BJ’s(BJRI) - 2026 Q2 - Quarterly Report

FORM 10-Q This quarterly report on Form 10-Q was filed by BJ's Restaurants, Inc. for the period ended July 1, 2025 - BJ's Restaurants, Inc. filed its Quarterly Report on Form 10-Q for the period ended July 1, 2025[1][2] - The company is classified as a Large accelerated filer[4] - As of August 6, 2025, there were 22,124,179 shares of Common Stock outstanding[4] TABLE OF CONTENTS The report is structured into two main parts: Financial Information and Other Information - The report is structured into two main parts: Part I. Financial Information and Part II. Other Information[7] - Part I includes Consolidated Financial Statements, Management's Discussion and Analysis, Market Risk disclosures, and Controls and Procedures[7] - Part II covers Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities, and Exhibits[7] PART I. FINANCIAL INFORMATION This section presents unaudited consolidated financial statements, management's discussion, market risk, and controls - Part I encompasses the unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures[8][7] Item 1. CONSOLIDATED FINANCIAL STATEMENTS This item presents the unaudited consolidated financial statements of BJ's Restaurants, Inc. for specified interim periods Consolidated Balance Sheets This section presents the company's assets, liabilities, and equity as of July 1, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (in thousands): | Metric | July 1, 2025 | December 31, 2024 | Change | | :--------------------------------- | :----------- | :---------------- | :----- | | Total assets | $1,025,237 | $1,041,064 | $(15,827) | | Total liabilities | $638,673 | $671,047 | $(32,374) | | Total shareholders' equity | $386,564 | $370,017 | $16,547 | - Current assets decreased from $79.6 million to $72.6 million, driven by reductions in accounts and other receivables, inventories, and prepaid expenses[10] - Long-term operating lease obligations decreased from $394.1 million to $374.5 million[10] Unaudited Consolidated Statements of Operations This section details revenues, expenses, and net income for the interim periods Consolidated Statements of Operations Highlights (in thousands, except per share data): | Metric | 13 Weeks Ended July 1, 2025 | 13 Weeks Ended July 2, 2024 | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenues | $365,597 | $349,927 | $713,570 | $687,261 | | Net income | $22,208 | $17,157 | $35,700 | $24,880 | | Basic net income per share | $1.00 | $0.74 | $1.59 | $1.07 | | Diluted net income per share | $0.97 | $0.72 | $1.54 | $1.04 | - For the thirteen weeks, revenues increased by 4.5% and net income grew by 29.4%[12] - For the twenty-six weeks, revenues increased by 3.8% and net income grew by 43.5%[12] Unaudited Consolidated Statements of Shareholders' Equity This section outlines changes in shareholders' equity, including net income and stock repurchases Shareholders' Equity Changes (in thousands): | Item | 13 Weeks Ended July 1, 2025 | 26 Weeks Ended July 1, 2025 | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Net income | $22,208 | $35,700 | | Repurchase, retirement and reclassification of common stock | $(15,131) | $(29,230) | | Stock-based compensation | $1,986 | $4,026 | | Exercise of stock options | $6,020 | $6,700 | - Total shareholders' equity increased from $370.0 million at December 31, 2024, to $386.6 million at July 1, 2025[10][14] - The company repurchased approximately 842,000 shares of common stock for $29.2 million during the twenty-six weeks ended July 1, 2025[14][56] Unaudited Consolidated Statements of Cash Flows This section presents cash flows from operating, investing, and financing activities for the interim periods Consolidated Statements of Cash Flows Highlights (in thousands): | Activity | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $66,900 | $42,532 | | Net cash used in investing activities | $(37,019) | $(41,349) | | Net cash used in financing activities | $(30,013) | $(14,068) | | Net decrease in cash and cash equivalents | $(132) | $(12,885) | - Operating cash flow increased by $24.4 million, primarily due to timing of accounts payable and accrued expenses, and improved net income[106] - Cash used in financing activities increased by $15.9 million, mainly due to higher share repurchases[109] Notes to Unaudited Consolidated Financial Statements This section provides detailed disclosures and explanations for the unaudited consolidated financial statements Note 1. BASIS OF PRESENTATION This note describes the basis of preparation for interim financial statements and recent accounting pronouncements - Financial statements are prepared in accordance with U.S. GAAP for interim information and SEC rules, including normal recurring adjustments[23] - The company is evaluating ASU 2024-03, Disaggregation of Income Statement Expenses, effective for fiscal years beginning after December 15, 2026, for its potential impact[27] - ASU 2023-09, Improvements to Income Tax Disclosures, effective for fiscal years beginning after December 15, 2024, is not expected to impact consolidated financial statements[26] Note 2. REVENUE RECOGNITION This note details policies for recognizing revenue from food, beverage, gift cards, and loyalty programs - Revenues are primarily from food and beverage sales, recognized when payment is tendered[29] - Gift card sales are recorded as a liability and recognized as revenue upon redemption, with estimated breakage recognized proportionally to historical redemption patterns[29] Gift Card and Loyalty Program Liabilities (in thousands): | Item | July 1, 2025 | December 31, 2024 | | :------------------------ | :----------- | :---------------- | | Gift card liability | $10,618 | $15,668 | | Deferred loyalty revenue | $3,066 | $2,910 | Note 3. LEASES This note outlines the company's accounting for operating leases, including lease costs and components - All material operating leases for restaurant locations and office space are classified as operating leases[32] - The company has elected to account for lease and non-lease components as a single lease component for office and beverage equipment[32] Total Lease Costs (in thousands): | Lease Cost Type | 13 Weeks Ended July 1, 2025 | 13 Weeks Ended July 2, 2024 | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Lease cost | $14,821 | $14,442 | $29,497 | $28,831 | | Variable lease cost | $1,098 | $997 | $2,040 | $1,792 | | Total lease costs | $15,919 | $15,439 | $31,537 | $30,623 | Note 4. LONG-TERM DEBT This note describes the company's credit facility, terms, available commitments, and interest rates - The company entered into a Fifth Amended and Restated Credit Agreement on May 30, 2025, extending the maturity to May 30, 2030[34][35] - The Credit Facility provides $215 million in revolving loan commitments, with $135.2 million available as of July 1, 2025[35] - The weighted average interest rate for the twenty-six weeks ended July 1, 2025, was approximately 6.0%, a decrease from 6.9% in the prior year[36] Note 5. NET INCOME PER SHARE This note explains the calculation of basic and diluted net income per share - Basic and diluted net income per share are calculated by dividing net income by the weighted average number of common shares outstanding, including dilutive equity awards[39] Net Income Per Share (in thousands, except per share data): | Metric | 13 Weeks Ended July 1, 2025 | 13 Weeks Ended July 2, 2024 | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $22,208 | $17,157 | $35,700 | $24,880 | | Weighted-average shares outstanding – basic | 22,220 | 23,309 | 22,452 | 23,313 | | Weighted-average shares outstanding – diluted | 22,962 | 23,921 | 23,130 | 23,954 | | Basic net income per share | $1.00 | $0.74 | $1.59 | $1.07 | | Diluted net income per share | $0.97 | $0.72 | $1.54 | $1.04 | - Approximately 0.4 million and 0.6 million common stock equivalents were excluded from diluted EPS calculation for the thirteen and twenty-six weeks ended July 1, 2025, respectively, due to being anti-dilutive[40] Note 6. STOCK-BASED COMPENSATION This note details stock-based compensation plans, valuation methodologies, and recognized expenses - The company grants non-qualified stock options, service-based RSUs, and performance-based RSUs under the BJ's Restaurants, Inc. 2024 Equity Incentive Plan[41] - Stock options are valued using the Black-Scholes model, and performance-based RSUs with market-based metrics use the Monte Carlo simulation model[43] Total Stock-Based Compensation Recognized (in thousands): | Category | 13 Weeks Ended July 1, 2025 | 13 Weeks Ended July 2, 2024 | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Labor and benefits | $865 | $529 | $1,265 | $1,037 | | General and administrative | $1,042 | $2,237 | $2,592 | $4,206 | | Capitalized | $79 | $79 | $169 | $163 | | Total stock-based compensation | $1,986 | $2,845 | $4,026 | $5,406 | Note 7. INCOME TAXES This note provides information on the company's effective income tax rate and unrecognized tax benefits - The effective income tax rate for the twenty-six weeks ended July 1, 2025, was an expense rate of 4.4%, compared to a benefit rate of 11.7% for the comparable prior period[52] - The difference from the statutory tax rate is primarily due to significant Federal Insurance Contributions Act (FICA) tax tip credits[52] Unrecognized Tax Benefits (in thousands): | Item | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Beginning gross unrecognized tax benefits | $874 | $967 | | Increases for tax positions taken in the current year | $67 | $51 | | Ending gross unrecognized tax benefits | $941 | $1,018 | Note 8. LEGAL PROCEEDINGS This note summarizes legal proceedings and management's assessment of their potential financial impact - The company faces lawsuits and administrative proceedings common to the foodservice industry[54] - BJ's Restaurants is self-insured for a portion of its general liability, workers' compensation, and employment practice liability, with third-party insurance limiting exposure[54] - Management believes current legal proceedings will not have a material adverse effect on the company's financial position, results of operations, or liquidity[54] Note 9. SHAREHOLDERS' EQUITY This note details changes in shareholders' equity, including warrant extensions and share repurchases - BJ's Act III, LLC's warrant for 876,949 shares was extended by two years to May 4, 2027[55] - During the twenty-six weeks ended July 1, 2025, the company repurchased and retired approximately 842,000 shares of common stock for $29.2 million[56] - As of July 1, 2025, $56.7 million remained available under the authorized $600 million share repurchase program[56] - The company currently does not pay any cash dividends[57] Note 10. RELATED PARTY TRANSACTIONS This note discloses transactions with related parties, including warrant extensions and equity investments - The extension of Act III's warrant termination date resulted in a $4.6 million expense recorded in 'Other (expense) income, net'[59] - The company holds a 20% equity method investment, contributing $5.0 million in assets, and recorded a net loss of $0.2 million for the twenty-six weeks ended July 1, 2025[60] Note 11. SEGMENT INFORMATION This note identifies the company's single operating segment and how performance is assessed by the CODM - The company operates in one operating segment: full-service company-owned restaurants in the United States[61] - The Chief Operating Decision Maker (CODM) uses income (loss) from operations and net income to assess performance and allocate resources[61] Segment Revenue and Expenses (in thousands): | Metric | 13 Weeks Ended July 1, 2025 | 13 Weeks Ended July 2, 2024 | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenues | $365,597 | $349,927 | $713,570 | $687,261 | | Income from operations | $21,214 | $13,221 | $36,164 | $21,479 | | Net income | $22,208 | $17,157 | $35,700 | $24,880 | Note 12. SUBSEQUENT EVENTS This note discloses significant events occurring after the balance sheet date, such as new tax legislation - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, amending U.S. tax law[63] - The company is currently evaluating the impact of the OBBBA on its consolidated financial statements and disclosures[63] Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section analyzes the company's financial condition, operations, liquidity, and capital resources STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE This statement clarifies that the report contains forward-looking information subject to risks - The report contains forward-looking statements about performance trends, growth plans, and business goals[64][65] - These statements are subject to risks and uncertainties that could cause actual results to differ materially[65] - The company assumes no obligation to update these forward-looking statements[65] GENERAL This section provides an overview of BJ's Restaurants' business, restaurant count, menu, and revenue sources - BJ's Restaurants is a leading full-service restaurant brand with 219 restaurants in 31 states as of August 8, 2025[66] - The menu features approximately 100 items, including deep-dish pizza, slow-roasted entrees, and craft beers produced at four in-house brewing facilities[67] - Revenues are derived from food and beverage sales, including takeout, delivery, and catering, with gift card and loyalty program revenues recognized upon redemption[68][69] RESULTS OF OPERATIONS This section analyzes financial performance, including revenue and expense trends for interim periods Consolidated Statements of Operations as % of Total Revenues: | Metric | 13 Weeks Ended July 1, 2025 | 13 Weeks Ended July 2, 2024 | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenues | 100.0% | 100.0% | 100.0% | 100.0% | | Cost of sales | 24.8% | 25.7% | 24.9% | 25.4% | | Labor and benefits | 35.4% | 36.1% | 35.7% | 36.6% | | Income from operations | 5.8% | 3.8% | 5.1% | 3.1% | | Net income | 6.1% | 4.9% | 5.0% | 3.6% | - Net income as a percentage of revenues increased from 4.9% to 6.1% for the thirteen-week period and from 3.6% to 5.0% for the twenty-six-week period[78] - Operating income as a percentage of revenues improved from 3.8% to 5.8% for the thirteen-week period and from 3.1% to 5.1% for the twenty-six-week period[78] Thirteen Weeks Ended July 1, 2025 Compared to Thirteen Weeks Ended July 2, 2024 This section compares operational results for the thirteen-week periods ended July 1, 2025, and July 2, 2024 - Total revenues increased by $15.7 million (4.5%) to $365.6 million[79] - Comparable restaurant sales increased by 2.9%, driven by a 3.3% increase in guest traffic[79] - Cost of sales as a percentage of revenues decreased from 25.7% to 24.8%, primarily due to lower commodity costs and cost savings initiatives[80] - Labor and benefit costs as a percentage of revenues decreased from 36.1% to 35.4%, attributed to leveraging comparable restaurant growth and improved labor efficiency[81] - Occupancy and operating expenses as a percentage of revenues increased from 22.7% to 22.8%, mainly due to a $2.5 million increase in marketing-related expenses[83] Twenty-Six Weeks Ended July 1, 2025 Compared to Twenty-Six Weeks Ended July 2, 2024 This section compares operational results for the twenty-six-week periods ended July 1, 2025, and July 2, 2024 - Total revenues increased by $26.3 million (3.8%) to $713.6 million[90] - Comparable restaurant sales increased by 2.3%, driven by a 3.0% increase in guest traffic[90] - Cost of sales as a percentage of revenues decreased from 25.4% to 24.9%, due to lower commodity costs and cost savings initiatives[91][92] - Labor and benefit costs as a percentage of revenues decreased from 36.6% to 35.7%, driven by leveraging comparable restaurant growth and improved labor efficiency[93] - General and administrative expenses as a percentage of revenues decreased from 6.3% to 6.1%, primarily due to leveraging fixed costs over a higher revenue base[95] LIQUIDITY AND MATERIAL CASH REQUIREMENTS This section discusses capital requirements, liquidity sources, and projected capital expenditures - Capital requirements are driven by new restaurant expansion, existing restaurant enhancements, and share repurchases[102] - The company expects to accelerate restaurant openings in 2026 and anticipates total capital expenditures for fiscal 2025 to be approximately $65 million to $75 million[102][108] - Liquidity is expected to be adequate for the next twelve months, funded by current cash, operating cash flows, and the credit agreement[103] Key Liquidity Measurements (in thousands): | Metric | July 1, 2025 | December 31, 2024 | | :------------------------ | :----------- | :---------------- | | Cash and cash equivalents | $25,964 | $26,096 | | Net working capital | $(117,392) | $(116,744) | | Current ratio | 0.4:1.0 | 0.4:1.0 | CASH FLOWS This section provides a detailed analysis of cash flows from operating, investing, and financing activities Summary of Cash Flows (in thousands): | Activity | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $66,900 | $42,532 | | Net cash used in investing activities | $(37,019) | $(41,349) | | Net cash used in financing activities | $(30,013) | $(14,068) | | Net decrease in cash and cash equivalents | $(132) | $(12,885) | - Net cash provided by operating activities increased by $24.4 million, primarily due to improved net income and timing of accounts payable and accrued expenses[106] Operating Cash Flows This section analyzes net cash provided by operating activities and the factors influencing its changes - Net cash provided by operating activities was $66.9 million, an increase of $24.4 million from the prior year[106] - The increase is primarily due to the timing of accounts payable and accrued expenses, coupled with improved net income[106] Investing Cash Flows This section analyzes net cash used in investing activities, primarily related to capital expenditures - Net cash used in investing activities decreased by $4.3 million to $37.0 million[107] - The decrease is primarily due to the number of new restaurant openings and timing of restaurant remodel activity[107] Components of Capital Expenditures (in thousands): | Category | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | New restaurants | $4,506 | $15,406 | | Restaurant maintenance and remodels, and key productivity initiatives | $32,076 | $25,391 | | Restaurant and corporate systems | $474 | $552 | | Total capital expenditures | $37,056 | $41,349 | Financing Cash Flows This section analyzes net cash used in financing activities, including borrowings and share repurchases - Net cash used in financing activities increased by $15.9 million to $30.0 million[109] - The increase is primarily due to higher share repurchases, partially offset by increased proceeds from stock option exercises[109] Key Financing Activities (in thousands): | Activity | 26 Weeks Ended July 1, 2025 | 26 Weeks Ended July 2, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Borrowings on line of credit | $418,000 | $453,900 | | Payments on line of credit | $(424,000) | $(458,400) | | Repurchase of common stock | $(29,230) | $(8,835) | | Proceeds from exercise of stock options | $6,700 | $168 | OFF-BALANCE SHEET ARRANGEMENTS This section confirms the absence of any material off-balance sheet arrangements as of the reporting date - As of July 1, 2025, the company is not involved in any off-balance sheet arrangements[110] IMPACT OF INFLATION This section discusses the effects of inflation on operations and mitigation strategies - Inflation has impacted operations and new restaurant construction[111] - The company has partially offset inflation through menu price increases, efficient purchasing, and productivity improvements[111] - There is no assurance that the company can continue to offset inflation, and macroeconomic conditions could limit future menu price increases[111] SEASONALITY AND ADVERSE WEATHER This section explains how weather, seasonal factors, and new restaurant openings impact quarterly results - Business is impacted by weather and seasonal factors, including holidays and severe weather, affecting sales volumes[112] - Quarterly results are significantly impacted by the timing of new restaurant openings and associated expenses[112] - Financial results for any given quarter may not be indicative of a full fiscal year[112] CRITICAL ACCOUNTING POLICIES This section highlights the company's reliance on estimates and assumptions in financial reporting - Financial statements rely on estimates and assumptions, which are inherently uncertain[113][114] - There were no significant changes in critical accounting policies during the twenty-six weeks ended July 1, 2025[115] Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This item discusses the company's exposure to market risks, including interest rate and commodity price risks Interest Rate Risk This section details the company's exposure to interest rate fluctuations on its floating-rate credit facility - The company has a $215 million Credit Facility with a floating interest rate, with $60.5 million outstanding as of July 1, 2025[117] - A hypothetical 1% change in interest rates would result in an approximate $0.5 million annual impact on net income[117] Food, Supplies and Commodity Price Risks This section addresses the company's exposure to volatility in food, supplies, and commodity prices - The company is exposed to volatility in food, supplies, and commodity prices due to market factors, government regulation, and trade policies[118] - Mitigation strategies include fixed-price purchase commitments (up to one year) and flexibility to adjust menu prices or items[118] - The company does not use financial instruments to hedge commodity prices[118] Item 4. CONTROLS AND PROCEDURES This item reports on the effectiveness of disclosure controls and changes in internal control Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures as of July 1, 2025 - The Chief Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of July 1, 2025[119] - Controls are designed to ensure timely recording, processing, summarizing, and reporting of required information[119] Changes in Internal Control Over Financial Reporting This section discusses the implementation of a new ERP system and its impact on internal control - A new ERP system was implemented during the quarter ended July 1, 2025, replacing legacy systems[120] - The new ERP system is an important component of the company's system of disclosure controls and procedures[120] - No other material changes in internal control over financial reporting occurred during the quarter[121] Item 5. OTHER INFORMATION This item states that there is no other information to report beyond what is already disclosed - No other information is reported under this item[123] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, and exhibits - Part II covers legal proceedings, risk factors, equity security sales, and exhibits[124][7] Item 1. LEGAL PROCEEDINGS This item refers to Note 8 for a summary of legal proceedings, indicating no new material changes - For a summary of legal proceedings, refer to Note 8 of the Unaudited Consolidated Financial Statements[125] Item 1A. RISK FACTORS This item states no material changes to risk factors from the Annual Report on Form 10-K - No material changes to risk factors from the Annual Report on Form 10-K for fiscal year ended December 31, 2024[126] Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This item details the company's share repurchase program and remaining authorization - As of July 1, 2025, the company cumulatively repurchased approximately $543.3 million in shares since the program's inception in 2014[127] - During the twenty-six weeks ended July 1, 2025, approximately 842,000 shares were repurchased for $29.2 million[127] - The Board approved a $50 million increase in the share repurchase program in February 2025[127] Common Share Repurchases (26 Weeks Ended July 1, 2025): | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :-------------------- | :------------------------------- | :--------------------------- | :-------------------------------------------------------------------------- | | 01/01/25 - 01/28/25 | 58,284 | $35.07 | $33,886,105 | | 01/29/25 - 02/25/25 | 46,960 | $36.16 | $82,187,998 | | 02/26/25 - 04/01/25 | 298,320 | $34.72 | $71,830,877 | | 04/02/25 - 04/29/25 | 309,226 | $32.21 | $61,871,926 | | 04/30/25 - 05/27/25 | 83,891 | $37.72 | $58,707,907 | | 05/28/25 - 07/01/25 | 45,094 | $44.52 | $56,700,365 | | Total | 841,775 | | | Item 6. EXHIBITS This item lists the exhibits filed as part of the Form 10-Q, including corporate documents - The section lists various exhibits, including corporate governance documents, credit agreements, and certifications[130] - Exhibit 10.1 is the Fifth Amended and Restated Credit Agreement dated May 30, 2025[130] SIGNATURES This section provides the signatures of the company's principal executive and financial officers - The report was signed on August 8, 2025, by Lyle D. Tick (CEO, President, and Director), William J. Atkins (Interim Principal Financial Officer), and Jacob J. Guild (SVP and Chief Accounting Officer)[132]