GTIM Good Times Restaurants Inc

Total Revenues increased 15% to $27.2 million in Q2

Conference Call Thursday, May 9, 2019, at 3:00 p.m. MT/5:00 p.m. ET

Good Times Restaurants Inc. (Nasdaq: GTIM), operator of Bad Daddy’s Burger Bar, a full-service, upscale burger bar concept, and Good Times Burgers & Frozen Custard, a regional quick-service restaurant chain focused on fresh, high quality, all natural products, today announced its preliminary unaudited financial results for the second fiscal quarter ended March 26, 2019.

Key highlights of the Company’s financial results include:

• Total revenues increased 15% to $27,172,000 for the quarter
• Total Restaurant Sales for Bad Daddy’s restaurants increased 27.8% to $20,384,000 and Bad Daddy’s Restaurant Level Operating Profit* (a non-GAAP measure) was $3,322,000 or 16.3% as a percent of sales
• Same store sales for company-owned Bad Daddy’s restaurants increased 1.3% for the quarter on top of last year’s increase of 0.2%
• The Company opened one new Bad Daddy’s restaurant during the quarter
• Total Restaurant Sales for Good Times restaurants were $6,570,000 and Good Times Restaurant Level Operating Profit* (a non-GAAP measure) was $509,000 or 7.7% as a percent of sales
• Net Loss Attributable to Common Shareholders was $450,000 for the quarter
• Adjusted EBITDA* (a non-GAAP measure) for the quarter was $1,148,000
• The Company ended the quarter with $3.4 million in cash and $12.3 million drawn against its senior credit facility

Boyd Hoback, President and CEO, said, “Similar to our first quarter’s results, we continued to post favorable same-store sales results for Bad Daddy’s but our Good Times same-store sales were significantly impacted by more inclement weather compared to the prior year and were down 5.9% during the second quarter, adjusted for the impact of store closures on March 13th. However, subsequent to the end of the quarter we have returned to more seasonable weather and our same-store sales at Good Times have rebounded, up more than 4% so far in the third quarter, validating our assertion that the first and second quarter sales comps were largely the result of weather compared to the prior year. We opened one new Bad Daddy’s during the quarter which continues to post sales significantly ahead of our system average, even as it moves out of its honeymoon period. We have three additional Bad Daddy’s under development that we expect to open this fiscal year and one that we expect to open shortly after the end of the fiscal year.”

Commenting on the Company’s earnings guidance, Ryan Zink, Chief Financial Officer, stated, “We are reaffirming our guidance from the prior quarter, 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. We have updated our same-store sales assumptions at Good Times to reflect a return to positive same-store-sales.”

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 +1% to +2% for the balance of the year for Good Times and 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 five 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 $7.0 to $7.5 million including approximately $0.6 million related to fiscal 2020 development. This does not include the use of approximately $3.0 million of cash in the previously disclosed acquisition of the non-controlling interest in three Bad Daddy’s restaurants.
• 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 second quarter 2019 financial results on Thursday, May 9, 2019 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) 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 Quarter Ended     Year-To-Date Statement of Operations March 26,2019     March 27,2018 March 26,2019     March 27,2018 Net revenues: Restaurant sales $ 26,954 $ 23,342 $ 52,101 $ 45,939 Franchise revenues   218     254     441     505   Total net revenues 27,172 23,596 52,542 46,444   Restaurant operating costs: Food and packaging costs 7,903 7,118 15,426 14,321 Payroll and other employee benefit costs 10,228 8,642 19,781 16,921 Restaurant occupancy costs 2,165 1,788 4,130 3,428 Other restaurant operating costs 2,829 2,137 5,412 4,253 Preopening costs 193 496 820 1,073 Depreciation and amortization   1,089     882     2,123     1,728   Total restaurant operating costs 24,407 21,063 47,692 41,724   General and administrative costs 2,193 1,898 4,254 3,815 Advertising costs 547 602 1,175 1197 Franchise costs 16 11 23 21 Asset impairment charge - 72 - 72 Gain on disposal of restaurants and equipment   (9 )   (9 )   (39 )   (17 ) Income/(Loss) from operations 18 (41 ) (563 ) (368 )   Other income (expense): Interest income (expense), net (199 ) (91 ) (359 ) (174 ) Other income   1     -     -     -   Total other income (expense), net   (198 )   (91 )   (359 )   (174 ) Net loss (180 ) (132 ) (922 ) (542 ) Income attributable to non-controlling interests   (270 )   (299 )   (579 )   (472 ) Net loss attributable to common shareholders $ (450 ) $ (431 ) $ (1,501 ) $ (1,014 )   Basic and diluted loss per share $ (0.04 ) $ (0.03 ) $ (0.12 ) $ (0.08 )  

Basic and diluted weighted average common shares outstanding

12,523 12,468 12,514 12,456   Good Times Restaurants Inc. Unaudited Supplemental Information

(In thousands)

          March 26,2019     September 25,2018 Balance Sheet Data Cash & cash equivalents $ 3,399 $ 3,477   Current assets 5,695 6,381 Property and equipment, net 35,821 35,245 Other assets   19,361   19,324 Total assets $ 60,877 $ 60,950  

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

$ 7,638 $ 8,335 Long-term debt due after one year 12,300 7,472 Other liabilities   8,260   7,922 Total liabilities   28,198   23,729   Stockholders’ equity $ 32,679 $ 37,221       Bad Daddy’sBurger Bar     Good Times Burgers &Frozen Custard Fiscal Quarter Ended 2019     2018 2019     2018   Restaurant sales (in thousands) $ 20,384 $ 15,954 $ 6,570 $ 7,388 Restaurants opened during period 1 1 - - Restaurants closed during period - - - 1 Restaurants open at period end 33 25 26 27   Restaurant operating weeks 428.0 323.3 336.3 356.0  

Average weekly sales per restaurant (in thousands)

$ 47.6 $ 49.3 $ 19.4 $ 20.8     Bad Daddy’sBurger Bar Good Times Burgers &Frozen Custard Year-To-Date Period Ended 2019 2018 2019 2018   Restaurant sales (in thousands) $ 38,634 $ 30,941 $ 13,467 $ 14,998 Restaurants opened during period 2 3 - - Restaurants closed during period - - - 1 Restaurants open at period end 33 25 26 27   Restaurant operating weeks 838.3 632.9 674.3 720.0  

Average weekly sales per restaurant (in thousands)

$ 46.1 $ 48.9 $ 20.0 $ 20.8  

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 March 26, 2019   March 27, 2018 March 26, 2019   March 27, 2018

Mar. 26, 2019

 

Mar. 27, 2018

        Restaurant sales $ 20,384 100.0 % $ 15,954 100.0 % $ 6,570 100.0 % $ 7,388 100.0 % $ 26,954 $ 23,342

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

Food and packaging costs 5,804 28.5 % 4,727 29.6 % 2,099 31.9 % 2,391 32.4 % 7,903 7,118

Payroll and other employee benefit costs

7,669 37.6 % 5,969 37.4 % 2,559 39.0 % 2,673 36.2 % 10,228 8,642 Restaurant occupancy costs 1,354 6.6 % 1,018 6.4 % 811 12.3 % 770 10.4 % 2,165 1,788 Other restaurant operating costs   2,237 11.0 %   1,541 9.7 %   592 9.0 %   596 8.1 %   2,829     2,137   Restaurant-level operating profit $ 3,320 16.3 % $ 2,699 16.9 % $ 509 7.7 % $ 958 13.0 % $ 3,829 3,657  

Franchise advertising contributions and net royalty income

218 254   Deduct - Other operating: Depreciation and amortization 1,089 882 General and administrative 2,193 1,898 Advertising costs 547 602 Franchise costs 16 11 Gain on restaurant asset sale (9 ) (9 ) Asset impairment charge - 72 Preopening costs   193     496   Total other operating   4,029     3,952  

 

Income / (loss) from operations

$ 18   $ (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 TimesRestaurants Inc.

 

Year-To-Date

March 26, 2019   March 27, 2018

March 26, 2019

  March 27, 2018

Mar. 26, 2019

 

Mar. 27, 2018

        Restaurant sales $ 38,634 100.0 % $ 30,941 100.0 % $ 13,467 100.0 % $ 14,998 100.0 % $ 52,101 $ 45,939  

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

Food and packaging costs 11,073 28.7 % 9,360 30.3 % 4,353 32.3 % 4,961 33.1 % 15,426 14,321 Payroll and other employee benefit costs 14,651 37.9 % 11,563 37.4 % 5,130 38.1 % 5,358 35.7 % 19,781 16,921 Restaurant occupancy costs 2,632 6.8 % 1,958 6.3 % 1,498 11.1 % 1,470 9.8 % 4,130 3,428 Other restaurant operating costs   4,220 10.9 %   3,008 9.7 %   1,192 8.9 %   1,245 8.3 %   5,412     4,253   Restaurant-level operating profit $ 6,058 15.7 % $ 5,052 16.3 % $ 1,294 9.6 % $ 1,964 13.1 % 7,352 7,016   Franchise royalty income, net 441 505   Deduct - Other operating: Depreciation and amortization 2,123 1,728 General and administrative 4,254 3,815 Advertising costs 1,175 1,197 Franchise costs 23 21 Gain on restaurant asset sale (39 ) (17 ) Asset impairment charge - 72 Preopening costs   820     1,073   Total other operating   8,356     7,889     Loss from operations $ (563 ) $ (368 )

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 second 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 Loss to Non-GAAP Adjusted EBITDA

      Fiscal Quarter Ended     Year-to-Date March 26,2019     March 27,2018 March 26,2019     March 27,2018 Adjusted EBITDA: Net loss, as reported $ (450 ) $ (431 ) $ (1,501 ) $ (1,014 ) Depreciation and amortization 1,068 845 2,061 1,653 Interest expense, net   199     91     359     175   EBITDA 817 505 919 814 Preopening expense 193 491 799 976 Non-cash stock-based compensation 109 97 221 215 GAAP rent-cash cash difference 37 11 (6 ) (16 ) Gain on disposal of assets (9 ) (9 ) (39 ) (17 ) Asset impairment charge   -     72     -     72   Adjusted EBITDA $ 1,147   $ 1,167   $ 1,894   $ 2,044  

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.

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Good Times Restaurants Inc. Contacts:Boyd E. Hoback, President and Chief Executive Officer, (303) 384-1411Ryan Zink, Chief Financial Officer, (303) 384-1432Christi Pennington, (303) 384-1440