Jack in the Box (JACK) Tops Q4 EPS by 15c

November 21, 2016 4:09 PM EST
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Jack in the Box (NASDAQ: JACK) reported Q4 EPS of $1.03, $0.15 better than the analyst estimate of $0.88. Revenue for the quarter came in at $398.42 million versus the consensus estimate of $398.71 million.

Jack in the Box system same-store sales increased 2.0 percent for the quarter and exceeded the QSR sandwich segment by 1.3 percentage points for the comparable period, according to The NPD Group’s SalesTrack® Weekly for the 13-week time period ended October 2, 2016. Included in this segment are 16 of the top QSR sandwich and burger chains in the country. Company same-store sales increased 0.5 percent in the fourth quarter, with average check up 3.5 percent.

Qdoba same-store sales increased 0.8 percent system-wide and 1.2 percent for company restaurants in the fourth quarter. Company same-store sales reflected a 0.7 percent increase in transactions as well as growth in catering sales.

GUIDANCE:

Jack in the Box sees GAAP FY2017 EPS of $4.55-$4.75, which may note compare to the consensus of $4.75.

Guidance

The following guidance and underlying assumptions reflect the company’s current expectations for the first quarter and fiscal year ending October 1, 2017. Fiscal 2017 is a 52-week year, with 16 weeks in the first quarter, 12 weeks in each of the second, third and fourth quarters. Fiscal 2016 was a 53-week year, with the additional week occurring in the fourth quarter.

First quarter fiscal year 2017 guidance

  • Same-store sales increase of approximately 2.0 to 4.0 percent at Jack in the Box system restaurants versus a 1.4 percent increase in the year-ago quarter.
  • Same-store sales of approximately flat to up 1.0 percent at Qdoba company restaurants versus a 1.5 percent increase in the year-ago quarter.

Fiscal year 2017 guidance

  • Same-store sales increase of approximately 2.0 to 3.0 percent at Jack in the Box system restaurants.
  • Same-store sales increase of approximately 2.0 to 3.0 percent at Qdoba company restaurants.
  • Commodity deflation of approximately flat to down 1 percent for both Jack in the Box and Qdoba.
  • Consolidated restaurant operating margin of approximately 20.0 to 21.0 percent.
  • SG&A as a percentage of revenues of approximately 11.0 to 11.5 percent as compared to 12.7 percent in fiscal 2016.
  • Impairment and other charges as a percentage of revenues of approximately 70 basis points, excluding restructuring charges.
  • Approximately 20 to 25 new Jack in the Box restaurants opening system-wide, the majority of which will be franchise locations.
  • Approximately 60 to 70 new Qdoba restaurants, of which approximately 40 are expected to be company locations.
  • Capital expenditures of $105 to $115 million.
  • Tax rate of approximately 38 percent.
  • Operating earnings per share, 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, ranging from $4.55 to $4.75. This guidance assumes share repurchases of approximately $408 million during the year, representing the amount remaining under current Board authorization

Lenny Comma, chairman and chief executive officer, said, “Operating earnings per share for the fourth quarter exceeded our expectations, due primarily to a reduction in G&A costs resulting from our restructuring initiatives, as well as lower impairment charges and a lower tax rate. We were pleased that Jack in the Box® system same-store sales outperformed sluggish industry trends, and although sales and traffic growth at Qdoba were solid, margins were hampered by the impact of new restaurant openings.

“Operating earnings per share for the year (excluding the benefit of the 53rd week) grew more than 25 percent, the fifth consecutive year of growth in excess of 20 percent.

“We are happy with the progress we made on our key strategic initiatives during the year, as we made significant headway on reducing our G&A, increased our borrowing capacity to support our capital structure goals, and began implementing plans to increase the franchise mix at Jack in the Box to over 90 percent of the system.”

For earnings history and earnings-related data on Jack in the Box (JACK) click here.



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