Buffalo Wild Wings, Inc. Announces Second Quarter Earnings Per Share of $1.12

- 41-Unit Franchise Acquisition Expected to Close in August 2015 -

- 2015 Net Earnings Growth Goal Revised to 13% -

MINNEAPOLIS, July 28, 2015 (GLOBE NEWSWIRE) -- Buffalo Wild Wings, Inc. (NASDAQ:BWLD) announced today financial results for the second quarter ended June 28, 2015. Highlights for the second quarter versus the same period a year ago were:

  • Total revenue increased 16.5% to $426.4 million
  • Company-owned restaurant sales increased 17.1% to $401.9 million
  • Same-store sales increased 4.2% at company-owned restaurants and 2.5% at franchised restaurants
  • Net earnings decreased 9.3% to $21.5 million from $23.7 million, and earnings per diluted share decreased 9.9% to $1.12 from $1.25

Sally Smith, President and Chief Executive Officer, commented, “Solid sales performance in the second quarter was offset by a challenging cost environment. Our second quarter same-store sales were 4.2% at company-owned restaurants and 2.5% at franchised locations. This spring we created World of Sports, which highlighted the playoffs, women's World Cup, and unique sports from around the globe to help drive sales over our strong same-store sales last year. We also launched B-Dubs® Fast Break, a system-wide lunch program, and supported the campaign with national and local advertising.”

Ms. Smith continued, “We earned $1.12 per diluted share in the second quarter, a decline from 2014 primarily from increased food and labor costs. The price per pound for traditional chicken wings was 26% higher than the prior year. Labor as a percentage of sales increased due to higher wage rates and benefits costs and the addition of Guest Experience Captains at all company-owned restaurants that was completed in fourth quarter last year.”

Total revenue increased 16.5% to $426.4 million in the second quarter compared to $366.0 million in the second quarter of 2014. Company-owned restaurant sales for the quarter increased 17.1% over the same period in 2014, to $401.9 million, driven by a same-store sales increase at company-owned Buffalo Wild Wings restaurants of 4.2% and 64 additional Buffalo Wild Wings restaurants at the end of the second quarter of 2015. Franchise royalties and fees increased 7.3% to $24.5 million for the quarter versus $22.9 million in the second quarter of 2014. This increase is attributed to a same-store sales increase at franchised Buffalo Wild Wings locations of 2.5% and 8 additional franchised Buffalo Wild Wings restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned Buffalo Wild Wings restaurants were $61,960 for the second quarter of 2015 compared to $59,403 for the same quarter last year, a 4.3% increase. Franchised Buffalo Wild Wings restaurants in the United States averaged $63,904 for the period versus $61,845 in the second quarter a year ago, a 3.3% increase.

For the second quarter, net earnings decreased 9.3% to $21.5 million versus $23.7 million in the second quarter of 2014. Earnings per diluted share were $1.12, as compared to second quarter 2014 earnings per diluted share of $1.25.

2015 Outlook

Ms. Smith remarked, “Same-store sales increased 4.8% at company-owned restaurants and 2.0% at franchised locations for the first four weeks of the third quarter of 2015 compared to 8.2% and 7.4%, respectively, for the same period last year, which included the men's World Cup finals. We're excited for the start of the football season and our restaurant teams are getting ready to host fantasy football draft parties. Buffalo Wild Wings remains the place to watch all the gridiron action and we will air new advertising focusing on the great football environment our restaurants offer.”

Ms. Smith continued, "In July, we finalized a purchase agreement to acquire 41 franchised Buffalo Wild Wings locations in Texas, New Mexico, and Hawaii and we anticipate the transaction closing in August. This acquisition is expected to decrease net earnings in 2015 due to the timing of the closing, increased depreciation and amortization of reacquired franchise rights, and $5 million in transition costs."

Ms. Smith concluded, "Investments in Buffalo Wild Wings, including the Guest Experience Business Model and Stadia restaurant design, further strengthen our brand. Same-store sales at Buffalo Wild Wings are strong and we have long-term opportunities that will continue to drive restaurant sales and net earnings growth. As a result of the near-term expenses from the integration of the franchise acquisition, we are revising our net earnings growth goal for 2015 to 13%.”

Buffalo Wild Wings will be hosting a conference call today, July 28, 2015 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 August 4, 2015. To access this replay, please dial 1.858.384.5517 password 1555267.

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 1,100 Buffalo Wild Wings locations in the United States, Canada, Mexico, and Philippines.

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 third quarter sales trends and projected unit and net earnings growth rates for 2015, 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 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, 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 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.

(Dollar and share amounts in thousands except per share data)
Three months ended Six months ended
June 28,
June 29,
June 28,
June 29,
Restaurant sales$401,860 343,141 816,832 688,086
Franchise royalties and fees24,527 22,853 50,141 45,763
Total revenue426,387 365,994 866,973 733,849
Costs and expenses:
Restaurant operating costs:
Cost of sales117,843 96,837 243,520 194,324
Labor129,294 107,432 259,688 212,766
Operating56,822 50,017 115,373 99,055
Occupancy22,354 19,283 44,344 38,252
Depreciation and amortization29,208 23,746 57,277 46,578
General and administrative33,701 30,223 64,223 58,379
Preopening3,204 2,197 4,474 4,775
Loss on asset disposals and impairment2,306 1,211 2,911 1,998
Total costs and expenses394,732 330,946 791,810 656,127
Income from operations31,655 35,048 75,163 77,722
Investment income (loss)41 235 (34) 108
Earnings before income taxes31,696 35,283 75,129 77,830
Income tax expense10,264 11,580 24,712 25,811
Net earnings including noncontrolling interests21,432 23,703 50,417 52,019
Net loss attributable to noncontrolling interests(67) (145)
Net earnings attributable to Buffalo Wild Wings$21,499 23,703 50,562 52,019
Earnings per common share – basic$1.13 1.25 2.66 2.75
Earnings per common share – diluted$1.12 1.25 2.65 2.74
Weighted average shares outstanding – basic19,003 18,904 18,998 18,888
Weighted average shares outstanding – diluted19,113 18,981 19,094 18,967

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 28,
June 29,
June 28,
June 29,
Restaurant sales94.2% 93.8% 94.2% 93.8%
Franchise royalties and fees5.8 6.2 5.8 6.2
Total revenue100.0 100.0 100.0 100.0
Costs and expenses:
Restaurant operating costs:
Cost of sales29.3 28.2 29.8 28.2
Labor32.2 31.3 31.8 30.9
Operating14.1 14.6 14.1 14.4
Occupancy5.6 5.6 5.4 5.6
Depreciation and amortization6.9 6.5 6.6 6.3
General and administrative7.9 8.3 7.4 8.0
Preopening0.8 0.6 0.5 0.7
Loss on asset disposals and impairment0.5 0.3 0.3 0.3
Total costs and expenses92.6 90.4 91.3 89.4
Income from operations7.4 9.6 8.7 10.6
Investment income (loss)0.0 0.1 (0.0) 0.0
Earnings before income taxes7.4 9.6 8.7 10.6
Income tax expense2.4 3.2 2.9 3.5
Net earnings including noncontrolling interests5.0 6.5 5.8 7.1
Net loss attributable to noncontrolling interests(0.0) (0.0)
Net earnings attributable to Buffalo Wild Wings5.0% 6.5% 5.8% 7.1%

(Dollar amounts in thousands)
June 28,
December 28,
Current assets:
Cash and cash equivalents$73,495 93,329
Marketable securities18,401 19,547
Accounts receivable, net of allowance of $2528,422 28,322
Inventory11,877 11,893
Prepaid expenses16,789 4,215
Refundable income taxes2,854 9,779
Deferred income taxes16,898 15,807
Restricted assets56,194 81,037
Total current assets224,930 263,929
Property and equipment, net522,602 494,401
Reacquired franchise rights, net57,216 37,631
Other assets19,110 19,399
Goodwill52,565 38,106
Total assets$876,423 853,466
Liabilities and Stockholders’ Equity
Current liabilities:
Unearned franchise fees$2,295 2,099
Accounts payable44,025 37,241
Accrued compensation and benefits42,415 59,161
Accrued expenses14,222 16,573
Current portion of deferred lease credits 743
System-wide payables55,194 79,668
Total current liabilities158,151 195,485
Long-term liabilities:
Other liabilities16,099 6,388
Deferred income taxes30,853 39,815
Deferred lease credits41,214 37,479
Total liabilities246,317 279,167
Commitments and contingencies
Stockholders’ equity:
Undesignated stock, 1,000,000 shares authorized
Common stock, no par value. Authorized 44,000,000 shares; issued and outstanding 19,012,522 and 18,937,131, respectively154,169 148,114
Retained earnings478,257 427,695
Accumulated other comprehensive loss(2,761) (2,096)
Total stockholders’ equity629,665 573,713
Noncontrolling interests441 586
Total equity630,106 574,299
Total liabilities and equity$876,423 853,466

(Dollar amounts in thousands)
Six months ended
June 28,
June 29,
Cash flows from operating activities:
Net earnings including noncontrolling interests$50,417 52,019
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation54,805 44,312
Amortization2,472 2,266
Loss on asset disposals and impairment2,911 1,998
Deferred lease credits2,903 2,998
Deferred income taxes(9,757) (10,623)
Stock-based compensation7,253 7,665
Excess tax benefit from stock issuance(262) (118)
Change in operating assets and liabilities, net of effect of acquisitions:
Trading securities(708) (569)
Accounts receivable144 (347)
Inventory357 (608)
Prepaid expenses(12,530) (6,618)
Other assets279 (2)
Unearned franchise fees196 (58)
Accounts payable236 69
Income taxes7,187 5,885
Accrued expenses(5,033) 1,019
Net cash provided by operating activities100,870 99,288
Cash flows from investing activities:
Acquisition of property and equipment(67,334) (54,864)
Acquisition of businesses(49,036) (3,000)
Purchase of marketable securities(12,301) (11,996)
Proceeds from marketable securities14,155
Net cash used in investing activities(114,516) (69,860)
Cash flows from financing activities:
Issuance of common stock1,604 1,665
Excess tax benefit from stock issuance262 118
Tax payments for restricted stock units(7,627) (7,474)
Net cash used in financing activities(5,761) (5,691)
Effect of exchange rate changes on cash and cash equivalents(427) (337)
Net increase (decrease) in cash and cash equivalents(19,834) 23,400
Cash and cash equivalents at beginning of period93,329 57,502
Cash and cash equivalents at end of period$73,495 80,902

Supplemental Information
Restaurant Count
Company-owned Restaurants (includes Buffalo Wild Wings, Rusty Taco, and Buffalo Wild Wings-owned PizzaRev locations):

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

Same-Store Sales at Buffalo Wild Wings locations in United States and Canada
Company-owned Restaurants:
2015 7.0% 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:
2015 6.0% 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%

Supplemental Information
Average Weekly Sales Volumes at Buffalo Wild Wings locations in United States and Canada
Company-owned Restaurants:
2014 60,96659,40359,64362,11960,470
2013 56,95354,75955,59258,20456,392
2012 55,13151,52452,56155,59553,783
2011 48,84547,97049,46151,98349,627

Franchised Restaurants:
2014 63,85261,84561,58663,94962,595
2013 60,05058,18658,92661,16759,594
2012 57,28254,76655,60858,49056,570
2011 52,74450,99551,35053,38552,081

Investor Relations Contact: Heather Pribyl 952.253.0731

Source:Buffalo Wild Wings, Inc.