0001525769 false 0001525769 2022-06-07 2022-06-07 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

 

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): June 7, 2022

 

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)

 

1221 S. Belt Line Rd., Suite 500

Coppell, TX 75019

(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 June 7, 2022, Dave & Buster’s Entertainment, Inc. (the “Company”) issued a press release (the “Press Release”) announcing its first quarter 2022 results. A copy of this Press Release is attached hereto as Exhibit 99.1.

 

Item 9.01.Financial Statements and Exhibits

 

(d)       Exhibits.

 

99.1Press release dated June 7, 2022.
 104Cover Page Interactive Date File (the Cover Page Interactive Data File is embedded within the Inline XBRL document).

 

 

 

 

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: June 7, 2022 By: /s/ Robert W. Edmund
    Robert W. Edmund
    General Counsel, Secretary and
    Senior Vice President of Human Resources

 

 

 

Exhibit 99.1

 

 

 

Dave & Buster’s Reports Record First Quarter 2022 Financial Results

 

DALLAS, June 7, 2022 (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 first quarter ended May 1, 2022.

 

Key First Quarter 2022 Highlights

 

·Revenue increased 24.1% from the first quarter of 2019 to a record $451.1 million compared with $265.3 million in the first quarter of 2021 and $363.6 million in the first quarter of 2019

 

·Total comparable sales increased 10.9% compared with the same period in 2019

 

·Net income totaled a record $67.0 million, or $1.35 per diluted share, compared with net income of $19.6 million, or $0.40 per diluted share in the first quarter of 2021 and net income of $42.4 million, or $1.13 per diluted share in the first quarter of 2019

 

·Adjusted EBITDA increased 45.9% from the first quarter of 2019 to a record $143.2 million or 31.8% of revenue, compared with Adjusted EBITDA of $76.7 million in the first quarter of 2021 (28.9% of revenue) and Adjusted EBITDA of $98.2 million, or 27.0% of revenue in the first quarter of 2019

 

·Ended the quarter with $139.1 million in cash, approximately $492.5 million of liquidity available under the Company’s $500 million revolving credit facility, net of $7.5 million in letters of credit, and a net debt leverage ratio of 0.7x

 

“We are pleased to report another quarter of outstanding financial results,” said Kevin Sheehan, Dave & Buster’s Board Chair and Interim Chief Executive Officer. “We set records for revenue, net income and Adjusted EBITDA in the first quarter indicating a return to a normalized operating environment. I am so proud of our teams as they have enthusiastically welcomed back guests to our stores. We are excited about the trajectory of our business and particularly the next few months as we begin our “Summer of Games” roll-out that we hope will drive even more visitation to our stores. As demonstrated by our first quarter results, our teams continue to execute on our initiatives to drive organic growth, improve profitability, and produce significant cash flow from the business. We have significant upside potential and with our continued focus on innovation, growth and value creation, we are determined to deliver on that potential. To that end, we are excited to add Main Event to the Dave & Buster’s team. Their strong management team and strategic fit with our Company provide for even more growth opportunities, for both brands, which will benefit all stakeholders. We expect to close the transaction in a few weeks and we will have more to say about Main Event shortly thereafter. We are optimistic about the future and look forward to sharing our ongoing progress in the coming quarters.”

 

Michael Quartieri, Dave & Buster’s Chief Financial Officer, said: “Our record first quarter results demonstrate our ability to drive revenue, profitability and strong cash flow despite continued headwinds in the economy.  We are benefiting from a higher mix of amusements and a leaner operating model. While we are still experiencing pressures from wage and commodity inflation, our margins continued to improve as we have offset inflationary costs with a more efficient labor model, costs savings and efficiencies and thoughtful pricing actions. In addition, over the past year we have reduced our net debt ratio to 0.7x and ended the first quarter of 2022 with $139 million of cash on the balance sheet.”

 

1 

 

 

First Quarter 2022 Results

 

Total revenue was a record $451.1 million, an increase of 70.0% from $265.3 million in the first quarter of 2021 and an increase of 24.1% from $363.6 million in the first quarter of 2019. Comparable store sales increased 10.9% compared with the first quarter of 2019 (the Company has chosen to continue reporting comparable store sales versus 2019 in order to provide a more meaningful comparison). Walk-in comparable store sales increased 14.7% while Special Event comparable store sales declined 34.6% compared with the same period in 2019. Non-comparable store revenue totaled $89.2 million compared with $58.5 million in the first quarter of 2021 and $33.9 million in the first quarter of 2019.

 

Operating income totaled a record $98.7 million, or 21.9% of revenue, compared with operating income of $37.0 million, or 14.0% of revenue in the first quarter of 2021 and operating income $57.7 million, or 15.9% of revenue in the first quarter of 2019.

 

Net income totaled a record $67.0 million, or $1.35 per diluted share, compared with net income of $19.6 million, or $0.40 per diluted share in the first quarter of 2021 and net income of $42.4 million, or $1.13 per diluted share in the first quarter of 2019.

 

Adjusted EBITDA totaled a record $143.2 million, or 31.8% of revenue, compared with adjusted EBITDA of $76.7 million, or 28.9% of revenue in the first quarter of 2021 and adjusted EBITDA of $98.2 million, or 27.0% of revenue in the first quarter of 2019.

 

Store operating income before depreciation and amortization totaled $163.3 million, or 36.2% of revenue, compared with store operating income before depreciation and amortization of $90.8 million, or 34.2% of revenue in the first quarter of 2021 and store operating income before depreciation and amortization of $112.7 million, or 31.0% of revenue in the first quarter of 2019.

 

Balance Sheet, Liquidity and Cash Flow

 

The Company generated approximately $148.6 million in operating cash flow during the first quarter, ending the quarter with $139.1 million in cash and approximately $492.5 million of availability under its $500 million revolving credit facility, net $7.5 million in letters of credit.

 

The Company’s net debt leverage ratio was approximately 0.7x as of May 1, 2022.

 

Second Quarter 2022 Business Update

 

The Company’s business has continued to strengthen through the first five weeks of the second quarter, during which comparable store sales increased 12.2% compared with the same period in 2019. Walk-in comparable store sales increased 17.8% while Special Event comparable store sales declined 27.9% for the five-week period compared with 2019.

 

Quarterly Report on Form 10-Q Available

 

The Company’s Quarterly Report on Form 10-Q, 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 first quarter ended May 1, 2022.

 

Investor Conference Call and Webcast

 

Management will hold a conference call to report these results on Tuesday, June 7, 2022, at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). Participants can register for the conference by navigating to https://dpregister.com/sreg/10167749/f310771715. Registered participants will receive their dial in number upon registration. Those who are unable to pre-register can access the conference call by dialing toll-free (877) 270-2148. The international dial-in for unregistered participants is (412) 902-6510. A replay will be available after the call for one year beginning at 9:30 a.m. Central Time (10:30 a.m. Eastern Time) and can be accessed by dialing toll-free (877) 344-7529 or by the international toll number (412) 317-0088; the replay access code 2607413. Additionally, a live and archived webcast of the conference call will be available under the Investor Relations section at www.daveandbusters.com.

 

2 

 

 

About Dave & Buster’s Entertainment, Inc.

 

Founded in 1982 and headquartered in Coppell, Texas, Dave & Buster’s Entertainment, Inc., is the owner and operator of 147 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 41 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 coronavirus pandemic. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by the uncertain and unprecedented impact of the pandemic and new coronavirus variants 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 implementation and duration of government-mandated and voluntary shutdowns and restrictions; the speed with which our stores safely can be reopened and fully operated and the level of customer demand following reopening and full operations; the economic impact of the pandemic and related disruptions on the communities we serve; our overall level of indebtedness; general business and economic conditions, including as a result of the pandemic; 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 pandemic; 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.

 

 

For Investor Relations Inquiries:

 

Michael Quartieri, SVP & Chief Financial Officer

Dave & Buster’s Entertainment, Inc.

(972) 813-1151

michael.quartieri@daveandbusters.com

 

3 

 

 

DAVE & BUSTER'S ENTERTAINMENT, INC.

Condensed Consolidated Balance Sheets

(in thousands)

 

ASSETS  May 1, 2022   January 30, 2022 
   (unaudited)   (audited) 
Current assets:          
Cash and cash equivalents  $139,081   $25,910 
Other current assets   78,059    119,661 
Total current assets   217,140    145,571 
Property and equipment, net   787,750    778,597 
Operating lease right of use assets   1,055,328    1,037,197 
Intangible and other assets, net   382,882    384,425 
Total assets  $2,443,100   $2,345,790 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Total current liabilities  $313,078   $311,515 
Operating lease liabilities   1,294,486    1,277,539 
Other long-term liabilities   51,828    49,881 
Long-term debt, net   431,966    431,395 
Stockholders' equity   351,742    275,460 
Total liabilities and stockholders' equity  $2,443,100   $2,345,790 

 

4 

 

 

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 
   May 1, 2022   May 2, 2021   May 5, 2019 
Food and beverage revenue  $151,912    33.7%  $85,758    32.3%  $148,221    40.8%
Amusement and other revenue   299,189    66.3%   179,582    67.7%   215,361    59.2%
Total revenue   451,101    100.0%   265,340    100.0%   363,582    100.0%
                               
Cost of food and beverage (as a percentage of food and beverage revenue)   43,255    28.5%   23,157    27.0%   38,754    26.1%
Cost of amusement and other (as a percentage of amusement and other revenue)   26,766    8.9%   16,614    9.3%   22,971    10.7%
Total cost of products   70,021    15.5%   39,771    15.0%   61,725    17.0%
Operating payroll and benefits   93,361    20.7%   50,279    18.9%   82,873    22.8%
Other store operating expenses   124,425    27.5%   84,445    31.9%   106,245    29.2%
General and administrative expenses   28,297    6.3%   17,091    6.4%   16,846    4.6%
Depreciation and amortization expense   33,288    7.4%   35,099    13.2%   31,141    8.6%
Pre-opening costs   2,997    0.7%   1,659    0.6%   7,002    1.9%
Total operating costs   352,389    78.1%   228,344    86.0%   305,832    84.1%
                               
Operating income     98,712    21.9%   36,996    14.0%   57,750    15.9%
                               
Interest expense, net   11,391    2.5%   14,820    5.6%   4,056    1.1%
                               
Income before provision for income taxes   87,321    19.4%   22,176    8.4%   53,694    14.8%
Provision for income taxes   20,337    4.6%   2,541    1.0%   11,251    3.1%
Net income    $66,984    14.8%  $19,635    7.4%  $42,443    11.7%
                               
Net income per share:                              
Basic  $1.38        $0.41        $1.15      
Diluted  $1.35        $0.40        $1.13      
Weighted average shares used in per share calculations:                              
Basic shares   48,580,273         47,695,705         36,827,665      
Diluted shares   49,453,503         49,331,092         37,591,944      
                               
Other information:                              
Company-owned stores at end of period   145         141         127      
Store operating weeks in the period   1,876         1,633         1,616      
Total revenue per store operating weeks in the period  $240        $162        $225      

 

5 

 

 

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 
   May 1, 2022   May 2, 2021   May 5, 2019 
Net income  $66,984    14.8%  $19,635    7.4%  $42,443    11.7%
Add back:  Interest expense, net   11,391         14,820         4,056      
Provision for income taxes   20,337         2,541         11,251      
Depreciation and amortization expense   33,288         35,099         31,141      
EBITDA   132,000    29.3%   72,095    27.2%   88,891    24.4%
Add back:  Loss on asset disposal   216         145         420      
Share-based compensation   3,555         2,971         1,825      
Pre-opening costs   2,997         1,659         7,002      
Other costs (1)   4,479         (165)        46      
Adjusted EBITDA  $143,247    31.8%  $76,705    28.9%  $98,184    27.0%

 

(1) First quarter 2022 amount primarily represents costs related to the pending acquisition of Main Event.

 

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 
   May 1, 2022   May 2, 2021   May 5, 2019 
Operating income  $98,712    21.9%  $36,996    14.0%  $57,750    15.9%
Add back:  General and administrative expenses   28,297         17,091         16,846      
Depreciation and amortization expense   33,288         35,099         31,141      
Pre-opening costs   2,997         1,659         7,002      
Store operating income before depreciation and amortization  $163,294    36.2%  $90,845    34.2%  $112,739    31.0%

 

6