Good Times Restaurants Reports Q3 Results

  • Total Revenues Increase 20%
  • Consolidated Net Income Increases to $304,000
  • Initial Fiscal 2019 Guidance Provided
  • Conference Call Thursday, August 9, 2018, at 3:00 p.m. MT/5:00 p.m. ET

DENVER - (BUSINESS WIRE) - August 9, 2018 - 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 26, 2018.

Key highlights of the Company’s financial results include:

  • Same store sales for company-owned Good Times restaurants increased 3.8% for the quarter on top of last year’s increase of 3.7%. Year to date, same store sales increased 4.9% versus last year’s increase of 1.2%
  • Bad Daddy’s same store sales increased 0.5% during the quarter over the prior year’s increase of 0.1%. Year to date, same store sales increased 0.5% versus last year’s increase of 1.7%. Same store sales exclude the weeks during which the original Bad Daddy’s in Charlotte, NC was closed for remodeling. Total revenues increased 20% to $26,175,000 for the quarter
  • The Company opened two new Bad Daddy’s restaurants during the quarter for a total of five new restaurants opened through the third quarter of 2018. Subsequent to the end of the quarter, the Company opened an additional two restaurants and expects to open two more before the end of the fiscal year for a total of nine new restaurants in fiscal 2018
  • Sales for the Bad Daddy’s restaurants for the quarter increased 37% versus last year to $17,765,000
  • Restaurant Level Operating Profit (a non-GAAP measure) increased 26.8% to $4,779,000 (18.4% as a percent of sales) from $3,770,000 (17.5% as a percent of sales)*
  • Adjusted EBITDA (a non-GAAP measure) for the quarter increased 36.6% to $1,907,000 from $1,396,000 last year*
  • The Company ended the quarter with $3.2 million in cash and $5.1 million of long-term debt

Boyd Hoback, President & CEO, said, “We are very pleased with our continued growth in same store sales at both brands as well as our improved operating margins. Our class of 2018 Bad Daddy’s openings have been very strong on average and we anticipate they will be settling into a sales trend post-honeymoon at or above our system average. We are now operating in seven different metropolitan areas and are on track to enter three to four additional new areas in fiscal 2019, as we continue our expansion focused primarily on the Southeast.”

Regarding initial fiscal 2019 guidance, Ryan Zink, Chief Financial Officer, commented, “The strength of our new Bad Daddy’s restaurants opened during the 2018 fiscal year has generated cash for development which has limited our need to incur any significant incremental debt, and that has created a strong foundation on which to continue development in 2019. With this growth, we expect Adjusted EBITDA of between $7.6 and $8.1 million for the 2019 fiscal year, with an estimated run rate at the end of the fiscal year that approaches $10 million, consistent with our prior commentary projecting continued 40% annual growth in our Adjusted EBITDA.”

Fiscal 2018 Outlook:

The Company provided the following guidance for fiscal 2018:

  • Total revenues of approximately $99 million to $100 million with a year-end revenue run rate of approximately $110 million
  • Total revenue estimates assume same store sales of approximately +1% for Good Times and flat to slightly positive for Bad Daddy’s in Q4
  • General and administrative expenses of approximately $7.9 million, including approximately $500,000 of non-cash equity compensation expense
  • The opening of a total of 4 new Bad Daddy’s restaurants (including 1 joint venture unit) in Q4, for a total of 9 new restaurants during the full fiscal year
  • Total Adjusted EBITDA* of approximately $5.4 million to $5.6 million
  • Restaurant pre-opening expenses of approximately $2.7 million
  • Capital expenditures (net of tenant improvement allowances and sale-leaseback proceeds) of approximately $8.5 to $9.0 million including approximately $0.6 million related to fiscal 2019 development
  • Fiscal year-end long term debt of approximately $9.0 to $9.5 million

Fiscal 2019 Outlook:

The Company provided the following initial guidance for fiscal 2019:

  • Total revenues of approximately $120 million to $123 million with a year-end revenue run rate of approximately $130 million
  • Total revenue estimates assume same store sales of approximately +2% for Good Times, excluding Q2 where we project flat comparable sales, and assumes +1% for Bad Daddy’s
  • General and administrative expenses of approximately $8.7 to $9.0 million, including approximately $600,000 of non-cash equity compensation expense
  • The opening of a total of 7 - 9 new company-owned Bad Daddy’s restaurants
  • Total Adjusted EBITDA* of approximately $7.6 million to $8.1 million
  • Restaurant pre-opening expenses of approximately $2.5 million to $3.0 million
  • Capital expenditures (net of tenant improvement allowances) of approximately $11.0 – $11.5 million
  • Fiscal year-end long term debt of approximately $13.0 - $13.5 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 2018 financial results on Thursday, August 9, 2018 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 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, through 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 36 restaurants.

GTIM also owns, operates, franchises and licenses 31 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 26, 2017 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)

 
      Third Quarter     Year to Date
Statement of Operations     2018     2017     2018     2017
Net revenues:                        
Restaurant sales     $ 25,990       $ 21,518       $ 71,929       $ 55,981  
Franchise Revenues       185         184         515         515  
Total net revenues       26,175         21,702         72,444         56,496  
                         
Restaurant Operating Costs:                        
Food and packaging costs       7,833         6,822         22,154         17,591  
Payroll and other employee benefit costs       9,155         7,546         26,076         20,216  
Restaurant occupancy costs       1,850         1,484         5,278         4,207  
Other restaurant operating costs       2,373         1,896         6,626         5,003  
New store preopening costs       610         819         1,683         1,737  
Depreciation and amortization       937         753         2,665         2,086  
Total restaurant operating costs       22,758         19,320         64,482         50,840  
                         
General and administrative costs       2,069         1,831         5,884         5,222  
Advertising costs       565         514         1,587         1,357  
Franchise costs       11         28         32         80  
Asset Impairment Costs       0         0         72         0  
Loss (gain) on restaurant asset sale       (9 )       (6 )       (26 )       (17 )
Income (loss) from operations       781         15         413         (986 )
                         
Other income (expense):                        
Interest income (expense), net       (96 )       (49 )       (270 )       (105 )
Other income (expense), net       0         (1 )       0         (1 )
Total other income (expense), net       (96 )       (50 )       (270 )       (106 )
                         
Net Income (loss):     $ 685         ($35 )     $ 143         ($1,092 )
Income attributable to non-controlling interest       (381 )       (212 )       (853 )       (499 )

Net income (loss) attributable to Good Times Restaurants Inc.

    $ 304         ($247 )       ($710 )       ($1,591 )
                         
Basic and diluted income (loss) per share     $ 0.02         ($0.02 )       ($0.06 )       ($0.13 )
                         

Weighted average common shares outstanding - basic

      12,468,326         12,301,007         12,460,467         12,296,793  

Weighted average common shares outstanding - diluted

      12,665,172         N/A         N/A         N/A  
                                         
                                         

 

Good Times Restaurants Inc.
Unaudited Supplemental Information

($ in thousands)

 
          Jun. 26, 2018     Sep. 26, 2017
Balance Sheet Data:                
Cash & cash equivalents           3,186       4,337
Current assets           5,120       6,066
Property and Equipment, net           33,113       29,560
Other assets           19,359       19,397
Total assets         $ 57,592     $ 55,153
                 

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

          7,944       6,916
Long-term debt due after one year           5,126       5,339
Other liabilities           7,204       5,614
Total liabilities         $ 20,274     $ 17,869
Stockholders’ equity         $ 37,318     $ 37,284
                     
                     

 

      Good Times Burgers & Frozen Custard     Bad Daddy’s Burger Bar
      Third Quarter     Year to Date     Third Quarter     Year to Date
      2018     2017     2018     2017     2018     2017     2018     2017
                                                 
Restaurant sales     $ 8,225     $ 8,546     $ 23,223     $ 22,310     $ 17,765     $ 12,972     $ 48,706     $ 33,671
Restaurants open during period       0       0       0       1       2       3       5       5
Restaurants closed during period       1       0       2       0                        
Restaurants open at period end       26       28       26       28       27       21       27       21
Restaurant operating weeks       342.0       364.0       1,062.0       1,068.3       337.6       249.6       970.4       690.9
Average weekly sales per restaurant     $ 24.0     $ 23.5     $ 21.9     $ 20.9     $ 52.6     $ 52.0     $ 50.2     $ 48.7
                                                                 
                                                                 

 

Reconciliation of Non-GAAP Measurements to US GAAP Results

 

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

(In thousands, except percentage data)

 
      Good Times Burgers &
Frozen Custard
    Bad Daddy’s
Burger Bar
    Good Times
Restaurants Inc.
     

Fiscal Third Quarter

      2018     2017     2018     2017     2018   2017
                                   
Restaurant sales     $ 8,225   100.0 %     $ 8,546   100.0 %     $ 17,765   100.0 %     $ 12,972   100.0 %     $ 25,990     $ 21,518  
Restaurant operating costs (exclusive of
depreciation and amortization shown
separately below):
                                                 
Food and packaging costs       2,654   32.3 %       2,792   32.7 %       5,179   29.2 %       4,030   31.1 %       7,833       6,822  
Payroll and other employee benefit costs       2,716   33.0 %       2,846   33.3 %       6,439   36.2 %       4,700   36.2 %       9,155       7,546  
Restaurant occupancy costs       694   8.4 %       693   8.1 %       1,156   6.5 %       791   6.1 %       1,850       1,484  
Other restaurant operating costs       648   7.9 %       680   8.0 %       1,725   9.7 %       1,216   9.4 %       2,373       1,896  
Restaurant-level operating profit     $ 1,513   18.4 %     $ 1,535   18.0 %       3,266   18.4 %     $ 2,235   17.2 %       4,779       3,770  
                                                   
Franchise royalty income, net                                               185       184  
                                                   
Deduct - other operating:                                                  
Depreciation and amortization                                               937       753  
General and administrative                                               2,069       1,831  
Advertising costs                                               565       514  
Franchise costs                                               11       28  
Loss (gain) on restaurant asset sale                                               (9 )     (6 )
Preopening costs                                               610       819  
Total other operating                                               4,183       3,939  
                                                   
Income (loss) from operations                                             $ 781     $ 15  
 

Certain percentage amounts in the table above do not total due to rounding.

 

Reconciliation of Non-GAAP Measurements to US GAAP Results

 

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

(In thousands, except percentage data)

 

 
      Good Times Burgers &
Frozen Custard
    Bad Daddy’s
Burger Bar
    Good Times
Restaurants Inc.
     

Year to Date

      2018     2017     2018     2017     2018     2017
                                     
Restaurant sales     $ 23,223   100.0 %     $ 22,310   100.0 %     $ 48,706   100.0 %     $ 33,671   100.0 %     $ 71,929       $ 55,981  
Restaurant operating costs (exclusive of
depreciation and amortization shown
separately below):
                                                   
Food and packaging costs       7,615   32.8 %       7,191   32.2 %       14,539   29.9 %       10,400   30.9 %       22,154         17,591  
Payroll and other employee benefit costs       8,074   34.8 %       7,706   34.5 %       18,002   37.0 %       12,510   37.2 %       26,076         20,216  
Restaurant occupancy costs       2,164   9.3 %       2,075   9.3 %       3,114   6.4 %       2,132   6.3 %       5,278         4,207  
Other restaurant operating costs       1,891   8.1 %       1,833   8.2 %       4,735   9.7 %       3,170   9.4 %       6,626         5,003  
Restaurant-level operating profit       3,479   15.0 %     $ 3,505   15.7 %       8,316   17.1 %     $ 5,459   16.2 %       11,795         8,964  
                                                     
Franchise royalty income, net                                               515         515  
                                                     
Deduct - Other operating:                                                    
Depreciation and amortization                                               2,665         2,086  
General and administrative                                               5,884         5,222  
Advertising costs                                               1,587         1,357  
Franchise costs                                               32         80  
Loss (gain) on restaurant asset sale                                               (26 )       (17 )
Asset impairment charge                                               72         0  
Preopening costs                                               1,683         1,737  
Total other operating                                               11,897         10,465  
                                                     
Income (loss) from operations                                             $ 413       $ (986 )
 

Certain percentage amounts in the table above do not total due to rounding.

 

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 fiscal third quarters and year to date for fiscal 2018 and fiscal 2017, 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 Loss to Non-GAAP Adjusted EBITDA

(In thousands)

 
Good Times Restaurants Inc.
      Third Quarter     Year to Date
      2018     2017     2018     2017
                         
Net income (loss) as reported     $ 304         ($247 )       ($710 )       ($1,591 )
                         
Adjustments to net income (loss):                        
Depreciation and amortization       897         727         2,550         2,001  
Interest expense, net       97         50         272         108  
EBITDA     $ 1,298       $ 530       $ 2,112       $ 518  
Preopening costs       565         685         1,541         1,400  
Non-cash stock-based compensation       88         205         303         609  
GAAP rent in excess of cash rent       (35 )       (18 )       (51 )       (34 )
Non-cash disposal of assets       (9 )       (6 )       (26 )       (17 )
Asset impairment charge       0         0         72         0  
Adjusted EBITDA     $ 1,907       $ 1,396       $ 3,951       $ 2,476  
                                         

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20180809005501/en/

Investor Relations Contacts:

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

Ryan M. Zink
Good Times Restaurants Inc.
303-384-1432
Chief Financial Officer

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

SOURCE Good Times Restaurants Inc.

###

Comments:

comments powered by Disqus

Franchise News Room »


News By Industry »


Featured Opportunities

True REST Float Spa
Be on the ground floor of taking this movement mainstream by joining the established market leader today!
Discovery Point Child Development Centers®
• 30 years of brand strength in educational childcare • Only childcare franchise with a flat fee system (vs. fees based on % of your total...
Copper Branch
No chef or previous restaurant experience required. Well established provider network controls both food and labour cost, guarantees a consistent...
Chronic Tacos
Chronic Tacos is a California inspired authentic Mexican grill that celebrates the individuality of our customers. We have developed restaurants...
Sky Zone
Sky Zone created, built and franchises the first of its kind wall-to-wall trampoline playing courts with unlimited purposes and endless possibilities.
Share This Page

Subscribe to Franchising Express

A Franchise Update Media Production
Franchise Update Media
P.O. Box 20547
San Jose, CA 95160
PH. (408) 402-5681
In Loving Memory Of Timothy Gardner (1987-2014)

Copyright © 2001 - 2018.
All Rights Reserved.