Company Update (NASDAQ:BWLD): Buffalo Wild Wings Announces First Quarter Financial Results


Buffalo Wild Wings (NASDAQ:BWLD) announced today financial results for the first quarter ended March 27, 2016. Highlights for the first quarter versus the same period a year ago were: Total revenue increased 15.4% to $508.3 million Company-owned restaurant sales increased 16.6% to $483.9 million Same-store sales decreased 1.7% at company-owned restaurants and 2.4% at franchised restaurants Net earnings increased 12.8% to $32.8 million from $29.0 million, and earnings per diluted share increased 13.5% to $1.73 from $1.52.

Sally Smith, President and Chief Executive Officer, commented, “Our total revenue in the first quarter increased 15.4%, when compared to the prior year, resulting from continued unit development and franchise acquisitions over the last 12 months. We are dissatisfied to report a same-store sales decline and we’re undertaking several sales-driving initiatives to regain momentum. We were able to manage costs and improve our restaurant-level margin, and earnings per diluted share increased 13.5% year-over-year to $1.73.”

Total revenue increased 15.4% to $508.3 million in the first quarter, compared to $440.6 million in the first quarter of 2015. Companyowned restaurant sales for the quarter increased 16.6% over the same period in 2015, to $483.9 million, driven by 100 additional Buffalo Wild Wings® restaurants at the end of the first quarter of 2016, partially offset by a same-store sales decrease of 1.7%. Franchise royalties and fees decreased 5.0% to $24.3 million for the quarter, versus $25.6 million in the first quarter of 2015. This decrease is attributed to seven fewer franchised Buffalo Wild Wings locations and a same-store sales decrease of 2.4% at franchised Buffalo Wild Wings restaurants in operation at the end of the period, compared to the same period in 2015.

Average weekly sales for company-owned Buffalo Wild Wings restaurants were $62,829 for the first quarter of 2016, compared to $64,851 for the same quarter last year, a 3.1% decrease. FranchisedBuffalo Wild Wings restaurants in the United States averaged $65,636 for the period, versus $67,075 in the first quarter a year ago, a 2.1% decrease.

Other income in 2016 consisted primarily of a gain related to the valuation of contingent consideration for a franchise acquisition of $1.1 million, partially offset by interest expense of $0.9 million.

Under the previously announced share repurchase authorization, 173,892 shares were repurchased during the first quarter of 2016 for a total of $25 million.

For the first quarter, net earnings increased 12.8% to $32.8 million, versus $29.0 million in the first quarter of 2015. Earnings per diluted share were $1.73, compared to first quarter 2015 earnings per diluted share of $1.52.

2016 Outlook

Ms. Smith remarked, “We are focused on sales-driving initiatives to regain momentum in 2016. To strengthen our FastBreak™ lunch program, we’re piloting a speed of service guarantee. We’re promoting Wing Tuesdays® while evaluating different pricing and bundling options for this value day. Soccer is a growing sport in the United States and we’ll be the place to watch all the action on the pitch for the major tournaments this summer.”

Ms. Smith concluded, “The Buffalo Wild Wings brand remains strong and poised to deliver long-term earnings growth. In 2016, we’re continuing our development of new company-owned and franchisedBuffalo Wild Wings restaurants in the United States and we are aggressively remodeling locations. Given our recent sales trends and an increasing outlook for the cost of traditional chicken wings, we believe earnings per diluted share in 2016 should be $5.65 to $5.85.”

For 2016, the company expects the following new unit development:

  • Approximately 40 company-owned Buffalo Wild Wings restaurants
  • 30 to 35 franchised Buffalo Wild Wings locations in the United States
  • 12 to 15 franchised Buffalo Wild Wing locations internationally
  • 6 company-owned and 4 franchised R Taco restaurants
  • Continued unit expansion by PizzaRev

For 2016, the company expects the following:

  • Improving same-store sales
  • Deflationary food costs, excluding traditional chicken wings
  • Depreciation and amortization expense of $150 to $155 million
  • Share repurchase activity of approximately $100 million
  • Earnings per diluted share of $5.65 to $5.85
  • Capital expenditures of approximately $190 million, excluding additional franchise acquisitions or emerging brand investments (Original Source)

Shares of Buffalo Wild Wings are falling 11.5% to $128.02 in after-hours trading. BWLD has a 1-year high of $205.83 and a 1-year low of $134.95. The stock’s 50-day moving average is $149.53 and its 200-day moving average is $156.57.

On the ratings front, BWLD has been the subject of a number of recent research reports. In a report issued on April 18, Deutsche Bank analyst Brett Levy maintained a Hold rating on BWLD, with a price target of $165, which implies an upside of 14.1% from current levels. Separately, on April 12, CLSA’s Jeremy Scott initiated coverage with a Sell rating on the stock and has a price target of $154.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Brett Levy and Jeremy Scott have a total average return of 1.5% and 3.0% respectively. Levy has a success rate of 50.0% and is ranked #2036 out of 3829 analysts, while Scott has a success rate of 80.0% and is ranked #1764.

Overall, 2 research analysts have rated the stock with a Sell rating, 4 research analysts have assigned a Hold rating and 9 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $182.40 which is 26.1% above where the stock opened today.