WINA Winmark Corporation

Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 28, 2024 of $11,120,700 or $3.03 per share diluted compared to net income of $11,149,800 or $3.05 per share diluted in 2023. For the nine months ended September 28, 2024, net income was $30,371,200 or $8.29 per share diluted compared to net income of $30,461,300 or $8.40 per share diluted for the same period last year. Results during the quarter and nine months were impacted by the Company’s decision in May 2021 to run-off its leasing portfolio.

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 September 28, 2024, there were 1,343 franchises in operation and over 2,800 available territories. An additional 82 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)

 

 

 

 

 

 

 

 

 

September 28, 2024

 

December 30, 2023

ASSETS

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

37,197,000

 

 

$

13,361,500

 

Restricted cash

 

 

90,000

 

 

 

25,000

 

Receivables, net

 

 

1,602,200

 

 

 

1,475,300

 

Net investment in leases - current

 

 

—

 

 

 

75,100

 

Income tax receivable

 

 

—

 

 

 

31,400

 

Inventories

 

 

441,800

 

 

 

386,100

 

Prepaid expenses

 

 

1,171,600

 

 

 

1,392,100

 

Total current assets

 

 

40,502,600

 

 

 

16,746,500

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,519,000

 

 

 

1,669,800

 

Operating lease right of use asset

 

 

2,197,600

 

 

 

2,425,900

 

Intangible assets, net

 

 

2,728,800

 

 

 

2,994,300

 

Goodwill

 

 

607,500

 

 

 

607,500

 

Other assets

 

 

478,400

 

 

 

471,300

 

Deferred income taxes

 

 

3,917,300

 

 

 

4,052,400

 

 

 

$

51,951,200

 

 

$

28,967,700

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

 

 

 

 

 

 

Notes payable, net

 

$

3,472,100

 

 

$

4,217,900

 

Accounts payable

 

 

1,600,700

 

 

 

1,719,400

 

Income tax payable

 

 

30,400

 

 

 

—

 

Accrued liabilities

 

 

3,776,100

 

 

 

2,858,200

 

Deferred revenue

 

 

1,670,100

 

 

 

1,666,100

 

Total current liabilities

 

 

10,549,400

 

 

 

10,461,600

 

Long-Term Liabilities:

 

 

 

 

 

 

Line of credit/Term loan

 

 

30,000,000

 

 

 

30,000,000

 

Notes payable, net

 

 

32,431,200

 

 

 

34,848,800

 

Deferred revenue

 

 

8,028,600

 

 

 

7,657,500

 

Operating lease liabilities

 

 

3,260,100

 

 

 

3,715,800

 

Other liabilities

 

 

1,425,800

 

 

 

1,440,100

 

Total long-term liabilities

 

 

75,145,700

 

 

 

77,662,200

 

Shareholders’ Equity (Deficit):

 

 

 

 

 

 

Common stock, no par, 10,000,000 shares authorized, 3,520,402 and 3,496,977 shares issued and outstanding

 

 

11,941,900

 

 

 

7,768,800

 

Retained earnings (accumulated deficit)

 

 

(45,685,800

)

 

 

(66,924,900

)

Total shareholders’ equity (deficit)

 

 

(33,743,900

)

 

 

(59,156,100

)

 

 

$

51,951,200

 

 

$

28,967,700

 

WINMARK CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalties

 

$

19,512,500

 

 

$

19,210,000

 

 

$

54,555,700

 

 

$

53,063,400

 

 

Leasing income

 

 

316,200

 

 

 

1,291,900

 

 

 

1,677,400

 

 

 

3,948,700

 

 

Merchandise sales

 

 

702,500

 

 

 

997,800

 

 

 

2,738,500

 

 

 

3,601,900

 

 

Franchise fees

 

 

451,200

 

 

 

334,400

 

 

 

1,182,700

 

 

 

1,133,400

 

 

Other

 

 

528,500

 

 

 

483,700

 

 

 

1,586,800

 

 

 

1,456,200

 

 

Total revenue

 

 

21,510,900

 

 

 

22,317,800

 

 

 

61,741,100

 

 

 

63,203,600

 

 

Cost of merchandise sold

 

 

662,500

 

 

 

935,400

 

 

 

2,562,600

 

 

 

3,370,500

 

 

Leasing expense

 

 

—

 

 

 

11,000

 

 

 

36,600

 

 

 

381,700

 

 

Provision for credit losses

 

 

—

 

 

 

700

 

 

 

(1,500

)

 

 

(4,600

)

 

Selling, general and administrative expenses

 

 

5,919,800

 

 

 

6,248,200

 

 

 

18,979,000

 

 

 

18,694,300

 

 

Income from operations

 

 

14,928,600

 

 

 

15,122,500

 

 

 

40,164,400

 

 

 

40,761,700

 

 

Interest expense

 

 

(704,100

)

 

 

(763,100

)

 

 

(2,163,300

)

 

 

(2,339,800

)

 

Interest and other income

 

 

386,400

 

 

 

385,400

 

 

 

855,200

 

 

 

803,400

 

 

Income before income taxes

 

 

14,610,900

 

 

 

14,744,800

 

 

 

38,856,300

 

 

 

39,225,300

 

 

Provision for income taxes

 

 

(3,490,200

)

 

 

(3,595,000

)

 

 

(8,485,100

)

 

 

(8,764,000

)

 

Net income

 

$

11,120,700

 

 

$

11,149,800

 

 

$

30,371,200

 

 

$

30,461,300

 

 

Earnings per share - basic

 

$

3.16

 

 

$

3.20

 

 

$

8.65

 

 

$

8.77

 

 

Earnings per share - diluted

 

$

3.03

 

 

$

3.05

 

 

$

8.29

 

 

$

8.40

 

 

Weighted average shares outstanding - basic

 

 

3,520,334

 

 

 

3,485,852

 

 

 

3,510,461

 

 

 

3,475,066

 

 

Weighted average shares outstanding - diluted

 

 

3,671,121

 

 

 

3,653,730

 

 

 

3,663,309

 

 

 

3,627,550

 

 

WINMARK CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

September 28, 2024

 

September 30, 2023

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income

 

$

30,371,200

 

 

$

30,461,300

 

 

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

 

 

 

 

 

 

 

Depreciation of property and equipment

 

 

345,600

 

 

 

313,400

 

 

Amortization of intangible assets

 

 

265,500

 

 

 

265,500

 

 

Provision for credit losses

 

 

(1,500

)

 

 

(4,600

)

 

Compensation expense related to stock options

 

 

1,458,200

 

 

 

1,451,000

 

 

Deferred income taxes

 

 

135,100

 

 

 

148,400

 

 

Operating lease right of use asset amortization

 

 

228,200

 

 

 

206,000

 

 

Tax benefits on exercised stock options

 

 

943,300

 

 

 

839,000

 

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

(126,900

)

 

 

(265,400

)

 

Principal collections on lease receivables

 

 

104,700

 

 

 

485,200

 

 

Income tax receivable/payable

 

 

(881,600

)

 

 

(281,500

)

 

Inventories

 

 

(55,700

)

 

 

479,700

 

 

Prepaid expenses

 

 

220,500

 

 

 

215,300

 

 

Other assets

 

 

(7,200

)

 

 

(38,000

)

 

Accounts payable

 

 

(118,700

)

 

 

(427,100

)

 

Accrued and other liabilities

 

 

472,200

 

 

 

1,021,600

 

 

Rents received in advance and security deposits

 

 

(28,000

)

 

 

(254,600

)

 

Deferred revenue

 

 

375,100

 

 

 

616,200

 

 

Net cash provided by operating activities

 

 

33,700,000

 

 

 

35,231,400

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(194,900

)

 

 

(284,700

)

 

Net cash used for investing activities

 

 

(194,900

)

 

 

(284,700

)

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Payments on notes payable

 

 

(3,187,500

)

 

 

(3,187,500

)

 

Proceeds from exercises of stock options

 

 

2,715,000

 

 

 

3,154,200

 

 

Dividends paid

 

 

(9,132,100

)

 

 

(7,997,900

)

 

Net cash used for financing activities

 

 

(9,604,600

)

 

 

(8,031,200

)

 

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

 

 

23,900,500

 

 

 

26,915,500

 

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

13,386,500

 

 

 

13,680,600

 

 

Cash, cash equivalents and restricted cash, end of period

 

$

37,287,000

 

 

$

40,596,100

 

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

 

Cash paid for interest

 

$

2,149,200

 

 

$

2,309,100

 

 

Cash paid for income taxes

 

$

8,281,400

 

 

$

8,058,100

 

 

 

 

 

 

 

 

 

 

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:

 

 

Nine Months Ended

 

 

 

September 28, 2024

 

September 30, 2023

 

Cash and cash equivalents

 

$

37,197,000

 

 

$

40,556,100

 

 

Restricted cash

 

 

90,000

 

 

 

40,000

 

 

Total cash, cash equivalents and restricted cash

 

$

37,287,000

 

 

$

40,596,100

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241015891945/en/

Anthony D. Ishaug 763/520-8500