WINA Winmark Corporation

Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 30, 2023 of $40,178,100 or $11.04 per share diluted compared to net income of $39,424,900 or $10.97 per share diluted in 2022. The fourth quarter 2023 net income was $9,716,800 or $2.64 per share diluted, compared to net income of $10,176,600 or $2.86 per share diluted, for the same period last year. Revenues for the year ended December 30, 2023 were $83,243,500, up from $81,410,800 in 2022. 2023 results were impacted by the Company’s decision in May 2021 to run-off its leasing portfolio. Additionally, financial performance for the fourth quarter and full year 2022 included an extra week of operations due to the Company’s fiscal year ending on the last Saturday of December.

“Our 2023 results reflected positive performance by our franchise partners; however, growth was lower in the second half of the year,” commented Brett D. Heffes, Chair and Chief Executive Officer.

Winmark - the Resale Company®, is a nationally recognized franchisor 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 December 30, 2023, there were 1,319 franchises in operation and over 2,800 available territories. An additional 71 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)

 

December 30, 2023

December 31, 2022

 

ASSETS

Current Assets:

 

Cash and cash equivalents

$

13,361,500

$

13,615,600

Restricted cash

 

25,000

 

 

65,000

 

Receivables, net

 

1,475,300

 

 

1,438,600

 

Net investment in leases - current

 

75,100

 

 

344,900

 

Income tax receivable

 

31,400

 

 

558,700

 

Inventories

 

386,100

 

 

770,600

 

Prepaid expenses

 

1,392,100

 

 

1,310,400

 

Total current assets

 

16,746,500

 

 

18,103,800

 

 

Net investment in leases – long-term

 

—

 

 

5,400

 

Property and equipment, net

 

1,669,800

 

 

1,704,600

 

Operating lease right of use asset

 

2,425,900

 

 

2,716,000

 

Intangible assets, net

 

2,994,300

 

 

3,348,300

 

Goodwill

 

607,500

 

 

607,500

 

Other assets

 

471,300

 

 

429,700

 

Deferred income taxes

 

4,052,400

 

 

3,540,400

 

 

$

28,967,700

 

$

30,455,700

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

Current Liabilities:

Notes payable, net

$

4,217,900

 

$

4,217,900

 

Accounts payable

 

1,719,400

 

 

2,122,000

 

Accrued liabilities

 

2,858,200

 

 

2,611,700

 

Deferred revenue

 

1,666,100

 

 

1,643,900

 

Total current liabilities

 

10,461,600

 

 

10,595,500

 

Long-Term Liabilities:

 

 

Line of credit/Term loan

 

30,000,000

 

 

30,000,000

 

Notes payable, net

 

34,848,800

 

 

39,066,700

 

Deferred revenue

 

7,657,500

 

 

6,974,200

 

Operating lease liabilities

 

3,715,800

 

 

4,287,000

 

Other liabilities

 

1,440,100

 

 

1,164,400

 

Total long-term liabilities

 

77,662,200

 

 

81,492,300

 

Shareholders’ Equity (Deficit):

 

 

Common stock, no par, 10,000,000 shares authorized, 3,496,977 and 3,459,673 shares issued and outstanding

 

7,768,800

 

 

1,806,700

 

Retained earnings (accumulated deficit)

 

(66,924,900

)

 

(63,438,800

)

Total shareholders’ equity (deficit)

 

(59,156,100

)

 

(61,632,100

)

 

$

28,967,700

 

$

30,455,700

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

Quarter Ended

Fiscal Year Ended

 

December 30, 2023

December 31, 2022

December 30, 2023

December 31, 2022

Revenue:

 

 

 

 

Royalties

$

17,167,200

 

$

17,917,700

 

$

70,230,700

 

$

67,148,100

 

Leasing income

 

817,600

 

 

1,091,900

 

 

4,766,200

 

 

6,937,700

 

Merchandise sales

 

1,159,200

 

 

1,234,100

 

 

4,761,100

 

 

3,921,600

 

Franchise fees

 

378,600

 

 

415,200

 

 

1,512,000

 

 

1,575,400

 

Other

 

517,300

 

 

466,800

 

 

1,973,500

 

 

1,828,000

 

Total revenue

 

20,039,900

 

 

21,125,700

 

 

83,243,500

 

 

81,410,800

 

Cost of merchandise sold

 

1,091,100

 

 

1,160,500

 

 

4,461,500

 

 

3,712,800

 

Leasing expense

 

16,600

 

 

92,800

 

 

398,300

 

 

984,700

 

Provision for credit losses

 

(1,000

)

 

(11,300

)

 

(5,600

)

 

(57,900

)

Selling, general and administrative expenses

 

6,414,400

 

 

6,485,300

 

 

25,108,700

 

 

23,158,400

 

Income from operations

 

12,518,800

 

 

13,398,400

 

 

53,280,600

 

 

53,612,800

 

Interest expense

 

(751,100

)

 

(869,300

)

 

(3,091,000

)

 

(2,914,900

)

Interest and other income

 

368,300

 

 

78,600

 

 

1,171,700

 

 

85,600

 

Income before income taxes

 

12,136,000

 

 

12,607,700

 

 

51,361,300

 

 

50,783,500

 

Provision for income taxes

 

(2,419,200

)

 

(2,431,100

)

 

(11,183,200

)

 

(11,358,600

)

Net income

$

9,716,800

 

$

10,176,600

 

$

40,178,100

 

$

39,424,900

 

Earnings per share - basic

$

2.78

 

$

2.95

 

$

11.55

 

$

11.30

 

Earnings per share - diluted

$

2.64

 

$

2.86

 

$

11.04

 

$

10.97

 

Weighted average shares outstanding - basic

 

3,494,544

 

 

3,452,399

 

 

3,479,936

 

 

3,487,732

 

Weighted average shares outstanding - diluted

 

3,679,444

 

 

3,556,190

 

 

3,640,524

 

 

3,592,456

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Year Ended

 

December 30, 2023

December 31, 2022

OPERATING ACTIVITIES:

 

 

Net income

$

40,178,100

 

$

39,424,900

 

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

 

 

Depreciation and amortization

 

772,700

 

 

603,100

 

Provision for credit losses

 

(5,600

)

 

(57,900

)

Compensation expense related to stock options

 

1,952,400

 

 

1,652,400

 

Deferred income taxes

 

(512,000

)

 

(287,700

)

Gain from disposal of property and equipment

 

—

 

 

(9,400

)

Operating lease right of use asset amortization

 

290,100

 

 

266,000

 

Tax benefits on exercised stock options

 

1,138,500

 

 

858,300

 

Change in operating assets and liabilities:

 

 

Receivables

 

(36,700

)

 

(335,200

)

Principal collections on lease receivables

 

556,000

 

 

3,646,700

 

Income tax receivable/payable

 

(611,200

)

 

(749,500

)

Inventories

 

384,500

 

 

(445,400

)

Prepaid expenses

 

(81,700

)

 

(301,800

)

Other assets

 

(41,600

)

 

(11,400

)

Accounts payable

 

(402,600

)

 

23,000

 

Accrued and other liabilities

 

(16,900

)

 

222,800

 

Rents received in advance and security deposits

 

(275,200

)

 

(819,200

)

Deferred revenue

 

705,500

 

 

109,600

 

Net cash provided by operating activities

 

43,994,300

 

 

43,789,300

 

INVESTING ACTIVITIES:

 

 

 

 

Proceeds from sales of property and equipment

 

9,400

 

Purchase of property and equipment

 

(383,900

)

 

(139,100

)

Reacquired franchise rights

 

—

 

 

(3,540,000

)

Net cash used for investing activities

 

(383,900

)

 

(3,669,700

)

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

 

(4,250,000

)

 

(4,250,000

)

Repurchases of common stock

 

—

 

 

(49,119,800

)

Proceeds from exercises of stock options

 

4,009,700

 

 

4,751,700

 

Dividends paid

 

(43,664,200

)

 

(19,257,900

)

Net cash used for financing activities

 

(43,904,500

)

 

(37,876,000

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

(294,100

)

 

2,243,600

 

Cash, cash equivalents and restricted cash, beginning of period

 

13,680,600

 

 

11,437,000

 

Cash, cash equivalents and restricted cash, end of period

$

13,386,500

 

$

13,680,600

 

SUPPLEMENTAL DISCLOSURES:

 

 

Cash paid for interest

$

3,049,400

 

$

2,722,500

 

Cash paid for income taxes

$

10,874,300

 

$

11,308,800

 

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:

 

Year Ended

 

December 30, 2023

 

December 31, 2022

Cash and cash equivalents

$

13,361,500

$

13,615,600

Restricted cash

 

25,000

 

 

65,000

 

Total cash, cash equivalents and restricted cash

$

13,386,500

 

$

13,680,600

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240221814233/en/

Anthony D. Ishaug 763/520-8500