Revenues surges on acquisition of Bad Daddy’s International
Good Times Restaurants Inc. (NASDAQ: GTIM) announced its Q4 FY16 and full year FY16 financial results on December 08th, 2016.
The Lakewood, Colorado-based company, through its subsidiaries, owns, operates, and franchises restaurants in Colorado. The company operates and franchises 37 drive-thru fast food hamburger restaurants under the Good Times Burgers & Frozen Custard name. The company also owns and operates 19 Bad Daddy’s Burger Bar restaurants, a full service, upscale restaurant featuring a chef driven menu of gourmet signature burgers, appetizers and sandwiches with a selection of craft microbrew beers. The company counts Chipotle Mexican Grill Inc. (NYSE: CMG), Sonic Corp. (NASDAQ: SONC), Darden Restaurants Inc. (NYSE: DRI), Chik-fil-A Inc., and Whataburger as its competitors. Read more about the Good Times Restaurants’ financial results below.
Q4 FY16 and FY16 financial highlights
During Q4 FY16, Good Times Restaurants’ total revenues jumped 40% to $17.21 million and surged 60% to $64.43 million for full-year FY16. The surge in revenues reflects the acquisition of Bad Daddy’s International on May 07th, 2015, and the addition of six Bad Daddy’s restaurants during the year. During Q4 FY16, restaurant sales accounted for $17 million of the total revenues, with franchise revenues accounting for the rest. In FY16, restaurant sales accounted for $63.71 million of the total revenues, with franchise revenues accounting for the rest.
During the reporting quarter, same store sales for company-owned Good Times restaurants decreased 1.2%, but increased 0.3% for the year on top of last year’s increase of 6.8% for the comparable quarter and 6.9% for the year. Same store sales for company-owned Bad Daddy’s restaurants increased 1.9% for the quarter and 3.3% for the year on top of last year’s increase of 6.8% for the quarter.
Total restaurant operating costs in Q4 FY16 increased to $14.99 million from $12.66 million in the year-ago period. For the full-year FY16, total restaurant operating costs surged to $56.82 million from $38.16 million in the previous year. During Q4 FY16, restaurant level operating profit as a percentage of sales for Good Times restaurants improved to 17.5% versus 17.3% in the year-ago quarter. Restaurant level operating profit as a percentage of sales for Bad Daddy’s restaurants improved to 17.1% versus 14.9% in the year-ago period. For Q4 FY16, total restaurant level operating profit jumped 26% to $2.94 million and surged 44% to $10.80 million for the year.
Operating income for Q4 FY16 grew to $0.21 million from $0.15 million in the year-ago same period. For the full-year FY16, operating loss widened to $0.3 million from $0.23 million in the previous year. In all, for Q4 FY16, net loss widened to $71,000, or $0.01 per share, from a loss of $53,000, or $0.00 per share, in the year-ago period. For FY16, net loss widened to $1.32 million, or $0.11 per share, from a loss of $0.79 million, or $0.08 per share, in the previous year. Adjusted EBITDA for the quarter grew 20% to $1.05 million from $0.87 million and jumped 35% to $3.36 million from $2.50 million for the prior year.
Cash position: The Company ended FY16 with $6.3 million in cash and no long-term debt.
Change of fiscal year period: The Company said that it has changed its fiscal year end to a 52/53-week year ending on the last Tuesday of September, consisting of four 13-week quarters. This resulted in a change in FY16 end from September 30th, 2016 to September 27th, 2016 which resulted in $577,000 lower revenues and an estimated $150,000 in lower EBITDA for Q4 FY16 and FY16.
New restaurant openings: Good Times Restaurants is on track to replace its center kitchen lines in Good Times for the introduction of key product initiatives by the end of March 2017. The company also plans to open 2 Bad Daddy’s restaurants in Colorado on December 14th, 2016, 1 restaurant in North Carolina on January 16th, 2016. Over the remaining part of FY17, the company also plans to set up 2 more restaurants in Colorado, 3 more in North Carolina, and 2 to 4 in two new markets. It also plans to open one new Good Times restaurant in March 2017.
For FY17, Good Times Restaurants forecasts total revenues of approximately $80 million to $82 million with a year-end revenue run rate of approximately $94 million to $98 million. Total revenue estimates assume same store sales of approximately +1% to +2% for Good Times ranging from -1% to +1% in Q1 FY17 and Q2 FY17 and +3% to +3.5% in Q3 FY17 and Q4 FY17. Same store sales are forecast at +1% to +2% for Bad Daddy’s.
The company also forecasts general and administrative expenses of approximately $7.0 million to $7.2 million, including approximately $900,000 of non-cash equity compensation expense. It also forecasts opening of 9 to 11 new Bad Daddy’s restaurants (including 2 joint venture units) and 1 new Good Times restaurant as well as restaurant pre-opening expenses of approximately $3.5 million during the year.
Good Times Restaurants’ stock closed the day at $3.00, slipping 1.64%, at the close on Thursday, December 22nd, 2016, having vacillated between an intraday high of $3.05 and a low of $2.98 during the session. The stock’s trading volume was at 93,718 for the day. The Company’s market cap was at $36.30 million as of Thursday’s close.