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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): September 9, 2021

 

DAVE & BUSTER’S ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   001-35664   35-2382255

(State of

incorporation)

 

(Commission File
Number)

 

(IRS Employer

Identification Number)

  

2481 Manana Drive

Dallas TX 75220

(Address of principal executive offices)

  

Registrant’s telephone number, including area code: (214) 357-9588

 

Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the reporting obligation of the registrant under any of the following provisions:

 

¨

Written communications pursuant to Rule 425 under the Securities Act

¨

Soliciting material pursuant to Rule 14a-12 of the Exchange Act

¨

Pre-commencement communications pursuant to Rule 14d-2(b) Exchange Act

¨

Pre-commencement communications pursuant to Rule 13e-4(c) Exchange Act

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock $0.01 par value   PLAY   NASDAQ Stock Market LLC

 

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Section 2 – Financial Information

 

Item 2.02.Results of Operations and Financial Condition.

 

The information contained in Item 2.02 of this Current Report on Form 8-K, including the Exhibit attached hereto, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Furthermore, the information contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.

 

On September 9, 2021, Dave & Buster’s Entertainment, Inc. (the “Company”) issued a press release announcing results its second quarter 2021 results. A copy of this Press Release is attached hereto as Exhibit 99.1.

 

Item 9.01.Financial Statements and Exhibits

 

(d)       Exhibits.

 

99.1       Press release dated September 9, 2021.
   
  104       Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  DAVE & BUSTER’S ENTERTAINMENT, INC.
 
Date: September 9, 2021 By: /s/ Robert W. Edmund
    Robert W. Edmund
    General Counsel, Secretary and
    Senior Vice President of Human Resources

 

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Exhibit 99.1

 

 

 

Dave & Buster’s Reports Record Second Quarter 2021 Financial Results

 

DALLAS, September 9, 2021 (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 record quarterly revenues, net income and EBITDA for its second quarter of fiscal year 2021, which ended on August 1, 2021.

 

The Company began the second quarter with 138 open stores, or approximately 98 percent of its total store base. As of August 1, all of the Company’s 142 stores were open, including 1 new store opened during the quarter.

 

Key Second Quarter 2021 Highlights

 

§Revenues totaled a record $377.6 million compared with $50.8 million in the second quarter of 2020 and $344.6 million in the second quarter of 2019
§Overall comparable store sales increased 3.6% compared with the same period in 2019
§Net income totaled a record $52.8 million, or $1.07 per diluted share, compared with net loss of $58.6 million, or $1.24 per share in the second quarter of 2020 and net income of $32.4 million, or $0.90 per diluted share in the second quarter of 2019
§EBITDA totaled a record $114.0 million, or 30.2% of revenues, compared with EBITDA loss of $46.0 million in the second quarter of 2020 and EBITDA of $79.0 million, or 22.9% of revenues in the second quarter of 2019
§Adjusted EBITDA totaled a record $119.2 million, or 31.6% of revenues, compared with Adjusted EBITDA loss of $38.5 million in the second quarter of 2020 and Adjusted EBITDA of $86.0 million, or 25.0% of revenues in the second quarter of 2019
§Launched new menu, completed rollout of mobile web platform and tablets, and executed new marketing strategy
§Ended the quarter with $108 million in cash and approximately $340 million of liquidity available under the Company’s $500 million revolving credit facility, net of a $150 million minimum liquidity covenant and $10 million in letters of credit
§Company has elected to redeem $55 million of 7.625% senior secured notes at 103% of principal, saving approximately $4.2 million in annualized interest

 

Brian Jenkins, Dave & Buster’s Chief Executive Officer, said, “Dave & Buster’s second quarter was clear evidence that the brand is back, posting record revenues and EBITDA with all 142 stores open as of the end of the quarter. The entire team has demonstrated great resilience navigating the pandemic and positioning the Company to achieve new levels of performance. Through continued execution of our strategic initiatives, including our new menu, optimized marketing, and technology investments, we are excited to move forward with a strong foundation to drive sustained profitable growth.

 

Second Quarter 2021 Results

 

Total revenues of $377.6 million increased 642.9% from $50.8 in the first quarter of 2020 and increased 9.6% from $344.6 million in the second quarter of 2019. Comparable store sales increased 3.6% compared with the second quarter of 2019 (the Company has chosen to continue reporting comparable store sales versus 2019 in order to provide a more meaningful comparison). Non-comparable store revenue totaled $67.3 million compared with $10.4 million in the second quarter of 2020.

 

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Operating income totaled $79.2 million, or 21.0% of revenues, compared with operating loss of $81.1 million, or (159.6)% of revenues in the second quarter of 2020 and operating income $46.2 million, or 13.4% of revenues in the second quarter of 2019.

 

Net income totaled $52.8 million, or $1.07 per diluted share, compared with net loss of $58.6 million, or $1.24 per share in the second quarter of 2020 and net income of $32.4 million, or $0.90 per diluted share in the second quarter of 2019.

 

EBITDA totaled $114.0 million, or 30.2% of revenues, compared with EBITDA loss of $46.0 million, or (90.4)% of revenues in the second quarter of 2020 and EBITDA of $79.0 million, or 22.9% of revenues in the second quarter of 2019.

 

Adjusted EBITDA totaled $119.2 million, or 31.6% of revenues, compared with adjusted EBITDA loss of $38.5 million, or (75.7)% of revenues in the second quarter of 2020 and adjusted EBITDA of $86.0 million, or 25.0% of revenues in the second quarter of 2019.

 

Store operating income before depreciation and amortization totaled $134.2 million, or 35.5% of revenues, compared with store operating loss before depreciation and amortization of $34.3 million, or (67.5)% of revenues in the second quarter of 2020 and $99.7 million, or 28.9% of revenues in the second quarter of 2019.

 

Balance Sheet, Liquidity and Cash Flow

 

The Company generated approximately $121 million in operating cash flow during the second quarter, ending the quarter with $108 million in cash and approximately $340 million of availability under its $500 million revolving credit facility, net of a $150 million minimum liquidity covenant and $10 million in letters of credit.

 

Total long-term debt stood at $550 million consisting of 7.625% senior secured notes maturing in 2025. As part of its ongoing capital allocation strategy, the Company has elected to redeem $55 million, or 10%, of its senior secured notes utilizing a redemption option in the Company’s October 2020 indenture agreement. Per the agreement, up to 10% of the notes may be redeemed at 103% of principal in the first twelve-month period after issuance. The Company expects to complete this redemption by September 20, 2021, resulting in annualized interest savings of approximately $4.2 million. Upon separate election, the Company may redeem an additional 10% at 103% of principal in the second twelve-month period after issuance, which commences October 27, 2021.

 

Third Quarter Business Update and Outlook

 

The Company’s business recovery has continued through the first five weeks of the third quarter, including Labor Day Monday, during which comparable store sales increased 1.3% compared with 2019.

 

Based on current trends, and barring any significant downturn due to the pandemic, the Company currently expects the following:

 

·Third quarter comparable store sales to be approximately in line with the quarter-to-date trends compared to third quarter 2019.
·Third quarter EBITDA to be significantly higher than third quarter 2019 EBITDA of $39.8 million, but with some moderation compared with the increase in the second quarter.
·A total of four new store openings during fiscal year 2021 and the relocation of one existing location.
·FY2021 capital additions (net of tenant allowances) of approximately $95 to $100 million, with approximately 49% dedicated to new stores and other operating initiatives, 14% for games, and 37% for maintenance needs.

 

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Quarterly Report on Form 10-Q Available

 

The Company’s Quarterly Report on Form 10-Q, which will be available at www.sec.gov and at the Company’s investor relations website, contains a thorough review of its financial results for the 13 and 26 weeks ended August 1, 2021.

 

Investor Conference Call and Webcast

 

Management will hold a conference call to report these results today at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). The conference call can be accessed over the phone by dialing (720) 543-0206 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 8867697.

 

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

 

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 143 venues in North America 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 40 states, Puerto Rico, and Canada.

 

Forward-Looking Statements

 

The Company cautions that this release contains forward-looking statements, including, without limitation, statements relating to the impact on our business and operations of the global spread of the novel coronavirus outbreak. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by the uncertain and unprecedented impact of the coronavirus on our business and operations and the related impact on our liquidity needs; our ability to continue as a going concern; our ability to obtain waivers, and thereafter continue to satisfy covenant requirements, under our revolving credit facility; our ability to access other funding sources; the duration of government-mandated and voluntary shutdowns and restrictions; the speed with which our stores safely can be reopened and the level of customer demand following reopening; the economic impact of the coronavirus and related disruptions on the communities we serve; our overall level of indebtedness; general business and economic conditions, including as a result of the coronavirus; 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, including as a result of the coronavirus; 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.

 

-- Financial Tables Follow –

 

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DAVE & BUSTER'S ENTERTAINMENT, INC.
Condensed Consolidated Balance Sheets
(in thousands)
         
ASSETS  August 1,
2021
   January 31,
2021
 
   (unaudited)   (audited) 
Current assets:          
           
Cash and cash equivalents  $107,801   $11,891 
Other current assets   88,154    106,980 
           
Total current assets   195,955    118,871 
           
Property and equipment, net   785,227    815,027 
           
Operating lease right of use assets   1,018,558    1,037,569 
           
Intangible and other assets, net   384,765    381,357 
           
Total assets  $2,384,505   $2,352,824 
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Total current liabilities  $308,933   $271,636 
           
Operating lease liabilities   1,248,038    1,267,791 
           
Other long-term liabilities   59,843    63,777 
           
Long-term debt, net   537,816    596,388 
           
Stockholders' equity   229,875    153,232 
           
Total liabilities and stockholders' equity  $2,384,505   $2,352,824 

 

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DAVE & BUSTER'S ENTERTAINMENT, INC. 
Consolidated Statements of Operations (Unaudited) 
(in thousands, except share and per share amounts) 
                         
   13 Weeks Ended   13 Weeks Ended   13 Weeks Ended 
   August 1, 2021   August 2, 2020   August 4, 2019 
Food and beverage revenues  $123,006    32.6%  $17,002    33.4%  $137,921    40.0%
Amusement and other revenues   254,632    67.4%   33,831    66.6%   206,678    60.0%
Total revenues   377,638    100.0%   50,833    100.0%   344,599    100.0%
                               
Cost of food and beverage (as a percentage of food and beverage revenues)   33,127    26.9%   4,659    27.4%   36,934    26.8%
Cost of amusement and other (as a percentage of amusement and other revenues)   24,584    9.7%   4,025    11.9%   22,689    11.0%
Total cost of products   57,711    15.3%   8,684    17.1%   59,623    17.3%
Operating payroll and benefits   80,623    21.3%   13,756    27.1%   80,927    23.5%
Other store operating expenses   105,116    27.9%   62,682    123.2%   104,376    30.3%
General and administrative expenses   18,470    4.9%   9,278    18.3%   15,991    4.6%
Depreciation and amortization expense   34,875    9.2%   35,160    69.2%   32,745    9.5%
Pre-opening costs   1,676    0.4%   2,388    4.7%   4,723    1.4%
Total operating costs   298,471    79.0%   131,948    259.6%   298,385    86.6%
                               
Operating income (loss)   79,167    21.0%   (81,115)   -159.6%   46,214    13.4%
                               
Interest expense, net   13,728    3.7%   8,163    16.0%   4,605    1.3%
                               
Income (loss) before provision (benefit) for income taxes   65,439    17.3%   (89,278)   -175.6%   41,609    12.1%
Provision (benefit) for income taxes   12,669    3.3%   (30,676)   -60.3%   9,253    2.7%
Net income (loss)    $52,770    14.0%  $(58,602)   -115.3%  $32,356    9.4%
                               
Net income (loss) per share:                              
Basic  $1.10        $(1.24)       $0.91      
Diluted  $1.07        $(1.24)       $0.90      
Weighted average shares used in per share calculations:                              
Basic shares   48,178,611         47,111,763         35,407,965      
Diluted shares   49,229,817         47,111,763         36,015,710      
                               
Other information:                              
Company-owned stores at end of period   142         137         130      
Store operating weeks in the period   1,817         628         1,674      
Total revenue per store operating weeks in the period  $208        $81        $206      

 

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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   13 Weeks Ended 
   August 1, 2021   August 2, 2020   August 4, 2019 
Net income (loss)    $52,770    14.0%  $(58,602)   -115.3%  $32,356    9.4%
Add back:  Interest expense, net   13,728         8,163         4,605      
Provision (benefit) for income taxes   12,669         (30,676)        9,253      
Depreciation and amortization expense   34,875         35,160         32,745      
EBITDA   114,042    30.2%   (45,955)   -90.4%   78,959    22.9%
Add back:  Loss on asset disposal   112         264         406      
Impairment of long-lived assets and lease termination costs   -         2,178         -      
Share-based compensation   3,187         2,734         1,907      
Pre-opening costs   1,676         2,388         4,723      
Other costs   135         (88)        (13)     
Adjusted EBITDA  $119,152    31.6%  $(38,479)   -75.7%  $85,982    25.0%

 

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   13 Weeks Ended 
   August 1, 2021   August 2, 2020   August 4, 2019 
Operating income (loss)  $79,167    21.0%  $(81,115)   -159.6%  $46,214    13.4%
Add back:  General and administrative expenses   18,470         9,278         15,991      
Depreciation and amortization expense   34,875         35,160         32,745      
Pre-opening costs   1,676         2,388         4,723      
Store operating income (loss) before depreciation and amortization  $134,188    35.5%  $(34,289)   -67.5%  $99,673    28.9%

 

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DAVE & BUSTER'S ENTERTAINMENT, INC. 
Consolidated Statements of Operations (Unaudited) 
(in thousands, except share and per share amounts) 
                         
   26 Weeks Ended   26 Weeks Ended   26 Weeks Ended 
   August 1, 2021   August 2, 2020   August 4, 2019 
Food and beverage revenues  $208,764    32.5%  $80,922    38.4%  $286,142    40.4%
Amusement and other revenues   434,214    67.5%   129,717    61.6%   422,039    59.6%
Total revenues   642,978    100.0%   210,639    100.0%   708,181    100.0%
                               
Cost of food and beverage (as a percentage of food and beverage revenues)   56,284    27.0%   22,003    27.2%   75,688    26.5%
Cost of amusement and other (as a percentage of amusement and other revenues)   41,198    9.5%   14,753    11.4%   45,660    10.8%
Total cost of products   97,482    15.2%   36,756    17.4%   121,348    17.1%
Operating payroll and benefits   130,902    20.4%   57,493    27.3%   163,800    23.1%
Other store operating expenses   189,561    29.4%   158,354    75.3%   210,621    29.8%
General and administrative expenses   35,561    5.5%   23,841    11.3%   32,837    4.6%
Depreciation and amortization expense   69,974    10.9%   70,512    33.5%   63,886    9.0%
Pre-opening costs   3,335    0.5%   6,211    2.9%   11,725    1.7%
Total operating costs   526,815    81.9%   353,167    167.7%   604,217    85.3%
                               
Operating income (loss)   116,163    18.1%   (142,528)   -67.7%   103,964    14.7%
                               
Interest expense, net   28,548    4.5%   14,278    6.7%   8,661    1.2%
                               
Income (loss) before provision (benefit) for income taxes   87,615    13.6%   (156,806)   -74.4%   95,303    13.5%
Provision (benefit) for income taxes   15,210    2.3%   (54,660)   -25.9%   20,504    2.9%
Net income (loss)    $72,405    11.3%  $(102,146)   -48.5%  $74,799    10.6%
                               
Net income (loss) per share:                              
Basic  $1.51        $(2.59)       $2.07      
Diluted  $1.47        $(2.59)       $2.03      
Weighted average shares used in per share calculations:                              
Basic shares   47,937,158         39,470,874         36,117,815      
Diluted shares   49,272,693         39,470,874         36,803,001      
                               
Other information:                              
Company-owned stores at end of period   142         137         130      
Store operating weeks in the period   3,450         1,461         3,290      
Total revenue per store operating weeks in the period  $186        $144        $215      

 

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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   26 Weeks Ended 
   August 1, 2021   August 2, 2020   August 4, 2019 
Net income (loss)    $72,405    11.3%  $(102,146)   -48.5%  $74,799    10.6%
Add back:  Interest expense, net   28,548         14,278         8,661      
Provision (benefit) for income taxes   15,210         (54,660)        20,504      
Depreciation and amortization expense   69,974         70,512         63,886      
EBITDA   186,137    28.9%   (72,016)   -34.2%   167,850    23.7%
Add back:  Loss on asset disposal   257         417         826      
Impairment of long-lived assets and lease termination costs   -         13,727         -      
Share-based compensation   6,158         2,345         3,732      
Pre-opening costs   3,335         6,211         11,725      
Other costs   (30)        59         33      
Adjusted EBITDA  $195,857    30.5%  $(49,257)   -23.4%  $184,166    26.0%

 

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   26 Weeks Ended 
   August 1, 2021   August 2, 2020   August 4, 2019 
Operating income (loss)  $116,163    18.1%  $(142,528)   -67.7%  $103,964    14.7%
Add back:  General and administrative expenses   35,561         23,841         32,837      
Depreciation and amortization expense   69,974         70,512         63,886      
Pre-opening costs   3,335         6,211         11,725      
Store operating income (loss) before depreciation and amortization  $225,033    35.0%  $(41,964)   -19.9%  $212,412    30.0%

 

For Investor Relations Inquiries:

 

Scott Bowman, CFO

Dave & Buster’s Entertainment, Inc.

972.813.1151

scott.bowman@daveandbusters.com

 

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