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Good Times Reports 3rd Quarter Results

By: Good Times |  0 Shares     78 Reads

Restaurant-Level Operating Profit Increases 37%
Sixteenth Consecutive Quarter of Increased Same Store Sales
Fiscal Year 2014 Guidance Affirmed

GOLDEN, Colo. - August 07, 2014 - (BUSINESS WIRE) - Good Times Restaurants Inc. (NASDAQ: GTIM), operator of Good Times Burgers & Frozen Custard, a regional quick service restaurant chain focused on fresh, high quality, all natural products and of Bad Daddy's Burger Bar, a full service, upscale concept, today announced its unaudited financial results for the third fiscal quarter ended June 30, 2014.

Key highlights of the Company's report include:

• Same store sales for company-owned Good Times restaurants increased 12.5% for the quarter on top of last year's increase of 15.2% which was the sixteenth consecutive quarter of increasing same store sales
• Restaurant Level Operating Profit for Good Times restaurants (see schedule below) increased 37% or $380,000 over last year during the quarter
• The restaurant level operating margin for Good Times restaurants increased by 380 basis points to 19.7% from 15.9% last year during the quarter (see schedule below)
• Preopening costs related to the development of the initial Bad Daddy's Burger Bar restaurants in Colorado were $80,000 during the quarter
• Subsequent to the quarter's end, the Company announced the second Bad Daddy's restaurant in Colorado had opened at a weekly sales volume for the concept that was an all-time high for weekly sales for any Bad Daddy's restaurant, which is also over 3 times higher than the average weekly sales at the first Colorado Bad Daddy's
• The Affiliate Investment Loss from the Company's 48% ownership of Bad Daddy's Franchise Development LLC was $44,000 during the quarter related to initial development costs for the Bad Daddy's franchise program
• Income from Operations for the quarter increased to $316,000 this year, up from $235,000 in the prior year, including an increase in General and Administrative expenses this year related to the Company's expanded Investor Relations expenses and Bad Daddy's of Colorado initial operating losses and preopening expenses
• Net Income for the quarter increased to $272,000 from $208,000 last year, even with an increase in General and Administrative expenses of $159,000 from last year and with losses attributable to the initial Bad Daddy's development of $237,000 higher than in the same quarter last year
• The Company ended the quarter with $8.2 million in cash with minimal long term debt which includes the net proceeds from the exercise of approximately 97% of the B warrants

"Continuing our trend at Good Times, our sales gains continue to leverage our fixed and semi-fixed operating costs, translating into large increases in our restaurant profitability. While we have certain commodity cost pressures in beef, bacon and dairy, we've been able to maintain our gross profit margin through price increases and menu engineering. We again expect our Restaurant Level Operating Profit (see schedule below) from our Good Times Drive Thru Inc. subsidiary to exceed $4 million this fiscal year with Earnings Before Interest, Depreciation and Amortization (EBITDA) from Good Times Drive Thru Inc. of $1,300,000 to $1,500,000 compared to $496,000 last year, even with higher General and Administrative expenses related to expanded investor relations and professional services," said Boyd Hoback, President and CEO. "As we add additional Good Times restaurants to the Colorado market and allocate increased General and Administrative expenses to our BD of Colorado subsidiary and as those expenses are reduced as a percentage of total sales from the two concepts, we expect our Good Times Drive Thru Inc. subsidiary will continue to increase in profitability in fiscal 2015."

Hoback added, "The opening of our second Bad Daddy's at much higher sales levels than the system average is very gratifying and we expect it will significantly accelerate our achievement of profitability from the BD of Colorado subsidiary as early as our fourth fiscal quarter this year, but certainly in fiscal 2015 as the first store matures and we bring several new stores online. In our view, the third quarter margins are not representative of where we'll be with the concept as significant training costs are included in labor and our first store sales potential won't be fully realized until the area disruption is complete, but we wanted to break them out for full transparency. The rooftop patio and bar are unique to the second location; however, the overall customer response to the food and concept has been overwhelmingly positive, which we believe bodes particularly well for other similarly positioned sites we have in the pipeline for fiscal 2015. We plan to open our third store in Colorado prior to Thanksgiving in a large, upscale lifestyle shopping center in which we operate a high volume Good Times restaurant. The additional sites we have signed and that are under development more closely align with the site dynamics and characteristics of both our second store and the Bad Daddy's stores in North Carolina which have high levels of retail, daytime employment, traffic and visibility."

Regarding the Company's development plans for unit growth, Hoback said, "We have two of the anticipated three Good Times new stores under development and are negotiating the final terms for the third. After we open our third Bad Daddy's in Colorado this fall, we plan to open between five and eight Bad Daddy's in 2015, depending on the timing of new retail developments in which we are negotiating leases. On July 30, 2014 we closed on a development loan for $2.1 million at the Good Times Drive Thru Inc. subsidiary level specifically for the implementation of our new point of sale system and the development of three new restaurants. We anticipate using a portion of our cash flow generated from Good Times to complete the remodeling of existing restaurants in fiscal 2015 and allocate most of our cash on hand for the development of new Bad Daddy's restaurants. We also anticipate our existing franchisee in South Carolina will be developing additional Bad Daddy's stores in 2015 as well as signing other new multi-unit franchisees for new markets. However, at the same time, we believe we can rapidly add significant shareholder value through focusing on company-owned development of Bad Daddy's in BD of Colorado LLC."

About Good Times Restaurants Inc.

Good Times Restaurants Inc. (NASDAQ: GTIM) operates Good Times Burgers & Frozen Custard, a regional chain of quick service restaurants located primarily in Colorado, in its wholly owned subsidiary, Good Times Drive Thru Inc. Good Times provides a menu of high quality all natural hamburgers, 100% all natural chicken tenderloins, fresh frozen custard, fresh cut fries, fresh lemonades and other unique offerings. Good Times currently operates and franchises 36 restaurants.

GTIM will also own and operate Bad Daddy's Burger Bar restaurants through its wholly owned subsidiary, BD of Colorado LLC and will franchise Bad Daddy's Burger Bar restaurants through its 48% ownership of Bad Daddy's Franchise Development LLC. 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.

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, 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 30, 2013 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)
				Three Months Ended
				June 30,
Statement of Operations				2014					2013
Net Revenues:
Restaurant sales				$	7,464				$	6,394
Area development and franchise fees					6					0
Franchise revenues					102					93
Total net revenues					7,572					6,487
Restaurant Operating Costs:
Food and packaging costs					2,493					2,149
Payroll and other employee benefit costs					2,425					2,104
Restaurant occupancy costs					906					866
Other restaurant operating costs					336					260
New store preopening costs					80					29
Depreciation and amortization					180					169
Total restaurant operating costs					6,420					5,577
General and administrative costs					549					390
Advertising costs					292					275
Franchise costs					22					17
Loss (Gain) on disposal of restaurants and equipment					(7	)				(6	)
Income from Operations					316					234
Other Income (Expenses):
Interest expense, net					2					(2	)
Other income (expense)					(2	)				(1	)
Affiliate investment loss					(44	)				(23	)
Total other expenses, net					(44	)				(26	)
Net Income				$	272				$	208
Income attributable to non-controlling interest					(110	)				(67	)
Net Income attributable to Good Times Restaurants Inc.				$	162				$	141
Preferred stock dividends					0					30
Net Income attributable to common shareholders				$	162				$	111
Basic and diluted income (loss) per share:
Net income attributable to common shareholders				$	0.02				$	0.04
Weighted Average Common Shares Outstanding:
Basic					6,870					2,726
Diluted					7,001					2,801

 

				June 30,				September 30,
Balance Sheet Data				2014				2013
				(In thousands)
Cash & cash equivalents				$	8,188			$	6,143
Current assets					8,818				6,641
Property and Equipment, net					4,672				2,851
Other assets					619				383
Total assets				$	14,109			$	9,875
Current liabilities, including capital lease obligations and long-term debt due within one year					2,008				1,807
Long-term debt due after one year					8				20
Capital lease obligations due after one year					51				74
Other liabilities					638				653
Total liabilities				$	2,705			$	2,554
Stockholders’ equity				$	11,404			$	7,321

 

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

from Operations and Net Income

(In thousands, except percentage data)

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 table below sets forth certain unaudited information for the three months ended June 30, 2014 and June 30, 2013, expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenues.

				Good Times Drive Thru Inc.																		Bad Daddy’s of Colorado, LLC
				Three Months Ended																		Three Months Ended
				June 30, 2014									June 30, 2013									June 30, 2014
Restaurant Sales				$	7,076				98.5	%			$	6,394				98.6	%			$	388				100	%
Restaurant Operating Costs (exclusive of depreciation and amortization shown separately below):
Food and packaging costs					2,353				33.3	%				2,149				33.6	%				140				36.1	%
Payroll and other employee benefit costs					2,185				30.9	%				2,104				32.9	%				240				61.9	%
Restaurant occupancy costs					851				12.0	%				866				13.5	%				55				14.2	%
Other restaurant operating costs					292				4.1	%				260				4.1	%				44				11.3	%
Restaurant-level operating profit				$	1,395				19.7	%			$	1,015				15.9	%			$	(91	)			(23.5	%)
Add - Franchise royalties and fees					108				1.4	%				93				1.4	%
Deduct - Other operating:
Depreciation and amortization					158				2.2	%				168				2.6	%				22				5.7	%
General and administrative					488				6.8	%				389				6.0	%				41				10.6	%
Advertising costs					281				3.9	%				276				4.3	%				11				2.8	%
Franchise costs					22				0.3	%				17				0.3	%				0				0.0	%
Gain on disposal of restaurants and equipment					(7	)			(0.1	%)				(6	)			(.1	%)				0				0.0	%
Preopening costs					0				0.0	%				0				0.0	%				80				20.6	%
Total other operating				$	942				13.1	%			$	844				13.1	%			$	154				39.7	%
Income (loss) from Operations				$	561				7.8	%			$	264				4.1	%			$	(245	)			(63.1	%)

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.

Investor Contacts:

Boyd E. Hoback
Good Times Restaurants Inc.
303-384-1411
President and CEO

Christi Pennington
Good Times Restaurants Inc.
303-384-1440

Gary Heller
Good Times Restaurants Inc.
914-813-8547

Mike Porter
Porter, LeVay & Rose
212-564-4700

 

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