Release Details

Successfully Executing Near-Term Priorities to Drive Growth

DALLAS, Dec. 10, 2019 (GLOBE NEWSWIRE) -- Dave & Buster's Entertainment, Inc., (NASDAQ:PLAY), ("Dave & Buster's" or "the Company"), an owner and operator of entertainment and dining venues, today announced financial results for its third quarter 2019, which ended on November 3, 2019.

Key Highlights (all comparisons to third quarter 2018)

• Total revenues increased 6.1% to $299.4 million from $282.1 million
• Number of stores increased 13.6% to 134 from 118
• Comparable store sales decreased 4.1%
• Net income totaled $0.5 million, or $0.02 per diluted share, vs. net income of $11.9 million, or $0.30 per diluted share.
  • Third quarter 2019 net income was negatively affected by pre-tax charges totaling $3.3 million ($2.6 million, net of tax, or $0.08 per diluted share) related to on-going litigation and corporate restructuring. Third quarter 2018 net income benefited from a $2.3 million pre-tax insurance recovery ($1.4 million net of tax, or $0.03 per diluted share).
• EBITDA decreased 13.5% to $39.8 million from $46.0 million.
  • Both third quarter 2019 and third quarter 2018 EBITDA were affected by pre-tax items described above. Excluding these impacts from the respective third quarter measures, EBITDA in the third quarter of 2019 declined by $0.6 million or 1.4% to $43.2 million from $43.8 million.
• Repurchased 2.4 million shares for approximately $97 million and increased quarterly cash dividend by 7% to $0.16 per share
• Fiscal 2019 guidance updated

“We delivered 6% revenue growth in the third quarter driven by strong new store performance, and are encouraged by our progress advancing our near-term priorities to drive improved performance and sustainable shareholder value,” said Brian Jenkins, Chief Executive Officer. “We are successfully executing our plan to drive growth and position the company for long-term success despite comp sales headwinds from increased competition. We will continue to manage the pace of new store growth to maximize returns and focus on advancing our store revitalization efforts.”

Third Quarter Results
(All comparisons are between third quarter 2019 and third quarter 2018, unless otherwise noted)

Total revenues increased 6.1% to $299.4 million from $282.1 million, driven by a 7.0% increase in Amusements and Other revenue and a 4.9% increase in Food and Beverage revenue. Amusement and Other revenue increased 50 basis points as a percentage of total revenue to 58.4%.

Comparable store sales decreased 4.1%, driven by a 4.6% decline in walk-in sales, partially offset by a 0.7% increase in special events sales. Comparable store sales decreased 3.9% in Amusements & Other and 4.4% in Food & Beverage. Third quarter 2018 comparable store sales decreased 1.3%. Non-comparable store revenue totaled $75.4 million, an increase of $26.2 million, or 53.3%.

Operating income decreased 58.0% to $6.5 million, or 2.2% of revenues, compared with $15.5 million, or 5.5% of revenues.

Net income totaled $0.5 million, or $0.02 per diluted share (31.5 million diluted share base) compared with $11.9 million, or $0.30 per diluted share (39.9 million diluted share base).

EBITDA decreased 13.5% to $39.8 million, or 13.3% of revenues, compared with $46.0 million, or 16.3% of revenues.

Adjusted EBITDA decreased 12.1% to $46.3 million, or 15.5% of revenues, compared with $52.7 million, or 18.7% or revenues.

Store operating income before depreciation and amortization decreased 8.4% to $60.3 million, or 20.1% of revenues, compared with $65.8 million, or 23.3% of revenues.

New Store Development

The Company is on track to open 16 new locations in fiscal 2019, representing unit growth of approximately 12% (net of one first quarter closing). These store openings include 11 large and 5 small format locations and are split between new and existing markets for the Dave & Buster’s brand.  The Board and management team remain open-minded about the pace of new unit growth in 2021 and beyond and will continue to monitor progress, consistent with the Company’s focus on maximizing returns for investors.

During the third quarter of 2019, the Company opened four new stores: Concord, California; Huntsville, Alabama; McDonough, Georgia; and Wichita, Kansas. During the fourth quarter, the Company has already opened a store in Canton, Ohio and has one more store scheduled to open in Shenandoah, Texas later in the fiscal fourth quarter. 

Capital Allocation

During the third quarter of 2019, the Company repurchased 2.4 million shares for approximately $97 million and at quarter-end had approximately $173 million remaining under the current $800 million authorization.  The Company declared a quarterly cash dividend of $0.16 per share during the third quarter.  Returning capital to shareholders will continue to be an important component of the company’s capital allocation plans in 2020 and beyond.

Financial Outlook

The Company is updating its fiscal 2019 guidance as follows:

• Total revenues of $1.347 billion to $1.354 billion (vs. $1.338 billion to $1.359 billion)
• Comparable store sales of -3.0% to -2.5% (vs. -3.5% to -2.0%) 
• 16 new stores (vs. 15-16 new stores)
• Net income of $94 million to $98 million (vs. $91 million to $100 million)
• Effective tax rate of 21.5% to 22.0% (vs. 22.0% to 22.5%) and diluted share count of approximately 34.0 million (unchanged)
• EBITDA of $275 million to $280 million (vs. $272 million to $282 million)
• Total capital additions (net of tenant improvement allowances and other landlord payments) of $215 million to $220 million (vs. $200 million to $210 million)

Investor Conference Call and Webcast

Management will hold a conference call today at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss these results and updated guidance. The conference call can be accessed over the phone by dialing (323) 794-2093 or toll-free (800) 458-4121. A replay will be available after the call for one year beginning at 7:00 p.m. Central Time (8:00 p.m. Eastern Time) and can be accessed by dialing (412) 317-6671 or toll-free (844) 512-2921; the passcode is 1233569.

Additionally, a live and archived webcast of the conference call will be available at www.daveandbusters.com under the Investor Relations section.

About Dave & Buster’s Entertainment, Inc.

Founded in 1982 and headquartered in Dallas, Texas, Dave & Buster's Entertainment, Inc., is the owner and operator of 135 venues in North America (as of December 10, 2019) that combine entertainment and dining and offer customers the opportunity to "Eat Drink Play and Watch," all in one location. Dave & Buster's offers a full menu of entrées and appetizers, a complete selection of alcoholic and non-alcoholic beverages, and an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events. Dave & Buster's currently has stores in 39 states, Puerto Rico, and Canada.

Forward-Looking Statements

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. Accordingly, actual results may differ materially from the forward-looking statements, and the Company therefore cautions you against relying on such forward-looking statements. Dave & Buster's intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more appropriate information becomes available, except as required by law.

*Non-GAAP Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses the following non-GAAP financial measures: EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, Store operating income before depreciation and amortization, and store operating income before depreciation and amortization margin (collectively the "non-GAAP financial measures"). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that they provide useful information about operating results, enhance the overall understanding of our operating performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measures used by the Company in this press release may be different from the measures used by other companies.

DAVE & BUSTER'S ENTERTAINMENT, INC.
Condensed Consolidated Balance Sheets
(in thousands)
ASSETS	November 3, 2019			February 3, 2019
	(unaudited)			(audited)
Current assets:
Cash and cash equivalents	$	20,880		$	21,585
Other current assets	50,729			69,508
Total current assets	71,609			91,093
Property and equipment, net	878,203			805,337
Operating lease right of use assets	967,697			-
Intangible and other assets, net	380,678			376,757
Total assets	$	2,298,187		$	1,273,187
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities	$	281,383		$	244,390
Operating lease liabilities	1,174,772			-
Other long-term liabilities	53,527			262,491
Long-term debt, net	640,384			378,469
Stockholders' equity	148,121			387,837
Total liabilities and stockholders' equity	$	2,298,187		$	1,273,187

 

DAVE & BUSTER'S ENTERTAINMENT, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
	13 Weeks Ended					13 Weeks Ended
	November 3, 2019					November 4, 2018
Food and beverage revenues	$	124,637		41.6%		$	118,807		42.1%
Amusement and other revenues	174,715			58.4%		163,332			57.9%
Total revenues	299,352			100.0%		282,139			100.0%
Cost of food and beverage (as a percentage of food and beverage revenues)	33,384			26.8%		31,163			26.2%
Cost of amusement and other (as a percentage of amusement and other revenues)	18,796			10.8%		17,571			10.8%
Total cost of products	52,180			17.4%		48,734			17.3%
Operating payroll and benefits	76,165			25.4%		71,309			25.3%
Other store operating expenses	110,713			37.1%		96,267			34.1%
General and administrative expenses	16,210			5.4%		15,043			5.3%
Depreciation and amortization expense	33,340			11.1%		30,574			10.8%
Pre-opening costs	4,245			1.4%		4,740			1.7%
Total operating costs	292,853			97.8%		266,667			94.5%
Operating income	6,499			2.2%		15,472			5.5%
Interest expense, net	6,110			2.1%		3,321			1.2%
Income before provision (benefit) for income taxes	389			0.1%		12,151			4.3%
Provision (benefit) for income taxes	(93)			-0.1%		295			0.1%
Net income	$	482		0.2%		$	11,856		4.2%
Net income per share:
Basic	$	0.02				$	0.30
Diluted	$	0.02				$	0.30
Weighted average shares used in per share calculations:
Basic shares	30,980,878					38,892,288
Diluted shares	31,515,454					39,855,648
Other information:
Company-owned and operated stores open at end of period	134					118
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
	November 3, 2019					November 4, 2018
Net income	$	482		0.2%		$	11,856		4.2%
Add back:  Interest expense, net	6,110					3,321
Provision (benefit) for income taxes	(93)					295
Depreciation and amortization expense	33,340					30,574
EBITDA	39,839			13.3%		46,046			16.3%
Add back:  Loss on asset disposal	458					120
Share-based compensation	1,747					1,757
Pre-opening costs	4,245					4,740
Other costs	1					6
Adjusted EBITDA	$	46,290		15.5%		$	52,669		18.7%
The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown:
	13 Weeks Ended					13 Weeks Ended
	November 3, 2019					November 4, 2018
Operating income	$	6,499		2.2%		$	15,472		5.5%
Add back:  General and administrative expenses	16,210					15,043
Depreciation and amortization expense	33,340					30,574
Pre-opening costs	4,245					4,740
Store operating income before depreciation and amortization	$	60,294		20.1%		$	65,829		23.3%

 

 

DAVE & BUSTER'S ENTERTAINMENT, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
	39 Weeks Ended					39 Weeks Ended
	November 3, 2019					November 4, 2018
Food and beverage revenues	$	410,779		40.8%		$	388,804		41.6%
Amusement and other revenues	596,754			59.2%		544,713			58.4%
Total revenues	1,007,533			100.0%		933,517			100.0%
Cost of food and beverage (as a percentage of food and beverage revenues)	109,072			26.6%		101,181			26.0%
Cost of amusement and other (as a percentage of amusement and other revenues)	64,456			10.8%		60,248			11.1%
Total cost of products	173,528			17.2%		161,429			17.3%
Operating payroll and benefits	239,965			23.8%		217,939			23.3%
Other store operating expenses	321,334			31.9%		284,432			30.5%
General and administrative expenses	49,047			4.9%		45,461			4.9%
Depreciation and amortization expense	97,226			9.6%		87,129			9.3%
Pre-opening costs	15,970			1.6%		17,121			1.8%
Total operating costs	897,070			89.0%		813,511			87.1%
Operating income	110,463			11.0%		120,006			12.9%
Interest expense, net	14,771			1.5%		9,406			1.1%
Income before provision for income taxes	95,692			9.5%		110,600			11.8%
Provision for income taxes	20,411			2.0%		22,815			2.4%
Net income	$	75,281		7.5%		$	87,785		9.4%
Net income per share:
Basic	$	2.19				$	2.23
Diluted	$	2.15				$	2.18
Weighted average shares used in per share calculations:
Basic shares	34,405,503					39,314,271
Diluted shares	35,042,311					40,257,231
Other information:
Company-owned and operated stores open at end of period	134					118
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:
	39 Weeks Ended					39 Weeks Ended
	November 3, 2019					November 4, 2018
Net income	$	75,281		7.5%		$	87,785		9.4%
Add back:  Interest expense, net	14,771					9,406
Provision for income taxes	20,411					22,815
Depreciation and amortization expense	97,226					87,129
EBITDA	207,689			20.6%		207,135			22.2%
Add back:  Loss on asset disposal	1,284					813
Share-based compensation	5,479					5,771
Pre-opening costs	15,970					17,121
Other costs	34					127
Adjusted EBITDA	$	230,456		22.9%		$	230,967		24.7%
The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown:
	39 Weeks Ended					39 Weeks Ended
	November 3, 2019					November 4, 2018
Operating income	$	110,463		11.0%		$	120,006		12.9%
Add back:  General and administrative expenses	49,047					45,461
Depreciation and amortization expense	97,226					87,129
Pre-opening costs	15,970					17,121
Store operating income before depreciation and amortization	$	272,706		27.1%		$	269,717		28.9%

For Investor Relations Inquiries:

Scott Bowman, CFO
Dave & Buster’s Entertainment, Inc.
972.813.1151
scott.bowman@daveandbusters.com

 

 

Source: Dave & Buster's Entertainment, Inc.