Buffalo Wild Wings, Inc. Announces Fourth Quarter 2007 Results
Same-store sales increases of 3.4% at company-owned and 2.3% at franchised restaurants; Earnings per diluted share of $0.34
MINNEAPOLIS--(BUSINESS WIRE)--Feb. 12, 2008--Buffalo Wild Wings, Inc. (Nasdaq: BWLD) announced today financial results for the fourth quarter ended December 30, 2007. Highlights for the fourth quarter were:
-- Total revenue increased 9.7% to $91.4 million (13 weeks) from
$83.3 million (14 weeks); excluding the additional operating
week in 2006, revenue increased 18.9% over the prior year
-- Company-owned restaurant sales grew 9.1% to $81.0 million (13
weeks) from $74.2 million (14 weeks); excluding the additional
operating week in 2006, company-owned restaurant sales grew
18.1% over prior year
-- Same-store sales increased 3.4% at company-owned restaurants
and 2.3% at franchised restaurants
-- Earnings per diluted share of $0.34 (13 weeks) versus $0.38
(14 weeks) from prior year, with the additional operating week
in 2006 estimated to have contributed $0.08 per diluted share;
excluding the additional operating week in 2006, earnings per
diluted share increased 13.3% over prior year
As a reminder, Buffalo Wild Wings utilizes a 52- or 53-week fiscal year. The fiscal year ended December 30, 2007 was a 52-week year, with the fourth quarter having thirteen weeks. The fiscal year ended December 31, 2006 was a 53-week year, with the fourth quarter of 2006 having fourteen weeks.
Sally Smith, President and Chief Executive Officer, commented, "In October of 2006, we shared our 2007 annual performance goals of 15% unit growth, 20% revenue growth and 25% net income growth and I am pleased to report that we achieved them all. We ended the year with 493 locations, and the performance of newer restaurants drove increases in our average weekly sales volumes of 7.6% for company-owned and 4.4% for franchised locations for the year. Our total revenue for the fourth quarter increased 18.9% over prior year, when excluding the additional operating week in the fourth quarter last year, with same-store sales increases of 3.4% at company-owned and 2.3% at franchised restaurants. More importantly, for the full year of 2007, our revenue increased 21.3%, excluding the additional operating week in 2006, with same-store sales increases of 6.9% at company-owned and 3.9% at franchised restaurants. The fourth quarter of 2007 provided earnings per diluted share of $0.34, which equates to a 13% increase over the prior year, when excluding the estimated $0.08 per share benefit due to the additional operating week in 2006. For the full year of 2007, on a 52-week comparison, our earnings per diluted share increased more than 30%, to $1.10 per share."
Total revenue, which includes company-owned restaurant sales and franchise royalties and fees, increased 9.7% to $91.4 million in the fourth quarter compared to $83.3 million in the fourth quarter of 2006. Company-owned restaurant sales for the quarter increased 9.1% to $81.0 million driven by a company-owned same-store sales increase of 3.4% and 22 more company-owned restaurants in operation at the end of fourth quarter 2007 relative to the same period in 2006. Franchise royalties and fees increased 14.8% to $10.4 million versus $9.1 million in the prior year. This increase was due to a franchised same-store sales increase of 2.3% and 42 more franchised restaurants at the end of the period versus a year ago.
Average weekly sales for company-owned restaurants were $40,485 for the fourth quarter of 2007 compared to $38,800 for the same quarter last year, a 4.3% increase. Franchised restaurants averaged $47,293 for the period versus $46,008 in the fourth quarter a year ago, a 2.8% increase.
For the fourth quarter, earnings per diluted share were $0.34, as compared to fourth quarter 2006 earnings per diluted share of $0.38. Fourth quarter 2006 benefited from an additional fourteenth week, which contributed an estimated $.08 per diluted share.
2008 Outlook
Ms. Smith continued, "We thank our franchisees and team members for another great year, and believe that together we will achieve continued success in 2008. First quarter is well underway, and our same-store sales to date are 4.1% for our company-owned and 1.3% at franchised restaurants. We believe our operational attention to guest service and hospitality and a strong first-quarter marketing plan will deliver results."
In closing, Ms. Smith stated, "Despite an uncertain economy, we remain committed to 15% unit growth in 2008. While no one can predict how the consumer will react in a changing economy, and the extent of commodity increases is still unknown, we are focused on continuing our four-year trend of positive quarterly same-store sales and our eight-year trend of average weekly sales volume growth. We believe that with our unit growth, along with continued sales strength and an emphasis on cost controls, we can achieve our net income growth target of 25% in 2008."
Buffalo Wild Wings will be hosting a conference call today, February 12, 2008 at 4:00 p.m. Central Standard Time to discuss these results. There will be a simultaneous webcast conducted at our website http://www.buffalowildwings.com.
A replay of the call will be available until February 19, 2008. To access this replay, please dial 1.303.590.3030, password 3836783.
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 496 Buffalo Wild Wings locations across 37 states.
Forward-looking Statements
Certain statements in this release that are not historical facts, including, without limitation, those relating to our anticipated Las Vegas restaurant acquisition, our expected store openings prior to year-end and our expectations to meet our 2008 growth goals, are forward-looking statements that involve risks and uncertainties. Such 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 timing of obtaining the requisite regulatory approvals and completing other contingencies necessary to consummate the Las Vegas restaurant acquisition, the outcome and impact of the Las Vegas restaurant acquisition, timing and completion of the Avado restaurant site acquisition, 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, the cost of fresh chicken wings, the success of our marketing initiatives, our ability to control restaurant labor and other restaurant operating costs 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
(Dollar and share amounts in thousands except per share data)
(unaudited)
Three months ended (1) Fiscal years ended (1)
------------------------- -------------------------
December 30, December 31, December 30, December 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Revenue:
Restaurant sales $ 80,950 74,222 292,824 247,150
Franchising
royalties and
fees 10,435 9,092 36,828 31,033
------------ ------------ ------------ ------------
Total
revenue 91,385 83,314 329,652 278,183
------------ ------------ ------------ ------------
Costs and
expenses:
Restaurant
operating
costs:
Cost of sales 24,899 22,497 90,065 76,087
Labor 23,471 21,608 87,784 73,030
Operating 13,501 12,117 47,974 41,087
Occupancy 5,300 4,721 19,986 17,529
Depreciation 4,783 4,080 16,987 14,492
General and
administrative
(2) 9,438 8,255 35,740 30,374
Preopening 2,227 801 4,520 3,077
Asset disposals
and impairment 449 652 987 1,008
------------ ------------ ------------ ------------
Total costs
and
expenses 84,068 74,731 304,043 256,684
------------ ------------ ------------ ------------
Income from
operations 7,317 8,583 25,609 21,499
Interest income 686 813 2,909 2,339
------------ ------------ ------------ ------------
Earnings before
income taxes 8,003 9,396 28,518 23,838
Income tax
expense 1,998 2,597 8,864 7,565
------------ ------------ ------------ ------------
Net earnings 6,005 6,799 19,654 16,273
============ ============ ============ ============
Earnings per
common share -
basic $ 0.34 0.39 1.12 0.95
Earnings per
common share -
diluted 0.34 0.38 1.10 0.92
Weighted average
share
outstanding -
basic 17,612 17,249 17,554 17,157
Weighted average
share
outstanding -
diluted 17,860 17,678 17,833 17,629
(1) Buffalo Wild Wings, Inc. operates on a 52/53-week fiscal year, with each quarter in a 52-week fiscal year representing a 13-week period. Fiscal year 2006 was a 53-week fiscal year, with the fourth quarter representing a 14-week period, while fiscal year 2007 was a 52-week fiscal year, with the fourth quarter representing a 13-week period.
(2) Contains stock-based compensation of $707, $1,008, $3,755, and $3,216, 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 (1) Fiscal years ended (1)
------------------------- -------------------------
December 30, December 31, December 30, December 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Revenue:
Restaurant sales 88.6% 89.1% 88.8% 88.8%
Franchising
royalties and
fees 11.4 10.9 11.2 11.2
------------ ------------ ------------ ------------
Total revenue 100.0 100.0 100.0 100.0
------------ ------------ ------------ ------------
Costs and
expenses:
Restaurant
operating costs:
Cost of sales 30.8 30.3 30.8 30.8
Labor 29.0 29.1 30.0 29.5
Operating 16.7 16.3 16.4 16.6
Occupancy 6.5 6.4 6.8 7.1
Depreciation 5.2 4.9 5.2 5.2
General and
administrative 10.3 9.9 10.8 10.9
Preopening 2.4 1.0 1.4 1.1
Asset disposals
and impairment 0.5 0.8 0.3 0.4
------------ ------------ ------------ ------------
Total costs
and expenses 92.0 89.7 92.2 92.3
------------ ------------ ------------ ------------
Income from
operations 8.0 10.3 7.8 7.7
Interest income 0.8 1.0 0.9 0.8
------------ ------------ ------------ ------------
Earnings before
income taxes 8.8 11.3 8.7 8.6
Income tax expense 2.2 3.1 2.7 2.7
------------ ------------ ------------ ------------
Net earnings 6.6 8.2 6.0 5.8
============ ============ ============ ============
(1) Buffalo Wild Wings, Inc. operates on a 52/53-week fiscal year, with each quarter in a 52-week fiscal year representing a 13-week period. Fiscal year 2006 was a 53-week fiscal year, with the fourth quarter representing a 14-week period, while fiscal year 2007 was a 52-week fiscal year, with the fourth quarter representing a 13-week period.
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
December 30, December 31,
2007 2006
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 1,521 11,756
Marketable securities 66,513 52,829
Accounts receivable - franchisees, net
of allowance of $25 and $47,
respectively 885 929
Accounts receivable - other 6,976 5,212
Inventory 2,362 1,767
Prepaid expenses 3,060 1,052
Refundable income tax 1,886 --
Deferred income taxes 1,303 1,405
------------ ------------
Total current assets 84,506 74,950
Property and equipment, net 102,742 78,137
Restricted cash 7,161 6,007
Other assets 2,320 1,720
Goodwill 369 369
------------ ------------
Total assets $ 197,098 161,183
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Unearned franchise fees $ 2,316 2,347
Accounts payable 10,692 5,874
Income taxes payable -- 264
Accrued compensation and benefits 12,615 10,963
Accrued expenses 6,207 5,538
Current portion of deferred lease
credits 660 794
------------ ------------
Total current liabilities 32,490 25,780
Long-term liabilities:
Other liabilities 1,031 478
Marketing fund payables 7,161 6,007
Deferred income taxes 2,166 3,162
Deferred lease credits, net of current
portion 12,585 9,540
------------ ------------
Total liabilities 55,433 44,967
------------ ------------
Commitments and contingencies
Stockholders' equity:
Undesignated stock, 1,000,000 and
5,600,000 shares authorized,
respectively; none issued -- --
Common stock, no par value. Authorized
20,200,000 and 15,600,000 shares,
respectively; issued and outstanding
17,933,497, and 17,591,180,
respectively 80,825 75,030
Retained earnings 60,840 41,186
------------ ------------
Total stockholders' equity 141,665 116,216
------------ ------------
Total liabilities and stockholders'
equity $ 197,098 161,183
============ ============
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
Fiscal years ended
-------------------------
December 30, December 31,
2007 2006
------------ ------------
Cash flows from operating activities:
Net earnings $ 19,654 16,273
Adjustments to reconcile net earnings to
cash provided by operations:
Depreciation 16,987 14,492
Amortization (54) (54)
Asset disposals and impairment 987 1,008
Deferred lease credits 2,374 393
Deferred income taxes (894) (2,228)
Stock-based compensation 3,755 3,216
Excess tax benefit from stock
issuance (1,007) (1,153)
Change in operating assets and
liabilities:
Purchase of marketable
securities (302) (1,288)
Accounts receivable (1,183) (1,575)
Inventory (595) (265)
Prepaid expenses (2,008) 920
Other assets (600) (853)
Unearned franchise fees (31) 153
Accounts payable 3,683 (1,884)
Income taxes (1,143) 1,315
Accrued expenses 3,956 4,561
------------ ------------
Net cash provided by
operating activities 43,579 33,031
------------ ------------
Cash flows from investing activities:
Acquisition of property and equipment (41,359) (23,760)
Purchase of marketable securities (158,170) (108,328)
Proceeds of marketable securities 144,842 105,259
------------ ------------
Net cash used in investing
activities (54,687) (26,829)
------------ ------------
Cash flows from financing activities:
Issuance of common stock 1,446 1,101
Tax payments for restricted stock (1,580) (686)
Excess tax benefit from stock issuance 1,007 1,153
------------ ------------
Net cash provided by
financing activities 873 1,568
------------ ------------
Net increase (decrease) in
cash and cash equivalents (10,235) 7,770
Cash and cash equivalents at beginning of
year 11,756 3,986
------------ ------------
Cash and cash equivalents at end of year $ 1,521 11,756
============ ============
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Restaurant Count
Company-owned Restaurants:
Q1 Q2 Q3 Q4
----------- ----------- ----------- -----------
2007 140 145 148 161
2006 124 129 134 139
2005 106 110 116 122
2004 88 92 97 103
2003 73 74 77 84
Franchised Restaurants:
Q1 Q2 Q3 Q4
----------- ----------- ----------- -----------
2007 299 301 313 332
2006 260 270 278 290
2005 212 224 234 248
2004 168 175 189 203
2003 131 138 142 161
Same-Store Sales
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ----------
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%
2004 11.1% 10.6% 9.9% 7.6% 9.7%
2003 (1.4%) 2.7% 6.7% 8.5% 4.3%
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ----------
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%
2004 12.0% 10.4% 5.7% 3.7% 7.6%
2003 (0.4%) 2.3% 8.5% 10.7% 5.6%
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Average Weekly Sales Volumes
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ----------
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
2004 32,289 30,248 30,983 33,038 31,663
2003 28,782 27,132 28,281 31,171 28,886
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ----------
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
2004 39,678 38,072 38,727 40,926 39,402
2003 33,920 33,393 35,289 39,014 35,491
Average Wing Price Per Pound
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ----------
2007 $1.40 1.25 1.24 1.24 1.28
2006 1.24 1.10 1.14 1.21 1.17
2005 1.45 1.14 1.08 1.17 1.20
2004 1.49 1.46 1.35 1.30 1.39
2003 1.01 1.02 1.00 1.21 1.06
CONTACT: Buffalo Wild Wings, Inc.
Investor Relations Contact:
Mary Twinem, 952-253-0731
SOURCE: Buffalo Wild Wings, Inc.
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