Jack in the Box(JACK) - 2024 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and related disclosures for the reporting period Item 1. Condensed Consolidated Financial Statements (Unaudited) This section provides the unaudited condensed consolidated financial statements, including balance sheets, statements of earnings, comprehensive income, cash flows, and stockholders' deficit, along with explanatory notes Condensed Consolidated Balance Sheets This table summarizes the company's financial position, including assets, liabilities, and stockholders' deficit, at two specific points in time | Metric | April 14, 2024 (in thousands) | October 1, 2023 (in thousands) | Change (in thousands) | | :---------------------- | :---------------------------- | :----------------------------- | :-------------------- | | Total Assets | $2,898,975 | $3,001,092 | $(102,117) | | Cash | $20,197 | $157,653 | $(137,456) | | Total Current Assets | $194,307 | $325,984 | $(131,677) | | Total Liabilities | $3,601,596 | $3,719,419 | $(117,823) | | Stockholders' Deficit | $(702,621) | $(718,327) | $15,706 | Condensed Consolidated Statements of Earnings This table presents the company's revenues, operating costs, earnings, and earnings per share for the quarter and year-to-date periods | Metric (in thousands) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Total Revenues | $365,347 | $395,744 | $852,845 | $922,840 | | Operating Costs and Expenses, net | $311,157 | $334,105 | $719,175 | $760,270 | | Earnings from Operations | $54,190 | $61,639 | $133,670 | $162,570 | | Net Earnings | $24,980 | $26,507 | $63,663 | $79,761 | | Basic EPS | $1.27 | $1.28 | $3.22 | $3.83 | | Diluted EPS | $1.26 | $1.27 | $3.19 | $3.81 | | Cash Dividends Declared per Share | $0.44 | $0.44 | $0.88 | $0.88 | Condensed Consolidated Statements of Comprehensive Income This table details the company's net earnings and other comprehensive income components for the quarter and year-to-date periods | Metric (in thousands) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :----------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Net Earnings | $24,980 | $26,507 | $63,663 | $79,761 | | Other Comprehensive Income, net of taxes | $362 | $366 | $846 | $855 | | Comprehensive Income | $25,342 | $26,873 | $64,509 | $80,616 | Condensed Consolidated Statements of Cash Flows This table outlines the company's cash flows from operating, investing, and financing activities, and the net change in cash and restricted cash | Cash Flow Activity (in thousands) | YTD April 14, 2024 | YTD April 16, 2023 | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :----------- | | Operating Activities | $(6,021) | $94,108 | $(100,129) | | Investing Activities | $(55,854) | $9,730 | $(65,584) | | Financing Activities | $(75,055) | $(117,042) | $41,987 | | Net Decrease in Cash & Restricted Cash | $(136,930) | $(13,204) | $(123,726) | | Cash & Restricted Cash at End of Period | $48,977 | $122,836 | $(73,859) | Condensed Consolidated Statements of Stockholders' Deficit This table details the changes in the company's stockholders' deficit, including retained earnings and treasury stock, between two fiscal periods | Metric (in thousands) | October 1, 2023 | April 14, 2024 | Change | | :------------------------------ | :-------------- | :------------- | :----- | | Total Stockholders' Deficit | $(718,327) | $(702,621) | $15,706 | | Retained Earnings | $1,937,598 | $1,983,944 | $46,346 | | Treasury Stock, at cost | $(3,125,037) | $(3,165,336) | $(40,299) | Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes supporting the condensed consolidated financial statements 1. BASIS OF PRESENTATION This note describes the company's operations, restaurant counts, fiscal year alignment, and marketing fund contributions - Jack in the Box Inc. operates and franchises Jack in the Box and Del Taco quick-service restaurants, with 144 company-operated and 2,051 franchise-operated Jack in the Box restaurants, and 166 company-operated and 429 franchise-operated Del Taco restaurants as of April 14, 2024[18] - Del Taco's fiscal year shifted to align with Jack in the Box beginning fiscal 2024, resulting in two fewer days for Del Taco's 2024 results[18] - Total company contributions to marketing funds for both brands were $7.8 million for the quarter and $18.2 million year-to-date in 2024, down from $9.2 million and $21.3 million in 2023, respectively[18] 2. REVENUE This note provides a breakdown of the company's revenue sources, including company restaurant sales, franchise rental revenues, royalties, and advertising contributions | Revenue Source (in thousands) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :---------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Company restaurant sales | $167,098 | $202,604 | $391,138 | $472,795 | | Franchise rental revenues | $85,826 | $83,520 | $199,022 | $192,350 | | Franchise royalties and other | $55,084 | $53,982 | $128,414 | $130,372 | | Franchise contributions for advertising and other services | $57,339 | $55,638 | $134,271 | $127,323 | | Total Revenue | $365,347 | $395,744 | $852,845 | $922,840 | - Deferred franchise and development fees at the end of the period were $50,396 thousand (YTD April 14, 2024), with $8.6 million related to unopened restaurants[27] 3. SUMMARY OF REFRANCHISINGS AND ASSETS HELD FOR SALE This note summarizes the number of restaurants refranchised and the financial impact of these sales, along with changes in assets held for sale | Metric | YTD April 14, 2024 | YTD April 16, 2023 | | :-------------------------------------- | :----------------- | :----------------- | | Del Taco Restaurants Sold to Franchisees | 13 | 16 | | Jack in the Box Restaurants Sold to Franchisees | 0 | 5 | | (Loss) Gain on Sale of Company-Operated Restaurants (in thousands) | $(1,319) | $4,529 | - Assets classified as held for sale increased from $13.9 million at October 1, 2023, to $25.0 million at April 14, 2024[31] 4. FRANCHISE ACQUISITIONS This note details the acquisition of franchise restaurants and the associated financial gain - Acquired 9 Del Taco franchise restaurants in Q1 2024 for $86 thousand[32][35] - Recognized a gain of $2,357 thousand on the acquisition of these franchise-operated restaurants[35] 5. GOODWILL AND INTANGIBLE ASSETS, NET This note provides a summary of the company's goodwill and intangible assets, including changes over the period | Metric (in thousands) | October 1, 2023 | April 14, 2024 | Change | | :------------------------------ | :-------------- | :------------- | :----- | | Total Goodwill | $329,986 | $329,583 | $(403) | | Net Definite-Lived Intangible Assets | $11,330 | $11,254 | $(76) | | Del Taco Trademark (Indefinite-Lived) | $283,500 | $283,500 | $0 | - Goodwill decreased primarily due to the sale of Del Taco company-operated restaurants to franchisees ($105 thousand) and reclassification to assets held for sale ($298 thousand)[38] 6. LEASES This note presents the company's operating and variable lease income from franchise operations | Metric (in thousands) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :---------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Operating lease income - franchise | $59,445 | $55,713 | $137,694 | $129,233 | | Variable lease income - franchise | $26,123 | $27,744 | $60,721 | $62,979 | | Franchise rental revenues | $85,826 | $83,520 | $199,022 | $192,350 | 7. FAIR VALUE MEASUREMENTS This note details the fair value of certain financial instruments and liabilities, including deferred compensation and debt | Metric (in thousands) | April 14, 2024 | October 1, 2023 | | :---------------------------------------- | :------------- | :-------------- | | Non-qualified deferred compensation plan | $17,088 | $15,051 | - Fair value of Series 2019 Class A-2 Notes was $663,206 thousand (carrying amount $703,250 thousand) and Series 2022 Class A-2 Notes was $942,322 thousand (carrying amount $1,056,000 thousand) as of April 14, 2024, estimated using Level 2 inputs[49] 8. OTHER OPERATING EXPENSES (INCOME), NET This note provides a breakdown of other operating expenses and income, including acquisition costs, closed restaurant costs, and gains/losses on asset dispositions | Metric (in thousands) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :-------------------------------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Acquisition, integration, and strategic initiatives | $4,268 | $1,259 | $9,889 | $2,896 | | Costs of closed restaurants and other | $773 | $560 | $1,632 | $2,745 | | Gains on acquisition of restaurants | $0 | $0 | $(2,357) | $0 | | Losses (gains) on disposition of property and equipment, net | $138 | $976 | $1,148 | $(8,615) | | Total Other operating expenses (income), net | $5,267 | $2,980 | $10,437 | $(2,521) | 9. SEGMENT REPORTING This note explains the company's revised segment reporting structure and presents the segment profit for Jack in the Box and Del Taco brands - The company revised its segment reporting to reflect a shared-services model, assessing each brand's results separately and excluding certain corporate functions and unallocated costs[54] | Metric (in thousands) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Jack in the Box segment profit | $84,545 | $84,648 | $200,588 | $213,428 | | Del Taco segment profit | $9,646 | $12,271 | $20,387 | $28,507 | | Shared services and unallocated costs | $(18,046) | $(17,747) | $(43,249) | $(46,275) | | Earnings from operations | $54,190 | $61,639 | $133,670 | $162,570 | 10. INCOME TAXES This note provides the effective income tax rates for the current and prior periods and explains the primary drivers of changes | Metric | Q2 FY2024 | Q2 FY2023 | YTD FY2024 | YTD FY2023 | | :----------------- | :-------- | :-------- | :--------- | :--------- | | Effective Tax Rate | 26.5% | 34.8% | 26.7% | 29.6% | - The decrease in tax rates was primarily due to a lower impact from estimated disposals of non-deductible goodwill attributable to refranchising transactions[58] 11. RETIREMENT PLANS This note describes the company's defined benefit pension and post-retirement healthcare plans, including their net periodic benefit costs - The company sponsors two defined benefit pension plans (Qualified Plan and SERP) and two post-retirement healthcare plans, all closed to new participants[59] | Metric (in thousands) | YTD April 14, 2024 | YTD April 16, 2023 | | :-------------------------------- | :----------------- | :----------------- | | Defined Benefit Pension Plans Net Periodic Benefit Cost | $3,794 | $3,876 | | Post-retirement Healthcare Plans Net Periodic Benefit Credit | $(109) | $(125) | - The company does not anticipate making any contributions to its Qualified Plan in fiscal 2024[63] 12. STOCKHOLDERS EQUITY AND REPURCHASES OF COMMON STOCK This note details the company's common stock repurchase activities and cash dividends declared - Repurchased 0.5 million shares of common stock for $40.3 million year-to-date ended April 14, 2024[64] - $210.0 million remains under authorized share repurchase programs[64] - Declared two cash dividends of $0.44 per common share, totaling $17.3 million year-to-date[64] 13. WEIGHTED AVERAGE SHARES OUTSTANDING This note provides the basic and diluted weighted-average shares outstanding for the quarter and year-to-date periods | Metric (in thousands) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Weighted-average shares outstanding – basic | 19,653 | 20,744 | 19,790 | 20,845 | | Weighted-average shares outstanding – diluted | 19,785 | 20,864 | 19,949 | 20,946 | 14. COMMITMENTS AND CONTINGENCIES This note outlines the company's accruals for legal matters and provides updates on significant legal proceedings - Accruals for legal matters totaled $15.9 million as of April 14, 2024[68] - For Gessele v. Jack in the Box Inc., the company accrued $6.4 million in damages and penalties, plus an additional $9.0 million for estimated pre-judgment and post-judgment interest and fees[68] - The $50.0 million settlement for the Torrez class action was fully paid by November 27, 2023, with no further amounts accrued[68] - The $8.0 million jury verdict in the J&D Restaurant Group case was overturned by the court, and the company reversed the accrual[69] Additional Balance Sheet Details This table provides further details on selected balance sheet accounts, including receivables, property and equipment, and liabilities | Account (in thousands) | April 14, 2024 | October 1, 2023 | | :------------------------------ | :------------- | :-------------- | | Accounts and other receivables, net | $102,664 | $99,678 | | Property and equipment, net | $417,136 | $412,030 | | Other assets, net | $248,636 | $240,707 | | Accrued liabilities | $168,973 | $302,178 | | Other long-term liabilities | $143,301 | $143,123 | Subsequent Events This note discloses significant events that occurred after the balance sheet date - A cash dividend of $0.44 per common share was declared on May 10, 2024, payable on June 25, 2024[74] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial performance, liquidity, and capital resources for the quarter and year-to-date periods, covering operational results, expenses, and accounting policies GENERAL This introductory section outlines the scope of the Management's Discussion and Analysis, defining key performance metrics used by management - The company's fiscal year is 52 or 53 weeks, ending the Sunday closest to September 30, with Del Taco's fiscal year aligning with Jack in the Box starting fiscal 2024[77] - Key performance metrics include same-store sales, systemwide sales, franchised restaurant sales, and average unit volumes (AUVs), which are non-GAAP measures useful for analyzing profitability[77] OVERVIEW This section provides a brief overview of the company's business, highlighting its operations and primary revenue sources from Jack in the Box and Del Taco quick-service restaurants - As of April 14, 2024, the company operated and franchised 2,195 Jack in the Box restaurants and 595 Del Taco restaurants[78] - Revenue sources include retail sales from company-operated restaurants and rental revenue, royalties, franchise fees, and advertising contributions from franchisees[78] RESULTS OF OPERATIONS This section details the financial performance of both Jack in the Box and Del Taco brands, including same-store sales, restaurant counts, and a breakdown of revenues and costs Jack in the Box Brand This section analyzes the operational and financial performance of the Jack in the Box brand, including company and franchise restaurant sales and key cost drivers | Metric (Jack in the Box) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :----------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Company Same-Store Sales | (0.6%) | 10.8% | 0.9% | 11.8% | | Franchise Same-Store Sales | (2.6%) | 9.4% | (0.8%) | 8.2% | | System Same-Store Sales | (2.5%) | 9.5% | (0.7%) | 8.6% | | Metric (Jack in the Box) | YTD April 14, 2024 | YTD April 16, 2023 | | :----------------------- | :----------------- | :----------------- | | Company Restaurants | 144 | 140 | | Franchise Restaurants | 2,051 | 2,047 | | Total System Restaurants | 2,195 | 2,187 | Company Restaurant Operations This subsection details the sales performance and cost structure of Jack in the Box company-operated restaurants | Metric (Jack in the Box Company) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :------------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Company restaurant sales (in thousands) | $98,927 | $95,489 | $230,984 | $221,631 | | Change in same-store sales | (0.6%) | 10.8% | 0.9% | 11.8% | | Average check increase | 3.1% | 7.6% | 3.5% | 7.6% | | Transactions decrease | (3.7%) | 3.2% | (2.6%) | 4.2% | - Food and packaging costs as a percentage of sales decreased by 2.5% in the quarter and 2.8% year-to-date, driven by commodity deflation (0.5% in Q2, 1.9% YTD) and menu price increases[88] - Payroll and employee benefit costs as a percentage of sales were flat in the quarter and decreased 0.3% year-to-date, despite labor inflation of 4.6% in Q2 and 3.6% YTD[88] Franchise Operations This subsection details the revenue performance of Jack in the Box franchise operations, including rental revenues and royalties | Metric (Jack in the Box Franchise) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :--------------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Franchise rental revenues (in thousands) | $79,618 | $80,910 | $185,196 | $187,006 | | Royalties (in thousands) | $45,414 | $46,401 | $106,737 | $113,970 | | Franchised restaurant sales (in thousands) | $911,265 | $931,257 | $2,138,015 | $2,140,239 | | Change in same-store sales | (2.6%) | 9.4% | (0.8%) | 8.2% | - Franchise rental revenues decreased by $1.3 million (1.6%) in the quarter and $1.8 million (1.0%) year-to-date, primarily due to lower percentage rent from decreased franchise restaurant sales[90] - Franchise royalties and other decreased by $0.5 million (1.1%) in the quarter and $6.6 million (5.6%) year-to-date, mainly due to a $7.3 million termination fee in the prior year[91] Del Taco Brand This section analyzes the operational and financial performance of the Del Taco brand, including company and franchise restaurant sales and key cost drivers | Metric (Del Taco) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :---------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Company Same-Store Sales | (1.8%) | 3.5% | 0.2% | 3.3% | | Franchise Same-Store Sales | (1.1%) | 2.8% | 0.8% | 2.8% | | System Same-Store Sales | (1.4%) | 3.2% | 0.7% | 3.0% | | Metric (Del Taco) | YTD April 14, 2024 | YTD April 16, 2023 | | :---------------- | :----------------- | :----------------- | | Company Restaurants | 166 | 273 | | Franchise Restaurants | 429 | 322 | | Total System Restaurants | 595 | 595 | Company Restaurant Operations This subsection details the sales performance and cost structure of Del Taco company-operated restaurants | Metric (Del Taco Company) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :------------------------ | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Company restaurant sales (in thousands) | $68,171 | $107,115 | $160,154 | $251,164 | | Change in same-store sales | (1.8%) | 3.5% | 0.2% | 3.3% | | Average check increase | 3.2% | 6.9% | 3.4% | 7.8% | | Transactions decrease | (5.0%) | (3.4%) | (3.2%) | (4.5%) | - Company restaurant sales decreased primarily due to the refranchising of 108 company-operated restaurants and the closing of 8 company-operated restaurants since Q2 2023[94] - Food and packaging costs as a percentage of sales decreased by 1.9% in the quarter and 1.5% year-to-date, driven by menu price increases and commodity deflation (1.6% in Q2, 0.8% YTD)[97] - Payroll and employee benefit costs as a percentage of sales increased by 1.4% in the quarter and 1.1% year-to-date, due to labor inflation (4.7% in Q2, 3.8% YTD) and changes in restaurant mix[97] Franchise Operations This subsection details the revenue performance of Del Taco franchise operations, including rental revenues and royalties | Metric (Del Taco Franchise) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :-------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Franchise rental revenues (in thousands) | $6,208 | $2,610 | $13,826 | $5,344 | | Royalties (in thousands) | $7,314 | $5,658 | $16,768 | $12,592 | | Franchised restaurant sales (in thousands) | $154,854 | $118,896 | $353,330 | $264,994 | | Change in same-store sales | (1.1%) | 2.8% | 0.8% | 2.8% | - Franchise rental revenues increased by $3.6 million (137.9%) in the quarter and $8.5 million (158.7%) year-to-date, primarily due to new subleases from refranchised restaurants[100] - Franchise royalties and other increased by $1.6 million (27.7%) in the quarter and $4.6 million (35.6%) year-to-date, driven by higher franchise restaurant sales from refranchised and new franchise-operated restaurants[100] Company-Wide Results This section provides an overview of company-wide financial results, including depreciation, SG&A expenses, other operating expenses, and interest and income tax expenses Depreciation and Amortization This subsection discusses the changes in depreciation and amortization expenses and their primary drivers - Depreciation and amortization decreased by $0.7 million in the quarter and $1.6 million year-to-date, primarily due to Del Taco refranchising and fully depreciated Jack in the Box assets[102] Selling, General and Administrative ("SG&A") Expenses This subsection details the components of SG&A expenses and the factors influencing their changes | Metric (in thousands) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Advertising | $7,778 | $9,159 | $18,171 | $21,312 | | Incentive compensation | $1,856 | $6,004 | $6,482 | $11,149 | | Share-based compensation | $3,841 | $2,399 | $8,662 | $5,932 | | Cash surrender value of COLI policies, net | $(1,232) | $(844) | $(6,066) | $(6,568) | | Litigation matters | $472 | $(1,141) | $718 | $4,929 | | Total SG&A Expenses | $37,520 | $39,405 | $83,885 | $89,547 | - Advertising costs decreased due to lower company-operated restaurant sales from refranchising, incentive compensation decreased due to lower achievement levels, and share-based compensation increased due to higher achievement relating to performance-based equity awards[103] Other Operating Expenses (Income), Net This subsection explains the changes in other operating expenses and income, net, highlighting key contributing factors - Other operating expenses (income), net, increased by $2.3 million in the quarter and $13.0 million year-to-date[106] - Quarter increase primarily due to $2.0 million in consulting fees for strategic initiatives[106] - Year-to-date increase due to $9.5 million prior-year gains on Jack in the Box restaurant property sales and $7.0 million higher strategic consulting fees, partially offset by $2.4 million gains from Del Taco acquisitions[106] Gains and Losses on the Sale of Company-Operated Restaurants This subsection details the net gains or losses recognized from the sale of company-operated restaurants in the current and prior fiscal years - Recognized a net loss of $1.3 million year-to-date from the sale of 13 Del Taco company-operated restaurants in fiscal 2024[106] - In fiscal 2023, recognized a net gain of $4.5 million from the sale of five Jack in the Box and 16 Del Taco company-operated restaurants[106] Interest Expense, Net This subsection presents the company's net interest expense and explains the factors contributing to its change | Metric (in thousands) | Quarter Ended April 14, 2024 | Quarter Ended April 16, 2023 | YTD April 14, 2024 | YTD April 16, 2023 | | :------------------------ | :--------------------------- | :--------------------------- | :----------------- | :----------------- | | Interest expense, net | $18,603 | $19,357 | $43,089 | $45,505 | - Decrease primarily due to lower average borrowings and interest rates, and an increase in interest income[107] Income Tax Expense This subsection provides the effective income tax rates and the primary reasons for their fluctuations | Metric | Q2 FY2024 | Q2 FY2023 | YTD FY2024 | YTD FY2023 | | :----------------- | :-------- | :-------- | :--------- | :--------- | | Effective Tax Rate | 26.5% | 34.8% | 26.7% | 29.6% | - The decrease in tax rates was primarily due to a lower impact from estimated disposals of non-deductible goodwill attributable to refranchising transactions[108] LIQUIDITY AND CAPITAL RESOURCES This section discusses the company's sources and uses of cash, including operating, investing, and financing activities, and details its debt structure and covenant compliance General This subsection provides an overview of the company's liquidity position, including cash balances and available borrowings - As of April 14, 2024, the company had $49.0 million in cash and restricted cash and $175.5 million in available borrowings under its Variable Funding Notes and revolving credit facility[109] - The company expects cash flows from operations, securitized financing, and revolving credit facility to be sufficient for capital expenditures, working capital, and debt service for at least the next twelve months[109] Cash Flows This subsection analyzes the changes in cash flows from operating, investing, and financing activities year-over-year | Cash Flow Activity (in thousands) | YTD April 14, 2024 | YTD April 16, 2023 | Change (YoY) | | :-------------------------------- | :----------------- | :----------------- | :----------- | | Operating Activities | $(6,021) | $94,108 | $(100,129) | | Investing Activities | $(55,854) | $9,730 | $(65,584) | | Financing Activities | $(75,055) | $(117,042) | $41,987 | - Operating cash flow decrease was primarily due to a $95.5 million unfavorable change in working capital (driven by decreases in income tax liabilities, accrued legal, and advertising accruals) and $4.6 million lower net income[110] - Investing cash flow decrease was due to $23.9 million higher purchases of property and equipment, $21.9 million lower proceeds from Jack in the Box property sales, and $16.4 million lower proceeds from company-operated restaurant sales[110] Capital Expenditures This subsection details the company's capital expenditures by category and explains the reasons for increases | Capital Expenditure Category (in thousands) | YTD April 14, 2024 | YTD April 16, 2023 | Change (YoY) | | :------------------------------------------ | :----------------- | :----------------- | :----------- | | Restaurant facility expenditures | $21,545 | $15,058 | $6,487 | | Purchases of assets intended for sale | $11,985 | $5,801 | $6,184 | | Restaurant information technology | $12,491 | $8,607 | $3,884 | | Corporate information technology | $6,566 | $2,625 | $3,941 | | Total Capital Expenditures | $61,071 | $37,196 | $23,875 | - Increases in capital expenditures were for capital maintenance, operational initiatives, exercising right of first refusal for land/building intended for sale/leaseback, and new enterprise resource planning system[113] Sale of Company-Operated Restaurants This subsection provides details on the number of company-operated restaurants sold and the total proceeds generated from these sales | Metric | YTD April 14, 2024 | YTD April 16, 2023 | | :-------------------------------------- | :----------------- | :----------------- | | Number of Jack in the Box restaurants sold | 0 | 5 | | Number of Del Taco restaurants sold | 13 | 16 | | Total proceeds (in thousands) | $1,989 | $18,417 | Financing Activities This subsection analyzes the changes in cash used in financing activities, including debt repayments and stock repurchases - Cash used in financing activities decreased by $42.0 million year-over-year[114] - This change was primarily due to a $50.0 million repayment on Variable Funding Notes in the prior year, partially offset by a $7.4 million increase in stock repurchases in the current year[114] - As of April 14, 2024, the company had no outstanding borrowings and $100.5 million available under its Variable Funding Notes, and no outstanding borrowings and $75.0 million available under its revolving credit facility[115] DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES This section states that there have been no material changes to the critical accounting policies and estimates previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended October 1, 2023 - No material changes to critical accounting policies and estimates since the 2023 Form 10-K[116] NEW ACCOUNTING PRONOUNCEMENTS This section refers to Note 1, Basis of Presentation, for details on new accounting pronouncements, specifically mentioning ASU 2023-07 and ASU 2023-09 - The company is evaluating ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes) but does not expect them to have a significant impact on disclosures[21] CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS This section outlines various risks and uncertainties that could cause actual results to differ materially from forward-looking statements, including changes in labor costs, consumer confidence, and regulatory changes - Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors[119] - Key risk factors include changes in labor and commodity costs, declines in consumer confidence, intense competition, inability to attract/retain personnel, negative publicity, severe weather, food safety concerns, integration risks from acquisitions, highly franchised business model risks, and increasing regulatory/legal complexity[119][120] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes in the company's quantitative and qualitative market risks since the Annual Report on Form 10-K for the fiscal year ended October 1, 2023 - No material changes in market risks since the 2023 Form 10-K[122] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and states that there have been no material changes in internal control over financial reporting during the quarter Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures This subsection confirms the effectiveness of the company's disclosure controls and procedures as assessed by management - CEO and CFO concluded that disclosure controls and procedures were effective as of April 14, 2024[123] Changes in Internal Control over Financial Reporting This subsection states that there were no material changes in the company's internal control over financial reporting during the quarter - No material changes in internal control over financial reporting during the quarter ended April 14, 2024[124] PART II – OTHER INFORMATION This section contains other required information not included in the financial statements, such as legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings This section refers to Note 14, Commitments and Contingencies, for a detailed discussion of the company's legal matters and contingencies - Legal proceedings are discussed in Note 14, Commitments and Contingencies[127] Item 1A. Risk Factors This section directs readers to the risks and uncertainties described in Item 1A of the 2023 Form 10-K and the 'Cautionary Statements Regarding Forward-Looking Statements' in Item 2 of this report for a comprehensive understanding of potential business impacts - Readers should consider risks and uncertainties from Item 1A of the 2023 Form 10-K and 'Cautionary Statements Regarding Forward-Looking Statements' in Item 2 of this report[128] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchase activities during the second quarter of 2024, including shares repurchased, cost, and remaining authorization | Period | Total Shares Purchased | Average Price Paid per Share | Total Shares Purchased under Publicly Announced Programs | Maximum Dollar Value Remaining (in thousands) | | :----------------------------------- | :--------------------- | :--------------------------- | :------------------------------------------------------- | :-------------------------------------------- | | February 19, 2024 - March 17, 2024 | 203,627 | $73.66 | 203,627 | $210,000 | | Total (Q2 2024) | 203,627 | | 203,627 | $210,000 | - A Rule 10b5-1 trading arrangement for up to $15.0 million to repurchase shares was entered into on February 27, 2024, and terminated on April 12, 2024[132] Item 3. Defaults of Senior Securities This section states that there were no defaults of senior securities to report - No defaults of senior securities[131] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company's operations - Not applicable[131] Item 5. Other Information This section reports that no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter, though a specific Rule 10b5-1 arrangement was entered into and subsequently terminated - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[132] - A Rule 10b5-1 trading arrangement for up to $15.0 million was entered into on February 27, 2024, and terminated on April 12, 2024[132] Item 6. Exhibits This section lists the exhibits filed with the SEC, including various certifications and iXBRL taxonomy documents - Includes certifications of CEO and CFO (31.1, 31.2, 32.1, 32.2) and iXBRL taxonomy documents[133][134] SIGNATURE This section contains the official signature confirming the submission of the report SIGNATURE This section confirms the official signing of the report by the authorized signatory - Report signed by Brian Scott, Chief Financial Officer, on May 14, 2024[136]