Raises Full Year 2022 EPS Outlook and
On Track to Deliver 19th Consecutive Year of
Domestic Same Store Sales Growth
DALLAS, Oct. 26,
2022 /PRNewswire/ -- Wingstop Inc. ("Wingstop"
or the "Company") (NASDAQ: WING) today announced financial results
for the fiscal third quarter ended September 24, 2022.
Highlights for the fiscal third quarter 2022 compared to the
fiscal third quarter 2021:
- System-wide sales increased 17.7% to $699.6 million
- 40 net new openings in the fiscal third quarter 2022
- Domestic same store sales increased 6.9%
- Domestic restaurant AUV of $1.6
million
- Digital sales of 62.0% of sales
- Total revenue increased 40.9% to $92.7
million
- Net income increased 18.4% to $13.4
million, or $0.45 per diluted
share, compared to net income of $11.3
million, or $0.38 per diluted
share in the prior fiscal third quarter. Adjusted net income and
adjusted earnings per diluted share, both non-GAAP measures,
increased 57.9% to $13.6 million, or
$0.45 per diluted share, compared to
$8.6 million, or $0.29 per diluted share in the prior fiscal third
quarter
- Adjusted EBITDA, a non-GAAP measure, increased 32.7% to
$28.4 million, compared to adjusted
EBITDA of $21.4 million in the prior
fiscal third quarter
Adjusted EBITDA, adjusted net income, adjusted earnings per
diluted share, and cost of sales excluding pre-opening expenses are
non-GAAP measures. Reconciliations of adjusted EBITDA, adjusted net
income, adjusted earnings per diluted share, and cost of sales
excluding pre-opening expenses to the most directly comparable
financial measure presented in accordance with accounting
principles generally accepted in the
United States ("GAAP") are set forth in the schedule
accompanying this release. See "Non-GAAP Financial
Measures."
"The third quarter results underscore the strength of our
long-term growth strategies and the growth levers we have to pull
as a brand. We delivered 6.9% domestic same store sales growth,
with the majority of this growth driven by an increase in
transactions, a demonstration of the momentum and underlying health
of our business. This translates to 36.2% domestic same store sales
growth on a three-year basis," commented Michael Skipworth, President & Chief
Executive Officer. "We've opened 167 net new restaurants through
the third quarter and are on track to have a record year for
restaurant development, enabled by significant bone-in wing
deflation strengthening our brand partners' unit economics. This
gives us confidence in our ability to deliver another record
setting year for Wingstop."
Key operating metrics for the fiscal third quarter 2022
compared to the fiscal third quarter 2021:
|
Thirteen Weeks
Ended
|
|
September 24,
2022
|
|
September 25,
2021
|
Number of system-wide
restaurants open at end of period
|
1,898
|
|
1,673
|
Number of domestic
franchise restaurants open at end of period
|
1,631
|
|
1,461
|
Number of international
franchise restaurants open at end of period
|
225
|
|
180
|
System-wide sales (in
thousands)
|
$
699,569
|
|
$
594,300
|
Domestic restaurant AUV
(in thousands)
|
$
1,591
|
|
$
1,579
|
Domestic same store
sales growth
|
6.9 %
|
|
3.9 %
|
Company-owned domestic
same store sales growth
|
4.3 %
|
|
(0.2) %
|
Net income (in
thousands)
|
$
13,368
|
|
$
11,290
|
Adjusted net income (in
thousands)
|
$
13,550
|
|
$
8,579
|
Adjusted EBITDA (in
thousands)
|
$
28,394
|
|
$
21,399
|
Fiscal third quarter 2022 financial results
Total revenue for the fiscal third quarter 2022 increased to
$92.7 million from $65.8 million in the fiscal third quarter last
year. Royalty revenue, franchise fees and other increased
$7.5 million due to 215 net franchise
restaurant openings since September 25, 2021, as well as
domestic same store sales growth of 6.9%. Advertising fees
increased $16.6 million due to an increase in the national
advertising fund contribution rate to 5% from 4% effective the
first day of the fiscal second quarter 2022, as well as a 17.7%
increase in system-wide sales in the fiscal third quarter 2022
compared to the fiscal third quarter 2021. Additionally, during the
fiscal third quarter 2021, a $6.9
million non-recurring rebate of advertising surplus was
returned to franchisees, reducing the revenue recognized.
Company-owned restaurant sales increased $2.8 million due to an increase of $2.3 million related to the addition of nine net
new company-owned restaurants compared to the prior year comparable
period, as well as a 4.3% increase in company-owned same store
sales, which was driven by an increase in menu prices and an
increase in transactions.
Cost of sales increased to $15.7
million from $15.2 million in
the fiscal third quarter of the prior year, and included
$0.2 million in pre-opening expenses
in the fiscal third quarters 2022 and 2021. As a percentage of
company-owned restaurant sales, cost of sales (excluding
pre-opening expenses) decreased to 77.2% from 86.3% in the prior
year comparable period. The decrease was primarily driven by food,
beverage and packaging costs benefiting from a 42.7% decrease in
the cost of bone-in chicken wings as compared to the prior year
period. However, this benefit was partially offset by the opening
of eight restaurants in the New York
City market since the prior year comparable period, which
have higher rent and other operating costs.
Selling, general & administrative expense ("SG&A")
increased by $1.7 million to
$16.7 million from $15.0 million in the fiscal third quarter of the
prior year. The increase in SG&A expense was primarily due
to an increase of $1.0 million in
headcount related expenses to support the growth in our business,
as well as an increase of $0.4
million in professional fees to support the Company's
strategic initiatives. These increases were partially offset by a
decrease of $0.5 million in
stock-based compensation expense related to stock awards forfeited
during the fiscal third quarter 2022.
Interest expense, net was $5.7
million in fiscal third quarter 2022, an increase of
$2.0 million compared to $3.7 million in the prior fiscal period. The
increase was due to the securitized financing transaction completed
on March 9, 2022, which increased our
outstanding debt by $250 million.
Income tax expense was $4.7
million in fiscal third quarter 2022, yielding an effective
tax rate of 25.9%, compared to an effective tax rate of 34.1% in
the prior year period. The decrease in the effective tax rate was
primarily due to the impact of nondeductible expenses for executive
compensation during the fiscal third quarter 2021.
Financial Outlook
The Company is increasing guidance for diluted earnings per
share to between $1.61 and
$1.63, previously between
$1.55 to $1.57. Additionally, the Company expects the
following for the fiscal year ended December
31, 2022:
- Low-single digit domestic same store sales growth;
- Net system-wide restaurant openings of between 225 - 235,
previously between 220 - 235
- SG&A of between $68.5 -
$70.5 million, previously between
$70.0 - $72.0
million;
- Stock-based compensation expense of approximately $6.0 million, previously $7.5 - 8.5 million;
- Depreciation and amortization of between $10.5 - $11.5
million; and
- Interest expense of approximately $22.5
million, previously $23.5
million.
Restaurant Development
As of September 24, 2022, there were 1,898 Wingstop
restaurants system-wide. This included 1,673 restaurants in
the United States, of which 1,631
were franchised restaurants and 42 were company-owned, and 225
franchised restaurants in international markets. During the fiscal
third quarter 2022, there were 40 net system-wide Wingstop
restaurant openings.
Quarterly Dividend
In recognition of the Company's strong cash flow generation and
our commitment to returning value to stockholders, on
October 25, 2022, our board of directors approved a quarterly
dividend of $0.19 per share of common
stock, resulting in a total dividend of approximately $5.7 million. This dividend will be paid on
December 2, 2022 to stockholders of record as of
November 11, 2022.
The following definitions apply to these terms as used in
this release:
Domestic average unit volume ("AUV") consists of the
average annual sales of all restaurants that have been open for a
trailing 52-week period or longer. This measure is calculated by
dividing sales during the applicable period for all restaurants
being measured by the number of restaurants being measured.
Domestic AUV includes revenue from both company-owned and
franchised restaurants. Domestic AUV allows management to assess
our company-owned and franchised restaurant economics. Changes in
domestic AUV are primarily driven by increases in same store sales
and are also influenced by opening new restaurants.
Domestic same store sales reflect the change in
year-over-year sales for the comparable restaurant base. We define
the comparable restaurant base to include those restaurants open
for at least 52 full weeks. This measure highlights the performance
of existing restaurants, while excluding the impact of new
restaurant openings and permanent closures.
System-wide sales represents net sales for all of
our company-owned and franchised restaurants, as reported by
franchisees.
Adjusted EBITDA is defined as net income before
interest expense, net, income tax expense (benefit), and
depreciation and amortization (EBITDA) further adjusted for losses
on debt extinguishment and refinancing transactions, transaction
costs, costs and fees associated with investments in our strategic
initiatives, gains and losses on the disposal of assets, and
stock-based compensation expense.
Adjusted net income is defined as net income
adjusted for losses on debt extinguishment and refinancing
transactions, transaction costs, costs and fees associated with
investments in our strategic initiatives, gains and losses on the
disposal of assets, and related tax adjustments.
Adjusted net income per diluted share is defined as
adjusted net income divided by weighted average diluted share
count.
We caution investors that amounts presented in accordance with
our definitions above may not be comparable to similar measures
disclosed by our competitors because not all companies and analysts
calculate certain non-GAAP measurements in the same manner.
Conference Call and Webcast
The Company will host a conference call today to discuss the
fiscal third quarter 2022 financial results at 10:00 AM Eastern Time. The conference call can be
accessed live by dialing 1-877-259-5243 or 1-412-317-5176
(international) and asking for the Wingstop conference call. A
replay will be available two hours after the call and can be
accessed by dialing 1-877-344-7529 or 1-412-317-0088
(international), then entering the replay code 8871945. The replay
will be available through Wednesday,
November 2, 2022.
The conference call will also be webcast live and later archived
on the investor relations section of Wingstop's corporate website
at ir.wingstop.com under the 'News & Events' section.
About Wingstop
Founded in 1994 and headquartered in Dallas, TX, Wingstop Inc. (NASDAQ: WING)
operates and franchises 1,900 locations worldwide. The Wing
Experts are dedicated to Serving the World Flavor through an
unparalleled guest experience and use of a best-in-class technology
platform, all while offering classic and boneless wings, tenders,
and chicken sandwiches, always cooked to order and hand
sauced-and-tossed in fans' choice of 11 bold, distinctive flavors.
Wingstop's menu also features signature sides including fresh-cut,
seasoned fries and freshly-made ranch and bleu cheese dips.
In fiscal year 2021, Wingstop's system-wide sales increased
20.2% year-over-year to approximately $2.3
billion, marking the 18th consecutive year of same store
sales growth. With a vision of becoming a Top 10 Global Restaurant
Brand, our system is comprised of independent franchisees, or brand
partners, who account for approximately 98% of Wingstop's total
restaurant count of 1,898 as of September 24, 2022.
A key to this business success and consumer fandom stems from
The Wingstop Way, which includes a core value system of being
Authentic, Entrepreneurial, Service-minded, and Fun. The Wingstop
Way extends to the brand's environmental, social and governance
platform as Wingstop seeks to provide value to all
stakeholders.
Rounding out a strong year in 2021, the Company was ranked #1 on
Technomic 500's "Fastest Growing Franchise" and #22 on Entrepreneur
Magazine's "Franchise 500," maintained its certification as a Great
Place to Work and named to Fast Company's "The World's Most
Innovative Companies" list ranking #4 in the dining category.
For more information visit www.wingstop.com or
www.wingstop.com/own-a-wingstop and follow @Wingstop on Twitter,
Instagram, Facebook, and TikTok. Learn more about Wingstop's
involvement in its local communities at
www.wingstopcharities.org.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use non-GAAP
financial measures, including those indicated above. By providing
non-GAAP financial measures, together with a reconciliation to the
most comparable GAAP measure, we believe we are enhancing
investors' understanding of our business and our results of
operations, as well as assisting investors in evaluating how well
we are executing our strategic initiatives. These measures are not
intended to be considered in isolation or as substitutes for, or
superior to, financial measures prepared and presented in
accordance with GAAP. The non-GAAP measures used in this press
release may be different from the measures used by other companies.
A reconciliation of each measure to the most directly comparable
GAAP measure is available in this news release. In addition, the
Current Report on Form 8-K furnished to the SEC concurrent with the
issuance of this press release includes a more detailed description
of each of these non-GAAP financial measures, together with a
discussion of the usefulness and purpose of such measures.
Forward-looking Statements
This news release includes statements of our expectations,
intentions, plans and beliefs that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, and are intended to come within the safe
harbor protection provided by those sections. These statements,
which involve risks and uncertainties, relate to the discussion of
our business strategies and our expectations concerning future
operations, margins, profitability, trends, liquidity and capital
resources and to analyses and other information that are based on
forecasts of future results and estimates of amounts not yet
determinable. These forward-looking statements can generally be
identified by the use of forward-looking terminology, including the
terms "may," "will," "should," "expect," "intend," "plan,"
"outlook," "guidance," "anticipate," "believe," "think,"
"estimate," "seek," "predict," "on track," "could," "project,"
"potential" or, in each case, their negative or other variations or
comparable terminology, although not all forward-looking statements
are accompanied by such terms. Examples of forward-looking
statements in this news release include, but are not limited to,
our 2022 fiscal year outlook for domestic same store sales growth,
the cost of chicken, SG&A expenses, stock-based compensation
expense, depreciation and amortization, interest expense, diluted
earnings per share, and unit growth. These forward-looking
statements are made based on expectations and beliefs concerning
future events affecting us and are subject to uncertainties, risks,
and factors relating to our operations and business environments,
all of which are difficult to predict and many of which are beyond
our control, that could cause our actual results to differ
materially from those matters expressed or implied by these
forward-looking statements. Please refer to the risk factors
discussed in our Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q, which can be found at the SEC's website www.sec.gov.
The discussion of these risks is specifically incorporated by
reference into this news release.
When considering forward-looking statements in this news release
or that we make in other reports or statements, you should keep in
mind the cautionary statements in this news release and future
reports we file with the SEC. New risks and uncertainties arise
from time to time, and we cannot predict when they may arise or how
they may affect us. Any forward-looking statement in this news
release speaks only as of the date on which it was made. Except as
required by law, we assume no obligation to update or revise any
forward-looking statements for any reason, or to update the reasons
actual results could differ materially from those anticipated in
any forward-looking statements, even if new information becomes
available in the future.
Media Contact
Megan
Sprague
972-331-9155
Media@wingstop.com
Investor Contact
Susana
Arevalo
972-331-8484
IR@wingstop.com
WINGSTOP INC. AND
SUBSIDIARIES Consolidated Balance
Sheets (amounts in thousands, except share and per share
data)
|
|
|
September
24,
2022
|
|
December 25,
2021
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
173,511
|
|
$
48,583
|
Restricted
cash
|
13,182
|
|
3,448
|
Accounts receivable,
net
|
8,829
|
|
6,993
|
Prepaid expenses and
other current assets
|
5,752
|
|
4,928
|
Advertising fund
assets, restricted
|
21,817
|
|
6,197
|
Total current
assets
|
223,091
|
|
70,149
|
Property and equipment,
net
|
63,236
|
|
54,503
|
Goodwill
|
58,570
|
|
56,877
|
Trademarks
|
32,700
|
|
32,700
|
Customer relationships,
net
|
9,339
|
|
10,302
|
Other non-current
assets
|
24,100
|
|
24,672
|
Total
assets
|
$
411,036
|
|
$
249,203
|
Liabilities and
stockholders' deficit
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
3,497
|
|
$
5,414
|
Other current
liabilities
|
28,041
|
|
28,070
|
Current portion of
debt
|
7,300
|
|
—
|
Advertising fund
liabilities
|
21,817
|
|
6,197
|
Total current
liabilities
|
60,655
|
|
39,681
|
Long-term debt,
net
|
708,176
|
|
469,394
|
Deferred revenues, net
of current
|
26,942
|
|
28,024
|
Deferred income tax
liabilities, net
|
6,757
|
|
7,432
|
Other non-current
liabilities
|
15,102
|
|
14,197
|
Total
liabilities
|
817,632
|
|
558,728
|
Commitments and
contingencies
|
|
|
|
Stockholders'
deficit
|
|
|
|
Common stock, $0.01
par value; 100,000,000 shares authorized;
29,916,183 and 29,837,454 shares issued and outstanding as of
September 24, 2022 and December 25, 2021,
respectively
|
299
|
|
299
|
Additional
paid-in-capital
|
991
|
|
463
|
Retained
deficit
|
(406,902)
|
|
(310,031)
|
Accumulated other
comprehensive loss
|
(984)
|
|
(256)
|
Total stockholders'
deficit
|
(406,596)
|
|
(309,525)
|
Total liabilities
and stockholders' deficit
|
$
411,036
|
|
$
249,203
|
WINGSTOP INC. AND
SUBSIDIARIES Consolidated Statements of
Operations (amounts in thousands, except per share
data)
|
|
|
Thirteen Weeks
Ended
|
|
September
24,
2022
|
|
September
25,
2021
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenue:
|
|
|
|
Royalty revenue,
franchise fees and other
|
$
40,363
|
|
$
32,829
|
Advertising
fees
|
32,146
|
|
15,575
|
Company-owned
restaurant sales
|
20,163
|
|
17,380
|
Total
revenue
|
92,672
|
|
65,784
|
Costs and
expenses:
|
|
|
|
Cost of sales
(1)
|
15,724
|
|
15,206
|
Advertising
expenses
|
33,106
|
|
16,232
|
Selling, general and
administrative
|
16,686
|
|
15,020
|
Depreciation and
amortization
|
2,836
|
|
2,061
|
Loss (gain) on
disposal of assets
|
239
|
|
(3,567)
|
Total costs and
expenses
|
68,591
|
|
44,952
|
Operating
income
|
24,081
|
|
20,832
|
Interest expense,
net
|
5,742
|
|
3,724
|
Other expense
(income)
|
290
|
|
(22)
|
Income before income
tax expense
|
18,049
|
|
17,130
|
Income tax
expense
|
4,681
|
|
5,840
|
Net income
|
$
13,368
|
|
$
11,290
|
|
|
|
|
Earnings per
share
|
|
|
|
Basic
|
$
0.45
|
|
$
0.38
|
Diluted
|
$
0.45
|
|
$
0.38
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
Basic
|
29,915
|
|
29,799
|
Diluted
|
29,967
|
|
29,963
|
|
|
|
|
Dividends per
share
|
$
0.19
|
|
$
0.17
|
|
(1) Cost of sales includes all
operating expenses of company-owned restaurants, including
advertising
expenses, and excludes depreciation and amortization, which are
presented separately.
|
WINGSTOP INC. AND
SUBSIDIARIES Unaudited Supplemental
Information Cost of Sales Margin
Analysis (amounts in thousands)
|
|
|
Thirteen Weeks
Ended
|
|
September 24,
2022
|
|
September 25,
2021
|
|
In
dollars
|
|
As a % of
company-
owned
restaurant
sales
|
|
In
dollars
|
|
As a % of
company-
owned
restaurant
sales
|
Cost of
sales:
|
|
|
|
|
|
|
|
Food, beverage and
packaging costs
|
7,504
|
|
37.2 %
|
|
8,353
|
|
48.1 %
|
Labor costs
|
4,652
|
|
23.1 %
|
|
4,269
|
|
24.6 %
|
Other restaurant
operating expenses
|
3,842
|
|
19.1 %
|
|
2,781
|
|
16.0 %
|
Vendor
rebates
|
(441)
|
|
(2.2) %
|
|
(396)
|
|
(2.3) %
|
Cost of sales
(excluding pre-opening expenses)
|
15,557
|
|
77.2 %
|
|
15,007
|
|
86.3 %
|
Pre-opening
expenses
|
167
|
|
0.8 %
|
|
199
|
|
1.1 %
|
Total cost of
sales
|
15,724
|
|
78.0 %
|
|
15,206
|
|
87.5 %
|
WINGSTOP INC. AND
SUBSIDIARIES Unaudited Supplemental
Information Restaurant Count
|
|
|
Thirteen Weeks
Ended
|
|
September
24,
2022
|
|
September
25,
2021
|
Domestic Franchised
Activity:
|
|
|
|
Beginning of
period
|
1,600
|
|
1,415
|
Openings
|
32
|
|
44
|
Closures
|
—
|
|
(1)
|
Acquired by
Company
|
(1)
|
|
(3)
|
Re-franchised by
Company
|
—
|
|
6
|
Restaurants end of
period
|
1,631
|
|
1,461
|
|
|
|
|
Domestic
Company-Owned Activity:
|
|
|
|
Beginning of
period
|
39
|
|
34
|
Openings
|
2
|
|
1
|
Closures
|
—
|
|
—
|
Acquired by
Company
|
1
|
|
3
|
Re-franchised to
franchisees
|
—
|
|
(6)
|
Restaurants end of
period
|
42
|
|
32
|
|
|
|
|
Total Domestic
Restaurants
|
1,673
|
|
1,493
|
|
|
|
|
International
Franchised Activity:
|
|
|
|
Beginning of
period
|
219
|
|
175
|
Openings
|
9
|
|
10
|
Closures
|
(3)
|
|
(5)
|
Restaurants end of
period
|
225
|
|
180
|
|
|
|
|
Total System-wide
Restaurants
|
1,898
|
|
1,673
|
WINGSTOP INC. AND
SUBSIDIARIES Non-GAAP Financial Measures - EBITDA and
Adjusted EBITDA (Unaudited) (amounts in
thousands)
|
|
|
Thirteen Weeks
Ended
|
|
September
24,
2022
|
|
September
25,
2021
|
Net income
|
$
13,368
|
|
$
11,290
|
Interest expense,
net
|
5,742
|
|
3,724
|
Income tax
expense
|
4,681
|
|
5,840
|
Depreciation and
amortization
|
2,836
|
|
2,061
|
EBITDA
|
$
26,627
|
|
$
22,915
|
Additional
adjustments:
|
|
|
|
Loss (gain) on disposal
of assets (a)
|
239
|
|
(3,567)
|
Stock-based
compensation expense, net of forfeitures (b)
|
1,528
|
|
2,051
|
Adjusted
EBITDA
|
$
28,394
|
|
$
21,399
|
|
|
(a)
|
Represents a loss
(gain) resulting from the sale of assets to a franchisee. This loss
(gain) is included in Loss (gain) on
disposal of assets in the Consolidated Statements of
Operations.
|
|
|
(b)
|
Includes non-cash,
stock-based compensation, net of forfeitures.
|
WINGSTOP INC. AND
SUBSIDIARIES Non-GAAP Financial Measures - Adjusted Net
Income and Adjusted EPS (Unaudited) (amounts in
thousands, except per share data)
|
|
|
Thirteen Weeks
Ended
|
|
September
24,
2022
|
|
September
25,
2021
|
Numerator:
|
|
|
|
Net income
|
$
13,368
|
|
$
11,290
|
Adjustments:
|
|
|
|
Loss (gain) on
disposal of assets (a)
|
239
|
|
(3,567)
|
Tax effect of
adjustments (b)
|
(57)
|
|
856
|
Adjusted net
income
|
$
13,550
|
|
$
8,579
|
|
|
|
|
Denominator:
|
|
|
|
Weighted-average
shares outstanding - diluted
|
29,967
|
|
29,963
|
|
|
|
|
Adjusted earnings per
diluted share
|
$
0.45
|
|
$
0.29
|
|
|
(a)
|
Represents a loss
(gain) resulting from the sale of assets to a franchisee. This loss
(gain) is included in Loss (gain) on
disposal of assets in the Consolidated Statements of
Operations.
|
|
|
(b)
|
Represents the tax
effect of the aforementioned adjustments to reflect corporate
income taxes at an assumed effective tax
rate of 24% for the thirteen and thirty-nine weeks ended
September 24, 2022, which includes provisions for U.S.
federal
income taxes, and assumes the respective statutory rates for
applicable state and local jurisdictions.
|
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SOURCE Wingstop Restaurants Inc.