Wingstop Inc. Files 10-Q for Q2 2024

TL;DR

Wingstop's Q2 2024 10-Q is in. Check financials for company-owned restaurants and franchise fees.

AI Summary

Wingstop Inc. filed its 10-Q for the period ending June 29, 2024. The company reported key financial data, including revenue from company-owned restaurants and royalty/franchise fees. Specific figures for advertising revenue and customer relationships were also detailed for the reporting periods.

Why It Matters

This filing provides investors with the latest financial performance data for Wingstop, crucial for understanding the company's operational health and growth trajectory.

Risk Assessment

Risk Level: low — This is a routine quarterly financial filing with no immediate red flags.

Key Numbers

• 2024-06-29 — Reporting Period End Date (Indicates the end of the fiscal quarter for which financial data is reported.)
• 2023-12-31 — Previous Year-End Date (Provides a comparative point for financial analysis.)
• 2023-07-01 — Previous Year's Q2 End Date (Used for year-over-year comparison of quarterly performance.)

Key Players & Entities

• Wingstop Inc. (company) — Filer of the 10-Q
• 0001636222-24-000121 (dollar_amount) — Accession Number for the filing
• 20240629 (date) — Conformed Period of Report
• 20240731 (date) — Filed as of Date

FAQ

Key Financial Figures

• $0.01 — ich registered Common Stock, par value $0.01 per share WING NASDAQ Global Select Mar

Filing Documents

• wing-20240629.htm (10-Q) — 860KB
• exh311ceocertq22024.htm (EX-31.1) — 10KB
• exh312cfocertq22024.htm (EX-31.2) — 10KB
• exh321soxceocertq22024.htm (EX-32.1) — 5KB
• exh322soxcfocertq22024.htm (EX-32.2) — 5KB
• 0001636222-24-000121.txt ( ) — 4072KB
• wing-20240629.xsd (EX-101.SCH) — 27KB
• wing-20240629_cal.xml (EX-101.CAL) — 54KB
• wing-20240629_def.xml (EX-101.DEF) — 147KB
• wing-20240629_lab.xml (EX-101.LAB) — 421KB
• wing-20240629_pre.xml (EX-101.PRE) — 279KB
• wing-20240629_htm.xml (XML) — 311KB

Financial Statements

Item 1. Financial Statements 4 Consolidated Balance Sheets - June 29 , 2024 (Unaudited) and December 30, 2023 4 Consolidated Statements of Comprehensive Income (Unaudited) - Thirteen and Twenty-six Weeks Ended June 29, 2024 and July 1, 2023 5 Consolidated Statements of Stockholders' Deficit (Unaudited) - Thirteen and Twenty-six Weeks Ended June 29, 2024 and J uly 1, 2023 6 Consolidated Statements of Cash Flows (Unaudited) - Twenty - s ix Weeks Ended June 29, 2024 and July 1, 2023 8

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 9 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 15 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 27 Item 4.

Controls and Procedures

Controls and Procedures 28 PART II Other Information 29

Legal Proceedings

Item 1. Legal Proceedings 29

Risk Factors

Item 1A. Risk Factors 29

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 29

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 29

Other Information

Item 5. Other Information 29

Exhibits

Item 6. Exhibits 30

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements WINGSTOP INC. AND SUBSIDIARIES Consolidated Balance Sheets (amounts in thousands, except share and par value amounts) June 29, 2024 December 30, 2023 (Unaudited) Assets Current assets Cash and cash equivalents $ 96,749 $ 90,216 Restricted cash 11,444 11,444 Accounts receivable, net 16,059 12,408 Prepaid expenses and other current assets 6,768 4,948 Advertising fund assets, restricted 31,768 25,328 Total current assets 162,788 144,344 Property and equipment, net 107,738 91,292 Operating lease assets 55,379 19,092 Goodwill 68,733 67,708 Trademarks 32,700 32,700 Customer relationships, net 7,108 7,740 Other non-current assets 17,375 14,949 Total assets $ 451,821 $ 377,825 Liabilities and stockholders' deficit Current liabilities Accounts payable $ 5,752 $ 4,725 Current portion of operating lease liabilities 4,061 2,380 Other current liabilities 42,955 38,571 Advertising fund liabilities 31,768 25,328 Total current liabilities 84,536 71,004 Long-term debt, net 713,258 712,327 Operating lease liabilities 53,943 17,807 Deferred revenues, net of current 32,928 30,145 Deferred income tax liabilities, net 4,626 3,721 Other non-current liabilities 71 187 Total liabilities 889,362 835,191 Commitments and contingencies (see Note 7) Stockholders' deficit Common stock, $ 0.01 par value; 100,000,000 shares authorized; 29,304,401 and 29,337,920 shares issued and outstanding as of June 29, 2024 and December 30, 2023, respectively 293 293 Additional paid-in-capital 1,869 2,676 Retained deficit ( 439,326 ) ( 459,994 ) Accumulated other comprehensive loss ( 377 ) ( 341 ) Total stockholders' deficit ( 437,541 ) ( 457,366 ) Total liabilities and stockholders' deficit $ 451,821 $ 377,825 See accompanying notes to consolidated financial statements. 4 WINGSTOP INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (amounts in thousands, except per share data) (Unaudited) Thirteen Weeks Ended T

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) (1) Basis of Presentation and Update to Significant Accounting Policies Nature of operations. Wingstop Inc., together with its consolidated subsidiaries (collectively, "Wingstop" or the "Company"), is in the business of franchising and operating Wingstop restaurants. As of June 29, 2024, the Company had a total of 2,352 restaurants system-wide. The Company's restaurant base is approximately 98 % franchised, with 2,300 franchised locations (including 312 restaurants in international locations and U.S. territories) and 52 company-owned restaurants as of June 29, 2024. Basis of presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted. Balance sheet amounts are as of June 29, 2024 and December 30, 2023, and operating results are for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023. Certain prior period information on the Consolidated Balance Sheets have been reclassified to conform to the current presentation. In the Company's opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2023. Fiscal year. The Company uses a 52- or 53-week fiscal yea

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Basic weighted average shares outstanding 29,343 29,972 29,346 29,959 Dilutive shares 114 77 122 84 Diluted weighted average shares outstanding 29,457 30,049 29,468 30,043 For the thirteen weeks ended June 29, 2024 and July 1, 2023, equity awards representing approximately 0 and 1,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive. For the twenty-six weeks ended June 29, 2024 and July 1, 2023, equity awards representing approximately 28,000 and 3,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive. (3) Stockholders' Deficit Dividends In connection with the Company's regular dividend program, in each of the first two quarters of 2024, our Board of Directors declared a quarterly dividend of $ 0.22 per share of common stock, which, in aggregate, totaled $ 12.9 million, or $ 0.44 per share of common stock, and which was paid during the twenty-six weeks ended June 29, 2024. Subsequent to the second quarter, on July 30, 2024, our Board of Directors declared a quarterly dividend of $ 0.27 per share of common stock for stockholders of record as of August 16, 2024. The regular quarterly dividend is to be paid on September 6, 2024, totaling approximately $ 7.9 million . Share Repurchase Program On August 17, 2023, the Company announced a share repurchase program with authorization to purchase up to $ 250.0 million of its outstanding shares of common stock (the "Share Repurchase Program"). During the thirteen weeks ended June 29, 2024, the Company repurchased and retired 75,862 shares of its common stock at

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short-term nature. Fair value of debt and the investment in bonds issued by the Company's United Kingdom master franchisee, Lemon Pepper Holdings Ltd. ("LPH"), are determined on a non-recurring basis, which results are summarized as follows (in thousands): Fair Value Hierarchy June 29, 2024 December 30, 2023 Carrying Value Fair Value Carrying Value Fair Value Securitized Financing Facility: 2020-1 Class A-2 Senior Secured Notes (1) Level 2 $ 472,800 $ 429,548 $ 472,800 $ 423,823 2022-1 Class A-2 Senior Secured Notes (1) Level 2 $ 248,125 $ 222,370 $ 248,125 $ 222,370 Investments in bonds of LPH (2) Level 3 $ 3,624 $ 4,367 $ 3,557 $ 4,306 (1) The fair value of the 2020-1 and 2022-1 Class A-2 Senior Secured Notes was estimated using available market information. (2) The fair value approximates discounted cash flows using current market rates for debt investments with similar maturities and credit risk. The Company also measures certain non-financial assets (primarily long-lived assets, intangible assets, and goodwill) at fair value on a non-recurring basis in connection with its periodic evaluations of such assets for potential impairment. (5) Income Taxes Income tax expense and the effective tax rate were $ 9.0 million and 24.7 %, respectively, for the thirteen weeks ended June 29, 2024, and $ 6.1 million and 27.3 %, respectively, for the thirteen weeks ended July 1, 2023. Income tax expense and the effective tax rate were $ 18.8 million and 25.0 %, respectively, for the twenty-six weeks ended June 29, 2024, and $ 11.3 million and 26.2 %, respectively, for the twenty-six weeks ended July 1, 2023. The decrease in the effective tax rate is primarily related to an increase in excess tax benefits recognized from stock-based compensation in income tax expense as comp

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) The 2020 Class A-2 Notes and 2022 Notes were issued in securitization transactions, and are guaranteed by certain limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company and secured by a security interest in substantially all of their assets, including certain domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements, intellectual property, and vendor rebate contracts. (7) Commitments and Contingencies The Company is subject to legal proceedings, claims, and liabilities, including claims and actions resulting from employment-related and franchise-related matters, which arise in the ordinary course of business and are generally covered by insurance. In the opinion of management, the amount of ultimate liability with respect to such actions is not likely to have a material adverse impact on the Company's financial position, results of operations, or cash flows. (8) Leases The Company has operating leases for retail store locations, office space, and equipment. The Company determines whether an arrangement is a lease at inception. The Company's leases have remaining terms of 0.3 years to 13.7 years, some of which include options to extend the lease term for up to ten years. The years remaining on the Company's lease terms may include years that may be added to the lease terms by the exercise of options to renew when it is reasonably certain that the Company will exercise such options. During the first fiscal quarter 2024, the Company executed a lease for an office building, which commenced in May 2024. The operating lease has an initial lease term of 13.8 years with undiscounted fixed payments of $ 66.9 million over the initial term. Components of lease expense were as follows (in thousands): Twenty-Six Weeks Ended June 29, 2024 July 1, 2023 Operating lease cost (1) 2,480 1,685 Variable lease cost (2) 370 293 Total lease c

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) period ("NNR PSUs"). The NNR PSUs vest in equal annual amounts over a three-year period, and the maximum vesting percentage that could be realized for each of the NNR PSUs is 100 % based on the level of performance achieved for the awards. The PSUs had a weighted-average grant-date fair value of $ 370.95 per unit. Total compensation cost for the PSUs is determined based on the most likely outcome of the performance condition and the number of awards expected to vest based on the outcome. Total compensation expense related to all share-based awards, net of forfeitures recognized, was $ 8.7 million and $ 6.9 million for the twenty-six weeks ended June 29, 2024 and July 1, 2023, respectively, and was included in Selling, general and administrative ("SG&A") expense in the Consolidated Statements of Comprehensive Income. (10) Revenue from Contracts with Customers The following table represents a disaggregation of revenue from contracts with customers for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023 (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Royalty revenue $ 64,201 $ 43,271 $ 125,393 $ 86,785 Advertising fees and related income 54,654 36,596 104,803 74,059 Franchise fees 1,440 1,107 2,682 2,169 Franchise fee, development fee, and international territory fee payments received by the Company are recorded as deferred revenue on the Consolidated Balance Sheets, which represents a contract liability. Deferred revenue is reduced as fees are recognized in revenue over the term of the franchise license for the respective restaurant. As the term of the franchise license is typically ten years , substantially all of the franchise fee revenue recognized in the thirteen and twenty-six weeks ended June 29, 2024 was included in the deferred revenue balance as of December 30, 2023. Approximately $ 10.3 million and $ 9.3

View Full Filing

View this 10-Q filing on SEC EDGAR