Wingstop Inc. Reports Fiscal Second Quarter 2024 Financial Results
Delivers 15.0% Unit Growth
Domestic Same Store Sales Increased 28.7%, Driven by Transaction Growth
DALLAS, July 31, 2024 /PRNewswire/ -- Wingstop Inc. (NASDAQ: WING) today announced financial results for the fiscal second quarter ended June 29, 2024.
Highlights for the fiscal second quarter 2024 compared to the fiscal second quarter 2023:
- System-wide sales increased 45.2% to $1.2 billion
- 73 net new openings in the fiscal second quarter 2024
- Domestic restaurant AUV increased to $2.0 million
- Domestic same store sales increased 28.7%
- Digital sales increased to 68.3% of system-wide sales
- Total revenue increased 45.3% to $155.7 million
- Net income increased 69.9% to $27.5 million, or $0.93 per diluted share
- Adjusted EBITDA, a non-GAAP measure, increased 50.7% to $51.8 million
Adjusted EBITDA is a non-GAAP measure. A reconciliation of adjusted EBITDA to the most directly comparable financial measure presented in accordance with accounting principles generally accepted in the United States ("GAAP") is set forth in the schedule accompanying this release. See "Non-GAAP Financial Measures."
"The second quarter marked another industry-leading quarter for Wingstop, further solidifying our category-of-one position. With same store sales growth of 28.7%, driven primarily by transactions, our AUVs now exceed $2.0 million, a target we set only two years ago when AUVs just crossed $1.5 million. Due to the strength and staying power of our multi-year strategies, we believe we have line of sight to a new AUV target of $3.0 million," said Michael Skipworth, President and Chief Executive Officer. "This growth in AUVs has further enhanced our best-in-class unit economics, and as we continue to open new restaurants at a record pace, we believe there is an opportunity to more than triple our current U.S. footprint."
Key operating metrics for the fiscal second quarter 2024 compared to the fiscal second quarter 2023:
Thirteen Weeks Ended | |||
June 29, 2024 | July 1, 2023 | ||
Number of system-wide restaurants open at end of period | 2,352 | 2,046 | |
Number of domestic franchise restaurants open at end of period | 1,988 | 1,749 | |
Number of international franchise restaurants open at end of period (1) | 312 | 252 | |
System-wide sales (in millions) | $ 1,176 | $ 810 | |
Domestic AUV (in thousands) | $ 2,032 | $ 1,704 | |
Domestic same store sales growth | 28.7 % | 16.8 % | |
Company-owned domestic same store sales growth | 14.1 % | 5.7 % | |
Net income (in thousands) | $ 27,485 | $ 16,181 | |
Adjusted EBITDA (in thousands) | $ 51,778 | $ 34,350 | |
______________________________ |
(1) Including U.S. territories. |
Fiscal second quarter 2024 financial results
Total revenue for the fiscal second quarter 2024 increased to $155.7 million from $107.2 million in the fiscal second quarter last year. Royalty revenue, franchise fees and other increased $23.2 million, of which $12.1 million was due to domestic same store sales growth of 28.7%, and $8.1 million was due to net new franchise development. Advertising fees increased $18.1 million due to a 45.2% increase in system-wide sales in the fiscal second quarter 2024, as well as an increase in the national advertising fund contribution rate to 5.3% from 5.0%, effective the first day of the fiscal second quarter 2024. Company-owned restaurant sales increased $7.3 million due to the addition of seven net new company-owned restaurants since the prior fiscal second quarter and 14.1% company-owned domestic same store sales growth, driven primarily by an increase in transactions.
Cost of sales was $22.7 million compared to $16.6 million in the fiscal second quarter of the prior year. As a percentage of company-owned restaurant sales, cost of sales increased to 75.9% from 73.7% in the prior year comparable period. The increase as a percentage of company-owned restaurant sales was driven by food, beverage and packaging costs primarily resulting from an increase in the cost of bone-in chicken wings as compared to the prior fiscal second quarter. Our purchases in the prior fiscal second quarter were tied primarily to the spot market, which benefited from significant deflation in the cost of bone-in chicken wings. The increase in food, beverage and packaging costs was partially offset by a decrease in labor costs and other restaurant operating expenses as a percentage of company-owned restaurant sales primarily due to leverage related to the company-owned domestic same store sales increase of 14.1%.
Selling, general & administrative ("SG&A") expense increased $6.0 million to $28.1 million from $22.1 million in the fiscal second quarter of the prior year. The increase in SG&A expense was driven by an increase in headcount-related expenses of $1.9 million to support the growth in our business, an increase in incentive compensation and performance-based stock compensation expense of $1.9 million primarily related to our performance, and an increase in consulting and other professional fees of $1.0 million associated with our strategic initiatives.
Depreciation and amortization increased $1.9 million to $5.2 million from $3.2 million in the fiscal second quarter of the prior year. The increase in depreciation and amortization was primarily due to depreciation expense for the software assets placed in service related to our MyWingstop technology platform during the fiscal second quarter 2024.
Financial Outlook
Based on year-to-date results, the Company is providing updated guidance for 2024:
- Approximately 20% domestic same store sales growth, previously low double digits;
- 285 to 300 global net new units, previously 275 to 295; and
- SG&A expense of between $114 - $116 million, previously $111 million.
Additionally, the Company is reiterating guidance for 2024:
- Depreciation and amortization of between $18 - $19 million; and
- Stock-based compensation expense of approximately $20 million.
Restaurant Development
As of June 29, 2024, there were 2,352 Wingstop restaurants system-wide. This included 2,040 restaurants in the United States, of which 1,988 were franchised restaurants and 52 were company-owned, and 312 franchised restaurants were in international markets and U.S. territories. During the fiscal second quarter 2024, there were 73 net system-wide Wingstop restaurant openings.
Quarterly Dividend
In recognition of the Company's strong cash flow generation and our commitment to returning value to stockholders, on July 30, 2024, our Board of Directors approved an increase in the quarterly dividend payable to Wingstop stockholders from $0.22 to $0.27 per share of common stock, resulting in a total dividend of approximately $7.9 million. This dividend will be paid on September 6, 2024 to stockholders of record as of August 16, 2024.
Share Repurchases
During the fiscal second quarter of 2024, the Company repurchased and retired 75,862 shares of its common stock at an average price of $381.29 per share. As of June 29, 2024, $96.1 million remained available under the share repurchase program previously approved by the Company's Board of Directors.
The Company has repurchased and retired 721,814 shares of its common stock at an average price of $217.32 per share since inception of its share repurchase program in August 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.
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 2024 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 7955331. The replay will be available through Wednesday, August 7, 2024.
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 2,350 locations worldwide. The Wing Experts are dedicated to Serving the World Flavor through an unparalleled guest experience and a best-in-class technology platform, all while offering classic and boneless wings, tenders, and chicken sandwiches, cooked to order and hand sauced-and-tossed in fans' choice of 12 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 2023, Wingstop's system-wide sales increased 27.1% to approximately $3.5 billion, marking the 20th consecutive year of same store sales growth. With a vision of becoming a Top 10 Global Restaurant Brand, Wingstop's system is comprised of corporate-owned restaurants and independent franchisees, or brand partners, who account for approximately 98% of Wingstop's total restaurant count of 2,352 as of June 29, 2024.
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.
In 2023, Wingstop earned its "Best Places to Work" certification. The Company landed on Entrepreneur Magazine's "Fastest-Growing Franchises" list and ranked #16 on "Franchise 500." Wingstop was listed on Technomic's "Top 500 Chain Restaurant Report," QSR Magazine's "2023 QSR 50" and Franchise Time's "40 Smartest-Growing Franchises."
For more information, visit www.wingstop.com or www.wingstop.com/own-a-wingstop and follow @Wingstop on X, Instagram, Facebook, and TikTok. Learn more about Wingstop's involvement in its local communities at www.wingstopcharities.org. Unless specifically noted otherwise, references to our website addresses, the website addresses of third parties or other references to online content in this press release do not constitute incorporation by reference of the information contained on such website and should not be considered part of this release.
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 2024 fiscal year outlook for domestic same store sales growth, global net new units, SG&A expense, stock-based compensation expense, and depreciation and amortization, as well as references to domestic AUV targets and our potential domestic restaurant footprint. 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
Media@wingstop.com
Investor Contact
Kristen Thomas
IR@wingstop.com
WINGSTOP INC. AND SUBSIDIARIES Consolidated Balance Sheets (amounts in thousands, except share and per share data) | |||
June 29, | December 30, | ||
(Unaudited) | |||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ 96,749 | $ 90,216 | |
Restricted cash | 11,444 | 11,444 | |
Accounts receivable, net | 16,059 | 12,408 | |
Prepaid expenses and other current assets | 6,768 | 4,948 | |
Advertising fund assets, restricted | 31,768 | 25,328 | |
Total current assets | 162,788 | 144,344 | |
Property and equipment, net | 107,738 | 91,292 | |
Operating lease assets | 55,379 | 19,092 | |
Goodwill | 68,733 | 67,708 | |
Trademarks | 32,700 | 32,700 | |
Customer relationships, net | 7,108 | 7,740 | |
Other non-current assets | 17,375 | 14,949 | |
Total assets | $ 451,821 | $ 377,825 | |
Liabilities and stockholders' deficit | |||
Current liabilities | |||
Accounts payable | $ 5,752 | $ 4,725 | |
Current portion of operating lease liabilities | 4,061 | 2,380 | |
Other current liabilities | 42,955 | 38,571 | |
Advertising fund liabilities | 31,768 | 25,328 | |
Total current liabilities | 84,536 | 71,004 | |
Long-term debt, net | 713,258 | 712,327 | |
Operating lease liabilities | 53,943 | 17,807 | |
Deferred revenues, net of current | 32,928 | 30,145 | |
Deferred income tax liabilities, net | 4,626 | 3,721 | |
Other non-current liabilities | 71 | 187 | |
Total liabilities | 889,362 | 835,191 | |
Commitments and contingencies | |||
Stockholders' deficit | |||
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,304,401 and 29,337,920 shares issued and outstanding as of June 29, 2024 and December 30, 2023, respectively | 293 | 293 | |
Additional paid-in-capital | 1,869 | 2,676 | |
Retained deficit | (439,326) | (459,994) | |
Accumulated other comprehensive loss | (377) | (341) | |
Total stockholders' deficit | (437,541) | (457,366) | |
Total liabilities and stockholders' deficit | $ 451,821 | $ 377,825 | |
WINGSTOP INC. AND SUBSIDIARIES Consolidated Statements of Operations (amounts in thousands, except per share data) | |||
Thirteen Weeks Ended | |||
June 29, | July 1, | ||
(Unaudited) | (Unaudited) | ||
Revenue: | |||
Royalty revenue, franchise fees and other | $ 71,160 | $ 47,984 | |
Advertising fees | 54,654 | 36,596 | |
Company-owned restaurant sales | 29,885 | 22,593 | |
Total revenue | 155,699 | 107,173 | |
Costs and expenses: | |||
Cost of sales (1) | 22,673 | 16,642 | |
Advertising expenses | 58,548 | 38,729 | |
Selling, general and administrative | 28,097 | 22,128 | |
Depreciation and amortization | 5,161 | 3,218 | |
Total costs and expenses | 114,479 | 80,717 | |
Operating income | 41,220 | 26,456 | |
Interest expense, net | 5,200 | 4,244 | |
Other (income) expense | (471) | (46) | |
Income before income tax expense | 36,491 | 22,258 | |
Income tax expense | 9,006 | 6,077 | |
Net income | $ 27,485 | $ 16,181 | |
Earnings per share | |||
Basic | $ 0.94 | $ 0.54 | |
Diluted | $ 0.93 | $ 0.54 | |
Weighted average shares outstanding | |||
Basic | 29,343 | 29,972 | |
Diluted | 29,457 | 30,049 | |
Dividends per share | $ 0.22 | $ 0.19 | |
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(1) | Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, but excludes depreciation and amortization, which are presented separately. |
WINGSTOP INC. AND SUBSIDIARIES Unaudited Supplemental Information Cost of Sales Margin Analysis (amounts in thousands) | |||||||
Thirteen Weeks Ended | |||||||
June 29, 2024 | July 1, 2023 | ||||||
In dollars | As a % of | In dollars | As a % of | ||||
Cost of sales: | |||||||
Food, beverage and packaging costs | $ 10,695 | 35.8 % | $ 7,264 | 32.2 % | |||
Labor costs | 6,987 | 23.4 % | 5,520 | 24.4 % | |||
Other restaurant operating expenses | 5,757 | 19.3 % | 4,408 | 19.5 % | |||
Vendor rebates | (766) | (2.6) % | (550) | (2.4) % | |||
Total cost of sales | $ 22,673 | 75.9 % | $ 16,642 | 73.7 % | |||
WINGSTOP INC. AND SUBSIDIARIES Unaudited Supplemental Information Restaurant Count | |||
Thirteen Weeks Ended | |||
June 29, | July 1, | ||
Domestic Franchised Activity | |||
Beginning of period | 1,924 | 1,710 | |
Openings | 65 | 42 | |
Closures | — | (1) | |
Acquired by Company | (1) | (2) | |
Restaurants end of period | 1,988 | 1,749 | |
Domestic Company-Owned Activity | |||
Beginning of period | 50 | 43 | |
Openings | 1 | — | |
Closures | — | — | |
Acquired by Company | 1 | 2 | |
Restaurants end of period | 52 | 45 | |
Total Domestic Restaurants | 2,040 | 1,794 | |
International Franchised Activity(1) | |||
Beginning of period | 305 | 243 | |
Openings | 10 | 9 | |
Closures | (3) | — | |
Restaurants end of period | 312 | 252 | |
Total System-wide Restaurants | 2,352 | 2,046 | |
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(1) | Includes U.S. Territories. |
WINGSTOP INC. AND SUBSIDIARIES Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA (Unaudited) (amounts in thousands) | |||
Thirteen Weeks Ended | |||
June 29, | July 1, | ||
Net income | $ 27,485 | $ 16,181 | |
Interest expense, net | 5,200 | 4,244 | |
Income tax expense | 9,006 | 6,077 | |
Depreciation and amortization | 5,161 | 3,218 | |
EBITDA | $ 46,852 | $ 29,720 | |
Additional adjustments: | |||
Consulting fees (a) | — | 1,084 | |
Stock-based compensation expense (b) | 4,926 | 3,546 | |
Adjusted EBITDA | $ 51,778 | $ 34,350 | |
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(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 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, which review was completed in fiscal year 2023. Given the magnitude and scope of this strategic review initiative that is not expected to recur in the foreseeable future, the Company considers the incremental consulting fees incurred with respect to the initiative not reflective of the ongoing costs to operate its business. |
(b) | Includes non-cash, stock-based compensation, net of forfeitures. |
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SOURCE Wingstop Restaurants Inc.
