Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today
financial results for the second quarter ended June 26, 2011.
Highlights for the second quarter versus the same period a year ago
were:
- Total revenue increased 26.4% to $184.1
million
- Company-owned restaurant sales grew
27.6% to $167.9 million
- Same-store sales increased 5.9% at
company-owned restaurants and 2.7% at franchised restaurants
- Net earnings increased 16.4% to $10.7
million from $9.2 million, and earnings per diluted share increased
16.0% to $0.58 from $0.50
Sally Smith, President and Chief Executive Officer, commented,
“The appeal of our brand is evident in the strong same-store sales
we saw in the second quarter, with an increase of 5.9% at
company-owned locations and 2.7% at franchised locations. Our
same-store sales, combined with our unit growth, fueled the
substantial increase in revenue of 26.4%. In May, we celebrated the
opening of our first international location near Toronto. We’re
entering numerous major markets this year, and we increased our
presence across the United States with 18 additional locations in
the second quarter. To ensure that we successfully launch our brand
in these new markets we incurred year-over-year increases in
preopening costs and general and administrative expenses. Net
earnings grew by over 16% in the second quarter, providing value to
our shareholders with earnings per diluted share of $0.58, even
with these investments in our future.”
Total revenue increased 26.4% to $184.1 million in the second
quarter compared to $145.7 million in the second quarter of 2010.
Company-owned restaurant sales for the quarter increased 27.6% over
the same period in 2010, to $167.9 million, driven by a
company-owned same-store sales increase of 5.9% and 43 additional
company-owned restaurants at the end of second quarter 2011
relative to the same period in 2010. Franchise royalties and fees
increased 14.4% to $16.2 million versus $14.2 million in the second
quarter of 2010. This increase is attributed to a franchise
same-store sales increase of 2.7% and 45 additional franchised
restaurants at the end of the period versus a year ago.
Average weekly sales for company-owned restaurants were $47,970
for the second quarter of 2011 compared to $43,021 for the same
quarter last year, an 11.5% increase. Franchised restaurants
averaged $50,995 for the period versus $49,051 in the second
quarter a year ago, a 4.0% increase.
For the second quarter, net earnings increased 16.4% to $10.7
million versus $9.2 million in the second quarter of 2010. Earnings
per diluted share were $0.58, as compared to second quarter 2010
earnings per diluted share of $0.50.
2011 Outlook
Ms. Smith remarked, “Same-store sales remain impressive with an
increase of 4.9% at company-owned and 3.0% at franchised locations
to date in the third quarter. We join with our Guests in
anticipation of the upcoming football season and Tablegating™ at
Buffalo Wild Wings. Our restaurant teams are gearing up to deliver
the great game day experience we’re known for. We’ll have an
increased media presence throughout the third and fourth quarters
and we have marketing and operations plans in place to engage our
passionate Buffalo Wild Wings fans.”
Ms. Smith concluded, “We’re investing in our unit growth,
particularly as we enter new markets. In the second half of 2011,
we expect to open 29 company-owned restaurants in the United States
and three in Canada and our franchisees should open about 37
locations, attaining our 13% unit growth goal for the year. Our net
earnings growth for the first half of 2011 is over 29%, exceeding
our stated annual goal of over 18% growth. With the strength of our
bottom-line performance to date, the NFL season intact, and
continuing same-store sales momentum, we should achieve net
earnings growth of more than 20% for the year.”
Buffalo Wild Wings will be hosting a conference call today, July
26, 2011 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 2, 2011. To
access this replay, please dial 1.858.384.5517 password
4454245.
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 18 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 773 Buffalo Wild Wings locations
across 45 states in the United States, as well as in Canada.
Forward-looking Statements
Various remarks we make about future expectations, plans, and
prospects for the company constitute forward-looking statements for
purposes of the Safe Harbor provisions under the Private Securities
Litigation Reform Act of 1995. These statements relate to our
future financial and store performance measures and growth goals
for 2011 and beyond, including but not limited to those relating to
our second quarter sales trends and projected unit, revenue and net
earnings growth rates for 2011 and beyond. All statements other
than statements of historical fact are statements that could be
deemed forward-looking statements and are based upon the current
beliefs and expectations of our management. We have attempted to
identify forward-looking statements by terminology, including
“anticipates,” “believes,” “can,” “continue,” “could,” “estimates,”
“expects,” “intends,” “may,” “plans,” “potential,” “predicts,”
“should” or “will” or the negative of these terms or other
comparable terminology. Actual results may vary materially from
those contained in forward-looking statements based on a number of
factors, including, but not limited to, our ability to achieve and
manage our planned expansion, the ability of our franchisees to
open and manage new restaurants, 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 cost of commodities such as traditional chicken wings, the
success of our key initiatives and our advertising and marketing
campaigns, our ability to control restaurant labor and 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,
disruption to sports seasons, 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 26, 2010, 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 26, June 27,
June 26, June 27, 2011
2010 2011 2010 Revenue: Restaurant sales $
167,896 131,531 333,423 269,493 Franchise royalties and fees
16,205 14,170 32,828 28,479 Total revenue
184,101 145,701 366,251 297,972 Costs and
expenses: Restaurant operating costs: Cost of sales 45,735 37,601
91,999 79,825 Labor 51,309 40,089 100,187 80,774 Operating 25,048
21,173 49,597 42,628 Occupancy 10,659 8,807 20,886 17,717
Depreciation and amortization 11,931 9,456 22,953 19,006 General
and administrative (1) 18,766 12,929 35,058 24,955 Preopening 4,116
1,197 6,503 2,312 Loss on asset disposals and store closures
492 526 903 937 Total costs and expenses
168,056 131,778 328,086 268,154 Income from
operations 16,045 13,923 38,165 29,818 Investment income (loss)
(152 ) (156 ) 204 29 Earnings before income taxes 15,893
13,767 38,369 29,847 Income tax expense 5,220 4,601
12,835 10,120 Net earnings $ 10,673 9,166
25,534 19,727 Earnings per common share – basic $ 0.58 0.50 1.39
1.09 Earnings per common share – diluted 0.58 0.50 1.39 1.08
Weighted average shares outstanding – basic 18,330 18,167 18,318
18,157 Weighted average shares outstanding – diluted 18,401 18,234
18,389 18,230
(1) Includes stock-based compensation of $3,399, $1,313, $5,952,
and $2,538, 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 26, June 27,
June 26, June 27, 2011
2010 2011 2010 Revenue: Restaurant sales 91.2
% 90.3 % 91.0 % 90.4 % Franchising royalties and fees 8.8
9.7 9.0 9.6 Total revenue 100.0 100.0
100.0 100.0 Costs and expenses:
Restaurant operating costs: Cost of sales 27.2 28.6 27.6 29.6 Labor
30.6 30.5 30.0 30.0 Operating 14.9 16.1 14.9 15.8 Occupancy 6.3 6.7
6.3 6.6 Depreciation and amortization 6.5 6.5 6.3 6.4 General and
administrative 10.2 8.9 9.6 8.4 Preopening 2.2 0.8 1.8 0.8 Loss on
asset disposals and store closures 0.3 0.4 0.2
0.3 Total costs and expenses 91.3 90.4 89.6
90.0 Income from operations 8.7 9.6 10.4 10.0
Investment income (loss) (0.1 ) (0.1 ) 0.1 0.0
Earnings before income taxes 8.6 9.4 10.5 10.0 Income tax expense
2.8 3.2 3.5 3.4 Net earnings 5.8
6.3 7.0 6.6
BUFFALO WILD
WINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands) (unaudited)
June 26, December 26,
2011 2010 Assets Current assets: Cash and cash
equivalents $ 37,836 15,309 Marketable securities 48,267 56,827
Accounts receivable – franchisees, net of allowance of $88 and $25
1,209 1,086 Accounts receivable – other 10,250 7,947 Inventory
4,344 4,158 Prepaid expenses 2,428 3,505 Refundable income taxes
834 6,366 Deferred income taxes 7,470 6,069 Restricted assets
32,731 32,937 Total current assets 145,369
134,204 Property and equipment, net 257,434 224,970 Other
assets 13,286 9,937 Goodwill 12,192 11,246
Total assets $ 428,281 380,357
Liabilities
and Stockholders’ Equity Current liabilities: Unearned
franchise fees $ 2,049 2,109 Accounts payable 24,681 17,632 Accrued
compensation and benefits 20,261 19,324 Accrued expenses 6,449
5,696 Current portion of deferred lease credits — 293 System-wide
payables 32,943 34,062 Total current
liabilities 86,383 79,116 Long-term liabilities: Other
liabilities 1,674 1,574 Deferred income taxes 31,638 24,557
Deferred lease credits, net of current portion 19,901
18,289 Total liabilities 139,596 123,536
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 18,343,604 and 18,214,065 respectively 108,813
102,484 Retained earnings 179,881 154,346 Accumulated other
comprehensive loss (9 ) (9 ) Total stockholders’ equity
288,685 256,821 Total liabilities and
stockholders’ equity $ 428,281 380,357
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollar amounts in thousands)
(unaudited) Six months ended
June 26, June 27, 2011
2010 Cash flows from operating activities: Net earnings $
25,534 19,727 Adjustments to reconcile net earnings to cash
provided by operations: Depreciation 22,574 18,699 Amortization 379
307 Loss on asset disposals and store closures 904 847 Deferred
lease credits 1,568 929 Deferred income taxes 4,795 (2,123 )
Stock-based compensation 5,952 2,538 Excess tax benefit from stock
issuance (211 ) (116 ) Change in operating assets and liabilities:
Trading securities (246 ) (748 ) Accounts receivable (2,643 ) 124
Inventory (186 ) 244 Prepaid expenses 1,077 967 Other assets (1,534
) (312 ) Unearned franchise fees (60 ) (347 ) Accounts payable
4,072 2,472 Income taxes 5,743 1,014 Accrued expenses 2,525
(2,749 ) Net cash provided by operating activities
70,243 41,473 Cash flows for investing
activities: Acquisition of property and equipment (55,159 ) (25,506
) Purchase of marketable securities (54,790 ) (61,114 ) Proceeds of
marketable securities 63,597 46,005 Net cash
used in investing activities (46,352 ) (40,615 ) Cash
flows for financing activities: Issuance of common stock 867 782
Tax payments for restricted stock units (2,481 ) (1,625 ) Excess
tax benefit from stock issuance 211 116 Net
cash used in financing activities (1,403 ) (727 ) Effect of
exchange rate changes on cash and cash equivalents 39
— Net increase in cash and cash equivalents 22,527 131 Cash
and cash equivalents at beginning of period 15,309
9,580 Cash and cash equivalents at end of period $ 37,836
9,711
BUFFALO WILD WINGS, INC. AND
SUBSIDIARIES
Supplemental Information
Restaurant Count Company-owned
Restaurants: Q1
Q2
Q3 Q4
2011 263 277
2010 235 234 244 259
2009 206 215
220 232
2008 165 169 187 197
2007 140 145 148 161
Franchised Restaurants:
Q1
Q2 Q3
Q4 2011 488 492
2010 430 447 457 473
2009 373 383 400 420
2008
340 346 348 363
2007 299 301 313 332
Same-Store Sales Company-owned Restaurants:
Q1
Q2 Q3
Q4 Year 2011 3.9 %
5.9 %
2010 0.1 % (0.1 %) 2.6 % (0.3 %) 0.6 %
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 %
Franchised Restaurants:
Q1
Q2
Q3 Q4
Year 2011 1.6 % 2.7
%
2010 0.7 % (0.7 %) 0.3 % (1.1 %) (0.2 %)
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 %
BUFFALO WILD WINGS, INC. AND
SUBSIDIARIES
Supplemental Information
Average Weekly Sales Volumes Company-owned
Restaurants: Q1
Q2
Q3 Q4
Year 2011 $ 48,845
47,970
2010 45,327 43,021 44,394 45,595 44,601
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
Franchised Restaurants:
Q1
Q2 Q3
Q4 Year 2011 $
52,744 50,995
2010 51,532 49,051 49,005 49,837 49,835
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
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