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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)

August 8, 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 August 8, 2019 Good Times Restaurants Inc. issued a press release announcing earnings and other financial results for its fiscal quarter ended June 25, 2019 and that management would review these results in a conference call on Thursday, August 8, 2019 at 5:00 p.m. ET.

 

Item 7.01.Regulation FD Disclosure.

 

On August 8, 2019 Good Times Restaurants Inc. issued a press release announcing earnings and other financial results for its fiscal quarter ended June 25, 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 9.01Financial Statements and Exhibits.

 

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

 

Exhibit Number   Description
99.1   Press Release, dated August 8, 2019

 

  
  

 

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:      August 8, 2019 By:    
    Boyd E. Hoback  
    President and Chief Executive Officer  

 

  
  

 

EXHIBIT INDEX

 

The following exhibits are furnished as part of this report:

 

Exhibit Number   Description
99.1   Press Release, dated August 8, 2019

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

  

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

August 8, 2019 Nasdaq Capital Markets - GTIM        

 

 

GOOD TIMES RESTAURANTS REPORTS Q3 RESULTS

Total Revenues Increased 12% to $29.5 Million in Q3
Consolidated Net Income Increases to $540,000 for the Quarter

 

Conference Call Thursday, August 8, 2019, at 3:00 p.m. MT/5:00 p.m. ET

 

(DENVER, CO) 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 third fiscal quarter ended June 25, 2019.

 

Key highlights of the Company’s financial results include:

 

·Total revenues increased 12% to $29.5 million for the quarter

 

·Total Restaurant Sales for Bad Daddy’s restaurants increased 18.7% to $21.1 million and Bad Daddy’s Restaurant Level Operating Profit* (a non-GAAP measure) was $3.4 million or 16.3% of sales

 

·Same store sales for company-owned Bad Daddy’s restaurants decreased 0.7% and for Good Times restaurants increased 2.8%

 

·Total Restaurant Sales for Good Times restaurants were $8.1 million and Good Times Restaurant Level Operating Profit* (a non-GAAP measure) was $1.5 million or 18.0% as a percent of sales

 

·Net Income Attributable to Common Shareholders was $540,000 for the quarter

 

·Adjusted EBITDA* (a non-GAAP measure) for the quarter was $2.1 million

 

·The Company ended the quarter with $2.6 million in cash and $11.2 million drawn against its senior credit facility

 

Boyd Hoback, President and CEO, said “We’ve seen a strong turnaround in our Good Times sales trends once we returned to normal year over year weather patterns, which has accelerated subsequent to the end of the quarter. Bad Daddy’s same store sales were impacted by some competitive intrusion around two restaurants as well as minor remodeling of another restaurant. We have four additional Bad Daddy’s currently under construction in the Nashville, TN; Huntsville, AL; Charleston, SC; and Columbia, SC markets. We expect two of those to open prior to the end of fiscal 2019, and two to open shortly after the end of our fiscal year.”

 

Commenting on the Company’s earnings guidance, Ryan Zink, Chief Financial Officer, stated “Our updated guidance for the year calls for Adjusted EBITDA of approximately $5.2 to $5.4 million, reflecting margin compression from wage inflation and delivery commissions on stronger-than expected delivery sales, coupled with reduced on-premise revenue expectations. We anticipate we will provide guidance for fiscal 2020 prior to the end of our fiscal year as we finalize our pace of growth, but we expect the development of at least five new Bad Daddy’s during fiscal 2020.”

 

Fiscal 2019 Outlook:

 

The Company updated its guidance for fiscal 2019 to reflect adjustments to expected store openings and unit volumes through the balance of the year:

 

·Total revenues of approximately $110 million

 

·Total revenue estimates assume same-store sales decreases of approximately 1% for the balance of the year for Bad Daddy’s

 

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·General and administrative expenses of approximately $8.6 million including approximately $450,000 of non-cash equity compensation expense

 

·The opening of two additional Bad Daddy’s restaurants before the end of fiscal 2019

 

·Net loss of approximately $1.6 to $1.8 million, including approximately $1.7 million of pre-opening costs

 

·Total Adjusted EBITDA* between $5.2 and $5.4 million

 

·Capital expenditures (net of tenant improvement allowances) of approximately $6.9 to $7.2 million including approximately $2.0 million related to fiscal 2020 development, primarily two stores expected to open in October 2019. 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 $13.0 to $13.3 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 third quarter 2019 financial results on Thursday, August 8, 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. 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 34 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 CONTACTS:

Boyd E. Hoback, President and Chief Executive Officer (303) 384-1411

Ryan 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  Year-To-Date
Statement of Operations  June 25,
2019
   June 26,
2018
   June 25,
2019
   June 26,
2018
 
Net revenues:                    
Restaurant sales  $29,180   $25,990   $81,281   $71,929 
Franchise revenues   277    273    718    778 
Total net revenues   29,457    26,263    81,999    72,707 
                     
Restaurant operating costs:                    
Food and packaging costs   8,529    7,833    23,955    22,154 
Payroll and other employee benefit costs   10,677    9,155    30,458    26,076 
Restaurant occupancy costs   2,091    1,850    6,221    5,278 
Other restaurant operating costs   2,989    2,373    8,401    6,626 
Preopening costs   129    610    949    1,683 
Depreciation and amortization   1,104    937    3,227    2,665 
Total restaurant operating costs   25,519    22,758    73,211    64,482 
                     
General and administrative costs   2,144    2,069    6,398    5,884 
Advertising costs   666    653    1,841    1,850 
Franchise costs   8    11    31    32 
Asset impairment charge   -    -    -    72 
Gain on disposal of restaurants and equipment   44    (9)   5    (26)
Income from operations   1,076    781    513    413 
                     
Other income (expense):                    
Interest income (expense), net   (202)   (96)   (561)   (270)
Other income   (1)   -    (1)   - 
Total other income (expense), net   (203)   (96)   (562)   (270)
Net income (loss)   873    685    (49)   143 
Income attributable to non-controlling interests   (333)   (381)   (912)   (853)
Net income (loss) attributable to common
shareholders
  $540   $304   $(961)  $(710)
                     
Basic and diluted income (loss) per share  $0.04   $0.02   $(0.08)  $(0.06)
                     
Basic weighted average common
shares outstanding
   12,523    12,468    12,517    12,460 
Diluted weighted average common
shares outstanding
   12,723    12,665    12,517    12,460 

 

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Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands)

 

   June 25,
2019
   September 25,
2018
 
Balance Sheet Data          
Cash and cash equivalents  $2,619   $3,477 
           
Current assets  $4,560   $6,381 
Property and equipment, net   36,666    35,245 
Other assets   19,330    19,324 
Total assets  $60,556   $60,950 
           
Current liabilities, including capital lease obligations and
long-term debt due within one year
  $7,801   $8,335 
Long-term debt due after one year   11,150    7,472 
Other liabilities   8,290    7,922 
Total liabilities  $27,241   $23,729 
           
Stockholders’ equity  $33,315   $37,221 

 

 

   Bad Daddy’s
Burger Bar
  Good Times Burgers &
Frozen Custard
   --------------------------------Fiscal Quarter Ended--------------------------------
   2019  2018  2019  2018
             
Restaurant sales (in thousands)  $21,080   $17,765   $8,100   $8,225 
Restaurants opened during period   -    2    -    0 
Restaurants closed during period   -    -    -    1 
Restaurants open at period end   33    27    26    26 
                     
Restaurant operating weeks   429.0    337.6    338    342.0 
                     
Average weekly sales per restaurant (in
thousands)
  $49.1   $52.6   $24.0   $24.0 

 

 

   Bad Daddy’s
Burger Bar
  Good Times Burgers &
Frozen Custard
   --------------------------------Year-To-Date Period Ended--------------------------------
   2019  2018  2019  2018
             
Restaurant sales (in thousands)  $59,714   $48,706   $21,567   $23,223 
Restaurants opened during period   2    5    -    0 
Restaurants closed during period   -    -    -    2 
Restaurants open at period end   33    27    26    26 
                     
Restaurant operating weeks   1,267.3    970.4    1,053.0    1,062.0 
                     
Average weekly sales per restaurant (in
thousands)
  $47.1   $50.2   $20.5   $21.9 

 

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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-----------------------------------------------------------------------------------
   June 25, 2019  June 26, 2018  June 25, 2019  June 26, 2018  June 25,
2019
  June 26,
2018
                               
Restaurant sales  $21,080    100.0%  $17,765    100.0%  $8,100    100.0%  $8,225    100.0%  $29,180   $25,990 
Restaurant operating costs
(exclusive of depreciation and
amortization shown separately
below):
                                                  
Food and packaging costs   6,063    28.8%   5,179    29.2%   2,466    30.4%   2,654    32.3%   8,529    7,833 
Payroll and benefits costs   7,851    37.2%   6,439    36.2%   2,826    34.9%   2,716    33.0%   10,677    9,155 
Restaurant occupancy costs   1,391    6.6%   1,156    6.5%   700    8.6%   694    8.4%   2,091    1,850 
Other restaurant operating costs   2,339    11.1%   1,725    9.7%   650    8.0%   648    7.9%   2,989    2,373 
Restaurant-level operating profit  $3,436    16.3%   3,266    18.4%  $1,458    18.0%  $1,513    18.4%  $4,894    4,779 
                                                   
Franchise advertising
contributions and net royalty
income
                                           277    273 
Deduct - Other operating:                                                  
Depreciation and amortization                                           1,104    937 
General and administrative                                           2,144    2,069 
Advertising costs                                           666    653 
Franchise costs                                           8    11 
Gain (Loss) on restaurant asset
sale
                                           44    (9)
Asset impairment charge                                           -    - 
Preopening costs                                           129    610 
Total other operating                                           4,095    4,271 
                                                   
Income from operations                                           $1,076   $781 

 

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---------------------------------------------------------------------------------------------
   June 25, 2019  June 26, 2018  June 25, 2019  June 26, 2018  June 26,
2019
  June 25,
2018
                   
Restaurant sales  $59,714    100.0%  $48,706    100.0%  $21,567    100.0%  $23,223    100.0%  $81,281   $71,929 
                                                   
Restaurant operating costs (exclusive of
depreciation and amortization shown
separately below):
                                                  
Food and packaging costs   17,136    28.7%   14,539    29.9%   6,819    31.6%   7,615    32.8%   23,955    22,154 
Payroll and other employee benefit costs   22,502    37.7%   18,002    37.0%   7,956    36.9%   8,074    34.8%   30,458    26,076 
Restaurant occupancy costs   4,022    6.7%   3,114    6.4%   2,199    10.2%   2,164    9.3%   6,221    5,278 
Other restaurant operating costs   6,560    11.0%   4,735    9.7%   1,841    8.5%   1,891    8.1%   8,401    6,626 
Restaurant-level operating profit  $9,494    15.9%   8,316    17.1%  $2,752    12.8%   3,479    15.0%   12,246    11,795 
Franchise royalty income, net                                           718    778 
Deduct - Other operating:                                                  
Depreciation and amortization                                           3,227    2,665 
General and administrative                                           6,398    5,884 
Advertising costs                                           1,841    1,850 
                                                   
Franchise costs                                           31    32 
Gain (Loss) on restaurant asset sale                                           5    (26)
Asset impairment charge                                           -    72 
Preopening costs                                           949    1,683 
Total other operating                                           12,451    12,160 
                                                   
Income from operations                                          $513   $413 

 

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

 

   Fiscal Quarter Ended   Year-to-Date 
   June 25,
2019
   June 26,
2018
   June 25,
2019
   June 26,
2018
 
Adjusted EBITDA:                    
Net Income (Loss), as reported  $540   $304   $(961)  $(710)
Depreciation and amortization   1,096    897    3,157    2,550 
Interest expense, net   202    97    561    272 
EBITDA   1,838   $1,298    2,757   $2,112 
Preopening expense   128    565    928    1,541 
Non-cash stock-based compensation   110    88    331    303 
GAAP rent-cash cash difference   (44)   (35)   (50)   (51)
Gain (Loss) on disposal of assets   44    (9)   5    (26)
Asset impairment charge   -    0    -    72 
Adjusted EBITDA  $2,076   $1,907   $3,971   $3,951 

 

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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