Wingstop Inc. Reports Fiscal Third Quarter 2024 Financial Results
Delivers Record Third Quarter with 106 Net New Openings and 17.1% Unit Growth
Domestic Same Store Sales Increased 20.9%, Driven by Transaction Growth
DALLAS, Oct. 30, 2024 /PRNewswire/ -- Wingstop Inc. (NASDAQ:WING) today announced financial results for the fiscal third quarter ended September 28, 2024.
Highlights for the fiscal third quarter 2024 compared to the fiscal third quarter 2023:
System-wide sales increased 39.4% to $1.2 billion
106 net new openings in the fiscal third quarter 2024
Domestic restaurant AUV increased to $2.1 million
Domestic same store sales increased 20.9%
Digital sales increased to 69.0% of system-wide sales
Total revenue increased 38.8% to $162.5 million
Net income increased 31.9% to $25.7 million, or $0.88 per diluted share
Adjusted EBITDA, a non-GAAP measure, increased 39.5% to $53.7 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."
"Our third quarter results demonstrated the staying power of our multi-year strategies we are executing against, delivering 20.9% same store sales growth, primarily driven by transaction growth," said Michael Skipworth, President and Chief Executive Officer. "We opened a record 106 net new units in the third quarter, a 17.1% growth in system-wide restaurants over the prior year, which showcases the excitement among our Brand Partners who are seeing industry-leading returns."
Key operating metrics for the fiscal third quarter 2024 compared to the fiscal third quarter 2023:
Thirteen Weeks Ended
September 28, 2024
September 30, 2023
Number of system-wide restaurants open at end of period
2,458
2,099
Number of domestic franchise restaurants open at end of period
2,064
1,791
Number of international franchise restaurants open at end of period (1)
338
262
System-wide sales (in millions)
$ 1,233
$ 885
Domestic AUV (in thousands)
$ 2,116
$ 1,755
Domestic same store sales growth
20.9 %
15.3 %
Company-owned domestic same store sales growth
7.3 %
6.0 %
Net income (in thousands)
$ 25,732
$ 19,511
Adjusted EBITDA (in thousands)
$ 53,672
$ 38,483
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(1) Including U.S. territories.
Fiscal third quarter 2024 financial results
Total revenue for the fiscal third quarter 2024 increased to $162.5 million from $117.1 million in the fiscal third quarter last year. Royalty revenue, franchise fees and other increased $21.2 million, of which $9.6 million was due to domestic same store sales growth of 20.9%, and $9.3 million was due to net new franchise development. Advertising fees increased $16.8 million due to a 39.4% increase in system-wide sales in the fiscal third 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 $7.4 million due to the addition of 10 net new company-owned restaurants since the prior fiscal third quarter and 7.3% company-owned domestic same store sales growth, driven primarily by an increase in transactions.
Cost of sales was $24.4 million compared to $17.6 million in the fiscal third quarter of the prior year. As a percentage of company-owned restaurant sales, cost of sales increased to 77.8% from 73.6% 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 third quarter. Our purchases in the prior fiscal third quarter were tied primarily to the spot market, which benefited from significant deflation in the cost of bone-in chicken wings.
Selling, general & administrative ("SG&A") expense increased $9.2 million to $32.3 million from $23.0 million in the fiscal third quarter of the prior year. The increase in SG&A expense was driven by an increase in performance-based stock compensation and incentive compensation expense of $4.9 million primarily related to the Company's performance, an increase in headcount related expenses of $2.8 million to support the growth in our business, an increase in consulting and other professional fees of $1.3 million associated with our strategic initiatives, including system implementation costs.
Depreciation and amortization increased $1.7 million to $5.1 million from $3.4 million in the fiscal third quarter of the prior year. The increase in depreciation and amortization was primarily due to depreciation expense for the software assets placed in service during the second fiscal quarter 2024 related to our MyWingstop technology platform.
Financial Outlook
The Company is reiterating guidance of approximately 20% domestic same store sales growth for fiscal year 2024.
Additionally, based on year-to-date results, the Company is providing updated guidance for 2024:
320 to 330 global net new units, previously 285 to 300;
Stock-based compensation expense of approximately $22.5 million, previously $20 million;
SG&A expense of between $117.5 - $118.5 million, previously $114 - 116 million; and
Depreciation and amortization of approximately $19 million, previously $18 - $19 million.
Restaurant Development
As of September 28, 2024, there were 2,458 Wingstop restaurants system-wide. This included 2,120 restaurants in the United States, of which 2,064 were franchised restaurants and 56 were company-owned, and 338 franchised restaurants were in international markets and U.S. territories. During the fiscal third quarter 2024, there were 106 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 October 29, 2024, our Board of Directors authorized and declared a quarterly dividend of $0.27 per share of common stock, resulting in a total dividend of approximately $7.9 million. This dividend will be paid on December 6, 2024 to stockholders of record as of November 15, 2024.
Share Repurchases
During the fiscal third quarter 2024, the Company repurchased and retired 93,617 shares of its common stock at an average price of $373.68 per share. As of September 28, 2024, $61.1 million remained available under the share repurchase program previously approved by the Company's Board of Directors.
The Company has repurchased and retired 815,431 shares of its common stock at an average price of $276.43 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, system implementation costs, 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 third 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 2235392. The replay will be available through Wednesday, November 6, 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 2,450 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 2,458 as of September 28, 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 ...
