Good Times Restaurants Reports Results for the Fiscal Fourth Quarter and Year Ended September 24, 2019
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Good Times Restaurants Reports Results for the Fiscal Fourth Quarter and Year Ended September 24, 2019

DENVER - (BUSINESS WIRE) - December 12, 2019 - 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 focused on fresh, high-quality, all-natural products, today reported financial results for the fiscal fourth quarter and year ended September 24, 2019.

Key highlights of the Company’s financial results include:

  • Total Revenues increased 7.0% to $28.8 million for the quarter and 11.2% to $110.8 million for the year
  • Total Restaurant Sales for Bad Daddy’s restaurants increased 7.0% to $20.0 million for the quarter and increased 18.3% to $79.8 million for the year
  • The Company opened two Bad Daddy’s restaurants during the fourth quarter, bringing the total new development for the year to four restaurants
  • Total Restaurant Sales for Good Times restaurants increased $0.6 million for the quarter to $8.5 million and decreased $1.1 million to $30.0 million for the year
  • Same Store Sales for company-owned Bad Daddy’s restaurants decreased 1.3% for the quarter and decreased 0.2% for the year
  • Same Store Sales for company-owned Good Times restaurants increased 7.2% for the quarter and decreased 0.4% for the year
  • Net Loss Attributable to Common Shareholders was $4.2 million for the quarter including $2.8 million of asset impairment costs, $0.8 million of pre-opening costs, and $0.8 million of accrued non-recurring severance costs in connection with the separation of the Company’s former CEO in October 2019
  • For the year, Net Loss Attributable to Common Shareholders was $5.1 million
  • Adjusted EBITDA* (a non-GAAP measure) for the quarter was $1.5 million and $5.4 million for the year
  • The Company ended the quarter with $2.7 million in cash and $12.9 million drawn against its senior credit facility

Ryan M. Zink, the Company’s Acting Chief Executive Officer, said, “Fiscal 2019 saw significant erosion in margins, primarily due to higher wage costs and significant opt-in by our customers to our third-party delivery option, as well as the de-leveraging impact of lower unit volumes at some of our class of 2018 and the first of our class of 2019 restaurants. Our focus during fiscal 2020 has shifted from unit growth to stabilization of margins and earnings growth through improving unit-level performance at our existing restaurants. We have opened four restaurants during the past three months, all of which are performing at or above our sales target for new restaurants. Our guidance for fiscal 2020 calls for Adjusted EBITDA of approximately $6.0 to $6.2 million, reflecting the expectation that we will stabilize EBITDA margins on a year-over-year basis with a view that such margins will be expansionary in future years, coupled with new restaurant development resuming in fiscal 2021.”

Fiscal 2020 Outlook:

Additionally, the Company provided guidance for fiscal 2020:

  • Total revenues of approximately $120 to $123 million
  • Total revenue estimates assume generally flat same store sales for the year for Bad Daddy’s and same store sales increases of approximately 3.5% for Good Times
  • 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
  • No additional restaurant openings during fiscal 2020
  • Net loss of approximately $0.5 to $0.7 million, including approximately $0.9 million of pre-opening costs
  • Total Adjusted EBITDA* between $6.0 and $6.2 million
  • Capital expenditures (net of tenant improvement allowances) of approximately $1.7 million including approximately $0.6 million related to the two stores opened in October and December 2019.
  • Fiscal year-end long-term debt of approximately $10.7 to $11.2 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 fourth quarter 2019 financial results on Thursday, December 12, 2019 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 34 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 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)

 

 

 

September 24,
2019

 

September 25,
2018

Balance Sheet Data

 

 

 

 

Cash and cash equivalents

 

$

2,745

 

$

3,477

 

 

 

 

 

Current assets

 

$

4,915

 

$

6,381

Property and equipment, net

 

 

35,677

 

 

35,245

Other assets

 

 

19,313

 

 

19,324

Total assets

 

$

59,905

 

$

60,950

 

 

 

 

 

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

 

$

9,228

 

$

8,335

Long-term debt due after one year

 

 

12,850

 

 

7,472

Other liabilities

 

 

8,907

 

 

7,922

Total liabilities

 

$

30,985

 

$

23,729

 

 

 

 

 

Stockholders’ equity

 

$

28,920

 

$

37,221

 

Supplemental Information (dollars in thousands):

 

 

Bad Daddy’s Burger Bar

 

Good Times Burgers &
Frozen Custard

 

 

Fiscal Fourth Quarter

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Restaurant sales

 

$

20,039

 

$

18,722

 

$

8,480

 

$

7,913

Restaurants opened during period

 

 

2

 

 

5

 

 

-

 

 

-

Restaurants closed during period

 

 

-

 

 

-

 

 

-

 

 

-

Restaurants open at period end

 

 

35

 

 

31

 

 

26

 

 

26

 

 

 

 

 

 

 

 

 

Restaurant operating weeks

 

 

432

 

 

367

 

 

338

 

 

338

 

 

 

 

 

 

 

 

 

Average weekly sales per restaurant

 

$

46.4

 

$

51.0

 

$

25.1

 

$

23.4

         

 

 

Bad Daddy’s Burger Bar

 

Good Times Burgers &
Frozen Custard

 

 

Fiscal Year

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Restaurant sales

 

$

79,753

 

$

67,428

 

$

30,047

 

$

31,136

Restaurants opened during period

 

 

4

 

 

9

 

 

-

 

 

0

Restaurants closed during period

 

 

-

 

 

-

 

 

-

 

 

2

Restaurants open at period end

 

 

35

 

 

31

 

 

26

 

 

26

 

 

 

 

 

 

 

 

 

Restaurant operating weeks

 

 

1,699

 

 

1,341

 

 

1,699

 

 

1,400

 

 

 

 

 

 

 

 

 

Average weekly sales per restaurant

 

$

46.9

 

$

50.3

 

$

22.2

 

$

22.2

                       

 

 

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

 

 

September 24,
2019

 

September 25,
2018

 

September 24,
2019

 

September 25,
2018

 

Sept 24,
2019

 

Sept 25,
2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant sales

 

$

20,039

 

100.0

%

 

$

18,722

 

100.0

%

 

$

8,480

 

100.0

%

 

$

7,913

 

100.0

%

 

$

28,519

 

 

$

26,635

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and packaging costs

 

 

5,869

 

29.3

%

 

 

5,509

 

29.4

%

 

 

2,647

 

31.2

%

 

 

2,593

 

32.8

%

 

 

8,516

 

 

 

8,102

 

Payroll and benefits costs

 

 

7,721

 

38.5

%

 

 

6,859

 

36.6

%

 

 

3,042

 

35.9

%

 

 

2,718

 

34.3

%

 

 

10,763

 

 

 

9,577

 

Restaurant occupancy costs

 

 

1,392

 

6.9

%

 

 

1,234

 

6.6

%

 

 

742

 

8.8

%

 

 

749

 

9.4

%

 

 

2,134

 

 

 

1,983

 

Other restaurant operating costs

 

 

2,334

 

11.6

%

 

 

1,984

 

10.6

%

 

 

735

 

8.7

%

 

 

673

 

8.5

%

 

 

3,069

 

 

 

2,657

 

Restaurant-level operating profit

 

$

2,723

 

13.6

%

 

$

3,136

 

16.8

%

 

$

1,314

 

15.5

%

 

$

1,180

 

14.9

%

 

$

4,037

 

 

$

4,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise advertising contributions and net royalty income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

240

 

 

 

229

 

Deduct - Other operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,118

 

 

 

1,040

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,063

 

 

 

1,973

 

Advertising costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

511

 

 

 

472

 

Franchise costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

9

 

Gain on restaurant asset sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

 

(9

)

Asset impairment charge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,771

 

 

 

-

 

Pre-opening costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

825

 

 

 

1,101

 

Total other operating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,285

 

 

 

4,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(4,008

)

 

$

(41

)

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

 

 

September 24,
2019

 

September 25,
2018

 

September 24,
2019

 

September 25,
2018

 

Sept 24,
2019

 

Sept 25,
2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant sales

 

$

79,753

 

100.0

%

 

$

67,428

 

100.0

%

 

$

30,047

 

100.0

%

 

$

31,136

 

100.0

%

 

$

109,800

 

 

$

98,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and packaging costs

 

 

23,006

 

28.8

%

 

 

20,048

 

29.7

%

 

 

9,465

 

31.5

%

 

 

10,208

 

32.8

%

 

 

32,471

 

 

 

30,256

 

Payroll and other employee benefit costs

 

 

30,224

 

37.9

%

 

 

24,861

 

36.9

%

 

 

10,997

 

36.6

%

 

 

10,792

 

34.7

%

 

 

41,221

 

 

 

35,653

 

Restaurant occupancy costs

 

 

5,413

 

6.8

%

 

 

4,348

 

6.4

%

 

 

2,942

 

9.8

%

 

 

2,913

 

9.4

%

 

 

8,355

 

 

 

7,261

 

Other restaurant operating costs

 

 

8,894

 

11.2

%

 

 

6,719

 

10.0

%

 

 

2,576

 

8.6

%

 

 

2,564

 

8.2

%

 

 

11,470

 

 

 

9,283

 

Restaurant-level operating profit

 

$

12,216

 

15.3

%

 

$

11,452

 

17.0

%

 

$

4,067

 

13.5

%

 

$

4,659

 

14.9

%

 

$

16,283

 

 

$

16,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise royalty income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

958

 

 

 

1,007

 

Deduct - Other operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,345

 

 

 

3,705

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,461

 

 

 

7,857

 

Advertising costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,352

 

 

 

2,322

 

Franchise costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

 

41

 

Gain on restaurant asset sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

(35

)

Asset impairment charge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,771

 

 

 

72

 

Pre-opening costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,774

 

 

 

2,784

 

Total other operating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,736

 

 

 

16,746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(3,495

)

 

$

372

 

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 (Thousands of US Dollars)

 

 

Fiscal Quarter Ended

 

Year-to-Date

 

 

Sept 24,
2019

 

Sept 25,
2018

 

Sept 24,
2019

 

Sept 25,
2018

Adjusted EBITDA:

 

 

 

 

 

 

 

 

Net loss, as reported

 

$

(4,176

)

 

$

(324

)

 

$

(5,137

)

 

$

(1,034

)

Depreciation and amortization 1

 

 

1,105

 

 

 

977

 

 

 

4,262

 

 

 

3,528

 

Interest expense, net

 

 

191

 

 

 

118

 

 

 

753

 

 

 

391

 

EBITDA

 

 

(2,880

)

 

 

771

 

 

 

(122

)

 

 

2,885

 

Pre-opening expense 1

 

 

824

 

 

 

922

 

 

 

1,752

 

 

 

2,463

 

Non-cash stock-based compensation

 

 

388

 

 

 

114

 

 

 

719

 

 

 

417

 

Non-recurring severance costs

 

 

731

 

 

 

-

 

 

 

731

 

 

 

-

 

GAAP rent-cash rent difference

 

 

(61

)

 

 

7

 

 

 

(111

)

 

 

(44

)

Gain on disposal of assets

 

 

(9

)

 

 

(9

)

 

 

(5

)

 

 

(35

)

Asset impairment charge 1

 

 

2,476

 

 

 

-

 

 

 

2,476

 

 

 

72

 

Adjusted EBITDA

 

$

1,469

 

 

$

1,805

 

 

$

5,440

 

 

$

5,758

 

                 

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, pre-opening expense, and asset impairment charge have been reduced by any amounts attributable to non-controlling interests.

Contacts:

Ryan Zink
Good Times Restaurants Inc.
Acting Chief Executive Officer
Chief Financial Officer and Treasurer
(303) 384-1432

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

SOURCE Good Times Restaurants Inc.

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