Good Times Restaurants Reports Q2 Results

DENVER–(hospitalitybusinessnews.com)–Good Times Restaurants Inc., 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 second fiscal quarter ended March 31, 2016.

Key highlights of the Company’s financial results include:

  • Same store sales for company-owned Good Times restaurants increased 0.5% for the quarter and 2.6% for the year on top of last year’s increase of 8.3% for the quarter and 8.1% for the year, which makes twenty-three consecutive quarters of same store sales growth
  • Same store sales for company-owned Bad Daddy’s restaurants increased 1.9% for the quarter and 4.0% for the year
  • Total revenues increased 76% to $15,318,000 for the quarter and increased 76% to $29,156,000 for the year
  • The Company opened two new Bad Daddy’s restaurants during the quarter and has opened one additional restaurant after the quarter ended for a total of five new restaurants opened since the beginning of the fiscal year
  • The five new Bad Daddy’s restaurants opened in fiscal 2015 are averaging in excess of $2.5 million in annualized sales
  • Sales for the company-owned Good Times restaurants for the quarter were $6,700,000 and Restaurant Level Operating Profit (a non-GAAP measure) was $1,063,000 or 15.9% as a percent of sales *
  • Sales for the Bad Daddy’s restaurants for the quarter were $8,441,000 and Restaurant Level Operating Profit (a non-GAAP measure) was $1,336,000 or 15.8% as a percent of sales *
  • Adjusted EBITDA (a non-GAAP measure) for the quarter increased 92% to $639,000 from $332,000 and increased 96% to $884,000 from $452,000 for the year*
  • The Company ended the quarter with $9.0 million in cash

Boyd Hoback, President & CEO said, “Our new Bad Daddy’s restaurants are performing well, averaging over our $2.5 million in annualized sales target as of the end of April, despite above average snow in Colorado. Same store sales remain strong, we are improving our store level operating margins and we plan to accelerate our development into fiscal 2017 with entry into two new markets as well as our pipeline of locations in Colorado and North Carolina. We anticipate that we will be on track to meet or exceed our original revenue run rate goal of $100 million by the end of fiscal 2017 with further acceleration into 2018.”

Commenting on Good Times Burgers & Frozen Custard, Hoback added “Good Times sales are impacted more by severe weather than Bad Daddy’s and we are pleased to have maintained positive same store sales with the above average snow we’ve had along with the competitive discounting environment. We have seen a significant bounce in our sales trend during periods of normal weather patterns and are maintaining our expectations for 3-4% same store sales growth for Good Times. We are focusing on our core brand tenets with a pipeline of both new products and improvements to our primary menu items that we believe will continue to entrench our competitive advantage with our customers.”

2016 & Preliminary 2017 Outlook:

The Company currently anticipates the following for fiscal 2016 and 2017:

  • Total revenues of approximately $66 million to $67 million for fiscal 2016 and a preliminary outlook in excess of $88 million for the fiscal 2017 year for the fiscal 2017 year with a year end revenue run rate exceeding $100 million
  • Total revenue estimates assume same store sales growth of approximately 3-4% for the balance of the year and low single digits growth for fiscal 2017 for the Good Times concept and low single digits growth for the Bad Daddy’s concept for both the balance of the year and fiscal 2017
  • General and administrative expenses of approximately $6.1 million to $6.2 million, including approximately $800,000 of non-cash equity compensation expense for fiscal 2016
  • The opening of 1 new Good Times restaurant
  • The opening of 10-12 additional new Bad Daddy’s restaurants through the end of fiscal 2017
  • Total Adjusted EBITDA* of approximately $4.0 million to 4.2 million in fiscal 2016
  • Restaurant pre-opening expenses of approximately $2.0 million in fiscal 2016
  • Capital expenditures (net of tenant improvement allowances) of approximately $7 million to $8 million in fiscal 2016 and $12 million to $14 million in fiscal 2017

 

Good Times Restaurants Inc.
Unaudited Supplemental Information
(In thousands, except per share amounts)

Three Months Ended
March 31,
Six Months Ended
March 31,
Statement of Operations

2016

2015

2016

2015

Net revenues:
Restaurant sales $ 15,141 $ 8,626 $ 28,797 $ 16,392
Franchise revenues 177 88 359 177

Total net revenues

15,318 8,714 29,156 16,569
Restaurant Operating Costs:
Food and packaging costs 4,785 2,874 9,290 5,623
Payroll and other employee benefit costs 5,394 2,913 10,166 5,446
Restaurant occupancy costs 1,231 731 2,294 1,406
Other restaurant operating costs 1,332 665 2,583 1,290
Royalty expense 0 60 0 98
New store preopening costs 576 185 1,301 422
Depreciation and amortization 549 256 1,008 462
Total restaurant operating costs 13,867 7,684 26,642 14,747
General and administrative costs 1,510 919 3,116 1,794
Advertising costs 352 261 718 521
Acquisition costs 0 197 0 197
Franchise costs 27 27 54 53
Gain on restaurant asset sale (7 ) (6 ) (12 ) (12 )
Loss from operations (431 ) (368 ) (1,362 ) (731 )
Other income (expense):
Interest income (expense), net (36 ) (4 ) (66 ) (1 )
Other expense 0 (1 ) 0 (3 )
Affiliate investment income 0 12 0 13
Total other income (expense), net (36 ) 7 (66 ) 9
Net loss ($467 ) ($361 ) ($1,428 ) ($722 )
Net loss attributable to non-controlling interest (206 ) (74 ) (369 ) (123 )
Net loss attributable to Good Times Restaurants Inc. ($673 ) ($435 ) ($1,797 ) ($845 )
Basic and diluted loss per share ($0.05 ) ($0.05 ) ($0.15 ) ($0.09 )
Basic and diluted weighted average common shares outstanding 12,263 9,452 12,262 9,134

Good Times Restaurants Inc.
Unaudited Supplemental Information
(In thousands)

March 31, September 30,
Balance Sheet Data

2016

2015

Cash & cash equivalents $ 9,040 $ 13,809
Current assets 10,833 14,728
Property and equipment, net 18,802 14,222
Other assets 19,267 19,278
Total assets 48,902 48,228
Current liabilities, including capital lease obligations and long-term debt due within one year 7,434 7,258
Long-term debt due after one year 1,006 1,093
Capital lease obligations due after one year 5 11
Other liabilities 3,692 1,609
Total liabilities 12,137 9,971
Stockholders’ equity 36,765 38,257

Supplemental Information:

Good Times Burgers & Frozen Custard Bad Daddy’s Burger Bar
Three Months Ended
March 31,
Six Months Ended
March 31,
Three Months Ended
March 31,
Six Months Ended
March 31,

2016

2015

2016

2015

2016

2015

2016

2015

Restaurant Sales (in thousands) $ 6,700 $ 6,617 $ 13,647 $ 13,132 $ 8,441 $ 2,009 $ 15,150 $ 3,260
Restaurants open during period 0 0 0 1 2 0 4 1
Restaurants open at period end 27 26 27 26 11 2 11 2
Restaurant operating weeks 351.0 334.3 705.9 668.9 175.0 37.7 320.3 64.0
Average weekly sales per restaurant (in thousands) $ 19.1 $ 19.8 $ 19.3 $ 19.6 $ 48.2 $ 53.3 $ 47.3 $ 50.9

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)

Good Times Burgers & Frozen Custard Bad Daddy’s Burger Bar Good Times Restaurants Inc.
Three Months
Ended March 31,
Three Months
Ended March 31,
Three Months
Ended March 31,
2016 2015 2016 2015 2016 2015
Restaurant Sales $ 6,700 100.0 % $ 6,617 100.0 % $ 8,441 100.0 % $ 2,009 100.0 % $ 15,141 $ 8,626

Restaurant Operating Costs (exclusive of
depreciation and amortization shown
separately below):

Food and packaging costs 2,124 31.7 % 2,240 33.9 % 2,661 31.5 % 634 31.6 % 4.785 2,874
Payroll and other employee benefit costs 2,283 34.1 % 2,138 32.3 % 3,111 36.9 % 775 38.6 % 5,394 2,913
Restaurant occupancy costs 692 10.3 % 612 9.2 % 539 6.4 % 119 5.9 % 1,231 731
Other restaurant operating costs 538 8.0 % 507 7.7 % 794 9.4 % 158 7.9 % 1,332 665
Restaurant-level operating profit 1,063 15.9 % 1,120 16.9 % 1,336 15.8 % 323 16.1 % 2,399 1,443
Franchise royalty income and expense, net 177 28
Deduct – Other operating:
Depreciation and amortization 549 256
General and administrative 1,510 919
Advertising costs 352 261
Acquisition costs 0 197
Franchise costs 27 27
Gain on restaurant asset sale (7 ) (6 )
Preopening costs 576 185
Total other operating 3,007 1,839
Loss from Operations $ (431 ) $ (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.

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)

Good Times Burgers & Frozen Custard Bad Daddy’s Burger Bar Good Times Restaurants Inc.
Six Months Ended March 31, Six Months Ended March 31, Six Months Ended March 31,

2016

2015

2016

2015

2016

2015

Restaurant Sales $ 13,647 100.0 % $ 13,132 100.0 % $ 15,150 100.0 % $ 3,260 100.0 % $ 28,797 $ 16,392

Restaurant Operating Costs (exclusive of
depreciation and amortization shown
separately below):

Food and packaging costs 4,437 32.5 % 4,580 34.9 % 4,853 32.0 % 1,043 32.0 % 9,290 5,623
Payroll and other employee benefit costs 4,582 33.6 % 4,173 31.8 % 5,584 36.9 % 1,273 39.0 % 10,166 5,446
Restaurant occupancy costs 1,349 9.9 % 1,203 9.2 % 945 6.2 % 203 6.2 % 2,294 1,406
Other restaurant operating costs 1,126 8.3 % 1,026 7.8 % 1,457 9.6 % 264 8.1 % 2,583 1,290
Restaurant-level operating profit 2,153 15.8 % 2,150 16.4 % 2,311 15.3 % 477 14.6 % 4,464 2,627
Franchise royalty income and expense, net 359 79
Deduct – Other operating:
Depreciation and amortization 1,008 462
General and administrative 3,116 1,794
Advertising costs 718 521
Acquisition costs 0 197
Franchise costs 54 53
Gain on restaurant asset sale (12 ) (12 )
Preopening costs 1,301 422
Total other operating 6,185 3,437
Loss from Operations $ (1,362 ) $ (731 )

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 three months ended March 31, 2015 and March 31, 2014, 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.

Three Months Ended
March 31,
Six Months Ended
March 31,

2016

2015

2016

2015

Net loss as reported ($673 ) ($435 ) ($1,797 ) ($845 )
Adjustments to net loss:
Interest expense (income), net 36 4 66 1
Depreciation and amortization 520 272 947 494
Preopening expense 576 185 1,301 422
Non-cash stock based compensation 177 85 355 152
Non-recurring acquisition costs 0 197 0 197
GAAP rent in excess of cash rent 10 30 24 43
Non-cash disposal of assets (7 ) (6 ) (12 ) (12 )
Adjusted EBITDA $ 639 $ 332 $ 884 $ 452
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