MINNEAPOLIS, Oct. 23, 2012 (GLOBE NEWSWIRE) -- Buffalo Wild Wings, Inc. (Nasdaq:BWLD), announced today financial results for the third quarter ended September 23, 2012. Highlights for the third quarter versus the same period a year ago were:
- Total revenue increased 24.8% to $246.9 million
- Company-owned restaurant sales grew 26.2% to $228.4 million
- Same-store sales increased 6.2% at company-owned restaurants and 5.8% at franchised restaurants
- Net earnings decreased 5.0% to $10.7 million from $11.3 million, and earnings per diluted share decreased 6.6% to $0.57 from $0.61
Sally Smith, President and Chief Executive Officer, commented, "We're pleased with our strong top-line growth of nearly 25% in the third quarter. We focused on operational excellence at the restaurant level and our teams delivered strong same-store sales. In addition, we leveraged on labor, operating, and occupancy expenses. High cost of sales and incremental preopening expenses moderated our bottom-line expansion, producing earnings per diluted share of $0.57 compared to $0.61 in 2011."
Total revenue increased 24.8% to $246.9 million in the third quarter compared to $197.8 million in the third quarter of 2011. Company-owned restaurant sales for the quarter increased 26.2% over the same period in 2011, to $228.4 million, driven by a company-owned same-store sales increase of 6.2% and 55 additional company-owned restaurants at the end of third quarter 2012 relative to the same period in 2011. Franchise royalties and fees increased 10.2% to $18.4 million for the quarter versus $16.7 million in the third quarter of 2011. This increase is attributed to a franchise same-store sales increase of 5.8% and 13 additional franchised restaurants at the end of the period versus a year ago.
Average weekly sales for company-owned restaurants were $52,561 for the third quarter of 2012 compared to $49,461 for the same quarter last year, a 6.3% increase. Franchised restaurants averaged $55,608 for the period versus $51,350 in the third quarter a year ago, an 8.3% increase.
For the third quarter, net earnings decreased 5.0% to $10.7 million versus $11.3 million in the third quarter of 2011. Earnings per diluted share were $0.57, as compared to third quarter 2011 earnings per diluted share of $0.61.
2012 and 2013 Outlook
Ms. Smith remarked, "With the excitement of football season, the entire Buffalo Wild Wings team is focused on maximizing sales as we have strong prior year same-store sales to eclipse during the next two quarters. Same-store sales are about 3.8% at company-owned restaurants and 5.6% at franchised locations for the first four weeks of the fourth quarter compared to 6.6% and 5.3%, respectively, for the same period last year. Our unit growth will continue and we expect to open at least 24 new company-owned and 20 new franchised restaurants before year end. We completed the purchase of nine franchised locations and are positioned to acquire an additional nine locations this quarter. With continued leveraging of expenses and the benefit of a 53rd week, we will partially offset the continuing high wing costs and estimate our net earnings growth for 2012 will be 15%."
Ms. Smith concluded, "We are a vibrant and resilient brand. In 2013, we will open more than 60 company-owned and 45 franchised restaurants, and should achieve the 1,000 unit mark by the end of the year. We now anticipate we can expand to 1,700 locations in North America, with additional growth abroad. We'll begin to realize the benefit of strategies we've been working on over the past year. We have an enhanced Guest service strategy along with new innovations in food, beverage, and technology that will drive revenue. With this growth and financial diligence, we have a goal for 2013 to achieve 20% net earnings growth on a 52-week basis."
Buffalo Wild Wings will be hosting a conference call today, October 23, 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 October 30, 2012. To access this replay, please dial 1.858.384.5517 password 4568234.
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 20 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 861 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 third 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 | Nine months ended | |||
|
September 23, 2012 |
September 25, 2011 |
September 23, 2012 |
September 25, 2011 |
|
| Revenue: | ||||
| Restaurant sales | $228,418 | 181,036 | 681,284 | 514,459 |
| Franchise royalties and fees | 18,441 | 16,727 | 55,420 | 49,555 |
| Total revenue | 246,859 | 197,763 | 736,704 | 564,014 |
| Costs and expenses: | ||||
| Restaurant operating costs: | ||||
| Cost of sales | 71,263 | 51,655 | 213,213 | 143,654 |
| Labor | 68,804 | 54,783 | 203,710 | 154,970 |
| Operating | 34,626 | 28,537 | 99,772 | 78,134 |
| Occupancy | 13,458 | 11,195 | 39,349 | 32,081 |
| Depreciation and amortization | 16,818 | 12,748 | 48,439 | 35,701 |
| General and administrative | 21,813 | 18,336 | 62,213 | 53,394 |
| Preopening | 4,535 | 3,864 | 8,662 | 10,367 |
| Loss on asset disposals and store closures | 788 | 612 | 2,122 | 1,515 |
| Total costs and expenses | 232,105 | 181,730 | 677,480 | 509,816 |
| Income from operations | 14,754 | 16,033 | 59,224 | 54,198 |
| Investment income (loss) | 418 | (374) | 713 | (170) |
| Earnings before income taxes | 15,172 | 15,659 | 59,937 | 54,028 |
| Income tax expense | 4,464 | 4,393 | 19,322 | 17,228 |
| Net earnings | $10,708 | 11,266 | 40,615 | 36,800 |
| Earnings per common share – basic | $0.58 | 0.61 | 2.19 | 2.01 |
| Earnings per common share – diluted | 0.57 | 0.61 | 2.17 | 2.00 |
| Weighted average shares outstanding – basic | 18,589 | 18,352 | 18,573 | 18,330 |
| Weighted average shares outstanding – diluted | 18,723 | 18,520 | 18,675 | 18,433 |
| 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 23, 2012 |
September 25, 2011 |
September 23, 2012 |
September 25, 2011 |
|
| Revenue: | ||||
| Restaurant sales | 92.5% | 91.5% | 92.5% | 91.2% |
| Franchising royalties and fees | 7.5 | 8.5 | 7.5 | 8.8 |
| Total revenue | 100.0 | 100.0 | 100.0 | 100.0 |
| Costs and expenses: | ||||
| Restaurant operating costs: | ||||
| Cost of sales | 31.2 | 28.5 | 31.3 | 27.9 |
| Labor | 30.1 | 30.3 | 29.9 | 30.1 |
| Operating | 15.2 | 15.8 | 14.6 | 15.2 |
| Occupancy | 5.9 | 6.2 | 5.8 | 6.2 |
| Depreciation and amortization | 6.8 | 6.4 | 6.6 | 6.3 |
| General and administrative | 8.8 | 9.3 | 8.4 | 9.5 |
| Preopening | 1.8 | 2.0 | 1.2 | 1.8 |
| Loss on asset disposals and store closures | 0.3 | 0.3 | 0.3 | 0.3 |
| Total costs and expenses | 94.0 | 91.9 | 92.0 | 90.4 |
| Income from operations | 6.0 | 8.1 | 8.0 | 9.6 |
| Investment income (loss) | 0.2 | (0.2) | 0.1 | 0.0 |
| Earnings before income taxes | 6.1 | 7.9 | 8.1 | 9.6 |
| Income tax expense | 1.8 | 2.2 | 2.6 | 3.1 |
| Net earnings | 4.3 | 5.7 | 5.5 | 6.5 |
| BUFFALO WILD WINGS, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (Dollar amounts in thousands) | ||
| (unaudited) | ||
|
September 23, 2012 |
December 25, 2011 |
|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $31,322 | 20,530 |
| Marketable securities | 52,511 | 39,956 |
| Accounts receivable – net of allowance of $25 | 17,785 | 12,165 |
| Inventory | 6,511 | 6,311 |
| Prepaid expenses | 3,128 | 3,707 |
| Refundable income taxes | 2,355 | 7,561 |
| Deferred income taxes | 7,249 | 6,323 |
| Restricted assets | 36,266 | 42,692 |
| Total current assets | 157,127 | 139,245 |
| Property and equipment, net | 346,963 | 310,170 |
| Other assets | 27,979 | 28,174 |
| Goodwill | 17,777 | 17,770 |
| Total assets | $549,846 | 495,359 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Unearned franchise fees | $1,815 | 1,852 |
| Accounts payable | 37,591 | 30,089 |
| Accrued compensation and benefits | 33,595 | 30,499 |
| Accrued expenses | 11,614 | 7,580 |
| System-wide payables | 36,503 | 44,250 |
| Total current liabilities | 121,118 | 114,270 |
| Long-term liabilities: | ||
| Other liabilities | 1,679 | 1,544 |
| Deferred income taxes | 35,826 | 38,512 |
| Deferred lease credits, net of current portion | 25,381 | 23,047 |
| Total liabilities | 184,004 | 177,373 |
| 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 18,590,352 and 18,377,920, respectively | 120,268 | 113,509 |
| Retained earnings | 245,387 | 204,772 |
| Accumulated other comprehensive income (loss) | 187 | (295) |
| Total stockholders' equity | 365,842 | 317,986 |
| Total liabilities and stockholders' equity | $549,846 | 495,359 |
| BUFFALO WILD WINGS, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (Dollar amounts in thousands) | ||
| (unaudited) | ||
| Nine months ended | ||
|
September 23, 2012 |
September 25, 2011 |
|
| Cash flows from operating activities: | ||
| Net earnings | $40,615 | 36,800 |
| Adjustments to reconcile net earnings to cash provided by operations: | ||
| Depreciation | 46,409 | 35,065 |
| Amortization | 2,030 | 636 |
| Loss on asset disposals and store closures | 1,757 | 1,279 |
| Deferred lease credits | 2,966 | 2,703 |
| Deferred income taxes | (3,612) | 8,220 |
| Stock-based compensation | 6,207 | 8,642 |
| Excess tax benefit from stock issuance | (2,024) | (700) |
| Change in operating assets and liabilities: | ||
| Trading securities | (850) | 37 |
| Accounts receivable | (7,712) | (5,752) |
| Inventory | (199) | (632) |
| Prepaid expenses | 583 | (1,019) |
| Other assets | (1,826) | (2,216) |
| Unearned franchise fees | (37) | (124) |
| Accounts payable | 2,088 | 5,704 |
| Income taxes | 7,230 | 2,877 |
| Accrued expenses | 13,162 | 13,322 |
| Net cash provided by operating activities | 106,787 | 104,842 |
| Cash flows for investing activities: | ||
| Acquisition of property and equipment | (79,007) | (84,651) |
| Purchase of marketable securities | (123,943) | (78,690) |
| Proceeds of marketable securities | 112,238 | 94,387 |
| Net cash used in investing activities | (90,712) | (68,954) |
| Cash flows for financing activities: | ||
| Issuance of common stock | 1,147 | 870 |
| Tax payments for restricted stock units | (8,447) | (2,481) |
| Excess tax benefit from stock issuance | 2,024 | 700 |
| Net cash used in financing activities | (5,276) | (911) |
| Effect of exchange rate changes on cash and cash equivalents | (7) | (86) |
| Net increase in cash and cash equivalents | 10,792 | 34,891 |
| Cash and cash equivalents at beginning of period | 20,530 | 15,309 |
| Cash and cash equivalents at end of period | $31,322 | 50,200 |
| BUFFALO WILD WINGS, INC. AND SUBSIDIARIES | |||||
| Supplemental Information | |||||
| Restaurant Count | |||||
| Company-owned Restaurants: | |||||
| Q1 | Q2 | Q3 | Q4 | ||
| 2012 | 327 | 330 | 343 | ||
| 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 | 505 | 511 | ||
| 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% | 5.3% | 6.2% | ||
| 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% | 5.5% | 5.8% | ||
| 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% |
| BUFFALO WILD WINGS, INC. AND SUBSIDIARIES | |||||
| Supplemental Information | |||||
| Average Weekly Sales Volumes | |||||
| Company-owned Restaurants: | |||||
| Q1 | Q2 | Q3 | Q4 | Year | |
| 2012 | $55,131 | 51,524 | 52,561 | ||
| 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 | 54,766 | 55,608 | ||
| 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 |