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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 13, 2018
 
 
(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.

 

 

 
 

 

 

Item 2.02Results of Operations and Financial Condition.

 

On December 13, 2018 Good Times Restaurants Inc. issued a press release announcing earnings and other financial results for its fiscal quarter ended September 25, 2018 and that management would review these results in a conference call on Thursday, December 13, 2018 at 5:00 p.m. ET.

 

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 13, 2018

 

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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 13, 2018    
  By:  
   

Boyd E. Hoback

President and Chief Executive Officer

 

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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 13, 2018

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

December 13, 2018 Nasdaq Capital Markets - GTIM

 

GOOD TIMES RESTAURANTS REPORTS Q4 AND FISCAL YEAR END RESULTS

Total Revenues for Fiscal 2018 Increased 25% to $99 Million

Net Loss for the Year Narrowed to $1.0 Million

Conference Call Thursday, December 13, 2018, at 3:00 p.m. MT/5:00 p.m. ET

 

(DENVER, CO) Good Times Restaurants Inc. (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 fourth fiscal quarter ended September 25, 2018.

 

Key highlights of the Company’s financial results vs prior year include:

 

·Total revenues increased 19% to $26,796,000 for the quarter and increased 25% to $99,240,000 for the year, which reflects the addition of nine new Bad Daddy’s restaurants during the year

 

·Same store sales for company-owned Good Times restaurants increased 0.5% for the quarter and increased 4.2% for the year on top of last year’s increases of 3.9% for the quarter and 2.1% for the year

 

·Adjusted for the impact of hurricane Florence, same store sales for company-owned Bad Daddy’s restaurants increased 0.7% for the quarter and 0.8% for the year on top of last year’s increases of 1.4% for the quarter and 1.6% for the year

 

·The company opened five restaurants during the fiscal fourth quarter, bringing the total new restaurants opened during fiscal 2018 to nine

 

·Income from Operations improved from a loss of $1,422,000 to income of $372,000 for the year, which includes the impact of $2,784,000 of new store preopening costs incurred in fiscal 2018

 

·Restaurant Level Operating Profit (a non-GAAP measure) for Bad Daddy’s restaurants improved 50% to $3,136,000 in the fourth quarter from $2,081,000 in the fourth quarter last year*

 

·Total Restaurant Level Operating Profit (a non-GAAP measure) increased 26% to $4,318,000 for the quarter and increased 30% to $16,111,000 for the year*

 

·Net Loss Attributable to Common Shareholders for the year narrowed to $324,000 for the quarter and $1,034,000 for the full fiscal year

 

·Adjusted EBITDA (a non-GAAP measure) for the quarter increased 38% to $1,805,000 and increased 52% to $5,758,000* for the fiscal year

 

·The Company ended the year with $3.5 million in cash and $7.5 million of long term debt

 

Boyd Hoback, President & CEO said “We are very pleased with our results for the quarter and fiscal year, including our adjusted EBITDA that was slightly ahead of the upper end of our guidance for the fiscal year. Even though labor costs continue to be a pressure point on our operating margins, Bad Daddy’s Restaurant Level Operating Profit margin improved to 17% for the year from 15.8% last year.”

 

Commenting on fiscal 2019, Hoback added, “At the end of the fiscal year, we opened two new Bad Daddy’s restaurants, one in the Atlanta metro area and one in Greenville, South Carolina and subsequent to year end we’ve opened one additional restaurant in the Atlanta metro area with another restaurant scheduled to open on January 2, 2019 in the Raleigh metro area. During our first fiscal quarter of 2019, our Good Times’ and Bad Daddy’s sales have been negatively impacted by much more inclement weather compared to last year, including the loss of approximately 10 store days due to the snow storm in North Carolina. The new Atlanta & Greenville, South Carolina restaurants have had relatively softer openings than the high honeymoon sales we experienced in our fiscal 2017 and 2018 openings, so we’ve moderated our development schedule for the balance of the year as we fine tune our site selection model for accelerated growth in fiscal 2020. As a result, we expect our first fiscal 2019 quarter’s results to be negatively impacted which is reflected in our overall fiscal 2019 guidance.”

 

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Fiscal 2019 Outlook:

 

The Company has updated its guidance for fiscal 2019 to reflect its adjusted development expectations:

 

·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 -2% to -3% for the year for Good Times due to inclement weather in Q1 and Q2 compared to unseasonably warm weather in the prior year, and approximately +1 to +2% 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 to 6 new Bad Daddy’s restaurants

 

·Net loss of approximately $0.9 million, including pre-opening expenses of approximately $1.6 million

 

·Total Adjusted EBITDA* of approximately $6.0 million to $6.5 million

 

·Capital expenditures (net of tenant improvement allowances) of approximately $7.0 - $7.5 million including approximately $0.6 million related to fiscal 2020 development

 

·Debt balance at the end of the year between $11.0 and $11.5 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 2018 financial results on Thursday, December 13, 2018 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 by telephone 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.investors.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 34 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 26, 2017 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. INVESTOR RELATIONS CONTACTS:

Boyd E. Hoback, President and CEO, (303) 384-1411

Ryan M. Zink, Chief Financial Officer (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   Fiscal Year Ended 
   Sept. 25,   Sept. 26,   Sept. 25,   Sept. 26, 
Statement of Operations  2018   2017   2018   2017 
Net revenues:                
Restaurant sales  $26,635   $22,414   $98,564   $78,395 
Franchise revenues   161    170    676    685 
Total net revenues   26,796    22,584    99,240    79,080 
                     
Restaurant Operating Costs:                    
Food and packaging costs   8,102    7,309    30,256    24,900 
Payroll and other employee benefit costs   9,577    8,058    35,653    28,274 
Restaurant occupancy costs   1,983    1,552    7,261    5,759 
Other restaurant operating costs   2,657    2,081    9,283    7,084 
New store preopening costs   1,101    851    2,784    2,588 
Depreciation and amortization   1,040    811    3,705    2,897 
Total restaurant operating costs   24,460    20,662    88,942    71,502 
                     
General and administrative costs   1,973    1,780    7,857    7,002 
Advertising costs   404    337    1,991    1,694 
Franchise costs   9    28    41    108 
Asset impairment costs   -    219    72    219 
Gain on disposal of restaurants and equipment   (9)   (6)   (35)   (23)
Income (loss) from operations   (41)   (436)   372    (1,422)
                     
Other income (expense):                    
Interest income (expense), net   (118)   (77)   (388)   (182)
Other expense   (1)   -    (1)   (1)
Total other expense   (119)   (77)   (389)   (183)
Net loss  ($160)  ($513)  ($17)  ($1,605)
Income attributable to non-controlling interest  (164)   (151)   (1,017)   (650)
Net loss attributable to Good Times Restaurants Inc.   (324)   (664)   (1,034)  ($2,255)
                     
Basic and diluted loss per share  ($0.03)  ($0.05)  ($0.08)  ($0.18)
                     
Basic and diluted weighted average common shares
outstanding
   12,474    12,393    12,464    12,321 

 

Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands)

 

   Sept. 25,   Sept. 26, 
Balance Sheet Data  2018   2017 
Cash & cash equivalents  $3,477   $4,337 
Current assets   6,381    6,066 
Property and Equipment, net   35,245    29,691 
Other assets   19,324    19,397 
Total assets  $60,950   $55,153 
           
Current liabilities, including capital lease obligations and long-term debt due
within one year
  $8,335   $6,916 
Long-term debt due after one year   7,472    5,339 
Other liabilities   7,922    5,614 
Total liabilities  $23,729   $17,869 
Stockholders’ equity  $37,221   $37,284 

 

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Supplemental Information:

 

   Company-Owned Restaurants 
   Bad Daddy’s Burger Bar   Good Times Burgers & Frozen Custard 
   Fiscal Quarter Ended   Fiscal Year Ended   Fiscal Quarter Ended   Fiscal Year Ended 
   Sept. 25,
2018
   Sept. 26,
2017
   Sept. 25,
2018
   Sept. 26,
2017
   Sept. 25,
2018
   Sept. 26,
2017
   Sept. 25,
2018
  

Sept. 26,

2017

 
Restaurant Sales  $18,723   $14,036    67,428   $47,706   $7,912   $8,378    31,136   $30,689 
Average weekly sales per restaurant   51.0    50.6    50.3    49.3    22.5    23.0    21.9    21.4 
                                         
Restaurant operating weeks   367    277.3    1,341    968.1    351    364    1,422    1,432 
Restaurants open during period   5    1    9    6    0    0    0    1 
Restaurants open at period end   31    22    31    22    26    28    26    28 

 

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Reconciliation of Non-GAAP Measurements to US GAAP Results

 

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income (Loss) from Operations

(In thousands, except percentage data)

 

   Bad Daddy’s Burger Bar      Good Times Burgers &
Frozen Custard
   Good Times
Restaurants Inc.
 
   ------------------------------------------------------------Fiscal Quarter Ended------------------------------------------------------------ 
   Sept. 25, 2018   Sept. 26, 2017   Sept. 25, 2018   Sept. 26, 2017   Sept. 25,
2018
   Sept. 26,
2017
 
Restaurant Sales  $18,723    100.0%  $14,036    100.0%  $7,912    100.0%  $8,378    100%   26,635   $22,414 
Restaurant Operating Costs
(exclusive of depreciation and
amortization shown separately
below):
                                                  
Food and packaging costs   5,510    29.4%   4,507    32.1%   2,592    32.8%   2,802    33.4%   8,102    7,309 
Payroll and other employee
benefit costs

   6,858    36.6%   5,215    37.2%   2,719    34.4%   2,843    33.9%   9,577    8,058 
Restaurant occupancy costs   1,236    6.6%   855    6.1%   747    9.4%   697    8.3%   1,983    1,552 
Other restaurant operating costs   1,983    10.6%   1,378    9.8%   674    8.5%   703    8.4%   2,657    2,081 
Restaurant-level operating profit   3,136    16.8%   2,081    14.8%   1,180    15.0%   1,333    15.9%   4,316    3,414 
                                                   
Franchise royalty income and
expense, net
                                           161    170 
Deduct - Other operating:                                                  
Depreciation and amortization                                           1,040    811 
General and administrative                                           1,973    1,780 
Advertising costs                                           404    337 
Franchise costs                                           9    28 
Gain on disposal of
restaurants and equipment
                                           (9)   (6)
Asset impairment costs                                           -    219 
Preopening costs                                           1,101    851 
Total other operating                                           4,518    4,020 
                                                   
Loss from Operations                                          ($41)  ($436)

 

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 US GAAP Results

 

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income (Loss) from Operations

(In thousands, except percentage data)

 

   Bad Daddy’s Burger Bar      Good Times Burgers &
Frozen Custard
   Good Times
Restaurants Inc.
 
   ------------------------------------------------------------Fiscal Year Ended------------------------------------------------------------ 
   Sept. 25, 2018   Sept. 26, 2017   Sept. 25, 2018   Sept. 26, 2017   Sept. 25,
2018
   Sept. 26,
2017
 
Restaurant Sales   67,428    100.0%  $47,706    100.0%   31,136    100.0%  $30,689    100%   98,564   $78,395 
Restaurant Operating Costs
(exclusive of depreciation and
amortization shown separately
below):
                                                  
Food and packaging costs   20,048    29.7%   14,906    31.2%   10,208    32.8%   9,994    32.6%   30,256    24,900 
Payroll and other employee
benefit costs
   24,861    36.9%   17,726    37.2%   10,792    34.7%   10,548    34.4%   35,653    28,274 
Restaurant occupancy costs   4,348    6.4%   2,987    6.3%   2,913    9.4%   2,772    9.0%   7,261    5,759 
Other restaurant operating costs   6,719    10.0%   4,548    9.5%   2,564    8.2%   2,536    8.3%   9,283    7,084 
Restaurant-level operating profit   11,452    17.0%   7,539    15.8%   4,659    15.0%   4,839    15.8%   16,111    12,378 
                                                   
Franchise royalty income and
expense, net
                                           676    685 
Deduct - Other operating:                                                  
Depreciation and amortization                                           3,705    2,897 
General and administrative                                           7,857    7,002 
Advertising costs                                           1,991    1,694 
Franchise costs                                           41    108 
Gain on disposal of
restaurants and equipment
                                           (35)   (23)
Asset impairment costs                                           72    219 
Preopening costs                                           2,784    2,588 
Total other operating                                           16,415    14,485 
                                                   
Income (Loss) from Operations                                           372   ($1,422)

 

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 fiscal quarters and fiscal years ended September 25, 2018 and September 26, 2017, 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 Quarter Ended   Fiscal Year Ended 
   Sept. 25,   Sept. 26,   Sept. 25,   Sept. 26, 
   2018   2017   2018   2017 
Net loss as reported  ($324)  ($664)  ($1,034)  ($2,255)
                     
Adjustments to net loss:                    
Depreciation and amortization   977    774    3,528    2,776 
Interest expense, net   118    77    391    185 
EBITDA   771    187    2,885    706 
Asset impairment cost   -    219    72    219 
Preopening expense   922    759    2,463    2,154 
Non-cash stock-based compensation   114    139    417    748 
GAAP rent - cash rent difference   7    7    (44)   (27)
Non-cash disposal of assets   (9)   (6)   (35)   (23)
Adjusted EBITDA  $1,805   $1,305    5,758   $3,777 

 

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.

 

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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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