WINA 8-K
Winmark Corp (WINA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02Results of Operations and Financial Condition
On April 19, 2023, Winmark Corporation (the “Company”) announced in a press release its results of operations and financial condition for the first quarter April 1, 2023. A copy of the press release is attached as Exhibit 99.1 of this Current Report on Form 8-K.
Item 7.01Regulation FD Disclosure
On April 19, 2023, the Company announced in a press release its results of operations and financial condition for the first quarter ended April 1, 2023. A copy of the press release is attached as Exhibit 99.1 of this Current Report on Form 8-K.
On April 19, 2023, the Company also announced in a press release that its Board of Directors has approved the payment of a cash dividend to its shareholders. The quarterly dividend of $0.80 per share will be paid on June 1, 2023 to shareholders of record on the close of business on May 17, 2023. Future dividends will be subject to Board approval. A copy of the press release is attached as Exhibit 99.2 of this Current Report of Form 8-K.
Item 8.01Other Events
On April 19, 2023 the Company announced in a press release that its Board of Directors approved the payment of a cash dividend to its shareholders. The quarterly dividend of $0.80 per share will be paid on June 1, 2023 to shareholders of record on the close of business on May 17, 2023. Future dividends will be subject to Board approval. A copy of the press release is attached as Exhibit 99.2 of this Current Report on Form 8-K.
Item 9.01Financial Statements and Exhibits
(d)Exhibits
99.1 | First Quarter Results Press Release dated April 19, 2023 | |
99.2 | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL Document and incorporated as Exhibit 101) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WINMARK CORPORATION | ||
Date: April 19, 2023 | By: | /s/ Anthony D. Ishaug |
Anthony D. Ishaug | ||
Chief Financial Officer and Treasurer | ||
Exhibit 99.1
Contact:Anthony D. Ishaug
763/520-8500
FOR IMMEDIATE RELEASE
WINMARK CORPORATION ANNOUNCES
FIRST QUARTER RESULTS
Minneapolis, MN (April 19, 2023) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended April 1, 2023 of $8,942,700 or $2.49 per share diluted compared to net income of $9,852,500 or $2.65 per share diluted in 2022. Results during the quarter were impacted by the Company’s decision in May 2021 to run-off its leasing portfolio.
“2023 is off to a good start,” commented Brett D. Heffes, Chairman and Chief Executive Officer.
Winmark - the Resale Company®, 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 April 1, 2023, there were 1,297 franchises in operation and over 2,800 available territories. An additional 70 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)
|
| April 1, 2023 |
| December 31, 2022 | ||
ASSETS | ||||||
Current Assets: | | |
| | | |
Cash and cash equivalents | | $ | 24,551,600 | | $ | 13,615,600 |
Restricted cash | | | 80,000 | | | 65,000 |
Receivables, net | | | 1,581,800 | | | 1,438,600 |
Net investment in leases - current | | | 125,300 | | | 344,900 |
Income tax receivable | | | — | | | 558,700 |
Inventories | | | 414,300 | | | 770,600 |
Prepaid expenses | | | 888,000 | | | 1,310,400 |
Total current assets | | | 27,641,000 | | | 18,103,800 |
| | | | | | |
Net investment in leases – long-term | | | — | | | 5,400 |
Property and equipment, net | | | 1,606,100 | | | 1,704,600 |
Operating lease right of use asset | | | 2,649,100 | | | 2,716,000 |
Intangible assets, net | | | 3,259,800 | | | 3,348,300 |
Goodwill | | | 607,500 | | | 607,500 |
Other assets | | | 470,100 | | | 429,700 |
Deferred income taxes | | | 3,516,200 | | | 3,540,400 |
| | $ | 39,749,800 | | $ | 30,455,700 |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||
Current Liabilities: | | | | | | |
Notes payable, net | | $ | 4,217,900 | | $ | 4,217,900 |
Accounts payable | | | 1,443,700 | | | 2,122,000 |
Income tax payable | | | 2,009,900 | | | — |
Accrued liabilities | | | 3,884,600 | | | 2,611,700 |
Deferred revenue | | | 1,673,700 | | | 1,643,900 |
Total current liabilities | | | 13,229,800 | | | 10,595,500 |
Long-Term Liabilities: | | | | | | |
Line of Credit/Term Loan | | | 30,000,000 | | | 30,000,000 |
Notes payable, net | | | 38,012,200 | | | 39,066,700 |
Deferred revenue | | | 7,242,100 | | | 6,974,200 |
Operating lease liabilities | | | 4,151,100 | | | 4,287,000 |
Other liabilities | | | 1,159,600 | | | 1,164,400 |
Total long-term liabilities | | | 80,565,000 | | | 81,492,300 |
Shareholders’ Equity (Deficit): | | | | | | |
Common stock, no par, 10,000,000 shares authorized, | | | 2,873,000 | | | 1,806,700 |
Retained earnings (accumulated deficit) | | | (56,918,000) | | | (63,438,800) |
Total shareholders’ equity (deficit) | | | (54,045,000) | | | (61,632,100) |
| | $ | 39,749,800 | | $ | 30,455,700 |
2
Winmark Corporation
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| | Three Months Ended | | | ||||
| | April 1, 2023 | | March 26, 2022 | | | ||
Revenue: |
| | |
| | |
|
|
Royalties | | $ | 16,747,700 | | $ | 15,390,100 | | |
Leasing income | | | 1,637,000 | | | 2,871,700 | | |
Merchandise sales | | | 1,276,000 | | | 914,300 | | |
Franchise fees | | | 378,200 | | | 420,600 | | |
Other | | | 484,700 | | | 453,100 | | |
Total revenue | | | 20,523,600 | | | 20,049,800 | | |
Cost of merchandise sold | | | 1,187,300 | | | 864,500 | | |
Leasing expense | | | 316,400 | | | 216,000 | | |
Provision for credit losses | | | (4,600) | | | (8,900) | | |
Selling, general and administrative expenses | | | 6,636,100 | | | 5,540,000 | | |
Income from operations | | | 12,388,400 | | | 13,438,200 | | |
Interest expense | | | (797,600) | | | (513,100) | | |
Interest and other income (expense) | | | 125,700 | | | (900) | | |
Income before income taxes | | | 11,716,500 | | | 12,924,200 | | |
Provision for income taxes | | | (2,773,800) | | | (3,071,700) | | |
Net income | | $ | 8,942,700 | | $ | 9,852,500 | | |
Earnings per share - basic | | $ | 2.58 | | $ | 2.74 | | |
Earnings per share - diluted | | $ | 2.49 | | $ | 2.65 | | |
Weighted average shares outstanding - basic | | | 3,460,720 | | | 3,597,926 | | |
Weighted average shares outstanding - diluted | | | 3,594,234 | | | 3,716,322 | | |
3
Winmark Corporation
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Three Months Ended | | ||||
|
| April 1, 2023 |
| March 26, 2022 |
| ||
OPERATING ACTIVITIES: | | | | | | | |
Net income | | $ | 8,942,700 | | $ | 9,852,500 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | |
| 192,500 | |
| 102,500 | |
Provision for credit losses | |
| (4,600) | |
| (8,900) | |
Compensation expense related to stock options | |
| 475,900 | |
| 421,600 | |
Deferred income taxes | |
| 24,200 | |
| (113,200) | |
Operating lease right of use asset amortization | | | 66,900 | | | 60,300 | |
Tax benefits on exercised stock options | |
| 77,700 | |
| 95,300 | |
Change in operating assets and liabilities: | | | | | | | |
Receivables | |
| (143,200) | |
| (369,900) | |
Principal collections on lease receivables | | | 423,800 | | | 530,500 | |
Income tax receivable/payable | |
| 2,490,900 | |
| 2,946,500 | |
Inventories | |
| 356,300 | |
| (167,100) | |
Prepaid expenses | |
| 422,400 | |
| 23,500 | |
Other assets | | | (40,400) | | | (10,400) | |
Accounts payable | |
| (678,300) | |
| (203,000) | |
Accrued and other liabilities | |
| 1,140,200 | |
| 390,500 | |
Rents received in advance and security deposits | |
| (194,200) | |
| (159,700) | |
Deferred revenue | |
| 297,700 | |
| (43,100) | |
Net cash provided by operating activities | |
| 13,850,500 | |
| 13,347,900 | |
INVESTING ACTIVITIES: | | | | | | | |
Purchase of property and equipment | |
| (5,500) | |
| (21,500) | |
Net cash used for investing activities | |
| (5,500) | |
| (21,500) | |
FINANCING ACTIVITIES: | | | | | | | |
Proceeds from borrowings on line of credit/term loan | |
| — | |
| 15,600,000 | |
Payments on line of credit/term loan | |
| — | |
| (2,000,000) | |
Payments on notes payable | | | (1,062,500) | | | (1,062,500) | |
Repurchases of common stock | |
| — | |
| (36,591,400) | |
Proceeds from exercises of stock options | |
| 590,400 | |
| 1,258,300 | |
Dividends paid | |
| (2,421,900) | |
| (1,625,300) | |
Net cash used for financing activities | |
| (2,894,000) | |
| (24,420,900) | |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |
| 10,951,000 | |
| (11,094,500) | |
Cash, cash equivalents and restricted cash, beginning of period | |
| 13,680,600 | |
| 11,437,000 | |
Cash, cash equivalents and restricted cash, end of period | | $ | 24,631,600 | | $ | 342,500 | |
SUPPLEMENTAL DISCLOSURES: | | | | | | | |
Cash paid for interest | | $ | 791,500 | | $ | 490,500 | |
Cash paid for income taxes | | $ | 181,200 | | $ | 143,100 | |
| | | | | | | |
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: | |||||||
| | Three Months Ended | | ||||
|
| April 1, 2023 |
| March 26, 2022 |
| ||
Cash and cash equivalents | | $ | 24,551,600 | | $ | 287,500 | |
Restricted cash | |
| 80,000 | |
| 55,000 | |
Total cash, cash equivalents and restricted cash | | $ | 24,631,600 | | $ | 342,500 | |
4
Exhibit 99.2
Contact:Anthony D. Ishaug
763/520-8500
FOR IMMEDIATE RELEASE
WINMARK CORPORATION
ANNOUNCES INCREASE IN CASH DIVIDEND
Minneapolis, MN (April 19, 2023) - Winmark Corporation (Nasdaq: WINA) announced today that its Board of Directors has approved an increase in its regular quarterly cash dividend to shareholders. The quarterly dividend of $0.80 per share represents an increase of $0.10 from its previous dividend rate. The cash dividend will be paid June 1, 2023 to shareholders of record on the close of business on May 17, 2023. Future dividends will be subject to Board approval.
Winmark - the Resale Company®, 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 April 1, 2023, there were 1,297 franchises in operation and over 2,800 available territories. An additional 70 franchises have been awarded but are not open.