Form 8-K Good Times Restaurants For: Dec 07

December 7, 2017 4:05 PM

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 7, 2017
 
(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, Colorado 80228
(Address of principal executive offices)   (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 2.02
Results of Operations and Financial Condition.
 
On December 7, 2017 Good Times Restaurants Inc. issued a press release announcing earnings and other financial results for its fiscal quarter ended September 26, 2017 and that management would review these results in a conference call on Thursday, December 7, 2017 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
 
2

 
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 7, 2017
By:
   
Boyd E. Hoback
   
President and Chief Executive Officer
 

3
Exhibit 99.1
 
FOR IMMEDIATE RELEASE
December 7, 2017
Nasdaq Capital Markets - GTIM
 
GOOD TIMES RESTAURANTS REPORTS Q4 AND FISCAL YEAR END RESULTS
Total Revenues Increased 31% to $22.5 Million in Q4
Total Revenues for Fiscal 2017 Increased 23% to $79 Million
Conference Call Thursday, December 7, 2017, at 3:00 p.m. MT/5:00 p.m. ET
  
(DENVER, CO) Good Times Restaurants Inc. (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 fourth fiscal quarter ended September 26, 2017.
 
Key highlights of the Company’s financial results vs prior year include:
 
·
Same store sales for company-owned Good Times restaurants increased 3.9% for the quarter and increased 2.1% for the year on top of last year’s increase of 0.3% for the year
 
·
Same store sales for company-owned Bad Daddy’s restaurants increased 1.4% for the quarter and 1.6% for the year on top of last year’s increase of 1.9% for the quarter and 3.3% for the year
 
·
Total revenues increased 31% to $22,584,000 for the quarter and increased 23% to $79,080,000 for the year, which reflects the addition of one new Good Times restaurant and six Bad Daddy’s restaurants during the year
 
·
Subsequent to the year end two additional Bad Daddy’s opened during the first two weeks of October
 
·
Income from Operations declined by $1,122,000 to a loss of $1,422,000 for the year, which includes the impact of $2,588,000 of new store preopening costs incurred in fiscal 2017.
 
·
Restaurant Level Operating Profit (a non-GAAP measure) for Good Times restaurants improved to $1,333,000 for the quarter versus $1,313,000 in the same quarter last year*
 
·
Restaurant Level Operating Profit (a non-GAAP measure) for Bad Daddy’s restaurants improved 28% to $2,081,000 in the fourth quarter from $1,631,000 in the fourth quarter last year*
 
·
Total Restaurant Level Operating Profit (a non-GAAP measure) increased 16% to $3,414,000 for the quarter and increased 15% to $12,378,000 for the year*
 
·
Adjusted EBITDA (a non-GAAP measure) for the quarter increased 24% to $1,305,000 from $1,051,000 and increased 12% to $3,777,000 from $3,368,000 for the fiscal year*
 
·
The Company ended the quarter with $4.3 million in cash and $5.3 million of long term debt
  
Boyd Hoback, President & CEO said “We are pleased with our results that were slightly ahead of our revised guidance for the fourth quarter, particularly given the intense discounting and value pricing environment in both segments and absorbing the spike in commodity costs that began in our third quarter.  For the first nine weeks of our first quarter of fiscal 2018 same store sales are +4.3% for Good Times and +1.7% at Bad Daddy’s.  Our class of 2017 new Bad Daddy’s are averaging above our systemwide sales average and we are pleased with their performance as they reach stabilized sales trends after their honeymoon sales periods.”
   
Hoback added, “We opened two Bad Daddy’s on October 2nd and October 9th in North Carolina that had been planned for the last two weeks of fiscal 2017 and expect to open an additional seven restaurants during the balance of fiscal 2018.  We expect to open our next Bad Daddy’s in the Atlanta, Georgia market in very early January 2018 with additional units following in North Carolina, South Carolina, and Tennessee.  We have eight Bad Daddy’s leases signed and expect to sign an additional four leases by the end of the calendar year for our fiscal 2018 and initial 2019 development.”
 

 
Fiscal 2018 Outlook:
 
The Company has confirmed and updated its guidance for fiscal 2018:
 
·
Total revenues of approximately $100 million to $102 million with a year-end revenue run rate of approximately $109 million to $111 million
 
·
Total revenue estimates assume same store sales of approximately +3% to +3.5% for Good Times consistently throughout the year and +1% to +2% for Bad Daddy’s.
 
·
General and administrative expenses of approximately $7.8 million to $8.0 million, including approximately $700,000 of non-cash equity compensation expense
 
·
The opening of 9 new Bad Daddy’s restaurants (including 2 joint venture units)
 
·
Net loss of approximately $1.4 million, including pre-opening expenses of approximately $2.5 million
 
·
Total Adjusted EBITDA* of approximately $5.0 million to $5.5 million
 
·
Capital expenditures (net of tenant improvement allowances) of approximately $9.5 million including approximately $1.2 million related to fiscal 2019 development
 
*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 2017 financial results on Thursday, December 7, 2017 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) operates Good Times Burgers & Frozen Custard, a regional chain of quick service restaurants located primarily in Colorado, through its wholly-owned subsidiary, Good Times Drive Thru Inc.  Good Times provides a menu of high quality all natural hamburgers, 100% all natural chicken tenderloins, fresh frozen custard, natural cut fries, fresh lemonades and other unique offerings.  Good Times currently operates and franchises a total of 38 restaurants.
 
GTIM also owns, operates, franchises and licenses 26 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.
 
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 27, 2016 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
 

 
Good Times Restaurants Inc.
Unaudited Supplemental Information
(In thousands, except per share amounts)
 
   
Fiscal Quarter Ended
   
Fiscal Year Ended
 
   
Sept. 26,
   
Sept. 27,
   
Sept. 26,
   
Sept. 27,
 
Statement of Operations
 
2017
   
2016
   
2017
   
2016
 
Net revenues:
                       
Restaurant sales
 
$
22,414
   
$
17,040
   
$
78,395
   
$
63,716
 
Franchise revenues
   
170
     
177
     
685
     
723
 
Total net revenues
   
22,584
     
17,217
     
79,080
     
64,439
 
Restaurant Operating Costs:
                               
Food and packaging costs
   
7,309
     
5,383
     
24,900
     
20,236
 
Payroll and other employee benefit costs
   
8,058
     
5,868
     
28,274
     
22,098
 
Restaurant occupancy costs
   
1,552
     
1,290
     
5,759
     
4,893
 
Other restaurant operating costs
   
2,081
     
1,555
     
7,084
     
5,684
 
New store preopening costs
   
851
     
267
     
2,588
     
1,695
 
Depreciation and amortization
   
811
     
630
     
2,897
     
2,222
 
Total restaurant operating costs
   
20,662
     
14,993
     
71,502
     
56,828
 
General and administrative costs
   
1,780
     
1,587
     
7,002
     
6,288
 
Advertising costs
   
337
     
403
     
1,694
     
1,540
 
Franchise costs
   
28
     
26
     
108
     
108
 
Asset impairment costs
   
219
     
0
     
219
     
0
 
(Gain) on disposal of restaurants and equipment
   
(6
)
   
(6
)
   
(23
)
   
(25
)
Income (loss) from operations
   
(436
)
   
214
     
(1,422
)
   
(300
)
Other income (expense):
                               
Interest income (expense), net
   
(77
)
   
(17
)
   
(182
)
   
(107
)
Debt extinguishment costs
   
0
     
(57
)
   
0
     
(57
)
Other expense
   
0
     
0
     
(1
)
   
(1
)
Total other income (expenses), net
   
(77
)
   
(74
)
   
(183
)
   
(165
)
Net income (loss)
 
(513
)
 
$
140
   
(1,605
)
 
(465
)
Income attributable to non-controlling interest
   
(151
)
   
(211
)
   
(650
)
   
(856
)
Net loss attributable to Good Times Restaurants Inc.
   
(664
)
 
(71
)
 
(2,255
)
 
(1,321
)
Basic and diluted loss per share
 
(0.05
)
 
(0.01
)
 
(0.18
)
 
(0.11
)
Basic and diluted weighted average common shares
outstanding
   
12,393
     
12,283
     
12,321
     
12,269
 
 

 
Good Times Restaurants Inc.
Unaudited Supplemental Information
(In thousands)

   
Sept. 26,
   
Sept. 27,
 
Balance Sheet Data
 
2017
   
2016
 
Cash & cash equivalents
 
$
4,337
   
$
6,330
 
Current assets
   
6,066
     
7,793
 
Property and Equipment, net
   
29,691
     
19,692
 
Other assets
   
19,396
     
19,392
 
Total assets
 
$
55,153
   
$
46,877
 
Current liabilities, including capital lease obligations and
long-term debt due within one year
 
$
6,916
   
$
5,122
 
Long-term debt due after one year
   
5,339
     
19
 
Other liabilities
   
5,614
     
3,938
 
Total liabilities
 
$
17,869
   
$
9,079
 
Stockholders’ equity
 
$
37,284
   
$
37,798
 

Supplemental Information:

   
Good Times Burgers & Frozen Custard
   
Bad Daddy’s Burger Bar
 
   
Fiscal Quarter Ended
   
Fiscal Year Ended
   
Fiscal Quarter Ended
   
Fiscal Year Ended
 
   
Sept. 26,
   
Sept. 27,
   
Sept. 26,
   
Sept. 27,
   
Sept. 26,
   
Sept. 27,
   
Sept. 26,
   
Sept. 27,
 
   
2017
   
2016
   
2017
   
2016
   
2017
   
2016
   
2017
   
2016
 
Restaurant Sales
 
$
8,378
   
$
7,500
   
$
30,689
   
$
28,861
   
$
14,036
   
$
9,540
   
$
47,706
   
$
34,855
 
Average weekly sales per restaurant
   
23.0
     
21.4
     
21.4
     
20.6
     
50.6
     
48.0
     
49.3
     
49.0
 
Restaurant operating weeks
   
364
     
351.0
     
1432.3
     
1,404.0
     
277.3
     
198.7
     
968.1
     
710.7
 
Restaurants open during period
   
0
     
0
     
1
     
0
     
1
     
1
     
6
     
6
 
Restaurants open at period end
   
28
     
27
     
28
     
27
     
22
     
16
     
22
     
16
 
 

 
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)

   
Good Times Burgers & Frozen Custard
   
Bad Daddy’s Burger Bar
    Good Times Restaurants Inc.  
   
Fiscal Quarter Ended
   
Fiscal Quarter Ended
   
Fiscal Quarter Ended
 
   
Sept. 26,
2017
   
Sept. 27,
2016
   
Sept. 26,
2017
   
Sept. 27,
2016
    Sept. 26,
2017
    Sept. 27,
2016
 
Restaurant Sales
 
$
8,378
     
100.0
%
 
$
7,500
     
100.0
%
 
$
14,036
     
100.0
%
 
$
9,540
     
100.0
%
 
$
22,414
   
$
17,040
 
Restaurant Operating Costs (exclusive
of depreciation and amortization
shown separately below):
                                                                               
Food and packaging costs
   
2,802
     
33.4
%
   
2,430
     
32.4
%
   
4,507
     
32.1
%
   
2,953
     
31.0
%
   
7,309
     
5,383
 
Payroll and other employee
benefit costs
   
2,843
     
33.9
%
   
2,424
     
32.3
%
   
5,215
     
37.2
%
   
3,444
     
36.1
%
   
8,058
     
5,868
 
Restaurant occupancy costs
   
697
     
8.3
%
   
686
     
9.1
%
   
855
     
6.1
%
   
604
     
6.3
%
   
1,552
     
1,290
 
Other restaurant operating costs
   
703
     
8.4
%
   
647
     
8.6
%
   
1,378
     
9.8
%
   
908
     
9.5
%
   
2,081
     
1,555
 
Restaurant-level operating profit
   
1,333
     
15.9
%
   
1,313
     
17.5
%
   
2,081
     
14.8
%
   
1,631
     
17.1
%
   
3,414
     
2,944
 
Franchise royalty income and
expense, net
                                                                   
170
     
177
 
Deduct - Other operating:
                                                                               
Depreciation and amortization
                                                                   
811
     
630
 
General and administrative
                                                                   
1,780
     
1,587
 
Advertising costs
                                                                   
337
     
403
 
Franchise costs
                                                                   
28
     
26
 
(Gain) on disposal of
restaurants and equipment
                                                                   
(6
)
   
(6
)
Asset impairment costs
                                                                   
219
     
0
 
Preopening costs
                                                                   
851
     
267
 
Total other operating
                                                                   
4,020
     
2,907
 
Income (loss) from Operations
                                                                 
$
(436
)
 
$
214
 
 
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 US GAAP Results          

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Loss from Operations
(In thousands, except percentage data)
 
   
Good Times Burgers & Frozen Custard
   
Bad Daddy’s Burger Bar
   
Good Times Restaurants Inc.
 
   
Fiscal Year Ended
   
Fiscal Year Ended
   
Fiscal Year Ended
 
   
Sept. 26,
   
Sept. 27,
   
Sept. 26,
   
Sept. 27,
   
Sept. 26,
   
Sept. 27,
 
   
2017
   
2016
   
2017
   
2016
   
2017
   
2016
 
Restaurant Sales
 
$
30,689
     
100
%
 
$
28,861
     
100.0
%
 
$
47,706
     
100.0
%
 
$
34,855
     
100.0
%
 
$
78,395
   
$
63,716
 
Restaurant Operating Costs
(exclusive of depreciation and
amortization shown separately
below):
                                                                               
Food and packaging costs
   
9,994
     
32.6
%
   
9,346
     
32.4
%
   
14,906
     
31.2
%
   
10,890
     
31.2
%
   
24,900
     
20,236
 
Payroll and other employee
benefit costs
   
10,548
     
34.4
%
   
9,450
     
32.7
%
   
17,726
     
37.2
%
   
12,648
     
36.3
%
   
28,274
     
22,098
 
Restaurant occupancy costs
   
2,772
     
9.0
%
   
2,711
     
9.4
%
   
2,987
     
6.3
%
   
2,182
     
6.3
%
   
5,759
     
4,893
 
Other restaurant operating costs
   
2,536
     
8.3
%
   
2,381
     
8.2
%
   
4,548
     
9.5
%
   
3,303
     
9.5
%
   
7,084
     
5,684
 
Restaurant-level operating profit
   
4,839
     
15.8
%
   
4,973
     
17.2
%
   
7,539
     
15.8
%
   
5,832
     
16.7
%
   
12,378
     
10,805
 
Franchise royalty income and
expense, net
                                                                   
685
     
723
 
Deduct - Other operating:
                                                                               
Depreciation and amortization
                                                                   
2,897
     
2,222
 
General and administrative
                                                                   
7,002
     
6,288
 
Advertising costs
                                                                   
1694
     
1,540
 
Franchise costs
                                                                   
108
     
108
 
(Gain) on disposal of
restaurants and equipment
                                                                   
(23
)
   
(25
)
Asset impairment costs
                                                                   
219
     
0
 
Preopening costs
                                                                   
2,588
     
1,695
 
Total other operating
                                                                   
14,485
     
11,828
 
Loss from Operations
                                                                 
(1,422
)
 
(300
)

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 quarters and fiscal years ended September 26, 2017 and September 27, 2016, 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. 26,
   
Sept. 27,
   
Sept. 26,
   
Sept. 27,
 
   
2017
   
2016
   
2017
   
2016
 
Net loss as reported
 
(664
)
 
(71
)
 
(2,255
)
 
(1,321
)
Adjustments to net income (loss):
                               
Depreciation and amortization
   
774
     
611
     
2,776
     
2,116
 
Asset impairment cost
   
219
     
0
     
219
     
0
 
Interest expense, net
   
77
     
16
     
185
     
107
 
EBITDA
   
406
     
556
     
925
     
902
 
Preopening expense
   
759
     
253
     
2,154
     
1,680
 
Non-cash stock based compensation
   
139
     
186
     
748
     
718
 
Debt extinguishment costs
   
0
     
57
     
0
     
57
 
GAAP rent in excess of cash rent
   
7
     
6
     
(27
)
   
36
 
Non-cash disposal of assets
   
(6
)
   
(7
)
   
(23
)
   
(25
)
Adjusted EBITDA
 
$
1,305
   
$
1,051
   
$
3,777
   
$
3,368
 
 
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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