What changed in this filing

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Item 1. Financial Statements

2022-07-28 compared with 2022-05-04 · 67 added, 39 removed, 252 unchanged (30% of the section changed)

21 unchanged sentences

Accounts payable $ 3,121 $ 5,414

Dividends payable 120,149 300

Other current liabilities 29,188 28,070

11 unchanged sentences

100,000,000 shares authorized;

29,876,820 and 29,837,454 shares issued and outstanding as of March 26, 2022 and December 25, 2021, respectively

29,914,368 and 29,837,454 shares issued and outstanding as of June 25, 2022 and December 25, 2021, respectively

Additional paid-in-capital 646 463

8 unchanged sentences

(amounts in thousands, except per share data)

Thirteen Weeks Ended

2022 March 27,

Thirteen Weeks Ended Twenty-Six Weeks Ended

2022 June 26,

2021 June 25,

2022 June 26,

Royalty revenue, franchise fees and other $ 36,044 $ 33,135 $ 71,114 $ 64,741

33 unchanged sentences

Consolidated Statements of Stockholders' Deficit

For the Thirteen Weeks Ended March 27, 2021 and March 26, 2022

For the Twenty-Six Weeks Ended June 26, 2021

(amounts in thousands, except share data)

6 unchanged sentences

Tax payments for restricted stock upon vesting ( 11,243 ) — — ( 1,862 ) — ( 1,862 )

Stock-based compensation expense — — 2,316 — — 2,316

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 )

See accompanying notes to consolidated financial statements.

WINGSTOP INC.

AND SUBSIDIARIES

Consolidated Statements of Stockholders' Deficit

For the Twenty-Six Weeks Ended June 25, 2022

(amounts in thousands, except share data)

Shares Amount Additional

4 unchanged sentences

Tax payments for restricted stock upon vesting ( 1,923 ) — — ( 298 ) — ( 298 )

Stock-based compensation expense — — 2,191 — — 2,191

Stock-based compensation expense, net of forfeitures — — 2,191 — — 2,191

Dividends declared on common stock and equivalents — — ( 2,370 ) ( 122,960 ) — ( 125,330 )

1 unchanged sentence

Balance at March 26, 2022 29,876,820 299 409 ( 424,613 ) ( 322 ) ( 424,227 )

Net income — — — 13,307 — 13,307

Shares issued under stock plans 37,594 — 1,838 — — 1,838

Tax payments for restricted stock upon vesting ( 46 ) — — ( 4 ) — ( 4 )

Stock-based compensation expense, net of forfeitures — — ( 1,601 ) — — ( 1,601 )

Dividends declared on common stock and equivalents — — — ( 4,512 ) — ( 4,512 )

Currency translation adjustment — — — — ( 271 ) ( 271 )

Balance at June 25, 2022 29,914,368 $ 299 $ 646 $ ( 415,822 ) $ ( 593 ) $ ( 415,470 )

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(amounts in thousands)

Thirteen Weeks Ended

2022 March 27,

Twenty-Six Weeks Ended

2022 June 26,

Operating activities

18 unchanged sentences

Proceeds from sales of assets 3,637 —

Payments for investments — ( 4,163 )

Cash used in investing activities ( 9,058 ) ( 12,421 )

2 unchanged sentences

Borrowings of long-term debt 250,000 —

Repayments of long-term debt — ( 1,200 )

Payment of deferred financing costs and other debt-related costs ( 5,442 ) —

14 unchanged sentences

Wingstop Inc., together with its consolidated subsidiaries (collectively, “Wingstop” or the “Company”), is in the business of franchising and operating Wingstop restaurants.

As of March 26, 2022, the Company had a total of 1,791 restaurants in its system.

The Company's restaurant base is approximately 98 % franchised, with 1,754 franchised locations (including 203 international locations) and 37 company-owned restaurants as of March 26, 2022.

As of June 25, 2022, the Company had a total of 1,858 restaurants in its system.

The Company's restaurant base is approximately 98 % franchised, with 1,819 franchised locations (including 219 international locations) and 39 company-owned restaurants as of June 25, 2022.

Basis of presentation.

1 unchanged sentence

Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted.

Balance sheet amounts are as of March 26, 2022 and December 25, 2021, and operating results are for the thirteen weeks ended March 26, 2022 and March 27, 2021.

Balance sheet amounts are as of June 25, 2022 and December 25, 2021, and operating results are for the thirteen and twenty-six weeks ended June 25, 2022 and June 26, 2021.

In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented.

4 unchanged sentences

Cash, Cash Equivalents, and Restricted Cash.

Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of March 26, 2022 and December 25, 2021 were as follows (in thousands):

March 26, 2022 December 25, 2021

Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of June 25, 2022 and December 25, 2021 were as follows (in thousands):

June 25, 2022 December 25, 2021

Cash and cash equivalents $ 165,824 $ 48,583

12 unchanged sentences

Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):

Thirteen Weeks Ended

2022 March 27,

Thirteen Weeks Ended Twenty-Six Weeks Ended

2022 June 26,

2021 June 25,

2022 June 26,

Basic weighted average shares outstanding 29,882 29,739 29,866 29,722

1 unchanged sentence

Diluted weighted average shares outstanding 29,914 29,873 29,944 29,859

For the thirteen weeks ended March 26, 2022 and March 27, 2021, equity awards representing approximately 8,000 and 5,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

For the thirteen weeks ended June 25, 2022 and June 26, 2021, equity awards representing approximately 77,000 and 8,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

For the twenty-six weeks ended June 25, 2022 and June 26, 2021, equity awards representing approximately 38,000 and 7,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

(3) Dividends

In connection with the Company's regular dividend program, on February 15, 2022, our Board of Directors declared a quarterly dividend of $ 0.17 per share of common stock, resulting in a total dividend of approximately $ 5.1 million.

This dividend was paid on March 25, 2022 to stockholders of record as of March 11, 2022.

Subsequent to the first quarter, on May 3, 2022, the Company’s Board of Directors declared a quarterly dividend of $ 0.17 per share of common stock for stockholders of record as of May 20, 2022.

The regular quarterly dividend is to be paid on June 10, 2022, totaling approximately $ 5.1 million.

In each of the first two quarters of 2022, the Company’s Board of Directors declared a quarterly dividend of $ 0.17 per share of common stock, which, in the aggregate, totaled $ 10.2 million, or $ 0.34 per share of common stock, and which was paid during the twenty-six weeks ended June 25, 2022.

Subsequent to the second quarter, on July 27, 2022, the Company’s Board of Directors declared a quarterly dividend of $ 0.19 per share of common stock for stockholders of record as of August 12, 2022.

The regular quarterly dividend is to be paid on September 2, 2022, totaling approximately $ 5.7 million.

Separate from the Company’s regular dividend program, on March 9, 2022, the Company’s Board of Directors declared a special dividend of $ 4.00 per share of common stock, resulting in a total dividend of approximately $ 119.5 million.

10 unchanged sentences

The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short-term nature.

Fair value of debt and the investment in bonds held by the Company’s United Kingdom master franchisee, Lemon Pepper Holdings Ltd., (“LPH”) are determined on a non-recurring basis, which results are summarized as follows (in thousands):

March 26, 2022 December 25, 2021

Fair value of debt and the investment in bonds held by the Company’s United Kingdom master franchisee, Lemon Pepper Holdings Ltd.

(“LPH”), are determined on a non-recurring basis, which results are summarized as follows (in thousands):

June 25, 2022 December 25, 2021

Fair Value Carrying

7 unchanged sentences

(1) The fair value of the 2020-1 and 2022-1 Class A-2 Senior Secured Notes was estimated using available market information.

(2) The fair value is based on a discounted cash flow analysis using current market rates for debt investments with similar maturities and credit risk.

(2) The fair value approximates discounted cash flows using current market rates for debt investments with similar maturities and credit risk.

The Company also measures certain non-financial assets (primarily long-lived assets, intangible assets, and goodwill) at fair value on a non-recurring basis in connection with its periodic evaluations of such assets for potential impairment.

(5) Income Taxes

Income tax expense and the effective tax rate were $ 2.9 million and 24.8 %, respectively, for the thirteen weeks ended March 26, 2022, and $ 2.9 million and 17.9 %, respectively, for the thirteen weeks ended March 27, 2021.

Income tax expense for the thirteen weeks ended March 26, 2022 included $ 0.2 million in tax benefits resulting from the recognition of excess tax benefits from stock-based compensation, as compared to $ 1.3 million in tax benefits for the thirteen weeks ended March 27, 2021, respectively.

Income tax expense and the effective tax rate were $ 3.1 million and 18.7 %, respectively, for the thirteen weeks ended June 25, 2022, and $ 3.9 million and 25.5 %, respectively, for the thirteen weeks ended June 26, 2021.

Income tax expense and the effective tax rate were $ 5.9 million and 21.2 %, respectively, for the twenty-six weeks ended June 25, 2022, and $ 6.7 million and 21.6 %, respectively, for the twenty-six weeks ended June 26, 2021.

The major components of the year-over-year decrease in effective tax rates were the impact of stock awards forfeited during the twenty-six weeks ended June 25, 2022, partially offset by the impact of excess tax benefits associated with stock options exercised in the prior year comparable period.

(6) Debt Obligations

Long-term debt consisted of the following components (in thousands):

March 26, 2022 December 25, 2021

June 25, 2022 December 25, 2021

2020-1 Class A-2 Senior Secured Notes $ 477,600 $ 477,600

14 unchanged sentences

interest reserves, and there were no amounts drawn down on the letters of credit as of December 25, 2021.

No borrowings were outstanding under the 2022 Variable Funding Notes as of March 26, 2022.

No borrowings were outstanding under the 2022 Variable Funding Notes as of June 25, 2022.

The 2022 Notes were issued in a securitization transaction, which is guaranteed by certain limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company and secured by a security interest in substantially all of their assets, including certain domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements, intellectual property, and vendor rebate contracts.

8 unchanged sentences

Additionally, during a commitment availability period, there is a 30 -basis point commitment fee on the committed portion of the 2022 Variable Funding Notes.

There were no amounts drawn down on the letters of credit as of March 26, 2022.

There were no amounts drawn down on the letters of credit as of June 25, 2022.

The 2022 Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the 2022 Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the 2022 Class A-2 Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, that the assets pledged as collateral for the 2022 Notes are in stated ways defective or ineffective, and (iv) covenants relating to recordkeeping, access to information, and similar matters.

1 unchanged sentence

The 2022 Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the 2022 Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments.

As of March 26, 2022, the Company was in compliance with all financial covenants.

As of June 25, 2022, the Company was in compliance with all financial covenants.

During the first quarter of 2022, as a result of the termination of the 2020 Variable Funding Notes, the Company recorded a loss on debt extinguishment of $ 0.8 million related to the write-off of previously capitalized financing costs.

10 unchanged sentences

(8) Stock-Based Compensation

During the thirteen weeks ended March 26, 2022, the Company granted stock options to purchase 37,787 shares of common stock and 26,431 restricted stock units (“RSUs”) to certain employees.

During the twenty-six weeks ended June 25, 2022, the Company granted stock options to purchase 37,787 shares of common stock and 56,493 restricted stock units (“RSUs”) to certain employees.

The stock options vest in equal annual amounts over a three-year period subsequent to the grant date, and have a maximum contractual term of ten years .

1 unchanged sentence

The RSUs granted to certain employees generally vest in equal annual amounts over a three-year period, subsequent to the grant date and had a weighted-average grant-date fair value of $ 111.56 per unit.

In addition, the Company granted 30,209 performance stock units (“PSUs”) to certain employees during the thirteen weeks ended March 26, 2022.

In addition, the Company granted 42,556 performance stock units (“PSUs”) to certain employees during the twenty-six weeks ended June 25, 2022.

The PSUs cliff-vest at the end of a three year service period or vest in equal annual amounts over a three year period.

3 unchanged sentences

Total compensation cost for the PSUs is determined based on the most likely outcome of the performance condition and the number of awards expected to vest based on the outcome.

Total compensation expense related to all share-based awards was $ 2.2 million and $ 2.3 million for the thirteen weeks ended March 26, 2022 and March 27, 2021, respectively, and was included in Selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Comprehensive Income.

Total compensation expense related to all share-based awards, net of forfeitures recognized, was $ 0.6 million and $ 4.8 million for the twenty-six weeks ended June 25, 2022 and June 26, 2021, respectively, and was included in Selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Comprehensive Income.

The Company recognized forfeitures of $ 4.2 million during the thirteen and twenty-six weeks ended June 25, 2022.

(9) Revenue from Contracts with Customers

The following table represents a disaggregation of revenue from contracts with customers for the thirteen weeks ended March 26, 2022 and March 27, 2021 (in thousands):

Thirteen Weeks Ended

March 26, 2022 March 27, 2021

The following table represents a disaggregation of revenue from contracts with customers for the thirteen and twenty-six weeks ended June 25, 2022 and June 26, 2021 (in thousands):

Thirteen Weeks Ended Twenty-Six Weeks Ended

June 25, 2022 June 26, 2021 June 25, 2022 June 26, 2021

Royalty revenue $ 33,037 $ 30,414 $ 65,241 $ 59,223

3 unchanged sentences

Deferred revenue is reduced as fees are recognized in revenue over the term of the franchise license for the respective restaurant.

As the term of the franchise license is typically ten years , substantially all of the franchise fee revenue recognized in the thirteen weeks ended March 26, 2022 was included in the deferred revenue balance as of December 25, 2021.

Approximately $ 9.4 million and $ 10.4 million of deferred revenue as of March 26, 2022 and December 25, 2021, respectively, relates to restaurants that have not yet opened, so the fees are not yet being amortized.

As the term of the franchise license is typically ten years , substantially all of the franchise fee revenue recognized in the thirteen and twenty-six weeks ended June 25, 2022 was included in the deferred revenue balance as of December 25, 2021.

Approximately $ 8.7 million and $ 10.4 million of deferred revenue as of June 25, 2022 and December 25, 2021, respectively, relates to restaurants that have not yet opened, so the fees are not yet being amortized.

The weighted average remaining amortization period for deferred franchise and renewal fees related to open restaurants is 7.0 years.

The Company did not have any material contract assets as of March 26, 2022.

The Company did not have any material contract assets as of June 25, 2022.

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-Q

Item 1. Financial Statements