Winmark corporation announces second quarter results
Minneapolis--(business wire)--winmark corporation (nasdaq: wina) announced today net income for the quarter ended june 26, 2021 of $8,937,300 or $2.33 per share diluted compared to net income of $5,055,200 or $1.33 per share diluted in 2020. for the six months ended june 26, 2021, net income was $18,248,400 or $4.74 per share diluted compared to net income of $12,372,200 or $3.21 per share diluted for the same period last year. “our business model is thriving in the current retail environment,” 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 june 26, 2021, there were 1,266 franchises in operation and over 2,000 available territories. an additional 36 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) june 26, 2021 december 26, 2020 assets current assets: cash and cash equivalents $ 7,223,300 $ 6,659,000 restricted cash 25,000 25,000 receivables, net 1,176,300 1,581,900 net investment in leases - current 6,005,300 8,687,500 income tax receivable 695,200 221,200 inventories 329,400 106,600 prepaid expenses 687,200 995,200 total current assets 16,141,700 18,276,400 net investment in leases – long-term 1,779,400 4,573,600 property and equipment, net 2,158,200 2,332,800 operating lease right of use asset 3,116,400 3,226,300 goodwill 607,500 607,500 other assets 418,100 435,900 deferred income taxes 2,798,100 1,890,700 $ 27,019,400 $ 31,343,200 liabilities and shareholders’ equity (deficit) current liabilities: notes payable, net $ 4,236,100 $ 4,236,100 accounts payable 1,458,000 1,769,600 accrued liabilities 3,102,600 2,624,000 discounted lease rentals 816,200 1,096,600 deferred revenue 1,650,200 1,657,400 total current liabilities 11,263,100 11,383,700 long-term liabilities: notes payable, net 15,514,600 17,632,700 discounted lease rentals 217,200 574,000 deferred revenue 6,937,800 7,050,900 operating lease liabilities 5,063,500 5,307,400 other liabilities 763,700 773,200 total long-term liabilities 28,496,800 31,338,200 shareholders’ equity (deficit): common stock, no par, 10,000,000 shares authorized, 3,668,019 and 3,756,028 shares issued and outstanding — 9,281,800 retained earnings (accumulated deficit) (12,740,500 ) (20,660,500 ) total shareholders’ equity (deficit) (12,740,500 ) (11,378,700 ) $ 27,019,400 $ 31,343,200 winmark corporation condensed statements of operations (unaudited) quarter ended six months ended june 26, 2021 june 27, 2020 june 26, 2021 june 27, 2020 revenue: royalties $ 14,716,500 $ 7,805,800 $ 28,765,300 $ 18,978,300 leasing income 2,848,600 3,473,800 6,085,600 9,345,000 merchandise sales 683,100 361,500 1,275,500 1,115,600 franchise fees 358,900 342,100 717,900 729,500 other 422,500 406,300 844,200 821,100 total revenue 19,029,600 12,389,500 37,688,500 30,989,500 cost of merchandise sold 647,800 346,100 1,206,600 1,063,800 leasing expense 662,400 516,600 1,051,900 1,932,800 provision for credit losses (62,700 ) (111,500 ) (111,400 ) 503,900 selling, general and administrative expenses 5,805,200 4,960,500 10,907,500 10,709,400 income from operations 11,976,900 6,677,800 24,633,900 16,779,600 interest expense (304,300 ) (538,700 ) (622,400 ) (1,063,900 ) interest and other income 4,900 12,600 11,700 18,500 income before income taxes 11,677,500 6,151,700 24,023,200 15,734,200 provision for income taxes (2,740,200 ) (1,096,500 ) (5,774,800 ) (3,362,000 ) net income $ 8,937,300 $ 5,055,200 $ 18,248,400 $ 12,372,200 earnings per share - basic $ 2.42 $ 1.37 $ 4.91 $ 3.34 earnings per share - diluted $ 2.33 $ 1.33 $ 4.74 $ 3.21 weighted average shares outstanding - basic 3,693,503 3,688,248 3,715,088 3,699,923 weighted average shares outstanding - diluted 3,830,844 3,803,807 3,852,534 3,857,779 winmark corporation condensed statements of cash flows (unaudited) six months ended june 26, 2021 june 27, 2020 operating activities: net income $ 18,248,400 $ 12,372,200 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 223,200 246,000 provision for credit losses (111,400 ) 503,900 compensation expense related to stock options 698,100 538,000 deferred income taxes (907,400 ) (839,900 ) loss from disposal of property and equipment — 200 deferred initial direct costs (2,100 ) (14,500 ) amortization of deferred initial direct costs 16,400 66,400 operating lease right of use asset amortization 109,900 242,100 tax benefits on exercised stock options 248,900 477,900 change in operating assets and liabilities: receivables 405,600 (224,300 ) principal collections on lease receivables 5,332,200 7,995,000 income tax receivable/payable (722,900 ) 3,300,800 inventories (222,800 ) 2,200 prepaid expenses 308,000 1,200 other assets 17,800 17,200 accounts payable (311,600 ) 816,600 accrued and other liabilities 232,100 (701,600 ) rents received in advance and security deposits (317,700 ) (1,145,100 ) deferred revenue (120,300 ) (412,100 ) net cash provided by operating activities 23,124,400 23,242,200 investing activities: purchase of property and equipment (48,600 ) (33,700 ) purchase of equipment for lease contracts (78,200 ) (2,658,200 ) net cash used for investing activities (126,800 ) (2,691,900 ) financing activities: proceeds from borrowings on line of credit — 45,700,000 payments on line of credit — (45,700,000 ) payments on notes payable (2,125,000 ) (1,625,000 ) repurchases of common stock (18,918,200 ) (48,987,500 ) proceeds from exercises of stock options 1,210,300 6,159,500 dividends paid (2,600,400 ) (1,096,700 ) proceeds from discounted lease rentals — 1,157,000 net cash used for financing activities (22,433,300 ) (44,392,700 ) net increase (decrease) in cash, cash equivalents and restricted cash 564,300 (23,842,400 ) cash, cash equivalents and restricted cash, beginning of period 6,684,000 25,180,300 cash, cash equivalents and restricted cash, end of period $ 7,248,300 $ 1,337,900 supplemental disclosures: cash paid for interest $ 603,700 $ 1,067,000 cash paid for income taxes $ 7,156,200 $ 423,300 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: six months ended june 26, 2021 june 27, 2020 cash and cash equivalents $ 7,223,300 $ 1,287,900 restricted cash 25,000 50,000 total cash, cash equivalents and restricted cash $ 7,248,300 $ 1,337,900
