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
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 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 1,040 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 |