Press Release

Good Times Restaurants Reports Q3 Results

Company Release - 8/8/2019 4:05 PM ET

Total Revenues Increased 12% to $29.5 Million in Q3
Consolidated Net Income Increases to $540,000 for the Quarter

Conference Call Thursday, August 8, 2019, at 3:00 p.m. MT/5:00 p.m. ET

DENVER--(BUSINESS WIRE)-- Good Times Restaurants Inc. (Nasdaq: GTIM), operator of Bad Daddy’s Burger Bar, a full-service, upscale burger bar concept, and Good Times Burgers & Frozen Custard, a regional quick-service restaurant chain focused on fresh, high quality, all natural products, today announced its preliminary unaudited financial results for the third fiscal quarter ended June 25, 2019.

Key highlights of the Company’s financial results include:

  • Total revenues increased 12% to $29.5 million for the quarter
  • Total Restaurant Sales for Bad Daddy’s restaurants increased 18.7% to $21.1 million and Bad Daddy’s Restaurant Level Operating Profit* (a non-GAAP measure) was $3.4 million or 16.3% of sales
  • Same store sales for company-owned Bad Daddy’s restaurants decreased 0.7% and for Good Times restaurants increased 2.8%
  • Total Restaurant Sales for Good Times restaurants were $8.1 million and Good Times Restaurant Level Operating Profit* (a non-GAAP measure) was $1.5 million or 18.0% as a percent of sales
  • Net Income Attributable to Common Shareholders was $540,000 for the quarter
  • Adjusted EBITDA* (a non-GAAP measure) for the quarter was $2.1 million
  • The Company ended the quarter with $2.6 million in cash and $11.2 million drawn against its senior credit facility

Boyd Hoback, President and CEO, said, “We’ve seen a strong turnaround in our Good Times sales trends once we returned to normal year over year weather patterns, which has accelerated subsequent to the end of the quarter. Bad Daddy’s same store sales were impacted by some competitive intrusion around two restaurants as well as minor remodeling of another restaurant. We have four additional Bad Daddy’s currently under construction in the Nashville, TN; Huntsville, AL; Charleston, SC; and Columbia, SC markets. We expect two of those to open prior to the end of fiscal 2019, and two to open shortly after the end of our fiscal year.”

Commenting on the Company’s earnings guidance, Ryan Zink, Chief Financial Officer, stated, “Our updated guidance for the year calls for Adjusted EBITDA of approximately $5.2 to $5.4 million, reflecting margin compression from wage inflation and delivery commissions on stronger-than expected delivery sales, coupled with reduced on-premise revenue expectations. We anticipate we will provide guidance for fiscal 2020 prior to the end of our fiscal year as we finalize our pace of growth, but we expect the development of at least five new Bad Daddy’s during fiscal 2020.”

Fiscal 2019 Outlook:

The Company updated its guidance for fiscal 2019 to reflect adjustments to expected store openings and unit volumes through the balance of the year:

  • Total revenues of approximately $110 million
  • Total revenue estimates assume same-store sales decreases of approximately 1% for the balance of the year for Bad Daddy’s
  • General and administrative expenses of approximately $8.6 million including approximately $450,000 of non-cash equity compensation expense
  • The opening of two additional Bad Daddy’s restaurants before the end of fiscal 2019
  • Net loss of approximately $1.6 to $1.8 million, including approximately $1.7 million of pre-opening costs
  • Total Adjusted EBITDA* between $5.2 and $5.4 million
  • Capital expenditures (net of tenant improvement allowances) of approximately $6.9 to $7.2 million including approximately $2.0 million related to fiscal 2020 development, primarily two stores expected to open in October 2019. This does not include the use of approximately $3.0 million of cash in the previously disclosed acquisition of the non-controlling interest in three Bad Daddy’s restaurants.
  • Fiscal year-end long-term debt of approximately $13.0 to $13.3 million

*For a reconciliation of restaurant level operating profit and Adjusted EBITDA to the most directly comparable financial measures presented in accordance with GAAP and a discussion of why the Company considers them useful, see the financial information schedules accompanying this release.

Conference Call: Management will host a conference call to discuss its third quarter 2019 financial results on Thursday, August 8, 2019 at 3:00 p.m. MT/5:00 p.m. ET. Hosting the call will be Boyd Hoback, President and Chief Executive Officer, and Ryan Zink, Chief Financial Officer.

The conference call can be accessed live over the phone by dialing (888) 339-0806 and requesting the Good Times Restaurants (GTIM) call. The conference call will also be webcast live from the Company's corporate website www.goodtimesburgers.com. An archive of the webcast will be available at the same location on the corporate website shortly after the call has concluded.

About Good Times Restaurants Inc.: Good Times Restaurants Inc. (GTIM) owns, operates, franchises and licenses 35 Bad Daddy’s Burger Bar restaurants through its wholly-owned subsidiaries. Bad Daddy’s Burger Bar is a full service, upscale, “small box” restaurant concept featuring a chef-driven menu of gourmet signature burgers, chopped salads, appetizers and sandwiches with a full bar and a focus on a selection of craft microbrew beers in a high energy atmosphere that appeals to a broad consumer base. Additionally, through its wholly-owned subsidiaries, Good Times Restaurants Inc. operates and franchises a regional quick service restaurant chain consisting of 34 Good Times Burgers & Frozen Custard restaurants, located primarily in Colorado.

Good Times Forward-Looking Statements: This press release contains forward-looking statements within the meaning of federal securities laws. The words “intend,” “may,” “believe,” “will,” “should,” “anticipate,” “expect,” “seek” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, which may cause the Company’s actual results to differ materially from results expressed or implied by the forward-looking statements. These risks include such factors as the uncertain nature of current restaurant development plans and the ability to implement those plans and integrate new restaurants, delays in developing and opening new restaurants because of weather, local permitting or other reasons, increased competition, cost increases or shortages in raw food products, and other matters discussed under the Risk Factors section of Good Times’ Annual Report on Form 10-K for the fiscal year ended September 25, 2018 filed with the SEC. Although Good Times may from time to time voluntarily update its forward-looking statements, it disclaims any commitment to do so except as required by securities laws.

Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands, except per share amounts)

 

 

 

Fiscal Quarter Ended

 

Year-To-Date

Statement of Operations

June 25,
2019

 

June 26,
2018

 

June 25,
2019

 

June 26,
2018

Net revenues:

 

 

 

 

Restaurant sales

$

29,180

 

$

25,990

 

$

81,281

 

$

71,929

 

Franchise revenues

 

277

 

 

273

 

 

718

 

 

778

 

Total net revenues

 

29,457

 

 

26,263

 

 

81,999

 

 

72,707

 

 

 

 

 

Restaurant operating costs:

 

 

 

 

Food and packaging costs

 

8,529

 

 

7,833

 

 

23,955

 

 

22,154

 

Payroll and other employee benefit costs

 

10,677

 

 

9,155

 

 

30,458

 

 

26,076

 

Restaurant occupancy costs

 

2,091

 

 

1,850

 

 

6,221

 

 

5,278

 

Other restaurant operating costs

 

2,989

 

 

2,373

 

 

8,401

 

 

6,626

 

Preopening costs

 

129

 

 

610

 

 

949

 

 

1,683

 

Depreciation and amortization

 

1,104

 

 

937

 

 

3,227

 

 

2,665

 

Total restaurant operating costs

 

25,519

 

 

22,758

 

 

73,211

 

 

64,482

 

 

 

 

 

General and administrative costs

 

2,144

 

 

2,069

 

 

6,398

 

 

5,884

 

Advertising costs

 

666

 

 

653

 

 

1,841

 

 

1,850

 

Franchise costs

 

8

 

 

11

 

 

31

 

 

32

 

Asset impairment charge

 

-

 

 

-

 

 

-

 

 

72

 

Gain on disposal of restaurants and equipment

 

44

 

 

(9

)

 

5

 

 

(26

)

Income from operations

 

1,076

 

 

781

 

 

513

 

 

413

 

 

 

 

 

Other income (expense):

 

 

 

 

Interest income (expense), net

 

(202

)

 

(96

)

 

(561

)

 

(270

)

Other income

 

(1

)

 

-

 

 

(1

)

 

-

 

Total other income (expense), net

 

(203

)

 

(96

)

 

(562

)

 

(270

)

Net income (loss)

 

873

 

 

685

 

 

(49

)

 

143

 

Income attributable to non-controlling interests

 

(333

)

 

(381

)

 

(912

)

 

(853

)

Net income (loss) attributable to common shareholders

$

540

 

$

304

 

$

(961

)

$

(710

)

 

 

 

 

Basic and diluted income (loss) per share

$

0.04

 

$

0.02

 

$

(0.08

)

$

(0.06

)

 

 

 

 

Basic weighted average common shares outstanding

 

12,523

 

 

12,468

 

 

12,517

 

 

12,460

 

Diluted weighted average common shares outstanding

 

12,723

 

 

12,665

 

 

12,517

 

 

12,460

 

 

Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands)

 

 

 

June 25,
2019

 

September 25,
2018

Balance Sheet Data

 

 

 

Cash and cash equivalents

$

2,619

 

$

3,477

 

 

 

 

Current assets

$

4,560

 

$

6,381

Property and equipment, net

 

36,666

 

 

35,245

Other assets

 

19,330

 

 

19,324

Total assets

$

60,556

 

$

60,950

 

 

 

 

Current liabilities, including capital lease obligations and long-term debt due within one year

$

7,801

 

$

8,335

Long-term debt due after one year

 

11,150

 

 

7,472

Other liabilities

 

8,290

 

 

7,922

Total liabilities

$

27,241

 

$

23,729

 

 

 

 

Stockholders’ equity

$

33,315

 

$

37,221

 

 

Bad Daddy’s
Burger Bar

 

Good Times Burgers &
Frozen Custard

 

Fiscal Quarter Ended

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Restaurant sales (in thousands)

$

21,080

 

$

17,765

 

$

8,100

 

$

8,225

Restaurants opened during period

 

-

 

 

2

 

 

-

 

 

0

Restaurants closed during period

 

-

 

 

-

 

 

-

 

 

1

Restaurants open at period end

 

33

 

 

27

 

 

26

 

 

26

 

 

 

 

 

 

 

 

Restaurant operating weeks

 

429.0

 

 

337.6

 

 

338

 

 

342.0

 

 

 

 

 

 

 

 

Average weekly sales per restaurant (in thousands)

$

49.1

 

$

52.6

 

$

24.0

 

$

24.0

 

Bad Daddy’s
Burger Bar

 

Good Times Burgers &
Frozen Custard

 

Year-To-Date Period Ended

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Restaurant sales (in thousands)

$

59,714

 

$

48,706

 

$

21,567

 

$

23,223

Restaurants opened during period

 

2

 

 

5

 

 

-

 

 

0

Restaurants closed during period

 

-

 

 

-

 

 

-

 

 

2

Restaurants open at period end

 

33

 

 

27

 

 

26

 

 

26

 

 

 

 

 

 

 

 

Restaurant operating weeks

 

1,267.3

 

 

970.4

 

 

1,053.0

 

 

1,062.0

 

 

 

 

 

 

 

 

Average weekly sales per restaurant (in thousands)

$

47.1

 

$

50.2

 

$

20.5

 

$

21.9

Reconciliation of Non-GAAP Measurements to U.S. GAAP Results

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income from Operations

(In thousands, except percentage data)

 

Bad Daddy’s Burger Bar

 

Good Times Burgers &
Frozen Custard

 

Good Times
Restaurants Inc.

 

Fiscal Quarter Ended

 

June 25,
2019

 

June 26,
2018

 

June 25,
2019

 

June 26,
2018

 

June 25,
2019

 

June 26,
2018

 

 

 

 

 

 

 

 

 

 

 

 

$

21,080

100.0

%

$

17,765

100.0

%

$

8,100

100.0

%

$

8,225

100.0

%

$

29,180

$

25,990

 

Restaurant operating costs (exclusive of depreciation and amortization shown separately below):

 

 

 

 

 

 

 

 

 

 

Food and packaging costs

 

6,063

28.8

%

 

5,179

29.2

%

 

2,466

30.4

%

 

2,654

32.3

%

 

8,529

 

7,833

 

Payroll and benefits costs

 

7,851

37.2

%

 

6,439

36.2

%

 

2,826

34.9

%

 

2,716

33.0

%

 

10,677

 

9,155

 

Restaurant occupancy costs

 

1,391

6.6

%

 

1,156

6.5

%

 

700

8.6

%

 

694

8.4

%

 

2,091

 

1,850

 

Other restaurant operating costs

 

2,339

11.1

%

 

1,725

9.7

%

 

650

8.0

%

 

648

7.9

%

 

2,989

 

2,373

 

Restaurant-level operating profit

$

3,436

16.3

%

 

3,266

18.4

%

$

1,458

18.0

%

$

1,513

18.4

%

$

4,894

 

4,779

 

 

 

 

 

 

 

 

 

 

 

 

Franchise advertising contributions and net royalty income

 

 

 

 

 

 

 

 

 

277

 

273

 

Deduct - Other operating:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

1,104

 

937

 

General and administrative

 

 

 

 

 

 

 

 

 

2,144

 

2,069

 

Advertising costs

 

 

 

 

 

 

 

 

 

666

 

653

 

Franchise costs

 

 

 

 

 

 

 

 

 

8

 

11

 

Gain (Loss) on restaurant asset sale

 

 

 

 

 

 

 

 

 

44

 

(9

)

Asset impairment charge

 

 

 

 

 

 

 

 

 

-

 

-

 

Preopening costs

 

 

 

 

 

 

 

 

 

129

 

610

 

Total other operating

 

 

 

 

 

 

 

 

 

4,095

 

4,271

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

 

 

 

 

 

 

$

1,076

$

781

 

Certain percentage amounts in the table above do not total due to rounding as well as the fact that restaurant operating costs are expressed as a percentage of restaurant revenues (as opposed to total revenues).

Reconciliation of Non-GAAP Measurements to U.S. GAAP Results

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income from Operations

(In thousands, except percentage data)

 

Bad Daddy’s Burger Bar

Good Times Burgers &
Frozen Custard

Good Times
Restaurants Inc.

 

Year-To-Date

 

June 25,
2019

June 26,
2018

June 25,
2019

June 26,
2018

June 26,
2019

June 25,
2018

 

 

 

 

 

 

 

 

 

 

 

Restaurant sales

$

59,714

100.0

%

$

48,706

100.0

%

$

21,567

100.0

%

$

23,223

100.0

%

$

81,281

$

71,929

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant operating costs (exclusive of depreciation and amortization shown separately below):

 

 

 

 

 

 

 

 

 

 

Food and packaging costs

 

17,136

28.7

%

 

14,539

29.9

%

 

6,819

31.6

%

 

7,615

32.8

%

 

23,955

 

22,154

 

Payroll and other employee benefit costs

 

22,502

37.7

%

 

18,002

37.0

%

 

7,956

36.9

%

 

8,074

34.8

%

 

30,458

 

26,076

 

Restaurant occupancy costs

 

4,022

6.7

%

 

3,114

6.4

%

 

2,199

10.2

%

 

2,164

9.3

%

 

6,221

 

5,278

 

Other restaurant operating costs

 

6,560

11.0

%

 

4,735

9.7

%

 

1,841

8.5

%

 

1,891

8.1

%

 

8,401

 

6,626

Restaurant-level operating profit

$

9,494

15.9

%

 

8,316

17.1

%

$

2,752

12.8

%

 

3,479

15.0

%

 

12,246

 

11,795

 

 

 

 

 

 

 

 

 

 

 

 

Franchise royalty income, net

 

 

 

 

 

 

 

 

 

718

 

778

 

Deduct - Other operating:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

3,227

 

2,665

 

General and administrative

 

 

 

 

 

 

 

 

 

6,398

 

5,884

 

Advertising costs

 

 

 

 

 

 

 

 

 

1,841

 

1,850

 

Franchise costs

 

 

 

 

 

 

 

 

 

31

 

32

 

Gain (Loss) on restaurant asset sale

 

 

 

 

 

 

 

 

 

5

 

(26

)

Asset impairment charge

 

 

 

 

 

 

 

 

 

-

 

72

 

Preopening costs

 

 

 

 

 

 

 

 

 

949

 

1,683

 

Total other operating

 

 

 

 

 

 

 

 

 

12,451

 

12,160

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

 

 

 

 

 

 

$

513

$

413

 

Certain percentage amounts in the table above do not total due to rounding as well as the fact that restaurant operating costs are expressed as a percentage of restaurant revenues (as opposed to total revenues).

The Company believes that restaurant-level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. The Company defines restaurant-level operating profit to be restaurant revenues minus restaurant-level operating costs, excluding restaurant closures and impairment costs. The measure includes restaurant-level occupancy costs, which include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance and other property costs, but excludes depreciation. The measure excludes depreciation and amortization expense, substantially all of which is related to restaurant level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes selling, general and administrative costs, and therefore excludes occupancy costs associated with selling, general and administrative functions, and pre-opening costs. The Company excludes restaurant closure costs as they do not represent a component of the efficiency of continuing operations. Restaurant impairment costs are excluded, because similar to depreciation and amortization, they represent a non-cash charge for the Company’s investment in its restaurants and not a component of the efficiency of restaurant operations. Restaurant-level operating profit is not a measurement determined in accordance with generally accepted accounting principles (“GAAP”) and should not be considered in isolation, or as an alternative, to income from operations or net income as indicators of financial performance. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies. The tables above set forth certain unaudited information for the current and prior year fiscal quarters and year-to-date periods for fiscal 2019 and fiscal 2018, expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenues.

Reconciliation of Net Income (Loss) to Non-GAAP Adjusted EBITDA

 

Fiscal Quarter Ended

 

Year-to-Date

 

June 25,
2019

 

June 26,
2018

 

June 25,
2019

 

June 26,
2018

Adjusted EBITDA:

 

 

 

 

Net Income (Loss), as reported

$

540

 

$

304

 

$

(961

)

$

(710

)

Depreciation and amortization

 

1,096

 

 

897

 

 

3,157

 

 

2,550

 

Interest expense, net

 

202

 

 

97

 

 

561

 

 

272

 

EBITDA

 

1,838

 

$

1,298

 

 

2,757

 

$

2,112

 

Preopening expense

 

128

 

 

565

 

 

928

 

 

1,541

 

Non-cash stock-based compensation

 

110

 

 

88

 

 

331

 

 

303

 

GAAP rent-cash cash difference

 

(44

)

 

(35

)

 

(50

)

 

(51

)

Gain (Loss) on disposal of assets

 

44

 

 

(9

)

 

5

 

 

(26

)

Asset impairment charge

 

-

 

 

0

 

 

-

 

 

72

 

Adjusted EBITDA

$

2,076

 

$

1,907

 

$

3,971

 

$

3,951

 

Adjusted EBITDA is a supplemental measure of operating performance that does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by GAAP, and our calculation thereof may not be comparable to that reported by other companies. This measure is presented because we believe that investors' understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for evaluating our ongoing results of operations.

Adjusted EBITDA is calculated as net income before interest expense, provision for income taxes and depreciation and amortization and further adjustments to reflect the additions and eliminations presented in the table above.

Adjusted EBITDA is presented because: (i) we believe it is a useful measure for investors to assess the operating performance of our business without the effect of non-cash charges such as depreciation and amortization expenses and asset disposals, closure costs and restaurant impairments, and (ii) we use adjusted EBITDA internally as a benchmark for certain of our cash incentive plans and to evaluate our operating performance or compare our performance to that of our competitors. The use of adjusted EBITDA as a performance measure permits a comparative assessment of our operating performance relative to our performance based on our GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. Companies within our industry exhibit significant variations with respect to capital structures and cost of capital (which affect interest expense and income tax rates) and differences in book depreciation of property, plant and equipment (which affect relative depreciation expense), including significant differences in the depreciable lives of similar assets among various companies. Our management believes that adjusted EBITDA facilitates company-to-company comparisons within our industry by eliminating some of these foregoing variations. Adjusted EBITDA, as presented, may not be comparable to other similarly-titled measures of other companies, and our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by excluded or unusual items.

GOOD TIMES RESTAURANTS INC CONTACTS:
Boyd E. Hoback, President and Chief Executive Officer, (303) 384-1411
Ryan Zink, Chief Financial Officer, (303) 384-1432
Christi Pennington, (303) 384-1440

Source: Good Times Restaurants Inc.