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Winmark Corporation Announces Third Quarter Results

By: Winmark Corporation |  2 Shares     97 Reads

MINNEAPOLIS - October 12, 2016 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 24, 2016 of $6,094,200 (or $1.41 per share diluted) compared to net income of $5,339,600 (or $1.23 per share diluted) in the third quarter of 2015. For the nine months ended September 24, 2016, net income was $16,051,400 (or $3.72 per share diluted) compared to net income of $16,145,300 (or $3.39 per share diluted) for the same period last year.

Earnings growth during the third quarter was driven by an increase in customer activity within the Company’s lease portfolio and reduced selling, general and administrative expenses. Brett D. Heffes, Chief Executive Officer, commented, “I am pleased that we were able to grow our earnings per share by 15% over last year. Our performance during the quarter demonstrated the benefits of our diverse business model.”

Winmark Corporation creates, supports and finances business. At September 24, 2016, there were 1,184 franchises in operation under the brands Plato's Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. An additional 67 retail franchises have been awarded but are not open. In addition, at September 24, 2016, the Company had a lease portfolio of $37.3 million.

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 including statements with respect to our ability to finance the growth of our leasing and franchising businesses for the foreseeable future. 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 24, 2016					December 26, 2015
ASSETS
Current Assets:
Cash and cash equivalents			$	1,120,900				$	1,006,700
Marketable securities				204,100					227,800
Receivables, net				1,555,300					1,416,900
Restricted cash				40,000					25,000
Net investment in leases - current				16,264,100					17,741,500
Income tax receivable				769,200					3,290,400
Inventories				95,600					45,200
Prepaid expenses				921,000					677,800
Total current assets				20,970,200					24,431,300
Net investment in leases – long-term				21,070,300					21,246,000
Property and equipment, net				847,700					1,121,500
Goodwill				607,500					607,500
			$	43,495,700				$	47,406,300
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net			$	1,990,000				$	1,990,000
Accounts payable				1,118,900					1,643,300
Accrued liabilities				2,644,500					1,875,700
Discounted lease rentals				-					38,700
Deferred revenue				1,671,700					1,963,200
Total current liabilities				7,425,100					7,510,900
Long-Term Liabilities:
Line of credit				25,200,000					42,400,000
Notes payable, net				20,424,000					21,916,500
Deferred revenue				1,451,200					1,421,600
Other liabilities				1,036,100					1,216,300
Deferred income taxes				3,676,900					3,614,800
Total long-term liabilities				51,788,200					70,569,200
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 4,122,037 and 4,124,767 shares issued and outstanding				859,200					406,500
Accumulated other comprehensive loss				(7,300	)				(32,900	)
Retained earnings (accumulated deficit)				(16,569,500	)				(31,047,400	)
Total shareholders’ equity (deficit)				(15,717,600	)				(30,673,800	)
			$	43,495,700				$	47,406,300

 

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
			Quarter Ended										Nine Months Ended
			September 24, 2016					September 26, 2015					September 24, 2016					September 26, 2015
REVENUE:
Royalties			$	11,311,000				$	11,286,100				$	32,140,800				$	31,226,700
Leasing income				4,174,000					3,247,000					12,839,000					16,919,900
Merchandise sales				520,000					762,300					1,882,400					2,182,300
Franchise fees				501,800					483,200					1,367,800					1,253,500
Other				227,500					220,900					984,400					917,900
Total revenue				16,734,300					15,999,500					49,214,400					52,500,300
COST OF MERCHANDISE SOLD				499,100					711,600					1,784,800					2,055,600
LEASING EXPENSE				646,200					173,400					2,010,400					4,941,300
PROVISION FOR CREDIT LOSSES				(29,700	)				38,800					(52,000	)				(123,400	)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES				5,180,700					5,733,900					17,671,500					18,226,700
Income from operations				10,438,000					9,341,800					27,799,700					27,400,100
INTEREST EXPENSE				(552,300	)				(687,700	)				(1,786,800	)				(1,142,900	)
INTEREST AND OTHER INCOME/(EXPENSE)				(6,300	)				(12,400	)				(7,300	)				(61,800	)
Income before income taxes				9,879,400					8,641,700					26,005,600					26,195,400
PROVISION FOR INCOME TAXES				(3,785,200	)				(3,302,100	)				(9,954,200	)				(10,050,100	)
NET INCOME			$	6,094,200				$	5,339,600				$	16,051,400				$	16,145,300
EARNINGS PER SHARE – BASIC			$	1.48				$	1.29				$	3.90				$	3.53
EARNINGS PER SHARE – DILUTED			$	1.41				$	1.23				$	3.72				$	3.39
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC				4,116,957					4,128,031					4,113,819					4,568,813
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED				4,328,168					4,338,230					4,320,284					4,758,158

SOURCE Winmark Corporation

Contact:

Brett D. Heffes
Winmark Corporation
763-520-8500

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