Buffalo Wild Wings, Inc. Announces First Quarter Earnings Per Share of $0.98 and Quarterly Net Earnings Growth of over 22%

MINNEAPOLIS--(BUSINESS WIRE)-- Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the first quarter ended March 25, 2012. Highlights for the first quarter versus the same period a year ago were:

  • Total revenue increased 37.9% to $251.1 million
  • Company-owned restaurant sales grew 40.3% to $232.3 million
  • Same-store sales increased 9.2% at company-owned restaurants and 7.3% at franchised restaurants
  • Net earnings increased 22.8% to $18.2 million from $14.9 million, and earnings per diluted share increased 21.0% to $0.98 from $0.81

Sally Smith, President and Chief Executive Officer, commented, "We are pleased with our solid start in 2012, with first quarter same-store sales increases of 9.2% at company-owned restaurants and 7.3% at franchised locations. The combination of strong same-store sales, new restaurant performance, and sales from franchised restaurants acquired in 2011 fueled our substantial revenue increase of 37.9%. We continued to invest in the infrastructure necessary to support our expansion in North America and internationally. Through leveraging expenses at the restaurant level, we limited the impact of higher wing costs. For the first quarter, we achieved net earnings growth of over 22%, and provided value to our shareholders with earnings per diluted share of $0.98."

Total revenue increased 37.9% to $251.1 million in the first quarter compared to $182.2 million in the first quarter of 2011. Company-owned restaurant sales for the quarter increased 40.3% over the same period in 2011, to $232.3 million, driven by a company-owned same-store sales increase of 9.2% and 64 additional company-owned restaurants at the end of first quarter 2012 relative to the same period in 2011. Franchise royalties and fees increased 13.1% to $18.8 million for the quarter versus $16.6 million in the first quarter of 2011. This increase is attributed to a franchise same-store sales increase of 7.3% and 17 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $55,131 for the first quarter of 2012 compared to $48,845 for the same quarter last year, a 12.9% increase. Franchised restaurants averaged $57,282 for the period versus $52,744 in the first quarter a year ago, an 8.6% increase.

For the first quarter, net earnings increased 22.8% to $18.2 million versus $14.9 million in the first quarter of 2011. Earnings per diluted share were $0.98, as compared to first quarter 2011 earnings per diluted share of $0.81.

2012 Outlook

Ms. Smith remarked, "For the first four weeks of the second quarter, same-store sales are 6.7% at company-owned restaurants and 6.6% at our franchised locations. We're increasing our advertising over last year with national radio to cover all of our markets and we're airing a new TV spot. Our Operations Excellence team remains keenly focused on the fundamentals of providing great service to our guests and driving restaurant-level profitability. With solid first quarter results, ongoing same-store sales strength, the benefit of a 53rd week, and expense leveraging, we believe we will achieve our net earnings growth goal of 20% for 2012."

Ms. Smith concluded, "We continue to implement strategies for long-term growth. Our plans include a development pace to achieve 1,500 locations in North America in the next five to seven years. We're also actively pursuing international franchising opportunities and investigating potential concepts for acquisition that would provide additional growth. We are innovating around the critical aspects of the Buffalo Wild Wings brand, including our facilities, food and beverage, sports and entertainment, technology, and our service strategy. We believe that with a dedicated focus on our Guest experience and unit-level profitability, we will prudently expand our presence across the globe and generate industry-leading net earnings growth well into the future."

Buffalo Wild Wings will be hosting a conference call today, April 24, 2012 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 May 1, 2012. To access this replay, please dial 1.858.384.5517 password 4530757.

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 more than 835 Buffalo Wild Wings locations across 48 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 second 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 25, 2011, 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
      March 25,     March 27,
      2012     2011
Revenue:            
Restaurant sales     $ 232,316     165,527
Franchise royalties and fees       18,806     16,623
Total revenue       251,122     182,150
Costs and expenses:            
Restaurant operating costs:            
Cost of sales       72,151     46,264
Labor       68,268     48,878
Operating       32,797     24,549
Occupancy       12,800     10,227
Depreciation and amortization       15,531     11,022
General and administrative       19,424     16,292
Preopening       2,591     2,387
Loss on asset disposals and store closures       737     411
Total costs and expenses       224,299     160,030
Income from operations       26,823     22,120
Investment income       410     356
Earnings before income taxes       27,233     22,476
Income tax expense       8,988     7,615
Net earnings     $ 18,245     14,861
Earnings per common share — basic     $ 0.98     0.81
Earnings per common share — diluted       0.98     0.81
Weighted average shares outstanding — basic       18,555     18,306
Weighted average shares outstanding — diluted       18,638     18,375
               

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 25,     March 27,
      2012     2011
Revenue:            
Restaurant sales     92.5 %     90.9 %
Franchising royalties and fees     7.5       9.1  
Total revenue     100.0       100.0  
Costs and expenses:            
Restaurant operating costs:            
Cost of sales     31.1       27.9  
Labor     29.4       29.5  
Operating     14.1       14.8  
Occupancy     5.5       6.2  
Depreciation and amortization     6.2       6.1  
General and administrative     7.7       8.9  
Preopening     1.0       1.3  
Loss on asset disposals and store closures     0.3       0.2  
Total costs and expenses     89.3       87.9  
Income from operations     10.7       12.1  
Investment income     0.2       0.2  
Earnings before income taxes     10.8       12.3  
Income tax expense     3.6       4.2  
Net earnings     7.3 %     8.2 %
                 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)

             
      March 25,     December 25,
      2012     2011

Assets

           
Current assets:            
Cash and cash equivalents     $ 27,342       20,530  
Marketable securities       44,141       39,956  
Accounts receivable, net of allowance of$25       16,166       12,165  
Inventory       6,228       6,311  
Prepaid expenses       3,439       3,707  
Refundable income taxes             7,561  
Deferred income taxes       6,663       6,323  
Restricted assets       32,797       42,692  
Total current assets       136,776       139,245  
             
Property and equipment, net       312,585       310,170  
Other assets       27,404       28,174  
Goodwill       17,770       17,770  
Total assets     $ 494,535       495,359  
             

Liabilities and Stockholders' Equity

           
Current liabilities:            
Unearned franchise fees     $ 1,701       1,852  
Income tax payable       1,296        
Accounts payable       22,831       30,089  
Accrued compensation and benefits       27,405       30,499  
Accrued expenses       9,627       7,580  
Current portion of deferred lease credits       367        
System-wide payables       32,919       44,250  
Total current liabilities       96,146       114,270  
             
Long-term liabilities:            
Other liabilities       1,605       1,544  
Deferred income taxes       38,141       38,512  
Deferred lease credits, net of current portion       23,149       23,047  
Total liabilities       159,041       177,373  
             
Commitments and contingencies            
Stockholders' equity:            
Undesignated stock, 1,000,000 shares authorized              
Common stock, no par value. Authorized 44,000,000 shares; issued and outstanding 18,564,152 and 18,377,920 respectively       112,637       113,509  
Retained earnings       223,017       204,772  
Accumulated other comprehensive loss       (160 )     (295 )
Total stockholders' equity       335,494       317,986  
Total liabilities and stockholders' equity     $ 494,535       495,359  
                   

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

             
      Three months ended
      March 25,     March 27,
      2012     2011
Cash flows from operating activities:            
Net earnings     $ 18,245       14,861  
Adjustments to reconcile net earnings to cash provided by operations:            
Depreciation       14,852       10,871  
Amortization       679       151  
Loss on asset disposals and store closures       723       411  
Deferred lease credits       838       802  
Deferred income taxes       (711 )     2,806  
Stock-based compensation       1,232       2,553  
Excess tax benefit from the exercise of stock options       (259 )     (140 )
Change in operating assets and liabilities:            
Trading securities       (519 )     (289 )
Accounts receivable       (5,676 )     (2,796 )
Inventory       85       39  
Prepaid expenses       270       425  
Other assets       72       (468 )
Unearned franchise fees       (151 )     5  
Accounts payable       (934 )     2,236  
Income taxes       9,116       3,777  
Accrued expenses       4,378       4,565  
Net cash provided by operating activities       42,240       39,809  
Cash flows from investing activities:            
Acquisition of property and equipment       (23,845 )     (18,746 )
Purchase of marketable securities       (19,669 )     (27,185 )
Proceeds of marketable securities       16,003       23,401  
Net cash used in investing activities       (27,511 )     (22,530 )
Cash flows from financing activities:            
Issuance of common stock       256       168  
Excess tax benefit from the exercise of stock options       259       140  
Tax payments for restricted stock       (8,447 )     (2,481 )
Net cash used in financing activities       (7,932 )     (2,173 )
Effect of exchange rate changes on cash and cash equivalents       15       (4 )
Net increase in cash and cash equivalents       6,812       15,102  
Cash and cash equivalents at beginning of period       20,530       15,309  
Cash and cash equivalents at end of period     $ 27,342       30,411  
                   

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information

 

Restaurant Count

         

Company-owned Restaurants:

                                 
     

Q1

   

Q2

   

Q3

   

Q4

     
2012     327                          
2011     263     277     288     319        
2010     235     234     244     259        
2009     206     215     220     232        
2008     165     169     187     197        
                                 
Franchised Restaurants:        
                                 
     

Q1

   

Q2

   

Q3

   

Q4

     
2012     505                          
2011     488     492     498     498        
2010     430     447     457     473        
2009     373     383     400     420        
2008     340     346     348     363        
         
         
Same-Store Sales
         
Company-owned Restaurants:
                                 
     

Q1

   

Q2

   

Q3

   

Q4

   

Year

2012     9.2 %                          
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 %
                                 

Franchised Restaurants:

       
                                 
     

Q1

   

Q2

   

Q3

   

Q4

   

Year

2012     7.3 %                          
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 %
                                         
 

Average Weekly Sales Volumes

 

Company-owned Restaurants:

                               
     

Q1

   

Q2

   

Q3

   

Q4

   

Year

2012     $ 55,131                        
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
                                 

Franchised Restaurants:

                                 
     

Q1

   

Q2

   

Q3

   

Q4

   

Year

2012     $ 57,282                        
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

Source: Buffalo Wild Wings, Inc.

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