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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 Second Quarter Results

July 14, 2021 GMT

MINNEAPOLIS--(BUSINESS WIRE)--Jul 14, 2021--

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 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 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.

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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)

 

 

 

 

 

 

 

 

 

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

 

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20210714005721/en/

CONTACT: Brett D. Heffes

763/520-8500

KEYWORD: UNITED STATES NORTH AMERICA MINNESOTA

INDUSTRY KEYWORD: RETAIL SPECIALTY OTHER RETAIL FASHION

SOURCE: Winmark Corporation

Copyright Business Wire 2021.

PUB: 07/14/2021 11:34 AM/DISC: 07/14/2021 11:34 AM

http://www.businesswire.com/news/home/20210714005721/en