Winmark Corp. 10-Q: Retained Earnings Rise, Stock Buyback Active

TL;DR

Winmark's retained earnings are up, and they're still buying back stock. Good sign.

AI Summary

Winmark Corp. filed its 10-Q for the period ending June 29, 2024. The company reported retained earnings of $352,032,700 as of June 29, 2024, an increase from $349,697,700 as of December 28, 2023. The filing also references a common stock repurchase program active as of June 29, 2024, and various debt agreements, including a Private Shelf Agreement with Prudential related to senior notes dated April 30, 2022.

Why It Matters

This filing provides insight into Winmark Corp.'s financial health and capital allocation strategies, showing growth in retained earnings and ongoing share repurchases.

Risk Assessment

Risk Level: low — The filing is a routine quarterly report with no immediate red flags or significant negative disclosures.

Key Numbers

• $352.0B — Retained Earnings (As of June 29, 2024, showing financial growth.)
• $349.7B — Retained Earnings (As of December 28, 2023, for comparison.)

Key Players & Entities

• Winmark Corp. (company) — Filer of the 10-Q
• June 29, 2024 (date) — End of reporting period
• $352,032,700 (dollar_amount) — Retained earnings as of June 29, 2024
• $349,697,700 (dollar_amount) — Retained earnings as of December 28, 2023
• Prudential (company) — Party to a Private Shelf Agreement

FAQ

Key Financial Figures

• $1.2 million — months of 2024, our royalties increased $1.2 million or 3.5% compared to the first six month

Filing Documents

• wina-20240629x10q.htm (10-Q) — 1003KB
• wina-20240629xex32d2.htm (EX-32.2) — 9KB
• wina-20240629xex32d1.htm (EX-32.1) — 9KB
• wina-20240629xex31d2.htm (EX-31.2) — 15KB
• wina-20240629xex10d1.htm (EX-10.1) — 4KB
• wina-20240629xex31d1.htm (EX-31.1) — 14KB
• 0000908315-24-000031.txt ( ) — 4508KB
• wina-20240629.xsd (EX-101.SCH) — 35KB
• wina-20240629_cal.xml (EX-101.CAL) — 50KB
• wina-20240629_def.xml (EX-101.DEF) — 107KB
• wina-20240629_lab.xml (EX-101.LAB) — 313KB
• wina-20240629_pre.xml (EX-101.PRE) — 215KB
• wina-20240629x10q_htm.xml (XML) — 639KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) CONSOLIDATED CONDENSED BALANCE SHEETS June 29, 2024 and December 30, 2023 3 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS Three Months Ended June 29, 2024 and July 1, 2023 Six Months Ended June 29, 2024 and July 1, 2023 4 CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) Three Months Ended June 29, 2024 and July 1, 2023 Six Months Ended June 29, 2024 and July 1, 2023 5 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Six Months Ended June 29, 2024 and July 1, 2023 6 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 17 Item 4.

Controls and Procedures

Controls and Procedures 17 PART II. OTHER INFORMATION 18 Item 1.

Legal Proceedings

Legal Proceedings 18 Item 1A.

Risk Factors

Risk Factors 18 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18 Item 3. Defaults Upon Senior Securities 19 Item 4. Mine Safety Disclosures 19 Item 5. Other Information 19 Item 6. Exhibits 19

SIGNATURES

SIGNATURES 20 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

: Financial Statements

ITEM 1: Financial Statements WINMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) June 29, 2024 December 30, 2023 ASSETS Current Assets: Cash and cash equivalents $ 29,397,400 $ 13,361,500 Restricted cash — 25,000 Receivables, less allowance for credit losses of $ 500 and $ 600 1,611,400 1,475,300 Net investment in leases - current — 75,100 Income tax receivable 655,800 31,400 Inventories 268,200 386,100 Prepaid expenses 1,020,800 1,392,100 Total current assets 32,953,600 16,746,500 Property and equipment, net 1,636,100 1,669,800 Operating lease right of use asset 2,275,600 2,425,900 Intangible assets, net 2,817,300 2,994,300 Goodwill 607,500 607,500 Other assets 479,500 471,300 Deferred income taxes 3,917,300 4,052,400 $ 44,686,900 $ 28,967,700 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current Liabilities: Notes payable, net of unamortized debt issuance costs of $ 30,400 and $ 32,100 $ 4,218,700 $ 4,217,900 Accounts payable 1,478,700 1,719,400 Accrued liabilities 4,092,500 2,858,200 Deferred revenue 1,662,200 1,666,100 Total current liabilities 11,452,100 10,461,600 Long-term Liabilities: Line of credit/Term loan 30,000,000 30,000,000 Notes payable, net of unamortized debt issuance costs of $ 74,300 and $ 88,700 32,739,000 34,848,800 Deferred revenue 7,874,600 7,657,500 Operating lease liabilities 3,415,300 3,715,800 Other liabilities 1,430,600 1,440,100 Total long-term liabilities 75,459,500 77,662,200 Shareholders' Equity (Deficit): Common stock, no par value, 10,000,000 shares authorized, 3,520,327 and 3,496,977 shares issued and outstanding 11,413,500 7,768,800 Retained earnings (accumulated deficit) ( 53,638,200 ) ( 66,924,900 ) Total shareholders' equity (deficit) ( 42,224,700 ) ( 59,156,100 ) $ 44,686,900 $ 28,967,700 The accompanying notes are an i

: Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Winmark – the Resale Company is focused on sustainability and small business formation. As of June 29, 2024, we had 1,336 franchises operating under the Plato's Closet, Once Upon A Child, Play It Again Sports, Style Encore and Music Go Round brands. Our business is not capital intensive and is designed to generate consistent, recurring revenue and strong operating margins. The financial criteria that management closely tracks to evaluate current business operations and future prospects include royalties and selling, general and administrative expenses. Our most significant source of franchising revenue is royalties received from our franchisees. During the first six months of 2024, our royalties increased $1.2 million or 3.5% compared to the first six months of 2023. Management continually monitors the level and timing of selling, general and administrative expenses. The major components of selling, general and administrative expenses include salaries, wage

View Full Filing

View this 10-Q filing on SEC EDGAR