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:
- Total revenue increased 15.0% to $490.2
million
- Company-owned restaurant sales
increased 16.1% to $466.6 million
- Same-store sales decreased 2.1%
at company-owned restaurants and 2.6% at franchised
restaurants
- Net earnings increased 10.2% to $23.7
million from $21.5 million, and earnings per diluted share
increased 13.1% to $1.27 from $1.12
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:
- Approximately 40 company-owned Buffalo
Wild Wings restaurants
- 30 to 35 franchised Buffalo Wild Wings
locations in the United States
- 12 to 15 franchised Buffalo Wild Wing
locations internationally
- 6 company-owned and 4 franchised R
Taco® restaurants
For 2016, the company expects the following:
- Deflationary food costs, excluding
traditional chicken wings
- Depreciation and amortization expense
of $150 to $155 million
- Share repurchase activity of
approximately $150 million for the year
- Earnings per diluted share of $5.65 to
$5.85
- Capital expenditures of approximately
$170 million
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
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version on businesswire.com: http://www.businesswire.com/news/home/20160726006244/en/
Buffalo Wild Wings, Inc.Investor Relations
Contact:Heather Pribyl, 952-540-2095
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