Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today
financial results for the second quarter ended June 27, 2010.
Highlights for the second quarter versus the same period a year ago
were:
- Total revenue increased 12.4% to
$145.7 million
- Company-owned restaurant sales
grew 11.7% to $131.5 million
- Same-store sales decreased 0.1%
at company-owned restaurants and 0.7% at franchised
restaurants
- Net earnings increased 31.4% to
$9.2 million from $7.0 million, and earnings per diluted share
increased 28.2% to $0.50 from $0.39
Sally Smith, President and Chief Executive Officer, commented,
“The recent strengthening of our sales is encouraging, and our
focused efforts brought company-owned and franchised restaurants to
nearly flat same-store sales in the second quarter. We continue our
steady expansion, opening sixteen additional restaurants during the
quarter, and revenue grew by 12%. Coupled with increased
restaurant-level cash flow, we provided our shareholders with a
substantial increase in net earnings of 31%, achieving earnings per
share of $.50.”
Total revenue increased 12.4% to $145.7 million in the second
quarter compared to $129.6 million in the second quarter of 2009.
Company-owned restaurant sales for the quarter increased 11.7% over
the same period in 2009, to $131.5 million, mainly the result of
operating 19 additional company-owned restaurants at the end of
second quarter 2010 relative to the same period in 2009. Same-store
sales at company-owned locations for the second quarter decreased
0.1%. Franchise royalties and fees increased 19.5% to $14.2 million
versus $11.9 million in the second quarter of 2009. This increase
is attributed to 64 additional franchised restaurants at the end of
the period versus a year ago, partially offset by a franchised
same-store sales decrease of 0.7%.
Average weekly sales for company-owned restaurants were $43,021
for the second quarter of 2010 compared to $42,938 for the same
quarter last year, a 0.2% increase. Franchised restaurants averaged
$49,051 for the period versus $48,619 in the second quarter a year
ago, a 0.9% increase.
For the second quarter, net earnings increased 31.4% to $9.2
million versus $7.0 million in the second quarter of 2009. Earnings
per diluted share were $0.50, as compared to second quarter 2009
earnings per diluted share of $0.39.
2010 Outlook
Ms. Smith remarked, “Company-owned locations are posting
positive same-store sales of 2.2% in July. Franchised locations are
also positive with same-store sales increases of 0.2%. Our
restaurant Teams are well-prepared and excited as we head into the
football season, and our marketing and media plans are stronger
than ever.”
Ms. Smith concluded, “We have previously stated that our 2010
growth goals are 13 to 15% unit growth and 20% net earnings growth.
We are exceeding both of these annual targets for the first half of
the year. Based on the anticipated new restaurants opening in the
third and fourth quarters, we are on track for 13% unit growth for
2010. We have growing confidence that our 20% annual net earnings
growth goal is achievable given the recent improvement in
same-store sales and the moderation of wing costs.”
Buffalo Wild Wings will be hosting a conference call today, July
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 August 3, 2010. To
access this replay, please dial 1.858.384.5517, password
4329040.
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 eighteen 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 684 Buffalo Wild Wings locations
across 44 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 third quarter sales trends and projected unit,
revenue and net 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
Six months ended June 27, June 28, June
27, June 28, 2010 2009 2010
2009 Revenue: Restaurant sales $ 131,531 117,763 269,493
237,187 Franchise royalties and fees 14,170 11,859
28,479 23,990 Total revenue 145,701 129,622 297,972
261,177 Costs and expenses: Restaurant operating costs: Cost of
sales 37,601 35,922 79,825 72,130 Labor 40,089 36,056 80,774 71,605
Operating 21,173 17,966 42,628 35,953 Occupancy 8,807 7,924 17,717
15,518 Depreciation and amortization 9,456 7,888 19,006 15,383
General and administrative (1) 12,929 11,773 24,955 23,193
Preopening 1,197 1,673 2,312 4,082 Loss on asset disposals and
store closures 526 272 937 447 Total costs and
expenses 131,778 119,474 268,154 238,311 Income from
operations 13,923 10,148 29,818 22,866 Investment income (loss)
(156 ) 413 29 489 Earnings before income taxes 13,767 10,561
29,847 23,355 Income tax expense 4,601 3,586 10,120
7,894 Net earnings $ 9,166 6,975 19,727 15,461 Earnings per
common share – basic $ 0.50 0.39 1.09 0.86 Earnings per common
share – diluted 0.50 0.39 1.08 0.86 Weighted average shares
outstanding – basic 18,167 17,999 18,157 17,990 Weighted average
shares outstanding – diluted 18,234 18,070 18,230 18,052
(1) Includes stock-based compensation of $1,313, $1,689, $2,538,
and $2,490, 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 Six months
ended June 27, June 28, June 27, June
28, 2010 2009 2010 2009 Revenue:
Restaurant sales 90.3 % 90.9 % 90.4 % 90.8 % Franchising royalties
and fees 9.7 9.1 9.6 9.2 Total revenue
100.0 100.0 100.0 100.0 Costs and
expenses: Restaurant operating costs: Cost of sales 28.6 30.5 29.6
30.4 Labor 30.5 30.6 30.0 30.2 Operating 16.1 15.3 15.8 15.2
Occupancy 6.7 6.7 6.6 6.5 Depreciation and amortization 6.5 6.1 6.4
5.9 General and administrative 8.9 9.1 8.4 8.9 Preopening 0.8 1.3
0.8 1.6 Loss on asset disposals and store closures 0.4 0.2
0.3 0.2 Total costs and expenses 90.4
92.2 90.0 91.2 Income from operations 9.6 7.8
10.0 8.8 Investment income (loss) (0.1 ) 0.3 0.0 0.2
Earnings before income taxes 9.4 8.1 10.0 8.9 Income tax
expense 3.2 2.8 3.4 3.0 Net earnings
6.3 5.4 6.6 5.9
BUFFALO WILD WINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Dollar amounts in
thousands)
(unaudited)
June 27, December 27, 2010 2009
Assets Current assets: Cash and cash equivalents $ 9,711
9,580 Marketable securities 59,489 43,632 Accounts receivable –
franchisees, net of allowance of $25 1,150 2,118 Accounts
receivable – other 7,946 7,383 Inventory 3,400 3,644 Prepaid
expenses 2,005 2,972 Refundable income taxes 974 1,872 Deferred
income taxes 2,555 2,938 Restricted assets 24,505 24,384
Total current assets 111,735 98,523 Property and equipment,
net 194,607 189,639 Other assets 9,670 9,665 Goodwill 11,246
11,246 Total assets $ 327,258 309,073
Liabilities and
Stockholders’ Equity Current liabilities: Unearned franchise
fees $ 2,359 2,706 Accounts payable 14,720 13,436 Accrued
compensation and benefits 16,790 19,554 Accrued expenses 5,191
6,540 Current portion of deferred lease credits 76 84 System-wide
payables 24,505 24,384 Total current liabilities 63,641
66,704 Long-term liabilities: Other liabilities 1,582 1,422
Deferred income taxes 12,434 14,940 Deferred lease credits, net of
current portion 16,830 16,174 Total liabilities
94,487 99,240 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 18,181,009 and 18,054,375
respectively 97,098 93,887 Retained earnings 135,673 115,946
Total stockholders’ equity 232,771 209,833 Total liabilities
and stockholders’ equity $ 327,258 309,073
BUFFALO
WILD WINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS (Dollar amounts in thousands)
(unaudited) Six months ended June 27,
June 28, 2010 2009 Cash flows from operating
activities: Net earnings $ 19,727 15,461 Adjustments to reconcile
net earnings to cash provided by operations: Depreciation 18,699
15,077 Amortization 307 306 Loss on asset disposals and store
closures 847 447 Deferred lease credits 929 840 Deferred income
taxes (2,123 ) 1,639 Stock-based compensation 2,538 2,490 Excess
tax benefit from the exercise of stock options (116 ) (31 ) Change
in operating assets and liabilities: Trading securities (748 )
(1,204 ) Accounts receivable 124 (734 ) Inventory 244 (255 )
Prepaid expenses 967 1,389 Other assets (312 ) (105 ) Unearned
franchise fees (347 ) 166 Accounts payable 2,472 (61 ) Income taxes
1,014 1,895 Accrued expenses (2,749 ) 20 Net cash
provided by operating activities 41,473 37,340
Cash flows from investing activities: Acquisition of property and
equipment (25,506 ) (33,115 ) Purchase of marketable securities
(61,114 ) (25,284 ) Proceeds of marketable securities 46,005
24,778 Net cash used in investing activities
(40,615 ) (33,621 ) Cash flows from financing activities: Issuance
of common stock 782 555 Tax payments for restricted stock units
(1,625 ) (1,513 ) Excess tax benefit from the exercise of stock
options 116 31 Net cash used in financing
activities (727 ) (927 ) Net increase in cash and cash
equivalents 131 2,792 Cash and cash equivalents at beginning of
period 9,580 8,347 Cash and cash equivalents
at end of period $ 9,711 11,139
BUFFALO WILD WINGS, INC. AND
SUBSIDIARIES
Supplemental
Information
Restaurant Count Company-owned Restaurants:
Q1
Q2 Q3
Q4 2010 235 234
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 430 447
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 % (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 % (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 43,021
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 49,051
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
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