Buffalo Wild Wings, Inc. (NASDAQ: BWLD), announced today financial results for the second quarter ended June 28, 2009. Highlights for the second quarter versus the same period a year ago were:
- Total revenue increased 32.4% to $129.6 million
- Company-owned restaurant sales grew 34.6% to $117.8 million
- Same-store sales increased 2.8% at company-owned restaurants and 3.7% at franchised restaurants
- Net earnings increased 24.2% to $7.0 million from $5.6 million, and earnings per diluted share increased 25.8% to $0.39 from $0.31
Sally Smith, President and Chief Executive Officer, commented, “We’re very pleased with our ongoing success and the strong second quarter results. Our revenue growth of 32.4% produced impressive net earnings growth of 24.2% over the same period in the prior year, achieving earnings per diluted share of $0.39. With the unsettling and ever-changing economic backdrop, our results are testament that we provided our Guests with an unparalleled dining experience and that Team Members at all levels of our organization were tenacious in delivering strong operational and financial performance.”
Total revenue increased 32.4% to $129.6 million in the second quarter compared to $97.9 million in the second quarter of 2008. Company-owned restaurant sales for the quarter increased 34.6% over the same period in 2008, to $117.8 million driven by a company-owned same-store sales increase of 2.8% and 46 additional company-owned restaurants in operation at the end of second quarter 2009 relative to the same period in 2008. Franchise royalties and fees increased 14.0% to $11.9 million versus $10.4 million in the second quarter of 2008. This increase was the result of a franchised same-store sales increase of 3.7% and 37 additional franchised restaurants at the end of the period versus a year ago.
Average weekly sales for company-owned restaurants were $42,938 for the second quarter of 2009 compared to $40,572 for the same quarter last year, a 5.8% increase. Franchised restaurants averaged $48,619 for the period versus $46,390 in the second quarter a year ago, a 4.8% increase.
For the second quarter, net earnings increased 24.2% to $7.0 million versus $5.6 million in the second quarter of 2008. Earnings per diluted share were $0.39, as compared to second quarter 2008 earnings per diluted share of $0.31.
2009 Outlook
Ms. Smith continued, “We’re heading into our favorite time of the year – football season! We’re investing in our brand with enhanced facilities, craveable new products, and expanded national media campaigns, and our Operations Team is prepared to deliver the You Have To Be Here® experience to our Guests.”
Ms. Smith concluded, “We continue on pace to meet each of our 2009 annual goals of 15% unit, 25% revenue, and 20 to 25% net earnings growth. Since going public nearly six years ago, you’ve heard us speak about our goal of becoming a restaurant chain of 1,000 units in the United States, which we believe we will achieve in 2013. We continue expansion into all fifty states, which will include small towns and urban markets, and development of nontraditional sites such as airports. With the groundwork underway for international development, this 1,000-unit goal is a stepping stone on our way to becoming a global brand.”
Buffalo Wild Wings will be hosting a conference call today, July 27, 2009 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 August 3, 2009. To access this replay, please dial 1.303.590.3030, password 4116719.
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 601 Buffalo Wild Wings locations across 41 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, the projected timeline for and nature of our expansion activities, and our anticipated marketing activities. 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, unforeseen obstacles in developing nontraditional sites, the cost of commodities, the success of our marketing and other initiatives, our ability to control restaurant labor and other restaurant operating costs, 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 | |||||||||||||||
| (Amounts in thousands except per share data) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three months ended | Six months ended | ||||||||||||||
June 28, | June 29, | June 28, | June 29, | ||||||||||||
| Revenue: | |||||||||||||||
| Restaurant sales | $ | 117,763 | 87,462 | 237,187 | 174,358 | ||||||||||
| Franchise royalties and fees | 11,859 | 10,406 | 23,990 | 20,772 | |||||||||||
| Total revenue | 129,622 | 97,868 | 261,177 | 195,130 | |||||||||||
| Costs and expenses: | |||||||||||||||
| Restaurant operating costs: | |||||||||||||||
| Cost of sales | 35,922 | 26,248 | 72,130 | 52,663 | |||||||||||
| Labor | 36,056 | 27,020 | 71,605 | 52,878 | |||||||||||
| Operating | 17,966 | 13,857 | 35,953 | 27,132 | |||||||||||
| Occupancy | 7,924 | 5,902 | 15,518 | 11,599 | |||||||||||
| Depreciation and amortization | 7,888 | 5,510 | 15,383 | 10,749 | |||||||||||
| General and administrative (1) | 11,773 | 9,047 | 23,193 | 18,388 | |||||||||||
| Preopening | 1,673 | 1,758 | 4,082 | 2,943 | |||||||||||
| Loss on asset disposals and impairment | 272 | 385 | 447 | 1,138 | |||||||||||
| Total costs and expenses | 119,474 | 89,727 | 238,311 | 177,490 | |||||||||||
| Income from operations | 10,148 | 8,141 | 22,866 | 17,640 | |||||||||||
| Investment income | 413 | 400 | 489 | 832 | |||||||||||
| Earnings before income taxes | 10,561 | 8,541 | 23,355 | 18,472 | |||||||||||
| Income tax expense | 3,586 | 2,926 | 7,894 | 6,332 | |||||||||||
| Net earnings | $ | 6,975 | 5,615 | 15,461 | 12,140 | ||||||||||
| Earnings per common share – basic | $ | 0.39 | 0.32 | 0.86 | 0.68 | ||||||||||
| Earnings per common share – diluted | 0.39 | 0.31 | 0.86 | 0.68 | |||||||||||
| Weighted average shares outstanding – basic | 17,999 | 17,810 | 17,990 | 17,788 | |||||||||||
| Weighted average shares outstanding – diluted | 18,070 | 17,906 | 18,052 | 17,893 | |||||||||||
(1) Includes stock-based compensation of $1,689, $904, $2,490, and $1,924, 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 | Six months ended | |||||||||||||||||
| June 28, 2009 | June 29, 2008 | June 28, 2009 | June 29, 2008 | |||||||||||||||
| Revenue: | ||||||||||||||||||
| Restaurant sales | 90.9 | % | 89.4 | % | 90.8 | % | 89.4 | % | ||||||||||
| Franchising royalties and fees | 9.1 | 10.6 | 9.2 | 10.6 | ||||||||||||||
| Total revenue | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||||
| Costs and expenses: | ||||||||||||||||||
| Restaurant operating costs: | ||||||||||||||||||
| Cost of sales | 30.5 | 30.0 | 30.4 | 30.2 | ||||||||||||||
| Labor | 30.6 | 30.9 | 30.2 | 30.3 | ||||||||||||||
| Operating | 15.3 | 15.8 | 15.2 | 15.6 | ||||||||||||||
| Occupancy | 6.7 | 6.7 | 6.5 | 6.7 | ||||||||||||||
| Depreciation and amortization | 6.1 | 5.6 | 5.9 | 5.5 | ||||||||||||||
| General and administrative | 9.1 | 9.2 | 8.9 | 9.4 | ||||||||||||||
| Preopening | 1.3 | 1.8 | 1.6 | 1.5 | ||||||||||||||
| Loss on asset disposals and impairment | 0.2 | 0.4 | 0.2 | 0.6 | ||||||||||||||
| Total costs and expenses | 92.2 | 91.7 | 91.2 | 91.0 | ||||||||||||||
| Income from operations | 7.8 | 8.3 | 8.8 | 9.0 | ||||||||||||||
| Investment income | 0.3 | 0.4 | 0.2 | 0.4 | ||||||||||||||
| Earnings before income taxes | 8.1 | 8.7 | 8.9 | 9.5 | ||||||||||||||
| Income tax expense | 2.8 | 3.0 | 3.0 | 3.2 | ||||||||||||||
| Net earnings | 5.4 | 5.7 | 5.9 | 6.2 | ||||||||||||||
| BUFFALO WILD WINGS, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| June 28, 2009 and December 28, 2008 | ||||||||
| (Dollar amounts in thousands) | ||||||||
| (unaudited) | ||||||||
June 28, | December 28, | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ 11,139 | $ 8,347 | ||||||
| Marketable securities | 37,867 | 36,157 | ||||||
| Accounts receivable – franchisees, net of allowance of $25 | 881 | 895 | ||||||
| Accounts receivable – other | 6,746 | 5,759 | ||||||
| Inventory | 3,359 | 3,104 | ||||||
| Prepaid expenses | 1,905 | 3,294 | ||||||
| Refundable income taxes | — | 1,611 | ||||||
| Deferred income taxes | 2,741 | 1,731 | ||||||
| Total current assets | 64,638 | 60,898 | ||||||
| Property and equipment, net | 168,171 | 154,432 | ||||||
| Restricted cash | 10,707 | 7,670 | ||||||
| Other assets | 9,645 | 9,846 | ||||||
| Goodwill | 10,972 | 10,972 | ||||||
| Total assets | $ 264,133 | 243,818 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Unearned franchise fees | $ 2,680 | 2,514 | ||||||
| Income tax payable | 253 | — | ||||||
| Accounts payable | 12,778 | 16,691 | ||||||
| Accrued compensation and benefits | 14,245 | 14,155 | ||||||
| Accrued expenses | 5,606 | 7,116 | ||||||
| Current portion of deferred lease credits | 173 | 56 | ||||||
| Total current liabilities | 35,735 | 40,532 | ||||||
| Long-term liabilities: | ||||||||
| Other liabilities | 1,350 | 1,270 | ||||||
| Marketing fund payables | 10,707 | 7,670 | ||||||
| Deferred income taxes | 11,565 | 8,916 | ||||||
| Deferred lease credits, net of current portion | 14,799 | 13,837 | ||||||
| Total liabilities | 74,156 | 72,225 | ||||||
| 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 18,023,450 and 17,887,271 respectively | 89,241 | 86,318 | ||||||
| Retained earnings | 100,736 | 85,275 | ||||||
| Total stockholders’ equity | 189,977 | 171,593 | ||||||
| Total liabilities and stockholders’ equity | $ 264,133 | 243,818 | ||||||
| BUFFALO WILD WINGS, INC. AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (Dollar amounts in thousands) | |||||||||||
| (unaudited) | |||||||||||
| Six months ended | |||||||||||
| June 28, 2009 | June 29, 2008 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net earnings | $ | 15,461 | 12,140 | ||||||||
| Adjustments to reconcile net earnings to cash provided by operations: | |||||||||||
| Depreciation | 15,077 | 10,749 | |||||||||
| Amortization | 306 | 36 | |||||||||
| Loss on asset disposals and impairment | 447 | 1,138 | |||||||||
| Deferred lease credits | 840 | 1,113 | |||||||||
| Deferred income taxes | 1,639 | 2,386 | |||||||||
| Stock-based compensation | 2,490 | 1,924 | |||||||||
| Excess tax benefit from the exercise of stock options | (31 | ) | (302 | ) | |||||||
| Change in operating assets and liabilities: | |||||||||||
| Trading securities | (1,204 | ) | (76 | ) | |||||||
| Accounts receivable | (734 | ) | 182 | ||||||||
| Inventory | (255 | ) | (155 | ) | |||||||
| Prepaid expenses | 1,389 | 1,098 | |||||||||
| Other assets | (105 | ) | (79 | ) | |||||||
| Unearned franchise fees | 166 | 89 | |||||||||
| Accounts payable | (61 | ) | 376 | ||||||||
| Income taxes | 1,895 | 960 | |||||||||
| Accrued expenses | 20 | (928 | ) | ||||||||
| Net cash provided by operating activities | 37,340 | 30,651 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisition of property and equipment | (33,115 | ) | (24,643 | ) | |||||||
| Purchase of marketable securities | (25,284 | ) | (68,578 | ) | |||||||
| Proceeds of marketable securities | 24,778 | 69,852 | |||||||||
| Net cash used in investing activities | (33,621 | ) | (23,369 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Issuance of common stock | 555 | 562 | |||||||||
| Tax payments for restricted stock units | (1,513 | ) | (989 | ) | |||||||
| Excess tax benefit from the exercise of stock options | 31 | 302 | |||||||||
| Net cash used in financing activities | (927 | ) | (125 | ) | |||||||
| Net increase in cash and cash equivalents | 2,792 | 7,157 | |||||||||
| Cash and cash equivalents at beginning of period | 8,347 | 1,521 | |||||||||
| Cash and cash equivalents at end of period | $ | 11,139 | 8,678 | ||||||||
| BUFFALO WILD WINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||
| Supplemental Information | ||||||||||||||||||||||||||||||
| Restaurant Count | ||||||||||||||||||||||||||||||
Company-owned Restaurants: | ||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||||||||||
| 2009 | 206 | 215 | ||||||||||||||||||||||||||||
| 2008 | 165 | 169 | 187 | 197 | ||||||||||||||||||||||||||
| 2007 | 140 | 145 | 148 | 161 | ||||||||||||||||||||||||||
| 2006 | 124 | 129 | 134 | 139 | ||||||||||||||||||||||||||
| 2005 | 106 | 110 | 116 | 122 | ||||||||||||||||||||||||||
Franchised Restaurants: | ||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||||||||||
| 2009 | 373 | 383 | ||||||||||||||||||||||||||||
| 2008 | 340 | 346 | 348 | 363 | ||||||||||||||||||||||||||
| 2007 | 299 | 301 | 313 | 332 | ||||||||||||||||||||||||||
| 2006 | 260 | 270 | 278 | 290 | ||||||||||||||||||||||||||
| 2005 | 212 | 224 | 234 | 248 | ||||||||||||||||||||||||||
Same-Store Sales | ||||||||||||||||||||||||||||||
Company-owned Restaurants: | ||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||||||||||||
| 2009 | 6.4 | % | 2.8 | % | ||||||||||||||||||||||||||
| 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 | % | ||||||||||||||||||||
Franchised Restaurants: | ||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||||||||||||
| 2009 | 6.0 | % | 3.7 | % | ||||||||||||||||||||||||||
| 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 | % | ||||||||||||||||||||
| Average Weekly Sales Volumes | ||||||||||||||||||||||||||
| Company-owned Restaurants: | ||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||||||||
| 2009 | $ | 45,593 | 42,938 | |||||||||||||||||||||||
| 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 | |||||||||||||||||||||
Franchised Restaurants: | ||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||||||||
| 2009 | $ | 50,729 | 48,619 | |||||||||||||||||||||||
| 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 | |||||||||||||||||||||
Contacts:
Investor Relations Contact:
Mary
Twinem, 952-253-0731