Winmark Corporation Announces Third Quarter Results

Winmark Corporation Announces Third Quarter Results

MINNEAPOLIS - (BUSINESS WIRE) - October 17, 2018 - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 29, 2018 of $8,364,300 (or $2.01 per share diluted) compared to net income of $5,860,600 (or $1.36 per share diluted) in the third quarter of 2017. For the nine months ended September 29, 2018, net income was $22,467,700 (or $5.43 per share diluted) compared to net income of $16,942,100 (or $3.84 per share diluted) for the same period last year.

Brett D. Heffes, Chief Executive Officer, commented, “Earnings growth during the third quarter reflected a continuation of the strong operating performance of our businesses throughout the year.”

Winmark Corporation creates, supports and finances business. At September 29, 2018, there were 1,236 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 51 retail franchises have been awarded but are not open. In addition, at September 29, 2018, the Company had a lease portfolio of $44.5 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. 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 29, 2018   December 30, 2017 (1)
ASSETS
Current Assets:            
Cash and cash equivalents   $ 1,187,200   $ 1,073,200
Restricted cash     55,000     90,000
Receivables, net     1,756,900     1,796,000
Net investment in leases - current     17,568,700     15,332,300
Income tax receivable         2,161,800
Inventories     128,200     97,100
Prepaid expenses     1,075,400     901,600
Total current assets     21,771,400     21,452,000
             
Net investment in leases – long-term     26,949,600     25,945,300
Property and equipment, net     725,500     486,800
Goodwill     607,500     607,500
Other assets     440,500     350,400
    $ 50,494,500   $ 48,842,000
             
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:            
Notes payable, net   $ 3,236,100   $ 3,236,100
Accounts payable     1,445,000     2,073,000
Income tax payable     902,800    
Accrued liabilities     3,273,000     1,837,300
Discounted lease rentals     2,555,600     570,800
Deferred revenue     2,887,200     3,012,700
Total current liabilities     14,299,700     10,729,900
             
Long-Term Liabilities:            
Line of credit     10,100,000     35,400,000
Notes payable, net     26,413,900     28,841,000
Discounted lease rentals     2,364,600     1,121,600
Deferred revenue     7,387,300     7,297,500
Other liabilities     1,211,900     845,000
Deferred income taxes     425,800     320,500
Total long-term liabilities     47,903,500     73,825,600
             
Shareholders’ Equity (Deficit):            

Common stock, no par, 10,000,000 shares authorized, 3,901,202 and 3,843,078 shares issued and outstanding

    4,597,400     1,476,200
Retained earnings (accumulated deficit)     (16,306,100)     (37,189,700)
             
Total shareholders’ equity (deficit)     (11,708,700)     (35,713,500)
    $ 50,494,500   $ 48,842,000

(1) Adjusted for the adoption of ASU 2014-09 under the retrospective method.

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

                         
    Quarter Ended   Nine Months Ended
    Sept. 29, 2018   Sept. 30, 2017 (1)   Sept. 29, 2018   Sept. 30, 2017 (1)
REVENUE:                        
Royalties   $ 12,865,900   $ 12,316,700   $ 35,735,900   $ 33,865,100
Leasing income     4,608,600     3,915,800     14,994,500     13,722,000
Merchandise sales     858,400     773,100     2,340,200     2,058,500
Franchise fees     383,300     342,900     1,162,300     1,180,300
Other     402,300     382,400     1,206,400     1,145,600
Total revenue     19,118,500     17,730,900     55,439,300     51,971,500
COST OF MERCHANDISE SOLD     811,500     728,300     2,235,000     1,942,400
LEASING EXPENSE     718,500     792,000     1,769,200     2,724,000
PROVISION FOR CREDIT LOSSES     (55,600)     (13,300)     148,400     (26,200)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     6,208,800     6,184,400     19,702,500     19,165,300
Income from operations     11,435,300     10,039,500     31,584,200     28,166,000
INTEREST EXPENSE     (576,900)     (613,900)     (1,978,600)     (1,559,300)
INTEREST AND OTHER INCOME (EXPENSE)     (1,000)     28,000     (13,300)     29,900
Income before income taxes     10,857,400     9,453,600     29,592,300     26,636,600
PROVISION FOR INCOME TAXES     (2,493,100)     (3,593,000)     (7,124,600)     (9,694,500)
NET INCOME   $ 8,364,300   $ 5,860,600   $ 22,467,700   $ 16,942,100
EARNINGS PER SHARE – BASIC   $ 2.15   $ 1.46   $ 5.81   $ 4.10
EARNINGS PER SHARE – DILUTED   $ 2.01   $ 1.36   $ 5.43   $ 3.84
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC     3,886,473     4,024,692     3,864,077     4,131,269
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED     4,164,339     4,314,412     4,140,816     4,416,185

(1)Adjusted for the adoption of ASU 2014-09 under the retrospective method.

Contacts:

Brett D. Heffes
Winmark Corporation
763-520-8500

SOURCE Winmark Corporation

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