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July 24, 2012

Buffalo Wild Wings, Inc. Announces Second Quarter Earnings Per Share of $0.62 and Quarterly Net Earnings Growth of 9.3%

MINNEAPOLIS, July 24, 2012 (GLOBE NEWSWIRE) -- Buffalo Wild Wings, Inc. (Nasdaq:BWLD), announced today financial results for the second quarter ended June 24, 2012. Highlights for the second quarter versus the same period a year ago were:

  • Total revenue increased 29.7% to $238.7 million
  • Company-owned restaurant sales grew 31.4% to $220.6 million
  • Same-store sales increased 5.3% at company-owned restaurants and 5.5% at franchised restaurants
  • Net earnings increased 9.3% to $11.7 million from $10.7 million, and earnings per diluted share increased 6.9% to $0.62 from $0.58

Sally Smith, President and Chief Executive Officer, commented, "We are very pleased with our strong sales and our ongoing ability to drive revenue increases. We continue to outpace the casual dining category with same-store sales increases of 5.3% at company-owned restaurants and 5.5% at franchised locations for the second quarter. The combination of strong same-store sales, new restaurant performance, and franchised restaurants acquired in 2011 fueled our substantial revenue increase of nearly 30%. We managed controllable costs, but the higher year-over-year wing costs in the second quarter moderated our net earnings to a 9.3% increase over the same quarter last year, providing earnings per diluted share of $0.62 compared to $0.58 a year ago."

Total revenue increased 29.7% to $238.7 million in the second quarter compared to $184.1 million in the second quarter of 2011. Company-owned restaurant sales for the quarter increased 31.4% over the same period in 2011, to $220.6 million, driven by a company-owned same-store sales increase of 5.3% and 53 additional company-owned restaurants at the end of second quarter 2012 relative to the same period in 2011. Franchise royalties and fees increased 12.1% to $18.2 million for the quarter versus $16.2 million in the second quarter of 2011. This increase is attributed to a franchise same-store sales increase of 5.5% and 13 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $51,524 for the second quarter of 2012 compared to $47,970 for the same quarter last year, a 7.4% increase. Franchised restaurants averaged $54,766 for the period versus $50,995 in the second quarter a year ago, also a 7.4% increase.

For the second quarter, net earnings increased 9.3% to $11.7 million versus $10.7 million in the second quarter of 2011. Earnings per diluted share were $0.62, as compared to second quarter 2011 earnings per diluted share of $0.58.

2012 Outlook

Ms. Smith remarked, "We have exciting things happening in the second half of 2012 and are pleased that our same-store sales remain strong, at 6.8% at company-owned restaurants and 7.3% at franchised locations for the first four weeks of the third quarter. We plan to open more than 70 new company-owned and franchised locations before the end of the year, and we intend to purchase nine Buffalo Wild Wings franchised locations this quarter. We are building more locations in Canada, including our first location in the Calgary, Alberta market, and we are pleased to announce we have signed two new international franchising agreements. We have an agreement for up to 22 locations across six countries in the Middle East over the next six years, and another agreement for four locations in Puerto Rico in the next four years."

Ms. Smith continued, "We are gearing up for football season, an exciting time of year for us. Yesterday, we announced we have become the title sponsor of a longstanding college bowl game to be played on December 29th in Tempe, Arizona that will now be titled the Buffalo Wild Wings Bowl. We plan to make this a bowl game for football fans across the country and will bring the Buffalo Wild Wings experience to this exciting game for Big Ten and Big Twelve teams.

"Our focus for the remainder of the year is on driving strong sales and disciplined expense management. Like industries across the country, we are facing rising commodity costs. We are responding to the challenge with menu price increases and marketing and operations strategies that will help lessen the bottom-line impact of wings in the near future and long term. Considering these factors, and provided sales remain strong, we should achieve net earnings growth between 15% and 20% for 2012."

Ms. Smith concluded, "As we look ahead, we are excited about the strategies we have set in motion to evolve our brand to ensure we remain compelling to our Guests in the future. In addition to our updated logo, we have begun construction of restaurants that incorporate our new facility design. We are building a technology foundation for a pipeline of new initiatives to engage our Guests with unique and interactive platforms that will ensure Buffalo Wild Wings remains the preferred destination for a great sports-viewing experience. Fans across North America continue to embrace our growing brand and we look forward to sharing it across the globe."

Buffalo Wild Wings will be hosting a conference call today, July 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 July 31, 2012. To access this replay, please dial 1.858.384.5517 password 4551930.

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 837 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   Six months ended  
  June 24,
2012		 June 26,
2011		 June 24,
2012		 June 26,
2011
Revenue:         
Restaurant sales  $ 220,550  167,896  452,866  333,423
Franchise royalties and fees   18,173  16,205  36,979  32,828
Total revenue   238,723  184,101  489,845  366,251
         
Costs and expenses:         
Restaurant operating costs:         
Cost of sales   69,799  45,735  141,950  91,999
Labor   66,638  51,309  134,906  100,187
Operating   32,349  25,048  65,146  49,597
Occupancy   13,091  10,659  25,891  20,886
Depreciation and amortization   16,090  11,931  31,621  22,953
General and administrative   20,976  18,766  40,400  35,058
Preopening   1,536  4,116  4,127  6,503
Loss on asset disposals and store closures   597  492  1,334  903
Total costs and expenses   221,076  168,056  445,375  328,086
         
Income from operations   17,647  16,045  44,470  38,165
Investment income (loss)    (115)  (152)  295  204
         
Earnings before income taxes   17,532  15,893  44,765  38,369
Income tax expense   5,870  5,220  14,858  12,835
         
Net earnings  $ 11,662  10,673  29,907  25,534
         
Earnings per common share — basic  $ 0.63  0.58  1.61  1.39
Earnings per common share — diluted   0.62  0.58  1.60  1.39
Weighted average shares outstanding — basic   18,575  18,330  18,565  18,318
Weighted average shares outstanding — diluted   18,660  18,401  18,650  18,389

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 24,
2012		 June 26,
2011		 June 24,
2012		 June 26,
2011
Revenue:        
Restaurant sales  92.4% 91.2%  92.5%  91.0%
Franchising royalties and fees  7.6 8.8  7.5  9.0
Total revenue 100.0 100.0 100.0 100.0
         
Costs and expenses:        
Restaurant operating costs:        
Cost of sales  31.6 27.2  31.3  27.6
Labor  30.2  30.6  29.8  30.0
Operating  14.7 14.9  14.4  14.9
Occupancy  5.9 6.3  5.7  6.3
Depreciation and amortization  6.7 6.5  6.5  6.3
General and administrative  8.8 10.2  8.2  9.6
Preopening  0.6 2.2  0.8  1.8
Loss on asset disposals and store closures  0.3 0.3  0.3  0.2
Total costs and expenses  92.6 91.3  90.9  89.6
         
Income from operations  7.4 8.7  9.1  10.4
Investment income (loss) 0.0 (0.1)  0.1  0.1
         
Earnings before income taxes  7.3 8.6  9.1  10.5
Income tax expense  2.5 2.8  3.0  3.5
         
Net earnings  4.9 5.8  6.1  7.0
         

 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
     
  June 24,
2012		 December 25,
2011
     
Assets    
Current assets:    
Cash and cash equivalents $23,247 20,530
Marketable securities 52,985 39,956
Accounts receivable — net of allowance of $25 14,390 12,165
Inventory 6,022 6,311
Prepaid expenses 2,617 3,707
Refundable income taxes 1,600 7,561
Deferred income taxes 6,963 6,323
Restricted assets 30,751 42,692
Total current assets 138,575 139,245
     
Property and equipment, net 321,440 310,170
Other assets 27,903 28,174
Goodwill 17,777 17,770
Total assets $505,695 495,359
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Unearned franchise fees $1,807 1,852
Accounts payable 28,299 30,089
Accrued compensation and benefits 23,151 30,499
Accrued expenses 8,750 7,580
System-wide payables 30,861 44,250
Total current liabilities 92,868 114,270
     
Long-term liabilities:    
Other liabilities 1,631 1,544
Deferred income taxes 36,907 38,512
Deferred lease credits, net of current portion 23,868 23,047
Total liabilities 155,274 177,373
     
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 18,587,152 and 18,377,920 respectively 116,215 113,509
Retained earnings 234,679 204,772
Accumulated other comprehensive loss  (473)  (295)
     
Total stockholders' equity 350,421 317,986
     
Total liabilities and stockholders' equity $505,695 495,359
 
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
     
     
  Six months ended
  June 24,
2012		 June 26,
2011
     
Cash flows from operating activities:     
Net earnings  $29,907 25,534
Adjustments to reconcile net earnings to cash provided by operations:     
Depreciation  30,267 22,574
Amortization   1,354  379
Loss on asset disposals and store closures   1,143  904
Deferred lease credits   1,618  1,568
Deferred income taxes   (2,245)  4,795
Stock-based compensation   3,919  5,952
Excess tax benefit from stock issuance   (289)  (211)
Change in operating assets and liabilities:     
Trading securities   (534)  (246)
Accounts receivable   (4,484)  (2,643)
Inventory   281  (186)
Prepaid expenses   1,090  1,077
Other assets   (1,084)  (1,534)
Unearned franchise fees   (45)  (60)
Accounts payable   (177)  4,072
Income taxes   6,250  5,743
Accrued expenses   (234)  2,525
Net cash provided by operating activities   66,737  70,243
     
Cash flows for investing activities:     
Acquisition of property and equipment   (44,438)  (55,159)
Purchase of marketable securities   (52,493)  (54,790)
Proceeds of marketable securities   39,998  63,597
Net cash used in investing activities   (56,933)  (46,352)
     
Cash flows for financing activities:     
Issuance of common stock   1,117  867
Tax payments for restricted stock units   (8,447)  (2,481)
Excess tax benefit from stock issuance  289  211
Net cash used in financing activities   (7,041)  (1,403)
Effect of exchange rate changes on cash and cash equivalents  (46)  39
     
Net increase in cash and cash equivalents   2,717  22,527
Cash and cash equivalents at beginning of period   20,530  15,309
Cash and cash equivalents at end of period  $23,247 37,836
   
   
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES  
Supplemental Information  
           
Restaurant Count  
Company-owned Restaurants:  
  Q1 Q2 Q3 Q4  
2012 327 330      
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 505 505      
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% 5.3%      
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% 5.5%      
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%
           
           
           
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
           
Average Weekly Sales Volumes
           
Company-owned Restaurants:
  Q1 Q2 Q3 Q4 Year
2012 $55,131 51,524      
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 54,766      
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 
CONTACT: Investor Relations Contact:

         Mary Twinem, CFO

         952.253.0731
Source: Buffalo Wild Wings, Inc.

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