Category: Restaurants

Buffalo Wild Wings, Inc. Announces Fourth Quarter 2008 Results

Same-store sales increases of 4.5% at company-owned and 2.5% at franchised restaurants; Earnings per diluted share increaseMINNEAPOLIS--(BUSINESS WIRE)--Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the fourth quarter ended December 28, 2008. Highlights for the fourth quarter versus the same period a year ago were: of 26.5% to $0.43

Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the fourth quarter ended December 28, 2008. Highlights for the fourth quarter versus the same period a year ago were:
  • Total revenue increased 32.6% to $121.2 million
  • Company-owned restaurant sales grew 35.7% to $109.8 million
  • Same-store sales increased 4.5% at company-owned restaurants and 2.5% at franchised restaurants
  • Net earnings increased 28.7% to $7.7 million from $6.0 million, and earnings per diluted share increased 26.5% to $0.43 from $0.34

Sally Smith, President and Chief Executive Officer, commented, “We’re excited to share our impressive fourth quarter and full year 2008 results. Our outstanding revenue growth of 32.6% for fourth quarter translated to net earnings growth of 28.7%, providing a strong finish to the year. For the full year of 2008, we increased our number of locations by 67 units, built our top line revenue by over 28%, and delivered net earnings growth of more than 24% to our shareholders. Our performance demonstrates the strength of this brand and the high level of execution by our Franchisees and Team Members.”

Total revenue increased 32.6% to $121.2 million in the fourth quarter compared to $91.4 million in the fourth quarter of 2007. Company-owned restaurant sales for the quarter increased 35.7% to $109.8 million driven by a company-owned same-store sales increase of 4.5% and 36 more company-owned restaurants in operation at the end of fourth quarter 2008 relative to the same period in 2007. Franchise royalties and fees increased 9.0% to $11.4 million versus $10.4 million in the prior year. This increase was the result of a franchised same-store sales increase of 2.5% and 31 more franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $43,864 for the fourth quarter of 2008 compared to $40,485 for the same quarter last year, an 8.3% increase. Franchised restaurants averaged $48,424 for the period versus $47,293 in the fourth quarter a year ago, a 2.4% increase.

For the fourth quarter, net earnings increased 28.7% to $7.7 million versus $6.0 million in the prior year. Earnings per diluted share were $0.43, as compared to fourth quarter 2007 earnings per diluted share of $0.34.

2009 Outlook

Ms. Smith continued, “2009 is off to a great start! To date, our first quarter same-store sales are among the best in the industry with an 8% increase at company-owned restaurants and a 7% increase at franchised locations. Our first quarter marketing and media plans are firmly in place, including a new TV commercial that will air nationally during each week of the college basketball tournaments up through the championship game. Our restaurant Team Members are well-prepared, energized, and ready to "WOW" the crowds.”

Ms. Smith concluded, “We believe our 2009 annual goals of 15% unit growth, 25% revenue growth, and 20% to 25% net earnings growth are achievable. Our brand offers a unique and appealing experience that is more than just going out to eat. Buffalo Wild Wings is a haven where people go to relax and connect with friends and family, and we are thankful that, in this economy, they are choosing Buffalo Wild Wings as the place they want to be for hot wings and a cold beer.”

Buffalo Wild Wings will be hosting a conference call today, February 11, 2009 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 18, 2009. To access this replay, please dial 1.303.590.3030, password 3967792.

About the Company

Buffalo Wild Wings, Inc., founded in 1982 and headquartered in Minneapolis, Minnesota, is a growing owner, operator and franchisor of restaurants featuring a variety of boldly-flavored, made-to-order menu items including Buffalo-style chicken wings spun in one of 14 signature sauces. Buffalo Wild Wings is an inviting neighborhood destination with widespread appeal and is the recipient of dozens of “Best Wings” and “Best Sports Bar” awards from across the country. There are currently 567 Buffalo Wild Wings locations across 39 states.

Forward-looking Statements

Certain statements in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. These statements include, without limitation, those relating to our projected unit, revenue and earnings growth rates for 2009 and beyond and our ability to fund our growth. Forward-looking statements are based upon the current beliefs and expectations of our management. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, the actual number of locations opening in the future, the sales at these and our other company-owned and franchised locations, our ability to successfully operate in new markets, the cost of commodities, the success of our marketing and other initiatives, our ability to control restaurant labor and other restaurant operating costs, the transition of the recently-acquired Las Vegas restaurants, economic conditions (including changes in consumer preferences or consumer discretionary spending), the availability of financing to real estate developers and franchisees, competition, the impact of applicable regulations, and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission. 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 28,
2008

  December 30,
2007
  December 28,
2008
  December 30,
2007
Revenue:                
Restaurant sales   $ 109,836     80,950   379,686   292,824
Franchising royalties and fees     11,377     10,435   42,731   36,828
Total revenue     121,213     91,385   422,417   329,652
Costs and expenses:                
Restaurant operating costs:                
Cost of sales     32,181     24,899   113,266   90,065
Labor     32,442     23,471   114,609   87,784
Operating     17,398     13,501   60,205   47,974
Occupancy     7,285     5,300   25,157   19,986
Depreciation and amortization     6,902     4,783   23,622   16,987
General and administrative (1)     11,079     9,438   40,151   35,740
Preopening     2,511     2,227   7,930   4,520
Loss on asset disposals and impairment     15     449   2,083   987
Total costs and expenses     109,813     84,068   387,023   304,043
Income from operations     11,400     7,317   35,394   25,609
Investment income (loss)     (126 )   686   970   2,909
Earnings before income taxes     11,274     8,003   36,364   28,518
Income tax expense     3,547     1,998   11,929   8,864
Net earnings   $ 7,727     6,005   24,435   19,654
Earnings per common share – basic   $ 0.43     0.34   1.37   1.12
Earnings per common share – diluted     0.43     0.34   1.36   1.10
Weighted average shares outstanding – basic     17,854     17,612   17,813   17,554
Weighted average shares outstanding – diluted     18,011     17,860   17,996   17,833

(1) Includes stock-based compensation of $1,679, $707, $4,900, and $3,755, 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 28,
2008
  December 30,
2007
  December 28,
2008
  December 30,
2007
Revenue:                
Restaurant sales   90.6 %   88.6 %   89.9 %   88.8 %
Franchising royalties and fees   9.4     11.4     10.1     11.2  
Total revenue   100.0     100.0     100.0     100.0  
Costs and expenses:                
Restaurant operating costs:                
Cost of sales   29.3     30.8     29.8     30.8  
Labor   29.5     29.0     30.2     30.0  
Operating   15.8     16.7     15.9     16.4  
Occupancy   6.6     6.5     6.6     6.8  
Depreciation and amortization   5.7     5.2     5.6     5.2  
General and administrative   9.1     10.3     9.5     10.8  
Preopening   2.1     2.4     1.9     1.4  
Loss on asset disposals and impairment   0.0     0.5     0.5     0.3  
Total costs and expenses   90.6     92.0     91.6     92.2  
Income from operations   9.4     8.0     8.4     7.8  
Investment income (loss)   (0.1 )   0.8     0.2     0.9  
Earnings before income taxes   9.3     8.8     8.6     8.7  
Income tax expense   2.9     2.2     2.8     2.7  
Net earnings   6.4     6.6     5.8     6.0  

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

 

(Dollar amounts in thousands, except share data)

(unaudited)

         
    December 28,
2008
  December 30,
2007
Assets        
Current assets:        
Cash and cash equivalents   $ 8,347   1,521
Marketable securities     36,157   66,513
Accounts receivable – franchisees, net of allowance of $25     895   885
Accounts receivable – other     5,759   6,976
Inventory     3,104   2,362
Prepaid expenses     3,294   3,060
Refundable income taxes     1,611   1,886
Deferred income taxes     1,731   1,303
Total current assets     60,898   84,506
         
Property and equipment, net     154,432   102,742
Restricted cash     7,670   7,161
Other assets     9,846   2,320
Goodwill     10,972   369
Total assets   $ 243,818   197,098
         
Liabilities and Stockholders’ Equity        
Current liabilities:        
Unearned franchise fees   $ 2,514   2,316
Accounts payable     16,691   10,692
Accrued compensation and benefits     14,155   12,615
Accrued expenses     7,116   6,207
Current portion of deferred lease credits     56   660
Total current liabilities     40,532   32,490
         
Long-term liabilities:        
Other liabilities     1,270   1,031
Marketing fund payables     7,670   7,161
Deferred income taxes     8,916   2,166
Deferred lease credits, net of current portion     13,837   12,585
Total liabilities     72,225   55,433
         
Commitments and contingencies        
Stockholders’ equity:        
Undesignated stock, 1,000,000 shares authorized; none issued      
Common stock, no par value. Authorized 44,000,000 and 20,200,000 shares, respectively; issued and outstanding 17,887,271 and 17,657,020 respectively     86,318   80,825
Retained earnings     85,275   60,840
Total stockholders’ equity     171,593   141,665
Total liabilities and stockholders’ equity   $ 243,818   197,098

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

         

CONSOLIDATED STATEMENTS OF CASH FLOWS

         

(Dollar amounts in thousands)

         

(unaudited)

         
    Fiscal years ended
    December 28,
2008
  December 30,
2007
Cash flows from operating activities:        
Net earnings   $ 24,435     19,654  
Adjustments to reconcile net earnings to cash provided by operations:        
Depreciation     23,415     16,987  
Amortization     207     (54 )
Loss on asset disposals and impairment     2,083     987  
Deferred lease credits     1,955     2,374  
Deferred income taxes     6,322     (894 )
Stock-based compensation     4,900     3,755  
Excess tax benefit from the exercise of stock options     (615 )   (1,007 )
Change in operating assets and liabilities:        
Trading securities     23     (302 )
Accounts receivable     375     (1,183 )
Inventory     (473 )   (595 )
Prepaid expenses     (152 )   (2,008 )
Other assets     (608 )   (600 )
Unearned franchise fees     198     (31 )
Accounts payable     809     3,683  
Refundable income taxes     890     (1,143 )
Accrued expenses     2,343     3,956  
Net cash provided by operating activities     66,107     43,579  
         
Cash flows from investing activities:        
Acquisition of property and equipment     (67,396 )   (41,359 )
Acquisition of franchised restaurants     (23,071 )    
Purchase of marketable securities     (116,259 )   (158,170 )
Proceeds of marketable securities     146,592     144,842  
Net cash used in investing activities     (60,134 )   (54,687 )
         
Cash flows from financing activities:        
Issuance of common stock     1,227     1,446  
Tax payments for restricted stock units     (989 )   (1,580 )
Excess tax benefit from the exercise of stock options     615     1,007  
Net cash provided by financing activities     853     873  
Net increase (decrease) in cash and cash equivalents     6,826     (10,235 )
Cash and cash equivalents at beginning of period     1,521     11,756  
Cash and cash equivalents at end of period   $ 8,347     1,521  

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

                       

Restaurant Count

                       

Company-owned Restaurants:

                       
   

Q1

 

Q2

 

Q3

 

Q4

   
2008   165     169     187     197        
2007   140     145     148     161        
2006   124     129     134     139        
2005   106     110     116     122        
2004   88     92     97     103        
                       

Franchised Restaurants:

                       
   

Q1

 

Q2

 

Q3

 

Q4

   
2008   340     346     348     363        
2007   299     301     313     332        
2006   260     270     278     290        
2005   212     224     234     248        
2004   168     175     189     203        
                       

Same-Store Sales

                       

Company-owned Restaurants:

                       
   

Q1

 

Q2

 

Q3

 

Q4

 

Year

2008   4.1 %   8.3 %   6.8 %   4.5 %   5.9 %
2007   8.7 %   8.1 %   8.3 %   3.4 %   6.9 %
2006   7.7 %   8.2 %   11.8 %   13.2 %   10.4 %
2005   6.1 %   2.7 %   1.8 %   2.5 %   3.2 %
2004   11.1 %   10.6 %   9.9 %   7.6 %   9.7 %
                       

Franchised Restaurants:

                       
   

Q1

 

Q2

 

Q3

 

Q4

 

Year

2008   2.1 %   4.5 %   2.1 %   2.5 %   2.8 %
2007   3.3 %   4.0 %   5.9 %   2.3 %   3.9 %
2006   6.7 %   4.7 %   6.4 %   6.5 %   6.1 %
2005   3.2 %   1.8 %   1.1 %   2.6 %   2.2 %
2004   12.0 %   10.4 %   5.7 %   3.7 %   7.6 %

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

                     

Average Weekly Sales Volumes

                     

Company-owned Restaurants:

                     
   

Q1

 

Q2

 

Q3

 

Q4

 

Year

   2008

  $41,438   40,572   42,400   43,864   42,141

   2007

  39,254   36,655   38,498   40,485   38,757

   2006

  35,857   33,660   35,380   38,800   36,033

   2005

  33,195   30,531   31,361   33,953   32,304

   2004

  32,289   30,248   30,983   33,038   31,663
                     

Franchised Restaurants:

                     
   

Q1

 

Q2

 

Q3

 

Q4

 

Year

   2008

  $47,812   46,390   46,889   48,424   47,382

   2007

  46,439   43,998   45,879   47,293   45,901

   2006

  44,342   42,338   42,963   46,008   43,975

   2005

  41,309   39,824   40,149   42,533   40,999

   2004

  39,678   38,072   38,727   40,926   39,402

 


Contact:

Buffalo Wild Wings, Inc.
Investor Relations Contact:
Mary Twinem, 952-253-0731