Winmark Corporation Announces First Quarter Results

MINNEAPOLIS--()--Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended April 1, 2017 of $5,416,400 (or $1.22 per share diluted) compared to net income of $4,562,900 (or $1.06 per share diluted) in the first quarter of 2016.

“Earlier this year, we announced our initiative to partner with emerging franchisors and entrepreneurs who can benefit from Winmark’s experience in establishing, growing and managing successful businesses. We have made meaningful progress on this front, and believe that Winmark Franchise Partners will provide us with opportunities for additional growth.”

Earnings growth during the first quarter was driven by an increase in customer activity within the Company’s lease portfolio and moderate royalty growth in the franchise business. Brett D. Heffes, Chief Executive Officer, stated “Earlier this year, we announced our initiative to partner with emerging franchisors and entrepreneurs who can benefit from Winmark’s experience in establishing, growing and managing successful businesses. We have made meaningful progress on this front, and believe that Winmark Franchise Partners will provide us with opportunities for additional growth.”

Winmark Corporation creates, supports and finances business. At April 1, 2017, there were 1,184 franchises in operation under the brands Plato's Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. An additional 70 retail franchises have been awarded but are not open. In addition, at April 1, 2017, the Company had a lease portfolio of $41.7 million.

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, 2017     December 31, 2016
ASSETS
Current Assets:
Cash and cash equivalents $ 1,723,400 $ 1,252,900
Marketable securities 207,500 199,900
Receivables, net 1,513,400 1,479,200
Restricted cash 30,000 40,000
Net investment in leases - current 16,411,900 17,004,800
Income tax receivable - 1,678,800
Inventories 106,200 87,500
Prepaid expenses   809,400     1,050,700  
Total current assets 20,801,800 22,793,800
 
Net investment in leases – long-term 25,303,700 24,410,700
Property and equipment, net 683,000 769,600
Goodwill   607,500     607,500  
$ 47,396,000   $ 48,581,600  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net $ 1,990,000 $ 1,990,000
Accounts payable 1,249,800 1,692,000
Income tax payable 1,407,600 -
Accrued liabilities 1,797,100 1,811,100
Deferred revenue   1,912,700     1,864,700  
Total current liabilities 8,357,200 7,357,800
 
Long-Term Liabilities:
Line of credit 16,200,000 23,400,000
Notes payable, net 19,429,000 19,926,500
Deferred revenue 1,422,100 1,423,800
Other liabilities 937,500 993,600
Deferred income taxes   3,331,900     3,331,900  
Total long-term liabilities 41,320,500 49,075,800
 
Shareholders’ Equity (Deficit):

Common stock, no par, 10,000,000 shares authorized, 4,169,769 and 4,165,769 shares issued and outstanding

3,541,700

2,976,100

Accumulated other comprehensive loss (5,100 ) (9,900 )
Retained earnings (accumulated deficit)   (5,818,300 )   (10,818,200 )
 
Total shareholders’ equity (deficit)   (2,281,700 )   (7,852,000 )
$ 47,396,000   $ 48,581,600  
 
   

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)

 
Three Months Ended
April 1, 2017     March 26, 2016
REVENUE:    
Royalties $ 10,454,000 $ 10,272,500
Leasing income 5,859,600 4,512,700
Merchandise sales 748,300 737,100
Franchise fees 269,300 372,500
Other   292,600     285,500  
Total revenue 17,623,800 16,180,300
 
COST OF MERCHANDISE SOLD 715,000 697,400
 
LEASING EXPENSE 1,271,400 904,100
 
PROVISION FOR CREDIT LOSSES (1,400 ) (14,400 )
 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   6,503,400     6,554,600  
Income from operations 9,135,400 8,038,600
 
INTEREST EXPENSE (499,100 ) (640,700 )
 
INTEREST AND OTHER INCOME (EXPENSE)   1,800     (10,500 )
Income before income taxes 8,638,100 7,387,400
 

PROVISION FOR INCOME TAXES

 

(3,221,700

)

 

(2,824,500

)

 

NET INCOME

$

5,416,400

 

$

4,562,900

 
 
EARNINGS PER SHARE - BASIC $ 1.30   $ 1.11  
 
EARNINGS PER SHARE - DILUTED $ 1.22   $ 1.06  
 
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC   4,167,132     4,114,071  
 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED   4,450,495     4,313,920  
 

Contacts

Winmark Corporation
Brett D. Heffes, 763-520-8500

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