Buffalo Wild Wings, Inc. (Nasdaq:BWLD), announced today financial
results for the fourth quarter ended December 25, 2005. Highlights
for the fourth quarter were: -- Total revenue increased 21.3% over
the prior year to $59.0 million -- Company-owned restaurant sales
grew 21.3% over the prior year to $52.3 million -- Fourth quarter
same-store sales increased 2.5% at company-owned restaurants and
2.6% at franchised restaurants over the prior year -- Earnings per
diluted share of $0.30, which includes an impairment charge of
$0.08 Sally Smith, President and Chief Executive Officer,
commented, "We are pleased with our continued top-line growth in
the fourth quarter, increasing revenue by 21% over the prior year,
the result of continued same-store sales increases and new
restaurant openings. Earnings per diluted share were $0.30 for the
quarter, compared to $0.28 in the prior year. Our bottom-line
performance was impacted by an impairment charge of $1.1 million,
due to an asset write-down of three restaurants in the Atlanta
market. We ended the year with a 23% growth in revenue to $209.7
million. This translates into an increase of 21% in earnings per
diluted share to $1.02 for 2005, from $0.84 in 2004." Total
revenue, which includes company-owned restaurant sales and
franchise royalties and fees, increased 21.3% to $59.0 million in
the fourth quarter compared to $48.6 million in the fourth quarter
of 2004. Company-owned restaurant sales for the quarter increased
21.3% to $52.3 million driven by a company-owned same-store sales
increase of 2.5% and 19 more company-owned locations in operation
at the end of fourth quarter 2005 relative to the same period in
2004. Franchise royalties and fees increased 21.1% to $6.7 million
versus $5.5 million in the prior year. This increase was due to a
franchised same-store sales increase of 2.6% and 45 more franchised
restaurants at the end of the period versus a year ago. Average
weekly sales for company-owned restaurants were $33,953 for the
fourth quarter of 2005 compared to $33,038 for the same quarter
last year, a 2.8% increase. Franchised restaurants averaged $42,533
for the period versus $40,926 in the fourth quarter a year ago, a
3.9% increase. For the fourth quarter, earnings per diluted share
were $0.30, which included an impairment charge of $1.1 million, or
$0.08 per diluted share, and stock-based compensation expense of
$653,000 or $.05 per diluted share. This compares to fourth quarter
2004 earnings per diluted share of $0.28, which did not include an
impairment charge, but did include stock-based compensation expense
of $491,000, or $0.04 per diluted share. First Quarter 2006 Outlook
For the first quarter ending March 26, 2006, we expect total
revenue of approximately $62 to $63 million, based on estimated
same-store sales increases of 4 to 6% for company-owned and 3 to 5%
for franchised restaurants, as well as the addition of two
company-owned and nine franchised restaurants. Earnings per diluted
share for the first quarter are expected to range from $0.35 to
$0.38. This is based on the previously-mentioned revenue
assumptions, average chicken wing prices for the first quarter of
$1.22 per pound, stock-based compensation expense of $750,000 and
diluted weighted average shares outstanding of 8.8 million. "We are
excited about our plans for 2006," commented Ms. Smith. "In the
first quarter, we are introducing our newly designed menu, which
highlights our signature sauces and unveils four new sauces. In
January, we kicked off our year-long partnership with ESPN, our
first step into national advertising. We believe this national
exposure, paired with an additional 0.5% system-wide contribution
to our advertising fund, will provide a great start to the year."
Ms. Smith concluded, "We continue to focus on restaurant operations
with the goal of improving store-level margins. We look forward to
sharing our successes with you during the year." Included in this
release is information regarding restaurant unit counts, same-store
sales and average weekly sales volumes. 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, February 7, 2006 at 5:00 p.m. EST to discuss these
results. There will be a simultaneous webcast conducted at our
website http://www.buffalowildwings.com. A replay of the call will
be available until February 14, 2006. To access this replay, please
dial (719) 457-0820, password 4340246. 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 our
signature sauces. The widespread appeal of Buffalo Wild Wings
establishes it as an inviting, neighborhood destination with 375
restaurants in 35 states. Forward-looking Statements Certain
statements in this release that are not historical facts,
including, without limitation, those relating to our anticipated
financial performance and expected store openings for the first
quarter and our goal to improve store-level margins during 2006,
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 first quarter, 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 Three months and fiscal years
ended December 26, 2004 and December 25, 2005 (Dollar and share
amounts in thousands except per share data) Three months ended
Fiscal years ended ------------------ ------------------ Dec. 26,
Dec. 25, Dec. 26, Dec. 25, 2004 2005 2004 2005 --------- --------
-------- --------- Revenue: Restaurant sales $ 43,104 52,288
152,221 185,823 Franchising royalties and fees 5,502 6,664 18,827
23,877 --------- -------- -------- --------- Total revenue 48,606
58,952 171,048 209,700 --------- -------- -------- --------- Costs
and expenses: Restaurant operating costs: Cost of sales 13,983
16,153 51,507 58,771 Labor 12,596 15,467 43,853 55,403 Operating
6,375 8,665 23,080 29,717 Occupancy 2,665 4,005 10,259 14,172
Depreciation 3,283 3,260 9,717 11,765 General and administrative
5,740 5,660 19,372 22,303 Preopening 663 868 2,042 2,599 Restaurant
impairment and closures 26 1,120 573 1,991 --------- --------
-------- --------- Total costs and expenses 45,331 55,198 160,403
196,721 --------- -------- -------- --------- Income from
operations 3,276 3,754 10,645 12,979 --------- -------- --------
--------- Other income: Interest income 209 382 671 1,340 ---------
-------- -------- --------- Total other income 209 382 671 1,340
--------- -------- -------- --------- Earnings before income taxes
3,485 4,136 11,316 14,319 Income tax expense 1,061 1,518 4,115
5,439 --------- -------- -------- --------- Net earnings 2,424
2,618 7,201 8,880 ========= ======== ======== ========= Earnings
per common share - basic $ 0.29 0.31 0.88 1.05 Earnings per common
share - diluted 0.28 0.30 0.84 1.02 Weighted average share
outstanding - basic 8,318 8,482 8,165 8,446 Weighted average share
outstanding - diluted 8,645 8,711 8,604 8,708 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 ------------------
------------------ Dec. 26, Dec. 25, Dec. 26 Dec. 25 2004 2005 2004
2005 -------- --------- -------- --------- Revenue: Restaurant
sales 88.7% 88.7% 89.0% 88.6% Franchising royalties and fees 11.3
11.3 11.0 11.4 -------- --------- -------- --------- Total revenue
100.0 100.0 100.0 100.0 -------- --------- -------- --------- Costs
and expenses: Restaurant operating costs: Cost of sales 32.4 30.9
33.8 31.6 Labor 29.2 29.6 28.8 29.8 Operating 14.8 16.6 15.2 16.0
Occupancy 6.2 7.7 6.7 7.6 Depreciation 6.8 5.5 5.7 5.6 General and
administrative 11.8 9.6 11.3 10.6 Preopening 1.4 1.5 1.2 1.2
Restaurant impairment and closures 0.1 1.9 0.3 0.9 --------
--------- -------- --------- Total costs and expenses 93.3 93.6
93.8 93.8 -------- --------- -------- --------- Income from
operations 6.7 6.4 6.2 6.2 -------- --------- -------- ---------
Other income: Interest income 0.4 0.6 0.4 0.6 -------- ---------
-------- --------- Total other income, net 0.4 0.6 0.4 0.6 --------
--------- -------- --------- Earnings before income taxes 7.2 7.0
6.6 6.8 Income tax expense 2.2 2.6 2.4 2.6 -------- ---------
-------- --------- Net earnings 5.0 4.4 4.2 4.2 ======== =========
======== ========= BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS December 26, 2004 and December 25, 2005
(Dollar amounts in thousands) Dec. 26, Dec. 25, 2004 2005 --------
-------- Assets Current assets: Cash and cash equivalents $ 12,557
3,986 Marketable securities 36,454 48,418 Accounts
receivable--franchisees, net of allowance of $25 689 731 Accounts
receivable--other 2,077 3,700 Inventory 1,207 1,502 Income taxes
receivable 1,727 -- Prepaid expenses 1,470 1,972 Deferred income
taxes 840 770 -------- -------- Total current assets 57,021 61,079
Property and equipment, net 59,649 68,693 Restricted cash 782 2,115
Other assets 774 867 Goodwill 759 369 -------- -------- Total
assets $118,985 133,123 ======== ======== Liabilities and Common
Stockholders' Equity Current liabilities: Unearned franchise fees $
2,433 2,194 Accounts payable 5,383 6,628 Accrued income tax payable
-- 102 Accrued compensation and benefits 6,339 6,775 Accrued
expenses 3,663 3,900 Current portion of deferred lease credits 509
604 -------- -------- Total current liabilities 18,327 20,203
Long-term liabilities: Marketing fund payables 782 2,115 Deferred
income taxes 6,298 4,755 Deferred lease credits, net of current
portion 7,871 9,202 -------- -------- Total liabilities 33,278
36,275 Commitments and contingencies Common 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 8,616,222, respectively 71,491 74,503 Deferred
compensation (1,817) (2,568) Retained earnings 16,033 24,913
-------- -------- Total common stockholders' equity 85,707 96,848
-------- -------- Total liabilities and common stockholders' equity
$118,985 133,123 ======== ======== BUFFALO WILD WINGS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal years
ended December 26, 2004 and December 25, 2005 (Dollar amounts in
thousands) Fiscal years ended ------------------------- December
26, December 25, 2004 2005 ------------ ------------ Cash flows
from operating activities: Net earnings $ 7,201 8,880 Adjustments
to reconcile net earnings to cash provided by operations:
Depreciation 9,717 11,765 Amortization 151 90 Restaurant impairment
and closures 573 1,991 Deferred lease credits 142 362 Tax benefit
from stock issuance 958 409 Deferred income taxes 1,947 (1,473)
Stock-based compensation 909 1,700 Change in operating assets and
liabilities: Accounts receivable (1,023) (1,064) Inventory (229)
(295) Prepaid expenses (240) (502) Other assets (72) (93) Unearned
franchise fees 474 (239) Accounts payable 442 1,245 Income taxes
(1,360) 1,829 Accrued expenses 1,772 95 ------------ ------------
Net cash provided by operating activities 21,362 24,700
------------ ------------ Cash flows from investing activities:
Acquisition of property and equipment (23,310) (21,947) Purchase of
marketable securities (95,475) (91,539) Proceeds from marketable
securities 58,870 79,485 ------------ ------------ Net cash used in
investing activities (59,915) (34,001) ------------ ------------
Cash flows from financing activities: Issuance of common stock
1,572 1,014 Tax payments for restricted stock -- (284) ------------
------------ Net cash provided by financing activities 1,572 730
------------ ------------ Net decrease in cash and cash equivalents
(36,981) (8,571) Cash and cash equivalents at beginning of year
49,538 12,557 ------------ ------------ Cash and cash equivalents
at end of year $ 12,557 3,986 ============ ============ BUFFALO
WILD WINGS, INC. AND SUBSIDIARIES Supplemental Information
Restaurant Count Company-owned Restaurants: Q1 Q2 Q3 Q4 -- -- -- --
2005 106 110 116 122 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 212 224 234 248 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% 2.5% 3.2% 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% 2.6% 2.2% 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 33,953 32,304 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 42,533 40,999 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 1.17 1.20 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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