Dave & Buster’s Achieves Double-Digit Revenue Growth in Second Quarter
Launches Industry Leading Proprietary VR Platform
Initiates Quarterly Dividend; Expands Share Repurchase Authorization by
Key highlights from the second quarter 2018 compared to the second quarter 2017 include:
- Total revenues increased 13.7% to
$319.2 from$280.8 million , or 11.4% on a comparable week basis* - Launched Jurassic World VR Expedition on our industry-leading proprietary platform.
- Opened five new stores compared to four new stores
- Comparable store sales decreased 2.4%
- Net income of
$33.8 million , or$0.84 per diluted share, vs. net income of$30.4 million , or$0.71 per diluted share - EBITDA increased 17.1% to
$75.0 million from$64.0 million , or 6.7% on a comparable week basis, and excluding the 2017 litigation settlement expense** in Q2 2017 - Adjusted EBITDA increased 16.7% to
$82.4 million from$70.6 million , or 7.4% on a comparable week basis, and excluding the 2017 litigation settlement expense** in Q2 2017 - On
September 11, 2018 , adopted new capital allocation initiatives- Initiated a quarterly cash dividend of
$0.15 per share - Expanded share repurchase authorization by
$100 million
- Initiated a quarterly cash dividend of
Brian A. Jenkins , Chief Executive Officer, has been appointed to the Company’s Board of Directors effectiveSeptember 13, 2018
*Comparable week basis: Fiscal 2017 was a 53-week year, resulting in a one-week calendar shift in fiscal year 2018. During the second quarter of 2018, this calendar shift had a favorable impact on total revenue of
**2017 litigation settlement expense: During the second quarter 2017, we recorded a
“We delivered meaningful sequential improvement in comparable store sales and double-digit revenue growth during the second quarter. We are pleased with the strong guest response to our proprietary VR platform and look forward to building on this momentum. Our team is laser-focused on executing on our key strategic priorities to drive further improvement in performance. Meanwhile, our new stores are tracking well and we remain well-positioned to capitalize on the long-term opportunity to more than double our store base in the US and Canada,” said
“We are raising guidance on key metrics in light of our second quarter results. We are excited to be in a strong financial position to return value to shareholders, including the just announced cash dividend and increased share repurchase authorization, while continuing to invest in future growth initiatives,” said
Quarterly Dividend
On
Additional Share Repurchase Authorization
On
Brian A. Jenkins Appointed to Board of Directors
The Board appointed
Review of Second Quarter 2018 Operating Results Compared to Second Quarter 2017
Total revenues increased 13.7% to
Comparable store sales decreased 2.4% in the second quarter 2018 compared to a 1.1% increase in the same period last year. Our comparable store sales decline was driven by a 2.6% decrease in walk-in sales and a 0.1% increase in special events sales. Comparable store sales in Amusements & Other decreased 1.2% and in Food & Beverage decreased 4.1%. Non-comparable store revenues increased
Operating income increased to
Net income was
EBITDA increased 17.1% to
Adjusted EBITDA increased 16.7% to
Store operating income before depreciation and amortization increased 11.4% to
Development
In fiscal 2018, we remain on track to open 14 to 15 new stores, representing 13% to 14% unit growth. At the top end of the range, these store openings include 11 large, two small and two 17K format stores, and will skew towards new markets for our brand. We currently have eight stores under construction.
We opened five stores during the second quarter in
Financial Outlook
We are raising guidance on key metrics for fiscal 2018, which ends on
- Total revenues of
$1.230 billion to $1.255 billion (vs.$1.200 billion to $1.240 billion previously) - Comparable store sales (on a comparable 52-week basis) decrease of low single-digits (vs. decrease in the low to mid-single digits previously)
- 14 to 15 new stores (unchanged)
- Net income of
$101 million to $111 million (vs.$95 million to $110 million previously) - Effective tax rate of approximately 24% (unchanged) and diluted share count of approximately 40.3 million shares (vs. 40.5 million previously)
- EBITDA of
$263 million to $277 million (vs.$255 million to $275 million previously) - Total capital additions (net of tenant improvement allowances and other landlord payments) of
$179 million to $189 million (unchanged)
Conference Call Today
Management will hold a conference call to discuss these results today at
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
Founded in 1982 and headquartered in
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 | August 5, 2018 | February 4, 2018 | |||
| (unaudited) | (audited) | ||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 22,398 | $ | 18,795 | |
| Other current assets | 80,046 | 76,112 | |||
| Total current assets | 102,444 | 94,907 | |||
| Property and equipment, net | 776,242 | 726,455 | |||
| Intangible and other assets, net | 376,171 | 375,668 | |||
| Total assets | $ | 1,254,857 | $ | 1,197,030 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Total current liabilities | $ | 216,645 | $ | 207,825 | |
| Other long-term liabilities | 250,428 | 216,310 | |||
| Long-term debt, net | 346,859 | 351,249 | |||
| Stockholders' equity | 440,925 | 421,646 | |||
| Total liabilities and stockholders' equity | $ | 1,254,857 | $ | 1,197,030 | |
| DAVE & BUSTER'S ENTERTAINMENT, INC. | |||||||||||||||
| Consolidated Statements of Operations (Unaudited) | |||||||||||||||
| (in thousands, except share and per share amounts) | |||||||||||||||
| 13 Weeks Ended | 13 Weeks Ended | ||||||||||||||
| August 5, 2018 | July 30, 2017 | ||||||||||||||
| Food and beverage revenues | $ | 130,242 | 40.8 | % | $ | 118,689 | 42.3 | % | |||||||
| Amusement and other revenues | 188,946 | 59.2 | % | 162,062 | 57.7 | % | |||||||||
| Total revenues | 319,188 | 100.0 | % | 280,751 | 100.0 | % | |||||||||
| Cost of food and beverage (as a percentage of food and beverage revenues) | 33,998 | 26.1 | % | 30,473 | 25.7 | % | |||||||||
| Cost of amusement and other (as a percentage of amusement and other revenues) | 21,558 | 11.4 | % | 17,978 | 11.1 | % | |||||||||
| Total cost of products | 55,556 | 17.4 | % | 48,451 | 17.3 | % | |||||||||
| Operating payroll and benefits | 73,736 | 23.1 | % | 64,453 | 23.0 | % | |||||||||
| Other store operating expenses | 94,825 | 29.7 | % | 82,529 | 29.3 | % | |||||||||
| General and administrative expenses | 14,764 | 4.6 | % | 16,762 | 6.0 | % | |||||||||
| Depreciation and amortization expense | 29,049 | 9.1 | % | 24,847 | 8.9 | % | |||||||||
| Pre-opening costs | 5,328 | 1.7 | % | 4,546 | 1.6 | % | |||||||||
| Total operating costs | 273,258 | 85.6 | % | 241,588 | 86.1 | % | |||||||||
| Operating income | 45,930 | 14.4 | % | 39,163 | 13.9 | % | |||||||||
| Interest expense, net | 3,228 | 1.0 | % | 2,063 | 0.7 | % | |||||||||
| Income before provision for income taxes | 42,702 | 13.4 | % | 37,100 | 13.2 | % | |||||||||
| Provision for income taxes | 8,923 | 2.8 | % | 6,744 | 2.4 | % | |||||||||
| Net income | $ | 33,779 | 10.6 | % | $ | 30,356 | 10.8 | % | |||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 0.86 | $ | 0.73 | |||||||||||
| Diluted | $ | 0.84 | $ | 0.71 | |||||||||||
| Weighted average shares used in per share calculations: | |||||||||||||||
| Basic shares | 39,355,105 | 41,460,651 | |||||||||||||
| Diluted shares | 40,280,301 | 42,830,873 | |||||||||||||
| Other information: | |||||||||||||||
| Company-owned and operated stores open at end of period | 117 | 100 | |||||||||||||
| 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 | ||||||||||||||
| August 5, 2018 | July 30, 2017 | ||||||||||||||
| Net income | $ | 33,779 | 10.6 | % | $ | 30,356 | 10.8 | % | |||||||
| Add back: Interest expense, net | 3,228 | 2,063 | |||||||||||||
| Provision for income taxes | 8,923 | 6,744 | |||||||||||||
| Depreciation and amortization expense | 29,049 | 24,847 | |||||||||||||
| EBITDA | 74,979 | 23.5 | % | 64,010 | 22.8 | % | |||||||||
| Add back: Loss on asset disposal | 431 | 239 | |||||||||||||
| Share-based compensation | 1,626 | 2,386 | |||||||||||||
| Pre-opening costs | 5,328 | 4,546 | |||||||||||||
| Other costs | 26 | (607 | ) | ||||||||||||
| Adjusted EBITDA | $ | 82,390 | 25.8 | % | $ | 70,574 | 25.1 | % | |||||||
| 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 | ||||||||||||||
| August 5, 2018 | July 30, 2017 | ||||||||||||||
| Operating income | $ | 45,930 | 14.4 | % | $ | 39,163 | 13.9 | % | |||||||
| Add back: General and administrative expenses | 14,764 | 16,762 | |||||||||||||
| Depreciation and amortization expense | 29,049 | 24,847 | |||||||||||||
| Pre-opening costs | 5,328 | 4,546 | |||||||||||||
| Store operating income before depreciation and amortization | $ | 95,071 | 29.8 | % | $ | 85,318 | 30.4 | % | |||||||
| DAVE & BUSTER'S ENTERTAINMENT, INC. | |||||||||||||||
| Consolidated Statements of Operations (Unaudited) | |||||||||||||||
| (in thousands, except share and per share amounts) | |||||||||||||||
| 26 Weeks Ended | 26 Weeks Ended | ||||||||||||||
| August 5, 2018 | July 30, 2017 | ||||||||||||||
| Food and beverage revenues | $ | 269,997 | 41.5 | % | $ | 248,500 | 42.5 | % | |||||||
| Amusement and other revenues | 381,381 | 58.5 | % | 336,399 | 57.5 | % | |||||||||
| Total revenues | 651,378 | 100.0 | % | 584,899 | 100.0 | % | |||||||||
| Cost of food and beverage (as a percentage of food and beverage revenues) | 70,018 | 25.9 | % | 63,175 | 25.4 | % | |||||||||
| Cost of amusement and other (as a percentage of amusement and other revenues) | 42,677 | 11.2 | % | 34,261 | 10.2 | % | |||||||||
| Total cost of products | 112,695 | 17.3 | % | 97,436 | 16.7 | % | |||||||||
| Operating payroll and benefits | 146,630 | 22.5 | % | 129,643 | 22.2 | % | |||||||||
| Other store operating expenses | 188,165 | 28.9 | % | 164,897 | 28.2 | % | |||||||||
| General and administrative expenses | 30,418 | 4.7 | % | 31,740 | 5.4 | % | |||||||||
| Depreciation and amortization expense | 56,555 | 8.7 | % | 48,775 | 8.3 | % | |||||||||
| Pre-opening costs | 12,381 | 1.9 | % | 9,017 | 1.5 | % | |||||||||
| Total operating costs | 546,844 | 84.0 | % | 481,508 | 82.3 | % | |||||||||
| Operating income | 104,534 | 16.0 | % | 103,391 | 17.7 | % | |||||||||
| Interest expense, net | 6,085 | 0.9 | % | 3,917 | 0.7 | % | |||||||||
| Income before provision for income taxes | 98,449 | 15.1 | % | 99,474 | 17.0 | % | |||||||||
| Provision for income taxes | 22,520 | 3.4 | % | 26,322 | 4.5 | % | |||||||||
| Net income | $ | 75,929 | 11.7 | % | $ | 73,152 | 12.5 | % | |||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 1.92 | $ | 1.75 | |||||||||||
| Diluted | $ | 1.88 | $ | 1.69 | |||||||||||
| Weighted average shares used in per share calculations: | |||||||||||||||
| Basic shares | 39,525,263 | 41,744,101 | |||||||||||||
| Diluted shares | 40,444,201 | 43,182,918 | |||||||||||||
| Other information: | |||||||||||||||
| Company-owned and operated stores open at end of period | 117 | 100 | |||||||||||||
| 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 | ||||||||||||||
| August 5, 2018 | July 30, 2017 | ||||||||||||||
| Net income | $ | 75,929 | 11.7 | % | $ | 73,152 | 12.5 | % | |||||||
| Add back: Interest expense, net | 6,085 | 3,917 | |||||||||||||
| Provision for income taxes | 22,520 | 26,322 | |||||||||||||
| Depreciation and amortization expense | 56,555 | 48,775 | |||||||||||||
| EBITDA | 161,089 | 24.7 | % | 152,166 | 26.0 | % | |||||||||
| Add back: Loss on asset disposal | 693 | 884 | |||||||||||||
| Share-based compensation | 4,014 | 4,449 | |||||||||||||
| Pre-opening costs | 12,381 | 9,017 | |||||||||||||
| Other costs | 121 | (375 | ) | ||||||||||||
| Adjusted EBITDA | $ | 178,298 | 27.4 | % | $ | 166,141 | 28.4 | % | |||||||
| The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown: | |||||||||||||||
| 26 Weeks Ended | 26 Weeks Ended | ||||||||||||||
| August 5, 2018 | July 30, 2017 | ||||||||||||||
| Operating income | $ | 104,534 | 16.0 | % | $ | 103,391 | 17.7 | % | |||||||
| Add back: General and administrative expenses | 30,418 | 31,740 | |||||||||||||
| Depreciation and amortization expense | 56,555 | 48,775 | |||||||||||||
| Pre-opening costs | 12,381 | 9,017 | |||||||||||||
| Store operating income before depreciation and amortization | $ | 203,888 | 31.3 | % | $ | 192,923 | 33.0 | % | |||||||
For Investor Relations Inquiries:
Dave & Buster’s
214.904.2202
arvind_bhatia@daveandbusters.com
Source: Dave & Buster's Entertainment, Inc.