What changed in this filing

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Item 1. Financial Statements

2023-11-01 compared with 2023-08-02 · 82 added, 47 removed, 260 unchanged (33% of the section changed)

4 unchanged sentences

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

September 30,

2023 December 31,

28 unchanged sentences

100,000,000 shares authorized;

29,977,614 and 29,932,668 shares issued and outstanding as of July 1, 2023 and December 31, 2022, respectively

29,414,920 and 29,932,668 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in-capital 1,238 2,797

8 unchanged sentences

(amounts in thousands, except per share data)

Thirteen Weeks Ended Twenty-Six Weeks Ended

2023 June 25,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Royalty revenue, franchise fees and other $ 53,200 $ 40,363 $ 149,372 $ 111,477

33 unchanged sentences

Consolidated Statements of Stockholders' Deficit

For the Twenty-Six Weeks Ended June 25, 2022

For the Thirty-Nine Weeks Ended September 24, 2022

(amounts in thousands, except share data)

6 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 )

8 unchanged sentences

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

Dividends declared on common stock and equivalents — — ( 1,183 ) ( 4,448 ) — ( 5,631 )

Currency translation adjustment — $ — $ — $ — $ ( 391 ) $ ( 391 )

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

See accompanying notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Stockholders' Deficit

For the Twenty-Six Weeks Ended July 1, 2023

For the Thirty-Nine Weeks Ended September 30, 2023

(amounts in thousands, except share data)

5 unchanged sentences

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

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

Stock-based compensation expense, net of forfeitures — — 3,345 — — 3,345

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

4 unchanged sentences

Tax payments for restricted stock upon vesting ( 342 ) — — ( 69 ) — ( 69 )

Stock-based compensation expense — — 3,546 — — 3,546

Stock-based compensation expense, net of forfeitures — — 3,546 — — 3,546

Dividends declared on common stock and equivalents — — ( 2,679 ) ( 3,030 ) — ( 5,709 )

1 unchanged sentence

Balance at July 1, 2023 29,977,614 300 2,038 ( 367,327 ) ( 362 ) ( 365,351 )

Net income — — — 19,511 — 19,511

Shares issued under stock plans 4,857 — 270 — — 270

Tax payments for restricted stock upon vesting ( 400 ) — — ( 66 ) — ( 66 )

Stock-based compensation expense, net of forfeitures — — 3,128 — — 3,128

Dividends declared on common stock and equivalents — — ( 3,957 ) ( 2,653 ) — ( 6,610 )

Purchases of common stock ( 567,151 ) ( 6 ) ( 241 ) ( 125,878 ) — ( 126,125 )

Currency translation adjustment — — — — ( 199 ) ( 199 )

Balance at September 30, 2023 29,414,920 $ 294 $ 1,238 $ ( 476,413 ) $ ( 561 ) $ ( 475,442 )

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(amounts in thousands)

Twenty-Six Weeks Ended

2023 June 25,

Thirty-Nine Weeks Ended

September 30,

2023 September 24,

Operating activities

22 unchanged sentences

Financing activities

Proceeds from exercise of stock options 473 1,963

Borrowings of long-term debt — 250,000

1 unchanged sentence

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

Proceeds from exercise of stock options 743 1,963

Purchases of common stock ( 125,250 ) —

Tax payments for restricted stock upon vesting ( 2,427 ) ( 302 )

1 unchanged sentence

Cash provided by (used in) financing activities ( 149,017 ) 109,432

Net increase in cash, cash equivalents, and restricted cash 8,387 136,719

Net increase (decrease) in cash, cash equivalents, and restricted cash ( 98,769 ) 145,954

Cash, cash equivalents, and restricted cash at beginning of period 205,715 54,906

9 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 July 1, 2023, the Company had a total of 2,046 restaurants in its system.

The Company’s restaurant base is approximately 98 % franchised, with 2,001 franchised locations (including 252 international locations) and 45 company-owned restaurants as of July 1, 2023.

As of September 30, 2023, the Company had a total of 2,099 restaurants in its system.

The Company’s restaurant base is approximately 98 % franchised, with 2,053 franchised locations (including 262 international locations) and 46 company-owned restaurants as of September 30, 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 July 1, 2023 and December 31, 2022, and operating results are for the thirteen and twenty-six weeks ended July 1, 2023 and June 25, 2022.

Balance sheet amounts are as of September 30, 2023 and December 31, 2022, and operating results are for the thirteen and thirty-nine weeks ended September 30, 2023 and September 24, 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 July 1, 2023 and December 31, 2022 were as follows (in thousands):

July 1, 2023 December 31, 2022

Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of September 30, 2023 and December 31, 2022 were as follows (in thousands):

September 30, 2023 December 31, 2022

Cash and cash equivalents $ 77,983 $ 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 Twenty-Six Weeks Ended

2023 June 25,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Basic weighted average shares outstanding 29,750 29,915 29,889 29,882

1 unchanged sentence

Diluted weighted average shares outstanding 29,818 29,967 29,969 29,951

For the thirteen weeks ended July 1, 2023 and June 25, 2022, equity awards representing approximately 1,000 and 77,000 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 July 1, 2023 and June 25, 2022, equity awards representing approximately 3,000 and 38,000 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, in each of the first two quarters of 2023, our Board of Directors declared a quarterly dividend of $ 0.19 per share of common stock, which, in aggregate, totaled $ 11.4 million, or $ 0.38 per share of common stock, and which was paid during the twenty-six weeks ended July 1, 2023.

Subsequent to the second quarter, on August 1, 2023, the Company’s Board of Directors declared a quarterly dividend of $ 0.22 per share of common stock for stockholders of record as of August 18, 2023.

The regular quarterly dividend is to be paid on September 8, 2023, totaling approximately $ 6.6 million.

For the thirteen weeks ended September 30, 2023 and September 24, 2022, equity awards representing approximately 9,000 and 21,000 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 30, 2023 and September 24, 2022, equity awards representing approximately 5,000 and 31,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

(3) Stockholders’ Deficit

In connection with the Company’s regular dividend program, the Company’s Board of Directors declared a quarterly dividend of $ 0.19 per share of common stock in each of the first two quarters of 2023, and a quarterly dividend of $ 0.22 per share of common stock in the third quarter of 2023, resulting in aggregate dividend payments of $ 18.0 million, or $ 0.60 per share of common stock, during the thirty-nine weeks ended September 30, 2023.

Subsequent to the third quarter, on October 31, 2023, the Company’s Board of Directors declared a quarterly dividend of $ 0.22 per share of common stock for stockholders of record as of November 17, 2023.

The regular quarterly dividend is to be paid on December 8, 2023, totaling approximately $ 6.5 million.

Share Repurchase Program

On August 16, 2023, the Company’s Board of Directors approved a new share repurchase program with authorization to purchase up to $ 250.0 million of its outstanding shares of common stock (the “Share Repurchase Authorization”).

On August 23, 2023, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a third-party financial institution to repurchase $ 125.0 million of the Company’s common stock as part of the Share Repurchase Authorization.

Under the ASR Agreement, the Company made an initial payment to the financial institution of $ 125.0 million in cash and received and retired an initial delivery of 567,151 shares of common stock, representing an estimated 75 % of the total shares expected to be delivered under the ASR Agreement, based on the closing price on the date of initial delivery of $ 165.30 .

The delivery of any remaining shares will occur at the final settlement of the the transactions under the ASR Agreement, which is scheduled in the fiscal fourth quarter of 2023.

The number of shares to be delivered upon final settlement is based on the daily volume-weighted average share prices during the valuation period specified in the ASR Agreement, less a discount and subject to adjustments.

As of September 30, 2023, the Company had a total remaining authorized amount for share repurchases under the program of approximately $ 125.0 million.

(4) Fair Value Measurements

10 unchanged sentences

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

July 1, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Fair Value Carrying

10 unchanged sentences

(5) Income Taxes

Income tax expense and the effective tax rate were $ 6.1 million and 27.3 %, respectively, for the thirteen weeks ended July 1, 2023, and $ 3.1 million and 18.7 %, respectively, for the thirteen weeks ended June 25, 2022.

Income tax expense and the effective tax rate were $ 11.3 million and 26.2 %, respectively, for the twenty-six weeks ended July 1, 2023, and $ 5.9 million and 21.2 %, respectively, for the twenty-six weeks ended June 25, 2022.

The main component of the year-over-year increase in effective tax rates was the impact of stock awards forfeited during the thirteen and twenty-six weeks ended June 25, 2022.

Income tax expense and the effective tax rate were $ 6.6 million and 25.4 %, respectively, for the thirteen weeks ended September 30, 2023, and $ 4.7 million and 25.9 %, respectively, for the thirteen weeks ended September 24, 2022.

Income tax expense and the effective tax rate were $ 18.0 million and 25.9 %, respectively, for the thirty-nine weeks ended September 30, 2023, and $ 10.6 million and 23.1 %, respectively, for the thirty-nine weeks ended September 24, 2022.

The main component of the increase in effective tax rates during the year-to-date period was the impact of stock awards forfeited during the thirty-nine weeks ended September 24, 2022.

(6) Debt Obligations

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

July 1, 2023 December 31, 2022

September 30, 2023 December 31, 2022

2020-1 Class A-2 Senior Secured Notes $ 472,800 $ 475,200

6 unchanged sentences

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 July 1, 2023 and December 31, 2022.

As of July 1, 2023, the Company’s leverage ratio under the 2020 Class A-2 Notes and the 2022 Class A-2 Notes was less than 5.0 x.

No borrowings were outstanding under the 2022 Variable Funding Notes as of September 30, 2023 and December 31, 2022.

As of September 30, 2023, the Company’s leverage ratio under the 2020 Class A-2 Notes and the 2022 Class A-2 Notes was less than 5.0 x.

Per the terms of the Company’s debt agreements, principal payments can be suspended at the borrower’s election until the repayment date as long as the Company maintains a leverage ratio of less than 5.0 x.

Accordingly, the Company elected to suspend payments following the principal payment made in the second quarter of 2023, and the entire outstanding balance of $ 720.9 million of the 2020 Class A-2 Notes and the 2022 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026.

Accordingly, the Company elected to suspend payments following the principal payment made in the second quarter of 2023, and the entire outstanding balance of

WINGSTOP INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

$ 720.9 million of the 2020 Class A-2 Notes and the 2022 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026.

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.

3 unchanged sentences

(8) Stock-Based Compensation

During the twenty-six weeks ended July 1, 2023, the Company granted 41,885 restricted stock units (“RSUs”) to certain employees.

During the thirty-nine weeks ended September 30, 2023, the Company granted 46,879 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 $ 172.27 per unit.

In addition, the Company granted 37,414 performance stock units (“PSUs”) to certain employees during the twenty-six weeks ended July 1, 2023.

In addition, the Company granted 39,886 performance stock units (“PSUs”) to certain employees during the thirty-nine weeks ended September 30, 2023.

Of the total PSUs granted, 32,201 PSUs are subject to a service condition and a performance vesting condition based on return on incremental invested capital (“ROI PSUs”).

4 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, net of forfeitures recognized, was $ 6.9 million and $ 0.6 million for the twenty-six weeks ended July 1, 2023 and June 25, 2022, 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 $ 10.0 million and $ 2.1 million for the thirty-nine weeks ended September 30, 2023 and September 24, 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 twenty-six weeks ended July 1, 2023 and June 25, 2022 (in thousands):

Thirteen Weeks Ended Twenty-Six Weeks Ended

July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022

The following table represents a disaggregation of revenue from contracts with customers for the thirteen and thirty-nine weeks ended September 30, 2023 and September 24, 2022 (in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 30, 2023 September 24, 2022 September 30, 2023 September 24, 2022

Royalty revenue $ 47,546 $ 36,778 $ 134,330 $ 102,020

1 unchanged sentence

Franchise fees 1,660 1,257 3,828 3,221

Franchise fee, development fee, and international territory fee payments received by the Company are recorded as deferred revenue on the Consolidated Balance Sheets, which represents a contract liability.

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 twenty-six weeks ended July 1, 2023 was included in the deferred revenue balance as of December 31, 2022.

Approximately $ 8.8 million and $ 7.7 million of deferred revenue as of July 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 July 1, 2023.

WINGSTOP INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

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 30, 2023 was included in the deferred revenue balance as of December 31, 2022.

Approximately $ 8.8 million and $ 7.7 million of deferred revenue as of September 30, 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 30, 2023.

(10) Acquisitions of Company-owned Restaurants

11 unchanged sentences

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

(11) Subsequent Events

Subsequent to the end of the third fiscal quarter 2023, the Company acquired one existing restaurant in the Dallas, TX market from a franchisee.

The total purchase price was $ 6.5 million, funded by cash on hand.

The restaurant acquisition is accounted for as a business combination 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 this location will be included in our Consolidated Statements of Comprehensive Income as of the date 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