-FY2017 Guidance Updated to $4.00 to $4.50
GAAP EPS and $4.50 to $5.00 adjusted EPS-
Buffalo Wild Wings, Inc. (NASDAQ: BWLD) 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.
- Company-owned restaurant sales
increased 1.9% to $475.7 million.
- Same-store sales decreased 1.2%
at company-owned 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.
- Company-owned 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 will be hosting a conference call today, July
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 August 2, 2017. To
access this replay, please dial 1-412-317-6671 password
5733019.
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 1,240 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 third 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, 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 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
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726006208/en/
Buffalo Wild Wings, Inc.Heather Pribyl, 952-540-2095
Buffalo Wild Wings, Inc. (delisted) (NASDAQ:BWLD)
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