Winmark Corporation Announces Second Quarter Results
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Winmark Corporation Announces Second Quarter Results

MINNEAPOLIS - (BUSINESS WIRE) - July 17, 2019 - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended June 29, 2019 of $7,301,900 (or $1.79 per share diluted) compared to net income of $7,143,000 (or $1.73 per share diluted) in the second quarter of 2018. For the six months ended June 29, 2019, net income was $14,574,100 (or $3.52 per share diluted) compared to net income of $14,103,400 (or $3.42 per share diluted) for the same period last year.

Brett D. Heffes, Chief Executive Officer, commented, “Our franchisees are continuing to perform at a high level, but we have been disappointed by the activity in our leasing business. The result of the recent changes to our leasing organization will be a leaner cost structure that is better aligned with the current level of operations.”

Winmark Corporation creates, supports and finances business. At June 29, 2019, there were 1,249 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 43 retail franchises have been awarded but are not open. In addition, at June 29, 2019, the Company had a lease portfolio of $33.0 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)

 

 

 

 

 

 

 

 

June 29, 2019

 

December 29, 2018

ASSETS

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,101,200

 

 

$

2,496,000

 

Restricted cash

 

 

65,000

 

 

 

80,000

 

Receivables, net

 

 

1,510,300

 

 

 

1,553,100

 

Net investment in leases - current

 

 

15,923,700

 

 

 

18,547,500

 

Income tax receivable

 

 

1,608,300

 

 

 

565,500

 

Inventories

 

 

114,400

 

 

 

107,600

 

Prepaid expenses

 

 

853,000

 

 

 

901,600

 

Total current assets

 

 

21,175,900

 

 

 

24,251,300

 

 

 

 

 

 

 

Net investment in leases – long-term

 

 

17,059,200

 

 

 

20,455,500

 

Property and equipment, net

 

 

1,936,400

 

 

 

866,200

 

Operating lease right of use asset

 

 

4,867,900

 

 

 

Goodwill

 

 

607,500

 

 

 

607,500

 

Other assets

 

 

509,200

 

 

 

482,600

 

 

 

$

46,156,100

 

 

$

46,663,100

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

Current Liabilities:

 

 

 

 

 

Notes payable, net

 

$

3,236,100

 

 

$

3,236,100

 

Accounts payable

 

 

1,167,400

 

 

 

1,351,800

 

Accrued liabilities

 

 

2,783,300

 

 

 

3,128,600

 

Discounted lease rentals

 

 

3,172,700

 

 

 

3,021,900

 

Deferred revenue

 

 

1,725,500

 

 

 

1,744,900

 

Total current liabilities

 

 

12,085,000

 

 

 

12,483,300

 

 

 

 

 

 

 

Long-Term Liabilities:

 

 

 

 

 

Line of credit

 

 

6,000,000

 

 

 

Notes payable, net

 

 

23,986,800

 

 

 

25,604,900

 

Discounted lease rentals

 

 

1,752,900

 

 

 

2,723,500

 

Deferred revenue

 

 

8,093,900

 

 

 

8,432,400

 

Operating lease liabilities

 

 

6,061,000

 

 

 

Other liabilities

 

 

818,900

 

 

 

1,079,200

 

Deferred income taxes

 

 

1,188,000

 

 

 

1,148,300

 

Total long-term liabilities

 

 

47,901,500

 

 

 

38,988,300

 

 

 

 

 

 

 

Shareholders’ Equity (Deficit):

 

 

 

 

 

Common stock, no par, 10,000,000 shares authorized, 3,781,339 and 3,907,686 shares issued and outstanding

 

 

1,305,600

 

 

 

4,425,600

 

Retained earnings (accumulated deficit)

 

 

(15,136,000

)

 

 

(9,234,100

)

 

 

 

 

 

 

Total shareholders’ equity (deficit)

 

 

(13,830,400

)

 

 

(4,808,500

)

 

 

$

46,156,100

 

 

$

46,663,100

 

 

WINMARK CORPORATION 
CONDENSED STATEMENTS OF OPERATIONS 
(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

June 29, 2019

 

June 30, 2018

 

June 29, 2019

 

June 30, 2018

REVENUE:

 

 

 

 

 

 

 

 

Royalties

 

$

12,653,200

 

 

$

11,821,000

 

 

$

24,414,600

 

 

$

22,870,000

 

Leasing income

 

 

3,203,000

 

 

 

4,857,100

 

 

 

8,358,300

 

 

 

10,385,900

 

Merchandise sales

 

 

721,800

 

 

 

704,900

 

 

 

1,332,800

 

 

 

1,481,800

 

Franchise fees

 

 

413,900

 

 

 

378,100

 

 

 

805,700

 

 

 

779,000

 

Other

 

 

412,300

 

 

 

398,700

 

 

 

824,000

 

 

 

804,100

 

Total revenue

 

 

17,404,200

 

 

 

18,159,800

 

 

 

35,735,400

 

 

 

36,320,800

 

COST OF MERCHANDISE SOLD

 

 

681,200

 

 

 

681,000

 

 

 

1,252,700

 

 

 

1,423,500

 

LEASING EXPENSE

 

 

370,900

 

 

 

495,800

 

 

 

1,069,600

 

 

 

1,050,700

 

PROVISION FOR CREDIT LOSSES

 

 

69,300

 

 

 

109,000

 

 

 

79,400

 

 

 

204,000

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

 

6,435,900

 

 

 

6,799,300

 

 

 

13,420,300

 

 

 

13,493,700

 

Income from operations

 

 

9,846,900

 

 

 

10,074,700

 

 

 

19,913,400

 

 

 

20,148,900

 

INTEREST EXPENSE

 

 

(500,300

)

 

 

(657,900

)

 

 

(942,500

)

 

 

(1,401,700

)

INTEREST AND OTHER INCOME (EXPENSE)

 

 

(6,100

)

 

 

(11,300

)

 

 

(6,400

)

 

 

(12,300

)

Income before income taxes

 

 

9,340,500

 

 

 

9,405,500

 

 

 

18,964,500

 

 

 

18,734,900

 

PROVISION FOR INCOME TAXES

 

 

(2,038,600

)

 

 

(2,262,500

)

 

 

(4,390,400

)

 

 

(4,631,500

)

NET INCOME

 

$

7,301,900

 

 

$

7,143,000

 

 

$

14,574,100

 

 

$

14,103,400

 

EARNINGS PER SHARE – BASIC

 

$

1.94

 

 

$

1.85

 

 

$

3.80

 

 

$

3.66

 

EARNINGS PER SHARE – DILUTED

 

$

1.79

 

 

$

1.73

 

 

$

3.52

 

 

$

3.42

 

WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC

 

 

3,771,439

 

 

 

3,858,446

 

 

 

3,839,563

 

 

 

3,852,880

 

WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED

 

 

4,072,408

 

 

 

4,133,535

 

 

 

4,135,827

 

 

 

4,129,055

 

Contact:

Brett D. Heffes
763/520-8500

SOURCE Winmark Corporation

###

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