wing-202210250001636222FALSEAddisonTexas00016362222022-10-252022-10-25
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 25, 2022
WINGSTOP INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Delaware | 001-37425 | 47-3494862 |
| (State or other jurisdiction of incorporation or organization) | Commission File Number | (IRS Employer Identification No.) |
| | |
| 15505 Wright Brothers Drive | | |
Addison, Texas | | 75001 |
| (Address of principal executive offices) | | (Zip Code) |
(972) 686-6500
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | | | | | |
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| | | | | | | | |
| Securities registered pursuant to Section 12(b) of the Act: |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share | WING | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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| Item 2.02. | Results of Operations and Financial Condition |
The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.” Consequently, it shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.
On October 26, 2022, Wingstop Inc. (the “Company,” “we,” “our,” or “us”) issued a press release reporting the Company’s financial results for its fiscal third quarter ended September 24, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein in its entirety. The press release uses the following non-GAAP financial measures: EBITDA and Adjusted EBITDA, Adjusted net income and Adjusted earnings per diluted share, and Cost of sales excluding pre-opening expenses. A discussion of these financial measures, including a discussion of the usefulness and purpose of each measure, is included below.
EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measure derived in accordance with GAAP, or as alternatives to cash flows from operating activities as a measure of our liquidity.
We define “EBITDA” as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization. We define “Adjusted EBITDA” as EBITDA further adjusted for losses on debt extinguishment and refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and stock-based compensation expense. We present EBITDA and Adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations on a period-over-period basis and would ordinarily add back non-cash expenses such as depreciation and amortization, as well as items that are not part of normal day-to-day operations of our business.
Management uses EBITDA and Adjusted EBITDA:
•as a measurement of operating performance because they assist management in comparing the operating performance of our restaurants on a consistent basis, as they remove the impact of items not directly resulting from our core operations;
•for planning purposes, including the preparation of our internal annual operating budget and financial projections;
•to evaluate the performance and effectiveness of our operational strategies;
•to evaluate our capacity to fund capital expenditures and expand our business; and
•to calculate incentive compensation payments for our employees, including assessing performance under our annual incentive compensation plan and determining the vesting of performance-based equity awards.
By providing these non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. In addition, the instruments governing our indebtedness may use EBITDA (with additional adjustments) to measure our compliance with covenants. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation, or as an alternative to, or a substitute for, net income or other financial statement data presented in our consolidated financial statements as indicators of financial performance. Some of the limitations include, but are not limited to, the following:
•such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
•such measures do not reflect changes in, or cash requirements for, our working capital needs;
•such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
•such measures do not reflect our tax expense or the cash requirements to pay our taxes;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and
•other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures.
Due to these and other limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only supplementally. As noted in the press release attached hereto as Exhibit 99.1, Adjusted EBITDA includes adjustments for losses on debt extinguishment and refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and stock-based compensation expense. It is reasonable to expect that these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period-to-period, do not directly relate to the ongoing operations of our restaurants, and complicate comparisons of our internal operating results and operating results of other restaurant companies over time.
Adjusted Net Income and Adjusted Earnings Per Diluted Share. Adjusted net income represents net income adjusted for losses on debt extinguishment and refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and related tax adjustments that management believes are not indicative of the Company’s core operating results or business outlook over the long-term. However, it is reasonable to expect that these items will occur in future periods. Adjusted earnings per diluted share is defined as adjusted net income divided by weighted average diluted share count. Adjusted net income and adjusted earnings per diluted share are supplemental measures of operating performance that do not represent and should not be considered alternatives to net income and earnings per diluted share, as determined by GAAP. These measures have not been prepared in accordance with Article 11 of Regulation S-X promulgated under the Securities Act. Management believes adjusted net income and adjusted earnings per diluted share supplement GAAP measures and enable management to more effectively evaluate the Company’s performance period-over-period and relative to competitors.
Cost of Sales Excluding Pre-opening Expenses. Cost of sales excluding pre-opening expenses represents cost of sales adjusted for expenses incurred related to the opening of new company-owned restaurants, inclusive of training and real estate costs. Cost of sales excluding pre-opening expenses is a supplemental measure of operating performance that does not represent and should not be considered an alternative to Cost of sales, as determined by GAAP. This measure has not been prepared in accordance with Article 11 of Regulation S-X promulgated under the Securities Act. Management believes Cost of sales excluding pre-opening expenses supplements GAAP measures and enables management to more effectively evaluate the Company’s performance period-over-period and relative to competitors.
We caution investors that amounts presented in accordance with our definitions may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate certain non-GAAP measures in the same manner.
Quarterly Dividend
On October 25, 2022, the Company’s Board of Directors (the “Board”) declared a quarterly cash dividend of $0.19 per share of common stock. The dividend is payable on December 2, 2022 to stockholders of record as of the close of business on November 11, 2022. The declaration of any future dividends is subject to the Board’s discretion.
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| Item 9.01. | Financial Statements and Exhibits |
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| (d) | Exhibits |
| 99.1 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL Document) |
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 thereunto duly authorized. | | | | | | | | | | | | | | |
| | | | Wingstop Inc. |
| | | | |
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| Date: | October 26, 2022 | | By: | /s/ Alex R. Kaleida |
| | | | Chief Financial Officer (Principal Financial and Accounting Officer) |
FOR IMMEDIATE RELEASE
Wingstop Inc. Reports Fiscal Third Quarter Financial Results
Raises Full Year 2022 EPS Outlook and
On Track to Deliver 19th Consecutive Year of Domestic Same Store Sales Growth
Dallas, October 26, 2022 - (PR NEWSWIRE) - Wingstop Inc. (“Wingstop” or the “Company”) (NASDAQ: WING) today announced financial results for the fiscal third quarter ended September 24, 2022.
Highlights for the fiscal third quarter 2022 compared to the fiscal third quarter 2021:
▪System-wide sales increased 17.7% to $699.6 million
▪40 net new openings in the fiscal third quarter 2022
▪Domestic same store sales increased 6.9%
▪Domestic restaurant AUV of $1.6 million
▪Digital sales of 62.0% of sales
▪Total revenue increased 40.9% to $92.7 million
▪Net income increased 18.4% to $13.4 million, or $0.45 per diluted share, compared to net income of $11.3 million, or $0.38 per diluted share in the prior fiscal third quarter. Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased 57.9% to $13.6 million, or $0.45 per diluted share, compared to $8.6 million, or $0.29 per diluted share in the prior fiscal third quarter
▪Adjusted EBITDA, a non-GAAP measure, increased 32.7% to $28.4 million, compared to adjusted EBITDA of $21.4 million in the prior fiscal third quarter
Adjusted EBITDA, adjusted net income, adjusted earnings per diluted share, and cost of sales excluding pre-opening expenses are non-GAAP measures. Reconciliations of adjusted EBITDA, adjusted net income, adjusted earnings per diluted share, and cost of sales excluding pre-opening expenses to the most directly comparable financial measure presented in accordance with accounting principles generally accepted in the United States ("GAAP") are set forth in the schedule accompanying this release. See “Non-GAAP Financial Measures.”
“The third quarter results underscore the strength of our long-term growth strategies and the growth levers we have to pull as a brand. We delivered 6.9% domestic same store sales growth, with the majority of this growth driven by an increase in transactions, a demonstration of the momentum and underlying health of our business. This translates to 36.2% domestic same store sales growth on a three-year basis,” commented Michael Skipworth, President & Chief Executive Officer. “We’ve opened 167 net new restaurants through the third quarter and are on track to have a record year for restaurant development, enabled by significant bone-in wing deflation strengthening our brand partners’ unit economics. This gives us confidence in our ability to deliver another record setting year for Wingstop.”
Key operating metrics for the fiscal third quarter 2022 compared to the fiscal third quarter 2021:
| | | | | | | | | | | |
| Thirteen Weeks Ended |
| September 24, 2022 | | September 25, 2021 |
| Number of system-wide restaurants open at end of period | 1,898 | | | 1,673 | |
| Number of domestic franchise restaurants open at end of period | 1,631 | | | 1,461 | |
| Number of international franchise restaurants open at end of period | 225 | | | 180 | |
| System-wide sales (in thousands) | $ | 699,569 | | | $ | 594,300 | |
| Domestic restaurant AUV (in thousands) | $ | 1,591 | | | $ | 1,579 | |
| Domestic same store sales growth | 6.9 | % | | 3.9 | % |
| Company-owned domestic same store sales growth | 4.3 | % | | (0.2) | % |
| Net income (in thousands) | $ | 13,368 | | | $ | 11,290 | |
| Adjusted net income (in thousands) | $ | 13,550 | | | $ | 8,579 | |
| Adjusted EBITDA (in thousands) | $ | 28,394 | | | $ | 21,399 | |
Fiscal third quarter 2022 financial results
Total revenue for the fiscal third quarter 2022 increased to $92.7 million from $65.8 million in the fiscal third quarter last year. Royalty revenue, franchise fees and other increased $7.5 million due to 215 net franchise restaurant openings since September 25, 2021, as well as domestic same store sales growth of 6.9%. Advertising fees increased $16.6 million due to an increase in the national advertising fund contribution rate to 5% from 4% effective the first day of the fiscal second quarter 2022, as well as a 17.7% increase in system-wide sales in the fiscal third quarter 2022 compared to the fiscal third quarter 2021. Additionally, during the fiscal third quarter 2021, a $6.9 million non-recurring rebate of advertising surplus was returned to franchisees, reducing the revenue recognized. Company-owned restaurant sales increased $2.8 million due to an increase of $2.3 million related to the addition of nine net new company-owned restaurants compared to the prior year comparable period, as well as a 4.3% increase in company-owned same store sales, which was driven by an increase in menu prices and an increase in transactions.
Cost of sales increased to $15.7 million from $15.2 million in the fiscal third quarter of the prior year, and included $0.2 million in pre-opening expenses in the fiscal third quarters 2022 and 2021. As a percentage of company-owned restaurant sales, cost of sales (excluding pre-opening expenses) decreased to 77.2% from 86.3% in the prior year comparable period. The decrease was primarily driven by food, beverage and packaging costs benefiting from a 42.7% decrease in the cost of bone-in chicken wings as compared to the prior year period. However, this benefit was partially offset by the opening of eight restaurants in the New York City market since the prior year comparable period, which have higher rent and other operating costs.
Selling, general & administrative expense (“SG&A”) increased by $1.7 million to $16.7 million from $15.0 million in the fiscal third quarter of the prior year. The increase in SG&A expense was primarily due to an increase of $1.0 million in headcount related expenses to support the growth in our business, as well as an increase of $0.4 million in professional fees to support the Company’s strategic initiatives. These increases were partially offset by a decrease of $0.5 million in stock-based compensation expense related to stock awards forfeited during the fiscal third quarter 2022.
Interest expense, net was $5.7 million in fiscal third quarter 2022, an increase of $2.0 million compared to $3.7 million in the prior fiscal period. The increase was due to the securitized financing transaction completed on March 9, 2022, which increased our outstanding debt by $250 million.
Income tax expense was $4.7 million in fiscal third quarter 2022, yielding an effective tax rate of 25.9%, compared to an effective tax rate of 34.1% in the prior year period. The decrease in the effective tax rate was primarily due to the impact of nondeductible expenses for executive compensation during the fiscal third quarter 2021.
Financial Outlook
The Company is increasing guidance for diluted earnings per share to between $1.61 and $1.63, previously between $1.55 to $1.57. Additionally, the Company expects the following for the fiscal year ended December 31, 2022:
•Low-single digit domestic same store sales growth;
•Net system-wide restaurant openings of between 225 - 235, previously between 220 - 235
•SG&A of between $68.5 - $70.5 million, previously between $70.0 - $72.0 million;
•Stock-based compensation expense of approximately $6.0 million, previously $7.5 - 8.5 million;
•Depreciation and amortization of between $10.5 - $11.5 million; and
•Interest expense of approximately $22.5 million, previously $23.5 million.
Restaurant Development
As of September 24, 2022, there were 1,898 Wingstop restaurants system-wide. This included 1,673 restaurants in the United States, of which 1,631 were franchised restaurants and 42 were company-owned, and 225 franchised restaurants in international markets. During the fiscal third quarter 2022, there were 40 net system-wide Wingstop restaurant openings.
Quarterly Dividend
In recognition of the Company’s strong cash flow generation and our commitment to returning value to stockholders, on October 25, 2022, our board of directors approved a quarterly dividend of $0.19 per share of common stock, resulting in a total dividend of approximately $5.7 million. This dividend will be paid on December 2, 2022 to stockholders of record as of November 11, 2022.
The following definitions apply to these terms as used in this release:
Domestic average unit volume (“AUV”) consists of the average annual sales of all restaurants that have been open for a trailing 52-week period or longer. This measure is calculated by dividing sales during the applicable period for all restaurants being measured by the number of restaurants being measured. Domestic AUV includes revenue from both company-owned and franchised restaurants. Domestic AUV allows management to assess our company-owned and franchised restaurant economics. Changes in domestic AUV are primarily driven by increases in same store sales and are also influenced by opening new restaurants.
Domestic same store sales reflect the change in year-over-year sales for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for at least 52 full weeks. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and permanent closures.
System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees.
Adjusted EBITDA is defined as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization (EBITDA) further adjusted for losses on debt extinguishment and refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and stock-based compensation expense.
Adjusted net income is defined as net income adjusted for losses on debt extinguishment and refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and related tax adjustments.
Adjusted net income per diluted share is defined as adjusted net income divided by weighted average diluted share count.
We caution investors that amounts presented in accordance with our definitions above may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate certain non-GAAP measurements in the same manner.
Conference Call and Webcast
The Company will host a conference call today to discuss the fiscal third quarter 2022 financial results at 10:00 AM Eastern Time. The conference call can be accessed live by dialing 1-877-259-5243 or 1-412-317-5176 (international) and asking for the Wingstop conference call. A replay will be available two hours after the call and can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 (international), then entering the replay code 8871945. The replay will be available through Wednesday, November 2, 2022.
The conference call will also be webcast live and later archived on the investor relations section of Wingstop’s corporate website at ir.wingstop.com under the ‘News & Events’ section.
About Wingstop
Founded in 1994 and headquartered in Dallas, TX, Wingstop Inc. (NASDAQ: WING) operates and franchises 1,900 locations worldwide. The Wing Experts are dedicated to Serving the World Flavor through an unparalleled guest experience and use of a best-in-class technology platform, all while offering classic and boneless wings, tenders, and chicken sandwiches, always cooked to order and hand sauced-and-tossed in fans' choice of 11 bold, distinctive flavors. Wingstop's menu also features signature sides including fresh-cut, seasoned fries and freshly-made ranch and bleu cheese dips.
In fiscal year 2021, Wingstop’s system-wide sales increased 20.2% year-over-year to approximately $2.3 billion, marking the 18th consecutive year of same store sales growth. With a vision of becoming a Top 10 Global Restaurant Brand, our system is comprised of independent franchisees, or brand partners, who account for approximately 98% of Wingstop’s total restaurant count of 1,898 as of September 24, 2022.
A key to this business success and consumer fandom stems from The Wingstop Way, which includes a core value system of being Authentic, Entrepreneurial, Service-minded, and Fun. The Wingstop Way extends to the brand's environmental, social and governance platform as Wingstop seeks to provide value to all stakeholders.
Rounding out a strong year in 2021, the Company was ranked #1 on Technomic 500's "Fastest Growing Franchise" and #22 on Entrepreneur Magazine's "Franchise 500," maintained its certification as a Great Place to Work and named to Fast Company's "The World's Most Innovative Companies" list ranking #4 in the dining category.
For more information visit www.wingstop.com or www.wingstop.com/own-a-wingstop and follow @Wingstop on Twitter, Instagram, Facebook, and TikTok. Learn more about Wingstop's involvement in its local communities at www.wingstopcharities.org.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP financial measures, including those indicated above. By providing non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. These measures are not intended to be considered in isolation or as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. The non-GAAP measures used in this press release may be different from the measures used by other companies. A reconciliation of each measure to the most directly comparable GAAP measure is available in this news release. In
addition, the Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release includes a more detailed description of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.
Forward-looking Statements
This news release includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, trends, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “may,” “will,” “should,” “expect,” “intend,” “plan,” “outlook,” “guidance,” “anticipate,” “believe,” “think,” “estimate,” “seek,” “predict,” “on track,” “could,” “project,” “potential” or, in each case, their negative or other variations or comparable terminology, although not all forward-looking statements are accompanied by such terms. Examples of forward-looking statements in this news release include, but are not limited to, our 2022 fiscal year outlook for domestic same store sales growth, the cost of chicken, SG&A expenses, stock-based compensation expense, depreciation and amortization, interest expense, diluted earnings per share, and unit growth. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks, and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements. Please refer to the risk factors discussed in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which can be found at the SEC’s website www.sec.gov. The discussion of these risks is specifically incorporated by reference into this news release.
When considering forward-looking statements in this news release or that we make in other reports or statements, you should keep in mind the cautionary statements in this news release and future reports we file with the SEC. New risks and uncertainties arise from time to time, and we cannot predict when they may arise or how they may affect us. Any forward-looking statement in this news release speaks only as of the date on which it was made. Except as required by law, we assume no obligation to update or revise any forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
Media Contact
Megan Sprague
972-331-9155
Media@wingstop.com
Investor Contact
Susana Arevalo
972-331-8484
IR@wingstop.com
WINGSTOP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(amounts in thousands, except share and per share data) | | | | | | | | | | | |
| September 24,
2022 | | December 25,
2021 |
| (Unaudited) | | |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents | $ | 173,511 | | | $ | 48,583 | |
| Restricted cash | 13,182 | | | 3,448 | |
| Accounts receivable, net | 8,829 | | | 6,993 | |
| Prepaid expenses and other current assets | 5,752 | | | 4,928 | |
| Advertising fund assets, restricted | 21,817 | | | 6,197 | |
| Total current assets | 223,091 | | | 70,149 | |
| Property and equipment, net | 63,236 | | | 54,503 | |
| Goodwill | 58,570 | | | 56,877 | |
| Trademarks | 32,700 | | | 32,700 | |
| Customer relationships, net | 9,339 | | | 10,302 | |
| Other non-current assets | 24,100 | | | 24,672 | |
| Total assets | $ | 411,036 | | | $ | 249,203 | |
| Liabilities and stockholders' deficit | | | |
| Current liabilities | | | |
| Accounts payable | $ | 3,497 | | | $ | 5,414 | |
| Other current liabilities | 28,041 | | | 28,070 | |
| Current portion of debt | 7,300 | | | — | |
| Advertising fund liabilities | 21,817 | | | 6,197 | |
| Total current liabilities | 60,655 | | | 39,681 | |
| Long-term debt, net | 708,176 | | | 469,394 | |
| Deferred revenues, net of current | 26,942 | | | 28,024 | |
| Deferred income tax liabilities, net | 6,757 | | | 7,432 | |
| Other non-current liabilities | 15,102 | | | 14,197 | |
| Total liabilities | 817,632 | | | 558,728 | |
| Commitments and contingencies | | | |
| Stockholders' deficit | | | |
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,916,183 and 29,837,454 shares issued and outstanding as of September 24, 2022 and December 25, 2021, respectively | 299 | | | 299 | |
| Additional paid-in-capital | 991 | | | 463 | |
| Retained deficit | (406,902) | | | (310,031) | |
| Accumulated other comprehensive loss | (984) | | | (256) | |
| Total stockholders' deficit | (406,596) | | | (309,525) | |
| Total liabilities and stockholders' deficit | $ | 411,036 | | | $ | 249,203 | |
WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(amounts in thousands, except per share data)
| | | | | | | | | | | | | | | |
| Thirteen Weeks Ended | | |
| September 24,
2022 | | September 25,
2021 | | | | |
| (Unaudited) | | (Unaudited) | | | | |
| Revenue: | | | | | | | |
| Royalty revenue, franchise fees and other | $ | 40,363 | | | $ | 32,829 | | | | | |
| Advertising fees | 32,146 | | | 15,575 | | | | | |
| Company-owned restaurant sales | 20,163 | | | 17,380 | | | | | |
| Total revenue | 92,672 | | | 65,784 | | | | | |
| Costs and expenses: | | | | | | | |
Cost of sales (1) | 15,724 | | | 15,206 | | | | | |
| Advertising expenses | 33,106 | | | 16,232 | | | | | |
| Selling, general and administrative | 16,686 | | | 15,020 | | | | | |
| Depreciation and amortization | 2,836 | | | 2,061 | | | | | |
| Loss (gain) on disposal of assets | 239 | | | (3,567) | | | | | |
| Total costs and expenses | 68,591 | | | 44,952 | | | | | |
| Operating income | 24,081 | | | 20,832 | | | | | |
| Interest expense, net | 5,742 | | | 3,724 | | | | | |
| | | | | | | |
| Other expense (income) | 290 | | | (22) | | | | | |
| Income before income tax expense | 18,049 | | | 17,130 | | | | | |
| Income tax expense | 4,681 | | | 5,840 | | | | | |
| Net income | $ | 13,368 | | | $ | 11,290 | | | | | |
| | | | | | | |
| Earnings per share | | | | | | | |
| Basic | $ | 0.45 | | | $ | 0.38 | | | | | |
| Diluted | $ | 0.45 | | | $ | 0.38 | | | | | |
| | | | | | | |
| Weighted average shares outstanding | | | | | | | |
| Basic | 29,915 | | | 29,799 | | | | | |
| Diluted | 29,967 | | | 29,963 | | | | | |
| | | | | | | |
| Dividends per share | $ | 0.19 | | | $ | 0.17 | | | | | |
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(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately.
WINGSTOP INC. AND SUBSIDIARIES
Unaudited Supplemental Information
Cost of Sales Margin Analysis
(amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen Weeks Ended |
| September 24, 2022 | | September 25, 2021 |
| In dollars | | As a % of company-owned restaurant sales | | In dollars | | As a % of company-owned restaurant sales |
| Cost of sales: | | | | | | | |
| Food, beverage and packaging costs | 7,504 | | | 37.2 | % | | 8,353 | | | 48.1 | % |
| Labor costs | 4,652 | | | 23.1 | % | | 4,269 | | | 24.6 | % |
| Other restaurant operating expenses | 3,842 | | | 19.1 | % | | 2,781 | | | 16.0 | % |
| Vendor rebates | (441) | | | (2.2) | % | | (396) | | | (2.3) | % |
| Cost of sales (excluding pre-opening expenses) | 15,557 | | | 77.2 | % | | 15,007 | | | 86.3 | % |
| Pre-opening expenses | 167 | | | 0.8 | % | | 199 | | | 1.1 | % |
| Total cost of sales | 15,724 | | | 78.0 | % | | 15,206 | | | 87.5 | % |
WINGSTOP INC. AND SUBSIDIARIES
Unaudited Supplemental Information
Restaurant Count
| | | | | | | | | | | | | | | |
| Thirteen Weeks Ended | | |
| September 24,
2022 | | September 25,
2021 | | | | |
| Domestic Franchised Activity: | | | | | | | |
| Beginning of period | 1,600 | | | 1,415 | | | | | |
| Openings | 32 | | | 44 | | | | | |
| Closures | — | | | (1) | | | | | |
| Acquired by Company | (1) | | | (3) | | | | | |
| Re-franchised by Company | — | | | 6 | | | | | |
| Restaurants end of period | 1,631 | | | 1,461 | | | | | |
| | | | | | | |
| Domestic Company-Owned Activity: | | | | | | | |
| Beginning of period | 39 | | | 34 | | | | | |
| Openings | 2 | | | 1 | | | | | |
| Closures | — | | | — | | | | | |
| Acquired by Company | 1 | | | 3 | | | | | |
| Re-franchised to franchisees | — | | | (6) | | | | | |
| Restaurants end of period | 42 | | | 32 | | | | | |
| | | | | | | |
| Total Domestic Restaurants | 1,673 | | | 1,493 | | | | | |
| | | | | | | |
| International Franchised Activity: | | | | | | | |
| Beginning of period | 219 | | | 175 | | | | | |
| Openings | 9 | | | 10 | | | | | |
| Closures | (3) | | | (5) | | | | | |
| | | | | | | |
| Restaurants end of period | 225 | | | 180 | | | | | |
| | | | | | | |
| Total System-wide Restaurants | 1,898 | | | 1,673 | | | | | |
WINGSTOP INC. AND SUBSIDIARIES
Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA
(Unaudited)
(amounts in thousands)
| | | | | | | | | | | | | | | |
| Thirteen Weeks Ended | | |
| September 24,
2022 | | September 25,
2021 | | | | |
| Net income | $ | 13,368 | | | $ | 11,290 | | | | | |
| Interest expense, net | 5,742 | | | 3,724 | | | | | |
| Income tax expense | 4,681 | | | 5,840 | | | | | |
| Depreciation and amortization | 2,836 | | | 2,061 | | | | | |
| EBITDA | $ | 26,627 | | | $ | 22,915 | | | | | |
| Additional adjustments: | | | | | | | |
| | | | | | | |
Loss (gain) on disposal of assets (a) | 239 | | | (3,567) | | | | | |
| | | | | | | |
Stock-based compensation expense, net of forfeitures (b) | 1,528 | | | 2,051 | | | | | |
| Adjusted EBITDA | $ | 28,394 | | | $ | 21,399 | | | | | |
(a) Represents a loss (gain) resulting from the sale of assets to a franchisee. This loss (gain) is included in Loss (gain) on disposal of assets in the Consolidated Statements of Operations.
(b) Includes non-cash, stock-based compensation, net of forfeitures.
WINGSTOP INC. AND SUBSIDIARIES
Non-GAAP Financial Measures - Adjusted Net Income and Adjusted EPS
(Unaudited)
(amounts in thousands, except per share data)
| | | | | | | | | | | | | | | |
| Thirteen Weeks Ended | | |
| September 24,
2022 | | September 25,
2021 | | | | |
| Numerator: | | | | | | | |
| Net income | $ | 13,368 | | | $ | 11,290 | | | | | |
| Adjustments: | | | | | | | |
| | | | | | | |
Loss (gain) on disposal of assets (a) | 239 | | | (3,567) | | | | | |
| | | | | | | |
Tax effect of adjustments (b) | (57) | | | 856 | | | | | |
| Adjusted net income | $ | 13,550 | | | $ | 8,579 | | | | | |
| | | | | | | |
| Denominator: | | | | | | | |
| Weighted-average shares outstanding - diluted | 29,967 | | | 29,963 | | | | | |
| | | | | | | |
| Adjusted earnings per diluted share | $ | 0.45 | | | $ | 0.29 | | | | | |
(a) Represents a loss (gain) resulting from the sale of assets to a franchisee. This loss (gain) is included in Loss (gain) on disposal of assets in the Consolidated Statements of Operations.
(b) Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax rate of 24% for the thirteen and thirty-nine weeks ended September 24, 2022, which includes provisions for U.S. federal income taxes, and assumes the respective statutory rates for applicable state and local jurisdictions.