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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)
February 7, 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.

 

 

 

   

 

 

Item 2.02Results of Operations and Financial Condition.

 

On February 7, 2019 Good Times Restaurants Inc. issued a press release announcing earnings and other financial results for its fiscal quarter ended December 25, 2018 and that management would review these results in a conference call on Thursday, February 7, 2019 at 5:00 p.m. ET

.

Item 7.01.Regulation FD Disclosure.

 

On February 7, 2019 Good Times Restaurants Inc. issued a press release announcing earnings and other financial results for its fiscal quarter ended December 25, 2018. Included in the press release is the announcement of the acquisition of the membership interest in three Bad Daddy’s Burger Bar locations in Raleigh, North Carolina which occurred subsequent to the end of the quarter.

 

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 February 7, 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: February 7, 2019 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 February 7, 2019

 

  

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Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

February 7, 2019 Nasdaq Capital Markets - GTIM

 

 

GOOD TIMES RESTAURANTS REPORTS Q1 RESULTS

Total Revenues increased 11% to $25.4 million in Q1

Company announces buyout of JV partners

Company reaffirms fiscal 2019 guidance

 

Conference Call Thursday, February 7, 2019, at 3:00 p.m. MST/5:00 p.m. EST

 

(DENVER, CO) 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.

 

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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 shares
outstanding
   12,505    12,445 

 

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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’s
Burger 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 

 

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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 Times
Restaurants 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 and
amortization shown separately
below):
                                                  
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 employee
benefit 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 advertising
contributions and net royalty
income
                                           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).

 

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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 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.

 

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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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