QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) | |||||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
x | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
Page | ||||||||
PART I | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
PART II | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
June 29, 2024 | December 30, 2023 | ||||||||||
(Unaudited) | |||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable, net | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Advertising fund assets, restricted | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Operating lease assets | |||||||||||
Goodwill | |||||||||||
Trademarks | |||||||||||
Customer relationships, net | |||||||||||
Other non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and stockholders' deficit | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Current portion of operating lease liabilities | |||||||||||
Other current liabilities | |||||||||||
Advertising fund liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, net | |||||||||||
Operating lease liabilities | |||||||||||
Deferred revenues, net of current | |||||||||||
Deferred income tax liabilities, net | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (see Note 7) | |||||||||||
Stockholders' deficit | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in-capital | |||||||||||
Retained deficit | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders' deficit | ( | ( | |||||||||
Total liabilities and stockholders' deficit | $ | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Royalty revenue, franchise fees and other | $ | $ | $ | $ | |||||||||||||||||||
Advertising fees | |||||||||||||||||||||||
Company-owned restaurant sales | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Cost of sales (1) | |||||||||||||||||||||||
Advertising expenses | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Loss on disposal of assets | |||||||||||||||||||||||
Total costs and expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Other (income) expense | ( | ( | ( | ||||||||||||||||||||
Income before income tax expense | |||||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Dividends per share | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Currency translation adjustment | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Common Stock | |||||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Retained Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Shares issued under stock plans | — | — | — | ||||||||||||||||||||||||||||||||
Tax payments for restricted stock upon vesting | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation expense, net of forfeitures | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends declared on common stock and equivalents | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at April 1, 2023 | ( | ( | ( | ||||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Shares issued under stock plans | — | — | — | ||||||||||||||||||||||||||||||||
Tax payments for restricted stock upon vesting | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation expense, net of forfeitures | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends declared on common stock and equivalents | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at July 1, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Retained Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||
Balance at December 30, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Shares issued under stock plans | — | — | |||||||||||||||||||||||||||||||||
Tax payments for restricted stock upon vesting | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation expense, net of forfeitures | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends declared on common stock and equivalents | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance at March 30, 2024 | ( | ( | ( | ||||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Shares issued under stock plans | — | — | — | ||||||||||||||||||||||||||||||||
Purchases of common stock | ( | ( | ( | ( | — | ( | |||||||||||||||||||||||||||||
Tax payments for restricted stock upon vesting | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation expense, net of forfeitures | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends declared on common stock and equivalents | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance at June 29, 2024 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Twenty-Six Weeks Ended | |||||||||||
June 29, 2024 | July 1, 2023 | ||||||||||
Operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income taxes | ( | ||||||||||
Stock-based compensation expense | |||||||||||
Loss on disposal of assets | |||||||||||
Amortization of debt issuance costs | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Prepaid expenses and other assets | ( | ( | |||||||||
Advertising fund assets and liabilities, net | |||||||||||
Accounts payable and other current liabilities | ( | ||||||||||
Deferred revenue | |||||||||||
Other non-current liabilities | |||||||||||
Cash provided by operating activities | |||||||||||
Investing activities | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Acquisition of restaurants from franchisee | ( | ( | |||||||||
Payments for investments | ( | ( | |||||||||
Cash used in investing activities | ( | ( | |||||||||
Financing activities | |||||||||||
Proceeds from exercise of stock options | |||||||||||
Repayments of long-term debt | ( | ||||||||||
Purchases of common stock | ( | ||||||||||
Tax payments for restricted stock upon vesting | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Cash used in financing activities | ( | ( | |||||||||
Net increase in cash, cash equivalents, and restricted cash | |||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ | |||||||||
Supplemental information: | |||||||||||
Accrued capital expenditures | $ | $ |
June 29, 2024 | December 30, 2023 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Restricted cash, included in Advertising fund assets, restricted | |||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
Basic weighted average shares outstanding | |||||||||||||||||||||||
Dilutive shares | |||||||||||||||||||||||
Diluted weighted average shares outstanding |
Fair Value Hierarchy | June 29, 2024 | December 30, 2023 | |||||||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||||||
Securitized Financing Facility: | |||||||||||||||||||||||||||||
2020-1 Class A-2 Senior Secured Notes (1) | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
2022-1 Class A-2 Senior Secured Notes (1) | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Investments in bonds of LPH (2) | Level 3 | $ | $ | $ | $ |
June 29, 2024 | December 30, 2023 | ||||||||||
2020-1 Class A-2 Senior Secured Notes | $ | $ | |||||||||
2022-1 Class A-2 Senior Secured Notes | |||||||||||
Debt issuance costs, net of amortization | ( | ( | |||||||||
Total debt | |||||||||||
Twenty-Six Weeks Ended | |||||||||||
June 29, 2024 | July 1, 2023 | ||||||||||
Operating lease cost (1) | |||||||||||
Variable lease cost (2) | |||||||||||
Total lease cost |
Twenty-Six Weeks Ended | |||||||||||
June 29, 2024 | July 1, 2023 | ||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
Royalty revenue | $ | $ | $ | $ | |||||||||||||||||||
Advertising fees and related income | |||||||||||||||||||||||
Franchise fees |
Purchase Price Allocation | |||||
Working capital | $ | ||||
Property and equipment | |||||
Reacquired franchise rights | |||||
Goodwill | |||||
Total purchase price | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
Domestic Franchised Activity: | |||||||||||||||||||||||
Beginning of period | 1,924 | 1,710 | 1,877 | 1,678 | |||||||||||||||||||
Openings | 65 | 42 | 112 | 74 | |||||||||||||||||||
Closures | — | (1) | — | (1) | |||||||||||||||||||
Acquired by Company | (1) | (2) | (1) | (2) | |||||||||||||||||||
Restaurants end of period | 1,988 | 1,749 | 1,988 | 1,749 | |||||||||||||||||||
Domestic Company-Owned Activity: | |||||||||||||||||||||||
Beginning of period | 50 | 43 | 49 | 43 | |||||||||||||||||||
Openings | 1 | — | 2 | — | |||||||||||||||||||
Closures | — | — | — | — | |||||||||||||||||||
Acquired by Company | 1 | 2 | 1 | 2 | |||||||||||||||||||
Restaurants end of period | 52 | 45 | 52 | 45 | |||||||||||||||||||
Total Domestic Restaurants | 2,040 | 1,794 | 2,040 | 1,794 | |||||||||||||||||||
International Franchised Activity(1): | |||||||||||||||||||||||
Beginning of period | 305 | 243 | 288 | 238 | |||||||||||||||||||
Openings | 10 | 9 | 27 | 17 | |||||||||||||||||||
Closures | (3) | — | (3) | (3) | |||||||||||||||||||
Restaurants end of period | 312 | 252 | 312 | 252 | |||||||||||||||||||
Total System-wide Restaurants | 2,352 | 2,046 | 2,352 | 2,046 |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
Number of system-wide restaurants open at end of period | 2,352 | 2,046 | 2,352 | 2,046 | |||||||||||||||||||
System-wide sales (1) | $ | 1,175,910 | $ | 809,750 | $ | 2,299,518 | $ | 1,631,359 | |||||||||||||||
Domestic restaurant AUV | $ | 2,032 | $ | 1,704 | $ | 2,032 | $ | 1,704 | |||||||||||||||
Domestic same store sales growth | 28.7 | % | 16.8 | % | 25.1 | % | 18.4 | % | |||||||||||||||
Company-owned domestic same store sales growth | 14.1 | % | 5.7 | % | 10.1 | % | 7.9 | % | |||||||||||||||
Total revenue | $ | 155,699 | $ | 107,173 | $ | 301,488 | $ | 215,894 | |||||||||||||||
Net income | $ | 27,485 | $ | 16,181 | $ | 56,232 | $ | 31,850 | |||||||||||||||
Adjusted EBITDA (2) | $ | 51,778 | $ | 34,350 | $ | 102,041 | $ | 68,933 | |||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
Net income | $ | 27,485 | $ | 16,181 | $ | 56,232 | $ | 31,850 | |||||||||||||||
Interest expense, net | 5,200 | 4,244 | 9,744 | 8,817 | |||||||||||||||||||
Income tax expense | 9,006 | 6,077 | 18,756 | 11,319 | |||||||||||||||||||
Depreciation and amortization | 5,161 | 3,218 | 8,571 | 6,207 | |||||||||||||||||||
EBITDA | $ | 46,852 | $ | 29,720 | $ | 93,303 | $ | 58,193 | |||||||||||||||
Additional adjustments: | |||||||||||||||||||||||
Consulting fees (a) | — | 1,084 | — | 3,850 | |||||||||||||||||||
Stock-based compensation expense (b) | 4,926 | 3,546 | 8,738 | 6,890 | |||||||||||||||||||
Adjusted EBITDA | $ | 51,778 | $ | 34,350 | $ | 102,041 | $ | 68,933 |
Thirteen Weeks Ended | Increase / (Decrease) | ||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | $ | % | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Royalty revenue, franchise fees and other | $ | 71,160 | $ | 47,984 | $ | 23,176 | 48.3 | % | |||||||||||||||
Advertising fees | 54,654 | 36,596 | 18,058 | 49.3 | % | ||||||||||||||||||
Company-owned restaurant sales | 29,885 | 22,593 | 7,292 | 32.3 | % | ||||||||||||||||||
Total revenue | 155,699 | 107,173 | 48,526 | 45.3 | % | ||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Cost of sales (1) | 22,673 | 16,642 | 6,031 | 36.2 | % | ||||||||||||||||||
Advertising expenses | 58,548 | 38,729 | 19,819 | 51.2 | % | ||||||||||||||||||
Selling, general and administrative | 28,097 | 22,128 | 5,969 | 27.0 | % | ||||||||||||||||||
Depreciation and amortization | 5,161 | 3,218 | 1,943 | 60.4 | % | ||||||||||||||||||
Total costs and expenses | 114,479 | 80,717 | 33,762 | 41.8 | % | ||||||||||||||||||
Operating income | 41,220 | 26,456 | 14,764 | 55.8 | % | ||||||||||||||||||
Interest expense, net | 5,200 | 4,244 | 956 | 22.5 | % | ||||||||||||||||||
Other (income) expense | (471) | (46) | (425) | 923.9 | % | ||||||||||||||||||
Income before income tax expense | 36,491 | 22,258 | 14,233 | 63.9 | % | ||||||||||||||||||
Income tax expense | 9,006 | 6,077 | 2,929 | 48.2 | % | ||||||||||||||||||
Net income | $ | 27,485 | $ | 16,181 | $ | 11,304 | 69.9 | % |
Thirteen Weeks Ended | |||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | ||||||||||||||||||||||
In dollars | As a % of company-owned restaurant sales | In dollars | As a % of company-owned restaurant sales | ||||||||||||||||||||
Food, beverage and packaging costs | $ | 10,695 | 35.8 | % | $ | 7,264 | 32.2 | % | |||||||||||||||
Labor costs | 6,987 | 23.4 | % | 5,520 | 24.4 | % | |||||||||||||||||
Other restaurant operating expenses | 5,757 | 19.3 | % | 4,408 | 19.5 | % | |||||||||||||||||
Vendor rebates | (766) | (2.6) | % | (550) | (2.4) | % | |||||||||||||||||
Total cost of sales | $ | 22,673 | 75.9 | % | $ | 16,642 | 73.7 | % |
Twenty-Six Weeks Ended | Increase / (Decrease) | ||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | $ | % | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Royalty revenue, franchise fees and other | $ | 138,257 | $ | 96,172 | $ | 42,085 | 43.8 | % | |||||||||||||||
Advertising fees | 104,803 | 74,059 | 30,744 | 41.5 | % | ||||||||||||||||||
Company-owned restaurant sales | 58,428 | 45,663 | 12,765 | 28.0 | % | ||||||||||||||||||
Total revenue | 301,488 | 215,894 | 85,594 | 39.6 | % | ||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Cost of sales (1) | 43,944 | 33,337 | 10,607 | 31.8 | % | ||||||||||||||||||
Advertising expenses | 111,740 | 78,372 | 33,368 | 42.6 | % | ||||||||||||||||||
Selling, general and administrative | 53,275 | 45,773 | 7,502 | 16.4 | % | ||||||||||||||||||
Depreciation and amortization | 8,571 | 6,207 | 2,364 | 38.1 | % | ||||||||||||||||||
Loss on disposal of assets | — | 77 | (77) | (100.0) | % | ||||||||||||||||||
Total costs and expenses | 217,530 | 163,766 | 53,764 | 32.8 | % | ||||||||||||||||||
Operating income | 83,958 | 52,128 | 31,830 | 61.1 | % | ||||||||||||||||||
Interest expense, net | 9,744 | 8,817 | 927 | 10.5 | % | ||||||||||||||||||
Other (income) expense | (774) | 142 | (916) | (645.1) | % | ||||||||||||||||||
Income before income tax expense | 74,988 | 43,169 | 31,819 | 73.7 | % | ||||||||||||||||||
Income tax expense | 18,756 | 11,319 | 7,437 | 65.7 | % | ||||||||||||||||||
Net income | $ | 56,232 | $ | 31,850 | $ | 24,382 | 76.6 | % |
Twenty-Six Weeks Ended | |||||||||||||||||||||||
June 29, 2024 | July 1, 2023 | ||||||||||||||||||||||
In dollars | As a % of company-owned restaurant sales | In dollars | As a % of company-owned restaurant sales | ||||||||||||||||||||
Food, beverage and packaging costs | $ | 20,596 | 35.3 | % | $ | 14,751 | 32.3 | % | |||||||||||||||
Labor costs | 13,663 | 23.4 | % | 11,037 | 24.2 | % | |||||||||||||||||
Other restaurant operating expenses | 11,167 | 19.1 | % | 8,633 | 18.9 | % | |||||||||||||||||
Vendor rebates | (1,482) | (2.5) | % | (1,084) | (2.4) | % | |||||||||||||||||
Total cost of sales | $ | 43,944 | 75.2 | % | $ | 33,337 | 73.0 | % | |||||||||||||||
Twenty-Six Weeks Ended | |||||||||||
June 29, 2024 | July 1, 2023 | ||||||||||
Net cash provided by (used in): | |||||||||||
Operating activities | $ | 80,837 | $ | 47,967 | |||||||
Investing activities | (25,251) | (22,206) | |||||||||
Financing activities | (45,161) | (17,374) | |||||||||
Net change in cash and cash equivalents | $ | 10,425 | $ | 8,387 |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) | |||||||||||||||||||
March 31, 2024 - April 27, 2024 | — | $ | — | — | $ | — | |||||||||||||||||
April 28, 2024 - May 25, 2024 | 38,763 | 386.92 | 38,763 | 109,999,905 | |||||||||||||||||||
May 26, 2024 - June 29, 2024 | 37,099 | 375.41 | 37,099 | 96,070,713 | |||||||||||||||||||
Total | 75,862 | $ | 381.29 | 75,862 | $ | 96,070,713 |
Exhibit No. | Description | ||||
3.1 | |||||
3.2 | |||||
10.1† | |||||
10.2† | |||||
10.3† | |||||
10.4† | |||||
10.5† | |||||
31.1* | |||||
31.2* | |||||
32.1** | |||||
32.2** | |||||
101 INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
101 SCH* | Inline XBRL Taxonomy Extension Schema Document | ||||
101 CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||
101 DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||
101 LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||
101 PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||
104* | Cover Page Interactive Data File (formatted as Inline XBRL and Contained in Exhibit 101) |
Wingstop Inc. | ||||||||||||||
(Registrant) | ||||||||||||||
Date: | July 31, 2024 | By: | /s/ Michael J. Skipworth | |||||||||||
President and Chief Executive Officer | ||||||||||||||
(Principal Executive Officer) | ||||||||||||||
Date: | July 31, 2024 | By: | /s/ Alex R. Kaleida | |||||||||||
Chief Financial Officer | ||||||||||||||
(Principal Financial and Accounting Officer) |
Date: | July 31, 2024 | ||||
By: | /s/ Michael J. Skipworth | ||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
Date: | July 31, 2024 | ||||
By: | /s/ Alex R. Kaleida | ||||
Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |
Date: | July 31, 2024 | ||||
By: | /s/ Michael J. Skipworth | ||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
Date: | July 31, 2024 | ||||
By: | /s/ Alex R. Kaleida | ||||
Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) | |||||
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 29, 2024 |
Dec. 30, 2023 |
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Statement of Financial Position [Abstract] | ||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 29,304,401 | 29,337,920 |
Common stock, shares outstanding (in shares) | 29,304,401 | 29,337,920 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
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Jun. 29, 2024 |
Jul. 01, 2023 |
Jun. 29, 2024 |
Jul. 01, 2023 |
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Revenue: | ||||||
Total revenue | $ 155,699 | $ 107,173 | $ 301,488 | $ 215,894 | ||
Costs and expenses: | ||||||
Cost of sales | [1] | 22,673 | 16,642 | 43,944 | 33,337 | |
Advertising expenses | 58,548 | 38,729 | 111,740 | 78,372 | ||
Selling, general and administrative | 28,097 | 22,128 | 53,275 | 45,773 | ||
Depreciation and amortization | 5,161 | 3,218 | 8,571 | 6,207 | ||
Loss on disposal of assets | 0 | 0 | 0 | 77 | ||
Total costs and expenses | 114,479 | 80,717 | 217,530 | 163,766 | ||
Operating income | 41,220 | 26,456 | 83,958 | 52,128 | ||
Interest expense, net | 5,200 | 4,244 | 9,744 | 8,817 | ||
Other (income) expense | (471) | (46) | (774) | 142 | ||
Income before income tax expense | 36,491 | 22,258 | 74,988 | 43,169 | ||
Income tax expense | 9,006 | 6,077 | 18,756 | 11,319 | ||
Net income | $ 27,485 | $ 16,181 | $ 56,232 | $ 31,850 | ||
Earnings per share | ||||||
Basic (in USD per share) | $ 0.94 | $ 0.54 | $ 1.92 | $ 1.06 | ||
Diluted (in USD per share) | $ 0.93 | $ 0.54 | $ 1.91 | $ 1.06 | ||
Weighted average shares outstanding | ||||||
Basic (in shares) | 29,343,000 | 29,972,000 | 29,346,000 | 29,959,000 | ||
Diluted (in shares) | 29,457,000 | 30,049,000 | 29,468,000 | 30,043,000 | ||
Dividends per share (in USD per share) | $ 0.22 | $ 0.19 | $ 0.44 | $ 0.38 | ||
Other comprehensive income (loss) | ||||||
Currency translation adjustment | $ (12) | $ 128 | $ (36) | $ 276 | ||
Other comprehensive income (loss) | (12) | 128 | (36) | 276 | ||
Comprehensive income | 27,473 | 16,309 | 56,196 | 32,126 | ||
Royalty revenue, franchise fees and other | ||||||
Revenue: | ||||||
Total revenue | 71,160 | 47,984 | 138,257 | 96,172 | ||
Advertising fees | ||||||
Revenue: | ||||||
Total revenue | 54,654 | 36,596 | 104,803 | 74,059 | ||
Company-owned restaurant sales | ||||||
Revenue: | ||||||
Total revenue | $ 29,885 | $ 22,593 | $ 58,428 | $ 45,663 | ||
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Basis of Presentation and Update to Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Update to Significant Accounting Policies | 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 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. 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 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. 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 30, 2023. Fiscal year. The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2024 and 2023 each have 52 weeks. Cash, Cash Equivalents, and Restricted Cash. Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of June 29, 2024 and December 30, 2023 were as follows (in thousands):
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 disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.
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Earnings per Share |
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | 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. Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):
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.
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Stockholders’ Deficit |
6 Months Ended |
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Jun. 29, 2024 | |
Dividends [Abstract] | |
Stockholders’ Deficit | Stockholders’ Deficit Dividends 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 millionShare 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 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.
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Fair Value Measurements |
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Jun. 29, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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 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. Fair value of debt and the investment in bonds issued by the Company’s United Kingdom master franchisee, Lemon Pepper Holdings Ltd. (“LPH”), are determined on a non-recurring basis, which results are summarized as follows (in thousands):
(1) The fair value of the 2020-1 and 2022-1 Class A-2 Senior Secured Notes was 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 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.
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Income Taxes |
6 Months Ended |
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Jun. 29, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes 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.
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Debt Obligations |
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations | Debt Obligations Long-term debt consisted of the following components (in thousands):
The Company’s outstanding debt was issued by Wingstop Funding LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of Wingstop Inc. and consists of (i) Series 2020-1 2.84% Fixed Rate Senior Secured Notes, Class A-2 (the “2020 Class A-2 Notes”), (ii) Series 2022-1 3.734% Fixed Rate Senior Secured Notes, Class A-2 (the “2022 Class A-2 Notes”), and (iii) a revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “2022 Variable Funding Notes,” and together with the 2022 Class A-2 Notes, the “2022 Notes”), which permits borrowings of up to a maximum principal amount of $200 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit. No borrowings were outstanding under the 2022 Variable Funding Notes as of 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 5.0x. 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 $720.9 million of the 2020 Class A-2 Notes and the 2022 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026. The 2020 Class A-2 Notes and 2022 Notes were issued in securitization transactions, and are guaranteed by certain limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company and secured by a security interest in substantially all of their assets, including certain domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements, intellectual property, and vendor rebate contracts.
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Commitments and Contingencies |
6 Months Ended |
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Jun. 29, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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.
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Leases |
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases 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):
(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):
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Stock-Based Compensation |
6 Months Ended |
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Jun. 29, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 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 23,874 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 3,281 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 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. The PSUs had a weighted-average grant-date fair value of $370.95 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. 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.
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Revenue from Contracts with Customers |
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers The following table represents a disaggregation of revenue from contracts with customers for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023 (in thousands):
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Acquisitions of Company-owned Restaurants |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Acquisitions of Company-owned Restaurants | 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):
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 $7.0 million, funded by cash flow from operations. The restaurant acquisitions are accounted for as business combinations. The Company is still determining the estimated fair value of assets acquired and liabilities assumed. The excess of the purchase price over the aggregate fair value of assets acquired will be allocated to goodwill. The results of operations of these acquisitions will be included in our Consolidated Statements of Comprehensive Income as of the dates of acquisition.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
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Jun. 29, 2024 |
Mar. 30, 2024 |
Jul. 01, 2023 |
Apr. 01, 2023 |
Jun. 29, 2024 |
Jul. 01, 2023 |
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Pay vs Performance Disclosure | ||||||
Net income | $ 27,485 | $ 28,747 | $ 16,181 | $ 15,669 | $ 56,232 | $ 31,850 |
Insider Trading Arrangements |
3 Months Ended |
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Jun. 29, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation and Update to Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 29, 2024 | |
Accounting Policies [Abstract] | |
Basis of presentation | 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 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. 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 30, 2023.
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Fiscal year | Fiscal year. The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2024 and 2023 each have 52 weeks.
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Recently issued accounting pronouncements | 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 disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.
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Basis of Presentation and Update to Significant Accounting Policies (Tables) |
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash, Cash Equivalents, and Restricted Cash | 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 June 29, 2024 and December 30, 2023 were as follows (in thousands):
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Earnings per Share (Tables) |
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Basic Shares Outstanding to Diluted Shares Outstanding | Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):
|
Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Measurements | Fair value of debt and the investment in bonds issued by the Company’s United Kingdom master franchisee, Lemon Pepper Holdings Ltd. (“LPH”), are determined on a non-recurring basis, which results are summarized as follows (in thousands):
(1) The fair value of the 2020-1 and 2022-1 Class A-2 Senior Secured Notes was 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.
|
Debt Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following components (in thousands):
|
Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Expense and Supplemental Cash Flow Information | Components of lease expense were as follows (in thousands):
(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):
|
Revenue from Contracts with Customers (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | 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):
|
Acquisitions of Company-owned Restaurants (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation for Acquisitions | 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):
|
Basis of Presentation and Update to Significant Accounting Policies - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 29, 2024
restaurant
| |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 2,352 |
Franchised units | |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 2,300 |
Proportion of restaurants that are franchised (as a percent) | 98.00% |
Franchised units | International and US locations | |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 312 |
Entity operated units | |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 52 |
Basis of Presentation and Update to Significant Accounting Policies -Schedule of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 29, 2024 |
Dec. 30, 2023 |
Jul. 01, 2023 |
Dec. 31, 2022 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 96,749 | $ 90,216 | ||
Restricted cash | 11,444 | 11,444 | ||
Restricted cash, included in Advertising fund assets, restricted | 21,908 | 18,016 | ||
Total cash, cash equivalents, and restricted cash | $ 130,101 | $ 119,676 | $ 214,102 | $ 205,715 |
Earnings per Share - Schedule of Reconciliation of Basic Shares Outstanding to Diluted Shares Outstanding (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2024 |
Jul. 01, 2023 |
Jun. 29, 2024 |
Jul. 01, 2023 |
|
Earnings Per Share [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 29,343,000 | 29,972,000 | 29,346,000 | 29,959,000 |
Dilutive shares (in shares) | 114,000 | 77,000 | 122,000 | 84,000 |
Diluted weighted average shares outstanding (in shares) | 29,457,000 | 30,049,000 | 29,468,000 | 30,043,000 |
Earnings per Share - Additional Information (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2024 |
Jul. 01, 2023 |
Jun. 29, 2024 |
Jul. 01, 2023 |
|
Earnings Per Share [Abstract] | ||||
Equity awards outstanding (in shares) | 0 | 1 | 28 | 3 |
Stockholders’ Deficit (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jul. 30, 2024 |
Jun. 29, 2024 |
Mar. 30, 2024 |
Jul. 01, 2023 |
Jun. 29, 2024 |
Jul. 01, 2023 |
Aug. 17, 2023 |
|
Dividends Payable [Line Items] | |||||||
Dividends paid per share (in USD per share) | $ 0.22 | $ 0.19 | $ 0.44 | $ 0.38 | |||
Dividends paid | $ 12,900 | ||||||
Stock repurchased and retired average share price (in USD per share) | $ 381.29 | $ 381.29 | |||||
Subsequent event | |||||||
Dividends Payable [Line Items] | |||||||
Dividends payable per share (in USD per share) | $ 0.27 | ||||||
Dividends payable | $ 7,900 | ||||||
Share Repurchase Authorization | |||||||
Dividends Payable [Line Items] | |||||||
Stock repurchase, authorized amount | $ 96,100 | $ 96,100 | $ 250,000 | ||||
Stock repurchased and retired (in shares) | 75,862 | ||||||
Dividend paid | |||||||
Dividends Payable [Line Items] | |||||||
Dividends paid per share (in USD per share) | $ 0.22 | $ 0.22 | $ 0.44 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2024 |
Jul. 01, 2023 |
Jun. 29, 2024 |
Jul. 01, 2023 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 9,006 | $ 6,077 | $ 18,756 | $ 11,319 |
Effective income tax rate (as a percent) | 24.70% | 27.30% | 25.00% | 26.20% |
Debt Obligations - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands |
Jun. 29, 2024 |
Dec. 30, 2023 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt issuance costs, net of amortization | $ (7,667) | $ (8,598) |
Total debt | 713,258 | 712,327 |
2020-1 Class A-2 Senior Secured Notes | ||
Debt Instrument [Line Items] | ||
Gross debt | 472,800 | 472,800 |
2022-1 Class A-2 Senior Secured Notes | ||
Debt Instrument [Line Items] | ||
Gross debt | $ 248,125 | $ 248,125 |
Debt Obligations - Additional Information (Details) - USD ($) |
Jun. 29, 2024 |
Dec. 30, 2023 |
---|---|---|
Debt Instrument [Line Items] | ||
Maximum borrowing capacity for line of credit | $ 200,000,000 | |
2020-1 Class A-2 Senior Secured Notes | ||
Debt Instrument [Line Items] | ||
Senior secured note fixed interest rate (as a percent) | 2.84% | |
Debt outstanding | $ 472,800,000 | $ 472,800,000 |
2020-1 Class A-2 Senior Secured Notes | Senior notes | ||
Debt Instrument [Line Items] | ||
Debt outstanding | $ 720,900,000 | |
2022-1 Class A-2 Senior Secured Notes | ||
Debt Instrument [Line Items] | ||
Senior secured note fixed interest rate (as a percent) | 3.734% | |
Debt outstanding | $ 248,125,000 | 248,125,000 |
2020 Variable Funding Notes | Line of credit | ||
Debt Instrument [Line Items] | ||
Line of credit | $ 0 | $ 0 |
2020 and 2022 Class A-2 Senior Secured Notes | ||
Debt Instrument [Line Items] | ||
Covenant, leverage ratio | 5.0 |
Leases - Additional Information (Details) - USD ($) $ in Millions |
Jun. 29, 2024 |
Mar. 30, 2024 |
---|---|---|
Lessee, Lease, Description [Line Items] | ||
Lease term | 13 years 9 months 18 days | |
Lessee, undiscounted fixed payments | $ 66.9 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 3 months 18 days | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 13 years 8 months 12 days |
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 29, 2024 |
Jul. 01, 2023 |
|
Leases [Abstract] | ||
Operating lease cost | $ 2,480 | $ 1,685 |
Variable lease cost | 370 | 293 |
Total lease cost | $ 2,850 | $ 1,978 |
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 29, 2024 |
Jul. 01, 2023 |
|
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 |
Revenue from Contracts with Customers - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2024 |
Jul. 01, 2023 |
Jun. 29, 2024 |
Jul. 01, 2023 |
|
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 155,699 | $ 107,173 | $ 301,488 | $ 215,894 |
Royalty revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 64,201 | 43,271 | 125,393 | 86,785 |
Advertising fees and related income | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 54,654 | 36,596 | 104,803 | 74,059 |
Franchise fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 1,440 | $ 1,107 | $ 2,682 | $ 2,169 |
Revenue from Contracts with Customers - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 29, 2024 |
Jun. 29, 2024 |
Dec. 30, 2023 |
|
Disaggregation of Revenue [Line Items] | |||
Average franchise license term (in years) | 10 years | 10 years | |
Deferred revenue not yet being amortized | $ 10.3 | $ 10.3 | $ 9.3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-06-30 | |||
Disaggregation of Revenue [Line Items] | |||
Remaining amortization period for deferred revenue related to open restaurants (in years) | 7 years 1 month 6 days | 7 years 1 month 6 days |
Acquisitions of Company-owned Restaurants- Additional Information (Details) $ in Thousands |
3 Months Ended |
---|---|
Jun. 29, 2024
USD ($)
restaurant
| |
Business Acquisition [Line Items] | |
Number of restaurants re-franchised | restaurant | 2 |
Total purchase price | $ 3,298 |
Company acquired existing restaurants from franchisees | |
Business Acquisition [Line Items] | |
Combined purchase price | $ 7,000 |
Company acquired existing restaurants from franchisees | Entity operated units | |
Business Acquisition [Line Items] | |
Number of restaurants re-franchised | restaurant | 1 |
Existing Restaurants From Franchisees | |
Business Acquisition [Line Items] | |
Total purchase price | $ 3,300 |
Acquisitions of Company-owned Restaurants -Schedule of Purchase Price for Acquisition (Details) - USD ($) $ in Thousands |
Jun. 29, 2024 |
Dec. 30, 2023 |
---|---|---|
Business Acquisition [Line Items] | ||
Goodwill | $ 68,733 | $ 67,708 |
Total purchase price | 3,298 | |
Series of Individually Immaterial Business Acquisitions | ||
Business Acquisition [Line Items] | ||
Working capital | 8 | |
Property and equipment | 65 | |
Reacquired franchise rights | 2,200 | |
Goodwill | 1,025 | |
Existing Restaurants From Franchisees | ||
Business Acquisition [Line Items] | ||
Total purchase price | $ 3,300 |
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