Market Overview

Good Times Restaurants Reports Q2 Results

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Total Revenues increased 15% to $27.2 million in Q2

Conference Call Thursday, May 9, 2019, at 3:00 p.m. MT/5:00 p.m. ET

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 second fiscal
quarter ended March 26, 2019.

Key highlights of the Company's financial results include:

  • Total revenues increased 15% to $27,172,000 for the quarter
  • Total Restaurant Sales for Bad Daddy's restaurants increased 27.8% to
    $20,384,000 and Bad Daddy's Restaurant Level Operating Profit* (a
    non-GAAP measure) was $3,322,000 or 16.3% as a percent of sales
  • Same store sales for company-owned Bad Daddy's restaurants increased
    1.3% for the quarter on top of last year's increase of 0.2%
  • The Company opened one new Bad Daddy's restaurant during the quarter
  • Total Restaurant Sales for Good Times restaurants were $6,570,000 and
    Good Times Restaurant Level Operating Profit* (a non-GAAP measure) was
    $509,000 or 7.7% as a percent of sales
  • Net Loss Attributable to Common Shareholders was $450,000 for the
    quarter
  • Adjusted EBITDA* (a non-GAAP measure) for the quarter was $1,148,000
  • The Company ended the quarter with $3.4 million in cash and $12.3
    million drawn against its senior credit facility

Boyd Hoback, President and CEO, said, "Similar to our first quarter's
results, we continued to post favorable same-store sales results for Bad
Daddy's but our Good Times same-store sales were significantly impacted
by more inclement weather compared to the prior year and were down 5.9%
during the second quarter, adjusted for the impact of store closures on
March 13th. However, subsequent to the end of the quarter we
have returned to more seasonable weather and our same-store sales at
Good Times have rebounded, up more than 4% so far in the third quarter,
validating our assertion that the first and second quarter sales comps
were largely the result of weather compared to the prior year. We opened
one new Bad Daddy's during the quarter which continues to post sales
significantly ahead of our system average, even as it moves out of its
honeymoon period. We have three additional Bad Daddy's under development
that we expect to open this fiscal year and one that we expect to open
shortly after the end of the fiscal year."

Commenting on the Company's earnings guidance, Ryan Zink, Chief
Financial Officer, stated, "We are reaffirming our guidance from the
prior quarter, 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. We have updated our same-store sales assumptions at
Good Times to reflect a return to positive same-store-sales."

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 +1%
    to +2% for the balance of the year for Good Times and 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 five 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 $7.0 to $7.5 million including approximately $0.6
    million related to fiscal 2020 development. 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 $13.5 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 second quarter 2019 financial results on Thursday, May 9,
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
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.

 
Good Times Restaurants Inc.
Unaudited Supplemental Information

(In thousands, except per share amounts)

 
    Fiscal Quarter Ended     Year-To-Date
Statement of Operations March 26,
2019
    March 27,
2018
March 26,
2019
    March 27,
2018
Net revenues:
Restaurant sales $ 26,954 $ 23,342 $ 52,101 $ 45,939
Franchise revenues   218     254     441     505  
Total net revenues 27,172 23,596 52,542 46,444
 
Restaurant operating costs:
Food and packaging costs 7,903 7,118 15,426 14,321
Payroll and other employee benefit costs 10,228 8,642 19,781 16,921
Restaurant occupancy costs 2,165 1,788 4,130 3,428
Other restaurant operating costs 2,829 2,137 5,412 4,253
Preopening costs 193 496 820 1,073
Depreciation and amortization   1,089     882     2,123     1,728  
Total restaurant operating costs 24,407 21,063 47,692 41,724
 
General and administrative costs 2,193 1,898 4,254 3,815
Advertising costs 547 602 1,175 1197
Franchise costs 16 11 23 21
Asset impairment charge - 72 - 72
Gain on disposal of restaurants and equipment   (9 )   (9 )   (39 )   (17 )
Income/(Loss) from operations 18 (41 ) (563 ) (368 )
 
Other income (expense):
Interest income (expense), net (199 ) (91 ) (359 ) (174 )
Other income   1     -     -     -  
Total other income (expense), net   (198 )   (91 )   (359 )   (174 )
Net loss (180 ) (132 ) (922 ) (542 )
Income attributable to non-controlling interests   (270 )   (299 )   (579 )   (472 )
Net loss attributable to common shareholders $ (450 ) $ (431 ) $ (1,501 ) $ (1,014 )
 
Basic and diluted loss per share $ (0.04 ) $ (0.03 ) $ (0.12 ) $ (0.08 )
 

Basic and diluted weighted average common shares outstanding

12,523 12,468 12,514 12,456
 
Good Times Restaurants Inc.
Unaudited Supplemental Information

(In thousands)

 
        March 26,
2019
    September 25,
2018
Balance Sheet Data
Cash & cash equivalents $ 3,399 $ 3,477
 
Current assets 5,695 6,381
Property and equipment, net 35,821 35,245
Other assets   19,361   19,324
Total assets $ 60,877 $ 60,950
 

Current liabilities, including capital lease obligations and
long-term debt due within one year

$ 7,638 $ 8,335
Long-term debt due after one year 12,300 7,472
Other liabilities   8,260   7,922
Total liabilities   28,198   23,729
 
Stockholders' equity $ 32,679 $ 37,221
 
    Bad Daddy's
Burger Bar
    Good Times Burgers &
Frozen Custard
Fiscal Quarter Ended
2019     2018 2019     2018
 
Restaurant sales (in thousands) $ 20,384 $ 15,954 $ 6,570 $ 7,388
Restaurants opened during period 1 1 - -
Restaurants closed during period - - - 1
Restaurants open at period end 33 25 26 27
 
Restaurant operating weeks 428.0 323.3 336.3 356.0
 

Average weekly sales per restaurant (in thousands)

$ 47.6 $ 49.3 $ 19.4 $ 20.8
 
 
Bad Daddy's
Burger Bar
Good Times Burgers &
Frozen Custard
Year-To-Date Period Ended
2019 2018 2019 2018
 
Restaurant sales (in thousands) $ 38,634 $ 30,941 $ 13,467 $ 14,998
Restaurants opened during period 2 3 - -
Restaurants closed during period - - - 1
Restaurants open at period end 33 25 26 27
 
Restaurant operating weeks 838.3 632.9 674.3 720.0
 

Average weekly sales per restaurant (in thousands)

$ 46.1 $ 48.9 $ 20.0 $ 20.8
 

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
March 26, 2019   March 27, 2018 March 26, 2019   March 27, 2018

Mar. 26, 2019

 

Mar. 27, 2018

       
Restaurant sales $ 20,384 100.0 % $ 15,954 100.0 % $ 6,570 100.0 % $ 7,388 100.0 % $ 26,954 $ 23,342

Restaurant operating costs (exclusive of depreciation and
amortization
shown separately below):

Food and packaging costs 5,804 28.5 % 4,727 29.6 % 2,099 31.9 % 2,391 32.4 % 7,903 7,118

Payroll and other employee benefit costs

7,669 37.6 % 5,969 37.4 % 2,559 39.0 % 2,673 36.2 % 10,228 8,642
Restaurant occupancy costs 1,354 6.6 % 1,018 6.4 % 811 12.3 % 770 10.4 % 2,165 1,788
Other restaurant operating costs   2,237 11.0 %   1,541 9.7 %   592 9.0 %   596 8.1 %   2,829     2,137  
Restaurant-level operating profit $ 3,320 16.3 % $ 2,699 16.9 % $ 509 7.7 % $ 958 13.0 % $ 3,829 3,657
 

Franchise advertising contributions and net royalty income

218 254
 
Deduct - Other operating:
Depreciation and amortization 1,089 882
General and administrative 2,193 1,898
Advertising costs 547 602
Franchise costs 16 11
Gain on restaurant asset sale (9 ) (9 )
Asset impairment charge - 72
Preopening costs   193     496  
Total other operating   4,029     3,952  

 

Income / (loss) from operations

$ 18   $ (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).

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

March 26, 2019   March 27, 2018

March 26, 2019

  March 27, 2018

Mar. 26, 2019

 

Mar. 27, 2018

       
Restaurant sales $ 38,634 100.0 % $ 30,941 100.0 % $ 13,467 100.0 % $ 14,998 100.0 % $ 52,101 $ 45,939
 

Restaurant operating costs (exclusive of depreciation and
amortization
shown separately below):

Food and packaging costs 11,073 28.7 % 9,360 30.3 % 4,353 32.3 % 4,961 33.1 % 15,426 14,321
Payroll and other employee benefit costs 14,651 37.9 % 11,563 37.4 % 5,130 38.1 % 5,358 35.7 % 19,781 16,921
Restaurant occupancy costs 2,632 6.8 % 1,958 6.3 % 1,498 11.1 % 1,470 9.8 % 4,130 3,428
Other restaurant operating costs   4,220 10.9 %   3,008 9.7 %   1,192 8.9 %   1,245 8.3 %   5,412     4,253  
Restaurant-level operating profit $ 6,058 15.7 % $ 5,052 16.3 % $ 1,294 9.6 % $ 1,964 13.1 % 7,352 7,016
 
Franchise royalty income, net 441 505
 
Deduct - Other operating:
Depreciation and amortization 2,123 1,728
General and administrative 4,254 3,815
Advertising costs 1,175 1,197
Franchise costs 23 21
Gain on restaurant asset sale (39 ) (17 )
Asset impairment charge - 72
Preopening costs   820     1,073  
Total other operating   8,356     7,889  
 
Loss from operations $ (563 ) $ (368 )

Certain percentage amounts in the table above do not total due to
rounding as well as the fact that restaurant operating costs are
expressed as a percentage of restaurant revenues (as opposed to total
revenues).

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 second 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 Loss to Non-GAAP Adjusted EBITDA

 
    Fiscal Quarter Ended     Year-to-Date
March 26,
2019
    March 27,
2018
March 26,
2019
    March 27,
2018
Adjusted EBITDA:
Net loss, as reported $ (450 ) $ (431 ) $ (1,501 ) $ (1,014 )
Depreciation and amortization 1,068 845 2,061 1,653
Interest expense, net   199     91     359     175  
EBITDA 817 505 919 814
Preopening expense 193 491 799 976
Non-cash stock-based compensation 109 97 221 215
GAAP rent-cash cash difference 37 11 (6 ) (16 )
Gain on disposal of assets (9 ) (9 ) (39 ) (17 )
Asset impairment charge   -     72     -     72  
Adjusted EBITDA $ 1,147   $ 1,167   $ 1,894   $ 2,044  

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.

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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