Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 30, 2023 of $11,149,800 or $3.05 per share diluted compared to net income of $10,368,600 or $2.93 per share diluted in 2022. For the nine months ended September 30, 2023, net income was $30,461,300 or $8.40 per share diluted compared to net income of $29,248,300 or $8.11 per share diluted for the same period last year.
Winmark — the Resale Company®, is a nationally recognized franchising business focused on sustainability and small-business formation. We champion and guide entrepreneurs interested in operating one of our award winning resale franchises: Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. At September 30, 2023, there were 1,312 franchises in operation and over 2,800 available territories. An additional 72 franchises have been awarded but are not open.
This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.
WINMARK CORPORATION |
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CONDENSED BALANCE SHEETS |
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(Unaudited) |
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September 30, 2023 |
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December 31, 2022 |
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ASSETS |
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Current Assets: |
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|
|
|
|
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Cash and cash equivalents |
|
$ |
40,556,100 |
|
|
$ |
13,615,600 |
|
Restricted cash |
|
|
40,000 |
|
|
|
65,000 |
|
Receivables, net |
|
|
1,704,000 |
|
|
|
1,438,600 |
|
Net investment in leases - current |
|
|
124,300 |
|
|
|
344,900 |
|
Income tax receivable |
|
|
1,200 |
|
|
|
558,700 |
|
Inventories |
|
|
290,900 |
|
|
|
770,600 |
|
Prepaid expenses |
|
|
1,095,100 |
|
|
|
1,310,400 |
|
Total current assets |
|
|
43,811,600 |
|
|
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18,103,800 |
|
|
|
|
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|
|
|
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Net investment in leases – long-term |
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|
— |
|
|
|
5,400 |
|
Property and equipment, net |
|
|
1,675,900 |
|
|
|
1,704,600 |
|
Operating lease right of use asset |
|
|
2,510,000 |
|
|
|
2,716,000 |
|
Intangible assets, net |
|
|
3,082,800 |
|
|
|
3,348,300 |
|
Goodwill |
|
|
607,500 |
|
|
|
607,500 |
|
Other assets |
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|
467,700 |
|
|
|
429,700 |
|
Deferred income taxes |
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|
3,392,000 |
|
|
|
3,540,400 |
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|
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$ |
55,547,500 |
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|
$ |
30,455,700 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
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Current Liabilities: |
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Notes payable, net |
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$ |
4,217,900 |
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$ |
4,217,900 |
|
Accounts payable |
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|
1,694,900 |
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|
|
2,122,000 |
|
Accrued liabilities |
|
|
4,038,900 |
|
|
|
2,611,700 |
|
Deferred revenue |
|
|
1,680,700 |
|
|
|
1,643,900 |
|
Total current liabilities |
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|
11,632,400 |
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|
|
10,595,500 |
|
Long-Term Liabilities: |
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|
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Line of Credit/Term Loan |
|
|
30,000,000 |
|
|
|
30,000,000 |
|
Notes payable, net |
|
|
35,903,300 |
|
|
|
39,066,700 |
|
Deferred revenue |
|
|
7,553,600 |
|
|
|
6,974,200 |
|
Operating lease liabilities |
|
|
3,871,600 |
|
|
|
4,287,000 |
|
Other liabilities |
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|
1,150,100 |
|
|
|
1,164,400 |
|
Total long-term liabilities |
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78,478,600 |
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|
|
81,492,300 |
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Shareholders’ Equity (Deficit): |
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Common stock, no par, 10,000,000 shares authorized,
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|
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6,411,900 |
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1,806,700 |
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Retained earnings (accumulated deficit) |
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|
(40,975,400 |
) |
|
|
(63,438,800 |
) |
Total shareholders’ equity (deficit) |
|
|
(34,563,500 |
) |
|
|
(61,632,100 |
) |
|
|
$ |
55,547,500 |
|
|
$ |
30,455,700 |
|
WINMARK CORPORATION |
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CONDENSED STATEMENTS OF OPERATIONS |
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(Unaudited) |
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Quarter Ended |
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Nine Months Ended |
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September 30, 2023 |
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September 24, 2022 |
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September 30, 2023 |
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September 24, 2022 |
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Revenue: |
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Royalties |
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$ |
19,210,000 |
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$ |
17,859,000 |
|
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$ |
53,063,400 |
|
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$ |
49,230,400 |
|
Leasing income |
|
|
1,291,900 |
|
|
|
1,762,100 |
|
|
|
3,948,700 |
|
|
|
5,845,800 |
|
Merchandise sales |
|
|
997,800 |
|
|
|
746,000 |
|
|
|
3,601,900 |
|
|
|
2,687,500 |
|
Franchise fees |
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|
334,400 |
|
|
|
348,100 |
|
|
|
1,133,400 |
|
|
|
1,160,200 |
|
Other |
|
|
483,700 |
|
|
|
449,300 |
|
|
|
1,456,200 |
|
|
|
1,361,200 |
|
Total revenue |
|
|
22,317,800 |
|
|
|
21,164,500 |
|
|
|
63,203,600 |
|
|
|
60,285,100 |
|
Cost of merchandise sold |
|
|
935,400 |
|
|
|
717,600 |
|
|
|
3,370,500 |
|
|
|
2,552,300 |
|
Leasing expense |
|
|
11,000 |
|
|
|
376,300 |
|
|
|
381,700 |
|
|
|
891,900 |
|
Provision for credit losses |
|
|
700 |
|
|
|
(22,000 |
) |
|
|
(4,600 |
) |
|
|
(46,600 |
) |
Selling, general and administrative expenses |
|
|
6,248,200 |
|
|
|
5,671,500 |
|
|
|
18,694,300 |
|
|
|
16,673,100 |
|
Income from operations |
|
|
15,122,500 |
|
|
|
14,421,100 |
|
|
|
40,761,700 |
|
|
|
40,214,400 |
|
Interest expense |
|
|
(763,100 |
) |
|
|
(820,500 |
) |
|
|
(2,339,800 |
) |
|
|
(2,045,600 |
) |
Interest and other income |
|
|
385,400 |
|
|
|
21,700 |
|
|
|
803,400 |
|
|
|
7,000 |
|
Income before income taxes |
|
|
14,744,800 |
|
|
|
13,622,300 |
|
|
|
39,225,300 |
|
|
|
38,175,800 |
|
Provision for income taxes |
|
|
(3,595,000 |
) |
|
|
(3,253,700 |
) |
|
|
(8,764,000 |
) |
|
|
(8,927,500 |
) |
Net income |
|
$ |
11,149,800 |
|
|
$ |
10,368,600 |
|
|
$ |
30,461,300 |
|
|
$ |
29,248,300 |
|
Earnings per share - basic |
|
$ |
3.20 |
|
|
$ |
3.01 |
|
|
$ |
8.77 |
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|
$ |
8.36 |
|
Earnings per share - diluted |
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$ |
3.05 |
|
|
$ |
2.93 |
|
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$ |
8.40 |
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$ |
8.11 |
|
Weighted average shares outstanding - basic |
|
|
3,485,852 |
|
|
|
3,439,417 |
|
|
|
3,475,066 |
|
|
|
3,500,411 |
|
Weighted average shares outstanding - diluted |
|
|
3,653,730 |
|
|
|
3,540,779 |
|
|
|
3,627,550 |
|
|
|
3,605,445 |
|
WINMARK CORPORATION |
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CONDENSED STATEMENTS OF CASH FLOWS |
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(Unaudited) |
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Nine Months Ended |
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September 30, 2023 |
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September 24, 2022 |
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OPERATING ACTIVITIES: |
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|
|
|
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Net income |
|
$ |
30,461,300 |
|
|
$ |
29,248,300 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
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Depreciation and amortization |
|
|
578,900 |
|
|
|
409,500 |
|
Provision for credit losses |
|
|
(4,600 |
) |
|
|
(46,600 |
) |
Compensation expense related to stock options |
|
|
1,451,000 |
|
|
|
1,203,800 |
|
Deferred income taxes |
|
|
148,400 |
|
|
|
(214,700 |
) |
Operating lease right of use asset amortization |
|
|
206,000 |
|
|
|
185,700 |
|
Tax benefits on exercised stock options |
|
|
839,000 |
|
|
|
429,500 |
|
Change in operating assets and liabilities: |
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|
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Receivables |
|
|
(265,400 |
) |
|
|
(530,200 |
) |
Principal collections on lease receivables |
|
|
485,200 |
|
|
|
2,819,200 |
|
Income tax receivable/payable |
|
|
(281,500 |
) |
|
|
194,600 |
|
Inventories |
|
|
479,700 |
|
|
|
(312,700 |
) |
Prepaid expenses |
|
|
215,300 |
|
|
|
2,500 |
|
Other assets |
|
|
(38,000 |
) |
|
|
2,000 |
|
Accounts payable |
|
|
(427,100 |
) |
|
|
(189,100 |
) |
Accrued and other liabilities |
|
|
1,021,600 |
|
|
|
1,395,000 |
|
Rents received in advance and security deposits |
|
|
(254,600 |
) |
|
|
(556,200 |
) |
Deferred revenue |
|
|
616,200 |
|
|
|
164,700 |
|
Net cash provided by operating activities |
|
|
35,231,400 |
|
|
|
34,205,300 |
|
INVESTING ACTIVITIES: |
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|
|
|
|
|
||
Purchase of property and equipment |
|
|
(284,700 |
) |
|
|
(70,000 |
) |
Reacquired franchise rights |
|
|
— |
|
|
|
(3,540,000 |
) |
Net cash used for investing activities |
|
|
(284,700 |
) |
|
|
(3,610,000 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Proceeds from borrowings on line of credit/term loan |
|
|
— |
|
|
|
33,700,000 |
|
Payments on line of credit/term loan |
|
|
— |
|
|
|
(3,700,000 |
) |
Payments on notes payable |
|
|
(3,187,500 |
) |
|
|
(3,187,500 |
) |
Repurchases of common stock |
|
|
— |
|
|
|
(48,281,200 |
) |
Proceeds from exercises of stock options |
|
|
3,154,200 |
|
|
|
2,937,100 |
|
Dividends paid |
|
|
(7,997,900 |
) |
|
|
(6,459,700 |
) |
Net cash used for financing activities |
|
|
(8,031,200 |
) |
|
|
(24,991,300 |
) |
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
26,915,500 |
|
|
|
5,604,000 |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
13,680,600 |
|
|
|
11,437,000 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
40,596,100 |
|
|
$ |
17,041,000 |
|
SUPPLEMENTAL DISCLOSURES: |
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|
|
|
|
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||
Cash paid for interest |
|
$ |
2,309,100 |
|
|
$ |
1,925,400 |
|
Cash paid for income taxes |
|
$ |
8,058,100 |
|
|
$ |
8,518,100 |
|
|
|
|
|
|
|
|
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The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Balance Sheets to the total of the same amounts shown above: |
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|
|
Nine Months Ended |
||||||
|
|
September 30, 2023 |
|
September 24, 2022 |
||||
Cash and cash equivalents |
|
$ |
40,556,100 |
|
|
$ |
16,986,000 |
|
Restricted cash |
|
|
40,000 |
|
|
|
55,000 |
|
Total cash, cash equivalents and restricted cash |
|
$ |
40,596,100 |
|
|
$ |
17,041,000 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20231018540190/en/
Contacts
Anthony D. Ishaug
763/520-8500
