WINA Winmark Corporation

Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended June 29, 2024 of $10,431,400 or $2.85 per share diluted compared to net income of $10,368,800 or $2.85 per share diluted in 2023. For the six months ended June 29, 2024, net income was $19,250,400 or $5.26 per share diluted compared to net income of $19,311,500 or $5.34 per share diluted for the same period last year. Results during the quarter were impacted by the Company’s decision in May 2021 to run-off its leasing portfolio.

“Year-to-date growth in royalties resulted from higher overall store count and, to a lesser extent, increases in per unit performance,” commented Brett D. Heffes, Chair and Chief Executive Officer.

Winmark – the Resale Company®, is a nationally recognized franchisor 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 June 29, 2024, there were 1,336 franchises in operation and over 2,800 available territories. An additional 77 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)

 

 

 

 

 

 

 

 

 

June 29, 2024

 

December 30, 2023

ASSETS

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,397,400

 

 

$

13,361,500

 

Restricted cash

 

 

—

 

 

 

25,000

 

Receivables, net

 

 

1,611,400

 

 

 

1,475,300

 

Net investment in leases - current

 

 

—

 

 

 

75,100

 

Income tax receivable

 

 

655,800

 

 

 

31,400

 

Inventories

 

 

268,200

 

 

 

386,100

 

Prepaid expenses

 

 

1,020,800

 

 

 

1,392,100

 

Total current assets

 

 

32,953,600

 

 

 

16,746,500

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,636,100

 

 

 

1,669,800

 

Operating lease right of use asset

 

 

2,275,600

 

 

 

2,425,900

 

Intangible assets, net

 

 

2,817,300

 

 

 

2,994,300

 

Goodwill

 

 

607,500

 

 

 

607,500

 

Other assets

 

 

479,500

 

 

 

471,300

 

Deferred income taxes

 

 

3,917,300

 

 

 

4,052,400

 

 

 

$

44,686,900

 

 

$

28,967,700

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

 

 

 

 

 

 

Notes payable, net

 

$

4,218,700

 

 

$

4,217,900

 

Accounts payable

 

 

1,478,700

 

 

 

1,719,400

 

Accrued liabilities

 

 

4,092,500

 

 

 

2,858,200

 

Deferred revenue

 

 

1,662,200

 

 

 

1,666,100

 

Total current liabilities

 

 

11,452,100

 

 

 

10,461,600

 

Long-Term Liabilities:

 

 

 

 

 

 

Line of credit/Term loan

 

 

30,000,000

 

 

 

30,000,000

 

Notes payable, net

 

 

32,739,000

 

 

 

34,848,800

 

Deferred revenue

 

 

7,874,600

 

 

 

7,657,500

 

Operating lease liabilities

 

 

3,415,300

 

 

 

3,715,800

 

Other liabilities

 

 

1,430,600

 

 

 

1,440,100

 

Total long-term liabilities

 

 

75,459,500

 

 

 

77,662,200

 

Shareholders’ Equity (Deficit):

 

 

 

 

 

 

Common stock, no par, 10,000,000 shares authorized, 3,520,327 and 3,496,977 shares issued and outstanding

 

 

11,413,500

 

 

 

7,768,800

 

Retained earnings (accumulated deficit)

 

 

(53,638,200

)

 

 

(66,924,900

)

Total shareholders’ equity (deficit)

 

 

(42,224,700

)

 

 

(59,156,100

)

 

 

$

44,686,900

 

 

$

28,967,700

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 29, 2024

 

July 1, 2023

 

June 29, 2024

 

July 1, 2023

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Royalties

 

$

17,774,500

 

 

$

17,105,800

 

 

$

35,043,200

 

 

$

33,853,500

 

Leasing income

 

 

524,400

 

 

 

1,019,800

 

 

 

1,361,200

 

 

 

2,656,800

 

Merchandise sales

 

 

925,500

 

 

 

1,328,100

 

 

 

2,036,000

 

 

 

2,604,100

 

Franchise fees

 

 

366,900

 

 

 

420,700

 

 

 

731,500

 

 

 

798,900

 

Other

 

 

529,200

 

 

 

487,800

 

 

 

1,058,300

 

 

 

972,500

 

Total revenue

 

 

20,120,500

 

 

 

20,362,200

 

 

 

40,230,200

 

 

 

40,885,800

 

Cost of merchandise sold

 

 

861,100

 

 

 

1,247,800

 

 

 

1,900,100

 

 

 

2,435,100

 

Leasing expense

 

 

—

 

 

 

54,300

 

 

 

36,600

 

 

 

370,700

 

Provision for credit losses

 

 

—

 

 

 

(700

)

 

 

(1,500

)

 

 

(5,300

)

Selling, general and administrative expenses

 

 

6,241,800

 

 

 

5,810,000

 

 

 

13,059,200

 

 

 

12,446,100

 

Income from operations

 

 

13,017,600

 

 

 

13,250,800

 

 

 

25,235,800

 

 

 

25,639,200

 

Interest expense

 

 

(721,400

)

 

 

(779,100

)

 

 

(1,459,200

)

 

 

(1,576,700

)

Interest and other income

 

 

280,800

 

 

 

292,300

 

 

 

468,800

 

 

 

418,000

 

Income before income taxes

 

 

12,577,000

 

 

 

12,764,000

 

 

 

24,245,400

 

 

 

24,480,500

 

Provision for income taxes

 

 

(2,145,600

)

 

 

(2,395,200

)

 

 

(4,995,000

)

 

 

(5,169,000

)

Net income

 

$

10,431,400

 

 

$

10,368,800

 

 

$

19,250,400

 

 

$

19,311,500

 

Earnings per share - basic

 

$

2.97

 

 

$

2.98

 

 

$

5.49

 

 

$

5.57

 

Earnings per share - diluted

 

$

2.85

 

 

$

2.85

 

 

$

5.26

 

 

$

5.34

 

Weighted average shares outstanding - basic

 

 

3,513,788

 

 

 

3,478,628

 

 

 

3,505,526

 

 

 

3,469,675

 

Weighted average shares outstanding - diluted

 

 

3,657,439

 

 

 

3,634,688

 

 

 

3,659,405

 

 

 

3,614,462

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 29, 2024

 

July 1, 2023

OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

19,250,400

 

 

$

19,311,500

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation of property and equipment

 

 

224,300

 

 

 

208,100

 

Amortization of intangible assets

 

 

177,000

 

 

 

177,000

 

Provision for credit losses

 

 

(1,500

)

 

 

(5,300

)

Compensation expense related to stock options

 

 

940,500

 

 

 

942,000

 

Deferred income taxes

 

 

135,100

 

 

 

148,400

 

Operating lease right of use asset amortization

 

 

150,300

 

 

 

135,600

 

Tax benefits on exercised stock options

 

 

943,400

 

 

 

832,300

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

(136,100

)

 

 

(153,900

)

Principal collections on lease receivables

 

 

96,300

 

 

 

499,800

 

Income tax receivable/payable

 

 

(1,567,800

)

 

 

(796,100

)

Inventories

 

 

117,900

 

 

 

323,700

 

Prepaid expenses

 

 

371,300

 

 

 

490,700

 

Other assets

 

 

(8,200

)

 

 

(31,600

)

Accounts payable

 

 

(240,700

)

 

 

(483,600

)

Accrued and other liabilities

 

 

940,300

 

 

 

1,390,000

 

Rents received in advance and security deposits

 

 

(19,700

)

 

 

(234,200

)

Deferred revenue

 

 

213,200

 

 

 

397,900

 

Net cash provided by operating activities

 

 

21,586,000

 

 

 

23,152,300

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(190,600

)

 

 

(96,900

)

Net cash used for investing activities

 

 

(190,600

)

 

 

(96,900

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

Payments on notes payable

 

 

(2,125,000

)

 

 

(2,125,000

)

Proceeds from exercises of stock options

 

 

2,704,200

 

 

 

2,974,900

 

Dividends paid

 

 

(5,963,700

)

 

 

(5,209,400

)

Net cash used for financing activities

 

 

(5,384,500

)

 

 

(4,359,500

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

16,010,900

 

 

 

18,695,900

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

13,386,500

 

 

 

13,680,600

 

Cash, cash equivalents and restricted cash, end of period

 

$

29,397,400

 

 

$

32,376,500

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

Cash paid for interest

 

$

1,448,400

 

 

$

1,563,800

 

Cash paid for income taxes

 

$

5,484,400

 

 

$

4,984,600

 

 

 

 

 

 

 

 

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

 

 

June 29, 2024

 

July 1, 2023

Cash and cash equivalents

 

$

29,397,400

 

 

$

32,321,500

 

Restricted cash

 

 

—

 

 

 

55,000

 

Total cash, cash equivalents and restricted cash

 

$

29,397,400

 

 

$

32,376,500

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240716804566/en/

Anthony D. Ishaug 763/520-8500