Winmark Corporation Announces Year End Results

Rhea-AI Summary

Winmark Corporation (Nasdaq: WINA) reported a net income of $39.42 million or $10.97 per diluted share for the year ended December 31, 2022, a decrease from $39.92 million or $10.48 per diluted share in 2021. Fourth quarter net income was $10.18 million or $2.86 per diluted share, down from $11.59 million or $3.09 in Q4 2021. Annual revenues increased to $81.41 million from $78.22 million in 2021, partially attributed to an extra operational week. The company noted progress in store development and ongoing marketing investments.

Positive

• Annual revenues increased by $3.19 million, a 4.1% rise year-over-year.
• Operational performance was positively influenced by increased marketing investments.

Negative

• Year-over-year net income decreased by $495,000.
• Fourth quarter net income fell by $1.41 million, representing a 12.1% decline.

MINNEAPOLIS--(BUSINESS WIRE)-- Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 31, 2022 of $39,424,900 or $10.97 per share diluted compared to net income of $39,919,900 or $10.48 per share diluted in 2021. The fourth quarter 2022 net income was $10,176,600 or $2.86 per share diluted, compared to net income of $11,589,000 or $3.09 per share diluted, for the same period last year. Revenues for the year ended December 31, 2022 were $81,410,800 up from $78,216,200 in 2021. Financial performance for 2022 included an extra week of operations due to the Company’s fiscal year ending on the last Saturday of December.

Brett D. Heffes, Chairman and Chief Executive Officer commented “I am pleased with Winmark’s operational and financial performance during 2022. Our talented franchise partners continue to make a positive impact in the local communities they serve. Increased marketing investments during the year yielded an improvement in new store development activity.”

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 December 31, 2022, there were 1,295 franchises in operation and over 2,800 available territories. An additional 57 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)
		December 31, 2022				December 25, 2021
ASSETS
Current Assets:
Cash and cash equivalents		$	13,615,600			$	11,407,000
Restricted cash			65,000				30,000
Receivables, net			1,438,600				1,103,400
Net investment in leases - current			344,900				2,890,600
Income tax receivable			558,700				667,500
Inventories			770,600				325,200
Prepaid expenses			1,310,400				1,008,600
Total current assets			18,103,800				17,432,300
Net investment in leases – long-term			5,400				229,300
Property and equipment, net			1,704,600				1,976,900
Operating lease right of use asset			2,716,000				2,982,000
Intangible assets, net			3,348,300				—
Goodwill			607,500				607,500
Other assets			429,700				418,300
Deferred income taxes			3,540,400				3,252,700
		$	30,455,700			$	26,899,000
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net		$	4,217,900			$	4,232,600
Accounts payable			2,122,000				2,099,000
Accrued liabilities			2,611,700				2,001,000
Deferred revenue			1,643,900				1,645,000
Total current liabilities			10,595,500				9,977,600
Long-Term Liabilities:
Line of Credit/Term Loan			30,000,000				—
Notes payable, net			39,066,700				43,376,400
Deferred revenue			6,974,200				6,863,500
Operating lease liabilities			4,287,000				4,810,100
Other liabilities			1,164,400				954,800
Total long-term liabilities			81,492,300				56,004,800
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,459,673 and 3,635,806 shares issued and outstanding			1,806,700				—
Retained earnings (accumulated deficit)			(63,438,800	)			(39,083,400	)
Total shareholders’ equity (deficit)			(61,632,100	)			(39,083,400	)
		$	30,455,700			$	26,899,000

WINMARK CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
		Quarter Ended								Fiscal Year Ended
		December 31, 2022				December 25, 2021				December 31, 2022				December 25, 2021
Revenue:
Royalties		$	17,917,700			$	15,638,100			$	67,148,100			$	60,779,300
Leasing income			1,091,900				2,796,500				6,937,700				11,148,300
Merchandise sales			1,234,100				1,119,800				3,921,600				3,100,100
Franchise fees			415,200				395,600				1,575,400				1,496,900
Other			466,800				424,300				1,828,000				1,691,600
Total revenue			21,125,700				20,374,300				81,410,800				78,216,200
Cost of merchandise sold			1,160,500				1,052,800				3,712,800				2,940,500
Leasing expense			92,800				439,500				984,700				1,850,300
Provision for credit losses			(11,300	)			(39,300	)			(57,900	)			(206,600	)
Selling, general and administrative expenses			6,485,300				6,008,200				23,158,400				22,295,800
Income from operations			13,398,400				12,913,100				53,612,800				51,336,200
Interest expense			(869,300	)			(508,300	)			(2,914,900	)			(1,453,900	)
Interest and other income (expense)			78,600				(7,900	)			85,600				(15,000	)
Income before income taxes			12,607,700				12,396,900				50,783,500				49,867,300
Provision for income taxes			(2,431,100	)			(807,900	)			(11,358,600	)			(9,947,400	)
Net income		$	10,176,600			$	11,589,000			$	39,424,900			$	39,919,900
Earnings per share - basic		$	2.95			$	3.20			$	11.30			$	10.87
Earnings per share - diluted		$	2.86			$	3.09			$	10.97			$	10.48
Weighted average shares outstanding - basic			3,452,399				3,622,690				3,487,732				3,671,980
Weighted average shares outstanding - diluted			3,556,190				3,753,982				3,592,456				3,810,480

WINMARK CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
		Year Ended
		December 31, 2022				December 25, 2021
OPERATING ACTIVITIES:
Net income		$	39,424,900			$	39,919,900
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			603,100				430,600
Provision for credit losses			(57,900	)			(206,600	)
Compensation expense related to stock options			1,652,400				1,435,500
Deferred income taxes			(287,700	)			(1,362,000	)
Gain from disposal of property and equipment			(9,400	)			—
Deferred initial direct costs			—				(2,100	)
Amortization of deferred initial direct costs			—				18,900
Operating lease right of use asset amortization			266,000				244,300
Tax benefits on exercised stock options			858,300				2,479,600
Change in operating assets and liabilities:
Receivables			(335,200	)			478,500
Principal collections on lease receivables			3,646,700				9,915,400
Income tax receivable/payable			(749,500	)			(2,925,900	)
Inventories			(445,400	)			(218,600	)
Prepaid expenses			(301,800	)			(13,400	)
Other assets			(11,400	)			17,600
Accounts payable			23,000				329,400
Accrued and other liabilities			222,800				(948,500	)
Rents received in advance and security deposits			(819,200	)			(1,046,600	)
Deferred revenue			109,600				(199,800	)
Net cash provided by operating activities			43,789,300				48,346,200
INVESTING ACTIVITIES:
Proceeds from sales of property and equipment			9,400				—
Purchase of property and equipment			(139,100	)			(74,700	)
Reacquired franchise rights			(3,540,000	)			—
Purchase of equipment for lease contracts			—				(208,400	)
Net cash used for investing activities			(3,669,700	)			(283,100	)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit/term loan			33,700,000				—
Payments on line of credit/term loan			(3,700,000	)			—
Proceeds from borrowings on notes payable			—				30,000,000
Payments on notes payable			(4,250,000	)			(4,250,000	)
Repurchases of common stock			(49,119,800	)			(44,217,500	)
Proceeds from exercises of stock options			4,751,700				8,320,000
Dividends paid			(19,257,900	)			(33,162,600	)
Net cash used for financing activities			(37,876,000	)			(43,310,100	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			2,243,600				4,753,000
Cash, cash equivalents and restricted cash, beginning of period			11,437,000				6,684,000
Cash, cash equivalents and restricted cash, end of period		$	13,680,600			$	11,437,000
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest		$	2,722,500			$	1,388,900
Cash paid for income taxes		$	11,308,800			$	11,555,100
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 31, 2022				December 25, 2021
Cash and cash equivalents		$	13,615,600			$	11,407,000
Restricted cash			65,000				30,000
Total cash, cash equivalents and restricted cash		$	13,680,600			$	11,437,000

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230301005803/en/

Brett D. Heffes

763/520-8500

Source: Winmark Corporation

FAQ

What were Winmark Corporation's earnings per share for 2022?

Winmark Corporation reported earnings of $10.97 per diluted share for the year ended December 31, 2022.

How much revenue did Winmark Corporation generate in 2022?

Winmark Corporation generated $81.41 million in revenue for the year ended December 31, 2022.

What was the net income for Winmark Corporation in Q4 2022?

In the fourth quarter of 2022, Winmark Corporation reported a net income of $10.18 million.

How did Winmark Corporation's 2022 performance compare to 2021?

In 2022, Winmark's net income decreased compared to 2021, though revenues increased.

How many franchises does Winmark Corporation operate as of December 31, 2022?

As of December 31, 2022, Winmark Corporation operated 1,295 franchises.