Winmark Corporation Announces First Quarter Results

Rhea-AI Summary

Winmark (WINA) reported strong Q1 2025 financial results with net income of $9.96 million or $2.71 per share diluted, compared to $8.82 million or $2.41 per share diluted in 2024. The quarter included $2.2 million of leasing income from settlement of customer litigation.

Total revenue increased to $21.92 million, up from $20.11 million in Q1 2024, driven by higher royalties of $17.77 million and leasing income of $2.31 million. The company's franchise network expanded to 1,363 locations in operation, with 79 additional franchises awarded but not yet opened.

The company noted that the run-off of their leasing portfolio announced in May 2021 is substantially complete. Winmark continues to focus on sustainability and small business formation through its resale franchise brands: Plato's Closet, Once Upon A Child, Play It Again Sports, Style Encore, and Music Go Round.

Positive

• Net income increased 12.9% to $9.96 million in Q1 2025
• Diluted EPS grew 12.4% to $2.71 from $2.41
• Total revenue rose 9% to $21.92 million
• One-time leasing settlement contributed $2.2 million to income
• Cash and equivalents increased to $21.83 million from $12.19 million

Negative

• Merchandise sales declined 15.2% to $941,300 from $1.11 million
• Franchise fees decreased 8.9% to $332,100 from $364,500
• Selling, general and administrative expenses increased 9.1% to $7.43 million

Insights

Financial Analyst

Winmark 's Q1 2025 results reveal net income of $9,956,400 ($2.71 per diluted share), representing a 12.9% year-over-year increase from Q1 2024's $8,819,000 ($2.41 per diluted share). However, this growth comes with an important qualifier: $2.2 million of the reported leasing income resulted from a one-time litigation settlement.

Excluding this non-recurring item, the company's performance shows more modest underlying growth. Royalties, Winmark's primary revenue stream, increased by only 2.9% year-over-year to $17.8 million, indicating steady but unspectacular growth in its core franchise operations. Total revenue reached $21.9 million, up 9.0% from the prior year.

The company continues to demonstrate strong cash generation capabilities, with operating activities providing $15.1 million in cash flow during the quarter. This contributed to a significant improvement in cash position, with cash and equivalents rising to $21.8 million from $12.2 million at year-end 2024.

Management's statement about substantially completing the leasing portfolio run-off (announced in May 2021) signals the successful execution of a multi-year strategic initiative. With 1,363 franchises currently operating, 79 more awarded but not yet open, and over 2,800 available territories, Winmark maintains considerable expansion potential through its asset-light franchise model.

The company continues to prioritize shareholder returns, repurchasing $2.25 million in stock and distributing $3.19 million in dividends during the quarter. While maintaining a technically negative shareholders' equity position, Winmark's steady cash generation supports this capital structure approach.

MINNEAPOLIS--(BUSINESS WIRE)-- Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 29, 2025 of $9,956,400 or $2.71 per share diluted compared to net income of $8,819,000 or $2.41 per share diluted in 2024. First quarter results included $2.2 million of leasing income due to the settlement of outstanding customer litigation.

“The run-off of our leasing portfolio announced in May of 2021 is substantially complete,” 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 March 29, 2025, there were 1,363 franchises in operation and over 2,800 available territories. An additional 79 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)
		March 29, 2025				December 28, 2024
ASSETS
Current Assets:
Cash and cash equivalents		$	21,828,800			$	12,189,800
Restricted cash			140,000				140,000
Receivables, net			2,586,400				1,336,400
Income tax receivable			—				96,400
Inventories			338,200				397,600
Prepaid expenses			881,600				1,205,400
Total current assets			25,775,000				15,365,600
Property and equipment, net			1,373,400				1,419,400
Operating lease right of use asset			2,026,600				2,108,700
Intangible assets, net			2,551,800				2,640,300
Goodwill			607,500				607,500
Other assets			516,400				491,200
Deferred income taxes			4,211,800				4,211,800
		$	37,062,500			$	26,844,500
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable		$	1,544,100			$	1,562,000
Income tax payable			2,883,600				—
Accrued liabilities			3,597,900				1,866,200
Deferred revenue			1,666,800				1,659,700
Total current liabilities			9,692,400				5,087,900
Long-Term Liabilities:
Line of credit/Term loan			30,000,000				30,000,000
Notes payable, net			29,947,400				29,942,800
Deferred revenue			8,249,800				8,027,600
Operating lease liabilities			2,929,500				3,092,800
Other liabilities			2,184,700				1,739,500
Total long-term liabilities			73,311,400				72,802,700
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,532,571 and 3,539,744 shares issued and outstanding			13,124,900				14,790,500
Retained earnings (accumulated deficit)			(59,066,200	)			(65,836,600	)
Total shareholders’ equity (deficit)			(45,941,300	)			(51,046,100	)
		$	37,062,500			$	26,844,500

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended
		March 29, 2025				March 30, 2024
Revenue:
Royalties		$	17,774,700			$	17,268,700
Leasing income			2,307,800				836,800
Merchandise sales			941,300				1,110,500
Franchise fees			332,100				364,500
Other			563,800				529,000
Total revenue			21,919,700				20,109,500
Cost of merchandise sold			888,300				1,038,900
Leasing expense			—				36,600
Provision for credit losses			—				(1,500	)
Selling, general and administrative expenses			7,434,800				6,817,300
Income from operations			13,596,600				12,218,200
Interest expense			(613,900	)			(737,700	)
Interest and other income			149,900				187,900
Income before income taxes			13,132,600				11,668,400
Provision for income taxes			(3,176,200	)			(2,849,400	)
Net income		$	9,956,400			$	8,819,000
Earnings per share - basic		$	2.81			$	2.52
Earnings per share - diluted		$	2.71			$	2.41
Weighted average shares outstanding - basic			3,538,647				3,497,261
Weighted average shares outstanding - diluted			3,672,943				3,661,367

WINMARK CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
		Three Months Ended
		March 29, 2025				March 30, 2024
OPERATING ACTIVITIES:
Net income		$	9,956,400			$	8,819,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment			97,200				108,300
Amortization of intangible assets			88,500				88,500
Provision for credit losses			—				(1,500	)
Compensation expense related to stock options			536,600				485,900
Operating lease right of use asset amortization			82,200				74,200
Change in operating assets and liabilities:
Receivables			(1,250,000	)			(213,300	)
Principal collections on lease receivables			—				62,300
Income tax receivable/payable			2,980,000				2,500,400
Inventories			59,400				(34,800	)
Prepaid expenses			323,700				126,500
Other assets			(25,200	)			(16,600	)
Accounts payable			(18,000	)			(423,100	)
Accrued and other liabilities			2,018,300				1,729,800
Rents received in advance and security deposits			—				(19,700	)
Deferred revenue			229,300				78,100
Net cash provided by operating activities			15,078,400				13,364,000
INVESTING ACTIVITIES:
Purchase of property and equipment			(51,200	)			(87,900	)
Net cash used for investing activities			(51,200	)			(87,900	)
FINANCING ACTIVITIES:
Payments on notes payable			—				(1,062,500	)
Repurchases of common stock			(2,249,900	)			—
Proceeds from exercises of stock options			47,700				70,000
Dividends paid			(3,186,000	)			(2,797,900	)
Net cash used for financing activities			(5,388,200	)			(3,790,400	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			9,639,000				9,485,700
Cash, cash equivalents and restricted cash, beginning of period			12,329,800				13,386,500
Cash, cash equivalents and restricted cash, end of period		$	21,968,800			$	22,872,200
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest		$	604,000			$	725,700
Cash paid for income taxes		$	196,200			$	349,100
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:
		Year Ended
		December 28, 2024				December 30, 2023
Cash and cash equivalents		$	21,828,800			$	22,872,200
Restricted cash			140,000				—
Total cash, cash equivalents and restricted cash		$	21,968,800			$	22,872,200

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250416289040/en/

Anthony D. Ishaug

763/520-8500

Source: Winmark Corporation

FAQ

What was Winmark 's (WINA) earnings per share in Q1 2025?

Winmark reported diluted earnings per share of $2.71 in Q1 2025, up from $2.41 in Q1 2024.

How much revenue did WINA generate in Q1 2025?

Winmark generated total revenue of $21.92 million in Q1 2025, compared to $20.11 million in Q1 2024.

How many Winmark franchise locations were operating as of March 2025?

As of March 29, 2025, Winmark had 1,363 franchises in operation, with 79 additional franchises awarded but not yet opened.

What was the impact of the leasing settlement on WINA's Q1 2025 results?

The Q1 2025 results included $2.2 million of leasing income due to the settlement of outstanding customer litigation.