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

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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