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Buffalo Wild Wings, Inc. Announces Fourth Quarter Earnings Per Share Of $0.73 And Annual Net Earnings Growth Of Over 31% For 2011

Stocks in this article: BWLD

About the Company Buffalo Wild Wings, Inc., founded in 1982 and headquartered in Minneapolis, Minnesota, is a growing owner, operator and franchisor of Buffalo Wild Wings Grill & Bar 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 18 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 827 Buffalo Wild Wings locations across 47 states in the United States, as well as in Canada.

Forward-looking StatementsVarious 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 store performance measures and growth goals for 2012 and beyond, including but not limited to those relating to our first quarter sales trends and projected unit and net earnings growth rates for 2012 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), 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 practices, policies and procedures, 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 26, 2010, 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 Fiscal years ended
December 25, December 26, December 25, December 26,
2011 2010 2011 2010
Revenue:
Restaurant sales $ 202,936 148,738 717,395 555,184
Franchise royalties and fees   17,528 15,198 67,083 58,072
Total revenue   220,464 163,936 784,478 613,256
Costs and expenses:
Restaurant operating costs:
Cost of sales 59,637 42,820 203,291 160,877
Labor 60,679 44,424 215,649 167,193
Operating 31,520 23,231 109,654 88,694
Occupancy 11,924 9,653 44,005 36,501
Depreciation and amortization 14,212 10,433 49,913 39,205
General and administrative (1) 19,295 15,038 72,689 53,996
Preopening 4,197 3,297 14,564 8,398
Loss on asset disposals and store closures   414 432 1,929 2,051
Total costs and expenses   201,878 149,328 711,694 556,915
Income from operations 18,586 14,608 72,784 56,341
Investment income   288 350 118 684
Earnings before income taxes 18,874 14,958 72,902 57,025
Income tax expense   5,248 4,789 22,476 18,625
Net earnings $ 13,626 10,169 50,426 38,400
Earnings per common share – basic $ 0.74 0.56 2.75 2.11
Earnings per common share – diluted 0.73 0.55 2.73 2.10
Weighted average shares outstanding – basic 18,361 18,200 18,337 18,175
Weighted average shares outstanding – diluted 18,633 18,363 18,483 18,270
 

(1) Includes stock-based compensation of $2,741, $3,133, $11,383, and $7,712, respectively

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     Fiscal years ended
December 25,     December 26, December 25,     December 26,
2011 2010 2011 2010
Revenue:
Restaurant sales 92.0 % 90.7 % 91.4 % 90.5 %
Franchising royalties and fees 8.0   9.3   8.6   9.5  
Total revenue 100.0   100.0   100.0   100.0  
Costs and expenses:
Restaurant operating costs:
Cost of sales 29.4 28.8 28.3 29.0
Labor 29.9 29.9 30.1 30.1
Operating 15.5 15.6 15.3 16.0
Occupancy 5.9 6.5 6.1 6.6
Depreciation and amortization 6.4 6.4 6.4 6.4
General and administrative 8.8 9.2 9.3 8.8
Preopening 1.9 2.0 1.9 1.4
Loss on asset disposals and store closures 0.2   0.3   0.2   0.3  
Total costs and expenses 91.6   91.1   90.7   90.8  
Income from operations 8.4 8.9 9.3 9.2
Investment income 0.1   0.2     0.1  
Earnings before income taxes 8.6 9.1 9.3 9.3
Income tax expense 2.4   2.9   2.9   3.0  
Net earnings 6.2 % 6.2 % 6.4 % 6.3 %
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
       
December 25, December 26,
2011 2010
Assets
Current assets:
Cash and cash equivalents $ 20,530 15,309
Marketable securities 39,956 56,827
Accounts receivable – franchisees, net of allowance of $25 1,161 1,086
Accounts receivable – other 11,004 7,947
Inventory 6,311 4,158
Prepaid expenses 3,707 3,505
Refundable income taxes 7,561 6,366
Deferred income taxes 6,323 6,069
Restricted assets   42,692   32,937  
Total current assets 139,245 134,204
 
Property and equipment, net 310,170 224,970
Other assets 28,174 9,937
Goodwill   17,770   11,246  
Total assets $ 495,359   380,357  
 
 
Liabilities and Stockholders’ Equity
 
Current liabilities:
Unearned franchise fees $ 1,852 2,109
Accounts payable 30,089 17,632
Accrued compensation and benefits 30,499 19,324
Accrued expenses 7,580 5,696
Current portion of deferred lease credits 293
System-wide payables   44,250   34,062  
Total current liabilities 114,270 79,116
 
Long-term liabilities:
Other liabilities 1,544 1,574
Deferred income taxes 38,512 24,557
Deferred lease credits, net of current portion   23,047   18,289  
Total liabilities   177,373   123,536  
 
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 18,337,920 and 18,214,065, respectively 113,509 102,484
Retained earnings 204,772 154,346
Accumulated other comprehensive loss   (295 ) (9 )
Total stockholders’ equity   317,986   256,821  
Total liabilities and stockholders’ equity $ 495,359   380,357  
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
       
Fiscal years ended
December 25, December 26,
2011 2010
Cash flows from operating activities:
Net earnings $ 50,426 38,400
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation 49,003 38,591
Amortization 910 614
Loss on asset disposals and store closures 1,680 1,835
Deferred lease credits 3,632 2,217
Deferred income taxes 12,816 6,486
Stock-based compensation 11,383 7,712
Excess tax benefit from stock issuance (4,462 ) (1,475 )
Change in operating assets and liabilities, net of effect of acquisition:
Trading securities (317 ) (1,369 )
Accounts receivable (1,222 ) (357 )
Inventory (1,840 ) (514 )
Prepaid expenses 20 (533 )
Other assets (2,550 ) (885 )
Unearned franchise fees (257 ) (597 )
Accounts payable 17,676 1,898
Income taxes 3,267 (3,019 )
Accrued expenses   8,095   695  
Net cash provided by operating activities   148,260   89,699  
Cash flows from investing activities:
Acquisition of property and equipment (130,127 ) (73,399 )
Purchase of marketable securities (98,644 ) (99,165 )
Proceeds of marketable securities 115,833 87,338
Acquisition of franchised restaurants   (33,744 )  
Net cash used in investing activities   (146,682 ) (85,226 )
Cash flows from financing activities:
Issuance of common stock 1,709 1,415
Excess tax benefit from stock issuance 4,462 1,475
Tax payments for restricted stock units   (2,481 ) (1,625 )
Net cash provided by financing activities   3,690   1,265  
Effect of exchange rate changes on cash and cash equivalents   (47 ) (9 )
Net increase in cash and cash equivalents 5,221 5,729
Cash and cash equivalents at beginning of year   15,309   9,580  
Cash and cash equivalents at end of year $ 20,530   15,309  
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
 
Restaurant Count
 
Company-owned Restaurants:
    Q1     Q2     Q3     Q4
2011 263 277 288 319
2010 235 234 244 259
2009 206 215 220 232
2008 165 169 187 197
2007 140 145 148 161
 

Franchised Restaurants:

Q1 Q2 Q3 Q4
2011 488 492 498 498
2010 430 447 457 473
2009 373 383 400 420
2008 340 346 348 363
2007 299 301 313 332
 
 
Same-Store Sales
 
Company-owned Restaurants:
      Q1       Q2       Q3       Q4       Year
2011 3.9 % 5.9 % 5.7 % 8.9 % 6.1 %
2010 0.1 % (0.1 %) 2.6 % (0.3 %) 0.6 %
2009 6.4 % 2.8 % 0.8 % 2.6 % 3.1 %
2008 4.1 % 8.3 % 6.8 % 4.5 % 5.9 %
2007 8.7 % 8.1 % 8.3 % 3.4 % 6.9 %
 

Franchised Restaurants:

Q1 Q2 Q3 Q4 Year
2011 1.6 % 2.7 % 4.2 % 5.9 % 3.6 %
2010 0.7 % (0.7 %) 0.3 % (1.1 %) (0.2 %)
2009 6.0 % 3.7 % 1.9 % 2.0 % 3.4 %
2008 2.1 % 4.5 % 2.1 % 2.5 % 2.8 %
2007 3.3 % 4.0 % 5.9 % 2.3 % 3.9 %
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
 
Average Weekly Sales Volumes
 
Company-owned Restaurants:
    Q1     Q2     Q3     Q4     Year
2011 $ 48,845 47,970 49,461 51,983 49,627
2010 45,327 43,021 44,394 45,595 44,601
2009 45,593 42,938 42,602 44,583 43,912
2008 41,438 40,572 42,400 43,864 42,141
2007 39,254 36,655 38,498 40,485 38,757
 

Franchised Restaurants:

Q1 Q2 Q3 Q4 Year
2011 $ 52,744 50,995 51,350 53,385 52,081
2010 51,532 49,051 49,005 49,837 49,835
2009 50,729 48,619 48,458 50,115 49,479
2008 47,812 46,390 46,889 48,424 47,382
2007 46,439 43,998 45,879 47,293 45,901




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