Winmark Corp (WINA) SEC Filing 10-Q Quarterly report for the period ending Saturday, September 28, 2019

Earnings Press Release
10-Q Quarterly Report
10-Q QoQ Changes
Winmark Corp
Ticker: WINA CIK: 908315

Exhibit 99.1

Contact:Brett D. Heffes

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

THIRD QUARTER RESULTS

Minneapolis, MN (October 16, 2019)

 Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 28, 2019 of $9,113,800 (or $2.24 per share diluted) compared to net income of $8,364,300 (or $2.01 per share diluted) in the third quarter of 2018. For the nine months ended September 28, 2019, net income was $23,687,900 (or $5.76 per share diluted) compared to net income of $22,467,700 (or $5.43 per share diluted) for the same period last year.

“I am pleased with the performance of our core franchising operations during the quarter. However, during 2019, the pace of new equipment purchases in our leasing business has slowed and the size of our portfolio has declined,” commented Brett D. Heffes, Chief Executive Officer. “We continue to explore ways to grow leased assets and acquire new customers.”

Winmark Corporation creates, supports and finances business. At September 28, 2019, there were 1,255 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 40 retail franchises have been awarded but are not open. In addition, at September 28, 2019, the Company had a lease portfolio of $30.0 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)


	September 28, 2019		December 29, 2018
ASSETS
Current Assets:
Cash and cash equivalents	$	7,487,200	$	2,496,000
Restricted cash		75,000		80,000
Receivables, net		1,594,400		1,553,100
Net investment in leases - current		14,352,800		18,547,500
Income tax receivable		391,700		565,500
Inventories		69,700		107,600
Prepaid expenses		1,012,500		901,600
Total current assets		24,983,300		24,251,300

Net investment in leases – long-term		15,644,900		20,455,500
Property and equipment, net		2,863,700		866,200
Operating lease right of use asset		3,734,400		—
Goodwill		607,500		607,500
Other assets		501,200		482,600
Deferred income taxes		172,500		—
	$	48,507,500	$	46,663,100

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	3,486,100	$	3,236,100
Accounts payable		1,185,300		1,351,800
Accrued liabilities		2,980,000		3,128,600
Discounted lease rentals		3,012,900		3,021,900
Deferred revenue		1,730,900		1,744,900
Total current liabilities		12,395,200		12,483,300
Long-Term Liabilities:
Notes payable, net		22,927,800		25,604,900
Discounted lease rentals		1,354,000		2,723,500
Deferred revenue		8,031,900		8,432,400
Operating lease liabilities		5,953,100		—
Other liabilities		971,500		1,079,200
Deferred income taxes		—		1,148,300
Total long-term liabilities		39,238,300		38,988,300
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,822,978 and 3,907,686 shares issued and outstanding		3,851,000		4,425,600
Retained earnings (accumulated deficit)		(6,977,000)		(9,234,100)
Total shareholders’ equity (deficit)		(3,126,000)		(4,808,500)
	$	48,507,500	$	46,663,100

Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	Quarter Ended				Nine Months Ended
	Sept. 28, 2019		Sept. 29, 2018		Sept. 28, 2019		Sept. 29, 2018
REVENUE:
Royalties	$	13,808,800	$	12,865,900	$	38,223,400	$	35,735,900
Leasing income		4,375,500		4,608,600		12,733,800		14,994,500
Merchandise sales		704,500		858,400		2,037,300		2,340,200
Franchise fees		377,400		383,300		1,183,100		1,162,300
Other		414,700		402,300		1,238,700		1,206,400
Total revenue		19,680,900		19,118,500		55,416,300		55,439,300
COST OF MERCHANDISE SOLD		671,700		811,500		1,924,400		2,235,000
LEASING EXPENSE		572,400		718,500		1,642,000		1,769,200
PROVISION FOR CREDIT LOSSES		(55,500)		(55,600)		23,900		148,400
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		6,217,600		6,208,800		19,637,900		19,702,500
Income from operations		12,274,700		11,435,300		32,188,100		31,584,200
INTEREST EXPENSE		(406,200)		(576,900)		(1,348,700)		(1,978,600)
INTEREST AND OTHER EXPENSE		500		(1,000)		(5,900)		(13,300)
Income before income taxes		11,869,000		10,857,400		30,833,500		29,592,300
PROVISION FOR INCOME TAXES		(2,755,200)		(2,493,100)		(7,145,600)		(7,124,600)
NET INCOME	$	9,113,800	$	8,364,300	$	23,687,900	$	22,467,700
EARNINGS PER SHARE – BASIC	$	2.39	$	2.15	$	6.19	$	5.81
EARNINGS PER SHARE – DILUTED	$	2.24	$	2.01	$	5.76	$	5.43
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC		3,808,863		3,886,473		3,829,329		3,864,077
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED		4,065,301		4,164,339		4,112,318		4,140,816

The following information was filed by Winmark Corp (WINA) on Wednesday, October 16, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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