 20 bps from the year-ago quarter to 26%. The increase was driven by the benefit of refranchising, but was partially offset by an increase in food and packaging costs resulting from commodity inflation, higher repairs and maintenance costs, wage inflation and higher costs for workers' compensation insurance.
Franchise operating margin was 52.6%, down 30 bps year over year. Franchise EBITDA was 60.9% in the quarter, reflecting a year-over-year decline of 10 bps. The downside was due to reduced royalties from some restaurants sold to franchisees in 2017, and a decrease in franchise-operated restaurant comps in the current quarter. This was, however, partially offset by an uptick in franchise fees of $0.8 million from the refranchising of 22 restaurants in the first quarter.
Balance Sheet
As of Jan 21, 2018, Cash totaled $3.8 million compared with $4.5 million as of Oct 1, 2017 (end of fourth-quarter and fiscal 2017). Inventories in the first quarter amounted to $3.3 million, down from $3.4 million at the end of fiscal 2017.
Long-term debt was $1.03 billion as of Jan 21, 2018 compared with $1.07 billion at the end of fiscal 2017. Cash flows from operating activities declined to $53.7 million in the first quarter, compared with $69.8 million as of Oct 1, 2017.
The company did not repurchase any shares of its common stock in the first quarter of 2018. However, its board of directors announced a cash dividend of 40 cents per share on the company's common stock which is payable on Mar 16, 2018, to shareholders of record at the close of business on Mar 5, 2018.
Second-quarter Fiscal 2018 Guidance
Comps are expected in the range of -1% to 1% at Jack in the Box system restaurants, compared with a 0.8% decline in the year-ago quarter.
Fiscal 2018 Outlook
Comps at Jack in the Box system restaurants are expected to increase 1% to 2%. Restaurant operating margin is anticipated in the range of 22-23%, while Restaurant-Level EBITDA is projected within 26-27%.
Adjusted EBITDA of approximately $260-$270 million is expected in the fiscal year. Capital expenditures are estimated roughly in the range of $30-$35 million.
Chipotle Mexican Grill (CMG - Free Report) posted mixed fourth-quarter 2017 results, with adjusted earnings of $1.34 per share, surpassing the consensus estimate of $1.32 by 1.5%. Earnings also grew 143.6% year over year on lower costs and higher revenues.
McDonald's (MCD - Free Report) reported fourth-quarter 2017adjusted earnings per share (EPS) of $1.71, beating the consensus mark of $1.59 by 7.5%. Earnings improved 19% from the year-ago quarter (16% in constant currencies). The upside reflects strong operating performance and G&A savings.
Dunkin' Brands fourth-quarter 2017 adjusted earnings of 64 cents per share beat the Zacks Consensus Estimate of 63 cents. Earnings, however, stayed flat year over year, as a decline in adjusted net income was offset by lower shares outstanding.
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Jack in the Box (JACK) Q1 Earnings & Revenues Top, Shares Up
Jack in the Box Inc. (JACK - Free Report) reported better-than-expected results in the first quarter of fiscal 2018.
Adjusted earnings of $1.23 per share surpassed the Zacks Consensus Estimate of $1.06 by 16%. The bottom line also increased nearly 15% year over year on margin improvement driven by refranchising.
Revenues of $294.5 million exceeded the Zacks Consensus Estimate of $285.9 million by 3%. However, the top line fell 16.6% on a year-over-year basis owing to lower comps.
Jack In The Box Inc. Price, Consensus and EPS Surprise
Jack In The Box Inc. Price, Consensus and EPS Surprise | Jack In The Box Inc. Quote
Following its earnings release on Feb 21, shares of the company rose 2.2% in after-hours trading. However, Jack in the Box lost 10% in the past year, underperforming the industry’s growth of 10.5%.
Notably, the company’s refranchising strategies are effectively improving margins despite pressure from higher labor and maintenance costs and commodity inflation.
Jack in the Box Comps Discussion
Comps at Jack in the Box company stores increased 0.2%, comparing unfavorably with the prior-year quarter’s rise of 0.6%, but better than last quarter’s decline of 2%. The comps growth was driven by average check growth of 2.6%, partially offset by a 2.4% decline in transactions.
Same-store sales at franchised stores declined 0.3%, comparing unfavorably with a gain of 3.9% in the year-ago quarter, but improved from a loss of 0.7% in the previous quarter. System-wide same-store sales fell 0.2% against a rise of 3.1% in the comparable period last year and the prior-quarter’s comps decline of 1%.
Qdoba Scenario
In the fiscal first quarter, the company signed an agreement to sell Qdoba to Apollo Global Management, LLC. The transaction, however, is expected to close by April 2018. Therefore, the company did not allocate any general and administrative shared services expenses to discontinued operations that incorporate Qdoba’s operating results.
Qdoba generated net loss of $0.6 million in the quarter against net earnings of $1.4 million in the prior-year quarter.
Operating Highlights
The company’s consolidated restaurant operating margin was 22.2%, up 60 basis points (bps) year over year.
Restaurant-level EBITDA increased 20 bps from the year-ago quarter to 26%. The increase was driven by the benefit of refranchising, but was partially offset by an increase in food and packaging costs resulting from commodity inflation, higher repairs and maintenance costs, wage inflation and higher costs for workers' compensation insurance.
Franchise operating margin was 52.6%, down 30 bps year over year. Franchise EBITDA was 60.9% in the quarter, reflecting a year-over-year decline of 10 bps. The downside was due to reduced royalties from some restaurants sold to franchisees in 2017, and a decrease in franchise-operated restaurant comps in the current quarter. This was, however, partially offset by an uptick in franchise fees of $0.8 million from the refranchising of 22 restaurants in the first quarter.
Balance Sheet
As of Jan 21, 2018, Cash totaled $3.8 million compared with $4.5 million as of Oct 1, 2017 (end of fourth-quarter and fiscal 2017). Inventories in the first quarter amounted to $3.3 million, down from $3.4 million at the end of fiscal 2017.
Long-term debt was $1.03 billion as of Jan 21, 2018 compared with $1.07 billion at the end of fiscal 2017. Cash flows from operating activities declined to $53.7 million in the first quarter, compared with $69.8 million as of Oct 1, 2017.
The company did not repurchase any shares of its common stock in the first quarter of 2018. However, its board of directors announced a cash dividend of 40 cents per share on the company's common stock which is payable on Mar 16, 2018, to shareholders of record at the close of business on Mar 5, 2018.
Second-quarter Fiscal 2018 Guidance
Comps are expected in the range of -1% to 1% at Jack in the Box system restaurants, compared with a 0.8% decline in the year-ago quarter.
Fiscal 2018 Outlook
Comps at Jack in the Box system restaurants are expected to increase 1% to 2%. Restaurant operating margin is anticipated in the range of 22-23%, while Restaurant-Level EBITDA is projected within 26-27%.
Adjusted EBITDA of approximately $260-$270 million is expected in the fiscal year. Capital expenditures are estimated roughly in the range of $30-$35 million.
Zacks Rank & Peer Releases
Jack in the Box carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chipotle Mexican Grill (CMG - Free Report) posted mixed fourth-quarter 2017 results, with adjusted earnings of $1.34 per share, surpassing the consensus estimate of $1.32 by 1.5%. Earnings also grew 143.6% year over year on lower costs and higher revenues.
McDonald's (MCD - Free Report) reported fourth-quarter 2017adjusted earnings per share (EPS) of $1.71, beating the consensus mark of $1.59 by 7.5%. Earnings improved 19% from the year-ago quarter (16% in constant currencies). The upside reflects strong operating performance and G&A savings.
Dunkin' Brands fourth-quarter 2017 adjusted earnings of 64 cents per share beat the Zacks Consensus Estimate of 63 cents. Earnings, however, stayed flat year over year, as a decline in adjusted net income was offset by lower shares outstanding.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>