Benzinga | Oct 14, 2020 11:51AM EDT

Winmark Corporation Announces Q3 EPS OF $2.43, Revenue Of $18,277,000

Winmark Corporation (NASDAQ:WINA) announced today net income for the quarter ended September 26, 2020 of $9,358,800 (or $2.43 per share diluted) compared to net income of $9,113,800 (or $2.24 per share diluted) in the third quarter of 2019. For the nine months ended September 26, 2020, net income was $21,731,000 (or $5.63 per share diluted) compared to net income of $23,687,900 (or $5.76 per share diluted) for the same period last year.

Winmark Corporation creates, supports and finances business. At September 26, 2020, there were 1,262 franchises in operation under the brands Plato's Closet(r), Once Upon A Child(r), Play It Again Sports(r), Style Encore(r) and Music Go Round(r). An additional 35 retail franchises have been awarded but are not open.

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)



September 26, December 28, 2020 2019

ASSETS

Current Assets:

Cash and cash equivalents $ 8,267,400 $ 25,130,300

Restricted cash 50,000 50,000

Receivables, net 1,947,600 1,669,500

Net investment in leases - current 10,514,200 12,800,100

Income tax receivable ? 497,900

Inventories 85,100 86,000

Prepaid expenses 1,158,800 968,100

Total current assets 22,023,100 41,201,900



Net investment in leases ? long-term 5,090,800 12,505,500

Property and equipment, net 2,439,100 2,772,600

Operating lease right of use asset 3,301,800 3,595,200

Goodwill 607,500 607,500

Other assets 458,300 492,500

Deferred income taxes 1,918,000 667,000

$ 35,838,600 $ 61,842,200



LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities:

Notes payable, net $ 4,236,100 $ 3,736,100

Accounts payable 1,272,700 1,015,000

Income tax payable 472,500 ?

Accrued liabilities 2,478,000 2,783,100

Discounted lease rentals 1,522,500 2,680,700

Deferred revenue 1,675,200 1,717,000

Total current liabilities 11,657,000 11,931,900

Long-Term Liabilities:

Notes payable, net $ 18,691,700 $ 21,868,800

Discounted lease rentals 763,000 836,900

Deferred revenue 7,270,000 7,858,500

Operating lease liabilities 5,417,500 5,846,100

Other liabilities 873,100 1,051,700

Total long-term liabilities 33,015,300 37,462,000

Shareholders' Equity (Deficit):

Common stock, no par, 10,000,000 sharesauthorized, 3,735,437 and 3,947,858 shares 7,717,800 11,929,300issued and outstanding

Retained earnings (accumulated deficit) (16,551,500 ) 519,000

Total shareholders' equity (deficit) (8,833,700 ) 12,448,300

$ 35,838,600 $ 61,842,200

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)



Quarter Ended Nine Months Ended

September 26, September 28, September 26, September 28, 2020 2019 2020 2019

Revenue:

Royalties $ 14,210,000 $ 13,808,800 $ 33,188,300 $ 38,223,400

Leasing income 2,695,800 4,375,500 12,040,800 12,733,800

Merchandise 631,200 704,500 1,746,800 2,037,300 sales

Franchise fees 335,400 377,400 1,064,900 1,183,100

Other 404,600 414,700 1,225,700 1,238,700

Total revenue 18,277,000 19,680,900 49,266,500 55,416,300

Cost ofmerchandise 598,200 671,700 1,662,000 1,924,400 sold

Leasing 510,900 572,400 2,443,700 1,642,000 expense

Provision for (339,600 ) (55,500 ) 164,300 23,900 credit losses

Selling,general and 5,009,700 6,217,600 15,719,100 19,637,900 administrativeexpenses

Income from 12,497,800 12,274,700 29,277,400 32,188,100 operations

Interest (345,700 ) (406,200 ) (1,409,600 ) (1,348,700 )expense

Interest andother income 9,200 500 27,700 (5,900 )(expense)

Income before 12,161,300 11,869,000 27,895,500 30,833,500 income taxes

Provision for (2,802,500 ) (2,755,200 ) (6,164,500 ) (7,145,600 )income taxes

Net income $ 9,358,800 $ 9,113,800 $ 21,731,000 $ 23,687,900

Earnings per $ 2.51 $ 2.39 $ 5.86 $ 6.19 share - basic

Earnings pershare - $ 2.43 $ 2.24 $ 5.63 $ 5.76 diluted

Weightedaverage shares 3,730,490 3,808,863 3,710,112 3,829,329 outstanding -basic

Weightedaverage shares 3,857,702 4,065,301 3,857,754 4,112,318 outstanding -diluted



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