BJ’s Restaurants Inc. (BJRI) reported first-quarter 2012 earnings of 30 cents per share, missing the Zacks Consensus Estimate of 31 cents but surpassing the prior-year earnings of 25 cents a share. The year-over-year upside was attributable to double-digit growth in the top line.

Inside the Headline Numbers

Revenues in the reported quarter grew 16.0% year over year to $167.6 million. The increase was attributable to modest increases in both comparable restaurant sales and new restaurant openings.

BJ’s sustained its top-line growth momentum in the first quarter on the back of operating efficiencies, innovative offerings and expansion, which have helped the casual dining restaurant operator to drive traffic.

Comparable restaurant sales grew 3.3% compared with 7.8% in the prior-year quarter. Operation for the first quarter of fiscal 2012 began on January 4, 2012 compared to December 29 last year. Hence, the first quarter of 2012 saw tougher year-over-year comparison in the absence of New Year.

Operating margin was up 10 basis points (bps) year over year at 7.1%, reflecting a 10-bp drop in cost of sales, fall of 10 bps in restaurant opening costs and 40 bps in general and administrative expenses. These were partially offset by a 50-bp spike in occupancy and operating costs, 20-bp increase in depreciation and amortization and a 10-bp rise in labor and benefits costs.

Store Update

The company opened 2 restaurants during the first quarter. At quarter-end, the company operates 117 units.

BJ’s has already chalked out its unit opening plan for the next three quarters of 2012. Five units are planned for the second quarter (of which one has already been unveiled at Dublin), six new units are slated for the third quarter while the fourth quarter will see three openings.

Financial Position

BJ’s ended the quarter with cash and cash equivalents of $43.0 million and shareholders equity of $343.3 million. As of April 3, 2012, BJ’s long-term debt liability was nil.

Outlook

Despite a quarterly miss, we remain optimistic on BJ’s several sales-building initiatives planned for 2012, and expansion plan which will likely support its future comps momentum.

BJ’s Restaurants competes with Darden Restaurants Inc. (DRI) and currently retains the Zacks #2 Rank, which translates into a short-term ‘Buy’ rating. We are maintaining our long-term Neutral recommendation on the stock.

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