Winmark Corporation (NASDAQ:WINA) announced today net income for the quarter ended September 30, 2023 of $11,149,800 or $3.05 per share diluted compared to net income of $10,368,600 or $2.93 per share diluted in 2022. For the nine months ended September 30, 2023, net income was $30,461,300 or $8.40 per share diluted compared to net income of $29,248,300 or $8.11 per share diluted for the same period last year.

Winmark — the Resale Company®, is a nationally recognized franchising business focused on sustainability and small-business formation. We champion and guide entrepreneurs interested in operating one of our award winning resale franchises: Plato's Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. At September 30, 2023, there were 1,312 franchises in operation and over 2,800 available territories. An additional 72 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 30, 2023			December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	40,556,100		$	13,615,600
Restricted cash		40,000			65,000
Receivables, net		1,704,000			1,438,600
Net investment in leases - current		124,300			344,900
Income tax receivable		1,200			558,700
Inventories		290,900			770,600
Prepaid expenses		1,095,100			1,310,400
Total current assets		43,811,600			18,103,800

Net investment in leases – long-term		—			5,400
Property and equipment, net		1,675,900			1,704,600
Operating lease right of use asset		2,510,000			2,716,000
Intangible assets, net		3,082,800			3,348,300
Goodwill		607,500			607,500
Other assets		467,700			429,700
Deferred income taxes		3,392,000			3,540,400
	$	55,547,500		$	30,455,700

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	4,217,900		$	4,217,900
Accounts payable		1,694,900			2,122,000
Accrued liabilities		4,038,900			2,611,700
Deferred revenue		1,680,700			1,643,900
Total current liabilities		11,632,400			10,595,500
Long-Term Liabilities:
Line of Credit/Term Loan		30,000,000			30,000,000
Notes payable, net		35,903,300			39,066,700
Deferred revenue		7,553,600			6,974,200
Operating lease liabilities		3,871,600			4,287,000
Other liabilities		1,150,100			1,164,400
Total long-term liabilities		78,478,600			81,492,300
Shareholders' Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,486,869 and 3,459,673 shares issued and outstanding		6,411,900			1,806,700
Retained earnings (accumulated deficit)		(40,975,400	)		(63,438,800	)
Total shareholders' equity (deficit)		(34,563,500	)		(61,632,100	)
	$	55,547,500		$	30,455,700

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

	Quarter Ended						Nine Months Ended
	September 30, 2023			September 24, 2022			September 30, 2023			September 24, 2022
Revenue:
Royalties	$	19,210,000		$	17,859,000		$	53,063,400		$	49,230,400
Leasing income		1,291,900			1,762,100			3,948,700			5,845,800
Merchandise sales		997,800			746,000			3,601,900			2,687,500
Franchise fees		334,400			348,100			1,133,400			1,160,200
Other		483,700			449,300			1,456,200			1,361,200
Total revenue		22,317,800			21,164,500			63,203,600			60,285,100
Cost of merchandise sold		935,400			717,600			3,370,500			2,552,300
Leasing expense		11,000			376,300			381,700			891,900
Provision for credit losses		700			(22,000	)		(4,600	)		(46,600	)
Selling, general and administrative expenses		6,248,200			5,671,500			18,694,300			16,673,100
Income from operations		15,122,500			14,421,100			40,761,700			40,214,400
Interest expense		(763,100	)		(820,500	)		(2,339,800	)		(2,045,600	)
Interest and other income		385,400			21,700			803,400			7,000
Income before income taxes		14,744,800			13,622,300			39,225,300			38,175,800
Provision for income taxes		(3,595,000	)		(3,253,700	)		(8,764,000	)		(8,927,500	)
Net income	$	11,149,800		$	10,368,600		$	30,461,300		$	29,248,300
Earnings per share - basic	$	3.20		$	3.01		$	8.77		$	8.36
Earnings per share - diluted	$	3.05		$	2.93		$	8.40		$	8.11
Weighted average shares outstanding - basic		3,485,852			3,439,417			3,475,066			3,500,411
Weighted average shares outstanding - diluted		3,653,730			3,540,779			3,627,550			3,605,445

WINMARK CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	September 30, 2023			September 24, 2022
OPERATING ACTIVITIES:
Net income	$	30,461,300		$	29,248,300
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		578,900			409,500
Provision for credit losses		(4,600	)		(46,600	)
Compensation expense related to stock options		1,451,000			1,203,800
Deferred income taxes		148,400			(214,700	)
Operating lease right of use asset amortization		206,000			185,700
Tax benefits on exercised stock options		839,000			429,500
Change in operating assets and liabilities:
Receivables		(265,400	)		(530,200	)
Principal collections on lease receivables		485,200			2,819,200
Income tax receivable/payable		(281,500	)		194,600
Inventories		479,700			(312,700	)
Prepaid expenses		215,300			2,500
Other assets		(38,000	)		2,000
Accounts payable		(427,100	)		(189,100	)
Accrued and other liabilities		1,021,600			1,395,000
Rents received in advance and security deposits		(254,600	)		(556,200	)
Deferred revenue		616,200			164,700
Net cash provided by operating activities		35,231,400			34,205,300
INVESTING ACTIVITIES:
Purchase of property and equipment		(284,700	)		(70,000	)
Reacquired franchise rights		—			(3,540,000	)
Net cash used for investing activities		(284,700	)		(3,610,000	)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit/term loan		—			33,700,000
Payments on line of credit/term loan		—			(3,700,000	)
Payments on notes payable		(3,187,500	)		(3,187,500	)
Repurchases of common stock		—			(48,281,200	)
Proceeds from exercises of stock options		3,154,200			2,937,100
Dividends paid		(7,997,900	)		(6,459,700	)
Net cash used for financing activities		(8,031,200	)		(24,991,300	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		26,915,500			5,604,000
Cash, cash equivalents and restricted cash, beginning of period		13,680,600			11,437,000
Cash, cash equivalents and restricted cash, end of period	$	40,596,100		$	17,041,000
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	2,309,100		$	1,925,400
Cash paid for income taxes	$	8,058,100		$	8,518,100

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Balance Sheets to the total of the same amounts shown above:
	Nine Months Ended
	September 30, 2023			September 24, 2022
Cash and cash equivalents	$	40,556,100		$	16,986,000
Restricted cash		40,000			55,000
Total cash, cash equivalents and restricted cash	$	40,596,100		$	17,041,000

View source version on businesswire.com: https://www.businesswire.com/news/home/20231018540190/en/

Winmark Corporation Announces Third Quarter Results