Business Wire | Aug 4, 2021 04:06PM EDT

Jack in the Box Inc. Reports Third Quarter 2021 Earnings

Aug. 04, 2021

SAN DIEGO--(BUSINESS WIRE)--Aug. 04, 2021--Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the third quarter ended July 4, 2021, comprised of growth in systemwide sales, system same store sales and earnings per share.

"I am very pleased with our third quarter results, and proud of the continued momentum and execution from our franchisees and operators," said Darin Harris, Jack in the Box Chief Executive Officer. "Comps on a two-year basis of +16.8%, coupled with solid earnings performance, are all part of creating the store-level profitability that will help us maximize our growth and expansion opportunities going forward."

Systemwide sales increased 10.6% in the third quarter, comprised of positive results in same store sales and a slight decline in net unit growth. The company had a third quarter net store decline of 9 stores, comprised of 4 store openings and 13 closures - with 7 closings that include future offsetting locations, and the remainder related to agreement expirations. In the third quarter, there were development agreements signed for 60 future restaurants, bringing the year-to-date total to 64 future restaurants.

Company-operated same-store sales grew 9.0% in the third quarter, with evenly-balanced contribution from both transactions and average check. Franchise same-store sales grew 10.3%, with similar trends in both average check and transactions.

Same-store sales:

12 Weeks Ended 40 Weeks Ended

July 4, 2021 July 5, 2020 July 4, 2021 July 5, 2020

Company 9.0% 4.1% 10.0% 1.2%

Franchise 10.3% 6.9% 14.5% 1.5%

System SSS 10.2% 6.6% 14.0% 1.5%

Restaurant Counts:

2021 2020

Company Franchise Total Company Franchise Total

Store count at 148 2,080 2,228 144 2,102 2,246 beginning of Q3

New - 4 4 - 4 4

Closed - (13 ) (13 ) - (6 ) (6 )

Store count at 148 2,071 2,219 144 2,100 2,244 end of Q3

Q3 Net UnitIncrease/ - (9 ) (9 ) - (2 ) (2 )(Decrease)

Q3 2021 vs. Q32020 Unit % 2.8 % (1.4 )% (1.1 ) 5.1 % (0.2 )% 0.1 %Increase/ %(Decrease)

Third quarter diluted earnings per share was $1.79, up 26.1% over the prior year quarter. Total revenues increased 11.2% to $269.5 million, compared to $242.3 million in the comparable period ended July 5, 2020, driven by 10.2% growth in system same-store sales. Net earnings increased to $40.0 million for the third quarter of fiscal 2021, compared with $32.6 million for the third quarter of fiscal 2020. Adjusted EBITDA(1), a non-GAAP measure, was $79.0 million in the third quarter of fiscal 2021 compared with $72.9 million for the prior year quarter.

Restaurant-Level Margin(2), a non-GAAP measure, remained flat at 25.4% of company restaurant sales in the third quarter of fiscal 2021 from a year ago. Sales leverage was offset by an increase in food and packaging costs, wage inflation of 8%, higher incentive compensation as well as an increase in delivery fees and maintenance and repair costs. The increase in food and packaging costs were primarily driven by higher costs for ingredients, partially offset by favorable sales mix and menu price increases. Commodity costs increased in the quarter by approximately 5.7%, primarily due to increases in pork and beverages, partially offset by a decrease in beef.

Franchise-Level Margin(2), a non-GAAP measure, increased by $10.5 million in the third quarter, primarily driven by higher royalties and rental revenues as a result of higher franchise same-store sales.

(1) 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, net, depreciation and amortization, the amortization of franchise tenant improvement allowances and other, and pension settlement charges. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

(2) 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."

Capital Allocation

The company repurchased 0.6 million shares of our common stock for an aggregate cost of $65.0 million. As of July 4, 2021, there was $70.0 million remaining under the Board-authorized stock buyback program which expire in November 2022.

On July 30, 2021, the Board of Directors declared a cash dividend of $0.44 per share on the company's common stock. The dividend is payable on September 3, 2021, to shareholders of record at the close of business on August 18, 2021.

Updates to 2021 Guidance Measures

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

* 2021 CapEx of $40-45 million Previously stated at Investor Day on June 29, 2021 - and does not include the Other Investments stated below which commence with our 2022 guidance * 2021 G&A of $71-76 million Replaces previous % of system sales guidance, and excludes net COLI gains/losses * 2021 Commodity outlook up 4-5% compared to 2020 Previous guidance was up 1-3% * 2021 Labor Cost outlook up 7-8% compared to 2020 Previous guidance was up 5-6%

The Company will provide similar guidance measures for FY 2022 on its Q4 2021 earnings call.

CapEx & Other Investments Guidance for 2022

The following guidance range and underlying assumptions reflect the company's current expectations for the fiscal year ending October 2, 2022:

* 2022 CapEx & Other Investments: $65-75 million * Note: Beginning in 2022, CapEx & Other Investments guidance factors in two main items: Capital expenditures (located within cash flows from investing activities) Franchise tenant improvement allowances and incentives (located within cash flows from operating activities)

Conference Call

The company will host a conference call for analysts and investors on Wednesday, August 4, 2021, beginning at 2:00 p.m. PT (5:00 p.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 (833) 513-0565 and using ID 2691153.

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(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

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 40 Weeks Ended

July 4, July 5, July 4, July 5, 2021 2020 2021 2020

Revenues:

Company restaurant sales $ 91,892 $ 82,444 $ 292,132 $ 262,188

Franchise rental revenues 80,598 76,021 262,248 241,990

Franchise royalties and 48,582 43,239 155,461 133,469 other

Franchise contributions foradvertising and other 48,386 40,571 155,375 128,458 services

269,458 242,275 865,216 766,105

Operating costs and expenses, net:

Food and packaging 27,061 24,077 83,376 77,662

Payroll and employee 27,356 25,085 88,727 81,236 benefits

Occupancy and other 14,103 12,334 45,287 40,862

Franchise occupancy 48,824 48,612 162,897 161,470 expenses

Franchise support and other 2,722 2,692 9,336 10,339 costs

Franchise advertising and 49,168 42,176 158,967 133,134 other services expenses

Selling, general and 21,796 13,680 61,156 66,131 administrative expenses

Depreciation and 10,389 12,141 35,656 41,151 amortization

Impairment and other 922 738 1,698 (7,837 )charges (gains), net

Gains on the sale ofcompany-operated (264 ) (1,050 ) (3,079 ) (2,625 )restaurants

202,077 180,485 644,021 601,523

Earnings from operations 67,381 61,790 221,195 164,582

Other pension andpost-retirement expenses, 204 1,482 678 40,972 net

Interest expense, net 15,158 15,700 51,120 51,051

Earnings before income 52,019 44,608 169,397 72,559 taxes

Income taxes 11,991 12,432 42,576 21,023

Earnings from continuing 40,028 32,176 126,821 51,536 operations

Earnings from discontinuedoperations, net of income - 379 - 379 taxes

Net earnings $ 40,028 $ 32,555 $ 126,821 $ 51,915



Net earnings per share - basic:

Earnings from continuing $ 1.80 $ 1.41 $ 5.59 $ 2.22 operations

Earnings from discontinued - 0.02 - 0.02 operations

Net earnings per share (1) $ 1.80 $ 1.42 $ 5.59 $ 2.24

Net earnings per share - diluted:

Earnings from continuing $ 1.79 $ 1.40 $ 5.57 $ 2.21 operations

Earnings from discontinued - 0.02 - 0.02 operations

Net earnings per share (1) $ 1.79 $ 1.42 $ 5.57 $ 2.23



Weighted-average shares outstanding:

Basic 22,263 22,847 22,683 23,192

Diluted 22,326 22,916 22,761 23,322



Dividends declared per $ 0.44 $ - $ 1.24 $ 0.80 common share

____________________________

(1)

Earnings per share may not add due to rounding.

____________________________

(1) Earnings per share may not add due to rounding.

JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

July 4, September 27, 2021 2020

ASSETS

Current assets:

Cash $ 84,220 $ 199,662

Restricted cash 18,221 37,258

Accounts and other receivables, net 68,278 78,417

Inventories 2,120 1,808

Prepaid expenses 8,990 10,114

Current assets held for sale 3,255 4,598

Other current assets 4,123 3,724

Total current assets 189,207 335,581

Property and equipment:

Property and equipment, at cost 1,140,824 1,132,430

Less accumulated depreciation and amortization (809,375 ) (796,448 )

Property and equipment, net 331,449 335,982

Other assets:

Operating lease right-of-use assets 924,210 904,548

Intangible assets, net 256 277

Goodwill 47,161 47,161

Deferred tax assets 72,419 72,322

Other assets, net 222,771 210,623

Total other assets 1,266,817 1,234,931

$ 1,787,473 $ 1,906,494

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Current maturities of long-term debt $ 858 $ 818

Current operating lease liabilities 153,217 179,000

Accounts payable 34,557 31,105

Accrued liabilities 137,018 129,431

Total current liabilities 325,650 340,354

Long-term liabilities:

Long-term debt, net of current maturities 1,272,405 1,376,913

Long-term operating lease liabilities, net of 797,803 776,094 current portion

Other long-term liabilities 203,217 206,494

Total long-term liabilities 2,273,425 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, 82,536,059 and 82,369,714 issued, 825 824 respectively

Capital in excess of par value 499,668 489,515

Retained earnings 1,734,976 1,636,211

Accumulated other comprehensive loss (107,798 ) (110,605 )

Treasury stock, at cost, 60,846,347 and (2,939,273 ) (2,809,306 )59,646,773 shares, respectively

Total stockholders' deficit (811,602 ) (793,361 )

$ 1,787,473 $ 1,906,494

JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

40 Weeks Ended

July 4, July 5, 2021 2020

Cash flows from operating activities:

Net earnings $ 126,821 $ 51,915

Earnings from discontinued operations - 379

Earnings from continuing operations $ 126,821 $ 51,536

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

Depreciation and amortization 35,656 41,151

Amortization of franchise tenant improvement allowances 2,330 2,383 and incentives

Deferred finance cost amortization 4,304 4,337

Excess tax benefit from share-based compensation (1,164 ) (71 )arrangements

Deferred income taxes (2,599 ) 12,567

Share-based compensation expense 3,338 7,612

Pension and post-retirement expense 678 40,972

Gains on cash surrender value of company-owned life (12,561 ) (1,861 )insurance

Gains on the sale of company-operated restaurants (3,079 ) (2,625 )

Gains on the disposition of property and equipment, net (1,754 ) (10,386 )

Non-cash operating lease costs (16,511 ) (5,689 )

Impairment charges and other 1,951 195

Changes in assets and liabilities, excluding acquisitions:

Accounts and other receivables 14,485 (38,783 )

Inventories (250 ) 14

Prepaid expenses and other current assets 1,194 (5,034 )

Accounts payable (9,821 ) (2,756 )

Accrued liabilities 20,611 15,755

Pension and post-retirement contributions (4,961 ) (4,921 )

Franchise tenant improvement allowance and incentive (8,009 ) (9,384 )disbursements

Other (778 ) (4,844 )

Cash flows provided by operating activities 149,881 90,168

Cash flows from investing activities:

Capital expenditures (35,157 ) (16,736 )

Proceeds from the sale of property and equipment 5,272 22,790

Proceeds from the sale and leaseback of assets - 19,828

Proceeds from the sale of company-operated restaurants 1,229 2,625

Other 2,616 1,036

Cash flows (used in) provided by investing activities (26,040 ) 29,543

Cash flows from financing activities:

Borrowings on revolving credit facilities - 111,376

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

Principal repayments on debt (640 ) (7,094 )

Debt issuance costs - (216 )

Dividends paid on common stock (27,886 ) (18,466 )

Proceeds from issuance of common stock 6,646 3,559

Repurchases of common stock (124,399 ) (155,576 )

Payroll tax payments for equity award issuances (4,166 ) (4,442 )

Cash flows used in financing activities (258,320 ) (74,359 )

Net (decrease) increase in cash and restricted cash (134,479 ) 45,352

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

Cash and restricted cash at end of period $ 102,441 $ 196,913

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 40 Weeks Ended

July 4, July 5, July 4, July 5, 2021 2020 2021 2020

Revenues:

Company restaurant sales 34.1 % 34.0 % 33.8 % 34.2 %

Franchise rental revenues 29.9 % 31.4 % 30.3 % 31.6 %

Franchise royalties and other 18.0 % 17.8 % 18.0 % 17.4 %

Franchise contributions for advertising and 18.0 % 16.7 % 18.0 % 16.8 %other services

100.0 % 100.0 % 100.0 % 100.0 %

Operating costs and expenses, net:

Food and packaging (1) 29.4 % 29.2 % 28.5 % 29.6 %

Payroll and employee benefits (1) 29.8 % 30.4 % 30.4 % 31.0 %

Occupancy and other (1) 15.3 % 15.0 % 15.5 % 15.6 %

Franchise occupancy expenses (2) 60.6 % 63.9 % 62.1 % 66.7 %

Franchise support and other costs (3) 5.6 % 6.2 % 6.0 % 7.7 %

Franchise advertising and other services 101.6 % 104.0 % 102.3 % 103.6 %expenses (4)

Selling, general and administrative 8.1 % 5.6 % 7.1 % 8.6 %expenses

Depreciation and amortization 3.9 % 5.0 % 4.1 % 5.4 %

Impairment and other charges (gains), net 0.3 % 0.3 % 0.2 % (1.0) %

Gains on the sale of company-operated (0.1) % (0.4) % (0.4) % (0.3) %restaurants

Earnings from operations 25.0 % 25.5 % 25.6 % 21.5 %

Income tax rate (5) 23.1 % 27.9 % 25.1 % 29.0 %

____________________________

(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 continuing operations 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 from continuing operations before income taxes.

Jack in the Box system sales (in thousands):

12 Weeks Ended

40 Weeks Ended

July 4,2021

July 5,2020

July 4,2021

July 5,2020

Company-operated restaurant sales

$

91,892

$

82,444

$

292,132

$

262,188

Franchised restaurant sales (1)

889,558

804,791

2,852,746

2,480,062

Systemwide sales (1)

$

981,450

$

887,235

$

3,144,878

$

2,742,250

Jack in the Box system sales (in thousands):

12 Weeks Ended 40 Weeks Ended

July 4, July 5, July 4, July 5, 2021 2020 2021 2020

Company-operated restaurant $ 91,892 $ 82,444 $ 292,132 $ 262,188sales

Franchised restaurant sales (1) 889,558 804,791 2,852,746 2,480,062

Systemwide sales (1) $ 981,450 $ 887,235 $ 3,144,878 $ 2,742,250

____________________________

(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 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 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 - 10 10 - 20 20

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

Closed - (32 ) (32 ) (1 ) (18 ) (19 )

End of period 148 2,071 2,219 144 2,100 2,244

% of system 7 % 93 % 100 % 6 % 94 % 100 %

JACK IN THE BOX INC. AND SUBSIDIARIESRECONCILIATION 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: 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.

Adjusted EBITDA

Adjusted EBITDA represents net earnings on a GAAP basis excluding earnings from discontinued operations, 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 incentives, 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 40 Weeks Ended

July 4, July 5, July 4, July 5, 2021 2020 2021 2020

Net earnings - GAAP $ 40,028 $ 32,555 $ 126,821 $ 51,915

Earnings from discontinued - (379 ) - (379 )operations, net of taxes

Income tax expense 11,991 12,432 42,576 21,023

Interest expense, net 15,158 15,700 51,120 51,051

Pension settlement charges - 103 - 39,030

Gains on the sale ofcompany-operated (264 ) (1,050 ) (3,079 ) (2,625 )restaurants

Impairment and other 922 738 1,698 (7,837 )charges (gains), net

Depreciation and 10,389 12,141 35,656 41,151 amortization

Amortization of franchisetenant improvement 796 618 2,330 2,383 allowances and incentives

Adjusted EBITDA - Non-GAAP $ 79,020 $ 72,858 $ 257,122 $ 195,712

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 40 Weeks Ended

July 4, July 5, July 4, July 5, 2021 2020 2021 2020

Earnings from operations $ 67,381 $ 61,790 $ 221,195 $ 164,582 - GAAP

Franchise rental revenues (80,598 ) (76,021 ) (262,248 ) (241,990 )

Franchise royalties and (48,582 ) (43,239 ) (155,461 ) (133,469 )other

Franchise contributionsfor advertising and other (48,386 ) (40,571 ) (155,375 ) (128,458 )services

Franchise occupancy 48,824 48,612 162,897 161,470 expenses

Franchise support and 2,722 2,692 9,336 10,339 other costs

Franchise advertising and 49,168 42,176 158,967 133,134 other services expenses

Selling, general and 21,796 13,680 61,156 66,131 administrative expenses

Impairment and other 922 738 1,698 (7,837 )charges (gains), net

Gains on the sale ofcompany-operated (264 ) (1,050 ) (3,079 ) (2,625 )restaurants

Depreciation and 10,389 12,141 35,656 41,151 amortization

Restaurant-Level Margin- $ 23,372 $ 20,948 $ 74,742 $ 62,428 Non-GAAP



Company restaurant sales $ 91,892 $ 82,444 $ 292,132 $ 262,188



Restaurant-Level Margin % 25.4 % 25.4 % 25.6 % 23.8 %- 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 40 Weeks Ended

July 4, July 5, July 4, July 5, 2021 2020 2021 2020

Earnings from operations $ 67,381 $ 61,790 $ 221,195 $ 164,582 - GAAP

Company restaurant sales (91,892 ) (82,444 ) (292,132 ) (262,188 )

Food and packaging 27,061 24,077 83,376 77,662

Payroll and employee 27,356 25,085 88,727 81,236 benefits

Occupancy and other 14,103 12,334 45,287 40,862

Selling, general and 21,796 13,680 61,156 66,131 administrative expenses

Impairment and other 922 738 1,698 (7,837 )charges (gains), net

Gains on the sale ofcompany-operated (264 ) (1,050 ) (3,079 ) (2,625 )restaurants

Depreciation and 10,389 12,141 35,656 41,151 amortization

Franchise-Level Margin - $ 76,852 $ 66,351 $ 241,884 $ 198,974 Non-GAAP



Franchise rental revenues $ 80,598 $ 76,021 $ 262,248 $ 241,990

Franchise royalties and 48,582 43,239 155,461 133,469 other

Franchise contributionsfor advertising and other 48,386 40,571 155,375 128,458 services

Total franchise revenues $ 177,566 $ 159,831 $ 573,084 $ 503,917



Franchise-Level Margin % 43.3 % 41.5 % 42.2 % 39.5 %- Non-GAAP

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804005922/en/

CONTACT: Chris Brandon Vice President, Investor Relations chris.brandon@jackinthebox.com 619.902.0269