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Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the third quarter ended September 27, 2009. Highlights for the third quarter versus the same period a year ago were:
-- Total revenue increased 25.1% to $132.7 million
-- Company-owned restaurant sales grew 26.0% to $120.3 million
-- Same-store sales increased 0.8% at company-owned restaurants and 1.9% at franchised restaurants
-- Net earnings increased 50.4% to $6.9 million from $4.6 million, and earnings per diluted share increased 52.0% to $0.38 from $0.25
Sally Smith, President and Chief Executive Officer, commented, "Buffalo Wild Wings continues to deliver category-leading operational and financial performance as demonstrated by our outstanding third quarter results. Our revenue growth of 25% produced impressive net earnings growth of 50% over last year, achieving earnings per diluted share of $0.38. Our results demonstrate the compelling You Have To Be Here(R) experience that we provide to our Guests. I credit our success to the entire Buffalo Wild Wings Team for their continued dedication to improvement which delivered these great results."
Total revenue increased 25.1% to $132.7 million in the third quarter compared to $106.1 million in the third quarter of 2008. Company-owned restaurant sales for the quarter increased 26.0% over the same period in 2008, to $120.3 million driven by a company-owned same-store sales increase of 0.8% and 33 additional company-owned restaurants in operation at the end of third quarter 2009 relative to the same period in 2008. Franchise royalties and fees increased 17.7% to $12.5 million versus $10.6 million in the third quarter of 2008. This increase was the result of a franchised same-store sales increase of 1.9% and 52 additional franchised restaurants at the end of the period versus a year ago.
Average weekly sales for company-owned restaurants were $42,602 for the third quarter of 2009 compared to $42,400 for the same quarter last year, a 0.5% increase. Franchised restaurants averaged $48,458 for the period versus $46,889 in the third quarter a year ago, a 3.3% increase.
For the third quarter, net earnings increased 50.4% to $6.9 million versus $4.6 million in the third quarter of 2008. Earnings per diluted share were $0.38, as compared to third quarter 2008 earnings per diluted share of $0.25.
2009 and 2010 Outlook
Ms. Smith continued, "Football season is off to a great start and our same-store sales momentum to date in the fourth quarter should provide a strong finish to the year. We are confident we will achieve our 2009 growth goals of 15% unit growth, 25% revenue growth, and 20 to 25% net earnings growth, with net earnings likely to be at the higher end of our stated goal."
Ms. Smith concluded, "With the strong foundation we have built, we have set goals for 2010 that will uphold Buffalo Wild Wings as a leader in the casual dining category. Based on our current development pipeline, we believe we can achieve 13% to 15% unit growth in 2010, which, along with strong restaurant-level performance and leveraging our infrastructure, should translate into net earnings growth of 20%."
Buffalo Wild Wings will be hosting a conference call today, October 27, 2009 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 3, 2009. To access this replay, please dial 1.303.590.3030, password 4169893.
About the Company
Buffalo Wild Wings, Inc., founded in 1982 and headquartered in Minneapolis, Minnesota, is a growing owner, operator and franchisor of restaurants featuring a variety of boldly-flavored, made-to-order menu items including Buffalo-style chicken wings spun in one of 14 signature sauces. Buffalo Wild Wings is an inviting neighborhood destination with widespread appeal and is the recipient of dozens of "Best Wings" and "Best Sports Bar" awards from across the country. There are currently 633 Buffalo Wild Wings locations across 41 states.
Forward-looking Statements
Certain statements in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. These statements include, without limitation, those relating to our fourth quarter sales and projected unit, revenue and earnings growth rates for 2009, 2010, and beyond. Forward-looking statements are based upon the current beliefs and expectations of our management. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, the actual number of locations opening in the future, the sales at these and our other company-owned and franchised locations, our ability to successfully operate in new markets, unforeseen obstacles in developing nontraditional sites, the cost of commodities, the success of our marketing and other initiatives, our ability to control restaurant labor and other restaurant operating costs, economic conditions (including changes in consumer preferences or consumer discretionary spending), the availability of financing to real estate developers and franchisees, competition, the impact of applicable regulations, and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission. 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
(Amounts in thousands except per share data)
(unaudited)
Three months ended Nine months ended
September 27, September 28, September 27, September 28,
2009 2008 2009 2008
Revenue:
Restaurant sales $ 120,290 95,492 357,477 269,850
Franchise royalties and fees 12,451 10,582 36,441 31,354
Total revenue 132,741 106,074 393,918 301,204
Costs and expenses:
Restaurant operating costs:
Cost of sales 35,809 28,422 107,939 81,085
Labor 36,369 29,289 107,974 82,167
Operating 19,416 15,675 55,369 42,807
Occupancy 8,256 6,273 23,774 17,872
Depreciation and amortization 8,267 5,971 23,650 16,720
General and administrative (1) 12,943 10,684 36,136 29,072
Preopening 1,149 2,476 5,231 5,419
Loss on asset disposals and impairment 842 930 1,289 2,068
Total costs and expenses 123,051 99,720 361,362 277,210
Income from operations 9,690 6,354 32,556 23,994
Investment income 379 264 868 1,096
Earnings before income taxes 10,069 6,618 33,424 25,090
Income tax expense 3,197 2,050 11,091 8,382
Net earnings $ 6,872 4,568 22,333 16,708
Earnings per common share - basic $ 0.38 0.26 1.24 0.94
Earnings per common share - diluted 0.38 0.25 1.24 0.93
Weighted average shares outstanding - basic 18,024 17,823 18,001 17,800
Weighted average shares outstanding - diluted 18,098 17,920 18,068 17,903
(1) Includes stock-based compensation of $1,788, $1,297, and $4,278, and $3,221 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 Nine months ended
September 27, September 28, September 27, September 28,
2009 2008 2009 2008
Revenue:
Restaurant sales 90.6 % 90.0 % 90.7 % 89.6 %
Franchising royalties and fees 9.4 10.0 9.3 10.4
Total revenue 100.0 100.0 100.0 100.0
Costs and expenses:
Restaurant operating costs:
Cost of sales 29.8 29.8 30.2 30.0
Labor 30.2 30.7 30.2 30.4
Operating 16.1 16.4 15.5 15.9
Occupancy 6.9 6.6 6.7 6.6
Depreciation and amortization 6.2 5.6 6.0 5.6
General and administrative 9.8 10.1 9.2 9.7
Preopening 0.9 2.3 1.3 1.8
Loss on asset disposals and impairment 0.6 0.9 0.3 0.7
Total costs and expenses 92.7 94.0 91.7 92.0
Income from operations 7.3 6.0 8.3 8.0
Investment income 0.3 0.2 0.2 0.4
Earnings before income taxes 7.6 6.2 8.5 8.3
Income tax expense 2.4 1.9 2.8 2.8
Net earnings 5.2 4.3 5.7 5.5
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 27, 2009 and December 28, 2008
(Dollar amounts in thousands)
(unaudited)
September 27, December 28,
2009 2008
Assets
Current assets:
Cash and cash equivalents $ 12,083 $ 8,347
Marketable securities 40,283 36,157
Accounts receivable - franchisees, net of allowance of $25 1,037 895
Accounts receivable - other 7,669 5,759
Inventory 3,227 3,104
Prepaid expenses 3,512 3,294
Refundable income taxes 1,510 1,611
Deferred income taxes 4,935 1,731
Total current assets 74,256 60,898
Property and equipment, net 181,186 154,432
Restricted cash 21,325 7,670
Other assets 9,439 9,846
Goodwill 11,246 10,972
Total assets $ 297,452 243,818
Liabilities and Stockholders' Equity
Current liabilities:
Unearned franchise fees $ 2,769 2,514
Accounts payable 19,682 16,691
Accrued compensation and benefits 15,968 14,155
Accrued expenses 6,487 7,116
Current portion of deferred lease credits 76 56
Total current liabilities 44,982 40,532
Long-term liabilities:
Other liabilities 1,388 1,270
System-wide payables 21,325 7,670
Deferred income taxes 15,119 8,916
Deferred lease credits, net of current portion 15,595 13,837
Total liabilities 98,409 72,225
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 91,435 86,318
and
outstanding 18,025,351 and 17,887,271 respectively
Retained earnings 107,608 85,275
Total stockholders' equity 199,043 171,593
Total liabilities and stockholders' equity $ 297,452 243,818
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
Nine months ended
September 27, September 28,
2009 2008
Cash flows from operating activities:
Net earnings $ 22,333 16,708
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation 23,191 16,720
Amortization 459 80
Loss on asset disposals and impairment 1,289 2,068
Deferred lease credits 1,705 1,426
Deferred income taxes 2,999 3,929
Stock-based compensation 4,278 3,221
Excess tax benefit from the exercise of stock options (418 ) (435 )
Change in operating assets and liabilities, net of effect of
acquisition:
Trading securities (1,731 ) (164 )
Accounts receivable (1,979 ) (62 )
Inventory (123 ) (327 )
Prepaid expenses (218 ) 438
Other assets (52 ) (429 )
Unearned franchise fees 255 53
Accounts payable 2,792 2,519
Refundable income tax 519 1,016
Accrued expenses 2,662 1,511
Net cash provided by operating activities 57,961 47,272
Cash flows from investing activities:
Acquisition of property and equipment (51,309 ) (48,378 )
Acquisition of franchised restaurants -- (23,071 )
Purchase of marketable securities (39,115 ) (98,984 )
Proceeds of marketable securities 36,720 125,156
Net cash used in investing activities (53,704 ) (45,277 )
Cash flows from financing activities:
Issuance of common stock 574 569
Tax payments for restricted stock units (1,513 ) (989 )
Excess tax benefit from the exercise of stock options 418 435
Net cash provided by (used in) financing activities (521 ) 15
Net increase in cash and cash equivalents 3,736 3,010
Cash and cash equivalents at beginning of period 8,347 1,521
Cash and cash equivalents at end of period $ 12,083 4,531
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Restaurant Count
Company-owned Restaurants:
Q1 Q2 Q3 Q4
2009 206 215 220
2008 165 169 187 197
2007 140 145 148 161
2006 124 129 134 139
2005 106 110 116 122
Franchised Restaurants:
Q1 Q2 Q3 Q4
2009 373 383 400
2008 340 346 348 363
2007 299 301 313 332
2006 260 270 278 290
2005 212 224 234 248
Same-Store Sales
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
2009 6.4 % 2.8 % 0.8 %
2008 4.1 % 8.3 % 6.8 % 4.5 % 5.9 %
2007 8.7 % 8.1 % 8.3 % 3.4 % 6.9 %
2006 7.7 % 8.2 % 11.8 % 13.2 % 10.4 %
2005 6.1 % 2.7 % 1.8 % 2.5 % 3.2 %
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
2009 6.0 % 3.7 % 1.9 %
2008 2.1 % 4.5 % 2.1 % 2.5 % 2.8 %
2007 3.3 % 4.0 % 5.9 % 2.3 % 3.9 %
2006 6.7 % 4.7 % 6.4 % 6.5 % 6.1 %
2005 3.2 % 1.8 % 1.1 % 2.6 % 2.2 %
Average Weekly Sales Volumes
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
2009 $45,593 42,938 42,602
2008 41,438 40,572 42,400 43,864 42,141
2007 39,254 36,655 38,498 40,485 38,757
2006 35,857 33,660 35,380 38,800 36,033
2005 33,195 30,531 31,361 33,953 32,304
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
2009 $50,729 48,619 48,458
2008 47,812 46,390 46,889 48,424 47,382
2007 46,439 43,998 45,879 47,293 45,901
2006 44,342 42,338 42,963 46,008 43,975
2005 41,309 39,824 40,149 42,533 40,999
SOURCE: Buffalo Wild Wings, Inc.
Buffalo Wild Wings, Inc. Investor Relations Contact: Mary Twinem, 952-253-0731
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