UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 2015
BUFFALO WILD WINGS, INC.
(Exact name of registrant as specified in its charter)
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| | |
Minnesota | 000-24743 | 31-1455915 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
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5500 Wayzata Boulevard, Suite 1600 Minneapolis, Minnesota | | 55416 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code 952-593-9943
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02. | Results of Operations and Financial Condition. |
On July 28, 2015, Buffalo Wild Wings, Inc. issued a press release announcing its 2015 second quarter financial results. A copy of the press release is furnished as Exhibit 99.1 hereto.
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Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
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Exhibit | Description |
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99.1 | Press Release dated July 28, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| BUFFALO WILD WINGS, INC. |
| | |
Date: July 28, 2015 | By | /s/ Emily C. Decker |
| | Emily C. Decker |
| | Senior Vice President, General Counsel and Secretary |
EXHIBIT INDEX
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| | |
Exhibit No. | Description | Manner of Filing |
99.1 | Press Release dated July 28, 2015. | Furnished Electronically |
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FOR IMMEDIATE RELEASE
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Investor Relations Contact: Heather Pribyl 952.253.0731 | |
Buffalo Wild Wings, Inc. Announces
Second Quarter Earnings per Share of $1.12
- 41-Unit Franchise Acquisition Expected to Close in August 2015 -
- 2015 Net Earnings Growth Goal Revised to 13% -
Minneapolis, Minnesota, July 28, 2015 – 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:
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◦ | Total revenue increased 16.5% to $426.4 million |
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◦ | Company-owned restaurant sales increased 17.1% to $401.9 million |
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◦ | Same-store sales increased 4.2% at company-owned restaurants and 2.5% at franchised restaurants |
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◦ | 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)
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| | | | | | | | | | | | |
| 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 fees | 24,527 |
| | 22,853 |
| | 50,141 |
| | 45,763 |
|
Total revenue | 426,387 |
| | 365,994 |
| | 866,973 |
| | 733,849 |
|
Costs and expenses: | | | | | | | |
Restaurant operating costs: | | | | | | | |
Cost of sales | 117,843 |
| | 96,837 |
| | 243,520 |
| | 194,324 |
|
Labor | 129,294 |
| | 107,432 |
| | 259,688 |
| | 212,766 |
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Operating | 56,822 |
| | 50,017 |
| | 115,373 |
| | 99,055 |
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Occupancy | 22,354 |
| | 19,283 |
| | 44,344 |
| | 38,252 |
|
Depreciation and amortization | 29,208 |
| | 23,746 |
| | 57,277 |
| | 46,578 |
|
General and administrative | 33,701 |
| | 30,223 |
| | 64,223 |
| | 58,379 |
|
Preopening | 3,204 |
| | 2,197 |
| | 4,474 |
| | 4,775 |
|
Loss on asset disposals and impairment | 2,306 |
| | 1,211 |
| | 2,911 |
| | 1,998 |
|
Total costs and expenses | 394,732 |
| | 330,946 |
| | 791,810 |
| | 656,127 |
|
Income from operations | 31,655 |
| | 35,048 |
| | 75,163 |
| | 77,722 |
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Investment income (loss) | 41 |
| | 235 |
| | (34 | ) | | 108 |
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Earnings before income taxes | 31,696 |
| | 35,283 |
| | 75,129 |
| | 77,830 |
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Income tax expense | 10,264 |
| | 11,580 |
| | 24,712 |
| | 25,811 |
|
Net earnings including noncontrolling interests | 21,432 |
| | 23,703 |
| | 50,417 |
| | 52,019 |
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Net loss attributable to noncontrolling interests | (67 | ) | | — |
| | (145 | ) | | — |
|
Net earnings attributable to Buffalo Wild Wings | $ | 21,499 |
| | 23,703 |
| | 50,562 |
| | 52,019 |
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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 – basic | 19,003 |
| | 18,904 |
| | 18,998 |
| | 18,888 |
|
Weighted average shares outstanding – diluted | 19,113 |
| | 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:
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| | | | | | | | | | | |
| Three months ended | | Six months ended |
| June 28,
2015 | | June 29,
2014 | | June 28,
2015 | | June 29,
2014 |
Revenue: | | | | | | | |
Restaurant sales | 94.2 | % | | 93.8 | % | | 94.2 | % | | 93.8 | % |
Franchise royalties and fees | 5.8 |
| | 6.2 |
| | 5.8 |
| | 6.2 |
|
Total revenue | 100.0 |
| | 100.0 |
| | 100.0 |
| | 100.0 |
|
Costs and expenses: | | | | | | | |
Restaurant operating costs: | | | | | | | |
Cost of sales | 29.3 |
| | 28.2 |
| | 29.8 |
| | 28.2 |
|
Labor | 32.2 |
| | 31.3 |
| | 31.8 |
| | 30.9 |
|
Operating | 14.1 |
| | 14.6 |
| | 14.1 |
| | 14.4 |
|
Occupancy | 5.6 |
| | 5.6 |
| | 5.4 |
| | 5.6 |
|
Depreciation and amortization | 6.9 |
| | 6.5 |
| | 6.6 |
| | 6.3 |
|
General and administrative | 7.9 |
| | 8.3 |
| | 7.4 |
| | 8.0 |
|
Preopening | 0.8 |
| | 0.6 |
| | 0.5 |
| | 0.7 |
|
Loss on asset disposals and impairment | 0.5 |
| | 0.3 |
| | 0.3 |
| | 0.3 |
|
Total costs and expenses | 92.6 |
| | 90.4 |
| | 91.3 |
| | 89.4 |
|
Income from operations | 7.4 |
| | 9.6 |
| | 8.7 |
| | 10.6 |
|
Investment income (loss) | 0.0 |
| | 0.1 |
| | (0.0 | ) | | 0.0 |
|
Earnings before income taxes | 7.4 |
| | 9.6 |
| | 8.7 |
| | 10.6 |
|
Income tax expense | 2.4 |
| | 3.2 |
| | 2.9 |
| | 3.5 |
|
Net earnings including noncontrolling interests | 5.0 |
| | 6.5 |
| | 5.8 |
| | 7.1 |
|
Net loss attributable to noncontrolling interests | (0.0 | ) | | — |
| | (0.0 | ) | | — |
|
Net earnings attributable to Buffalo Wild Wings | 5.0 | % | | 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 securities | 18,401 |
| | 19,547 |
|
Accounts receivable, net of allowance of $25 | 28,422 |
| | 28,322 |
|
Inventory | 11,877 |
| | 11,893 |
|
Prepaid expenses | 16,789 |
| | 4,215 |
|
Refundable income taxes | 2,854 |
| | 9,779 |
|
Deferred income taxes | 16,898 |
| | 15,807 |
|
Restricted assets | 56,194 |
| | 81,037 |
|
Total current assets | 224,930 |
| | 263,929 |
|
| | | |
Property and equipment, net | 522,602 |
| | 494,401 |
|
Reacquired franchise rights, net | 57,216 |
| | 37,631 |
|
Other assets | 19,110 |
| | 19,399 |
|
Goodwill | 52,565 |
| | 38,106 |
|
Total assets | $ | 876,423 |
| | 853,466 |
|
| | | |
Liabilities and Stockholders’ Equity | | | |
Current liabilities: | | | |
Unearned franchise fees | $ | 2,295 |
| | 2,099 |
|
Accounts payable | 44,025 |
| | 37,241 |
|
Accrued compensation and benefits | 42,415 |
| | 59,161 |
|
Accrued expenses | 14,222 |
| | 16,573 |
|
Current portion of deferred lease credits | — |
| | 743 |
|
System-wide payables | 55,194 |
| | 79,668 |
|
Total current liabilities | 158,151 |
| | 195,485 |
|
| | | |
Long-term liabilities: | | | |
Other liabilities | 16,099 |
| | 6,388 |
|
Deferred income taxes | 30,853 |
| | 39,815 |
|
Deferred lease credits | 41,214 |
| | 37,479 |
|
Total liabilities | 246,317 |
| | 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, respectively | 154,169 |
| | 148,114 |
|
Retained earnings | 478,257 |
| | 427,695 |
|
Accumulated other comprehensive loss | (2,761 | ) | | (2,096 | ) |
Total stockholders’ equity | 629,665 |
| | 573,713 |
|
Noncontrolling interests | 441 |
| | 586 |
|
Total equity | 630,106 |
| | 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: | | | |
Depreciation | 54,805 |
| | 44,312 |
|
Amortization | 2,472 |
| | 2,266 |
|
Loss on asset disposals and impairment | 2,911 |
| | 1,998 |
|
Deferred lease credits | 2,903 |
| | 2,998 |
|
Deferred income taxes | (9,757 | ) | | (10,623 | ) |
Stock-based compensation | 7,253 |
| | 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 | ) |
Inventory | 357 |
| | (608 | ) |
Prepaid expenses | (12,530 | ) | | (6,618 | ) |
Other assets | 279 |
| | (2 | ) |
Unearned franchise fees | 196 |
| | (58 | ) |
Accounts payable | 236 |
| | 69 |
|
Income taxes | 7,187 |
| | 5,885 |
|
Accrued expenses | (5,033 | ) | | 1,019 |
|
Net cash provided by operating activities | 100,870 |
| | 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 securities | 14,155 |
| | — |
|
Net cash used in investing activities | (114,516 | ) | | (69,860 | ) |
Cash flows from financing activities: | | | |
Issuance of common stock | 1,604 |
| | 1,665 |
|
Excess tax benefit from stock issuance | 262 |
| | 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 period | 93,329 |
| | 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):
|
| | | | |
| Q1 | Q2 | Q3 | Q4 |
2015 | 501 | 517 |
|
|
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 Rusty Taco locations):
|
| | | | |
| Q1 | Q2 | Q3 | Q4 |
2015 | 593 | 593 |
|
|
2014 | 569 | 579 | 588 | 591 |
2013 | 514 | 525 | 534 | 559 |
2012 | 505 | 505 | 511 | 510 |
2011 | 488 | 492 | 498 | 498 |
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% |
|
|
|
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% |
|
|
|
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:
|
| | | | | | |
| | Q1 | Q2 | Q3 | Q4 | Year |
2015 | $ | 64,851 | 61,960 |
|
|
|
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 |
|
|
|
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 |
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