Wingstop Inc. 10-Q

Item 1. Financial Statements WINGSTOP INC. AND SUBSIDIARIES Consolidated Balance Sheets (amounts in thousands, except share and par value amounts) March 28, 2026 December 27, 2025 (Unaudited) Assets Current assets Cash and cash equivalents $ 128,816 $ 196,572 Restricted cash 25,994 25,994 Accounts receivable, net 23,525 20,823 Prepaid expenses and other current assets 7,689 7,956 Advertising fund assets, restricted 30,921 16,143 Total current assets 216,945 267,488 Property and equipment, net 138,427 130,581 Operating lease assets 47,909 48,637 Goodwill 83,875 83,875 Trademarks 32,700 32,700 Investments 88,358 87,164 Other non-current assets, net 40,672 42,964 Total assets $ 648,886 $ 693,409 Liabilities and stockholders' deficit Current liabilities Accounts payable $ 9,362 $ 12,846 Current portion of operating lease liabilities 3,401 3,232 Other current liabilities 53,056 49,744 Advertising fund liabilities 30,921 16,143 Total current liabilities 96,740 81,965 Long-term debt, net 1,209,837 1,209,094 Operating lease liabilities 57,177 58,080 Deferred revenues, net of current 50,876 47,721 Deferred income tax liabilities, net 33,279 33,142 Other non-current liabilities 149 169 Total liabilities 1,448,058 1,430,171 Commitments and contingencies (see Note 7) Stockholders' deficit Common stock, $ 0.01 par value; 100,000,000 shares authorized; 27,232,479 and 27,540,619 shares issued and outstanding as of March 28, 2026 and December 27, 2025, respectively 272 275 Additional paid-in-capital 213 1,529 Retained deficit ( 804,285 ) ( 744,915 ) Accumulated other comprehensive income (loss) 4,628 6,349 Total stockholders' deficit ( 799,172 ) ( 736,762 ) Total liabilities and stockholders' deficit $ 648,886 $ 693,409 See accompanying notes to consolidated financial statements. 4 WINGSTOP INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (amounts in thousands, except per share data) (Unaudited) Thirteen Weeks Ended March 28, 2026 March 29, 2025 Revenue: Royalty revenue, franchise fees and other $ 87,470 $ 78,775 Advertising fees 63,269 62,272 Company-owned restaurant sales 32,986 30,047 Total revenue 183,725 171,094 Costs and expenses: Cost of sales (1) 24,716 22,835 Advertising expenses 67,311 65,795 Selling, general and administrative 34,449 31,440 Depreciation and amortization 6,841 6,228 Loss on disposal of assets — 6,535 Total costs and expenses 133,317 132,833 Operating income 50,408 38,261 Interest expense, net 9,764 8,910 Investment (income) expense 72 ( 93,839 ) Income before income tax expense 40,572 123,190 Income tax expense 10,689 30,925 Net income $ 29,883 $ 92,265 Earnings per share Basic $ 1.09 $ 3.25 Diluted $ 1.08 $ 3.24 Other comprehensive income (loss) Currency translation adjustment $ ( 1,721 ) $ 3,259 Other comprehensive income (loss) ( 1,721 ) 3,259 Comprehensive income $ 28,162 $ 95,524 (1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately. See accompanying notes to consolidated financial statements. 5 WINGSTOP INC. AND SUBSIDIARIES Consolidated Statements of Stockholders' Deficit For the Thirteen Weeks Ended March 28, 2026 and March 29, 2025 (amounts in thousands, except share data) (Unaudited) Common Stock Shares Amount Additional Paid-In Capital Retained Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Deficit Balance at December 27, 2025 27,540,619 $ 275 $ 1,529 $ ( 744,915 ) $ 6,349 $ ( 736,762 ) Net income — — — 29,883 — 29,883 Shares issued under stock plans 101,952 1 ( 1 ) — — — Purchases of common stock ( 374,324 ) ( 4 ) ( 6,034 ) ( 72,480 ) — ( 78,518 ) Tax payments for restricted stock upon vesting ( 35,768 ) — — ( 8,460 ) — ( 8,460 ) Stock-based compensation expense, net of forfeitures — — 4,823 — — 4,823 Dividends declared on common stock and equivalents — — ( 104 ) ( 8,313 ) — ( 8,417 ) Currency translation adjustment — — — — ( 1,721 ) ( 1,721 ) Balance at March 28, 2026 27,232,479 272 213 ( 804,285 ) 4,628 ( 799,172 ) Common Stock Shares Amount Additional Paid-In Capital Retained Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Deficit Balance at December 28, 2024 28,662,614 $ 287 $ 1,568 $ ( 676,940 ) $ ( 501 ) $ ( 675,586 ) Net income — — — 92,265 92,265 Shares issued under stock plans 109,964 1 ( 1 ) — — — Purchases of common stock ( 830,012 ) ( 8 ) ( 5,179 ) ( 115,582 ) — ( 120,769 ) Tax payments for restricted stock upon vesting ( 39,678 ) ( 1 ) — ( 11,596 ) — ( 11,597 ) Stock-based compensation expense, net of forfeitures — — 5,312 — — 5,312 Dividends declared on common stock and equivalents — — ( 409 ) ( 7,457 ) — ( 7,866 ) Currency translation adjustment — — — — 3,259 3,259 Balance at March 29, 2025 27,902,888 279 1,291 ( 719,310 ) 2,758 ( 714,982 ) See accompanying notes to consolidated financial statements. 6 WINGSTOP INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (amounts in thousands) (Unaudited) Thirteen Weeks Ended March 28, 2026 March 29, 2025 Operating activities Net income $ 29,883 $ 92,265 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 6,841 6,228 Deferred income taxes 137 13,320 Stock-based compensation expense 4,823 5,312 Non cash investment income ( 2,406 ) ( 1,467 ) Loss on disposal of assets — 6,535 Gain on sale of investment — ( 92,485 ) Amortization of debt issuance costs 802 769 Changes in operating assets and liabilities: Accounts receivable ( 2,702 ) 1,209 Prepaid expenses and other assets 474 ( 6,802 ) Advertising fund assets and liabilities, net 15,936 ( 15,223 ) Accounts payable and other current liabilities 4,616 12,223 Deferred revenue 3,152 2,515 Other non-current liabilities ( 175 ) 895 Cash provided by operating activities 61,381 25,294 Investing activities Purchases of property and equipment ( 17,725 ) ( 8,022 ) Proceeds from sales of assets — 17,330 Payments for investments — ( 76,513 ) Proceeds from sale of investments — 107,700 Cash (used in) provided by investing activities ( 17,725 ) 40,495 Financing activities Purchases of common stock ( 78,518 ) ( 120,772 ) Tax payments for restricted stock upon vesting ( 8,460 ) ( 11,597 ) Dividends paid ( 8,500 ) ( 8,046 ) Cash used in financing activities ( 95,478 ) ( 140,415 ) Net change in cash, cash equivalents, and restricted cash ( 51,822 ) ( 74,626 ) Cash, cash equivalents, and restricted cash at beginning of period 228,453 359,574 Cash, cash equivalents, and restricted cash at end of period $ 176,631 $ 284,948 Supplemental information: Accrued capital expenditures $ 2,018 $ 6,689 See accompanying notes to consolidated financial statements. 7 WINGSTOP INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (1) Basis of Presentation and Update to Significant Accounting Policies Nature of operations. 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 28, 2026, the Company had a total of 3,153 restaurants system-wide. The Company’s restaurant base is approximately 98 % franchised, with 3,096 franchised locations (including 500 restaurants in international locations and U.S. territories) and 57 company-owned restaurants as of March 28, 2026. Basis of presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. 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 28, 2026 and December 27, 2025, and operating results are for the thirteen weeks ended March 28, 2026 and March 29, 2025. Certain reclassifications have been made to the financial statements and accompanying footnotes to conform to the Company’s current period presentation. In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2025 (the “Annual Report”). Fiscal year. The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2026 and 2025 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 March 28, 2026 and December 27, 2025 were as follows (in thousands): March 28, 2026 December 27, 2025 Cash and cash equivalents $ 128,816 $ 196,572 Restricted cash 25,994 25,994 Restricted cash, included in Advertising fund assets, restricted 21,821 5,887 Total cash, cash equivalents, and restricted cash $ 176,631 $ 228,453 Recently issued accounting pronouncements. 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 that were previously disclosed in the Annual Report. (2) Earnings per Share Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the reporting period. 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 service-based and performance-based restricted stock units, respectively, as determined using the treasury stock method. 8 WINGSTOP INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands): Thirteen Weeks Ended March 28, 2026 March 29, 2025 Basic weighted average shares outstanding 27,481 28,385 Dilutive shares 112 124 Diluted weighted average shares outstanding 27,593 28,509 For the thirteen weeks ended March 28, 2026 and March 29, 2025, equity awards representing approximately 98,000 and 8,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive. (3) Stockholders’ Deficit Dividends In connection with the Company’s regular dividend program, our Board of Directors declared a quarterly dividend of $ 0.30 per share of common stock in the first quarter of 2026. Subsequent to the first quarter, on April 28, 2026, our Board of Directors declared a regular quarterly dividend of $ 0.30 per share of common stock for stockholders of record as of May 15, 2026. The regular quarterly dividend is to be paid on June 5, 2026, totaling approximately $ 8.2 million. Share Repurchase Program The following table summarizes shares repurchased and retired, and the average price per share, during the periods presented: March 28, 2026 December 27, 2025 # of shares Weighted average price per share # of shares Weighted average price per share 2023 & 2024 ASR Agreements — $ — 317,202 $ 292.28 Share repurchases 374,324 208.08 901,191 243.81 Total share repurchases 374,324 $ 208.08 1,218,393 $ 256.43 On March 5, 2026, the Company’s Board of Directors authorized the purchase of up to an additional $ 300.0 million of the Company’s common stock under the share repurchase program. On December 9, 2024, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a third-party financial institution to repurchase $ 250.0 million of the Company’s common stock under its Share Repurchase Program. Pursuant to the terms of the ASR Agreement, the Company paid the financial institution $ 250.0 million and, on December 9, 2024, the Company received and retired 551,325 shares of its common stock. The final settlement under the ASR Agreement occurred on February 20, 2025, and the Company received and retired an additional 317,202 shares of common stock. In connection with the ASR Agreement, the Company received and retired a total of 868,527 shares of common stock at an average price of $ 287.84 per share. The total number of shares repurchased under the ASR Agreement was based on a daily volume-weighted average share price during the valuation period specified in the ASR Agreement, less a discount and subject to adjustments. During the thirteen weeks ended March 28, 2026, the Company repurchased and retired 374,324 shares of its common stock at an average price of $ 208.08 per share. As of March 28, 2026, $ 313.4 million remained available under the Share Repurchase Program. (4) Fair Value Measurements Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or 9 WINGSTOP INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows: Level 1 — Unadjusted quoted prices for identical instruments traded in active markets. Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data. Level 3 — Unobservable inputs reflecting management’s estimates and assumptions. The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short-term nature. Certain assets are measured at fair value on a non-recurring basis using Level 3 inputs. The fair value of the Company’s preference share investment in the Company’s United Kingdom master franchisee, Lemon Pepper Holdings Ltd. (“LPH”), which is accounted for as a held-to-maturity debt security, was estimated using a discounted cash flow model that incorporates unobservable inputs, including expected cash flows, discount rates, and an assumed maturity term of approximately five years. Based on this valuation approach, the estimated fair value of the preference share investment was determined at $ 94.5 million. The carrying value of the investment as of March 28, 2026 was $ 86.5 million, net of an allowance for credit losses of $ 5.1 million. Fair value of debt and the investment in debt securities are determined on a non-recurring basis, which results are summarized as follows (in thousands): Fair Value Hierarchy March 28, 2026 December 27, 2025 Carrying Value Fair Value Carrying Value Fair Value Securitized Financing Facility: 2020-1 Class A-2 Senior Secured Notes (1) Level 2 $ 472,800 $ 457,968 $ 472,800 $ 456,961 2022-1 Class A-2 Senior Secured Notes (1) Level 2 $ 248,125 $ 238,657 $ 248,125 $ 240,061 2024-1 Class A-2 Senior Secured Notes (1) Level 2 $ 500,000 $ 507,715 $ 500,000 $ 514,500 Investment in preference shares of LPH (2) Level 3 $ 86,527 $ 94,525 $ 85,597 $ 87,482 (1) The fair values of the 2020-1, 2022-1, and 2024-1 Class A-2 Senior Secured Notes were estimated using available market information. (2) The fair value approximates discounted cash flows using current market rates for debt investments with similar maturities and credit risk. The preference shares are accounted for as held-to-maturity debt securities at amortized cost. Refer to Note 9 for additional information regarding the Company’s investments. The Company also measures certain non-financial assets (primarily long-lived assets, intangible assets, and goodwill) at fair value on a non-recurring basis in connection with its periodic evaluations of such assets for potential impairment. (5) Income Taxes Income tax expense and the effective tax rate were $ 10.7 million and 26.3 %, respectively, for the thirteen weeks ended March 28, 2026, and $ 30.9 million and 25.1 %, respectively, for the thirteen weeks ended March 29, 2025. T he increase in the effective tax rate was primarily due to an increase in state income taxes and other non-deductible items. The decrease in total tax expense for the thirteen weeks ended March 28, 2026 is primarily related to the taxable gain on the sale of our non-controlling interest in LPH. 10 WINGSTOP INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (6) Debt Obligations Long-term debt consisted of the following components (in thousands): March 28, 2026 December 27, 2025 2020-1 Class A-2 Senior Secured Notes $ 472,800 $ 472,800 2022-1 Class A-2 Senior Secured Notes 248,125 248,125 2024-1 Class A-2 Senior Secured Notes 500,000 500,000 Debt issuance costs, net of amortization ( 11,088 ) ( 11,831 ) Total debt 1,209,837 1,209,094 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”), (iii) Series 2024-1 5.858 % Fixed Rate Senior Secured Notes, Class A-2 (the “2024 Class A-2 Notes”), and (iv) a revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “Variable Funding Notes”), which permits borrowings of up to a maximum principal amount of $ 300 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit. No borrowings were outstanding under the Variable Funding Notes as of March 28, 2026 and December 27, 2025. As of March 28, 2026, the Company’s leverage ratio under the 2020 Class A-2 Notes, the 2022 Class A-2 Notes, and the 2024 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, and the entire outstanding balance of $ 1.2 billion 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 as the repayment date is more than one year from March 28, 2026. The 2020 Class A-2 Notes, 2022 Class A-2 Notes, and 2024 Class A-2 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 The Company is subject to legal proceedings, claims, and liabilities, including claims and actions resulting from employment-related and franchise-related matters, which arise in the ordinary course of business and are generally covered by insurance. 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. (8) Stock-Based Compensation During the thirteen weeks ended March 28, 2026, the Company granted 38,984 restricted stock units (“RSUs”) to certain employees. The RSUs granted generally vest ratably over a three-year period subsequent to the grant date and had a weighted-average grant-date fair value of $ 236.25 per unit. In addition, the Company granted 31,669 performance stock units (“PSUs”) to certain employees during the thirteen weeks ended March 28, 2026. Of the total PSUs granted, 27,358 PSUs are subject to a service condition and a performance vesting condition based on return on incremental invested capital (“ROIIC PSUs”). The ROIIC 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 ROIIC PSUs is 250 % based on the level of performance achieved for the awards. The remaining 4,311 PSUs granted are subject to a service condition and a performance vesting condition based on the number of net new restaurants opened over the performance period (“NNR PSUs”). The NNR PSUs vest ratably over a three-year period, and the maximum vesting percentage that could be realized for each of the NNR PSUs is 100 % based on the level of performance achieved for the awards. The PSUs had a weighted-average grant-date fair value of $ 236.34 per unit. 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. 11 WINGSTOP INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Total compensation expense related to all share-based awards, net of forfeitures recognized, was $ 4.8 million and $ 5.3 million for the thirteen weeks ended March 28, 2026 and March 29, 2025, respectively, and was included in Selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Comprehensive Income. (9) Investments In the first fiscal quarter of 2025, LPH, which was an unconsolidated equity method investment of the Company, completed a transaction to sell all its outstanding equity to a third party. The Company received proceeds of $ 107.7 million and recognized a gain of $ 97.2 million in Investment (income) expense on the Consolidated Statements of Comprehensive Income. In connection with the transaction, the Company reinvested $ 75.4 million in a newly formed entity, consisting primarily of preference shares and an approximately 18.75 % non-controlling equity interest. Substantially all of the reinvestment consists of preference shares, which will be accounted for as held-to-maturity debt securities at amortized cost, with interest income recognized using the effective interest method. These securities are evaluated for credit losses on a quarterly basis under the current expected credit loss (“CECL”) methodology. The Company recorded a provision for credit losses of $ 4.7 million in Investment (income) expense on the Consolidated Statements of Comprehensive Income during the first fiscal quarter of 2025. The Company’s 18.75 % ownership interest in ordinary shares is accounted for using the equity method, with the Company’s share of investee income will be recorded in Investment (income) expense on 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 28, 2026 and March 29, 2025 (in thousands): Thirteen Weeks Ended March 28, 2026 March 29, 2025 Royalty revenue $ 76,801 $ 71,947 Advertising fees and related income 63,269 62,272 Franchise fees 1,879 1,399 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 28, 2026 was included in the deferred revenue balance as of December 27, 2025. Approximately $ 14.7 million and $ 13.6 million of deferred revenue as of March 28, 2026 and December 27, 2025, 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 7.5 years. The Company did not have any material contract assets as of March 28, 2026. 12 WINGSTOP INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (11) Segment Information The Company has one reportable segment, and the measure of restaurant segment assets is reported as Total assets on the Consolidated Balance Sheets. Financial information for the Company’s reportable segment is as follows (in thousands): Thirteen Weeks Ended March 28, 2026 March 29, 2025 Revenue: Royalty revenue, franchise fees and other $ 87,470 $ 78,775 Advertising fees 63,269 62,272 Company-owned restaurant sales 32,986 30,047 Total revenue 183,725 171,094 Cost of sales: Food, beverage and packaging costs 11,794 11,241 Labor 7,889 7,153 Other operating costs 5,869 5,191 Vendor rebates ( 836 ) ( 750 ) Total cost of sales 24,716 22,835 Advertising expenses 67,311 65,795 Selling, general & administrative: Transaction costs — 497 System implementation costs 546 1,311 Amortization of capitalized system implementation costs 467 — Restructuring charges 2,390 — Stock-based compensation expense 4,823 5,312 Other segment expense (1) 26,223 24,320 Total selling, general and administrative 34,449 31,440 Depreciation and amortization 6,841 6,228 Loss on disposal of assets — 6,535 Interest expense, net 9,764 8,910 Investment (income) expense 72 ( 93,839 ) Income tax expense 10,689 30,925 Net income $ 29,883 $ 92,265 (1) Other segment expense consists primarily of corporate related items such as headcount-related expenses, office rent expense, and other overhead costs. 13