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

 

 

 

Brett D. Heffes 763/520-8500

Winmark (NASDAQ:WINA)
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