Wingstop Restaurants Inc. Investor Relations

Quarterly Results

Wingstop Inc. Reports Fiscal Second Quarter 2023 Financial Results

16.8% Domestic Same Store Sales Growth

Increases Outlook for Fiscal Year 2023

DALLAS, Aug. 2, 2023 — Wingstop Inc. (NASDAQ: WING) today announced financial results for the fiscal second quarter ended July 1, 2023.

Highlights for the fiscal second quarter 2023 compared to the fiscal second quarter 2022:

  • System-wide sales increased 27.8% to $809.8 million
  • 50 net new openings in the fiscal second quarter 2023
  • Domestic same store sales increased 16.8%
  • Domestic restaurant AUVs exceeded $1.7 million
  • Digital sales increased to 65.2%
  • Total revenue increased 27.9% to $107.2 million
  • Net income increased 21.6% to $16.2 million, or $0.54 per diluted share, compared to net income of $13.3 million, or $0.44 per diluted share in the prior fiscal second quarter
  • Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased 27.4% to $17.0 million, or $0.57 per diluted share, compared to $13.3 million, or $0.45 per diluted share in the prior fiscal second quarter
  • Adjusted EBITDA, a non-GAAP measure, increased 47.1% to $34.4 million, compared to adjusted EBITDA of $23.3 million in the prior fiscal second quarter

Adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share are non-GAAP measures. Reconciliations of adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share 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 demonstrated the continued strength and staying power of our strategies. We exceeded $1.7 million AUVs fueled by 16.8% growth in domestic same store sales, which was primarily due to transaction growth,” said Michael Skipworth, President and Chief Executive Officer. “We opened 50 net new restaurants for the quarter and surpassed 2,000 restaurants globally. And yet, we’re just getting started as we work toward our 20th consecutive year of same store sales growth and our vision of becoming a Top 10 Global Restaurant Brand.”

Key operating metrics for the fiscal second quarter 2023 compared to the fiscal second quarter 2022:

Thirteen Weeks Ended

July 1, 2023

June 25, 2022

Number of system-wide restaurants open at end of period

2,046

1,858

Number of domestic franchise restaurants open at end of period

1,749

1,600

Number of international franchise restaurants open at end of period

252

219

System-wide sales (in millions)

$ 810

$ 634

Domestic AUV (in thousands)

$ 1,704

$ 1,581

Domestic same store sales growth

16.8 %

(3.3) %

Company-owned domestic same store sales growth

5.7 %

(4.9) %

Net income (in thousands)

$ 16,181

$ 13,307

Adjusted net income (in thousands)

$ 17,005

$ 13,345

Adjusted EBITDA (in thousands)

$ 34,350

$ 23,344

Fiscal second quarter 2023 financial results

Total revenue for the fiscal second quarter 2023 increased to $107.2 million from $83.8 million in the fiscal second quarter last year. Royalty revenue, franchise fees and other increased $11.9 million primarily due to domestic same store sales growth of 16.8% and 182 net new franchise restaurants since June 25, 2022. Advertising fees increased $7.6 million due to a 27.8% increase in system-wide sales in the fiscal second quarter 2023. Company-owned restaurant sales increased $3.8 million due to an increase of $2.9 million related to the addition of six net new company-owned restaurants since the prior fiscal second quarter, as well as a 5.7% increase in company-owned same store sales driven by an increase in transactions.

Cost of sales increased to $16.6 million from $14.9 million in the fiscal second quarter of the prior year. As a percentage of company-owned restaurant sales, cost of sales decreased to 73.7% from 79.5% in the prior year comparable period. The decrease was primarily driven by food, beverage and packaging costs benefiting from a 39.6% decrease in the cost of bone-in chicken wings as compared to the prior fiscal second quarter.

Selling, general & administrative (“SG&A”) increased $8.2 million to $22.1 million from $13.9 million in the fiscal second quarter of the prior year. The prior fiscal second quarter was impacted by the benefit of $4.1 million of stock awards forfeited during the quarter. In addition, incentive compensation and performance-based stock compensation expense increased $2.2 million related to the Company’s current fiscal year performance, headcount related expenses increased $1.2 million to support the growth in our business, and consulting fees increased $1.1 million associated with the Company’s strategic initiatives.

Interest expense, net was $4.2 million, a decrease of $1.7 million compared to $6.0 million of interest expense, net in the comparable period in 2022. The decrease was driven by $1.6 million in interest income earned on our cash balances during the thirteen weeks ended July 1, 2023.

Financial Outlook

Based on year-to-date results, the Company is providing updated guidance for 2023, which is a 52-week fiscal year:

  • 10% to 12% domestic same store sales growth, previously high-single digits;
  • 240 to 250 global net new units, previously 240 global net new units;
  • SG&A of between $91.0$93.0 million, which includes $3.9 million in consulting projects to support the Company’s strategic initiatives, previously $85.5$87.5 million; and
  • Stock-based compensation expense of approximately $14.0$15.0 million, reflecting an increase in incentive based compensation based on company performance, previously $12.0$13.0 million.

Additionally, the Company is reiterating guidance for depreciation and amortization of between $14.0$15.0 million for 2023.

Restaurant Development

As of July 1, 2023, there were 2,046 Wingstop restaurants system-wide. This included 1,794 restaurants in the United States, of which 1,749 were franchised restaurants and 45 were company-owned, and 252 franchised restaurants were in international markets. During the fiscal second quarter 2023, there were 50 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 August 1, 2023, our board of directors approved an increase in the quarterly dividend payable to Wingstop stockholders from $0.19 to $0.22 per share of common stock, resulting in a total dividend of approximately $6.6 million. This dividend will be paid on September 8, 2023 to stockholders of record as of August 18, 2023.

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 domestic 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 reflects the change in year-over-year sales for the same store restaurant base. We define the same store 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. We review same store sales for domestic company-owned restaurants as well as system-wide domestic restaurants. Domestic same store sales growth is driven by increases in transactions and average transaction size. Transaction size increases are driven by price increases or favorable mix shift from either an increase in items purchased or shifts into higher priced items.

System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees. This measure allows management to better assess changes in our royalty revenue, our overall store performance, the health of our brand and the strength of our market position relative to competitors. Our system-wide sales growth is driven by new restaurant openings as well as increases in same store sales.

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 financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, and stock-based compensation expense. Beginning in the first quarter of 2023, gains and losses on disposal of assets are no longer presented as an adjustment to EBITDA, in our calculation of Adjusted EBITDA. Prior period amounts have been excluded from EBITDA adjustments to conform to the current presentation.

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

Adjusted earnings 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 2023 financial results at 10:00 AM Eastern Time. The conference call can be joined telephonically by dialing 1-877-259-5243 or 1-412-317-5176 (international) and asking for the Wingstop conference call. 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 4190850. The replay will be available through Wednesday, August 9, 2023.

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 2,000 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, tenders, and chicken sandwiches, 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 2022, Wingstop’s system-wide sales increased 16.8% to approximately $2.7 billion, marking the 19th consecutive year of same store sales growth. With a vision of becoming a Top 10 Global Restaurant Brand, Wingstop’s system is comprised of independent franchisees, or brand partners, who account for approximately 98% of Wingstop’s total restaurant count of 2,046 as of July 1, 2023.

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 guests.

Rounding out a strong year in 2022, the Company made Technomic 500’s “Fastest Growing Franchise” list, was ranked #16 on Entrepreneur Magazine’s “Franchise 500,” won Fast Casual’s Excellence in Food Safety award, and was 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 Securities and Exchange Commission (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,” “guidance,” “anticipate,” “believe,” “think,” “estimate,” “seek,” “predict,” “can,” “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 2023 fiscal year outlook for domestic same store sales growth, SG&A expense, stock-based compensation expense, depreciation and amortization, and unit 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. 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
Maddie Lupori
[email protected]

Investor Contact
Kristen Thomas
[email protected]

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)

July 1,
2023

December 31,
2022

(Unaudited)

Assets

Current assets

Cash and cash equivalents

$ 188,500

$ 184,496

Restricted cash

11,444

13,296

Accounts receivable, net

10,747

9,461

Prepaid expenses and other current assets

5,548

4,252

Advertising fund assets, restricted

21,944

15,167

Total current assets

238,183

226,672

Property and equipment, net

78,570

66,851

Goodwill

65,175

62,514

Trademarks

32,700

32,700

Customer relationships, net

8,378

9,015

Other non-current assets

28,211

26,438

Total assets

$ 451,217

$ 424,190

Liabilities and stockholders’ deficit

Current liabilities

Accounts payable

$ 6,112

$ 5,219

Other current liabilities

30,732

34,726

Current portion of debt

7,300

Advertising fund liabilities

21,944

15,167

Total current liabilities

58,788

62,412

Long-term debt, net

711,411

706,846

Deferred revenues, net of current

28,296

27,052

Deferred income tax liabilities, net

3,150

4,180

Other non-current liabilities

14,923

14,561

Total liabilities

816,568

815,051

Commitments and contingencies

Stockholders’ deficit

Common stock, $0.01 par value; 100,000,000 shares authorized;
29,977,614 and 29,932,668 shares issued and outstanding as of July 1,
2023 and December 31, 2022, respectively

300

300

Additional paid-in-capital

2,038

2,797

Retained deficit

(367,327)

(393,321)

Accumulated other comprehensive loss

(362)

(637)

Total stockholders’ deficit

(365,351)

(390,861)

Total liabilities and stockholders’ deficit

$ 451,217

$ 424,190

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(amounts in thousands, except per share data)

Thirteen Weeks Ended

July 1,
2023

June 25,
2022

(Unaudited)

(Unaudited)

Revenue:

Royalty revenue, franchise fees and other

$ 47,984

$ 36,044

Advertising fees

36,596

28,987

Company-owned restaurant sales

22,593

18,746

Total revenue

107,173

83,777

Costs and expenses:

Cost of sales (1)

16,642

14,899

Advertising expenses

38,729

29,685

Selling, general and administrative

22,128

13,949

Depreciation and amortization

3,218

2,547

Loss on disposal of assets

323

Total costs and expenses

80,717

61,403

Operating income

26,456

22,374

Interest expense, net

4,244

5,986

Other (income) expense

(46)

26

Income before income tax expense

22,258

16,362

Income tax expense

6,077

3,055

Net income

$ 16,181

$ 13,307

Earnings per share

Basic

$ 0.54

$ 0.45

Diluted

$ 0.54

$ 0.44

Weighted average shares outstanding

Basic

29,972

29,882

Diluted

30,049

29,914

Dividends per share

$ 0.19

$ 0.17

(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

July 1, 2023

June 25, 2022

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

$ 7,264

32.2 %

$ 7,376

39.3 %

Labor costs

5,520

24.4 %

4,328

23.1 %

Other restaurant operating expenses

4,408

19.5 %

3,607

19.2 %

Vendor rebates

(550)

(2.4) %

(412)

(2.2) %

Total cost of sales

$ 16,642

73.7 %

$ 14,899

79.5 %

WINGSTOP INC. AND SUBSIDIARIES
Unaudited Supplemental Information
Restaurant Count

Thirteen Weeks Ended

July 1,
2023

June 25,
2022

Domestic Franchised Activity:

Beginning of period

1,710

1,551

Openings

42

49

Closures

(1)

Acquired by Company

(2)

Restaurants end of period

1,749

1,600

Domestic Company-Owned Activity:

Beginning of period

43

37

Openings

2

Closures

Acquired by Company

2

Restaurants end of period

45

39

Total Domestic Restaurants

1,794

1,639

International Franchised Activity:

Beginning of period

243

203

Openings

9

16

Closures

Restaurants end of period

252

219

Total System-wide Restaurants

2,046

1,858

WINGSTOP INC. AND SUBSIDIARIES
Non-GAAP Financial Measures – EBITDA and Adjusted EBITDA
(Unaudited)
(amounts in thousands)

Thirteen Weeks Ended

July 1,
2023

June 25,
2022

Net income

$ 16,181

$ 13,307

Interest expense, net

4,244

5,986

Income tax expense

6,077

3,055

Depreciation and amortization

3,218

2,547

EBITDA

$ 29,720

$ 24,895

Additional adjustments:

Consulting fees (a)

1,084

50

Stock-based compensation expense (b)

3,546

(1,601)

Adjusted EBITDA

$ 34,350

$ 23,344

(a)

Represents non-recurring consulting fees that are not part of our ongoing operations and are incurred to execute discrete, project-based strategic initiatives, which are included in Selling, general and administrative on the Consolidated Statements of Operations. The costs incurred in the thirteen weeks ended June 25, 2022 include third-party consulting fees incurred relating to a strategic initiative to consider the development of a business plan and financial model for potential vertical integration of a poultry complex, which review was completed in fiscal year 2022. The costs incurred in the thirteen weeks ended July 1, 2023 include consulting fees relating to a comprehensive review of our long-term growth strategy for our domestic business to explore potential future initiatives, and which review is expected to be completed in fiscal year 2023. Given the magnitude and scope of these two strategic review initiatives that are not expected to recur in the foreseeable future, the Company considers the incremental consulting fees incurred with respect to the initiatives not reflective of the ongoing costs to operate its business.

(b)

Includes non-cash, stock-based compensation.

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

July 1,
2023

June 25,
2022

Numerator:

Net income

$ 16,181

$ 13,307

Adjustments:

Consulting fees (a)

1,084

50

Tax effect of adjustments (b)

(260)

(12)

Adjusted net income

$ 17,005

$ 13,345

Denominator:

Weighted-average shares outstanding – diluted

30,049

29,914

Adjusted earnings per diluted share

$ 0.57

$ 0.45

(a)

Represents non-recurring consulting fees that are not part of our ongoing operations and are incurred to execute discrete, project-based strategic initiatives, which are included in Selling, general and administrative on the Consolidated Statements of Operations. The costs incurred in the thirteen weeks ended June 25, 2022 include third-party consulting fees incurred relating to a strategic initiative to consider the development of a business plan and financial model for potential vertical integration of a poultry complex, which review was completed in fiscal year 2022. The costs incurred in the thirteen weeks ended July 1, 2023 include consulting fees relating to a comprehensive review of our long-term growth strategy for our domestic business to explore potential future initiatives, and which review is expected to be completed in fiscal year 2023. Given the magnitude and scope of these two strategic review initiatives that are not expected to recur in the foreseeable future, the Company considers the incremental consulting fees incurred with respect to the initiatives not reflective of the ongoing costs to operate its business.

(b)

Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax rate of 24% for the periods ended July 1, 2023 and 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.

Wingstop Inc. Reports Fiscal First Quarter 2023 Financial Results

20.1% Domestic Same Store Sales Growth
Digital Sales Mix Achieved Record Level of 65.2%

DALLAS, May 3, 2023 — Wingstop Inc. (NASDAQ: WING) today announced financial results for the fiscal first quarter ended April 1, 2023.

Highlights for the fiscal first quarter 2023 compared to the fiscal first quarter 2022:

  • System-wide sales increased 30.4% to $821.6 million
  • 37 net new openings in the fiscal first quarter 2023, resulting in an increase in unit count of 11.4%
  • Domestic same store sales increased 20.1%
  • Domestic restaurant AUVs increased to $1.7 million
  • Digital sales increased to 65.2%
  • Total revenue increased 42.7% to $108.7 million
  • Net income increased 80.6% to $15.7 million, or $0.52 per diluted share, compared to net income of $8.7 million, or $0.29 per diluted share in the prior fiscal first quarter. Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased 81.1% to $17.8 million, or $0.59 per diluted share, compared to $9.8 million, or $0.33 per diluted share in the prior fiscal first quarter.
  • Adjusted EBITDA, a non-GAAP measure, increased 59.8% to $34.6 million, compared to adjusted EBITDA of $21.6 million in the prior fiscal first quarter

Adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share are non-GAAP measures. Reconciliations of adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share 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 strong first quarter results reflect the continued momentum and strength of the Wingstop brand as we delivered 20.1% domestic same store sales growth, driven by transaction growth,” said Michael Skipworth, President and Chief Executive Officer. “With this underlying strength, we believe that our strategies we are executing against can deliver our 20th consecutive year of same store sales growth and another record year of unit growth for Wingstop.”

Key operating metrics for the fiscal first quarter 2023 compared to the fiscal first quarter 2022:

Thirteen Weeks Ended

April 1, 2023

March 26, 2022

Number of system-wide restaurants open at end of period

1,996

1,791

Number of domestic franchise restaurants open at end of period

1,710

1,551

Number of international franchise restaurants open at end of period

243

203

System-wide sales (in millions)

$ 822

$ 630

Domestic AUV (in thousands)

$ 1,662

$ 1,602

Domestic same store sales growth

20.1 %

1.2 %

Company-owned domestic same store sales growth

10.3 %

2.1 %

Net income (in thousands)

$ 15,669

$ 8,676

Adjusted net income (in thousands)

$ 17,771

$ 9,815

Adjusted EBITDA (in thousands)

$ 34,584

$ 21,645

Fiscal first quarter 2023 financial results

Total revenue for the fiscal first quarter 2023 increased to $108.7 million from $76.2 million in the fiscal first quarter last year. Royalty revenue, franchise fees and other increased $13.1 million primarily due to domestic same store sales growth of 20.1% and 199 net franchise restaurant openings since March 26, 2022. Advertising fees increased $14.9 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, and a 30.4% increase in system-wide sales in the fiscal first quarter 2023. Company-owned restaurant sales increased $4.5 million due to an increase of $2.9 million related to the addition of six net new company-owned restaurants since the prior fiscal first quarter, as well as a 10.3% increase in company-owned same store sales driven by an increase in transactions.

Cost of sales increased to $16.7 million from $15.7 million in the fiscal first quarter of the prior year. As a percentage of company-owned restaurant sales, cost of sales decreased to 72.4% from 84.3% in the prior year comparable period. The decrease was primarily driven by food, beverage and packaging costs benefiting from a 52.8% decrease in the cost of bone-in chicken wings as compared to the prior fiscal first quarter.

Selling, general & administrative (“SG&A”) increased $5.6 million to $23.6 million from $18.1 million in the fiscal first quarter of the prior year. The increase in SG&A was due to an increase of $2.8 million related to consulting fees associated with the Company’s strategic initiatives, a $1.6 million increase in incentive compensation and performance-based stock compensation expense recognized related to the Company’s performance, and a $0.6 million increase in headcount related expenses to support the growth in our business.

Interest expense, net was $4.6 million in the fiscal first quarter of 2023, an increase of approximately $0.4 million, or 9.1%, compared to $4.2 million in the fiscal first quarter of the prior year. The increase was due to an additional $1.8 million in interest expense relating to the securitized financing transaction completed on March 9, 2022, which increased our outstanding debt by $250 million. This was partially offset by an increase of $1.4 million in interest income earned on our cash balances during the thirteen weeks ended April 1, 2023.

Financial Outlook

Based on fiscal first quarter results, the Company is providing updated guidance for 2023, which is a 52-week fiscal year:

  • High-single digit domestic same store sales growth;
  • SG&A of between $85.5$87.5 million, which includes $2.8 million in consulting projects to support the Company’s strategic initiatives, previously $82.0$84.0 million; and
  • Stock-based compensation expense of approximately $12.0$13.0 million, previously $11.5$12.5 million.
  • Additionally, the Company is reiterating the following guidance for 2023:
  • Approximately 240 global net new units; and
  • Depreciation and amortization of between $14.0$15.0 million.

Restaurant Development

As of April 1, 2023, there were 1,996 Wingstop restaurants system-wide. This included 1,753 restaurants in the United States, of which 1,710 were franchised restaurants and 43 were company-owned, and 243 franchised restaurants were in international markets. During the fiscal first quarter 2023, there were 37 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 May 2, 2023, our board of directors authorized and declared a quarterly dividend of $0.19 per share of common stock, resulting in a total dividend of approximately $5.7 million. This dividend will be paid on June 9, 2023 to stockholders of record as of May 19, 2023.

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 domestic 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 reflects the change in year-over-year sales for the same store restaurant base. We define the same store 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. We review same store sales for domestic company-owned restaurants as well as system-wide domestic restaurants. Domestic same store sales growth is driven by increases in transactions and average transaction size. Transaction size increases are driven by price increases or favorable mix shift from either an increase in items purchased or shifts into higher priced items.

System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees. This measure allows management to better assess changes in our royalty revenue, our overall store performance, the health of our brand and the strength of our market position relative to competitors. Our system-wide sales growth is driven by new restaurant openings as well as increases in same store sales.

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 financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, and stock-based compensation expense. Beginning in the first quarter of 2023, gains and losses on disposal of assets are no longer presented as an adjustment to EBITDA, in our calculation of Adjusted EBITDA. Prior period amounts have been excluded from EBITDA adjustments to conform to the current presentation.

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

Adjusted earnings 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 first quarter 2023 financial results at 10:00 AM Eastern Time. The conference call can be joined telephonically by dialing 1-877-259-5243 or 1-412-317-5176 (international) and asking for the Wingstop conference call. 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) and entering the passcode 5855268. The replay will be available through Wednesday, May 10, 2023.

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 1,950 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, tenders, and chicken sandwiches, 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 2022, Wingstop’s system-wide sales increased 16.8% to approximately $2.7 billion, marking the 19th 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 1,996 as of April 1, 2023.

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 2022, the Company made Technomic 500’s “Fastest Growing Franchise” list, was ranked #16 on Entrepreneur Magazine’s “Franchise 500,” won Fast Casual’s Excellence in Food Safety award, and was 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 Securities and Exchange Commission (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,” “guidance,” “anticipate,” “believe,” “think,” “estimate,” “seek,” “predict,” “can,” “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 2023 fiscal year outlook for domestic same store sales growth, SG&A expense, stock-based compensation expense, depreciation and amortization, and unit 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. 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
Maddie Lupori
[email protected]

Investor Contact
Ashley Firlan
[email protected]

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)

April 1,
2023

December 31,
2022

(Unaudited)

Assets

Current assets

Cash and cash equivalents

$ 196,198

$ 184,496

Restricted cash

13,281

13,296

Accounts receivable, net

10,137

9,461

Prepaid expenses and other current assets

3,061

4,252

Advertising fund assets, restricted

26,725

15,167

Total current assets

249,402

226,672

Property and equipment, net

71,518

66,851

Goodwill

62,514

62,514

Trademarks

32,700

32,700

Customer relationships, net

8,696

9,015

Other non-current assets

26,467

26,438

Total assets

$ 451,297

$ 424,190

Liabilities and stockholders’ deficit

Current liabilities

Accounts payable

$ 6,848

$ 5,219

Other current liabilities

38,438

34,726

Current portion of debt

7,300

7,300

Advertising fund liabilities

26,725

15,167

Total current liabilities

79,311

62,412

Long-term debt, net

705,483

706,846

Deferred revenues, net of current

27,667

27,052

Deferred income tax liabilities, net

3,380

4,180

Other non-current liabilities

15,246

14,561

Total liabilities

831,087

815,051

Commitments and contingencies

Stockholders’ deficit

Common stock, $0.01 par value; 100,000,000 shares authorized;
29,968,872 and 29,932,668 shares issued and outstanding as of April 1,
2023 and December 31, 2022, respectively

300

300

Additional paid-in-capital

809

2,797

Retained deficit

(380,409)

(393,321)

Accumulated other comprehensive loss

(490)

(637)

Total stockholders’ deficit

(379,790)

(390,861)

Total liabilities and stockholders’ deficit

$ 451,297

$ 424,190

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(amounts in thousands, except per share data)

Thirteen Weeks Ended

April 1,
2023

March 26,
2022

(Unaudited)

(Unaudited)

Revenue:

Royalty revenue, franchise fees and other

$ 48,188

$ 35,070

Advertising fees

37,463

22,539

Company-owned restaurant sales

23,070

18,596

Total revenue

108,721

76,205

Costs and expenses:

Cost of sales (1)

16,695

15,674

Advertising expenses

39,643

23,167

Selling, general and administrative

23,645

18,086

Depreciation and amortization

2,989

2,227

Loss on disposal of assets

77

444

Total costs and expenses

83,049

59,598

Operating income

25,672

16,607

Interest expense, net

4,573

4,192

Loss on debt extinguishment

814

Other expense

188

65

Income before income tax expense

20,911

11,536

Income tax expense

5,242

2,860

Net income

$ 15,669

$ 8,676

Earnings per share

Basic

$ 0.52

$ 0.29

Diluted

$ 0.52

$ 0.29

Weighted average shares outstanding

Basic

29,947

29,851

Diluted

30,031

29,974

Dividends per share

$ 0.19

$ 4.17

(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

April 1, 2023

March 26, 2022

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

$ 7,486

32.4 %

$ 7,967

42.8 %

Labor costs

5,517

23.9 %

4,807

25.8 %

Other restaurant operating expenses

4,226

18.3 %

3,307

17.8 %

Vendor rebates

(534)

(2.3) %

(407)

(2.2) %

Total cost of sales

16,695

72.4 %

15,674

84.3 %

WINGSTOP INC. AND SUBSIDIARIES
Unaudited Supplemental Information
Restaurant Count

Thirteen Weeks Ended

April 1,
2023

March 26,
2022

Domestic Franchised Activity:

Beginning of period

1,678

1,498

Openings

32

56

Closures

(3)

Restaurants end of period

1,710

1,551

Domestic Company-Owned Activity:

Beginning of period

43

36

Openings

1

Closures

Restaurants end of period

43

37

Total Domestic Restaurants

1,753

1,588

International Franchised Activity:

Beginning of period

238

197

Openings

8

7

Closures

(3)

(1)

Restaurants end of period

243

203

Total System-wide Restaurants

1,996

1,791

WINGSTOP INC. AND SUBSIDIARIES
Non-GAAP Financial Measures – EBITDA and Adjusted EBITDA
(Unaudited)
(amounts in thousands)

Thirteen Weeks Ended

April 1,
2023

March 26,
2022

Net income

$ 15,669

$ 8,676

Interest expense, net

4,573

4,192

Income tax expense

5,242

2,860

Depreciation and amortization

2,989

2,227

EBITDA

$ 28,473

$ 17,955

Additional adjustments:

Loss on debt extinguishment and financing
transactions (a)

1,124

Consulting fees (b)

2,766

375

Stock-based compensation expense (c)

3,345

2,191

Adjusted EBITDA

$ 34,584

$ 21,645

(a)

Represents costs and expenses related to our 2022 securitized financing facility and payment of a special dividend, as well as the extinguishment of our 2020 variable funding note facility; all transaction costs are included in Loss on debt extinguishment and financing transactions during the year ended March 26, 2022, with the exception of $310,000 that is included in Selling, general and administrative on the Consolidated Statements of Operations.

(b)

Represents costs and expenses related to consulting projects 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.

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

April 1,
2023

March 26,
2022

Numerator:

Net income

$ 15,669

$ 8,676

Adjustments:

Loss on debt extinguishment and financing
transactions (a)

1,124

Consulting fees (b)

2,766

375

Tax effect of adjustments (c)

(664)

(360)

Adjusted net income

$ 17,771

$ 9,815

Denominator:

Weighted-average shares outstanding – diluted

30,031

29,974

Adjusted earnings per diluted share

$ 0.59

$ 0.33

(a)

Represents costs and expenses related to our 2022 securitized financing facility and payment of a special dividend, as well as the extinguishment of our 2020 variable funding note facility; all transaction costs are included in Loss on debt extinguishment during the thirteen weeks ended March 26, 2022, with the exception of $310,000 during the fiscal year that is included in Selling, general and administrative on the Consolidated Statements of Operations.

(b)

Represents costs and expenses related to consulting projects 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 periods ended April 1, 2023 and March 26, 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.

Wingstop Inc. Reports Fiscal Fourth Quarter and Full Year 2022 Financial Results

Delivers 19th Consecutive Year of Domestic Same Store Sales Growth and 13.2% Increase in Unit Count in Fiscal Year 2022

DALLAS, Feb. 22, 2023 — Wingstop Inc. (NASDAQ: WING) today announced financial results for the fiscal fourth quarter and fiscal year ended December 31, 2022, periods that benefited from a 53rd week as compared to fiscal 2021.

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

  • System-wide sales increased 28.9% to $775.7 million
  • 61 net new openings in the fiscal fourth quarter 2022
  • Domestic same store sales increased 8.7%
  • Domestic restaurant AUV of $1.6 million
  • Digital sales of 63.2%, an increase of 1.9% to the prior fiscal fourth quarter
  • Total revenue increased 45.6% to $104.9 million
  • Net income increased 155.2% to $17.6 million, or $0.59 per diluted share, compared to net income of $6.9 million, or $0.23 per diluted share in the prior fiscal fourth quarter
  • Adjusted EBITDA, a non-GAAP measure, increased 71.6% to $34.7 million, compared to adjusted EBITDA of $20.2 million in the prior fiscal fourth quarter

Highlights for the fiscal year 2022 compared to the fiscal year 2021:

  • System-wide sales increased 16.8% to $2.7 billion
  • System-wide restaurant count increased 13.2% to 1,959 worldwide locations with 228 net openings
  • Domestic same store sales increased 3.4%
  • Total revenue increased 26.6% to $357.5 million
  • Net income increased 24.1% to $52.9 million, or $1.77 per diluted share, compared to $42.7 million, or $1.42 per diluted share, in the prior fiscal year. Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased 37.3% to $55.4 million, or $1.85 per diluted share, compared to $40.3 million, or $1.35 per diluted share in the prior fiscal year
  • Adjusted EBITDA, a non-GAAP measure, increased 23.1% to $108.8 million, compared to adjusted EBITDA of $88.4 million in the prior fiscal year

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.”

“Wingstop delivered another record year in 2022 highlighted by 13.2% unit growth and an industry-leading 19th consecutive year of positive same store sales growth. We delivered 8.7% domestic same store sales growth over the prior fiscal fourth quarter, which was driven entirely by transaction growth,” said Michael Skipworth, President and Chief Executive Officer. “The combination of strong top-line growth and meaningful deflation in our business in 2022 has continued to strengthen our brand partners’ unit economics and positioned the brand for continued long term growth on our path to scaling Wingstop into a Top 10 Global Restaurant Brand.”

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

 

Fiscal Quarter Ended

 

December 31, 2022

 

December 25, 2021

Number of system-wide restaurants open at end of period

1,959

 

1,731

Number of domestic franchise restaurants open at end of period

1,678

 

1,498

Number of international franchise restaurants open at end of period

238

 

197

System-wide sales (in millions)

$ 776

 

$ 602

Domestic AUV (in thousands)

$ 1,606

 

$ 1,592

Domestic same store sales growth(1)

8.7 %

 

7.5 %

Company-owned domestic same store sales growth(1)

2.6 %

 

5.3 %

Net income (in thousands)

$ 17,596

 

$ 6,896

Adjusted net income (in thousands)

$ 18,059

 

$ 7,272

Adjusted EBITDA (in thousands)

$ 34,659

 

$ 20,198

           

(1) For the fiscal fourth quarter 2022, same store sales percentages were calculated excluding the 53rd week.

 

Fiscal fourth quarter 2022 financial results

Total revenue for the fiscal fourth quarter 2022 increased to $104.9 million from $72.0 million in the fiscal fourth quarter last year. Royalty revenue, franchise fees and other increased $14.0 million primarily due to domestic same store sales growth of 8.7%, 221 net franchise restaurant openings since December 25, 2021, and $3.0 million of additional revenue from the 53rd week. Advertising fees increased $13.5 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, a 28.9% increase in system-wide sales in the fiscal fourth quarter 2022, and $2.7 million of additional advertising fees from the 53rd week. Company-owned restaurant sales increased $5.3 million due to an increase of $3.1 million related to the increase in the number of company-owned restaurants compared to the prior year comparable period, a 2.6% increase in company-owned same store sales driven by an increase in transactions, and $1.5 million of additional sales from the 53rd week.

Cost of sales increased to $17.0 million from $14.4 million in the fiscal fourth quarter of the prior year, and included $0.1 million and $0.3 million in pre-opening expenses in the fiscal fourth quarter 2022 and 2021, respectively. As a percentage of company-owned restaurant sales, cost of sales (excluding pre-opening expenses) decreased to 75.8% from 84.7% in the prior year comparable period. The decrease was primarily driven by food, beverage and packaging costs benefiting from a 49.3% decrease in the cost of bone-in chicken wings as compared to the prior year period. This benefit was partially offset by the opening of eight restaurants in the New York City market since the prior year comparable period, which have higher rent and other operating costs.

Selling, general & administrative (“SG&A”) increased $0.3 million to $18.3 million from $18.0 million in the fiscal fourth quarter of the prior year. The increase in SG&A was primarily due to an increase of approximately $1.0 million related to the 53rd week and $0.9 million in headcount-related expenses to support the growth in our business. These increases were partially offset by a decrease of $0.7 million in stock-based compensation expense related primarily to stock awards forfeited during the fiscal fourth quarter.

Interest expense, net was $5.3 million in the fiscal fourth quarter of 2022, an increase of approximately $1.6 million, or 41.4%, compared to $3.8 million in the fiscal fourth quarter of the prior year. The increase was due to the securitized financing transaction completed in March 2022, which increased our outstanding debt by $250 million, as well as an estimated $0.4 million of additional interest expense related to the 53rd week.

Key Operating Metrics for the fiscal year 2022 compared to the fiscal year 2021:

 

Fiscal Year Ended

 

December 31, 2022

 

December 25, 2021

Number of system-wide restaurants open at end of period

1,959

 

1,731

Number of domestic franchise restaurants open at end of period

1,678

 

1,498

Number of international franchise restaurants open at end of period

238

 

197

System-wide sales (in millions)

$ 2,739

 

$ 2,345

Domestic AUV (in thousands)

$ 1,606

 

$ 1,592

Domestic same store sales growth(1)

3.4 %

 

8.0 %

Company-owned domestic same store sales growth(1)

1.0 %

 

3.4 %

Net income (in thousands)

$ 52,947

 

$ 42,658

Adjusted net income (in thousands)

$ 55,351

 

$ 40,323

Adjusted EBITDA (in thousands)

$ 108,808

 

$ 88,393

           

(1) For the fiscal year 2022, same store sales percentages were calculated excluding the 53rd week.

 

Fiscal year 2022 financial results

Total Revenue for fiscal year 2022 was $357.5 million, an increase of $75.0 million, or 26.6%, compared to $282.5 million in the prior fiscal year. Royalty revenue, franchise fees and other increased $27.9 million primarily due to 221 net franchise restaurant openings since December 25, 2021, same store sales growth of 3.4%, and $3.0 million due to additional revenue in the 53rd week. Advertising fees increased $37.5 million due to a 16.8% increase in system-wide sales during fiscal year 2022, an increase in the national advertising fund contribution rate to 5% from 4% effective the first day of the fiscal second quarter 2022, and $2.7 million of additional advertising fees from the 53rd week. Additionally, during the prior fiscal year, a $6.9 million non-recurring rebate of advertising surplus was returned to franchisees, reducing the revenue recognized in the prior fiscal year. Company-owned restaurant sales increased $9.6 million primarily due to an increase of $7.7 million related to the increase in the number of company-owned restaurants compared to the prior fiscal year, company-owned same store sales growth of 1.0%, which was driven by an increase in average ticket, and approximately $1.5 million of additional sales from the 53rd week.

Cost of sales increased to $63.4 million from $57.4 million in the prior fiscal year and included $0.9 million and $0.5 million in pre-opening expenses in the fiscal years 2022 and 2021, respectively. As a percentage of company-owned restaurant sales, cost of sales (excluding pre-opening expenses) decreased to 78.2% from 81.0% in the prior year comparable period. The decrease was primarily due to a 26.9% decrease in the cost of bone-in chicken wings as compared to the prior fiscal year. This benefit was partially offset by the opening of eight restaurants in the New York City market since the prior year comparable period, which have higher rent and other operating costs.

SG&A expense was $67.1 million in fiscal year 2022, an increase of $4.2 million, or 6.6%, compared to $62.9 million in the prior fiscal year. The increase in SG&A expense was primarily due to an increase of $4.0 million in headcount related expenses to support the growth in our business, an increase of $2.3 million in professional fees to support the Company’s strategic initiatives and approximately $1 million related to the 53rd week. These increases were partially offset by a decrease of $5.4 million in stock-based compensation expense primarily related to stock awards forfeited in fiscal year 2022.

Interest expense, net was $21.2 million in fiscal year 2022, an increase of $6.2 million, or 41.7%, compared to $15.0 million in the prior fiscal year. This increase was due to the securitized financing transaction completed in March 2022, which increased our outstanding debt by $250 million, as well as an estimated $0.4 million of additional interest expense related to the 53rd week.

Financial Outlook

The Company is reaffirming its three- to five-year outlook of mid-single digit domestic same store sales growth. Additionally, the Company expects the following for 2023, which is a 52-week fiscal year:

  • Approximately 240 global net new units;
  • SG&A of between $82.0$84.0 million;
  • Stock-based compensation expense of between $11.5$12.5 million; and
  • Depreciation and amortization of between $14.0$15.0 million.

Restaurant Development

As of December 31, 2022, there were 1,959 Wingstop restaurants system-wide. This included 1,721 restaurants in the United States, of which 1,678 were franchised restaurants and 43 were company-owned, and 238 franchised restaurants were in international markets. During the fiscal fourth quarter 2022, there were 61 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 February 21, 2023, our board of directors authorized and declared a quarterly dividend of $0.19 per share of common stock, resulting in a total dividend of approximately $5.7 million. This dividend will be paid on March 31, 2023 to stockholders of record as of March 10, 2023.

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 domestic 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 reflects the change in year-over-year sales for the same store restaurant base. We define the same store 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. We review same store sales for domestic company-owned restaurants as well as system-wide domestic restaurants. Domestic same store sales growth is driven by increases in transactions and average transaction size. Transaction size increases are driven by price increases or favorable mix shift from either an increase in items purchased or shifts into higher priced items.

System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees. This measure allows management to better assess changes in our royalty revenue, our overall store performance, the health of our brand and the strength of our market position relative to competitors. Our system-wide sales growth is driven by new restaurant openings as well as increases in same store sales.

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 financing 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 that management believes are not indicative of the Company’s core operating results or business outlook over the long-term.

Adjusted earnings 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 fourth quarter 2022 financial results at 10:00 AM Eastern Time. The conference call can be joined telephonically by dialing 1-877-259-5243 or 1-412-317-5176 (international) and asking for the Wingstop conference call. 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) and entering the passcode 1996778. The replay will be available through Wednesday, March 1, 2023.

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 1,950 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, tenders, and chicken sandwiches, 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 2022, Wingstop’s system-wide sales increased 16.8% to approximately $2.7 billion, marking the 19th 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 1,959 as of December 31, 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 2022, the Company made Technomic 500’s “Fastest Growing Franchise” list, was ranked #16 on Entrepreneur Magazine’s “Franchise 500,” won Fast Casual’s Excellence in Food Safety award, and was 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 Securities and Exchange Commission (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,” “position,” “outlook,” “guidance,” “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 2023 fiscal year outlook for domestic same store sales growth, SG&A expense, stock-based compensation expense, depreciation and amortization, and unit 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. 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
[email protected]

Investor Contact
Ashley Firlan
[email protected]

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)

       
 

December 31,
2022

 

December 25,
2021

Assets

     

Current assets

     

Cash and cash equivalents

$ 184,496

 

$ 48,583

Restricted cash

13,296

 

3,448

Accounts receivable, net

9,461

 

6,993

Prepaid expenses and other current assets

4,252

 

4,928

Advertising fund assets, restricted

15,167

 

6,197

Total current assets

226,672

 

70,149

Property and equipment, net

66,851

 

54,503

Goodwill

62,514

 

56,877

Trademarks

32,700

 

32,700

Customer relationships, net

9,015

 

10,302

Other non-current assets

26,438

 

24,672

Total assets

$ 424,190

 

$ 249,203

Liabilities and stockholders’ deficit

     

Current liabilities

     

Accounts payable

$ 5,219

 

$ 5,414

Other current liabilities

34,726

 

28,070

Current portion of debt

7,300

 

Advertising fund liabilities

15,167

 

6,197

Total current liabilities

62,412

 

39,681

Long-term debt, net

706,846

 

469,394

Deferred revenues, net of current

27,052

 

28,024

Deferred income tax liabilities, net

4,180

 

7,432

Other non-current liabilities

14,561

 

14,197

Total liabilities

815,051

 

558,728

Commitments and contingencies

     

Stockholders’ deficit

     

Common stock, $0.01 par value; 100,000,000 shares authorized;
29,932,668 and 29,837,454 shares issued and outstanding as of
December 31, 2022 and December 25, 2021, respectively

300

 

299

Additional paid-in-capital

2,797

 

463

Retained deficit

(393,321)

 

(310,031)

Accumulated other comprehensive loss

(637)

 

(256)

Total stockholders’ deficit

(390,861)

 

(309,525)

Total liabilities and stockholders’ deficit

$ 424,190

 

$ 249,203

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(amounts in thousands, except per share data)

 
 

Fiscal Quarter Ended

 

Year Ended

 

December 31,
2022

 

December 25,
2021

 

December 31,
2022

 

December 25,
2021

 

(Unaudited)

 

(Unaudited)

       

Revenue:

             

Royalty revenue, franchise fees and other

$ 47,137

 

$ 33,106

 

$ 158,614

 

$ 130,676

Advertising fees

35,339

 

21,857

 

119,011

 

81,529

Company-owned restaurant sales

22,391

 

17,065

 

79,896

 

70,297

Total revenue

104,867

 

72,028

 

357,521

 

282,502

Costs and expenses:

             

Cost of sales (1)

17,098

 

14,724

 

63,395

 

57,416

Advertising expenses

37,111

 

22,429

 

123,069

 

83,989

Selling, general and administrative

18,339

 

18,023

 

67,061

 

62,895

Depreciation and amortization

3,289

 

2,564

 

10,899

 

7,943

Loss (gain) on disposal of assets

159

 

70

 

1,164

 

(3,497)

Total costs and expenses

75,996

 

57,810

 

265,588

 

208,746

Operating income

28,871

 

14,218

 

91,933

 

73,756

Interest expense, net

5,310

 

3,754

 

21,230

 

14,984

Loss on debt extinguishment and financing
transactions

 

 

814

 

Other (income) expense

192

 

(113)

 

573

 

(135)

Income before income tax expense

23,369

 

10,577

 

69,316

 

58,907

Income tax expense

5,773

 

3,681

 

16,369

 

16,249

Net income

$ 17,596

 

$ 6,896

 

$ 52,947

 

$ 42,658

               

Earnings per share

             

Basic

$ 0.59

 

$ 0.23

 

$ 1.77

 

$ 1.43

Diluted

$ 0.59

 

$ 0.23

 

$ 1.77

 

$ 1.42

               

Weighted average shares outstanding

             

Basic

29,924

 

29,831

 

29,893

 

29,769

Diluted

30,003

 

29,970

 

29,963

 

29,944

               

Dividends per share

$ 0.19

 

$ 0.17

 

$ 4.72

 

$ 0.62

   

(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)

   
 

Fiscal Quarter Ended

 

December 31, 2022

 

December 25, 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

$ 7,732

 

34.5 %

 

$ 7,816

 

45.8 %

Labor costs

5,447

 

24.3 %

 

4,250

 

24.9 %

Other restaurant operating expenses

4,457

 

19.9 %

 

3,029

 

17.7 %

Vendor rebates

(538)

 

(2.4) %

 

(371)

 

(2.2) %

Total cost of sales

$ 17,098

 

76.4 %

 

$ 14,724

 

86.3 %

Pre-opening expenses (1)

134

 

0.6 %

 

276

 

1.6 %

Cost of sales (excluding pre-opening expenses)

16,964

 

75.8 %

 

14,448

 

84.7 %

   

(1)

Pre-opening expenses are incurred in conjunction with the opening of a new restaurant and are included within Other restaurant operating expenses in the table above.

 

Fiscal Year Ended

 

December 31, 2022

 

December 25, 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

$ 30,579

 

38.3 %

 

$ 31,496

 

44.8 %

Labor costs

19,234

 

24.1 %

 

16,022

 

22.8 %

Other restaurant operating expenses

15,380

 

19.3 %

 

11,457

 

16.3 %

Vendor rebates

(1,798)

 

(2.3) %

 

(1,559)

 

(2.2) %

Total cost of sales

$ 63,395

 

79.3 %

 

$ 57,416

 

81.7 %

Pre-opening expenses (1)

935

 

1.2 %

 

484

 

0.7 %

Cost of sales (excluding pre-opening expenses)

62,460

 

78.2 %

 

56,932

 

81.0 %

 
   

(1)

Pre-opening expenses are incurred in conjunction with the opening of a new restaurant and are included within Other restaurant operating expenses in the table above.

WINGSTOP INC. AND SUBSIDIARIES
Unaudited Supplemental Information
Restaurant Count

 
 

Fiscal Quarter Ended

 

Fiscal Year Ended

 

December 31,
2022

 

December 25,
2021

 

December 31,
2022

 

December 25,
2021

Domestic Franchised Activity:

             

Beginning of period

1,631

 

1,461

 

1,498

 

1,327

Openings

50

 

38

 

187

 

170

Closures

(1)

 

(1)

 

(4)

 

(2)

Acquired by Company

(2)

 

 

(3)

 

(3)

Re-franchised by Company

 

 

 

6

Restaurants end of period

1,678

 

1,498

 

1,678

 

1,498

               

Domestic Company-Owned Activity:

             

Beginning of period

42

 

32

 

36

 

32

Openings

 

4

 

5

 

7

Closures

(1)

 

 

(1)

 

Acquired by Company

2

 

 

3

 

3

Re-franchised to franchisees

 

 

 

(6)

Restaurants end of period

43

 

36

 

43

 

36

               

Total Domestic Restaurants

1,721

 

1,534

 

1,721

 

1,534

               

International Franchised Activity:

             

Beginning of period

225

 

180

 

197

 

179

Openings

13

 

18

 

45

 

34

Closures

 

(1)

 

(4)

 

(16)

Restaurants end of period

238

 

197

 

238

 

197

               

Total System-wide Restaurants

1,959

 

1,731

 

1,959

 

1,731

WINGSTOP INC. AND SUBSIDIARIES
Non-GAAP Financial Measures – EBITDA and Adjusted EBITDA
(Unaudited)
(amounts in thousands)

 
 

Fiscal Quarter Ended

 

Fiscal Year Ended

 

December 31,
2022

 

December 25,
2021

 

December 31,
2022

 

December 25,
2021

Net income

$ 17,596

 

$ 6,896

 

$ 52,947

 

$ 42,658

Interest expense, net

5,310

 

3,754

 

21,230

 

14,984

Income tax expense

5,773

 

3,681

 

16,369

 

16,249

Depreciation and amortization

3,289

 

2,564

 

10,899

 

7,943

EBITDA

$ 31,968

 

$ 16,895

 

$ 101,445

 

$ 81,834

Additional adjustments:

             

Loss on debt extinguishment and financing
transactions (a)

 

 

1,124

 

Loss (gain) on disposal of assets (b)

159

 

70

 

1,164

 

(3,497)

Consulting fees (c)

450

 

425

 

875

 

425

Stock-based compensation expense (d)

2,082

 

2,808

 

4,200

 

9,631

Adjusted EBITDA

$ 34,659

 

$ 20,198

 

$ 108,808

 

$ 88,393

   

(a)

Represents costs and expenses related to the refinancing of our securitized financing facility and payment of a special dividend; all transaction costs are included in Loss on debt extinguishment and refinancing transactions with the exception of $310,000 during the fiscal year ended December 31, 2022 that is included in Selling, general and administrative on the Consolidated Statements of Operations.

(b)

Represents a loss (gain) resulting from the sale of assets to a franchisee. The loss (gain) is included in Loss (gain) on disposal of assets on the Consolidated Statements of Operations.

(c)

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

(d)

Includes non-cash, stock-based compensation.

WINGSTOP INC. AND SUBSIDIARIES
Non-GAAP Financial Measures – Adjusted Net Income and Adjusted EPS
(Unaudited)
(amounts in thousands, except per share data)

       
 

Fiscal Quarter Ended

 

Fiscal Year Ended

 

December 31,
2022

 

December 25,
2021

 

December 31,
2022

 

December 25,
2021

Numerator:

             

Net income

$ 17,596

 

$ 6,896

 

$ 52,947

 

$ 42,658

Adjustments:

             

Loss on debt extinguishment and financing
transactions (a)

 

 

1,124

 

Loss (gain) on disposal of assets (b)

159

 

70

 

1,164

 

(3,497)

Consulting fees (c)

450

 

425

 

875

 

425

Tax effect of adjustments (d)

(146)

 

(119)

 

(759)

 

737

Adjusted net income

$ 18,059

 

$ 7,272

 

$ 55,351

 

$ 40,323

               

Denominator:

             

Weighted-average shares outstanding – diluted

30,003

 

29,970

 

29,963

 

29,944

               

Adjusted earnings per diluted share

$ 0.60

 

$ 0.24

 

$ 1.85

 

$ 1.35

   

(a)

Represents costs and expenses related to the refinancing of our securitized financing facility and payment of a special dividend; all transaction costs are included in Loss on debt extinguishment and refinancing transactions with the exception of $310,000 during the fiscal year ended December 31, 2022 that is included in Selling, general and administrative on the Consolidated Statements of Operations.

(b)

Represents a loss (gain) resulting from the sale of assets to a franchisee. The loss (gain) is included in Loss (gain) on disposal of assets on the Consolidated Statements of Operations.

(c)

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

(d)

Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax rate of 24% for the periods ended December 31, 2022 and December 25, 2021, 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.

Wingstop Inc. Reports Fiscal Third Quarter Financial Results

Raises Full Year 2022 EPS Outlook and

On Track to Deliver 19th Consecutive Year of Domestic Same Store Sales Growth

DALLAS, Oct. 26, 2022 — Wingstop Inc. (“Wingstop” or the “Company”) (NASDAQ: WING) today announced financial results for the fiscal third quarter ended September 24, 2022.

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

  • System-wide sales increased 17.7% to $699.6 million
  • 40 net new openings in the fiscal third quarter 2022
  • Domestic same store sales increased 6.9%
  • Domestic restaurant AUV of $1.6 million
  • Digital sales of 62.0% of sales
  • Total revenue increased 40.9% to $92.7 million
  • Net income increased 18.4% to $13.4 million, or $0.45 per diluted share, compared to net income of $11.3 million, or $0.38 per diluted share in the prior fiscal third quarter. Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased 57.9% to $13.6 million, or $0.45 per diluted share, compared to $8.6 million, or $0.29 per diluted share in the prior fiscal third quarter
  • Adjusted EBITDA, a non-GAAP measure, increased 32.7% to $28.4 million, compared to adjusted EBITDA of $21.4 million in the prior fiscal third 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.”

“The third quarter results underscore the strength of our long-term growth strategies and the growth levers we have to pull as a brand. We delivered 6.9% domestic same store sales growth, with the majority of this growth driven by an increase in transactions, a demonstration of the momentum and underlying health of our business. This translates to 36.2% domestic same store sales growth on a three-year basis,” commented Michael Skipworth, President & Chief Executive Officer. “We’ve opened 167 net new restaurants through the third quarter and are on track to have a record year for restaurant development, enabled by significant bone-in wing deflation strengthening our brand partners’ unit economics. This gives us confidence in our ability to deliver another record setting year for Wingstop.”

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

Thirteen Weeks Ended

September 24, 2022

September 25, 2021

Number of system-wide restaurants open at end of period

1,898

1,673

Number of domestic franchise restaurants open at end of period

1,631

1,461

Number of international franchise restaurants open at end of period

225

180

System-wide sales (in thousands)

$ 699,569

$ 594,300

Domestic restaurant AUV (in thousands)

$ 1,591

$ 1,579

Domestic same store sales growth

6.9 %

3.9 %

Company-owned domestic same store sales growth

4.3 %

(0.2) %

Net income (in thousands)

$ 13,368

$ 11,290

Adjusted net income (in thousands)

$ 13,550

$ 8,579

Adjusted EBITDA (in thousands)

$ 28,394

$ 21,399

Fiscal third quarter 2022 financial results

Total revenue for the fiscal third quarter 2022 increased to $92.7 million from $65.8 million in the fiscal third quarter last year. Royalty revenue, franchise fees and other increased $7.5 million due to 215 net franchise restaurant openings since September 25, 2021, as well as domestic same store sales growth of 6.9%. Advertising fees increased $16.6 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 17.7% increase in system-wide sales in the fiscal third quarter 2022 compared to the fiscal third quarter 2021. Additionally, during the fiscal third quarter 2021, a $6.9 million non-recurring rebate of advertising surplus was returned to franchisees, reducing the revenue recognized. Company-owned restaurant sales increased $2.8 million due to an increase of $2.3 million related to the addition of nine net new company-owned restaurants compared to the prior year comparable period, as well as a 4.3% increase in company-owned same store sales, which was driven by an increase in menu prices and an increase in transactions.

Cost of sales increased to $15.7 million from $15.2 million in the fiscal third quarter of the prior year, and included $0.2 million in pre-opening expenses in the fiscal third quarters 2022 and 2021. As a percentage of company-owned restaurant sales, cost of sales (excluding pre-opening expenses) decreased to 77.2% from 86.3% in the prior year comparable period. The decrease was primarily driven by food, beverage and packaging costs benefiting from a 42.7% decrease in the cost of bone-in chicken wings as compared to the prior year period. However, this benefit was partially offset by the opening of eight restaurants in the New York City market since the prior year comparable period, which have higher rent and other operating costs.

Selling, general & administrative expense (“SG&A”) increased by $1.7 million to $16.7 million from $15.0 million in the fiscal third quarter of the prior year. The increase in SG&A expense was primarily due to an increase of $1.0 million in headcount related expenses to support the growth in our business, as well as an increase of $0.4 million in professional fees to support the Company’s strategic initiatives. These increases were partially offset by a decrease of $0.5 million in stock-based compensation expense related to stock awards forfeited during the fiscal third quarter 2022.

Interest expense, net was $5.7 million in fiscal third quarter 2022, an increase of $2.0 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 $4.7 million in fiscal third quarter 2022, yielding an effective tax rate of 25.9%, compared to an effective tax rate of 34.1% in the prior year period. The decrease in the effective tax rate was primarily due to the impact of nondeductible expenses for executive compensation during the fiscal third quarter 2021.

Financial Outlook

The Company is increasing guidance for diluted earnings per share to between $1.61 and $1.63, previously between $1.55 to $1.57. Additionally, the Company expects the following for the fiscal year ended December 31, 2022:

  • Low-single digit domestic same store sales growth;
  • Net system-wide restaurant openings of between 225 – 235, previously between 220 – 235
  • SG&A of between $68.5$70.5 million, previously between $70.0$72.0 million;
  • Stock-based compensation expense of approximately $6.0 million, previously $7.5 – 8.5 million;
  • Depreciation and amortization of between $10.5$11.5 million; and
  • Interest expense of approximately $22.5 million, previously $23.5 million.

Restaurant Development

As of September 24, 2022, there were 1,898 Wingstop restaurants system-wide. This included 1,673 restaurants in the United States, of which 1,631 were franchised restaurants and 42 were company-owned, and 225 franchised restaurants in international markets. During the fiscal third quarter 2022, there were 40 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 October 25, 2022, our board of directors approved a quarterly dividend of $0.19 per share of common stock, resulting in a total dividend of approximately $5.7 million. This dividend will be paid on December 2, 2022 to stockholders of record as of November 11, 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 third 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) and asking for the Wingstop conference call. 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 8871945. The replay will be available through Wednesday, November 2, 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 1,900 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, tenders, and chicken sandwiches, 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 1,898 as of September 24, 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 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,” “guidance,” “anticipate,” “believe,” “think,” “estimate,” “seek,” “predict,” “on track,” “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. 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. 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
[email protected]

Investor Contact
Susana Arevalo
972-331-8484
[email protected]

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)

September 24,
2022

December 25,
2021

(Unaudited)

Assets

Current assets

Cash and cash equivalents

$ 173,511

$ 48,583

Restricted cash

13,182

3,448

Accounts receivable, net

8,829

6,993

Prepaid expenses and other current assets

5,752

4,928

Advertising fund assets, restricted

21,817

6,197

Total current assets

223,091

70,149

Property and equipment, net

63,236

54,503

Goodwill

58,570

56,877

Trademarks

32,700

32,700

Customer relationships, net

9,339

10,302

Other non-current assets

24,100

24,672

Total assets

$ 411,036

$ 249,203

Liabilities and stockholders’ deficit

Current liabilities

Accounts payable

$ 3,497

$ 5,414

Other current liabilities

28,041

28,070

Current portion of debt

7,300

Advertising fund liabilities

21,817

6,197

Total current liabilities

60,655

39,681

Long-term debt, net

708,176

469,394

Deferred revenues, net of current

26,942

28,024

Deferred income tax liabilities, net

6,757

7,432

Other non-current liabilities

15,102

14,197

Total liabilities

817,632

558,728

Commitments and contingencies

Stockholders’ deficit

Common stock, $0.01 par value; 100,000,000 shares authorized;
29,916,183 and 29,837,454 shares issued and outstanding as of
September 24, 2022 and December 25, 2021, respectively

299

299

Additional paid-in-capital

991

463

Retained deficit

(406,902)

(310,031)

Accumulated other comprehensive loss

(984)

(256)

Total stockholders’ deficit

(406,596)

(309,525)

Total liabilities and stockholders’ deficit

$ 411,036

$ 249,203

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(amounts in thousands, except per share data)

Thirteen Weeks Ended

September 24,
2022

September 25,
2021

(Unaudited)

(Unaudited)

Revenue:

Royalty revenue, franchise fees and other

$ 40,363

$ 32,829

Advertising fees

32,146

15,575

Company-owned restaurant sales

20,163

17,380

Total revenue

92,672

65,784

Costs and expenses:

Cost of sales (1)

15,724

15,206

Advertising expenses

33,106

16,232

Selling, general and administrative

16,686

15,020

Depreciation and amortization

2,836

2,061

Loss (gain) on disposal of assets

239

(3,567)

Total costs and expenses

68,591

44,952

Operating income

24,081

20,832

Interest expense, net

5,742

3,724

Other expense (income)

290

(22)

Income before income tax expense

18,049

17,130

Income tax expense

4,681

5,840

Net income

$ 13,368

$ 11,290

Earnings per share

Basic

$ 0.45

$ 0.38

Diluted

$ 0.45

$ 0.38

Weighted average shares outstanding

Basic

29,915

29,799

Diluted

29,967

29,963

Dividends per share

$ 0.19

$ 0.17

(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

September 24, 2022

September 25, 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

7,504

37.2 %

8,353

48.1 %

Labor costs

4,652

23.1 %

4,269

24.6 %

Other restaurant operating expenses

3,842

19.1 %

2,781

16.0 %

Vendor rebates

(441)

(2.2) %

(396)

(2.3) %

Cost of sales (excluding pre-opening expenses)

15,557

77.2 %

15,007

86.3 %

Pre-opening expenses

167

0.8 %

199

1.1 %

Total cost of sales

15,724

78.0 %

15,206

87.5 %

WINGSTOP INC. AND SUBSIDIARIES
Unaudited Supplemental Information
Restaurant Count

Thirteen Weeks Ended

September 24,
2022

September 25,
2021

Domestic Franchised Activity:

Beginning of period

1,600

1,415

Openings

32

44

Closures

(1)

Acquired by Company

(1)

(3)

Re-franchised by Company

6

Restaurants end of period

1,631

1,461

Domestic Company-Owned Activity:

Beginning of period

39

34

Openings

2

1

Closures

Acquired by Company

1

3

Re-franchised to franchisees

(6)

Restaurants end of period

42

32

Total Domestic Restaurants

1,673

1,493

International Franchised Activity:

Beginning of period

219

175

Openings

9

10

Closures

(3)

(5)

Restaurants end of period

225

180

Total System-wide Restaurants

1,898

1,673

WINGSTOP INC. AND SUBSIDIARIES
Non-GAAP Financial Measures – EBITDA and Adjusted EBITDA
(Unaudited)
(amounts in thousands)

Thirteen Weeks Ended

September 24,
2022

September 25,
2021

Net income

$ 13,368

$ 11,290

Interest expense, net

5,742

3,724

Income tax expense

4,681

5,840

Depreciation and amortization

2,836

2,061

EBITDA

$ 26,627

$ 22,915

Additional adjustments:

Loss (gain) on disposal of assets (a)

239

(3,567)

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

1,528

2,051

Adjusted EBITDA

$ 28,394

$ 21,399

(a)

Represents a loss (gain) resulting from the sale of assets to a franchisee. This loss (gain) is included in Loss (gain) on
disposal of assets in the Consolidated Statements of Operations.

(b)

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

September 24,
2022

September 25,
2021

Numerator:

Net income

$ 13,368

$ 11,290

Adjustments:

Loss (gain) on disposal of assets (a)

239

(3,567)

Tax effect of adjustments (b)

(57)

856

Adjusted net income

$ 13,550

$ 8,579

Denominator:

Weighted-average shares outstanding – diluted

29,967

29,963

Adjusted earnings per diluted share

$ 0.45

$ 0.29

(a)

Represents a loss (gain) resulting from the sale of assets to a franchisee. This loss (gain) is included in Loss (gain) on
disposal of assets in the Consolidated Statements of Operations.

(b)

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 thirty-nine weeks ended September 24, 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.

FINANCIAL SUMMARY TABLE

 
Press Release
Earnings Webcast
10-Q/10-K