wing-20220924

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 24, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File No. 001-37425

WINGSTOP INC.

(Exact name of registrant as specified in its charter)


Delaware						47-3494862
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)


15505 Wright Brothers Drive
Addison, Texas						75001
(Address of principal executive offices)						(Zip Code)

(972) 686-6500

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	WING	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

On October 25, 2022 there were 29,916,380 shares of common stock outstanding.

TABLE OF CONTENTS


		Page
PART I	Financial Information	4
Item 1.	Financial Statements	4
	Consolidated Balance Sheets - September 2 4 , 2022 (Unaudited) and December 25, 2021	4
	Consolidated Statements of Comprehensive Income (Unaudited) - Thirteen and Thirty-nine Weeks Ended September 24, 2022 and September 25, 2021	5

	Consolidated Statements of Stockholders’ Deficit (Unaudited) - Thirteen and Thirty-nine Weeks Ended September 24, 2022 and September 25, 2021	6
	Consolidated Statements of Cash Flows (Unaudited) - Thirty-nine Weeks Ended September 24, 2022 and September 25, 2021	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

PART II	Other Information	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
	Signatures	33

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(amounts in thousands, except share and par value amounts)


	September 24, 2022		December 25, 2021
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	173,511	$	48,583
Restricted cash	13,182		3,448
Accounts receivable, net	8,829		6,993
Prepaid expenses and other current assets	5,752		4,928
Advertising fund assets, restricted	21,817		6,197
Total current assets	223,091		70,149
Property and equipment, net	63,236		54,503
Goodwill	58,570		56,877
Trademarks	32,700		32,700
Customer relationships, net	9,339		10,302
Other non-current assets	24,100		24,672
Total assets	$	411,036	$	249,203
Liabilities and stockholders' deficit
Current liabilities
Accounts payable	$	3,497	$	5,414
Other current liabilities	28,041		28,070
Current portion of debt	7,300		—
Advertising fund liabilities	21,817		6,197
Total current liabilities	60,655		39,681
Long-term debt, net	708,176		469,394
Deferred revenues, net of current	26,942		28,024
Deferred income tax liabilities, net	6,757		7,432
Other non-current liabilities	15,102		14,197
Total liabilities	817,632		558,728
Commitments and contingencies (see Note 7)
Stockholders' deficit
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,916,183 and 29,837,454 shares issued and outstanding as of September 24, 2022 and December 25, 2021, respectively	299		299
Additional paid-in-capital	991		463
Retained deficit	(406,902)		(310,031)
Accumulated other comprehensive loss	(984)		(256)
Total stockholders' deficit	(406,596)		(309,525)
Total liabilities and stockholders' deficit	$	411,036	$	249,203

See accompanying notes to consolidated financial statements.

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(amounts in thousands, except per share data)

(Unaudited)


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 24, 2022		September 25, 2021		September 24, 2022		September 25, 2021
Revenue:
Royalty revenue, franchise fees and other	$	40,363	$	32,829	$	111,477	$	97,570
Advertising fees	32,146		15,575		83,672		59,672
Company-owned restaurant sales	20,163		17,380		57,505		53,232
Total revenue	92,672		65,784		252,654		210,474
Costs and expenses:
Cost of sales (1)	15,724		15,206		46,297		42,692
Advertising expenses	33,106		16,232		85,958		61,560
Selling, general and administrative	16,686		15,020		48,721		44,872
Depreciation and amortization	2,836		2,061		7,610		5,379
Loss (gain) on disposal of assets	239		(3,567)		1,006		(3,567)
Total costs and expenses	68,591		44,952		189,592		150,936
Operating income	24,081		20,832		63,062		59,538
Interest expense, net	5,742		3,724		15,920		11,230
Loss on debt extinguishment	—		—		814		—
Other expense (income)	290		(22)		381		(22)
Income before income tax expense	18,049		17,130		45,947		48,330
Income tax expense	4,681		5,840		10,596		12,568
Net income	$	13,368	$	11,290	$	35,351	$	35,762

Earnings per share
Basic	$	0.45	$	0.38	$	1.18	$	1.20
Diluted	$	0.45	$	0.38	$	1.18	$	1.19

Weighted average shares outstanding
Basic	29,915		29,799		29,882		29,748
Diluted	29,967		29,963		29,951		29,936

Dividends per share	$	0.19	$	0.17	$	4.53	$	0.45

Other comprehensive income (loss)
Currency translation adjustment	$	(391)	$	(63)	$	(728)	$	(172)
Other comprehensive income (loss)	(391)		(63)		(728)		(172)
Comprehensive income	$	12,977	$	11,227	$	34,623	$	35,590

(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately.

See accompanying notes to consolidated financial statements.

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Deficit

For the Thirty-Nine Weeks Ended September 25, 2021

(amounts in thousands, except share data)

(Unaudited)


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
Balance at December 26, 2020	29,687,123	$	297	$	421	$	(342,028)	$	—	$	(341,310)

Net income	—	—		—		13,160		—		13,160
Shares issued under stock plans	60,958	1		155		—		—		156
Tax payments for restricted stock upon vesting	(11,243)	—		—		(1,862)		—		(1,862)
Stock-based compensation expense, net of forfeitures	—	—		2,316		—		—		2,316
Dividends declared on common stock and equivalents	—	—		(2,866)		(1,322)		—		(4,188)
Balance at March 27, 2021	29,736,838	298		26		(332,052)		—		(331,728)
Net income	—	—		—		11,312		—		11,312
Shares issued under stock plans	6,613	—		—		—		—		—
Tax payments for restricted stock upon vesting	(76)	—		—		(11)		—		(11)
Stock-based compensation expense, net of forfeitures	—	—		2,456		—		—		2,456
Dividends declared on common stock and equivalents	—	—		(1,888)		(2,275)		—		(4,163)
Currency translation adjustment	—	—		—		—		(109)		(109)
Balance at June 26, 2021	29,743,375	298		594		(323,026)		(109)		(322,243)
Net income	—	—		—		11,290		—		11,290
Shares issued under stock plans	82,553	1		500		—		—		501
Tax payments for restricted stock upon vesting	(165)	—		—		(28)		—		(28)
Stock-based compensation expense, net of forfeitures	—	—		2,051		—		—		2,051
Dividends declared on common stock and equivalents	—	—		(2,078)		(3,562)		—		(5,640)
Currency translation adjustment	—	$	—	$	—	$	—	$	(63)	$	(63)
Balance at September 25, 2021	29,825,763	$	299	$	1,067	$	(315,326)	$	(172)	$	(314,132)

See accompanying notes to consolidated financial statements.

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Deficit

For the Thirty-Nine Weeks Ended September 24, 2022

(amounts in thousands, except share data)

(Unaudited)


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
Balance at December 25, 2021	29,837,454	$	299	$	463	$	(310,031)	$	(256)	$	(309,525)
Net income	—	—		—		8,676		—		8,676
Shares issued under stock plans	41,289	—		125		—		—		125
Tax payments for restricted stock upon vesting	(1,923)	—		—		(

SEC Form 10-Q filed by Wingstop Inc.