QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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☒ |
Accelerated filer |
☐ | |||
Non-accelerated filer |
☐ |
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☐ | |||
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☐ |
Page |
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PART I |
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ITEM 1. |
3 |
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ITEM 2. |
18 |
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ITEM 3. |
30 |
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ITEM 4. |
31 |
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PART II |
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ITEM 1. |
31 |
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ITEM 1A. |
31 |
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ITEM 2. |
32 |
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ITEM 6. |
33 |
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34 |
ITEM 1. |
FINANCIAL STATEMENTS |
August 4, |
February 3, |
|||||||
2019 |
2019 |
|||||||
(unaudited) |
(audited) |
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ASSETS |
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Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Inventories |
||||||||
Prepaid expenses |
||||||||
Income taxes receivable |
||||||||
Other current assets |
||||||||
Total current assets |
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Property and equipment (net of $ |
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Operating lease right of use assets |
— |
|||||||
Deferred tax assets |
||||||||
Tradenames |
||||||||
Goodwill |
||||||||
Other assets and deferred charges |
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Total assets |
$ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Current installments of long-term debt |
$ | $ | ||||||
Accounts payable |
||||||||
Accrued liabilities |
||||||||
Income taxes payable |
||||||||
Total current liabilities |
||||||||
Deferred income taxes |
||||||||
Deferred occupancy costs |
— |
|||||||
Operating lease liabilities |
— |
|||||||
Other liabilities |
||||||||
Long-term debt, net |
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Commitments and contingencies |
||||||||
Stockholders’ equity: |
||||||||
Common stock, par value $ |
||||||||
Preferred stock, |
||||||||
Paid-in capital |
||||||||
Treasury stock, |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Retained earnings |
||||||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | $ |
Thirteen Weeks |
Thirteen Weeks |
|||||||
Ended |
Ended |
|||||||
August 4, 2019 |
August 5, 2018 |
|||||||
Food and beverage revenues |
$ | |
$ | |
||||
Amusement and other revenues |
|
|
||||||
Total revenues |
|
|
||||||
Cost of food and beverage |
|
|
||||||
Cost of amusement and other |
|
|
||||||
Total cost of products |
|
|
||||||
Operating payroll and benefits |
|
|
||||||
Other store operating expenses |
|
|
||||||
General and administrative expenses |
|
|
||||||
Depreciation and amortization expense |
|
|
||||||
Pre-opening costs |
|
|
||||||
Total operating costs |
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|
||||||
Operating income |
|
|
||||||
Interest expense, net |
|
|
||||||
Income before provision for income taxes |
|
|
||||||
Provision for income taxes |
|
|
||||||
Net income |
|
|
||||||
Unrealized foreign currency translation gain (loss) |
|
( |
) | |||||
Change in fair value of derivatives, net of tax |
( |
) | — |
|||||
Total other comprehensive loss |
( |
) | ( |
) | ||||
Total comprehensive income |
$ | |
$ | |
||||
Net income per share: |
||||||||
Basic |
$ | |
$ | |
||||
Diluted |
$ | |
$ | |
||||
Weighted average shares used in per share calculations: |
||||||||
Basic |
|
|
||||||
Diluted |
|
|
||||||
Cash dividends declared per share |
$ | |
$ | — |
Twenty-Six WeeksEnded August 4, 2019 |
Twenty-Six WeeksEnded August 5, 2018 |
|||||||
Food and beverage revenues |
$ | |
$ | |
||||
Amusement and other revenues |
|
|
||||||
Total revenues |
|
|
||||||
Cost of food and beverage |
|
|
||||||
Cost of amusement and other |
|
|
||||||
Total cost of products |
|
|
||||||
Operating payroll and benefits |
|
|
||||||
Other store operating expenses |
|
|
||||||
General and administrative expenses |
|
|
||||||
Depreciation and amortization expense |
|
|
||||||
Pre-opening costs |
|
|
||||||
Total operating costs |
|
|
||||||
Operating income |
|
|
||||||
Interest expense, net |
|
|
||||||
Income before provision for income taxes |
|
|
||||||
Provision for income taxes |
|
|
||||||
Net income |
|
|
||||||
Unrealized foreign currency translation loss |
( |
) | ( |
) | ||||
Change in fair value of derivatives, net of tax |
( |
) | — |
|||||
Total other comprehensive loss |
( |
) | ( |
) | ||||
Total comprehensive income |
$ | |
$ | |
||||
Net income per share: |
||||||||
Basic |
$ | |
$ | |
||||
Diluted |
$ | |
$ | |
||||
Weighted average shares used in per share calculations: |
||||||||
Basic |
|
|
||||||
Diluted |
|
|
||||||
Cash dividends declared per share |
$ | |
$ | — |
Thirteen Weeks Ended August 4, 2019 |
||||||||||||||||||||||||||||||||
Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||||||||||
Shares |
Amt. |
|
Shares |
Amt. |
|
|
|
|||||||||||||||||||||||||
Balance May 5, 2019 |
|
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||
Unrealized foreign currency translation gain |
— |
— |
— |
— |
— |
|
— |
|
||||||||||||||||||||||||
Change in fair value of derivatives, net of tax |
— |
— |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||||||||
Share-based compensation |
— |
— |
|
— |
— |
— |
— |
|
||||||||||||||||||||||||
Issuance of common stock |
|
— |
|
— |
— |
— |
— |
|
||||||||||||||||||||||||
Repurchase of common stock |
— |
— |
|
( |
) | — |
— |
( |
) | |||||||||||||||||||||||
Dividends declared ($ |
— |
— |
— |
— |
— |
— |
( |
) | ( |
) | ||||||||||||||||||||||
Balance August 4, 2019 |
|
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
Thirteen Weeks Ended August 5, 2018 |
||||||||||||||||||||||||||||||||
Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||||||||||
Shares |
Amt. |
Shares |
Amt. |
|||||||||||||||||||||||||||||
Balance May 6, 2018 |
|
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||
Unrealized foreign currency translation loss |
— |
— |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||||||||
Share-based compensation |
— |
— |
|
— |
— |
— |
— |
|
||||||||||||||||||||||||
Issuance of common stock |
|
|
|
— |
— |
— |
— |
|
||||||||||||||||||||||||
Repurchase of common stock |
— |
— |
— |
|
( |
) | — |
— |
( |
) | ||||||||||||||||||||||
Balance August 5, 2018 |
|
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
Twenty-Six Weeks Ended August 4, 2019 |
||||||||||||||||||||||||||||||||
Accumulated |
||||||||||||||||||||||||||||||||
Other |
||||||||||||||||||||||||||||||||
Paid-In |
Treasury Stock |
Comprehensive |
Retained |
|||||||||||||||||||||||||||||
Common Stock |
Capital |
At Cost |
Loss |
Earnings |
Total |
|||||||||||||||||||||||||||
Shares |
Amt. |
Shares |
Amt. |
|
|
|
||||||||||||||||||||||||||
Balance February 3, 2019 |
|
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||||
Cumulative effect of a change in accounting principle, net of tax |
— |
— |
— |
— |
— |
— |
( |
) | ( |
) | ||||||||||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||
Unrealized foreign currency translation loss |
— |
— |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||||||||
Change in fair value of derivatives, net of tax |
— |
— |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||||||||
Share-based compensation |
— |
— |
|
— |
— |
— |
— |
|
||||||||||||||||||||||||
Issuance of common stock |
|
|
|
— |
— |
— |
— |
|
||||||||||||||||||||||||
Repurchase of common stock |
— |
— |
|
( |
) | — |
— |
( |
) | |||||||||||||||||||||||
Dividends declared ($0.30 per share) |
— |
— |
— |
— |
— |
— |
( |
) | ( |
) | ||||||||||||||||||||||
Balance August 4, 2019 |
|
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||||
Twenty-Six Weeks Ended August 5, 2018 |
||||||||||||||||||||||||||||||||
Accumulated |
||||||||||||||||||||||||||||||||
Other |
||||||||||||||||||||||||||||||||
Paid-In |
Treasury Stock |
Comprehensive |
Retained |
|||||||||||||||||||||||||||||
Common Stock |
Capital |
At Cost |
Loss |
Earnings |
Total |
|||||||||||||||||||||||||||
Shares |
Amt. |
|
Shares |
Amt. |
|
|
|
|||||||||||||||||||||||||
Balance February 4, 2018 |
|
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||||
Net income |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||
Unrealized foreign currency translation loss |
— |
— |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||||||||
Share-based compensation |
— |
— |
|
— |
— |
— |
— |
|
||||||||||||||||||||||||
Issuance of common stock |
|
|
|
— |
— |
— |
— |
|
||||||||||||||||||||||||
Repurchase of common stock |
— |
— |
— |
|
( |
) | — |
— |
( |
) | ||||||||||||||||||||||
Balance August 5, 2018 |
|
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||||
Twenty-Six Weeks Ended August 4, 2019 |
Twenty-Six Weeks Ended August 5, 2018 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | |
$ | |
||||
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
||||||
Deferred taxes |
|
|
||||||
Loss on disposal of fixed assets |
|
|
||||||
Share-based compensation |
|
|
||||||
Other, net |
|
|
||||||
Changes in assets and liabilities: |
||||||||
Inventories |
( |
) | |
|||||
Prepaid expenses |
( |
) | ( |
) | ||||
Income tax receivable |
|
|
||||||
Other current assets |
( |
) | ( |
) | ||||
Other assets and deferred charges |
( |
) | ( |
) | ||||
Accounts payable |
( |
) | |
|||||
Accrued liabilities |
|
|
||||||
Income taxes payable |
( |
) | |
|||||
Deferred occupancy costs |
— |
|
||||||
Other liabilities |
|
|
||||||
Net cash provided by operating activities |
|
|
||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
( |
) | ( |
) | ||||
Proceeds from sales of property and equipment |
|
|
||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from debt |
|
|
||||||
Payments of debt |
( |
) | ( |
) | ||||
Proceeds from the exercise of stock options |
|
|
||||||
Repurchase of common stock under share repurchase program |
( |
) | ( |
) | ||||
Dividends paid |
( |
) | — |
|||||
Repurchases of common stock to satisfy employee withholding tax obligations |
( |
) | ( |
) | ||||
Net cash used in financing activities |
( |
) | ( |
) | ||||
Increase in cash and cash equivalents |
|
|
||||||
Beginning cash and cash equivalents |
|
|
||||||
Ending cash and cash equivalents |
$ | |
$ | |
||||
Supplemental disclosures of cash flow information: |
||||||||
Decrease in fixed asset accounts payable |
$ | ( |
) | $ | ( |
) | ||
Cash paid for income taxes, net |
$ | |
$ | |
||||
Cash paid for interest, net |
$ | |
$ | |
||||
Leases (note 4) |
Fair Value |
||||||||
Balance Sheet Location |
August 4, 2019 |
|||||||
Derivatives designated as hedging instruments: |
||||||||
Interest rate swaps |
Accrued liabilities |
$ | ( |
) | ||||
Interest rate swaps |
Other liabilities |
( |
) | |||||
Total derivatives |
$ | ( |
) | |||||
Thirteen Weeks Ended August 4, 2019 |
Twenty-six Weeks Ended August 4, 2019 |
||||||||
Gain (loss) recognized in accumulated other comprehensive loss |
$ | ( |
) | $ | ( |
) | |||
Loss reclassified from accumulated other comprehensive loss into net earnings (1) |
$ | |
$ | |
|||||
Income tax (expense) benefit of interest rate swaps on accumulated other comprehensive loss |
$ | |
$ | |
(1) |
Amounts reclassified into net earnings included in “Interest expense, net” in the Consolidated Statements of Comprehensive Income. |
August 4, 2019 |
February 3, 2019 |
|||||||
Current portion of operating lease liabilities, net (refer to Note 4) |
$ | $ | — |
|||||
Current portion of deferred occupancy costs |
— |
|||||||
Deferred amusement revenue |
||||||||
Compensation and benefits |
||||||||
Amusement redemption liability |
||||||||
Property taxes |
||||||||
Deferred gift card revenue |
||||||||
Current portion of long-term insurance |
||||||||
Sales and use taxes |
||||||||
Customer deposits |
||||||||
Utilities |
||||||||
Inventory liabilities |
||||||||
Variable rent liabilities |
||||||||
Current portion of derivatives |
— |
|||||||
Other (refer to Note 5) |
||||||||
Total accrued liabilities |
$ | $ | ||||||
August 4, 2019 |
February 3, 2019 |
|||||||
Credit facility - term |
$ | $ | ||||||
Credit facility - revolver |
||||||||
Total debt outstanding |
||||||||
Less: |
||||||||
Current installments - term |
( |
) | ( |
) | ||||
Debt issuance costs - term |
( |
) | ( |
) | ||||
Long-term debt, net |
$ | $ | ||||||
Thirteen Weeks Ended August 4, 2019 |
Thirteen Weeks Ended August 5, 2018 |
|||||||
Interest expense on credit facilities |
$ | $ | ||||||
Amortization of issuance cost |
||||||||
Interest income |
( |
) | ( |
) | ||||
Capitalized interest |
( |
) | ( |
) | ||||
Change in fair value of interest rate cap |
— |
|||||||
Total interest expense, net |
$ | $ | ||||||
Twenty-six Weeks Ended August 4, 2019 |
Twenty-six Weeks Ended August 5, 2018 |
|||||||
Interest expense on credit facilities |
$ | $ | ||||||
Amortization of issuance cost |
||||||||
Interest income |
( |
) | ( |
) | ||||
Capitalized interest |
( |
) | ( |
) | ||||
Change in fair value of interest rate cap |
— |
( |
) | |||||
Total interest expense, net |
$ | $ | ||||||
Thirteen Weeks Ended August 4, 2019 |
Twenty-six WeeksEnded August 4, 2019 |
|||||||
Operating |
$ | |
$ | |
||||
Variable |
|
|
||||||
Short-term |
|
|
||||||
Total |
$ | |
$ | |
||||
Twenty-six Weeks Ended August 4, 2019 |
||||
Cash paid for amounts included in the measurement of lease liabities |
|
|
|
|
Operating cash flows from operating leases |
$ | |
||
ROU assets obtained in exchange for new operating lease liabilities |
$ | |
||
Weighted-average remaining lease term - operating leases (in years) |
|
|||
Weighted-average discount rate - operating leases |
|
% |
Remainder of 2019 |
$ | |
||
2020 |
|
|||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
Thereafter |
|
|||
Total |
$ | |
||
Less: Interest |
|
|||
Total discounted operating lease liabilities |
$ | |
||
2019 |
$ | |
||
2020 |
|
|||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
Thereafter |
|
|||
Total |
$ | |
||
Thirteen Weeks Ended August 4, 2019 |
Thirteen Weeks Ended August 5, 2018 |
|||||||
Numerator: |
||||||||
Net income |
$ | |
$ | |
||||
Denominator: |
||||||||
Weighted average number of common shares outstanding (basic) |
|
|
||||||
Weighted average dilutive impact of equity-based awards |
|
|
||||||
Weighted average number of common and common equivalent shares outstanding (diluted) |
|
|
||||||
Net income per share: |
||||||||
Basic |
$ | |
$ | |
||||
Diluted |
$ | |
$ | |
||||
Twenty- s ix WeeksEnded August 4, 2019 |
Twenty-six Weeks Ended August 5, 2018 |
|||||||
Numerator: |
||||||||
Net income |
$ | |
$ | |
||||
Denominator: |
||||||||
Weighted average number of common shares outstanding (basic) |
|
|
||||||
Weighted average dilutive impact of equity-based awards |
|
|
||||||
Weighted average number of common and common equivalent shares outstanding (diluted) |
|
|
||||||
Net income per share: |
||||||||
Basic |
$ | |
$ | |
||||
Diluted |
$ | |
$ | |
Thirteen Weeks Ended |
Twenty-six Weeks Ended |
|||||||||||||||
August 4, 2019 |
August 5, 2018 |
August 4, 2019 |
August 5, 2018 |
|||||||||||||
Stock options |
$ | |
|
$ | |
$ | |
|||||||||
RSU’s and restricted stock |
|
|
|
|
||||||||||||
Total share-based compensation expense |
$ | |
$ | |
$ | |
$ | |
2014 Stock Incentive Plan |
2010 Stock Incentive Plan |
|||||||||||||||
Number of Options |
Weighted Average Exercise Price |
Number of Options |
Weighted Average Exercise Price |
|||||||||||||
Outstanding at February 3, 2019 |
|
$ | |
|
$ | |
||||||||||
Granted |
|
|
— |
— |
||||||||||||
Exercised |
( |
) | |
( |
) | |
||||||||||
Forfeited |
( |
) | |
— |
— |
|||||||||||
Outstanding at August 4, 2019 |
|
$ | |
|
$ | |
||||||||||
Exercisable at August 4, 2019 |
|
$ | |
|
$ | |
||||||||||
Shares |
Weighted Average Fair Value |
|||||||
Outstanding at February 3, 2019 |
|
$ | |
|||||
Granted |
|
|
||||||
Change in units based on performance |
|
|
||||||
Vested |
( |
) | |
|||||
Forfeited |
( |
) | |
|||||
Outstanding at August 4, 2019 |
|
$ | |
|||||
• | Revitalize our existing stores |
• | Build deeper guest engagement |
• | Maintain disciplined cost management |
• | Invest in high-return new stores |
• | Return capital to shareholders |
Thirteen Weeks Ended |
Thirteen Weeks Ended |
|||||||||||||||
August 4, 2019 |
August 5, 2018 |
|||||||||||||||
Food and beverage revenues |
$ | 137,921 |
40.0 |
% | $ | 130,242 |
40.8 |
% | ||||||||
Amusement and other revenues |
206,678 |
60.0 |
188,946 |
59.2 |
||||||||||||
Total revenues |
344,599 |
100.0 |
319,188 |
100.0 |
||||||||||||
Cost of food and beverage (as a percentage of food and beverage revenues) |
36,934 |
26.8 |
33,998 |
26.1 |
||||||||||||
Cost of amusement and other (as a percentage of amusement and other revenues) |
22,689 |
11.0 |
21,558 |
11.4 |
||||||||||||
Total cost of products |
59,623 |
17.3 |
55,556 |
17.4 |
||||||||||||
Operating payroll and benefits |
80,927 |
23.5 |
73,736 |
23.1 |
||||||||||||
Other store operating expenses |
104,376 |
30.3 |
94,825 |
29.7 |
||||||||||||
General and administrative expenses |
15,991 |
4.6 |
14,764 |
4.6 |
||||||||||||
Depreciation and amortization expense |
32,745 |
9.5 |
29,049 |
9.1 |
||||||||||||
Pre-opening costs |
4,723 |
1.4 |
5,328 |
1.7 |
||||||||||||
Total operating costs |
298,385 |
86.6 |
273,258 |
85.6 |
||||||||||||
Operating income |
46,214 |
13.4 |
45,930 |
14.4 |
||||||||||||
Interest expense, net |
4,605 |
1.3 |
3,228 |
1.0 |
||||||||||||
Income before provision for income taxes |
41,609 |
12.1 |
42,702 |
13.4 |
||||||||||||
Provision for income taxes |
9,253 |
2.7 |
8,923 |
2.8 |
||||||||||||
Net income |
$ | 32,356 |
9.4 |
% | $ | 33,779 |
10.6 |
% | ||||||||
Change in comparable store sales (1) |
(1.8 |
)% | (2.4 |
)% | ||||||||||||
Company-owned stores open at end of period (1) |
130 |
117 |
||||||||||||||
Comparable stores open at end of period (1) |
99 |
86 |
(1) |
Our store in Duluth (Atlanta), Georgia permanently closed on March 3, 2019 as we did not exercise the renewal option and has been excluded from fiscal 2019 store counts and comparable store sales. |
Thirteen Weeks |
Thirteen Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
August 4, 2019 |
August 5, 2018 |
|||||||||||||||
Net income |
$ | 32,356 |
9.4 |
% | $ | 33,779 |
10.6 |
% | ||||||||
Interest expense, net |
4,605 |
3,228 |
||||||||||||||
Provision for income taxes |
9,253 |
8,923 |
||||||||||||||
Depreciation and amortization expense |
32,745 |
29,049 |
||||||||||||||
EBITDA |
78,959 |
22.9 |
% | 74,979 |
23.5 |
% | ||||||||||
Loss on asset disposal |
406 |
431 |
||||||||||||||
Share-based compensation |
1,907 |
1,626 |
||||||||||||||
Pre-opening costs |
4,723 |
5,328 |
||||||||||||||
Other costs (1) |
(13 |
) | 26 |
|||||||||||||
Adjusted EBITDA |
$ | 85,982 |
25.0 |
% | $ | 82,390 |
25.8 |
% |
(1) |
Primarily represents costs related to currency transaction (gains) or losses. |
Thirteen Weeks |
Thirteen Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
August 4, 2019 |
August 5, 2018 |
|||||||||||||||
Operating income |
$ | 46,214 |
13.4 |
% | $ | 45,930 |
14.4 |
% | ||||||||
General and administrative expenses |
15,991 |
14,764 |
||||||||||||||
Depreciation and amortization expense |
32,745 |
29,049 |
||||||||||||||
Pre-opening costs |
4,723 |
5,328 |
||||||||||||||
Store Operating Income Before Depreciation and Amortization |
$ | 99,673 |
28.9 |
% | $ | 95,071 |
29.8 |
% |
Thirteen Weeks |
Thirteen Weeks |
|||||||
Ended |
Ended |
|||||||
August 4, 2019 |
August 5, 2018 |
|||||||
New store and operating initiatives |
$ | 40,029 |
$ | 30,256 |
||||
Games |
6,146 |
11,171 |
||||||
Maintenance capital |
4,190 |
7,431 |
||||||
Total capital additions |
$ | 50,365 |
$ | 48,858 |
||||
Payments from landlords |
$ | 7,099 |
$ | 15,758 |
Comparable stores |
$ | (4,877 |
) | |
Non-comparable stores |
29,633 |
|||
Other |
655 |
|||
Total |
$ | 25,411 |
Twenty-six Weeks Ended |
Twenty-six Weeks Ended |
|||||||||||||||
August 4, 2019 |
August 5, 2018 |
|||||||||||||||
Food and beverage revenues |
$ | 286,142 |
40.4 |
% | $ | 269,997 |
41.5 |
% | ||||||||
Amusement and other revenues |
422,039 |
59.6 |
381,381 |
58.5 |
||||||||||||
Total revenues |
708,181 |
100.0 |
651,378 |
100.0 |
||||||||||||
Cost of food and beverage (as a percentage of food and beverage revenues) |
75,688 |
26.5 |
70,018 |
25.9 |
||||||||||||
Cost of amusement and other (as a percentage of amusement and other revenues) |
45,660 |
10.8 |
42,677 |
11.2 |
||||||||||||
Total cost of products |
121,348 |
17.1 |
112,695 |
17.3 |
||||||||||||
Operating payroll and benefits |
163,800 |
23.1 |
146,630 |
22.5 |
||||||||||||
Other store operating expenses |
210,621 |
29.8 |
188,165 |
28.9 |
||||||||||||
General and administrative expenses |
32,837 |
4.6 |
30,418 |
4.7 |
||||||||||||
Depreciation and amortization expense |
63,886 |
9.0 |
56,555 |
8.7 |
||||||||||||
Pre-opening costs |
11,725 |
1.7 |
12,381 |
1.9 |
||||||||||||
Total operating costs |
604,217 |
85.3 |
546,844 |
84.0 |
||||||||||||
Operating income |
103,964 |
14.7 |
104,534 |
16.0 |
||||||||||||
Interest expense, net |
8,661 |
1.2 |
6,085 |
0.9 |
||||||||||||
Income before provision for income taxes |
95,303 |
13.5 |
98,449 |
15.1 |
||||||||||||
Provision for income taxes |
20,504 |
2.9 |
22,520 |
3.4 |
||||||||||||
Net income |
$ | 74,799 |
10.6 |
% | $ | 75,929 |
11.7 |
% | ||||||||
Change in comparable store sales (1) |
(1.0 |
)% | (3.7 |
)% | ||||||||||||
Company-owned stores open at end of period (1) |
130 |
117 |
||||||||||||||
Comparable stores open at end of period (1) |
99 |
86 |
(1) |
Our store in Duluth (Atlanta), Georgia permanently closed on March 3, 2019 as we did not exercise the renewal option and has been excluded from fiscal 2019 store counts and comparable store sales. |
Twenty-six Weeks |
Twenty-six Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
August 4, 2019 |
August 5, 2018 |
|||||||||||||||
Net income |
$ | 74,799 |
10.6 |
% | $ | 75,929 |
11.7 |
% | ||||||||
Interest expense, net |
8,661 |
6,085 |
||||||||||||||
Provision for income taxes |
20,504 |
22,520 |
||||||||||||||
Depreciation and amortization expense |
63,886 |
56,555 |
||||||||||||||
EBITDA |
167,850 |
23.7 |
% | 161,089 |
24.7 |
% | ||||||||||
Loss on asset disposal |
826 |
693 |
||||||||||||||
Share-based compensation |
3,732 |
4,014 |
||||||||||||||
Pre-opening costs |
11,725 |
12,381 |
||||||||||||||
Other costs (1) |
33 |
121 |
||||||||||||||
Adjusted EBITDA |
$ | 184,166 |
26.0 |
% | $ | 178,298 |
27.4 |
% |
(1) |
Primarily represents costs related to currency transaction (gains) or losses. |
Twenty-six Weeks |
Twenty-six Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
August 4, 2019 |
August 5, 2018 |
|||||||||||||||
Operating income |
$ | 103,964 |
14.7 |
% | $ | 104,534 |
16.0 |
% | ||||||||
General and administrative expenses |
32,837 |
30,418 |
||||||||||||||
Depreciation and amortization expense |
63,886 |
56,555 |
||||||||||||||
Pre-opening costs |
11,725 |
12,381 |
||||||||||||||
Store Operating Income Before Depreciation and Amortization |
$ | 212,412 |
30.0 |
% | $ | 203,888 |
31.3 |
% |
Twenty-six Weeks |
Twenty-six Weeks |
|||||||
Ended |
Ended |
|||||||
August 4, 2019 |
August 5, 2018 |
|||||||
New store and operating initiatives |
$ | 91,447 |
$ | 78,464 |
||||
Games |
9,842 |
18,604 |
||||||
Maintenance capital |
10,485 |
10,726 |
||||||
Total capital additions |
$ | 111,774 |
$ | 107,794 |
||||
Payments from landlords |
$ | 21,341 |
$ | 30,545 |
Comparable stores |
$ | (5,802 |
) | |
Non-comparable stores |
62,221 |
|||
Other |
384 |
|||
Total |
$ | 56,803 |
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. |
CONTROLS AND PROCEDURES |
ITEM 1. |
LEGAL PROCEEDINGS |
ITEM 1A. |
RISK FACTORS |
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period (1) |
Total Number of Shares Repurchased |
Average Price Paid per Share |
Total Number of Shares Repurchased as Part of Publicly Announced Plan (2) |
Approximate Dollar Value of Shares That May Yet Be Repurchased Under the Plan (3) |
||||||||||||
May 6, 2019 – June 2, 2019 |
— |
$ | — |
— |
$ | 406,666 |
||||||||||
June 3, 2019 – July 7, 2019 |
1,400,000 |
$ | 39.93 |
1,400,000 |
$ | 350,766 |
||||||||||
July 8, 2019 – August 4, 2019 |
2,000,000 |
$ | 40.39 |
2,000,000 |
$ | 269,990 |
(1) |
Monthly information is presented by reference to our fiscal periods during the thirteen weeks ended August 4, 2019. |
(2) |
Our Board of Directors approved a share repurchase program, under which the Company may repurchase shares on the open market, through privately negotiated transactions, and through trading plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The share repurchase program may be modified, suspended or discontinued at any time. |
(3) |
Based on total share repurchase authorization in effect on August 4, 2019. |
ITEM 6. |
EXHIBITS |
Exhibit Number |
Description | |||
31.1* |
||||
31.2* |
||||
32.1* |
||||
32.2* |
||||
101 |
XBRL Interactive Data files. | |||
104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* | Filed herein |
DAVE & BUSTER’S ENTERTAINMENT, INC., a Delaware corporation | ||||||
Date: September 10, 2019 |
By: |
/s/ Brian A. Jenkins | ||||
Brian A. Jenkins | ||||||
Chief Executive Officer | ||||||
Date: September 10, 2019 |
By: |
/s/ Scott J. Bowman | ||||
Scott J. Bowman | ||||||
Chief Financial Officer |
Exhibit 31.1
CERTIFICATION
I, Brian A. Jenkins, Chief Executive Officer of Dave & Busters Entertainment, Inc., certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Dave & Busters Entertainment, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants second fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: September 10, 2019 | /s/ Brian A. Jenkins | |||||
Brian A. Jenkins | ||||||
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Scott J. Bowman, Chief Financial Officer of Dave & Busters Entertainment, Inc., certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Dave & Busters Entertainment, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants second fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: September 10, 2019 | /s/ Scott J. Bowman | |||||
Scott J. Bowman | ||||||
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION
In connection with the Quarterly Report of Dave & Busters Entertainment, Inc. (the Company) on Form 10-Q for the period ended August 4, 2019 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Brian A. Jenkins, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that:
(1) | The Report fully complies with the applicable requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: September 10, 2019
/s/ Brian A. Jenkins |
Brian A. Jenkins |
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION
In connection with the Quarterly Report of Dave & Busters Entertainment, Inc. (the Company) on Form 10-Q for the period ended August 4, 2019 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Scott J. Bowman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that:
(1) | The Report fully complies with the applicable requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: September 10, 2019
/s/ Scott J. Bowman |
Scott J. Bowman |
Chief Financial Officer |