Winmark Corporation — Third Quarter 2026 Earnings Summary

Financial Performance

• Net income for the quarter ended September 26, 2026, was $11,818,100 ($3.21 per share diluted), compared to $11,136,500 ($3.02 per share diluted) in the same period last year.
• Net income for the nine months ended September 26, 2026, was $31,467,700 ($8.51 per share diluted), compared to $31,694,200 ($8.61 per share diluted) for the same period last year; 2025 year-to-date results included $2.2 million of leasing income from customer litigation settlement.
• Total revenue for the quarter was $27,890,500, up from $22,632,900 in the prior year quarter.
• Total revenue for the nine months was $70,706,200, up from $64,969,400 in the prior year period.
• Royalty revenue for the quarter was $21,707,800 (up from $20,911,300), and for the nine months was $61,087,600 (up from $57,348,000).
• North American advertising fund revenue was $3,825,300 for the quarter and nine months, compared to $0 in the prior year periods.
• Software revenue was $497,100 for the quarter (up from $93,100) and $678,900 for the nine months (up from $278,900).
• Merchandise sales were $1,031,500 for the quarter (up from $693,600) and $2,544,700 for the nine months (up from $2,438,500).
• Franchise fees were $330,100 for the quarter (down from $417,600) and $1,092,500 for the nine months (up from $1,088,100).
• Leasing income was $0 for the current quarter and nine months, compared to $46,600 and $2,401,100 respectively in the prior year periods.
• Income from operations was $15,785,800 for the quarter (up from $14,923,200) and $41,788,500 for the nine months (up from $41,580,800).
• Net cash provided by operating activities for the nine months was $35,548,400, compared to $36,373,800 in the prior year period.
• Net cash used for investing activities for the nine months was $2,549,100, compared to $172,700 in the prior year period.
• Net cash used for financing activities for the nine months was $15,345,800, compared to $8,656,100 in the prior year period.
• Cash and cash equivalents increased to $27,964,200 at September 26, 2026, from $10,295,700 at December 27, 2025.
• Total shareholders' equity was a deficit of $37,397,300 at September 26, 2026, compared to a deficit of $53,682,400 at December 27, 2025.
• Total long-term liabilities were $72,227,600 at September 26, 2026, compared to $72,900,500 at December 27, 2025.
• Deferred revenue was $10,114,300 total ($1,666,900 current + $8,447,400 long-term) at September 26, 2026, compared to $10,017,400 total ($1,667,300 current + $8,350,100 long-term) at December 27, 2025.
• Debt levels remained stable with a Line of credit/Term loan of $30,000,000 and Notes payable, net of $29,974,700 at September 26, 2026.

Business Segments and Product Lines

• The company launched the North American Advertising Fund for Plato's Closet during the quarter.
• A point-of-sale pilot was delivered at one franchised location.
• North American Advertising Funds were announced for Once Upon A Child and Play It Again Sports brands for campaigns starting in 2027.
• At September 26, 2026, there were 1,398 franchises in operation across the five brands: Plato's Closet, Once Upon A Child, Play It Again Sports, Style Encore, and Music Go Round.
• There were over 2,800 available territories and 79 additional franchises awarded but not yet open.

Management Commentary and Tone

• Brett D. Heffes, Chair and Chief Executive Officer, stated that the company has historically underinvested in marketing to amplify its message across North America.
• Management indicated they are taking appropriate steps to expand brand awareness through the new advertising funds and point-of-sale initiatives.

Other Key Points

• During the nine months ended September 26, 2026, the Company repurchased $9.85 million of its common stock under its share repurchase program.
• Cash payments for repurchased shares during the quarter totaled $8.10 million.
• At September 26, 2026, $1.75 million of the repurchases was included in Accrued liabilities.
• Dividends paid for the nine months were $10,751,400, compared to $9,991,400 in the prior year period.
• Proceeds from exercises of stock options were $3,497,200 for the nine months, compared to $3,754,000 in the prior year period.
• Capitalized software costs were $2,272,400 for the nine months, with no such costs in the prior year period.
• The company is a franchisor focused on sustainability and small business formation.