Exhibit 99.1
Buffalo Wild Wings, Inc. Announces
Fourth Quarter 2005 Results; Fourth Quarter Earnings Per Diluted Share
of $0.30, Which Includes an Impairment Charge of $0.08
MINNEAPOLIS--(BUSINESS WIRE)--Feb. 7, 2006--Buffalo Wild Wings,
Inc. (Nasdaq:BWLD), announced today financial results for the fourth
quarter ended December 25, 2005. Highlights for the fourth quarter
were:
-- Total revenue increased 21.3% over the prior year to $59.0
million
-- Company-owned restaurant sales grew 21.3% over the prior year
to $52.3 million
-- Fourth quarter same-store sales increased 2.5% at
company-owned restaurants and 2.6% at franchised restaurants
over the prior year
-- Earnings per diluted share of $0.30, which includes an
impairment charge of $0.08
Sally Smith, President and Chief Executive Officer, commented, "We
are pleased with our continued top-line growth in the fourth quarter,
increasing revenue by 21% over the prior year, the result of continued
same-store sales increases and new restaurant openings. Earnings per
diluted share were $0.30 for the quarter, compared to $0.28 in the
prior year. Our bottom-line performance was impacted by an impairment
charge of $1.1 million, due to an asset write-down of three
restaurants in the Atlanta market. We ended the year with a 23% growth
in revenue to $209.7 million. This translates into an increase of 21%
in earnings per diluted share to $1.02 for 2005, from $0.84 in 2004."
Total revenue, which includes company-owned restaurant sales and
franchise royalties and fees, increased 21.3% to $59.0 million in the
fourth quarter compared to $48.6 million in the fourth quarter of
2004. Company-owned restaurant sales for the quarter increased 21.3%
to $52.3 million driven by a company-owned same-store sales increase
of 2.5% and 19 more company-owned locations in operation at the end of
fourth quarter 2005 relative to the same period in 2004. Franchise
royalties and fees increased 21.1% to $6.7 million versus $5.5 million
in the prior year. This increase was due to a franchised same-store
sales increase of 2.6% and 45 more franchised restaurants at the end
of the period versus a year ago.
Average weekly sales for company-owned restaurants were $33,953
for the fourth quarter of 2005 compared to $33,038 for the same
quarter last year, a 2.8% increase. Franchised restaurants averaged
$42,533 for the period versus $40,926 in the fourth quarter a year
ago, a 3.9% increase.
For the fourth quarter, earnings per diluted share were $0.30,
which included an impairment charge of $1.1 million, or $0.08 per
diluted share, and stock-based compensation expense of $653,000 or
$.05 per diluted share. This compares to fourth quarter 2004 earnings
per diluted share of $0.28, which did not include an impairment
charge, but did include stock-based compensation expense of $491,000,
or $0.04 per diluted share.
First Quarter 2006 Outlook
For the first quarter ending March 26, 2006, we expect total
revenue of approximately $62 to $63 million, based on estimated
same-store sales increases of 4 to 6% for company-owned and 3 to 5%
for franchised restaurants, as well as the addition of two
company-owned and nine franchised restaurants. Earnings per diluted
share for the first quarter are expected to range from $0.35 to $0.38.
This is based on the previously-mentioned revenue assumptions, average
chicken wing prices for the first quarter of $1.22 per pound,
stock-based compensation expense of $750,000 and diluted weighted
average shares outstanding of 8.8 million.
"We are excited about our plans for 2006," commented Ms. Smith.
"In the first quarter, we are introducing our newly designed menu,
which highlights our signature sauces and unveils four new sauces. In
January, we kicked off our year-long partnership with ESPN, our first
step into national advertising. We believe this national exposure,
paired with an additional 0.5% system-wide contribution to our
advertising fund, will provide a great start to the year." Ms. Smith
concluded, "We continue to focus on restaurant operations with the
goal of improving store-level margins. We look forward to sharing our
successes with you during the year."
Included in this release is information regarding restaurant unit
counts, same-store sales and average weekly sales volumes. Our
management team believes such information is an important measure of
our performance and is useful in assessing consumer acceptance of the
Buffalo Wild Wings Grill & Bar concept. Franchise information also
provides an understanding of our revenues as franchise royalties and
fees are based on the opening of franchised units and their sales.
However, these sales measures are not prepared in accordance with U.S.
Generally Accepted Accounting Principles (GAAP), should not be
considered in isolation or as a substitute for other measures of
performance prepared in accordance with GAAP, and may not be
comparable to sales measures as defined or used by other companies.
Buffalo Wild Wings will be hosting a conference call today,
February 7, 2006 at 5:00 p.m. EST to discuss these results. There will
be a simultaneous webcast conducted at our website
http://www.buffalowildwings.com.
A replay of the call will be available until February 14, 2006. To
access this replay, please dial (719) 457-0820, password 4340246.
About the Company
Buffalo Wild Wings, Inc., founded in 1982 and headquartered in
Minneapolis, Minnesota, is an established and growing owner, operator
and franchisor of Buffalo Wild Wings Grill & Bar restaurants featuring
a variety of boldly flavored, made-to-order menu items including
Buffalo, New York-style chicken wings spun in one of our signature
sauces. The widespread appeal of Buffalo Wild Wings establishes it as
an inviting, neighborhood destination with 375 restaurants in 35
states.
Forward-looking Statements
Certain statements in this release that are not historical facts,
including, without limitation, those relating to our anticipated
financial performance and expected store openings for the first
quarter and our goal to improve store-level margins during 2006, are
forward-looking statements that involve risks and uncertainties. Such
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 during the
first quarter, the sales at these and our other company-owned and
franchised locations, our ability to successfully operate in new
markets, the cost of wings, the success of our marketing initiatives,
our ability to control other restaurant operating costs 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
Three months and fiscal years ended December 26, 2004 and
December 25, 2005
(Dollar and share amounts in thousands except per share data)
Three months ended Fiscal years ended
------------------ ------------------
Dec. 26, Dec. 25, Dec. 26, Dec. 25,
2004 2005 2004 2005
--------- -------- -------- ---------
Revenue:
Restaurant sales $ 43,104 52,288 152,221 185,823
Franchising royalties and fees 5,502 6,664 18,827 23,877
--------- -------- -------- ---------
Total revenue 48,606 58,952 171,048 209,700
--------- -------- -------- ---------
Costs and expenses:
Restaurant operating costs:
Cost of sales 13,983 16,153 51,507 58,771
Labor 12,596 15,467 43,853 55,403
Operating 6,375 8,665 23,080 29,717
Occupancy 2,665 4,005 10,259 14,172
Depreciation 3,283 3,260 9,717 11,765
General and administrative 5,740 5,660 19,372 22,303
Preopening 663 868 2,042 2,599
Restaurant impairment and
closures 26 1,120 573 1,991
--------- -------- -------- ---------
Total costs and expenses 45,331 55,198 160,403 196,721
--------- -------- -------- ---------
Income from operations 3,276 3,754 10,645 12,979
--------- -------- -------- ---------
Other income:
Interest income 209 382 671 1,340
--------- -------- -------- ---------
Total other income 209 382 671 1,340
--------- -------- -------- ---------
Earnings before income taxes 3,485 4,136 11,316 14,319
Income tax expense 1,061 1,518 4,115 5,439
--------- -------- -------- ---------
Net earnings 2,424 2,618 7,201 8,880
========= ======== ======== =========
Earnings per common share -
basic $ 0.29 0.31 0.88 1.05
Earnings per common share -
diluted 0.28 0.30 0.84 1.02
Weighted average share
outstanding - basic 8,318 8,482 8,165 8,446
Weighted average share
outstanding - diluted 8,645 8,711 8,604 8,708
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
------------------ ------------------
Dec. 26, Dec. 25, Dec. 26 Dec. 25
2004 2005 2004 2005
-------- --------- -------- ---------
Revenue:
Restaurant sales 88.7% 88.7% 89.0% 88.6%
Franchising royalties and fees 11.3 11.3 11.0 11.4
-------- --------- -------- ---------
Total revenue 100.0 100.0 100.0 100.0
-------- --------- -------- ---------
Costs and expenses:
Restaurant operating costs:
Cost of sales 32.4 30.9 33.8 31.6
Labor 29.2 29.6 28.8 29.8
Operating 14.8 16.6 15.2 16.0
Occupancy 6.2 7.7 6.7 7.6
Depreciation 6.8 5.5 5.7 5.6
General and administrative 11.8 9.6 11.3 10.6
Preopening 1.4 1.5 1.2 1.2
Restaurant impairment and
closures 0.1 1.9 0.3 0.9
-------- --------- -------- ---------
Total costs and expenses 93.3 93.6 93.8 93.8
-------- --------- -------- ---------
Income from operations 6.7 6.4 6.2 6.2
-------- --------- -------- ---------
Other income:
Interest income 0.4 0.6 0.4 0.6
-------- --------- -------- ---------
Total other income, net 0.4 0.6 0.4 0.6
-------- --------- -------- ---------
Earnings before income taxes 7.2 7.0 6.6 6.8
Income tax expense 2.2 2.6 2.4 2.6
-------- --------- -------- ---------
Net earnings 5.0 4.4 4.2 4.2
======== ========= ======== =========
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 26, 2004 and December 25, 2005
(Dollar amounts in thousands)
Dec. 26, Dec. 25,
2004 2005
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 12,557 3,986
Marketable securities 36,454 48,418
Accounts receivable--franchisees, net of
allowance of $25 689 731
Accounts receivable--other 2,077 3,700
Inventory 1,207 1,502
Income taxes receivable 1,727 --
Prepaid expenses 1,470 1,972
Deferred income taxes 840 770
-------- --------
Total current assets 57,021 61,079
Property and equipment, net 59,649 68,693
Restricted cash 782 2,115
Other assets 774 867
Goodwill 759 369
-------- --------
Total assets $118,985 133,123
======== ========
Liabilities and Common Stockholders' Equity
Current liabilities:
Unearned franchise fees $ 2,433 2,194
Accounts payable 5,383 6,628
Accrued income tax payable -- 102
Accrued compensation and benefits 6,339 6,775
Accrued expenses 3,663 3,900
Current portion of deferred lease credits 509 604
-------- --------
Total current liabilities 18,327 20,203
Long-term liabilities:
Marketing fund payables 782 2,115
Deferred income taxes 6,298 4,755
Deferred lease credits, net of current portion 7,871 9,202
-------- --------
Total liabilities 33,278 36,275
Commitments and contingencies
Common stockholders' equity:
Undesignated stock, 5,600,000 shares authorized -- --
Common stock, no par value. Authorized
15,600,000 shares; issued and outstanding
8,425,771 and 8,616,222, respectively 71,491 74,503
Deferred compensation (1,817) (2,568)
Retained earnings 16,033 24,913
-------- --------
Total common stockholders' equity 85,707 96,848
-------- --------
Total liabilities and common stockholders'
equity $118,985 133,123
======== ========
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal years ended December 26, 2004 and December 25, 2005
(Dollar amounts in thousands)
Fiscal years ended
-------------------------
December 26, December 25,
2004 2005
------------ ------------
Cash flows from operating activities:
Net earnings $ 7,201 8,880
Adjustments to reconcile net earnings to
cash provided by operations:
Depreciation 9,717 11,765
Amortization 151 90
Restaurant impairment and closures 573 1,991
Deferred lease credits 142 362
Tax benefit from stock issuance 958 409
Deferred income taxes 1,947 (1,473)
Stock-based compensation 909 1,700
Change in operating assets and
liabilities:
Accounts receivable (1,023) (1,064)
Inventory (229) (295)
Prepaid expenses (240) (502)
Other assets (72) (93)
Unearned franchise fees 474 (239)
Accounts payable 442 1,245
Income taxes (1,360) 1,829
Accrued expenses 1,772 95
------------ ------------
Net cash provided by operating
activities 21,362 24,700
------------ ------------
Cash flows from investing activities:
Acquisition of property and equipment (23,310) (21,947)
Purchase of marketable securities (95,475) (91,539)
Proceeds from marketable securities 58,870 79,485
------------ ------------
Net cash used in investing
activities (59,915) (34,001)
------------ ------------
Cash flows from financing activities:
Issuance of common stock 1,572 1,014
Tax payments for restricted stock -- (284)
------------ ------------
Net cash provided by financing
activities 1,572 730
------------ ------------
Net decrease in cash and cash
equivalents (36,981) (8,571)
Cash and cash equivalents at beginning of
year 49,538 12,557
------------ ------------
Cash and cash equivalents at end of year $ 12,557 3,986
============ ============
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Restaurant Count
Company-owned Restaurants:
Q1 Q2 Q3 Q4
-- -- -- --
2005 106 110 116 122
2004 88 92 97 103
2003 73 74 77 84
2002 56 60 63 70
2001 45 47 48 53
Franchised Restaurants:
Q1 Q2 Q3 Q4
-- -- -- --
2005 212 224 234 248
2004 168 175 189 203
2003 131 138 142 161
2002 108 119 123 129
2001 95 97 100 105
Quarterly Same-Store Sales
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
-- -- -- -- ----
2005 6.1% 2.7% 1.8% 2.5% 3.2%
2004 11.1% 10.6% 9.9% 7.6% 9.7%
2003 (1.4%) 2.7% 6.7% 8.5% 4.3%
2002 5.6% 4.6% (0.7%) (1.8%) 1.6%
2001 9.1% 7.0% 6.4% 12.1% 8.8%
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
-- -- -- -- ----
2005 3.2% 1.8% 1.1% 2.6% 2.2%
2004 12.0% 10.4% 5.7% 3.7% 7.6%
2003 (0.4%) 2.3% 8.5% 10.7% 5.6%
2002 4.2% 4.5% 0.0% (1.8%) 1.5%
2001 4.3% 3.7% 5.3% 8.4% 5.5%
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Average Weekly Sales Volumes
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
-- -- -- -- ----
2005 $33,195 30,531 31,361 33,953 32,304
2004 32,289 30,248 30,983 33,038 31,663
2003 28,782 27,132 28,281 31,171 28,886
2002 29,564 26,330 25,916 28,466 27,547
2001 27,675 25,644 26,722 29,426 27,382
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
-- -- -- -- ----
2005 $41,309 39,824 40,149 42,533 40,999
2004 39,678 38,072 38,727 40,926 39,402
2003 33,920 33,393 35,289 39,014 35,491
2002 32,956 31,623 31,619 34,023 32,574
2001 30,533 28,820 29,835 33,267 30,652
Average Quarterly Wing Prices Per Pound
Q1 Q2 Q3 Q4 Year
-- -- -- -- ----
2005 $1.45 1.14 1.08 1.17 1.20
2004 1.49 1.46 1.35 1.30 1.39
2003 1.01 1.02 1.00 1.21 1.06
2002 1.11 .87 .84 .78 .89
2001 1.14 1.22 1.22 1.16 1.18
CONTACT: Buffalo Wild Wings, Inc., Minneapolis
Investor Relations Contact:
Mary Twinem, 952-253-0731