Wingstop, Inc. (WING) has reported a 13.24 percent fall in profit for the quarter ended Sep. 24, 2016. The company has earned $2.75 million, or $0.09 a share in the quarter, compared with $3.17 million, or $0.11 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $3.73 million, or $0.13 a share compared with $3.17 million or $0.11 a share, a year ago.
Revenue during the quarter grew 13.99 percent to $21.81 million from $19.13 million in the previous year period. Gross margin for the quarter contracted 8 basis points over the previous year period to 72.07 percent. Total expenses were 72.12 percent of quarterly revenues, up from 69.41 percent for the same period last year. That has resulted in a contraction of 271 basis points in operating margin to 27.88 percent.
Operating income for the quarter was $6.08 million, compared with $5.85 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $8.32 million compared with $6.54 million in the prior year period. At the same time, adjusted EBITDA margin improved 395 basis points in the quarter to 38.14 percent from 34.20 percent in the last year period.
President and Chief Executive Officer Charlie Morrison stated, "Our ‘category of one’ brand positioning and focus on unit development, revenue growth, and profitability are enabling us to deliver consistently strong quarterly performances, including a very solid third quarter. Based upon our results to date and expectations for a strong finish to the fiscal year, we are pleased to be raising our annual guidance."
For fiscal year 2016, Wingstop expects revenue to be in the range of $90.50 million to $91.50 million. The Company forecasts net income to be in the range of $14.60 million to $15.10 million. and projects adjusted net income to be in the range of $16 million to $16.50 million. It projects diluted earnings per share to be in the range of $0.55 to $0.57 on adjusted basis.
Cash and cash equivalents stood at $3.83 million as on Sep. 24, 2016, down 33.04 percent or $1.89 million from $5.72 million on Sep. 26, 2015.
Working capital turns negative
Working capital of Wingstop, Inc. has turned negative to $4.49 million on Sep. 24, 2016 from positive $3.55 million on Sep. 26, 2015. Current ratio was at 0.72 as on Sep. 24, 2016, down from 1.30 on Sep. 26, 2015.
Days sales outstanding went down to 11 days for the quarter compared with 12 days for the same period last year.
At the same time, days payable outstanding was almost stable at 22 days for the quarter, when compared with the previous year period.
Debt increases substantially
Wingstop has witnessed an increase in total debt over the last one year. It stood at $157.43 million as on Sep. 24, 2016, up 64.85 percent or $61.93 million from $95.50 million on Sep. 26, 2015. Short-term debt stood at $3.50 million as on Sep. 24, 2016. Total debt was 140.14 percent of total assets as on Sep. 24, 2016, compared with 81.49 percent on Sep. 26, 2015.
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