BJ's Restaurants, Inc.

Good afternoon, and welcome to the BJ's Restaurant's fourth quarter 2023 earnings release conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn to the conference over to Ronna Shermer, Director of SEC Reporting. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to our fiscal 2023 fourth quarter investor conference call and webcast. After the market closed today, we released our financial results for our fiscal 2023 fourth quarter. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. I will begin by reminding you that our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. These statements are based on management's current business and market expectations, and our actual results could differ materially from those projections in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise, unless required to do so by the securities laws. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements contained in the company's filings with the Securities and Exchange Commission. We will start today's call with prepared remarks from Greg Levin, our Chief Executive Officer and President, and Tom Hodek, our Chief Financial Officer, after which we will take your questions. And with that, I will turn the call over to Greg Levin. Greg?

Thank you, Rana. BJ's delivered another quarter of positive comparable restaurant sales and year-over-year margin expansion as we continue to benefit from the strategies we shared at our Investor Day in November. These strategies are focused on driving sales through our familiar-made Brewhouse Fabulous culinary initiative, our people initiative around hospitality and gold standard level of operational excellence, and a welcoming contemporary ambiance through our remodel initiative. Our overall strategy also encompasses margin expansion through productivity and cost savings initiatives. Taken together and with successes already evident on many of these fronts, we have established a solid foundation for future restaurant growth and enhancements of shareholder value. From a fourth quarter sales perspective, comparable restaurant sales were positive 0.6%, which was our 11th consecutive quarter of beating the industry as measured by BlackBox. We expanded our restaurant margins to 14.4%, representing an increase of 150 basis points from the prior year and generated adjusted EBITDA of more than 27 million in the quarter. Our margin improvement results compared to last year are even more impressive in that fiscal 2022 was a 53-week year and included 3.2 million related to a one-time gain in gift card breakage in the fourth quarter. Therefore, excluding these benefits from last year, our restaurant-level margins improved by 270 basis points and adjusted EBITDA increased by approximately 40% year-over-year in the fourth quarter. For the fiscal 2023 full year, adjusted EBITDA increased to approximately $104 million, an increase of more than 30% on a reported basis, and more than 40% from last year when adjusting for gift card breakage and the 53rd week that benefited fiscal 2022. While Tom will discuss this in more detail, the margin improvement initiatives that generated strong results in 2023 will continue to yield further benefits in 2024. We expect restaurant-level margins to expand again this year and increase from our fourth-quarter exit rate in the mid-14 percentage points and further close the gap to pre-pandemic levels, consistent with what we outlined in our Investor Day presentation in November. Our familiar-made Brewhouse Fabulous culinary strategy began this past July as we rolled out our smaller menu, removing some of the non-core menu items that added complexity. While it can be difficult to grow comp sales with fewer menu items in the short term, this is the right approach to move BJ's forward and allow for new menu innovation while improving execution and team member satisfaction. In this regard, our new familiar-made Brewhouse fabulous items are moving the business forward. Our October spooky pizookie dessert had the highest incident rate of any seasonal pizookie, and our surf and turf combo increased our overall entree incidents and added approximately $300 to our weekly sales average during the promotion period. We shared with the investment community in November our three-year culinary strategy, which includes upgrading 50% of our menus to have a more visual wow for our guests, ongoing investment in our core workhorse items, and further innovation around 20% of our menu focused on value and price point. The changes we made to the menu are resonating with our team and workflow, allowing us to improve overall execution. In Q4, our team member retention improved for both hourly team members and managers compared to the prior year and are now better than pre-COVID levels, bringing added stability and less training time and costs to our business. In fact, our retention was better than our casual dining peers, which has created tremendous synergy in our restaurants, bench strength, and career advancement opportunities. This synergy has led to improved net promoter scores and, again, reduced training and overtime costs, helping to move our restaurant margins in the right direction. Through our research, we know that a key differentiator in full-service restaurants is ambiance. Guests want a contemporary, relevant atmosphere that complements our team members' gracious hospitality and BJ's delicious food. In fiscal 2023, we completed 36 remodels and expect to do at least 20 remodels this year. We believe we have about 130 more restaurants that can use one aspect of our remodel program, and with several quarters of data in hand following other remodels, we know this approach helps drive sales and traffic. By the end of 2024, we expect half of our restaurants will either be remodeled or be our newer, lighter prototype. While the best way for us to continue our margin growth is by driving top-line sales, since every additional sales dollar leverages the fixed elements of our cost structure, we also laid out a plan last year to identify at least $25 million of four-wall cost savings opportunities that will benefit our restaurant operating margins while maintaining our quality standards. We have now unlocked over $35 million of cost savings on an annualized basis as we reduce food, labor, and operating and occupancy costs. Going into fiscal 24, we expect to find additional savings that will further contribute to our initiatives to move restaurant-level margins higher. We also continue to open new restaurants in a balanced manner and make sure our portfolio is optimized to continue driving the best return for our shareholders. In 2023, we opened five new restaurants, including the relocation of our Chandler, Arizona restaurant. Our restaurants open since 2021 are doing exceptionally well with weekly sales average of more than 130,000 or approximately 10% higher than our system average with restaurant level margins in the mid to upper teens on an annual run rate average. Going into 2024, we plan to reduce the investment costs for new builds by approximately 1 million, which will bring down our investment costs to around 6.1 million net of landlord allowances. At the same time, we are working on further refining our prototype with the goal of reducing our investment costs by another 500,000. Our long-term cadence in this business is to drive top line sales in the 8% to 10% range through a combination of 5% plus unit growth and comparable restaurant sales in the low to mid single digits. At the same time, we continue to expand margins through sales leverage and productivity and savings initiatives. Our continuous focus on optimizing the business and solid financial cadence generates significant free cash flow, which we can translate into enhanced shareholder value. Based on our new restaurant performance, we know that BJ's is a welcome concept by guests throughout the US, and this provides us the opportunity to double our footprint over time. However, as we've always said, we are going to do it with the right quality and at the right investment cost to continue to drive strong new restaurant investment returns that maximizes shareholder value. To that point, and as we continue to focus on reducing our investment costs in our new restaurants, we now plan to open three restaurants this year. We are targeting total CapEx in the 70 million range, net attendant improvement allowances, including remodeling at least 20 restaurants this year. We expect to generate over $40 million of cash flow this year that we can use to enhance shareholder value through share repurchases or debt reduction. Our strong EBITDA growth and free cash flow profile will provide solid earnings growth for our shareholders as we are increasingly confident in our strategy to grow sales, expand margins, open new restaurants at the right pace, and return capital to our shareholders. To this point, as we announced today, our Board of Directors has approved an increase of $50 million to our share repurchase plan. Now, let me turn it over to Tom to provide a more detailed update from the quarter and current trends. Tom?