105 0 Kommentare Winmark Corporation Announces First Quarter Results

Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 26, 2022 of $9,852,500 or $2.65 per share diluted compared to net income of $9,311,100 or $2.40 per share diluted in 2021.

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 March 26, 2022, there were 1,276 franchises in operation and over 2,800 available territories. An additional 44 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)

	March 26, 2022			December 25, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	287,500		$	11,407,000
Restricted cash		55,000			30,000
Receivables, net		1,473,300			1,103,400
Net investment in leases - current		2,593,000			2,890,600
Income tax receivable		—			667,500
Inventories		492,300			325,200
Prepaid expenses		985,100			1,008,600
Total current assets		5,886,200			17,432,300

Net investment in leases – long-term		165,000			229,300
Property and equipment, net		1,895,900			1,976,900
Operating lease right of use asset		2,921,700			2,982,000
Goodwill		607,500			607,500
Other assets		428,700			418,300
Deferred income taxes		3,365,900			3,252,700
	$	15,270,900		$	26,899,000

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	4,232,600		$	4,232,600
Accounts payable		1,896,000			2,099,000
Income tax payable		2,374,300			—
Accrued liabilities		2,515,400			2,001,000
Deferred revenue		1,634,400			1,645,000
Total current liabilities		12,652,700			9,977,600
Long-Term Liabilities:
Line of Credit		13,600,000			—
Notes payable, net		42,318,200			43,376,400
Deferred revenue		6,831,000			6,863,500
Operating lease liabilities		4,686,700			4,810,100
Other liabilities		950,000			954,800
Total long-term liabilities		68,385,900			56,004,800
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,480,376 and 3,635,806 shares issued and outstanding		—			—
Retained earnings (accumulated deficit)		(65,767,700	)		(39,083,400	)
Total shareholders’ equity (deficit)		(65,767,700	)		(39,083,400	)
	$	15,270,900		$	26,899,000

WINMARK CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended
	March 26, 2022			March 27, 2021
Revenue:
Royalties	$	15,390,100		$	14,048,800
Leasing income		2,871,700			3,237,000
Merchandise sales		914,300			592,400
Franchise fees		420,600			359,000
Other		453,100			421,700
Total revenue		20,049,800			18,658,900
Cost of merchandise sold		864,500			558,800
Leasing expense		216,000			389,500
Provision for credit losses		(8,900	)		(48,700	)
Selling, general and administrative expenses		5,540,000			5,102,300
Income from operations		13,438,200			12,657,000
Interest expense		(513,100	)		(318,100	)
Interest and other income (expense)		(900	)		6,800
Income before income taxes		12,924,200			12,345,700
Provision for income taxes		(3,071,700	)		(3,034,600	)
Net income	$	9,852,500		$	9,311,100
Earnings per share - basic	$	2.74		$	2.49
Earnings per share - diluted	$	2.65		$	2.40
Weighted average shares outstanding - basic		3,597,926			3,736,676
Weighted average shares outstanding - diluted		3,716,322			3,874,227

WINMARK CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended
	March 26, 2022			March 27, 2021
OPERATING ACTIVITIES:
Net income	$	9,852,500		$	9,311,100
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		102,500			113,800
Provision for credit losses		(8,900	)		(48,700	)
Compensation expense related to stock options		421,600			385,200
Deferred income taxes		(113,200	)		(439,900	)
Deferred initial direct costs		—			(1,500	)
Amortization of deferred initial direct costs		—			10,500
Operating lease right of use asset amortization		60,300			54,200
Tax benefits on exercised stock options		95,300			47,100
Change in operating assets and liabilities:
Receivables		(369,900	)		(515,000	)
Principal collections on lease receivables		530,500			2,268,700
Income tax receivable/payable		2,946,500			3,333,300
Inventories		(167,100	)		(3,600	)
Prepaid expenses		23,500			155,300
Other assets		(10,400	)		(2,600	)
Accounts payable		(203,000	)		(370,300	)
Accrued and other liabilities		390,500			(532,300	)
Rents received in advance and security deposits		(159,700	)		(95,400	)
Deferred revenue		(43,100	)		(84,900	)
Net cash provided by operating activities		13,347,900			13,585,000
INVESTING ACTIVITIES:
Purchase of property and equipment		(21,500	)		(34,300	)
Purchase of equipment for lease contracts		—			(65,500	)
Net cash used for investing activities		(21,500	)		(99,800	)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit		15,600,000			—
Payments on line of credit		(2,000,000	)		—
Payments on notes payable		(1,062,500	)		(1,062,500	)
Repurchases of common stock		(36,591,400	)		(10,455,200	)
Proceeds from exercises of stock options		1,258,300			268,800
Dividends paid		(1,625,300	)		(935,400	)
Net cash used for financing activities		(24,420,900	)		(12,184,300	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(11,094,500	)		1,300,900
Cash, cash equivalents and restricted cash, beginning of period		11,437,000			6,684,000
Cash, cash equivalents and restricted cash, end of period	$	342,500		$	7,984,900
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	490,500		$	309,200
Cash paid for income taxes	$	143,100		$	94,100

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
	March 26, 2022			March 27, 2021
Cash and cash equivalents	$	287,500		$	7,959,900
Restricted cash		55,000			25,000
Total cash, cash equivalents and restricted cash	$	342,500		$	7,984,900