Total Revenues increased 11% to $25.4 million
in Q1Company announces buyout of JV partnersCompany reaffirms
fiscal 2019 guidanceConference Call Thursday, February 7, 2019, at
3:00 p.m. MST/5:00 p.m. EST
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 first fiscal quarter ended December 25, 2018.
Key highlights of the Company’s financial results
include:
- Total revenues increased 11% to
$25,370,000 for the quarter
- Total Restaurant Sales for Bad Daddy’s
restaurants increased 21.8% to $18,250,000 and Bad Daddy’s
Restaurant Level Operating Profit* (a non-GAAP measure) was
$2,738,000 or 15.0% as a percent of sales
- Same store sales for company-owned Bad
Daddy’s restaurants increased 0.2% for the quarter on top of last
year’s increase of 0.7%
- The Company opened one new Bad Daddy’s
restaurant during the quarter
- Total Restaurant Sales for Good Times
restaurants were $6,897,000 and Good Times Restaurant Level
Operating Profit* (a non-GAAP measure) was $785,000 or 11.4% as a
percent of sales
- Net Loss Attributable to Common
Shareholders was $1.1 million for the quarter
- Adjusted EBITDA* (a non-GAAP measure)
for the quarter was $767,000
- The Company ended the quarter with $2.4
million in cash and $10.2 million drawn against its senior credit
facility
- Subsequent to the end of the quarter
the Company announced that it has purchased the non-controlling
interests in three existing Bad Daddy’s restaurants in the Raleigh,
NC market
Boyd Hoback, President & CEO, said, “During our first
quarter, while we continued to post favorable same store sales
results for Bad Daddy’s, our Good Times same store sales were
significantly impacted by more inclement weather compared to the
prior year and were down 5.2% during the quarter. Two Bad Daddy’s
restaurants that were opened at the very end of fiscal 2018 and the
one opened during the quarter have had slower starts as compared to
the bigger honeymoon periods we experienced on new stores in fiscal
2018. However, subsequent to the end of the quarter we opened our
fourth store in the Raleigh, NC market which has again experienced
significantly above average weekly sales during its first four
weeks. We are also reporting the purchase of the non-controlling
interests in the other three restaurants in the Raleigh market,
which is our highest average unit sales market in the system. We
paid approximately $3 million for the trailing twelve-month cash
flow of approximately $600,000 and we believe we can improve that
cash flow stream by an additional 25% with more control over the
restaurants by the end of the fiscal year, which would equate to an
effective multiple of approximately four times cash flow.”
Commenting on the Company’s earnings guidance, Ryan Zink, Chief
Financial Officer, stated, “We are generally reaffirming our
guidance, which calls for Adjusted EBITDA of approximately $6.0 to
$6.5 million and the opening of five new Bad Daddy’s restaurants
for the 2019 fiscal year. Due to the acquisition of the
Raleigh-area non-controlling interests, our expected total capital
expenditures and end-of-year balance on our credit facility have
each increased by approximately $3 million.”
Fiscal 2019 Outlook:
The Company reiterated its guidance for fiscal 2019:
- Total revenues of approximately $112
million to $114 million with a year-end revenue run rate of
approximately $120 million
- Total revenue estimates assume same
store sales of approximately -3% to -4% for the year for Good
Times. We expect same store sales of +1% to +2% for the year for
Bad Daddy’s
- General and administrative expenses of
approximately $8.4 million to $8.6 million, including approximately
$500,000 of non-cash equity compensation expense
- The opening of 5 new Bad Daddy’s
restaurants
- Net loss of approximately $1.0 million
including pre-opening expenses of approximately $1.7 million
- Total Adjusted EBITDA* of approximately
$6.0 million to $6.5 million
- Capital expenditures (net of tenant
improvement allowances) of approximately $10.0 to $10.5, $3 million
associated with the acquisition of the Raleigh joint venture
non-controlling interests, and $7.0 – 7.5 million other capital
expenditures, including approximately $0.6 million related to
fiscal 2020 development
- Fiscal year-end long-term debt of
approximately $13.5 to $14.0 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 2019 financial results on Thursday,
February 7 at 3:00 p.m. MST/5:00 p.m. EST. 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) owns, operates, franchises and licenses 35 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.
Additionally, through its wholly-owned subsidiaries, Good Times
Restaurants Inc. operates and franchises a regional quick service
restaurant chain consisting of 35 Good Times Burgers & Frozen
Custard restaurants, 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, except per share
amounts)
Fiscal First Quarter Statement of Operations
2019 2018 Net revenues:
Restaurant sales $ 25,147 $ 22,597 Franchise revenues
223 251 Total net
revenues 25,370 22,848 Restaurant Operating Costs: Food and
packaging costs 7,523 7,203 Payroll and other employee benefit
costs 9,553 8,279 Restaurant occupancy costs 1,965 1,640 Other
restaurant operating costs 2,583 2,116 Preopening costs 627 577
Depreciation and amortization
1,034
846 Total restaurant operating costs
23,285 20,661 General and administrative costs 2,061 1,917
Advertising costs 628 595 Franchise costs 7 10 Gain on disposal of
restaurants and equipment
(30 )
(8 ) Loss from operations (581 )
(327 ) Other expense: Interest expense, net (160 ) (83 )
Other expenses
(1 )
- Total other expense, net
(161 ) (83
) Net loss (742 ) (410 ) Income attributable to
non-controlling interests
(309 )
(173 ) Net loss attributable to
common shareholders
$ (1,051
) $ (583 )
Basic and diluted loss per share ($0.08 ) ($0.05 )
Basic and diluted weighted average common sharesoutstanding 12,505
12,445
Good Times Restaurants Inc.
Unaudited Supplemental
Information
(In thousands)
December 25,2018 September 25,
2018
Balance Sheet Data Cash & cash equivalents
$ 2,447 $ 3,477
Current assets 5,197 6,381 Property and Equipment, net
36,302 35,245 Other assets
19,333
19,324 Total assets
$ 60,832
$ 60,950
Current liabilities, including capital
lease obligations and long-term debt due within one
year
$ 6,419 $ 8,335 Long-term debt due after one year 10,217 7,472
Other liabilities
8,080
7,922 Total liabilities
24,716
23,729 Stockholders’ equity
$ 36,116 $
37,221
Supplemental Information (Company
Operated Restaurants):
Good Times Burgers &Frozen
Custard Bad Daddy’sBurger Bar
Fiscal First Quarter 2019 2018
2019 2018 Restaurant Sales (in
thousands) $ 6,897 $ 7,610 $ 18,250 $ 14,987 Restaurants opened
during period - - 1 2 Restaurants closed during period - - - -
Restaurants open at period end 26 28 32 24 Restaurant
operating weeks 338.0 364.0 423.3 309.6
Average weekly sales per restaurant (in
thousands)
$ 20.4 $ 20.9 $ 43.1 $ 48.4
Reconciliation of
Non-GAAP Measurements to US 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
TimesRestaurants Inc. Fiscal Quarter Ended
December 25, 2018 December 26, 2017
December 25, 2018 December
26, 2017
Dec. 25,2018
Dec. 26,2017 Restaurant Sales $ 18,250
100.0 % $ 14,987 100.0 % $ 6,897
100.0 % $ 7,610 100.0 % $ 25,147 $ 22,597
Restaurant Operating Costs (exclusive of depreciation
andamortization shown separatelybelow): Food and packaging costs
5,269 28.9 % 4,633 30.9 % 2,254 32.7 % 2,570 33.8 % 7,523 7,203
Payroll and other employeebenefit costs 6,982 38.3 % 5,594 37.3 %
2,571 37.3 % 2,685 35.3 % 9,553 8,279 Restaurant occupancy costs
1,277 7.0 % 939 6.3 % 688 10.0 % 701 9.2 % 1,965 1,640 Other
restaurant operating costs
1,984
10.9 % 1,467
9.8 % 599 8.7
% 649 8.5
% 2,583
2,116 Restaurant-level operating profit 2,738
15.0 % $ 2,354 15.7 % 785 11.4 % $ 1,005 13.2 % 3,523 3,359
Franchise advertisingcontributions and net royaltyincome 223 251
Deduct - Other operating: Depreciation and amortization
1,034 846 General and administrative 2,061 1,917 Advertising costs
628 595 Franchise costs 7 10 Gain on restaurant asset sale (30 ) (8
) Preopening costs
627
577 Total other operating
4,327 3,937
Loss from Operations
$ (581
) $ (327 )
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 fiscal first quarters 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 Loss to Non-GAAP
Adjusted EBITDA
(In thousands)
Good Times Restaurants Inc.
Fiscal First Quarter 2019
2018 Net loss as reported (1,051 )
($583 ) Adjustments to net loss: Depreciation
and amortization 993 809 Interest expense
160
84 EBITDA $ 102 $ 310 Preopening
costs 605 485 Non-cash stock-based compensation 112 118 GAAP
rent-cash rent difference (43 ) (28 ) Non-cash gain on disposal of
assets
(9 ) (8
) Adjusted EBITDA
$ 767
$ 877
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/20190207005855/en/
Good Times Restaurants Inc.Investor Relations
Contacts:Boyd E. Hoback, President and CEO, 303-384-1411Ryan M.
Zink, Chief Financial Officer, 303-384-1432Christi Pennington,
303-384-1440
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