Wingstop Inc. Reports Fiscal Second Quarter 2023 Financial Results
- 16.8% increase in domestic same store sales
- 27.9% rise in total revenue
- Digital sales surged to 65.2%
- Net income increased 21.6% to $16.2 million
- Fiscal year 2023 outlook raised to 10-12% domestic same store sales growth and 240-250 global net new units
- None.
Increases Outlook for Fiscal Year 2023
Highlights for the fiscal second quarter 2023 compared to the fiscal second quarter 2022:
- System-wide sales increased
27.8% to$809.8 million - 50 net new openings in the fiscal second quarter 2023
- Domestic same store sales increased
16.8% - Domestic restaurant AUVs exceeded
$1.7 million - Digital sales increased to
65.2% - Total revenue increased
27.9% to$107.2 million - Net income increased
21.6% to$16.2 million $0.54 $13.3 million $0.44 - Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased
27.4% to$17.0 million $0.57 $13.3 million $0.45 - Adjusted EBITDA, a non-GAAP measure, increased
47.1% to$34.4 million $23.3 million
Adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share are non-GAAP measures. Reconciliations of adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share to the most directly comparable financial measure presented in accordance with accounting principles generally accepted in
"Our second quarter demonstrated the continued strength and staying power of our strategies. We exceeded
Key operating metrics for the fiscal second quarter 2023 compared to the fiscal second quarter 2022:
Thirteen Weeks Ended | |||
July 1, 2023 | June 25, 2022 | ||
Number of system-wide restaurants open at end of period | 2,046 | 1,858 | |
Number of domestic franchise restaurants open at end of period | 1,749 | 1,600 | |
Number of international franchise restaurants open at end of period | 252 | 219 | |
System-wide sales (in millions) | $ 810 | $ 634 | |
Domestic AUV (in thousands) | $ 1,704 | $ 1,581 | |
Domestic same store sales growth | 16.8 % | (3.3) % | |
Company-owned domestic same store sales growth | 5.7 % | (4.9) % | |
Net income (in thousands) | $ 16,181 | $ 13,307 | |
Adjusted net income (in thousands) | $ 17,005 | $ 13,345 | |
Adjusted EBITDA (in thousands) | $ 34,350 | $ 23,344 | |
Fiscal second quarter 2023 financial results
Total revenue for the fiscal second quarter 2023 increased to
Cost of sales increased to
Selling, general & administrative ("SG&A") increased
Interest expense, net was
Financial Outlook
Based on year-to-date results, the Company is providing updated guidance for 2023, which is a 52-week fiscal year:
10% to12% domestic same store sales growth, previously high-single digits;- 240 to 250 global net new units, previously 240 global net new units;
- SG&A of between
$91.0 $93.0 million $3.9 million $85.5 $87.5 million - Stock-based compensation expense of approximately
$14.0 $15.0 million $12.0 $13.0 million
Additionally, the Company is reiterating guidance for depreciation and amortization of between
Restaurant Development
As of July 1, 2023, there were 2,046 Wingstop restaurants system-wide. This included 1,794 restaurants in
Quarterly Dividend
In recognition of the Company's strong cash flow generation and our commitment to returning value to stockholders, on August 1, 2023, our board of directors approved an increase in the quarterly dividend payable to Wingstop stockholders from
The following definitions apply to these terms as used in this release:
Domestic average unit volume ("AUV") consists of the average annual sales of all restaurants that have been open for a trailing 52-week period or longer. This measure is calculated by dividing sales during the applicable period for all restaurants being measured by the number of restaurants being measured. Domestic AUV includes revenue from both company-owned and franchised restaurants. Domestic AUV allows management to assess our domestic company-owned and franchised restaurant economics. Changes in domestic AUV are primarily driven by increases in same store sales and are also influenced by opening new restaurants.
Domestic same store sales reflects the change in year-over-year sales for the same store restaurant base. We define the same store restaurant base to include those restaurants open for at least 52 full weeks. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and permanent closures. We review same store sales for domestic company-owned restaurants as well as system-wide domestic restaurants. Domestic same store sales growth is driven by increases in transactions and average transaction size. Transaction size increases are driven by price increases or favorable mix shift from either an increase in items purchased or shifts into higher priced items.
System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees. This measure allows management to better assess changes in our royalty revenue, our overall store performance, the health of our brand and the strength of our market position relative to competitors. Our system-wide sales growth is driven by new restaurant openings as well as increases in same store sales.
Adjusted EBITDA is defined as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization (EBITDA), further adjusted for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, and stock-based compensation expense. Beginning in the first quarter of 2023, gains and losses on disposal of assets are no longer presented as an adjustment to EBITDA, in our calculation of Adjusted EBITDA. Prior period amounts have been excluded from EBITDA adjustments to conform to the current presentation.
Adjusted net income is defined as net income adjusted for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, and related tax adjustments that management believes are not indicative of the Company's core operating results or business outlook over the long-term.
Adjusted earnings per diluted share is defined as adjusted net income divided by weighted average diluted share count.
We caution investors that amounts presented in accordance with our definitions above may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate certain non-GAAP measurements in the same manner.
Conference Call and Webcast
The Company will host a conference call today to discuss the fiscal second quarter 2023 financial results at 10:00 AM Eastern Time. The conference call can be joined telephonically by dialing 1-877-259-5243 or 1-412-317-5176 (international) and asking for the Wingstop conference call. A replay will be available two hours after the call and can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 (international), then entering the replay code 4190850. The replay will be available through Wednesday, August 9, 2023.
The conference call will also be webcast live and later archived on the investor relations section of Wingstop's corporate website at ir.wingstop.com under the 'News & Events' section.
About Wingstop
Founded in 1994 and headquartered in
In fiscal year 2022, Wingstop's system-wide sales increased
A key to this business success and consumer fandom stems from The Wingstop Way, which includes a core value system of being Authentic, Entrepreneurial, Service-minded, and Fun. The Wingstop Way extends to the brand's environmental, social and governance platform as Wingstop seeks to provide value to all guests.
Rounding out a strong year in 2022, the Company made Technomic 500's "Fastest Growing Franchise" list, was ranked #16 on Entrepreneur Magazine's "Franchise 500," won Fast Casual's Excellence in Food Safety award, and was named to Fast Company's "The World's Most Innovative Companies" list ranking #4 in the dining category.
For more information visit www.wingstop.com or www.wingstop.com/own-a-wingstop and follow @Wingstop on Twitter, Instagram, Facebook, and TikTok. Learn more about Wingstop's involvement in its local communities at www.wingstopcharities.org.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP financial measures, including those indicated above. By providing non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. These measures are not intended to be considered in isolation or as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. The non-GAAP measures used in this press release may be different from the measures used by other companies. A reconciliation of each measure to the most directly comparable GAAP measure is available in this news release. In addition, the Current Report on Form 8-K furnished to the Securities and Exchange Commission (the "SEC") concurrent with the issuance of this press release includes a more detailed description of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.
Forward-looking Statements
This news release includes statements of our expectations, intentions, plans and beliefs that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, trends, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms "may," "will," "should," "expect," "intend," "plan," "outlook," "guidance," "anticipate," "believe," "think," "estimate," "seek," "predict," "can," "could," "project," "potential" or, in each case, their negative or other variations or comparable terminology, although not all forward-looking statements are accompanied by such terms. Examples of forward-looking statements in this news release include, but are not limited to, our 2023 fiscal year outlook for domestic same store sales growth, SG&A expense, stock-based compensation expense, depreciation and amortization, and unit growth. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks, and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements. Please refer to the risk factors discussed in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which can be found at the SEC's website www.sec.gov. The discussion of these risks is specifically incorporated by reference into this news release.
When considering forward-looking statements in this news release or that we make in other reports or statements, you should keep in mind the cautionary statements in this news release and future reports we file with the SEC. New risks and uncertainties arise from time to time, and we cannot predict when they may arise or how they may affect us. Any forward-looking statement in this news release speaks only as of the date on which it was made. Except as required by law, we assume no obligation to update or revise any forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
Media Contact
Maddie Lupori
Media@wingstop.com
Investor Contact
Kristen Thomas
IR@wingstop.com
WINGSTOP INC. AND SUBSIDIARIES | |||
July 1, | December 31, | ||
(Unaudited) | |||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ 188,500 | $ 184,496 | |
Restricted cash | 11,444 | 13,296 | |
Accounts receivable, net | 10,747 | 9,461 | |
Prepaid expenses and other current assets | 5,548 | 4,252 | |
Advertising fund assets, restricted | 21,944 | 15,167 | |
Total current assets | 238,183 | 226,672 | |
Property and equipment, net | 78,570 | 66,851 | |
Goodwill | 65,175 | 62,514 | |
Trademarks | 32,700 | 32,700 | |
Customer relationships, net | 8,378 | 9,015 | |
Other non-current assets | 28,211 | 26,438 | |
Total assets | $ 451,217 | $ 424,190 | |
Liabilities and stockholders' deficit | |||
Current liabilities | |||
Accounts payable | $ 6,112 | $ 5,219 | |
Other current liabilities | 30,732 | 34,726 | |
Current portion of debt | — | 7,300 | |
Advertising fund liabilities | 21,944 | 15,167 | |
Total current liabilities | 58,788 | 62,412 | |
Long-term debt, net | 711,411 | 706,846 | |
Deferred revenues, net of current | 28,296 | 27,052 | |
Deferred income tax liabilities, net | 3,150 | 4,180 | |
Other non-current liabilities | 14,923 | 14,561 | |
Total liabilities | 816,568 | 815,051 | |
Commitments and contingencies | |||
Stockholders' deficit | |||
Common stock, | 300 | 300 | |
Additional paid-in-capital | 2,038 | 2,797 | |
Retained deficit | (367,327) | (393,321) | |
Accumulated other comprehensive loss | (362) | (637) | |
Total stockholders' deficit | (365,351) | (390,861) | |
Total liabilities and stockholders' deficit | $ 451,217 | $ 424,190 | |
WINGSTOP INC. AND SUBSIDIARIES | |||
Thirteen Weeks Ended | |||
July 1, | June 25, | ||
(Unaudited) | (Unaudited) | ||
Revenue: | |||
Royalty revenue, franchise fees and other | $ 47,984 | $ 36,044 | |
Advertising fees | 36,596 | 28,987 | |
Company-owned restaurant sales | 22,593 | 18,746 | |
Total revenue | 107,173 | 83,777 | |
Costs and expenses: | |||
Cost of sales (1) | 16,642 | 14,899 | |
Advertising expenses | 38,729 | 29,685 | |
Selling, general and administrative | 22,128 | 13,949 | |
Depreciation and amortization | 3,218 | 2,547 | |
Loss on disposal of assets | — | 323 | |
Total costs and expenses | 80,717 | 61,403 | |
Operating income | 26,456 | 22,374 | |
Interest expense, net | 4,244 | 5,986 | |
Other (income) expense | (46) | 26 | |
Income before income tax expense | 22,258 | 16,362 | |
Income tax expense | 6,077 | 3,055 | |
Net income | $ 16,181 | $ 13,307 | |
Earnings per share | |||
Basic | $ 0.54 | $ 0.45 | |
Diluted | $ 0.54 | $ 0.44 | |
Weighted average shares outstanding | |||
Basic | 29,972 | 29,882 | |
Diluted | 30,049 | 29,914 | |
Dividends per share | $ 0.19 | $ 0.17 | |
(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately. |
WINGSTOP INC. AND SUBSIDIARIES | |||||||
Thirteen Weeks Ended | |||||||
July 1, 2023 | June 25, 2022 | ||||||
In dollars | As a % of | In dollars | As a % of | ||||
Cost of sales: | |||||||
Food, beverage and packaging costs | $ 7,264 | 32.2 % | $ 7,376 | 39.3 % | |||
Labor costs | 5,520 | 24.4 % | 4,328 | 23.1 % | |||
Other restaurant operating expenses | 4,408 | 19.5 % | 3,607 | 19.2 % | |||
Vendor rebates | (550) | (2.4) % | (412) | (2.2) % | |||
Total cost of sales | $ 16,642 | 73.7 % | $ 14,899 | 79.5 % | |||
WINGSTOP INC. AND SUBSIDIARIES | |||||||
Thirteen Weeks Ended | |||||||
July 1, | June 25, | ||||||
Domestic Franchised Activity: | |||||||
Beginning of period | 1,710 | 1,551 | |||||
Openings | 42 | 49 | |||||
Closures | (1) | — | |||||
Acquired by Company | (2) | — | |||||
Restaurants end of period | 1,749 | 1,600 | |||||
Domestic Company-Owned Activity: | |||||||
Beginning of period | 43 | 37 | |||||
Openings | — | 2 | |||||
Closures | — | — | |||||
Acquired by Company | 2 | — | |||||
Restaurants end of period | 45 | 39 | |||||
Total Domestic Restaurants | 1,794 | 1,639 | |||||
International Franchised Activity: | |||||||
Beginning of period | 243 | 203 | |||||
Openings | 9 | 16 | |||||
Closures | — | — | |||||
Restaurants end of period | 252 | 219 | |||||
Total System-wide Restaurants | 2,046 | 1,858 | |||||
WINGSTOP INC. AND SUBSIDIARIES | |||||||
Thirteen Weeks Ended | |||||||
July 1, | June 25, | ||||||
Net income | $ 16,181 | $ 13,307 | |||||
Interest expense, net | 4,244 | 5,986 | |||||
Income tax expense | 6,077 | 3,055 | |||||
Depreciation and amortization | 3,218 | 2,547 | |||||
EBITDA | $ 29,720 | $ 24,895 | |||||
Additional adjustments: | |||||||
Consulting fees (a) | 1,084 | 50 | |||||
Stock-based compensation expense (b) | 3,546 | (1,601) | |||||
Adjusted EBITDA | $ 34,350 | $ 23,344 | |||||
(a) | Represents non-recurring consulting fees that are not part of our ongoing operations and are incurred to execute discrete, project-based strategic initiatives, which are included in Selling, general and administrative on the Consolidated Statements of Operations. The costs incurred in the thirteen weeks ended June 25, 2022 include third-party consulting fees incurred relating to a strategic initiative to consider the development of a business plan and financial model for potential vertical integration of a poultry complex, which review was completed in fiscal year 2022. The costs incurred in the thirteen weeks ended July 1, 2023 include consulting fees relating to a comprehensive review of our long-term growth strategy for our domestic business to explore potential future initiatives, and which review is expected to be completed in fiscal year 2023. Given the magnitude and scope of these two strategic review initiatives that are not expected to recur in the foreseeable future, the Company considers the incremental consulting fees incurred with respect to the initiatives not reflective of the ongoing costs to operate its business. |
(b) | Includes non-cash, stock-based compensation. |
WINGSTOP INC. AND SUBSIDIARIES | |||
Thirteen Weeks Ended | |||
July 1, | June 25, | ||
Numerator: | |||
Net income | $ 16,181 | $ 13,307 | |
Adjustments: | |||
Consulting fees (a) | 1,084 | 50 | |
Tax effect of adjustments (b) | (260) | (12) | |
Adjusted net income | $ 17,005 | $ 13,345 | |
Denominator: | |||
Weighted-average shares outstanding - diluted | 30,049 | 29,914 | |
Adjusted earnings per diluted share | $ 0.57 | $ 0.45 | |
(a) | Represents non-recurring consulting fees that are not part of our ongoing operations and are incurred to execute discrete, project-based strategic initiatives, which are included in Selling, general and administrative on the Consolidated Statements of Operations. The costs incurred in the thirteen weeks ended June 25, 2022 include third-party consulting fees incurred relating to a strategic initiative to consider the development of a business plan and financial model for potential vertical integration of a poultry complex, which review was completed in fiscal year 2022. The costs incurred in the thirteen weeks ended July 1, 2023 include consulting fees relating to a comprehensive review of our long-term growth strategy for our domestic business to explore potential future initiatives, and which review is expected to be completed in fiscal year 2023. Given the magnitude and scope of these two strategic review initiatives that are not expected to recur in the foreseeable future, the Company considers the incremental consulting fees incurred with respect to the initiatives not reflective of the ongoing costs to operate its business. |
(b) | Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax rate of |
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SOURCE Wingstop Restaurants Inc.
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