Exhibit 99.1
Buffalo Wild Wings, Inc. Announces
Third Quarter 2006 Results
-- Same-store sales increased 11.8% at company-owned and 6.4% at
franchised restaurants
-- Earnings per diluted share increased 82% to $0.40
MINNEAPOLIS--(BUSINESS WIRE)--Oct. 24, 2006--Buffalo Wild Wings,
Inc. (Nasdaq:BWLD), announced today financial results for the third
quarter ended September 24, 2006. Highlights for the third quarter
versus the same period a year ago were:
-- Total revenue increased 32.1% to $68.3 million
-- Company-owned restaurant sales grew 32.5% to $60.8 million
-- Same-store sales increased 11.8% at company-owned restaurants
and 6.4% at franchised restaurants
-- Earnings per diluted share increased 82% to $0.40 from $0.22
Sally Smith, President and Chief Executive Officer, remarked, "Our
top-line performance drove earnings per diluted share of $0.40, an
impressive increase over prior year. We are extremely pleased with our
strong sales, proving that our new advertising tag line YOU HAVE TO BE
HERE(TM) is on the mark. Company-owned restaurants had 11.8%
same-store sales and 12.8% average weekly sales volume increases,
signs of our growing brand strength. Franchised locations also
continued strong same-store sales at 6.4% for the quarter, with
average unit volumes on pace to exceed $2.3 million for the year."
Total revenue, which includes company-owned restaurant sales and
franchise royalties and fees, increased 32.1% to $68.3 million in the
third quarter compared to $51.7 million in the third quarter of 2005.
Company-owned restaurant sales for the quarter grew 32.5% to $60.8
million driven by a company-owned same-store sales increase of 11.8%
and 18 more company-owned locations in operation at the end of the
third quarter 2006 relative to the same period in 2005. Franchise
royalties and fees increased 29.2% to $7.5 million versus $5.8 million
in the prior year, due to a franchised same-store sales increase of
6.4% and 44 more franchised restaurants at the end of the period
versus a year ago.
Average weekly sales for company-owned restaurants were $35,380
for the third quarter of 2006 compared to $31,361 for the same quarter
last year, a 12.8% increase. Franchised restaurants averaged $42,964
for the period versus $40,149 in the third quarter a year ago, a 7.0%
increase.
For the third quarter of 2006, earnings per diluted share were
$0.40. For the third quarter of 2005, earnings per diluted share were
$0.22, which included an impairment charge of $622,000 or $0.04 per
share.
Future Earnings Guidance
Ms. Smith continued, "Buffalo Wild Wings is a growing and dynamic
company, with myriad variables such as same-store sales, wing prices,
self-insurance costs, and tax rates, making accurate guidance on a
quarterly basis challenging. Compounding this challenge is a low share
count, which rounds a penny of earnings on $44,000 of net income -
less than one-tenth of one percent of this quarter's revenue. As a
result, we will provide annual performance goals consistent with our
internal measures of success, but will not provide quarterly ranges
for earnings per diluted share. However, during our conference calls,
we will share factors that we believe are relevant to our current
business trends."
Ms. Smith concluded, "Our annual goals for the next three years
are to expand our unit base by over 15%, grow revenues by over 20%,
and leverage this growth to increase our bottom line by over 25%. We
have delivered increased value to our shareholders in previous years,
and we plan to continue increasing value as we build the Buffalo Wild
Wings system nationwide."
Buffalo Wild Wings will be hosting a conference call today,
October 24, 2006 at 4:00 p.m. Central Daylight Time 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 October 31, 2006. To
access this replay, please dial (719) 457-0820, password 7481806.
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.
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 415 Buffalo Wild Wings locations across 37 states.
Forward-looking Statements
Certain statements in this release that are not historical facts,
including, without limitation, those relating to our projected growth
rate and future financial performance, 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 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 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
(Dollar amounts in thousands except share and per share data)
(unaudited)
Three months ended Nine months ended
--------------------------- ---------------------------
September 25, September 24, September 25, September 24,
2005 2006 2005 2006
------------- ------------- ------------- -------------
Revenue:
Restaurant
sales $45,892 60,800 133,535 172,928
Franchise
royalties and
fees 5,840 7,548 17,213 21,941
------------- ------------- ------------- -------------
Total
revenue 51,732 68,348 150,748 194,869
------------- ------------- ------------- -------------
Costs and
expenses:
Restaurant
operating
costs:
Cost of sales 14,096 18,557 42,618 53,590
Labor 13,743 18,265 39,936 51,422
Operating 7,529 10,291 21,052 28,970
Occupancy 3,616 4,450 10,167 12,808
Depreciation 2,998 3,649 8,505 10,412
General and
adminis-
trative (1) 5,383 7,600 16,643 22,119
Preopening 818 755 1,731 2,276
Loss on
equipment
disposal and
impairment 849 102 871 356
------------- ------------- ------------- -------------
Total costs
and
expenses 49,032 63,669 141,523 181,953
------------- ------------- ------------- -------------
Income from
operations 2,700 4,679 9,225 12,916
Interest income 349 556 958 1,526
------------- ------------- ------------- -------------
Earnings before
income taxes 3,049 5,235 10,183 14,442
Income tax
expense 1,174 1,709 3,921 4,968
------------- ------------- ------------- -------------
Net earnings $1,875 3,526 6,262 9,474
============= ============= ============= =============
Earnings per
common share -
basic $0.22 0.41 0.74 1.11
Earnings per
common share -
diluted 0.22 0.40 0.72 1.08
Weighted
average shares
outstanding -
basic 8,472,529 8,597,918 8,429,352 8,561,767
Weighted
average shares
outstanding -
diluted 8,678,108 8,762,079 8,673,544 8,751,838
- ---------------
(1) Contains stock-based compensation of $193, $669, $1,047, and
$2,208, 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 Nine months ended
--------------------------- ---------------------------
September 25, September 24, September 25, September 24,
2005 2006 2005 2006
------------- ------------- ------------- -------------
Revenue:
Restaurant
sales 88.7% 89.0% 88.6% 88.7%
Franchising
royalties and
fees 11.3 11.0 11.4 11.3
------------- ------------- ------------- -------------
Total
revenue 100.0 100.0 100.0 100.0
------------- ------------- ------------- -------------
Costs and
expenses:
Restaurant
operating
costs:
Cost of sales 30.7 30.5 31.9 31.0
Labor 29.9 30.0 29.9 29.7
Operating 16.4 16.9 15.8 16.8
Occupancy 7.9 7.3 7.6 7.4
Depreciation 5.8 5.3 5.6 5.3
General and
adminis-
trative 10.4 11.1 11.0 11.4
Preopening 1.6 1.1 1.1 1.2
Loss on
equipment
disposal and
impairment 1.6 0.1 0.6 0.2
------------- ------------- ------------- -------------
Total costs
and
expenses 94.8 93.2 93.9 93.4
------------- ------------- ------------- -------------
Income from
operations 5.2 6.8 6.1 6.6
Interest income 0.7 0.8 0.6 0.8
------------- ------------- ------------- -------------
Earnings before
income taxes 5.9 7.7 6.8 7.4
Income tax
expense 2.3 2.5 2.6 2.5
------------- ------------- ------------- -------------
Net earnings 3.6 5.2 4.2 4.9
============= ============= ============= =============
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)
December 25, September 24,
2005 2006
------------ -------------
Assets
Current assets:
Cash and cash equivalents $3,986 3,457
Marketable securities 48,418 53,133
Accounts receivable--franchisees, net
of allowance of $25 and $65 731 871
Accounts receivable--other 3,700 5,187
Inventory 1,502 1,644
Prepaid expenses 1,972 1,736
Deferred income taxes 770 1,871
------------ -------------
Total current assets 61,079 67,899
Property and equipment, net 68,693 77,624
Restricted cash 2,115 4,328
Other assets 867 892
Goodwill 369 369
------------ -------------
Total assets $133,123 151,112
============ =============
Liabilities and Stockholders' Equity
Current liabilities:
Unearned franchise fees $2,194 2,348
Accounts payable 6,628 8,953
Accrued income tax payable 102 351
Accrued compensation and benefits 6,775 8,061
Accrued expenses 3,900 4,114
Current portion of deferred lease
credits 604 722
------------ -------------
Total current liabilities 20,203 24,549
Long-term liabilities:
Marketing fund payables 2,115 4,328
Deferred income taxes 4,755 3,471
Deferred lease credits, net of current
portion 9,202 9,439
------------ -------------
Total liabilities 36,275 41,787
------------ -------------
Commitments and contingencies
Stockholders' equity:
Undesignated stock, 5,600,000 shares
authorized -- --
Common stock, no par value. Authorized
15,600,000 shares; issued and
outstanding 8,616,222 and 8,776,187,
respectively 74,503 74,938
Deferred compensation (2,568 ) --
Retained earnings 24,913 34,387
------------ -------------
Total stockholders' equity 96,848 109,325
------------ -------------
Total liabilities and
stockholders' equity $133,123 151,112
============ =============
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
Nine months ended
---------------------------
September 25, September 24,
2005 2006
------------- -------------
Cash flows from operating activities:
Net earnings $6,262 9,474
Adjustments to reconcile net earnings to
cash provided by operations:
Depreciation 8,505 10,412
Amortization (62) (88)
Loss on equipment disposal and
impairment 871 356
Deferred lease credits 554 185
Deferred income taxes (1,749) (2,385)
Stock-based compensation 1,047 2,208
Excess tax benefit from the exercise
of stock options -- (185)
Change in operating assets and
liabilities:
Purchase of marketable securities -- (1,144)
Accounts receivable (1,158) (1,457)
Inventory (77) (142)
Prepaid expenses (285) 236
Other assets 36 (25)
Unearned franchise fees (305) 154
Accounts payable 144 (404)
Income taxes 2,746 434
Accrued expenses (626) 2,078
------------- -------------
Net cash provided by
operating activities 15,903 19,707
------------- -------------
Cash flows from investing activities:
Acquisition of property and equipment (15,180) (16,970)
Purchase of marketable securities (65,590) (76,752)
Proceeds of marketable securities 55,847 73,269
------------- -------------
Net cash used in investing
activities (24,923) (20,453)
------------- -------------
Cash flows from financing activities:
Issuance of common stock 763 719
Tax payments for restricted stock (326) (687)
Excess tax benefit from the exercise of
stock options -- 185
------------- -------------
Net cash provided by
financing activities 437 217
------------- -------------
Net decrease in cash and cash
equivalents (8,583) (529)
Cash and cash equivalents at beginning
of period 12,557 3,986
------------- -------------
Cash and cash equivalents at end of
period $3,974 3,457
============= =============
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Restaurant Count
Company-owned Restaurants:
Q1 Q2 Q3 Q4
----------- ----------- ----------- ------------
2006 124 129 134
2005 106 110 116 122
2004 88 92 97 103
2003 73 74 77 84
2002 56 60 63 70
Franchised Restaurants:
Q1 Q2 Q3 Q4
----------- ----------- ----------- ------------
2006 260 270 278
2005 212 224 234 248
2004 168 175 189 203
2003 131 138 142 161
2002 108 119 123 129
Same-Store Sales
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ------------
2006 7.7% 8.2% 11.8%
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%
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ------------
2006 6.7% 4.7% 6.4%
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%
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information
Average Weekly Sales Volumes
Company-owned Restaurants:
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ------------
2006 $35,857 $33,660 $35,380
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
Franchised Restaurants:
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ------------
2006 $44,342 $42,338 $42,964
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
Average Wing Price Per Pound
Q1 Q2 Q3 Q4 Year
----------- ----------- ----------- ----------- ------------
2006 $1.24 $1.10 $1.14
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
CONTACT: Buffalo Wild Wings, Inc.
Investor Relations Contact:
Mary Twinem, 952-253-0731