WINMARK : ANNOUNCES THIRD QUARTER RESULTS - Form 8-K
WINA
WINMARK CORPORATION ANNOUNCES
THIRD QUARTER RESULTS
Minneapolis, MN (October 13, 2021) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 25, 2021 of $10,082,500 or $2.67 per share diluted compared to net income of $9,358,800 or $2.43 per share diluted in 2020. For the nine months ended September 25, 2021, net income was $28,330,900 or $7.40 per share diluted compared to net income of $21,731,000 or $5.63 per share diluted for the same period last year.
"We are pleased with the continued strength of our business and the performance of our franchisees. Our sustainable business model continues to be well received by consumers in the communities we serve,"commented Brett D. Heffes, Chairman and Chief Executive Officer.
Winmark - the Resale CompanyTM, 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 25, 2021, there were 1,269 franchises in operation and over 2,000 available territories. An additional 39 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 25, 2021
December 26, 2020
ASSETS
Current Assets:
Cash and cash equivalents
$
37,569,100
$
6,659,000
Restricted cash
15,000
25,000
Receivables, net
1,394,900
1,581,900
Net investment in leases - current
3,884,600
8,687,500
Income tax receivable
188,200
221,200
Inventories
408,600
106,600
Prepaid expenses
958,700
995,200
Total current assets
44,419,100
18,276,400
Net investment in leases - long-term
1,157,000
4,573,600
Property and equipment, net
2,055,800
2,332,800
Operating lease right of use asset
3,059,300
3,226,300
Goodwill
607,500
607,500
Other assets
416,900
435,900
Deferred income taxes
3,256,200
1,890,700
$
54,971,800
$
31,343,200
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net
$
4,232,600
$
4,236,100
Accounts payable
1,988,600
1,769,600
Accrued liabilities
2,918,800
2,624,000
Discounted lease rentals
-
1,096,600
Deferred revenue
1,643,900
1,657,400
Total current liabilities
10,783,900
11,383,700
Long-Term Liabilities:
Notes payable, net
44,434,500
17,632,700
Discounted lease rentals
-
574,000
Deferred revenue
6,849,600
7,050,900
Operating lease liabilities
4,946,900
5,307,400
Other liabilities
759,000
773,200
Total long-term liabilities
56,990,000
31,338,200
Shareholders' Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,623,538 and 3,756,028 shares issued and outstanding
-
9,281,800
Retained earnings (accumulated deficit)
(12,802,100)
(20,660,500)
Total shareholders' equity (deficit)
(12,802,100)
(11,378,700)
$
54,971,800
$
31,343,200
2
Winmark Corporation
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended
Nine Months Ended
September 25, 2021
September 26, 2020
September 25, 2021
September 26, 2020
Revenue:
Royalties
$
16,375,900
$
14,210,000
$
45,141,200
$
33,188,300
Leasing income
2,266,200
2,695,800
8,351,800
12,040,800
Merchandise sales
704,800
631,200
1,980,300
1,746,800
Franchise fees
383,400
335,400
1,101,300
1,064,900
Other
423,100
404,600
1,267,300
1,225,700
Total revenue
20,153,400
18,277,000
57,841,900
49,266,500
Cost of merchandise sold
681,100
598,200
1,887,700
1,662,000
Leasing expense
358,900
510,900
1,410,800
2,443,700
Provision for credit losses
(55,900)
(339,600)
(167,300)
164,300
Selling, general and administrative expenses
5,380,100
5,009,700
16,287,600
15,719,100
Income from operations
13,789,200
12,497,800
38,423,100
29,277,400
Interest expense
(323,200)
(345,700)
(945,600)
(1,409,600)
Interest and other income (expense)
(18,800)
9,200
(7,100)
27,700
Income before income taxes
13,447,200
12,161,300
37,470,400
27,895,500
Provision for income taxes
(3,364,700)
(2,802,500)
(9,139,500)
(6,164,500)
Net income
$
10,082,500
$
9,358,800
$
28,330,900
$
21,731,000
Earnings per share - basic
$
2.77
$
2.51
$
7.68
$
5.86
Earnings per share - diluted
$
2.67
$
2.43
$
7.40
$
5.63
Weighted average shares outstanding - basic
3,635,055
3,730,490
3,688,419
3,710,112
Weighted average shares outstanding - diluted
3,782,873
3,857,702
3,829,322
3,857,754
3
Winmark Corporation
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 25, 2021
September 26, 2020
OPERATING ACTIVITIES:
Net income
$
28,330,900
$
21,731,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
328,800
366,700
Provision for credit losses
(167,300)
164,300
Compensation expense related to stock options
1,074,200
929,900
Deferred income taxes
(1,365,500)
(1,251,000)
Loss from disposal of property and equipment
-
200
Deferred initial direct costs
(2,100)
(18,300)
Amortization of deferred initial direct costs
18,800
89,400
Operating lease right of use asset amortization
167,000
293,400
Tax benefits on exercised stock options
249,200
602,400
Change in operating assets and liabilities:
Receivables
187,000
(278,100)
Principal collections on lease receivables
7,452,200
11,418,500
Income tax receivable/payable
(216,200)
368,000
Inventories
(302,000)
900
Prepaid expenses
36,500
(190,700)
Other assets
19,000
34,200
Accounts payable
219,000
257,700
Accrued and other liabilities
(94,100)
(864,100)
Rents received in advance and security deposits
(674,500)
(1,252,000)
Deferred revenue
(214,800)
(630,300)
Net cash provided by operating activities
35,046,100
31,772,100
INVESTING ACTIVITIES:
Purchase of property and equipment
(51,800)
(33,400)
Purchase of equipment for lease contracts
(78,200)
(3,128,200)
Net cash used for investing activities
(130,000)
(3,161,600)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit
-
46,600,000
Payments on line of credit
-
(46,600,000)
Proceeds from borrowings on notes payable
30,000,000
-
Payments on notes payable
(3,187,500)
(2,687,500)
Repurchases of common stock
(27,892,900)
(48,987,500)
Proceeds from exercises of stock options
1,299,300
7,074,100
Dividends paid
(4,234,900)
(2,029,500)
Proceeds from discounted lease rentals
-
1,157,000
Net cash used for financing activities
(4,016,000)
(45,473,400)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
30,900,100
(16,862,900)
Cash, cash equivalents and restricted cash, beginning of period
6,684,000
25,180,300
Cash, cash equivalents and restricted cash, end of period
$
37,584,100
$
8,317,400
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest
$
884,100
$
1,426,100
Cash paid for income taxes
$
10,472,000
$
6,445,200
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 25, 2021
September 26, 2020
Cash and cash equivalents
$
37,569,100
$
8,267,400
Restricted cash
15,000
50,000
Total cash, cash equivalents and restricted cash
$
37,584,100
$
8,317,400
4
Disclaimer
Winmark Corporation published this content on 14 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 October 2021 17:01:06 UTC.