Wingstop Inc.WING

Wingstop Inc. Fair Value Disclosure

10-KFiled Feb 18, 20262 min read
(4)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. Certain assets are measured at fair value on a non-recurring basis using Level 3 inputs. The fair value of the Company’s preferred equity investment in the Company’s United Kingdom master franchisee Lemon Pepper Holdings Ltd. (“LPH”) was estimated using a discounted cash flow model that incorporates unobservable inputs, including expected cash flows, discount rates, and an assumed maturity term of approximately five years.
Based on this valuation approach, the estimated fair value of the preferred investment was determined at $87.5 million. The carrying value of the investment as of December 27, 2025 was $85.6 million, net of an allowance for credit losses of $5.1 million.
Fair value of debt and the investment in debt securities are determined on a non-recurring basis, which results are summarized as follows (in thousands):
 
Fair Value
Hierarchy
 December 27, 2025December 28, 2024
  
Carrying
Value
Fair Value
Carrying
Value
Fair Value
Securitized Financing Facility:
2020-1 Class A-2 Senior Secured Notes (1)
Level 2$472,800 $456,961 $472,800 $439,846 
2022-1 Class A-2 Senior Secured Notes (1)
Level 2$248,125 $240,061 $248,125 $230,905 
2024-1 Class A-2 Senior Secured Notes (1)
Level 2$500,000 $514,500 $500,000 $496,050 
Investments in bonds of LPH (2)
Level 3$85,597 $87,482 $3,699 $4,560 
(1) The fair value of the 2020-1, 2022-1, and 2024-1 Class A-2 Senior Secured Notes was estimated using available market information.
(2) The fair value approximates discounted cash flows using current market rates for debt investments with similar maturities and credit risk. Refer to Note 10 for additional information regarding the Company’s investments
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.

Historical Timeline

Fiscal YearFiled
2025Feb 18, 2026Showing above
2024Feb 19, 2025
2023Feb 21, 2024
2022Feb 22, 2023
2021Feb 16, 2022
2020Feb 18, 2021
2019Feb 19, 2020
2018Feb 27, 2019
2017Feb 23, 2018
2016Mar 3, 2017
2015Mar 4, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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