Jack In The Box Earnings Call Insights: Speed of Service and 2013 Guidance
Speed of Service
Joseph Buckley – Bank of America Merrill Lynch Research: I guess could you elaborate a little bit on the speed of service? I know sequentially you’re seeing improvement quarter after quarter? Is that a rolling market focus or on a specific initiatives that you’re implementing each subsequent quarter to achieve those gains and where do you think you stand in terms of the potential on speed of service?
Lenny Comma – President and COO: Joe, this is Lenny Comma. We’ve mentioned I guess about a year ago that we could improve speed of service almost a minute and still be slower than other QSRs that we compete directly with. We continue to see about that amount of opportunity for us with speed of service, and so we’ll continue to do what I mentioned to folks earlier, which is focus on improving speed of service while not doing anything that would negatively impact food quality. So we are going to move slowly, but we think that over the course of the next couple of years we’d improve speed of service to the same degree that we have improved it in the last two years, and so we think the opportunity is big. It’s not a rolling situation market-by-market while focusing on the entire country and each of the local markets has the same focus and the same toolkit that they are using to make these improvements, so we do think that there’s still lot of fruit left on the vine and that we intend to go after it, but like I said, it won’t be all in one fell swoop.
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Joseph Buckley – Bank of America Merrill Lynch Research: Then, just a follow up for Jerry, the more aggressive share buyback the last four months, does that reflect a greater commitment to share buybacks or is it more based around the distribution center and the freeing up of that $60 million of capital?
Jerry P. Rebel – EVP and CFO: Joe, I don’t know if I’ll call it a more aggressive focus on share buyback. We did purchase last year almost $200 million worth of stock in 2011. We did slow it down somewhat earlier in the beginning of this – in the beginning of ’12 as we were buying back Qdoba restaurants from franchisees. I would say that what we did in late in the fourth quarter and early into this quarter was to just continue with our focus of returning cash to shareholders. One thing I want to mention also is that the new credit facility also reloaded our share repurchase baskets. We now have $500 million worth of availability under that new facility and the $50 million that we purchased back late in the fourth quarter and early in the first quarter were under the prior credit facility, so we still have the entire $500 million basket available under the new credit facility. Also, I’ll mention that our changed business model generates a significant amount of free cash flow. So, I would expect that we would continue to be constructive with respect to returning cash to shareholders going forward.
John Glass – Morgan Stanley: Jerry, just first on your guidance for 2013, does that include the selling of the southeastern stores that you’ve talked about and can you just remind us are you still on track to do that this year and what the benefits to the P&L to earnings would be, any updated thought on that as well?
Jerry P. Rebel – EVP and CFO: The southwest, we do plan on selling the southeast more close to the end of the year rather than in the beginning, and as a result of that, I wouldn’t expect it to have a meaningful impact on this year’s earnings, and as a result, there really is not benefit included in our guidance for this year on that. To the extent that we are able to move up one or more of those individual markets in the southeast to sell earlier in the year, I’d expect that to have a positive impact on our earnings and I think at our February Investor Day we talked about a $0.10 to $0.12 benefit if we were able to sell the southeast markets and we’re still comfortable with that kind of range.
John Glass – Morgan Stanley: And then just as a follow-up; one, then is that any assumption of the $2.14 or is that just sort of a kind of a new run rate? And then secondly can you talk about the 15.5% to 16% (strong) margin goal for this year, how much of that – just in broad strokes, how much of that is brand mix, how much of that is refranchising driven, and how much of that is just individual improvement in the underlying margins of their respective businesses?
Jerry P. Rebel – EVP and CFO: Given the fact that we are at 76% franchise operated today. Absent selling the southeast I wouldn’t expect a meaningful appreciation in margin from refranchising activities going forward. So the 15.5% to 16% is primarily due to improvement in operations of both brands with the same-store sales assumptions that we have at that 2% to 3%. The $2 per share for 2014 the southeast is assumed to be in there, although I’m not certain that we actually needed to be to hit the number.
A Closer Look: Jack In The Box Earnings Cheat Sheet>>