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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200211005953/en/
GOOD TIMES RESTAURANTS INC. CONTACTS: Ryan Zink, Acting
Chief Executive Officer Chief Financial Officer and Treasurer (303)
384-1432 Christi Pennington (303) 384-1440
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