BWLD Buffalo Wild Wings, Inc. (delisted)

Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the first quarter ended March 28, 2010. Highlights for the first quarter versus the same period a year ago were:

• Total revenue increased 15.7% to $152.3 million
• Company-owned restaurant sales grew 15.5% to $138.0 million
• Same-store sales increased 0.1% at company-owned restaurants and 0.7% at franchised restaurants
• Net earnings increased 24.5% to $10.6 million from $8.5 million, and earnings per diluted share increased 23.4% to $0.58 from $0.47

Sally Smith, President and Chief Executive Officer, commented, “In the first quarter, we achieved year-over-year growth in units, revenue and bottom-line performance, even while same-store sales were nearly flat at 0.1% at company-owned restaurants and 0.7% at franchised locations. We’ve opened 86 additional restaurants in the last twelve months, a 14.9% unit increase. Our first quarter revenue grew by 15.7%, and we produced net earnings growth of 24.5%, even in the face of record-high wing costs. We continued to provide value to our shareholders with earnings per share of $.58.”

Total revenue increased 15.7% to $152.3 million in the first quarter compared to $131.6 million in the first quarter of 2009. Company-owned restaurant sales for the quarter increased 15.5% over the same period in 2009, to $138.0 million, mainly the result of operating 29 additional company-owned restaurants at the end of first quarter 2010 relative to the same period in 2009. Same-store sales at company-owned locations for the first quarter increased 0.1%. Franchise royalties and fees increased 18.0% to $14.3 million versus $12.1 million in the first quarter of 2009. This increase is attributed to 57 additional franchised restaurants at the end of the period versus a year ago and a franchised same-store sales increase of 0.7%.

Average weekly sales for company-owned restaurants were $45,327 for the first quarter of 2010 compared to $45,593 for the same quarter last year, a 0.6% decrease. Franchised restaurants averaged $51,532 for the period versus $50,729 in the first quarter a year ago, a 1.6% increase.

For the first quarter, net earnings increased 24.5% to $10.6 million versus $8.5 million in the first quarter of 2009. Earnings per diluted share were $0.58, as compared to first quarter 2009 earnings per diluted share of $0.47.

2010 Outlook

Ms. Smith remarked, “We are experiencing softness in April same-store sales of (3.7%) at company-owned restaurants and (2.4%) at franchised locations. We are addressing specific unit performance as well as implementing system-wide strategies to drive sales. We expect to realize year-over-year cost savings in the quarter for traditional wings, as the market has declined steadily in the past few months. While we believe that our previously-announced net earnings growth goal for 2010 of 20% may be achievable, improvement in same-store sales and moderate wing costs are key to meeting this goal.”

Ms. Smith concluded, “We have a vigorous focus on the core elements of our brand that have been the cornerstone of our success and that have built loyalty among our Guests with our unique You Have To Be Here™ experience. Our diligence to improve our performance and build our sales and profitability will not waver. We are dedicated to maintaining our position as a leader by delivering wings, beer and sports in a fun and social atmosphere that will continue to drive Guest loyalty and the long-term success and growth of Buffalo Wild Wings.”

Buffalo Wild Wings will be hosting a conference call today, April 27, 2010 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 May 4, 2010. To access this replay, please dial 1.303.590.3030, password 4283446.

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 669 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 27, 2009, 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 March 28, March 29, 2010 2009 Revenue: Restaurant sales $ 137,962 $ 119,424 Franchise royalties and fees   14,309   12,131 Total revenue   152,271   131,555 Costs and expenses: Restaurant operating costs: Cost of sales 42,224 36,208 Labor 40,685 35,549 Operating 21,455 17,987 Occupancy 8,910 7,594 Depreciation and amortization 9,550 7,495 General and administrative (1) 12,026 11,420 Preopening 1,115 2,409 Loss on asset disposals   411   175 Total costs and expenses   136,376   118,837 Income from operations 15,895 12,718 Investment income   185   76 Earnings before income taxes 16,080 12,794 Income tax expense   5,519   4,308 Net earnings $ 10,561 $ 8,486 Earnings per common share – basic $ 0.58 $ 0.47 Earnings per common share – diluted 0.58 0.47 Weighted average shares outstanding – basic 18,147 17,980 Weighted average shares outstanding – diluted 18,229 18,041  

(1) Includes stock-based compensation of $1,225 and $801, 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 March 28,     March 29, 2010 2009 Revenue: Restaurant sales 90.6 % 90.8 % Franchising royalties and fees 9.4   9.2   Total revenue 100.0   100.0   Costs and expenses: Restaurant operating costs: Cost of sales 30.6 30.3 Labor 29.5 29.8 Operating 15.6 15.1 Occupancy 6.5 6.4 Depreciation and amortization 6.3 5.7 General and administrative 7.9 8.7 Preopening 0.7 1.8 Loss on asset disposals 0.3   0.1  

Total costs and expenses

89.6   90.3   Income from operations 10.4 9.7 Investment income 0.1   0.1   Earnings before income taxes 10.6 9.7 Income tax expense 3.6   3.3   Net earnings 6.9 % 6.5 %     BUFFALO WILD WINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 28, 2010 and December 27, 2009 (Dollar amounts in thousands) (unaudited)         March 28, December 27, 2010 2009

Assets

Current assets: Cash and cash equivalents $ 14,873 $ 9,580 Marketable securities 51,943 43,632 Accounts receivable – franchisees, net of allowance of $25 1,182 2,118 Accounts receivable – other 9,191 7,383 Inventory 3,602 3,644 Prepaid expenses 2,901 2,972 Refundable income taxes — 1,872 Deferred income taxes 3,425 2,938 Restricted assets   26,127   24,384 Total current assets 113,244 98,523   Property and equipment, net 190,142 189,639 Other assets 9,557 9,665 Goodwill   11,246   11,246 Total assets $ 324,189 $ 309,073  

Liabilities and Stockholders’ Equity

Current liabilities: Unearned franchise fees $ 2,591 $ 2,706 Income tax payable 4,155 — Accounts payable 14,574 13,436 Accrued compensation and benefits 17,466 19,554 Accrued expenses 6,196 6,540 Current portion of deferred lease credits 365 84 System-wide payables   26,127   24,384 Total current liabilities 71,474 66,704   Long-term liabilities: Other liabilities 1,500 1,422 Deferred income taxes 14,291 14,940 Deferred lease credits, net of current portion   16,349   16,174 Total liabilities   103,614   99,240 Commitments and contingencies Stockholders’ equity: Undesignated stock, 1,000,000 shares authorized; none issued —

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Common stock, no par value. Authorized 44,000,000 shares; issued and outstanding 18,154,900 and 18,054,375 respectively 94,068 93,887 Retained earnings   126,507   115,946 Total stockholders’ equity   220,575   209,833 Total liabilities and stockholders’ equity $ 324,189 $ 309,073     BUFFALO WILD WINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar amounts in thousands) (unaudited)         Three months ended March 28, March 29, 2010 2009 Cash flows from operating activities: Net earnings $ 10,561 $ 8,486 Adjustments to reconcile net earnings to cash provided by operations: Depreciation 9,396 7,342 Amortization 154 153 Loss on asset disposals 410 175 Deferred lease credits 537 620 Deferred income taxes (1,136 ) 1,153 Stock-based compensation 1,225 801 Excess tax benefit from stock issuance (74 ) (2 ) Change in operating assets and liabilities: Trading securities (205 ) (691 ) Accounts receivable (953 ) (2,339 ) Inventory 42 (411 ) Prepaid expenses 71 698 Other assets (46 ) (78 ) Unearned franchise fees (115 ) 171 Accounts payable 866 784 Income taxes 6,101 2,779 Accrued expenses   (2,099 )   (384 ) Net cash provided by operating activities   24,735     19,257   Cash flows from investing activities: Acquisition of property and equipment (9,908 ) (18,916 ) Purchase of marketable securities (17,960 ) (13,070 ) Proceeds of marketable securities   9,854     12,639   Net cash used in investing activities   (18,014 )   (19,347 ) Cash flows from financing activities: Issuance of common stock 123 3 Excess tax benefit from stock issuance 74 2 Tax payments for restricted stock   (1,625 )   (1,517 ) Net cash used in financing activities   (1,428 )   (1,512 ) Net increase (decrease) in cash and cash equivalents 5,293 (1,602 ) Cash and cash equivalents at beginning of period   9,580     8,347   Cash and cash equivalents at end of period $ 14,873   $ 6,745       BUFFALO WILD WINGS, INC. AND SUBSIDIARIES Supplemental Information                       Restaurant Count   Company-owned Restaurants:  

Q1

Q2

Q3

Q4

2010 235 2009 206 215 220 232 2008 165 169 187 197 2007 140 145 148 161 2006 124 129 134 139    

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

2010 430 2009 373 383 400 420 2008 340 346 348 363 2007 299 301 313 332 2006 260 270 278 290     Same-Store Sales   Company-owned Restaurants:  

Q1

Q2

Q3

Q4

Year

2010 0.1 % 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 %    

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

2010 0.7 % 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 %     BUFFALO WILD WINGS, INC. AND SUBSIDIARIES Supplemental Information     Average Weekly Sales Volumes   Company-owned Restaurants:                    

Q1

Q2

Q3

Q4

Year

2010 $ 45,327 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  

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

2010 $ 51,532 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