8-K: Winmark Reports Strong Q3, Declares Special Dividend

Winmark Corporation announced increased third-quarter net income and revenue, alongside a significant special cash dividend of $10.00 per share.

Summary

• Net income for Q3 2025 was $11,136,500, a slight increase from $11,120,700 in Q3 2024.
• Diluted earnings per share for Q3 2025 was $3.02, a slight decrease from $3.03 in Q3 2024.
• Year-to-date net income for 2025 reached $31,694,200, up from $30,371,200 for the same period in 2024.
• Year-to-date diluted earnings per share for 2025 was $8.61, an increase from $8.29 for the same period in 2024.
• Total revenue for Q3 2025 increased to $22,632,900 from $21,510,900 in Q3 2024.
• The Board of Directors approved a quarterly cash dividend of $0.96 per share.
• A special cash dividend of $10.00 per share was also approved, totaling approximately $35.6 million.
• Cash and cash equivalents significantly increased to $39,734,800 as of September 27, 2025, from $12,189,800 at December 28, 2024.
• Net cash provided by operating activities for the nine months ended September 27, 2025, was $36,373,800, up from $33,700,000 in the prior year.
• The company operates 1,377 franchises with an additional 77 awarded but not yet open, and over 2,800 available territories.

Sentiment

Score: 8

Explanation: The company reported strong year-to-date financial performance, including increased net income, EPS, and operating cash flow. The declaration of a significant special dividend, alongside a regular quarterly dividend, demonstrates robust financial health and a strong commitment to shareholder returns. While some Q3 metrics showed slight dips, the overall picture is very positive, especially considering the substantial cash position.

Positives

• Increased net income for Q3 2025 and year-to-date 2025.
• Higher diluted EPS year-to-date 2025 ($8.61 vs. $8.29).
• Overall revenue growth for Q3 2025 and year-to-date 2025, primarily driven by royalties.
• Strong increase in cash and cash equivalents to $39,734,800.
• Significant increase in net cash provided by operating activities to $36,373,800 year-to-date.
• Approval of a substantial special cash dividend of $10.00 per share, signaling financial strength and shareholder return.
• Reduction in shareholders' equity deficit from $(51,046,100) to $(26,341,200).

Negatives

• Slight decrease in diluted EPS for Q3 2025 ($3.02 vs. $3.03).
• Slight decrease in income from operations for Q3 2025 ($14,923,200 vs. $14,928,600).
• Significant decrease in leasing income for Q3 2025 ($46,600 vs. $316,200).
• Decrease in merchandise sales and franchise fees for Q3 2025.

Risks

• Forward-looking statements are subject to risks and uncertainties, and actual events or results could differ materially from those anticipated.

Future Outlook

Future dividends will be subject to Board approval. The company's forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from predictions.

Industry Context

Winmark operates as a franchisor in the resale market, emphasizing sustainability and small business formation. This sector continues to show resilience and growth, driven by consumer demand for value and environmentally conscious shopping. The company's continued expansion of franchises and strong cash generation indicate a robust position within this niche.

Stakeholder Impact

• Shareholders: Directly benefit from the quarterly cash dividend of $0.96 per share and a substantial special dividend of $10.00 per share, indicating strong returns and financial health.
• Franchisees: The continued growth in franchises in operation (1,377) and awarded (77) suggests a healthy and expanding franchise system, potentially benefiting existing and future franchisees.
• Employees: Strong financial performance generally supports job security and potential for future growth within the company.
• Customers: The expansion of franchise locations (Plato's Closet, Once Upon A Child, etc.) indicates increased accessibility to the company's resale offerings.

Next Steps

• Payment of quarterly dividend of $0.96 per share on December 1, 2025.
• Payment of special dividend of $10.00 per share on December 1, 2025.
• Future dividends will be subject to Board approval.

Key Dates

Recommendation

The company's robust year-to-date financial performance, marked by increased net income, EPS, and operating cash flow, demonstrates fundamental strength. The declaration of a substantial special dividend of $10.00 per share, in addition to the regular quarterly dividend, signals exceptional financial health, strong cash generation, and a clear commitment to returning capital to shareholders. This move, supported by a significant increase in cash and cash equivalents, suggests management confidence and a potentially undervalued stock, making it a strong buy for investors seeking both income and growth.

Keywords

Winmark, WINA, Q3 Earnings, Financial Results, Dividend, Special Dividend, Franchisor, Resale, Plato's Closet, Once Upon A Child, Play It Again Sports, Style Encore, Music Go Round, Retail, Sustainability