Winmark Corporation Announces Third Quarter Results

Rhea-AI Summary

Winmark Corporation (Nasdaq: WINA) reported a net income of $10,082,500 or $2.67 per diluted share for the quarter ending September 25, 2021, an increase from $9,358,800 or $2.43 per diluted share a year prior. For the nine months, net income rose to $28,330,900 or $7.40 per diluted share, compared to $21,731,000 or $5.63 in 2020. With 1,269 franchises operating and over 2,000 available territories, Winmark continues to experience growth and the continued support of its franchise system.

Positive

• Quarterly net income increased to $10,082,500 from $9,358,800 year-over-year.
• Diluted earnings per share rose to $2.67, up from $2.43 in the previous year.
• Net income for the nine-month period increased to $28,330,900 compared to $21,731,000 in 2020.
• Strong performance of franchisees contributing positively to business growth.
• 1,269 active franchises with over 2,000 territories available indicate robust expansion potential.

Negative

• None.

MINNEAPOLIS--(BUSINESS WIRE)-- Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 25, 2021 of $10,082,500 or $2.67 per share diluted compared to net income of $9,358,800 or $2.43 per share diluted in 2020. For the nine months ended September 25, 2021, net income was $28,330,900 or $7.40 per share diluted compared to net income of $21,731,000 or $5.63 per share diluted for the same period last year.

“We are pleased with the continued strength of our business and the performance of our franchisees. Our sustainable business model continues to be well received by consumers in the communities we serve,” commented Brett D. Heffes, Chairman and Chief Executive Officer.

Winmark - the Resale Company^TM, 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 September 25, 2021, there were 1,269 franchises in operation and over 2,000 available territories. An additional 39 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 25, 2021				December 26, 2020
ASSETS
Current Assets:
Cash and cash equivalents		$	37,569,100			$	6,659,000
Restricted cash			15,000				25,000
Receivables, net			1,394,900				1,581,900
Net investment in leases - current			3,884,600				8,687,500
Income tax receivable			188,200				221,200
Inventories			408,600				106,600
Prepaid expenses			958,700				995,200
Total current assets			44,419,100				18,276,400
Net investment in leases – long-term			1,157,000				4,573,600
Property and equipment, net			2,055,800				2,332,800
Operating lease right of use asset			3,059,300				3,226,300
Goodwill			607,500				607,500
Other assets			416,900				435,900
Deferred income taxes			3,256,200				1,890,700
		$	54,971,800			$	31,343,200
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net		$	4,232,600			$	4,236,100
Accounts payable			1,988,600				1,769,600
Accrued liabilities			2,918,800				2,624,000
Discounted lease rentals			—				1,096,600
Deferred revenue			1,643,900				1,657,400
Total current liabilities			10,783,900				11,383,700
Long-Term Liabilities:
Notes payable, net			44,434,500				17,632,700
Discounted lease rentals			—				574,000
Deferred revenue			6,849,600				7,050,900
Operating lease liabilities			4,946,900				5,307,400
Other liabilities			759,000				773,200
Total long-term liabilities			56,990,000				31,338,200
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,623,538 and 3,756,028 shares issued and outstanding			—				9,281,800
Retained earnings (accumulated deficit)			(12,802,100	)			(20,660,500	)
Total shareholders’ equity (deficit)			(12,802,100	)			(11,378,700	)
		$	54,971,800			$	31,343,200

WINMARK CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
		Quarter Ended								Nine Months Ended
		September 25, 2021				September 26, 2020				September 25, 2021				September 26, 2020
Revenue:
Royalties		$	16,375,900			$	14,210,000			$	45,141,200			$	33,188,300
Leasing income			2,266,200				2,695,800				8,351,800				12,040,800
Merchandise sales			704,800				631,200				1,980,300				1,746,800
Franchise fees			383,400				335,400				1,101,300				1,064,900
Other			423,100				404,600				1,267,300				1,225,700
Total revenue			20,153,400				18,277,000				57,841,900				49,266,500
Cost of merchandise sold			681,100				598,200				1,887,700				1,662,000
Leasing expense			358,900				510,900				1,410,800				2,443,700
Provision for credit losses			(55,900	)			(339,600	)			(167,300	)			164,300
Selling, general and administrative expenses			5,380,100				5,009,700				16,287,600				15,719,100
Income from operations			13,789,200				12,497,800				38,423,100				29,277,400
Interest expense			(323,200	)			(345,700	)			(945,600	)			(1,409,600	)
Interest and other income (expense)			(18,800	)			9,200				(7,100	)			27,700
Income before income taxes			13,447,200				12,161,300				37,470,400				27,895,500
Provision for income taxes			(3,364,700	)			(2,802,500	)			(9,139,500	)			(6,164,500	)
Net income		$	10,082,500			$	9,358,800			$	28,330,900			$	21,731,000
Earnings per share - basic		$	2.77			$	2.51			$	7.68			$	5.86
Earnings per share - diluted		$	2.67			$	2.43			$	7.40			$	5.63
Weighted average shares outstanding - basic			3,635,055				3,730,490				3,688,419				3,710,112
Weighted average shares outstanding - diluted			3,782,873				3,857,702				3,829,322				3,857,754

WINMARK CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
		Nine Months Ended
		September 25, 2021				September 26, 2020
OPERATING ACTIVITIES:
Net income		$	28,330,900			$	21,731,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			328,800				366,700
Provision for credit losses			(167,300	)			164,300
Compensation expense related to stock options			1,074,200				929,900
Deferred income taxes			(1,365,500	)			(1,251,000	)
Loss from disposal of property and equipment			—				200
Deferred initial direct costs			(2,100	)			(18,300	)
Amortization of deferred initial direct costs			18,800				89,400
Operating lease right of use asset amortization			167,000				293,400
Tax benefits on exercised stock options			249,200				602,400
Change in operating assets and liabilities:
Receivables			187,000				(278,100	)
Principal collections on lease receivables			7,452,200				11,418,500
Income tax receivable/payable			(216,200	)			368,000
Inventories			(302,000	)			900
Prepaid expenses			36,500				(190,700	)
Other assets			19,000				34,200
Accounts payable			219,000				257,700
Accrued and other liabilities			(94,100	)			(864,100	)
Rents received in advance and security deposits			(674,500	)			(1,252,000	)
Deferred revenue			(214,800	)			(630,300	)
Net cash provided by operating activities			35,046,100				31,772,100
INVESTING ACTIVITIES:
Purchase of property and equipment			(51,800	)			(33,400	)
Purchase of equipment for lease contracts			(78,200	)			(3,128,200	)
Net cash used for investing activities			(130,000	)			(3,161,600	)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit			—				46,600,000
Payments on line of credit			—				(46,600,000	)
Proceeds from borrowings on notes payable			30,000,000				—
Payments on notes payable			(3,187,500	)			(2,687,500	)
Repurchases of common stock			(27,892,900	)			(48,987,500	)
Proceeds from exercises of stock options			1,299,300				7,074,100
Dividends paid			(4,234,900	)			(2,029,500	)
Proceeds from discounted lease rentals			—				1,157,000
Net cash used for financing activities			(4,016,000	)			(45,473,400	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			30,900,100				(16,862,900	)
Cash, cash equivalents and restricted cash, beginning of period			6,684,000				25,180,300
Cash, cash equivalents and restricted cash, end of period		$	37,584,100			$	8,317,400
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest		$	884,100			$	1,426,100
Cash paid for income taxes		$	10,472,000			$	6,445,200
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 25, 2021				September 26, 2020
Cash and cash equivalents		$	37,569,100			$	8,267,400
Restricted cash			15,000				50,000
Total cash, cash equivalents and restricted cash		$	37,584,100			$	8,317,400

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211013005878/en/

Brett D. Heffes

763/520-8500

Source: Winmark Corporation

FAQ

What is Winmark Corporation's net income for Q3 2021?

Winmark Corporation reported a net income of $10,082,500 for the quarter ended September 25, 2021.

How much did Winmark's diluted earnings per share increase in 2021?

Diluted earnings per share increased from $2.43 to $2.67 year-over-year.

What is Winmark's nine-month net income for 2021?

For the nine months ended September 25, 2021, Winmark's net income was $28,330,900.

How many franchises does Winmark Corporation currently operate?

Winmark Corporation operates 1,269 franchises.

How many territories are available for Winmark franchises?

There are over 2,000 available territories for Winmark franchises.