Dave & Buster’s Achieves First Quarter Revenue Growth of 9.2% and EPS of $1.04
Key highlights from the first quarter 2018 compared to the first quarter 2017 include:
- Total revenues increased 9.2% to
$332.2 million from$304.1 million , or 9.7% on a comparable week basis*. - Opened six new stores compared to four new stores.
- Comparable store sales decreased 4.9%.
- Net income of
$42.2 million , or$1.04 per diluted share, vs. net income of$42.8 million , or$0.98 per diluted share. - EBITDA decreased 2.3% to
$86.1 million from$88.2 million while Adjusted EBITDA increased 0.4% to$95.9 million from$95.6 million . - Excluding the 2017 use tax settlement** in Q1 2017, and on a comparable week basis, EBITDA increased 1.8%, while Adjusted EBITDA increased 4.0%.
- Pre-opening costs increased
$2.6 million to $7.1 million from$4.5 million .
*Comparable week basis: Fiscal 2017 was a 53-week year, resulting in a one-week calendar shift in fiscal year 2018. During the first quarter of 2018, this calendar shift had an unfavorable impact on total revenue of
**2017 use tax settlement: Q1 2017 results included
“We continue to be pleased with our new store performance and are confident in our unit growth guidance for the year. We opened six stores during the quarter, our fastest pace so far, and these openings include a few that have delivered some of the highest volume openings in our history. The 2017 class of stores is also performing well for us, on track to achieve strong first year returns in line with our recent classes of stores. At the same time, evolving the brand and improving comparable store performance is a priority for us. The upcoming launch of our proprietary virtual reality platform, and the new 100% Angus Butcher’s Blend burger are just two examples of improvements in our overall offering,” said
“We delivered near double-digit revenue growth, and drove EBITDA and Adjusted EBITDA growth of approximately 2% and 4% respectively on a comparable week basis, excluding the 2017 use tax settlement. While comparable store sales declined in the first quarter this year, I’m confident that our operating team’s continued focus on execution will drive improved results over time,” said
Share Repurchase Activity
During the first quarter of 2018, we repurchased approximately 606,000 shares for
Review of First Quarter 2018 Operating Results
Total revenues increased 9.2% to
Comparable store sales decreased 4.9% in the first quarter 2018 compared to a 2.2% increase in the first quarter of 2017 on a comparable week basis. Our comparable store sales decrease was driven by a 4.8% decrease in walk-in sales and a 6.4% decrease in special events sales. Comparable store sales in Amusements & Other decreased 4.0% and in Food & Beverage decreased 6.1%. Non-comparable store revenues increased
Operating income decreased to
Net income was
EBITDA decreased 2.3% to
Excluding the 2017 use tax settlement, and on a comparable week basis, EBITDA increased 1.8% (210 basis points decrease as a percentage of total revenue), while Adjusted EBITDA increased 4.0% (150 basis points decrease as a percentage of total revenue) compared to the first quarter of 2017.
Store operating income before depreciation and amortization increased 1.1% to
Development
In fiscal 2018, we are 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 five stores under construction.
We opened six stores during the first quarter in
Financial Outlook
We are reaffirming our financial outlook on several key metrics for fiscal 2018, which ends on
- Total revenues of
$1.20 billion to $1.24 billion - Comparable store sales decrease in the low-to-mid single digits (on a comparable 52-week basis)
- 14 to 15 new stores
- Net income of
$95 million to $110 million - Effective tax rate of approximately 24% (including the estimated impact of the Tax Cuts and Jobs Act of 2017) (vs. 23% to 24% previously) and diluted share count of approximately 40.5 million shares (vs. 41.0 million shares previously)
- EBITDA of
$255 million to $275 million - Total capital additions (net of tenant improvement allowances and other landlord payments) of
$179 million to $189 million , up from$170 million to $180 million
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, 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 | May 6, 2018 | February 4, 2018 | ||||
| (unaudited) | (audited) | |||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 16,914 | $ | 18,795 | ||
| Other current assets | 78,480 | 76,112 | ||||
| Total current assets | 95,394 | 94,907 | ||||
| Property and equipment, net | 757,082 | 726,455 | ||||
| Intangible and other assets, net | 374,830 | 375,668 | ||||
| Total assets | $ | 1,227,306 | $ | 1,197,030 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Total current liabilities | $ | 218,234 | $ | 207,825 | ||
| Other long-term liabilities | 231,308 | 216,310 | ||||
| Long-term debt, net | 339,554 | 351,249 | ||||
| Stockholders' equity | 438,210 | 421,646 | ||||
| Total liabilities and stockholders' equity | $ | 1,227,306 | $ | 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 | |||||||||||
| May 6, 2018 | April 30, 2017 | |||||||||||
| Food and beverage revenues | $ | 139,755 | 42.1 | % | $ | 129,811 | 42.7 | % | ||||
| Amusement and other revenues | 192,435 | 57.9 | % | 174,337 | 57.3 | % | ||||||
| Total revenues | 332,190 | 100.0 | % | 304,148 | 100.0 | % | ||||||
| Cost of food and beverage (as a percentage of food and beverage revenues) | 36,020 | 25.8 | % | 32,702 | 25.2 | % | ||||||
| Cost of amusement and other (as a percentage of amusement and other revenues) | 21,119 | 11.0 | % | 16,283 | 9.3 | % | ||||||
| Total cost of products | 57,139 | 17.2 | % | 48,985 | 16.1 | % | ||||||
| Operating payroll and benefits | 72,894 | 21.9 | % | 65,190 | 21.4 | % | ||||||
| Other store operating expenses | 93,340 | 28.2 | % | 82,368 | 27.1 | % | ||||||
| General and administrative expenses | 15,654 | 4.7 | % | 14,978 | 4.9 | % | ||||||
| Depreciation and amortization expense | 27,506 | 8.3 | % | 23,928 | 7.9 | % | ||||||
| Pre-opening costs | 7,053 | 2.1 | % | 4,471 | 1.5 | % | ||||||
| Total operating costs | 273,586 | 82.4 | % | 239,920 | 78.9 | % | ||||||
| Operating income | 58,604 | 17.6 | % | 64,228 | 21.1 | % | ||||||
| Interest expense, net | 2,857 | 0.8 | % | 1,854 | 0.6 | % | ||||||
| Income before provision for income taxes | 55,747 | 16.8 | % | 62,374 | 20.5 | % | ||||||
| Provision for income taxes | 13,597 | 4.1 | % | 19,578 | 6.4 | % | ||||||
| Net income | $ | 42,150 | 12.7 | % | $ | 42,796 | 14.1 | % | ||||
| Net income per share: | ||||||||||||
| Basic | $ | 1.06 | $ | 1.02 | ||||||||
| Diluted | $ | 1.04 | $ | 0.98 | ||||||||
| Weighted average shares used in per share calculations: | ||||||||||||
| Basic shares | 39,695,421 | 42,027,551 | ||||||||||
| Diluted shares | 40,612,388 | 43,522,403 | ||||||||||
| Other information: | ||||||||||||
| Company-owned and operated stores open at end of period | 112 | 96 | ||||||||||
| 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 | |||||||||||
| May 6, 2018 | April 30, 2017 | |||||||||||
| Net income | $ | 42,150 | 12.7 | % | $ | 42,796 | 14.1 | % | ||||
| Add back: Interest expense, net | 2,857 | 1,854 | ||||||||||
| Provision for income taxes | 13,597 | 19,578 | ||||||||||
| Depreciation and amortization expense | 27,506 | 23,928 | ||||||||||
| EBITDA | 86,110 | 25.9 | % | 88,156 | 29.0 | % | ||||||
| Add back: Loss on asset disposal | 262 | 645 | ||||||||||
| Share-based compensation | 2,388 | 2,063 | ||||||||||
| Pre-opening costs | 7,053 | 4,471 | ||||||||||
| Other costs | 95 | 232 | ||||||||||
| Adjusted EBITDA | $ | 95,908 | 28.9 | % | $ | 95,567 | 31.4 | % | ||||
| 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 | |||||||||||
| May 6, 2018 | April 30, 2017 | |||||||||||
| Operating income | $ | 58,604 | 17.6 | % | $ | 64,228 | 21.1 | % | ||||
| Add back: General and administrative expenses | 15,654 | 14,978 | ||||||||||
| Depreciation and amortization expense | 27,506 | 23,928 | ||||||||||
| Pre-opening costs | 7,053 | 4,471 | ||||||||||
| Store operating income before depreciation and amortization | $ | 108,817 | 32.8 | % | $ | 107,605 | 35.4 | % | ||||
For Investor Relations Inquiries:
Dave & Buster’s
214.904.2202
arvind_bhatia@daveandbusters.com
Source: Dave & Buster's Entertainment, Inc.