Buffalo Wild Wings, Inc. Announces Third Quarter Earnings Per Share Of $0.61 And Quarterly Net Earnings Growth Of 32.5%

Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the third quarter ended September 25, 2011. Highlights for the third quarter versus the same period a year ago were:
  • Total revenue increased 30.7% to $197.8 million
  • Company-owned restaurant sales grew 32.2% to $181.0 million
  • Same-store sales increased 5.7% at company-owned restaurants and 4.2% at franchised restaurants
  • Net earnings increased 32.5% to $11.3 million from $8.5 million, and earnings per diluted share increased 29.8% to $0.61 from $0.47

Sally Smith, President and Chief Executive Officer, commented, “Demand for the Buffalo Wild Wings brand is apparent in our strong same-store sales for the third quarter, with an increase of 5.7% at company-owned restaurants and 4.2% at franchised locations. Unit growth and strong sales in our new and existing restaurants combined to achieve a substantial increase in revenue of 30.7%. We leveraged this revenue growth to accomplish net earnings growth of over 32%, providing our shareholders with earnings per diluted share of $0.61.”

Total revenue increased 30.7% to $197.8 million in the third quarter compared to $151.3 million in the third quarter of 2010. Company-owned restaurant sales for the quarter increased 32.2% over the same period in 2010, to $181.0 million, driven by a company-owned same-store sales increase of 5.7% and 44 additional company-owned restaurants at the end of third quarter 2011 relative to the same period in 2010. Franchise royalties and fees increased 16.2% to $16.7 million for the quarter versus $14.4 million in the third quarter of 2010. This increase is attributed to a franchise same-store sales increase of 4.2% and 41 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $49,461 for the third quarter of 2011 compared to $44,394 for the same quarter last year, an 11.4% increase. Franchised restaurants averaged $51,350 for the period versus $49,005 in the third quarter a year ago, a 4.8% increase.

For the third quarter, net earnings increased 32.5% to $11.3 million versus $8.5 million in the third quarter of 2010. Earnings per diluted share were $0.61, as compared to third quarter 2010 earnings per diluted share of $0.47.

2011 and 2012 Outlook

Ms. Smith remarked, "We're pleased with our strong sales momentum as we approach the end of this year. For the first three weeks of the fourth quarter, same-store sales are 8.3% at company-owned restaurants and 6.7% at franchised locations. Football fans are filling our restaurants and our fourth quarter marketing plans are stronger than ever. We will reach our goal of 13% unit growth for the year, and we are confident that net earnings growth will be at least 23% for 2011."

Ms. Smith continued, "2012 is setting up to be another great year for Buffalo Wild Wings. Our pipeline for restaurant development will enable us to achieve 12% unit growth. We believe our ongoing sales strength, unit-level execution, and the benefit of a 53rd week will overcome rising commodity costs, and we will achieve net earnings growth of 20% in 2012."

Ms. Smith concluded, “This is an exciting time for our brand. We’ll achieve our goal of 1,000 Buffalo Wild Wings restaurants in North America in 2013. And, we’ll continue to grow to 1,500 locations in the United States and Canada, with hundreds more across the globe in the coming years.”

Buffalo Wild Wings will be hosting a conference call today, October 19, 2011 at 4:00 p.m. Central Daylight Time to discuss these results. There will be a simultaneous webcast conducted at our website www.buffalowildwings.com.

A replay of the call will be available until October 26, 2011. To access this replay, please dial 1.858.384.5517 password 4478165.

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 795 Buffalo Wild Wings locations across 45 states in the United States, as well as in Canada.

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 store performance measures and growth goals for 2011, 2012, and beyond, including but not limited to those relating to our fourth quarter sales trends and projected unit and net earnings growth rates for 2011, 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     Nine months ended
September 25,     September 26, September 25,     September 26,
2011 2010 2011 2010
Revenue:
Restaurant sales $ 181,036 136,953 514,459 406,446
Franchise royalties and fees   16,727   14,395 49,555   42,874
Total revenue   197,763   151,348 564,014   449,320
Costs and expenses:
Restaurant operating costs:
Cost of sales 51,655 38,232 143,654 118,057
Labor 54,783 41,995 154,970 122,769
Operating 28,537 22,835 78,134 65,463
Occupancy 11,195 9,131 32,081 26,848
Depreciation and amortization 12,748 9,766 35,701 28,772
General and administrative (1) 18,336 14,003 53,394 38,958
Preopening 3,864 2,789 10,367 5,101
Loss on asset disposals and store closures   612   682 1,515   1,619
Total costs and expenses   181,730   139,433 509,816   407,587
Income from operations 16,033 11,915 54,198 41,733
Investment income (loss)   (374 ) 305 (170 ) 334
Earnings before income taxes 15,659 12,220 54,028 42,067
Income tax expense   4,393   3,716 17,228   13,836
Net earnings $ 11,266   8,504 36,800   28,231
Earnings per common share – basic $ 0.61 0.47 2.01 1.55
Earnings per common share – diluted 0.61 0.47 2.00 1.55
Weighted average shares outstanding – basic 18,352 18,187 18,330 18,167
Weighted average shares outstanding – diluted 18,520 18,253 18,433 18,238

(1) Includes stock-based compensation of $2,691, $2,041, $8,642, and $4,579, 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     Nine months ended
September 25,     September 26, September 25,     September 26,
2011 2010 2011 2010
Revenue:
Restaurant sales 91.5 % 90.5 % 91.2 % 90.5 %
Franchising royalties and fees 8.5   9.5   8.8   9.5  
Total revenue 100.0   100.0   100.0   100.0  
Costs and expenses:
Restaurant operating costs:
Cost of sales 28.5 27.9 27.9 29.0
Labor 30.3 30.7 30.1 30.2
Operating 15.8 16.7 15.2 16.1
Occupancy 6.2 6.7 6.2 6.6
Depreciation and amortization 6.4 6.5 6.3 6.4
General and administrative 9.3 9.3 9.5 8.7
Preopening 2.0 1.8 1.8 1.1
Loss on asset disposals and store closures 0.3   0.5   0.3   0.4  
Total costs and expenses 91.9   92.1   90.4   90.7  
Income from operations 8.1 7.9 9.6 9.3
Investment income (loss) (0.2 ) 0.2   0.0   0.1  
Earnings before income taxes 7.9 8.1 9.6 9.4
Income tax expense 2.2   2.5   3.1   3.1  
Net earnings 5.7   5.6   6.5   6.3  
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
 
    September 25,     December 26,
2011 2010
Assets
Current assets:
Cash and cash equivalents $ 50,200 15,309
Marketable securities 41,094 56,827
Accounts receivable – franchisees, net of allowance of $73 and $25 1,388 1,086
Accounts receivable – other 13,266 7,947
Inventory 4,786 4,158
Prepaid expenses 4,522 3,505
Refundable income taxes 4,189 6,366
Deferred income taxes 8,074 6,069
Restricted assets   42,327   32,937  
Total current assets 169,846 134,204
 
Property and equipment, net 281,832 224,970
Other assets 14,891 9,937
Goodwill   12,399   11,246  
Total assets $ 478,968   380,357  
 
Liabilities and Stockholders’ Equity
Current liabilities:
Unearned franchise fees $ 1,985 2,109
Accounts payable 35,845 17,632
Accrued compensation and benefits 26,726 19,324
Accrued expenses 10,744 5,696
Current portion of deferred lease credits 293
System-wide payables   42,595   34,062  
Total current liabilities 117,895 79,116
 
Long-term liabilities:
Other liabilities 1,601 1,574
Deferred income taxes 35,667 24,557
Deferred lease credits, net of current portion   21,092   18,289  
Total liabilities   176,255   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 18,352,396 and 18,214,065, respectively 111,995 102,484
Retained earnings 191,146 154,346
Accumulated other comprehensive loss   (428 ) (9 )
Total stockholders’ equity   302,713   256,821  
Total liabilities and stockholders’ equity $ 478,968   380,357  
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
 
    Nine months ended
September 25,     September 26,
2011 2010
Cash flows from operating activities:
Net earnings $ 36,800 28,231
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation 35,065 28,312
Amortization 636 460
Loss on asset disposals and store closures 1,279 1,425
Deferred lease credits 2,703 1,468
Deferred income taxes 8,220 2,328
Stock-based compensation 8,642 4,579
Excess tax benefit from stock issuance (700 ) (172 )
Change in operating assets and liabilities:
Trading securities 37 (1,072 )
Accounts receivable (5,752 ) (1,432 )
Inventory (632 ) 13
Prepaid expenses (1,019 ) (953 )
Other assets (2,216 ) (654 )
Unearned franchise fees (124 ) (441 )
Accounts payable 5,704 3,165
Income taxes 2,877 (3,553 )
Accrued expenses   13,322   1,342  
Net cash provided by operating activities   104,842   63,046  
 
Cash flows for investing activities:
Acquisition of property and equipment (84,651 ) (45,546 )
Purchase of marketable securities (78,690 ) (84,398 )
Proceeds of marketable securities   94,387   65,264  
Net cash used in investing activities   (68,954 ) (64,680 )
 
Cash flows for financing activities:
Issuance of common stock 870 795
Tax payments for restricted stock units (2,481 ) (1,625 )
Excess tax benefit from stock issuance   700   172  
Net cash used in financing activities   (911 ) (658 )
Effect of exchange rate changes on cash and cash equivalents   (86 )  
Net increase (decrease) in cash and cash equivalents 34,891 (2,292 )
Cash and cash equivalents at beginning of period   15,309   9,580  
Cash and cash equivalents at end of period $ 50,200   7,288  
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
 
Restaurant Count
 

Company-owned Restaurants:
 
        Q1       Q2       Q3       Q4
2011 263 277 288
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
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 %
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 %
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
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
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

Copyright Business Wire 2010

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