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 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® 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 Contact: Heather Pribyl 952.253.0731Source:Buffalo Wild Wings, Inc.