Wingstop Inc

Previous wording

Wingstop is the largest fast casual chicken wings-focused restaurant chain in the world, with over 2,250 locations worldwide. We are dedicated to serving the world flavor through an unparalleled guest experience and offering of classic wings, boneless wings, tenders, and chicken sandwiches, always cooked to order and hand-sauced-and-tossed in 11 bold, distinctive flavors.

Current wording

Wingstop is the largest fast casual chicken wings-focused restaurant chain in the world, with over 2,350 locations worldwide. We are dedicated to serving the world flavor through an unparalleled guest experience and offering of classic wings, boneless wings, tenders, and chicken sandwiches, always cooked to order and hand-sauced-and-tossed in 12 bold, distinctive flavors.

Previous wording

•65 net new openings in the fiscal first quarter 2024 for a total of 2,279 worldwide locations;

Current wording

•73 net new openings in the fiscal second quarter 2024 for a total of 2,352 worldwide locations;

Previous wording

•Company-owned restaurant same store sales increased 6.2% over the prior fiscal first quarter;

Current wording

•Company-owned restaurant same store sales increased 14.1% over the prior fiscal second quarter;

Previous wording

•Digital sales increased to 68.3% of system-wide sales;

Current wording

•Digital sales increased to 68.3% of system-wide sales, as compared to 65.2% in the prior fiscal second quarter;

Previous wording

•Domestic AUV increased to $1.9 million;

Current wording

•Domestic AUV increased to $2.0 million;

Previous wording

•Net income increased 83.5% to $28.7 million, or $0.98 per diluted share, compared to net income of $15.7 million, or $0.52 per diluted share in the prior fiscal first quarter;

Current wording

•Net income increased 69.9% to $27.5 million, or $0.93 per diluted share, compared to net income of $16.2 million, or $0.54 per diluted share, in the prior fiscal second quarter; and

Previous wording

•Adjusted EBITDA, a non-GAAP measure, increased 45.3% to $50.3 million, compared to adjusted EBITDA of $34.6 million in the prior fiscal first quarter.

Current wording

•Adjusted EBITDA, a non-GAAP measure, increased 50.7% to $51.8 million, compared to adjusted EBITDA of $34.4 million in the prior fiscal second quarter.

Previous wording

The following table sets forth our key performance indicators for the thirteen weeks ended March 30, 2024 and April 1, 2023 (in thousands, except unit data):

Current wording

The following table sets forth our key performance indicators for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023 (in thousands, except unit data):

Previous wording

The following table reconciles net income to EBITDA and Adjusted EBITDA for the thirteen weeks ended March 30, 2024 and April 1, 2023 (in thousands):

Current wording

The following table reconciles net income to EBITDA and Adjusted EBITDA for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023 (in thousands):

Previous wording

(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 Comprehensive Income. The costs incurred in the thirteen weeks ended April 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.

Current wording

(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 Comprehensive Income. The costs incurred in the thirteen and twenty-six 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.

Previous wording

During the thirteen weeks ended March 30, 2024, total revenue was $145.8 million, an increase of $37.1 million, or 34.1%, compared to $108.7 million in the comparable period in 2023.

Current wording

During the thirteen weeks ended June 29, 2024, total revenue was $155.7 million, an increase of $48.5 million, or 45.3%, compared to $107.2 million in the comparable period in 2023.

Previous wording

Royalty revenue, franchise fees and other increased $18.9 million, of which $9.4 million was due to domestic same store sales growth of 21.6%, and $7.2 million was due to net new franchise restaurant development. Other revenue increased by $1.1 million primarily due to an increase in vendor rebates.

Current wording

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 restaurant development. Other revenue increased by $1.9 million primarily due to an increase in vendor rebates.

Previous wording

Company-owned restaurant sales increased $5.5 million, due to an increase of $3.3 million related to the addition of seven net new company-owned restaurants since the prior fiscal first quarter. The remainder of the increase was due to company-owned same store sales growth of 6.2%, which was driven primarily by an increase in transactions.

Current wording

Company-owned restaurant sales increased $7.3 million, due to an increase of $3.6 million related to the addition of seven net new company-owned restaurants since the prior fiscal second quarter. The remainder of the increase was due to company-owned same store sales growth of 14.1%, which was driven primarily by an increase in transactions.

Previous wording

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 34.7% in the thirteen weeks ended March 30, 2024, compared to 32.4% in the comparable period in 2023. This increase was primarily due to a 34.8% increase in the cost of bone-in chicken wings as compared to the prior year period. Our purchases in the prior fiscal first quarter were tied primarily to the spot market, which benefited from significant deflation in the cost of bone-in chicken wings.

Current wording

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 35.8% in the thirteen weeks ended June 29, 2024, compared to 32.2% in the comparable period in 2023. This increase was primarily due to a 46.3% increase in the cost of bone-in chicken wings as compared to the prior year period. 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.

Previous wording

Labor costs as a percentage of company-owned restaurant sales were 23.4% for the thirteen weeks ended March 30, 2024, compared to 23.9% in the comparable period in 2023. The decrease as a percentage of company-owned restaurant sales was primarily due to sales leverage as a result of company-owned domestic same store sales growth of 6.2%.

Current wording

Labor costs as a percentage of company-owned restaurant sales were 23.4% for the thirteen weeks ended June 29, 2024, compared to 24.4% in the comparable period in 2023. The decrease as a percentage of company-owned restaurant sales was primarily due to leverage as a result of company-owned domestic same store sales growth of 14.1%.

Previous wording

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 19.0% for the thirteen weeks ended March 30, 2024 compared to 18.3% for the thirteen weeks ended April 1, 2023. The increase as a percentage of company-owned restaurant sales was primarily due to increases in restaurant level operating expenses.

Current wording

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 19.3% for the thirteen weeks ended June 29, 2024, compared to 19.5% for the thirteen weeks ended July 1, 2023. The decrease as a percentage of company-owned restaurant sales was primarily due to leverage related to the company-owned domestic same store sales increase of 14.1%, partially offset by an increase in pre-opening expenses in the current fiscal quarter and 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.

Previous wording

During the thirteen weeks ended March 30, 2024, advertising expenses were $53.2 million, an increase of $13.5 million compared to $39.6 million in the comparable period in 2023. Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the related advertising spend.

Current wording

During the thirteen weeks ended June 29, 2024, advertising expenses were $58.5 million, an increase of $19.8 million compared to $38.7 million in the comparable period in 2023. Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the related advertising spend.

Previous wording

During the thirteen weeks ended March 30, 2024, SG&A expense was $25.2 million, an increase of $1.5 million compared to $23.6 million in the comparable period in 2023. The increase in SG&A expense was driven by an increase in headcount related expenses of $2.1 million to support the growth in our business, professional fees of $1.4 million associated with the Company’s strategic initiatives, and an increase in performance-based stock compensation expense of $0.5 million primarily related to the Company’s prior year performance. These increases were partially offset by $2.8 million in non-recurring consulting fees incurred in the prior fiscal first quarter.

Current wording

During the thirteen weeks ended June 29, 2024, SG&A expense was $28.1 million, an increase of $6.0 million compared to $22.1 million in the comparable period in 2023. 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 the Company’s performance, and an increase in consulting and other professional fees of $1.0 million associated with our strategic initiatives.

Previous wording

During the thirteen weeks ended March 30, 2024, depreciation expense was $3.4 million, an increase of $0.4 million compared to $3.0 million in the comparable period in 2023. The increase in depreciation and amortization was primarily due to capital expenditures related to our technology investments.

Current wording

During the thirteen weeks ended June 29, 2024, depreciation and amortization was $5.2 million, an increase of $1.9 million compared to $3.2 million in the comparable period in 2023. 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 thirteen weeks ended June 29, 2024.

Previous wording

During the thirteen weeks ended March 30, 2024, we recognized income tax expense of $9.8 million yielding an effective tax rate of 25.3%, comparable to an effective tax rate of 25.1% in the prior year period.

Current wording

During the thirteen weeks ended June 29, 2024, we recognized income tax expense of $9.0 million, yielding an effective tax rate of 24.7%, compared to an effective tax rate of 27.3% in the prior year period. The decrease in the effective tax rate is primarily related to an increase in excess tax benefits recognized from stock-based compensation in income tax expense as compared to the prior fiscal quarter.

Previous wording

General. Our primary sources of liquidity and capital resources are cash provided from operating activities, cash and cash equivalents on hand, and borrowings available under our securitized financing facility. Our primary requirements for liquidity and capital are working capital, general corporate needs, capital expenditures, income tax payments, debt service requirements, dividend payments, and repurchasing shares of our common stock (if any). Historically, we have operated with minimal positive working capital or with negative working capital. We generally utilize available cash flows from operations to invest in our business, service our debt obligations, pay dividends, and repurchase shares of our common stock (if any).

Current wording

General. Our primary sources of liquidity and capital resources are cash provided from operating activities, cash and cash equivalents on hand, and borrowings available under our securitized financing facility. Our primary requirements for liquidity and capital are working capital, general corporate needs, capital expenditures, income tax payments, debt service requirements, dividend payments, and the repurchases of shares of our common stock (if any). Historically, we have operated with minimal positive working capital or with negative working capital. We generally utilize available cash flows from operations to invest in our business, service our debt obligations, pay dividends, and repurchases of shares of our common stock (if any).

Previous wording

Our primary sources of short-term and long-term liquidity are expected to be cash flows from operations and available borrowings under our 2022 Variable Funding Notes (as defined below). As of March 30, 2024, the Company had $108.3 million of cash and cash equivalents on its balance sheet.

Current wording

Our primary sources of short-term and long-term liquidity are expected to be cash flows from operations and available borrowings under our 2022 Variable Funding Notes (as defined below). As of June 29, 2024, the Company had $96.7 million of cash and cash equivalents on its balance sheet.

Previous wording

The following table shows summary cash flows information for the thirteen weeks ended March 30, 2024 and April 1, 2023 (in thousands):

Current wording

The following table shows summary cash flows information for the twenty-six weeks ended June 29, 2024 and July 1, 2023 (in thousands):

Previous wording

Net cash provided by operating activities was $44.7 million in the thirteen weeks ended March 30, 2024, an increase of $9.0 million from cash provided by operating activities of $35.7 million in the thirteen weeks ended April 1, 2023. The increase is primarily due to an increase in operating income, partially offset by the timing of changes in working capital and changes in Ad Fund cash and cash equivalents, which are directly related to the timing of payments for expenses incurred for national advertising.

Current wording

Net cash provided by operating activities was $80.8 million in the twenty-six weeks ended June 29, 2024, an increase of $32.9 million from net cash provided by operating activities of $48.0 million in the twenty-six weeks ended July 1, 2023. The increase is primarily due to an increase in operating income.

Previous wording

Investing activities. Our net cash used in investing activities was $11.7 million in the thirteen weeks ended March 30, 2024, an increase of $7.3 million from cash used in investing activities of $4.3 million in the thirteen weeks ended April 1, 2023. The increase in cash used in investing activities was primarily due to an increase in capital expenditures related to our technology investments as compared to the prior fiscal year period.

Current wording

Investing activities. Our net cash used in investing activities was $25.3 million in the twenty-six weeks ended June 29, 2024, an increase of $3.0 million from net cash used in investing activities of $22.2 million in the twenty-six weeks ended July 1, 2023. The increase in net cash used in investing activities was primarily due to an increase in capital expenditures related to our technology investments as compared to the prior fiscal year period.

Previous wording

Financing activities. Our net cash used in financing activities was $9.6 million in the thirteen weeks ended March 30, 2024, a decrease of $0.5 million from cash used in financing activities of $10.1 million in the thirteen weeks ended April 1, 2023. The decrease in cash used in financing activities was primarily due to a principal payment made in the prior fiscal year period, partially offset by an increase in taxes paid on stock vesting during the period.

Current wording

Financing activities. Our net cash used in financing activities was $45.2 million in the twenty-six weeks ended June 29, 2024, an increase of $27.8 million from net cash used in financing activities of $17.4 million in the twenty-six weeks ended July 1, 2023. The increase in net cash used in financing activities was primarily due to the repurchase of approximately $29.2 million in common stock under our Share Repurchase Program in the twenty-six weeks ended June 29, 2024, partially offset by principal payments made in the twenty-six weeks ended July 1, 2023.

Previous wording

Securitized financing facility. On March 9, 2022, the Company completed a securitized financing transaction, pursuant to which Wingstop Funding LLC (the “Issuer”), a limited purpose, bankruptcy-remote, indirect wholly-owned subsidiary of the Company, issued $250 million of its Series 2022-1 3.734% Fixed Rate Senior Secured Notes, Class A-2 (the "2022 Class A-2 Notes"). The Issuer also entered into a revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “2022 Variable Funding Notes,” and together with the 2022 Class A-2 Notes, the “2022 Notes”), which permits borrowings of up to a maximum principal amount of $200 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit. The proceeds from the securitized financing transaction were used to pay related transaction fees and expenses, strengthen the Company's liquidity position and for general corporate purposes, which included a return of capital to the Company’s stockholders.

Current wording

Securitized financing facility. On March 9, 2022, the Company completed a securitized financing transaction, pursuant to which Wingstop Funding LLC, a limited purpose, bankruptcy-remote, indirect wholly-owned subsidiary of the Company, issued $250 million of its Series 2022-1 3.734% Fixed Rate Senior Secured Notes, Class A-2 (the "2022 Class A-2 Notes"), and entered into a revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “2022 Variable Funding Notes,” and together with the 2022 Class A-2 Notes, the “2022 Notes”), which permits borrowings of up to a maximum principal amount of $200 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit. The proceeds from the securitized financing transaction were used to pay related transaction fees and expenses, strengthen the Company's liquidity position and for general corporate purposes, which included a return of capital to the Company’s stockholders.

Previous wording

During the fiscal first quarter of 2024, the Company continued to have a leverage ratio under the 2020 Class A-2 Notes and the 2022 Class A-2 Notes of less than 5.0x. Per the terms of the Company’s debt agreements, principal payments are not due until the repayment date as long as the Company maintains a leverage ratio of less than 5.0x. Accordingly, the entire outstanding balance of the 2020 Class A-2 Notes and the 2022 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026.

Current wording

During the fiscal second quarter of 2024, the Company continued to have a leverage ratio under the 2020 Class A-2 Notes and the 2022 Class A-2 Notes of less than 5.0x. Per the terms of the Company’s debt agreements, principal payments are not due until the repayment date as long as the Company maintains a leverage ratio of less than 5.0x. Accordingly, the entire outstanding balance of the 2020 Class A-2 Notes and the 2022 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026.

Previous wording

Dividends. We paid a quarterly cash dividend of $0.22 per share of common stock, aggregating $6.5 million in the fiscal first quarter of 2024. On April 30, 2024, the Company’s Board of Directors approved a dividend of $0.22 per share, to be paid on June 7, 2024 to stockholders of record as of May 17, 2024, totaling $6.5 million.

Current wording

Dividends. We paid a quarterly cash dividend of $0.22 per share of common stock in each of the first two quarters of 2024, aggregating $12.9 million in the twenty-six weeks ended June 29, 2024. On July 30, 2024, our Board of Directors approved a dividend of $0.27 per share, to be paid on September 6, 2024 to stockholders of record as of August 16, 2024, totaling approximately $7.9 million.

Previous wording

Share Repurchase Program. On August 17, 2023, the Company announced a share repurchase program with authorization to purchase up to $250.0 million of its outstanding shares of common stock (the “Share Repurchase Program”). As of March 30, 2024, $125.0 million remained available for repurchase under the Share Repurchase Program.

Current wording

Share Repurchase Program. On August 17, 2023, the Company announced a share repurchase program with authorization to purchase up to $250.0 million of its outstanding shares of common stock (the “Share Repurchase Program”). During the thirteen weeks ended June 29, 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.

Previous wording

•our relationships with, and the performance of, our franchisees, as well as actions by franchisees that could harm our business;

Current wording

•our relationships with, and the performance of, our existing and new franchises and franchisees, as well as actions by franchisees that could harm our business;

Previous wording

•our ability to successfully expand into new markets;

Current wording

•our ability to successfully expand into new and existing markets;

Previous wording

•our ability to protect our intellectual property, including trademarks and trade secrets;

Current wording

•our ability to protect our intellectual property, including trademarks, trade secrets and other proprietary rights;