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

MINNEAPOLIS–(hospitalitybusinessnews.com)–Buffalo Wild Wings, Inc.  announced today financial results for the second quarter ended June 25, 2017.

Key metrics for the second quarter, versus the same period a year ago, were:

  • Total revenue increased 2.0% to $500.0 million.
  • Companyowned restaurant sales increased 1.9% to $475.7 million.
  • Samestore sales decreased 1.2% at companyowned restaurants.
  • Net earnings decreased 62.9% to $8.8 million from $23.7 million, and earnings per diluted share decreased 57.0% to $0.55 from $1.27.
  • Adjusted net earnings decreased 57.6% to $10.6 million from $25.0 million, and adjusted earnings per diluted share decreased 50.7% to $0.66 from $1.34.

Sally Smith, President and Chief Executive Officer, commented, “During the second quarter, we continued to work on stabilizing the business in the challenging restaurant environment. Our profitability was pressured this quarter driven by historically high wing costs, a mix shift to our promotional days, lower than expected same-store sales, and higher operating expenses.”

Ms. Smith concluded, “As traditional chicken wing costs remain at historically high levels, we’re adapting our value day on Tuesday to feature our boneless wings at company-owned restaurants. In addition, we continue to implement our cost savings plan to improve margins and profitability in areas we can control. Due to our disappointing second quarter earnings and an outlook for slowing traffic as we manage through the Tuesday promotional change, we are lowering our 2017 earnings outlook. We are optimistic about the transition to boneless wings which provides a more stable promotional platform for the future.”

Revenue

  • Total revenue increased $9.8 million to $500.0 million in the second quarter, compared to $490.2 million in the second quarter of 2016. There was a $4.1 million revenue deferral for the Blazin’ Rewards loyalty program in the second quarter.
  • Companyowned restaurant sales for the second quarter increased 1.9% over the same period in 2016 to $475.7 million, driven by 26 additional company-owned restaurants.
  • Franchise royalties and fees increased 3.1% to $24.3 million for the quarter, versus $23.6 million in the second quarter of 2016, driven by 28 additional franchised restaurants.

Restaurant-level costs and expenses

  • Cost of sales for the second quarter was 32.1% of restaurant sales, compared to 29.7% in the quarter last year, driven by higher traditional chicken wing prices compounded by a change in sales mix from promotional activity compared to the second quarter of 2016.
    • Traditional wings were $2.05 per pound in the second quarter, representing an $0.11 increase, or 5.7%, higher than last year’s second quarter average of $1.94. Traditional wings as a percent of cost of sales was 30.7% in the second quarter.
  • Cost of labor for the second quarter was 32.4% of restaurant sales, 40 basis points higher than second quarter last year, resulting from increased healthcare costs and management salaries, partially offset by lower hourly labor.
  • Restaurant operating expenses as a percentage of restaurant sales were 15.7%, an increase of 110 basis points from the second quarter of 2016, driven by an increase in general liability expenses, higher repair and maintenance expenses, and third-party delivery commissions.
  • Occupancy costs were 5.9% as a percentage of restaurant sales, 10 basis points higher compared to the same quarter last year.
  • Restaurant-level profit was $65.9 million, or 13.8%, of restaurant sales, compared to $83.3 million, or 17.9%, in the second quarter last year.

Other Expenses

  • Depreciation and amortization expense for the second quarter was $38.1 million, increasing 0.4%, due to new unit openings over the last 12 months.
  • General and administrative expenses were $39.2 million in the second quarter, increasing 31.3% from the same period last year, due to increased advisory fees and consulting services as well as stock-based compensation.
    • Stock-based compensation was $3.4 million in the second quarter, compared to $0.7 million of expense in the prior year, which included a reversal of previously recognized expense.
  • Preopening expenses for the quarter totaled $0.9 million, versus $1.8 million in the second quarter last year, due to fewer openings.
  • Loss on asset disposal for the second quarter totaled $2.6 million, compared to last year of $1.9 million. The 2017 expense represented impairment of two restaurants totaling $1.7 million and the write-off of miscellaneous equipment. The expense in 2016 represented disposals due to remodels, and the write-off of miscellaneous equipment.
  • Interest expense was $3.3 million in the second quarter, compared to $0.8 million in the prior year period.
  • Other income was $5.9 million for the quarter, which is primarily from a gain on the sale of our minority investment in PizzaRev, compared to an expense of $1.0 million in 2016.
  • The effective tax rate during the quarter was 27.9%, compared to 29.9% in the prior year.

Earnings

  • Operating income was $9.4 million in the second quarter, or 1.9% of total revenue, compared to $35.5 million and 7.2% in the prior year. For the year to date period, operating income was $43.2 million, or 4.2% of total revenue, compared to $82.1 million and 8.2%.
  • Net earnings decreased 62.9% to $8.8 million in the second quarter, versus $23.7 million in the second quarter of 2016. For the year to date period, net earnings decreased 46.3% to $30.3 million, versus $56.5 million in 2016.
  • Earnings per diluted share were $0.55, compared to second quarter 2016 earnings per diluted share of $1.27. Earnings per diluted share decreased 39.3% to $1.83 for the year to date period, compared to $3.00 in the same period last year.
  • Adjusted earnings per diluted share were $0.66, compared to first quarter 2016 adjusted earnings per diluted share of $1.34. Adjusted earnings per diluted share for the year to date period decreased 31.7% to $2.13, compared to $3.12 in the same period last year.

Balance Sheet

  • Cash totaled $19.9 million at the end of the second quarter.
  • The credit facility had an outstanding balance of $390 million as of the end of the quarter.

Cash Flow

  • Cash flow from operations was $49.9 million for the quarter, a 31.0% decrease over the second quarter last year. For the year to date period, cash flow from operations was $98.8 million, a 33.9% decrease over 2016.
  • Free cash flow in the second quarter was $32.5 million, compared to $35.8 million in the prior year. Free cash flow in the year to date period was $64.2 million, compared to $78.8 million in the same period of the prior year.
  • 659,598 shares were repurchased for a total of $100.0 million during the second quarter of 2017. For the year to date period, 2,022,488 shares were repurchased for a total of $312.2 million.

2017 Outlook

The company expects approximately the following new unit development in 2017:

  • 15 company-owned Buffalo Wild Wings restaurants in the United States, with 2 in the third quarter
  • 15 franchised Buffalo Wild Wings locations in the United States, with 6 in the third quarter
  • 20 franchised Buffalo Wild Wing locations internationally, with 5 in the third quarter
  • 2 company-owned and 10 to 13 franchised R Taco restaurants

The company expects the following in 2017:

  • Same-store sales growth of approximately -1% to -2%
  • Traditional chicken wing inflation of 8% to 10%
  • Depreciation and amortization expense of $153 to $155 million
  • General and administrative expense of $138 to $142 million, including stock-based compensation of $8 to $9 million
  • Interest expense of approximately $13 million
  • Earnings per diluted share of $4.00 to $4.50
  • Adjusted earnings per diluted share of $4.50 to $5.00
  • Capital expenditures of approximately $100 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 25, June 26, June 25, June 26,
2017 2016 2017 2016
Revenue:
Restaurant sales $ 475,665 466,583 984,870 950,494
Franchise royalties and fees 24,315 23,595 49,873 47,941
Total revenue 499,980 490,178 1,034,743 998,435
Costs and expenses:
Restaurant operating costs:
Cost of sales 152,714 138,480 312,715 282,303
Labor 154,324 149,375 315,358 298,504
Operating 74,628 68,180 152,168 137,860
Occupancy 28,126 27,205 56,589 53,928
Depreciation and amortization 38,103 37,953 76,980 75,502
General and administrative 39,155 29,821 71,907 61,486
Preopening 917 1,838 1,504 3,701
Loss on asset disposals and impairment 2,628 1,874 4,356 3,096
Total costs and expenses 490,595 454,726 991,577 916,380
Income from operations 9,385 35,452 43,166 82,055
Interest expense 3,334 846 5,692 1,686
Other expense (income) (5,940 ) 1,028 (4,780 ) 161
Earnings before income taxes 11,991 33,578 42,254 80,208
Income tax expense 3,342 10,033 12,218 23,985
Net earnings including noncontrolling interests 8,649 23,545 30,036 56,223
Net loss attributable to noncontrolling interests (133 ) (157 ) (295 ) (252 )
Net earnings attributable to Buffalo Wild Wings $ 8,782 23,702 30,331 56,475
Earnings per common share – basic $ 0.55 1.27 1.83 3.01
Earnings per common share – diluted $ 0.55 1.27 1.83 3.00
Weighted average shares outstanding – basic 15,983 18,605 16,573 18,764
Weighted average shares outstanding – diluted 16,048 18,636 16,619 18,797

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 25, June 26, June 25, June 26,
2017 2016 2017 2016
Revenue:
Restaurant sales 95.1 % 95.2 % 95.2 % 95.2 %
Franchise royalties and fees 4.9 4.8 4.8 4.8
Total revenue 100.0 100.0 100.0 100.0
Costs and expenses:
Restaurant operating costs:
Cost of sales 32.1 29.7 31.8 29.7
Labor 32.4 32.0 32.0 31.4
Operating 15.7 14.6 15.5 14.5
Occupancy 5.9 5.8 5.7 5.7
Depreciation and amortization 7.6 7.7 7.4 7.6
General and administrative 7.8 6.1 6.9 6.2
Preopening 0.2 0.4 0.1 0.4
Loss on asset disposals and impairment 0.5 0.4 0.4 0.3
Total costs and expenses 98.1 92.8 95.8 91.8
Income from operations 1.9 7.2 4.2 8.2
Interest expense 0.7 0.2 0.6 0.2
Other expense (income) (1.2 ) 0.2 (0.5 ) 0.0
Earnings before income taxes 2.4 6.9 4.1 8.0
Income tax expense 0.7 2.0 1.2 2.4
Net earnings including noncontrolling interests 1.7 4.8 2.9 5.6
Net loss attributable to noncontrolling interests (0.0 ) (0.0 ) (0.0 ) (0.0 )
Net earnings attributable to Buffalo Wild Wings 1.8 % 4.8 % 2.9 % 5.7 %
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
June 25, December 25,
2017 2016
Assets
Current assets:
Cash $ 19,941 49,266
Accounts receivable, net of allowance of $251 37,927 34,225
Inventory 15,080 16,532
Prepaid expenses 7,503 9,075
Refundable income taxes 4,483 1,018
Restricted assets 24,532 66,471
Total current assets 109,466 176,587
Property and equipment, net 551,317 592,806
Reacquired franchise rights, net 112,348 118,973
Other assets 39,889 41,625
Goodwill 117,228 117,228
Total assets $ 930,248 1,047,219
Liabilities and Stockholders’ Equity
Current liabilities:
Deferred revenue $ 8,316 3,089
Accounts payable 37,887 45,797
Accrued compensation and benefits 43,944 47,304
Accrued expenses 33,367 32,347
Current portion of long-term debt and capital lease obligations 3,599 3,745
Current portion of deferred lease credits 4,685 873
System-wide payables 58,588 108,814
Total current liabilities 190,386 241,969
Long-term liabilities:
Other liabilities 16,529 16,109
Deferred income taxes 15,166 21,588
Long-term debt and capital lease obligations, net of current portion 426,074 205,312
Deferred lease credits, net of current portion 40,866 44,341
Total liabilities 689,021 529,319
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 15,491,688 and 17,462,465 shares, respectively 139,334 147,234
Retained earnings 106,135 374,683
Accumulated other comprehensive loss (3,808 ) (3,878 )
Total stockholders’ equity 241,661 518,039
Noncontrolling interests (434 ) (139 )
Total equity 241,227 517,900
Total liabilities and equity $ 930,248 1,047,219
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
Six months ended
June 25, June 26,
2017 2016
Cash flows from operating activities:
Net earnings including noncontrolling interests $ 30,036 56,223
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization 76,980 75,502
Loss on asset disposals and impairment 4,356 3,096
Deferred lease credits 1,548 3,380
Deferred income taxes (6,489 ) 2,397
Stock-based compensation 4,021 2,108
Excess tax benefit from stock issuance (35 )
Change in fair value of contingent consideration 359 (1,106 )
Gain on sale of investment in affiliate (5,692 )
Loss on investments in affiliate 1,488 1,247
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable (6,007 ) 802
Inventory 1,458 1,418
Prepaid expenses 1,573 567
Other assets (4,334 ) (2,462 )
Deferred revenue 5,227 118
Accounts payable (2,004 ) (3,520 )
Income taxes (3,465 ) 16,607
Accrued expenses (294 ) (6,943 )
Net cash provided by operating activities 98,761 149,399
Cash flows from investing activities:
Acquisition of property and equipment (34,553 ) (70,630 )
Acquisition of businesses (3,862 )
Proceeds from sale of investment in affiliate 8,126
Net cash used in investing activities (26,427 ) (74,492 )
Cash flows from financing activities:
Proceeds from revolving credit facility 330,000 286,873
Repayments of revolving credit facility (110,000 ) (263,343 )
Borrowings from (payments to) restricted funds (6,533 ) 12,288
Repurchases of common stock (312,249 ) (99,981 )
Other financing activities (1,715 ) (1,065 )
Issuance of common stock 2,570 1,960
Excess tax benefit from stock issuance 35
Tax payments for restricted stock units (3,796 ) (9,172 )
Net cash used in financing activities (101,723 ) (72,405 )
Effect of exchange rate changes on cash 64 (87 )
Net increase (decrease) in cash (29,325 ) 2,415
Cash at beginning of period 49,266 11,220
Cash at end of period $ 19,941 13,635
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

2017 634 635
2016 603 609 617 631
2015 501 517 573 596
2014 443 449 463 491
2013 397 407 415 434

Franchised Restaurants (includes Buffalo Wild Wings and R Taco locations):

Q1

Q2

Q3

Q4

2017 616 624
2016 587 596 602 609
2015 593 593 569 579
2014 569 579 588 591
2013 514 525 534 559

Restaurant Count Rollforward:

Six Months Ended
June 25, 2017 June 26, 2016
Corporate Franchise Total Corporate Franchise Total
Buffalo Wild Wings
Beginning of period 621 602 1,223 590 573 1,163
Opened 6 12 18 11 18 29
Acquired 1 (1)
Closed/Relocated (1) (3) (4) (1) (1) (2)
End of period 626 611 1,237 601 589 1,190
R Taco
Beginning of period 8 7 15 4 6 10
Opened 1 6 7 2 1 3
Acquired
Closed/Relocated
End of period 9 13 22 6 7 13
PizzaRev
Beginning of period 2 n/a 2 2 n/a 2
Opened n/a n/a
Acquired n/a n/a
Closed/Relocated (2) n/a (2) n/a
End of period n/a 2 n/a 2
Consolidated
End of the period 635 624 1,259 609 596 1,205
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

2017 0.5 % (1.2 %)
2016 (1.7 %) (2.1 %) (1.8 %) (4.0 %) (2.4 %)
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 %

Franchised Restaurants:

Q1

Q2

Q3

Q4

Year

2017 0.6 % (2.1 %)
2016 (2.4 %) (2.6 %) (1.6 %) (3.9 %) (2.7 %)
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 %
Average Weekly Sales Volumes at Buffalo Wild Wings locations in United States and Canada
Company-owned Restaurants:

Q1

Q2

Q3

Q4

Year

2017 $ 62,970 58,912
2016 62,829 59,894 59,690 59,120 60,366
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

Franchised Restaurants:

Q1

Q2

Q3

Q4

Year

2017 $ 65,713 61,217
2016 65,636 62,454 61,497 61,397 62,662
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

Restaurant-Level Profit and Restaurant-Level Margin

Restaurant-level profit and restaurant-level margin are neither required by, nor presented in accordance with U.S. GAAP and are non-GAAP financial measures. Restaurant-level profit is defined restaurant sales less restaurant operating costs (cost of sales, labor, operating, and occupancy expense). Restaurant-level margin is defined as restaurant-level profit as a percentage of restaurant sales. Restaurant-level profit and restaurant-level margin have limitations as analytical tools, and should not be evaluated in isolation or as substitutes for analysis of results as reported under U.S. GAAP. Management believes the restaurant-level profit and restaurant-level margin are important tools for investors because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency and performance. Management uses restaurant-level profit and restaurant-level margin as key performance indicators to evaluate the profitability of company-owned restaurants.

A reconciliation of restaurant sales to restaurant-level margin is provided below:

Three months ended Six months ended
June 25, 2017 June 26, 2016 June 25, 2017 June 26, 2016
Restaurant sales $ 475,665 466,583 984,870 950,494
Restaurant operating costs 409,792 383,240 836,830 772,595
Restaurant-level profit 65,873 83,343 148,040 177,899
Restaurant-level margin 13.8 % 17.9 % 15.0 % 18.7 %

EBITDA

Earnings before interest, taxes, and depreciation and amortization (EBITDA) is not required by, nor presented in accordance with U.S. GAAP and is a non-GAAP financial measure. The Company defines EBITDA as net earnings including non-controlling interests plus interest expense, income tax expense, and depreciation and amortization. EBITDA has limitations as an analytical tool, and should not be evaluated in isolation or as a substitute for analysis of results as reported under U.S. GAAP. Management utilizes this metric as a basis for evaluating our ongoing operations, and believes investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for evaluating our ongoing results of operations, without the effects of interest, taxes, and depreciation and amortization.

A reconciliation of net earnings including noncontrolling interests to EBITDA is provided below:

Three months ended Six months ended
June 25, 2017 June 26, 2016 June 25, 2017 June 26, 2016
Net earnings including noncontrolling interests $ 8,649 23,545 30,036 56,223
Income tax expense 3,342 10,033 12,218 23,985
Interest expense 3,334 846 5,692 1,686
Depreciation and amortization 38,103 37,953 76,980 75,502
EBITDA $ 53,428 72,377 124,926 157,396

Adjusted Net Earnings and Adjusted Earnings per Diluted Share

Adjusted net earnings and adjusted earnings per diluted share are not required by, nor presented in accordance with U.S. GAAP and are non-GAAP financial measures. The Company defines adjusted earnings diluted per share as adjusted net earnings attributable to Buffalo Wild Wings divided by our weighted diluted average shares outstanding. Adjusted net earnings attributable to Buffalo Wild Wings is calculated as earnings before income taxes plus loss on asset disposals and impairment (excluding store closing reserve costs), proxy costs for contested election, advisory and consulting fees, restructuring costs, acquisition costs, and divestiture costs less gain on sale of investment in affiliate. This amount is then adjusted for an estimated income tax expense and net earnings (loss) attributable to noncontrolling interests. Adjusted net earnings and adjusted earnings per diluted share have limitations as analytical tools, and should not be evaluated in isolation or as a substitute for analysis of results as reported under U.S. GAAP. Management utilizes these metrics as a basis for evaluating our ongoing operations, and believes investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for evaluating our ongoing results of operations, without the effects of certain non-recurring or non-cash items.

Three months ended Six months ended
June 25, June 26, June 25, June 26,
2017 2016 2017 2016
Earnings before income taxes (a) $ 11,991 33,578 42,254 80,208
Loss on asset disposals and impairment (b) 2,566 1,858 4,261 3,063
Proxy costs for contested election (c) 3,991 5,901
Advisory and consulting fees, and restructuring costs (d) 1,582 2,502
Gain on sale of investment in affiliate (e) (5,692 ) (5,692 )
Acquisition costs (f) 145
Divestiture costs (g) 80 80
Adjusted earnings before income taxes 14,518 35,436 49,306 83,416
Estimated income tax expense (h) 4,046 10,588 14,257 24,944
Adjusted earnings including noncontrolling interests 10,472 24,848 35,049 58,472
Net earnings (loss) attributable to noncontrolling interests (a) (133 ) (157 ) (295 ) (252 )
Adjusted net earnings attributable to Buffalo Wild Wings $ 10,605 25,005 35,344 58,724
Weighted average shares outstanding – diluted (a) 16,048 18,636 16,619 18,797
Adjusted earnings per diluted share $ 0.66 1.34 2.13 3.12
(a) Equals the amount shown on our Consolidated Statements of Earnings.

(b)

Consists of loss on asset disposals and impairments, excluding store closing reserve costs of $62 and $16, for the three-month periods ended June 25, 2017 and June 26, 2016, respectively. Consists of loss on asset disposals and impairments, excluding store closing reserve costs of $95 and $33, for the six-month periods ended June 25, 2017 and June 26, 2016, respectively.

(c)

Consists of costs related to the advisory fees and preparation of proxy materials in a contested election for the board of directors.

(d)

Consists of costs related to consulting services pertaining to the identification of best practices and improving efficiencies, and organizational restructuring costs.

(e)

Consists of the gain recorded from the sale of our investment in affiliate, Pie Squared Holdings.

(f)

Consists of costs associated with an acquisition of a franchise-owned store.

(g)

Consists of costs associated with the proposed divestiture of company-owned stores.

(h)

Our effective tax rates for the three-month periods ended June 25, 2017 and June 26, 2016 were 27.9% and 29.9%, respectively.

Our effective tax rates for the six-month periods ended June 25, 2017 and June 26, 2016 were 28.9% and 29.9%, respectively. The calculated estimated income tax expense is based on these rates.

Adjusted Earnings per Diluted Share Forecast

Adjusted earnings per diluted share is not required by, nor presented in accordance with U.S. GAAP and is a non-GAAP financial measure. The Company defines adjusted earnings per diluted share as diluted earnings per share on a U.S. GAAP basis, plus diluted earnings per share impacts of loss on tangible and intangible asset disposals and impairment, costs related to the advisory fees and preparation of proxy materials in a contested election for the board of directors, and costs related to consulting services pertaining to the identification of best practices and improving efficiencies. Adjusted earnings per diluted share has limitations as an analytical tool, and should not be evaluated in isolation or as a substitute for analysis of results as reported under U.S. GAAP. Management utilizes this metric to forecast and evaluate our ongoing operations, and believes investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for forecasting and evaluating our ongoing results of operations, without the effects of certain non-recurring or non-cash items.

Twelve months ending December 31, 2017
Low Projection High Projection
Earnings per diluted share forecast (a) $ 4.00 4.50
Loss on asset disposals and impairment (b) 0.38 0.38
Proxy costs for contested election(c) 0.26 0.26
Advisory and consulting fees, and restructuring costs (d) 0.11 0.11
Gain on sale of investment in affiliate (e) (0.25 ) (0.25 )
Adjusted earnings per diluted share forecast (f) $ 4.50 5.00
(a) Equals the projected earnings per diluted share on a U.S. GAAP basis for fiscal year 2017.

(b)

Consists of the projected earnings per diluted share impact of our loss on tangible and intangible asset disposals and impairment for fiscal year 2017.

(c)

Consists of the projected earnings per diluted share impact of costs related to the advisory fees and preparation of proxy materials in a contested election for the board of directors.

(d)

Consists of the projected earnings per diluted share impact of costs related to consulting services pertaining to the identification of best practices and improving efficiencies, and organizational restructuring costs for fiscal year 2017.

(e)

Consists of the projected earnings per diluted share impact of the gain recorded from the sale of our investment in affiliate, Pie Squared Holdings.

(f)

This estimate assumes diluted weighted average shares outstanding of 16,070 for fiscal year 2017.

Free Cash Flow

Free cash flow is not required by, nor presented in accordance with U.S. GAAP and is a non-GAAP financial measure. The Company defines free cash flow as net cash provided operating activities minus acquisition of property and equipment. Free cash flow has limitations as an analytical tool, and should not be evaluated in isolation or as a substitute for analysis of results as reported under U.S. GAAP. Management utilizes this metric, and also believes investors’ understanding of our performance is enhanced by including this non-GAAP financial measure, as a basis for evaluating our cash flow available after capital expenditures.

Six months ended
June 25, 2017 June 26, 2016
Net cash provided by operating activities $ 98,761 149,399
Acquisition of property and equipment (34,553 ) (70,630 )
Free cash flow $ 64,208 78,769
Share Button
About the Author