Press Release

Good Times Restaurants Reports Results for the First Quarter Ending December 31, 2019

Company Release - 2/11/2020 4:05 PM ET

DENVER--(BUSINESS WIRE)-- Good Times Restaurants Inc. (Nasdaq: GTIM), operator of Bad Daddy’s Burger Bar, a full-service premium burger bar concept, and Good Times Burgers & Frozen Custard, a regional quick-service restaurant chain, today reported financial results for the fiscal first quarter ended December 31, 2019.

Key highlights of the Company’s financial results include:

  • Total Revenues increased 21.5% to $30.8 million for the quarter
  • Total Restaurant Sales for Bad Daddy’s restaurants increased 25.0% to $22.8 million for the quarter
  • The Company opened two Bad Daddy’s restaurants during the first quarter, in Charleston and Columbia, South Carolina
  • Same Store Sales for company-owned Bad Daddy’s restaurants decreased 3.4% for the quarter
  • Total Restaurant Sales for Good Times restaurants increased $0.9 million for the quarter to $7.8 million
  • Same Store Sales for company-owned Good Times restaurants increased 5.8% for the quarter
  • Net Loss Attributable to Common Shareholders was $0.8 million for the quarter
  • Adjusted EBITDA* (a non-GAAP measure) for the quarter was $1.5 million
  • The Company ended the quarter with $3.3 million in cash and $14.4 million drawn against its senior credit facility

Ryan M. Zink, the Company’s Acting Chief Executive Officer, said, “I am pleased with the progress our team is making in turning our near-term primary focus towards service, hospitality, and operational excellence within our existing restaurants. Our first quarter of fiscal 2020 saw the addition of two new Bad Daddy’s restaurants, which continue to perform well as our operators embrace the objective to serve our guests with unmatched hospitality from day one. Additionally, we continue to experience same-store sales strength at our Good Times Burgers and Frozen Custard concept as we improve our service speed and order accuracy, while still providing the same high-quality, all-natural burgers our customers have come to expect.”

Mr. Zink continued, “Although we still experienced year-over-year margin erosion in our quarterly results, we made improvements sequentially throughout the quarter and significantly narrowed the year-over-year margin gap from where we ended fiscal 2019. We expect to make additional progress throughout the rest of this year. As a result of our fiscal calendar, we had an extra operating week during the first quarter, which in the current year consisted of fourteen weeks. This extra week contributed approximately $2.5 million of incremental revenues, contributed $0.3 million of incremental adjusted EBITDA, and reduced net loss by $0.2 million for the quarter. Same store sales at Bad Daddy’s continues to be an opportunity that we are keenly focused on, and to support this, beyond our operations initiatives we expect to moderately increase our advertising spending during the second and third fiscal quarters.”

Fiscal 2020 Outlook:

Additionally, the Company updated its guidance for fiscal 2020:

  • Total revenues of approximately $120 to $123 million
  • Total revenue estimates assume generally flat same store sales at Bad Daddy’s initially decreasing by approximately 3% but trending flat by the end of the fiscal year, and at Good Times increasing by an average of approximately 3.5% during the remainder of the fiscal year
  • General and administrative expenses of approximately $8.5 to $8.7 million including approximately $400,000 to $450,000 of non-cash equity compensation expense
  • The opening of up to one additional Bad Daddy’s Burger Bar during the fourth quarter
  • Net loss of approximately $0.3 to $0.5 million, including approximately $1.2 million of pre-opening costs
  • Total adjusted EBITDA* between $6.3 and $6.5 million
  • Capital expenditures (net of tenant improvement allowances) of approximately $2.8 million including approximately $0.7 million related to the two restaurants opened in October and December 2019.
  • Fiscal year-end long-term debt of approximately $12.2 to $12.7 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 first quarter 2020 financial results on Tuesday, February 11, 2020 at 3:00 p.m. MT/5:00 p.m. ET. Hosting the call will be Ryan M. Zink its Acting Chief Executive Officer and its Chief Financial Officer and Treasurer.

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 39 Bad Daddy’s Burger Bar restaurants through its wholly owned subsidiaries. Bad Daddy’s Burger Bar is a full-service “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 33 Good Times Burgers & Frozen Custard restaurants focused on fresh, high quality, all-natural products which are 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 24, 2019 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 First Quarter

 

(14 weeks)

 

(13 weeks)

Statement of Operations

2020

 

2019

Net revenues:

 

 

 

Restaurant sales

$

30,593

 

 

$

25,147

 

Franchise revenues

 

221

 

 

 

218

 

Total net revenues

 

30,814

 

 

 

25,365

 

 

 

 

Restaurant Operating Costs:

 

 

 

Food and packaging costs

 

9,032

 

 

 

7,523

 

Payroll and other employee benefit costs

 

11,819

 

 

 

9,553

 

Restaurant occupancy costs

 

2,438

 

 

 

1,965

 

Other restaurant operating costs

 

3,276

 

 

 

2,670

 

Pre-opening costs

 

802

 

 

 

627

 

Depreciation and amortization

 

1,079

 

 

 

1,034

 

Total restaurant operating costs

 

28,446

 

 

 

23,372

 

 

 

 

General and administrative costs

 

2,213

 

 

 

1,974

 

Advertising costs

 

546

 

 

 

623

 

Franchise costs

 

-

 

 

 

7

 

Gain on disposal of restaurants and equipment

 

(19

)

 

 

(30

)

Loss from operations

 

(372

)

 

 

(581

)

 

 

 

Other expense:

 

 

 

Interest expense, net

 

(227

)

 

 

(160

)

Other expenses

 

-

 

 

 

(1

)

Total other expense, net

 

(227

)

 

 

(161

)

Net loss

 

(599

)

 

 

(742

)

Income attributable to non-controlling interests

 

(212

)

 

 

(309

)

Net loss attributable to common shareholders

$

(811

)

 

$

(1,051

)

 

 

 

Basic and diluted loss per share

$

(0.06

)

 

$

(0.08

)

 

 

 

Basic and diluted weighted average common shares outstanding

 

12,597

 

 

 

12,505

 

Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands)

  
 

December 31, 2019

 

September 24, 2019

Balance Sheet Data

 

 

 

 

Cash and cash equivalents

 

$

3,292

 

$

2,745

 

 

 

 

 

Total assets1

 

$

112,886

 

$

59,905

 

 

 

 

 

Long-term debt due after one year

 

 

14,350

 

 

12,850

 

 

 

 

 

Stockholders’ equity

 

$

26,586

 

$

27,398

1 Includes approximately $51.9 million of operating lease right of use assets recorded during the first quarter of 2020 as a result of the adoption of Accounting Standards Update 2016-02, Leases (Topic 842).

 

Supplemental Information for Company-Owned Restaurants (dollars in thousands):

 

 

Bad Daddy’s Burger Bar

 

Good Times Burgers &
Frozen Custard

 

Fiscal First Quarter

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

Restaurant sales

$

22,813

 

$

18,250

 

$

7,780

 

$

6,897

Restaurants opened during period

 

2

 

 

1

 

 

-

 

 

-

Restaurants closed during period

 

-

 

 

-

 

 

-

 

 

-

Restaurants open at period end

 

37

 

 

32

 

 

26

 

 

26

 

 

 

 

 

 

 

 

Restaurant operating weeks

 

508.6

 

 

410.3

 

 

364

 

 

338

 

 

 

 

 

 

 

 

Average weekly sales per restaurant

$

44.9

 

$

44.5

$

21.4

$

20.4 

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

 

December 31, 2019

 

December 25, 2018

 

December 31, 2019

 

December 25, 2018

 

Dec 31,
2019

 

Dec 25,
2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant sales

$

22,813

100.0

%

$

18,250

100.0

%

$

7,780

100.0

%

$

6,897

100.0

%

 

$

30,593

 

$

25,147

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and packaging costs

 

6,618

 

29.0

%

 

 

5,269

 

28.9

%

 

 

2,414

 

31.0

%

 

 

2,254

 

32.7

%

 

 

9,032

 

 

 

7,523

 

Payroll and benefits costs

 

8,841

 

38.8

%

 

 

6,982

 

38.3

%

 

 

2,978

 

38.3

%

 

 

2,571

 

37.3

%

 

 

11,819

 

 

 

9,553

 

Restaurant occupancy costs

 

1,644

 

7.2

%

 

 

1,277

 

7.0

%

 

 

794

 

10.2

%

 

 

688

 

10.0

%

 

 

2,438

 

 

 

1,965

 

Other restaurant operating costs

 

2,565

 

11.2

%

 

 

2,041

 

11.2

%

 

 

711

 

9.1

%

 

 

629

 

9.1

%

 

 

3,276

 

 

 

2,670

 

Restaurant-level operating profit

$

3,145

 

13.8

%

 

$

2,681

 

14.7

%

 

$

883

 

11.3

%

 

$

755

 

10.9

%

 

$

4,028

 

 

$

3,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

221

 

 

 

218

 

Deduct - Other operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,079

 

 

 

1,034

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,213

 

 

 

1,974

 

Advertising costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

546

 

 

 

623

 

Franchise costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

7

 

Gain on restaurant asset sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19

)

 

 

(30

)

Pre-opening costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

802

 

 

 

627

 

Total other operating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,621

 

 

 

4,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(372

)

 

$

(581

)

     

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 like 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 2020 and fiscal 2019, 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 (Thousands of US Dollars)

 

 

Fiscal Quarter Ended

 

December 31, 2019

 

December 25, 2018

Adjusted EBITDA:

 

 

 

Net loss, as reported

$

(811

)

 

$

(1,051

)

Depreciation and amortization 1

 

1,069

 

 

 

993

 

Interest expense, net

 

227

 

 

 

160

 

EBITDA

 

485

 

 

 

102

 

Pre-opening expense 1

 

801

 

 

 

605

 

Non-cash stock-based compensation

 

75

 

 

 

112

 

Non-recurring severance costs

 

41

 

 

 

-

 

GAAP rent-cash rent difference

 

121

 

 

 

(43

)

Gain on disposal of assets

 

(9

)

 

 

(9

)

Adjusted EBITDA

$

1,514

 

 

$

767

 

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.

__________________________

1 Depreciation and amortization, and preopening expense have been reduced by any amounts attributable to non-controlling interests.

GOOD TIMES RESTAURANTS INC. CONTACTS:
Ryan Zink, Acting Chief Executive Officer
Chief Financial Officer and Treasurer (303) 384-1432
Christi Pennington (303) 384-1440

Source: Good Times Restaurants Inc.