Winmark Corporation (Nasdaq: WINA) announced today net income
for the quarter ended April 1, 2023 of $8,942,700 or $2.49 per
share diluted compared to net income of $9,852,500 or $2.65 per
share diluted in 2022. Results during the quarter were impacted by
the Company’s decision in May 2021 to run-off its leasing
portfolio.
“2023 is off to a good start,” commented Brett D. Heffes,
Chairman and Chief Executive Officer.
Winmark - the Resale Company®, is a nationally recognized
franchising business 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 April 1, 2023, there were 1,297 franchises
in operation and over 2,800 available territories. An additional 70
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)
April 1, 2023
December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents
$
24,551,600
$
13,615,600
Restricted cash
80,000
65,000
Receivables, net
1,581,800
1,438,600
Net investment in leases - current
125,300
344,900
Income tax receivable
—
558,700
Inventories
414,300
770,600
Prepaid expenses
888,000
1,310,400
Total current assets
27,641,000
18,103,800
Net investment in leases – long-term
—
5,400
Property and equipment, net
1,606,100
1,704,600
Operating lease right of use asset
2,649,100
2,716,000
Intangible assets, net
3,259,800
3,348,300
Goodwill
607,500
607,500
Other assets
470,100
429,700
Deferred income taxes
3,516,200
3,540,400
$
39,749,800
$
30,455,700
LIABILITIES AND SHAREHOLDERS’
EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net
$
4,217,900
$
4,217,900
Accounts payable
1,443,700
2,122,000
Income tax payable
2,009,900
—
Accrued liabilities
3,884,600
2,611,700
Deferred revenue
1,673,700
1,643,900
Total current liabilities
13,229,800
10,595,500
Long-Term Liabilities:
Line of Credit/Term Loan
30,000,000
30,000,000
Notes payable, net
38,012,200
39,066,700
Deferred revenue
7,242,100
6,974,200
Operating lease liabilities
4,151,100
4,287,000
Other liabilities
1,159,600
1,164,400
Total long-term liabilities
80,565,000
81,492,300
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares
authorized, 3,463,191 and 3,459,673 shares issued and
outstanding
2,873,000
1,806,700
Retained earnings (accumulated
deficit)
(56,918,000
)
(63,438,800
)
Total shareholders’ equity (deficit)
(54,045,000
)
(61,632,100
)
$
39,749,800
$
30,455,700
WINMARK CORPORATION
CONDENSED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended
April 1, 2023
March 26, 2022
Revenue:
Royalties
$
16,747,700
$
15,390,100
Leasing income
1,637,000
2,871,700
Merchandise sales
1,276,000
914,300
Franchise fees
378,200
420,600
Other
484,700
453,100
Total revenue
20,523,600
20,049,800
Cost of merchandise sold
1,187,300
864,500
Leasing expense
316,400
216,000
Provision for credit losses
(4,600
)
(8,900
)
Selling, general and administrative
expenses
6,636,100
5,540,000
Income from operations
12,388,400
13,438,200
Interest expense
(797,600
)
(513,100
)
Interest and other income (expense)
125,700
(900
)
Income before income taxes
11,716,500
12,924,200
Provision for income taxes
(2,773,800
)
(3,071,700
)
Net income
$
8,942,700
$
9,852,500
Earnings per share - basic
$
2.58
$
2.74
Earnings per share - diluted
$
2.49
$
2.65
Weighted average shares outstanding -
basic
3,460,720
3,597,926
Weighted average shares outstanding -
diluted
3,594,234
3,716,322
WINMARK CORPORATION
CONDENSED STATEMENTS OF CASH
FLOWS
(Unaudited)
Three Months Ended
April 1, 2023
March 26, 2022
OPERATING ACTIVITIES:
Net income
$
8,942,700
$
9,852,500
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
192,500
102,500
Provision for credit losses
(4,600
)
(8,900
)
Compensation expense related to stock
options
475,900
421,600
Deferred income taxes
24,200
(113,200
)
Operating lease right of use asset
amortization
66,900
60,300
Tax benefits on exercised stock
options
77,700
95,300
Change in operating assets and
liabilities:
Receivables
(143,200
)
(369,900
)
Principal collections on lease
receivables
423,800
530,500
Income tax receivable/payable
2,490,900
2,946,500
Inventories
356,300
(167,100
)
Prepaid expenses
422,400
23,500
Other assets
(40,400
)
(10,400
)
Accounts payable
(678,300
)
(203,000
)
Accrued and other liabilities
1,140,200
390,500
Rents received in advance and security
deposits
(194,200
)
(159,700
)
Deferred revenue
297,700
(43,100
)
Net cash provided by operating
activities
13,850,500
13,347,900
INVESTING ACTIVITIES:
Purchase of property and equipment
(5,500
)
(21,500
)
Net cash used for investing activities
(5,500
)
(21,500
)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of
credit/term loan
—
15,600,000
Payments on line of credit/term loan
—
(2,000,000
)
Payments on notes payable
(1,062,500
)
(1,062,500
)
Repurchases of common stock
—
(36,591,400
)
Proceeds from exercises of stock
options
590,400
1,258,300
Dividends paid
(2,421,900
)
(1,625,300
)
Net cash used for financing activities
(2,894,000
)
(24,420,900
)
NET INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
10,951,000
(11,094,500
)
Cash, cash equivalents and restricted
cash, beginning of period
13,680,600
11,437,000
Cash, cash equivalents and restricted
cash, end of period
$
24,631,600
$
342,500
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest
$
791,500
$
490,500
Cash paid for income taxes
$
181,200
$
143,100
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:
Three Months Ended
April 1, 2023
March 26, 2022
Cash and cash equivalents
$
24,551,600
$
287,500
Restricted cash
80,000
55,000
Total cash, cash equivalents and
restricted cash
$
24,631,600
$
342,500
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230419005686/en/
Anthony D. Ishaug 763/520-8500
Winmark (NASDAQ:WINA)
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