Form 8-K Wingstop Inc. For: Aug 01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2018
WINGSTOP INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-37425 | 47-3494862 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
5501 LBJ Freeway, 5th Floor, Dallas, Texas | 75240 | |
(Address of principal executive offices) | (Zip Code) | |
(972) 686-6500
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.” Consequently, it is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or Securities Act of 1933, if such subsequent filing specifically references this Form 8-K.
On August 2, 2018, Wingstop Inc. (“the Company,” “we,” “our,” or “us”) issued a press release reporting the Company’s financial results for its fiscal second quarter ended June 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein in its entirety. The press release uses the following non-GAAP financial measures: EBITDA and Adjusted EBITDA. A discussion of these financial measures, including a discussion of the usefulness and purpose of each measure, is included below.
EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under U.S. GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities as a measure of our liquidity.
We define “EBITDA” as net income before interest expense, net, income tax expense, and depreciation and amortization. We define “Adjusted EBITDA” as EBITDA further adjusted for transaction costs, gains and losses on the disposal of assets, and stock-based compensation expense. We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA and Adjusted EBITDA in the same manner. We present EBITDA and Adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations on a period-over-period basis and would ordinarily add back non-cash expenses such as depreciation and amortization, as well as items that are not part of normal day-to-day operations of our business.
Management uses EBITDA and Adjusted EBITDA:
• | as a measurement of operating performance because they assist us in comparing the operating performance of our restaurants on a consistent basis, as they remove the impact of items not directly resulting from our core operations; |
• | for planning purposes, including the preparation of our internal annual operating budget and financial projections; |
• | to evaluate the performance and effectiveness of our operational strategies; |
• | to evaluate our capacity to fund capital expenditures and expand our business; and |
• | to calculate incentive compensation payments for our employees, including assessing performance under our annual incentive compensation plan and determining the vesting of performance-based equity awards. |
By providing these non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. In addition, the instruments governing our indebtedness use EBITDA (with additional adjustments) to measure our compliance with covenants such as our fixed charge coverage, lease adjusted leverage and debt incurrence. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation, or as an alternative to, or a substitute for, net income or other financial statement data presented in our consolidated financial statements as indicators of financial performance. Some of the limitations are:
• | such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; |
• | such measures do not reflect changes in, or cash requirements for, our working capital needs; |
• | such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt; |
• | such measures do not reflect our tax expense or the cash requirements to pay our taxes; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and |
• | other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures. |
Due to these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using these non-GAAP measures only supplementally. As noted in the press release attached hereto as Exhibit 99.1, Adjusted EBITDA includes adjustments for transaction costs, gains and losses on disposal of assets and stock-based compensation. It is reasonable to expect that these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period-to-period, do not directly relate to the ongoing operations of our restaurants and complicate comparisons of our internal operating results and operating results of other restaurant companies over time. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the press release help management measure our core operating performance over time by removing items that are not related to day-to-day operations.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On August 1, 2018, the Company’s Board of Directors, upon recommendation by the Company’s Nominating and Corporate Governance Committee, voted to increase the total size of the Board of Directors from six members to seven members and elected Krishnan (Kandy) Anand to fill the resulting vacancy as an independent Class I director of the Company, effective August 1, 2018. Mr. Anand has also been appointed to serve on the Company’s Audit Committee, effective August 1, 2018. Mr. Anand is entitled to receive compensation under the Company’s non-employee director compensation policy, including a grant of restricted stock, and has also entered into the Company’s standard indemnification agreement with directors. Mr. Anand served on the board of directors of Popeyes Louisiana Kitchen Inc. from November 2010 to 2017. He currently serves as the Chief Growth Officer of Molson Coors Brewing Co. (NYSE:TAP), prior to which he served as President and Chief Executive Officer of Molson Coors International from December 2009 to October 2016. Before joining Molson Coors, Mr. Anand held a variety of positions at The Coca Cola Company, most recently as president of Coca Cola’s Philippine business from 2007 to 2009. He also served as vice president of Coca Cola’s Global Commercial Leadership from 2004 to 2007 and prior to that as vice president of global brands strategy.
Item 8.01. Other Events
On August 2, 2018, the Company’s Board of Directors declared a $0.09 per common share quarterly cash dividend. The dividend is payable on September 18, 2018 to stockholders of record as of the close of business on September 4, 2018. The declaration of any future dividends is subject to the Board’s discretion.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Wingstop Inc. | ||||
Date: | August 2, 2018 | By: | /s/ Michael J. Skipworth | |
Chief Financial Officer (Principal Financial and Accounting Officer) | ||||
FOR IMMEDIATE RELEASE
Wingstop Inc. Reports Fiscal Second Quarter 2018 Financial Results;
Increases Regular Quarterly Dividend
Dallas, August 2, 2018 - (GLOBE NEWSWIRE) - Wingstop Inc. (NASDAQ: WING) today announced fiscal second quarter financial results for the period ended June 30, 2018.
Highlights for the Fiscal Second Quarter 2018 compared to the Fiscal Second Quarter 2017*:
▪ | System-wide sales increased 13.5% to $304.9 million |
▪ | System-wide restaurant count increased 12.5% to 1,188 global locations |
▪ | System-wide domestic same store sales increased 4.3% |
▪ | Total revenue increased 17.3% to $37.0 million |
▪ | Net income increased 39.4% to $6.8 million, or $0.23 per diluted share, compared to $4.9 million, or $0.17 per diluted share |
▪ | Adjusted EBITDA**, a non-GAAP measure, increased 27.1% to $11.7 million |
* In the first quarter of 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which changed the timing of recognition of initial franchise fees, development fees, territory fees for our international business and renewal and transfer fees, as well as the reporting of advertising fund contributions and related expenditures. See the “Adoption of New Accounting Guidance” section below for additional information. Amounts presented for the thirteen weeks ended July 1, 2017 have been adjusted to reflect the adoption of ASU 2014-09.
** Adjusted EBITDA is a non-GAAP measure. A reconciliation of adjusted EBITDA to the most directly comparable financial measure presented in accordance with GAAP is set forth in a schedule accompanying this release. See “Non-GAAP Financial Measures.”
Chairman and Chief Executive Officer Charlie Morrison stated, “Wingstop completed another strong quarter of growth on both the top and bottom lines as we continue positioning ourselves to become a top 10 global restaurant brand. We are effectively executing against our four growth strategies: building greater awareness through national advertising, innovating through technology to enhance the guest experience, optimizing delivery in test markets ahead of a national roll out in 2019, and expanding our international presence.”
Morrison continued, “We believe that raising our quarterly dividend demonstrates the strength of our overall business, our commitment to shareholder value and our confidence in future performance.”
Key Operating Metrics for the Fiscal Second Quarter 2018 Compared to the Fiscal Second Quarter 2017
Thirteen Weeks Ended | |||||||
June 30, 2018 | July 1, 2017 | ||||||
Number of system-wide restaurants open at end of period | 1,188 | 1,056 | |||||
Number of domestic franchise restaurants open at end of period | 1,040 | 946 | |||||
Number of international franchise restaurants open at end of period | 122 | 89 | |||||
System-wide sales (in thousands) | $ | 304,858 | $ | 268,504 | |||
System-wide domestic same store sales growth | 4.3 | % | 2.0 | % | |||
Net income (in thousands) | $ | 6,839 | $ | 4,907 | |||
Adjusted EBITDA (in thousands) | $ | 11,747 | $ | 9,243 | |||
Fiscal Second Quarter 2018 Financial Results
Total revenue for the fiscal second quarter 2018 increased 17.3% to $37.0 million from $31.6 million in the fiscal second quarter last year.
▪ | Royalty revenue, franchise fees and other increased $1.9 million to $17.2 million from $15.3 million in the fiscal second quarter last year. Royalty revenue increased $1.8 million primarily due to 127 net franchise restaurant openings since July 1, 2017 and domestic same store sales growth of 4.3%. |
▪ | Advertising fees and related income increased $0.9 million to $8.4 million from $7.5 million in the fiscal second quarter last year. Advertising fees increased primarily due to the increase in system-wide sales in the thirteen weeks ended June 30, 2018, compared to the prior year fiscal second quarter. |
▪ | Company-owned restaurant sales increased $2.6 million to $11.5 million from $8.8 million in the fiscal second quarter last year. The increase was primarily due to the acquisition of five franchised restaurants since the prior year comparable period resulting in additional sales of $2.3 million in the current fiscal second quarter. The remaining increase is due to company-owned domestic same store sales growth of 3.5%, which was driven by an increase in average transaction size. |
Cost of sales increased to $7.7 million from $6.9 million in the fiscal second quarter last year. As a percentage of company-owned restaurant sales, cost of sales decreased to 67.5% from 77.6%. The decrease was driven primarily by a 22.9% decrease in the cost of bone-in chicken wings as compared to the prior year period, as well as our ability to leverage costs due to the 3.5% increase in company-owned restaurant same store sales.
Advertising expenses increased to $8.2 million from $7.6 million in the fiscal second quarter last year. Under the new accounting guidance, advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the advertising spend.
Selling, general & administrative expenses (“SG&A”) increased 23.2% to $10.1 million compared to $8.2 million in the fiscal second quarter last year. The increase in SG&A expense is primarily due to an increase in payroll and benefit expenses related to planned headcount additions, as compared to the prior year period.
Net income increased 39.4% to $6.8 million, or $0.23 per diluted share, compared to net income of $4.9 million, or $0.17 per diluted share, in the fiscal second quarter last year.
Adoption of New Accounting Guidance
The Company adopted ASU 2014-09 in the first quarter of 2018, using the full retrospective transition method, which resulted in adjusting each prior reporting period presented and a recording a cumulative effect adjustment as of the first day of 2016. The adoption changed the timing of recognition of initial franchise fees, development fees, territory fees for our international business and renewal and transfer fees, as well as the reporting of advertising fund contributions and related expenditures. Additional information regarding the Company's adoption of the new revenue recognition guidance and the impact to historical financial results is contained in Exhibit 99.2 to the Company's current report on Form 8-K, filed with the Securities and Exchange Commission on February 22, 2018.
Restaurant Development
As of June 30, 2018, there were 1,188 Wingstop restaurants system-wide. This included 1,066 restaurants in the United States, of which 1,040 were franchised restaurants and 26 were company-owned. Our international presence consisted of 122 franchised restaurants across nine countries. During the fiscal second quarter 2018, there were 31 net system-wide Wingstop restaurants opened, including 10 international franchised locations.
Appointment of Independent Board Member
On August 1, 2018, the Board of Directors elected Krishnan (“Kandy”) Anand, an experienced public company director and the Chief Growth Officer of Molson Coors Brewing Co. (NYSE:TAP), to the Board as a new independent Director. Mr. Anand served on the Popeyes Louisiana Kitchen, Inc. board from November 2010 to April 2017. Prior to his current role at Molson Coors, Mr. Anand served as President and Chief Executive Officer of Molson Coors International from December 2009 to October 2016. Before joining Molson Coors, Mr. Anand held a variety of positions at The Coca Cola Company, most recently as president of Coca Cola’s Philippine business from 2007 to 2009. He also served as Vice President of Coca Cola’s Global Commercial Leadership from 2004 to 2007, and prior to that as Vice President of Global Brands Strategy.
Quarterly Dividend
In recognition of the Company’s strong cash flow generation, confidence in the business, and commitment to returning value to shareholders, our Board of Directors approved a 29% increase in the quarterly dividend payable to Wingstop shareholders from $0.07 to $0.09 per share of common stock, totaling approximately $2.6 million. This dividend will be paid on September 18, 2018 to shareholders of record as of September 4, 2018.
Financial Outlook
The Company is confirming our long-term guidance of low single digit domestic same store sales growth and 10%+ system-wide unit growth. For the fiscal year ending December 29, 2018, the Company is reiterating previous guidance, which is consistent with its long-term targets, with the exception of updating certain items impacting fully diluted Adjusted earnings per share:
▪ | Depreciation and amortization of approximately $4.5 million, reflecting the impact of amortization of reacquired franchise rights associated with restaurant acquisitions |
▪ | An on-going effective tax rate of approximately 25% (previously 23%), excluding the impact of excess tax benefits from stock option exercises |
▪ | Stock-based compensation expense of approximately $3.7 million (previously $3.0 million) |
Additionally, we expect unit development growth will be between 12.0 - 12.5%.
A reconciliation of diluted earnings per share to Adjusted diluted earnings per share is provided below, which reflects 29.6 million diluted shares outstanding. This estimate is comparable to fully diluted Adjusted earnings per share of $0.69 for fiscal year 2017, which has been restated to reflect the new revenue recognition standards. Fiscal year 2017 included a benefit of $0.08 to Adjusted earnings per share associated with excess tax benefits for stock options exercised. Our 2018 guidance includes a benefit of $0.05 to Adjusted earnings per share due to excess tax benefits realized in the first two quarters of 2018.
Fiscal Year Ended | |||
December 29, 2018 | |||
Diluted earnings per share | $ | 0.76 | |
Adjustments: | |||
Transaction costs (a) | 0.05 | ||
Tax impact of adjustments (b) | (0.01 | ) | |
Adjusted diluted earnings per share | $ | 0.80 | |
(a) Represents costs and expenses related to the refinancing of our credit agreement | |||
(b) Tax impact of adjustment calculated at a 25% effective tax rate | |||
The following definitions apply to these terms as used in this release:
Same store sales reflects the change in year-over-year sales for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for at least 52 full weeks. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and closures.
System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees.
Adjusted EBITDA is defined as net income before interest expense, net, income tax expense, and depreciation and amortization (EBITDA) further adjusted for transaction costs, gains and losses on the disposal of assets, and stock-based compensation expense. We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA and Adjusted EBITDA in the same manner.
Conference Call and Webcast
Chairman and Chief Executive Officer, Charlie Morrison, and Chief Financial Officer, Michael Skipworth, will host a conference call today to discuss the fiscal second quarter and fiscal year 2018 financial results at 4:30 PM Eastern Time.
The conference call can be accessed live by dialing 604-235-2082. A replay will be available two hours after the call and can be accessed by dialing 412-317-6671; the passcode is 10005248. The replay will be available through Thursday, August 9, 2018.
The conference call will also be webcast live and later archived on the investor relations section of Wingstop’s corporate website at ir.wingstop.com under the ‘News & Events’ section.
About Wingstop
Founded in 1994 and headquartered in Dallas, Texas, Wingstop Inc. (NASDAQ: WING) operates and franchises more than 1,100 restaurants across the United States, Mexico, Singapore, the Philippines, Indonesia, the United Arab Emirates, Malaysia, Saudi Arabia, Colombia, and Panama. The Wing Experts’ menu features classic and boneless wings with 11 bold, distinctive flavors including Original Hot, Cajun, Atomic, Mild, Teriyaki, Lemon Pepper, Hawaiian, Garlic Parmesan, Hickory Smoked BBQ, Louisiana Rub, and Mango Habanero. Wingstop’s wings are always cooked to order, hand-sauced and tossed and served with a variety of house-made sides including fresh-cut, seasoned fries. Having grown its domestic same store sales for 14 consecutive years, the Company has been ranked #3 on the “Top 100 Fastest Growing Restaurant Chains” by Nation’s Restaurant News (2016), #7 on the “Top 40 Fast Casual Chains” by Restaurant Business (2016), and was named “Best Franchise Deal in North America” by QSR magazine (2014). Wingstop was ranked #88 on Fortune’s 100 Best Medium Workplaces list in October 2016. For more information visit www.wingstop.com or www.wingstopfranchise.com. Follow us on facebook.com/Wingstop and Twitter @Wingstop.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP financial measures including those indicated above. By providing non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. These measures are not intended to be considered in isolation or as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. The non-GAAP measures used in this press release may be different from the measures used by other companies. A reconciliation of each measure to the most directly comparable GAAP measure is available in this news release. In addition, the Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release includes a more detailed description
of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.
Forward-looking Information
Certain statements contained in this news release, as well as other information provided from time to time by Wingstop Inc. or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “guidance,” “anticipate,” “estimate,” “expect,” “forecast,” “outlook,” “target,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,” “likely,” “future” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Examples of forward-looking statements in this news release include our fiscal year 2018 outlook for new restaurant openings, domestic same store sales growth, SG&A expenses, net income, EBTIDA, adjusted EBITDA, adjusted net income, adjusted earnings per diluted share and our diluted share count, as well as our anticipated potential domestic restaurant expansion opportunity, positioning to make progress towards domestic restaurant potential, and progress toward our goal of becoming a top 10 global restaurant brand.
Any such forward-looking statements are not guarantees of performance or results and involve risks, uncertainties (some of which are beyond the Company’s control), and assumptions. Although we believe any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in any forward-looking statements. Please refer to the risk factors discussed in our Form 10-K for the year ended December 30, 2017, which can be found at the SEC’s website www.sec.gov. The discussion of these risks is specifically incorporated by reference into this news release.
Any forward-looking statement made by Wingstop Inc. in this press release speaks only as of the date on which it is made. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Media Contact
Brian Bell
972-707-3956
Investor Contact
Raphael Gross
203-682-8253
WINGSTOP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)
June 30, 2018 | December 30, 2017 | ||||||
(Unaudited) | (As adjusted)* | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 3,147 | $ | 4,063 | |||
Accounts receivable, net | 4,484 | 4,567 | |||||
Prepaid expenses and other current assets | 3,262 | 4,334 | |||||
Advertising fund assets, restricted | 3,474 | 2,944 | |||||
Total current assets | 14,367 | 15,908 | |||||
Property and equipment, net | 6,328 | 5,826 | |||||
Goodwill | 49,655 | 46,557 | |||||
Trademarks | 32,700 | 32,700 | |||||
Customer relationships, net | 14,900 | 15,567 | |||||
Other non-current assets | 6,122 | 3,278 | |||||
Total assets | $ | 124,072 | $ | 119,836 | |||
Liabilities and stockholders' deficit | |||||||
Current liabilities | |||||||
Accounts payable | $ | 1,898 | $ | 1,752 | |||
Other current liabilities | 10,646 | 10,929 | |||||
Current portion of debt | 5,000 | 3,500 | |||||
Advertising fund liabilities | 3,474 | 2,944 | |||||
Total current liabilities | 21,018 | 19,125 | |||||
Long-term debt, net | 214,569 | 129,841 | |||||
Deferred revenues, net of current | 21,362 | 21,226 | |||||
Deferred income tax liabilities, net | 5,763 | 5,920 | |||||
Other non-current liabilities | 2,057 | 2,142 | |||||
Total liabilities | 264,769 | 178,254 | |||||
Commitments and contingencies | |||||||
Stockholders' deficit | |||||||
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,271,543 and 29,092,669 shares issued and outstanding as of June 30, 2018 and December 30, 2017, respectively | 293 | 291 | |||||
Additional paid-in-capital | 38 | 262 | |||||
Accumulated deficit | (141,028 | ) | (58,971 | ) | |||
Total stockholders' deficit | (140,697 | ) | (58,418 | ) | |||
Total liabilities and stockholders' deficit | $ | 124,072 | $ | 119,836 | |||
* Adjusted to reflect the adoption of ASU 2014-09.
WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(amounts in thousands, except per share data)
Thirteen Weeks Ended | |||||||
June 30, 2018 | July 1, 2017 | ||||||
(As adjusted)* | |||||||
Revenue: | |||||||
Royalty revenue, franchise fees and other | $ | 17,204 | $ | 15,267 | |||
Advertising fees and related income | 8,355 | 7,466 | |||||
Company-owned restaurant sales | 11,478 | 8,845 | |||||
Total revenue | 37,037 | 31,578 | |||||
Costs and expenses: | |||||||
Cost of sales (1) | 7,745 | 6,867 | |||||
Advertising expenses | 8,209 | 7,574 | |||||
Selling, general and administrative | 10,078 | 8,180 | |||||
Depreciation and amortization | 1,079 | 771 | |||||
Total costs and expenses | 27,111 | 23,392 | |||||
Operating income | 9,926 | 8,186 | |||||
Interest expense, net | 2,342 | 1,307 | |||||
Income before income tax expense | 7,584 | 6,879 | |||||
Income tax expense | 745 | 1,972 | |||||
Net income | $ | 6,839 | $ | 4,907 | |||
Earnings per share | |||||||
Basic | $ | 0.23 | $ | 0.17 | |||
Diluted | $ | 0.23 | $ | 0.17 | |||
Weighted average shares outstanding | |||||||
Basic | 29,230 | 29,032 | |||||
Diluted | 29,528 | 29,394 | |||||
Dividends per share | $ | 0.07 | $ | — | |||
(1) Cost of sales excludes depreciation and amortization, which are presented separately, and
includes advertising expenses incurred at company-owned restaurants.
* Adjusted to reflect the adoption of ASU 2014-09.
WINGSTOP INC. AND SUBSIDIARIES
Unaudited Supplemental Information
Cost of Sales Margin Analysis
(amounts in thousands)
Thirteen Weeks Ended | |||||||||||||
June 30, 2018 | As a % of company-owned restaurant sales | July 1, 2017 | As a % of company-owned restaurant sales | ||||||||||
Cost of sales: | |||||||||||||
Food, beverage and packaging costs | $ | 3,696 | 32.2 | % | $ | 3,512 | 39.7 | % | |||||
Labor costs | 2,549 | 22.2 | % | 2,124 | 24.0 | % | |||||||
Other restaurant operating expenses | 1,789 | 15.6 | % | 1,459 | 16.5 | % | |||||||
Vendor rebates | (289 | ) | (2.5 | )% | (228 | ) | (2.6 | )% | |||||
Total cost of sales | $ | 7,745 | 67.5 | % | $ | 6,867 | 77.6 | % | |||||
WINGSTOP INC. AND SUBSIDIARIES
Unaudited Supplemental Information
Restaurant Count
Thirteen Weeks Ended | |||||
June 30, 2018 | July 1, 2017 | ||||
Domestic Franchised Activity: | |||||
Beginning of period | 1,021 | 927 | |||
Openings | 21 | 23 | |||
Closures | — | (4 | ) | ||
Acquired by Company | (2 | ) | — | ||
Restaurants end of period | 1,040 | 946 | |||
Domestic Company-Owned Activity: | |||||
Beginning of period | 24 | 21 | |||
Openings | — | — | |||
Closures | — | — | |||
Acquired from franchisees | 2 | — | |||
Restaurants end of period | 26 | 21 | |||
Total Domestic Restaurants | 1,066 | 967 | |||
International Franchised Activity: | |||||
Beginning of period | 112 | 83 | |||
Openings | 10 | 8 | |||
Closures | — | (2 | ) | ||
Restaurants end of period | 122 | 89 | |||
Total System-wide Restaurants | 1,188 | 1,056 | |||
WINGSTOP INC. AND SUBSIDIARIES
Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA
(Unaudited)
(amounts in thousands)
Thirteen Weeks Ended | |||||||
June 30, 2018 | July 1, 2017 | ||||||
(As adjusted)* | |||||||
Net income | $ | 6,839 | $ | 4,907 | |||
Interest expense, net | 2,342 | 1,307 | |||||
Income tax expense | 745 | 1,972 | |||||
Depreciation and amortization | 1,079 | 771 | |||||
EBITDA | $ | 11,005 | $ | 8,957 | |||
Additional adjustments: | |||||||
Stock-based compensation expense (a) | 742 | 286 | |||||
Adjusted EBITDA | $ | 11,747 | $ | 9,243 | |||
(a) | Includes non-cash, stock-based compensation. |
* Adjusted to reflect the adoption of ASU 2014-09