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

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:

  • Total revenue increased 15.4% to $508.3 million
  • Company-owned restaurant sales increased 16.6% to $483.9 million
  • Same-store sales decreased 1.7% at company-owned restaurants and 2.4% at franchised restaurants
  • Net earnings increased 12.8% to $32.8 million from $29.0 million, and earnings per diluted share increased 13.5% to $1.73 from $1.52

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:

  • 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
  • Continued unit expansion by PizzaRev

For 2016, the company expects the following:

  • Improving same-store sales
  • Deflationary food costs, excluding traditional chicken wings
  • Depreciation and amortization expense of $150 to $155 million
  • Share repurchase activity of approximately $100 million
  • Earnings per diluted share of $5.65 to $5.85
  • Capital expenditures of approximately $190 million, excluding additional franchise acquisitions or emerging brand investments

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

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