Market Overview

Winmark Corporation Announces Third Quarter Results

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Winmark Corporation (NASDAQ: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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