Winmark (WINA) Q3 2024 earnings summary

Executive summary

• Revenue for Q3 2024 was $21.5M, down from $22.3M in Q3 2023; nine-month revenue was $61.7M, down from $63.2M year-over-year.

• Net income for Q3 2024 was $11.1M ($3.03/share diluted), nearly flat compared to $11.1M ($3.05/share diluted) in Q3 2023; nine-month net income was $30.4M ($8.29/share diluted), slightly down from $30.5M ($8.40/share diluted) year-over-year.

• Royalties, the largest revenue source, increased 1.6% in Q3 and 2.8% for the nine months, driven by additional franchise stores.

• Results continue to reflect the impact of the 2021 decision to run off the leasing portfolio.

• 1,343 franchises were in operation at quarter-end, with 82 more awarded but not yet open.

Financial highlights

• Royalties for Q3 2024 were $19.5M, up from $19.2M in Q3 2023; nine-month royalties were $54.6M, up from $53.1M.

• Leasing income dropped to $0.3M in Q3 2024 from $1.3M in Q3 2023; nine-month leasing income was $1.7M, down from $3.9M.

• Operating income for Q3 2024 was $14.9M, down slightly from $15.1M in Q3 2023.

• Cash, cash equivalents, and restricted cash at quarter-end were $37.3M, down from $40.6M a year ago, but up from $13.4M at year-end 2023.

• Net cash provided by operating activities for the nine months was $33.7M, down from $35.2M year-over-year.

Outlook and guidance

• Management expects leasing income to continue declining as the portfolio runs off.

• Cash on hand, operating cash flow, and available credit are expected to be sufficient to fund operations through 2025.

• Forward-looking statements caution that actual results may differ materially due to risks and uncertainties.