Cover
Cover - shares | 9 Months Ended | |
Sep. 25, 2021 | Nov. 02, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 25, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-37425 | |
Entity Registrant Name | WINGSTOP INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-3494862 | |
Entity Address, Address Line One | 15505 Wright Brothers Drive | |
Entity Address, City or Town | Addison | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75001 | |
City Area Code | 972 | |
Local Phone Number | 686-6500 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | WING | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 29,825,763 | |
Entity Central Index Key | 0001636222 | |
Current Fiscal Year End Date | --12-25 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 25, 2021 | Dec. 26, 2020 |
Current assets | ||
Cash and cash equivalents | $ 50,125 | $ 40,858 |
Restricted cash | 3,456 | 4,815 |
Accounts receivable, net | 6,052 | 4,929 |
Prepaid expenses and other current assets | 4,156 | 5,532 |
Advertising fund assets, restricted | 25,013 | 16,486 |
Total current assets | 88,802 | 72,620 |
Property and equipment, net | 49,151 | 27,948 |
Goodwill | 56,877 | 53,690 |
Trademarks | 32,700 | 32,700 |
Customer relationships, net | 10,626 | 11,600 |
Other non-current assets | 22,243 | 13,007 |
Total assets | 260,399 | 211,565 |
Current liabilities | ||
Accounts payable | 4,382 | 3,658 |
Other current liabilities | 29,914 | 26,729 |
Current portion of debt | 0 | 3,600 |
Advertising fund liabilities | 25,013 | 16,486 |
Total current liabilities | 59,309 | 50,473 |
Long-term debt, net | 469,084 | 466,933 |
Deferred revenues, net of current | 27,154 | 24,962 |
Deferred income tax liabilities, net | 6,475 | 4,480 |
Other non-current liabilities | 12,509 | 6,027 |
Total liabilities | 574,531 | 552,875 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,825,763 and 29,687,123 shares issued and outstanding as of September 25, 2021 and December 26, 2020, respectively | 299 | 297 |
Additional paid-in-capital | 1,067 | 421 |
Retained deficit | (315,326) | (342,028) |
Accumulated other comprehensive loss | (172) | 0 |
Total stockholders' deficit | (314,132) | (341,310) |
Total liabilities and stockholders' deficit | $ 260,399 | $ 211,565 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 25, 2021 | Dec. 26, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 29,825,763 | 29,687,123 |
Common stock, shares outstanding (in shares) | 29,825,763 | 29,687,123 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 25, 2021 | Sep. 26, 2020 | Sep. 25, 2021 | Sep. 26, 2020 | ||
Revenue: | |||||
Total revenue | $ 65,784 | $ 63,988 | $ 210,474 | $ 185,529 | |
Costs and expenses: | |||||
Cost of sales | [1] | 15,206 | 11,804 | 42,692 | 36,367 |
Advertising expenses | 16,232 | 20,240 | 61,560 | 57,660 | |
Selling, general and administrative | 15,020 | 16,542 | 44,872 | 42,155 | |
Depreciation and amortization | 2,061 | 2,334 | 5,379 | 5,287 | |
Gain on sale of restaurants and other expenses, net | (3,567) | (1,233) | (3,567) | (3,249) | |
Total costs and expenses | 44,952 | 49,687 | 150,936 | 138,220 | |
Operating income | 20,832 | 14,301 | 59,538 | 47,309 | |
Interest expense, net | 3,724 | 4,405 | 11,230 | 12,764 | |
Other income | (22) | 0 | (22) | 0 | |
Income before income tax expense | 17,130 | 9,896 | 48,330 | 34,545 | |
Income tax expense (benefit) | 5,840 | (185) | 12,568 | 4,829 | |
Net income | $ 11,290 | $ 10,081 | $ 35,762 | $ 29,716 | |
Earnings per share | |||||
Basic (in USD per share) | $ 0.38 | $ 0.34 | $ 1.20 | $ 1 | |
Diluted (in USD per share) | $ 0.38 | $ 0.34 | $ 1.19 | $ 1 | |
Weighted average shares outstanding | |||||
Basic (in shares) | 29,799 | 29,642 | 29,748 | 29,572 | |
Diluted (in shares) | 29,963 | 29,854 | 29,936 | 29,791 | |
Dividends per share (in USD per share) | $ 0.17 | $ 0.14 | $ 0.45 | $ 0.36 | |
Other comprehensive income (loss) | |||||
Currency translation adjustment | $ (63) | $ 0 | $ (172) | $ 0 | |
Other comprehensive income (loss) | (63) | 0 | (172) | 0 | |
Comprehensive income | 11,227 | 10,081 | 35,590 | 29,716 | |
Royalty revenue, franchise fees and other | |||||
Revenue: | |||||
Total revenue | 32,829 | 28,806 | 97,570 | 80,863 | |
Advertising fees | |||||
Revenue: | |||||
Revenue from customers | 15,575 | 19,653 | 59,672 | 55,590 | |
Company-owned restaurant sales | |||||
Revenue: | |||||
Total revenue | $ 17,380 | $ 15,529 | $ 53,232 | $ 49,076 | |
[1] | Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Deficit | Accumulated Other Comprehensive Loss |
Balance at beginning of period (in shares) at Dec. 28, 2019 | 29,457,228 | ||||
Balance at beginning of period at Dec. 28, 2019 | $ (209,428) | $ 295 | $ 552 | $ (210,275) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 8,096 | 8,096 | |||
Shares issued under stock plans (in shares) | 128,585 | ||||
Shares issued under stock plans | 505 | $ 1 | 504 | ||
Tax payments for restricted stock upon vesting (in shares) | (2,419) | ||||
Tax payments for restricted stock upon vesting | (229) | (229) | |||
Stock-based compensation expense | 1,331 | 1,331 | |||
Dividends declared on common stock and equivalents | (3,223) | (2,168) | (1,055) | ||
Balance at end of period (in shares) at Mar. 28, 2020 | 29,583,394 | ||||
Balance at end of period at Mar. 28, 2020 | (202,948) | $ 296 | 219 | (203,463) | 0 |
Balance at beginning of period (in shares) at Dec. 28, 2019 | 29,457,228 | ||||
Balance at beginning of period at Dec. 28, 2019 | (209,428) | $ 295 | 552 | (210,275) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 29,716 | ||||
Currency translation adjustment | 0 | ||||
Balance at end of period (in shares) at Sep. 26, 2020 | 29,683,465 | ||||
Balance at end of period at Sep. 26, 2020 | (183,537) | $ 297 | 496 | (184,330) | 0 |
Balance at beginning of period (in shares) at Mar. 28, 2020 | 29,583,394 | ||||
Balance at beginning of period at Mar. 28, 2020 | (202,948) | $ 296 | 219 | (203,463) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 11,539 | 11,539 | |||
Shares issued under stock plans (in shares) | 13,057 | ||||
Shares issued under stock plans | 57 | 57 | |||
Tax payments for restricted stock upon vesting (in shares) | (104) | ||||
Tax payments for restricted stock upon vesting | (12) | (12) | |||
Stock-based compensation expense | 1,969 | 1,969 | |||
Dividends declared on common stock and equivalents | (3,277) | (2,202) | (1,075) | ||
Balance at end of period (in shares) at Jun. 27, 2020 | 29,596,347 | ||||
Balance at end of period at Jun. 27, 2020 | (192,672) | $ 296 | 43 | (193,011) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 10,081 | 10,081 | |||
Shares issued under stock plans (in shares) | 87,751 | ||||
Shares issued under stock plans | 329 | $ 1 | 328 | ||
Tax payments for restricted stock upon vesting (in shares) | 633 | ||||
Tax payments for restricted stock upon vesting | (99) | (99) | |||
Stock-based compensation expense | 3,007 | 3,007 | |||
Dividends declared on common stock and equivalents | (4,183) | (2,882) | (1,301) | ||
Currency translation adjustment | 0 | ||||
Balance at end of period (in shares) at Sep. 26, 2020 | 29,683,465 | ||||
Balance at end of period at Sep. 26, 2020 | $ (183,537) | $ 297 | 496 | (184,330) | 0 |
Balance at beginning of period (in shares) at Dec. 26, 2020 | 29,687,123 | 29,687,123 | |||
Balance at beginning of period at Dec. 26, 2020 | $ (341,310) | $ 297 | 421 | (342,028) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 13,160 | 13,160 | |||
Shares issued under stock plans (in shares) | 60,958 | ||||
Shares issued under stock plans | 156 | $ 1 | 155 | ||
Tax payments for restricted stock upon vesting (in shares) | (11,243) | ||||
Tax payments for restricted stock upon vesting | (1,862) | (1,862) | |||
Stock-based compensation expense | 2,316 | 2,316 | |||
Dividends declared on common stock and equivalents | (4,188) | (2,866) | (1,322) | ||
Balance at end of period (in shares) at Mar. 27, 2021 | 29,736,838 | ||||
Balance at end of period at Mar. 27, 2021 | $ (331,728) | $ 298 | 26 | (332,052) | 0 |
Balance at beginning of period (in shares) at Dec. 26, 2020 | 29,687,123 | 29,687,123 | |||
Balance at beginning of period at Dec. 26, 2020 | $ (341,310) | $ 297 | 421 | (342,028) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 35,762 | ||||
Currency translation adjustment | $ (172) | ||||
Balance at end of period (in shares) at Sep. 25, 2021 | 29,825,763 | 29,825,763 | |||
Balance at end of period at Sep. 25, 2021 | $ (314,132) | $ 299 | 1,067 | (315,326) | (172) |
Balance at beginning of period (in shares) at Mar. 27, 2021 | 29,736,838 | ||||
Balance at beginning of period at Mar. 27, 2021 | (331,728) | $ 298 | 26 | (332,052) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 11,312 | 11,312 | |||
Shares issued under stock plans (in shares) | 6,613 | ||||
Shares issued under stock plans | 0 | ||||
Tax payments for restricted stock upon vesting (in shares) | (76) | ||||
Tax payments for restricted stock upon vesting | (11) | (11) | |||
Stock-based compensation expense | 2,456 | 2,456 | |||
Dividends declared on common stock and equivalents | (4,163) | (1,888) | (2,275) | ||
Currency translation adjustment | (109) | (109) | |||
Balance at end of period (in shares) at Jun. 26, 2021 | 29,743,375 | ||||
Balance at end of period at Jun. 26, 2021 | (322,243) | $ 298 | 594 | (323,026) | (109) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 11,290 | 11,290 | |||
Shares issued under stock plans (in shares) | 82,553 | ||||
Shares issued under stock plans | 501 | $ 1 | 500 | ||
Tax payments for restricted stock upon vesting (in shares) | (165) | ||||
Tax payments for restricted stock upon vesting | (28) | (28) | |||
Stock-based compensation expense | 2,051 | 2,051 | |||
Dividends declared on common stock and equivalents | (5,640) | (2,078) | (3,562) | ||
Currency translation adjustment | $ (63) | (63) | |||
Balance at end of period (in shares) at Sep. 25, 2021 | 29,825,763 | 29,825,763 | |||
Balance at end of period at Sep. 25, 2021 | $ (314,132) | $ 299 | $ 1,067 | $ (315,326) | $ (172) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 25, 2021 | Sep. 26, 2020 | |
Operating activities | ||
Net income | $ 35,762 | $ 29,716 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 5,379 | 5,287 |
Deferred income taxes | 2,167 | 377 |
Stock-based compensation expense | 6,823 | 6,307 |
Gain on disposal of assets | (3,567) | (3,247) |
Amortization of debt issuance costs | 1,056 | 1,228 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,123) | (203) |
Prepaid expenses and other assets | (689) | 668 |
Advertising fund assets and liabilities, net | 9,426 | 12,578 |
Accounts payable and other current liabilities | (2,224) | (4,165) |
Deferred revenue | 2,318 | 958 |
Other non-current liabilities | (1,283) | (2,725) |
Cash provided by operating activities | 54,045 | 46,779 |
Investing activities | ||
Purchases of property and equipment | (16,543) | (3,729) |
Acquisitions of restaurants from franchisees | (4,876) | (5,635) |
Proceeds from sales of assets | 7,207 | 4,800 |
Payments for investments | (4,163) | 0 |
Cash used in investing activities | (18,375) | (4,564) |
Financing activities | ||
Proceeds from exercise of stock options | 657 | 891 |
Borrowings of long-term debt | 0 | 16,000 |
Repayments of long-term debt | (2,400) | (800) |
Tax payments for restricted stock upon vesting | (1,901) | (340) |
Dividends paid | (14,690) | (10,683) |
Cash provided by (used in) financing activities | (18,334) | 5,068 |
Net increase in cash, cash equivalents, and restricted cash | 17,336 | 47,283 |
Cash, cash equivalents, and restricted cash at beginning of period | 59,270 | 21,175 |
Cash, cash equivalents, and restricted cash at end of period | 76,606 | 68,458 |
Supplemental information: | ||
Accrued capital expenditures | $ 8,943 | $ 0 |
Basis of Presentation and Updat
Basis of Presentation and Update to Significant Accounting Policies | 9 Months Ended |
Sep. 25, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Update to Significant Accounting Policies | Basis of Presentation and Update to Significant Accounting Policies Nature of operations. Wingstop Inc., together with its consolidated subsidiaries (collectively, “Wingstop” or the “Company”), is in the business of franchising and operating Wingstop restaurants. As of September 25, 2021, the Company had 1,461 domestic franchised restaurants and 180 international franchised restaurants. As of September 25, 2021, the Company owned and operated 32 restaurants. Basis of presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. Balance sheet amounts are as of September 25, 2021 and December 26, 2020, and operating results are for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020. The foreign currency translation adjustment included in the Consolidated Statements of Comprehensive Income represents the unrealized impact of translating our foreign investment. This amount is not included in Net income and would only be realized upon disposition of our investment. The related Accumulated other comprehensive loss is presented in the Consolidated Balance Sheets. In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2020. Fiscal year. The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2021 and 2020 each have 52 weeks. Cash, Cash Equivalents, and Restricted Cash. Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of September 25, 2021 and December 26, 2020 were as follows (in thousands): September 25, 2021 December 26, 2020 Cash and cash equivalents $ 50,125 $ 40,858 Restricted cash 3,456 4,815 Restricted cash, included in Advertising fund assets, restricted 23,025 13,597 Total cash, cash equivalents, and restricted cash $ 76,606 $ 59,270 Change in presentation. Beginning in the first quarter of 2021, headcount-related expenses that support our national advertising fund are presented within Advertising expenses on the Consolidated Statements of Comprehensive Income. Prior to the first quarter of 2021, these expenses were presented within Selling, general and administrative expenses. Prior period amounts have been reclassified to conform to the current presentation. This reclassification had no impact on operating income, balance sheets or statements of cash flows. Headcount related expenses associated with the national advertising fund were $2.0 million for each of the thirteen weeks ended September 25, 2021 and September 26, 2020, and were $5.9 million for each of the thirty-nine weeks ended September 25, 2021 and September 26, 2020. Recently issued accounting pronouncements. We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 25, 2021 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per ShareBasic earnings per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if securities convertible into, or other contracts to issue, common stock were exercised or converted into common stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of the exercise and vesting of stock options and restricted stock units, respectively, as determined using the treasury stock method. Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands): Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25, September 26, September 25, September 26, Basic weighted average shares outstanding 29,799 29,642 29,748 29,572 Dilutive shares 164 212 188 219 Diluted weighted average shares outstanding 29,963 29,854 29,936 29,791 For each of the thirteen weeks ended September 25, 2021 and September 26, 2020, equity awards representing approximately 400 shares were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive. |
Dividends
Dividends | 9 Months Ended |
Sep. 25, 2021 | |
Dividends [Abstract] | |
Dividends | DividendsThe Company’s Board of Directors declared a quarterly dividend of $0.14 per share of common stock in each of the first two quarters, and a quarterly dividend of $0.17 per share of common stock in the third quarter, resulting in aggregate dividend payments of $13.4 million, or $0.45 per share of common stock, during the thirty-nine weeks ended September 25, 2021.Subsequent to the third quarter, on November 2, 2021, the Company’s Board of Directors declared a quarterly dividend of $0.17 per share of common stock for stockholders of record as of November 19, 2021. The regular quarterly dividend is to be paid on December 10, 2021, totaling approximately $5.1 million. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 25, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows: Level 1 — Unadjusted quoted prices for identical instruments traded in active markets. Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data. Level 3 — Unobservable inputs reflecting management’s estimates and assumptions. The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short-term nature. Fair value of debt is determined on a non-recurring basis, which results are summarized as follows (in thousands): Fair Value Hierarchy September 25, 2021 December 26, 2020 Carrying Value Fair Value Carrying Value Fair Value Securitized Financing Facility: 2020-1 Class A-2 Senior Secured Notes (1) Level 2 $ 477,600 $ 486,187 $ 480,000 $ 483,365 (1) The fair value of the 2020-1 Class A-2 Senior Secured Notes was estimated using available market information. The Company also measures certain non-financial assets (primarily long-lived assets, intangible assets, and goodwill) at fair value on a non-recurring basis in connection with its periodic evaluations of such assets for potential impairment. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 25, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense (benefit) and the effective tax rate were $5.8 million and 34.1%, respectively, for the thirteen weeks ended September 25, 2021, and $(0.2) million and (1.9)%, respectively, for the thirteen weeks ended September 26, 2020. Income tax expense and the effective tax rate were $12.6 million and 26.0%, respectively, for the thirty-nine weeks ended September 25, 2021, and $4.8 million and 14.0%, respectively, for the thirty-nine weeks ended September 26, 2020. Income tax expense (benefit) for the thirteen and thirty-nine weeks ended September 25, 2021 included $0.1 million and $0.6 million, respectively, in tax benefits resulting from the recognition of excess tax benefits from stock-based compensation, as compared to $2.9 million and $4.4 million in tax benefits for the thirteen and thirty-nine weeks ended September 26, 2020, respectively. |
Investments
Investments | 9 Months Ended |
Sep. 25, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | Investments In the second quarter of 2021, a wholly-owned subsidiary of the Company acquired a 20% non-controlling interest in Wingstop’s United Kingdom master franchisee, Lemon Pepper Holdings Ltd., (“LPH”) for an aggregate amount of $4.2 million. Substantially all of the investment consisted of bonds issued by a subsidiary of LPH, which are recorded on an amortized cost basis. The fair value of the bonds approximates the current carrying value and was determined using level 3 inputs. In addition, the Company received 20% of the |
Debt Obligations
Debt Obligations | 9 Months Ended |
Sep. 25, 2021 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations Long-term debt consisted of the following components (in thousands): September 25, 2021 December 26, 2020 2020-1 Class A-2 Senior Secured Notes $ 477,600 $ 480,000 Debt issuance costs, net of amortization (8,516) (9,467) Total debt 469,084 470,533 Less: current portion of debt — (3,600) Long-term debt, net $ 469,084 $ 466,933 The Company’s outstanding debt consists of (i) Series 2020-1 2.84% Fixed Rate Senior Secured Notes, Class A-2 (the “2020 Class A-2 Notes”) issued by Wingstop Funding LLC (the “Issuer”), a limited-purpose, bankruptcy-remote, wholly owned indirect subsidiary of Wingstop Inc. and (ii) Series 2020-1 Variable Funding Senior Notes, Class A-1 (the “2020 Variable Funding Notes” and together with the Class A-2 Notes, the “2020 Notes”), which permit borrowings of up to a maximum principal amount of $50 million which may be used to borrow amounts on a revolving basis and to issue letters of credit. As of September 25, 2021 and December 26, 2020, the Company had $477.6 million and $480.0 million of 2020 Class A-2 Notes outstanding, respectively. There were no borrowings outstanding under the 2020 Variable Funding Notes as of September 25, 2021 and December 26, 2020. Further, as of September 25, 2021 and December 26, 2020, $3.5 million and $4.9 million, respectively, of letters of credit were outstanding against the 2020 Variable Funding Notes, which relate primarily to interest reserves required under the base indenture and related supplemental indenture. There were no amounts drawn down on the letters of credit as of September 25, 2021 or December 26, 2020. As of September 25, 2021, the Company’s leverage ratio under the Class A-2 Notes was less than 5.0x. Per the terms of the Company’s debt agreements, principal payments can be suspended at the borrower’s election until the repayment date as long as the Company maintains a leverage ratio of less than 5.0x. Accordingly, the Company has elected to suspend payments following the principal payment made in the third quarter, and the entire outstanding balance of the Class A-2 notes has been classified as long-term debt. The 2020 Notes were issued in a securitization transaction pursuant to which certain of the Company’s domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements and intellectual property, were contributed or otherwise transferred to the Issuer and certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as guarantors of the Notes and that have pledged substantially all of their assets. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 25, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesThe Company is subject to legal proceedings, claims, and liabilities, such as employment-related claims and premises-liability cases, which arise in the ordinary course of business and are generally covered by insurance. In the opinion of management, the amount of ultimate liability with respect to such actions is not likely to have a material adverse impact on the Company’s financial position, results of operations, or cash flows. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 25, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation During the thirty-nine weeks ended September 25, 2021, the Company granted stock options to purchase 42,703 shares of common stock and 23,191 restricted stock units (“RSUs”) to certain employees. The stock options vest in equal annual amounts over a three-year period subsequent to the grant date, and have a maximum contractual term of ten years. The stock options were granted with a weighted-average exercise price of $129.11 per share and had a weighted-average grant-date fair value of $42.51 per share. The RSUs granted to certain employees generally vest in equal annual amounts over a three-year period, subsequent to the grant date and had a weighted-average grant-date fair value of $135.51 per unit. In addition, the Company granted 32,733 performance stock units (“PSUs”) to certain employees during the thirty-nine weeks ended September 25, 2021. Of the total PSUs granted, 25,623 PSUs are subject to a service condition and a performance vesting condition based on return on incremental invested capital (“ROI PSUs”). The ROI PSUs are generally eligible to cliff-vest approximately three years from the grant date, and the maximum vesting percentage that could be realized for each of the ROI PSUs is 250% based on the level of performance achieved for the awards. The remaining 7,110 PSUs granted are subject to a service condition and a performance vesting condition based on the number of net new restaurants opened over the performance period (“NNR PSUs”). The NNR PSUs vest in equal annual amounts over a three-year period, and the maximum vesting percentage that could be realized for each of the NNR PSUs is 100% based on the level of performance achieved for the awards. The PSUs had a weighted-average grant-date fair value of $131.16 per unit. Total compensation cost for the PSUs is determined based on the most likely outcome of the performance condition and the number of awards expected to vest based on the outcome. Total compensation expense related to all share-based awards was $6.8 million and $6.3 million for the thirty-nine weeks ended September 25, 2021 and September 26, 2020, respectively, and was included in Selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Comprehensive Income. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 25, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The following table represents a disaggregation of revenue from contracts with customers for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020 (in thousands): Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020 Royalty revenue $ 30,039 $ 26,007 $ 89,262 $ 72,761 Advertising fees and related income 15,575 19,653 59,672 55,590 Franchise fees 902 1,151 2,961 2,914 |
Acquisitions and Refranchising
Acquisitions and Refranchising of Company-owned Restaurants | 9 Months Ended |
Sep. 25, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions and Refranchising of Company-owned Restaurants | Acquisitions and Refranchising of Company-owned Restaurants During the third fiscal quarter 2021, the Company completed the sale of six company-owned restaurants in the Colorado market to an existing franchisee for aggregate proceeds of $7.2 million. In connection with the sale of the restaurants, the Company recorded a $3.6 million pre-tax gain on the sale of the related assets and liabilities, which was net of an $80,000 reduction in goodwill. The net gain on these store sales was recorded in Gain on sale of restaurants and other expenses, net in the Company’s Consolidated Statements of Comprehensive Income as of September 25, 2021. In the third fiscal quarter 2021, the company acquired three existing restaurants from franchisees. The combined purchase price was $4.9 million and was funded by cash flow from operations. The following table summarizes the preliminary allocations of the purchase price to the estimated fair value of assets acquired and liabilities assumed at the date of the acquisition (in thousands): Purchase Price Allocation Working capital $ 61 Property and equipment 148 Reacquired franchise rights 1,400 Goodwill 3,267 Operating lease right-of-use assets 1,526 Operating lease liabilities (1,526) Total purchase price $ 4,876 The estimates of fair value are preliminary, and are therefore subject to further refinement. The excess of the purchase price over the aggregate fair value of assets acquired was allocated to goodwill and is attributable to the benefits expected as a result of the acquisition, including sales and unit growth opportunities. All of the goodwill from the acquisition is expected to be deductible for federal income tax purposes. Pro-forma financial information of the combined entities is not presented due to the immaterial impact of the financial results of the acquired restaurant on our consolidated financial statements. |
Basis of Presentation and Upd_2
Basis of Presentation and Update to Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 25, 2021 | |
Accounting Policies [Abstract] | |
Fiscal Year | Fiscal year. The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2021 and 2020 each have 52 weeks |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements. We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements. |
Basis of Presentation and Upd_3
Basis of Presentation and Update to Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 25, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Cash, Cash Equivalents, and Restricted Cash | Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of September 25, 2021 and December 26, 2020 were as follows (in thousands): September 25, 2021 December 26, 2020 Cash and cash equivalents $ 50,125 $ 40,858 Restricted cash 3,456 4,815 Restricted cash, included in Advertising fund assets, restricted 23,025 13,597 Total cash, cash equivalents, and restricted cash $ 76,606 $ 59,270 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 25, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic Shares Outstanding to Diluted Shares Outstanding | Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands): Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25, September 26, September 25, September 26, Basic weighted average shares outstanding 29,799 29,642 29,748 29,572 Dilutive shares 164 212 188 219 Diluted weighted average shares outstanding 29,963 29,854 29,936 29,791 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 25, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements, Nonrecurring | Fair value of debt is determined on a non-recurring basis, which results are summarized as follows (in thousands): Fair Value Hierarchy September 25, 2021 December 26, 2020 Carrying Value Fair Value Carrying Value Fair Value Securitized Financing Facility: 2020-1 Class A-2 Senior Secured Notes (1) Level 2 $ 477,600 $ 486,187 $ 480,000 $ 483,365 (1) The fair value of the 2020-1 Class A-2 Senior Secured Notes was estimated using available market information. |
Debt Obligations (Tables)
Debt Obligations (Tables) | 9 Months Ended |
Sep. 25, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following components (in thousands): September 25, 2021 December 26, 2020 2020-1 Class A-2 Senior Secured Notes $ 477,600 $ 480,000 Debt issuance costs, net of amortization (8,516) (9,467) Total debt 469,084 470,533 Less: current portion of debt — (3,600) Long-term debt, net $ 469,084 $ 466,933 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 25, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table represents a disaggregation of revenue from contracts with customers for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020 (in thousands): Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020 Royalty revenue $ 30,039 $ 26,007 $ 89,262 $ 72,761 Advertising fees and related income 15,575 19,653 59,672 55,590 Franchise fees 902 1,151 2,961 2,914 |
Acquisitions and Refranchisin_2
Acquisitions and Refranchising of Company-owned Restaurants (Tables) | 9 Months Ended |
Sep. 25, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Results of Operations of Locations included in Comprehensive Income | The following table summarizes the preliminary allocations of the purchase price to the estimated fair value of assets acquired and liabilities assumed at the date of the acquisition (in thousands): Purchase Price Allocation Working capital $ 61 Property and equipment 148 Reacquired franchise rights 1,400 Goodwill 3,267 Operating lease right-of-use assets 1,526 Operating lease liabilities (1,526) Total purchase price $ 4,876 |
Basis of Presentation and Upd_4
Basis of Presentation and Update to Significant Accounting Policies - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2021USD ($)restaurant | Sep. 26, 2020USD ($) | Sep. 25, 2021USD ($)restaurant | Sep. 26, 2020USD ($) | |
Franchisor Disclosure [Line Items] | ||||
Advertising expenses | $ | $ 2 | $ 2 | $ 5.9 | $ 5.9 |
Franchised Units | United States | ||||
Franchisor Disclosure [Line Items] | ||||
Number of restaurants | 1,461 | 1,461 | ||
Franchised Units | Non-US | ||||
Franchisor Disclosure [Line Items] | ||||
Number of restaurants | 180 | 180 | ||
Entity Operated Units | ||||
Franchisor Disclosure [Line Items] | ||||
Number of restaurants | 32 | 32 |
Basis of Presentation and Upd_5
Basis of Presentation and Update to Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 25, 2021 | Dec. 26, 2020 | Sep. 26, 2020 | Dec. 28, 2019 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 50,125 | $ 40,858 | ||
Restricted cash | 3,456 | 4,815 | ||
Restricted cash, included in Advertising fund assets, restricted | 23,025 | 13,597 | ||
Total cash, cash equivalents, and restricted cash | $ 76,606 | $ 59,270 | $ 68,458 | $ 21,175 |
Earnings per Share (Details)
Earnings per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2021 | Sep. 26, 2020 | Sep. 25, 2021 | Sep. 26, 2020 | |
Earnings Per Share [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 29,799,000 | 29,642,000 | 29,748,000 | 29,572,000 |
Dilutive shares (in shares) | 164,000 | 212,000 | 188,000 | 219,000 |
Diluted weighted average shares outstanding (in shares) | 29,963,000 | 29,854,000 | 29,936,000 | 29,791,000 |
Equity awards outstanding (in shares) | 400 | 400 | 4,000 | 400 |
Dividends (Details)
Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 02, 2021 | Sep. 25, 2021 | Jun. 26, 2021 | Mar. 27, 2021 | Sep. 26, 2020 | Sep. 25, 2021 | Sep. 26, 2020 |
Dividends Payable [Line Items] | |||||||
Dividends paid per share (in USD per share) | $ 0.17 | $ 0.14 | $ 0.14 | $ 0.14 | $ 0.45 | $ 0.36 | |
Dividends paid | $ 13.4 | ||||||
Subsequent Event | |||||||
Dividends Payable [Line Items] | |||||||
Dividends payable per share (in USD per share) | $ 0.17 | ||||||
Dividends payable | $ 5.1 | ||||||
Dividend Paid | |||||||
Dividends Payable [Line Items] | |||||||
Dividends paid per share (in USD per share) | $ 0.45 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Level 2 - 2020-1 Class A-2 Senior Secured Notes - Nonrecurring - USD ($) $ in Thousands | Sep. 25, 2021 | Dec. 26, 2020 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument | $ 477,600 | $ 480,000 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument | $ 486,187 | $ 483,365 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2021 | Sep. 26, 2020 | Sep. 25, 2021 | Sep. 26, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 5,840 | $ (185) | $ 12,568 | $ 4,829 |
Effective income tax rate (as a percent) | 34.10% | (1.90%) | 26.00% | 14.00% |
Tax benefits from stock-based compensation | $ 100 | $ 2,900 | $ 600 | $ 4,400 |
Investments (Details)
Investments (Details) - Lemmon Pepper Topco Ltd $ in Millions | Jun. 26, 2021USD ($) |
Schedule of Equity Method Investments [Line Items] | |
Proportionate equity interest (as a percent) | 20.00% |
Aggregate amount | $ 4.2 |
Debt Obligations - Components o
Debt Obligations - Components of Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 25, 2021 | Dec. 26, 2020 |
Debt Instrument [Line Items] | ||
Debt issuance costs, net of amortization | $ (8,516) | $ (9,467) |
Total debt | 469,084 | 470,533 |
Less: current portion of debt | 0 | (3,600) |
Long-term debt, net | 469,084 | 466,933 |
2020-1 Class A-2 Senior Secured Notes | ||
Debt Instrument [Line Items] | ||
Gross debt | $ 477,600 | $ 480,000 |
Debt Obligations - Narrative (D
Debt Obligations - Narrative (Details) - USD ($) | Sep. 25, 2021 | Dec. 26, 2020 |
Debt Instrument [Line Items] | ||
Maximum borrowing capacity for line of credit | $ 50,000,000 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Amount of debt drawn | 0 | $ 0 |
Interest reserve | $ 3,500,000 | 4,900,000 |
2020-1 Class A-2 Senior Secured Notes | ||
Debt Instrument [Line Items] | ||
Senior secured note fixed interest rate (as a percent) | 2.84% | |
Debt outstanding | $ 477,600,000 | 480,000,000 |
Leverage ratio | 5 | |
2020 Variable Funding Notes | ||
Debt Instrument [Line Items] | ||
Amount of debt drawn | $ 0 | $ 0 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |
Sep. 25, 2021 | Sep. 26, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 6.8 | $ 6.3 |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 42,703 | |
Vesting period | 3 years | |
Contractual term | 10 years | |
Weighted average exercise price of options granted (in USD per share) | $ 129.11 | |
Weighted average grant date fair value of options granted (in USD per share) | $ 42.51 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 23,191 | |
Vesting period | 3 years | |
Weighted average grant date fair value of RSUs granted (in USD per share) | $ 135.51 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 32,733 | |
Performance Shares | Share-based Payment Arrangement, Tranche One | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 25,623 | |
Performance units, service period (in years) | 3 years | |
Performance Shares | PSUs based on operational targets | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 7,110 | |
Performance units, service period (in years) | 3 years | |
Performance Shares | PSUs based on operational targets | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
PSU vesting percentage | 250.00% | |
Performance Shares | Market-based vesting | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average grant date fair value of RSUs granted (in USD per share) | $ 131.16 | |
Performance Shares | Market-based vesting | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
PSU vesting percentage | 100.00% |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 25, 2021 | Sep. 26, 2020 | Sep. 25, 2021 | Sep. 26, 2020 | Dec. 26, 2020 | |
Disaggregation of Revenue [Line Items] | |||||
Average franchise license term | 10 years | 10 years | |||
Deferred revenue not yet being amortized | $ 10,300 | $ 10,300 | $ 9,800 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-09-26 | |||||
Disaggregation of Revenue [Line Items] | |||||
Remaining amortization period for deferred revenue related to open restaurants | 7 years 3 months 18 days | 7 years 3 months 18 days | |||
Royalty revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from customers | $ 30,039 | $ 26,007 | $ 89,262 | $ 72,761 | |
Advertising fees and related income | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from customers | 15,575 | 19,653 | 59,672 | 55,590 | |
Franchise fees | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from customers | $ 902 | $ 1,151 | $ 2,961 | $ 2,914 |
Acquisitions and Refranchisin_3
Acquisitions and Refranchising of Company-owned Restaurants - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 25, 2021USD ($)restaurant | Mar. 27, 2021restaurant | Sep. 25, 2021USD ($) | |
Existing Restaurants from Franchisees | |||
Business Acquisition [Line Items] | |||
Combined purchase price | $ 4,900 | ||
Held-for-sale | Re-Franchised Company Owned Restaurants In Colorado | |||
Business Acquisition [Line Items] | |||
Purchase price of restaurants sold | 7,200 | $ 7,200 | |
Held for sale assets | $ 3,600 | 3,600 | |
Net of reduction in goodwill | $ 80 | ||
Franchised Units | |||
Business Acquisition [Line Items] | |||
Number of restaurants re-franchised | restaurant | 6 | ||
Entity Operated Units | Existing Restaurants from Franchisees | |||
Business Acquisition [Line Items] | |||
Number of restaurants acquired | restaurant | 3 |
Acquisitions and Refranchisin_4
Acquisitions and Refranchising of Company-owned Restaurants - Purchase Price for Acquisition (Details) - USD ($) $ in Thousands | Sep. 25, 2021 | Dec. 26, 2020 |
Business Acquisition [Line Items] | ||
Goodwill | $ 56,877 | $ 53,690 |
Existing Restaurants from Franchisees | ||
Business Acquisition [Line Items] | ||
Working capital | 61 | |
Property and equipment | 148 | |
Reacquired franchise rights | 1,400 | |
Goodwill | 3,267 | |
Operating lease right-of-use assets | 1,526 | |
Operating lease liabilities | (1,526) | |
Total purchase price | $ 4,876 |