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Buffalo Wild Wings, Inc. Announces Fourth Quarter Earnings per Share of $0.73 and Annual Net Earnings Growth of Over 31% for 2011

By: Buffalo Wild Wings |  4 Shares     122 Reads

MINNEAPOLIS--(BUSINESS WIRE)-- Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the fourth quarter ended December 25, 2011. Highlights for the fourth quarter versus the same period a year ago were:

• Total revenue increased 34.5% to $220.5 million
• Company-owned restaurant sales grew 36.4% to $202.9 million
• Same-store sales increased 8.9% at company-owned restaurants and 5.9% at franchised restaurants
• Net earnings increased 34.0% to $13.6 million from $10.2 million, and earnings per diluted share increased 32.7% to $0.73 from $0.55

Sally Smith, President and Chief Executive Officer, commented, "Our strong fourth quarter performance capped a tremendous year for Buffalo Wild Wings, which reflects the focused efforts and hard work of our franchisees and Team Members in providing sports fans with an outstanding guest experience. Together, we accomplished category-leading results. Fourth quarter same-store sales grew by 8.9% at company-owned and 5.9% at franchised locations, helping us surpass $2 billion in system-wide sales for 2011. Strong sales at both new and existing restaurants drove fourth quarter earnings per share of $0.73, bringing our annual net earnings growth to over 31%."

Total revenue increased 34.5% to $220.5 million in the fourth quarter compared to $163.9 million in the fourth quarter of 2010. Company-owned restaurant sales for the quarter increased 36.4% over the same period in 2010, to $202.9 million, driven by a company-owned same-store sales increase of 8.9% and 60 additional company-owned restaurants at the end of fourth quarter 2011 relative to the same period in 2010. Franchise royalties and fees increased 15.3% to $17.5 million for the quarter versus $15.2 million in the fourth quarter of 2010. This increase is attributed to a franchise same-store sales increase of 5.9% and 25 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $51,983 for the fourth quarter of 2011 compared to $45,595 for the same quarter last year, a 14.0% increase. Franchised restaurants averaged $53,385 for the period versus $49,837 in the fourth quarter a year ago, a 7.1% increase.

For the fourth quarter, net earnings increased 34.0% to $13.6 million versus $10.2 million in the fourth quarter of 2010. Earnings per diluted share were $0.73, as compared to fourth quarter 2010 earnings per diluted share of $0.55.

2012 Outlook

Ms. Smith remarked, "The first quarter is an exciting time for guests at Buffalo Wild Wings. We are off to a great start with strong sales momentum, and our same-store sales through the first six weeks of 2012 have increased 12.9% at company-owned and 10.8% at franchised restaurants. We'll debut our new TV and radio spots, and our multi-layered marketing and advertising program will have an increased presence in first quarter and throughout the year. Our restaurant teams are focused on driving sales and are ready to welcome basketball fans. In addition, we'll begin a phased roll-out of online ordering."

Ms. Smith concluded, "Buffalo Wild Wings is a fun and social brand with tremendous growth potential across the globe. We'll open our 900th restaurant this year, and continue to build our presence on the west and east coasts and in Canada. Ultimately, we believe that we will be a chain of more than 1500 locations in North America. With our strategic focus on guest experience and operational excellence, our ongoing sales strength and unit-level execution, and the benefit of a 53rd week, we will overcome rising commodity costs and achieve 20% net earnings growth for 2012."

Buffalo Wild Wings will be hosting a conference call today, February 7, 2012 at 4:00 p.m. Central Standard 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 February 14, 2012. To access this replay, please dial 1.858.384.5517 password 4503257.

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 18 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 827 Buffalo Wild Wings locations across 47 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 2012 and beyond, including but not limited to those relating to our first quarter sales trends and projected unit and net earnings growth rates for 2012 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), 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 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 26, 2010, 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							Fiscal years ended
			December 25,				December 26,			December 25,			December 26,
			2011				2010			2011			2010
Revenue:
Restaurant sales			$	202,936			148,738			717,395			555,184
Franchise royalties and fees				17,528			15,198			67,083			58,072
Total revenue				220,464			163,936			784,478			613,256
Costs and expenses:
Restaurant operating costs:
Cost of sales				59,637			42,820			203,291			160,877
Labor				60,679			44,424			215,649			167,193
Operating				31,520			23,231			109,654			88,694
Occupancy				11,924			9,653			44,005			36,501
Depreciation and amortization				14,212			10,433			49,913			39,205
General and administrative (1)				19,295			15,038			72,689			53,996
Preopening				4,197			3,297			14,564			8,398
Loss on asset disposals and store closures				414			432			1,929			2,051
Total costs and expenses				201,878			149,328			711,694			556,915
Income from operations				18,586			14,608			72,784			56,341
Investment income				288			350			118			684
Earnings before income taxes				18,874			14,958			72,902			57,025
Income tax expense				5,248			4,789			22,476			18,625
Net earnings			$	13,626			10,169			50,426			38,400
Earnings per common share – basic			$	0.74			0.56			2.75			2.11
Earnings per common share – diluted				0.73			0.55			2.73			2.10
Weighted average shares outstanding – basic				18,361			18,200			18,337			18,175
Weighted average shares outstanding – diluted				18,633			18,363			18,483			18,270

⁽¹⁾ Includes stock-based compensation of $2,741, $3,133, $11,383, and $7,712, 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								Fiscal years ended
			December 25,				December 26,				December 25,				December 26,
			2011				2010				2011				2010
Revenue:
Restaurant sales			92.0	%			90.7	%			91.4	%			90.5	%
Franchising royalties and fees			8.0				9.3				8.6				9.5
Total revenue			100.0				100.0				100.0				100.0
Costs and expenses:
Restaurant operating costs:
Cost of sales			29.4				28.8				28.3				29.0
Labor			29.9				29.9				30.1				30.1
Operating			15.5				15.6				15.3				16.0
Occupancy			5.9				6.5				6.1				6.6
Depreciation and amortization			6.4				6.4				6.4				6.4
General and administrative			8.8				9.2				9.3				8.8
Preopening			1.9				2.0				1.9				1.4
Loss on asset disposals and store closures			0.2				0.3				0.2				0.3
Total costs and expenses			91.6				91.1				90.7				90.8
Income from operations			8.4				8.9				9.3				9.2
Investment income			0.1				0.2				—				0.1
Earnings before income taxes			8.6				9.1				9.3				9.3
Income tax expense			2.4				2.9				2.9				3.0
Net earnings			6.2	%			6.2	%			6.4	%			6.3	%

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
			December 25,					December 26,
			2011					2010
Assets
Current assets:
Cash and cash equivalents			$	20,530				15,309
Marketable securities				39,956				56,827
Accounts receivable – franchisees, net of allowance of $25				1,161				1,086
Accounts receivable – other				11,004				7,947
Inventory				6,311				4,158
Prepaid expenses				3,707				3,505
Refundable income taxes				7,561				6,366
Deferred income taxes				6,323				6,069
Restricted assets				42,692				32,937
Total current assets				139,245				134,204
Property and equipment, net				310,170				224,970
Other assets				28,174				9,937
Goodwill				17,770				11,246
Total assets			$	495,359				380,357
Liabilities and Stockholders’ Equity
Current liabilities:
Unearned franchise fees			$	1,852				2,109
Accounts payable				30,089				17,632
Accrued compensation and benefits				30,499				19,324
Accrued expenses				7,580				5,696
Current portion of deferred lease credits				—				293
System-wide payables				44,250				34,062
Total current liabilities				114,270				79,116
Long-term liabilities:
Other liabilities				1,544				1,574
Deferred income taxes				38,512				24,557
Deferred lease credits, net of current portion				23,047				18,289
Total liabilities				177,373				123,536
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 18,337,920 and 18,214,065, respectively				113,509				102,484
Retained earnings				204,772				154,346
Accumulated other comprehensive loss				(295	)			(9	)
Total stockholders’ equity				317,986				256,821
Total liabilities and stockholders’ equity			$	495,359				380,357

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
			Fiscal years ended
			December 25,					December 26,
			2011					2010
Cash flows from operating activities:
Net earnings			$	50,426				38,400
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation				49,003				38,591
Amortization				910				614
Loss on asset disposals and store closures				1,680				1,835
Deferred lease credits				3,632				2,217
Deferred income taxes				12,816				6,486
Stock-based compensation				11,383				7,712
Excess tax benefit from stock issuance				(4,462	)			(1,475	)
Change in operating assets and liabilities, net of effect of acquisition:
Trading securities				(317	)			(1,369	)
Accounts receivable				(1,222	)			(357	)
Inventory				(1,840	)			(514	)
Prepaid expenses				20				(533	)
Other assets				(2,550	)			(885	)
Unearned franchise fees				(257	)			(597	)
Accounts payable				17,676				1,898
Income taxes				3,267				(3,019	)
Accrued expenses				8,095				695
Net cash provided by operating activities				148,260				89,699
Cash flows from investing activities:
Acquisition of property and equipment td>   (130,127)  (73,399)
Purchase of marketable securities				(98,644	)			(99,165	)
Proceeds of marketable securities				115,833				87,338
Acquisition of franchised restaurants				(33,744	)			—
Net cash used in investing activities				(146,682	)			(85,226	)
Cash flows from financing activities:
Issuance of common stock				1,709				1,415
Excess tax benefit from stock issuance				4,462				1,475
Tax payments for restricted stock units				(2,481	)			(1,625	)
Net cash provided by financing activities				3,690				1,265
Effect of exchange rate changes on cash and cash equivalents				(47	)			(9	)
Net increase in cash and cash equivalents				5,221				5,729
Cash and cash equivalents at beginning of year				15,309				9,580
Cash and cash equivalents at end of year			$	20,530				15,309

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Restaurant Count
Company-owned Restaurants:
			Q1			Q2			Q3			Q4
2011			263			277			288			319
2010			235			234			244			259
2009			206			215			220			232
2008			165			169			187			197
2007			140			145			148			161
Franchised Restaurants:
			Q1			Q2			Q3			Q4
2011			488			492			498			498
2010			430			447			457			473
2009			373			383			400			420
2008			340			346			348			363
2007			299			301			313			332

Same-Store Sales
Company-owned Restaurants:
				Q1					Q2					Q3					Q4					Year
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	%
2008				4.1	%				8.3	%				6.8	%				4.5	%				5.9	%
2007				8.7	%				8.1	%				8.3	%				3.4	%				6.9	%
Franchised Restaurants:
				Q1					Q2					Q3					Q4					Year
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	%
2008				2.1	%				4.5	%				2.1	%				2.5	%				2.8	%
2007				3.3	%				4.0	%				5.9	%				2.3	%				3.9	%

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Average Weekly Sales Volumes
Company-owned Restaurants:
			Q1				Q2			Q3			Q4			Year
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
2008				41,438			40,572			42,400			43,864			42,141
2007				39,254			36,655			38,498			40,485			38,757
Franchised Restaurants:
			Q1				Q2			Q3			Q4			Year
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
2008				47,812			46,390			46,889			48,424			47,382
2007				46,439			43,998			45,879			47,293			45,901

SOURCE: Buffalo Wild Wings, Inc.

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