What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2024-10-30 · 121 added, 162 removed, 201 unchanged (58% of the section changed)

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We believe our asset-light, highly-franchised business model generates strong operating margins and requires low capital expenditures, creating stockholder value through strong and consistent free cash flow and capital-efficient growth.

Third Quarter of 2024 Highlights

• System-wide sales increased 39.4% over the prior fiscal third quarter to $1.2 billion;

• 106 net new openings in the fiscal third quarter 2024 for a total of 2,458 worldwide locations;

• Domestic same store sales increased 20.9% over the prior fiscal third quarter;

• Company-owned restaurant same store sales increased 7.3% over the prior fiscal third quarter;

• Digital sales increased to 69.0% of system-wide sales, as compared to 66.9% in the prior fiscal third quarter;

• Domestic AUV increased to $2.1 million;

• Total revenue increased 38.8% over the prior fiscal third quarter to $162.5 million;

• Net income increased 31.9% to $25.7 million, or $0.88 per diluted share, compared to net income of $19.5 million, or $0.65 per diluted share, in the prior fiscal third quarter;

• Adjusted EBITDA, a non-GAAP measure, increased 39.5% to $53.7 million, compared to adjusted EBITDA of $38.5 million in the prior fiscal third quarter.

Year-to-Date Third Quarter of 2024 Highlights

Highlights for the fiscal first quarter 2025 compared to the fiscal first quarter 2024:

• System-wide sales increased 15.7% to $1.3 billion;

• 244 net new openings in the year-to-date third quarter of 2024;

• Domestic same store sales increased 23.6% over the prior fiscal year-to-date period;

• Total revenue increased 39.3% to $464.0 million over the prior fiscal year-to-date period;

• Net income increased 59.6% to $82.0 million, or $2.78 per diluted share, compared to net income of $51.4 million, or $1.71 per diluted share, in the prior fiscal year-to-date period;

• Adjusted EBITDA, a non-GAAP measure, increased 45.0% to $155.7 million, compared to adjusted EBITDA of $107.4 million in the prior fiscal year-to-date period.

• 126 net new openings in the fiscal first quarter 2025;

• Domestic AUV increased to $2.1 million;

• Domestic same store sales increased 0.5%;

• Digital sales increased to 72.0% of system-wide sales;

• Total revenue increased 17.4% to $171.1 million;

• Net income increased 221.0% to $92.3 million, or $3.24 per diluted share;

• Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, was $28.3 million, or $0.99 per diluted share, comparable to the prior fiscal first quarter;

• Adjusted EBITDA, a non-GAAP measure, increased 18.4% to $59.5 million.

Key Performance Indicators

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Management reviews the number of new restaurants, the number of closed restaurants, and the number of acquisitions and divestitures of restaurants to assess net new restaurant growth.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 28,

2024 September 30,

2023 September 28,

2024 September 30,

Thirteen Weeks Ended

2025 March 30,

Domestic Franchised Activity:

1 unchanged sentence

Openings 96 47

Closures — — — (1)

Acquired by Company (3) — (4) (2)

Restaurants end of period 2,250 1,924

1 unchanged sentence

Beginning of period 50 49

Openings 1 1 3 1

Closures — — — —

Acquired by Company 3 — 4 2

Restaurants end of period 51 50

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We define EBITDA as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization.

We define Adjusted EBITDA as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization, with further adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, system implementation costs, and stock-based compensation expense.

We define Adjusted EBITDA as net income before interest expense, net, income tax

expense (benefit), and depreciation and amortization, with further adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, certain system implementation costs, gains and losses on non-recurring transactions, and stock-based compensation expense.

Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in methods of calculation.

For a reconciliation of net income to EBITDA and Adjusted EBITDA and for further discussion of EBITDA and Adjusted EBITDA as non-GAAP measures and how we utilize them, see footnote 2 below.

The following table sets forth our key performance indicators for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands, except unit data):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Adjusted Net Income and Adjusted Earnings Per Diluted Share.

We define Adjusted net income as net income adjusted for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on non-recurring transactions, certain system implementation costs, and related tax adjustments that management believes are not indicative of the Company’s core operating results or business outlook over the long term.

We define Adjusted earnings per diluted share as Adjusted net income divided by weighted average diluted share count.

For a reconciliation of net income to Adjusted net income and for further discussion of Adjusted net income and Adjusted earnings per diluted share as non-GAAP measures and how we utilize them, see footnote 3 below.

The following table sets forth our key performance indicators for the thirteen weeks ended March 29, 2025 and March 30, 2024 (in thousands, except unit data):

Thirteen Weeks Ended

March 29, 2025 March 30, 2024

Number of system-wide restaurants open at end of period 2,689 2,279

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$ 59,497 $ 50,263

(1) The percentage of system-wide sales attributable to company-owned restaurants was 2.5% and 2.7% for the thirteen weeks ended September 28, 2024 and September 30, 2023, respectively, and was 2.5% and 2.8% for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively.

Adjusted net income (3)

$ 28,316 $ 28,747

(1) The percentage of system-wide sales attributable to company-owned restaurants was 2.3% and 2.5% for the thirteen weeks ended March 29, 2025 and March 30, 2024, respectively.

The remainder was generated by franchised restaurants, as reported by our franchisees.

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We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only as performance measures and supplementally.

As noted in the table below, Adjusted EBITDA includes adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, system implementation costs, and stock-based compensation expense.

As noted in the table below, Adjusted EBITDA includes adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, certain system implementation costs, gains and losses on non-recurring transactions, and stock-based compensation expense.

We believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our restaurants, and complicate comparisons of our internal operating results and operating results of other restaurant companies over time.

Each of the normal recurring adjustments and other adjustments described in this paragraph and in the reconciliation table below help management measure our core operating performance over time by removing items that are not related to day-to-day operations.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

September 28,

2024 September 30,

2023 September 28,

2024 September 30,

The following table reconciles net income to EBITDA and Adjusted EBITDA for the thirteen weeks ended March 29, 2025 and March 30, 2024 (in thousands):

Thirteen Weeks Ended

2025 March 30,

Net income $ 92,265 $ 28,747

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Additional adjustments:

Consulting fees (a)

— 1,300 — 5,150

System implementation costs (b)

Stock-based compensation expense (c)

7,273 3,128 16,011 10,019

Transaction costs (a)

Loss on disposal of building (b)

Gain on sale of investment (c)

System implementation costs (d)

Stock-based compensation expense (e)

Adjusted EBITDA $ 59,497 $ 50,263

(a) Represents non-recurring consulting fees that are not part of our ongoing operations and are incurred to execute discrete, project-based strategic initiatives, which are included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

The costs incurred in the thirteen and thirty-nine weeks ended September 30, 2023 include consulting fees relating to a comprehensive review of our long-term growth strategy for our domestic business to explore potential future initiatives, which review was completed in fiscal year 2023.

Given the magnitude and scope of

this strategic review that is not expected to recur in the foreseeable future, the Company considers the incremental consulting fees incurred with respect to the initiative not reflective of the ongoing costs to operate its business.

(b) System implementation costs represent non-recurring expenses incurred related to the development and implementation of new enterprise resource planning and human capital management technology, which are included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

(a) Represents non-recurring transaction costs that are not part of our ongoing operations and were incurred to execute the sale and subsequent reinvestment of the Company’s unconsolidated equity method investment in LPH, the Company’s United Kingdom master franchisee, during the fiscal first quarter 2025;

all transaction costs are included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

(b) Represents a non-recurring loss on sale of an office building during the fiscal first quarter 2025, which was included in Loss on disposal of assets on the Consolidated Statements of Comprehensive Income.

(c) Represents a non-recurring gain related to the sale of the Company’s unconsolidated equity method investment in LPH during the fiscal first quarter 2025, which was included in Investment income, net on the Consolidated Statements of Comprehensive Income.

Refer to Note 9 in the Consolidated Financial Statements for additional information.

(d) System implementation costs represent non-recurring expenses incurred related to the development and implementation of new enterprise resource planning and human capital management technology, which are included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

(e) Includes non-cash, stock-based compensation, net of forfeitures.

(3) Adjusted net income and adjusted earnings per diluted share are supplemental measures of operating performance that do not represent and should not be considered alternatives to net income and earnings per share, as determined by GAAP.

These measures have not been prepared in accordance with Article 11 of Regulation S-X promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

The Company believes the use of adjusted net income allows investors and analysts to better understand the results of the operations of the Company, by excluding certain items that have a disproportionate impact on the Company’s results for a particular period.

Additionally, management believes adjusted net income and adjusted earnings per diluted share supplement GAAP measures and enable management to more effectively evaluate the Company’s performance period-over-period and relative to competitors.

The following table reconciles net income to Adjusted net income and calculates adjusted earnings per diluted share for the thirteen weeks ended March 29, 2025 and March 30, 2024 (in thousands):

Thirteen Weeks Ended

2025 March 30,

Net income $ 92,265 $ 28,747

Transaction costs (a)

Loss on disposal of building (b)

Gain on sale of investment (c)

System implementation costs (d)

Tax effect of adjustments (e)

Adjusted net income $ 28,316 $ 28,747

Weighted-average shares outstanding - diluted 28,509 29,478

Adjusted earnings per diluted share $ 0.99 $ 0.98

all transaction costs are included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

Refer to Note 9 in the Consolidated Financial Statements for additional information.

(e) Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax rate of 24% for the thirteen weeks ended March 29, 2025, which includes provisions for U.S.

federal income taxes, and assumes the respective statutory rates for applicable state and local jurisdictions.

Results of Operations

Thirteen Weeks Ended September 28, 2024 compared to Thirteen Weeks Ended September 30, 2023

The following table sets forth our results of operations for the thirteen weeks ended September 28, 2024 and September 30, 2023 (dollars in thousands):

Thirteen Weeks Ended March 29, 2025 compared to Thirteen Weeks Ended March 30, 2024

The following table sets forth our results of operations for the thirteen weeks ended March 29, 2025 and March 30, 2024 (dollars in thousands):

Thirteen Weeks Ended Increase / (Decrease)

September 28,

2024 September 30,

2025 March 30,

Royalty revenue, franchise fees and other $ 78,775 $ 67,097 $ 11,678 17.4 %

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Depreciation and amortization 6,228 3,410 2,818 82.6 %

Loss on disposal of assets — 18 (18) (100.0) %

Loss on disposal of assets 6,535 — 6,535 NM*

Total costs and expenses 132,833 103,051 29,782 28.9 %

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Interest expense, net 8,910 4,544 4,366 96.1 %

Other (income) expense (800) (19) (781) 4,110.5 %

Investment income, net (93,839) (303) (93,536) NM*

Income before income tax expense 123,190 38,497 84,693 220.0 %

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(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, but excludes depreciation and amortization, which are presented separately.

During the thirteen weeks ended September 28, 2024, total revenue was $162.5 million, an increase of $45.4 million, or 38.8%, compared to $117.1 million in the comparable period in 2023.

Royalty revenue, franchise fees and other increased $21.2 million, of which $9.6 million was due to domestic same store sales growth of 20.9%, and $9.3 million was due to net new franchise restaurant development.

Other revenue increased by $2.1 million primarily due to an increase in vendor rebates.

Advertising fees increased $16.8 million primarily due to a 39.4% increase in system-wide sales during the fiscal third quarter 2024.

$3.2 million of the increase was due to an increase in the national advertising fund contribution rate to 5.3% from 5.0%, effective the first day of the fiscal second quarter 2024.

Company-owned restaurant sales increased $7.4 million, due to an increase of $4.9 million related to the addition of ten net new company-owned restaurants since the prior fiscal third quarter.

The remainder of the increase was due to company-owned same store sales growth of 7.3%, which was driven primarily by an increase in transactions.

*Not meaningful.

During the thirteen weeks ended March 29, 2025, total revenue was $171.1 million, an increase of $25.3 million, or 17.4%, compared to $145.8 million in the comparable period in 2024.

Royalty revenue, franchise fees and other increased $11.7 million, of which $10.0 million was due to net new franchise restaurant development, and $0.3 million was due to domestic same store sales growth of 0.5%.

Other revenue increased by $0.8 million primarily due to an increase in vendor rebates compared to prior fiscal first quarter.

Advertising fees increased $12.1 million primarily due to a 15.7% increase in system-wide sales during the fiscal first quarter 2025.

$5.6 million of the increase was due to an increase in the national advertising fund contribution rate to 5.5% from 5.0%, effective the first day of the fiscal first quarter 2025.

Company-owned restaurant sales increased $1.5 million, of which $0.5 million was related to company-owned same store sales growth of 1.4%, driven primarily by an increase in transactions, and $1.0 million was primarily related to company-owned restaurants opened and acquired since the prior fiscal first quarter.

Cost of sales

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Thirteen Weeks Ended

September 28, 2024 September 30, 2023

March 29, 2025 March 30, 2024

In dollars As a % of company-owned restaurant sales In dollars As a % of company-owned restaurant sales

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Total cost of sales $ 22,835 76.0 % $ 21,271 74.5 %

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 37.0% in the thirteen weeks ended September 28, 2024, compared to 33.0% in the comparable period in 2023.

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 37.4% in the thirteen weeks ended March 29, 2025, compared to 34.7% in the comparable period in 2024.

This increase was primarily due to a 13.2% increase in the cost of bone-in chicken wings as compared to the prior year period.

Our purchases in the prior fiscal third quarter were tied primarily to the spot market, which benefited from significant deflation in the cost of bone-in chicken wings.

Labor costs as a percentage of company-owned restaurant sales were 23.5% for the thirteen weeks ended September 28, 2024, which was comparable to 23.6% for the thirteen weeks ended September 30, 2023.

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 20.0% for the thirteen weeks ended September 28, 2024, compared to 19.4% for the thirteen weeks ended September 30, 2023.

The increase as a percentage of company-owned restaurant sales was primarily due to an increase in the national advertising fund contribution rate to 5.3% from 5.0%, effective the first day of the fiscal second quarter 2024, as well as an increase in pre-opening expenses as compared to the prior year period.

Advertising expenses

During the thirteen weeks ended September 28, 2024, advertising expenses were $61.0 million, an increase of $18.6 million compared to $42.4 million in the comparable period in 2023.

Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the related advertising spend.

Selling, general and administrative (“SG&A”)

During the thirteen weeks ended September 28, 2024, SG&A expense was $32.3 million, an increase of $9.2 million compared to $23.0 million in the comparable period in 2023.

The increase in SG&A expense was driven by an increase in performance-based stock compensation and incentive compensation expense of $4.9 million primarily related to the Company’s performance, an increase in headcount related expenses of $2.8 million to support the growth in our business, and an increase in consulting and other professional fees of $1.3 million associated with our strategic initiatives, including system implementation costs.

Depreciation and amortization

During the thirteen weeks ended September 28, 2024, depreciation and amortization was $5.1 million, an increase of $1.7 million compared to $3.4 million in the comparable period in 2023.

The increase in depreciation and amortization was primarily due to depreciation expense for the software assets placed in service during the second fiscal quarter 2024 related to our MyWingstop technology platform.

Interest expense, net

During the thirteen weeks ended September 28, 2024, interest expense, net was $5.1 million, an increase of $0.6 million compared to $4.5 million of interest expense, net in the comparable period in 2023.

The increase was primarily driven by additional interest income earned on our cash balances during the thirteen weeks ended September 30, 2023.

Income tax expense

During the thirteen weeks ended September 28, 2024, we recognized income tax expense of $9.8 million, yielding an effective tax rate of 27.5%, compared to an effective tax rate of 25.4% in the prior year period.

The increase in the effective tax rate is primarily related to the impact of nondeductible expenses for executive compensation during the thirteen weeks ended September 28, 2024.

Thirty-Nine Weeks Ended September 28, 2024 compared to Thirty-Nine Weeks Ended September 30, 2023

The following table sets forth our results of operations for the thirty-nine weeks ended September 28, 2024 and September 30, 2023 (dollars in thousands):

Thirty-Nine Weeks Ended Increase / (Decrease)

September 28,

2024 September 30,

Royalty revenue, franchise fees and other $ 212,652 $ 149,372 $ 63,280 42.4 %

Advertising fees 161,567 114,010 47,557 41.7 %

Company-owned restaurant sales 89,767 69,616 20,151 28.9 %

Total revenue 463,986 332,998 130,988 39.3 %

Costs and expenses:

Cost of sales (1)

68,311 50,959 17,352 34.1 %

Advertising expenses 172,705 120,753 51,952 43.0 %

Selling, general and administrative 85,569 68,820 16,749 24.3 %

Depreciation and amortization 13,625 9,591 4,034 42.1 %

Loss on disposal of assets — 95 (95) (100.0) %

Total costs and expenses 340,210 250,218 89,992 36.0 %

Operating income 123,776 82,780 40,996 49.5 %

Interest expense, net 14,874 13,337 1,537 11.5 %

Other (income) expense (1,574) 123 (1,697) (1,379.7) %

Income before income tax expense 110,476 69,320 41,156 59.4 %

Income tax expense 28,512 17,959 10,553 58.8 %

Net income $ 81,964 $ 51,361 $ 30,603 59.6 %

(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately.

During the thirty-nine weeks ended September 28, 2024, total revenue was $464.0 million, an increase of $131.0 million, or 39.3%, compared to $333.0 million in the comparable period in 2023.

Royalty revenue, franchise fees and other increased $63.3 million, of which $31.1 million was due to domestic same store sales growth of 23.6%, and $20.2 million was due to net new franchise development.

Other revenue increased by $5.0 million primarily due to an increase in vendor rebates.

Advertising fees increased $47.6 million due to a 40.4% increase in system-wide sales during the thirty-nine weeks ended September 28, 2024, and $6.3 million was due to an increase in the national advertising fund contribution rate to 5.3% from 5.0%, effective the first day of the fiscal second quarter 2024.

Company-owned restaurant sales increased $20.2 million, primarily due to an increase of $10.0 million related to the addition of ten net new company-owned restaurants since the prior year comparable period.

The remainder of the increase was due to company-owned same store sales growth of 9.1%, which was driven primarily by an increase in transactions.

Cost of sales

The table below presents the major components of cost of sales (dollars in thousands):

Thirty-Nine Weeks Ended

September 28, 2024 September 30, 2023

In dollars As a % of company-owned restaurant sales In dollars As a % of company-owned restaurant sales

Food, beverage and packaging costs $ 32,186 35.9 % $ 22,661 32.6 %

Labor costs 21,017 23.4 % 16,683 24.0 %

Other restaurant operating expenses 17,438 19.4 % 13,278 19.1 %

Vendor rebates (2,330) (2.6) % (1,663) (2.4) %

Total cost of sales $ 68,311 76.1 % $ 50,959 73.2 %

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 35.9% in the thirty-nine weeks ended September 28, 2024, compared to 32.6% in the comparable period in 2023.

The increase was primarily due to a 41.5% increase in the cost of bone-in chicken wings as compared to the prior year period.

Our purchases in the prior fiscal year period were tied primarily to the spot market, which benefited from significant deflation in the cost of bone-in chicken wings.

Labor costs as a percentage of company-owned restaurant sales were 23.4% for the thirty-nine weeks ended September 28, 2024, compared to 24.0% in the comparable period in 2023.

The decrease in company-owned restaurant wages as a percentage of sales was primarily due to leverage as a result of company-owned domestic same store sales growth of 9.1%.

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 19.4% for the thirty-nine weeks ended September 28, 2024, comparable to 19.1% in the prior fiscal year period in 2023.

Labor costs as a percentage of company-owned restaurant sales were 23.8% for the thirteen weeks ended March 29, 2025, which was comparable to 23.4% for the thirteen weeks ended March 30, 2024.

The increase is primarily due to an increase in company-owned restaurant wages, partially offset by the sale of corporate restaurants in the New York market to an existing franchisee during the fiscal fourth quarter 2024.

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 17.3% for the thirteen weeks ended March 29, 2025, compared to 19.0% for the thirteen weeks ended March 30, 2024.

The decrease as a percentage of company-owned restaurant sales was primarily due to the sale of corporate restaurants in the New York market during the fiscal fourth quarter 2024, partially offset by an increase in the national advertising fund contribution rate to 5.5%, effective the first day of the fiscal first quarter 2025.

Advertising expenses

During the thirty-nine weeks ended September 28, 2024, advertising expenses were $172.7 million, an increase of $52.0 million compared to $120.8 million in the comparable period in 2023.

During the thirteen weeks ended March 29, 2025, advertising expenses were $65.8 million, an increase of $12.6 million compared to $53.2 million in the comparable period in 2024.

Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the related advertising spend.

Selling, general and administrative (“SG&A”)

During the thirty-nine weeks ended September 28, 2024, SG&A expense was $85.6 million, an increase of $16.7 million compared to $68.8 million in the comparable period in 2023.

The increase in SG&A expense was driven by an increase in performance-based stock compensation and incentive compensation expense of $7.3 million primarily related to the Company’s performance, an increase in headcount related expenses of $6.8 million to support the growth in our business, and an increase in consulting and other professional fees of $1.6 million associated with our strategic initiatives, including system implementation costs.

During the thirteen weeks ended March 29, 2025, SG&A expense was $31.4 million, an increase of $6.3 million compared to $25.2 million in the comparable period in 2024.

The increase in SG&A expense was driven by an increase in headcount related expenses, inclusive of stock-based compensation, of $4.8 million to support the growth in our business, as well as system implementation costs of $1.3 million during the fiscal first quarter 2025.

Depreciation and amortization

During the thirty-nine weeks ended September 28, 2024, depreciation and amortization was $13.6 million, an increase of $4.0 million compared to $9.6 million in the comparable period in 2023.

The increase in depreciation and amortization was primarily due to depreciation expense for software assets placed in service related to our MyWingstop technology platform during the thirty-nine weeks ended September 28, 2024.

During the thirteen weeks ended March 29, 2025, depreciation and amortization was $6.2 million, an increase of $2.8 million compared to $3.4 million in the comparable period in 2024.

The increase in depreciation and amortization was primarily due to depreciation expense for software assets placed in service during the fiscal second quarter 2024 that relate to the launch of our proprietary technology platform:

Loss on disposal of assets, net

During the thirteen weeks ended March 29, 2025, loss on disposal of assets, net, was $6.5 million related to a loss on sale of an office building during the fiscal first quarter 2025.

Interest expense, net

During the thirty-nine weeks ended September 28, 2024, interest expense, net was $14.9 million, an increase of $1.5 million compared to $13.3 million of interest expense, net in the comparable period in 2023.

The increase was primarily driven by additional interest income earned on our cash balances during the thirty-nine weeks ended September 30, 2023.

During the thirteen weeks ended March 29, 2025, interest expense, net was $8.9 million, an increase of $4.4 million compared to $4.5 million of interest expense, net in the comparable period in 2024.

The increase was primarily driven by $7.8 million in interest expense related to the securitized financing transaction completed on December 3, 2024, which increased our

outstanding debt by $500 million, partially offset by additional interest income earned on our cash balances and interest earned on our investments, as compared to the prior year period.

Investment income, net

During the thirteen weeks ended March 29, 2025, investment income, net was $93.8 million, an increase of $93.5 million compared to $0.3 million in the comparable period in 2024.

The increase was driven almost entirely by a gain recorded on the sale of the Company’s unconsolidated equity method investment in its United Kingdom franchisee during the fiscal first quarter 2025.

See Note 9 of the Consolidated Financial Statements for further discussion.

Income tax expense

During the thirty-nine weeks ended September 28, 2024, we recognized income tax expense of $28.5 million yielding an effective tax rate of 25.8%, which is comparable to an effective tax rate of 25.9% in the prior year period.

During the thirteen weeks ended March 29, 2025, we recognized income tax expense of $30.9 million, yielding an effective tax rate of 25.1%, comparable to an effective tax rate of 25.3% in the prior year period.

The increase in total tax expense is primarily related to the increase in Investment income, net as a result of the gain on sale of our investment in LPH during the fiscal first quarter 2025.

Liquidity and Capital Resources

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We generally utilize available cash flows from operations to invest in our business, service our debt obligations, pay dividends, and repurchase shares of our common stock (if any).

Our primary sources of short-term and long-term liquidity are expected to be cash flows from operations and available borrowings under our 2022 Variable Funding Notes (as defined below).

As of September 28, 2024, the Company had $84.0 million of cash and cash equivalents on its balance sheet.

As of March 29, 2025, the Company had $251.4 million of cash and cash equivalents on its balance sheet.

Based upon current levels of operations and anticipated growth, we expect that cash flows from operations, combined with our securitized financing facility, including our Variable Funding Notes, will be sufficient to meet our capital expenditure, working capital and debt service requirements for at least the next twelve months and the foreseeable future.

The following table shows summary cash flows information for the thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands):

Thirty-Nine Weeks Ended

September 28,

2024 September 30,

The following table shows summary cash flows information for the thirteen weeks ended March 29, 2025 and March 30, 2024 (in thousands):

Thirteen Weeks Ended

2025 March 30,

Net cash provided by (used in):

7 unchanged sentences

Restaurant-level operating costs at our company-owned restaurants, unearned franchise and development fees, and corporate overhead costs also impact our cash flow from operating activities.

Net cash provided by operating activities was $149.9 million in the thirty-nine weeks ended September 28, 2024, an increase of $66.1 million from net cash provided by operating activities of $83.7 million in the thirty-nine weeks ended September 30, 2023.

The increase is primarily due to an increase in operating income, coupled with the change in working capital due to timing of payments associated with our national advertising campaign and taxes.

Net cash provided by operating activities was $25.3 million in the thirteen weeks ended March 29, 2025, a decrease of $19.4 million from net cash provided by operating activities of $44.7 million in the thirteen weeks ended March 30, 2024.

The decrease is primarily related to changes in Ad Fund cash and cash equivalents, directly related to the timing of payments for expenses incurred for national advertising, as well as changes in working capital.

Investing activities .

Our net cash used in investing activities was $50.1 million in the thirty-nine weeks ended September 28, 2024, an increase of $16.6 million from net cash used in investing activities of $33.5 million in the thirty-nine weeks ended September 30, 2023.

The increase is primarily due to an increase in capital expenditures related to our technology investments, as well as the impact of additional restaurants acquired from franchisees as compared to the prior fiscal year period.

Our net cash provided by investing activities was $40.5 million in the thirteen weeks ended March 29, 2025, a change of $52.2 million from net cash used in investing activities of $11.7 million in the thirteen weeks ended March 30, 2024.

The change is primarily due to proceeds from the sale of our non-controlling interest in LPH of $107.7 million offset by reinvestment in the newly formed entity of $75.4 million, as well as proceeds from the sale of an office building of $17.3 million.

Financing activities .

Our net cash used in financing activities was $88.3 million in the thirty-nine weeks ended September 28, 2024, a decrease of $60.7 million from net cash used in financing activities of $149.0 million in the thirty-nine weeks ended September 30, 2023.

The decrease is primarily due to a decrease in common stock repurchased under our Share Repurchase Program as compared to the prior fiscal year period, in which we initiated a $125.0 million accelerated share repurchase program, as well as principal payments made in the thirty-nine weeks ended September 30, 2023.

Our net cash used in financing activities was $140.4 million in the thirteen weeks ended March 29, 2025, an increase of $130.8 million from net cash used in financing activities of $9.6 million in the thirteen weeks ended March 30, 2024.

The increase is primarily related to $120.8 million in common stock repurchased under our share repurchase program as compared to the prior fiscal year period.

Securitized financing facility .

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

No borrowings were outstanding under the 2022 Variable Funding Notes as of September 28, 2024.

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 Class A-2 Notes”).

During the fiscal third quarter of 2024, the Company continued to have a leverage ratio under the 2020 Class A-2 Notes and the 2022 Class A-2 Notes of less than 5.0x.

On December 3, 2024, 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 $500 million of its Series 2024-1 5.858% Fixed Rate Senior Secured Notes, Class A-2 (the “2024 Class A-2 Notes”).

The Issuer also increased the capacity of its revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “Variable Funding Notes”) from $200 million to $300 million.

Following the increase, borrowing capacity under the Variable Funding Notes permits borrowings of up to a maximum principal amount of $300 million, a portion of which may be used to issue letters of credit.

The 2024 Class A-2 Notes and the Variable Funding Notes are referred to collectively as the “2024 Notes.” 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, including the repurchase of shares of the Company’s common stock.

In addition to the 2024 Notes, the Company’s outstanding debt consists of its existing Series 2022-1 3.734% Fixed Rate Senior Secured Notes, Class A-2 (the “2022 Class A-2 Notes”) and Series 2020-1 2.84% Fixed Rate Senior Secured Notes, Class A-2 (the “2020 Class A-2 Notes”).

During the fiscal first quarter of 2025, the Company continued to have a leverage ratio under the 2020 Class A-2 Notes, the 2022 Class A-2 Notes, and 2024 Class A-2 Notes of less than 5.0x.

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 5.0x.

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

We paid a quarterly cash dividend of $0.22 per share of common stock in each of the first two quarters of 2024, and a quarterly dividend of $0.27 per share of common stock in the third quarter of 2024, resulting in aggregate declared dividends of $20.8 million, or $0.71 per share of common stock, during the thirty-nine weeks ended September 28, 2024.

On October 29, 2024 the Company’s Board of Directors declared a dividend of $0.27 per share, to be paid on December 6, 2024 to stockholders of record as of November 15, 2024, totaling approximately $7.9 million.

Accordingly, the Company elected to suspend payments, and the entire outstanding balance of the 2020 Class A-2 Notes, the 2022 Class A-2 Notes, and the 2024 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026.

We paid a quarterly cash dividend of $0.27 per share of common stock, resulting in an aggregate of $7.6 million during the thirteen weeks ended March 29, 2025.

On April 29, 2025 the Company’s Board of Directors declared a dividend of $0.27 per share, to be paid on June 6, 2025 to stockholders of record as of May 16, 2025, totaling approximately $7.5 million.

We do not currently expect the restrictions in our debt instruments to impact our ability to make regular quarterly dividends pursuant to our quarterly dividend program.

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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”).

During the thirteen weeks ended September 28, 2024, the Company repurchased and retired 93,617 shares of its common stock at an average price of $373.68 per share.

As of September 28, 2024, $61.1 million remained available under the Share Repurchase Program.

On December 5, 2024, the Company’s Board of Directors authorized the repurchase of up to an additional $500.0 million of its outstanding shares of common stock under its existing share repurchase program (the “Share Repurchase Program”).

During the thirteen weeks ended March 29, 2025, the Company repurchased and retired 830,012 shares of its common stock at an average price of $257.40 per share, inclusive of common stock received as part of the final settlement under the ASR Agreement.

As of March 29, 2025, $191.3 million remained available under the Share Repurchase Program.

The authorization for the repurchase continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Company’s Board of Directors.

Critical Accounting Policies and Estimates

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• risks associated with the geographic concentration of our business;

• the impact on our business from unexpected events such as international conflict or war and related sanctions, acts of terrorism, civil unrest, epidemics and pandemics and severe weather;

• the impact on our business from unexpected events such as changes in trade relations and policies, including tariffs, retaliatory tariffs and other trade barriers, international conflict or war and related sanctions, acts of terrorism, civil unrest, epidemics and pandemics and severe weather;

• our ability to comply with laws and government regulations, including those relating to food products, employment and franchising, advertising and consumer protection, or increased costs associated with new or changing regulations;

13 unchanged sentences

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 2. Management’s Discussion and Analysis