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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): December 6, 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 December 6, 2022, Dave & Buster’s Entertainment, Inc. (the “Company”) issued a press release announcing results its third 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 December 6, 2022.
104Cover Page Interactive Data File (the Cover Page Interactive Data File is 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: December 6, 2022 By: /s/ Michael Quartieri
  Michael Quartieri
  Senior Vice President and Chief Financial Officer

 

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Exhibit 99.1

 

A picture containing text, clipart

Description automatically generated

 

Dave & Buster’s Reports Third Quarter 2022 Financial Results

 

DALLAS, December 6, 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 third quarter ended October 30, 2022.

 

Key Third Quarter 2022 Highlights

 

The Company reports its first full quarter of financial results including its Main Event branded stores, having completed its acquisition of Main Event on June 29, 2022. The Company is on pace to realize its previously disclosed annual synergy target of $25 million, and has already implemented $17 million of annualized cost savings to date.

 

Record third quarter revenue of $481.2 million increased 51.3% from the third quarter of 2021 and increased 60.7% from the third quarter of 2019. Including the pro forma contribution of Main Event in the third quarter of 2021 and 2019, this quarter’s revenue grew 20.6% and 32.5%, respectively.

 

Pro forma combined comparable store sales (including Main Event branded stores) increased 13.3% compared with the same period in 2021 and 17.5% compared with the same period in 2019.

 

Net income totaled $1.9 million, or 4 cents per diluted share, compared with net income of $10.6 million, or 21 cents per diluted share in the third quarter of 2021 and net income of $0.5 million, or 2 cents per diluted share in the third quarter of 2019.

 

Record third quarter Adjusted EBITDA of $90.0 million increased 31.9% from the third quarter of 2021 and increased 94.4% from the third quarter of 2019. Including the pro forma contribution of Main Event in the third quarter of 2021 and 2019, this quarter’s Adjusted EBITDA grew 15.0% and 88.4%, respectively.

 

The Company opened three new stores in the period under the Dave & Buster’s brand in Lynnwood, WA, Long Beach, CA, and Bakersfield, CA.

 

The Company ended the quarter with $599.3 million of liquidity, which included $108.2 million in cash and $491.1 million available under its $500 million revolving credit facility.

 

“We are pleased to report strong financial results for the third quarter. We delivered record revenue driven by double-digit comparable sales growth which resulted in record Adjusted EBITDA,” said Chris Morris, Dave & Buster’s Chief Executive Officer. “Our outstanding team continues to strongly execute our integration plan and deliver exceptional results, despite the challenging macro and inflationary environment. We remain focused on driving innovation, growth and value creation for our stakeholders. The future is incredibly bright for this new organization, and I am excited about sharing our progress with you over the next few years.”

 

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Third Quarter 2022 Results

 

Total revenue was a record $481.2 million, an increase of 51.3% from $318.0 million in the third quarter of 2021 and an increase of 60.7% from $299.4 million in the third quarter of 2019. Including the pro forma contribution of Main Event stores in the prior periods, total revenue increased 20.6% versus the third quarter of 2021 and increased 32.5% versus the third quarter of 2019.

 

Pro forma combined comparable store sales (including Main Event branded stores) increased 13.3% compared with the third quarter of 2021 and increased 17.5% compared with the third quarter of 2019. Pro forma combined walk-in comparable store sales increased 8.0% while Special Event comparable store sales increased 110.3% compared with the same period in 2021. Pro forma combined walk-in comparable store sales increased 20.3% while consolidated Special Event comparable store sales declined 6.7% compared with the same period in 2019. Non-comparable store revenue totaled $108.5 million in the third quarter.

 

Operating income totaled $30.1 million, or 6.3% of revenue, compared with operating income of $24.5 million, or 7.7% of revenue in the third quarter of 2021 and operating income of $6.5 million, or 2.2% of revenue in the third quarter of 2019.

 

Net income totaled $1.9 million, or 4 cents per diluted share, compared with net income of $10.6 million, or 21 cents per diluted share in the third quarter of 2021 and net income of $0.5 million, or 2 cents per diluted share in the third quarter of 2019.

 

Adjusted EBITDA totaled $90.0 million, or 18.7% of revenue, compared with Adjusted EBITDA of $68.2 million, or 21.5% of revenue in the third quarter of 2021 and Adjusted EBITDA of $46.3 million, or 15.5% of revenue in the third quarter of 2019.

 

Store operating income before depreciation and amortization totaled $115.2 million, or 23.9% of revenue, compared with store operating income before depreciation and amortization of $83.0 million, or 26.1% of revenue in the third quarter of 2021 and store operating income before depreciation and amortization of $60.3 million, or 20.1% of revenue in the third quarter of 2019.

 

Balance Sheet, Liquidity and Cash Flow

 

The Company generated $67.9 million in operating cash flow during the third quarter, ending the quarter with $108.2 million in cash and $491.1 million of availability under its $500 million revolving credit facility, net of $8.9 million in outstanding letters of credit.

 

“As a result of the integration process of these two great brands, we have implemented over $17.0 million in synergies to date and are rapidly approaching our previously disclosed target of $25.0 million,” said Michael Quartieri, Dave & Buster’s Chief Financial Officer. “Our strong balance sheet, significant operating cash flow, and sizeable liquidity profile is in excellent position to support the long-term growth objectives of our Company.”

 

Fourth Quarter 2022 Business Update

 

Through the first five weeks of the fourth quarter, pro forma combined comparable store sales (including Main Event branded stores) increased 3.1% versus the comparable period in 2021 and increased 9.2% versus the comparable period in 2019. Pro forma combined walk-in comparable store sales decreased 2.4% versus the comparable period in 2021 and increased 15.7% versus the comparable period in 2019. Pro forma combined Special Event comparable store sales increased 65.3% versus the comparable period in 2021 and declined 21.7% versus the comparable period in 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 third quarter ended October 30, 2022.

 

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Investor Conference Call and Webcast

 

Management will hold a conference call to report these results on Tuesday, December 6, 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 5940194. 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 9387822. 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 203 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 151 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:

 

Cory Hatton, VP Investor Relations & Treasurer

Dave & Buster’s Entertainment, Inc.

cory.hatton@daveandbusters.com

 

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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 
   October 30, 2022   October 31, 2021   November 3, 2019 
Food and beverage revenue  $165,855    34.5%  $107,747    33.9%  $124,637    41.6%
Amusement and other revenue   315,351    65.5%   210,229    66.1%   174,715    58.4%
Total revenue   481,206    100.0%   317,976    100.0%   299,352    100.0%
                               
Cost of food and beverage (as a percentage of food and beverage revenue)   48,939    29.5%   30,082    27.9%   33,384    26.8%
Cost of amusement and other (as a percentage of amusement and other revenue)   27,316    8.7%   22,531    10.7%   18,796    10.8%
Total cost of products   76,255    15.8%   52,613    16.5%   52,180    17.4%
Operating payroll and benefits   125,919    26.2%   78,995    24.8%   76,165    25.4%
Other store operating expenses   163,846    34.0%   103,322    32.5%   110,713    37.1%
General and administrative expenses   32,777    6.8%   22,104    7.0%   16,210    5.4%
Depreciation and amortization expense   48,427    10.1%   34,381    10.8%   33,340    11.1%
Pre-opening costs   3,874    0.8%   2,092    0.7%   4,245    1.4%
Total operating costs   451,098    93.7%   293,507    92.3%   292,853    97.8%
                               
Operating income   30,108    6.3%   24,469    7.7%   6,499    2.2%
                               
Interest expense, net   28,374    5.9%   13,423    4.2%   6,110    2.1%
Loss on debt refinancing / extinguishment   -    0.0%   2,829    0.9%   -    0.0%
                               
Income before benefit for income taxes   1,734    0.4%   8,217    2.6%   389    0.1%
Benefit for income taxes   (184)   0.0%   (2,368)   -0.7%   (93)   -0.1%
Net income  $1,918    0.4%  $10,585    3.3%  $482    0.2%
                               
Net income per share:                              
Basic  $0.04        $0.22        $0.02      
Diluted  $0.04        $0.21        $0.02      
Weighted average shares used in per share calculations:                              
Basic shares   48,256,090         48,277,358         30,980,878      
Diluted shares   48,740,003         49,283,503         31,515,454      
                               
                               
Other information:                              
Company-owned stores at end of period   203         143         134      
Store operating weeks in the period   2,616         1,854         1,722      
Total revenue per store operating weeks in the period  $184        $172        $174      

 

  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 
   October 30, 2022   October 31, 2021   November 3, 2019 
Net income  $1,918    0.4%  $10,585    3.3%  $482    0.2%
Add back:  Interest expense, net   28,374         13,423         6,110      
Loss on debt refinancing / extinguishment   -         2,829         -      
Benefit for income taxes   (184)        (2,368)        (93)     
Depreciation and amortization expense   48,427         34,381         33,340      
EBITDA   78,535    16.3%   58,850    18.5%   39,839    13.3%
Add back:  Loss on asset disposal   242         377         458      
Impairment of long-lived assets   -         -         -      
Share-based compensation   3,228         3,778         1,747      
Pre-opening costs   3,874         2,092         4,245      
Other costs (1)   4,094         3,112         1      
Adjusted EBITDA  $89,973    18.7%  $68,209    21.5%  $46,290    15.5%

 

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

                             

  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 
   October 30, 2022   October 31, 2021   November 3, 2019 
Operating income  $30,108    6.3%  $24,469    7.7%  $6,499    2.0%
Add back:  General and administrative expenses   32,777         22,104         16,210      
Depreciation and amortization expense   48,427         34,381         33,340      
Pre-opening costs   3,874         2,092         4,245      
Store operating income before depreciation and amortization  $115,186    23.9%  $83,046    26.1%  $60,294    20.1%

 

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DAVE & BUSTER'S ENTERTAINMENT, INC.

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share amounts)  

 

   39 Weeks Ended   39 Weeks Ended   39 Weeks Ended 
   October 30, 2022   October 31, 2021   November 3, 2019 
Food and beverage revenue  $474,762    33.9%  $316,511    32.9%  $410,779    40.8%
Amusement and other revenue   925,904    66.1%   644,443    67.1%   596,754    59.2%
Total revenue   1,400,666    100.0%   960,954    100.0%   1,007,533    100.0%
                               
Cost of food and beverage (as a percentage of food and beverage revenue)   138,655    29.2%   86,366    27.3%   109,072    26.6%
Cost of amusement and other (as a percentage of amusement and other revenue)   83,157    9.0%   63,729    9.9%   64,456    10.8%
Total cost of products   221,812    15.8%   150,095    15.6%   173,528    17.2%
Operating payroll and benefits   332,954    23.8%   209,897    21.8%   239,965    23.8%
Other store operating expenses   430,711    30.7%   292,883    30.5%   321,334    31.9%
General and administrative expenses   98,784    7.1%   57,665    6.0%   49,047    4.9%
Depreciation and amortization expense   120,329    8.6%   104,355    10.9%   97,226    9.6%
Pre-opening costs   10,784    0.8%   5,427    0.6%   15,970    1.6%
Total operating costs   1,215,374    86.8%   820,322    85.4%   897,070    89.0%
                               
Operating income   185,292    13.2%   140,632    14.6%   110,463    11.0%
                               
Interest expense, net   56,883    4.0%   41,971    4.3%   14,771    1.5%
Loss on debt refinancing / extinguishment   1,479    0.1%   2,829    0.3%   -    0.0%
                               
Income before provision for income taxes   126,930    9.1%   95,832    10.0%   95,692    9.5%
Provision for income taxes   28,940    2.1%   12,842    1.4%   20,411    2.0%
Net income  $97,990    7.0%  $82,990    8.6%  $75,281    7.5%
                               
Net income per share:                              
Basic  $2.02        $1.73        $2.19      
Diluted  $1.99        $1.68        $2.15      
Weighted average shares used in per share calculations:                              
Basic shares   48,556,001         48,050,558         34,405,503      
Diluted shares   49,173,864         49,257,269         35,042,311      
                               
                               
Other information:                              
Company-owned stores at end of period   203         143         134      
Store operating weeks in the period   6,663         5,304         5,012      
Total revenue per store operating weeks in the period  $210        $181        $201      

 

The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:          

 

   39 Weeks Ended   39 Weeks Ended   39 Weeks Ended 
   October 30, 2022   October 31, 2021   November 3, 2019 
Net income  $97,990    7.0%  $82,990    8.6%  $75,281    7.5%
Add back:  Interest expense, net   56,883         41,971         14,771      
Loss on debt refinancing / extinguishment   1,479         2,829         -      
Provision for income taxes   28,940         12,842         20,411      
Depreciation and amortization expense   120,329         104,355         97,226      
EBITDA   305,621    21.8%   244,987    25.5%   207,689    20.6%
Add back:  Loss on asset disposal   612         634         1,284      
Impairment of long-lived assets   1,841         -         -      
Share-based compensation   11,481         9,936         5,479      
Pre-opening costs   10,784         5,427         15,970      
Other costs (1)   22,431         3,082         34      
Adjusted EBITDA  $352,770    25.2%  $264,066    27.5%  $230,456    22.9%

 

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

                           

The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown:          

 

   39 Weeks Ended   39 Weeks Ended   39 Weeks Ended 
   October 30, 2022   October 31, 2021   November 3, 2019 
Operating income  $185,292    13.2%  $140,632    14.6%  $110,463    11.0%
Add back:  General and administrative expenses   98,784         57,665         49,047      
Depreciation and amortization expense   120,329         104,355         97,226      
Pre-opening costs   10,784         5,427         15,970      
Store operating income before depreciation and amortization  $415,189    29.6%  $308,079    32.1%  $272,706    27.1%

 

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DAVE & BUSTER'S ENTERTAINMENT, INC.

Condensed Consolidated Balance Sheets

(in thousands)  

 

ASSETS  October 30, 2022   January 30, 2022 
   (unaudited)   (audited) 
Current assets:          
           
Cash and cash equivalents  $108,211   $25,910 
Other current assets   125,394    119,661 
           
Total current assets   233,605    145,571 
           
Property and equipment, net   1,155,955    778,597 
           
Operating lease right of use assets   1,298,801    1,037,197 
           
Intangible and other assets, net   996,729    384,425 
           
Total assets  $3,685,090   $2,345,790 
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Total current liabilities  $406,242   $311,515 
           
Operating lease liabilities   1,583,910    1,277,539 
           
Other long-term liabilities   111,714    49,881 
           
Long-term debt, net   1,222,208    431,395 
           
Stockholders' equity   361,016    275,460 
           
Total liabilities and stockholders' equity  $3,685,090   $2,345,790 

 

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