Buffalo Wild Wings
Apr 26, 2016

Buffalo Wild Wings, Inc. Announces First Quarter Earnings Per Share of $1.73

2016 Earnings Per Diluted Share Outlook of $5.65 to $5.85

MINNEAPOLIS--(BUSINESS WIRE)-- Buffalo Wild Wings, Inc. (NASDAQ: BWLD) announced today financial results for the first quarter ended March 27, 2016. Highlights for the first quarter versus the same period a year ago were:

Sally Smith, President and Chief Executive Officer, commented, "Our total revenue in the first quarter increased 15.4%, when compared to the prior year, resulting from continued unit development and franchise acquisitions over the last 12 months. We are dissatisfied to report a same-store sales decline and we're undertaking several sales-driving initiatives to regain momentum. We were able to manage costs and improve our restaurant-level margin, and earnings per diluted share increased 13.5% year-over-year to $1.73."

Total revenue increased 15.4% to $508.3 million in the first quarter, compared to $440.6 million in the first quarter of 2015. Company-owned restaurant sales for the quarter increased 16.6% over the same period in 2015, to $483.9 million, driven by 100 additional Buffalo Wild Wings® restaurants at the end of the first quarter of 2016, partially offset by a same-store sales decrease of 1.7%. Franchise royalties and fees decreased 5.0% to $24.3 million for the quarter, versus $25.6 million in the first quarter of 2015. This decrease is attributed to seven fewer franchised Buffalo Wild Wings locations and a same-store sales decrease of 2.4% at franchised Buffalo Wild Wings restaurants in operation at the end of the period, compared to the same period in 2015.

Average weekly sales for company-owned Buffalo Wild Wings restaurants were $62,829 for the first quarter of 2016, compared to $64,851 for the same quarter last year, a 3.1% decrease. Franchised Buffalo Wild Wings restaurants in the United States averaged $65,636 for the period, versus $67,075 in the first quarter a year ago, a 2.1% decrease.

Other income in 2016 consisted primarily of a gain related to the valuation of contingent consideration for a franchise acquisition of $1.1 million, partially offset by interest expense of $0.9 million.

Under the previously announced share repurchase authorization, 173,892 shares were repurchased during the first quarter of 2016 for a total of $25 million.

For the first quarter, net earnings increased 12.8% to $32.8 million, versus $29.0 million in the first quarter of 2015. Earnings per diluted share were $1.73, compared to first quarter 2015 earnings per diluted share of $1.52.

2016 Outlook

Ms. Smith remarked, "We are focused on sales-driving initiatives to regain momentum in 2016. To strengthen our FastBreak™ lunch program, we're piloting a speed of service guarantee. We're promoting Wing Tuesdays® while evaluating different pricing and bundling options for this value day. Soccer is a growing sport in the United States and we'll be the place to watch all the action on the pitch for the major tournaments this summer."

Ms. Smith concluded, "The Buffalo Wild Wings brand remains strong and poised to deliver long-term earnings growth. In 2016, we're continuing our development of new company-owned and franchised Buffalo Wild Wings restaurants in the United States and we are aggressively remodeling locations. Given our recent sales trends and an increasing outlook for the cost of traditional chicken wings, we believe earnings per diluted share in 2016 should be $5.65 to $5.85."

For 2016, the company expects the following new unit development:

For 2016, the company expects the following:

Buffalo Wild Wings will be hosting a conference call today, April 26, 2016 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 May 3, 2016. To access this replay, please dial 1.858.384.5517 password 5721467.

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 1,180 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 second quarter trends and projected unit and net earnings growth rates for 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 international 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 27, 2015, 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
March 27,     March 29,
2016 2015
Revenue:
Restaurant sales $ 483,911 414,972
Franchise royalties and fees   24,346   25,614  
Total revenue   508,257   440,586  
Costs and expenses:
Restaurant operating costs:
Cost of sales 143,823 125,677
Labor 149,129 130,394
Operating 69,680 58,551
Occupancy 26,723 21,990
Depreciation and amortization 37,549 28,069
General and administrative 31,665 30,522
Preopening 1,863 1,270
Loss on asset disposals   1,222   605  
Total costs and expenses   461,654   397,078  
Income from operations 46,603 43,508
Interest and other income (expense)   27   (75 )
Earnings before income taxes 46,630 43,433
Income tax expense   13,952   14,448  
Net earnings including noncontrolling interests   32,678   28,985  
Net loss attributable to noncontrolling interests   (95 ) (78 )
Net earnings attributable to Buffalo Wild Wings $ 32,773   29,063  
Earnings per common share - basic $ 1.73 1.53
Earnings per common share - diluted $ 1.73 1.52
Weighted average shares outstanding - basic 18,922 18,993
Weighted average shares outstanding - diluted 18,957 19,074
 

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
March 27,     March 29,
2016 2015
Revenue:
Restaurant sales 95.2 % 94.2 %
Franchise royalties and fees 4.8   5.8  
Total revenue 100.0   100.0  
Costs and expenses:
Restaurant operating costs:
Cost of sales 29.7 30.3
Labor 30.8 31.4
Operating 14.4 14.1
Occupancy 5.5 5.3
Depreciation and amortization 7.4 6.4
General and administrative 6.2 6.9
Preopening 0.4 0.3
Loss on asset disposals 0.2   0.1  
Total costs and expenses 90.8   90.1  
Income from operations 9.2 9.9
Interest and other income (expense) 0.0   (0.0 )
Earnings before income taxes 9.2 9.9
Income tax expense 2.7   3.3  
Net earnings including noncontrolling interests 6.4   6.6  
Net loss attributable to noncontrolling interests (0.0 ) (0.0 )
Net earnings attributable to Buffalo Wild Wings 6.4 % 6.6 %
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
 
    March 27,     December 27,
2016 2015
Assets
Current assets:
Cash and cash equivalents $ 11,693 11,220
Marketable securities 9,147 9,043
Accounts receivable, net of allowance of $25 33,873 34,087
Inventory 14,583 15,351
Prepaid expenses 5,509 6,386
Refundable income taxes 21,591
Restricted assets   22,880   100,073  
Total current assets 97,685 197,751
 
Property and equipment, net 593,670 604,712
Reacquired franchise rights, net 128,175 129,282
Other assets 36,122 26,536
Goodwill   115,823   114,101  
Total assets $ 971,475   1,072,382  
 
Liabilities and Stockholders' Equity
Current liabilities:
Unearned franchise fees $ 1,963 2,144
Accounts payable 40,762 44,760
Accrued compensation and benefits 31,943 55,578
Accrued expenses 19,675 21,678
Income tax payable 1,189
Current portion of long-term debt and capital lease obligations 4,787 2,147
Current portion of deferred lease credits 76 59
System-wide payables   81,220   137,257  
Total current liabilities 181,615 263,623
 
Long-term liabilities:
Other liabilities 16,168 16,473
Deferred income taxes 24,585 23,726
Long-term debt and capital lease obligations, net of current portion 42,423 70,954
Deferred lease credits   42,636   41,869  
Total liabilities   307,427   416,645  
 
Commitments and contingencies
Stockholders' equity:
Undesignated stock, 1,000,000 shares authorized, none issued
Common stock, no par value. Authorized 44,000,000 shares; issued and outstanding 18,750,276 and 18,917,776, respectively 159,265 160,353
Retained earnings 508,332 499,085
Accumulated other comprehensive loss   (3,847 ) (4,094 )
Total stockholders' equity   663,750   655,344  
Noncontrolling interests   298   393  
Total equity   664,048   655,737  
Total liabilities and equity $ 971,475   1,072,382  
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
 
    Three months ended
March 27,     March 29,
2016 2015
Cash flows from operating activities:
Net earnings including noncontrolling interests $ 32,678 28,985
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation 34,552 26,851
Amortization 2,997 1,218
Loss on asset disposals 1,222 605
Deferred lease credits 2,067 1,159
Deferred income taxes 858 (5,508 )
Stock-based compensation 1,404 2,745
Excess tax benefit from stock issuance (33 ) (66 )
Change in fair value of contingent consideration (1,106 )
Loss on investments in affiliates 158
Change in operating assets and liabilities, net of effect of acquisitions:
Trading securities (104 ) (328 )
Accounts receivable (1,297 ) (2,053 )
Inventory 806 471
Prepaid expenses 889 (5,619 )
Other assets (428 ) 154
Unearned franchise fees (181 ) 362
Accounts payable (706 ) (1,037 )
Income taxes 22,813 17,796
Accrued expenses   (19,488 ) (18,374 )
Net cash provided by operating activities   77,101   47,361  
Cash flows from investing activities:
Acquisition of property and equipment (34,094 ) (25,788 )
Acquisition of businesses (3,860 ) (13,894 )
Purchase of marketable securities (12,297 )
Proceeds from marketable securities     11,155  
Net cash used in investing activities   (37,954 ) (40,824 )
Cash flows from financing activities:
Proceeds from line of credit 108,633
Repayments of line of credit (135,514 )
Borrowings from restricted funds 22,622
Repurchases of common stock (25,000 )
Other financing activities (500 )
Issuance of common stock 434 231
Excess tax benefit from stock issuance 33 66
Tax payments for restricted stock units   (9,172 ) (7,627 )
Net cash used in financing activities   (38,464 ) (7,330 )
Effect of exchange rate changes on cash and cash equivalents   (210 ) 65  
Net increase (decrease) in cash and cash equivalents 473 (728 )
Cash and cash equivalents at beginning of period   11,220   93,329  
Cash and cash equivalents at end of period $ 11,693   92,601  
 
 
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

2016 603
2015 501 517 573 596
2014 443 449 463 491
2013 397 407 415 434
2012 327 330 343 381
 

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

 

Q1

Q2

Q3

Q4

2016 587
2015 593 593 569 579
2014 569 579 588 591
2013 514 525 534 559
2012 505 505 511 510
 
 

Restaurant Count Rollforward:

   
Three Months Ended
March 27, 2016     March 29, 2015
Corporate     Franchise     Total Corporate     Franchise     Total
Buffalo Wild Wings
Beginning of period 590 573 1,163 487 584 1,071
Opened 6 8 14 3 11 14
Acquired 1 (1 ) 6 (6 )
Closed/Relocated (1 )   (1 ) (2 ) (2 )
End of period 596 580 1,176 496 587 1,083
R Taco
Beginning of period 4 6 10 2 7 9
Opened 1 1 2
Acquired 1 (1 )
Closed/Relocated          
End of period 5 7 12 3 6 9
PizzaRev
Beginning of period 2 n/a 2 2 n/a 2
Opened n/a n/a
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 603   587   1,190   501 593   1,094  
 
 
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

2016 (1.7%)
2015 7.0% 4.2% 3.9% 1.9% 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%
 

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

2016 (2.4%)
2015 6.0% 2.5% 1.2% 0.1% 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%
 

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

 

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

Year

2016 $ 62,829
2015 64,851 61,960 61,831 61,971 62,529
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
 

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

2016 $ 65,636
2015 67,075 63,904 62,819 64,032 64,474
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
 

Buffalo Wild Wings, Inc.
Investor Relations:
Heather Pribyl, 952-540-2095

Source: Buffalo Wild Wings, Inc.

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