Jack In The Box Inc.

Good day everyone and welcome to the Jack in the Box Inc. fourth quarter fiscal 2020 earnings conference call. Today's call is being broadcast live over the internet. A replay of the call will be available on the Jack in the Box corporate website starting today. During the question and answer period, please use your handset when asking a question. Please do not ask over a speakerphone. At this time, for opening remarks and introductions, I would like to turn the call over to Carol Duraimo for Jack in the Box. Please go ahead.

Carol Duraimo Thank you, Mariama, and good morning, everyone. Joining me on the call today are Chief Executive Officer Darren Harris, Interim Principal Financial Officer Don Hooper, and Treasurer VP of Financial Planning and Analysis Sean Bowe. In our comments this morning, per share amounts refer to diluted earnings per share. We will refer to non-GAAP items throughout today's call, including operating earnings per share, adjusted EBITDA, as well as restaurant-level margin and franchise-level margin. Please refer to the non-GAAP reconciliations provided in yesterday's earnings release. Following today's presentation, we'll take questions from the financial community. Please be advised that during the course of our presentation and our question and answer session today, we may make forward-looking statements that reflect management's expectations for the future, which are based on current information. And while management may provide current thinking on this call around the potential impacts of COVID-19 on our business, given the unprecedented nature of this pandemic and the rapidly changing environment, any forward-looking statements should be considered with this elevated level of uncertainty. Actual results may differ materially from these expectations based on risks to the business. The safe harbor statement in yesterday's news release and the cautionary statement in the company's most recent Form 10-K filed yesterday are considered a part of this conference call. Material risk factors, as well as information relating to company operations, are detailed in our most recent 10-K, 10-Q, and other public documents filed with the SEC. These documents are available in the Investors section of our website at www.jackinthebox.com. A couple of calendar items to note. Jack-in-the-Box Management will be participating in the Morgan Stanley Virtual Global Consumer and Retail Conference on December 1st. Our first quarter ends on Sunday, January 17th, 2021, and we tentatively plan to announce results on Wednesday, February 17th, after market closed. Our conference call is tentatively scheduled to be held at 8.30 a.m. Pacific time on Thursday, February the 18th. And with that, I'll turn the call over to Darren.

Thank you, Carol, and good morning. I'd first like to take a moment to express my continued heartfelt thanks to our restaurant team members, for keeping everyone's safety a top priority, as we provide for the needs of our guests and first responders. I'd also like to thank our corporate employees, franchisees, and suppliers for their partnership, flexibility, and ingenuity during these unprecedented times. I'm excited to discuss our strong fourth quarter results, but first would like to provide a quick update on where I am with onboarding, Jack's strategy, and some key leadership positions we are in the process of filling. I can tell you we have talked to several great candidates and have made tremendous progress on our CFO search. This role will be pivotal to our long-term strategy, not only as a CFO, but also in terms of development and growth of the company. As to development, we have recently hired Tim Winterman as Senior Vice President, Franchise and Corporate Development, who will report directly into me. He will be responsible for leading the development and execution of franchise sales and real estate strategies and initiatives. With his extensive background in the restaurant industry, including some of Tim's most recent experience as Chief Development Officer at Hull House and prior to that Global Franchise Group, Tim and I have also worked together before when I recruited him to both Arby's and Primrose schools. He has an impressive track record of accelerating growth through innovative approaches and fostering exceptional relationships with existing and potential franchisees. We did not previously have a dedicated franchise sales leader at Jack, so we are very excited to bring him on board and get him started to grow the pipeline of new units with our franchisees, both existing and future. We have also initiated a CMO search, a position that has been vacant for the last few years. While our two marketing SVPs have done a fantastic job of splitting the role and putting the customer first through this uncertain time, We are looking for a leader to come in and focus on three core areas for the long-term success of the brand. Overall brand strategy, the evolution to a more digitally enabled experience, and continued strength in product innovation. I'm very pleased to report that we have made significant progress with strengthening our relationship with our franchisees, including the resolution of a two-year lawsuit with the National Franchise Association. Jack cannot succeed unless our franchisees succeed. I like to think of this as a race. And historically, we've passed the baton to the franchisees at the fourth leg in the race. Now we're bringing them to the starting line with us. And by doing so, we have re-energized the relationship and look forward to seeing this transpire into further growth of the Jack in the Box brand. Lastly, I've met with my leadership team extensively over the past five months to get a better handle on where the brand has been and just how far we can take Jack in the Box. I plan to share more of these details next year after CFO is on board, but I'm excited about the strategy that is being formalized. Today's focus will be primarily on quarter four's outstanding performance, which has continued through the first seven weeks of the first quarter. We have certainly learned a lot about where consumers are headed during this pandemic. The continued importance of digital, the consolidation of transactions to drive higher check gains, and the desire for more indulgence. As mentioned last quarter, Jack pivoted early in the pandemic to capitalize on changing consumer trends, including changing media placements, leading into deliveries, and offering indulgent, flavorful, and portable menu items. Many of these consumer trends held strong through our fourth quarter. Same-store sales for the fourth quarter were the direct result of this, increasing 12.2% We are very pleased with the sequential improvement from our third quarter sales of 6.6%. This improvement was primarily driven by transactions. Although they remain negative as consumers are using brands differently, transaction consolidation and more premium product purchases drove strong check growth throughout the quarter. Sales and cash flow remain robust, and the company is in a very strong position amidst the pandemic. Don will share more detail on this in a minute. As we look at the results for the fourth quarter, same-store sales were the strongest in over 25 years, since 1994. I will take a minute to outline some of the key success drivers. Over the past few years, the team has been dialing in the right value equation to drive overall sales. In 2019 and in 2020, we experienced success with our 499 bundles and upsell and add-on strategies. We continue to see these price-pointed offers appealing to our core consumers during this time. We also continue to benefit from our innovation. Since their launch in mid-January, Tiny Tacos have remained highly incremental to our overall performance as a permanent menu item. Consumer response remains strong. Tiny Tacos drove transactions and bolstered check sizes as they're frequently added on to guest orders. We relaunched Mini Munchies in Quarter 4, featuring a return of mozzarella sticks as a $3 add-on. meeting our guest needs for craveable, snackable, and shareable size enabled us to further bolster check sizes in the quarter. We brought back our popular spicy chicken strips in mid-August. We found success in promotions with a thoughtful upsell strategy, and spicy strips were no different, as we offered two more chicken strips for $2 more. We also focused on digitally-enabled consumer trends, offering a 10-piece spicy chicken strips option available only through delivery. These upsell strategies are not only easy for our crews to execute, they enable the guests to get what they want at a great value and support profitability of these promotions for us and our franchisees. Operationally, we improved our procedures related to the spicy chicken strips, leading to better quality while reducing the frying time to ensure guests could get their favorite spicy strips faster. As to speed of service, customer perceptions improved again in the fourth quarter. During the quarter, we restarted the rollout of our holding bin enhancements to restaurants. This initiative will also enable higher quality products, faster speed of service, and it continues our focus on giving the guests an experience that is consistent and quick. Aside from these continued strategies, we're also seeing shifts in our business as a result of changes from consumer behavior amidst COVID. First, consumers are utilizing delivery and our mobile app more than ever. Delivery and mobile app sales remain approximately double what they were prior to the pandemic. As a reminder, over 95% of our restaurants are covered by at least one of the four major delivery providers, with 80% utilizing at least three of the major providers. We continue to integrate our POS systems with these third-party purveyors, allowing for simpler procedures for the restaurants. Second, while we had significant shifts away from breakfast and late-night day parts earlier in the pandemic, all five of our day parts were positive in the fourth quarter. While traffic remains negative across these day parts, we have seen significant rebound across all of them, including both breakfast and late night. Third, we've experienced continued increased sales of our more premium and indulgent items, items such as our Homestyle Chicken Sandwich and Classic Buttery Jack. Consumers are now placing larger orders as well, typically for multiple people. These shifts in consumer behavior have led to a sustained, significant increase in our check sizes during the pandemic. As our sales continued to improve in the fourth quarter, we shifted some of our marketing spend. The media team has remained extremely nimble, leaning into shifts in consumer consumption trends around gaming and video content to really meet the consumer where they are during this time. We've increased our social media presence and converted all our sports sponsorships into digital formats. Lastly, as to unit growth, franchisees opened seven new restaurants in the quarter and 27 new restaurants for the year. With the addition of Tim and the continued work on the new prototype, we are ironing out the development strategy to invigorate long-term growth for us and our franchisees. We look forward to sharing more about this strategy in 2021. I'll now turn the call over to Donna, our principal financial officer, for a closer look at our fourth quarter results.