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October 23, 2012

Buffalo Wild Wings, Inc. Announces Third Quarter Earnings Per Share of $0.57

MINNEAPOLIS, Oct. 23, 2012 (GLOBE NEWSWIRE) -- Buffalo Wild Wings, Inc. (Nasdaq:BWLD), announced today financial results for the third quarter ended September 23, 2012. Highlights for the third quarter versus the same period a year ago were:

  • Total revenue increased 24.8% to $246.9 million
  • Company-owned restaurant sales grew 26.2% to $228.4 million
  • Same-store sales increased 6.2% at company-owned restaurants and 5.8% at franchised restaurants
  • Net earnings decreased 5.0% to $10.7 million from $11.3 million, and earnings per diluted share decreased 6.6% to $0.57 from $0.61

Sally Smith, President and Chief Executive Officer, commented, "We're pleased with our strong top-line growth of nearly 25% in the third quarter. We focused on operational excellence at the restaurant level and our teams delivered strong same-store sales. In addition, we leveraged on labor, operating, and occupancy expenses. High cost of sales and incremental preopening expenses moderated our bottom-line expansion, producing earnings per diluted share of $0.57 compared to $0.61 in 2011."

Total revenue increased 24.8% to $246.9 million in the third quarter compared to $197.8 million in the third quarter of 2011. Company-owned restaurant sales for the quarter increased 26.2% over the same period in 2011, to $228.4 million, driven by a company-owned same-store sales increase of 6.2% and 55 additional company-owned restaurants at the end of third quarter 2012 relative to the same period in 2011. Franchise royalties and fees increased 10.2% to $18.4 million for the quarter versus $16.7 million in the third quarter of 2011. This increase is attributed to a franchise same-store sales increase of 5.8% and 13 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $52,561 for the third quarter of 2012 compared to $49,461 for the same quarter last year, a 6.3% increase. Franchised restaurants averaged $55,608 for the period versus $51,350 in the third quarter a year ago, an 8.3% increase.

For the third quarter, net earnings decreased 5.0% to $10.7 million versus $11.3 million in the third quarter of 2011. Earnings per diluted share were $0.57, as compared to third quarter 2011 earnings per diluted share of $0.61.

2012 and 2013 Outlook

Ms. Smith remarked, "With the excitement of football season, the entire Buffalo Wild Wings team is focused on maximizing sales as we have strong prior year same-store sales to eclipse during the next two quarters. Same-store sales are about 3.8% at company-owned restaurants and 5.6% at franchised locations for the first four weeks of the fourth quarter compared to 6.6% and 5.3%, respectively, for the same period last year. Our unit growth will continue and we expect to open at least 24 new company-owned and 20 new franchised restaurants before year end. We completed the purchase of nine franchised locations and are positioned to acquire an additional nine locations this quarter. With continued leveraging of expenses and the benefit of a 53rd week, we will partially offset the continuing high wing costs and estimate our net earnings growth for 2012 will be 15%."

Ms. Smith concluded, "We are a vibrant and resilient brand. In 2013, we will open more than 60 company-owned and 45 franchised restaurants, and should achieve the 1,000 unit mark by the end of the year. We now anticipate we can expand to 1,700 locations in North America, with additional growth abroad. We'll begin to realize the benefit of strategies we've been working on over the past year. We have an enhanced Guest service strategy along with new innovations in food, beverage, and technology that will drive revenue. With this growth and financial diligence, we have a goal for 2013 to achieve 20% net earnings growth on a 52-week basis."

Buffalo Wild Wings will be hosting a conference call today, October 23, 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 October 30, 2012. To access this replay, please dial 1.858.384.5517 password 4568234.

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 20 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 861 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 third 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 Nine months ended
  September 23,
2012		 September 25,
2011		 September 23,
2012		 September 25,
2011
         
Revenue:         
Restaurant sales  $228,418 181,036 681,284 514,459
Franchise royalties and fees  18,441 16,727 55,420 49,555
Total revenue  246,859 197,763 736,704 564,014
         
Costs and expenses:         
Restaurant operating costs:         
Cost of sales  71,263 51,655 213,213 143,654
Labor  68,804 54,783 203,710 154,970
Operating  34,626 28,537 99,772 78,134
Occupancy  13,458 11,195 39,349 32,081
Depreciation and amortization  16,818 12,748 48,439 35,701
General and administrative  21,813 18,336 62,213 53,394
Preopening  4,535 3,864 8,662 10,367
Loss on asset disposals and store closures  788 612 2,122 1,515
Total costs and expenses  232,105 181,730 677,480 509,816
         
Income from operations  14,754 16,033 59,224 54,198
Investment income (loss)  418 (374) 713 (170)
         
Earnings before income taxes  15,172 15,659 59,937 54,028
Income tax expense  4,464 4,393 19,322 17,228
         
Net earnings  $10,708 11,266 40,615 36,800
         
Earnings per common share — basic  $0.58 0.61 2.19 2.01
Earnings per common share — diluted  0.57 0.61 2.17 2.00
Weighted average shares outstanding — basic  18,589 18,352 18,573 18,330
Weighted average shares outstanding — diluted  18,723 18,520 18,675 18,433
         
         
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 23,
2012		 September 25,
2011		 September 23,
2012		 September 25,
2011
         
Revenue:        
Restaurant sales 92.5% 91.5% 92.5% 91.2%
Franchising royalties and fees 7.5 8.5 7.5 8.8
Total revenue 100.0 100.0 100.0 100.0
         
Costs and expenses:        
Restaurant operating costs:        
Cost of sales 31.2 28.5 31.3 27.9
Labor 30.1 30.3 29.9 30.1
Operating 15.2 15.8 14.6 15.2
Occupancy 5.9 6.2 5.8 6.2
Depreciation and amortization 6.8 6.4 6.6 6.3
General and administrative 8.8 9.3 8.4 9.5
Preopening 1.8 2.0 1.2 1.8
Loss on asset disposals and store closures 0.3 0.3 0.3 0.3
Total costs and expenses 94.0 91.9 92.0 90.4
         
Income from operations 6.0 8.1 8.0 9.6
Investment income (loss) 0.2 (0.2) 0.1 0.0
         
Earnings before income taxes 6.1 7.9 8.1 9.6
Income tax expense 1.8 2.2 2.6 3.1
         
Net earnings 4.3 5.7 5.5 6.5
     
     
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
     
  September 23,
2012		 December 25,
2011
     
Assets    
Current assets:    
Cash and cash equivalents $31,322 20,530
Marketable securities 52,511 39,956
Accounts receivable — net of allowance of $25 17,785 12,165
Inventory 6,511 6,311
Prepaid expenses 3,128 3,707
Refundable income taxes 2,355 7,561
Deferred income taxes 7,249 6,323
Restricted assets 36,266 42,692
Total current assets 157,127 139,245
     
Property and equipment, net 346,963 310,170
Other assets 27,979 28,174
Goodwill 17,777 17,770
Total assets $549,846 495,359
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Unearned franchise fees $1,815 1,852
Accounts payable 37,591 30,089
Accrued compensation and benefits 33,595 30,499
Accrued expenses 11,614 7,580
System-wide payables 36,503 44,250
Total current liabilities 121,118 114,270
     
Long-term liabilities:    
Other liabilities 1,679 1,544
Deferred income taxes 35,826 38,512
Deferred lease credits, net of current portion 25,381 23,047
Total liabilities 184,004 177,373
     
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 18,590,352 and 18,377,920, respectively 120,268 113,509
Retained earnings 245,387 204,772
Accumulated other comprehensive income (loss) 187 (295)
Total stockholders' equity 365,842 317,986
Total liabilities and stockholders' equity $549,846 495,359
     
     
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
     
  Nine months ended
  September 23,
2012		 September 25,
2011
     
Cash flows from operating activities:     
Net earnings  $40,615 36,800
Adjustments to reconcile net earnings to cash provided by operations:     
Depreciation  46,409 35,065
Amortization  2,030 636
Loss on asset disposals and store closures  1,757 1,279
Deferred lease credits  2,966 2,703
Deferred income taxes  (3,612) 8,220
Stock-based compensation  6,207 8,642
Excess tax benefit from stock issuance  (2,024) (700)
Change in operating assets and liabilities:     
Trading securities  (850) 37
Accounts receivable  (7,712) (5,752)
Inventory  (199) (632)
Prepaid expenses  583 (1,019)
Other assets  (1,826) (2,216)
Unearned franchise fees  (37) (124)
Accounts payable  2,088 5,704
Income taxes  7,230 2,877
Accrued expenses  13,162 13,322
Net cash provided by operating activities  106,787 104,842
     
Cash flows for investing activities:     
Acquisition of property and equipment  (79,007) (84,651)
Purchase of marketable securities  (123,943) (78,690)
Proceeds of marketable securities  112,238 94,387
Net cash used in investing activities  (90,712) (68,954)
     
Cash flows for financing activities:     
Issuance of common stock  1,147 870
Tax payments for restricted stock units  (8,447) (2,481)
Excess tax benefit from stock issuance 2,024 700
Net cash used in financing activities  (5,276) (911)
Effect of exchange rate changes on cash and cash equivalents (7) (86)
Net increase in cash and cash equivalents  10,792 34,891
     
Cash and cash equivalents at beginning of period  20,530 15,309
Cash and cash equivalents at end of period  $31,322 50,200
           
           
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
           
Restaurant Count
Company-owned Restaurants:  
  Q1 Q2 Q3 Q4  
2012 327 330 343    
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 505 505 511    
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% 6.2%    
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% 5.5% 5.8%    
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 52,561    
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 55,608    
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

         952.253.0731
Source: Buffalo Wild Wings, Inc.

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