Winmark Corporation Announces First Quarter Results

Rhea-AI Summary

Winmark Corporation (Nasdaq: WINA) reported a net income of $9,852,500 or $2.65 per diluted share for Q1 2022, showing an increase from $9,311,100 or $2.40 per diluted share in the same quarter of 2021. The franchise business, known for its sustainability focus, has 1,276 franchises operating and over 2,800 available territories. In addition, 44 new franchises have been awarded but not yet opened, indicating potential growth. Winmark continues to support entrepreneurs in operating its resale franchises including Plato’s Closet® and Play It Again Sports®.

Positive

• Net income increased to $9,852,500 for Q1 2022 from $9,311,100 in 2021.
• Earnings per diluted share rose to $2.65 from $2.40 year-over-year.
• Total franchises in operation reached 1,276, with 44 awarded but not yet open.

Negative

• None.

MINNEAPOLIS--(BUSINESS WIRE)-- Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 26, 2022 of $9,852,500 or $2.65 per share diluted compared to net income of $9,311,100 or $2.40 per share diluted in 2021.

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 March 26, 2022, there were 1,276 franchises in operation and over 2,800 available territories. An additional 44 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 26, 2022				December 25, 2021
ASSETS
Current Assets:
Cash and cash equivalents		$	287,500			$	11,407,000
Restricted cash			55,000				30,000
Receivables, net			1,473,300				1,103,400
Net investment in leases - current			2,593,000				2,890,600
Income tax receivable			—				667,500
Inventories			492,300				325,200
Prepaid expenses			985,100				1,008,600
Total current assets			5,886,200				17,432,300
Net investment in leases – long-term			165,000				229,300
Property and equipment, net			1,895,900				1,976,900
Operating lease right of use asset			2,921,700				2,982,000
Goodwill			607,500				607,500
Other assets			428,700				418,300
Deferred income taxes			3,365,900				3,252,700
		$	15,270,900			$	26,899,000
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net		$	4,232,600			$	4,232,600
Accounts payable			1,896,000				2,099,000
Income tax payable			2,374,300				—
Accrued liabilities			2,515,400				2,001,000
Deferred revenue			1,634,400				1,645,000
Total current liabilities			12,652,700				9,977,600
Long-Term Liabilities:
Line of Credit			13,600,000				—
Notes payable, net			42,318,200				43,376,400
Deferred revenue			6,831,000				6,863,500
Operating lease liabilities			4,686,700				4,810,100
Other liabilities			950,000				954,800
Total long-term liabilities			68,385,900				56,004,800
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,480,376 and 3,635,806 shares issued and outstanding			—				—
Retained earnings (accumulated deficit)			(65,767,700	)			(39,083,400	)
Total shareholders’ equity (deficit)			(65,767,700	)			(39,083,400	)
		$	15,270,900			$	26,899,000

WINMARK CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
		Three Months Ended
		March 26, 2022				March 27, 2021
Revenue:
Royalties		$	15,390,100			$	14,048,800
Leasing income			2,871,700				3,237,000
Merchandise sales			914,300				592,400
Franchise fees			420,600				359,000
Other			453,100				421,700
Total revenue			20,049,800				18,658,900
Cost of merchandise sold			864,500				558,800
Leasing expense			216,000				389,500
Provision for credit losses			(8,900	)			(48,700	)
Selling, general and administrative expenses			5,540,000				5,102,300
Income from operations			13,438,200				12,657,000
Interest expense			(513,100	)			(318,100	)
Interest and other income (expense)			(900	)			6,800
Income before income taxes			12,924,200				12,345,700
Provision for income taxes			(3,071,700	)			(3,034,600	)
Net income		$	9,852,500			$	9,311,100
Earnings per share - basic		$	2.74			$	2.49
Earnings per share - diluted		$	2.65			$	2.40
Weighted average shares outstanding - basic			3,597,926				3,736,676
Weighted average shares outstanding - diluted			3,716,322				3,874,227

WINMARK CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
		Three Months Ended
		March 26, 2022				March 27, 2021
OPERATING ACTIVITIES:
Net income		$	9,852,500			$	9,311,100
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			102,500				113,800
Provision for credit losses			(8,900	)			(48,700	)
Compensation expense related to stock options			421,600				385,200
Deferred income taxes			(113,200	)			(439,900	)
Deferred initial direct costs			—				(1,500	)
Amortization of deferred initial direct costs			—				10,500
Operating lease right of use asset amortization			60,300				54,200
Tax benefits on exercised stock options			95,300				47,100
Change in operating assets and liabilities:
Receivables			(369,900	)			(515,000	)
Principal collections on lease receivables			530,500				2,268,700
Income tax receivable/payable			2,946,500				3,333,300
Inventories			(167,100	)			(3,600	)
Prepaid expenses			23,500				155,300
Other assets			(10,400	)			(2,600	)
Accounts payable			(203,000	)			(370,300	)
Accrued and other liabilities			390,500				(532,300	)
Rents received in advance and security deposits			(159,700	)			(95,400	)
Deferred revenue			(43,100	)			(84,900	)
Net cash provided by operating activities			13,347,900				13,585,000
INVESTING ACTIVITIES:
Purchase of property and equipment			(21,500	)			(34,300	)
Purchase of equipment for lease contracts			—				(65,500	)
Net cash used for investing activities			(21,500	)			(99,800	)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit			15,600,000				—
Payments on line of credit			(2,000,000	)			—
Payments on notes payable			(1,062,500	)			(1,062,500	)
Repurchases of common stock			(36,591,400	)			(10,455,200	)
Proceeds from exercises of stock options			1,258,300				268,800
Dividends paid			(1,625,300	)			(935,400	)
Net cash used for financing activities			(24,420,900	)			(12,184,300	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			(11,094,500	)			1,300,900
Cash, cash equivalents and restricted cash, beginning of period			11,437,000				6,684,000
Cash, cash equivalents and restricted cash, end of period		$	342,500			$	7,984,900
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest		$	490,500			$	309,200
Cash paid for income taxes		$	143,100			$	94,100
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:
		Three Months Ended
		March 26, 2022				March 27, 2021
Cash and cash equivalents		$	287,500			$	7,959,900
Restricted cash			55,000				25,000
Total cash, cash equivalents and restricted cash		$	342,500			$	7,984,900

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220413005683/en/

Brett D. Heffes

763/520-8500

Source: Winmark Corporation

FAQ

What is Winmark Corporation's net income for Q1 2022?

Winmark Corporation reported a net income of $9,852,500 for Q1 2022.

How much did Winmark's earnings per share increase in Q1 2022?

Earnings per diluted share increased to $2.65 in Q1 2022 from $2.40 in Q1 2021.

How many franchises does Winmark currently operate?

Winmark currently operates 1,276 franchises.

How many territories are available for Winmark franchises?

There are over 2,800 available territories for Winmark franchises.

How many new franchises has Winmark awarded recently?

Winmark has awarded 44 new franchises that are not yet open.