Aug 30, 2012

Dave & Buster's, Inc. Reports a 36% Adjusted EBITDA Increase for Its Second Quarter Ended July 29, 2012

Dave & Buster's, Inc. Reports a 36% Adjusted EBITDA Increase for Its Second Quarter Ended July 29, 2012

DALLAS--()--Dave & Buster's, Inc., a leading operator of high volume entertainment/dining complexes, today announced results for its second quarter ended July 29, 2012.
 
Total revenues increased 15.0% to $147.9 million in the second quarter of 2012 compared to $128.7 million in the second quarter of 2011. The revenue increase was comprised of a 5.4% increase in comparable store sales along with a $12.6 million increase in revenues from non-comparable stores. Across all stores, Food and Beverage revenues increased 11.8% and Amusements and Other revenues increased 18.1%.

Adjusted EBITDA increased 36.0% to $26.7 million in the second quarter of 2012 from $19.7 million in the second quarter of 2011.

Total revenues for the 26-week period increased 12.3% to $311.4 million compared to $277.3 million for the 26-week period last year. The revenue increase was comprised of a 2.4% increase in comparable store sales along with a $28.7 million increase in revenues from non-comparable stores. This was partially offset by a $0.9 million revenue reduction related to the May 2, 2011 closure of a store in Dallas, Texas. Across all stores, Food and Beverage revenues increased 9.0% and Amusement and Other revenues increased 15.6%.

Adjusted EBITDA for the 26-week period increased 24.6% to $66.4 million from $53.3 million for the comparable period last year.

"We delivered an outstanding second quarter performance and attribute our success in driving higher sales and profitability to several factors," said CEO Steve King. "Specifically, we introduced several new food and beverage items, which were well received by our guests, and featured our most significant new games launch ever in our television advertising, all of which positively impacted our revenues. We also benefited from strong contributions of stores opened in 2011 and 2012, further demonstrating the soundness of our real estate strategy and broad-based appeal of our concept. We are pleased with the momentum achieved through the first half of the year."

Non-GAAP Financial Measures

A reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure presented in accordance with GAAP, is set forth in the attachment to this release.

The Company will hold a conference call to discuss second quarter results on Thursday, August 30, 2012, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). To participate in the conference call please dial (877) 317-6789 a few minutes before call start time and reference conference ID# 10017607. Canadian callers should dial (866) 605-3852; callers from all other international locations should dial 1 (412) 317-6789 to participate in the call. Additionally, a live and archived webcast of the conference call will be available on the Company's website, www.daveandbusters.com.

Founded in 1982 and headquartered in Dallas, Texas, Dave & Buster's is the premier national owner and operator of 59 high-volume venues that offer interactive entertainment options for adults and families, such as skill/sports-oriented redemption games and technologically advanced video and simulation games, combined with a full menu of high quality food and beverages. Dave & Buster's currently has stores in 25 states and Canada. For additional information on Dave & Buster's, please visit www.daveandbusters.com.

The statements contained in this release that are not historical facts are forward-looking statements. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by our level of indebtedness, general business and economic conditions, the impact of competition, the seasonality of the company's business, adverse weather conditions, future commodity prices, guest and employee complaints and litigation, fuel and utility costs, labor costs and availability, changes in consumer and corporate spending, changes in demographic trends, changes in governmental regulations, unfavorable publicity, our ability to open new stores, and acts of God.

DAVE & BUSTER'S, INC.

Condensed Consolidated Balance Sheets

(in thousands)

ASSETS July 29, 2012 January 29, 2012
(unaudited) (audited)
Current assets:
Cash and cash equivalents $ 54,725 $ 33,684
Other current assets 37,011 41,310

Total current assets

$ 91,736 $ 74,994
Property and equipment, net 318,031 323,342
Intangible and other assets, net 378,867 380,326
Total assets $ 788,634 $ 778,662
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 87,270 $ 86,643
Other long-term liabilities 102,752 104,987
Long-term debt, less current liabilities, net unamortized discount 344,576 345,167
Stockholders' equity 254,036 241,865
Total liabilities and stockholders' equity $ 788,634 $ 778,662

DAVE & BUSTER'S, INC.
Consolidated Statements of Operations
(dollars in thousands)
(unaudited)
13 Weeks Ended 13 Weeks Ended
July 29, 2012 July 31, 2011
Food and beverage revenues $ 71,431 48.3 % $ 63,877 49.6 %
Amusement and other revenues 76,510 51.7 % 64,787 50.4 %
Total revenues 147,941 100.0 % 128,664 100.0 %
Cost of products 29,388 19.9 % 25,745 20.0 %
Store operating expenses 85,756 57.9 % 76,242 59.3 %
General and administrative expenses 8,840 6.0 % 8,614 6.7 %
Depreciation and amortization 15,032 10.1 % 13,225 10.3 %
Pre-opening costs 559 0.4 % 1,431 1.1 %
Total operating expenses 139,575 94.3 % 125,257 97.4 %
Operating income 8,366 5.7 % 3,407 2.6 %
Interest expense, net 8,051 5.5 % 8,213 6.3 %
Income (loss) before income tax benefit 315 0.2 % (4,806 ) -3.7 %
Income tax benefit (372 ) -0.3 % (1,688 ) -1.3 %
Net income (loss) $ 687 0.5 % $ (3,118 ) -2.4 %
Other information:
Company-owned and operated stores open at end of period (1) 59 57
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:
13 Weeks Ended 13 Weeks Ended
July 29, 2012 July 31, 2011
Total net income (loss) $ 687 $ (3,118 )
Add back: Interest expense, net 8,051 8,213
Income tax benefit (372 ) (1,688 )
Depreciation and amortization 15,032 13,225
EBITDA 23,398 16,632
Add back: Loss on asset disposal 1,603 549
Share-based compensation 212 262
Currency transaction loss 51 38
Pre-opening costs 559 1,431
Reimbursement of affiliate expenses. 173 175
Deferred amusement revenue and ticket
redemption liability adjustments 637 350
Transaction and other costs 101 214
Adjusted EBITDA (2) $ 26,734 $ 19,651

DAVE & BUSTER'S, INC.
Consolidated Statements of Operations
(dollars in thousands)
(unaudited)
26 Weeks Ended 26 Weeks Ended
July 29, 2012 July 31, 2011
Food and beverage revenues $ 150,575 48.4% $ 138,139 49.8%
Amusement and other revenues 160,840 51.6% 139,128 50.2%
Total revenues 311,415 100.0% 277,267 100.0%
Cost of products 60,342 19.4% 54,044 19.5%
Store operating expenses 171,247 55.0% 155,613 56.1%
General and administrative expenses 17,857 5.7% 17,425 6.3%
Depreciation and amortization 29,827 9.6% 26,295 9.5%
Pre-opening costs 709 0.2% 2,171 0.8%
Total operating expenses 279,982 89.9% 255,548 92.2%
Operating income 31,433 10.1% 21,719 7.8%
Interest expense, net 16,393 5.3% 16,456 5.9%
Income before income tax provision 15,040 4.8% 5,263 1.9%
Income tax provision 3,369 1.1% 1,663 0.6%
Net income $ 11,671 3.7% $ 3,600 1.3%
Other information:
Company-owned and operated stores open at end of period (1) 59 57
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:
26 Weeks Ended 26 Weeks Ended
July 29, 2012 July 31, 2011
Total net income $ 11,671 $ 3,600
Add back: Interest expense, net 16,393 16,456
Provision for income taxes 3,369 1,663
Depreciation and amortization 29,827 26,295
EBITDA 61,260 48,014
Add back: Loss on asset disposal 1,939 977
Share-based compensation 504 622
Currency transaction (loss) gain 4 (157)
Pre-opening costs 709 2,171
Reimbursement of affiliate expenses. 374 240
Deferred amusement revenue and ticket
redemption liability adjustments 1,416 968
Transaction and other costs 202 451
Adjusted EBITDA (2) $ 66,408 $ 53,286

NOTE

(1) The store count excludes one franchise location in Canada.

(2) EBITDA, a non-GAAP measure, is defined as net income (loss) before income tax provision (benefit), interest expense (net) and depreciation and amortization. Adjusted EBITDA, also a non-GAAP measure, is defined as EBITDA plus (gain) loss on asset disposal, share-based compensation expense, pre-opening costs, reimbursement of affiliate expenses, and other non-cash or non-recurring charges. The company believes that EBITDA and Adjusted EBITDA (collectively, "EBITDA – Based Measures") provide useful information to debt holders regarding the Company's operating performance and its capacity to incur and service debt and fund capital expenditures. The Company believes that the EBITDA – Based Measures are used by many investors, analysts and rating agencies as a measure of performance. In addition, Adjusted EBITDA is approximately equal to "Consolidated EBITDA" as defined in our senior secured credit facility and indentures relating to the Company's senior notes. Neither of the EBITDA – Based Measures is defined by GAAP and neither should be considered in isolation or as an alternative to other financial data prepared in accordance with GAAP or as an indicator of the Company's operating performance. EBITDA and Adjusted EBITDA as defined in this release may differ from similarly titled measures presented by other companies.

Contacts

Halliburton Investor Relations
Geralyn DeBusk, 972-458-8000