Business Wire | May 12, 2021 04:05PM EDT

Jack in the Box Inc. Reports Second Quarter FY 2021 Earnings; Provides Fiscal 2021 Guidance; Announces 10 Percent Increase in Quarterly Cash Dividend

May 12, 2021

SAN DIEGO--(BUSINESS WIRE)--May 12, 2021--Jack in the Box Inc. (NASDAQ: JACK) today reported financial results for the second quarter ended April 11, 2021 and provided fiscal year 2021 financial guidance.

Jack in the Box(r) total revenues increased 19 percent to $257.2 million, compared to $216.2 million in the comparable period ended April 12, 2020, driven by 20.6 percent growth in system same-store sales. Company same-store sales increased 14.5 percent in the second quarter, reflecting average check growth of 19.9 percent and a 5.4 percent decrease in transactions. Franchise same-store sales increased 21.3 percent.

Increase/(Decrease) in same-store sales:

12 Weeks Ended 28 Weeks Ended

April 11, April 12, April 11, April 12, 2021 2020 2021 2020

Company 14.5% (4.1)% 10.4% (0.1)%

Franchise 21.3% (4.2)% 16.5% (0.9)%

System 20.6% (4.2)% 15.9% (0.8)%

Net earnings more than tripled to $35.9 million, or $1.58 per diluted share, for the second quarter of fiscal 2021, compared with $11.5 million, or $0.50 per diluted share, for the second quarter of fiscal 2020, which was negatively impacted due to the initial onset of COVID-19.

Darin Harris, chief executive officer, said, "Consumers continue to embrace Jack in the Box's iconic all-day menu and continuous menu innovations, driving growth across every day-part. A shift toward our core premium entrees, combined with an increase in items per order reflecting larger parties, fueled a nearly-20 percent increase in average check. Our performance was strong across all regions throughout the quarter, including in Texas where pandemic dine-in restrictions were lifted much earlier than in our other large markets. Stimulus payments also contributed to our strong performance during the last four weeks of the quarter."

Harris continued, "We are off to a good start through the first four weeks of the third quarter, giving us confidence that our key strategies continue to resonate with guests and position us to maintain momentum while we work closely with our franchisees to grow."

Operating Earnings Per Share(1), a non-GAAP measure, were $1.48 in the second quarter of fiscal 2021 compared with $0.50 in the prior year quarter. A reconciliation of non-GAAP Operating Earnings Per Share to GAAP results is provided below, with additional information included in the attachment to this release.

12 Weeks Ended 28 Weeks Ended

April April April April 11, 12, 11, 12, 2021 2020 2021 2020

Diluted earnings per share - GAAP $ 1.58 $ 0.50 $ 3.78 $ 0.82

Gains on the sale of (0.05 ) - (0.09 ) (0.05 )company-operated restaurants

Excess tax benefits from share-based (0.05 ) (0.01 ) (0.05 ) - compensation arrangements

Pension settlement charges - 0.01 - 1.14

Gain on sale of corporate office - - - (0.32 )building

Restructuring charges - - - 0.03

Operating Earnings Per Share - $ 1.48 $ 0.50 $ 3.64 $ 1.62 non-GAAP (1)

Adjusted EBITDA(2), a non-GAAP measure, was $75.8 million in the second quarter of fiscal 2021 compared with $46.3 million for the prior year quarter.

Restaurant-Level Margin(3), a non-GAAP measure, increased to 25.9 percent of company restaurant sales in the second quarter of fiscal 2021 from 20.6 percent a year ago. The increase is primarily due to sales leverage as well as a decrease in food and packaging costs as a percentage of company restaurant sales. This decrease is primarily driven by favorable changes in product mix and menu price increases, partially offset by higher costs for ingredients. Commodity costs increased in the quarter by approximately 1.7 percent, primarily due to increases in pork and oil, partially offset by a decrease in beef. The decrease in food and packaging costs was partially offset by higher labor costs, resulting from wage inflation of 6.3%, as well as higher incentive compensation costs and higher costs for delivery fees.

Franchise-Level Margin(3), a non-GAAP measure, increased by $17.2 million in the second quarter, primarily driven by higher royalties and rental revenues as a result of higher franchise same-store sales. Franchise-Level Margin(3), as a percentage of total franchise revenues, was 42.0 percent in the second quarter of fiscal 2021 compared with 38.6 percent in the prior year.

In the second quarter of fiscal 2021, SG&A expenses decreased by $5.3 million and were 7.3 percent of revenues compared with 11.2 percent in the prior year quarter. Advertising costs, which are included in SG&A, increased $0.8 million in the second quarter due to higher company restaurant sales and a reduction in the contribution rate in the prior year quarter.

As a percentage of system-wide sales, G&A was 1.6 percent in the second quarter of fiscal 2021 compared with 2.7 percent in the prior year quarter. The $6.1 million decrease in G&A, which excludes advertising, was primarily driven by:

* 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 $5.9 million year-over-year decrease in G&A; * a decrease of $2.1 million in insurance costs; and * a decrease of $1.9 million in costs related to litigation matters versus prior year. * These decreases were partially offset by a $2.3 million increase in incentive compensation.

The effective tax rate for the second quarter of fiscal 2021 was 27.3 percent compared with 32.3 percent in the prior year quarter. The lower rate in the quarter was primarily due to a decrease in the impact of certain non-deductible expenses and an increase in non-taxable gains related to COLI policies.

Capital Allocation

The company repurchased 0.6 million shares of its common stock in the second quarter of fiscal 2021 for an aggregate cost of $65.0 million. As of April 11, 2021, $135.0 million remained available under share repurchase programs authorized by the Board of Directors, consisting of $35.0 million that expires in November 2021 and $100.0 million that expires in November 2022. During the second quarter of 2021, the Company fully paid down its outstanding borrowings on its Variable Funding Notes. As of April 11, 2021, borrowing availability under the Variable Funding Notes was $110.5 million.

The company also announced today that on May 7, 2021, its Board of Directors declared a cash dividend of $0.44 per share on the company's common stock, representing a 10 percent increase from the prior dividend rate. The dividend is payable on June 11, 2021, to shareholders of record at the close of business on May 26, 2021.

Fiscal Year 2021 Guidance

The following guidance and underlying assumptions reflect the company's current expectations for the fiscal year ending October 3, 2021, which includes 53 weeks:

* High single-digit system same-store sales growth * G&A as a percentage of system-wide sales of approximately 1.7%, excluding net COLI gains or losses * Commodity cost inflation of approximately 3% * Labor cost inflation of 5% to 6% * Adjusted EBITDA of between approximately $320 million and $330 million, including approximately $6 million to $7 million benefit from the 53rd week.

Conference Call

The company will host a conference call for financial analysts and investors on Wednesday, May 12, 2021, beginning at 2:00 p.m. PT (5:00 p.m. ET). The conference call will be broadcast live over the Internet via the Jack in the Box Inc. corporate website. To access the live call through the Internet, log onto the Investors section of the Jack in the Box Inc. website at http://investors.jackinthebox.com at least 15 minutes prior to the event in order to download and install any necessary audio software. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days, beginning at approximately 5:00 p.m. PT on May 12, 2021.

About Jack in the Box Inc.

Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box(r) 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.

__________________

(1) Operating Earnings Per Share represents diluted earnings per share on aGAAP basis excluding gains or losses on the sale of company-operatedrestaurants, restructuring charges, gain on sale of corporate office building,pension settlement charges, and the excess tax benefit from share-basedcompensation arrangements. See "Reconciliation of Non-GAAP Measurements to GAAPResults." Operating earnings per share may not add due to rounding.

(2) Adjusted EBITDA represents net earnings on a GAAP basis excluding incometaxes, interest expense, net, gains or losses on the sale of company-operatedrestaurants, impairment and other charges, net, depreciation and amortization,the amortization of franchise tenant improvement allowances and other, andpension settlement charges. See "Reconciliation of Non-GAAP Measurements toGAAP Results."

(3) Restaurant-Level Margin and Franchise-Level Margin are non-GAAP measures.These non-GAAP measures are reconciled to earnings from operations, the mostcomparable GAAP measure, in the attachment to this release. See "Reconciliationof Non-GAAP Measurements to GAAP Results."

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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

12 Weeks Ended 28 Weeks Ended

April 11, April 12, April 11, April 12, 2021 2020 2021 2020

Revenues:

Company restaurant sales $ 85,962 $ 74,380 $ 200,240 $ 179,744

Franchise rental revenues 77,901 69,885 181,650 165,969

Franchise royalties and 47,231 37,764 106,879 90,230 other

Franchise contributionsfor advertising and other 46,123 34,128 106,989 87,887 services

257,217 216,157 595,758 523,830

Operating costs and expenses, net:

Food and packaging 23,938 22,237 56,315 53,585

Payroll and employee 26,440 24,261 61,371 56,151 benefits

Occupancy and other 13,349 12,570 31,184 28,528

Franchise occupancy 48,904 48,341 114,073 112,858 expenses

Franchise support and 3,341 2,971 6,614 7,647 other costs

Franchise advertising and 47,104 35,734 109,799 90,958 other services expenses

Selling, general and 18,861 24,203 39,360 52,451 administrative expenses

Depreciation and 10,696 12,282 25,267 29,010 amortization

Impairment and other 1,228 716 776 (8,575 )charges (gains), net

Gains on the sale ofcompany-operated (1,532 ) - (2,815 ) (1,575 )restaurants

192,329 183,315 441,944 421,038

Earnings from operations 64,888 32,842 153,814 102,792

Other pension andpost-retirement expenses, 203 512 474 39,490 net

Interest expense, net 15,227 15,409 35,962 35,351

Earnings before income 49,458 16,921 117,378 27,951 taxes

Income taxes 13,524 5,458 30,585 8,591

Net earnings $ 35,934 $ 11,463 $ 86,793 $ 19,360



Earnings per share:

Basic $ 1.58 $ 0.50 $ 3.80 $ 0.83

Diluted $ 1.58 $ 0.50 $ 3.78 $ 0.82



Weighted-average shares outstanding:

Basic 22,723 22,803 22,863 23,339

Diluted 22,784 22,895 22,945 23,490



Dividends declared per $ 0.40 $ 0.40 $ 0.80 $ 0.80 common share

JACK IN THE BOX INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

April 11, September 27, 2021 2020

ASSETS

Current assets:

Cash $ 90,637 $ 199,662

Restricted cash 18,137 37,258

Accounts and other receivables, net 86,721 78,417

Inventories 2,158 1,808

Prepaid expenses 6,784 10,114

Current assets held for sale 3,883 4,598

Other current assets 3,703 3,724

Total current assets 212,023 335,581

Property and equipment:

Property and equipment, at cost 1,144,503 1,132,430

Less accumulated depreciation and amortization (812,489 ) (796,448 )

Property and equipment, net 332,014 335,982

Other assets:

Operating lease right-of-use assets 914,010 904,548

Intangible assets, net 262 277

Goodwill 47,161 47,161

Deferred tax assets 71,167 72,322

Other assets, net 214,138 210,623

Total other assets 1,246,738 1,234,931

$ 1,790,775 $ 1,906,494

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Current maturities of long-term debt $ 850 $ 818

Current operating lease liabilities 153,297 179,000

Accounts payable 24,695 31,105

Accrued liabilities 123,550 129,431

Total current liabilities 302,392 340,354

Long-term liabilities:

Long-term debt, net of current maturities 1,271,412 1,376,913

Long-term operating lease liabilities, net of 792,183 776,094 current portion

Other long-term liabilities 205,345 206,494

Total long-term liabilities 2,268,940 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 sharesauthorized, 82,510,007 and 82,369,714 issued, 825 824 respectively

Capital in excess of par value 496,798 489,515

Retained earnings 1,704,766 1,636,211

Accumulated other comprehensive loss (108,640 ) (110,605 )

Treasury stock, at cost, 60,287,482 and (2,874,306 ) (2,809,306 )59,646,773 shares, respectively

Total stockholders' deficit (780,557 ) (793,361 )

$ 1,790,775 $ 1,906,494

JACK IN THE BOX INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

28 Weeks Ended

April 11, April 12, 2021 2020

Cash flows from operating activities:

Net earnings $ 86,793 $ 19,360

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 25,267 29,010

Amortization of franchise tenant improvement 1,534 1,765 allowances and other

Deferred finance cost amortization 3,013 3,046

Excess tax benefit from share-based compensation (1,112 ) (77 )arrangements

Deferred income taxes (882 ) 6,783

Share-based compensation expense 2,836 5,865

Pension and post-retirement expense 474 39,490

(Gains) losses on cash surrender value of (9,352 ) 3,150 company-owned life insurance

Gains on the sale of company-operated restaurants (2,815 ) (1,575 )

Gains on the disposition of property and equipment, (1,931 ) (10,170 )net

Non-cash operating lease costs (11,870 ) (13,118 )

Impairment charges and other 1,340 133

Changes in assets and liabilities, excluding acquisitions:

Accounts and other receivables (4,490 ) (22,858 )

Inventories (288 ) 28

Prepaid expenses and other current assets 3,461 (10,350 )

Accounts payable (14,614 ) 20,660

Accrued liabilities 6,499 1,400

Pension and post-retirement contributions (3,577 ) (3,582 )

Franchise tenant improvement allowance disbursements (567 ) (5,811 )

Other (1,175 ) (4,222 )

Cash flows provided by operating activities 78,544 58,927

Cash flows from investing activities:

Purchases of property and equipment (22,928 ) (12,777 )

Proceeds from the sale of property and equipment 3,629 22,394

Proceeds from the sale and leaseback of assets - 17,373

Proceeds from the sale of company-operated 965 1,575 restaurants

Other 2,616 1,036

Cash flows (used in) provided by investing (15,718 ) 29,601 activities

Cash flows from financing activities:

Borrowings on revolving credit facilities - 111,376

Repayments of borrowings on revolving credit (107,875 ) (3,500 )facilities

Principal repayments on debt (415 ) (3,640 )

Debt issuance costs - (216 )

Dividends paid on common stock (18,130 ) (18,466 )

Proceeds from issuance of common stock 4,340 3,559

Repurchases of common stock (65,000 ) (155,576 )

Payroll tax payments for equity award issuances (3,892 ) (4,442 )

Cash flows used in financing activities (190,972 ) (70,905 )

Net (decrease) increase in cash and restricted cash (128,146 ) 17,623

Cash and restricted cash at beginning of period 236,920 151,561

Cash and restricted cash at end of period $ 108,774 $ 169,184

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 April April April 11, 12, 11, 12, 2021 2020 2021 2020

Revenues:

Company restaurant sales 33.4 % 34.4 % 33.6 % 34.3 %

Franchise rental revenues 30.3 % 32.3 % 30.5 % 31.7 %

Franchise royalties and other 18.4 % 17.5 % 17.9 % 17.2 %

Franchise contributions for advertising 17.9 % 15.8 % 18.0 % 16.8 %and other services

100.0 % 100.0 % 100.0 % 100.0 %

Operating costs and expenses, net:

Food and packaging (1) 27.8 % 29.9 % 28.1 % 29.8 %

Payroll and employee benefits (1) 30.8 % 32.6 % 30.6 % 31.2 %

Occupancy and other (1) 15.5 % 16.9 % 15.6 % 15.9 %

Franchise occupancy expenses (2) 62.8 % 69.2 % 62.8 % 68.0 %

Franchise support and other costs (3) 7.1 % 7.9 % 6.2 % 8.5 %

Franchise advertising and other services 102.1 % 104.7 % 102.6 % 103.5 %expenses (4)

Selling, general and administrative 7.3 % 11.2 % 6.6 % 10.0 %expenses

Depreciation and amortization 4.2 % 5.7 % 4.2 % 5.5 %

Impairment and other charges (gains), net 0.5 % 0.3 % 0.1 % (1.6 ) %

Gains on the sale of company-operated (0.6 ) - % (0.5 ) (0.3 )restaurants % % %

Earnings from operations 25.2 % 15.2 % 25.8 % 19.6 %

Income tax rate (5) 27.3 % 32.3 % 26.1 % 30.7 %

____________________________

(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 before income taxes.

____________________________

(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 before income taxes.

Jack in the Box system sales (in thousands): 12 Weeks Ended 28 Weeks Ended

April 11, April 12, April 11, April 12, 2021 2020 2021 2020

Company-owned restaurant $ 85,962 $ 74,380 $ 200,240 $ 179,744 sales

Franchised restaurant 847,363 695,926 1,963,189 1,675,271 sales (1)

System sales (1) $ 933,325 $ 770,306 $ 2,163,429 $ 1,855,015

____________________________

(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 year-to-date changes in the number and mix of Jack in the Box company and franchise restaurants:

____________________________

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(1) 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 year-to-date 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 - 6 6 - 16 16

Acquired from 4 (4 ) - 8 (8 ) - franchisees

Closed - (19 ) (19 ) (1 ) (12 ) (13 )

End of period 148 2,080 2,228 144 2,102 2,246

% 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: 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 gains or losses on the sale of company-operated restaurants, restructuring charges, the gain on sale of corporate office building, pension settlement charges, and the excess tax benefit from share-based compensation arrangements. 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 Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings per share. Figures may not add due to rounding.

12 Weeks Ended 28 Weeks Ended

April April April April 11, 12, 11, 12, 2021 2020 2021 2020

Diluted earnings per share - GAAP $ 1.58 $ 0.50 $ 3.78 $ 0.82

Gains on the sale of (0.05) - (0.09) (0.05) company-operated restaurants

Excess tax benefits from share-based (0.05) (0.01) (0.05) - compensation arrangements

Pension settlement charges - 0.01 - 1.14

Gain on sale of corporate office - - - (0.32) building

Restructuring charges - - - 0.03

Operating Earnings Per Share - $ 1.48 $ 0.50 $ 3.64 $ 1.62 non-GAAP (1)

____________________

(1)

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, 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 other, 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).

____________________

(1) 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, 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 other, 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).

12 Weeks Ended 28 Weeks Ended

April 11, April 12, April 11, April 12, 2021 2020 2021 2020

Net earnings - GAAP $ 35,934 $ 11,463 $ 86,793 $ 19,360

Income tax expense 13,524 5,458 30,585 8,591

Interest expense, net 15,227 15,409 35,962 35,351

Pension settlement charges - 321 - 38,927

Gains on the sale ofcompany-operated (1,532 ) - (2,815 ) (1,575 )restaurants

Impairment and other 1,228 716 776 (8,575 )charges (gains), net

Depreciation and 10,696 12,282 25,267 29,010 amortization

Amortization of franchisetenant improvement 673 614 1,534 1,765 allowances and other

Adjusted EBITDA - Non-GAAP $ 75,750 $ 46,263 $ 178,102 $ 122,854

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 charges (gains), 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):

12 Weeks Ended 28 Weeks Ended

April 11, April 12, April 11, April 12, 2021 2020 2021 2020

Earnings from operations $ 64,888 $ 32,842 $ 153,814 $ 102,792 - GAAP

Franchise rental revenues (77,901 ) (69,885 ) (181,650 ) (165,969 )

Franchise royalties and (47,231 ) (37,764 ) (106,879 ) (90,230 )other

Franchise contributionsfor advertising and other (46,123 ) (34,128 ) (106,989 ) (87,887 )services

Franchise occupancy 48,904 48,341 114,073 112,858 expenses

Franchise support and 3,341 2,971 6,614 7,647 other costs

Franchise advertising and 47,104 35,734 109,799 90,958 other services expenses

Selling, general and 18,861 24,203 39,360 52,451 administrative expenses

Impairment and other 1,228 716 776 (8,575 )charges (gains), net

Gains on the sale ofcompany-operated (1,532 ) - (2,815 ) (1,575 )restaurants

Depreciation and 10,696 12,282 25,267 29,010 amortization

Restaurant-Level Margin- $ 22,235 $ 15,312 $ 51,370 $ 41,480 Non-GAAP



Company restaurant sales $ 85,962 $ 74,380 $ 200,240 $ 179,744



Restaurant-Level Margin % 25.9 % 20.6 % 25.7 % 23.1 %- Non-GAAP

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 charges (gains), 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):

12 Weeks Ended 28 Weeks Ended

April 11, April 12, April 11, April 12, 2021 2020 2021 2020

Earnings from operations $ 64,888 $ 32,842 $ 153,814 $ 102,792 - GAAP

Company restaurant sales (85,962 ) (74,380 ) (200,240 ) (179,744 )

Food and packaging 23,938 22,237 56,315 53,585

Payroll and employee 26,440 24,261 61,371 56,151 benefits

Occupancy and other 13,349 12,570 31,184 28,528

Selling, general and 18,861 24,203 39,360 52,451 administrative expenses

Impairment and other 1,228 716 776 (8,575 )charges (gains), net

Gains on the sale ofcompany-operated (1,532 ) - (2,815 ) (1,575 )restaurants

Depreciation and 10,696 12,282 25,267 29,010 amortization

Franchise-Level Margin - $ 71,906 $ 54,731 $ 165,032 $ 132,623 Non-GAAP



Franchise rental $ 77,901 $ 69,885 $ 181,650 $ 165,969 revenues

Franchise royalties and 47,231 37,764 106,879 90,230 other

Franchise contributionsfor advertising and 46,123 34,128 106,989 87,887 other services

Total franchise revenues $ 171,255 $ 141,777 $ 395,518 $ 344,086



Franchise-Level Margin % 42.0 % 38.6 % 41.7 % 38.5 %- Non-GAAP

View source version on businesswire.com: https://www.businesswire.com/news/home/20210512005312/en/

CONTACT: Investor Contact: Maria Hocut Maria.Hocut@jackinthebox.com