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Jack in the Box Inc. Reports Second Quarter 2025 Earnings

1. JACK's same-store sales fell 4.4% in Q2, indicating declining consumer activity. 2. Company reported a significant net loss of $142.2 million, up from $25 million profit. 3. Restaurant-Level Margins decreased due to inflation and lower sales across the brand. 4. JACK plans marketing efforts for H2 2025 to boost sales amid a tough environment. 5. Goodwill impairment of $203.2 million noted for Del Taco, impacting financial health.

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FAQ

Why Very Bearish?

The significant net loss and decreased same-store sales signal ongoing struggles, potentially leading to further declines in stock price. Historically, similar results have preceded drop in share prices.

How important is it?

The article highlights critical financial metrics and strategic plans that are likely to influence investor confidence and JACK's market performance.

Why Short Term?

The immediate financial performance suggests a rapid market reaction, as investors may sell off shares in response to the poor earnings report.

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TACO
SAN DIEGO--(BUSINESS WIRE)--Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the Jack in the Box and Del Taco brands in the second quarter, ended April 13, 2025. “I am encouraged by our marketing plans in the back half of 2025, which we expect to energize sales despite the difficult industry-wide macro environment in which we continue to operate,” said Lance Tucker, Jack in the Box Chief Executive Officer. “As we stated when announcing the recent 'JACK on Track' plan, we are addressing the areas of need to improve the business, and I am confident in our ability to establish consistent top-line trends while becoming a more simple, efficient company and investor story.” Jack in the Box Performance Same-store sales decreased 4.4% in the second quarter, comprised of franchise same-store sales decline of 4.5% and company-owned same-store sales decline of 4.0%. Price was higher versus prior year, while both transactions and mix were down compared to prior year. Systemwide sales for the second quarter decreased 4.9%. Restaurant-Level Margin(1), a non-GAAP measure, was $18.7 million, or 19.6%, down from $23.3 million, or 23.6%, a year ago driven primarily by lower sales, continued inflation for commodities, wage and utilities, as well as higher operating costs, partially offset by price increases and a decrease in food and packaging from a favorable increase of beverage funding relating to a new contract. Franchise-Level Margin(1), a non-GAAP measure, was $68.3 million, or 40.0%, a decrease from $71.7 million, or 40.4%, a year ago. The decrease was mainly driven by lower sales driving lower royalties and lower percentage rent, as well as higher franchise costs, partially offset by rent spread buyouts and higher early term penalties. Jack in the Box net restaurant count decreased slightly in the second quarter, with five restaurant openings and twelve restaurant closures. Del Taco Performance Same-store sales decreased 3.6% in the second quarter, comprised of franchise same-store sales decline of 4.2% and company-operated same-store sales decline of 1.7%. Sales performance resulted from a decline in transactions, partially offset by an increase in price. Systemwide sales for the fiscal second quarter decreased 4.5%. Restaurant-Level Margin(1), a non-GAAP measure, was $6.1 million, or 12.8%, down from $11.4 million, or 16.8%, a year ago. The decrease was due mainly to a decrease in restaurant count from refranchising and closing restaurants. The margin percentage decline was driven by lower sales and inflation in wages and commodities, partially offset by lower food and packaging as a result of favorable beverage funding. Franchise-Level Margin(1), a non-GAAP measure, was $5.7 million, or 24.4%, compared to $6.1 million, or 28.9%, a year ago. The decrease in margin percentage was driven by refranchising and the associated impact of pass-through rent, marketing and purchasing fees. Del Taco restaurant count in the second quarter had six restaurant openings and four restaurant closings. Company-Wide Performance Second quarter diluted loss per share was ($7.47). Operating Earnings Per Share(2), a non-GAAP measure, was $1.20 in the second quarter of fiscal 2025 compared with $1.46 in the prior year quarter. Total revenues decreased 7.8% to $336.7 million, compared to $365.3 million in the prior year quarter. The lower revenue is primarily the result of the Del Taco refranchising transactions. Net loss was $142.2 million for the second quarter of fiscal 2025. This compared with net earnings of $25.0 million for the second quarter of the prior year. Adjusted EBITDA(3), a non-GAAP measure, was $66.5 million in the second quarter of fiscal 2025 compared with $75.7 million for the prior year quarter. Company-wide SG&A expense for the second quarter was $35.5 million, an increase of $2.0 million compared to the prior year quarter. The increase was due primarily to the fluctuations in the cash surrender value of our company-owned life insurance policies, partially offset by lower share-based compensation and lower incentive-based compensation. When excluding net COLI losses, G&A was 2.2% of systemwide sales. During the quarter, the Company recognized goodwill and intangible impairment of $203.2 million relating to the Del Taco reporting unit. This is a non-cash charge which was the result of an internal quantitative impairment assessment and which does not impact future operations. The income tax provision reflects an effective tax rate of 19.5% in the second quarter of 2025, as compared to 26.5% in the second quarter of fiscal year 2024. The rate for the quarter was primarily due to non-deductible goodwill impairment and non-deductible losses from the market performance of insurance products used to fund certain non-qualified retirement plans. The non-GAAP operating EPS tax rate for the second quarter of 2025 was 24.8% primarily due to a reduction in non-deductible officers’ compensation limitations incurred in the quarter. Capital Allocation The Company did not repurchase any shares of our common stock in the second quarter. As of the end of the second quarter, there was $175.0 million remaining under the Board-authorized stock buyback program. As previously announced, Jack in the Box discontinued its dividend. Guidance & Outlook Updates All guidance measures remain the same as provided on April 23, 2025 as part of the “JACK on Track” plan announcement. Conference Call The Company will host a conference call for analysts and investors on Wednesday, May 14, 2025, beginning at 2:00 p.m. PT (5:00 p.m. ET). The call will be webcast live via the Investors section of the Jack in the Box company website at http://investors.jackinthebox.com. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days. The call can be accessed via phone by dialing (888) 596-4144 and using ID 7573961. About Jack in the Box Inc. Jack in the Box Inc. (NASDAQ: JACK), founded and headquartered in San Diego, California, is a restaurant company that operates and franchises Jack in the Box®, one of the nation's largest hamburger chains with approximately 2,180 restaurants across 22 states, and Del Taco®, the second largest Mexican-American QSR chain by units in the U.S. with approximately 590 restaurants across 17 states. For more information on both brands, including franchising opportunities, visit www.jackinthebox.com and www.deltaco.com. Category: Earnings Safe Harbor Statement This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,” “intend,” “plan,” “project,” “may,” “will,” “would” and similar expressions. These statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate. These estimates and assumptions involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause our actual results to differ materially from any forward-looking statements include, but are not limited to: the success of new products, marketing initiatives and restaurant remodels and drive-thru enhancements; the impact of competition, unemployment, trends in consumer spending patterns and commodity costs; the Company’s ability to achieve and manage its planned growth, which is affected by the availability of a sufficient number of suitable new restaurant sites, the performance of new restaurants, risks relating to expansion into new markets and successful franchise development; the ability to attract, train and retain top-performing personnel, litigation risks; risks associated with disagreements with franchisees; supply chain disruption; food-safety incidents or negative publicity impacting the reputation of the Company's brand; increased regulatory and legal complexities, risks associated with the amount and terms of the securitized debt issued by certain of our wholly owned subsidiaries; and stock market volatility. These and other factors are discussed in the Company’s annual report on Form 10-K and its periodic reports on Form 10-Q filed with the Securities and Exchange Commission, which are available online at http://investors.jackinthebox.com or in hard copy upon request. The Company undertakes no obligation to update or revise any forward-looking statement, whether as the result of new information or otherwise. JACK IN THE BOX INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) DATA (Unaudited) The following table presents certain income and expense items included in our condensed consolidated statements of earnings (loss) as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding. JACK IN THE BOX INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS (Unaudited) To supplement the condensed consolidated financial statements, which are presented in accordance with GAAP, the Company uses the following non-GAAP measures: Adjusted Net Income, Operating Earnings Per Share, Adjusted EBITDA, Restaurant-Level Margin and Franchise-Level Margin. Management believes that these measurements, when viewed with the Company's results of operations in accordance with GAAP and the accompanying reconciliations in the tables below, provide useful information about operating performance and period-over-period changes, and provide additional information that is useful for evaluating the operating performance of the Company's core business without regard to potential distortions. Operating Earnings Per Share Operating Earnings Per Share represents diluted earnings (loss) per share on a GAAP basis excluding integration and strategic initiatives, net COLI losses (gains), pension and post-retirement benefit costs, goodwill and intangible impairment, losses (gains) on the sale of company-operated restaurants, excess tax (benefits) shortfall from share-based compensation arrangements, and the tax-related impacts of the above adjustments. Operating Earnings Per Share should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Operating Earnings Per Share provides investors with a meaningful supplement of the Company’s operating performance and period-over-period changes without regard to potential distortions. Below is a reconciliation of Non-GAAP Adjusted Net Income to the most directly comparable GAAP measure of net income. Also below is a reconciliation of Non-GAAP Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings (loss) per share: Adjusted EBITDA Adjusted EBITDA represents net earnings (loss) on a GAAP basis excluding income taxes, interest expense, net, losses (gains) on the sale of company-operated restaurants, other operating expenses (income), net, goodwill and intangible impairment, depreciation and amortization, amortization of cloud computing costs, amortization of favorable and unfavorable leases and subleases, net, amortization of franchise tenant improvement allowances and other, net COLI losses (gains), and pension and post-retirement benefit costs. Adjusted EBITDA should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Adjusted EBITDA is useful to investors to gain an understanding of the factors and trends affecting the Company's ongoing cash earnings, from which capital investments are made and debt is serviced. Below is a reconciliation of non-GAAP Adjusted EBITDA to the most directly comparable GAAP measure, net earnings (loss) (in thousands): Restaurant-Level Margin Restaurant-Level Margin is defined as company restaurant sales less restaurant operating costs (food and packaging, labor, and occupancy costs) and is neither required by, nor presented in accordance with GAAP. Restaurant-Level Margin excludes revenues and expenses of our franchise operations and selling, general, and administrative expenses. Certain other costs, such as depreciation and amortization, goodwill impairment, other operating expenses, net, gains/ losses on the sale of company-operated restaurants, and other costs that are considered normal operating costs are excluded as they are considered corporate-level shared service costs. As such, Restaurant-Level Margin is not indicative of the overall results of the Company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Restaurant-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The Company is presenting Restaurant-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Restaurant-Level Margin as a key performance indicator to evaluate the profitability of company-operated restaurants. Below is a reconciliation of non-GAAP Restaurant-Level Margin to the most directly comparable GAAP measure, earnings (loss) from operations (in thousands): Franchise-Level Margin Franchise-Level Margin is defined as franchise revenues less franchise operating costs (occupancy expenses, advertising contributions, and franchise support and other costs) and is neither required by, nor presented in accordance with GAAP. Franchise-Level Margin excludes revenue and expenses of our company-operated restaurants and selling, general, and administrative expenses. Certain other costs, such as depreciation and amortization, goodwill impairment, other operating expenses, net, gains/ losses on the sale of company-operated restaurants, and other costs that are considered normal operating costs are excluded as they are considered corporate-level shared service costs. As such, Franchise-Level Margin is not indicative of the overall results of the Company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Franchise-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The Company is presenting Franchise-Level Margin because it believes that it provides a meaningful supplement to net earnings of the Company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Franchise-Level Margin as a key performance indicator to evaluate the profitability of our franchise operations. Below is a reconciliation of non-GAAP Franchise-Level Margin to the most directly comparable GAAP measure, earnings (loss) from operations (in thousands): More News From Jack in the Box Inc.

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