Winmark Corporation (Nasdaq: WINA) announced today net income
for the quarter ended July 1, 2023 of $10,368,800 or $2.85 per
share diluted compared to net income of $9,027,200 or $2.54 per
share diluted in 2022.
“Our year-to-date results reflect positive franchisee
performance and Winmark’s continued emphasis on providing
exceptional operational support,” commented Brett D. Heffes, Chair
and Chief Executive Officer.
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 July 1, 2023, there were 1,303 franchises
in operation and over 2,800 available territories. An additional 70
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
CONDENSED BALANCE
SHEETS
(Unaudited)
July 1, 2023
December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents
$
32,321,500
$
13,615,600
Restricted cash
55,000
65,000
Receivables, net
1,592,500
1,438,600
Net investment in leases - current
90,000
344,900
Income tax receivable
522,500
558,700
Inventories
446,900
770,600
Prepaid expenses
819,700
1,310,400
Total current assets
35,848,100
18,103,800
Net investment in leases – long-term
—
5,400
Property and equipment, net
1,593,400
1,704,600
Operating lease right of use asset
2,580,400
2,716,000
Intangible assets, net
3,171,300
3,348,300
Goodwill
607,500
607,500
Other assets
461,300
429,700
Deferred income taxes
3,392,000
3,540,400
$
47,654,000
$
30,455,700
LIABILITIES AND SHAREHOLDERS’
EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net
$
4,217,900
$
4,217,900
Accounts payable
1,638,400
2,122,000
Accrued liabilities
4,269,000
2,611,700
Deferred revenue
1,677,700
1,643,900
Total current liabilities
11,803,000
10,595,500
Long-Term Liabilities:
Line of Credit/Term Loan
30,000,000
30,000,000
Notes payable, net
36,957,700
39,066,700
Deferred revenue
7,338,300
6,974,200
Operating lease liabilities
4,013,200
4,287,000
Other liabilities
1,154,900
1,164,400
Total long-term liabilities
79,464,100
81,492,300
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares
authorized, 3,485,036 and 3,459,673 shares issued and
outstanding
5,723,600
1,806,700
Retained earnings (accumulated
deficit)
(49,336,700
)
(63,438,800
)
Total shareholders’ equity (deficit)
(43,613,100
)
(61,632,100
)
$
47,654,000
$
30,455,700
WINMARK CORPORATION
CONDENSED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended
Six Months Ended
July 1, 2023
June 25, 2022
July 1, 2023
June 25, 2022
Revenue:
Royalties
$
17,105,800
$
15,981,300
$
33,853,500
$
31,371,400
Leasing income
1,019,800
1,212,000
2,656,800
4,083,700
Merchandise sales
1,328,100
1,027,200
2,604,100
1,941,500
Franchise fees
420,700
391,500
798,900
812,100
Other
487,800
458,800
972,500
911,900
Total revenue
20,362,200
19,070,800
40,885,800
39,120,600
Cost of merchandise sold
1,247,800
970,200
2,435,100
1,834,700
Leasing expense
54,300
299,600
370,700
515,600
Provision for credit losses
(700
)
(15,700
)
(5,300
)
(24,600
)
Selling, general and administrative
expenses
5,810,000
5,461,600
12,446,100
11,001,600
Income from operations
13,250,800
12,355,100
25,639,200
25,793,300
Interest expense
(779,100
)
(712,000
)
(1,576,700
)
(1,225,100
)
Interest and other income (expense)
292,300
(13,800
)
418,000
(14,700
)
Income before income taxes
12,764,000
11,629,300
24,480,500
24,553,500
Provision for income taxes
(2,395,200
)
(2,602,100
)
(5,169,000
)
(5,673,800
)
Net income
$
10,368,800
$
9,027,200
$
19,311,500
$
18,879,700
Earnings per share - basic
$
2.98
$
2.61
$
5.57
$
5.35
Earnings per share - diluted
$
2.85
$
2.54
$
5.34
$
5.19
Weighted average shares outstanding -
basic
3,478,628
3,463,886
3,469,675
3,530,902
Weighted average shares outstanding -
diluted
3,634,688
3,559,231
3,614,462
3,637,772
WINMARK CORPORATION
CONDENSED STATEMENTS OF CASH
FLOWS
(Unaudited)
Six Months Ended
July 1, 2023
June 25, 2022
OPERATING ACTIVITIES:
Net income
$
19,311,500
$
18,879,700
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
385,100
219,400
Provision for credit losses
(5,300
)
(24,600
)
Compensation expense related to stock
options
942,000
771,400
Deferred income taxes
148,400
(185,400
)
Operating lease right of use asset
amortization
135,600
122,200
Tax benefits on exercised stock
options
832,300
348,000
Change in operating assets and
liabilities:
Receivables
(153,900
)
(218,400
)
Principal collections on lease
receivables
499,800
1,636,100
Income tax receivable/payable
(796,100
)
(549,500
)
Inventories
323,700
(278,200
)
Prepaid expenses
490,700
147,600
Other assets
(31,600
)
(2,200
)
Accounts payable
(483,600
)
(209,700
)
Accrued and other liabilities
1,390,000
2,213,500
Rents received in advance and security
deposits
(234,200
)
(472,700
)
Deferred revenue
397,900
(28,200
)
Net cash provided by operating
activities
23,152,300
22,369,000
INVESTING ACTIVITIES:
Purchase of property and equipment
(96,900
)
(43,000
)
Reacquired franchise rights
—
(3,540,000
)
Net cash used for investing activities
(96,900
)
(3,583,000
)
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
(2,125,000
)
(2,125,000
)
Repurchases of common stock
—
(47,847,500
)
Proceeds from exercises of stock
options
2,974,900
2,553,700
Dividends paid
(5,209,400
)
(4,052,600
)
Net cash used for financing activities
(4,359,500
)
(21,471,400
)
NET INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
18,695,900
(2,685,400
)
Cash, cash equivalents and restricted
cash, beginning of period
13,680,600
11,437,000
Cash, cash equivalents and restricted
cash, end of period
$
32,376,500
$
8,751,600
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest
$
1,563,800
$
1,108,100
Cash paid for income taxes
$
4,984,600
$
6,060,800
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:
Six Months Ended
July 1, 2023
June 25, 2022
Cash and cash equivalents
$
32,321,500
$
8,696,600
Restricted cash
55,000
55,000
Total cash, cash equivalents and
restricted cash
$
32,376,500
$
8,751,600
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version on businesswire.com: https://www.businesswire.com/news/home/20230719161145/en/
Anthony D. Ishaug 763/520-8500
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