Buffalo Wild Wings, Inc. Announces Fourth Quarter Earnings per Share

MINNEAPOLIS–(hospitalitybusinessnews.com)– Buffalo Wild Wings, Inc. 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
  • Companyowned restaurant sales increased 21.3% to $466.4 million
  • Samestore sales grew 1.9% at companyowned 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. Companyowned restaurant sales for the quarter increased 21.3% over the same period in 2014, to $466.4 million, driven by a samestore 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

 

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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