Buffalo Wild Wings
Apr 24, 2012

Buffalo Wild Wings, Inc. Announces First Quarter Earnings Per Share of $0.98 and Quarterly Net Earnings Growth of over 22%

MINNEAPOLIS--(BUSINESS WIRE)-- Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the first quarter ended March 25, 2012. Highlights for the first quarter versus the same period a year ago were:

Sally Smith, President and Chief Executive Officer, commented, "We are pleased with our solid start in 2012, with first quarter same-store sales increases of 9.2% at company-owned restaurants and 7.3% at franchised locations. The combination of strong same-store sales, new restaurant performance, and sales from franchised restaurants acquired in 2011 fueled our substantial revenue increase of 37.9%. We continued to invest in the infrastructure necessary to support our expansion in North America and internationally. Through leveraging expenses at the restaurant level, we limited the impact of higher wing costs. For the first quarter, we achieved net earnings growth of over 22%, and provided value to our shareholders with earnings per diluted share of $0.98."

Total revenue increased 37.9% to $251.1 million in the first quarter compared to $182.2 million in the first quarter of 2011. Company-owned restaurant sales for the quarter increased 40.3% over the same period in 2011, to $232.3 million, driven by a company-owned same-store sales increase of 9.2% and 64 additional company-owned restaurants at the end of first quarter 2012 relative to the same period in 2011. Franchise royalties and fees increased 13.1% to $18.8 million for the quarter versus $16.6 million in the first quarter of 2011. This increase is attributed to a franchise same-store sales increase of 7.3% and 17 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $55,131 for the first quarter of 2012 compared to $48,845 for the same quarter last year, a 12.9% increase. Franchised restaurants averaged $57,282 for the period versus $52,744 in the first quarter a year ago, an 8.6% increase.

For the first quarter, net earnings increased 22.8% to $18.2 million versus $14.9 million in the first quarter of 2011. Earnings per diluted share were $0.98, as compared to first quarter 2011 earnings per diluted share of $0.81.

2012 Outlook

Ms. Smith remarked, "For the first four weeks of the second quarter, same-store sales are 6.7% at company-owned restaurants and 6.6% at our franchised locations. We're increasing our advertising over last year with national radio to cover all of our markets and we're airing a new TV spot. Our Operations Excellence team remains keenly focused on the fundamentals of providing great service to our guests and driving restaurant-level profitability. With solid first quarter results, ongoing same-store sales strength, the benefit of a 53rd week, and expense leveraging, we believe we will achieve our net earnings growth goal of 20% for 2012."

Ms. Smith concluded, "We continue to implement strategies for long-term growth. Our plans include a development pace to achieve 1,500 locations in North America in the next five to seven years. We're also actively pursuing international franchising opportunities and investigating potential concepts for acquisition that would provide additional growth. We are innovating around the critical aspects of the Buffalo Wild Wings brand, including our facilities, food and beverage, sports and entertainment, technology, and our service strategy. We believe that with a dedicated focus on our Guest experience and unit-level profitability, we will prudently expand our presence across the globe and generate industry-leading net earnings growth well into the future."

Buffalo Wild Wings will be hosting a conference call today, April 24, 2012 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 1, 2012. To access this replay, please dial 1.858.384.5517 password 4530757.

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 more than 835 Buffalo Wild Wings locations across 48 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 2012 and beyond, including but not limited to those relating to our second quarter sales trends and projected unit and net earnings growth rates for 2012 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, 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 25, 2011, 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 25, March 27,
2012 2011
Revenue:
Restaurant sales $ 232,316 165,527
Franchise royalties and fees   18,806 16,623
Total revenue   251,122 182,150
Costs and expenses:
Restaurant operating costs:
Cost of sales 72,151 46,264
Labor 68,268 48,878
Operating 32,797 24,549
Occupancy 12,800 10,227
Depreciation and amortization 15,531 11,022
General and administrative 19,424 16,292
Preopening 2,591 2,387
Loss on asset disposals and store closures   737 411
Total costs and expenses   224,299 160,030
Income from operations 26,823 22,120
Investment income   410 356
Earnings before income taxes 27,233 22,476
Income tax expense   8,988 7,615
Net earnings $ 18,245 14,861
Earnings per common share — basic $ 0.98 0.81
Earnings per common share — diluted 0.98 0.81
Weighted average shares outstanding — basic 18,555 18,306
Weighted average shares outstanding — diluted 18,638 18,375
 

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 25, March 27,
2012 2011
Revenue:
Restaurant sales 92.5 % 90.9 %
Franchising royalties and fees 7.5   9.1  
Total revenue 100.0   100.0  
Costs and expenses:
Restaurant operating costs:
Cost of sales 31.1 27.9
Labor 29.4 29.5
Operating 14.1 14.8
Occupancy 5.5 6.2
Depreciation and amortization 6.2 6.1
General and administrative 7.7 8.9
Preopening 1.0 1.3
Loss on asset disposals and store closures 0.3   0.2  
Total costs and expenses 89.3   87.9  
Income from operations 10.7 12.1
Investment income 0.2   0.2  
Earnings before income taxes 10.8 12.3
Income tax expense 3.6   4.2  
Net earnings 7.3 % 8.2 %
 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)

       
March 25, December 25,
2012 2011

Assets

Current assets:
Cash and cash equivalents $ 27,342 20,530
Marketable securities 44,141 39,956
Accounts receivable, net of allowance of $25 16,166 12,165
Inventory 6,228 6,311
Prepaid expenses 3,439 3,707
Refundable income taxes 7,561
Deferred income taxes 6,663 6,323
Restricted assets   32,797   42,692  
Total current assets 136,776 139,245
 
Property and equipment, net 312,585 310,170
Other assets 27,404 28,174
Goodwill   17,770   17,770  
Total assets $ 494,535   495,359  
 

Liabilities and Stockholders' Equity

Current liabilities:
Unearned franchise fees $ 1,701 1,852
Income tax payable 1,296
Accounts payable 22,831 30,089
Accrued compensation and benefits 27,405 30,499
Accrued expenses 9,627 7,580
Current portion of deferred lease credits 367
System-wide payables   32,919   44,250  
Total current liabilities 96,146 114,270
 
Long-term liabilities:
Other liabilities 1,605 1,544
Deferred income taxes 38,141 38,512
Deferred lease credits, net of current portion   23,149   23,047  
Total liabilities   159,041   177,373  
 
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 18,564,152 and 18,377,920 respectively 112,637 113,509
Retained earnings 223,017 204,772
Accumulated other comprehensive loss   (160 ) (295 )
Total stockholders' equity   335,494   317,986  
Total liabilities and stockholders' equity $ 494,535   495,359  
 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)

       
Three months ended
March 25, March 27,
2012 2011
Cash flows from operating activities:
Net earnings $ 18,245 14,861
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation 14,852 10,871
Amortization 679 151
Loss on asset disposals and store closures 723 411
Deferred lease credits 838 802
Deferred income taxes (711 ) 2,806
Stock-based compensation 1,232 2,553
Excess tax benefit from the exercise of stock options (259 ) (140 )
Change in operating assets and liabilities:
Trading securities (519 ) (289 )
Accounts receivable (5,676 ) (2,796 )
Inventory 85 39
Prepaid expenses 270 425
Other assets 72 (468 )
Unearned franchise fees (151 ) 5
Accounts payable (934 ) 2,236
Income taxes 9,116 3,777
Accrued expenses   4,378   4,565  
Net cash provided by operating activities   42,240   39,809  
Cash flows from investing activities:
Acquisition of property and equipment (23,845 ) (18,746 )
Purchase of marketable securities (19,669 ) (27,185 )
Proceeds of marketable securities   16,003   23,401  
Net cash used in investing activities   (27,511 ) (22,530 )
Cash flows from financing activities:
Issuance of common stock 256 168
Excess tax benefit from the exercise of stock options 259 140
Tax payments for restricted stock   (8,447 ) (2,481 )
Net cash used in financing activities   (7,932 ) (2,173 )
Effect of exchange rate changes on cash and cash equivalents   15   (4 )
Net increase in cash and cash equivalents 6,812 15,102
Cash and cash equivalents at beginning of period   20,530   15,309  
Cash and cash equivalents at end of period $ 27,342   30,411  
 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information

 

Restaurant Count

   

Company-owned Restaurants:

               

Q1

Q2

Q3

Q4

2012 327
2011 263 277 288 319
2010 235 234 244 259
2009 206 215 220 232
2008 165 169 187 197
 
Franchised Restaurants:
 

Q1

Q2

Q3

Q4

2012 505
2011 488 492 498 498
2010 430 447 457 473
2009 373 383 400 420
2008 340 346 348 363
 
 
Same-Store Sales
 
Company-owned Restaurants:
 

Q1

Q2

Q3

Q4

Year

2012 9.2 %
2011 3.9 % 5.9 % 5.7 % 8.9 % 6.1 %
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 %
 

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

2012 7.3 %
2011 1.6 % 2.7 % 4.2 % 5.9 % 3.6 %
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 %
 
 

Average Weekly Sales Volumes

 

Company-owned Restaurants:

                   

Q1

Q2

Q3

Q4

Year

2012 $ 55,131
2011 48,845 47,970 49,461 51,983 49,627
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
 

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

2012 $ 57,282
2011 52,744 50,995 51,350 53,385 52,081
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

Buffalo Wild Wings, Inc.
Investor Relations Contact:
Mary Twinem — CFO
952-253-0731

Source: Buffalo Wild Wings, Inc.

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