What changed in this filing

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Item 1. Financial Statements

2024-07-31 compared with 2024-05-01 · 111 added, 51 removed, 226 unchanged (42% of the section changed)

13 unchanged sentences

Property and equipment, net 107,738 91,292

Operating lease assets 55,379 19,092

Goodwill 68,733 67,708

6 unchanged sentences

Accounts payable $ 5,752 $ 4,725

Current portion of operating lease liabilities 4,061 2,380

Other current liabilities 42,955 38,571

2 unchanged sentences

Long-term debt, net 713,258 712,327

Operating lease liabilities 53,943 17,807

Deferred revenues, net of current 32,928 30,145

6 unchanged sentences

100,000,000 shares authorized;

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

29,304,401 and 29,337,920 shares issued and outstanding as of June 29, 2024 and December 30, 2023, respectively

Additional paid-in-capital 1,869 2,676

8 unchanged sentences

(amounts in thousands, except per share data)

Thirteen Weeks Ended

2024 April 1,

Thirteen Weeks Ended Twenty-Six Weeks Ended

2023 June 29,

Royalty revenue, franchise fees and other $ 71,160 $ 47,984 $ 138,257 $ 96,172

32 unchanged sentences

Consolidated Statements of Stockholders' Deficit

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

For the Twenty-Six Weeks Ended July 1, 2023

(amounts in thousands, except share data)

10 unchanged sentences

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 )

See accompanying notes to consolidated financial statements.

WINGSTOP INC.

AND SUBSIDIARIES

Consolidated Statements of Stockholders' Deficit

For the Twenty-Six Weeks Ended June 29, 2024

(amounts in thousands, except share data)

Shares Amount Additional

8 unchanged sentences

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

Net income — — — 27,485 — 27,485

Shares issued under stock plans 11,323 — 546 — — 546

Purchases of common stock ( 75,862 ) ( 1 ) ( 4,304 ) ( 24,915 ) — ( 29,220 )

Tax payments for restricted stock upon vesting ( 1,038 ) — — ( 401 ) — ( 401 )

Stock-based compensation expense, net of forfeitures — — 4,926 — — 4,926

Dividends declared on common stock and equivalents — — ( 217 ) ( 6,269 ) — ( 6,486 )

Currency translation adjustment — — — — ( 12 ) ( 12 )

Balance at June 29, 2024 29,304,401 $ 293 $ 1,869 $ ( 439,326 ) $ ( 377 ) $ ( 437,541 )

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(amounts in thousands)

Thirteen Weeks Ended

2024 April 1,

Twenty-Six Weeks Ended

Operating activities

16 unchanged sentences

Purchases of property and equipment ( 21,459 ) ( 17,002 )

Acquisition of restaurants from franchisee ( 3,292 ) ( 4,396 )

Payments for investments ( 500 ) ( 808 )

3 unchanged sentences

Repayments of long-term debt — ( 3,650 )

Purchases of common stock ( 29,220 ) —

Tax payments for restricted stock upon vesting ( 4,118 ) ( 2,361 )

Dividends paid ( 13,077 ) ( 11,836 )

Cash provided by (used in) financing activities ( 9,615 ) ( 10,087 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 23,386 21,292

Cash used in financing activities ( 45,161 ) ( 17,374 )

Net increase in cash, cash equivalents, and restricted cash 10,425 8,387

Cash, cash equivalents, and restricted cash at beginning of period 119,676 205,715

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 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.

As of June 29, 2024, the Company had a total of 2,352 restaurants system-wide.

The Company’s restaurant base is approximately 98 % franchised, with 2,300 franchised locations (including 312 restaurants in international locations and U.S.

territories) and 52 company-owned restaurants as of June 29, 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 March 30, 2024 and December 30, 2023, and operating results are for the thirteen weeks ended March 30, 2024 and April 1, 2023.

Balance sheet amounts are as of June 29, 2024 and December 30, 2023, and operating results are for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023.

Certain prior period information on the Consolidated Balance Sheets have been reclassified to conform to the current presentation.

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 30, 2024 and December 30, 2023 were as follows (in thousands):

March 30, 2024 December 30, 2023

Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of June 29, 2024 and December 30, 2023 were as follows (in thousands):

June 29, 2024 December 30, 2023

Cash and cash equivalents $ 96,749 $ 90,216

13 unchanged sentences

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

Thirteen Weeks Ended

2024 April 1,

Thirteen Weeks Ended Twenty-Six Weeks Ended

2023 June 29,

Basic weighted average shares outstanding 29,343 29,972 29,346 29,959

1 unchanged sentence

Diluted weighted average shares outstanding 29,457 30,049 29,468 30,043

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.

For the thirteen weeks ended June 29, 2024 and July 1, 2023, equity awards representing approximately 0 and 1,000 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 29, 2024 and July 1, 2023, equity awards representing approximately 28,000 and 3,000 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 $ 0.22 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.

In connection with the Company’s regular dividend program, in each of the first two quarters of 2024, our Board of Directors declared a quarterly dividend of $ 0.22 per share of common stock, which, in aggregate, totaled $ 12.9 million, or $ 0.44 per share of common stock, and which was paid during the twenty-six weeks ended June 29, 2024.

Subsequent to the second quarter, on July 30, 2024, our Board of Directors declared a quarterly dividend of $ 0.27 per share of common stock for stockholders of record as of August 16, 2024.

The regular quarterly dividend is to be paid on September 6, 2024, totaling approximately $ 7.9 million .

Share Repurchase Program

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.

During the thirteen weeks ended June 29, 2024, the Company repurchased and retired 75,862 shares of its common stock at an average price of $ 381.29 per share.

As of June 29, 2024, $ 96.1 million remained available 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):

March 30, 2024 December 30, 2023

June 29, 2024 December 30, 2023

Fair Value Carrying

10 unchanged sentences

(5) Income Taxes

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.

Income tax expense and the effective tax rate were $ 9.0 million and 24.7 %, respectively, for the thirteen weeks ended June 29, 2024, and $ 6.1 million and 27.3 %, respectively, for the thirteen weeks ended July 1, 2023.

Income tax expense and the effective tax rate were $ 18.8 million and 25.0 %, respectively, for the twenty-six weeks ended June 29, 2024, and $ 11.3 million and 26.2 %, respectively, for the twenty-six weeks ended July 1, 2023.

The decrease in the effective tax rate is primarily related to an increase in excess tax benefits recognized from stock-based compensation in income tax expense as compared to the prior fiscal period.

(6) Debt Obligations

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

March 30, 2024 December 30, 2023

June 29, 2024 December 30, 2023

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

4 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 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.

No borrowings were outstanding under the 2022 Variable Funding Notes as of June 29, 2024 and December 30, 2023.

As of June 29, 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 $ 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

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 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.

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.

The Company has operating leases for retail store locations, office space, and equipment.

The Company determines whether an arrangement is a lease at inception.

The Company's leases have remaining terms of 0.3 years to 13.7 years, some of which include options to extend the lease term for up to ten years.

The years remaining on the Company’s lease terms may include years that may be added to the lease terms by the exercise of options to renew when it is reasonably certain that the Company will exercise such options.

During the first fiscal quarter 2024, the Company executed a lease for an office building, which commenced in May 2024.

The operating lease has an initial lease term of 13.8 years with undiscounted fixed payments of $ 66.9 million over the initial term.

Components of lease expense were as follows (in thousands):

Twenty-Six Weeks Ended

Operating lease cost (1)

Variable lease cost (2)

Total lease cost

(1) Includes short-term leases, which are immaterial.

(2) Primarily related to adjustments for inflation, common area maintenance, and property tax.

Supplemental cash flow information related to leases is as follows (in thousands):

Twenty-Six Weeks Ended

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$ 1,564 $ 1,629

Right-of-use assets obtained in exchange for new operating lease liabilities $ 37,950 $ 1,963

(9) Stock-Based Compensation

During the thirteen weeks ended March 30, 2024, the Company granted 22,200 restricted stock units (“RSUs”) to certain employees.

During the twenty-six weeks ended June 29, 2024, the Company granted 23,114 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 $ 371.17 per unit.

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

In addition, the Company granted 23,874 performance stock units (“PSUs”) to certain employees during the twenty-six weeks ended June 29, 2024.

Of the total PSUs granted, 20,593 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 3,136 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 remaining 3,281 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

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

1 unchanged sentence

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 $ 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.

Total compensation expense related to all share-based awards, net of forfeitures recognized, was $ 8.7 million and $ 6.9 million for the twenty-six weeks ended June 29, 2024 and July 1, 2023, respectively, and was included in Selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Comprehensive Income.

(10) Revenue from Contracts with Customers

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

The following table represents a disaggregation of revenue from contracts with customers for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023 (in thousands):

Thirteen Weeks Ended Twenty-Six Weeks Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Royalty revenue $ 64,201 $ 43,271 $ 125,393 $ 86,785

1 unchanged sentence

Franchise fees 1,440 1,107 2,682 2,169

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 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.

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 29, 2024 was included in the deferred revenue balance as of December 30, 2023.

Approximately $ 10.3 million and $ 9.3 million of deferred revenue as of June 29, 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 7.1 years.

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.

The Company did not have any material contract assets as of June 29, 2024.

(11) Acquisitions of Company-owned Restaurants

During the second fiscal quarter ended June 29, 2024, the Company acquired one existing restaurant from a franchisee.

The total purchase price was $ 3.3 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 $ 8

Property and equipment 65

Reacquired franchise rights 2,200

Goodwill 1,025

Total purchase price $ 3,298

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 acquisition on our consolidated financial statements.

Subsequent to the end of the fiscal second quarter 2024, the Company acquired two existing restaurants from a franchisee.

The purchase price, in the aggregate, was $ 7.0 million, funded by cash flow from operations.

The restaurant acquisitions are accounted for as business combinations.

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.

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

WINGSTOP INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The results of operations of these acquisitions will be included in our Consolidated Statements of Comprehensive Income as of the 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