BJ’s Restaurants, Inc. — Form 10-Q Summary
Period discrepancy: The request metadata says 2019 Q1, but the supplied filing is for the thirteen weeks ended March 30, 2021, compared with the thirteen weeks ended March 31, 2020. This summary reflects the filing provided.
Business context and reporting period
BJ’s operated 211 restaurants as of May 4, 2021, with one temporarily closed. The quarter continued to be affected by COVID-19 dining-room capacity limits, operating-hour restrictions and related costs. Results are unaudited and may not indicate full-year performance.
Financial performance
| Metric | Q1 2021 | Comparable 2020 period |
|---|---|---|
| Revenue | $223.3 million | $254.6 million |
| Operating loss | $8.2 million | $7.7 million |
| Net loss | $3.1 million; $0.14 per diluted share | $4.3 million; $0.22 per diluted share |
| Cash provided by operations | $14.2 million | $1.2 million |
| Capital expenditures | $6.9 million | $16.3 million |
- Revenue fell 12.3%; comparable restaurant sales declined 13.0%. Customer traffic was down approximately 20%, partly offset by a 7% increase in average check.
- Restaurant labor and benefits were 36.6% of revenue, down from 40.8%. Occupancy and operating costs rose to 26.8% of revenue from 24.1%, while general and administrative costs rose to 6.8% from 4.6%. Cost of sales remained 25.1% of revenue.
- Cash and cash equivalents were $90.2 million at March 30, up from $51.7 million at December 29, 2020. Working capital remained negative at $47.6 million; the current ratio was 0.7.
- Long-term debt was $116.8 million. The $215 million credit facility had $79.1 million of available borrowing capacity after outstanding letters of credit. The company reported compliance with its covenants.
Changes, outlook, risks and unusual items
- Despite lower revenue, net loss narrowed year over year, largely reflecting a smaller other expense and a tax benefit. Operating loss increased modestly. Operating cash flow rose, which management attributed mainly to timing of accrued-expense payments.
- In January 2021, the company sold 703,399 shares through an at-the-market offering for $30 million before fees. It also exercised and repaid $442.2 million of credit-line borrowings during the quarter, with no net line-of-credit borrowing change reported in cash flows.
- Management said current cash and available credit were expected to meet capital and working-capital needs for at least twelve months, based on current operations and reduced development spending. It gave no specific revenue or earnings guidance. One restaurant was expected to reopen in the second half of 2021; management anticipated one additional restaurant opening later in 2021.
- The company warned that COVID-19 restrictions could persist or return, and that outbreaks could reduce capacity or suspend dine-in operations. Other risks include food and labor inflation, worker availability, commodity and supply-chain volatility, interest-rate exposure, and seasonal or severe-weather effects.
- Quarterly dividends and share repurchases remained suspended. The filing describes ordinary-course legal claims and self-insurance exposure, but management did not expect their disposition to materially affect financial position, results or liquidity. No material changes to previously disclosed risk factors were reported.
Important facts for investors to verify
- Confirm the intended reporting period: the provided filing is Q1 2021, not Q1 2019.
- Track comparable sales, customer traffic and capacity restrictions as pandemic conditions change.
- Review liquidity and covenant requirements, including the scheduled covenant tests and minimum-liquidity requirement through December 2021.
- Assess cash generation relative to lease obligations, capital spending and the company’s restaurant reopening and development plans.
- Monitor the effects of labor, commodity and supply-chain cost changes on margins.