Winmark Corporation, a Minnesota-based company, reported its financial results for the first quarter of 2024. The company’s consolidated condensed balance sheet as of September 28, 2024, showed total assets of $143.1 million, total liabilities of $64.4 million, and total shareholders’ equity of $78.7 million. For the three months ended September 28, 2024, the company reported net sales of $34.4 million, a 12.1% increase from the same period in 2023. Net income for the quarter was $2.3 million, compared to a net loss of $0.3 million in the same period last year. The company’s cash and cash equivalents decreased by $1.4 million during the quarter, primarily due to the payment of dividends and the repurchase of common stock.
Overview of the Company’s Financial Performance
The financial report provides a comparison of the company’s financial performance for the three and nine months ended September 28, 2024 compared to the same periods in 2023. The key highlights are:
Revenue and Profit Trends
The company’s revenue performance is summarized in the table below:
Metric | Q3 2024 | Q3 2023 | Change | 9M 2024 | 9M 2023 | Change |
---|---|---|---|---|---|---|
Total Revenue | $21.5M | $22.3M | -3.6% | $61.7M | $63.2M | -2.4% |
Royalties | $19.5M | $19.2M | +1.6% | $54.6M | $53.1M | +2.8% |
Franchise Fees | $0.5M | $0.3M | +66.7% | $1.2M | $1.1M | +9.1% |
Leasing Income | $0.3M | $1.3M | -76.9% | $1.7M | $3.9M | -56.4% |
Merchandise Sales | $0.7M | $1.0M | -30.0% | $2.7M | $3.6M | -25.0% |
The company’s profitability is shown in the table below:
Metric | Q3 2024 | Q3 2023 | Change | 9M 2024 | 9M 2023 | Change |
---|---|---|---|---|---|---|
Franchising Segment Operating Income | $14.8M | $14.0M | +5.7% | $38.8M | $37.6M | +3.2% |
Other Operating Segment Income | $0.2M | $1.2M | -83.3% | $1.3M | $3.2M | -59.4% |
Net Income | $11.2M | $11.1M | +0.9% | $31.4M | $30.9M | +1.6% |
Strengths and Weaknesses
Strengths:
Weaknesses:
Outlook
The company believes it has adequate liquidity and capital resources to fund its planned operations through 2025. However, its ability to meet debt obligations and fund future growth depends on maintaining strong cash flows from operations and its access to credit markets. Potential risks include macroeconomic conditions, competition, and regulatory changes that could impact the company’s financial performance.
Overall, the company appears to be navigating a challenging operating environment reasonably well, with growth in its core franchising business offsetting declines in other areas. Continued focus on cost management and diversifying revenue streams will be important for sustaining profitability going forward.