Winmark Corporation Announces Third Quarter Results - Winmark (NASDAQ:WINA)

Winmark Corporation WINA announced today net income for the quarter ended September 26, 2020 of $9,358,800 (or $2.43 per share diluted) compared to net income of $9,113,800 (or $2.24 per share diluted) in the third quarter of 2019. For the nine months ended September 26, 2020, net income was $21,731,000 (or $5.63 per share diluted) compared to net income of $23,687,900 (or $5.76 per share diluted) for the same period last year.

Winmark Corporation creates, supports and finances business. At September 26, 2020, there were 1,262 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 35 retail 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)

	September 26, 2020			December 28, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	8,267,400		$	25,130,300
Restricted cash		50,000			50,000
Receivables, net		1,947,600			1,669,500
Net investment in leases - current		10,514,200			12,800,100
Income tax receivable		—			497,900
Inventories		85,100			86,000
Prepaid expenses		1,158,800			968,100
Total current assets		22,023,100			41,201,900

Net investment in leases – long-term		5,090,800			12,505,500
Property and equipment, net		2,439,100			2,772,600
Operating lease right of use asset		3,301,800			3,595,200
Goodwill		607,500			607,500
Other assets		458,300			492,500
Deferred income taxes		1,918,000			667,000
	$	35,838,600		$	61,842,200

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	4,236,100		$	3,736,100
Accounts payable		1,272,700			1,015,000
Income tax payable		472,500			—
Accrued liabilities		2,478,000			2,783,100
Discounted lease rentals		1,522,500			2,680,700
Deferred revenue		1,675,200			1,717,000
Total current liabilities		11,657,000			11,931,900
Long-Term Liabilities:
Notes payable, net	$	18,691,700		$	21,868,800
Discounted lease rentals		763,000			836,900
Deferred revenue		7,270,000			7,858,500
Operating lease liabilities		5,417,500			5,846,100
Other liabilities		873,100			1,051,700
Total long-term liabilities		33,015,300			37,462,000
Shareholders' Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,735,437 and 3,947,858 shares issued and outstanding		7,717,800			11,929,300
Retained earnings (accumulated deficit)		(16,551,500	)		519,000
Total shareholders' equity (deficit)		(8,833,700	)		12,448,300
	$	35,838,600		$	61,842,200

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)


	Quarter Ended						Nine Months Ended
	September 26, 2020			September 28, 2019			September 26, 2020			September 28, 2019
Revenue:
Royalties	$	14,210,000		$	13,808,800		$	33,188,300		$	38,223,400
Leasing income		2,695,800			4,375,500			12,040,800			12,733,800
Merchandise sales		631,200			704,500			1,746,800			2,037,300
Franchise fees		335,400			377,400			1,064,900			1,183,100
Other		404,600			414,700			1,225,700			1,238,700
Total revenue		18,277,000			19,680,900			49,266,500			55,416,300
Cost of merchandise sold		598,200			671,700			1,662,000			1,924,400
Leasing expense		510,900			572,400			2,443,700			1,642,000
Provision for credit losses		(339,600	)		(55,500	)		164,300			23,900
Selling, general and administrative expenses		5,009,700			6,217,600			15,719,100			19,637,900
Income from operations		12,497,800			12,274,700			29,277,400			32,188,100
Interest expense		(345,700	)		(406,200	)		(1,409,600	)		(1,348,700	)
Interest and other income (expense)		9,200			500			27,700			(5,900	)
Income before income taxes		12,161,300			11,869,000			27,895,500			30,833,500
Provision for income taxes		(2,802,500	)		(2,755,200	)		(6,164,500	)		(7,145,600	)
Net income	$	9,358,800		$	9,113,800		$	21,731,000		$	23,687,900
Earnings per share - basic	$	2.51		$	2.39		$	5.86		$	6.19
Earnings per share - diluted	$	2.43		$	2.24		$	5.63		$	5.76
Weighted average shares outstanding - basic		3,730,490			3,808,863			3,710,112			3,829,329
Weighted average shares outstanding - diluted		3,857,702			4,065,301			3,857,754			4,112,318

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