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Press release from GlobeNewswire (a Nasdaq OMX company)

Buffalo Wild Wings, Inc. Announces Second Quarter Earnings Per Share of $0.88

Tuesday, July 30, 2013

Buffalo Wild Wings, Inc. Announces Second Quarter Earnings Per Share of $0.88

13:01 EDT Tuesday, July 30, 2013

MINNEAPOLIS, July 30, 2013 (GLOBE NEWSWIRE) -- Buffalo Wild Wings, Inc. (Nasdaq:BWLD) announced today financial results for the second quarter ended June 30, 2013. Highlights for the second quarter versus the same period a year ago were:

  • Total revenue increased 27.8% to $305.0 million
  • Company-owned restaurant sales grew 29.4% to $285.4 million
  • Same-store sales increased 3.8% at company-owned restaurants and 4.1% at franchised restaurants
  • Net earnings increased 41.4% to $16.5 million from $11.7 million, and earnings per diluted share increased 41.9% to $0.88 from $0.62

Sally Smith, President and Chief Executive Officer, commented, "We're very pleased with our strong results for the second quarter. Revenue increased 27.8% driven primarily by a 23% increase in the number of company-owned restaurants versus last year and a 3.8% increase in same-store sales at company-owned locations. Same-store sales at franchised locations increased 4.1% for the second quarter. This quarter's growth is on top of strong second quarter same-store sales in 2012 of 5.3% at company-owned and 5.5% at franchised locations. We are pleased that same-store sales at both company-owned and franchised restaurants continue to outpace the casual dining category."

Ms. Smith continued, "We managed our controllable expenses and saw the cost per pound of traditional wings decline compared to last year, which benefited cost of sales. Strong sales growth and lower costs and expenses as a percent of revenue produced impressive net earnings growth of 41.4% and earnings per diluted share of $0.88."

Total revenue increased 27.8% to $305.0 million in the second quarter compared to $238.7 million in the second quarter of 2012. Company-owned restaurant sales for the quarter increased 29.4% over the same period in 2012, to $285.4 million, driven by a company-owned same-store sales increase of 3.8% and 77 additional company-owned restaurants at the end of second quarter 2013 relative to the same period in 2012. Franchise royalties and fees increased 7.9% to $19.6 million for the quarter versus $18.2 million in the second quarter of 2012. This increase is attributed to a franchise same-store sales increase of 4.1% and 20 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $54,759 for the second quarter of 2013 compared to $51,524 for the same quarter last year, a 6.3% increase. Franchised restaurants averaged $58,186 for the period versus $54,766 in the second quarter a year ago, a 6.2% increase.

For the second quarter, net earnings increased 41.4% to $16.5 million versus $11.7 million in the second quarter of 2012. Earnings per diluted share were $0.88, as compared to second quarter 2012 earnings per diluted share of $0.62.

2013 Outlook

Ms. Smith remarked, "Our same-store sales in the first four weeks of the third quarter are 1.5% at company-owned restaurants and 1.2% at franchised locations, and reflect one less UFC pay-per-view fight compared to last year. We are comping over last year's strong same-store sales in the first four weeks of the quarter of 6.8% and 7.3%, respectively. We are gearing up for fantasy football draft parties and are excited for the beginning of the NFL and NCAA football seasons, which include one extra week of games in our third quarter. This month we rolled out a new menu strategy of selling wings by portion at all of our restaurants. Guests now receive a more consistent amount of chicken in their order rather than a fixed number of wings. We expect this strategy, along with lower traditional wing costs versus last year, to improve our cost of sales percentage. We remain confident we will achieve 17% net earnings growth for 2013, equating to 25% on a 52-week basis."

Ms. Smith concluded, "We will continue to provide a rewarding experience for our Guests and remain diligent in managing our business with the right balance of executing today and preparing for tomorrow. We have exciting changes in motion to continue building the long-term success of Buffalo Wild Wings across the globe."

Buffalo Wild Wings will be hosting a conference call today, July 30, 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 August 6, 2013. To access this replay, please dial 1.858.384.5517 password 4629831.

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 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 over 930 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 beyond, including but not limited to those relating to our third quarter sales trends and projected unit and net earnings growth rates for 2013 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 Six months ended
  June 30, June 24, June 30, June 24,
  2013 2012 2013 2012
         
Revenue:        
Restaurant sales $285,403 220,550 569,828 452,866
Franchise royalties and fees 19,604 18,173 39,543 36,979
         
Total revenue 305,007 238,723 609,371 489,845
         
Costs and expenses:        
Restaurant operating costs:        
Cost of sales 86,630 69,799 179,721 141,950
Labor 88,929 66,638 174,760 134,906
Operating 41,212 32,349 82,317 65,146
Occupancy 16,865 13,091 32,991 25,891
Depreciation and amortization 21,084 16,090 41,227 31,621
General and administrative 23,601 20,976 44,898 40,400
Preopening 2,420 1,536 6,691 4,127
Loss on asset disposals and store closures 229 597 800 1,334
         
Total costs and expenses 280,970 221,076 563,405 445,375
         
Income from operations 24,037 17,647 45,966 44,470
Investment income (loss) (84) (115) 261 295
         
Earnings before income taxes 23,953 17,532 46,227 44,765
Income tax expense 7,464 5,870 13,359 14,858
         
Net earnings $16,489 11,662 32,868 29,907
         
Earnings per common share – basic $0.88 0.63 1.75 1.61
Earnings per common share – diluted 0.88 0.62 1.75 1.60
Weighted average shares outstanding – basic 18,768 18,575 18,758 18,565
Weighted average shares outstanding – diluted 18,827 18,660 18,815 18,650

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 30, June 24, June 30, June 24,
  2013 2012 2013 2012
         
Revenue:        
Restaurant sales 93.6% 92.4% 93.5% 92.5%
Franchising royalties and fees 6.4 7.6 6.5 7.5
         
Total revenue 100.0 100.0 100.0 100.0
         
Costs and expenses:        
Restaurant operating costs:        
Cost of sales 30.4 31.6 31.5 31.3
Labor 31.2 30.2 30.7 29.8
Operating 14.4 14.7 14.4 14.4
Occupancy 5.9 5.9 5.8 5.7
Depreciation and amortization 6.9 6.7 6.8 6.5
General and administrative 7.7 8.8 7.4 8.2
Preopening 0.8 0.6 1.1 0.8
Loss on asset disposals and store closures 0.1 0.3 0.1 0.3
         
Total costs and expenses 92.1 92.6 92.5 90.9
         
Income from operations 7.9 7.4 7.5 9.1
Investment income (loss) (0.0) (0.0) 0.0 0.1
         
Earnings before income taxes 7.9 7.3 7.6 9.1
Income tax expense 2.4 2.5 2.2 3.0
         
Net earnings 5.4 4.9 5.4 6.1
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
(Dollar amounts in thousands)
 
(unaudited)
     
     
  June 30, December 30,
  2013 2012
     
Assets    
Current assets:    
Cash and cash equivalents $23,499 21,340
Marketable securities 6,645 9,579
Accounts receivable – net of allowance of $25 18,411 20,203
Inventory 8,598 7,820
Prepaid expenses 2,213 3,869
Refundable income taxes 2,136 4,122
Deferred income taxes 9,336 5,774
Restricted assets 32,316 52,829
     
Total current assets 103,154 125,536
     
Property and equipment, net 407,867 386,570
Reacquired franchise rights, net 35,976 37,370
Goodwill 32,533 32,365
Other assets 16,140 9,246
     
Total assets $595,670 591,087
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Unearned franchise fees $2,173 1,763
Accounts payable 23,011 36,418
Accrued compensation and benefits 36,368 39,637
Accrued expenses 10,008 11,461
System-wide payables 32,296 51,564
     
Total current liabilities 103,856 140,843
     
Long-term liabilities:    
Other liabilities 1,939 1,752
Deferred income taxes 38,843 37,128
Deferred lease credits 30,247 27,992
     
Total liabilities 174,885 207,715
     
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 18,777,706 and 18,623,370, respectively 126,367 121,450
Retained earnings 294,915 262,047
Accumulated other comprehensive loss (497) (125)
     
Total stockholders' equity 420,785 383,372
     
Total liabilities and stockholders' equity $595,670 591,087
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Dollar amounts in thousands)
 
(unaudited)
     
     
  Six months ended
  June 30, June 24,
  2013 2012
     
Cash flows from operating activities:    
Net earnings $32,868 29,907
Adjustments to reconcile net earnings to cash provided by operations:    
Depreciation 38,704 30,267
Amortization 2,524 1,354
Loss on asset disposals and store closures 800 1,143
Deferred lease credits 2,105 1,618
Deferred income taxes (1,542) (2,245)
Stock-based compensation 4,014 3,919
Excess tax benefit from stock issuance (147) (289)
Change in operating assets and liabilities, net of effect of acquisitions:    
Trading securities (348) (534)
Accounts receivable 3,478 (4,484)
Inventory (678) 281
Prepaid expenses 1,653 1,090
Other assets (852) (1,084)
Unearned franchise fees 410 (45)
Accounts payable (8,135) (177)
Income taxes 2,133 6,250
Accrued expenses (221) (234)
     
Net cash provided by operating activities 76,766 66,737
     
Cash flows for investing activities:    
Acquisition of property and equipment (63,910) (44,438)
Acquisition of businesses/investments in affiliates (10,288)
Purchase of marketable securities (52,493)
Proceeds from marketable securities 3,282 39,998
     
Net cash used in investing activities (70,916) (56,933)
     
Cash flows for financing activities:    
Proceeds from line of credit 5,000
Repayments of line of credit (5,000)
Issuance of common stock 1,152 1,117
Excess tax benefit from stock issuance 147 289
Tax payments for restricted stock units (4,813) (8,447)
     
Net cash used in financing activities (3,514) (7,041)
     
Effect of exchange rate changes on cash and cash equivalents (177) (46)
     
     
Net increase in cash and cash equivalents 2,159 2,717
     
Cash and cash equivalents at beginning of period 21,340 20,530
     
Cash and cash equivalents at end of period $23,499 23,247
 
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
           
Restaurant Count
 
Company-owned Restaurants:
 
  Q1 Q2 Q3 Q4  
2013 397 407      
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      
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%      
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%      
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      
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      
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
952.253.0731

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