Buffalo Wild Wings, Inc. (Nasdaq:BWLD), announced today financial
results for the third quarter ended September 25, 2005. Highlights
for the third quarter versus the same period a year ago were: --
Total revenue increased 21.1% to $51.7 million -- Company-owned
restaurant sales grew 21.1% to $45.9 million -- Same-store sales
increased 1.8% at company-owned restaurants and 1.1% at franchised
restaurants -- Earnings per diluted share increased 57% to $0.22
from $0.14 Sally Smith, President and Chief Executive Officer
commented, "Same-store sales were positive for the quarter,
trending over last year's 9.9% company-owned and 5.7% franchised
same-store sales levels, withstanding the impact of the hurricanes,
which we estimate reduced franchised same-store sales by $250,000
due to temporary closures and shortened hours of operation. We did
take an $849,000, or $0.06 per share, goodwill and asset impairment
charge for the quarter. The effect of this charge was offset by
lower wing prices, lower stock-based compensation expense, and
controlled general and administrative expense growth. Bottom line:
we delivered $0.22 to our shareholders, a 57% increase over prior
year." Total revenue, which includes company-owned restaurant sales
and franchise royalties and fees, increased 21.1% to $51.7 million
in the third quarter compared to $42.7 million in the third quarter
of 2004. Company-owned restaurant sales for the quarter grew 21.1%
to $45.9 million aided by a company-owned same-store sales increase
of 1.8% and 19 more company-owned locations in operation at the end
of the third quarter 2005 relative to the same period in 2004.
Franchise royalties and fees increased 21.5% to $5.8 million versus
$4.8 million in the prior year, due to a franchised same-store
sales increase of 1.1% and 45 more franchised restaurants at the
end of the period versus a year ago. Average weekly sales for
company-owned restaurants were $31,361 for the third quarter of
2005 compared to $30,983 for the same quarter last year, a 1.2%
increase. Franchised restaurants averaged $40,149 for the period
versus $38,727 in the third quarter a year ago, a 3.7% increase.
For the third quarter, earnings per diluted share were $0.22,
versus earnings per diluted share of $0.14 in the third quarter of
2004. Fourth Quarter 2005 Outlook For the fourth quarter ending
December 25, 2005, the company anticipates total revenue of
approximately $59 million to $60 million, based on estimated
same-store sales increases of 1% to 2% for both company-owned
restaurants and franchised locations, as well as the addition of 6
new company-owned and 12 new franchised restaurants. Earnings per
diluted share for the fourth quarter are expected to range from
$0.32 to $0.34. This estimate is based on the previously mentioned
revenue assumptions, average chicken wing prices for the fourth
quarter of $1.25 per pound, stock-based compensation expense of
$467,000 and diluted weighted average shares outstanding of 8.7
million. Ms. Smith concluded, "We are excited about our fourth
quarter media campaigns - our largest advertising spend of the year
- which includes the rollout of our Boneless Thursdays promotion.
We believe that advertising, paired with an ongoing focus on
hospitality and operational execution, will drive sales in the
fourth quarter. As 2005 comes to an end, we are confident in our
ability to return another quarter of impressive year over year
earnings results. And, as we look forward to 2006, we are
well-positioned to continue bringing bottom line growth to our
shareholders." Included in this release is information regarding
restaurant unit counts, same-store sales, average weekly sales
volumes and average quarterly wing prices per pound. Our management
team believes such information is an important measure of our
performance and is useful in assessing consumer acceptance of the
Buffalo Wild Wings Grill & Bar concept. Franchise information
also provides an understanding of our revenues as franchise
royalties and fees are based on the opening of franchised units and
their sales. However, these sales measures are not prepared in
accordance with U.S. Generally Accepted Accounting Principles
(GAAP), should not be considered in isolation or as a substitute
for other measures of performance prepared in accordance with GAAP,
and may not be comparable to sales measures as defined or used by
other companies. Buffalo Wild Wings will be hosting a conference
call today, October 25, 2005 at 5:00 p.m. ET to discuss these
results. There will be a simultaneous webcast conducted at our
website http://www.buffalowildwings.com. About the Company Buffalo
Wild Wings, Inc., founded in 1982 and headquartered in Minneapolis,
Minnesota, is an established and growing owner, operator and
franchisor of Buffalo Wild Wings Grill & Bar restaurants
featuring a variety of boldly flavored, made-to-order menu items
including Buffalo, New York-style chicken wings spun in one of 12
signature sauces. The widespread appeal of Buffalo Wild Wings
establishes it as an inviting, neighborhood destination with over
350 restaurants in 34 states. Forward-looking Statements Certain
statements in this release that are not historical facts,
including, without limitation, those relating to our anticipated
financial performance, growth prospects and expected store openings
for the fourth quarter and full year of 2005, are forward-looking
statements that involve risks and uncertainties. Such statements
are based upon the current beliefs and expectations of our
management. Actual results may vary materially from those contained
in forward-looking statements based on a number of factors
including, without limitation, the actual number of locations
opening during the fourth quarter and full year of 2005, the sales
at these and our other company-owned and franchised locations, our
ability to successfully operate in new markets, the cost of wings,
the success of our marketing initiatives, our ability to control
other restaurant operating costs and other factors disclosed from
time to time in our filings with the U.S. Securities and Exchange
Commission. 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. -0- *T BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (Dollar amounts in thousands
except share and per share data) (unaudited) Three months ended
Nine months ended --------------------- --------------------- Sept.
26, Sept. 25, Sept. 26, Sept. 25, 2004 2005 2004 2005 ----------
---------- ---------- ---------- Revenue: Restaurant sales 37,900
45,892 109,117 133,535 Franchise royalties and fees 4,807 5,840
13,325 17,213 ---------- ---------- ---------- ---------- Total
revenue 42,707 51,732 122,442 150,748 ---------- ----------
---------- ---------- Costs and expenses: Restaurant operating
costs: Cost of sales 12,755 14,096 37,524 42,618 Labor 11,203
13,743 31,257 39,936 Operating 5,925 7,529 16,705 21,052 Occupancy
2,719 3,616 7,594 10,167 Depreciation 2,245 2,998 6,434 8,505
General and administrative (1) 5,009 5,383 13,632 16,643 Preopening
585 818 1,379 1,731 Restaurant closures and impairment 508 849 547
871 ---------- ---------- ---------- ---------- Total costs and
expenses 40,949 49,032 115,072 141,523 ---------- ----------
---------- ---------- Income from operations 1,758 2,700 7,370
9,225 ---------- ---------- ---------- ---------- Other income:
Interest income 174 349 462 958 ---------- ---------- ----------
---------- 174 349 462 958 ---------- ---------- ----------
---------- Earnings before income taxes 1,932 3,049 7,832 10,183
Income tax expense 753 1,174 3,055 3,921 ---------- ----------
---------- ---------- Net earnings 1,179 1,875 4,777 6,262
========== ========== ========== ========== Earnings per common
share--basic 0.14 0.22 0.59 0.74 Earnings per common share--diluted
0.14 0.22 0.56 0.72 Weighted average shares outstanding--basic
8,253,186 8,472,529 8,114,078 8,429,352 Weighted average shares
outstanding--diluted 8,599,355 8,678,108 8,576,845 8,673,544 (1)
Contains stock-based compensation of $291, $193, $418, and $1,047.
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 ---------------------
--------------------- Sept 26, Sept 25, Sept 26, Sept 25, 2004 2005
2004 2005 ---------- ---------- ---------- ---------- Revenue:
Restaurant sales 88.7% 88.7% 89.1% 88.6% Franchising royalties and
fees 11.3 11.3 10.9 11.4 ---------- ---------- ----------
---------- Total revenue 100.0 100.0 100.0 100.0 ----------
---------- ---------- ---------- Costs and expenses: Restaurant
operating costs: Cost of sales 33.7 30.7 34.4 31.9 Labor 29.6 29.9
28.6 29.9 Operating 15.6 16.4 15.3 15.8 Occupancy 7.2 7.9 7.0 7.6
Depreciation 5.3 5.8 5.3 5.6 General and administrative 11.7 10.4
11.1 11.0 Preopening 1.4 1.6 1.1 1.1 Restaurant closures and asset
impairment 1.2 1.6 0.4 0.6 ---------- ---------- ----------
---------- Total costs and expenses 95.9 94.8 94.0 93.9 ----------
---------- ---------- ---------- Income from operations 4.1 5.2 6.0
6.1 ---------- ---------- ---------- ---------- Other income:
Interest income 0.4 0.7 0.4 0.6 ---------- ---------- ----------
---------- Earnings before income taxes 4.5 5.9 6.4 6.8 Income tax
expense 1.8 2.3 2.5 2.6 ---------- ---------- ---------- ----------
Net earnings 2.8 3.6 3.9 4.2 ========== ========== ==========
========== BUFFALO WILD WINGS, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (Dollar amounts in thousands, except share data)
(unaudited) December 26, September 25, 2004 2005 -------------
------------- Assets Current assets: Cash and cash equivalents
$12,557 3,974 Marketable securities 36,454 46,259 Accounts
receivable--franchisees, net of allowance of $25 689 791 Accounts
receivable--other 2,077 3,113 Inventory 1,207 1,284 Income taxes
receivable 1,727 -- Prepaid expenses 1,470 1,755 Deferred income
taxes 840 1,360 ------------- ------------- Total current assets
57,021 58,536 Property and equipment, net 59,649 66,094 Restricted
cash 782 2,164 Other assets 774 738 Goodwill 759 369 -------------
------------- Total assets $118,985 127,901 =============
============= Liabilities and Stockholders' Equity Current
liabilities: Unearned franchise fees $2,433 2,128 Accounts payable
5,383 5,426 Accrued compensation and benefits 6,339 5,785 Accrued
expenses 3,663 3,591 Accrued income taxes -- 1,019 Current portion
of deferred lease credits 509 574 ------------- ------------- Total
current liabilities 18,327 18,523 Long-term liabilities: Marketing
fund payables 782 2,164 Deferred income taxes 6,298 5,069 Deferred
lease credits, net of current portion 7,871 8,692 -------------
------------- Total liabilities 33,278 34,448 -------------
------------- Commitments and contingencies Stockholders' equity:
Undesignated stock, 5,600,000 shares authorized -- -- Common stock,
no par value. Authorized 15,600,000 shares; issued and outstanding
8,425,771 and 8,602,763, respectively 71,491 73,642 Deferred
compensation (1,817) (2,484) Retained earnings 16,033 22,295
------------- ------------- Total stockholders' equity 85,707
93,453 ------------- ------------- Total liabilities and
stockholders' equity $118,985 127,901 ============= =============
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF CASH FLOWS (Dollar amounts in thousands) (unaudited) Nine months
ended --------------------------- September 26, September 25, 2004
2005 ------------- ------------- Cash flows from operating
activities: Net earnings $4,777 6,262 Adjustments to reconcile net
earnings to cash provided by operations: Depreciation 6,434 8,505
Amortization 165 (62) Restaurant closures and impairment 547 871
Deferred lease credits 7 554 Deferred income taxes 1,076 (1,749)
Stock-based compensation 418 1,047 Change in operating assets and
liabilities: Accounts receivable (615) (1,158) Inventory (123) (77)
Prepaid expenses 656 (285) Other assets (35) 36 Unearned franchise
fees 167 (305) Accounts payable 49 43 Income taxes (371) 2,746
Accrued expenses 95 (626) ------------- ------------- Net cash
provided by operating activities 13,247 15,802 -------------
------------- Cash flows from investing activities: Acquisition of
property and equipment (15,225) (15,079) Purchase of marketable
securities (77,354) (65,590) Proceeds from maturities of marketable
securities 44,435 55,847 ------------- ------------- Net cash used
in investing activities (48,144) (24,822) -------------
------------- Cash flows from financing activities: Issuance of
common stock 1,083 763 Tax payments for restricted stock -- (326)
------------- ------------- Net cash provided by financing
activities 1,083 437 ------------- ------------- Net decrease in
cash and cash equivalents (33,814) (8,583) Cash and cash
equivalents at beginning of period 49,538 12,557 -------------
------------- Cash and cash equivalents at end of period $15,724
3,974 ============= ============= BUFFALO WILD WINGS, INC. AND
SUBSIDIARIES Supplemental Information Restaurant Count
Company-owned Restaurants: Q1 Q2 Q3 Q4 -- -- -- -- 2005 106 110 116
2004 88 92 97 103 2003 73 74 77 84 2002 56 60 63 70 2001 45 47 48
53 Franchised Restaurants: Q1 Q2 Q3 Q4 -- -- -- -- 2005 212 224 234
2004 168 175 189 203 2003 131 138 142 161 2002 108 119 123 129 2001
95 97 100 105 Quarterly Same-Store Sales Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year -- -- -- -- ---- 2005 6.1% 2.7% 1.8% 2004 11.1%
10.6% 9.9% 7.6% 9.7% 2003 (1.4%) 2.7% 6.7% 8.5% 4.3% 2002 5.6% 4.6%
(0.7%) (1.8%) 1.6% 2001 9.1% 7.0% 6.4% 12.1% 8.8% Franchised
Restaurants: Q1 Q2 Q3 Q4 Year -- -- -- -- ---- 2005 3.2% 1.8% 1.1%
2004 12.0% 10.4% 5.7% 3.7% 7.6% 2003 (0.4%) 2.3% 8.5% 10.7% 5.6%
2002 4.2% 4.5% 0.0% (1.8%) 1.5% 2001 4.3% 3.7% 5.3% 8.4% 5.5%
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES Supplemental Information
Average Weekly Sales Volumes Company-owned Restaurants: Q1 Q2 Q3 Q4
Year -- -- -- -- ---- 2005 $33,195 30,531 31,361 2004 32,289 30,248
30,983 33,038 31,663 2003 28,782 27,132 28,281 31,171 28,886 2002
29,564 26,330 25,916 28,466 27,547 2001 27,675 25,644 26,722 29,426
27,382 Franchised Restaurants: Q1 Q2 Q3 Q4 Year -- -- -- -- ----
2005 $41,309 39,824 40,149 2004 39,678 38,072 38,727 40,926 39,402
2003 33,920 33,393 35,289 39,014 35,491 2002 32,956 31,623 31,619
34,023 32,574 2001 30,533 28,820 29,835 33,267 30,652 Average
Quarterly Wing Prices Per Pound Q1 Q2 Q3 Q4 Year -- -- -- -- ----
2005 $1.45 1.14 1.08 2004 1.49 1.46 1.35 1.30 1.39 2003 1.01 1.02
1.00 1.21 1.06 2002 1.11 .87 .84 .78 .89 2001 1.14 1.22 1.22 1.16
1.18 *T
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