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Section 1: 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported)

December 12, 2019

 

(Exact name of registrant as specified in its charter)

 

 

Nevada 000-18590 84-1133368

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

141 Union Boulevard, #400, Lakewood, CO 80228

(Address of principal executive offices including zip code)

 

Registrant’s telephone number, including area code: (303) 384-1400

 

Not applicable

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading
Symbol(s)
  Name of each exchange on which
registered
Common Stock, $0.001 par value   GTIM   Nasdaq Stock Exchange

 

 

 
 

 

Item 2.02Results of Operations and Financial Condition.

 

On December 12, 2019 Good Times Restaurants Inc. issued a press release announcing earnings and other financial results for its fiscal quarter ended September 24, 2019 and that management would review these results in a conference call on December 12, 2019 at 5:00 p.m. ET.

 

Item 7.01.Regulation FD Disclosure.

 

On December 12, 2019 Good Times Restaurants Inc. issued a press release announcing earnings and other financial results for its fiscal quarter ended September 24, 2019.

 

The information contained in, or incorporated into, this Item 7.01 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or otherwise subject to the liabilities of that section, nor expressly set forth by specific reference to such filing. This Item 7.01 will not be deemed an admission as to the materiality of any information in the Report that is required to be disclosed solely by Regulation FD.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits. The following exhibits are filed as part of this report.

 

Exhibit Number   Description
99.1   Press Release, dated December 12, 2019

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

  GOOD TIMES RESTAURANTS INC.
   
     
Date:     December 12, 2019 By:  
   

Ryan M. Zink

    Acting Chief Executive Officer, Chief Financial
Officer and Treasurer

 

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EXHIBIT INDEX

The following exhibits are furnished as part of this report:

 

Exhibit Number   Description
99.1   Press Release, dated December 12, 2019

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

December 12, 2019 Nasdaq Capital Markets - GTIM

 

 

GOOD TIMES RESTAURANTS REPORTS RESULTS FOR THE FISCAL FOURTH QUARTER AND YEAR ENDED SEPTEMBER 24, 2019

 

(DENVER, CO) 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

 

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·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 CONTACTS:

Ryan Zink, Acting Chief Executive Officer

Chief Financial Officer and Treasurer (303) 384-1432

Christi Pennington (303) 384-1440

 

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Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands, except per share amounts)

 

   Fiscal Quarter Ended   Year-To-Date 
Statement of Operations  Sept. 24,
2019
   Sept. 25,
2018
   Sept 24,
2019
   Sept 25,
2018
 
Net revenues:                    
Restaurant sales  $28,519   $26,635   $109,800   $98,564 
Franchise revenues   240    229    958    1,007 
Total net revenues   28,759    26,864    110,758    99,571 
                     
Restaurant operating costs:                    
Food and packaging costs   8,516    8,102    32,471    30,256 
Payroll and other employee benefit costs   10,763    9,577    41,221    35,653 
Restaurant occupancy costs   2,134    1,983    8,355    7,261 
Other restaurant operating costs   3,069    2,657    11,470    9,283 
Pre-opening costs   825    1,101    1,774    2,784 
Depreciation and amortization   1,118    1,040    4,345    3,705 
Total restaurant operating costs   26,425    24,460    99,636    88,942 
                     
General and administrative costs   3,063    1,973    9,461    7,857 
Advertising costs   511    472    2,352    2,322 
Franchise costs   7    9    38    41 
Asset impairment charge   2,771    -    2,771    72 
Gain on disposal of restaurants and equipment   (10)   (9)   (5)   (35)
Income (loss) from operations   (4,008)   (41)   (3,495)   372 
                     
Other income (expense):                    
Interest income (expense), net   (192)   (118)   (753)   (388)
Other income (expense)   1    (1)   -    (1)
Total other expense   (191)   (119)   (753)   (389)
Net loss   (4,199)   (160)   (4,248)   (17)
Loss (income) attributable to non-controlling
interests
   23    (164)   (889)   (1,017)
Net loss attributable to common shareholders  $(4,176)  $(324)  $(5,137)  $(1,034)
                     
Basic and diluted loss per share  $(0.33)  $(0.03)  $(0.41)  $(0.08)
                     
Basic and diluted weighted average common
shares outstanding
   12,540    12,474    12,523    12,464 

 

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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 

 

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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    - 
Preopening 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).

 

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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 
Preopening 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).

 

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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 
Preopening 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.

 

                                  

 

1 Depreciation and amortization, preopening expense, and asset impairment charge have been reduced by any amounts attributable to non-controlling interests.

 

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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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