Good Times Restaurants Reports Q3 Results

  • Total Revenues +40% with Restaurant Level Operating Profit +33% in Q3*
  • Adjusted EBITDA +21% in Q3*
  • Conference Call Wednesday, August 10, 2016, at 3:00 p.m. MDT/5:00 p.m. EDT

DENVER - August 10, 2016 - (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 Bad Daddy’s Burger Bar, a full service, upscale concept today announced its preliminary unaudited financial results for the third fiscal quarter ended June 30, 2016.

Key highlights of the Company’s financial results include:

  • Same store sales for company-owned Bad Daddy’s restaurants increased 3.6% for the quarter and increased 3.8% for the year
  • Same store sales for company-owned Good Times restaurants decreased 2.0% for the quarter and increased 0.8% for the year on top of last year’s increase of 4.8% for the quarter and 6.9% for the year
  • Total revenues increased 40% to $18,066,000 for the quarter and increased 60% to $47,222,000 for the year
  • The Company opened one new Bad Daddy’s restaurant during the quarter for a total of five new restaurants opened since the beginning of the fiscal year
  • Sales for the company-owned Good Times restaurants for the quarter were $7,715,000 and Restaurant Level Operating Profit (a non-GAAP measure) was $1,508,000 or 19.5% as a percent of sales *
  • Sales for the Bad Daddy’s restaurants for the quarter were $10,164,000 and Restaurant Level Operating Profit (a non-GAAP measure) was $1,889,000 or 18.6% as a percent of sales *
  • Adjusted EBITDA (a non-GAAP measure) for the quarter increased 21% to $1,432,000 from $1,188,000 and increased 41% to $2,317,000 from $1,641,000 for the year*

The Company ended the quarter with $7.2 million in cash

*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.

Boyd Hoback, President & CEO said, “We are very pleased with our continued sales growth at Bad Daddy’s and have several initiatives in place to resume our same store sales growth at Good Times. This is our first quarter in 23 quarters that we have not had positive same store sales at Good Times, reflecting the impact of the intense discounting and value pricing environment. We plan to open our sixth new Bad Daddy’s this year on September 2, 2016 and are excited about our accelerated growth plan for fiscal 2017.”

The Company also announced that it is changing its fiscal year end to a 52/53-week year ending on the last Tuesday of September consisting of four 13-week quarters. This results in a change in the 2016 fiscal year end from September 30, 2016 to September 27, 2016. Fiscal year 2017 will be 52 weeks long and will end on September 26, 2017.

2016 guidance

The Company currently anticipates the following for fiscal 2016:

  • Total revenues of approximately $64.3 million to $64.5 million including an approximately $550,000 negative impact from the change in the fiscal year from September 30 to September 27
  • Total revenue estimates assume same store sales for the balance of the year of approximately -1% to -2% for Good Times and +1% to +2% for Bad Daddy’s
  • General and administrative expenses of approximately $6.2 million to $6.3 million, including approximately $725,000 of non-cash equity compensation expense
  • The opening of 1 new Bad Daddy’s restaurant in September 2016
  • Total Adjusted EBITDA* of approximately $3.3 including an approximately $150,000 negative impact from the change in the fiscal year
  • Restaurant pre-opening expenses of approximately $1.8 million
  • Capital expenditures (net of tenant improvement allowances) of approximately $5.5 million to $6.5 million

Preliminary 2017 outlook

The Company provides the following preliminary guidance for fiscal 2017:

  • Total revenues of approximately $80 million to $84 million with a year end revenue run rate of approximately $94 million to $98 million
  • Total revenue estimates assume same store sales of approximately +1% to +2% for Good Times ranging from -1% to +1% in Q1 and Q2 and +3% to +3.5% in Q3 and Q4 and +1% to +2% for Bad Daddy’s
  • General and administrative expenses of approximately $7.0 million to $7.2 million, including approximately $900,000 of non-cash equity compensation expense
  • The opening of 9 to 11 new Bad Daddy’s restaurants (including 2 joint venture units) and 1 new Good Times restaurant
  • Total Adjusted EBITDA* of approximately $4.5 million to $5.0 million
  • Restaurant pre-opening expenses of approximately $3.5 million
  • Capital expenditures (net of tenant improvement allowances) of approximately $14.1 million including approximately $1.8 million related to fiscal 2018 development

Conference Call

Management will host a conference call to discuss its third quarter 2016 financial results on Wednesday, August 10, 2016 at 3:00 p.m. MDT/5:00 p.m. EDT. Hosting the call will be Boyd Hoback, President and Chief Executive Officer, and Jim Zielke, 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 under the Investor section. 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) 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, natural cut fries, fresh lemonades and other unique offerings. Good Times currently operates and franchises a total of 37 restaurants.

GTIM owns, operates, franchises and licenses 18 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.

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 30, 2015 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.

For full wide spreadsheet reports go to: [http://investors.goodtimesburgers.com/file/Index?KeyFile=35453840].

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 three months and nine months ended June 30, 2016 and June 30, 2015, expressed as a percentage of restaurant revenues.

         

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

         

Good Times Restaurants Inc.

       
         
    Three Months Ended
June 30,
  Nine Months Ended
June 30,
     

2016

     

2015

     

2016

     

2015

 
Net income (loss) as reported   $ 547     $ 106       ($1,250 )     ($739 )
Adjustments to net income (loss):                
Depreciation and amortization     558       335       1,506       829  
Interest expense, net     24       21       90       22  
EBITDA     1,129       462       346       112  
Preopening expense     127       156       1,428       578  
Non-cash stock based compensation     177       165       532       317  
Non-recurring acquisition costs     0       365       0       562  
GAAP rent in excess of cash rent     6       47       30       91  
Non-cash disposal of assets     (7 )     (7 )     (19 )     (19 )
Adjusted EBITDA   $ 1,432     $ 1,188     $ 2,317     $ 1,641  
                             

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.

SOURCE Good Times Restaurants Inc.

Contacts:

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

Jim Zielke
Good Times Restaurants Inc.
Investor Relations
Chief Financial Officer
303-384-1432

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

###

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