Winmark Corporation WINA announced today net income for the quarter ended March 31, 2018 of $6,960,400 (or $1.69 per share diluted) compared to net income of $5,550,800 (or $1.25 per share diluted) in the first quarter of 2017.
Brett D. Heffes, Chief Executive Officer, stated, "The first quarter of the year was highlighted by continued positive trends in our franchising business. Our improved operating results combined with a decrease in tax expense due to the reduction in corporate tax rates yielded exceptionally strong growth in earnings per share."
Winmark Corporation creates, supports and finances business. At March 31, 2018, there were 1,223 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 59 retail franchises have been awarded but are not open. In addition, at March 31, 2018, the Company had a lease portfolio of $41.9 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) |
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| March 31, 2018 | December 30, 2017 (1) | |||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 1,800,600 | $ | 1,073,200 | ||||||
| Restricted cash | 105,000 | 90,000 | ||||||||
| Receivables, net | 1,592,800 | 1,796,000 | ||||||||
| Net investment in leases - current | 15,597,200 | 15,332,300 | ||||||||
| Income tax receivable | — | 2,161,800 | ||||||||
| Inventories | 79,700 | 97,100 | ||||||||
| Prepaid expenses | 653,300 | 901,600 | ||||||||
| Total current assets | 19,828,600 | 21,452,000 | ||||||||
| Net investment in leases – long-term | 26,309,300 | 25,945,300 | ||||||||
| Property and equipment, net | 581,200 | 486,800 | ||||||||
| Goodwill | 607,500 | 607,500 | ||||||||
| Other assets | 398,200 | 350,400 | ||||||||
| $ | 47,724,800 | $ | 48,842,000 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||||||||||
| Current Liabilities: | ||||||||||
| Notes payable, net | $ | 3,236,100 | $ | 3,236,100 | ||||||
| Accounts payable | 2,067,600 | 2,073,000 | ||||||||
| Income tax payable | 31,100 | — | ||||||||
| Accrued liabilities | 2,101,900 | 1,837,300 | ||||||||
| Discounted lease rentals | 1,612,100 | 570,800 | ||||||||
| Deferred revenue | 3,016,900 | 3,012,700 | ||||||||
| Total current liabilities | 12,065,700 | 10,729,900 | ||||||||
| Long-Term Liabilities: | ||||||||||
| Line of credit | 24,600,000 | 35,400,000 | ||||||||
| Notes payable, net | 28,032,000 | 28,841,000 | ||||||||
| Discounted lease rentals | 2,679,700 | 1,121,600 | ||||||||
| Deferred revenue | 7,306,000 | 7,297,500 | ||||||||
| Other liabilities | 1,358,000 | 845,000 | ||||||||
| Deferred income taxes | 320,500 | 320,500 | ||||||||
| Total long-term liabilities | 64,296,200 | 73,825,600 | ||||||||
| Shareholders' Equity (Deficit): | ||||||||||
|
Common stock, no par, 10,000,000 shares authorized, 3,849,506 and 3,843,078 shares issued and outstanding |
2,015,400 | 1,476,200 | ||||||||
| Retained earnings (accumulated deficit) | (30,652,500 | ) | (37,189,700 | ) | ||||||
| Total shareholders' equity (deficit) | (28,637,100 | ) | (35,713,500 | ) | ||||||
| $ | 47,724,800 | $ | 48,842,000 | |||||||
|
(1) Adjusted for the adoption of ASU 2014-09 under the retrospective method. |
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| WINMARK CORPORATION | ||||||||||
| CONDENSED STATEMENTS OF OPERATIONS | ||||||||||
|
(Unaudited) |
||||||||||
| Three Months Ended | ||||||||||
| March 31, 2018 | April 1, 2017 (1) | |||||||||
| REVENUE: | ||||||||||
| Royalties | $ | 11,049,000 | $ | 10,454,000 | ||||||
| Leasing income | 5,528,800 | 5,859,600 | ||||||||
| Merchandise sales | 776,900 | 748,300 | ||||||||
| Franchise fees | 400,900 | 368,600 | ||||||||
| Other | 405,400 | 380,400 | ||||||||
| Total revenue | 18,161,000 | 17,810,900 | ||||||||
| COST OF MERCHANDISE SOLD | 742,500 | 715,000 | ||||||||
| LEASING EXPENSE | 554,900 | 1,271,400 | ||||||||
| PROVISION FOR CREDIT LOSSES | 95,000 | (1,400 | ) | |||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 6,694,400 | 6,512,500 | ||||||||
| Income from operations | 10,074,200 | 9,313,400 | ||||||||
| INTEREST EXPENSE | (743,800 | ) | (499,100 | ) | ||||||
| INTEREST AND OTHER INCOME (EXPENSE) | (1,000 | ) | 1,800 | |||||||
| Income before income taxes | 9,329,400 | 8,816,100 | ||||||||
| PROVISION FOR INCOME TAXES | (2,369,000 | ) | (3,265,300 | ) | ||||||
| NET INCOME | $ | 6,960,400 | $ | 5,550,800 | ||||||
| EARNINGS PER SHARE – BASIC | $ | 1.81 | $ | 1.33 | ||||||
| EARNINGS PER SHARE – DILUTED | $ | 1.69 | $ | 1.25 | ||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC | 3,847,312 | 4,167,132 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED | 4,124,573 | 4,450,495 | ||||||||
|
(1)Adjusted for the adoption of ASU 2014-09 under the retrospective method. |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20180418006064/en/
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