BJ’s(BJRI) - 2025 Q1 - Quarterly Report

Report Overview This section provides an overview of the Form 10-Q quarterly report, detailing filer status and outstanding common stock - This is a Form 10-Q quarterly report filed by BJ'S RESTAURANTS, INC. for the period ended April 2, 2024[1][2] - BJ'S RESTAURANTS, INC. is a large accelerated filer and has filed all required reports[2][4] - As of May 3, 2024, there were 23,383,119 shares of Common Stock of the Registrant outstanding[4] PART I. FINANCIAL INFORMATION This part contains the company's unaudited consolidated financial statements and management's discussion and analysis Item 1. Consolidated Financial Statements This section presents unaudited consolidated financial statements, including balance sheets, operations, equity, and cash flows Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity Consolidated Balance Sheets (in thousands) | Metric | April 2, 2024 (Unaudited) | January 2, 2024 | | :------------------------------------ | :------------------------ | :---------------- | | Total Assets | $1,044,922 | $1,058,454 | | Total Current Assets | $65,645 | $83,021 | | Total Liabilities | $669,570 | $692,693 | | Total Current Liabilities | $186,554 | $199,325 | | Total Shareholders' Equity | $375,352 | $365,761 | Unaudited Consolidated Statements of Operations This section presents the company's financial performance, detailing revenues, expenses, and net income Unaudited Consolidated Statements of Operations (in thousands, except per share data) | Metric | Thirteen Weeks Ended April 2, 2024 | Thirteen Weeks Ended April 4, 2023 | | :------------------------------------ | :--------------------------------- | :--------------------------------- | | Revenues | $337,334 | $341,280 | | Income from operations | $8,258 | $2,616 | | Net income | $7,723 | $3,481 | | Basic Net income per share | $0.33 | $0.15 | | Diluted Net income per share | $0.32 | $0.15 | Unaudited Consolidated Statements of Shareholders' Equity This section details changes in the company's equity over specific periods Unaudited Consolidated Statements of Shareholders' Equity (in thousands) | Metric | April 2, 2024 | April 4, 2023 | | :------------ | :------------ | :------------ | | Total Shareholders' Equity | $375,352 | $351,234 | | Retained Earnings (April 2, 2024) | $305,139 | $280,199 | | Net Income (Thirteen Weeks Ended) | $7,723 | $3,481 | Unaudited Consolidated Statements of Cash Flows This section reports cash generated and used across operating, investing, and financing activities Unaudited Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Thirteen Weeks Ended April 2, 2024 | Thirteen Weeks Ended April 4, 2023 | | :------------------------------------ | :--------------------------------- | :--------------------------------- | | Net cash provided by operating activities | $22,330 | $31,899 | | Net cash used in investing activities | $(21,882) | $(26,962) | | Net cash used in financing activities | $(10,698) | $(512) | | Net (decrease) increase in cash and cash equivalents | $(10,250) | $4,425 | | Cash and cash equivalents, end of period | $18,820 | $29,298 | - Cash paid for income taxes increased significantly from $2 thousand in Q1 2023 to $1,437 thousand in Q1 2024[34] - Cash paid for interest, net, increased from $858 thousand in Q1 2023 to $1,204 thousand in Q1 2024[34] Notes to Unaudited Consolidated Financial Statements This section provides detailed explanations and disclosures on accounting policies and financial items 1. BASIS OF PRESENTATION This note describes the accounting principles and assumptions used in preparing the unaudited interim financial statements - The financial statements are unaudited, prepared in accordance with U.S. GAAP for interim financial information, and include all material adjustments[57] - The preparation of financial statements requires management to make certain estimates and assumptions, which may differ from actual amounts[57] 2. REVENUE RECOGNITION This note details the company's policies for recognizing revenue from food and beverage sales, gift cards, and loyalty programs - Revenues are primarily from food and beverage sales, recognized upon payment. Gift card sales are recorded as a liability and recognized upon redemption, with estimated breakage recognized proportionally[58][74] - The 'BJ's Premier Rewards Plus' guest loyalty program defers revenue allocated to points until redemption[58][74] Gift Card and Loyalty Program Liabilities and Recognized Revenue (in thousands) | Metric | April 2, 2024 | January 2, 2024 | | :-------------------------------------- | :------------ | :-------------- | | Gift card liability | $10,615 | $14,380 | | Deferred loyalty revenue | $2,723 | $2,510 | | | | | | Thirteen Weeks Ended | April 2, 2024 | April 4, 2023 | | Revenue recognized from gift card liability | $5,863 | $6,245 | | Revenue recognized from guest loyalty program | $4,318 | $4,083 | 3. LEASES This note outlines the company's accounting treatment for operating leases, including lease and variable lease costs - All restaurant and office space leases are classified as operating leases, with lease and non-lease components accounted for as a single lease component for office and beverage gas equipment[59][60] Lease Costs (in thousands) | Lease Cost Type | April 2, 2024 | April 4, 2023 | | :---------------- | :------------ | :------------ | | Lease cost | $14,389 | $14,896 | | Variable lease cost | $795 | $989 | | Total lease costs | $15,184 | $15,885 | 4. LONG-TERM DEBT This note details the company's credit facility, outstanding borrowings, available capacity, and weighted average interest rates - The company has a Credit Facility maturing November 3, 2026, providing $215 million in revolving loan commitments, extendable up to $315 million[61] - As of April 2, 2024, $58.0 million was borrowed, $17.2 million in letters of credit were outstanding, leaving $139.8 million available[61] - The weighted average interest rate for the thirteen weeks ended April 2, 2024, was approximately 6.9%, up from 6.4% in the prior year[61] 5. NET INCOME PER SHARE This note provides a reconciliation of basic and diluted net income per share, including the impact of equity awards Net Income Per Share Reconciliation (in thousands, except per share data) | Metric | Thirteen Weeks Ended April 2, 2024 | Thirteen Weeks Ended April 4, 2023 | | :------------------------------------ | :--------------------------------- | :--------------------------------- |\n| Net income | $7,723 | $3,481 | | Weighted-average shares outstanding – basic | 23,318 | 23,481 | | Dilutive effect of equity awards | 647 | 445 | | Weighted-average shares outstanding – diluted | 23,965 | 23,926 | | Net income per share: Basic | $0.33 | $0.15 | | Net income per share: Diluted | $0.32 | $0.15 | - Approximately 0.9 million equity awards were excluded from diluted EPS calculation for both periods due to being anti-dilutive[63] 6. STOCK-BASED COMPENSATION This note details the stock-based compensation expense recognized and the unrecognized expense related to equity awards - Total stock-based compensation recognized was $2.561 million for Q1 2024, down from $2.735 million for Q1 2023[64][88] Stock-Based Compensation Expense (in thousands) | Category | Thirteen Weeks Ended April 2, 2024 | Thirteen Weeks Ended April 4, 2023 | | :------------------------- | :--------------------------------- | :--------------------------------- | | Labor and benefits | $508 | $866 | | General and administrative | $1,969 | $1,776 | | Capitalized | $84 | $93 | | Total | $2,561 | $2,735 | - Total unrecognized stock-based compensation expense related to non-vested stock options, RSUs, and market/performance-based RSUs is approximately $20.2 million, expected to be recognized over the next three to five years[91][92][95] 7. INCOME TAXES This note explains the effective income tax rate and details unrecognized tax benefits, including their impact on the rate - The effective income tax rate for Q1 2024 was a benefit of 2.4%, significantly lower than the 105.9% benefit rate for Q1 2023, primarily due to FICA tax tip credits[7][122] - Unrecognized tax benefits as of April 2, 2024, were approximately $1.0 million, with $0.9 million impacting the effective tax rate if reversed[7] Reconciliation of Unrecognized Tax Benefits (in thousands) | Metric | April 2, 2024 | April 4, 2023 | | :-------------------------------------- | :------------ | :------------ | | Beginning gross unrecognized tax benefits | $967 | $1,249 | | Increases for tax positions taken in current year | $26 | — | | Decreases due to lapse of statute of limitations | — | $(236) | | Ending gross unrecognized tax benefits | $993 | $1,031 | 8. LEGAL PROCEEDINGS This note describes the company's involvement in ordinary course lawsuits and administrative proceedings, and its self-insurance policies - The company is subject to ordinary course lawsuits and administrative proceedings, and is self-insured for a portion of general liability, workers' compensation, and employment practice liability[70] - Management believes the final disposition of these claims will not have a material adverse effect on financial position, results of operations, or liquidity[70] 9. SHAREHOLDERS' EQUITY This note details share repurchase activities, available program amounts, and the company's dividend policy - No shares of common stock were repurchased during Q1 2024. The Board approved a $50 million increase in the share repurchase program in February 2024, leaving approximately $61.1 million available under the $550 million program[99][117] - The company currently does not pay cash dividends, with any future payments subject to Board approval[100] 10. RELATED PARTY TRANSACTIONS This note discloses equity method investments with related parties and the associated net losses recognized - The company holds a 20% equity method investment in a company where its recently retired CEO and current Board member has a less than 1% interest[101] - A net loss of $147,000 related to this investment was recorded in Q1 2024, compared to $40,000 in Q1 2023[101] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition and results of operations, covering revenue, costs, liquidity, and capital STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE This statement clarifies that the report contains forward-looking statements subject to risks and uncertainties, with no obligation to update - The report contains forward-looking statements regarding performance trends, growth plans, and business goals, which are subject to risks and uncertainties[102] - These statements are based on information available as of the date made, and the company assumes no obligation to update them[102] GENERAL This section provides an overview of BJ's Restaurants' business, including its operations, menu offerings, and revenue sources - BJ's Restaurants is a leading casual dining brand operating 217 restaurants in 31 states as of May 6, 2024[73] - The company offers a broad menu including deep-dish pizza, slow-roasted entrees, and craft beers produced at in-house facilities and by third-party brewers[73] - Revenues are primarily from food and beverage sales, including takeout, delivery, and catering. All restaurants are Company-owned[73][74] RESULTS OF OPERATIONS This section analyzes the company's financial performance, comparing revenues, costs, and profitability for the current and prior periods Thirteen Weeks Ended April 2, 2024 Compared to Thirteen Weeks Ended April 4, 2023 This section provides a detailed comparative analysis of the company's operational results for the specified thirteen-week periods Consolidated Statements of Operations as Percentages of Total Revenues | Metric | Thirteen Weeks Ended April 2, 2024 | Thirteen Weeks Ended April 4, 2023 | | :-------------------------------------------- | :--------------------------------- | :--------------------------------- | | Revenues | 100.0 % | 100.0 % | | Cost of sales | 25.2 % | 26.6 % | | Labor and benefits | 37.1 % | 37.6 % | | Occupancy and operating | 22.8 % | 23.2 % | | General and administrative | 6.8 % | 5.8 % | | Depreciation and amortization | 5.3 % | 5.2 % | | Restaurant opening | 0.2 % | 0.2 % | | Loss on disposal and impairment of assets, net | 0.2 % | 0.6 % | | Total costs and expenses | 97.6 % | 99.2 % | | Income from operations | 2.4 % | 0.8 % | | Net income | 2.3 % | 1.0 % | - Total revenues decreased by 1.2% to $337.3 million, driven by a 1.7% decline in comparable restaurant sales (5.8% decrease in guest traffic, offset by 4.1% increase in average check) and $5.2 million from closed restaurants, partially offset by $7.1 million from new restaurants[106] - Cost of sales decreased by 6.5% to $85.0 million, and as a percentage of revenues, decreased to 25.2% from 26.6%, due to lower commodity costs, cost savings, and menu price increases[106] - Labor and benefit costs decreased by 2.6% to $125.0 million, and as a percentage of revenues, decreased to 37.1% from 37.6%, primarily due to improved labor efficiency and cost savings[106] - Occupancy and operating expenses decreased by 2.9% to $76.9 million, and as a percentage of revenues, decreased to 22.8% from 23.2%, mainly due to improved operational efficiency and cost savings[21][106] - General and administrative expenses increased by 16.7% to $23.0 million, and as a percentage of revenues, increased to 6.8% from 5.8%, primarily due to increased corporate expenses, legal fees related to shareholder cooperation agreements, and deleveraging from lower revenue[107] - Depreciation and amortization increased by 1.5% to $17.9 million, and as a percentage of revenues, increased to 5.3% from 5.2%, mainly due to new restaurant depreciation and a lower revenue base[107] - Restaurant opening expense decreased by 30.1% to $0.6 million due to timing of openings[79] - Loss on disposal and impairment of assets, net, decreased to $0.8 million from $2.1 million, primarily related to asset disposals for restaurant updates[79] - Interest expense, net, increased by $0.3 million to $1.4 million due to an increase in the weighted average interest rate[79] - Other income, net, increased by $0.5 million to $0.7 million, primarily from gains on cash surrender value of life insurance policies[79] - Effective income tax rate was a benefit of 2.4% for Q1 2024, compared to 105.9% for Q1 2023, primarily due to FICA tax tip credits[122] LIQUIDITY AND MATERIAL CASH REQUIREMENTS This section discusses the company's cash position, funding sources, capital expenditure plans, and ability to meet financial obligations - The company's financial objective is to improve total shareholder return through new restaurant expansion, existing restaurant enhancements, and share repurchases[10] - Capital requirements are funded by operating cash flows, debt, landlord allowances, and stock option exercises[10] - Current cash, cash from operations, and credit agreement availability are expected to meet capital expenditure and working capital needs for at least the next twelve months[10] Key Liquidity Measurements (in thousands) | Metric | April 2, 2024 | January 2, 2024 | | :------------------------ | :------------ | :-------------- | | Cash and cash equivalents | $18,820 | $29,070 | | Net working capital | $(120,909) | $(116,304) | | Current ratio | 0.4:1.0 | 0.4:1.0 | - The company plans to open three new restaurants in fiscal 2024, with anticipated capital expenditures of $70 million to $75 million, funded by cash, operations, and line of credit[111] CASH FLOWS This section provides a detailed breakdown of cash generated and used across operating, investing, and financing activities Operating Cash Flows This section details the cash generated or used from the company's primary business activities - Net cash provided by operating activities decreased by $9.6 million to $22.3 million for Q1 2024, from $31.9 million in Q1 2023, primarily due to timing of payments for accrued expenses and accounts receivable receipts, offset by net income[110] Investing Cash Flows This section details the cash used for capital expenditures, including new restaurants and remodels - Net cash used in investing activities decreased by $5.1 million to $21.9 million for Q1 2024, from $27.0 million in Q1 2023, primarily due to timing of restaurant construction and remodel activity[82][110] Components of Capital Expenditures (in thousands) | Category | Thirteen Weeks Ended April 2, 2024 | Thirteen Weeks Ended April 4, 2023 | | :------------------------------------------ | :--------------------------------- | :--------------------------------- | | New restaurants | $9,197 | $10,934 | | Restaurant maintenance and remodels, and key productivity initiatives | $12,150 | $15,723 | | Restaurant and corporate systems | $535 | $309 | | Total capital expenditures | $21,882 | $26,966 | Financing Cash Flows This section details the cash flows related to debt, equity, and other financing activities - Net cash used in financing activities increased by $10.2 million to $10.7 million for Q1 2024, from $0.5 million in Q1 2023, primarily due to payments on the line of credit[112] OFF-BALANCE SHEET ARRANGEMENTS This section confirms the absence of any off-balance sheet arrangements as of the reporting date - As of April 2, 2024, the company is not involved in any off-balance sheet arrangements[11] CRITICAL ACCOUNTING POLICIES This section highlights key accounting policies requiring significant management estimates and assumptions - The preparation of financial statements requires estimates and assumptions, which are continually reviewed. No significant changes in critical accounting policies occurred during Q1 2024[130] IMPACT OF INFLATION This section discusses how inflation affects operations and construction, and the company's mitigation strategies - Inflation has impacted operations and new restaurant construction. The company has partially offset this through menu price increases, cost savings, and productivity improvements[113] - There is no assurance that the company can continue to offset inflation, and macroeconomic conditions could limit future menu price increases[113] SEASONALITY AND ADVERSE WEATHER This section explains how seasonal factors and adverse weather conditions can impact restaurant sales and quarterly results - Business is impacted by weather and seasonal factors, including holidays and severe weather, which can affect restaurant sales volumes[85] - Quarterly results are significantly impacted by the timing of new restaurant openings and associated expenses[85] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section outlines the company's exposure to market risks, focusing on interest rates and commodity prices Interest Rate Risk This section details the company's exposure to interest rate fluctuations on its floating-rate credit facility - The company is exposed to interest rate risk due to its $215 million Credit Facility, of which $58.0 million is outstanding and carries a floating interest rate[115] - A hypothetical 1% change in interest rates under the Credit Facility would have an approximate $0.4 million annual impact on net income[115] Food, Supplies and Commodity Price Risks This section discusses the company's reliance on commodity deliveries and strategies to manage price volatility - The business is dependent on frequent and consistent deliveries of food, supplies, and commodities, which are subject to price volatility due to market factors and government regulation[133] - The company attempts to manage this risk through fixed-price purchase commitments (typically up to one year) for some commodity requirements and has flexibility to adjust menu prices or items[133] - The company does not use financial instruments to hedge commodity prices[133] PART II. OTHER INFORMATION This part includes legal proceedings, risk factors, equity sales, controls, and exhibits Item 1. Legal Proceedings This section refers to the detailed discussion of legal proceedings in the notes to the financial statements - Refer to Note 8 of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this report for a summary of legal proceedings[137] Item 1A. Risk Factors This section states no material changes to risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended January 2, 2024[138] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details share repurchase activities, noting no repurchases this quarter but an increased authorized program - No shares were repurchased during the thirteen weeks ended April 2, 2024[117] - Cumulatively, shares valued at approximately $488.9 million have been repurchased since the program's inception in 2014[117] - As of April 2, 2024, $61.1 million remains available under the authorized $550 million share repurchase program, following a $50 million increase approved in February 2024[117][118] Item 4. Controls and Procedures This section confirms management's evaluation of disclosure controls and procedures, concluding effectiveness and no material changes Evaluation of Disclosure Controls and Procedures This section confirms management's conclusion on the effectiveness of disclosure controls and procedures as of the reporting date - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of April 2, 2024, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[134] Changes in Internal Control Over Financial Reporting This section states that no material changes occurred in internal control over financial reporting during the fiscal quarter - No material changes in internal control over financial reporting occurred during the first fiscal quarter[135] Item 5. Other Information This section indicates no other information to disclose under this item for the reporting period - This section is marked as 'None' in the report, indicating no other information to disclose under this item[24] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including corporate governance documents and certifications - The report includes a list of exhibits, such as Amended and Restated Articles of Incorporation, Bylaws, Cooperation Agreements, and Section 302/906 Certifications[141] - Also includes Inline XBRL Instance Document and Taxonomy Extension files[141] SIGNATURES This section lists the principal executive, financial, and accounting officers who signed the report - The report is signed by Gregory S. Levin (Chief Executive Officer and President), Thomas A. Houdek (Senior Vice President and Chief Financial Officer), and Jacob J. Guild (Senior Vice President and Chief Accounting Officer)[14][121][142]