WING
$133.03
Wingstop
($1.10)
(.82%)
Earnings Details
2nd Quarter June 2022
Thursday, July 28, 2022 8:01:00 AM
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Summary

Wingstop Beats

Wingstop (WING) reported 2nd Quarter June 2022 earnings of $0.45 per share on revenue of $83.8 million. The consensus earnings estimate was $0.35 per share on revenue of $86.0 million. The Earnings Whisper number was $0.39 per share. Revenue grew 13.2% on a year-over-year basis.

The company said it continues to expect 2022 earnings of $1.55 to $1.57 per share. The current consensus earnings estimate is $1.51 per share for the year ending December 31, 2022.

Founded in 1994 and headquartered in Dallas, TX, Wingstop Inc. (NASDAQ: WING) operates and franchises over 1,500 locations worldwide.

Results
Reported Earnings
$0.45
Earnings Whisper
$0.39
Consensus Estimate
$0.35
Reported Revenue
$83.8 Mil
Revenue Estimate
$86.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Wingstop Inc. Reports Fiscal Second Quarter Financial Results

Delivers Unit Growth of 14.4% and Reiterates Full Year Financial Outlook

DALLAS, July 28, 2022 /PRNewswire/ -- Wingstop Inc. ("Wingstop" or the "Company") (NASDAQ: WING) today announced financial results for the fiscal second quarter ended June 25, 2022.

Highlights for the fiscal second quarter 2022 compared to the fiscal second quarter 2021:

  • System-wide sales increased 7.5% to $633.6 million
  • 67 net new openings in the fiscal second quarter 2022
  • Domestic same-store sales decreased 3.3%
  • Three-year domestic same-store sales increased 30.7%
  • Domestic restaurant AUV of $1.6 million
  • Digital sales of 60.5% of sales
  • Total revenue increased 13.2% to $83.8 million
  • Net income increased 17.6% to $13.3 million, or $0.44 per diluted share, compared to net income of $11.3 million, or $0.38 per diluted share in the prior fiscal second quarter. Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased 20.1% to $13.6 million, or $0.45 per diluted share, compared to $11.3 million, or $0.38 per diluted share in the prior fiscal second quarter
  • Adjusted EBITDA, a non-GAAP measure, increased 3.4% to $23.7 million, compared to adjusted EBITDA of $22.9 million in the prior fiscal second quarter.

Adjusted EBITDA, adjusted net income, adjusted earnings per diluted share, and cost of sales excluding pre-opening expenses are non-GAAP measures. Reconciliations of adjusted EBITDA, adjusted net income, adjusted earnings per diluted share, and cost of sales excluding pre-opening expenses to the most directly comparable financial measure presented in accordance with accounting principles generally accepted in the United States ("GAAP") are set forth in the schedule accompanying this release. See "Non-GAAP Financial Measures."

"Our second quarter results demonstrate the resiliency and underlying strength of the Wingstop brand as the unit economics have continued to strengthen throughout 2022, fueling another record number of net new openings this quarter," commented Michael Skipworth, President & Chief Executive Officer. "We are in a unique position for the back half of 2022 where we are benefiting from meaningful deflation in bone-in wings, have a proven playbook, along with sales-driving levers that give us confidence in our ability to deliver on our outlook for 2022."

Key operating metrics for the fiscal second quarter 2022 compared to the fiscal second quarter 2021:


Thirteen Weeks Ended


June 25, 2022


June 26, 2021

Number of system-wide restaurants open at end of period

1,858


1,624

Number of domestic franchise restaurants open at end of period

1,600


1,415

Number of international franchise restaurants open at end of period

219


175

System-wide sales (in thousands)

$                       633,620


$                       589,665

Domestic restaurant AUV (in thousands)

$                           1,581


$                           1,556

Domestic same-store sales growth

(3.3) %


2.1 %

Company-owned domestic same store sales growth

(4.9) %


(3.1) %

Net income (in thousands)

$                         13,307


$                         11,312

Adjusted net income (in thousands)

$                         13,590


$                         11,312

Adjusted EBITDA (in thousands) 

$                         23,667


$                         22,882

 

Fiscal second quarter 2022 financial results

Total revenue for the fiscal second quarter 2022 increased to $83.8 million from $74.0 million in the fiscal second quarter last year. Royalty revenue, franchise fees and other increased $2.9 million primarily due to 229 net franchise restaurant openings since June 26, 2021, partially offset by a domestic same-store sales decline of 3.3%. Advertising fees increased $6.4 million due to an increase in the national advertising fund contribution rate to 5% from 4% effective the first day of the fiscal second quarter 2022, as well as a 7.5% increase in system-wide sales in the fiscal quarter ended June 25, 2022 compared to the fiscal quarter ended June 26, 2021. Company-owned restaurant sales increased $0.5 million related to the addition of six net new company-owned restaurants compared to the prior year comparable period, partially offset by a 4.9% decline in company-owned same store sales, which was driven by a decline in transactions.

Cost of sales increased to $14.9 million from $14.2 million in the fiscal second quarter of the prior year, and included $0.2 million in pre-opening expenses in the fiscal quarter ended June 25, 2022. As a percentage of company-owned restaurant sales, cost of sales (excluding pre-opening expenses) increased to 78.5% from 77.6% in the prior year comparable period. Since the prior year period, we have opened six restaurants in the New York City market, which have higher labor costs, rent and other operating costs. Additionally, labor costs increased due to increases in company-owned restaurant wages and hiring and training costs as a result of the competitive labor market during the fiscal quarter ended June 25, 2022. These increases were partially offset by a decrease in food, beverage and packaging costs primarily driven by an 18.8% decrease in the cost of bone-in chicken wings as compared to the prior year period.

Selling, general & administrative expense ("SG&A") decreased $2.1 million to $13.9 million from $16.1 million in the fiscal second quarter of the prior year. The decrease of SG&A expense was primarily due to a decrease of $4.1 million in stock based compensation expense related to stock awards forfeited during the fiscal second quarter 2022. This was partially offset by an increase of $0.9 million in professional fees to support the Company's strategic initiatives and an increase of $0.5 million in travel expense as compared to the prior year period.

Interest expense, net was $6.0 million in the fiscal second quarter of 2022, an increase of $2.3 million compared to $3.7 million in the prior fiscal period. The increase was due to the securitized financing transaction completed on March 9, 2022, which increased our outstanding debt by $250 million.

Income tax expense was $3.1 million in the fiscal second quarter of 2022, yielding an effective tax rate of 18.7%, compared to an effective tax rate of 25.5% in the prior year period. The decrease in the effective tax rate was primarily due to the impact of stock awards forfeited during the fiscal second quarter of 2022.

Financial Outlook

The Company is reiterating guidance for 2022, which is a 53-week fiscal year:

  • Low-single digit domestic same store sales growth;
  • SG&A of between $70.0 - $72.0 million;
  • Stock-based compensation expense of between $7.5 - $8.5 million;
  • Depreciation and amortization of between $10.5 - $11.5 million;
  • Interest expense of approximately $23.5 million; and
  • Diluted earnings per share of between $1.55 to $1.57.

Additionally, the Company is updating its guidance for net system-wide restaurant openings from 220+ to between 220 and 235.

Restaurant Development

As of June 25, 2022, there were 1,858 Wingstop restaurants system-wide. This included 1,639 restaurants in the United States, of which 1,600 were franchised restaurants and 39 were company-owned, and 219 franchised restaurants in international markets. During the fiscal second quarter 2022, there were 67 net system-wide Wingstop restaurant openings.

Quarterly Dividend

In recognition of the Company's strong cash flow generation and our commitment to returning value to stockholders, on July 27, 2022, our board of directors approved an increase in the quarterly dividend payable to Wingstop stockholders from $0.17 to $0.19 per share of common stock, resulting in a total dividend of approximately $5.7 million. This dividend will be paid on September 2, 2022 to stockholders of record as of August 12, 2022.

The following definitions apply to these terms as used in this release:

Domestic average unit volume ("AUV") consists of the average annual sales of all restaurants that have been open for a trailing 52-week period or longer. This measure is calculated by dividing sales during the applicable period for all restaurants being measured by the number of restaurants being measured. Domestic AUV includes revenue from both company-owned and franchised restaurants. Domestic AUV allows management to assess our company-owned and franchised restaurant economics. Changes in domestic AUV are primarily driven by increases in same-store sales and are also influenced by opening new restaurants.

Domestic same-store sales reflect the change in year-over-year sales for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for at least 52 full weeks. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and permanent closures.

System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees.

Adjusted EBITDA is defined as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization (EBITDA) further adjusted for losses on debt extinguishment and refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and stock-based compensation expense.

Adjusted net income is defined as net income adjusted for losses on debt extinguishment and refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and related tax adjustments.

Adjusted net income per diluted share is defined as adjusted net income divided by weighted average diluted share count.

We caution investors that amounts presented in accordance with our definitions above may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate certain non-GAAP measurements in the same manner.

Conference Call and Webcast

The Company will host a conference call today to discuss the fiscal second quarter 2022 financial results at 10:00 AM Eastern Time. The conference call can be accessed live by dialing 1-877-259-5243 or 1-412-317-5176 (international). A replay will be available two hours after the call and can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 (international), then entering the replay code 5140987. The replay will be available through Thursday, August 4, 2022.

The conference call will also be webcast live and later archived on the investor relations section of Wingstop's corporate website at ir.wingstop.com under the 'News & Events' section.

About Wingstop

Founded in 1994 and headquartered in Dallas, TX, Wingstop Inc. (NASDAQ: WING) operates and franchises more than 1,850 locations worldwide. The Wing Experts are dedicated to Serving the World Flavor through an unparalleled guest experience and use of a best-in-class technology platform, all while offering classic and boneless wings and tenders, always cooked to order and hand sauced-and-tossed in fans' choice of 11 bold, distinctive flavors. Wingstop's menu also features signature sides including fresh-cut, seasoned fries and freshly-made ranch and bleu cheese dips.

In fiscal year 2021, Wingstop's system-wide sales increased 20.2% year-over-year to approximately $2.3 billion, marking the 18th consecutive year of same store sales growth. With a vision of becoming a Top 10 Global Restaurant Brand, our system is comprised of independent franchisees, or brand partners, who account for approximately 98% of Wingstop's total restaurant count of 1,858 as of June 25, 2022.

A key to this business success and consumer fandom stems from The Wingstop Way, which includes a core value system of being Authentic, Entrepreneurial, Service-minded, and Fun. The Wingstop Way extends to the brand's environmental, social and governance platform as Wingstop seeks to provide value to all stakeholders.

Rounding out a strong year in 2021, the Company was ranked #1 on Technomic 500's "Fastest Growing Franchise" and #22 on Entrepreneur Magazine's "Franchise 500," maintained its certification as a Great Place to Work, was named as a finalist for The Innovation SABRE Award's Best New Product/Brand Launch category for its Thighstop campaign, and named to Fast Company's "The World's Most Innovative Companies" list ranking #4 in the dining category.

For more information visit www.wingstop.com or www.wingstop.com/own-a-wingstop and follow @Wingstop on Twitter, Instagram, Facebook, and TikTok. Learn more about Wingstop's involvement in its local communities at www.wingstopcharities.org.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP financial measures, including those indicated above. By providing non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. These measures are not intended to be considered in isolation or as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. The non-GAAP measures used in this press release may be different from the measures used by other companies. A reconciliation of each measure to the most directly comparable GAAP measure is available in this news release. In addition, the Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release includes a more detailed description of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.

Forward-looking Statements

This news release includes statements of our expectations, intentions, plans and beliefs that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, trends, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms "may," "will," "should," "expect," "intend," "plan," "outlook," "anticipate," "believe," "think," "estimate," "seek," "predict," "could," "project," "potential" or, in each case, their negative or other variations or comparable terminology, although not all forward-looking statements are accompanied by such terms. Examples of forward-looking statements in this news release include, but are not limited to, our 2022 fiscal year outlook for domestic same store sales growth, the cost of chicken, SG&A expenses, stock-based compensation expense, depreciation and amortization, interest expense, diluted earnings per share, and unit growth, as well as statements regarding growth levers we are expecting to drive top-line growth. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks, and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements.

Our ability to achieve or maintain sales and earnings may be affected by COVID-19 and inflationary pressures, including, among others: competitive labor market, supply chain challenges, and inflationary pressures on the consumer. Please refer to the risk factors discussed in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which can be found at the SEC's website www.sec.gov. The discussion of these risks is specifically incorporated by reference into this news release.

When considering forward-looking statements in this news release or that we make in other reports or statements, you should keep in mind the cautionary statements in this news release and future reports we file with the SEC. New risks and uncertainties arise from time to time, and we cannot predict when they may arise or how they may affect us. Any forward-looking statement in this news release speaks only as of the date on which it was made. Except as required by law, we assume no obligation to update or revise any forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Media Contact
Megan Sprague
972-331-9155
Media@wingstop.com

Investor Contact
Susana Arevalo and Skyler Ray
972-331-8484
IR@wingstop.com

 

WINGSTOP INC. AND SUBSIDIARIES

 Consolidated Balance Sheets

(amounts in thousands, except share and per share data)



June 25,
2022


December 25,
2021


(Unaudited)



Assets




Current assets




Cash and cash equivalents

$              165,824


$                48,583

Restricted cash

17,112


3,448

Accounts receivable, net

7,234


6,993

Prepaid expenses and other current assets

5,628


4,928

Advertising fund assets, restricted

13,681


6,197

Total current assets

209,479


70,149

Property and equipment, net

60,854


54,503

Goodwill

56,877


56,877

Trademarks

32,700


32,700

Customer relationships, net

9,660


10,302

Other non-current assets

25,791


24,672

Total assets

$              395,361


$              249,203

Liabilities and stockholders' deficit




Current liabilities




Accounts payable

$                  3,121


$                  5,414

Other current liabilities

29,188


28,070

Current portion of debt

6,675


Advertising fund liabilities

13,681


6,197

Total current liabilities

52,665


39,681

Long-term debt, net

709,546


469,394

Deferred revenues, net of current

27,056


28,024

Deferred income tax liabilities, net

5,898


7,432

Other non-current liabilities

15,666


14,197

Total liabilities

810,831


558,728

Commitments and contingencies




Stockholders' deficit




Common stock, $0.01 par value; 100,000,000 shares authorized;
29,914,368 and 29,837,454 shares issued and outstanding as of June 25,
2022 and December 25, 2021, respectively

299


299

Additional paid-in-capital

646


463

Retained deficit

(415,822)


(310,031)

Accumulated other comprehensive loss

(593)


(256)

Total stockholders' deficit

(415,470)


(309,525)

Total liabilities and stockholders' deficit

$              395,361


$              249,203

 

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(amounts in thousands, except per share data)



Thirteen Weeks Ended


June 25,
2022


June 26,
2021


(Unaudited)


(Unaudited)

Revenue:




Royalty revenue, franchise fees and other

$                36,044


$                33,135

Advertising fees

28,987


22,577

Company-owned restaurant sales

18,746


18,288

Total revenue

83,777


74,000

Costs and expenses:




Cost of sales (1)

14,899


14,207

Advertising expenses

29,685


23,301

Selling, general and administrative

13,949


16,066

Depreciation and amortization

2,547


1,523

Loss on disposal of assets

323


Total costs and expenses

61,403


55,097

Operating income

22,374


18,903

Interest expense, net

5,986


3,724

Other expense

26


Income before income tax expense

16,362


15,179

Income tax expense

3,055


3,867

Net income

$                13,307


$                11,312





Earnings per share




Basic

$                    0.45


$                    0.38

Diluted

$                    0.44


$                    0.38





Weighted average shares outstanding




Basic

29,882


29,739

Diluted

29,914


29,873





Dividends per share

$                    0.17


$                    0.14

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

 

WINGSTOP INC. AND SUBSIDIARIES

Unaudited Supplemental Information

Cost of Sales Margin Analysis

(amounts in thousands)



Thirteen Weeks Ended


June 25, 2022


June 26, 2021


In dollars


As a % of
company-
owned
restaurant
sales


In dollars


As a % of
company-
owned
restaurant
sales

Cost of sales:








Food, beverage and packaging costs

7,376


39.3 %


8,023


43.9 %

Labor costs

4,328


23.1 %


3,774


20.6 %

Other restaurant operating expenses

3,419


18.2 %


2,809


15.4 %

Vendor rebates

(412)


(2.2) %


(410)


(2.2) %

Cost of sales (excluding pre-opening expenses)

14,711


78.5 %


14,196


77.6 %

Pre-opening expenses

188


1.0 %


11


0.1 %

Total cost of sales

14,899


79.5 %


14,207


77.7 %

 

WINGSTOP INC. AND SUBSIDIARIES

Unaudited Supplemental Information

Restaurant Count



Thirteen Weeks Ended


June 25,
2022


June 26,
2021

Domestic Franchised Activity:




Beginning of period

1,551


1,371

Openings

49


44

Closures


Restaurants end of period

1,600


1,415





Domestic Company-Owned Activity:




Beginning of period

37


33

Openings

2


1

Closures


Restaurants end of period

39


34





Total Domestic Restaurants

1,639


1,449





International Franchised Activity:




Beginning of period

203


175

Openings

16


4

Closures


(4)

Restaurants end of period

219


175





Total System-wide Restaurants

1,858


1,624

 

WINGSTOP INC. AND SUBSIDIARIES

Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA

(Unaudited)

(amounts in thousands)



Thirteen Weeks Ended


June 25,
2022


June 26,
2021

Net income

$             13,307


$             11,312

Interest expense, net

5,986


3,724

Income tax expense (benefit)

3,055


3,867

Depreciation and amortization

2,547


1,523

EBITDA

$             24,895


$             20,426

Additional adjustments:




Loss on disposal of assets (a)

323


Consulting fees (b)

50


Stock-based compensation expense, net of forfeitures (c)

(1,601)


2,456

Adjusted EBITDA

$             23,667


$             22,882



(a)

Represents a loss resulting from the sale of assets to a franchisee pursuant to a multi-unit development agreement executed
in the prior fiscal year. This loss is included in Loss on disposal of assets in the Consolidated Statements of Operations.

(b)

Represents costs and expenses related to a consulting project to support the Company's strategic initiatives, which are
included in Selling, general and administrative on the Consolidated Statements of Operations.

(c)

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

 

WINGSTOP INC. AND SUBSIDIARIES

Non-GAAP Financial Measures - Adjusted Net Income and Adjusted EPS

(Unaudited)

(amounts in thousands, except per share data)



Thirteen Weeks Ended


June 25,
2022


June 26,
2021

Numerator:




Net income

$          13,307


$          11,312

Adjustments:




Loss on disposal of assets (a)

323


Consulting fees (b)

50


Tax effect of adjustments (c)

(90)


Adjusted net income

$          13,590


$          11,312





Denominator:




Weighted-average shares outstanding - diluted

29,914


29,873





Adjusted earnings per diluted share

$               0.45


$               0.38



(a)

Represents a loss resulting from the sale of assets to a franchisee pursuant to a multi-unit development agreement executed
in the prior fiscal year. This loss is included in Loss on disposal of assets in the Consolidated Statements of Operations.

(b)

Represents costs and expenses related to a consulting project to support the Company's strategic initiatives, which are
included in Selling, general and administrative on the Consolidated Statements of Operations.

(c)

Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax
rate of 24% for the thirteen and twenty-six weeks ended June 25, 2022, which includes provisions for U.S. federal income
taxes, and assumes the respective statutory rates for applicable state and local jurisdictions.

 

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SOURCE Wingstop Restaurants Inc.