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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

 

 

Contacts

Brett D. Heffes

763/520-8500

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