Buffalo Wild Wings, Inc. Announces Third Quarter Earnings per Share of $1.14

MINNEAPOLIS - Oct. 27, 2014 // GLOBE NEWSWIRE // - Buffalo Wild Wings, Inc. (Nasdaq:BWLD) announced today financial results for the third quarter ended September 28, 2014. Highlights for the third quarter versus the same period a year ago were:

  • Total revenue increased 18.3% to $373.5 million
  • Company-owned restaurant sales grew 18.5% to $350.5 million
  • Same-store sales increased 6.0% at company-owned restaurants and 5.7% at franchised restaurants
  • Net earnings increased 21.7% to $21.8 million from $17.9 million, and earnings per diluted share increased 20.0% to $1.14 from $0.95

Net earnings increased 21.7% to $21.8 million from $17.9 million, and earnings per diluted share increased 20.0% to $1.14 from $0.95
Sally Smith, President and Chief Executive Officer, commented, "We're pleased with our results in the third quarter. Same-store sales increased 6.0% at company-owned restaurants and 5.7% at franchised locations. Our strong same-store sales continued during the World Cup tournament, introducing the brand to new Guests. Fantasy football draft parties helped maintain the sales momentum through the quarter. Our restaurant teams were excited for the start of college and professional football and are delivering a great game-day experience to our Guests."

Ms. Smith continued, "Our cost of sales percentage was lower than the prior year, driven by a decrease in the price per pound for traditional chicken wings and leverage from menu price increases taken over the last 12 months. We are nearing completion of staffing all of our company-owned Buffalo Wild Wings restaurants with Guest Experience Captains. These Team Members engage our Guests to deliver the ultimate social experience for sports fans and are an integral component of our Guest Experience strategy. Our strong sales growth, lower food costs, and a lower effective tax rate more than offset the increased labor cost of the Guest Experience Captains, producing net earnings growth of 21.7% and earnings per diluted share of $1.14 in the third quarter."

Total revenue increased 18.3% to $373.5 million in the third quarter compared to $315.8 million in the third quarter of 2013. Company-owned restaurant sales for the quarter increased 18.5% over the same period in 2013, to $350.5 million, driven by a same-store sales increase at company-owned Buffalo Wild Wings restaurants of 6.0% and 44 additional Buffalo Wild Wings restaurants at the end of third quarter of 2014 relative to the same period in 2013. Franchise royalties and fees increased 14.1% to $22.9 million for the quarter versus $20.1 million in the third quarter of 2013. This increase is attributed to a same-store sales increase at franchised Buffalo Wild Wings locations of 5.7% and 47 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 $59,643 for the third quarter of 2014 compared to $55,592 for the same quarter last year, a 7.3% increase. Franchised Buffalo Wild Wings restaurants in the United States averaged $61,586 for the period versus $58,926 in the third quarter a year ago, a 4.5% increase.

For the third quarter, net earnings increased 21.7% to $21.8 million versus $17.9 million in the third quarter of 2013. Earnings per diluted share were $1.14, as compared to third quarter 2013 earnings per diluted share of $0.95.

2014 and 2015 Outlook

Ms. Smith remarked, "Our restaurant teams are focused on providing our Guests with a unique and compelling social experience during football season, and we're pleased with our continued sales strength. Same-store sales increased about 5.4% at company-owned restaurants and 5.1% at franchised locations for the first four weeks of the fourth quarter compared to 5.3% and 3.0%, respectively, for the same period last year. Current costs for traditional chicken wings of $1.98 per pound are 30% higher than our third quarter average cost. Given this trend and known raises in certain minimum wage rates, we are increasing menu prices an average of 3.0% at the end of November. With our results for the first nine months and our outlook for the fourth quarter, we believe net earnings growth will exceed 28% for 2014."

Ms. Smith concluded, "Buffalo Wild Wings continues to expand toward our goal of 1,700 restaurants in the United States and Canada. In 2015, we plan to open approximately 50 company-owned Buffalo Wild Wings restaurants and expect our franchisees in the United States to add 40 franchised locations. Our international franchisees plan on opening eight to ten restaurants. We also plan to open a total of five company-owned Rusty Taco and PizzaRev locations, and both brands will continue their expansion through franchising. We believe with our planned unit growth and ongoing operational diligence we can achieve 18% net earnings growth for 2015."

Buffalo Wild Wings will be hosting a conference call today, October 27, 2014 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 November 3, 2014. To access this replay, please dial 1.858.384.5517 password 5171702.

About Buffalo Wild Wings, Inc.

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 1,040 Buffalo Wild Wings locations in the United States, Canada, and Mexico.

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 fourth quarter sales trends and projected unit and net earnings growth rates for 2014, 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," "intends," "may," "plans," "potential," "predicts," "should" 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, 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 29, 2013, 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

Nine months ended

 

September 28,

September 29,

September 28,

September 29,

 

2014

2013

2014

2013

Revenue:

 

 

 

 

Restaurant sales

 $ 350,524

295,693

1,038,610

865,521

Franchise royalties and fees

22,934

20,108

68,697

59,651

Total revenue

373,458

315,801

1,107,307

925,172

Costs and expenses:

 

 

 

 

Restaurant operating costs:

 

 

 

 

Cost of sales

101,886

88,689

296,210

268,410

Labor

111,897

89,740

324,663

264,500

Operating

52,364

44,668

151,419

126,985

Occupancy

19,796

17,276

58,048

50,267

Depreciation and amortization

24,776

21,587

71,354

62,814

General and administrative

27,784

24,664

86,163

69,562

Preopening

3,594

2,991

8,369

9,682

Loss on asset disposals and impairment

1,371

902

3,369

1,702

Total costs and expenses

343,468

290,517

999,595

853,922

Income from operations

29,990

25,284

107,712

71,250

Other income (loss)

(236)

383

(128)

644

Earnings before income taxes

29,754

25,667

107,584

71,894

Income tax expense

8,001

7,796

33,812

21,155

Net earnings

 $ 21,753

17,871

73,772

50,739

Earnings per common share - basic

 $ 1.15

0.95

3.90

2.70

Earnings per common share - diluted

 $ 1.14

0.95

3.89

2.69

Weighted average shares outstanding - basic

18,923

18,779

18,900

18,765

Weighted average shares outstanding - diluted

19,021

18,889

18,985

18,842

 

 

 

 

 

 

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

Nine months ended

 

September 28,

September 29,

September 28,

September 29,

 

2014

2013

2014

2013

Revenue:

 

 

 

 

Restaurant sales

93.9%

93.6%

93.8%

93.6%

Franchise royalties and fees

6.1

6.4

6.2

6.4

Total revenue

100.0

100.0

100.0

100.0

Costs and expenses:

 

 

 

 

Restaurant operating costs:

 

 

 

 

Cost of sales

29.1

30.0

28.5

31.0

Labor

31.9

30.3

31.3

30.6

Operating

14.9

15.1

14.6

14.7

Occupancy

5.6

5.8

5.6

5.8

Depreciation and amortization

6.6

6.8

6.4

6.8

General and administrative

7.4

7.8

7.8

7.5

Preopening

1.0

0.9

0.8

1.0

Loss on asset disposals and impairment

0.4

0.3

0.3

0.2

Total costs and expenses

92.0

92.0

90.3

92.3

Income from operations

8.0

8.0

9.7

7.7

Other income (loss)

(0.1)

0.1

0.0

0.1

Earnings before income taxes

8.0

8.1

9.7

7.8

Income tax expense

2.1

2.5

3.1

2.3

Net earnings

5.8%

5.7%

6.7%

5.5%

 

 

 

 

 

 

 

 

 

 

 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

 

 

 

CONSOLIDATED BALANCE SHEETS

 

 

 

(Dollar amounts in thousands)

 

 

 

(unaudited)

 

 

 

 

September 28,

December 29,

 

2014

2013

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

 $ 74,095

57,502

Marketable securities

26,234

7,584

Accounts receivable, net of allowance of $155 and $25, respectively

25,585

21,845

Inventory

9,975

9,492

Prepaid expenses

11,759

4,509

Refundable income taxes

4,329

Deferred income taxes

12,405

9,287

Restricted assets

48,493

68,208

Total current assets

208,546

182,756

 

 

 

Property and equipment, net

471,485

440,538

Reacquired franchise rights, net

32,517

33,403

Other assets

19,960

16,498

Goodwill

34,810

32,533

Total assets

 $ 767,318

705,728

 

 

 

Liabilities and Stockholders' Equity

 

 

Current liabilities:

 

 

Unearned franchise fees

 $ 2,241

1,818

Accounts payable

41,404

31,806

Accrued compensation and benefits

41,025

52,049

Accrued expenses

14,949

13,784

Income tax payable

2,429

System-wide payables

48,101

67,017

Total current liabilities

150,149

166,474

 

 

 

Long-term liabilities:

 

 

Other liabilities

6,774

1,913

Deferred income taxes

21,820

37,822

Deferred lease credits

37,046

33,711

Total liabilities

215,789

239,920

 

 

 

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 18,925,231 and 18,803,663, respectively

145,092

133,203

Retained earnings

407,373

333,601

Accumulated other comprehensive loss

(1,561)

(996)

Total stockholders' equity

550,904

465,808

Noncontrolling interests

625

Total equity

551,529

465,808

Total liabilities and equity

 $ 767,318

705,728

 

 

 

 

 

 

 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

(Dollar amounts in thousands)

 

 

 

(unaudited)

 

 

 

 

Nine months ended

 

September 28,

September 29,

 

2014

2013

Cash flows from operating activities:

 

 

Net earnings

 $ 73,772

50,739

Adjustments to reconcile net earnings to net cash provided by operations:

 

 

Depreciation

67,932

59,004

Amortization

3,422

3,810

Loss on asset disposals and impairment

3,369

1,682

Deferred lease credits

4,209

3,852

Deferred income taxes

(18,774)

(1,547)

Stock-based compensation

10,251

7,290

Excess tax deficiency (tax benefit) from stock issuance

217

(399)

Change in operating assets and liabilities, net of effect of acquisitions:

 

 

Trading securities

(657)

(829)

Accounts receivable

(3,323)

(266)

Inventory

(400)

(1,039)

Prepaid expenses

(7,245)

(225)

Other assets

(160)

(772)

Unearned franchise fees

333

465

Accounts payable

4,128

(6,925)

Income taxes

6,541

6,271

Accrued expenses

99

1,283

Net cash provided by operating activities

143,714

122,394

Cash flows from investing activities:

 

 

Acquisition of property and equipment

(95,347)

(96,552)

Acquisition of businesses/investments in affiliates

(7,307)

(10,288)

Purchase of marketable securities

(17,993)

Proceeds from marketable securities

3,282

Net cash used in investing activities

(120,647)

(103,558)

Cash flows from financing activities:

 

 

Proceeds from line of credit

5,000

Repayments of line of credit

(5,000)

Issuance of common stock

1,829

1,237

Excess tax benefit (tax deficiency) from stock issuance

(217)

399

Tax payments for restricted stock units

(7,474)

(4,813)

Net cash used in financing activities

(5,862)

(3,177)

Effect of exchange rate changes on cash and cash equivalents

(612)

(328)

Net increase in cash and cash equivalents

16,593

15,331

Cash and cash equivalents at beginning of period

57,502

21,340

Cash and cash equivalents at end of period

 $ 74,095

36,671

 

 

 

 

 

 

 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

 

 

 

 

 

 

Restaurant Count

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

 

 

 

 

 

 

 

Q1

Q2

Q3

Q4

 

2014

443

449

463

 

 

2013

397

407

415

434

 

2012

327

330

343

381

 

2011

263

277

288

319

 

2010

235

234

244

259

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Q1

Q2

Q3

Q4

 

2014

569

579

588

 

 

2013

514

525

534

559

 

2012

505

505

511

510

 

2011

488

492

498

498

 

2010

430

447

457

473

 

 

 

 

 

 

 

Same-Store Sales at Buffalo Wild Wings locations in United States and Canada

Company-owned Restaurants:

 

 

 

 

 

 

 

Q1

Q2

Q3

Q4

Year

2014

6.6%

7.7%

6.0%

 

 

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%

2010

0.1%

(0.1%)

2.6%

(0.3%)

0.6%

 

 

 

 

 

 

Franchised Restaurants:

 

 

 

 

 

 

 

Q1

Q2

Q3

Q4

Year

2014

5.0%

6.5%

5.7%

 

 

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%

2010

0.7%

(0.7%)

0.3%

(1.1%)

(0.2%)

 

 

 

 

 

 

 

 

 

 

 

 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

 

 

 

 

 

 

Average Weekly Sales Volumes at Buffalo Wild Wings locations in United States and Canada

 

 

 

 

 

 

Company-owned Restaurants:

 

 

 

 

 

 

 

Q1

Q2

Q3

Q4

Year

2014

 $60,966

59,403

59,643

 

 

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

2010

45,327

43,021

44,394

45,595

44,601

 

 

 

 

 

 

Franchised Restaurants:

 

 

 

 

 

 

 

Q1

Q2

Q3

Q4

Year

2014

 $63,852

61,845

61,586

 

 

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

2010

51,532

49,051

49,005

49,837

49,835

 

 

 

 

 

 

SOURCE Buffalo Wild Wings, Inc.

Investor Relations Contact:

Heather Pribyl
952.253.0731

###

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