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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 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 September 7, 2022, Dave & Buster’s Entertainment, Inc. (the “Company”) issued a press release announcing results its second 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 September 7, 2022.

104Cover Page Interactive Data 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: September 7, 2022 By: /s/ Michael Quartieri
    Michael Quartieri
    Senior Vice President and Chief Financial Officer

 

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Exhibit 99.1

 

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Description automatically generated

 

Dave & Buster’s Reports Second Quarter 2022 Financial Results

 

DALLAS, September 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 second quarter ended July 31, 2022.

 

Key Second Quarter 2022 Highlights

 

The Company completed its acquisition of Main Event on June 29, 2022.
The Company implemented over $11.5 million of annualized cost synergies to date that will be realized in future quarters and increased its target annualized cost synergies from $20.0 million to $25.0 million.
Record second quarter revenue of $468.4 million increased 35.9% from the second quarter of 2019 and increased 24.0% from the second quarter of 2021. Main Event branded stores contributed $51.4 million of revenue during the quarter.
Total comparable sales at Dave & Buster’s branded stores increased 9.6% compared with the same period in 2019.
Total comparable sales at Main Event branded stores increased 29.7% during the period from June 29 through July 31, 2022 compared with the same period in 2019.
Net income totaled $29.1 million, or 59 cents per diluted share, compared with net income of $52.8 million, or $1.07 per diluted share in the second quarter of 2021 and net income of $32.4 million, or 90 cents per diluted share in the second quarter of 2019.
Record Adjusted EBITDA of $119.6 million increased 39.0% from the second quarter of 2019 and increased 0.3% from the second quarter of 2021.
During the second quarter of 2022, the Company repurchased 764,988 shares for $25 million.
The Company ended the quarter with $591.8 million of liquidity, which includes $100.4 in cash and $491.4 million available under its $500 million revolving credit facility.

 

“We are pleased to report record revenue for the second quarter,” said Chris Morris, Dave & Buster’s Chief Executive Officer. “We experienced strong guest visitation and spending across both brands this quarter. Our teams continued to deliver high levels of service to our guests, while simultaneously beginning the process of integration into one company. I want to recognize the efforts of our combined teams as we work to capture the synergies from our combination and adopt best practices across our brands. While we saw substantial headwinds during the quarter from wage and commodity inflation, we remained focused on driving revenue and strong cash flow while still working to mitigate these pressures with operational efficiencies and appropriate pricing actions. We have significant upside potential and with our continued focus on innovation, growth and value creation, we are determined to deliver on that potential. We are excited about the future of this new organization and look forward to sharing our progress in the coming quarters.”

 

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Second Quarter 2022 Results

 

Total revenue was a record $468.4 million, an increase of 24.0% from $377.6 million in the second quarter of 2021 and an increase of 35.9% from $344.6 million in the second quarter of 2019. Total revenue at Dave & Buster’s branded stores was $417.0 million, an increase of 10.4% from $377.6 million in the second quarter of 2021 and an increase of 21.0% from $344.6 million from the second quarter of 2019. Total revenue at Main Event branded stores was $51.4 million for the period from June 29 through July 31, 2022.

 

Comparable store sales at Dave & Buster’s branded stores increased 9.6% 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). Walk-in comparable store sales at Dave & Buster’s branded stores increased 13.0% while Special Event comparable store sales declined 23.1% compared with the same period in 2019. Non-comparable store revenue at Dave & Buster’s branded stores totaled $84.7 million compared with $69.2 million in the second quarter of 2021 and $40.7 million in the second quarter of 2019.

 

Comparable store sales at Main Event branded stores for the period from June 29 through July 31, 2022, increased 29.7% compared with the same period in 2019. Walk-in comparable store sales at Main Event branded stores during the June 29 through July 31, 2022 period increased 34.9% while Special Event comparable store sales declined 1.4% compared with the same period in 2019. Non-comparable store revenue during this period at Main Event branded stores totaled $13.5 million.

 

Operating income totaled $56.5 million, or 12.1% of revenue, compared with operating income of $79.2 million, or 21.0% of revenue in the second quarter of 2021 and operating income of $46.2 million, or 13.4% of revenue in the second quarter of 2019. Operating income during the second quarter of 2022 was negatively impacted by transaction costs related to the acquisition of Main Event, increases in pre-opening and stock-based compensation expenses and an impairment charge.

 

Net income totaled $29.1 million, or 59 cents per diluted share, compared with net income of $52.8 million, or $1.07 per diluted share in the second quarter of 2021 and net income of $32.4 million, or 90 cents per diluted share in the second quarter of 2019.

 

Adjusted EBITDA totaled a record $119.6 million, or 25.5% of revenue, compared with Adjusted EBITDA of $119.2 million, or 31.6% of revenue in the second quarter of 2021 and adjusted EBITDA of $86.0 million, or 25.0% of revenue in the second quarter of 2019.

 

Store operating income before depreciation and amortization totaled $136.7 million, or 29.2% of revenue, compared with store operating income before depreciation and amortization of $134.2 million, or 35.5% of revenue in the second quarter of 2021 and store operating income before depreciation and amortization of $99.7 million, or 28.9% of revenue in the second quarter of 2019.

 

Balance Sheet, Liquidity and Cash Flow

 

In connection with the acquisition of Main Event, the Company refinanced its existing $500 million revolving credit facility and closed on a new $850 million term loan due June 29, 2029.

 

The Company generated $84.5 million in operating cash flow during the second quarter, and ended the quarter with $591.8 million of liquidity, which includes $100.4 in cash and $491.4 million available under its $500 million revolving credit facility.

 

During the second quarter of 2022, the Company repurchased 764,988 shares for $25 million under its $100 million authorized share repurchase program.

 

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Third Quarter 2022 Business Update

 

The Company’s business has continued to improve through the first five weeks of the third quarter, during which comparable store sales on a consolidated basis increased 22.1% with increases of 17.6% at Dave & Buster’s branded stores and 42.3% at Main Event branded stores compared with the same period in 2019. Consolidated walk-in comparable store sales increased 24.7% while Special Event comparable store sales declined 4.2% for the five-week period compared with 2019. At Dave & Buster’s branded stores, walk-in comparable store sales increased 20.0% while Special Event comparable store sales declined 11.9% for the five-week period compared with 2019. At Main Event branded stores, walk-in comparable store sales increased 48.9% while Special Event comparable store sales increased 9.3% 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 second quarter ended July 31, 2022.

 

Investor Conference Call and Webcast

 

Management will hold a conference call to report these results on Wednesday, September 7, 2022, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). Participants can access the conference call by dialing toll-free (877) 883-0383. The international dial-in for participants is (412) 902-6506. The participant entry number is 9220602. A replay will be available after the call for one year beginning at 6:00 p.m. Central Time (7:00 p.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 4030138. 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 Coppell, Texas, Dave & Buster's Entertainment, Inc., is the owner and operator of 200 venues in North America that offer premier entertainment and dining experiences to guests through two distinct brands: Dave & Buster’s and Main Event. The Company has 148 Dave & Buster’s branded stores in 41 states, Puerto Rico, and Canada and offers guests the opportunity to "Eat Drink Play and Watch," all in one location. Each store 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. The Company also operates 52 Main Event branded stores in 17 states across the country, and offers state-of-the-art bowling, laser tag, hundreds of arcade games and virtual reality, making it the perfect place for families to connect and make memories. For more information about each brand, visit daveandbusters.com and mainevent.com.

 

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.

 

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*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

 

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DAVE & BUSTER'S ENTERTAINMENT, INC.
Condensed Consolidated Balance Sheets
(in thousands)

 

   July 31, 2022   January 30, 2022 
   (unaudited)   (audited) 
ASSETS          
           
Current assets:          
           
Cash and cash equivalents  $100,386   $25,910 
Other current assets   114,120    119,661 
           
Total current assets   214,506    145,571 
           
Property and equipment, net   1,149,632    778,597 
           
Operating lease right of use assets   1,330,468    1,037,197 
           
Intangible and other assets, net   956,134    384,425 
           
Total assets  $3,650,740   $2,345,790 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Total current liabilities  $407,585   $311,515 
           
Operating lease liabilities   1,599,417    1,277,539 
           
Other long-term liabilities   67,681    49,881 
           
Long-term debt, net   1,219,678    431,395 
           
Stockholders' equity   356,379    275,460 
           
Total liabilities and stockholders' equity  $3,650,740   $2,345,790 

 

5

 

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 
   July 31, 2022   August 1, 2021   August 4, 2019 
Food and beverage revenue  $156,995    33.5%  $123,006    32.6%  $137,921    40.0%
Amusement and other revenue   311,364    66.5%   254,632    67.4%   206,678    60.0%
Total revenue   468,359    100.0%   377,638    100.0%   344,599    100.0%
                               
Cost of food and beverage (as a percentage of food and beverage revenue)   46,461    29.6%   33,127    26.9%   36,934    26.8%
Cost of amusement and other (as a percentage of amusement and other revenue)   29,075    9.3%   24,584    9.7%   22,689    11.0%
Total cost of products   75,536    16.1%   57,711    15.3%   59,623    17.3%
Operating payroll and benefits   113,674    24.3%   80,623    21.3%   80,927    23.5%
Other store operating expenses   142,440    30.4%   105,116    27.9%   104,376    30.3%
General and administrative expenses   37,710    8.1%   18,470    4.9%   15,991    4.6%
Depreciation and amortization expense   38,614    8.2%   34,875    9.2%   32,745    9.5%
Pre-opening costs   3,913    0.8%   1,676    0.4%   4,723    1.4%
Total operating costs   411,887    87.9%   298,471    79.0%   298,385    86.6%
                               
Operating income   56,472    12.1%   79,167    21.0%   46,214    13.4%
                               
Interest expense, net   17,118    3.7%   13,728    3.7%   4,605    1.3%
Loss on debt refinancing    1,479    0.3%   -    0.0%   -    0.0%
                               
Income before provision for income taxes   37,875    8.1%   65,439    17.3%   41,609    12.1%
Provision for income taxes   8,787    1.9%   12,669    3.3%   9,253    2.7%
Net income  $29,088    6.2%  $52,770    14.0%  $32,356    9.4%
                               
Net income per share:                              
Basic  $0.60        $1.10        $0.91      
Diluted  $0.59        $1.07        $0.90      
Weighted average shares used in per share calculations:                              
Basic shares   48,831,639         48,178,611         35,407,965      
Diluted shares   49,271,521         49,229,817         36,015,710      
                               
Other information:                              
Company-owned stores at end of period   200         142         130      
Store operating weeks in the period   2,171         1,817         1,674      
Total revenue per store operating weeks in the period  $216        $208        $206      

 

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 
   July 31, 2022   August 1, 2021   August 4, 2019 
Net income  $29,088    6.2%  $52,770    14.0%  $32,356    9.4%
Add back:  Interest expense, net   17,118         13,728         4,605      
Loss on debt refinancing   1,479         -         -      
Provision for income taxes   8,787         12,669         9,253      
Depreciation and amortization expense   38,614         34,875         32,745      
EBITDA   95,086    20.3%   114,042    30.2%   78,959    22.9%
Add back:  Loss on asset disposal   154         112         406      
Impairment of long-lived assets    1,841         -         -      
Share-based compensation   4,698         3,187         1,907      
Pre-opening costs   3,913         1,676         4,723      
Other costs (1)   13,858         135         (13)     
Adjusted EBITDA  $119,550    25.5%  $119,152    31.6%  $85,982    25.0%

 

(1) Fiscal year 2022 amount primarily represents costs related to the acquisition of Main Event and subsequent integration costs.

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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 
   July 31, 2022   August 1, 2021   August 4, 2019 
Operating income  $56,472    12.1%  $79,167    21.0%  $46,214    13.4%
Add back:  General and administrative expenses   37,710         18,470         15,991      
Depreciation and amortization expense   38,614         34,875         32,745      
Pre-opening costs   3,913         1,676         4,723      
Store operating income before depreciation and amortization  $136,709    29.2%  $134,188    35.5%  $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 
   July 31, 2022   August 1, 2021   August 4, 2019 
Food and beverage revenue  $308,907    33.6%  $208,764    32.5%  $286,142    40.4%
Amusement and other revenue   610,553    66.4%   434,214    67.5%   422,039    59.6%
Total revenue   919,460    100.0%   642,978    100.0%   708,181    100.0%
                               
Cost of food and beverage (as a percentage of food and beverage revenue)   89,716    29.0%   56,284    27.0%   75,688    26.5%
Cost of amusement and other (as a percentage of amusement and other revenue)   55,841    9.1%   41,198    9.5%   45,660    10.8%
Total cost of products   145,557    15.8%   97,482    15.2%   121,348    17.1%
Operating payroll and benefits   207,035    22.5%   130,902    20.4%   163,800    23.1%
Other store operating expenses   266,865    29.0%   189,561    29.4%   210,621    29.8%
General and administrative expenses   66,007    7.2%   35,561    5.5%   32,837    4.6%
Depreciation and amortization expense   71,902    7.8%   69,974    10.9%   63,886    9.0%
Pre-opening costs   6,910    0.8%   3,335    0.5%   11,725    1.7%
Total operating costs   764,276    83.1%   526,815    81.9%   604,217    85.3%
                               
Operating income   155,184    16.9%   116,163    18.1%   103,964    14.7%
                               
Interest expense, net   28,509    3.1%   28,548    4.5%   8,661    1.2%
Loss on debt refinancing    1,479    0.2%   -    0.0%   -    0.0%
                               
Income before provision for income taxes   125,196    13.6%   87,615    13.6%   95,303    13.5%
Provision for income taxes   29,124    3.2%   15,210    2.3%   20,504    2.9%
Net income  $96,072    10.4%  $72,405    11.3%  $74,799    10.6%
                               
Net income per share:                              
Basic  $1.97        $1.51        $2.07      
Diluted  $1.95        $1.47        $2.03      
Weighted average shares used in per share calculations:                              
Basic shares   48,705,956         47,937,158         36,117,815      
Diluted shares   49,357,051         49,272,693         36,803,001      
                               
Other information:                              
Company-owned stores at end of period   200         142         130      
Store operating weeks in the period   4,047         3,450         3,290      
Total revenue per store operating weeks in the period  $227        $186        $215      

 

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 
   July 31, 2022   August 1, 2021   August 4, 2019 
Net income  $96,072    10.4%  $72,405    11.3%  $74,799    10.6%
Add back:  Interest expense, net   28,509         28,548         -      
Loss on debt refinancing   1,479         -         8,661      
Provision for income taxes   29,124         15,210         20,504      
Depreciation and amortization expense   71,902         69,974         63,886      
EBITDA   227,086    24.7%   186,137    28.9%   167,850    23.7%
Add back:  Loss on asset disposal   370         257         826      
Impairment of long-lived assets    1,841         -         -      
Share-based compensation   8,253         6,158         3,732      
Pre-opening costs   6,910         3,335         11,725      
Other costs (1)   18,337         (30)        33      
Adjusted EBITDA  $262,797    28.6%  $195,857    30.5%  $184,166    26.0%

 

(1) Fiscal year 2022 amount primarily represents costs related to the acquisition of Main Event and subsequent integration costs.

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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 
   July 31, 2022   August 1, 2021   August 4, 2019 
Operating income  $155,184    16.9%  $116,163    18.1%  $103,964    14.7%
Add back:  General and administrative expenses   66,007         35,561         32,837      
Depreciation and amortization expense   71,902         69,974         63,886      
Pre-opening costs   6,910         3,335         11,725      
Store operating income before depreciation and amortization  $300,003    32.6%  $225,033    35.0%  $212,412    30.0%

 

 

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