Buffalo Wild Wings
Jul 26, 2016

Buffalo Wild Wings, Inc. Announces Second Quarter Earnings per Share of $1.27

MINNEAPOLIS--(BUSINESS WIRE)-- Buffalo Wild Wings, Inc. (NASDAQ: BWLD) announced today financial results for the second quarter ended June 26, 2016. Highlights for the second quarter versus the same period a year ago were:

Sally Smith, President and Chief Executive Officer, commented, "We delivered another solid quarter, with total revenue increasing by 15.0% from new restaurant openings and franchise acquisitions over the last year. We controlled costs and expenses well in a challenging sales environment, and this discipline, along with our revenue growth, helped us to achieve earnings per diluted share of $1.27, a 13.1% increase compared to the prior year. In the second quarter, we opportunistically repurchased $75 million of our common stock, delivering value to our shareholders."

Ms. Smith concluded, "Buffalo Wild Wings® remains strong and we're continuing to differentiate our brand for the long-term while also implementing near-term traffic driving programs. We launched a 15-minute guarantee for our FastBreak™ lunch program at the beginning of the third quarter and we're pleased with its early results. Also in the third quarter, we will be highlighting our value offering on Wing Tuesdays®. We are looking forward to the return of football and our new fall media campaign. There is no better place than Buffalo Wild Wings to host your fantasy football draft party and catch all the action on the gridiron this year."

Total revenue increased 15.0% to $490.2 million in the second quarter, compared to $426.4 million in the second quarter of 2015. Company-owned restaurant sales for the quarter increased 16.1% over the same period in 2015, to $466.6 million, driven by 89 additional Buffalo Wild Wings restaurants at the end of the second quarter of 2016, partially offset by a same-store sales decrease of 2.1%. Franchise royalties and fees decreased 3.8% to $23.6 million for the quarter, versus $24.5 million in the second quarter of 2015. This decrease is attributed to a same-store sales decrease of 2.6% 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 $59,894 for the second quarter of 2016, compared to $61,960 for the same quarter last year, a 3.3% decrease. Franchised Buffalo Wild Wings restaurants in the United States averaged $62,454 for the period, versus $63,904 in the second quarter a year ago, a 2.3% decrease.

Under the previously announced share repurchase authorization, 548,402 shares were repurchased during the second quarter of 2016 for a total of $75.0 million.

For the second quarter, net earnings increased 10.2% to $23.7 million, versus $21.5 million in the second quarter of 2015. Earnings per diluted share were $1.27, compared to second quarter 2015 earnings per diluted share of $1.12.

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, July 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 August 2, 2016. To access this replay, please dial 1-858-384-5517 password 7524224.

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 1,190 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 third 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 Six months ended
June 26,     June 28, June 26,     June 28,
2016 2015 2016 2015
Revenue:
Restaurant sales $ 466,583 401,860 950,494 816,832
Franchise royalties and fees   23,595   24,527   47,941   50,141  
Total revenue   490,178   426,387   998,435   866,973  
Costs and expenses:
Restaurant operating costs:
Cost of sales 138,480 117,843 282,303 243,520
Labor 149,375 129,294 298,504 259,688
Operating 68,180 56,822 137,860 115,373
Occupancy 27,205 22,354 53,928 44,344
Depreciation and amortization 37,953 29,208 75,502 57,277
General and administrative 29,821 33,701 61,486 64,223
Preopening 1,838 3,204 3,701 4,474
Loss on asset disposals   1,874   2,306   3,096   2,911  
Total costs and expenses   454,726   394,732   916,380   791,810  
Income from operations 35,452 31,655 82,055 75,163
Interest and other expense (income)   1,874   (41 ) 1,847   34  
Earnings before income taxes 33,578 31,696 80,208 75,129
Income tax expense   10,033   10,264   23,985   24,712  
Net earnings including noncontrolling interests   23,545   21,432   56,223   50,417  
Net loss attributable to noncontrolling interests   (157 ) (67 ) (252 ) (145 )
Net earnings attributable to Buffalo Wild Wings $ 23,702   21,499   56,475   50,562  
 
Earnings per common share - basic $ 1.27 1.13 3.01 2.66
Earnings per common share - diluted $ 1.27 1.12 3.00 2.65
Weighted average shares outstanding - basic 18,605 19,003 18,764 18,998
Weighted average shares outstanding - diluted 18,636 19,113 18,797 19,094
 

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 26,   June 28, June 26,   June 28,
2016 2015 2016 2015
Revenue:
Restaurant sales 95.2 % 94.2 % 95.2 % 94.2 %
Franchise royalties and fees 4.8   5.8   4.8   5.8  
Total revenue 100.0   100.0   100.0   100.0  
Costs and expenses:
Restaurant operating costs:
Cost of sales 29.7 29.3 29.7 29.8
Labor 32.0 32.2 31.4 31.8
Operating 14.6 14.1 14.5 14.1
Occupancy 5.8 5.6 5.7 5.4
Depreciation and amortization 7.7 6.9 7.6 6.6
General and administrative 6.1 7.9 6.2 7.4
Preopening 0.4 0.8 0.4 0.5
Loss on asset disposals 0.4   0.5   0.3   0.3  
Total costs and expenses 92.8   92.6   91.8   91.3  
Income from operations 7.2 7.4 8.2 8.7
Interest and other expense (income) 0.4   (0.0 ) 0.2   0.0  
Earnings before income taxes 6.9 7.4 8.0 8.7
Income tax expense 2.0   2.4   2.4   2.9  
Net earnings including noncontrolling interests 4.8   5.0   5.6   5.8  
Net loss attributable to noncontrolling interests (0.0 ) (0.0 ) (0.0 ) (0.0 )
Net earnings attributable to Buffalo Wild Wings 4.8 % 5.0 % 5.7 % 5.8 %
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
     
June 26, December 27,
2016 2015
Assets
Current assets:
Cash and cash equivalents $ 13,635 11,220
Marketable securities 9,043
Accounts receivable, net of allowance of $25 36,958 34,087
Inventory 13,977 15,351
Prepaid expenses 5,831 6,386
Refundable income taxes 5,019 21,591
Restricted assets   22,370   100,073  
Total current assets 97,790 197,751
 
Property and equipment, net 600,365 604,712
Reacquired franchise rights, net 125,138 129,282
Other assets 38,964 26,536
Goodwill   115,825   114,101  
Total assets $ 978,082   1,072,382  
 
Liabilities and Stockholders' Equity
Current liabilities:
Unearned franchise fees $ 2,262 2,144
Accounts payable 41,356 44,760
Accrued compensation and benefits 43,607 55,578
Accrued expenses 20,476 21,678
Current portion of long-term debt and capital lease obligations 5,826 2,147
Current portion of deferred lease credits 232 59
System-wide payables   70,514   137,257  
Total current liabilities 184,273 263,623
 
Long-term liabilities:
Other liabilities 16,747 16,473
Deferred income taxes 26,124 23,726
Long-term debt and capital lease obligations, net of current portion 93,052 70,954
Deferred lease credits   42,908   41,869  
Total liabilities   363,104   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 18,292,937 and 18,917,776, respectively 156,839 160,353
Retained earnings 461,711 499,085
Accumulated other comprehensive loss   (3,713 ) (4,094 )
Total stockholders' equity   614,837   655,344  
Noncontrolling interests   141   393  
Total equity   614,978   655,737  
Total liabilities and equity $ 978,082   1,072,382  
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
   
Six months ended
June 26,     June 28,
2016 2015
Cash flows from operating activities:
Net earnings including noncontrolling interests $ 56,223 50,417
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization 75,502 57,277
Loss on asset disposals 3,096 2,911
Deferred lease credits 3,380 2,903
Deferred income taxes 2,397 (9,757 )
Stock-based compensation 2,108 7,253
Excess tax benefit from stock issuance (35 ) (262 )
Change in fair value of contingent consideration (1,106 )
Loss on investments in affiliates 1,247
Change in operating assets and liabilities, net of effect of acquisitions:
Trading securities (708 )
Accounts receivable 802 144
Inventory 1,418 357
Prepaid expenses 567 (12,530 )
Other assets (2,462 ) 279
Unearned franchise fees 118 196
Accounts payable (3,520 ) 236
Income taxes 16,607 7,187
Accrued expenses   (6,943 ) (5,033 )
Net cash provided by operating activities   149,399   100,870  
Cash flows from investing activities:
Acquisition of property and equipment (70,630 ) (67,334 )
Acquisition of businesses (3,862 ) (49,036 )
Purchase of marketable securities (12,301 )
Proceeds from marketable securities     14,155  
Net cash used in investing activities   (74,492 ) (114,516 )
Cash flows from financing activities:
Proceeds from line of credit 286,873
Repayments of line of credit (263,343 )
Borrowings from restricted funds 12,288
Repurchases of common stock (99,981 )
Other financing activities (1,065 )
Issuance of common stock 1,960 1,604
Excess tax benefit from stock issuance 35 262
Tax payments for restricted stock units   (9,172 ) (7,627 )
Net cash used in financing activities   (72,405 ) (5,761 )
Effect of exchange rate changes on cash and cash equivalents   (87 ) (427 )
Net increase (decrease) in cash and cash equivalents 2,415 (19,834 )
Cash and cash equivalents at beginning of period   11,220   93,329  
Cash and cash equivalents at end of period $ 13,635   73,495  
 
 
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 603 609
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 587 596
2015 593 593 569 579
2014 569 579 588 591
2013 514 525 534 559
2012 505 505 511 510
 
 

Restaurant Count Rollforward:

   
Six Months Ended
June 26, 2016     June 28, 2015
Corporate   Franchise   Total Corporate   Franchise   Total
Buffalo Wild Wings
Beginning of period 590 573 1,163 487 584 1,071
Opened 11 18 29 12 22 34
Acquired 1 (1 ) 15 (15 )
Closed/Relocated (1 ) (1 ) (2 ) (2 ) (4 ) (6 )
End of period 601 589 1,190 512 587 1,099
R Taco
Beginning of period 4 6 10 2 7 9
Opened 2 1 3
Acquired 1 (1 )
Closed/Relocated            
End of period 6 7 13 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 609   596   1,205   517   593   1,110  
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
 

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

                   

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

Year

2016 (1.7 %) (2.1 %)
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 %) (2.6 %)
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 59,894
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 62,454
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 Contact:
Heather Pribyl, 952-540-2095

Source: Buffalo Wild Wings, Inc.

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