October 29, 2013

Buffalo Wild Wings, Inc. Announces Third Quarter Earnings per Share of $0.95

MINNEAPOLIS, Oct. 29, 2013 (GLOBE NEWSWIRE) -- Buffalo Wild Wings, Inc. (Nasdaq:BWLD) announced today financial results for the third quarter ended September 29, 2013. Highlights for the third quarter versus the same period a year ago were:

  • Total revenue increased 27.9% to $315.8 million
  • Company-owned restaurant sales grew 29.5% to $295.7 million
  • Same-store sales increased 4.8% at company-owned restaurants and 3.9% at franchised restaurants
  • Net earnings increased 66.9% to $17.9 million from $10.7 million, and earnings per diluted share increased 65.4% to $0.95 from $0.57

Sally Smith, President and Chief Executive Officer, commented, "We're proud to share this quarter's results as we approach our 10-year anniversary as a public company. Revenue increased 27.9%, which helped fuel impressive net earnings growth. We increased the number of company-owned restaurants by 21% with continued new unit growth and franchise acquisitions compared to third quarter last year, and same-store sales increased 4.8% at company-owned restaurants and 3.9% at franchised locations. The cost per pound for traditional chicken wings was lower than last year and our cost of sales percentage was 30.0%, the lowest percentage since fourth quarter of 2011. As a result, we grew our net earnings 66.9%, achieving earnings per diluted share of $0.95 for the third quarter."

Total revenue increased 27.9% to $315.8 million in the third quarter compared to $246.9 million in the third quarter of 2012. Company-owned restaurant sales for the quarter increased 29.5% over the same period in 2012, to $295.7 million, driven by a company-owned same-store sales increase of 4.8% and 72 additional company-owned restaurants at the end of third quarter 2013 relative to the same period in 2012. Franchise royalties and fees increased 9.0% to $20.1 million for the quarter versus $18.4 million in the third quarter of 2012. This increase is attributed to a franchise same-store sales increase of 3.9% and 23 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $55,592 for the third quarter of 2013 compared to $52,561 for the same quarter last year, a 5.8% increase. Franchised restaurants averaged $58,926 for the period versus $55,608 in the third quarter a year ago, a 6.0% increase.

For the third quarter, net earnings increased 66.9% to $17.9 million versus $10.7 million in the third quarter of 2012. Earnings per diluted share were $0.95, as compared to third quarter 2012 earnings per diluted share of $0.57.

2013 and 2014 Outlook

Ms. Smith remarked, "With the excitement of football season, we are focused on driving sales. Same-store sales are about 5.3% at company-owned restaurants and 3.0% at franchised locations for the first four weeks of the fourth quarter compared to 3.8% and 5.6%, respectively, for the same period last year. In the fourth quarter, unit growth continues with 22 company-owned and 22 franchised restaurants expected to open. Also, we expect our franchisees in Mexico to open two locations during the fourth quarter. With the strength of our net earnings growth in the first nine months of the year, positive momentum in same-store sales, and improved cost of sales percentage versus last year, we believe we will achieve 20% net earnings growth for 2013, equating to 28% on a 52-week basis."

Ms. Smith continued, "We will achieve the exciting milestone of 1,000 Buffalo Wild Wings restaurants in the first quarter of 2014. For the full year, we plan to open 45 company-owned and 40 franchised locations in the United States and Canada, and we expect our international franchisees to open at least 10 restaurants across the globe. We remain focused on providing a unique and compelling social experience for our sports-loving Guests, and we believe that with our planned unit growth and ongoing operational diligence we will achieve 20% net earnings growth for 2014."

Ms. Smith concluded, "As we look beyond 2014, we will continue to build Buffalo Wild Wings into an even stronger brand. We are committed to opening 1,700 Buffalo Wild Wings locations in the United States and Canada, and believe that we will achieve this goal within the next ten years. We anticipate further international expansion of Buffalo Wild Wings restaurants around the world, and we have begun implementing strategies to build an enduring, diversified portfolio of restaurant brands to sustain our long-term growth."

Buffalo Wild Wings will be hosting a conference call today, October 29, 2013 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 5, 2013. To access this replay, please dial 1.858.384.5517 password 4644910.

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® 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 21 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 959 Buffalo Wild Wings locations across 49 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 2013 and 2014 and beyond, including but not limited to those relating to our fourth quarter sales trends and projected unit and net earnings growth rates for 2013 and 2014 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), success of acquired restaurants and investments in new or emerging concepts, 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 system standards, 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 30, 2012, 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 29,
2013
September 23,
2012
September 29,
2013
 
September 23,
2012
Revenue:         
Restaurant sales  $ 295,693   228,418  865,521  681,284
Franchise royalties and fees   20,108  18,441  59,651  55,420
Total revenue   315,801   246,859  925,172  736,704
Costs and expenses:         
Restaurant operating costs:         
Cost of sales   88,689   71,263  268,410  213,213
Labor   89,740   68,804  264,500  203,710
Operating   44,668   34,626  126,985  99,772
Occupancy   17,276   13,458  50,267  39,349
Depreciation and amortization   21,587   16,818  62,814  48,439
General and administrative    24,664   21,813  69,562  62,213
Preopening   2,991   4,535  9,682  8,662
Loss on asset disposals and store closures   902   788  1,702  2,122
Total costs and expenses   290,517   232,105  853,922  677,480
Income from operations   25,284   14,754  71,250  59,224
Investment income   383   418  644  713
Earnings before income taxes   25,667   15,172  71,894  59,937
Income tax expense   7,796   4,464  21,155  19,322
Net earnings  $ 17,871   10,708  50,739  40,615
Earnings per common share — basic  $ 0.95   0.58  2.70  2.19
Earnings per common share — diluted   0.95   0.57  2.69  2.17
Weighted average shares outstanding — basic   18,779   18,589  18,765  18,573
Weighted average shares outstanding — diluted   18,889   18,723  18,842  18,675

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 29,
2013
September 23,
2012
September 29,
2013
September 23,
2012
Revenue:        
Restaurant sales 93.6% 92.5% 93.6% 92.5%
Franchising royalties and fees 6.4 7.5 6.4 7.5
Total revenue 100.0 100.0 100.0 100.0
Costs and expenses:        
Restaurant operating costs:        
Cost of sales 30.0 31.2 31.0 31.3
Labor 30.3 30.1 30.6 29.9
Operating 15.1 15.2 14.7 14.6
Occupancy 5.8 5.9 5.8 5.8
Depreciation and amortization 6.8 6.8 6.8 6.6
General and administrative 7.8 8.8 7.5 8.4
Preopening 0.9 1.8 1.0 1.2
Loss on asset disposals and store closures 0.3 0.3 0.2 0.3
Total costs and expenses 92.0 94.0 92.3 92.0
Income from operations 8.0 6.0 7.7 8.0
Investment income 0.1 0.2 0.1 0.1
Earnings before income taxes 8.1 6.1 7.8 8.1
Income tax expense 2.5 1.8 2.3 2.6
Net earnings 5.7 4.3 5.5 5.5

 

 

 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)

(unaudited)

     
  September 29,
2013
December 30,
2012
Assets    
Current assets:    
Cash and cash equivalents $ 36,671  21,340
Marketable securities  7,126  9,579
Accounts receivable — net of allowance of $25  21,964  20,203
Inventory  8,958  7,820
Prepaid expenses  4,090  3,869
Refundable income taxes  —  4,122
Deferred income taxes  9,908  5,774
Restricted assets  37,013  52,829
Total current assets  125,730  125,536
     
Property and equipment, net  422,833  386,570
Reacquired franchise rights, net  34,690  37,370
Goodwill  32,533  32,365
Other assets  16,061  9,246
Total assets $ 631,847  591,087
Liabilities and Stockholders' Equity    
Current liabilities:    
Unearned franchise fees $ 2,228  1,763
Income tax payable  1,750  —
Accounts payable  27,849  36,418
Accrued compensation and benefits  34,591  39,637
Accrued expenses  13,168  11,461
System-wide payables  37,111  51,564
Total current liabilities  116,697  140,843
     
Long-term liabilities:    
Other liabilities  1,961  1,752
Deferred income taxes  39,358  37,128
Deferred lease credits  31,647  27,992
Total liabilities  189,663  207,715
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 18,779,934 and 18,623,370, respectively  129,981  121,450
Retained earnings  312,786  262,047
Accumulated other comprehensive loss (583) (125)
Total stockholders' equity  442,184  383,372
Total liabilities and stockholders' equity $ 631,847  591,087

 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(unaudited)

 
  Nine months ended
  September 29,
2013
September 23,
2012
Cash flows from operating activities:     
Net earnings  $ 50,739  40,615
Adjustments to reconcile net earnings to cash provided by operations:     
Depreciation   59,004  46,409
Amortization   3,810  2,030
Loss on asset disposals and store closures   1,682  1,757
Deferred lease credits   3,852  2,966
Deferred income taxes   (1,547)  (3,612)
Stock-based compensation   7,290  6,207
Excess tax benefit from stock issuance   (399)  (2,024)
Change in operating assets and liabilities:     
Trading securities   (829)  (850)
Accounts receivable   (266)  (7,712)
Inventory   (1,039)  (199)
Prepaid expenses   (225)  583
Other assets   (772)  (1,826)
Unearned franchise fees   465  (37)
Accounts payable   (6,925)  2,088
Income taxes   6,271  7,230
Accrued expenses   1,283  13,162
Net cash provided by operating activities   122,394  106,787
Cash flows for investing activities:     
Acquisition of property and equipment   (96,552)  (79,007)
Acquisition of businesses/investments in affiliates  (10,288)  —
Purchase of marketable securities   —  (123,943)
Proceeds from marketable securities   3,282  112,238
Net cash used in investing activities   (103,558)  (90,712)
Cash flows for financing activities:     
Proceeds from line of credit  5,000  —
Repayments of line of credit  (5,000)  —
Issuance of common stock   1,237  1,147
Excess tax benefit from stock issuance  399  2,024
Tax payments for restricted stock units   (4,813)  (8,447)
Net cash used in financing activities   (3,177)  (5,276)
Effect of exchange rate changes on cash and cash equivalents  (328)  (7)
Net increase in cash and cash equivalents   15,331  10,792
Cash and cash equivalents at beginning of period   21,340  20,530
Cash and cash equivalents at end of period  $ 36,671  31,322

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

Restaurant Count
 
Company-owned Restaurants:
  Q1 Q2 Q3 Q4
2013 397 407 415  
2012 327 330 343 381
2011 263 277 288 319
2010 235 234 244 259
2009 206 215 220 232
 
Franchised Restaurants:
  Q1 Q2 Q3 Q4
2013 514 525 534  
2012 505 505 511 510
2011 488 492 498 498
2010 430 447 457 473
2009 373 383 400 420
Same-Store Sales
 
Company-owned Restaurants:
  Q1 Q2 Q3 Q4 Year
2013 1.4% 3.8% 4.8%    
2012 9.2% 5.3% 6.2% 5.8% 6.6%
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%
 
Franchised Restaurants:
  Q1 Q2 Q3 Q4 Year
2013 2.2% 4.1% 3.9%    
2012 7.3% 5.5% 5.8% 7.4% 6.5%
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%

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

Average Weekly Sales Volumes
 
Company-owned Restaurants:
  Q1 Q2 Q3 Q4 Year
2013 $56,953 54,759 55,592    
2012 55,131 51,524 52,561 55,595 53,783
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
           
Franchised Restaurants:
  Q1 Q2 Q3 Q4 Year
2013 $60,050 58,186 58,926    
2012 57,282 54,766 55,608 58,490 56,570
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
CONTACT: Investor Relations Contact:

         Heather Pribyl

         952.253.0731
Source: Buffalo Wild Wings, Inc.

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