Buffalo Wild Wings, Inc. Announces Third Quarter 2010 Results
- Same-store sales increased 2.6% at company-owned and 0.3% at franchised restaurants
- Earnings per diluted share increase of 23.7% to $0.47
MINNEAPOLIS--(BUSINESS WIRE)--Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the third quarter ended September 26, 2010. Highlights for the third quarter versus the same period a year ago were:
- Total revenue increased 14.0% to $151.3 million
- Company-owned restaurant sales grew 13.9% to $137.0 million
- Same-store sales increased 2.6% at company-owned restaurants and 0.3% at franchised restaurants
- Net earnings increased 23.7% to $8.5 million from $6.9 million, and earnings per diluted share increased 23.7% to $0.47 from $0.38
Sally Smith, President and Chief Executive Officer, commented, "We continue to be a leader in the industry, and our focus on execution and profitability again produced strong year-over-year growth in units, revenue, and net earnings. Buffalo Wild Wings has grown by 81 restaurants over the last twelve months, 20 of these in the third quarter, for a year-over-year unit increase of 13%. Our third quarter revenue increased by 14%, and we produced strong net earnings growth of over 23%, providing value to our shareholders with earnings per share of $0.47."
Total revenue increased 14.0% to $151.3 million in the third quarter compared to $132.7 million in the third quarter of 2009. Company-owned restaurant sales for the quarter increased 13.9% over the same period in 2009, to $137.0 million, driven by a company-owned same-store sales increase of 2.6% and 24 additional company-owned restaurants at the end of third quarter 2010 relative to the same period in 2009. Franchise royalties and fees increased 15.6% to $14.4 million versus $12.5 million in the third quarter of 2009. This increase is attributed to a franchised same-store sales increase of 0.3% and 57 additional franchised restaurants at the end of the period versus a year ago.
Average weekly sales for company-owned restaurants were $44,394 for the third quarter of 2010 compared to $42,602 for the same quarter last year, a 4.2% increase. Franchised restaurants averaged $49,005 for the period versus $48,458 in the third quarter a year ago, a 1.1% increase.
For the third quarter, net earnings increased 23.7% to $8.5 million versus $6.9 million in the third quarter of 2009. Earnings per diluted share were $0.47, as compared to third quarter 2009 earnings per diluted share of $0.38.
2010 and 2011 Outlook
Ms. Smith remarked, "We plan to open fifteen company-owned and seventeen franchised restaurants in the fourth quarter, on track to meet our 13% unit growth goal for 2010. For the first four weeks of the fourth quarter, same-store sales at company-owned locations are (0.7%) and franchised locations are (1.7%), comping over prior year same-store sales of 5.9% and 3.8%, respectively. With sustained efforts to drive traffic throughout the football season, combined with higher media spending, we believe we can achieve at least flat same-store sales at company-owned restaurants for the fourth quarter and accomplish our 2010 net earnings goal of 20% growth for the year."
Ms. Smith concluded, "We have an intense dedication to driving the long-term success of the Buffalo Wild Wings brand. We're committed to sustaining our unit growth across the United States and expect to open over 100 new restaurants next year, a 13% unit increase. With this unit growth, and our persistent focus on operational excellence and strong restaurant-level economics, we believe we can achieve over 18% net earnings growth in 2011."
Buffalo Wild Wings will be hosting a conference call today, October 26, 2010 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 2, 2010. To access this replay, please dial 1.858.384.5517, password 4373777.
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 eighteen 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 708 Buffalo Wild Wings locations across 43 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 trends and projected unit, revenue and net earnings growth rates for 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, our ability to achieve and manage our planned expansion, the ability of our franchisees to open and manage new restaurants, the actual number of locations opened during 2010 and 2011 and beyond, 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 sales at company-owned and franchised locations, the cost of commodities, the success of our key initiatives and our advertising and marketing campaigns, our ability to control 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, or the smoking of tobacco, 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 27, 2009, 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 26, September 27, September 26, September 27,
2010 2009 2010 2009
Revenue:
Restaurant sales $ 136,953 120,290 406,446 357,477
Franchise royalties and fees 14,395 12,451 42,874 36,441
Total revenue 151,348 132,741 449,320 393,918
Costs and expenses:
Restaurant operating costs:
Cost of sales 38,232 35,809 118,057 107,939
Labor 41,995 36,369 122,769 107,974
Operating 22,835 19,416 65,463 55,369
Occupancy 9,131 8,256 26,848 23,774
Depreciation and amortization 9,766 8,267 28,772 23,650
General and administrative (1) 14,003 12,943 38,958 36,136
Preopening 2,789 1,149 5,101 5,231
Loss on asset disposals and
store closures 682 842 1,619 1,289
Total costs and expenses 139,433 123,051 407,587 361,362
Income from operations 11,915 9,690 41,733 32,556
Investment income 305 379 334 868
Earnings before income taxes 12,220 10,069 42,067 33,424
Income tax expense 3,716 3,197 13,836 11,091
Net earnings $ 8,504 6,872 28,231 22,333
Earnings per common share
– basic $ 0.47 0.38 1.55 1.24
Earnings per common share
– diluted 0.47 0.38 1.55 1.24
Weighted average shares
outstanding – basic 18,187 18,024 18,167 18,001
Weighted average shares
outstanding – diluted 18,253 18,098 18,238 18,068
(1) Includes stock-based compensation of $ 2,041, $1,788, $4,579, and $4,278, 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 26, September 27, September 26, September 27,
2010 2009 2010 2009
Revenue:
Restaurant sales 90.5 % 90.6 % 90.5 % 90.7 %
Franchising royalties and fees 9.5 9.4 9.5 9.3
Total revenue 100.0 100.0 100.0 100.0
Costs and expenses:
Restaurant operating costs:
Cost of sales 27.9 29.8 29.0 30.2
Labor 30.7 30.2 30.2 30.2
Operating 16.7 16.1 16.1 15.5
Occupancy 6.7 6.9 6.6 6.7
Depreciation and amortization 6.5 6.2 6.4 6.0
General and administrative 9.3 9.8 8.7 9.2
Preopening 1.8 0.9 1.1 1.3
Loss on asset disposals
and store closures 0.5 0.6 0.4 0.3
Total costs and expenses 92.1 92.7 90.7 91.7
Income from operations 7.9 7.3 9.3 8.3
Investment income 0.2 0.3 0.1 0.2
Earnings before income taxes 8.1 7.6 9.4 8.5
Income tax expense 2.5 2.4 3.1 2.8
Net earnings 5.6 5.2 6.3 5.7
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
September 26, December 27,
2010 2009
Assets
Current assets:
Cash and cash equivalents $ 7,288 9,580
Marketable securities 63,838 43,632
Accounts receivable – franchisees,
net of allowance of $25 1,160 2,118
Accounts receivable – other 9,907 7,383
Inventory 3,631 3,644
Prepaid expenses 3,925 2,972
Refundable income taxes 5,597 1,872
Deferred income taxes 1,954 2,938
Restricted assets 32,120 24,384
Total current assets 129,420 98,523
Property and equipment, net 211,466 189,639
Other assets 9,859 9,665
Goodwill 11,246 11,246
Total assets $ 361,991 309,073
Liabilities and Stockholders' Equity
Current liabilities:
Unearned franchise fees $ 2,265 2,706
Accounts payable 22,521 13,436
Accrued compensation and benefits 19,566 19,554
Accrued expenses 6,449 6,540
Current portion of deferred lease credits 1 84
System-wide payables 32,120 24,384
Total current liabilities 82,922 66,704
Long-term liabilities:
Other liabilities 1,541 1,422
Deferred income taxes 16,284 14,940
Deferred lease credits,
net of current portion 17,859 16,174
Total liabilities 118,606 99,240
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
18,190,146 and 18,054,375 respectively 99,208 93,887
Retained earnings 144,177 115,946
Total stockholders' equity 243,385 209,833
Total liabilities and
stockholders' equity $ 361,991 309,073
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
Nine months ended
September 26, September 27,
2010 2009
Cash flows from operating activities:
Net earnings $ 28,231 22,333
Adjustments to reconcile net earnings to
cash provided by operations:
Depreciation 28,312 23,191
Amortization 460 459
Loss on asset disposals and store closures 1,425 1,289
Deferred lease credits 1,468 1,705
Deferred income taxes 2,328 2,999
Stock-based compensation 4,579 4,278
Excess tax benefit from the exercise of stock options (172) (418)
Change in operating assets and liabilities:
Trading securities (1,072) (1,731)
Accounts receivable (1,432) (1,979)
Inventory 13 (123)
Prepaid expenses (953) (218)
Other assets (654) (52)
Unearned franchise fees (441) 255
Accounts payable 3,165 2,792
Refundable income taxes (3,553) 519
Accrued expenses 1,342 2,662
Net cash provided by operating activities 63,046 57,961
Cash flows from investing activities:
Acquisition of property and equipment (45,546) (51,309)
Purchase of marketable securities (84,398) (39,115)
Proceeds of marketable securities 65,264 36,720
Net cash used in investing activities (64,680) (53,704)
Cash flows from financing activities:
Issuance of common stock 795 574
Tax payments for restricted stock units (1,625) (1,513)
Excess tax benefit from the exercise of stock options 172 418
Net cash used in financing activities (658) (521)
Net increase (decrease) in cash and cash equivalents (2,292) 3,736
Cash and cash equivalents at beginning of period 9,580 8,347
Cash and cash equivalents at end of period $ 7,288 12,083
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Restaurant Count
Company-owned Restaurants:
Q1 Q2 Q3 Q4
2010 235 234 244
2009 206 215 220 232
2008 165 169 187 197
2007 140 145 148 161
2006 124 129 134 139
Franchised Restaurants:
Q1 Q2 Q3 Q4
2010 430 447 457
2009 373 383 400 420
2008 340 346 348 363
2007 299 301 313 332
2006 260 270 278 290
Same-Store Sales
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
2010 0.1% (0.1%) 2.6%
2009 6.4% 2.8% 0.8% 2.6% 3.1%
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%
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
2010 0.7% (0.7%) 0.3%
2009 6.0% 3.7% 1.9% 2.0% 3.4%
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%
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Average Weekly Sales Volumes
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
2010 $ 45,327 43,021 44,394
2009 45,593 42,938 42,602 44,583 43,912
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
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
2010 $ 51,532 49,051 49,005
2009 50,729 48,619 48,458 50,115 49,479
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
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