BWLD Buffalo Wild Wings, Inc. (delisted)

- 2016 Earnings Per Diluted Share Outlook of $5.95 to $6.20 -

Buffalo Wild Wings, Inc. (NASDAQ: BWLD) announced today financial results for the fourth quarter and fiscal year ended December 27, 2015. Highlights for the fourth quarter, versus the same period a year ago, were:

• Total revenue increased 19.9% to $490.2 million
• Company-owned restaurant sales increased 21.3% to $466.4 million
• Same-store sales grew 1.9% at company-owned restaurants and 0.1% at franchised restaurants
• Net earnings increased 24.4% to $25.3 million from $20.3 million, and earnings per diluted share increased 23.4% to $1.32 from $1.07

Sally Smith, President and Chief Executive Officer, commented, “Our 2015 same-store sales increased 4.2% at company-owned restaurants and 2.5% at franchised locations. Same-store sales growth in the fourth quarter of 1.9% at company-owned restaurants and 0.1% at franchised locations did not meet our expectations, although they continued to outpace the casual dining industry. We estimate the holiday shifts for Halloween and Christmas negatively impacted fourth quarter same-store sales by 30 basis points. Our restaurant sales increase of 21.3% in the fourth quarter was driven by 105 additional company-owned restaurants this year.”

Ms. Smith continued, "Net earnings increased 24.4% during the fourth quarter primarily from increased revenue and leveraging food and labor costs as a percentage of restaurant sales. Depreciation and amortization as a percentage of total revenue increased compared to the prior year as a result of our new restaurant development and franchise acquisitions. We also recorded $3.3 million in pre-tax loss on asset disposals and impairments during the quarter. These non-cash charges tempered our net earnings growth for the year."

Total revenue increased 19.9% to $490.2 million in the fourth quarter, compared to $408.9 million in the fourth quarter of 2014. Company-owned restaurant sales for the quarter increased 21.3% over the same period in 2014, to $466.4 million, driven by a same-store sales increase at company-owned Buffalo Wild Wings restaurants of 1.9% and 103 additional company-owned Buffalo Wild Wings restaurants at the end of the fourth quarter of 2015 relative to the same period in 2014.

Franchise royalties and fees decreased (2.9)% to $23.8 million for the quarter, versus $24.5 million in the fourth quarter of 2014, driven by a decrease of 11 franchised locations at the end of the fourth quarter of 2015 relative to the same period in 2014.

Average weekly sales for company-owned Buffalo Wild Wings restaurants were $61,971 for the fourth quarter of 2015 compared to $62,119 for the same quarter last year, a 0.2% decrease. Franchised Buffalo Wild Wings locations in the United States averaged $64,032 for the period versus $63,949 in the fourth quarter a year ago, a 0.1% increase.

We recorded a $3.3 million loss on asset disposal and impairments in the quarter which included the impairment for one company-owned Buffalo Wild Wings and two company-owned PizzaRev restaurants, and writedowns for experimental technology.

Under the $200 million share repurchase authorization, announced in November 2015, 155,623 shares were repurchased during the fourth quarter of 2015 for a total of $25 million.

For the fourth quarter, net earnings increased 24.4% to $25.3 million, versus $20.3 million in the fourth quarter of 2014. Earnings per diluted share were $1.32, compared to fourth quarter 2014 earnings per diluted share of $1.07.

For the fiscal year 2015, net earnings increased 1.0% to $95.1 million, versus $94.1 million in the fiscal year of 2014. Earnings per diluted share were $4.97, compared to fiscal year 2014 earnings per diluted share of $4.95.

2016 Outlook

Ms. Smith remarked, “Same-store sales increased 0.3% at company-owned restaurants and decreased 1.5% at franchised locations for the first four weeks of the first quarter of 2016, compared to increases of 12.7% and 12.4%, respectively, for the same period last year. We're currently running a new national TV commercial and are looking forward to a fully-integrated campaign for college basketball. Our restaurants continue their commitment to operational excellence and are focused on the beer experience, lunch, and takeout as sales-driving initiatives for 2016.”

Ms. Smith concluded, "The Buffalo Wild Wings brand is strong and vibrant and we continue to invest to drive sales and deliver earnings growth for our shareholders. With our ongoing unit growth and operational diligence, our earnings per share goal for 2016 is $5.95 to $6.20, representing 20% to 25% growth over fiscal 2015.”

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

• 45 to 50 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
• Continued unit expansion by PizzaRev

For 2016, the company expects the following:

• Single-digit same-store sales growth, including modestly positive traffic
• Deflationary food costs, excluding traditional chicken wings
• Depreciation and amortization expense of $155 to $160 million
• Share repurchases of approximately $100 million
• Earnings per diluted share of $5.95 to $6.20
• Capital expenditures of approximately $200 million, excluding franchise acquisitions and emerging brand investments

We will discontinue disclosing quarter-to-date same-store sales trends after this quarter as a four-week trend is not predictive of quarterly same-store sales.

Buffalo Wild Wings will be hosting a conference call today, February 3, 2016 at 4:00 p.m. Central Standard 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 February 10, 2016. To access this replay, please dial 1.858.384.5517 password 2094542.

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 1,170 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

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on current expectations or beliefs and can be identified by the use of terminology such as ”continue,” “could,” “estimate,” “expect,” “goal,” “may,” “ongoing,” “plan,” “predict,” “project,” “should,” “will,” and similar words or expressions. Forward-looking statements in this press release include those relating to our future financial and restaurant performance measures, including but not limited to those relating to sales trends and projected unit and earnings growth, our growth strategy, planned sales efforts, unit development and expansion, share repurchase activity and cash requirements. 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, our capital allocation plans, 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 by subsequent reports filed with the SEC. Investors should take such risks into account when making investment decisions. You 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 statement.

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

   

CONSOLIDATED STATEMENTS OF EARNINGS

 

(Dollar and share amounts in thousands except per share data)

 

(unaudited)

  Three months ended Twelve months ended December 27,   December 28, December 27,   December 28, 2015 2014 2015 2014 Revenue: Restaurant sales 466,405 384,380 1,715,000 1,422,990 Franchise royalties and fees 23,818   24,536   97,722   93,233   Total revenue 490,223   408,916   1,812,722   1,516,223   Costs and expenses: Restaurant operating costs: Cost of sales 137,414 117,680 507,812 413,890 Labor 144,262 119,569 542,847 444,232 Operating 72,039 58,164 250,755 209,583 Occupancy 26,015 20,883 94,569 78,931 Depreciation and amortization 36,616 27,100 127,503 98,454 General and administrative 31,196 31,875 129,133 118,038 Preopening 4,903 5,175 14,154 13,544 Loss on asset disposals and impairment 3,282   458   7,462   3,827   Total costs and expenses 455,727   380,904   1,674,235   1,380,499   Income from operations 34,496 28,012 138,487 135,724 Interest and other income (expense) (912 ) (189 ) (2,346 ) (317 ) Earnings before income taxes 33,584 27,823 136,141 135,407 Income tax expense 8,292   7,540   41,265   41,352   Net earnings including noncontrolling interests 25,292   20,283   94,876   94,055   Net income (loss) attributable to noncontrolling interests 21   (39 ) (193 ) (39 ) Net earnings attributable to Buffalo Wild Wings 25,271   20,322   95,069   94,094   Earnings per common share – basic $ 1.33 1.07 5.00 4.98 Earnings per common share – diluted $ 1.32 1.07 4.97 4.95 Weighted average shares outstanding – basic 19,036 18,931 19,013 18,908 Weighted average shares outstanding – diluted 19,173 19,051 19,131 19,002  

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   Twelve months ended December 27,   December 28, December 27,   December 28, 2015 2014 2015 2014 Revenue: Restaurant sales 95.1 % 94.0 % 94.6 % 93.9 % Franchise royalties and fees 4.9   6.0   5.4   6.1   Total revenue 100.0   100.0   100.0   100.0   Costs and expenses: Restaurant operating costs: Cost of sales 29.5 30.6 29.6 29.1 Labor 30.9 31.1 31.7 31.2 Operating 15.4 15.1 14.6 14.7 Occupancy 5.6 5.4 5.5 5.5 Depreciation and amortization 7.5 6.6 7.0 6.5 General and administrative 6.4 7.8 7.1 7.8 Preopening 1.0 1.3 0.8 0.9 Loss on asset disposals and impairment 0.7   0.1   0.4   0.3   Total costs and expenses 93.0   93.1   92.4   91.0   Income from operations 7.0 6.9 7.6 9.0 Interest and other income (expense) (0.2 ) (0.0 ) (0.1 ) (0.0 ) Earnings before income taxes 6.9 6.8 7.5 8.9 Income tax expense 1.7   1.8   2.3   2.7   Net earnings including noncontrolling interests 5.2   5.0   5.2   6.2   Net income (loss) attributable to noncontrolling interests 0.0   (0.0 ) (0.0 ) (0.0 ) Net earnings attributable to Buffalo Wild Wings 5.2 % 5.0 % 5.2 % 6.2 %  

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Dollar amounts in thousands) (unaudited)

    December 27, December 28, 2015 2014 Assets Current assets: Cash and cash equivalents $ 11,220 93,329 Marketable securities 9,043 19,547 Accounts receivable, net of allowance of $25 and $25 34,087 28,322 Inventory 15,351 11,893 Prepaid expenses 6,386 4,215 Refundable income taxes 21,591 9,779 Deferred income taxes — 15,807 Restricted assets 100,073   81,037   Total current assets 197,751 263,929   Property and equipment, net 604,712 494,401 Reacquired franchise rights, net 129,282 37,631 Other assets 26,536 19,399 Goodwill 114,101   38,106   Total assets $ 1,072,382   853,466   Liabilities and Stockholders’ Equity Current liabilities: Unearned franchise fees $ 2,144 2,099 Accounts payable 44,760 37,241 Accrued compensation and benefits 55,578 59,161 Accrued expenses 21,678 16,573 Current portion of long-term debt and capital lease obligations 2,147 — Current portion of deferred lease credits 59 743 Due to related party 36,179 — System-wide payables 101,078   79,668   Total current liabilities 263,623 195,485 Long-term liabilities: Other liabilities 16,473 6,388 Deferred income taxes 23,351 39,815 Long-term debt and capital lease obligations, net of current portion 70,954 — Deferred lease credits, net of current 41,869   37,479   Total liabilities 416,270   279,167   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 18,917,776 and 18,937,131, respectively 160,353 148,114 Retained earnings 499,085 427,695 Accumulated other comprehensive loss (3,719 ) (2,096 ) Total stockholders’ equity 655,719   573,713   Noncontrolling interest 393   586   Total equity 656,112   574,299   Total liabilities and equity $ 1,072,382   853,466    

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(unaudited)

  Twelve months ended December 27,   December 28, 2015 2014 Cash flows from operating activities: Net earnings including noncontrolling interests $ 94,876 94,055 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation 120,060 93,773 Amortization 7,443 4,681 Loss on asset disposals and impairment 7,462 3,827 Deferred lease credits 4,052 4,331 Deferred income taxes 155 (3,946 ) Stock-based compensation 13,647 14,253 Excess tax benefit from stock issuance (5,455 ) (2,500 ) Loss on investments in affiliates 687 — Change in operating assets and liabilities, net of effect of acquisitions: Trading securities (495 ) (972 ) Accounts receivable (4,313 ) (3,443 ) Inventory (2,407 ) (2,178 ) Prepaid expenses (691 ) 383 Other assets (6,381 ) (139 ) Unearned franchise fees 100 191 Accounts payable 4,445 5,343 Income taxes (6,356 ) (2,948 ) Accrued expenses 10,867   13,155   Net cash provided by operating activities 237,696   217,866   Cash flows from investing activities: Acquisition of property and equipment (172,548 ) (137,466 ) Acquisition of businesses/investments in affiliates (203,642 ) (30,572 ) Purchase of marketable securities (12,301 ) (22,991 ) Proceeds from marketable securities 23,300   12,000   Net cash used in investing activities (365,191 ) (179,029 ) Cash flows from financing activities: Proceeds from line of credit 352,678 — Repayments of line of credit (318,148 ) — Proceeds from related party borrowing 36,179 — Repurchases of common stock (25,000 ) — Other financing activities (3,173 ) — Issuance of common stock 5,355 3,032 Excess tax benefit from stock issuance 5,455 2,500 Tax payments for restricted stock units (7,847 ) (7,474 ) Net cash provided by (used in) financing activities 45,499   (1,942 ) Effect of exchange rate changes on cash and cash equivalents (113 ) (1,068 ) Net increase (decrease) in cash and cash equivalents (82,109 ) 35,827 Cash and cash equivalents at beginning of year 93,329   57,502   Cash and cash equivalents at end of year $ 11,220   93,329    

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 501 517 573 596 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 593 593 569 579 2014 569 579 588 591 2013 514 525 534 559 2012 505 505 511 510 2011 488 492 498 498

Restaurant Count Rollforward:

  Twelve months ended December 27, 2015   December 28, 2014 Corporate   Franchise   Total Corporate   Franchise   Total Buffalo Wild Wings Beginning of period 487 584 1,071 434 559 993 Opened 51 50 101 46 47 93 Acquired 54 (54 ) — 13 (13 ) — Closed/Relocated (2 ) (7 ) (9 ) (6 ) (9 ) (15 ) End of period 590 573 1,163 487 584 1,071 R Taco Beginning of period 2 7 9 — — — Opened 1 — 1 — — — Acquired 1 (1 ) — 2 7 9 Closed/Relocated —   —   —   —   —   —   End of period 4 6 10 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 596   579   1,175   491   591   1,082    

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% 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% 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% 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% 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 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 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 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 2011 52,744 50,995 51,350 53,385 52,081  

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