Buffalo Wild Wings, Inc. Announces Third Quarter Earnings per Share of $0.95

MINNEAPOLIS - Oct. 29, 2013 // GLOBE NEWSWIRE // - Buffalo Wild Wings, Inc. (Nasdaq:BWLD) announced today financial results for the third quarter ended September 29, 2013. Highlights for the third quarter versus the same period a year ago were:

  • Total revenue increased 27.9% to $315.8 million
  • Company-owned restaurant sales grew 29.5% to $295.7 million
  • Same-store sales increased 4.8% at company-owned restaurants and 3.9% at franchised restaurants
  • Net earnings increased 66.9% to $17.9 million from $10.7 million, and earnings per diluted share increased 65.4% to $0.95 from $0.57

Sally Smith, President and Chief Executive Officer, commented, "We're proud to share this quarter's results as we approach our 10-year anniversary as a public company. Revenue increased 27.9%, which helped fuel impressive net earnings growth. We increased the number of company-owned restaurants by 21% with continued new unit growth and franchise acquisitions compared to third quarter last year, and same-store sales increased 4.8% at company-owned restaurants and 3.9% at franchised locations. The cost per pound for traditional chicken wings was lower than last year and our cost of sales percentage was 30.0%, the lowest percentage since fourth quarter of 2011. As a result, we grew our net earnings 66.9%, achieving earnings per diluted share of $0.95 for the third quarter."

Total revenue increased 27.9% to $315.8 million in the third quarter compared to $246.9 million in the third quarter of 2012. Company-owned restaurant sales for the quarter increased 29.5% over the same period in 2012, to $295.7 million, driven by a company-owned same-store sales increase of 4.8% and 72 additional company-owned restaurants at the end of third quarter 2013 relative to the same period in 2012. Franchise royalties and fees increased 9.0% to $20.1 million for the quarter versus $18.4 million in the third quarter of 2012. This increase is attributed to a franchise same-store sales increase of 3.9% and 23 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $55,592 for the third quarter of 2013 compared to $52,561 for the same quarter last year, a 5.8% increase. Franchised restaurants averaged $58,926 for the period versus $55,608 in the third quarter a year ago, a 6.0% increase.

For the third quarter, net earnings increased 66.9% to $17.9 million versus $10.7 million in the third quarter of 2012. Earnings per diluted share were $0.95, as compared to third quarter 2012 earnings per diluted share of $0.57.

2013 and 2014 Outlook

Ms. Smith remarked, "With the excitement of football season, we are focused on driving sales. Same-store sales are about 5.3% at company-owned restaurants and 3.0% at franchised locations for the first four weeks of the fourth quarter compared to 3.8% and 5.6%, respectively, for the same period last year. In the fourth quarter, unit growth continues with 22 company-owned and 22 franchised restaurants expected to open. Also, we expect our franchisees in Mexico to open two locations during the fourth quarter. With the strength of our net earnings growth in the first nine months of the year, positive momentum in same-store sales, and improved cost of sales percentage versus last year, we believe we will achieve 20% net earnings growth for 2013, equating to 28% on a 52-week basis."

Ms. Smith continued, "We will achieve the exciting milestone of 1,000 Buffalo Wild Wings restaurants in the first quarter of 2014. For the full year, we plan to open 45 company-owned and 40 franchised locations in the United States and Canada, and we expect our international franchisees to open at least 10 restaurants across the globe. We remain focused on providing a unique and compelling social experience for our sports-loving Guests, and we believe that with our planned unit growth and ongoing operational diligence we will achieve 20% net earnings growth for 2014."

Ms. Smith concluded, "As we look beyond 2014, we will continue to build Buffalo Wild Wings into an even stronger brand. We are committed to opening 1,700 Buffalo Wild Wings locations in the United States and Canada, and believe that we will achieve this goal within the next ten years. We anticipate further international expansion of Buffalo Wild Wings restaurants around the world, and we have begun implementing strategies to build an enduring, diversified portfolio of restaurant brands to sustain our long-term growth."

Buffalo Wild Wings will be hosting a conference call today, October 29, 2013 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 5, 2013. To access this replay, please dial 1.858.384.5517 password 4644910.

About Buffalo Wild Wings, Inc.

Buffalo Wild Wings, Inc., founded in 1982 and headquartered in Minneapolis, Minnesota, is a growing owner, operator and franchisor of Buffalo Wild Wings® 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 21 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 959 Buffalo Wild Wings locations across 49 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 2013 and 2014 and beyond, including but not limited to those relating to our fourth quarter sales trends and projected unit and net earnings growth rates for 2013 and 2014 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), success of acquired restaurants and investments in new or emerging concepts, 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 system standards, 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 30, 2012, 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 29,

2013

    September 23,

2012

    September 29,

2013 

    September 23,

2012

Revenue: 

 

 

 

 

Restaurant sales 

$ 295,693 

 228,418

 865,521

 681,284

Franchise royalties and fees 

 20,108

 18,441

 59,651

 55,420

Total revenue 

 315,801 

 246,859

 925,172

 736,704

Costs and expenses: 

 

 

 

 

Restaurant operating costs: 

 

 

 

 

Cost of sales 

 88,689 

 71,263

 268,410

 213,213

Labor 

 89,740 

 68,804

 264,500

 203,710

Operating 

 44,668 

 34,626

 126,985

 99,772

Occupancy 

 17,276 

 13,458

 50,267

 39,349

Depreciation and amortization 

 21,587 

 16,818

 62,814

 48,439

General and administrative  

 24,664 

 21,813

 69,562

 62,213

Preopening 

 2,991 

 4,535

 9,682

 8,662

Loss on asset disposals and store closures 

 902 

 788

 1,702

 2,122

Total costs and expenses 

 290,517 

 232,105

 853,922

 677,480

Income from operations 

 25,284 

 14,754

 71,250

 59,224

Investment income 

 383 

 418

 644

 713

Earnings before income taxes 

 25,667 

 15,172

 71,894

 59,937

Income tax expense 

 7,796 

 4,464

 21,155

 19,322

Net earnings 

$ 17,871 

 10,708

 50,739

 40,615

Earnings per common share — basic 

$ 0.95 

 0.58

 2.70

 2.19

Earnings per common share — diluted 

 0.95 

 0.57

 2.69

 2.17

Weighted average shares outstanding — basic 

 18,779 

 18,589

 18,765

 18,573

Weighted average shares outstanding — diluted 

 18,889 

 18,723

 18,842

 18,675

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 29,

2013

    September 23,

2012

    September 29,

2013

    September 23,

2012

Revenue:

 

 

 

 

Restaurant sales

93.6%

92.5%

93.6%

92.5%

Franchising royalties and fees

6.4

7.5

6.4

7.5

Total revenue

100.0

100.0

100.0

100.0

Costs and expenses:

 

 

 

 

Restaurant operating costs:

 

 

 

 

Cost of sales

30.0

31.2

31.0

31.3

Labor

30.3

30.1

30.6

29.9

Operating

15.1

15.2

14.7

14.6

Occupancy

5.8

5.9

5.8

5.8

Depreciation and amortization

6.8

6.8

6.8

6.6

General and administrative

7.8

8.8

7.5

8.4

Preopening

0.9

1.8

1.0

1.2

Loss on asset disposals and store closures

0.3

0.3

0.2

0.3

Total costs and expenses

92.0

94.0

92.3

92.0

Income from operations

8.0

6.0

7.7

8.0

Investment income

0.1

0.2

0.1

0.1

Earnings before income taxes

8.1

6.1

7.8

8.1

Income tax expense

2.5

1.8

2.3

2.6

Net earnings

5.7

4.3

5.5

5.5

 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)

(unaudited)

 

 

 

 

September 29, 2013

  December 30, 2012

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$ 36,671

 21,340

Marketable securities

 7,126

 9,579

Accounts receivable — net of allowance of $25

 21,964

 20,203

Inventory

 8,958

 7,820

Prepaid expenses

 4,090

 3,869

Refundable income taxes

 —

 4,122

Deferred income taxes

 9,908

 5,774

Restricted assets

 37,013

 52,829

Total current assets

 125,730

 125,536

 

 

 

Property and equipment, net

 422,833

 386,570

Reacquired franchise rights, net

 34,690

 37,370

Goodwill

 32,533

 32,365

Other assets

 16,061

 9,246

Total assets

$ 631,847

 591,087

Liabilities and Stockholders' Equity

 

 

Current liabilities:

 

 

Unearned franchise fees

$ 2,228

 1,763

Income tax payable

 1,750

 —

Accounts payable

 27,849

 36,418

Accrued compensation and benefits

 34,591

 39,637

Accrued expenses

 13,168

 11,461

System-wide payables

 37,111

 51,564

Total current liabilities

 116,697

 140,843

 

 

 

Long-term liabilities:

 

 

Other liabilities

 1,961

 1,752

Deferred income taxes

 39,358

 37,128

Deferred lease credits

 31,647

 27,992

Total liabilities

 189,663

 207,715

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 18,779,934 and 18,623,370, respectively

 129,981

 121,450

Retained earnings

 312,786

 262,047

Accumulated other comprehensive loss

(583)

(125)

Total stockholders' equity

 442,184

 383,372

Total liabilities and stockholders' equity

$ 631,847

 591,087

 

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(unaudited)

 

 

Nine months ended

 

September 29,

2013

    September 23,

2012

Cash flows from operating activities: 

 

 

Net earnings 

$ 50,739

 40,615

Adjustments to reconcile net earnings to cash provided by operations: 

 

 

Depreciation 

 59,004

 46,409

Amortization 

 3,810

 2,030

Loss on asset disposals and store closures 

 1,682

 1,757

Deferred lease credits 

 3,852

 2,966

Deferred income taxes 

 (1,547)

 (3,612)

Stock-based compensation 

 7,290

 6,207

Excess tax benefit from stock issuance 

 (399)

 (2,024)

Change in operating assets and liabilities: 

 

 

Trading securities 

 (829)

 (850)

Accounts receivable 

 (266)

 (7,712)

Inventory 

 (1,039)

 (199)

Prepaid expenses 

 (225)

 583

Other assets 

 (772)

 (1,826)

Unearned franchise fees 

 465

 (37)

Accounts payable 

 (6,925)

 2,088

Income taxes 

 6,271

 7,230

Accrued expenses 

 1,283

 13,162

Net cash provided by operating activities 

 122,394

 106,787

Cash flows for investing activities: 

 

 

Acquisition of property and equipment 

 (96,552)

 (79,007)

Acquisition of businesses/investments in affiliates

 (10,288)

 —

Purchase of marketable securities 

 —

 (123,943)

Proceeds from marketable securities 

 3,282

 112,238

Net cash used in investing activities 

 (103,558)

 (90,712)

Cash flows for financing activities: 

 

 

Proceeds from line of credit

 5,000

 —

Repayments of line of credit

 (5,000)

 —

Issuance of common stock 

 1,237

 1,147

Excess tax benefit from stock issuance

 399

 2,024

Tax payments for restricted stock units 

 (4,813)

 (8,447)

Net cash used in financing activities 

 (3,177)

 (5,276)

Effect of exchange rate changes on cash and cash equivalents

 (328)

 (7)

Net increase in cash and cash equivalents 

 15,331

 10,792

Cash and cash equivalents at beginning of period 

 21,340

 20,530

Cash and cash equivalents at end of period 

$ 36,671

 31,322

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

Restaurant Count

 

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

2013

397

407

415

 

2012

327

330

343

381

2011

263

277

288

319

2010

235

234

244

259

2009

206

215

220

232

 

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

2013

514

525

534

 

2012

505

505

511

510

2011

488

492

498

498

2010

430

447

457

473

2009

373

383

400

420

Same-Store Sales

 

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

Year

2013

   1.4%

3.8%

4.8%

 

 

2012

9.2%

5.3%

6.2%

5.8%

6.6%

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%

 

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

2013

2.2%

 4.1%

   3.9%

 

 

2012

7.3%

5.5%

5.8%

7.4%

  6.5%

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%

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

Average Weekly Sales Volumes

 

Company-owned Restaurants:

 

Q1

Q2

Q3

Q4

Year

2013

   $56,953

     54,759

    55,592

 

 

2012

55,131

51,524

52,561

    55,595

    53,783

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

 

 

 

 

 

 

Franchised Restaurants:

 

Q1

Q2

Q3

Q4

Year

2013

$60,050

58,186

58,926

 

 

2012

57,282

54,766

55,608

58,490

56,570

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

Contact:

Investor Relations

Heather Pribyl
952.253.0731

Source: Buffalo Wild Wings, Inc.

 

###

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