Jack in the Box (NASDAQ: JACK) reported Q3 EPS of $1.07, $0.20 better than the analyst estimate of $0.87. Revenue for the quarter came in at $368.94 million versus the consensus estimate of $367.52 million.

Lenny Comma, chairman and chief executive officer, said, “Operating earnings per share for the third quarter exceeded our expectations, and resulted primarily from healthy margins combined with proceeds from a legal settlement, mark-to-market adjustments and a lower tax rate. We were particularly pleased that Jack in the Box® system same-store sales closed the gap as compared to the industry, with results steadily improving throughout the quarter. We also began implementing our G&A cost reduction plans, and are happy with the progress that has been made thus far.”

Jack in the Box system same-store sales increased 1.1 percent for the quarter and lagged the QSR sandwich segment by 0.1 percentage points for the comparable period, according to The NPD Group’s SalesTrack® Weekly for the 12-week time period ended July 3, 2016. Included in this segment are 16 of the top QSR sandwich and burger chains in the country. Company same-store sales decreased 0.2 percent, with average check up 3.5 percent.

Qdoba same-store sales increased 0.6 percent system-wide and 1.0 percent for company restaurants in the third quarter. Company same-store sales reflected a 0.4 percent increase in transactions as well as growth in catering sales.

Guidance

The following guidance and underlying assumptions reflect the company’s current expectations for the fourth quarter and fiscal year ending October 2, 2016. Fiscal 2016 is a 53-week year, with 16 weeks in the first quarter, 12 weeks in each of the second and third quarters, and 13 weeks in the fourth quarter.

Fourth quarter fiscal year 2016 guidance

• Same-store sales increase of approximately 1.0 to 2.0 percent at Jack in the Box company restaurants versus a 4.1 percent increase in the year-ago quarter.
• Same-store sales increase of approximately 1.0 to 2.0 percent at Qdoba company restaurants versus a 6.1 percent increase in the year-ago quarter.

Fiscal year 2016 guidance

• Same-store sales of approximately flat to up 0.5 percent at Jack in the Box company restaurants.
• Same-store sales increase of approximately 1.5 to 2.0 percent at Qdoba company restaurants.
• Commodity deflation of approximately 2 to 3 percent for Jack in the Box and approximately 5 percent for Qdoba.
• Consolidated restaurant operating margin of approximately 20.0 to 20.5 percent.
• SG&A as a percentage of revenue of approximately 13.0 to 13.5 percent as compared to 14.4 percent in fiscal 2015.
• Impairment and other charges as a percentage of revenue of approximately 80 basis points, excluding restructuring charges.
• Approximately 20 new Jack in the Box restaurants opening system-wide, the majority of which will be franchise locations.
• Approximately 50 to 60 new Qdoba restaurants, of which approximately 35 are expected to be company locations.
• Capital expenditures of $100 million to $110 million.
• Tax rate of approximately 37 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 $3.65 to $3.75 in fiscal 2016 as compared to operating earnings per share of $3.00 in fiscal 2015. The estimated benefit of the 53rd week in fiscal 2016 is approximately $0.08 per diluted share.

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