BJ’s Restaurants, Inc. (NASDAQ:BJRI) today reported financial
results for its fiscal 2017 third quarter ended
Tuesday, October 3, 2017. The Company also announced that its
Board of Directors authorized the initiation of a quarterly cash
dividend of $0.11 per share of the Company’s common stock.
Third Quarter 2017 Highlights Compared
to Third Quarter 2016
- Total revenues grew 5.7% to $247.0 million
- Total restaurant operating weeks increased approximately
9%
- Comparable restaurant sales declined 1.7%
- Net income and diluted net income per share were $2.4 million
and $0.11, respectively, inclusive of the net impact of $1.3
million in certain pre-tax expenses or $0.04 diluted net income per
share. The pre-tax expenses relate to Hurricanes Harvey and Irma
which impacted operations in Texas and Florida, and also include
severance related expenses resulting from a reorganization at the
Company’s restaurant support center. Excluding the impact of these
charges, non-GAAP adjusted net income and non-GAAP adjusted diluted
net income per share was $3.2 million and $0.15, respectively.
“This quarter was a challenging time for us and
the overall restaurant industry,” commented Greg Trojan, President
and CEO. “Operations were severely impacted by Hurricanes Harvey
and Irma, resulting in estimated lost sales of approximately $1.7
million. Besides the lost sales, we incurred approximately $0.9
million of direct costs related to property damage, food spoilage,
labor and other expenses from the hurricanes. We also incurred
approximately $0.4 million in severance and other costs in the
third quarter as we reduced certain corporate overhead positions
primarily related to supporting new restaurant openings. We
estimate that these costs impacted diluted net income per share by
approximately $0.04 during the quarter. In addition to these direct
costs, we estimate that the $1.7 million of lost sales in the
quarter, related to the hurricanes, impacted comparable restaurant
sales by 60 basis points and our earnings per share by
approximately $0.03."
Trojan continued, “Notwithstanding last
quarter’s challenges, we are achieving significant progress on our
sales driving initiatives and they are beginning to deliver
meaningful top line results. In fact, excluding the estimated
impact on sales from Hurricane Irma in September, our comparable
restaurant sales were positive in September at approximately 1%
with flattish guest counts. These trends have improved in October
as our comparable restaurant sales and traffic for the first three
weeks of October are both positive in the 2.0% range. The recent
positive sales trends partially reflect the success of our
initiatives focused on off premise sales, Daily Brewhouse Specials
and other every day value offerings. Additionally, BJ’s slow
roasted menu items continue to do extremely well with our Prime Rib
special continuing its position as a top entrée item over the
weekend when it is available on our menu.
“With the traction of our sales initiatives
going into the fourth quarter, we continue to take a prudent
near-term approach to our restaurant development program with the
goals of expanding BJ’s brand, improving financial returns and
building shareholder value. Accordingly, as we begin our fiscal
2018 planning process, we currently intend to target four to six
restaurant openings compared to the 10 new restaurant openings this
year. The additional free cash flow related to this re-allocation
of resources will provide further flexibility to our already solid
financial foundation and allow for margin leverage, strategic
growth investments and expanded return of capital to
shareholders.”
Through the end of the fiscal 2017 third
quarter, the Company opened eight new restaurants and is on
schedule to open its remaining two restaurants in Bowie, Maryland
and Taylor, Michigan in the fourth quarter, thereby achieving its
stated goal of 10 new restaurants in fiscal 2017. Trojan continued,
“Notwithstanding our plans for 2018, with only 195 restaurants in
25 states currently open and estimated national capacity for at
least 425 BJ’s restaurants, we remain excited about the significant
ongoing mid- and long-term growth opportunity for the BJ’s brand
and concept.”
During the third quarter of 2017, the Company
repurchased and retired approximately 0.8 million shares of its
common stock at a cost of approximately $25.4 million. Since the
Company’s first share repurchase authorization was approved in
April 2014, BJ’s has repurchased and retired approximately 9.1
million shares at a cost of approximately $347.8 million and has
reduced its outstanding share count by approximately 30%. The
Company currently has approximately $52.2 million available under
its authorized $400 million share repurchase program.
The Company’s first quarterly dividend of $0.11
per share of common stock is payable on December 4, 2017, to
shareholders of record at the close of business on November 13,
2017. “The decision by our Board to initiate a quarterly cash
dividend reflects BJ’s ongoing commitment to deliver value to our
shareholders,” said Trojan. “Our strong annual free cash flow
provides BJ’s with liquidity to initiate the quarterly cash
dividend while continuing our share repurchase program. At this
time, we believe we can best enhance shareholder value by moving
forward with a measured new restaurant national expansion program
while returning capital to shareholders and allocating capital to
debt reduction and other sales and productivity initiatives.” While
the Company intends to pay quarterly cash dividends for the
foreseeable future, all subsequent dividends will be reviewed
quarterly and declared by the Board of Directors at its
discretion.
Investor Conference Call and
WebcastBJ’s Restaurants, Inc. will conduct a conference
call on its third quarter 2017 earnings release today, October 26,
2017, 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. currently owns and operates 195
casual dining restaurants under the BJ’s Restaurant &
Brewhouse®, BJ’s Restaurant & Brewery®, BJ’s Pizza & Grill®
and BJ’s Grill® brand names. BJ’s Restaurants offer an innovative
and broad menu featuring award-winning, signature deep-dish pizza
complemented with generously portioned salads, appetizers,
sandwiches, soups, pastas, entrees and desserts, including the
Pizookie® dessert. Quality, flavor, value, moderate prices and
sincere service remain distinct attributes of the BJ’s experience.
All restaurants feature BJ’s critically acclaimed proprietary craft
beers, which are produced at several of the Company’s Restaurant
& Brewery locations, its two brewpubs in Texas and by
independent third party craft brewers. The Company’s restaurants
are located in the 25 states of Alabama, Arizona, Arkansas,
California, Colorado, Florida, Indiana, Kansas, Kentucky,
Louisiana, Maryland, Nevada, New Jersey, New Mexico, New York,
North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South
Carolina Tennessee, Texas, Virginia and Washington. Visit BJ’s
Restaurants, Inc. on the Web at http://www.bjsrestaurants.com for
locations and additional information.
Forward-Looking Statements
DisclaimerCertain 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 and 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 63, 34 and 22, respectively,
of our current 195 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, and (xxi) 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.
BJ’s Restaurants,
Inc. |
Unaudited Consolidated Statements of
Income |
(Dollars in thousands except for per share
data) |
|
|
|
|
|
Third Quarter Ended |
|
Nine Months Ended |
|
October
3, 2017 |
September 27, 2016 |
|
October
3, 2017 |
September 27, 2016 |
Revenues |
$ |
247,009 |
|
100.0 |
% |
$ |
233,702 |
|
100.0 |
% |
|
$ |
770,642 |
|
100.0 |
% |
$ |
727,431 |
|
100.0 |
% |
Restaurant operating
costs (excluding depreciation and amortization): |
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
65,553 |
|
26.5 |
|
|
59,882 |
|
25.6 |
|
|
|
200,465 |
|
26.0 |
|
|
183,091 |
|
25.2 |
|
Labor and
benefits |
|
91,228 |
|
36.9 |
|
|
82,034 |
|
35.1 |
|
|
|
277,724 |
|
36.0 |
|
|
252,793 |
|
34.8 |
|
Occupancy
and operating |
|
55,238 |
|
22.4 |
|
|
50,474 |
|
21.6 |
|
|
|
164,054 |
|
21.3 |
|
|
149,691 |
|
20.6 |
|
General
and administrative |
|
13,035 |
|
5.3 |
|
|
12,921 |
|
5.5 |
|
|
|
41,536 |
|
5.4 |
|
|
41,050 |
|
5.6 |
|
Depreciation and amortization |
|
17,430 |
|
7.1 |
|
|
16,292 |
|
7.0 |
|
|
|
51,231 |
|
6.6 |
|
|
47,930 |
|
6.6 |
|
Restaurant opening |
|
534 |
|
0.2 |
|
|
2,218 |
|
0.9 |
|
|
|
3,205 |
|
0.4 |
|
|
5,216 |
|
0.7 |
|
Loss on
disposal and impairment of assets |
|
1,070 |
|
0.4 |
|
|
810 |
|
0.3 |
|
|
|
4,168 |
|
0.5 |
|
|
2,266 |
|
0.3 |
|
Natural
disaster and related |
|
905 |
|
0.4 |
|
|
- |
|
- |
|
|
|
905 |
|
0.1 |
|
|
- |
|
- |
|
Severance
and legal settlements |
|
423 |
|
0.2 |
|
|
- |
|
- |
|
|
|
423 |
|
0.1 |
|
|
369 |
|
0.1 |
|
Total costs and
expenses |
|
245,416 |
|
99.4 |
|
|
224,631 |
|
96.1 |
|
|
|
743,711 |
|
96.5 |
|
|
682,406 |
|
93.8 |
|
Income
from operations |
|
1,593 |
|
0.6 |
|
|
9,071 |
|
3.9 |
|
|
|
26,931 |
|
3.5 |
|
|
45,025 |
|
6.2 |
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
(1,177 |
) |
(0.5 |
) |
|
(344 |
) |
(0.1 |
) |
|
|
(3,178 |
) |
(0.4 |
) |
|
(1,100 |
) |
(0.2 |
) |
Other
income, net |
|
423 |
|
0.2 |
|
|
378 |
|
0.2 |
|
|
|
1,474 |
|
0.2 |
|
|
813 |
|
0.1 |
|
Total other (expense)
income |
|
(754 |
) |
(0.3 |
) |
|
34 |
|
- |
|
|
|
(1,704 |
) |
(0.2 |
) |
|
(287 |
) |
- |
|
Income
before income taxes |
|
839 |
|
0.3 |
|
|
9,105 |
|
3.9 |
|
|
|
25,227 |
|
3.3 |
|
|
44,738 |
|
6.2 |
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense |
|
(1,550 |
) |
(0.6 |
) |
|
1,868 |
|
0.8 |
|
|
|
3,933 |
|
0.5 |
|
|
12,068 |
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
2,389 |
|
1.0 |
% |
$ |
7,237 |
|
3.1 |
% |
|
$ |
21,294 |
|
2.8 |
% |
$ |
32,670 |
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.11 |
|
|
$ |
0.30 |
|
|
|
$ |
0.98 |
|
|
$ |
1.35 |
|
|
Diluted |
$ |
0.11 |
|
|
$ |
0.30 |
|
|
|
$ |
0.97 |
|
|
$ |
1.33 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
21,354 |
|
|
|
24,091 |
|
|
|
|
21,620 |
|
|
|
24,172 |
|
|
Diluted |
|
21,670 |
|
|
|
24,486 |
|
|
|
|
22,032 |
|
|
|
24,589 |
|
|
|
Percentages reflected above may not reconcile due to
rounding. |
BJ’s Restaurants,
Inc. |
Selected Consolidated Balance Sheet
Information |
(Dollars in thousands) |
|
October 3,
2017(unaudited) |
|
January 3,
2017(audited) |
Cash and cash
equivalents |
$ |
28,694 |
|
$ |
22,761 |
Total assets |
$ |
693,066 |
|
$ |
691,312 |
Total debt |
$ |
194,000 |
|
$ |
148,000 |
Shareholders’
equity |
$ |
245,178 |
|
$ |
274,897 |
BJ’s Restaurants, Inc. |
Unaudited Supplemental
Information |
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended |
|
Nine Months Ended |
|
October 3, 2017 |
September 27, 2016 |
|
October 3, 2017 |
September 27, 2016 |
Stock-based
compensation (1) |
|
|
|
|
|
|
|
|
|
Labor and benefits |
$ |
406 |
|
0.2 |
% |
$ |
413 |
|
0.2 |
% |
|
$ |
1,404 |
|
0.2 |
% |
$ |
1,321 |
|
0.2 |
% |
General and
administrative |
|
1,335 |
|
0.5 |
|
|
1,061 |
|
0.5 |
|
|
|
3,867 |
|
0.5 |
|
|
3,259 |
|
0.4 |
|
Total stock-based
compensation |
$ |
1,741 |
|
0.7 |
% |
$ |
1,474 |
|
0.7 |
% |
|
$ |
5,271 |
|
0.7 |
% |
$ |
4,580 |
|
0.6 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
Data |
|
|
|
|
|
|
|
|
|
Comparable restaurant
sales % change |
|
(1.7 |
%) |
|
|
(3.4 |
%) |
|
|
|
(1.5 |
%) |
|
|
(1.0 |
%) |
|
Restaurants opened
during period |
|
1 |
|
|
|
5 |
|
|
|
|
8 |
|
|
|
12 |
|
|
Restaurants open at
period-end |
|
195 |
|
|
|
182 |
|
|
|
|
195 |
|
|
|
182 |
|
|
Restaurant operating
weeks |
|
2,526 |
|
|
|
2,320 |
|
|
|
|
7,468 |
|
|
|
6,827 |
|
|
|
(1) Percentages represent percent of total
revenues. |
Reconciliation of Selected GAAP Financial Measures to
Non-GAAP Adjusted Financial Measures
To supplement the consolidated financial
statements presented in accordance with U.S. generally accepted
accounting principles (“GAAP”), the Company has included the
following non-GAAP adjusted financial measures to discuss the
Company’s financial results for third quarter 2017 which may be
accessed via the Company’s website at
http://www.bjsrestaurants.com: (i) non-GAAP adjusted net
income and (ii) non-GAAP adjusted diluted net income per share.
Each of these non-GAAP adjusted financial measures is adjusted from
results based on GAAP to exclude certain expenses. As a general
matter, the Company uses these non-GAAP adjusted financial measures
in addition to and in conjunction with results presented in
accordance with GAAP to help analyze the performance of its core
business. The Company believes that such non-GAAP adjusted
financial information is used by analysts and others in the
investment community to analyze the Company’s results and in
formulating estimates of future performance and that failure to
report these non-GAAP adjusted measures may result in confusion
among analysts and others and a misplaced perception that the
Company’s results have underperformed or exceeded expectations.
These non-GAAP adjusted financial measures
reflect an additional way of viewing aspects of the Company’s
operations that, when viewed with the reconciliation to the
corresponding GAAP financial measures, provide a more complete
understanding of the Company’s results of operations and the
factors and trends affecting the Company’s business. However, these
non-GAAP adjusted financial measures should be considered as a
supplement to, and not as a substitute for, or superior to, the
corresponding measures calculated in accordance with GAAP.
For the third quarter ended October 3, 2017,
non-GAAP adjusted net income and non-GAAP adjusted diluted net
income per share excludes natural disaster and related expense
which resulted from Hurricanes Harvey and Irma and severance
related expenses incurred to reorganize the Company’s restaurant
support center. For the nine months ended October 3, 2017, non-GAAP
adjusted net income and non-GAAP adjusted diluted net income per
share excludes the write-off of the remaining net book value of
certain convection ovens and point of sale terminals as a result of
our new slow roasting oven and server handheld tablet rollouts,
natural disaster and related expense resulting from Hurricanes
Harvey and Irma and severance related expenses incurred to
reorganize the Company’s restaurant support center.
Reconciliation of Non-GAAP Adjusted Financial
Measures |
(Unaudited, dollars in thousands except for
per share data) |
|
|
|
|
|
|
Third Quarter Ended |
|
October 3, 2017 |
September 27, 2016 |
|
$ |
% |
Per Share |
$ |
% |
Per Share |
Net income &
diluted net income per share, as reported |
$ |
2,389 |
|
1.0 |
% |
$ |
0.11 |
|
$ |
7,237 |
3.1 |
% |
$ |
0.30 |
Natural
disaster related expenses |
|
905 |
|
0.4 |
|
|
0.04 |
|
|
- |
- |
|
|
- |
Severance
related expenses |
|
423 |
|
0.2 |
|
|
0.02 |
|
|
- |
- |
|
|
- |
Income
tax effect of reconciling items (1) |
|
(502 |
) |
(0.2 |
) |
|
(0.02 |
) |
|
- |
- |
|
|
- |
Non-GAAP adjusted net
income & diluted net income per share |
$ |
3,215 |
|
1.3 |
% |
$ |
0.15 |
|
$ |
7,237 |
3.1 |
% |
$ |
0.30 |
|
|
|
Nine Months Ended |
|
October 3, 2017 |
September 27, 2016 |
|
$ |
% |
Per Share |
$ |
% |
Per Share |
Net income &
diluted net income per share, as reported |
$ |
21,294 |
|
2.8 |
% |
$ |
0.97 |
|
$ |
32,670 |
4.5 |
% |
$ |
1.33 |
Loss on
disposal and impairment of assets |
|
1,426 |
|
0.2 |
|
|
0.06 |
|
|
- |
- |
|
|
- |
Natural
disaster related expenses |
|
905 |
|
0.1 |
|
|
0.04 |
|
|
- |
- |
|
|
- |
Severance
related expenses |
|
423 |
|
0.1 |
|
|
0.02 |
|
|
- |
- |
|
|
- |
Income
tax effect of reconciling items (1) |
|
(1,361 |
) |
(0.2 |
) |
|
(0.06 |
) |
|
- |
- |
|
|
- |
Non-GAAP adjusted net
income & diluted net income per share |
$ |
22,687 |
|
2.9 |
% |
$ |
1.03 |
|
$ |
32,670 |
4.5 |
% |
$ |
1.33 |
|
|
Per share amounts and percentages reflected above may
not reconcile due to rounding. |
Percentages represent percent of total revenues. |
|
(1) The income tax effect of the reconciling items was
calculated based on the change in the tax provision calculation
after adjusting for the reconciling items. |
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
margin differently than we do, restaurant level 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 3, 2017 and September 27, 2016 is set forth below:
Supplemental Financial Information –
Restaurant Level Operating Margin |
(Unaudited, dollars in
thousands) |
|
|
|
|
|
Third Quarter Ended |
|
Nine Months Ended |
|
October 3, 2017 |
September 27, 2016 |
|
October 3, 2017 |
September 27, 2016 |
Income from
operations |
$ |
1,593 |
0.6 |
% |
$ |
9,071 |
3.9 |
% |
|
$ |
26,931 |
3.5 |
% |
$ |
45,025 |
6.2 |
% |
General
and administrative |
|
13,035 |
5.3 |
|
|
12,921 |
5.5 |
|
|
|
41,536 |
5.4 |
|
|
41,050 |
5.6 |
|
Depreciation and amortization |
|
17,430 |
7.1 |
|
|
16,292 |
7.0 |
|
|
|
51,231 |
6.6 |
|
|
47,930 |
6.6 |
|
Restaurant opening |
|
534 |
0.2 |
|
|
2,218 |
0.9 |
|
|
|
3,205 |
0.4 |
|
|
5,216 |
0.7 |
|
Loss on
disposal and impairment of assets |
|
1,070 |
0.4 |
|
|
810 |
0.3 |
|
|
|
4,168 |
0.5 |
|
|
2,266 |
0.3 |
|
Natural
disaster and related |
|
905 |
0.4 |
|
|
- |
- |
|
|
|
905 |
0.1 |
|
|
- |
- |
|
Severance
related expenses |
|
423 |
0.2 |
|
|
- |
- |
|
|
|
423 |
0.1 |
|
|
369 |
0.1 |
|
Restaurant level
operating margin |
$ |
34,990 |
14.2 |
% |
$ |
41,312 |
17.7 |
% |
|
$ |
128,399 |
16.7 |
% |
$ |
141,856 |
19.5 |
% |
|
Percentages above represent percent of total revenues
and may not reconcile due to rounding. |
|
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.
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