Buffalo Wild Wings
Oct 28, 2015

Buffalo Wild Wings, Inc. Announces Third Quarter Earnings Per Share of $1.00

MINNEAPOLIS--(BUSINESS WIRE)-- Buffalo Wild Wings, Inc. (NASDAQ: BWLD) announced today financial results for the third quarter ended September 27, 2015. Highlights for the third quarter versus the same period a year ago were:

Sally Smith, President and Chief Executive Officer, commented, "During the third quarter we acquired 41 franchised locations in Texas, New Mexico, and Hawaii, which includes two restaurants under development. We sincerely thank the hundreds of Team Members across the country that were part of the successful transition to company ownership. Combined with our ongoing company-owned development and other franchise acquisitions during the last 12 months, we've increased our company-owned Buffalo Wild Wings locations by 24% compared to a year ago."

Ms. Smith continued, "Our same-store sales in the third quarter increased 3.9% at company-owned restaurants and 1.2% at franchised locations, despite a shift in the sports calendar resulting in one less week of football and fewer pay-per-view events than last year. We estimate this negatively impacted our same-store sales by 80 basis points. Cost of sales and labor as a percentage of restaurant sales were higher compared to the prior year, and, with the additional depreciation, amortization, and other expenses related to the recently completed franchise acquisition, our earnings per diluted share decreased year-over-year to $1.00."

Total revenue increased 22.0% to $455.5 million in the third quarter, compared to $373.5 million in the third quarter of 2014. Company-owned restaurant sales for the quarter increased 23.2% over the same period in 2014, to $431.8 million, driven by a same-store sales increase at company-owned Buffalo Wild Wings restaurants of 3.9% and 109 additional Buffalo Wild Wings restaurants at the end of the third quarter of 2015. Franchise royalties and fees increased 3.6% to $23.8 million for the quarter versus $22.9 million in the third quarter of 2014. This increase is attributed to increased international franchise fees and increased same-store sales of 1.2% for the franchised Buffalo Wild Wings restaurants in operation at the end of the period compared to the same period in 2014.

Average weekly sales for company-owned Buffalo Wild Wings restaurants were $61,831 for the third quarter of 2015, compared to $59,643 for the same quarter last year, a 3.7% increase. Franchised Buffalo Wild Wings restaurants in the United States averaged $62,819 for the period versus $61,586 in the third quarter a year ago, a 2.0% increase.

For the third quarter, net earnings decreased 11.6% to $19.2 million versus $21.8 million in the third quarter of 2014. Earnings per diluted share were $1.00, compared to third quarter 2014 earnings per diluted share of $1.14.

2015 and 2016 Outlook

Ms. Smith remarked, "Same-store sales increased 2.8% at company-owned restaurants and 0.8% at franchised locations for the first four weeks of the fourth quarter of 2015 compared to 5.4% and 5.1%, respectively, for the same period last year. As we approach year end, we know our Guests will be rooting for their favorite NFL teams to reach the Super Bowl and their favorite college teams to reach a bowl game. We're excited to be the title sponsor of the Buffalo Wild Wings Citrus Bowl again this year."

Ms. Smith continued, "In anticipation of our purchase of the 41 franchised locations, we previously revised our 2015 net earnings growth goal to 13% to account for the incremental expense and transition costs we expected to incur in the third and fourth quarters. Based on our year-to-date results and updated outlook for the fourth quarter, we are now anticipating single-digit net earnings growth for the year."

Ms. Smith concluded, "We remain confident the Buffalo Wild Wings brand is strong and we're continually investing in our Guest Experience to increase sales. We're looking forward to 2016 and plan to open 50 company-owned Buffalo Wild Wings. Buffalo Wild Wings franchisees in the United States anticipate opening 30 restaurants and international franchisees should open approximately 15 locations. R Taco and PizzaRev will continue their growth plans through both company-owned and franchise development next year. As a result of this unit expansion combined with our ongoing sales-driving and operational initiatives, we believe net earnings growth in 2016 should exceed 20%."

Buffalo Wild Wings will be hosting a conference call today, October 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 November 4, 2015. To access this replay, please dial 1.858.384.5517 password 391456.

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 1,140 Buffalo Wild Wings locations around the world.

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 fourth quarter sales trends and projected unit and net earnings growth rates for 2015, 2016, 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 Nine months ended
September 27,
2015
  September 28,
2014
September 27,
2015
  September 28,
2014
Revenue:
Restaurant sales $ 431,763 350,524 1,248,595 1,038,610
Franchise royalties and fees   23,763   22,934   73,904   68,697  
Total revenue   455,526   373,458   1,322,499   1,107,307  
Costs and expenses:
Restaurant operating costs:
Cost of sales 126,878 101,886 370,398 296,210
Labor 138,897 111,897 398,585 324,663
Operating 63,343 52,364 178,716 151,419
Occupancy 24,210 19,796 68,554 58,048
Depreciation and amortization 33,610 24,776 90,887 71,354
General and administrative 33,714 27,784 97,937 86,163
Preopening 4,777 3,594 9,251 8,369
Loss on asset disposals and impairment   1,269   1,371   4,180   3,369  
Total costs and expenses   426,698   343,468   1,218,508   999,595  
Income from operations 28,828 29,990 103,991 107,712
Other expense   (1,400 ) (236 ) (1,434 ) (128 )
Earnings before income taxes 27,428 29,754 102,557 107,584
Income tax expense   8,261   8,001   32,973   33,812  
Net earnings including noncontrolling interests   19,167   21,753   69,584   73,772  
Net loss attributable to noncontrolling interests   (69 )   (214 )  
Net earnings attributable to Buffalo Wild Wings $ 19,236   21,753   69,798   73,772  
Earnings per common share - basic $ 1.01 1.15 3.67 3.90
Earnings per common share - diluted $ 1.00 1.14 3.65 3.89
Weighted average shares outstanding - basic 19,022 18,923 19,006 18,900
Weighted average shares outstanding - diluted 19,167 19,021 19,118 18,985
 

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 Nine months ended
September 27,
2015
  September 28,
2014
September 27,
2015
  September 28,
2014
Revenue:
Restaurant sales 94.8 % 93.9 % 94.4 % 93.8 %
Franchise royalties and fees 5.2   6.1   5.6   6.2  
Total revenue 100.0   100.0   100.0   100.0  
Costs and expenses:
Restaurant operating costs:
Cost of sales 29.4 29.1 29.7 28.5
Labor 32.2 31.9 31.9 31.3
Operating 14.7 14.9 14.3 14.6
Occupancy 5.6 5.6 5.5 5.6
Depreciation and amortization 7.4 6.6 6.9 6.4
General and administrative 7.4 7.4 7.4 7.8
Preopening 1.0 1.0 0.7 0.8
Loss on asset disposals and impairment 0.3   0.4   0.3   0.3  
Total costs and expenses 93.7   92.0   92.1   90.3  
Income from operations 6.3 8.0 7.9 9.7
Other expense (0.3 ) (0.1 ) (0.1 ) (0.0 )
Earnings before income taxes 6.0 8.0 7.8 9.7
Income tax expense 1.8   2.1   2.5   3.1  
Net earnings including noncontrolling interests 4.2   5.8   5.3   6.7  
Net loss attributable to noncontrolling interests (0.0 )   (0.0 )  
Net earnings attributable to Buffalo Wild Wings 4.2 % 5.8 % 5.3 % 6.7 %
 
   
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
(Dollar amounts in thousands)
 
(unaudited)
 
September 27,
2015
December 28,
2014
Assets
Current assets:
Cash and cash equivalents $ 11,479 93,329
Marketable securities 8,721 19,547
Accounts receivable, net of allowance of $25 35,168 28,322
Inventory 13,378 11,893
Prepaid expenses 8,815 4,215
Refundable income taxes 10,322 9,779
Deferred income taxes 17,419 15,807
Restricted assets   48,400   81,037  
Total current assets 153,702 263,929
 
Property and equipment, net 604,300 494,401
Reacquired franchise rights, net 132,993 37,631
Other assets 28,424 19,399
Goodwill   99,678   38,106  
Total assets $ 1,019,097   853,466  
 
Liabilities and Stockholders' Equity
Current liabilities:
Unearned franchise fees $ 2,148 2,099
Accounts payable 55,573 37,241
Accrued compensation and benefits 40,613 59,161
Accrued expenses 19,624 16,573
Current portion of long-term debt 1,927
Current portion of deferred lease credits 743
Due to related party 31,634
System-wide payables   48,778   79,668  
Total current liabilities 200,297 195,485
 
Long-term liabilities:
Other liabilities 17,674 6,388
Deferred income taxes 27,191 39,815
Long-term debt 74,856
Deferred lease credits   44,170   37,479  
Total liabilities   364,188   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 19,033,253 and 18,937,131, respectively 160,510 148,114
Retained earnings 497,493 427,695
Accumulated other comprehensive loss   (3,466 ) (2,096 )
Total stockholders' equity   654,537   573,713  
Noncontrolling interests   372   586  
Total equity   654,909   574,299  
Total liabilities and equity $ 1,019,097   853,466  
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Dollar amounts in thousands)
 
(unaudited)
 
Nine months ended
September 27,
2015
  September 28,
2014
Cash flows from operating activities:
Net earnings including noncontrolling interests $ 69,584 73,772
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation 86,119 67,932
Amortization 4,768 3,422
Loss on asset disposals and impairment 4,180 3,369
Deferred lease credits 4,260 4,209
Deferred income taxes (13,561 ) (18,774 )
Stock-based compensation 11,689 10,251
Excess tax benefit from stock issuance (1,088 ) 217
Change in operating assets and liabilities, net of effect of acquisitions:
Trading securities (173 ) (657 )
Accounts receivable (4,982 ) (3,323 )
Inventory (421 ) (400 )
Prepaid expenses (868 ) (7,245 )
Other assets 74 (160 )
Unearned franchise fees 104 333
Accounts payable 6,901 4,128
Income taxes 545 6,541
Accrued expenses   (248 ) 99  
Net cash provided by operating activities   166,883   143,714  
Cash flows from investing activities:
Acquisition of property and equipment (124,233 ) (95,347 )
Acquisition of businesses (209,713 ) (7,307 )
Purchase of marketable securities (12,301 ) (17,993 )
Proceeds from marketable securities   23,300    
Net cash used in investing activities   (322,947 ) (120,647 )
Cash flows from financing activities:
Proceeds from line of credit 197,422
Repayments of line of credit (150,467 )
Proceeds from related party borrowing 31,634
Other financing activities (580 )
Issuance of common stock 2,903 1,829
Excess tax benefit from stock issuance 1,088 (217 )
Tax payments for restricted stock units   (7,847 ) (7,474 )
Net cash provided by (used in) financing activities   74,153   (5,862 )
Effect of exchange rate changes on cash and cash equivalents   61   (612 )
Net increase (decrease) in cash and cash equivalents (81,850 ) 16,593
Cash and cash equivalents at beginning of period   93,329   57,502  
Cash and cash equivalents at end of period $ 11,479   74,095  
 
 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information

 

Restaurant Count

 

Company-owned Restaurants (includes Buffalo Wild Wings, R Taco, and Buffalo Wild Wings-owned PizzaRev locations):

       

Q1

Q2

Q3

Q4

2015 501 517 573
2014 443 449 463 491
2013 397 407 415 434
2012 327 330 343 381
2011 263 277 288 319
 
 

Franchised Restaurants (includes Buffalo Wild Wings and R Taco locations):

 

Q1

Q2

Q3

Q4

2015 593 593 569
2014 569 579 588 591
2013 514 525 534 559
2012 505 505 511 510
2011 488 492 498 498
 

Restaurant Count Rollforward:

 
Nine months ended
September 27, 2015   September 28, 2014
Corporate   Franchise   Total Corporate   Franchise   Total
Buffalo Wild Wings
Beginning of period 487 584 1,071 434 559 993
Opened 29 37 66 24 32 56
Acquired 54 (54) 3 (3)
Closed/Relocated (2) (4) (6) (2) (7) (9)
End of period 568 563 1,131 459 581 1,040
R Taco
Beginning of period 2 7 9
Opened
Acquired 1 (1) 2 7 9
Closed/Relocated
End of period 3 6 9 2 7 9
PizzaRev
Beginning of period 2 n/a 2 n/a
Opened n/a 2 n/a 2
Acquired n/a n/a
Closed/Relocated n/a n/a
End of period 2 n/a 2 2 n/a 2
Consolidated            
End of the period 573 569 1,142 463 588 1,051
 
         

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information

 

Same-Store Sales at Buffalo Wild Wings locations in United States and Canada

 

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

Year

2015 7.0% 4.2% 3.9%
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:

 

Q1

Q2

Q3

Q4

Year

2015 6.0% 2.5% 1.2%
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%
 

Average Weekly Sales Volumes at Buffalo Wild Wings locations in United States and Canada

 

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

Year

2015 $ 64,851 61,960 61,831
2014 60,966 59,403 59,643 62,119 60,470
2013 56,953 54,759 55,592 58,204 56,392
2012 55,131 51,524 52,561 55,595 53,783
2011 48,845 47,970 49,461 51,983 49,627
 

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

2015 $ 67,075 63,904 62,819
2014 63,852 61,845 61,586 63,949 62,595
2013 60,050 58,186 58,926 61,167 59,594
2012 57,282 54,766 55,608 58,490 56,570
2011 52,744 50,995 51,350 53,385 52,081
 

Buffalo Wild Wings, Inc.
Investor Relations Contact:
Heather Pribyl, 952-253-0731

Source: Buffalo Wild Wings, Inc.

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