-Cost Savings Initiatives of $40 to $50
million By the End of 2018-
Buffalo Wild Wings, Inc. (NASDAQ: BWLD) announced today
financial results for the first quarter ended March 26,
2017.
Key metrics for the first quarter, versus the same period a year
ago, were:
- Total revenue increased 5.2% to $534.8
million
- Company-owned restaurant sales
increased 5.2% to $509.2 million
- Same-store sales increased 0.5%
at company-owned restaurants
- Net earnings decreased 34.2% to $21.5
million from $32.8 million, and earnings per diluted share
decreased 27.5% to $1.25 from $1.73
- Adjusted net earnings decreased 26.6%
to $24.7 million from $33.7 million, and adjusted earnings per
diluted share decreased 19.1% to $1.44 from $1.78
Sally Smith, President and Chief Executive Officer, commented,
"In the first quarter, we are pleased same-store sales turned
positive for both company-owned and franchised locations,
outperforming both the negative restaurant industry and a negative
casual dining segment. This is due to the continued momentum of our
strategic initiatives launched in 2016. The popularity of
Half-Price Wing Tuesdays® combined with higher wing prices
increased our cost of sales. Labor and operating expenses were also
higher compared to the prior year, resulting in lower
restaurant-level and operating margins and negatively impacting EPS
for the quarter."
Ms. Smith continued, "In order to improve margins and
profitability, we've undertaken a thorough review of our restaurant
operating practices, field organization, and third-party spend with
a leading consulting firm who worked with our Team Members and
franchisees. We've identified areas to streamline work and improve
efficiencies. As a result of these initiatives, we expect to
realize $40 to $50 million in cost savings over the next two years.
Our team is focused, on track, and making the strategic changes to
improve sales and profitability for the long run."
Ms. Smith concluded, "With the consumer and competitive
headwinds and inflation on wings, offsetting our cost savings
initiatives and after absorbing the $0.25 to $0.40 impact of the
proxy matters and other adjustments, our GAAP EPS range is $5.20 to
$5.50."
Strategic Plan
In late 2016, Buffalo Wild Wings implemented several
traffic-driving initiatives to return to positive same-store sales
against a negative restaurant industry backdrop. Near-term
initiatives include: Half-Price Wing Tuesdays, FastBreak Lunch™,
Blazin' Rewards® loyalty program, and delivery. Longer term the
company is developing sales drivers targeted at the dine-in
experience to increase check average during game time and continue
to differentiate the Buffalo Wild Wings' game-day experience.
The company completed a thorough review of its cost structure
with a leading consulting firm utilizing benchmarks, streamlining
work, and improving efficiencies. This included eight weeks of
in-restaurant observations at company-owned restaurants and
high-margin franchised locations to implement best practices across
the Buffalo Wild Wings system. Also reviewed was the field
organization, cost of goods sold, general and administrative costs,
and third party contracts. As a result, Buffalo Wild Wings
estimates it can reduce its spend by approximately $40 to $50
million over the next two years with approximately $20 million to
be realized in fiscal 2017.
The company also determined to sell approximately 13% of
company-owned Buffalo Wild Wings restaurants and engaged the
Cypress Group to lead the sale process. The roughly 80 restaurants
in the portfolio optimization process have average unit volumes of
$2.5 million with restaurant-level margins of 9.8% on a trailing
twelve month basis.
Revenue
- Total revenue increased $26.5 million
to $534.8 million in the first quarter, compared to $508.3 million
in the first quarter of 2016.
- Company-owned restaurant sales
for the first quarter increased 5.2% over the same period in 2016
to $509.2 million, primarily driven by 31 additional company-owned
restaurants and a 0.5% increase in same-store sales at
company-owned restaurants.
- Franchise royalties and fees increased
5.0% on higher revenues to $25.6 million for the quarter, versus
$24.3 million in the first quarter of 2016, primarily driven by
additional franchised restaurants and same-stores sales of
0.6%.
Restaurant-level costs and expenses
- Cost of sales for the first quarter was
31.4% of restaurant sales, compared to 29.7% in the quarter last
year, driven by increased promotional activity, a change in sales
mix, and higher traditional wing prices.
- Traditional wings were $2.05 per pound
in the first quarter, representing an $0.08 increase, or 4.1%,
higher than last year's first quarter average of $1.97. Traditional
wings as a percent of cost of sales was 29.6% in the first
quarter.
- Cost of labor for the first quarter was
31.6% of restaurant sales, 80 basis points higher than first
quarter last year, resulting from increased healthcare costs and
compensation costs, partially offset by lower workers' compensation
expense.
- Restaurant operating expenses as a
percentage of restaurant sales were 15.2%, an increase of 80 basis
points from the first quarter of 2016, primarily driven by higher
repair and maintenance expenses, third-party delivery commissions,
and the timing of sports programming expenses.
- Occupancy costs were 5.6% as a
percentage of restaurant sales, 10 basis points higher compared to
the same quarter last year.
- Restaurant-level profit was $82.2
million, or 16.1%, of restaurant sales, compared to $94.6 million,
or 19.5%, in the first quarter last year.
Other Expenses
- Depreciation and amortization expense
for the first quarter was $38.9 million, increasing 3.5%, due to
new unit openings over the last 12 months.
- General and administrative expenses
were $32.8 million in the first quarter, increasing 3.4% from the
same period last year, due to higher salary and bonus expense, and
increased activist advisory fees and consulting services, partially
offset by lower stock-based compensation.
- Stock-based compensation was $0.6
million in the first quarter, compared to $1.4 million of expense
in the prior year.
- Preopening expenses for the quarter
totaled $0.6 million, versus $1.9 million in the first quarter last
year, due to fewer openings.
- Loss on asset disposal for the first
quarter totaled $1.7 million, compared to last year of $1.2
million.
- Interest expense was $2.4 million in
the first quarter, compared to $0.8 million in the prior year
period. The increase is a result of increased borrowing on the line
of credit.
- Other expense was $1.2 million for the
quarter, compared to $0.9 million of other income in 2016.
- The effective tax rate during the
quarter was 29.3%, compared to 29.9% in the prior year.
Earnings
- Operating income was $33.8 million in
the first quarter, or 6.3% of total revenue, compared to $46.6
million and 9.2% in the prior year.
- Net earnings decreased 34.2% to $21.5
million in the first quarter, versus $32.8 million in the first
quarter of 2016.
- Earnings per diluted share were $1.25,
compared to first quarter 2016 earnings per diluted share of
$1.73.
- Adjusted earnings per diluted share
were $1.44, compared to first quarter 2016 adjusted earnings per
diluted share of $1.78.
Balance Sheet
- Cash totaled $38.6 million at the end
of the first quarter.
- The credit facility had an outstanding
balance of $343 million as of the end of the quarter.
- The quarter ended with over $968.3
million in total assets and $327.5 million in total equity.
Cash Flow
- Cash flow from operations was $48.9
million for the quarter, a 36.6% decrease over the first quarter
last year.
- Free cash flow in the first quarter was
$31.7 million, compared to $43.0 million in the prior year.
- 1,362,890 shares were repurchased for a
total of $212.3 million during the first quarter of 2017.
2017 Outlook
The company expects the following approximate new unit
development in 2017:
- 15 company-owned Buffalo Wild Wings
restaurants in the United States
- 15 franchised Buffalo Wild Wings
locations in the United States
- 20 franchised Buffalo Wild Wing
locations internationally
- 2 company-owned and 12 to 15 franchised
R Taco restaurants
The company expects the following in 2017:
- Same-store sales growth of
approximately 1%
- Traditional chicken wing cost inflation
of 8% to 10%, and when combined with the sales mix shift result in
headwind to restaurant-level margins
- Depreciation and amortization expense
of $153 to $157 million
- General and administrative expense of
$143 to $147 million, including stock-based compensation of $10 to
$11 million and non-recurring consulting and advisory fees
estimated between $6 and $8 million
- Flat to nominal operating income
growth, including the 53rd week and excluding adjusting items
- Interest expense of approximately $16
million
- Achieving leverage of 1.5x net debt to
EBITDA by the end of the fiscal year
- Share repurchases of $450 to $500
million
- Earnings per diluted share of $5.20 to
$5.50
- Adjusted earnings per diluted share of
$5.45 to $5.90
- Capital expenditures of approximately
$100 million
Buffalo Wild Wings will be hosting a conference call today,
April 26, 2017 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 May 3, 2017. To
access this replay, please dial 1-412-317-6671 password
5551287.
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 1,230 Buffalo Wild Wings locations around the
world.
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 second quarter trends, projected unit and net earnings growth
rates, and projected share repurchase activity and capital
expenditures. 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 international 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 25, 2016, 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 March 26, March
27, 2017 2016 Revenue: Restaurant sales $ 509,205
483,911 Franchise royalties and fees 25,558 24,346
Total revenue 534,763 508,257 Costs and expenses:
Restaurant operating costs: Cost of sales 160,001 143,823 Labor
161,034 149,129 Operating 77,540 69,680 Occupancy 28,463 26,723
Depreciation and amortization 38,877 37,549 General and
administrative 32,752 31,665 Preopening 587 1,863 Loss on asset
disposals and impairment 1,728 1,222 Total costs and
expenses 500,982 461,654 Income from operations
33,781 46,603 Interest expense 2,358 840 Other expense (income)
1,160 (867 ) Earnings before income taxes 30,263 46,630
Income tax expense 8,876 13,952 Net earnings
including noncontrolling interests 21,387 32,678 Net
earnings (loss) attributable to noncontrolling interests (162 ) (95
) Net earnings attributable to Buffalo Wild Wings $ 21,549
32,773 Earnings per common share – basic $ 1.26 1.73
Earnings per common share – diluted $ 1.25 1.73 Weighted average
shares outstanding – basic 17,163 18,922 Weighted average shares
outstanding – diluted 17,187 18,957
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 March 26,
March 27, 2017 2016 Revenue: Restaurant sales
95.2 % 95.2 % Franchise royalties and fees 4.8 4.8
Total revenue 100.0 100.0 Costs and expenses:
Restaurant operating costs: Cost of sales 31.4 29.7 Labor 31.6 30.8
Operating 15.2 14.4 Occupancy 5.6 5.5 Depreciation and amortization
7.3 7.4 General and administrative 6.1 6.2 Preopening 0.1 0.4 Loss
on asset disposals and impairment 0.3 0.2 Total costs
and expenses 93.7 90.8 Income from operations 6.3 9.2
Interest expense 0.4 0.2 Other expense (income) 0.2 (0.2 )
Earnings before income taxes 5.7 9.2 Income tax expense 1.7
2.7 Net earnings including noncontrolling interests 4.0
6.4 Net earnings (loss) attributable to
noncontrolling interests (0.0 ) (0.0 ) Net earnings attributable to
Buffalo Wild Wings 4.0 % 6.4 %
BUFFALO WILD WINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
March 26, December 25,
2017 2016 Assets Current assets: Cash $ 38,611
49,266 Accounts receivable, net of allowance of $251 41,941 34,225
Inventory 14,917 16,532 Prepaid expenses 7,831 9,075 Refundable
income taxes — 1,018 Restricted assets 22,530 66,471
Total current assets 125,830 176,587 Property and equipment,
net 567,214 592,806 Reacquired franchise rights, net 115,660
118,973 Other assets 42,331 41,625 Goodwill 117,228 117,228
Total assets $ 968,263 1,047,219
Liabilities and Stockholders’ Equity Current liabilities:
Deferred revenue $ 4,515 3,089 Accounts payable 33,370 45,797
Accrued compensation and benefits 34,672 47,304 Accrued expenses
31,135 32,347 Income tax payable 10,407 — Current portion of
long-term debt and capital lease obligations 4,043 3,745 Current
portion of deferred lease credits 4,542 873 System-wide payables
63,322 108,814 Total current liabilities 186,006
241,969 Long-term liabilities: Other liabilities 15,976
16,109 Deferred income taxes 18,686 21,588 Long-term debt and
capital lease obligations, net of current portion 379,231 205,312
Deferred lease credits, net of current portion 40,913 44,341
Total liabilities 640,812 529,319
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
16,136,768 and 17,462,465 shares, respectively 139,927 147,234
Retained earnings 191,635 374,683 Accumulated other comprehensive
loss (3,810 ) (3,878 ) Total stockholders’ equity 327,752
518,039 Noncontrolling interests (301 ) (139 ) Total equity
327,451 517,900 Total liabilities and equity $
968,263 1,047,219
BUFFALO WILD
WINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollar amounts in thousands) (unaudited)
Three months ended March 26,
March 27, 2017 2016 Cash flows from operating
activities: Net earnings including noncontrolling interests $
21,387 32,678 Adjustments to reconcile net earnings to net cash
provided by operations: Depreciation and amortization 38,877 37,549
Loss on asset disposals 1,728 1,222 Deferred lease credits 1,911
2,067 Deferred income taxes (2,902 ) 858 Stock-based compensation
617 1,404 Excess tax benefit from stock issuance — (33 ) Change in
fair value of contingent consideration 170 (1,106 ) Loss on
investments in affiliates 1,363 158 Change in operating assets and
liabilities, net of effect of acquisitions: Trading securities —
(104 ) Accounts receivable (10,051 ) (1,297 ) Inventory 1,619 806
Prepaid expenses 1,245 889 Other assets (2,927 ) (428 ) Deferred
revenue 1,426 (181 ) Accounts payable (4,378 ) (706 ) Income taxes
11,425 22,813 Accrued expenses (12,658 ) (19,488 ) Net cash
provided by operating activities 48,852 77,101 Cash
flows from investing activities: Acquisition of property and
equipment (17,140 ) (34,094 ) Acquisition of businesses —
(3,860 ) Net cash used in investing activities (17,140 ) (37,954 )
Cash flows from financing activities: Proceeds from revolving
credit facility 220,000 108,633 Repayments of revolving credit
facility (47,000 ) (135,514 ) Borrowings from restricted funds 933
22,622 Repurchases of common stock (212,250 ) (25,000 ) Other
financing activities (1,123 ) (500 ) Issuance of common stock 769
434 Excess tax benefit from stock issuance — 33 Tax payments for
restricted stock units (3,716 ) (9,172 ) Net cash used in financing
activities (42,387 ) (38,464 ) Effect of exchange rate changes on
cash 20 (210 ) Net increase (decrease) in cash (10,655 ) 473
Cash at beginning of period 49,266 11,220 Cash at end
of period $ 38,611 11,693
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
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
2016 587 596 602 609
2015 593 593 569
579
2014 569 579 588 591
2013 514 525 534 559
Restaurant Count Rollforward:
Three Months Ended March 26, 2017
March 27, 2016 Corporate
Franchise Total Corporate
Franchise Total Buffalo Wild Wings
Beginning of period 621 602 1,223 590 573 1,163 Opened 3 7 10 6 8
14 Acquired — — — 1 (1) — Closed/Relocated (1) (2) (3) (1) — (1)
End of period 623 607 1,230 596 580 1,176
R Taco Beginning
of period 8 7 15 4 6 10 Opened 1 2 3 1 1 2 Acquired — — — — — —
Closed/Relocated — — — — — — End of period 9 9 18 5 7 12
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 634 616 1,250 603 587
1,190
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 %
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 %
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
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
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 March
26, March 27, 2017 2016 Restaurant sales $
509,205 483,911 Restaurant operating costs 427,038 389,355
Restaurant-level profit 82,167 94,556
Restaurant-level margin 16.1 % 19.5 %
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 March 26,
March 27, 2017 2016 Net earnings including
noncontrolling interests $ 21,387 32,678 Income tax expense 8,876
13,952 Interest expense 2,358 840 Depreciation and amortization
38,877 37,549 EBITDA $ 71,498 85,019
Adjusted Net Earnings and Adjusted Earnings
per Share
Adjusted net earnings and adjusted earnings per share are not
required by, nor presented in accordance with U.S. GAAP and are
non-GAAP financial measures. The Company defines adjusted earnings
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,
and acquisition costs. 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 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 costs that are not expected to recur frequently, or
costs that are subject to variations we do not believe are
indicative of our ongoing results of operations.
Three months ended March 26,
2017 March 27, 2016 Earnings before income taxes (a) $
30,263
46,630 Loss on asset disposals and impairment (b) 1,695 1,205 Proxy
costs for contested election, advisory and consulting fees (c)
2,830 — Acquisition costs (d) — 145 Adjusted earnings
before income taxes 34,788 47,980 Estimated income tax expense (e)
10,203 14,356 Adjusted earnings including
noncontrolling interests 24,585 33,624 Net earnings (loss)
attributable to noncontrolling interests (a) (162 ) (95 ) Adjusted
net earnings attributable to Buffalo Wild Wings $ 24,747
33,719 Weighted average shares outstanding – diluted (a)
17,187 18,957 Adjusted earnings per diluted share $ 1.44 1.78
(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 $33 and $17,
for the three-month periods ended March 26, 2017 and
March 27, 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, and costs related to consulting services
pertaining to the identification of best practices and improving
efficiencies.
(d)
Consists of costs associated with an
acquisition of a franchise-owned store.
(e)
Our effective tax rates for the
three-month periods ended March 26, 2017 and March 27,
2016 were 29.3% 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 costs that
are not expected to recur frequently, or costs that are subject to
variations we do not believe are indicative of our ongoing results
of operations.
Twelve months ending December 31, 2017 Low
Projection High Projection Earnings per diluted
share forecast (a) $ 5.20
5.50 Loss on tangible and intangible asset disposals and impairment
(b) 0.00 0.05 Proxy costs for contested election, advisory and
consulting fees (c) 0.25 0.35 Adjusted earnings per diluted
share forecast (d) $ 5.45
5.90 (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, and costs related to consulting services
pertaining to the identification of best practices and improving
efficiencies for fiscal year 2017.
(d)
This estimate assumes diluted weighted
average shares outstanding of 16,488 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.
Three months ended March 26,
2017 March 27, 2016 Net cash provided by operating
activities $ 48,852 77,101 Acquisition of property and equipment
(17,140 ) (34,094 ) Free cash flow $ 31,712 43,007
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version on businesswire.com: http://www.businesswire.com/news/home/20170426006475/en/
Buffalo Wild Wings, Inc.Investor Relations
Contact:Heather Pribyl, 952-540-2095
Buffalo Wild Wings, Inc. (delisted) (NASDAQ:BWLD)
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