Winmark Corporation Announces Third Quarter Results
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Winmark Corporation Announces Third Quarter Results

MINNEAPOLIS - (BUSINESS WIRE) - October 16, 2019 - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 28, 2019 of $9,113,800 (or $2.24 per share diluted) compared to net income of $8,364,300 (or $2.01 per share diluted) in the third quarter of 2019. For the nine months ended September 28, 2019, net income was $23,687,900 (or $5.76 per share diluted) compared to net income of $22,467,700 (or $5.43 per share diluted) for the same period last year.

“I am pleased with the performance of our core franchising operations during the quarter. However, during 2019, the pace of new equipment purchases in our leasing business has slowed and the size of our portfolio has declined,” commented Brett D. Heffes, Chief Executive Officer. “We continue to explore ways to grow leased assets and acquire new customers.”

Winmark Corporation creates, supports and finances business. At September 28, 2019, there were 1,255 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 40 retail franchises have been awarded but are not open. In addition, at September 28, 2019, the Company had a lease portfolio of $30.0 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 28, 2019

 

December 29, 2018

ASSETS

   

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,487,200

 

 

$

2,496,000

 

Restricted cash

 

 

75,000

 

 

 

80,000

 

Receivables, net

 

 

1,594,400

 

 

 

1,553,100

 

Net investment in leases - current

 

 

14,352,800

 

 

 

18,547,500

 

Income tax receivable

 

 

391,700

 

 

 

565,500

 

Inventories

 

 

69,700

 

 

 

107,600

 

Prepaid expenses

 

 

1,012,500

 

 

 

901,600

 

Total current assets

 

 

24,983,300

 

 

 

24,251,300

 

 

 

 

 

 

 

 

 

 

Net investment in leases – long-term

 

 

15,644,900

 

 

 

20,455,500

 

Property and equipment, net

 

 

2,863,700

 

 

 

866,200

 

Operating lease right of use asset

 

 

3,734,400

 

 

 

 

Goodwill

 

 

607,500

 

 

 

607,500

 

Other assets

 

 

501,200

 

 

 

482,600

 

Deferred income taxes

 

 

172,500

 

 

 

 

 

 

$

48,507,500

 

 

$

46,663,100

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

   

Current Liabilities:

 

 

 

 

 

 

 

 

Notes payable, net

 

$

3,486,100

 

 

$

3,236,100

 

Accounts payable

 

 

1,185,300

 

 

 

1,351,800

 

Accrued liabilities

 

 

2,980,000

 

 

 

3,128,600

 

Discounted lease rentals

 

 

3,012,900

 

 

 

3,021,900

 

Deferred revenue

 

 

1,730,900

 

 

 

1,744,900

 

Total current liabilities

 

 

12,395,200

 

 

 

12,483,300

 

Long-Term Liabilities:

 

 

 

 

 

 

 

 

Notes payable, net

 

 

22,927,800

 

 

 

25,604,900

 

Discounted lease rentals

 

 

1,354,000

 

 

 

2,723,500

 

Deferred revenue

 

 

8,031,900

 

 

 

8,432,400

 

Operating lease liabilities

 

 

5,953,100

 

 

 

 

Other liabilities

 

 

971,500

 

 

 

1,079,200

 

Deferred income taxes

 

 

 

 

 

1,148,300

 

Total long-term liabilities

 

 

39,238,300

 

 

 

38,988,300

 

Shareholders’ Equity (Deficit):

 

 

 

 

 

 

 

 

Common stock, no par, 10,000,000 shares authorized, 3,822,978 and 3,907,686 shares issued and outstanding

 

 

3,851,000

 

 

 

4,425,600

 

Retained earnings (accumulated deficit)

 

 

(6,977,000

)

 

 

(9,234,100

)

Total shareholders’ equity (deficit)

 

 

(3,126,000

)

 

 

(4,808,500

)

 

 

$

48,507,500

 

 

$

46,663,100

 

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nine Months Ended

 

 

September 28, 2019

 

September 29, 2018

 

September 28, 2019

 

September 29, 2018

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

Royalties

 

$

13,808,800

 

 

$

12,865,900

 

 

$

38,223,400

 

 

$

35,735,900

 

Leasing income

 

 

4,375,500

 

 

 

4,608,600

 

 

 

12,733,800

 

 

 

14,994,500

 

Merchandise sales

 

 

704,500

 

 

 

858,400

 

 

 

2,037,300

 

 

 

2,340,200

 

Franchise fees

 

 

377,400

 

 

 

383,300

 

 

 

1,183,100

 

 

 

1,162,300

 

Other

 

 

414,700

 

 

 

402,300

 

 

 

1,238,700

 

 

 

1,206,400

 

Total revenue

 

 

19,680,900

 

 

 

19,118,500

 

 

 

55,416,300

 

 

 

55,439,300

 

COST OF MERCHANDISE SOLD

 

 

671,700

 

 

 

811,500

 

 

 

1,924,400

 

 

 

2,235,000

 

LEASING EXPENSE

 

 

572,400

 

 

 

718,500

 

 

 

1,642,000

 

 

 

1,769,200

 

PROVISION FOR CREDIT LOSSES

 

 

(55,500

)

 

 

(55,600

)

 

 

23,900

 

 

 

148,400

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

 

6,217,600

 

 

 

6,208,800

 

 

 

19,637,900

 

 

 

19,702,500

 

Income from operations

 

 

12,274,700

 

 

 

11,435,300

 

 

 

32,188,100

 

 

 

31,584,200

 

INTEREST EXPENSE

 

 

(406,200

)

 

 

(576,900

)

 

 

(1,348,700

)

 

 

(1,978,600

)

INTEREST AND OTHER INCOME (EXPENSE)

 

 

500

 

 

 

(1,000

)

 

 

(5,900

)

 

 

(13,300

)

Income before income taxes

 

 

11,869,000

 

 

 

10,857,400

 

 

 

30,833,500

 

 

 

29,592,300

 

PROVISION FOR INCOME TAXES

 

 

(2,755,200

)

 

 

(2,493,100

)

 

 

(7,145,600

)

 

 

(7,124,600

)

NET INCOME

 

$

9,113,800

 

 

$

8,364,300

 

 

$

23,687,900

 

 

$

22,467,700

 

EARNINGS PER SHARE – BASIC

 

$

2.39

 

 

$

2.15

 

 

$

6.19

 

 

$

5.81

 

EARNINGS PER SHARE – DILUTED

 

$

2.24

 

 

$

2.01

 

 

$

5.76

 

 

$

5.43

 

WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC

 

 

3,808,863

 

 

 

3,886,473

 

 

 

3,829,329

 

 

 

3,864,077

 

WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED

 

 

4,065,301

 

 

 

4,164,339

 

 

 

4,112,318

 

 

 

4,140,816

 

Contact:

Brett D. Heffes
763/520-8500

SOURCE Winmark Corporation

###

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