Winmark Corp (WINA) Q3 2025 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 27, 2025. Winmark Corporation operates as a franchisor of value-oriented retail concepts (Plato's Closet, Once Upon A Child, Play It Again Sports, Style Encore, and Music Go Round) and maintains a run-off equipment leasing business (Winmark Capital). As of the period end, the company operated 1,377 franchises.
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | Q3 2024 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|---|
| Total Revenue | $22.63 million | $21.51 million | $64.97 million | $61.74 million |
| Net Income | $11.14 million | $11.12 million | $31.69 million | $30.37 million |
| Diluted EPS | $3.02 | $3.03 | $8.61 | $8.29 |
| Operating Cash Flow (YTD) | $36.37 million (2025) vs $33.70 million (2024) | |||
| Cash & Equivalents | $39.73 million (Sep 27, 2025) vs $12.19 million (Dec 28, 2024) | |||
| Total Debt | $60.0 million ($30M Term Loan + $30M Notes Payable) | |||
| Operating Margin (YTD) | 64.0% (2025) vs 65.1% (2024) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 5.2% year-over-year for the quarter and 5.2% for the nine-month period. Royalty revenue, the primary driver, grew 7.2% in Q3 and 5.1% YTD due to higher franchise retail sales and net store growth.
- Expense Increases: Selling, General, and Administrative (SG&A) expenses rose 19.0% in Q3 and 11.0% YTD. This was attributed to higher compensation costs, advertising timing, and a non-recurring software license expense.
- Leasing Segment Run-off: Leasing income dropped significantly in Q3 ($46.6k vs $316.2k) as the portfolio run-off nears completion. However, YTD leasing income was higher ($2.4M vs $1.7M) due to a $2.2M litigation settlement in the leasing business.
- Liquidity Improvement: Cash and cash equivalents increased from $12.2 million at year-end 2024 to $39.7 million at Q3 2025, driven by strong operating cash flows.
Guidance, Outlook, and Material Events
- Special Dividend: On October 15, 2025, the Board approved a $10.00 per share special cash dividend, payable December 1, 2025. This totals approximately $35.6 million and is expected to be funded by cash on hand.
- Franchise Growth: The company added 27 net new stores in the first nine months of 2025. Renewal rates remain high at 99% (89 of 90 agreements renewed).
- Debt Status: The company maintains a $20.0 million available line of credit and $30.0 million in delayed draw term loans. It is in compliance with all financial covenants.
- Outlook: Management expects the leasing portfolio run-off to be substantially complete by the end of 2025, with no further leasing income anticipated thereafter.
Investor Verification Checklist
- Verify the impact of the $35.6 million special dividend on year-end 2025 cash balances and liquidity ratios.
- Confirm the sustainability of royalty growth given the 11% increase in SG&A expenses YTD.
- Monitor the leasing segment to ensure the litigation settlement was a one-time event and that the run-off proceeds as planned with no residual liabilities.
- Review the stock repurchase program status; 70,656 shares remain available for repurchase under the current authorization.
- Assess the debt maturity profile, specifically the $30M term loan maturing in 2029 and the $30M Series C notes.