Winmark corporation announces third quarter results
Minneapolis--(business wire)--winmark corporation (nasdaq: wina) announced today net income for the quarter ended september 25, 2021 of $10,082,500 or $2.67 per share diluted compared to net income of $9,358,800 or $2.43 per share diluted in 2020. for the nine months ended september 25, 2021, net income was $28,330,900 or $7.40 per share diluted compared to net income of $21,731,000 or $5.63 per share diluted for the same period last year. “we are pleased with the continued strength of our business and the performance of our franchisees. our sustainable business model continues to be well received by consumers in the communities we serve,” commented brett d. heffes, chairman and chief executive officer. winmark - the resale companytm, is a nationally recognized franchising business focused on sustainability and small business formation. we champion and guide entrepreneurs interested in operating one of our award winning resale franchises: plato’s closet®, once upon a child®, play it again sports®, style encore® and music go round®. at september 25, 2021, there were 1,269 franchises in operation and over 2,000 available territories. an additional 39 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 25, 2021 december 26, 2020 assets current assets: cash and cash equivalents $ 37,569,100 $ 6,659,000 restricted cash 15,000 25,000 receivables, net 1,394,900 1,581,900 net investment in leases - current 3,884,600 8,687,500 income tax receivable 188,200 221,200 inventories 408,600 106,600 prepaid expenses 958,700 995,200 total current assets 44,419,100 18,276,400 net investment in leases – long-term 1,157,000 4,573,600 property and equipment, net 2,055,800 2,332,800 operating lease right of use asset 3,059,300 3,226,300 goodwill 607,500 607,500 other assets 416,900 435,900 deferred income taxes 3,256,200 1,890,700 $ 54,971,800 $ 31,343,200 liabilities and shareholders’ equity (deficit) current liabilities: notes payable, net $ 4,232,600 $ 4,236,100 accounts payable 1,988,600 1,769,600 accrued liabilities 2,918,800 2,624,000 discounted lease rentals — 1,096,600 deferred revenue 1,643,900 1,657,400 total current liabilities 10,783,900 11,383,700 long-term liabilities: notes payable, net 44,434,500 17,632,700 discounted lease rentals — 574,000 deferred revenue 6,849,600 7,050,900 operating lease liabilities 4,946,900 5,307,400 other liabilities 759,000 773,200 total long-term liabilities 56,990,000 31,338,200 shareholders’ equity (deficit): common stock, no par, 10,000,000 shares authorized, 3,623,538 and 3,756,028 shares issued and outstanding — 9,281,800 retained earnings (accumulated deficit) (12,802,100 ) (20,660,500 ) total shareholders’ equity (deficit) (12,802,100 ) (11,378,700 ) $ 54,971,800 $ 31,343,200 winmark corporation condensed statements of operations (unaudited) quarter ended nine months ended september 25, 2021 september 26, 2020 september 25, 2021 september 26, 2020 revenue: royalties $ 16,375,900 $ 14,210,000 $ 45,141,200 $ 33,188,300 leasing income 2,266,200 2,695,800 8,351,800 12,040,800 merchandise sales 704,800 631,200 1,980,300 1,746,800 franchise fees 383,400 335,400 1,101,300 1,064,900 other 423,100 404,600 1,267,300 1,225,700 total revenue 20,153,400 18,277,000 57,841,900 49,266,500 cost of merchandise sold 681,100 598,200 1,887,700 1,662,000 leasing expense 358,900 510,900 1,410,800 2,443,700 provision for credit losses (55,900 ) (339,600 ) (167,300 ) 164,300 selling, general and administrative expenses 5,380,100 5,009,700 16,287,600 15,719,100 income from operations 13,789,200 12,497,800 38,423,100 29,277,400 interest expense (323,200 ) (345,700 ) (945,600 ) (1,409,600 ) interest and other income (expense) (18,800 ) 9,200 (7,100 ) 27,700 income before income taxes 13,447,200 12,161,300 37,470,400 27,895,500 provision for income taxes (3,364,700 ) (2,802,500 ) (9,139,500 ) (6,164,500 ) net income $ 10,082,500 $ 9,358,800 $ 28,330,900 $ 21,731,000 earnings per share - basic $ 2.77 $ 2.51 $ 7.68 $ 5.86 earnings per share - diluted $ 2.67 $ 2.43 $ 7.40 $ 5.63 weighted average shares outstanding - basic 3,635,055 3,730,490 3,688,419 3,710,112 weighted average shares outstanding - diluted 3,782,873 3,857,702 3,829,322 3,857,754 winmark corporation condensed statements of cash flows (unaudited) nine months ended september 25, 2021 september 26, 2020 operating activities: net income $ 28,330,900 $ 21,731,000 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 328,800 366,700 provision for credit losses (167,300 ) 164,300 compensation expense related to stock options 1,074,200 929,900 deferred income taxes (1,365,500 ) (1,251,000 ) loss from disposal of property and equipment — 200 deferred initial direct costs (2,100 ) (18,300 ) amortization of deferred initial direct costs 18,800 89,400 operating lease right of use asset amortization 167,000 293,400 tax benefits on exercised stock options 249,200 602,400 change in operating assets and liabilities: receivables 187,000 (278,100 ) principal collections on lease receivables 7,452,200 11,418,500 income tax receivable/payable (216,200 ) 368,000 inventories (302,000 ) 900 prepaid expenses 36,500 (190,700 ) other assets 19,000 34,200 accounts payable 219,000 257,700 accrued and other liabilities (94,100 ) (864,100 ) rents received in advance and security deposits (674,500 ) (1,252,000 ) deferred revenue (214,800 ) (630,300 ) net cash provided by operating activities 35,046,100 31,772,100 investing activities: purchase of property and equipment (51,800 ) (33,400 ) purchase of equipment for lease contracts (78,200 ) (3,128,200 ) net cash used for investing activities (130,000 ) (3,161,600 ) financing activities: proceeds from borrowings on line of credit — 46,600,000 payments on line of credit — (46,600,000 ) proceeds from borrowings on notes payable 30,000,000 — payments on notes payable (3,187,500 ) (2,687,500 ) repurchases of common stock (27,892,900 ) (48,987,500 ) proceeds from exercises of stock options 1,299,300 7,074,100 dividends paid (4,234,900 ) (2,029,500 ) proceeds from discounted lease rentals — 1,157,000 net cash used for financing activities (4,016,000 ) (45,473,400 ) net increase (decrease) in cash, cash equivalents and restricted cash 30,900,100 (16,862,900 ) cash, cash equivalents and restricted cash, beginning of period 6,684,000 25,180,300 cash, cash equivalents and restricted cash, end of period $ 37,584,100 $ 8,317,400 supplemental disclosures: cash paid for interest $ 884,100 $ 1,426,100 cash paid for income taxes $ 10,472,000 $ 6,445,200 the following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed balance sheets to the total of the same amounts shown above: nine months ended september 25, 2021 september 26, 2020 cash and cash equivalents $ 37,569,100 $ 8,267,400 restricted cash 15,000 50,000 total cash, cash equivalents and restricted cash $ 37,584,100 $ 8,317,400
