Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today
financial results for the third quarter ended September 26, 2010.
Highlights for the third quarter versus the same period a year ago
were:
- Total revenue increased 14.0% to $151.3
million
- Company-owned restaurant sales grew
13.9% to $137.0 million
- Same-store sales increased 2.6% at
company-owned restaurants and 0.3% at franchised restaurants
- Net earnings increased 23.7% to $8.5
million from $6.9 million, and earnings per diluted share increased
23.7% to $0.47 from $0.38
Sally Smith, President and Chief Executive Officer, commented,
“We continue to be a leader in the industry, and our focus on
execution and profitability again produced strong year-over-year
growth in units, revenue, and net earnings. Buffalo Wild Wings has
grown by 81 restaurants over the last twelve months, 20 of these in
the third quarter, for a year-over-year unit increase of 13%. Our
third quarter revenue increased by 14%, and we produced strong net
earnings growth of over 23%, providing value to our shareholders
with earnings per share of $0.47.”
Total revenue increased 14.0% to $151.3 million in the third
quarter compared to $132.7 million in the third quarter of 2009.
Company-owned restaurant sales for the quarter increased 13.9% over
the same period in 2009, to $137.0 million, driven by a
company-owned same-store sales increase of 2.6% and 24 additional
company-owned restaurants at the end of third quarter 2010 relative
to the same period in 2009. Franchise royalties and fees increased
15.6% to $14.4 million versus $12.5 million in the third quarter of
2009. This increase is attributed to a franchised same-store sales
increase of 0.3% and 57 additional franchised restaurants at the
end of the period versus a year ago.
Average weekly sales for company-owned restaurants were $44,394
for the third quarter of 2010 compared to $42,602 for the same
quarter last year, a 4.2% increase. Franchised restaurants averaged
$49,005 for the period versus $48,458 in the third quarter a year
ago, a 1.1% increase.
For the third quarter, net earnings increased 23.7% to $8.5
million versus $6.9 million in the third quarter of 2009. Earnings
per diluted share were $0.47, as compared to third quarter 2009
earnings per diluted share of $0.38.
2010 and 2011 Outlook
Ms. Smith remarked, “We plan to open fifteen company-owned and
seventeen franchised restaurants in the fourth quarter, on track to
meet our 13% unit growth goal for 2010. For the first four weeks of
the fourth quarter, same-store sales at company-owned locations are
(0.7%) and franchised locations are (1.7%), comping over prior year
same-store sales of 5.9% and 3.8%, respectively. With sustained
efforts to drive traffic throughout the football season, combined
with higher media spending, we believe we can achieve at least flat
same-store sales at company-owned restaurants for the fourth
quarter and accomplish our 2010 net earnings goal of 20% growth for
the year.”
Ms. Smith concluded, “We have an intense dedication to driving
the long-term success of the Buffalo Wild Wings brand. We’re
committed to sustaining our unit growth across the United States
and expect to open over 100 new restaurants next year, a 13% unit
increase. With this unit growth, and our persistent focus on
operational excellence and strong restaurant-level economics, we
believe we can achieve over 18% net earnings growth in 2011.”
Buffalo Wild Wings will be hosting a conference call today,
October 26, 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 November 2, 2010.
To access this replay, please dial 1.858.384.5517, password
4373777.
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 708 Buffalo Wild Wings locations
across 43 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 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 2011 and beyond, market
acceptance in the new geographic regions we enter (particularly
non-U.S. locations), unforeseen obstacles in developing
nontraditional sites or non-U.S. locations, 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 Nine months ended September 26,
September 27, September 26, September 27,
2010 2009 2010 2009 Revenue: Restaurant
sales $ 136,953 120,290 406,446 357,477 Franchise royalties and
fees 14,395 12,451 42,874 36,441 Total revenue
151,348 132,741 449,320 393,918 Costs and expenses: Restaurant
operating costs: Cost of sales 38,232 35,809 118,057 107,939 Labor
41,995 36,369 122,769 107,974 Operating 22,835 19,416 65,463 55,369
Occupancy 9,131 8,256 26,848 23,774 Depreciation and amortization
9,766 8,267 28,772 23,650 General and administrative (1) 14,003
12,943 38,958 36,136 Preopening 2,789 1,149 5,101 5,231 Loss on
asset disposals and store closures 682 842 1,619 1,289 Total
costs and expenses 139,433 123,051 407,587 361,362 Income
from operations 11,915 9,690 41,733 32,556 Investment income
305 379 334 868 Earnings before income taxes 12,220 10,069 42,067
33,424 Income tax expense 3,716 3,197 13,836 11,091 Net
earnings $ 8,504 6,872 28,231 22,333 Earnings per common share –
basic $ 0.47 0.38 1.55 1.24 Earnings per common share – diluted
0.47 0.38 1.55 1.24 Weighted average shares outstanding – basic
18,187 18,024 18,167 18,001 Weighted average shares outstanding –
diluted 18,253 18,098 18,238 18,068
(1) Includes stock-based compensation of $
2,041, $1,788, $4,579, and $4,278, 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 Nine
months ended September 26, September
27, September 26, September 27,
2010 2009 2010 2009 Revenue: Restaurant
sales 90.5 % 90.6 % 90.5 % 90.7 % Franchising royalties and fees
9.5 9.4 9.5 9.3 Total revenue 100.0
100.0 100.0 100.0 Costs and expenses:
Restaurant operating costs: Cost of sales 27.9 29.8 29.0 30.2 Labor
30.7 30.2 30.2 30.2 Operating 16.7 16.1 16.1 15.5 Occupancy 6.7 6.9
6.6 6.7 Depreciation and amortization 6.5 6.2 6.4 6.0 General and
administrative 9.3 9.8 8.7 9.2 Preopening 1.8 0.9 1.1 1.3 Loss on
asset disposals and store closures 0.5 0.6 0.4
0.3 Total costs and expenses 92.1 92.7 90.7
91.7 Income from operations 7.9 7.3 9.3 8.3
Investment income 0.2 0.3 0.1 0.2
Earnings before income taxes 8.1 7.6 9.4 8.5 Income tax expense 2.5
2.4 3.1 2.8 Net earnings 5.6 5.2
6.3 5.7
BUFFALO WILD WINGS,
INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands) (unaudited)
September 26, December 27,
2010 2009 Assets Current assets: Cash and cash
equivalents $ 7,288 9,580 Marketable securities 63,838 43,632
Accounts receivable – franchisees, net of allowance of $25 1,160
2,118 Accounts receivable – other 9,907 7,383 Inventory 3,631 3,644
Prepaid expenses 3,925 2,972 Refundable income taxes 5,597 1,872
Deferred income taxes 1,954 2,938 Restricted assets 32,120
24,384 Total current assets 129,420 98,523 Property and
equipment, net 211,466 189,639 Other assets 9,859 9,665 Goodwill
11,246 11,246 Total assets $ 361,991 309,073
Liabilities
and Stockholders’ Equity Current liabilities: Unearned
franchise fees $ 2,265 2,706 Accounts payable 22,521 13,436 Accrued
compensation and benefits 19,566 19,554 Accrued expenses 6,449
6,540 Current portion of deferred lease credits 1 84 System-wide
payables 32,120 24,384 Total current liabilities 82,922
66,704 Long-term liabilities: Other liabilities 1,541 1,422
Deferred income taxes 16,284 14,940 Deferred lease credits, net of
current portion 17,859 16,174 Total liabilities
118,606 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 18,190,146 and 18,054,375
respectively 99,208 93,887 Retained earnings 144,177 115,946
Total stockholders’ equity 243,385 209,833 Total liabilities
and stockholders’ equity $ 361,991 309,073
BUFFALO
WILD WINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS (Dollar amounts in thousands)
(unaudited) Nine months
ended September 26, September 27, 2010
2009 Cash flows from operating activities: Net earnings $
28,231 22,333 Adjustments to reconcile net earnings to cash
provided by operations: Depreciation 28,312 23,191 Amortization 460
459 Loss on asset disposals and store closures 1,425 1,289 Deferred
lease credits 1,468 1,705 Deferred income taxes 2,328 2,999
Stock-based compensation 4,579 4,278 Excess tax benefit from the
exercise of stock options (172 ) (418 ) Change in operating assets
and liabilities: Trading securities (1,072 ) (1,731 ) Accounts
receivable (1,432 ) (1,979 ) Inventory 13 (123 ) Prepaid expenses
(953 ) (218 ) Other assets (654 ) (52 ) Unearned franchise fees
(441 ) 255 Accounts payable 3,165 2,792 Refundable income taxes
(3,553 ) 519 Accrued expenses 1,342 2,662 Net
cash provided by operating activities 63,046 57,961
Cash flows from investing activities: Acquisition of
property and equipment (45,546 ) (51,309 ) Purchase of marketable
securities (84,398 ) (39,115 ) Proceeds of marketable securities
65,264 36,720 Net cash used in investing
activities (64,680 ) (53,704 ) Cash flows from financing
activities: Issuance of common stock 795 574 Tax payments for
restricted stock units (1,625 ) (1,513 ) Excess tax benefit from
the exercise of stock options 172 418 Net cash
used in financing activities (658 ) (521 ) Net increase
(decrease) in cash and cash equivalents (2,292 ) 3,736 Cash and
cash equivalents at beginning of period 9,580 8,347
Cash and cash equivalents at end of period $ 7,288
12,083
BUFFALO WILD WINGS, INC. AND SUBSIDIARIESSupplemental
Information
Restaurant Count
Company-owned Restaurants:
Q1
Q2
Q3
Q4
2010 235 234 244
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 430 447 457
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%) 2.6%
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%) 0.3%
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 SUBSIDIARIESSupplemental
Information
Average Weekly Sales Volumes
Company-owned Restaurants:
Q1
Q2
Q3
Q4
Year
2010 $ 45,327 43,021 44,394
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 49,005
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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