Buffalo Wild Wings, Inc. Announces Second Quarter 2009 Results

Same-store sales increases of 2.8% at company-owned and 3.7% at franchised restaurants

MINNEAPOLIS--(BUSINESS WIRE)-- Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the second quarter ended June 28, 2009. Highlights for the second quarter versus the same period a year ago were:

  • Total revenue increased 32.4% to $129.6 million
  • Company-owned restaurant sales grew 34.6% to $117.8 million
  • Same-store sales increased 2.8% at company-owned restaurants and 3.7% at franchised restaurants
  • Net earnings increased 24.2% to $7.0 million from $5.6 million, and earnings per diluted share increased 25.8% to $0.39 from $0.31


Sally Smith, President and Chief Executive Officer, commented, "We're very pleased with our ongoing success and the strong second quarter results. Our revenue growth of 32.4% produced impressive net earnings growth of 24.2% over the same period in the prior year, achieving earnings per diluted share of $0.39. With the unsettling and ever-changing economic backdrop, our results are testament that we provided our Guests with an unparalleled dining experience and that Team Members at all levels of our organization were tenacious in delivering strong operational and financial performance."

Total revenue increased 32.4% to $129.6 million in the second quarter compared to $97.9 million in the second quarter of 2008. Company-owned restaurant sales for the quarter increased 34.6% over the same period in 2008, to $117.8 million driven by a company-owned same-store sales increase of 2.8% and 46 additional company-owned restaurants in operation at the end of second quarter 2009 relative to the same period in 2008. Franchise royalties and fees increased 14.0% to $11.9 million versus $10.4 million in the second quarter of 2008. This increase was the result of a franchised same-store sales increase of 3.7% and 37 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $42,938 for the second quarter of 2009 compared to $40,572 for the same quarter last year, a 5.8% increase. Franchised restaurants averaged $48,619 for the period versus $46,390 in the second quarter a year ago, a 4.8% increase.

For the second quarter, net earnings increased 24.2% to $7.0 million versus $5.6 million in the second quarter of 2008. Earnings per diluted share were $0.39, as compared to second quarter 2008 earnings per diluted share of $0.31.

2009 Outlook



Ms. Smith continued, "We're heading into our favorite time of the year - football season! We're investing in our brand with enhanced facilities, craveable new products, and expanded national media campaigns, and our Operations Team is prepared to deliver the You Have To Be Here® experience to our Guests."

Ms. Smith concluded, "We continue on pace to meet each of our 2009 annual goals of 15% unit, 25% revenue, and 20 to 25% net earnings growth. Since going public nearly six years ago, you've heard us speak about our goal of becoming a restaurant chain of 1,000 units in the United States, which we believe we will achieve in 2013. We continue expansion into all fifty states, which will include small towns and urban markets, and development of nontraditional sites such as airports. With the groundwork underway for international development, this 1,000-unit goal is a stepping stone on our way to becoming a global brand."

Buffalo Wild Wings will be hosting a conference call today, July 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 August 3, 2009. To access this replay, please dial 1.303.590.3030, password 4116719.

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 601 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 projected unit, revenue and earnings growth rates for 2009 and beyond, the projected timeline for and nature of our expansion activities, and our anticipated marketing activities. 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
March 29, March 30,
2009 2008
Revenue:
Restaurant sales $ 119,424 $ 86,896
Franchise royalties and fees 12,131 10,366
Total revenue 131,555 97,262

Costs and expenses:
Restaurant operating costs:
Cost of sales 36,208 26,415
Labor 35,549 25,858
Operating 17,987 13,275
Occupancy 7,594 5,697
Depreciation 7,495 5,239
General and administrative (1) 11,420 9,341
Preopening 2,409 1,185
Loss on asset disposals and impairment 175 753
Total costs and expenses 118,837 87,763
Income from operations 12,718 9,499
Investment income 76 432
Earnings before income taxes 12,794 9,931
Income tax expense 4,308 3,406
Net earnings $ 8,486 $ 6,525
Earnings per common share - basic $ 0.47 $ 0.37
Earnings per common share - diluted 0.47 0.36
Weighted average shares outstanding - basic 17,980 17,766
Weighted average shares outstanding - diluted 18,041 17,877


(1) Includes stock-based compensation of $801 and $1,020, 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
March 29, March 30,
2009 2008
Revenue:
Restaurant sales 90.8 % 89.3 %
Franchising royalties and fees 9.2 10.7
Total revenue 100.0 100.0

Costs and expenses:
Restaurant operating costs:
Cost of sales 30.3 30.4
Labor 29.8 29.8
Operating 15.1 15.3
Occupancy 6.4 6.6
Depreciation 5.7 5.4
General and administrative 8.7 9.6
Preopening 1.8 1.2
Loss on asset disposals and impairment 0.1 0.8
Total costs and expenses 90.3 90.2
Income from operations 9.7 9.8
Investment income 0.1 0.4
Earnings before income taxes 9.7 10.2
Income tax expense 3.3 3.5
Net earnings 6.5 % 6.7 %


BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 29, 2009 and December 28, 2008
(Dollar amounts in thousands)
(unaudited)

March 29, December 28,
2009 2008
Assets
Current
assets:
Cash and $ 6,745 $ 8,347
cash
equivalents
Marketable 37,279 36,157
securities
Accounts 1,001 895
receivable
-
franchisees
, net of
allowance
of $25
Accounts 8,008 5,759
receivable
- other
Inventory 3,515 3,104
Prepaid 2,596 3,294
expenses
Refundable - 1,611
income
taxes
Deferred 2,158 1,731
income
taxes
Total 61,302 60,898
current
assets

Property 163,071 154,432
and
equipment,
net
Restricted 6,395 7,670
cash
Other 9,771 9,846
assets
Goodwill 10,972 10,972
Total $ 251,511 $ 243,818
assets

Liabilities
and
Stockholder
s` Equity
Current
liabilities
:
Unearned $ 2,685 $ 2,514
franchise
fees
Income tax 1,166 -
payable
Accounts 14,715 16,691
payable
Accrued 12,714 14,155
compensatio
n and
benefits
Accrued 6,807 7,116
expenses
Current 141 56
portion of
deferred
lease
credits
Total 38,228 40,532
current
liabilities

Long-term
liabilities
:
Other 1,276 1,270
liabilities
Marketing 6,395 7,670
fund
payables
Deferred 10,496 8,916
income
taxes
Deferred 14,388 13,837
lease
credits,
net of
current
portion
Total 70,783 72,225
liabilities

Commitments
and
contingenci
es
Stockholder
s` equity:
Undesignate - -
d stock,
1,000,000
shares
authorized;
none issued
Common 86,967 86,318
stock, no
par value.
Authorized
44,000,000
shares;
issued and
outstanding
17,977,626
and
17,887,271
respectivel
y
Retained 93,761 85,275
earnings
Total 180,728 171,593
stockholder
s` equity
Total $ 251,511 $ 243,818
liabilities
and
stockholder
s` equity


BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)

Three months ended
March 29, March 30,
2009 2008
Cash flows from operating activities:
Net earnings $ 8,486 $ 6,525
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation 7,342 5,239
Amortization 153 (36 )
Loss on asset disposals and impairment 175 753
Deferred lease credits 620 834
Deferred income taxes 1,153 1,267
Stock-based compensation 801 1,020
Excess tax benefit from stock issuance (2 ) (278 )
Change in operating assets and liabilities:
Trading securities (691 ) 1
Accounts receivable (2,339 ) (345 )
Inventory (411 ) (260 )
Prepaid expenses 698 751
Other assets (78 ) 23
Unearned franchise fees 171 132
Accounts payable 784 (219 )
Income taxes 2,779 1,826
Accrued expenses (384 ) (1,212 )
Net cash provided by operating activities 19,257 16,021

Cash flows from investing activities:
Acquisition of property and equipment (18,916 ) (10,395 )
Purchase of marketable securities (13,070 ) (27,704 )
Proceeds of marketable securities 12,639 36,322
Net cash used in investing activities (19,347 ) (1,777 )

Cash flows from financing activities:
Issuance of common stock 3 101
Excess tax benefit from stock issuance 2 278
Tax payments for restricted stock (1,517 ) (989 )
Net cash used in financing activities (1,512 ) (610 )
Net increase (decrease) in cash and cash equivalents (1,602 ) 13,634
Cash and cash equivalents at beginning of period 8,347 1,521
Cash and cash equivalents at end of period $ 6,745 $ 15,155


BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information

Restaurant Count

Company-owned Restaurants:

Q1 Q2 Q3 Q4
2009 206
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
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 %
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 %
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 %


BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information

Average Weekly Sales Volumes

Company-owned Restaurants:

Q1 Q2 Q3 Q4 Year
2009 $45,593
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 $50,730
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



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