News

Wingstop reports strong Q2 results, entry into Saudi Arabia

August 4, 2016

The chicken business is good for Wingstop, which saw an 18.2-percent increase in Q2 revenue over the same period last year.

"We had another strong quarter in Q2 characterized by strong unit development, revenue and profitability growth," President and Chief Executive Officer Charlie Morrison said Thursday during a call with investors.

The chain has opened 69 net locations this year and ended Q2 with 914 restaurants worldwide, representing 16.4-percent unit growth over the prior-year period. 

"Delivering consistently strong quarterly performance is made possible by Wingsto's unique 'category of one' brand positioning and differentiated business model," Morrison said. "Our attractive franchiser cash flow attributes were certainly demonstrated by our recently completed $180 million recapitalization and meaningful return of capital to shareholders through a special dividend payment of $2.90 per share."

Q2 highlights included:

• Total revenue increased 18.2 percent to $22.7 million.
• System-wide restaurant count increased 16.4 percent to 914 worldwide locations.
• Domestic same-store sales increased 3.1 percent.
• Net income increased to $4.1 million, or $0.14 per diluted share, compared to $0.6 million, or $0.02 per diluted share.
• Adjusted EBITDA, a non-GAAP measure, increased 14.7 percent to $8.3 million.
• Adjusted net income, a non-GAAP measure, increased 31.3 percent to $4.2 million.
• Adjusted earnings per pro-forma diluted share, a non-GAAP measure, increased 36.4 percent to $0.15 from the prior period.

Planting a flag in Saudi Arabia
Morrison said the chain plans to hit 2,500 domestic units, but is also attracting heightened interest internationally. It just inked a deal with a franchisee in Saudi Arabia to build 100 restaurants over the next 10 years. The first will open in 2017.

"We are prioritizing international markets that have Western brand appeal and high per capita chicken consumption while furthering Wingstop’s mission to serve the world flavor," Morrison said.

2016 outlook
For the fiscal year ending Dec. 31, the chain is updating its financial outlook to the following:

• Total revenue between $90 million and $91 million (up from $89 million and $90 million), an increase of approximately 16 percent from 2015.
• 130 to 140 net system-wide restaurant openings (up from 125 to 135), representing approximately 16 percent unit growth.
• One additional company-owned restaurant expected to open in Q4 (included in the net openings range provided above).
• Low, single digit same-store sales growth.
• SG&A expenses between $34 million and $35 million inclusive of approximately $1.1 million of stock-based compensation expense, $1.1 million of expenses associated with our franchisee convention, $0.8 million of expenses associated with the 53rd week, $0.8 million of incremental on-going public company costs, $0.5 million of transaction costs related to the March 2016 secondary stock offering, and $1.3 million of transaction costs related to the June 2016 debt refinancing.