BWLD Buffalo Wild Wings, Inc. (delisted)

Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the fourth quarter ended December 27, 2009. Highlights for the fourth quarter versus the same period a year ago were:

• Total revenue increased 19.6% to $145.0 million
• Company-owned restaurant sales grew 19.5% to $131.2 million
• Same-store sales increased 2.6% at company-owned restaurants and 2.0% at franchised restaurants
• Net earnings increased 7.9% to $8.3 million from $7.7 million, and earnings per diluted share increased 7.0% to $0.46 from $0.43

Sally Smith, President and Chief Executive Officer, commented, “The fourth quarter capped off another successful year that exceeded all of our annual growth goals. Our fast-paced unit growth throughout 2009 further established our position as a leader in the casual dining category as we opened 92 additional locations, a 16% increase in total units. Our 2009 revenue increase of nearly 28% is testimony that our restaurant team members remained dedicated to creating a compelling dining experience for our Guests. And, our focus on bottom-line performance is validated by impressive annual net earnings growth of over 25%.”

Ms. Smith continued, “In the fourth quarter, we achieved strong top-line performance as revenue increased 20%, fueled in part by 2.6% same-store sales increases at company-owned restaurants and 2.0% at franchised locations. Net earnings increased 7.9% for the quarter, yet didn’t hamper our ability to exceed our annual net earnings goal even though we experienced a quarterly increase in insurance costs and stock compensation expense.”

Total revenue increased 19.6% to $145.0 million in the fourth quarter compared to $121.2 million in the fourth quarter of 2008. Company-owned restaurant sales for the quarter increased 19.5% over the same period in 2008, to $131.2 million driven by a company-owned same-store sales increase of 2.6% and 35 additional company-owned restaurants in operation at the end of fourth quarter 2009 relative to the same period in 2008. Franchise royalties and fees increased 21.1% to $13.8 million versus $11.4 million in the fourth quarter of 2008. This increase was the result of a franchised same-store sales increase of 2.0% and 57 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $44,583 for the fourth quarter of 2009 compared to $43,864 for the same quarter last year, a 1.6% increase. Franchised restaurants averaged $50,115 for the period versus $48,424 in the fourth quarter a year ago, a 3.5% increase.

For the fourth quarter, net earnings increased 7.9% to $8.3 million versus $7.7 million in the fourth quarter of 2008. Earnings per diluted share were $0.46, as compared to fourth quarter 2008 earnings per diluted share of $0.43.

2010 Outlook

“The first quarter is an exciting time for Buffalo Wild Wings and a great time of year for sports fans!” Ms. Smith remarked. “The excitement of the Super Bowl, one of our biggest sales days, is still buzzing as we transition into the Winter Olympics and begin gearing up for the college basketball tournaments. We’ll debut a new menu and a new TV spot. In addition, we are operationally focused on building sales and profitability, with an intense dedication toward delivering a fun and unique dining experience.”

Ms. Smith concluded, “We are moving full speed ahead! Buffalo Wild Wings is a great brand with tremendous opportunity. Despite the challenges of our economy, our momentum has continued and we achieved the healthy annual growth goals we set for ourselves. We are confident we can achieve our new annual goals of 13% to 15% unit growth and 20% net earnings growth in 2010.”

Buffalo Wild Wings will be hosting a conference call today, February 11, 2010 at 4:00 p.m. Central Standard 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 February 18, 2010. To access this replay, please dial 1.303.590.3030, password 4205262.

About the Company

Buffalo Wild Wings, Inc., founded in 1982 and headquartered in Minneapolis, Minnesota, is a growing owner, operator and franchisor of restaurants featuring a variety of boldly-flavored, made-to-order menu items including Buffalo-style chicken wings spun in one of 14 signature sauces. Buffalo Wild Wings is an inviting neighborhood destination with widespread appeal and is the recipient of dozens of “Best Wings” and “Best Sports Bar” awards from across the country. There are currently 658 Buffalo Wild Wings locations across 42 states.

Forward-looking Statements

Certain statements in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. These statements include, without limitation, those relating to our fourth quarter sales and projected unit, revenue and earnings growth rates for 2010 and beyond. Forward-looking 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, our ability to achieve and manage our planned expansion, the ability of our franchisees to open and manage new restaurants, the actual number of locations opened during 2010 and beyond, market acceptance in the new geographic regions we enter, unforeseen obstacles in developing nontraditional sites, 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 sales at company-owned and franchised locations, the cost of commodities, the success of our key initiatives and our advertising and marketing campaigns, our ability to control 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, or the smoking of tobacco, 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 28, 2008, 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 27,   December 28, December 27,   December 28, 2009 2008 2009 2008 Revenue: Restaurant sales $ 131,225 109,836 488,702 379,686 Franchising royalties and fees   13,781 11,377   50,222 42,731 Total revenue   145,006 121,213   538,924 422,417 Costs and expenses: Restaurant operating costs: Cost of sales 39,720 32,181 147,659 113,266 Labor 38,581 32,442 146,555 114,609 Operating 20,989 17,398 76,358 60,205 Occupancy 8,588 7,285 32,362 25,157 Depreciation and amortization 8,955 6,902 32,605 23,622 General and administrative (1) 13,268 11,079 49,404 40,151 Preopening 2,471 2,511 7,702 7,930 Loss on asset disposals and impairment   639 15   1,928 2,083 Total costs and expenses   133,211 109,813   494,573 387,023 Income from operations 11,795 11,400 44,351 35,394 Investment income   209 (126 ) 1,077 970 Earnings before income taxes 12,004 11,274 45,428 36,364 Income tax expense   3,666 3,547   14,757 11,929 Net earnings $ 8,338 7,727   30,671 24,435 Earnings per common share – basic $ 0.46 0.43 1.70 1.37 Earnings per common share – diluted 0.46 0.43 1.69 1.36 Weighted average shares outstanding – basic 18,038 17,854 18,010 17,813 Weighted average shares outstanding – diluted 18,208 18,011 18,177 17,995

(1) Includes stock-based compensation of $2,212, $1,679, $6,490, and $4,900, 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 27,   December 28, December 27,   December 28, 2009 2008 2009 2008 Revenue: Restaurant sales 90.5 % 90.6 % 90.7 % 89.9 % Franchising royalties and fees 9.5   9.4   9.3   10.1   Total revenue 100.0   100.0   100.0   100.0   Costs and expenses: Restaurant operating costs: Cost of sales 30.3 29.3 30.2 29.8 Labor 29.4 29.5 30.0 30.2 Operating 16.0 15.8 15.6 15.9 Occupancy 6.5 6.6 6.6 6.6 Depreciation and amortization 6.2 5.7 6.1 5.6 General and administrative 9.1 9.1 9.2 9.5 Preopening 1.7 2.1 1.4 1.9 Loss on asset disposals and impairment 0.4   0.0   0.4   0.5   Total costs and expenses 91.9   90.6   91.8   91.6   Income from operations 8.1 9.4 8.2 8.4 Investment income 0.1   (0.1 ) 0.2   0.2   Earnings before income taxes 8.3 9.3 8.4 8.6 Income tax expense 2.5   2.9   2.7   2.8   Net earnings 5.8 % 6.4 % 5.7 % 5.8 %  

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 27, 2009 and December 28, 2008

(Dollar amounts in thousands)

(unaudited)

    December 27, December 28, 2009 2008 Assets Current assets: Cash and cash equivalents $ 9,580 8,347 Marketable securities 43,632 36,157 Accounts receivable – franchisees, net of allowance of $25 2,118 895 Accounts receivable – other 7,383 5,759 Inventory 3,644 3,104 Prepaid expenses 2,972 3,294 Refundable income taxes 1,872 1,611 Deferred income taxes   2,938 1,731 Total current assets 74,139 60,898   Property and equipment, net 189,639 154,432 Restricted assets 24,384 7,670 Other assets 9,665 9,846 Goodwill   11,246 10,972 Total assets $ 309,073 243,818   Liabilities and Stockholders’ Equity Current liabilities: Unearned franchise fees $ 2,706 2,514 Accounts payable 13,436 16,691 Accrued compensation and benefits 19,554 14,155 Accrued expenses 6,540 7,116 Current portion of deferred lease credits   84 56 Total current liabilities 42,320 40,532   Long-term liabilities: Other liabilities 1,422 1,270 System-wide payables 24,384 7,670 Deferred income taxes 14,940 8,916 Deferred lease credits, net of current portion   16,174 13,837 Total liabilities   99,240 72,225 Commitments and contingencies Stockholders’ equity: Undesignated stock, 1,000,000 shares authorized — — Common stock, no par value. Authorized 44,000,000 shares; issued and outstanding 18,054,375 and 17,887,271, respectively 93,887 86,318 Retained earnings   115,946 85,275 Total stockholders’ equity   209,833 171,593 Total liabilities and stockholders’ equity $ 309,073 243,818  

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(unaudited)

    Fiscal years ended December 27, December 28, 2009 2008 Cash flows from operating activities: Net earnings $ 30,671 24,435 Adjustments to reconcile net earnings to cash provided by operations: Depreciation 31,993 23,415 Amortization 612 207 Loss on asset disposals and impairment 1,928 2,083 Deferred lease credits 2,181 1,955 Deferred income taxes 4,817 6,322 Stock-based compensation 6,490 4,900 Excess tax benefit from stock issuance (1,453 ) (615 ) Change in operating assets and liabilities, net of effect of acquisition: Trading securities (2,051 ) 23 Accounts receivable (2,663 ) 375 Inventory (540 ) (473 ) Prepaid expenses 322 (152 ) Other assets (490 ) (608 ) Unearned franchise fees 192 198 Accounts payable 1,150 809 Income taxes 1,192 890 Accrued expenses   4,935   2,343   Net cash provided by operating activities   79,286   66,107   Cash flows from investing activities: Acquisition of property and equipment (73,748 ) (67,396 ) Purchase of marketable securities (57,024 ) (116,259 ) Proceeds of marketable securities 51,600 146,592 Acquisition of franchised restaurants   —   (23,071 ) Net cash used in investing activities   (79,172 ) (60,134 ) Cash flows from financing activities: Issuance of common stock 1,179 1,227 Excess tax benefit from stock issuance 1,453 615 Tax payments for restricted stock   (1,513 ) (989 ) Net cash provided by financing activities   1,119   853   Net increase in cash and cash equivalents 1,233 6,826   Cash and cash equivalents at beginning of year   8,347   1,521   Cash and cash equivalents at end of year $ 9,580   8,347    

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

               

Restaurant Count

 

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

2009 206 215 220 232 2008 165 169 187 197 2007 140 145 148 161 2006 124 129 134 139 2005 106 110 116 122  

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

2009 373 383 400 420 2008 340 346 348 363 2007 299 301 313 332 2006 260 270 278 290 2005 212 224 234 248  

Same-Store Sales

 

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

Year

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 % 2006 7.7 % 8.2 % 11.8 % 13.2 % 10.4 % 2005 6.1 % 2.7 % 1.8 % 2.5 % 3.2 %  

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

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 % 2006 6.7 % 4.7 % 6.4 % 6.5 % 6.1 % 2005 3.2 % 1.8 % 1.1 % 2.6 % 2.2 %  

Average Weekly Sales Volumes

 

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

Year

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 2006 35,857 33,660 35,380 38,800 36,033 2005 33,195 30,531 31,361 33,953 32,304  

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

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 2006 44,342 42,338 42,963 46,008 43,975 2005 41,309 39,824 40,149 42,533 40,999