What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-02-18 compared with 2020-02-19 · 12 added, 159 removed, 11 unchanged (94% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock has traded on the NASDAQ Global Market under the symbol “WING” since June 12, 2015.

Before then, there was no public market for our common stock.

As of February 18, 2020, there were 5 shareholders of record of our common stock.

Our common stock trades on the NASDAQ Global Select Market under the symbol “WING”.

As of February 16, 2021, there were 5 stockholders of record of our common stock.

This number excludes stockholders whose stock is held in nominee or street name by brokers.

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Performance Graph

The following performance graph compares the dollar change in the cumulative shareholder return on our common stock with the cumulative total returns of the NASDAQ Composite Index and the S&P 600 Restaurants Index.

This graph assumes a $100 investment in our common stock on June 12, 2015 (the date when our common stock first started trading) and in each of the foregoing indices on June 12, 2015, and assumes the reinvestment of dividends, if any.

The following performance graph compares the dollar change in the cumulative stockholder return on our common stock with the cumulative total returns of the NASDAQ Composite Index and the S&P 600 Restaurants Index.

This graph assumes a $100 investment in our common stock and in each of the foregoing indices on December 26, 2015, and assumes the reinvestment of dividends, if any.

The indices are included for comparative purposes only.

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This graph is furnished and not “filed” with the SEC and it is not “soliciting material”, and should not be incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in such filing.

Dividends on Common Stock

Please refer to “Note 3 - Dividends” of the Notes to the Consolidated Financial Statements for information on dividends declared and paid in the fiscal years ended December 26, 2020 and December 28, 2019.

On February 16, 2021, the Company’s board of directors declared a quarterly dividend of $0.14 per share of common stock, to be paid on March 26, 2021 to stockholders of record as of March 5, 2021, totaling approximately $4.2 million.

We evaluate dividend payments on common stock within the context of our overall capital allocation strategy with our board of directors on an ongoing basis, giving consideration to our current and forecast earnings, financial condition, cash requirements and other factors.

There can be no assurance that we will continue to pay such dividends or the amount of such dividends.

Selected Financial Data

The selected financial data presented below, with the exception of our key performance indicators, including restaurant counts, same store sales, AUVs, system-wide sales and Adjusted EBITDA, has been derived from the audited consolidated financial statements of Wingstop.

Wingstop utilizes a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year.

The fiscal years ended December 28, 2019, December 29, 2018, December 30, 2017, and December 26, 2015 included 52 weeks, and the fiscal year ended on December 31, 2016 included 53 weeks.

The first three quarters of our fiscal year consist of 13 weeks and our fourth quarter consists of 13 weeks for 52-week fiscal years and 14 weeks for 53-week fiscal years.

The selected financial data presented below should be read in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our audited consolidated financial statements and the related notes thereto included elsewhere in this report.

Our selected financial data may not be indicative of our future performance.

(in thousands)

December 28, 2019 December 29, 2018 December 30, 2017 December 31, 2016 December 26, 2015*

Consolidated Statements of Income Data:

Royalty revenue, franchise fees and other

$ 88,291 $ 71,858 $ 66,076 $ 54,475 $ 46,688

Advertising fees and related income 55,932 34,484 30,174 14,561 —

Company-owned restaurant sales

55,453 46,839 37,069 34,288 31,281

Total revenue

199,676 153,181 133,319 103,324 77,969

Cost and expenses:

Cost of sales

41,105 32,063 28,745 25,308 22,219

Advertising expenses 52,891 33,699 32,427 13,849 —

Selling, general and administrative

57,295 44,579 34,898 34,552 33,350

Depreciation and amortization

5,484 4,313 3,376 3,008 2,682

Total costs and expenses 156,775 114,654 99,446 76,717 58,251

Operating income 42,901 38,527 33,873 26,607 19,718

Interest expense, net 17,136 10,123 5,131 4,396 3,477

Other expense, net — 1,477 — 254 396

Income before tax expense 25,765 26,927 28,742 21,957 15,845

Income tax expense 5,289 5,208 4,802 8,188 5,739

Net income $ 20,476 $ 21,719 $ 23,940 $ 13,769 $ 10,106

Consolidated Statement of Cash Flows Data:

Net cash provided by operating activities $ 38,583 $ 38,770 $ 27,435 $ 21,879 $ 13,860

Net cash used in investing activities (23,731) (10,498) (6,484) (2,056) (1,915)

Net cash used in financing activities (14,617) (13,724) (20,252) (28,213) (10,978)

Net increase (decrease) in cash and cash equivalents $ 235 $ 14,548 $ 699 $ (8,390) $ 967

* Fiscal year 2015 has not been adjusted to reflect the adoption of the new accounting standards adopted in fiscal year 2018.

(in thousands, except per share data)

December 28, 2019 December 29, 2018 December 30, 2017 December 31, 2016 December 26, 2015 (1)

Per Share data:

Earnings per share

Basic $ 0.70 $ 0.74 $ 0.82 $ 0.48 $ 0.37

Diluted $ 0.69 $ 0.73 $ 0.82 $ 0.47 $ 0.36

Weighted average shares outstanding

Basic 29,415 29,231 29,025 28,637 27,497

Diluted 29,670 29,587 29,424 28,983 27,816

Dividends per share $ 0.40 $ 6.54 $ 0.14 $ 2.90 $ 1.83

Selected Other Data (2) :

Number of system-wide restaurants open at end of period 1,385 1,252 1,133 998 845

Number of domestic company restaurants open at end of period 31 29 23 21 19

Number of domestic franchise restaurants open at end of period 1,200 1,095 1,004 901 767

Number of international franchise restaurants open at end of period 154 128 106 76 59

System-wide sales (3)

$ 1,514,590 $ 1,261,025 $ 1,087,434 $ 972,270 $ 821,248

Domestic restaurant AUV (4)

$ 1,246 $ 1,139 $ 1,100 $ 1,113 $ 1,126

Company-owned domestic AUV (4)

$ 1,874 $ 1,723 $ 1,712 $ 1,729 $ 1,646

Number of restaurants opened (during period) 146 139 147 159 142

Number of restaurants closed (during period) 13 20 12 6 9

Company-owned restaurants (acquired) refranchised (during period) (1) (6) (2) — —

$ 48,385 $ 41,363 $ 37,249 $ 29,361 $ 22,004

Adjusted EBITDA (5)

$ 56,989 $ 48,986 $ 39,100 $ 32,980 $ 28,879

Same Store Sales Data (6) :

System-wide domestic same store sales base (end of period)

1,109 1,018 904 779 667

System-wide domestic same store sales growth

11.1 % 6.5 % 2.6 % 3.2 % 7.9 %

(in thousands)

December 28, 2019 December 29, 2018 December 30, 2017 December 31, 2016 December 26, 2015 (1)

Consolidated Balance Sheet Data:

Cash and cash equivalents

$ 12,849 $ 12,493 $ 4,063 $ 3,750 $ 10,690

Working capital

(2,739) 3,424 (3,217) (5,863) 7,050

166,113 139,749 119,836 111,800 120,650

317,600 320,000 133,750 151,250 95,500

Total shareholders’ deficit

(209,428) (224,830) (58,418) (81,431) (9,673)

(1) Fiscal year 2015 has not been adjusted to reflect the adoption of the new accounting standards in adopted in fiscal year 2018.

(2) See the definitions of key performance indicators under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators.”

(3) The percentage of system-wide sales attributable to company-owned restaurants was 3.7%, 3.7%, 3.4%, 3.5%, and 3.8% for the fiscal years ended December 28, 2019, December 29, 2018, December 30, 2017, December 31, 2016, and December 26, 2015, respectively.

The remainder was generated by franchised restaurants, as reported by our franchisees.

(4) Domestic AUV and company-owned domestic AUV are calculated using the 52-week trailing period.

(5) EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with, U.S.

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 management fees and expense reimbursement, a management agreement termination fee, transaction costs, costs and fees associated with investments in our strategic initiatives, 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 period over period 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;

• to calculate incentive compensation payments for our employees, including assessing performance under our annual incentive compensation plan and determining the vesting of performance shares.

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.

Items excluded from these non-GAAP measures are significant components in understanding and assessing financial performance.

In addition, the instruments governing our indebtedness use EBITDA (with additional adjustments) to measure our compliance with certain financial covenants.

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;

• 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 table below, Adjusted EBITDA includes adjustments for transaction costs, costs and fees associated with investments in our strategic initiatives, and stock-based compensation, among other items.

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.

In addition, Adjusted EBITDA includes adjustments for other items that we do not expect to regularly record, such as transaction costs, management fees and expense reimbursement.

Each of the normal recurring adjustments and other adjustments described in this paragraph and in the reconciliation table below help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations.

The following table reconciles EBITDA and Adjusted EBITDA to the most directly comparable U.S.

GAAP financial performance measure, which is net income:

(in thousands)

December 28, 2019 December 29, 2018 December 30, 2017 December 31, 2016 December 26, 2015 (a)

$ 20,476 $ 21,719 $ 23,940 $ 13,769 $ 10,106

Interest expense, net

17,136 10,123 5,131 4,396 3,477

Income tax expense

5,289 5,208 4,802 8,188 5,739

Depreciation and amortization

5,484 4,313 3,376 3,008 2,682

$ 48,385 $ 41,363 $ 37,249 $ 29,361 $ 22,004

Management fees (b)

Management agreement termination fee (c)

— — — — 3,297

Transaction costs (d)

— 3,898 — 2,388 2,186

Consulting fees (e)

1,630 — — — —

Stock-based compensation expense (f)

6,974 3,725 1,851 1,231 1,155

Adjusted EBITDA

$ 56,989 $ 48,986 $ 39,100 $ 32,980 $ 28,879

(a) Fiscal year 2015 has not been adjusted to reflect the adoption of the new accounting standards adopted in fiscal year 2018.

(b) Includes management fees and other out-of-pocket expenses paid to Roark Capital Management, LLC ("Roark Capital Management").

(c) Represents a one-time fee of $3.3 million that was paid in consideration for the termination of our management agreement with Roark Capital Management during the second quarter of 2015 in connection with our initial public offering.

There are no further obligations related to management fees paid to Roark Capital Management.

(d) Represents costs and expenses related to the refinancings of our credit agreement and our public offerings;

all transaction costs are included in SG&A with the exception of $1.5 million during the year ended December 29, 2018, $215,000 during the year ended December 31, 2016, and $172,000 during the year ended December 26, 2015 that is included in Other expense, net.

(e) Represents costs and expenses related to a consulting project to support the Company's strategic initiatives, which are included in SG&A.

(f) Includes non-cash, stock-based compensation.

(6) We define the domestic same store base to include those domestic restaurants open for at least 52 full weeks.

Change in domestic same store sales reflects the change in year-over-year sales for the domestic same store base.

Pursuant to the early adoption of SEC Final Rule Release No.

33-10890, Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information , the Company has elected to omit Item 6.

Selected Financial Data.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity