HUNTINGTON BEACH, Calif., Oct. 24, 2019 (GLOBE NEWSWIRE) -- BJ’s Restaurants, Inc. (NASDAQ: BJRI) today reported financial results for its fiscal 2019 third quarter ended Tuesday, October 1, 2019.

Third Quarter 2019 Highlights Compared to Third Quarter 2018

  • Total revenues grew 3.1% to $278.7 million
  • Total restaurant operating weeks increased approximately 2.9%
  • Comparable restaurant sales declined 0.3%
  • Net income of $3.7 million compared to $8.5 million
    • Third quarter 2019 net income was impacted by a $0.6 million expense related to the adoption of ASU 2016-02, regarding lease accounting
    • Third quarter 2018 net income benefited from a $1.7 million excess tax benefit from equity awards
  • Diluted net income per share of $0.18 compared to $0.39
    • Third quarter 2019 diluted net income per share was impacted by a $0.03 expense related to the adoption of ASU 2016-02, regarding lease accounting
    • Third quarter 2018 diluted net income per share benefited from a $0.08 excess tax benefit from equity awards

“Third quarter casual dining sales were soft across the industry,” commented Greg Trojan, Chief Executive Officer. “The challenging environment coupled with weakness in certain California markets and the impact of Hurricane Dorian, which affected approximately 10% of our restaurants, led to slightly negative comparable sales. Notwithstanding the challenging environment, our newest restaurants continue to exceed sales and profitability expectations as their weekly sales average outperformed our comparable restaurant sales for the quarter. We believe this is a testament to the strength of the BJ’s concept and brand and our prospects for future growth as we continue our national expansion.

“During the quarter we continued making important investments in the business focused on building future sales and improving our already strong operations-based culture. For example, the recently completed investments in our Gold Standard Kitchen Systems are improving our daily operations as reflected by solid increases in our speed of service and food scores from our guest surveys, increased kitchen labor productivity and recently improved retention rates for our hourly kitchen team members. As expected, the addition of our popular slow roasted tri tip sirloin to our Daily Brewhouse Specials has been well received by guests and has proven effective in building sales and driving value as reflected in a 1.5% rise in our guest survey value scores in the quarter. These investments, coupled with our other ongoing sales and productivity initiatives, will enable us to continue expanding our industry leading guest traffic per square foot.”  

During the third quarter, the Company opened its first Connecticut location in the city of Manchester, as well as its sixth restaurant in the state of Indiana in Evansville. “We are on track to open our last two restaurants of the year in the fourth quarter, thereby achieving our goal of opening seven restaurants in fiscal 2019. As we look toward 2020, we currently plan to open eight to ten new restaurants. BJ’s development pipeline is in excellent shape and we remain committed to restaurant quality over restaurant quantity. This commitment combined with our ability to manage capital allocation priorities in the form of share repurchases, quarterly cash dividends, and sales building initiatives support our view of the tremendous value in the BJ’s concept and our ability to drive long-term value for shareholders,” concluded Trojan.

During the third quarter of 2019, the Company repurchased and retired approximately 1.1 million shares of its common stock at a cost of approximately $41.3 million. Since the Company’s first share repurchase authorization was approved in April 2014, BJ’s has repurchased and retired approximately 11.6 million shares at a cost of approximately $450.2 million. The Company has approximately $49.8 million available under its currently authorized share repurchase program.

The Company’s Board of Directors increased the Company’s quarterly cash dividend by 8.3% to $0.13 per share of common stock, payable November 25, 2019, to shareholders of record at the close of business on November 11, 2019. While the Company intends to pay quarterly cash dividends for the foreseeable future, dividends will be reviewed quarterly and declared by the Board of Directors at its discretion. 

Investor Conference Call and Webcast

BJ’s Restaurants, Inc. will conduct a conference call on its third quarter 2019 earnings release today, October 24, 2019, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Senior management will discuss the financial results and host a question and answer session. In addition, a live audio webcast of the call will be accessible to the public on the “Investors” page of the Company’s website located at http://www.bjsrestaurants.com, and a recording of the webcast will be archived on the site for 30 days following the live event. Please allow 15 minutes to register and download and install any necessary software.

About BJ’s Restaurants, Inc.

BJ’s Restaurants, Inc. (“BJ’s”) is a national brand with brewhouse roots and a menu where craft matters. BJ’s broad menu with over 140 offerings has something for everyone: slow-roasted entrees like prime rib, BJ’s EnLIGHTened Entrees® including Cherry Chipotle Glazed Salmon, signature deep dish pizza and the often imitated, but never replicated world-famous Pizookie® dessert. BJ’s has been a pioneer in the craft brewing world since 1996, and takes pride in serving BJ’s award-winning proprietary handcrafted beers, brewed at its brewing operations in five states and by independent third-party craft brewers. The BJ’s experience offers high-quality ingredients, bold flavors, moderate prices, sincere service and a cool, contemporary atmosphere. Founded in 1978, BJ’s owns and operates 207 casual dining restaurants. All restaurants offer dine-in, take-out, delivery and large party catering. BJ’s restaurants are located in 28 states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia and Washington. For more BJ’s information, visit http://www.bjsrestaurants.com

Forward-Looking Statements Disclaimer

Certain statements in the preceding paragraphs and all other statements that are not purely historical constitute “forward-looking” statements for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbors created thereby. Such statements include, but are not limited to, those regarding expected comparable restaurant sales and margin growth in future periods, total potential domestic capacity, the success of various sales-building and productivity initiatives, future guest traffic trends, construction cost savings initiatives and the number and timing of new restaurants expected to be opened in future periods. These “forward-looking” statements involve known and unknown risks, uncertainties and other factors which may cause actual results to be materially different from those projected or anticipated. Factors that might cause such differences include, but are not limited to: (i) our ability to manage new restaurant openings, (ii) construction delays, (iii) labor shortages, (iv) increases in minimum wage and other employment related costs, including compliance with the Patient Protection and Affordable Care Act and minimum salary requirements for exempt team members, (v) the effect of credit and equity market disruptions on our ability to finance our continued expansion on acceptable terms, (vi) food quality and health concerns and the effect of negative publicity about us, our restaurants, other restaurants, or others across the food supply chain, due to food borne illness or other reasons, whether or not accurate, (vii) factors that impact California, Texas and Florida, where a substantial number of  our restaurants are located, (viii) restaurant and brewery industry competition, (ix) impact of certain brewing business considerations, including without limitation, dependence upon suppliers, third party contractors and distributors, and related hazards, (x) consumer spending trends in general for casual dining occasions, (xi) potential uninsured losses and liabilities due to limitations on insurance coverage, (xii) fluctuating commodity costs and availability of food in general and certain raw materials related to the brewing of our craft beers and energy requirements, (xiii) trademark and service-mark risks, (xiv) government regulations and licensing costs, (xv) beer and liquor regulations, (xvi) loss of key personnel, (xvii) inability to secure acceptable sites, (xviii) legal proceedings, (xix) other general economic and regulatory conditions and requirements, (xx) the success of our key sales-building and related operational initiatives, (xxi) any failure of our information technology or security breaches with respect to our electronic systems and data, and (xxii) numerous other matters discussed in the Company’s filings with the Securities and Exchange Commission, including its recent reports on Forms 10-K, 10-Q and 8-K. The “forward-looking” statements contained in this press release are based on current assumptions and expectations, and BJ’s Restaurants, Inc. undertakes no obligation to update or alter its “forward-looking” statements whether as a result of new information, future events or otherwise.

For further information, please contact Greg Levin of BJ’s Restaurants, Inc. at (714) 500-2400 or JCIR at (212) 835-8500 or at bjri@jcir.com.



BJ’s Restaurants, Inc.
Unaudited Consolidated Statements of Income
(Dollars in thousands except for per share data)
    
 Third Quarter Ended Nine Months Ended
 October 1, 2019October 2, 2018 October 1, 2019October 2, 2018
Revenues$278,739 100.0%$270,268 100.0% $870,383 100.0%$836,425 100.0%
Restaurant operating costs (excluding
depreciation and amortization):
         
  Cost of sales 71,552   25.7  68,600  25.4   221,739   25.5  210,597   25.2 
  Labor and benefits 104,660   37.5  99,061  36.7   318,386   36.6  301,480   36.0 
  Occupancy and operating 64,921   23.3  61,102  22.6   191,005   21.9  177,678   21.2 
  General and administrative 14,272   5.1  14,661  5.4   47,153   5.4  45,643   5.5 
  Depreciation and amortization 18,163   6.5  17,686  6.5   53,644   6.2  52,760   6.3 
  Restaurant opening 970   0.3  403   0.1   2,028   0.2  1,835   0.2 
  Loss on disposal of assets 931   0.3  865   0.3   3,618   0.4  3,049   0.4 
Total costs and expenses 275,469   98.8  262,378 97.1   837,573   96.2  793,042 94.8 
Income from operations 3,270   1.2  7,890   2.9   32,810   3.8  43,383   5.2 
          
Other income (expense):         
  Interest expense, net (1,174)  (0.4) (1,058)  (0.4)  (3,310)  (0.4) (3,826)  (0.5)
  Other income, net 125    -  239   0.1   1,363   0.2  220    - 
Total other expense (1,049)  (0.4) (819)  (0.3)  (1,947)  (0.2) (3,606)  (0.4)
Income before income taxes 2,221   0.8  7,071   2.6   30,863   3.5  39,777   4.8 
          
Income tax (benefit) expense (1,450)  (0.5) (1,445)  (0.5)  136    -  (348)   - 
          
Net income$3,671   1.3%$8,516   3.2% $30,727   3.5%$40,125   4.8%
          
Net income per share:         
  Basic$0.18  $0.40   $1.49  $1.92  
  Diluted$0.18  $0.39   $1.47  $1.87  
          
Weighted average number of shares outstanding:         
  Basic 20,191   21,118    20,646   20,861  
  Diluted 20,441   21,807    20,963   21,500  

Percentages reflected above may not reconcile due to rounding.



BJ’s Restaurants, Inc.
Selected Consolidated Balance Sheet Information
(Dollars in thousands)
 October 1, 2019
(unaudited)
 January 1, 2019
Cash and cash equivalents$  24,373 $  29,224
Total assets (1)$    1,058,202 $     695,107
Total debt$    158,000 $    95,000
Shareholders’ equity$    286,565 $    309,221
 

     (1)  Total assets includes $374.1 million of lease right of use assets, as of the third quarter ended October 1, 2019, related to the adoption of ASU 2016-02. 


BJ’s Restaurants, Inc.
Unaudited Supplemental Information
(Dollars in thousands)
          
 Third Quarter Ended Nine Months Ended
 October 1, 2019October 2, 2018 October 1, 2019October 2, 2018
Stock-based compensation (1)         
Labor and benefits$  685 0.2%$  577 0.2% $ 1,698 0.2%$ 1,699 0.2%
General and administrative 1,476   0.5  1,600   0.6   4,841   0.6  4,559   0.5 
Total stock-based compensation$ 2,161 0.8%$ 2,177 0.8% $ 6,539 0.8%$ 6,258 0.7%
          
Operating Data         
Comparable restaurant sales % change (0.3%)  6.9%   1.3%  5.5% 
Restaurants opened during period 2   1      5     4  
Restaurants open at period-end 207   201      207     201  
Restaurant operating weeks 2,681   2,604    7,957   7,751  

                           (1)     Percentages represent percent of total revenues.

Note Regarding Non-GAAP Financial Measures

The Company is reporting below certain non-GAAP financial results and related reconciliations to the corresponding GAAP financial measures. These non-GAAP measures are not in accordance with, or a substitute for, measures prepared in accordance with GAAP, and may be different from non-GAAP measures used by other companies. These measures should only be used to evaluate the Company's results of operations in conjunction with corresponding GAAP measures.

Restaurant Level Operating Margin 

Restaurant level operating margin, a non-GAAP financial measure, is equal to the revenues generated by our restaurants less their direct operating costs which consist of cost of sales, labor and benefits, and occupancy and operating costs. This performance measure includes only the costs that restaurant level managers can directly control and excludes other operating costs that are essential to conduct the Company’s business, as detailed in the table below. Management uses restaurant level operating margin as a supplemental measure of restaurant performance. Management believes restaurant level operating margin is useful to investors in that it highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures. Because other companies may calculate restaurant level operating margin differently than we do, restaurant level operating margin as presented herein may not be comparable to similarly titled measures reported by other companies.

A reconciliation of income from operations to restaurant level operating margin for the third quarter and nine months ended October 1, 2019 and October 2, 2018 is set forth below:

Supplemental Financial Information – Restaurant Level Operating Margin
(Unaudited, dollars in thousands)
    
 Third Quarter Ended Nine Months Ended
 October 1, 2019October 2, 2018 October 1, 2019October 2, 2018 
Income from operations$3,2701.2%$7,8902.9% $32,8103.8%$43,3835.2% 
  General and administrative 14,272  5.1  14,661  5.4   47,153  5.4  45,643  5.5  
  Depreciation and amortization 18,163  6.5  17,686  6.5   53,644  6.2  52,760  6.3  
  Restaurant opening 970  0.3  403  0.1   2,028  0.2  1,835  0.2  
  Loss on disposal of assets 931  0.3  865  0.3   3,618  0.4  3,049  0.4  
Restaurant level operating margin$37,606  13.5%$41,505  15.4% $139,253  16.0%$146,670  17.5% 

Percentages above represent percent of total revenues and may not reconcile due to rounding.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)

Adjusted EBITDA is a non-GAAP financial measure that represents the sum of net income, interest expense, income tax expense, depreciation and amortization, stock-based compensation expense, other expense (income) and loss on disposal of assets detailed within the reconciliation below. Management uses Adjusted EBITDA as a supplemental measure of our performance. Management believes these measures are useful to investors in that they highlight cash flow and trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures. Because other companies may calculate these measures differently than we do, Adjusted EBITDA as presented herein may not be comparable to similarly titled measures reported by other companies.

Supplemental Financial Information – Net Income to Adjusted EBITDA
(Unaudited, dollars in thousands)
    
 Third Quarter Ended Nine Months Ended
 October 1, 2019October 2, 2018 October 1, 2019October 2, 2018
Net income$3,671 1.3%$8,516 3.2% $30,727 3.5%$40,125 4.8%
  Interest expense, net 1,174   0.4  1,058   0.4   3,310    0.4  3,826   0.5 
  Income tax (benefit) expense (1,450)   (0.5) (1,445)  (0.5)  136    -  (348)   - 
  Depreciation and amortization 18,163   6.5  17,686   6.5   53,644   6.2  52,760   6.3 
  Stock-based compensation expense 2,161   0.8  2,177   0.8   6,539   0.8  6,258   0.7 
  Other (income), net (125)   -  (239)  (0.1)  (1,363)  (0.2) (220)   - 
  Loss on disposal of assets 931   0.3  865   0.3   3,618   0.4  3,049   0.4 
Adjusted EBITDA$24,525  8.8%$28,618   10.6% $96,611   11.1%$105,450   12.6%


ASU 2016-02 Reconciliation

The following table illustrates the impact from the adoption of ASU 2016-02 on our results for the third quarter and nine months ended October 1, 2019. The Company believes the non-GAAP financial measure and reconciliation below provides analysts and others in the investment community a way to analyze and compare the Company’s results to prior period results in which ASU 2016-02 was not applied.

 
BJ’s Restaurants, Inc.
 Supplemental Financial Information – ASU 2016-02, Leases, Reconciliation
 (Dollars in thousands except for per share data)
   
 Third Quarter Ended
  October 1, 2019October 2, 2018
 New
Standard
Total
Adjustments
 Previous
Standard
Previous
Standard
Revenues$278,739 $  -  $278,739 $270,268 
Restaurant operating costs (excluding depreciation and amortization):     
  Cost of sales 71,552   96 (1) 71,648  68,600 
  Labor and benefits 104,660   -   104,660  99,061 
  Occupancy and operating 64,921  (677)(2) 64,244  61,102 
  General and administrative 14,272   -   14,272  14,661 
  Depreciation and amortization 18,163   -   18,163  17,686 
  Restaurant opening 970   -   970  403 
  Loss on disposal of assets 931   -   931  865 
Total costs and expenses 275,469  (581)  274,888  262,378 
Income from operations 3,270  581   3,851  7,890 
      
Other income (expense):     
  Interest expense, net (1,174)  -   (1,174) (1,058)
  Other income, net 125   -   125  239 
Total other expense (1,049)  -   (1,049) (819)
Income before income taxes 2,221  581   2,802  7,071 
      
Income tax benefit (1,450)  -   (1,450) (1,445)
      
Net income$3,671 $  581  $4,252 $8,516 
      
Net income per share:     
  Basic$0.18 $0.03  $0.21 $0.40 
  Diluted$0.18 $0.03  $0.21 $0.39 
Weighted average number of shares outstanding:     
  Basic 20,191  20,191   20,191  21,118 
  Diluted 20,441  20,441   20,441  21,807 


(1) Prior to the adoption of ASU 2016-02, this amount was recorded as “Cost of sales” expenses. Amount represents contract considerations, which is now required to be allocated to the lease and non-lease components and recorded as “Occupancy and operating” expenses.
(2) Amount primarily represents the amortization of deferred sales-leaseback gain coupled with the contract consideration noted in footnote (1). Prior to the adoption of ASU 2016-02, sales-leaseback gains were deferred and amortized over the life of the lease as a credit to “Occupancy and operating” expenses.



 BJ’s Restaurants, Inc.
 Supplemental Financial Information – ASU 2016-02, Leases, Reconciliation
 (Dollars in thousands except for per share data)
   
 Nine Months Ended
  October 1, 2019October 2, 2018
 New
Standard
Total
Adjustments
 Previous
Standard
Previous
Standard
Revenues$870,383 $  -  $870,383 $836,425 
Restaurant operating costs (excluding depreciation and amortization):     
  Cost of sales 221,739   284 (1) 222,023  210,597 
  Labor and benefits 318,386   -   318,386  301,480 
  Occupancy and operating 191,005  (1,937)(2) 189,068  177,678 
  General and administrative 47,153   -   47,153  45,643 
  Depreciation and amortization 53,644   -   53,644  52,760 
  Restaurant opening 2,028   -   2,028  1,835 
  Loss on disposal of assets 3,618   -   3,618  3,049 
Total costs and expenses 837,573  (1,653)  835,920  793,042 
Income from operations 32,810  1,653   34,463  43,383 
      
Other income (expense):     
  Interest expense, net (3,310)  -   (3,310) (3,826)
  Other income, net 1,363   -   1,363  220 
Total other expense (1,947)  -   (1,947) (3,606)
Income before income taxes 30,863  1,653   32,516  39,777 
      
Income tax expense (benefit) 136   -   136  (348)
      
Net income$30,727 $1,653  $32,380 $40,125 
      
Net income per share:     
  Basic$1.49 $0.08  $1.57 $1.92 
  Diluted$1.47 $0.08  $1.54 $1.87 
Weighted average number of shares outstanding:     
  Basic 20,646  20,646   20,646  20,861 
  Diluted 20,963  20,963   20,963  21,500 


(1) Prior to the adoption of ASU 2016-02, this amount was recorded as “Cost of sales” expenses. Amount represents contract considerations, which is now required to be allocated to the lease and non-lease components and recorded as “Occupancy and operating” expenses.
(2) Amount primarily represents the amortization of deferred sales-leaseback gain coupled with the contract consideration noted in footnote (1). Prior to the adoption of ASU 2016-02, sales-leaseback gains were deferred and amortized over the life of the lease as a credit to “Occupancy and operating” expenses.