Winmark Corporation Announces Second Quarter Results

Rhea-AI Summary

Winmark Corporation (Nasdaq: WINA) reports a net income of $10,368,800 for Q2 2023, reflecting a positive franchisee performance and operational support. The company's emphasis on sustainability and small-business formation is evident through its award-winning resale franchises: Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore®, and Music Go Round®.

Positive

• Positive net income growth of $1,341,600 compared to Q2 2022
• Emphasis on providing exceptional operational support
• 1,303 franchises in operation with over 2,800 available territories

Negative

• None.

MINNEAPOLIS--(BUSINESS WIRE)-- Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended July 1, 2023 of $10,368,800 or $2.85 per share diluted compared to net income of $9,027,200 or $2.54 per share diluted in 2022.

“Our year-to-date results reflect positive franchisee performance and Winmark’s continued emphasis on providing exceptional operational support,” commented Brett D. Heffes, Chair and Chief Executive Officer.

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 July 1, 2023, there were 1,303 franchises in operation and over 2,800 available territories. An additional 70 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)
		July 1, 2023				December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents		$	32,321,500			$	13,615,600
Restricted cash			55,000				65,000
Receivables, net			1,592,500				1,438,600
Net investment in leases - current			90,000				344,900
Income tax receivable			522,500				558,700
Inventories			446,900				770,600
Prepaid expenses			819,700				1,310,400
Total current assets			35,848,100				18,103,800
Net investment in leases – long-term			—				5,400
Property and equipment, net			1,593,400				1,704,600
Operating lease right of use asset			2,580,400				2,716,000
Intangible assets, net			3,171,300				3,348,300
Goodwill			607,500				607,500
Other assets			461,300				429,700
Deferred income taxes			3,392,000				3,540,400
		$	47,654,000			$	30,455,700
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net		$	4,217,900			$	4,217,900
Accounts payable			1,638,400				2,122,000
Accrued liabilities			4,269,000				2,611,700
Deferred revenue			1,677,700				1,643,900
Total current liabilities			11,803,000				10,595,500
Long-Term Liabilities:
Line of Credit/Term Loan			30,000,000				30,000,000
Notes payable, net			36,957,700				39,066,700
Deferred revenue			7,338,300				6,974,200
Operating lease liabilities			4,013,200				4,287,000
Other liabilities			1,154,900				1,164,400
Total long-term liabilities			79,464,100				81,492,300
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,485,036 and 3,459,673 shares issued and outstanding			5,723,600				1,806,700
Retained earnings (accumulated deficit)			(49,336,700	)			(63,438,800	)
Total shareholders’ equity (deficit)			(43,613,100	)			(61,632,100	)
		$	47,654,000			$	30,455,700

WINMARK CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
		Three Months Ended								Six Months Ended
		July 1, 2023				June 25, 2022				July 1, 2023				June 25, 2022
Revenue:
Royalties		$	17,105,800			$	15,981,300			$	33,853,500			$	31,371,400
Leasing income			1,019,800				1,212,000				2,656,800				4,083,700
Merchandise sales			1,328,100				1,027,200				2,604,100				1,941,500
Franchise fees			420,700				391,500				798,900				812,100
Other			487,800				458,800				972,500				911,900
Total revenue			20,362,200				19,070,800				40,885,800				39,120,600
Cost of merchandise sold			1,247,800				970,200				2,435,100				1,834,700
Leasing expense			54,300				299,600				370,700				515,600
Provision for credit losses			(700	)			(15,700	)			(5,300	)			(24,600	)
Selling, general and administrative expenses			5,810,000				5,461,600				12,446,100				11,001,600
Income from operations			13,250,800				12,355,100				25,639,200				25,793,300
Interest expense			(779,100	)			(712,000	)			(1,576,700	)			(1,225,100	)
Interest and other income (expense)			292,300				(13,800	)			418,000				(14,700	)
Income before income taxes			12,764,000				11,629,300				24,480,500				24,553,500
Provision for income taxes			(2,395,200	)			(2,602,100	)			(5,169,000	)			(5,673,800	)
Net income		$	10,368,800			$	9,027,200			$	19,311,500			$	18,879,700
Earnings per share - basic		$	2.98			$	2.61			$	5.57			$	5.35
Earnings per share - diluted		$	2.85			$	2.54			$	5.34			$	5.19
Weighted average shares outstanding - basic			3,478,628				3,463,886				3,469,675				3,530,902
Weighted average shares outstanding - diluted			3,634,688				3,559,231				3,614,462				3,637,772

WINMARK CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
		Six Months Ended
		July 1, 2023				June 25, 2022
OPERATING ACTIVITIES:
Net income		$	19,311,500			$	18,879,700
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			385,100				219,400
Provision for credit losses			(5,300	)			(24,600	)
Compensation expense related to stock options			942,000				771,400
Deferred income taxes			148,400				(185,400	)
Operating lease right of use asset amortization			135,600				122,200
Tax benefits on exercised stock options			832,300				348,000
Change in operating assets and liabilities:
Receivables			(153,900	)			(218,400	)
Principal collections on lease receivables			499,800				1,636,100
Income tax receivable/payable			(796,100	)			(549,500	)
Inventories			323,700				(278,200	)
Prepaid expenses			490,700				147,600
Other assets			(31,600	)			(2,200	)
Accounts payable			(483,600	)			(209,700	)
Accrued and other liabilities			1,390,000				2,213,500
Rents received in advance and security deposits			(234,200	)			(472,700	)
Deferred revenue			397,900				(28,200	)
Net cash provided by operating activities			23,152,300				22,369,000
INVESTING ACTIVITIES:
Purchase of property and equipment			(96,900	)			(43,000	)
Reacquired franchise rights			—				(3,540,000	)
Net cash used for investing activities			(96,900	)			(3,583,000	)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit/term loan			—				33,700,000
Payments on line of credit/term loan			—				(3,700,000	)
Payments on notes payable			(2,125,000	)			(2,125,000	)
Repurchases of common stock			—				(47,847,500	)
Proceeds from exercises of stock options			2,974,900				2,553,700
Dividends paid			(5,209,400	)			(4,052,600	)
Net cash used for financing activities			(4,359,500	)			(21,471,400	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			18,695,900				(2,685,400	)
Cash, cash equivalents and restricted cash, beginning of period			13,680,600				11,437,000
Cash, cash equivalents and restricted cash, end of period		$	32,376,500			$	8,751,600
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest		$	1,563,800			$	1,108,100
Cash paid for income taxes		$	4,984,600			$	6,060,800
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
		July 1, 2023				June 25, 2022
Cash and cash equivalents		$	32,321,500			$	8,696,600
Restricted cash			55,000				55,000
Total cash, cash equivalents and restricted cash		$	32,376,500			$	8,751,600

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230719161145/en/

Anthony D. Ishaug

763/520-8500

Source: Winmark Corporation

FAQ

What is Winmark Corporation's net income for Q2 2023?

Winmark Corporation reported a net income of $10,368,800 for the quarter ended July 1, 2023.

How many franchises does Winmark Corporation have in operation?

At July 1, 2023, there were 1,303 franchises in operation and over 2,800 available territories.

What are Winmark Corporation's award-winning resale franchises?

Winmark Corporation's award-winning resale franchises include Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore®, and Music Go Round®.