Buffalo Wild Wings, Inc. Announces Second Quarter Earnings

MINNEAPOLIS–(hospitalitybusinessnews.com)–Buffalo Wild Wings, Inc. 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
  • Companyowned restaurant sales increased 16.1% to $466.6 million
  • Samestore sales decreased 2.1% at companyowned 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. Companyowned 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, 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
Share Button
About the Author