News Release

Buffalo Wild Wings, Inc. Announces Second Quarter Earnings Per Share of $1.12

July 28, 2015 at 4:01 PM EDT

- 41-Unit Franchise Acquisition Expected to Close in August 2015 -

- 2015 Net Earnings Growth Goal Revised to 13% -

MINNEAPOLIS, July 28, 2015 (GLOBE NEWSWIRE) -- Buffalo Wild Wings, Inc. (NASDAQ:BWLD) announced today financial results for the second quarter ended June 28, 2015. Highlights for the second quarter versus the same period a year ago were:

  • Total revenue increased 16.5% to $426.4 million
  • Company-owned restaurant sales increased 17.1% to $401.9 million
  • Same-store sales increased 4.2% at company-owned restaurants and 2.5% at franchised restaurants
  • Net earnings decreased 9.3% to $21.5 million from $23.7 million, and earnings per diluted share decreased 9.9% to $1.12 from $1.25

Sally Smith, President and Chief Executive Officer, commented, "Solid sales performance in the second quarter was offset by a challenging cost environment.  Our second quarter same-store sales were 4.2% at company-owned restaurants and 2.5% at franchised locations.  This spring we created World of Sports, which highlighted the playoffs, women's World Cup, and unique sports from around the globe to help drive sales over our strong same-store sales last year. We also launched B-Dubs® Fast Break, a system-wide lunch program, and supported the campaign with national and local advertising."

Ms. Smith continued, "We earned $1.12 per diluted share in the second quarter, a decline from 2014 primarily from increased food and labor costs.  The price per pound for traditional chicken wings was 26% higher than the prior year.  Labor as a percentage of sales increased due to higher wage rates and benefits costs and the addition of Guest Experience Captains at all company-owned restaurants that was completed in fourth quarter last year." 

Total revenue increased 16.5% to $426.4 million in the second quarter compared to $366.0 million in the second quarter of 2014. Company-owned restaurant sales for the quarter increased 17.1% over the same period in 2014, to $401.9 million, driven by a same-store sales increase at company-owned Buffalo Wild Wings restaurants of 4.2% and 64 additional Buffalo Wild Wings restaurants at the end of the second quarter of 2015. Franchise royalties and fees increased 7.3% to $24.5 million for the quarter versus $22.9 million in the second quarter of 2014. This increase is attributed to a same-store sales increase at franchised Buffalo Wild Wings locations of 2.5% and 8 additional franchised Buffalo Wild Wings restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned Buffalo Wild Wings restaurants were $61,960 for the second quarter of 2015 compared to $59,403 for the same quarter last year, a 4.3% increase. Franchised Buffalo Wild Wings restaurants in the United States averaged $63,904 for the period versus $61,845 in the second quarter a year ago, a 3.3% increase.

For the second quarter, net earnings decreased 9.3% to $21.5 million versus $23.7 million in the second quarter of 2014. Earnings per diluted share were $1.12, as compared to second quarter 2014 earnings per diluted share of $1.25.

2015 Outlook

Ms. Smith remarked, "Same-store sales increased 4.8% at company-owned restaurants and 2.0% at franchised locations for the first four weeks of the third quarter of 2015 compared to 8.2% and 7.4%, respectively, for the same period last year, which included the men's World Cup finals. We're excited for the start of the football season and our restaurant teams are getting ready to host fantasy football draft parties. Buffalo Wild Wings remains the place to watch all the gridiron action and we will air new advertising focusing on the great football environment our restaurants offer."

Ms. Smith continued, "In July, we finalized a purchase agreement to acquire 41 franchised Buffalo Wild Wings locations in Texas, New Mexico, and Hawaii and we anticipate the transaction closing in August.  This acquisition is expected to decrease net earnings in 2015 due to the timing of the closing, increased depreciation and amortization of reacquired franchise rights, and $5 million in transition costs."

Ms. Smith concluded, "Investments in Buffalo Wild Wings, including the Guest Experience Business Model and Stadia restaurant design, further strengthen our brand. Same-store sales at Buffalo Wild Wings are strong and we have long-term opportunities that will continue to drive restaurant sales and net earnings growth. As a result of the near-term expenses from the integration of the franchise acquisition, we are revising our net earnings growth goal for 2015 to 13%."

Buffalo Wild Wings will be hosting a conference call today, July 28, 2015 at 4:00 p.m. Central Daylight Time to discuss these results. There will be a simultaneous webcast conducted at our investor website IR.BuffaloWildWings.com.

A replay of the call will be available until August 4, 2015. To access this replay, please dial 1.858.384.5517 password 1555267.

About the Company

Buffalo Wild Wings, Inc., founded in 1982 and headquartered in Minneapolis, is a growing owner, operator and franchisor of Buffalo Wild Wings® restaurants featuring a variety of boldly-flavored, made-to-order menu items including its namesake Buffalo, New York-style chicken wings. The Buffalo Wild Wings menu specializes in 21 mouth-watering signature sauces and seasonings with flavor sensations ranging from Sweet BBQ™ to Blazin'®. Guests enjoy a welcoming neighborhood atmosphere that includes an extensive multi-media system for watching their favorite sporting events. Buffalo Wild Wings is the recipient of hundreds of "Best Wings" and "Best Sports Bar" awards from across the country. There are currently more than 1,100 Buffalo Wild Wings locations in the United States, Canada, Mexico, and Philippines.

To stay up-to-date on all the latest events and offers for sports fans and wing lovers, like Buffalo Wild Wings on Facebook, follow @BWWings on Twitter and visit www.BuffaloWildWings.com.

Forward-looking Statements

Various remarks we make about future expectations, plans, and prospects for the company constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements relate to our future financial and restaurant performance measures and growth goals, including but not limited to those relating to our third quarter sales trends and projected unit and net earnings growth rates for 2015, and beyond. All statements other than statements of historical fact are statements that could be deemed forward-looking statements and are based upon the current beliefs and expectations of our management. We have attempted to identify forward-looking statements by terminology, including "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "goal," "intends," "may," "plans," "potential," "predicts," "should," "scheduled," or "will" or the negative of these terms or other comparable terminology. Actual results may vary materially from those contained in forward-looking statements based on a number of factors, including, but not limited to, our ability to achieve and manage our planned expansion, the ability of our franchisees to open and manage new restaurants, market acceptance in the new geographic regions we enter (particularly non-U.S. locations), success of acquired restaurants, success of investments in new or emerging concepts, unforeseen obstacles in developing nontraditional sites or non-U.S. locations, our ability to obtain and maintain licenses and permits necessary to operate our existing and new restaurants, our franchisees' adherence to our system standards, the cost of commodities such as traditional chicken wings and supply chain consistency, the success of our key initiatives and our advertising and marketing campaigns, our ability to control restaurant labor and other restaurant operating costs, the continued service of key management personnel, our ability to protect our name and logo and other proprietary information, economic conditions (including changes in consumer preferences or consumer discretionary spending), the impact of federal, state or local government regulations relating to our employees, the sale of food and alcoholic beverages, the effect of competition in the restaurant industry, and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission, including the factors described under "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2014, as updated in subsequent reports filed with the SEC. Investors should take such risks into account when making investment decisions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update any forward-looking statements.


    
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar and share amounts in thousands except per share data)
(unaudited)
    
 Three months ended Six months ended
 June 28,
 2015
 June 29,
 2014
 June 28,
 2015
 June 29,
 2014
Revenue:       
Restaurant sales$401,860  343,141  816,832   688,086 
Franchise royalties and fees24,527  22,853  50,141  45,763 
Total revenue426,387  365,994  866,973  733,849 
Costs and expenses:       
Restaurant operating costs:       
Cost of sales117,843  96,837  243,520  194,324 
Labor129,294  107,432  259,688  212,766 
Operating56,822  50,017  115,373  99,055 
Occupancy22,354  19,283   44,344  38,252 
Depreciation and amortization29,208  23,746  57,277   46,578 
General and administrative33,701  30,223  64,223  58,379 
Preopening3,204  2,197  4,474  4,775 
Loss on asset disposals and impairment2,306  1,211  2,911  1,998 
Total costs and expenses394,732  330,946  791,810  656,127 
Income from operations31,655  35,048  75,163  77,722 
Investment income (loss)41  235  (34) 108 
Earnings before income taxes31,696  35,283  75,129  77,830 
Income tax expense10,264  11,580  24,712  25,811 
Net earnings including noncontrolling interests21,432  23,703  50,417  52,019 
Net loss attributable to noncontrolling interests(67)   (145)  
Net earnings attributable to Buffalo Wild Wings$21,499  23,703  50,562  52,019 
Earnings per common share - basic$1.13  1.25  2.66  2.75 
Earnings per common share - diluted$1.12  1.25  2.65  2.74 
Weighted average shares outstanding - basic19,003  18,904   18,998  18,888 
Weighted average shares outstanding - diluted19,113  18,981  19,094  18,967 
            


The following table expresses results of operations as a percentage of total revenue for the periods presented, except for restaurant operating costs which are expressed as a percentage of restaurant sales:


    
  Three months ended Six months ended
 June 28,
 2015
 June 29,
 2014
 June 28,
 2015
 June 29,
 2014
Revenue:       
Restaurant sales94.2%  93.8% 94.2% 93.8%
Franchise royalties and fees5.8  6.2  5.8  6.2 
Total revenue100.0  100.0  100.0  100.0 
Costs and expenses:       
Restaurant operating costs:       
Cost of sales29.3  28.2  29.8  28.2 
Labor32.2  31.3  31.8  30.9 
Operating14.1  14.6  14.1  14.4 
Occupancy5.6  5.6  5.4  5.6 
Depreciation and amortization6.9  6.5  6.6  6.3 
General and administrative7.9  8.3  7.4  8.0 
Preopening0.8  0.6  0.5  0.7 
Loss on asset disposals and impairment0.5  0.3  0.3  0.3 
Total costs and expenses92.6  90.4  91.3  89.4 
Income from operations7.4  9.6  8.7  10.6 
Investment income (loss)0.0  0.1  (0.0) 0.0 
Earnings before income taxes7.4  9.6   8.7  10.6 
Income tax expense2.4  3.2  2.9  3.5 
Net earnings including noncontrolling interests5.0  6.5  5.8  7.1 
Net loss attributable to noncontrolling interests(0.0)   (0.0)  
Net earnings attributable to Buffalo Wild Wings5.0% 6.5% 5.8% 7.1%
             


    
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
    
 June 28,
 2015
 December 28,
 2014
Assets   
Current assets:   
Cash and cash equivalents$73,495  93,329 
Marketable securities18,401  19,547 
Accounts receivable, net of allowance of $2528,422  28,322 
Inventory11,877  11,893 
Prepaid expenses16,789  4,215 
Refundable income taxes2,854  9,779 
Deferred income taxes16,898  15,807 
Restricted assets56,194  81,037 
Total current assets224,930  263,929 
    
Property and equipment, net522,602  494,401 
Reacquired franchise rights, net57,216  37,631 
Other assets19,110  19,399 
Goodwill52,565  38,106 
Total assets$876,423  853,466 
    
Liabilities and Stockholders' Equity   
Current liabilities:   
Unearned franchise fees$2,295  2,099 
Accounts payable44,025  37,241 
Accrued compensation and benefits42,415  59,161 
Accrued expenses14,222  16,573 
Current portion of deferred lease credits  743 
System-wide payables55,194  79,668 
Total current liabilities158,151  195,485 
    
Long-term liabilities:   
Other liabilities16,099  6,388 
Deferred income taxes30,853  39,815 
Deferred lease credits 41,214  37,479 
Total liabilities246,317  279,167 
    
Commitments and contingencies   
Stockholders' equity:   
Undesignated stock, 1,000,000 shares authorized   
Common stock, no par value. Authorized 44,000,000 shares; issued and outstanding 19,012,522 and 18,937,131, respectively154,169  148,114 
Retained earnings478,257  427,695 
Accumulated other comprehensive loss(2,761) (2,096)
Total stockholders' equity629,665  573,713 
Noncontrolling interests441  586 
Total equity630,106   574,299 
Total liabilities and equity$876,423  853,466 
        


  
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
  
 Six months ended
 June 28,
 2015
 June 29,
 2014
Cash flows from operating activities:   
Net earnings including noncontrolling interests$50,417  52,019 
Adjustments to reconcile net earnings to net cash provided by operations:    
Depreciation54,805  44,312 
Amortization2,472  2,266 
Loss on asset disposals and impairment2,911  1,998 
Deferred lease credits2,903  2,998 
Deferred income taxes(9,757) (10,623)
Stock-based compensation7,253  7,665 
Excess tax benefit from stock issuance(262) (118)
Change in operating assets and liabilities, net of effect of acquisitions:   
Trading securities(708) (569)
Accounts receivable 144  (347)
Inventory357  (608)
Prepaid expenses(12,530) (6,618)
Other assets279  (2)
Unearned franchise fees196  (58)
Accounts payable236  69 
Income taxes7,187  5,885 
Accrued expenses(5,033) 1,019 
Net cash provided by operating activities100,870  99,288 
Cash flows from investing activities:   
Acquisition of property and equipment(67,334) (54,864)
Acquisition of businesses(49,036)  (3,000)
Purchase of marketable securities(12,301) (11,996)
Proceeds from marketable securities14,155   
Net cash used in investing activities(114,516) (69,860)
Cash flows from financing activities:   
Issuance of common stock1,604  1,665 
Excess tax benefit from stock issuance262  118 
Tax payments for restricted stock units(7,627) (7,474)
Net cash used in financing activities(5,761) (5,691)
Effect of exchange rate changes on cash and cash equivalents(427) (337)
Net increase (decrease) in cash and cash equivalents(19,834) 23,400 
Cash and cash equivalents at beginning of period93,329  57,502 
Cash and cash equivalents at end of period$73,495  80,902 
       


     
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
     
Restaurant Count
     
Company-owned Restaurants (includes Buffalo Wild Wings, Rusty Taco, and Buffalo Wild Wings-owned PizzaRev locations):
     
 Q1Q2Q3Q4
2015501517  
2014443449463491
2013397407415434
2012327330343381
2011263277288319
     


     
Franchised Restaurants (includes Buffalo Wild Wings and Rusty Taco locations):                                                                                  
     
 Q1 Q2Q3Q4
2015593593  
2014569579588591
2013514525534559
2012505 505511510
2011488492498498
     


      
Same-Store Sales at Buffalo Wild Wings locations in United States and Canada
      
Company-owned Restaurants:
       
 Q1Q2Q3Q4Year
2015 7.0% 4.2%   
2014 6.6% 7.7% 6.0% 5.9% 6.5%
2013 1.4% 3.8% 4.8% 5.2% 3.9%
2012 9.2% 5.3% 6.2% 5.8% 6.6%
2011 3.9% 5.9% 5.7% 8.9% 6.1%
                


      
Franchised Restaurants:                                                                                                    
      
 Q1Q2Q3Q4Year
2015 6.0% 2.5%   
2014 5.0% 6.5% 5.7% 5.1% 5.6%
2013 2.2% 4.1% 3.9% 3.1% 3.3%
2012 7.3% 5.5% 5.8% 7.4% 6.5%
2011 1.6% 2.7% 4.2% 5.9% 3.6%
                 


       
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
       
Average Weekly Sales Volumes at Buffalo Wild Wings locations in United States and Canada
       
Company-owned Restaurants:
       
  Q1Q2Q3Q4Year
2015$64,85161,960   
2014 60,96659,40359,64362,11960,470
2013 56,95354,75955,59258,20456,392
2012 55,13151,52452,56155,59553,783
2011 48,84547,97049,46151,98349,627


       
Franchised Restaurants:                                                                                                                                
       
  Q1Q2Q3Q4Year
2015$67,07563,904    
2014 63,85261,84561,58663,94962,595
2013 60,05058,18658,92661,16759,594
2012 57,28254,76655,60858,49056,570
2011 52,74450,99551,35053,38552,081
       
Investor Relations Contact:

Heather Pribyl

952.253.0731

Source: Buffalo Wild Wings, Inc.

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