Buffalo Wild Wings Profit Soars
Buffalo Wild Wings (
), best known for its chicken wings and sports bar, sustained its growth momentum in the second quarter of 2009, despite economic turmoil and rising unemployment, and affirmed its growth target of 15% in units, 25% in revenue, and 20% to 25% in net earnings, showing its resilience in a turbulent environment. ?
?
The company’s second quarter 2009 profit soared 24.2% year over year to $7.0 million. As a result, EPS jumped 25.8% to $0.39, surpassing street estimate by $0.05.?Menu price increases, new restaurant openings and operational focus on product preparation drove the growth in EPS.
The restaurant chain was able to increase its menu pricing when other restaurant operators were offering discounts to woo consumers during the recession.
Total revenue climbed 32.4% to $129.6 million. Sales at company-operated restaurant surged 34.6% to $117.8 million driven by comparable sales increase of 2.8%.?Franchise royalties and fees rose 14.0% to $11.9 million driven by 3.7% increase in comparable sales.
The growth in comparable sales also sustained in the first four weeks of the third quarter of 2009, increasing 1.2% at company-operated restaurants and 1.8% at franchised restaurants.
Restaurant operating cash flow margin surged 40 basis points to 16.9% driven by menu price increase, 30 basis points decline in labor costs to 30.6% (as a percentage of company-operated restaurant sales), 50 basis points fall in operating costs to 15.3%, offset by 50 basis points rise in cost of sales to 30.5%.?Occupancy costs remain flat as a percentage of company-operated restaurant sales.
Buffalo Wild Wings' long-term target is to open 1,000 units in the United States by 2013. With about 601 restaurants, we think the concept has a lot of room to grow before covering the market. Televised sporting events and beer attract customers in most major markets, so we do not anticipate unique regional tastes to dampen sales as the company expands into new markets.
Phase Forward's Q2 Revenues Up
Phase Forward Incorporated ( ), which provides data management solutions for clinical trials and drug safety, reported second-quarter revenues of $52.5 million, up 29% from a year ago level and surpassing consensus estimate of $51 million.
Non-GAAP revenues (excluding $968,000 purchase accounting adjustment to record assumed acquisition deferred revenues and backlog at fair value) were $53.5 million, up from $49.4 million in the prior quarter. Operating expenses increased 45.1% year over year to $27.3 million. GAAP EPS came in at $0.05 while non-GAAP EPS came in at $0.13 beating the consensus estimate by a penny.
Going forward, management expects non-GAAP revenues between $53.0 and $54.5 million while EPS is projected between $0.09 and $0.10. This includes an expected contribution of between $500,000 and $1.3 million from the recently announced acquisitions of Covance’s ( ) IVRS/IWRS business and Maaguzi lLC being acquired for $10 million and $11 million in cash respectively.
For full year 2009, the company expects non-GAAP revenues between $214.5 and $217.5 million against consensus estimate of $209.82 million. Non-GAAP EPS is forecasted between $0.47 and $0.50, down from the consensus estimate of $0.54 and the company’s non-GAAP EPS guidance between $0.51 and $0.54, primarily due to acquisition related costs of $0.04 and $0.05.
We believe Phase Forward has a subscription-based business model that offers significant visibility. It sells a 3-5 year license, and revenue is recognized quarterly over the term of the contract.? In the near term, revenue should grow at a slower pace than the backlog but should catch up with backlog growth in the longer term.
