Loading...
01/11 16:02
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several concerning factors: declining same-store sales, reduced margins, significant goodwill impairment, and a GAAP loss per share. Despite maintaining guidance, the financial health is weak with high debt levels and reduced share repurchase plans. The Q&A highlights industry challenges and company-specific headwinds, with management providing vague responses. The combination of these factors suggests a strong negative market reaction, potentially exacerbated by the lack of market cap information to gauge the impact.
Same Store Sales (Jack Brand) Decreased 4.4% (from a decrease of 4.5% for franchise restaurants and 4% for company-owned). This was driven by a decrease in transactions and negative mix, partially offset by price increases.
Restaurant Level Margin (Jack Brand) Decreased to 19.6% from 23.6% year-over-year. The decline was driven by lower sales, inflation in commodities, wages, and utilities, as well as higher operating costs, partially offset by price increases and favorable beverage funding.
Food and Packaging Costs (Jack Brand) Decreased to 27.8% of sales, down 100 basis points year-over-year, due to increased beverage funding and price increases, partially offset by commodity inflation of 3.4%.
Labor Costs (Jack Brand) Increased to 33.8% of sales, up 320 basis points year-over-year, primarily due to wage inflation of 10.6% related to California’s minimum wage law.
Occupancy and Other Operating Expenses (Jack Brand) Increased by 170 basis points, driven by higher rent, utilities, and other operating expenses including third-party delivery fees.
Franchise Level Margin (Jack Brand) $68.3 million or 40% of franchise revenues, down from $71.7 million or 40.4% year-over-year, mainly due to lower franchise same store sales.
Same Store Sales (Del Taco) Declined 3.6% (with franchise sales down 4.2% and company-owned down 1.7%). The decline was attributed to a decrease in transactions, partially offset by an increase in price.
Restaurant Level Margin (Del Taco) Decreased to 12.8%, down 400 basis points year-over-year, driven mainly by lower sales and commodity and wage inflation, partially offset by menu price increases.
Food and Packaging Costs (Del Taco) Decreased to 24.6% of sales, down 100 basis points year-over-year, due to favorable beverage funding, partially offset by commodity inflation of 5.7%.
Labor Costs (Del Taco) Increased to 38.2% of sales, up 330 basis points year-over-year, primarily due to wage inflation of 11.7% related to California’s minimum wage law.
Occupancy and Other Operating Costs (Del Taco) Increased by 160 basis points, driven primarily by higher utility and maintenance costs.
Franchise Level Margin (Del Taco) 24.4% of franchise revenues, down from 28.9% year-over-year, driven by refranchising and the associated impact of pass-through rent, marketing, and purchasing fees.
SG&A Expenses $35.5 million or 10.5% of revenues, down from $37.5 million or 10.3% year-over-year, primarily due to lower share-based and incentive-based compensation.
Consolidated Adjusted EBITDA $66.5 million, down from $75.7 million year-over-year, primarily due to impacts from Del Taco refranchising and sales deleverage and inflation experienced by both brands.
Goodwill and Intangible Asset Impairment $203.2 million for the Del Taco reporting unit, resulting from lower current performance and updates impacting long-term forecasts.
GAAP Diluted Loss Per Share Negative $7.47 compared to earnings of $1.26 in the prior year, primarily due to the impairment charge.
Operating Earnings Per Share $1.20 for the quarter versus $1.46 in the prior year.
Effective Tax Rate 19.5% compared to 26.5% year-over-year, primarily due to non-deductible goodwill impairment and COLI losses.
Capital Expenditures $21.5 million for the quarter, including investments in restaurant technology and digital initiatives.
Total Debt Outstanding $1.7 billion at quarter end.
Net Debt to Adjusted EBITDA Leverage Ratio 5.5 times.
Available Borrowing Capacity $96.5 million under variable funding notes net of letters of credit.
Digital Sales: Digital sales have reached 18% system wide, with a target of 20% ahead of schedule.
Kiosk Implementation: Nearly 1,500 restaurants have successfully implemented new flip kiosks as part of the new POS rollout.
New Menu Items: New flavors of curly fries, including Chili Crisp and barbecue chip, are set to be introduced.
Restaurant Openings: Five restaurant openings and 12 closures occurred in the quarter, with expectations to open 35-40 restaurants in fiscal 2025.
Market Expansion: New openings are planned in Chicago, Louisville, Salt Lake City, and Florida.
Tech Modernization: The company is investing in technology modernization, including a new POS system and digital initiatives.
Operational Efficiency: Focus on closing underperforming restaurants to improve net unit growth and competitive economics.
Jack on Track Plan: The plan aims to strengthen the balance sheet, accelerate cash flow, and simplify the business model.
Franchisee Engagement: Franchisees have shown strong support for the Jack on Track initiatives, focusing on long-term growth.
Top Line Environment: Significant pressure on multiple income cohorts leading to negative traffic, indicating a challenging market environment.
Technology Integration Challenges: Integration of modern technology with legacy systems has encountered challenges, impacting sales temporarily as the company modernizes its technology.
Inflationary Pressures: Continued inflation for commodities, wages, and utilities affecting restaurant level margins and overall profitability.
Franchise Performance: Lower franchise same store sales leading to decreased royalty and rent revenue, impacting overall financial performance.
Restaurant Closures: Planned closures of underperforming restaurants could impact brand presence and revenue generation.
Goodwill Impairment: A non-cash goodwill and intangible asset impairment charge of $203.2 million for the Del Taco reporting unit due to lower performance and updated cash flow assumptions.
Consumer Caution: Ongoing consumer caution affecting sales, particularly among low-income demographics, which may be more pronounced for the company.
Debt Levels: Total debt outstanding at $1.7 billion with a net debt to adjusted EBITDA leverage ratio of 5.5 times, indicating potential financial strain.
Jack on Track Plan: The company is focused on becoming a simpler asset-light organization that drives sustainable growth for franchisees and investors. Key actions include strengthening the balance sheet, closing underperforming restaurants, and modernizing technology.
Digital Sales Growth: The company aims to increase digital sales to 20% ahead of schedule, with current digital sales at 18% system-wide.
Restaurant Closures: The company plans to close underperforming restaurants to ensure consistent net unit growth and competitive unit economics.
New POS System Rollout: The new point of sale system has been implemented in nearly 1,500 restaurants, which is part of the tech modernization strategy.
Franchisee Support: Franchisees have shown strong support for the Jack on Track initiatives, focusing on long-term growth.
Same Store Sales Guidance: The company expects same store sales to remain challenging, with current trends in line with the second quarter performance.
Restaurant Openings: Jack in the Box expects to open between 35 to 40 restaurants for fiscal 2025, including openings in Chicago.
Capital Expenditures: Capital expenditures for the quarter were $21.5 million, focusing on technology and new restaurant development.
Debt Management: The company aims to strengthen its balance sheet and accelerate cash flow while managing total debt of $1.7 billion.
Digital Sales Target: The company is targeting 20% digital sales, with current performance at 18%.
Dividend Program: We discontinued our dividend.
Share Repurchase Program: We did not repurchase any shares of stock during the quarter.
The earnings call summary indicates mixed signals: modest improvements in same-store sales and effective marketing spend are positive, but negative sales projections and planned restaurant closures are concerning. The strategic focus on technology and innovation is promising, yet the lack of strong guidance and financial pressures on franchisees temper optimism. The Q&A reveals cautious macro assumptions and supportive franchisee sentiment, but also highlights financial challenges. Overall, these factors suggest a neutral stock price movement, with no strong catalysts for significant change.
The earnings call highlights a mixed picture: there are positive developments such as digital sales growth and strong franchisee support, but challenges remain with same-store sales and significant debt. The Q&A section reveals management's cautious optimism and some lack of clarity on critical metrics, which tempers enthusiasm. The lack of a new partnership announcement or significant positive catalyst, combined with ongoing operational challenges, suggests a neutral stock price reaction in the short term.
The earnings call revealed several negative factors: declining same-store sales, reduced margins, and a substantial noncash goodwill impairment leading to a significant GAAP loss. Despite maintaining guidance and some operational initiatives, the Q&A highlighted industry challenges, IT issues, and a cautious consumer base. The strategic alternatives for Del Taco and lack of clarity on closures add uncertainty. These factors, combined with reduced share repurchases and high debt, suggest a negative sentiment for the stock price in the near term.
The earnings call reveals several concerning factors: declining same-store sales, reduced margins, significant goodwill impairment, and a GAAP loss per share. Despite maintaining guidance, the financial health is weak with high debt levels and reduced share repurchase plans. The Q&A highlights industry challenges and company-specific headwinds, with management providing vague responses. The combination of these factors suggests a strong negative market reaction, potentially exacerbated by the lack of market cap information to gauge the impact.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
