Wed, Apr 16, 3:35 PM (14 days ago)
**Winmark Corporation (WINA) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** $21,919.7K, up from $20,109.5K in Q1 2024, driven by increased royalties and leasing income. - **Net Income:** $9,956.4K, up from $8,819K in Q1 2024. - **Earnings per Share (EPS):** Basic $2.81, diluted $2.71, compared to $2.52 and $2.41 in Q1 2024. - **Cash Flow:** Operating activities provided $15,078.4K, up from $13,364K in Q1 2024. **Profit Margins:** - **Operating Margin:** 62.0% in Q1 2025, up from 60.8% in Q1 2024. - **Net Margin:** 45.4% in Q1 2025, up from 43.9% in Q1 2024. **Key Trends and Uncertainties:** - **Revenue Growth:** Driven by additional franchise stores and a one-time settlement of customer litigation in the leasing segment. - **Expense Management:** Selling, general, and administrative expenses increased by 9.1%, primarily due to non-recurring software license expenses. - **Leasing Run-off:** The leasing portfolio run-off is substantially complete, expecting lower leasing income in future quarters. - **Franchise Renewals:** All 33 available franchise agreements were renewed, indicating strong franchisee satisfaction. **Future Operations Impact:** - **Franchise Growth:** Continued focus on supporting franchise partners and opening new franchises. - **Expense Control:** Emphasis on managing selling, general, and administrative expenses. - **Liquidity:** Adequate cash on hand and access to credit facilities to fund operations through 2025. **Market Risk:** - **Interest Rate Risk:** Exposure to changes in short-term interest rates due to the Line of Credit. - **Foreign Currency Risk:** Approximately 9% of revenues are denominated in foreign currency, with a potential impact of $730K on annual pretax earnings for a 10% exchange rate change. **Controls and Procedures:** - Effective disclosure controls and procedures in place, with no material changes in internal control over financial reporting. **Legal and Risk Factors:** - No material litigation or changes to risk factors from the previous fiscal year. **Stock Repurchase:** - Repurchased 7,383 shares at an average price of $304.74, with 71,217 shares remaining authorized for repurchase. **Conclusion:** Winmark Corporation demonstrated strong financial health in Q1 2025, with robust revenue growth, improved profit margins, and effective cash flow management. The company's focus on franchise growth, expense control, and liquidity management positions it well for future operations. However, uncertainties related to the leasing run-off and potential interest rate and foreign currency risks should be monitored.