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Press release content from Business Wire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Business Wire
Press release content from Business Wire. The AP news staff was not involved in its creation.

Winmark Corporation Announces Third Quarter Results

October 13, 2021 GMT

MINNEAPOLIS--(BUSINESS WIRE)--Oct 13, 2021--

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 Company TM, 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.

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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.

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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

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20211013005878/en/

CONTACT: Brett D. Heffes

763/520-8500

KEYWORD: MINNESOTA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: RETAIL SPECIALTY OTHER RETAIL FASHION

SOURCE: Winmark Corporation

Copyright Business Wire 2021.

PUB: 10/13/2021 11:38 AM/DISC: 10/13/2021 11:38 AM

http://www.businesswire.com/news/home/20211013005878/en