Wingstop Inc. Reports Fiscal Second Quarter Financial Results
Wingstop Inc. (WING) reported a 13.2% increase in total revenue to $83.8 million for Q2 2022, with net income rising 17.6% to $13.3 million, or $0.44 per diluted share. Despite a 3.3% decline in domestic same-store sales, the company experienced a 14.4% growth in unit openings, totaling 1,858 restaurants. Digital sales made up 60.5% of total sales. The company reiterated its 2022 guidance, anticipating low-single digit growth in same-store sales and increasing its projected net openings to 220-235 restaurants. A quarterly dividend was also raised to $0.19 per share.
- Revenue increased 13.2% to $83.8 million.
- Net income rose 17.6% to $13.3 million, or $0.44 per share.
- 14.4% growth in unit openings with 67 net new locations.
- Digital sales represented 60.5% of total sales.
- Quarterly dividend increased from $0.17 to $0.19 per share.
- Domestic same-store sales decreased by 3.3%.
- Company-owned same-store sales fell by 4.9%.
- Increased interest expense of $2.3 million due to added debt.
Delivers Unit Growth of
DALLAS, July 28, 2022 /PRNewswire/ -- Wingstop Inc. ("Wingstop" or the "Company") (NASDAQ: WING) today announced financial results for the fiscal second quarter ended June 25, 2022.
Highlights for the fiscal second quarter 2022 compared to the fiscal second quarter 2021:
- System-wide sales increased
7.5% to$633.6 million - 67 net new openings in the fiscal second quarter 2022
- Domestic same-store sales decreased
3.3% - Three-year domestic same-store sales increased
30.7% - Domestic restaurant AUV of
$1.6 million - Digital sales of
60.5% of sales - Total revenue increased
13.2% to$83.8 million - Net income increased
17.6% to$13.3 million , or$0.44 per diluted share, compared to net income of$11.3 million , or$0.38 per diluted share in the prior fiscal second quarter. Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased20.1% to$13.6 million , or$0.45 per diluted share, compared to$11.3 million , or$0.38 per diluted share in the prior fiscal second quarter - Adjusted EBITDA, a non-GAAP measure, increased
3.4% to$23.7 million , compared to adjusted EBITDA of$22.9 million in the prior fiscal second quarter.
Adjusted EBITDA, adjusted net income, adjusted earnings per diluted share, and cost of sales excluding pre-opening expenses are non-GAAP measures. Reconciliations of adjusted EBITDA, adjusted net income, adjusted earnings per diluted share, and cost of sales excluding pre-opening expenses to the most directly comparable financial measure presented in accordance with accounting principles generally accepted in the United States ("GAAP") are set forth in the schedule accompanying this release. See "Non-GAAP Financial Measures."
"Our second quarter results demonstrate the resiliency and underlying strength of the Wingstop brand as the unit economics have continued to strengthen throughout 2022, fueling another record number of net new openings this quarter," commented Michael Skipworth, President & Chief Executive Officer. "We are in a unique position for the back half of 2022 where we are benefiting from meaningful deflation in bone-in wings, have a proven playbook, along with sales-driving levers that give us confidence in our ability to deliver on our outlook for 2022."
Key operating metrics for the fiscal second quarter 2022 compared to the fiscal second quarter 2021:
Thirteen Weeks Ended | |||
June 25, 2022 | June 26, 2021 | ||
Number of system-wide restaurants open at end of period | 1,858 | 1,624 | |
Number of domestic franchise restaurants open at end of period | 1,600 | 1,415 | |
Number of international franchise restaurants open at end of period | 219 | 175 | |
System-wide sales (in thousands) | $ 633,620 | $ 589,665 | |
Domestic restaurant AUV (in thousands) | $ 1,581 | $ 1,556 | |
Domestic same-store sales growth | (3.3) % | 2.1 % | |
Company-owned domestic same store sales growth | (4.9) % | (3.1) % | |
Net income (in thousands) | $ 13,307 | $ 11,312 | |
Adjusted net income (in thousands) | $ 13,590 | $ 11,312 | |
Adjusted EBITDA (in thousands) | $ 23,667 | $ 22,882 | |
Fiscal second quarter 2022 financial results
Total revenue for the fiscal second quarter 2022 increased to
Cost of sales increased to
Selling, general & administrative expense ("SG&A") decreased
Interest expense, net was
Income tax expense was
Financial Outlook
The Company is reiterating guidance for 2022, which is a 53-week fiscal year:
- Low-single digit domestic same store sales growth;
- SG&A of between
$70.0 -$72.0 million ; - Stock-based compensation expense of between
$7.5 -$8.5 million ; - Depreciation and amortization of between
$10.5 -$11.5 million ; - Interest expense of approximately
$23.5 million ; and - Diluted earnings per share of between
$1.55 to$1.57 .
Additionally, the Company is updating its guidance for net system-wide restaurant openings from 220+ to between 220 and 235.
Restaurant Development
As of June 25, 2022, there were 1,858 Wingstop restaurants system-wide. This included 1,639 restaurants in the United States, of which 1,600 were franchised restaurants and 39 were company-owned, and 219 franchised restaurants in international markets. During the fiscal second quarter 2022, there were 67 net system-wide Wingstop restaurant openings.
Quarterly Dividend
In recognition of the Company's strong cash flow generation and our commitment to returning value to stockholders, on July 27, 2022, 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 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 reflect the change in year-over-year sales for the comparable restaurant base. We define the comparable 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.
System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees.
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 refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and stock-based compensation expense.
Adjusted net income is defined as net income adjusted for losses on debt extinguishment and refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and related tax adjustments.
Adjusted net income 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 2022 financial results at 10:00 AM Eastern Time. The conference call can be accessed live by dialing 1-877-259-5243 or 1-412-317-5176 (international). 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 5140987. The replay will be available through Thursday, August 4, 2022.
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 Dallas, TX, Wingstop Inc. (NASDAQ: WING) operates and franchises more than 1,850 locations worldwide. The Wing Experts are dedicated to Serving the World Flavor through an unparalleled guest experience and use of a best-in-class technology platform, all while offering classic and boneless wings and tenders, always cooked to order and hand sauced-and-tossed in fans' choice of 11 bold, distinctive flavors. Wingstop's menu also features signature sides including fresh-cut, seasoned fries and freshly-made ranch and bleu cheese dips.
In fiscal year 2021, 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 stakeholders.
Rounding out a strong year in 2021, the Company was ranked #1 on Technomic 500's "Fastest Growing Franchise" and #22 on Entrepreneur Magazine's "Franchise 500," maintained its certification as a Great Place to Work, was named as a finalist for The Innovation SABRE Award's Best New Product/Brand Launch category for its Thighstop campaign, and 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 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," "anticipate," "believe," "think," "estimate," "seek," "predict," "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 2022 fiscal year outlook for domestic same store sales growth, the cost of chicken, SG&A expenses, stock-based compensation expense, depreciation and amortization, interest expense, diluted earnings per share, and unit growth, as well as statements regarding growth levers we are expecting to drive top-line 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.
Our ability to achieve or maintain sales and earnings may be affected by COVID-19 and inflationary pressures, including, among others: competitive labor market, supply chain challenges, and inflationary pressures on the consumer. 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
Megan Sprague
972-331-9155
Media@wingstop.com
Investor Contact
Susana Arevalo and Skyler Ray
972-331-8484
IR@wingstop.com
WINGSTOP INC. AND SUBSIDIARIES | |||
Consolidated Balance Sheets | |||
(amounts in thousands, except share and per share data) | |||
June 25, | December 25, | ||
(Unaudited) | |||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ 165,824 | $ 48,583 | |
Restricted cash | 17,112 | 3,448 | |
Accounts receivable, net | 7,234 | 6,993 | |
Prepaid expenses and other current assets | 5,628 | 4,928 | |
Advertising fund assets, restricted | 13,681 | 6,197 | |
Total current assets | 209,479 | 70,149 | |
Property and equipment, net | 60,854 | 54,503 | |
Goodwill | 56,877 | 56,877 | |
Trademarks | 32,700 | 32,700 | |
Customer relationships, net | 9,660 | 10,302 | |
Other non-current assets | 25,791 | 24,672 | |
Total assets | $ 395,361 | $ 249,203 | |
Liabilities and stockholders' deficit | |||
Current liabilities | |||
Accounts payable | $ 3,121 | $ 5,414 | |
Other current liabilities | 29,188 | 28,070 | |
Current portion of debt | 6,675 | — | |
Advertising fund liabilities | 13,681 | 6,197 | |
Total current liabilities | 52,665 | 39,681 | |
Long-term debt, net | 709,546 | 469,394 | |
Deferred revenues, net of current | 27,056 | 28,024 | |
Deferred income tax liabilities, net | 5,898 | 7,432 | |
Other non-current liabilities | 15,666 | 14,197 | |
Total liabilities | 810,831 | 558,728 | |
Commitments and contingencies | |||
Stockholders' deficit | |||
Common stock, | 299 | 299 | |
Additional paid-in-capital | 646 | 463 | |
Retained deficit | (415,822) | (310,031) | |
Accumulated other comprehensive loss | (593) | (256) | |
Total stockholders' deficit | (415,470) | (309,525) | |
Total liabilities and stockholders' deficit | $ 395,361 | $ 249,203 | |
WINGSTOP INC. AND SUBSIDIARIES | |||
Consolidated Statements of Operations | |||
(amounts in thousands, except per share data) | |||
Thirteen Weeks Ended | |||
June 25, | June 26, | ||
(Unaudited) | (Unaudited) | ||
Revenue: | |||
Royalty revenue, franchise fees and other | $ 36,044 | $ 33,135 | |
Advertising fees | 28,987 | 22,577 | |
Company-owned restaurant sales | 18,746 | 18,288 | |
Total revenue | 83,777 | 74,000 | |
Costs and expenses: | |||
Cost of sales (1) | 14,899 | 14,207 | |
Advertising expenses | 29,685 | 23,301 | |
Selling, general and administrative | 13,949 | 16,066 | |
Depreciation and amortization | 2,547 | 1,523 | |
Loss on disposal of assets | 323 | — | |
Total costs and expenses | 61,403 | 55,097 | |
Operating income | 22,374 | 18,903 | |
Interest expense, net | 5,986 | 3,724 | |
Other expense | 26 | — | |
Income before income tax expense | 16,362 | 15,179 | |
Income tax expense | 3,055 | 3,867 | |
Net income | $ 13,307 | $ 11,312 | |
Earnings per share | |||
Basic | $ 0.45 | $ 0.38 | |
Diluted | $ 0.44 | $ 0.38 | |
Weighted average shares outstanding | |||
Basic | 29,882 | 29,739 | |
Diluted | 29,914 | 29,873 | |
Dividends per share | $ 0.17 | $ 0.14 | |
(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, |
WINGSTOP INC. AND SUBSIDIARIES | |||||||
Unaudited Supplemental Information | |||||||
Cost of Sales Margin Analysis | |||||||
(amounts in thousands) | |||||||
Thirteen Weeks Ended | |||||||
June 25, 2022 | June 26, 2021 | ||||||
In dollars | As a % of | In dollars | As a % of | ||||
Cost of sales: | |||||||
Food, beverage and packaging costs | 7,376 | 39.3 % | 8,023 | 43.9 % | |||
Labor costs | 4,328 | 23.1 % | 3,774 | 20.6 % | |||
Other restaurant operating expenses | 3,419 | 18.2 % | 2,809 | 15.4 % | |||
Vendor rebates | (412) | (2.2) % | (410) | (2.2) % | |||
Cost of sales (excluding pre-opening expenses) | 14,711 | 78.5 % | 14,196 | 77.6 % | |||
Pre-opening expenses | 188 | 1.0 % | 11 | 0.1 % | |||
Total cost of sales | 14,899 | 79.5 % | 14,207 | 77.7 % | |||
WINGSTOP INC. AND SUBSIDIARIES | |||
Unaudited Supplemental Information | |||
Restaurant Count | |||
Thirteen Weeks Ended | |||
June 25, | June 26, | ||
Domestic Franchised Activity: | |||
Beginning of period | 1,551 | 1,371 | |
Openings | 49 | 44 | |
Closures | — | — | |
Restaurants end of period | 1,600 | 1,415 | |
Domestic Company-Owned Activity: | |||
Beginning of period | 37 | 33 | |
Openings | 2 | 1 | |
Closures | — | — | |
Restaurants end of period | 39 | 34 | |
Total Domestic Restaurants | 1,639 | 1,449 | |
International Franchised Activity: | |||
Beginning of period | 203 | 175 | |
Openings | 16 | 4 | |
Closures | — | (4) | |
Restaurants end of period | 219 | 175 | |
Total System-wide Restaurants | 1,858 | 1,624 | |
WINGSTOP INC. AND SUBSIDIARIES | |||
Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA | |||
(Unaudited) | |||
(amounts in thousands) | |||
Thirteen Weeks Ended | |||
June 25, | June 26, | ||
Net income | $ 13,307 | $ 11,312 | |
Interest expense, net | 5,986 | 3,724 | |
Income tax expense (benefit) | 3,055 | 3,867 | |
Depreciation and amortization | 2,547 | 1,523 | |
EBITDA | $ 24,895 | $ 20,426 | |
Additional adjustments: | |||
Loss on disposal of assets (a) | 323 | — | |
Consulting fees (b) | 50 | — | |
Stock-based compensation expense, net of forfeitures (c) | (1,601) | 2,456 | |
Adjusted EBITDA | $ 23,667 | $ 22,882 | |
(a) | Represents a loss resulting from the sale of assets to a franchisee pursuant to a multi-unit development agreement executed |
(b) | Represents costs and expenses related to a consulting project to support the Company's strategic initiatives, which are |
(c) | Includes non-cash, stock-based compensation, net of forfeitures. |
WINGSTOP INC. AND SUBSIDIARIES | |||
Non-GAAP Financial Measures - Adjusted Net Income and Adjusted EPS | |||
(Unaudited) | |||
(amounts in thousands, except per share data) | |||
Thirteen Weeks Ended | |||
June 25, | June 26, | ||
Numerator: | |||
Net income | $ 13,307 | $ 11,312 | |
Adjustments: | |||
Loss on disposal of assets (a) | 323 | — | |
Consulting fees (b) | 50 | — | |
Tax effect of adjustments (c) | (90) | — | |
Adjusted net income | $ 13,590 | $ 11,312 | |
Denominator: | |||
Weighted-average shares outstanding - diluted | 29,914 | 29,873 | |
Adjusted earnings per diluted share | $ 0.45 | $ 0.38 | |
(a) | Represents a loss resulting from the sale of assets to a franchisee pursuant to a multi-unit development agreement executed |
(b) | Represents costs and expenses related to a consulting project to support the Company's strategic initiatives, which are |
(c) | Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax |
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SOURCE Wingstop Restaurants Inc.
FAQ
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