BJ's Restaurants, Inc.

Good afternoon, and welcome to the BJ's Restaurant's first quarter 2024 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 the conference over to Ronna Shermer, Director of SEC Reporting. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to our fiscal 2024 first quarter investor conference call and webcast. After the market closed today, we released our financial results for our fiscal 2024 first 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 the 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 by 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. Greg?

Thank you, Rana. BJ's delivered another quarter of improving restaurant-level margins and overall EBITDA growth, overcoming the challenging January weather, which impacted guest traffic industry-wide. Our improving results reflect the benefits of the strategies we shared at our Investor Day in November. These strategies focus on driving sales through our familiar-made Brewhouse Fabulous culinary initiative. building our awareness over time, our people initiative around hospitality and gold standard level of operational excellence, and a welcoming contemporary ambiance through our remodel initiative. Our holistic approach also addresses margin expansion through productivity and cost savings initiatives. Taken together, these strategies have established a foundation for future financial and restaurant growth and the enhancement of shareholder value. As we mentioned on our 2023 Q4 call in mid-February, comparable restaurant sales were down approximately 5% six weeks into the first quarter due to impacts from the winter storms. However, as weather largely normalized throughout the rest of the quarter, our comparable restaurant sales improved, resulting in comp sales being down only 1.7% for the quarter. The improvement in comp sales throughout the quarter came primarily from improved guest traffic. Q124 also marked our 12th consecutive quarter of beating the industry, as measured by BlackBox. Furthermore, our restaurant margins continued to expand and rose to 15%, representing an increase of 240 basis points from the prior year, despite the January weather impact. On a reported basis, adjusted EBITDA in the quarter rose to $29.4 million, inclusive of some one-time G&A costs, which Tom will discuss shortly. Excluding these one-time expenses, adjusted EBITDA would have been approximately $31 million, or approximately 25% higher than the prior year, and 9.2% of sales. Tom will discuss our margin growth initiatives that generated strong Q1 results in more detail in a moment. However, as we stated before, we continue to expect restaurant-level margins to expand again this year based on the foundation we have established. Therefore, despite ongoing sales choppiness that we expect through the first half of 2024 as we lap the final aspects of COVID revenge dining and begin lapping the more normalized pre-COVID seasonal trends that we experienced in the second half of last year, the foundation that we are building will position BJ's to further close the gap to our pre-pandemic restaurant level margins. Our solid results are a testament to our team members who continue to execute against our strategic initiatives to improve the overall dining experience for our guests while driving impressive margin growth through our productivity and savings initiatives. To this point, both our hourly and management turnover is lower than it was in 2019 and lower than last year. Our more tenured team, coupled with our culinary strategy focused on familiar made brew house fabulous and our initiatives underway, has resulted in both guests and operating benefits measured by faster service times and improved social sentiment scores compared to a year ago. As we bolstered our team last year, we implemented our gracious hospitality initiative to enhance our already high hospitality standards and scores. The first part of this initiative focused on new server scripting. With this new server scripting driving improved hospitality scores, this month we began rolling out our enhanced service model, which balances the number of tables per server, food runners, and quality fast expediter positions in our restaurant. These changes allow servers to get to our guests sooner so we can get the food into the kitchen faster. It also frees up our managers so that they have more time to be in the dining room to make sure we are delivering the gold standard level of operational excellence for our guests. Overall, we expect this initiative to help improve throughput in our restaurants so that we can handle even more demand. We expect the rollout of this initiative to take the better part of Q2 and Q3 of this year and will have a slight impact on training labor for these quarters. We also continue to execute against our remodel initiative that is similarly driving improved sales and traffic. We have completed 13 remodels year to date and expect to do approximately 10 more this year. By the end of 2024, approximately half of our restaurants will either be recently remodeled or one of our newer prototypes. We also continue to open new restaurants in a balanced manner. And in Q1, we opened one new restaurant in Brookfield, Wisconsin. This is our first restaurant in Wisconsin, and it's off to a very strong start, demonstrating the broad appeal of the BJ's concept in so many different regions of the US, which again reinforces our conviction that there is the white space for further expansion to 425 or more restaurants, which is approximately double our restaurant count today. Our next two openings this year will be in the second half of 2024 and will be our newest prototype that will cost approximately $1 million less to build, bringing the investment cost down to around $6 million on average. And that's net of landlord allowances. The new prototype will also provide greater operating efficiencies while incorporating our learnings from our remodel initiative, including lighter colors and a more contemporary bar featuring a 130-inch television as the focal point. Our long-term cadence in the 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. However, as we've always said, we are going to do so with the right quality and at the right investment costs to continue to drive strong new restaurant investment returns that deliver shareholder value. 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 our solid financial cadence results in significant free cash flow, which will translate into enhanced shareholder value over the medium and long term. Now, before I turn the call over to Tom, I would like to recognize three outstanding board members that are retiring from BJ's board. upon the June 18th annual meeting. They are Jerry Dixley, our former chief executive officer and chairman of the board, Pete Bassey, our lead independent director, and Larry Bouts, who has served as our chairman of the audit committee. All three of them joined BJ's in 2004 when we had less than 30 restaurants. These insightful board leaders helped shape our company over the last two decades and have paved the way strategically for BJ's to develop into one of the finest casual dining concepts. We are grateful for their tremendous legacy they leave and really want to thank them for their leadership and their years of service to BJs. Now let me turn it over to Tom to provide more detailed updates from the quarter and current trends. Tom?