What changed in this filing

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Item 1. Financial Statements

2023-05-03 compared with 2022-10-26 · 61 added, 145 removed, 208 unchanged (50% of the section changed)

4 unchanged sentences

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

September 24,

2023 December 31,

28 unchanged sentences

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

29,968,872 and 29,932,668 shares issued and outstanding as of April 1, 2023 and December 31, 2022, respectively

Additional paid-in-capital 809 2,797

8 unchanged sentences

(amounts in thousands, except per share data)

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 24,

2022 September 25,

2021 September 24,

2022 September 25,

Thirteen Weeks Ended

2023 March 26,

Royalty revenue, franchise fees and other $ 48,188 $ 35,070

8 unchanged sentences

Depreciation and amortization 2,989 2,227

Loss (gain) on disposal of assets 239 ( 3,567 ) 1,006 ( 3,567 )

Loss on disposal of assets 77 444

Total costs and expenses 83,049 59,598

2 unchanged sentences

Loss on debt extinguishment — 814

Other expense (income) 290 ( 22 ) 381 ( 22 )

Other expense 188 65

Income before income tax expense 20,911 11,536

17 unchanged sentences

Consolidated Statements of Stockholders' Deficit

For the Thirty-Nine Weeks Ended September 25, 2021

For the Thirteen Weeks Ended March 26, 2022 and April 1, 2023

(amounts in thousands, except share data)

6 unchanged sentences

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

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

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

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

Currency translation adjustment — — — — ( 66 ) ( 66 )

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)

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

Shares Amount Additional

4 unchanged sentences

Tax payments for restricted stock upon vesting ( 13,613 ) — — ( 2,292 ) — ( 2,292 )

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

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

Currency translation adjustment — — — — ( 66 ) ( 66 )

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 )

Net income — — — 13,368 — 13,368

Shares issued under stock plans 1,815 — — — — —

Stock-based compensation expense, net of forfeitures — — 1,528 — — 1,528

Stock-based compensation expense — — 3,345 — — 3,345

Dividends declared on common stock and equivalents — — ( 5,444 ) ( 465 ) — ( 5,909 )

Currency translation adjustment — — — — 147 147

Balance at September 24, 2022 29,916,183 $ 299 $ 991 $ ( 406,902 ) $ ( 984 ) $ ( 406,596 )

Balance at April 1, 2023 29,968,872 $ 300 $ 809 $ ( 380,409 ) $ ( 490 ) $ ( 379,790 )

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(amounts in thousands)

Thirty-Nine Weeks Ended

September 24,

2022 September 25,

Thirteen Weeks Ended

2023 March 26,

Operating activities

4 unchanged sentences

Stock-based compensation expense 3,345 2,191

Loss (gain) on disposal of assets 1,006 ( 3,567 )

Loss on disposal of assets 77 444

Amortization of debt issuance costs 515 373

10 unchanged sentences

Purchases of property and equipment ( 4,319 ) ( 6,293 )

Acquisitions of restaurants from franchisees ( 1,738 ) ( 4,876 )

Proceeds from sales of assets — 1,479

Payments for investments — ( 4,163 )

Cash used in investing activities ( 4,319 ) ( 4,814 )

19 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 September 24, 2022, the Company had a total of 1,898 restaurants in its system.

The Company's restaurant base is approximately 98 % franchised, with 1,856 franchised locations (including 225 international locations) and 42 company-owned restaurants as of September 24, 2022.

As of April 1, 2023, the Company had a total of 1,996 restaurants in its system.

The Company’s restaurant base is approximately 98 % franchised, with 1,953 franchised locations (including 243 international locations) and 43 company-owned restaurants as of April 1, 2023.

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 September 24, 2022 and December 25, 2021, and operating results are for the thirteen and thirty-nine weeks ended September 24, 2022 and September 25, 2021.

Balance sheet amounts are as of April 1, 2023 and December 31, 2022, and operating results are for the thirteen weeks ended April 1, 2023 and March 26, 2022.

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 September 24, 2022 and December 25, 2021 were as follows (in thousands):

September 24, 2022 December 25, 2021

Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of April 1, 2023 and December 31, 2022 were as follows (in thousands):

April 1, 2023 December 31, 2022

Cash and cash equivalents $ 196,198 $ 184,496

12 unchanged sentences

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 24,

2022 September 25,

2021 September 24,

2022 September 25,

Thirteen Weeks Ended

2023 March 26,

Basic weighted average shares outstanding 29,947 29,851

1 unchanged sentence

Diluted weighted average shares outstanding 30,031 29,974

For the thirteen weeks ended September 24, 2022 and September 25, 2021, equity awards representing approximately 21,000 and 400 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

For the thirty-nine weeks ended September 24, 2022 and September 25, 2021, equity awards representing approximately 31,000 and 4,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

For the thirteen weeks ended April 1, 2023 and March 26, 2022, equity awards representing approximately 13,000 and 8,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

(3) Dividends

The Company’s Board of Directors declared a quarterly dividend of $ 0.17 per share of common stock in each of the first two quarters of 2022, and a quarterly dividend of $ 0.19 per share of common stock in the third quarter of 2022, resulting in aggregate dividend payments of $ 15.8 million, or $ 0.53 per share of common stock, during the thirty-nine weeks ended September 24, 2022.

Subsequent to the third quarter, on October 25, 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 November 11, 2022.

The regular quarterly dividend is to be paid on December 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.

This dividend was paid on April 7, 2022 to stockholders of record as of March 24, 2022.

In connection with the Company’s regular dividend program, on February 21, 2023, our Board of Directors declared a quarterly dividend of $ 0.19 per share of common stock, resulting in a total dividend of approximately $ 5.7 million.

This dividend was paid on March 31, 2023 to stockholders of record as of March 10, 2023.

Subsequent to the first quarter, on May 2, 2023, the Company’s Board of Directors declared a quarterly dividend of $ 0.19 per share of common stock for stockholders of record as of May 19, 2023.

The regular quarterly dividend is to be paid on June 9, 2023, totaling approximately $ 5.7 million.

(4) Fair Value Measurements

4 unchanged sentences

Level 3 — Unobservable inputs reflecting management’s estimates and assumptions.

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

1 unchanged sentence

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

September 24, 2022 December 25, 2021

April 1, 2023 December 31, 2022

Fair Value Carrying

4 unchanged sentences

Level 2 $ 248,750 $ 215,169 $ 249,375 $ 215,709

Investment in bonds of LPH (2)

Investments in bonds of LPH (2)

Level 3 $ 3,305 $ 4,030 $ 3,196 $ 3,906

2 unchanged sentences

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.

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(5) Income Taxes

Income tax expense and the effective tax rate were $ 4.7 million and 25.9 %, respectively, for the thirteen weeks ended September 24, 2022, and $ 5.8 million and 34.1 %, respectively, for the thirteen weeks ended September 25, 2021.

Income tax expense and the effective tax rate were $ 10.6 million and 23.1 %, respectively, for the thirty-nine weeks ended September 24, 2022, and $ 12.6 million and 26.0 %, respectively, for the thirty-nine weeks ended September 25, 2021.

The major components of the year-over-year decrease in effective tax rates were the impact of stock awards forfeited during the thirty-nine weeks ended September 24, 2022, as well as the impact of nondeductible expenses for executive compensation in the prior year comparable period.

Income tax expense and the effective tax rate were $ 5.2 million and 25.1 %, respectively, for the thirteen weeks ended April 1, 2023, and $ 2.9 million and 24.8 %, respectively, for the thirteen weeks ended March 26, 2022.

The effective tax rate remained comparable to the prior fiscal first quarter.

(6) Debt Obligations

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

September 24, 2022 December 25, 2021

April 1, 2023 December 31, 2022

2020-1 Class A-2 Senior Secured Notes $ 474,000 $ 475,200

4 unchanged sentences

Long-term debt, net $ 705,483 $ 706,846

On March 9, 2022, the Company completed a securitized financing transaction, in which Wingstop Funding LLC, a limited purpose, bankruptcy-remote, indirect wholly owned subsidiary of the Company (the “Issuer”), issued $ 250 million of its Series 2022-1 3.734 % Fixed Rate Senior Secured Notes, Class A-2 (the “2022 Class A-2 Notes”).

The Issuer also entered into a revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “2022 Variable Funding Notes,” and together with the 2022 Class A-2 Notes, the “2022 Notes”), which permits borrowings of up to a maximum principal amount of $ 200 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit.

The proceeds from the securitized financing transaction were used to pay related transaction fees and expenses, strengthen the Company's liquidity position and for general corporate purposes, which included a return of capital to the Company’s stockholders.

In addition to the 2022 Notes, the Company’s outstanding debt consists of its existing Series 2020-1 2.84 % Fixed Rate Senior Secured Notes, Class A-2 (the “2020 Notes”).

The Company’s existing revolving financing facility of Series 2020-1 Class A-1 Notes (“the 2020 Variable Funding Notes”) was terminated in connection with the transaction.

As of December 25, 2021, $ 3.5 million of letters of credit were outstanding against the 2020 Variable Funding Notes, which related primarily to required

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 September 24, 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.

The 2022 Notes were issued pursuant to a base indenture and related supplemental indentures (collectively, the “Indenture”).

Interest and principal payments on the 2022 Class A-2 Notes are payable on a quarterly basis.

The requirement to make such quarterly principal payments on the 2022 Class A-2 Notes is subject to certain financial conditions set forth in the Indenture.

The legal final maturity date of the 2022 Notes is in March of 2052, but, unless earlier prepaid to the extent permitted under the Indenture, the anticipated repayment date of the 2022 Class A-2 Notes is March 2029.

If the Issuer has not repaid or refinanced the 2022 Class A-2 Notes prior to the anticipated repayment date, additional interest will accrue on the Notes.

The 2022 Variable Funding Notes accrue interest at a variable rate based on (i) the prime rate, (ii) the overnight federal funds rates, (iii) the secured overnight financing rate, or (iv) with respect to advances made by conduit investors, the weighted average cost of, or related to, the issuance of commercial paper allocated to fund or maintain such advances, in each case plus any applicable margin, as more fully set forth in the 2022 Variable Funding Note Purchase Agreement, dated March 9, 2022, and the indenture supplement.

Commitment fees and other usage fees apply to the 2022 Variable Funding Notes facility depending on the type of borrowing requested.

There is a 60 -basis points draw fee on borrowings requested pursuant to the terms of the 2022 Variable Fund Notes.

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 September 24, 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.

The 2022 Class A-2 Notes are also subject to customary rapid amortization events provided for in the indenture, including events tied to failure to maintain stated debt service coverage ratios, the sum of global gross sales for specified restaurants being below certain levels on certain measurement dates, certain change of control and manager termination events, an event of default, and the failure to repay or refinance the 2022 Class A-2 Notes on the applicable scheduled maturity date.

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 September 24, 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.

Total debt issuance costs incurred and capitalized in connection with the issuance of the 2022 Notes were $ 5.5 million.

As of December 25, 2021, the Company’s leverage ratio was less than 5.0 x, and accordingly, per the terms of the applicable debt agreements, the Company elected to suspend principal payments and classified the balance of the 2020 Notes as long-term debt.

Subsequent to the closing of the 2022 Notes, the Company had a leverage ratio of greater than 5.0 x and, accordingly, the Company resumed making scheduled amortization payments on the notes in the third quarter of 2022.

The 2020 Class A-2 Notes and the 2022 Class A-2 Notes are generally subject to 1 % annual amortization.

The Company’s outstanding debt was issued by Wingstop Funding LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of Wingstop Inc.

and consists of (i) Series 2020-1 2.84 % Fixed Rate Senior Secured Notes, Class A-2 (the “2020 Class A-2 Notes”), (ii) Series 2022-1 3.734 % Fixed Rate Senior Secured Notes, Class A-2 (the “2022 Class A-2 Notes”), and (iii) a revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “2022 Variable Funding Notes,” and together with the 2022 Class A-2 Notes, the “2022 Notes”), which permits borrowings of up to a maximum principal amount of $ 200 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit.

No borrowings were outstanding under the 2022 Variable Funding Notes as of April 1, 2023 and December 31, 2022.

The 2020 Class A-2 Notes and 2022 Notes were issued in securitization transactions, and are 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.

(7) Commitments and Contingencies

1 unchanged sentence

In the opinion of management, the amount of ultimate liability with respect to such actions is not likely to have a material adverse impact on the Company’s financial position, results of operations, or cash flows.

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(8) Stock-Based Compensation

During the thirty-nine weeks ended September 24, 2022, the Company granted stock options to purchase 37,787 shares of common stock and 61,394 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 .

The stock options were granted with a weighted-average exercise price of $ 144.94 per share and had a weighted-average grant-date fair value of $ 49.10 per share.

During the thirteen weeks ended April 1, 2023, the Company granted 38,338 restricted stock units (“RSUs”) to certain employees.

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 $ 170.17 per unit.

In addition, the Company granted 46,004 performance stock units (“PSUs”) to certain employees during the thirty-nine weeks ended September 24, 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.

Vested amounts may range from 0 % to a maximum of 500 % of targeted amounts depending on the achievement of performance measures at the end of each vesting period.

Such performance measures are based on the Company meeting certain return on incremental investment targets or unit development targets for the vesting period.

In addition, the Company granted 34,242 performance stock units (“PSUs”) to certain employees during the thirteen weeks ended April 1, 2023.

Of the total PSUs granted, 27,258 PSUs are subject to a service condition and a performance vesting condition based on return on incremental invested capital (“ROI PSUs”).

The ROI PSUs are generally eligible to cliff-vest approximately three years from the grant date, and the maximum vesting percentage that could be realized for each of the ROI PSUs is 250 % based on the level of performance achieved for the awards.

The remaining 6,984 PSUs granted are subject to a service condition and a performance vesting condition based on the number of net new restaurants opened over the performance period (“NNR PSUs”).

The NNR PSUs vest in equal annual amounts over a three-year period, and the maximum vesting percentage that could be realized for each of the NNR PSUs is 100 % based on the level of performance achieved for the awards.

The PSUs had a weighted-average grant-date fair value of $ 169.77 per unit.

Total compensation cost for the PSUs is determined based on the number of awards that are probable of vesting based on the outcome of the performance condition.

Total compensation expense related to all share-based awards, net of forfeitures recognized, was $ 2.1 million and $ 6.8 million for the thirty-nine weeks ended September 24, 2022 and September 25, 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 $ 5.2 million during the thirty-nine weeks ended September 24, 2022.

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.

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Total compensation expense related to all share-based awards was $ 3.3 million and $ 2.2 million for the thirteen weeks ended April 1, 2023 and March 26, 2022, respectively, and was included in Selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Comprehensive Income.

(9) Revenue from Contracts with Customers

The following table represents a disaggregation of revenue from contracts with customers for the thirteen and thirty-nine weeks ended September 24, 2022 and September 25, 2021 (in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 24, 2022 September 25, 2021 September 24, 2022 September 25, 2021

The following table represents a disaggregation of revenue from contracts with customers for the thirteen weeks ended April 1, 2023 and March 26, 2022 (in thousands):

Thirteen Weeks Ended

April 1, 2023 March 26, 2022

Royalty revenue $ 43,513 $ 32,204

Advertising fees 32,146 15,575 83,672 59,672

Advertising fees and related income 37,463 22,539

Franchise fees 1,061 960

1 unchanged sentence

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 and thirty-nine weeks ended September 24, 2022 was included in the deferred revenue balance as of December 25, 2021.

Approximately $ 8.5 million and $ 10.4 million of deferred revenue as of September 24, 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 weeks ended April 1, 2023 was included in the deferred revenue balance as of December 31, 2022.

Approximately $ 8.4 million and $ 7.7 million of deferred revenue as of April 1, 2023 and December 31, 2022, 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 7.1 years.

The Company did not have any material contract assets as of September 24, 2022.

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(10) Acquisition of Company-owned Restaurant

During the third fiscal quarter 2022, the company acquired one existing restaurant from a franchisee.

The purchase price was $ 1.7 million and was funded by cash flow from operations.

The following table summarizes the preliminary allocations of the purchase price to the estimated fair value of assets acquired and liabilities assumed at the date of the acquisition (in thousands):

Purchase Price Allocation

Working capital ( 6 )

Property and equipment 51

Goodwill 1,693

Total purchase price $ 1,738

The estimates of fair value are preliminary, and are therefore subject to further refinement.

The excess of the purchase price over the aggregate fair value of assets acquired was allocated to goodwill and is attributable to the benefits expected as a result of the acquisition, including sales and unit growth opportunities.

All of the goodwill from the acquisition is expected to be deductible for federal income tax purposes.

Pro-forma financial information of the combined entities is not presented due to the immaterial impact of the financial results of the acquired restaurant on our consolidated financial statements.

The Company did not have any material contract assets as of April 1, 2023.

(10) Subsequent Event

Subsequent to the end of first fiscal quarter 2023, the Company acquired two existing restaurants in the Dallas, TX market from a franchisee.

The total purchase price was $ 4.4 million, funded by cash on hand.

The restaurant acquisitions are accounted for as business combinations and the Company is still determining the estimated fair value of assets acquired and liabilities assumed.

The excess of the purchase price over the aggregate fair value of assets acquired will be allocated to goodwill.

The results of operations of these locations will be included in our Consolidated Statements of Comprehensive Income as of the respective dates of acquisition.

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