For the 12 weeks ended April 15, 2018, Jack in the Box reported net income of $47,605,000 compared to $33,094,000 during the same period a year ago. Net diluted earnings per share for the period was $1.62 compared with $1.06 reported in the second quarter of 2017.
The company completed the sale of its Mexican food subsidiary, Qdoba Restaurant Corp., on March 21, Jack in the Box noted. Results included discontinued operations for all periods presented. Earnings from continuing operations were $25.0 million, or $0.85 per diluted share, compared with $31.4 million, or $1.01 per diluted share, for the second quarter of 2017. Operating earnings per share, adjusted for one-time gains and losses, were $0.80 compared with $0.86 in the prior-year quarter.
“Our second quarter operating results were in line with our expectations,” said Lenny Comma, chairman and CEO of Jack in the Box. “We were pleased that a greater emphasis on value resulted in a sequential improvement in traffic during the quarter. And by balancing our value promotions with innovative premium products, we were able to protect restaurant margins.”
Revenues for the second quarter were $209,772,000, down from $265,884,000 reported in the second quarter of 2017.
Same-store sales in the quarter eased 0.1 percent, while company same-store sales increased 0.9 percent. Average check growth of 2.6 percent drove sales which were partially offset by a 1.7 percent decrease in transactions, the company said.
“With the refranchising of 63 Jack in the Box restaurants in the second quarter and 29 thus far in the third quarter, our franchise mix now stands at 93 percent,” Comma said. “We currently have signed non-binding letters of intent with franchisees to sell 17 additional restaurants, which would bring the Jack in the Box franchise mix to approximately 94 percent. In addition, we completed the sale of Qdoba during the quarter, which marks an important milestone in the actions we’re taking to enhance shareholder value.
“We resumed share repurchases during the quarter, with the purchase of $100 million of stock, and last week our board of directors authorized an additional $200 million stock buyback program,” Comma continued. “We also completed an amendment and extension of our existing credit facility which is an interim step that provides an immediate increase in our borrowing capacity to 4.5 times EBITDA while we work with our advisors to evaluate longer-term financing alternatives. We remain comfortable with ultimately increasing our leverage up to 5.0 times EBITDA.”
In updating its guidance for the third quarter of 2018, Jack in the Box expects same-store sales to be flat to up 1.0 percent at non-franchised restaurants compared with a 0.2 percent decline in the year-ago period.