Winmark Corporation Announces Year End Results

Rhea-AI Summary

Winmark Corporation (Nasdaq: WINA) reported a net income of $29.8 million for the year ending December 26, 2020, a decrease from $32.1 million in 2019. Earnings per share diluted fell from $7.84 to $7.72. Fourth quarter net income was $8.1 million, slightly down from $8.5 million the previous year. Revenue decreased to $66.1 million from $73.3 million in 2019. CEO Brett D. Heffes expressed satisfaction with the results despite challenges posed by COVID-19, highlighting the resilience of franchisees and the company's commitment to sustainability.

Positive

• Continued strong performance of franchise operations despite COVID-19 disruptions.
• Commitment to sustainability and support for local communities.
• Established network of 1,264 franchises with additional 30 franchises awarded.

Negative

• Net income decreased by $2.3 million year-over-year.
• Revenue declined by 9.9% compared to 2019.

Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 26, 2020 of $29,823,300 or $7.72 per share diluted compared to net income of $32,149,300 or $7.84 per share diluted in 2019. The fourth quarter 2020 net income was $8,092,300 or $2.09 per share diluted, compared to net income of $8,461,400 or $2.08 per share diluted, for the same period last year. Revenues for the year ended December 26, 2020 were $66,061,800, down from $73,298,900 in 2019.

“In light of the disruption to our franchise store operations from the resurgence of COVID-19 during the fourth quarter, we are satisfied with our results,” commented Brett D. Heffes, Chairman and Chief Executive Officer. “Our franchisees and employees have continued to respond well to the challenging environment with resolve and determination. Our committed franchisees continue to serve local communities by providing a safe, convenient way to buy and sell gently used items. Winmark continues to be a leader in the circular economy and has been at the forefront of the sustainability movement for over thirty years.”

Winmark Corporation creates, supports and finances business. At December 26, 2020, there were 1,264 franchises in operation under the brands Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. An additional 30 retail 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 26, 2020				December 28, 2019
ASSETS
Current Assets:
Cash and cash equivalents		$	6,659,000			$	25,130,300
Restricted cash			25,000				50,000
Receivables, net			1,581,900				1,669,500
Net investment in leases - current			8,687,500				12,800,100
Income tax receivable			221,200				497,900
Inventories			106,600				86,000
Prepaid expenses			995,200				968,100
Total current assets			18,276,400				41,201,900
Net investment in leases – long-term			4,573,600				12,505,500
Property and equipment, net			2,332,800				2,772,600
Operating lease right of use asset			3,226,300				3,595,200
Goodwill			607,500				607,500
Other assets			435,900				492,500
Deferred income taxes			1,890,700				667,000
		$	31,343,200			$	61,842,200
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net		$	4,236,100			$	3,736,100
Accounts payable			1,769,600				1,015,000
Accrued liabilities			2,624,000				2,783,100
Discounted lease rentals			1,096,600				2,680,700
Deferred revenue			1,657,400				1,717,000
Total current liabilities			11,383,700				11,931,900
Long-Term Liabilities:
Notes payable, net			17,632,700				21,868,800
Discounted lease rentals			574,000				836,900
Deferred revenue			7,050,900				7,858,500
Operating lease liabilities			5,307,400				5,846,100
Other liabilities			773,200				1,051,700
Total long-term liabilities			31,338,200				37,462,000
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,756,028 and 3,947,858 shares issued and outstanding			9,281,800				11,929,300
Retained earnings (accumulated deficit)			(20,660,500	)			519,000
Total shareholders’ equity (deficit)			(11,378,700	)			12,448,300
		$	31,343,200			$	61,842,200

WINMARK CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
		Quarter Ended								Fiscal Year Ended
		December 26, 2020				December 28, 2019				December 26, 2020				December 28, 2019
Revenue:
Royalties		$	13,097,900			$	13,198,400			$	46,286,200			$	51,421,800
Leasing income			2,443,200				3,322,000				14,484,000				16,055,800
Merchandise sales			468,600				581,500				2,215,400				2,618,800
Franchise fees			379,600				357,800				1,444,500				1,540,900
Other			406,000				422,900				1,631,700				1,661,600
Total revenue			16,795,300				17,882,600				66,061,800				73,298,900
Cost of merchandise sold			441,900				545,300				2,103,900				2,469,700
Leasing expense			178,900				389,100				2,622,600				2,031,100
Provision for credit losses			(243,600	)			(102,200	)			(79,300	)			(78,300	)
Selling, general and administrative expenses			5,484,000				6,107,400				21,203,100				25,745,300
Income from operations			10,934,100				10,943,000				40,211,500				43,131,100
Interest expense			(327,900	)			(382,400	)			(1,737,500	)			(1,731,100	)
Interest and other income			15,700				73,300				43,400				67,400
Income before income taxes			10,621,900				10,633,900				38,517,400				41,467,400
Provision for income taxes			(2,529,600	)			(2,172,500	)			(8,694,100	)			(9,318,100	)
Net income		$	8,092,300			$	8,461,400			$	29,823,300			$	32,149,300
Earnings per share - basic		$	2.16			$	2.18			$	8.02			$	8.37
Earnings per share - diluted		$	2.09			$	2.08			$	7.72			$	7.84
Weighted average shares outstanding - basic			3,747,604				3,874,570				3,719,485				3,840,638
Weighted average shares outstanding - diluted			3,879,796				4,065,566				3,863,264				4,100,629

 

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FAQ

What is Winmark Corporation's net income for 2020?

Winmark Corporation reported a net income of $29.8 million for the year ended December 26, 2020.

How did Winmark's revenue change in 2020 compared to 2019?

Winmark's revenue decreased to $66.1 million in 2020 from $73.3 million in 2019.

What was the earnings per share for Winmark Corporation in 2020?

The earnings per share diluted for Winmark Corporation in 2020 was $7.72.

What challenges did Winmark face in 2020?

Winmark experienced disruptions to franchise store operations due to the resurgence of COVID-19.

How many franchises does Winmark operate?

As of December 26, 2020, Winmark operated 1,264 franchises.