15:47:08 EST Sat 28 Jan 2023
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Dave & Buster ¢ € ™s Reports Third Quarter 2022 Financial Results

2022-12-06 16:15 ET - News Release

DALLAS, Dec. 06, 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.”

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.

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.

*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


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%
             



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%
                



 
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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