Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 30, 2023 of $11,149,800 or $3.05 per share diluted compared to net income of $10,368,600 or $2.93 per share diluted in 2022. For the nine months ended September 30, 2023, net income was $30,461,300 or $8.40 per share diluted compared to net income of $29,248,300 or $8.11 per share diluted for the same period last year.

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 September 30, 2023, there were 1,312 franchises in operation and over 2,800 available territories. An additional 72 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)

 

 

 

 

 

 

 

 

 

September 30, 2023

 

December 31, 2022

ASSETS

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

40,556,100

 

 

$

13,615,600

 

Restricted cash

 

 

40,000

 

 

 

65,000

 

Receivables, net

 

 

1,704,000

 

 

 

1,438,600

 

Net investment in leases - current

 

 

124,300

 

 

 

344,900

 

Income tax receivable

 

 

1,200

 

 

 

558,700

 

Inventories

 

 

290,900

 

 

 

770,600

 

Prepaid expenses

 

 

1,095,100

 

 

 

1,310,400

 

Total current assets

 

 

43,811,600

 

 

 

18,103,800

 

 

 

 

 

 

 

 

Net investment in leases – long-term

 

 

 

 

 

5,400

 

Property and equipment, net

 

 

1,675,900

 

 

 

1,704,600

 

Operating lease right of use asset

 

 

2,510,000

 

 

 

2,716,000

 

Intangible assets, net

 

 

3,082,800

 

 

 

3,348,300

 

Goodwill

 

 

607,500

 

 

 

607,500

 

Other assets

 

 

467,700

 

 

 

429,700

 

Deferred income taxes

 

 

3,392,000

 

 

 

3,540,400

 

 

 

$

55,547,500

 

 

$

30,455,700

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

 

 

 

 

 

 

Notes payable, net

 

$

4,217,900

 

 

$

4,217,900

 

Accounts payable

 

 

1,694,900

 

 

 

2,122,000

 

Accrued liabilities

 

 

4,038,900

 

 

 

2,611,700

 

Deferred revenue

 

 

1,680,700

 

 

 

1,643,900

 

Total current liabilities

 

 

11,632,400

 

 

 

10,595,500

 

Long-Term Liabilities:

 

 

 

 

 

 

Line of Credit/Term Loan

 

 

30,000,000

 

 

 

30,000,000

 

Notes payable, net

 

 

35,903,300

 

 

 

39,066,700

 

Deferred revenue

 

 

7,553,600

 

 

 

6,974,200

 

Operating lease liabilities

 

 

3,871,600

 

 

 

4,287,000

 

Other liabilities

 

 

1,150,100

 

 

 

1,164,400

 

Total long-term liabilities

 

 

78,478,600

 

 

 

81,492,300

 

Shareholders’ Equity (Deficit):

 

 

 

 

 

 

Common stock, no par, 10,000,000 shares authorized, 3,486,869 and 3,459,673 shares issued and outstanding

 

 

6,411,900

 

 

 

1,806,700

 

Retained earnings (accumulated deficit)

 

 

(40,975,400

)

 

 

(63,438,800

)

Total shareholders’ equity (deficit)

 

 

(34,563,500

)

 

 

(61,632,100

)

 

 

$

55,547,500

 

 

$

30,455,700

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nine Months Ended

 

 

September 30, 2023

 

September 24, 2022

 

September 30, 2023

 

September 24, 2022

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Royalties

 

$

19,210,000

 

 

$

17,859,000

 

 

$

53,063,400

 

 

$

49,230,400

 

Leasing income

 

 

1,291,900

 

 

 

1,762,100

 

 

 

3,948,700

 

 

 

5,845,800

 

Merchandise sales

 

 

997,800

 

 

 

746,000

 

 

 

3,601,900

 

 

 

2,687,500

 

Franchise fees

 

 

334,400

 

 

 

348,100

 

 

 

1,133,400

 

 

 

1,160,200

 

Other

 

 

483,700

 

 

 

449,300

 

 

 

1,456,200

 

 

 

1,361,200

 

Total revenue

 

 

22,317,800

 

 

 

21,164,500

 

 

 

63,203,600

 

 

 

60,285,100

 

Cost of merchandise sold

 

 

935,400

 

 

 

717,600

 

 

 

3,370,500

 

 

 

2,552,300

 

Leasing expense

 

 

11,000

 

 

 

376,300

 

 

 

381,700

 

 

 

891,900

 

Provision for credit losses

 

 

700

 

 

 

(22,000

)

 

 

(4,600

)

 

 

(46,600

)

Selling, general and administrative expenses

 

 

6,248,200

 

 

 

5,671,500

 

 

 

18,694,300

 

 

 

16,673,100

 

Income from operations

 

 

15,122,500

 

 

 

14,421,100

 

 

 

40,761,700

 

 

 

40,214,400

 

Interest expense

 

 

(763,100

)

 

 

(820,500

)

 

 

(2,339,800

)

 

 

(2,045,600

)

Interest and other income

 

 

385,400

 

 

 

21,700

 

 

 

803,400

 

 

 

7,000

 

Income before income taxes

 

 

14,744,800

 

 

 

13,622,300

 

 

 

39,225,300

 

 

 

38,175,800

 

Provision for income taxes

 

 

(3,595,000

)

 

 

(3,253,700

)

 

 

(8,764,000

)

 

 

(8,927,500

)

Net income

 

$

11,149,800

 

 

$

10,368,600

 

 

$

30,461,300

 

 

$

29,248,300

 

Earnings per share - basic

 

$

3.20

 

 

$

3.01

 

 

$

8.77

 

 

$

8.36

 

Earnings per share - diluted

 

$

3.05

 

 

$

2.93

 

 

$

8.40

 

 

$

8.11

 

Weighted average shares outstanding - basic

 

 

3,485,852

 

 

 

3,439,417

 

 

 

3,475,066

 

 

 

3,500,411

 

Weighted average shares outstanding - diluted

 

 

3,653,730

 

 

 

3,540,779

 

 

 

3,627,550

 

 

 

3,605,445

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30, 2023

 

September 24, 2022

OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

30,461,300

 

 

$

29,248,300

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

578,900

 

 

 

409,500

 

Provision for credit losses

 

 

(4,600

)

 

 

(46,600

)

Compensation expense related to stock options

 

 

1,451,000

 

 

 

1,203,800

 

Deferred income taxes

 

 

148,400

 

 

 

(214,700

)

Operating lease right of use asset amortization

 

 

206,000

 

 

 

185,700

 

Tax benefits on exercised stock options

 

 

839,000

 

 

 

429,500

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

(265,400

)

 

 

(530,200

)

Principal collections on lease receivables

 

 

485,200

 

 

 

2,819,200

 

Income tax receivable/payable

 

 

(281,500

)

 

 

194,600

 

Inventories

 

 

479,700

 

 

 

(312,700

)

Prepaid expenses

 

 

215,300

 

 

 

2,500

 

Other assets

 

 

(38,000

)

 

 

2,000

 

Accounts payable

 

 

(427,100

)

 

 

(189,100

)

Accrued and other liabilities

 

 

1,021,600

 

 

 

1,395,000

 

Rents received in advance and security deposits

 

 

(254,600

)

 

 

(556,200

)

Deferred revenue

 

 

616,200

 

 

 

164,700

 

Net cash provided by operating activities

 

 

35,231,400

 

 

 

34,205,300

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(284,700

)

 

 

(70,000

)

Reacquired franchise rights

 

 

 

 

 

(3,540,000

)

Net cash used for investing activities

 

 

(284,700

)

 

 

(3,610,000

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from borrowings on line of credit/term loan

 

 

 

 

 

33,700,000

 

Payments on line of credit/term loan

 

 

 

 

 

(3,700,000

)

Payments on notes payable

 

 

(3,187,500

)

 

 

(3,187,500

)

Repurchases of common stock

 

 

 

 

 

(48,281,200

)

Proceeds from exercises of stock options

 

 

3,154,200

 

 

 

2,937,100

 

Dividends paid

 

 

(7,997,900

)

 

 

(6,459,700

)

Net cash used for financing activities

 

 

(8,031,200

)

 

 

(24,991,300

)

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

26,915,500

 

 

 

5,604,000

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

13,680,600

 

 

 

11,437,000

 

Cash, cash equivalents and restricted cash, end of period

 

$

40,596,100

 

 

$

17,041,000

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

Cash paid for interest

 

$

2,309,100

 

 

$

1,925,400

 

Cash paid for income taxes

 

$

8,058,100

 

 

$

8,518,100

 

 

 

 

 

 

 

 

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:

 

 

Nine Months Ended

 

 

September 30, 2023

 

September 24, 2022

Cash and cash equivalents

 

$

40,556,100

 

 

$

16,986,000

 

Restricted cash

 

 

40,000

 

 

 

55,000

 

Total cash, cash equivalents and restricted cash

 

$

40,596,100

 

 

$

17,041,000

 

 

Anthony D. Ishaug 763/520-8500

Winmark (NASDAQ:WINA)
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