What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2023-11-01 · 51 added, 116 removed, 226 unchanged (42% of the section changed)

4 unchanged sentences

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

September 30,

2024 December 30,

16 unchanged sentences

Other current liabilities 38,675 40,951

Current portion of debt — 7,300

Advertising fund liabilities 33,710 25,328

9 unchanged sentences

100,000,000 shares authorized;

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

29,369,978 and 29,337,920 shares issued and outstanding as of March 30, 2024 and December 30, 2023, respectively

Additional paid-in-capital 918 2,676

8 unchanged sentences

(amounts in thousands, except per share data)

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 30,

2023 September 24,

2022 September 30,

2023 September 24,

Thirteen Weeks Ended

2024 April 1,

Royalty revenue, franchise fees and other $ 67,097 $ 48,188

12 unchanged sentences

Interest expense, net 4,544 4,573

Loss on debt extinguishment — — — 814

Other (income) expense ( 303 ) 188

18 unchanged sentences

Consolidated Statements of Stockholders' Deficit

For the Thirty-Nine Weeks Ended September 24, 2022

For the Thirteen Weeks Ended April 1, 2023 and March 30, 2024

(amounts in thousands, except share data)

9 unchanged sentences

Currency translation adjustment — — — — 147 147

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

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.

WINGSTOP INC.

AND SUBSIDIARIES

Consolidated Statements of Stockholders' Deficit

For the Thirty-Nine Weeks Ended September 30, 2023

(amounts in thousands, except share data)

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

Shares Amount Additional

7 unchanged sentences

Currency translation adjustment — — — — ( 24 ) ( 24 )

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

Net income — — — 16,181 — 16,181

Shares issued under stock plans 9,084 — 362 — — 362

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

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

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

Currency translation adjustment — — — — 128 128

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 )

Balance at March 30, 2024 29,369,978 294 918 ( 435,226 ) ( 365 ) ( 434,379 )

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(amounts in thousands)

Thirty-Nine Weeks Ended

September 30,

2023 September 24,

Thirteen Weeks Ended

2024 April 1,

Operating activities

6 unchanged sentences

Amortization of debt issuance costs 516 515

Loss on debt extinguishment — 814

Changes in operating assets and liabilities:

8 unchanged sentences

Purchases of property and equipment ( 11,158 ) ( 4,319 )

Acquisition of restaurants from franchisee ( 4,396 ) ( 1,738 )

Proceeds from sales of assets — 4,063

Payments for investments ( 500 ) —

1 unchanged sentence

Financing activities

Borrowings of long-term debt — 250,000

Repayments of long-term debt ( 3,650 ) ( 1,200 )

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

Proceeds from exercise of stock options 708 111

Purchases of common stock ( 125,250 ) —

Repayments of long-term debt — ( 1,825 )

Tax payments for restricted stock upon vesting ( 3,717 ) ( 2,292 )

13 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 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.

As of March 30, 2024, the Company had a total of 2,279 restaurants in its system.

The Company’s restaurant base is approximately 98 % franchised, with 2,229 franchised locations (including 305 international locations) and 50 company-owned restaurants as of March 30, 2024.

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 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.

Balance sheet amounts are as of March 30, 2024 and December 30, 2023, and operating results are for the thirteen weeks ended March 30, 2024 and April 1, 2023.

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

2 unchanged sentences

The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year.

Fiscal years 2023 and 2022 have 52 and 53 weeks, respectively.

Fiscal years 2024 and 2023 each have 52 weeks.

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 30, 2023 and December 31, 2022 were as follows (in thousands):

September 30, 2023 December 31, 2022

Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of March 30, 2024 and December 30, 2023 were as follows (in thousands):

March 30, 2024 December 30, 2023

Cash and cash equivalents $ 108,305 $ 90,216

4 unchanged sentences

We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements.

There have been no changes to the recently issued accounting pronouncements not yet adopted disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

(2) Earnings per Share

1 unchanged sentence

Diluted earnings per share reflects the potential dilution that could occur if securities convertible into, or other contracts to issue, common stock were exercised or converted into common stock.

For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of the exercise and vesting of stock options and restricted stock units, respectively, as determined using the treasury stock method.

For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of the exercise and vesting of stock options and service-based and performance-based restricted stock units, respectively, as determined using the treasury stock method.

WINGSTOP INC.

2 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 30,

2023 September 24,

2022 September 30,

2023 September 24,

Thirteen Weeks Ended

2024 April 1,

Basic weighted average shares outstanding 29,349 29,947

1 unchanged sentence

Diluted weighted average shares outstanding 29,478 30,031

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.

For the thirteen weeks ended March 30, 2024 and April 1, 2023, equity awards representing approximately 12,000 and 13,000 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.

In connection with the Company’s regular dividend program, the Company’s Board of Directors declared a quarterly dividend of $ 0.22 per share of common stock in the first quarter of 2024, resulting in a total dividend payment of approximately $ 6.5 million.

Subsequent to the first quarter, on April 30, 2024, the Company’s Board of Directors declared a quarterly dividend of $ 0.22 per share of common stock for stockholders of record as of May 17, 2024.

The regular quarterly dividend is to be paid on June 7, 2024, 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.

On August 17, 2023, the Company announced a share repurchase program with authorization to purchase up to $ 250.0 million of its outstanding shares of common stock (the “Share Repurchase Program”).

As of March 30, 2024, $ 125.0 million remained available for repurchase under the Share Repurchase Program.

(4) Fair Value Measurements

10 unchanged sentences

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

September 30, 2023 December 31, 2022

March 30, 2024 December 30, 2023

Fair Value Carrying

10 unchanged sentences

(5) Income Taxes

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.

Income tax expense and the effective tax rate were $ 9.8 million and 25.3 %, respectively, for the thirteen weeks ended March 30, 2024, and $ 5.2 million and 25.1 %, respectively, for the thirteen weeks ended April 1, 2023.

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 30, 2023 December 31, 2022

March 30, 2024 December 30, 2023

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

2 unchanged sentences

Total debt 712,790 712,327

current portion of debt — ( 7,300 )

Long-term debt, net $ 711,867 $ 706,846

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 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.

No borrowings were outstanding under the 2022 Variable Funding Notes as of March 30, 2024 and December 30, 2023.

As of March 30, 2024, 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

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.

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.

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.

Corporate office lease

During the fiscal first quarter 2024, the Company executed a lease for an office building with undiscounted fixed payments over the initial term of $ 66.9 million.

The lease has not yet commenced, and therefore has not been recognized on the Company's Consolidated Balance Sheet.

The lease has an initial lease term of 13.3 years and is expected to commence in the fiscal second quarter 2024.

(8) Stock-Based Compensation

During the thirty-nine weeks ended September 30, 2023, the Company granted 46,879 restricted stock units (“RSUs”) to certain employees.

During the thirteen weeks ended March 30, 2024, the Company granted 22,200 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 $ 370.76 per unit.

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

In addition, the Company granted 23,433 performance stock units (“PSUs”) to certain employees during the thirteen weeks ended March 30, 2024.

Of the total PSUs granted, 20,297 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 $ 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.

Total compensation expense related to all share-based awards, net of forfeitures recognized, was $ 3.8 million and $ 3.3 million for the thirteen weeks ended March 30, 2024 and April 1, 2023, 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 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

The following table represents a disaggregation of revenue from contracts with customers for the thirteen weeks ended March 30, 2024 and April 1, 2023 (in thousands):

Thirteen Weeks Ended

March 30, 2024 April 1, 2023

Royalty revenue $ 61,192 $ 43,513

6 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 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.

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 30, 2024 was included in the deferred revenue balance as of December 30, 2023.

Approximately $ 10.2 million and $ 9.3 million of deferred revenue as of March 30, 2024 and December 30, 2023, 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 September 30, 2023.

(10) Acquisitions of Company-owned Restaurants

In the second fiscal quarter 2023, the Company acquired two existing restaurants from a franchisee.

The combined purchase price was $ 4.4 million and was funded by cash flow from operations.

The following table summarizes the 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 $ 13

Property and equipment 92

Reacquired franchise rights 1,630

Goodwill 2,661

Total purchase price $ 4,396

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 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 Company did not have any material contract assets as of March 30, 2024.

(10) Subsequent Event

Subsequent to the end of the fiscal first quarter 2024, the Company acquired one existing restaurant from a franchisee.

The total purchase price was $ 3.3 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 restaurant acquisition is accounted for as a business combination.

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.

1 unchanged sentence

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