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 29, 2023.
Key Third Quarter 2023
Highlights
- Third quarter
revenue of $466.9 million decreased 3.0% from the third
quarter of 2022.
- Pro forma combined
comparable store sales (including Main Event branded stores)
decreased 7.8% compared with the same period in 2022 and increased
8.1% compared with the same period in 2019.
- Net loss totaled
$5.2 million, or $(0.12) per diluted share, compared with net
income of $1.9 million, or $0.04 per diluted share in the third
quarter of 2022. Adjusted net income totaled $0.4 million, or $0.01
per diluted share, compared with adjusted net income of $5.1
million, or $0.10 per diluted share in the third quarter of
2022.
- Adjusted EBITDA of
$81.6 million, or 17.5% of revenue, in the quarter decreased 5.2%
from the third quarter of 2022.
Key Year-to-Date 2023
Highlights
- Revenue of $1.61
billion increased 14.7% from the same period in 2022, and increased
0.3% compared to pro forma revenue from the same period in
2022.
- Pro forma combined
comparable store sales (including Main Event branded stores)
decreased 5.9% compared with the same period in 2022 and increased
8.1% compared with the same period in 2019.
- Net income totaled
$90.8 million, or $2.01 per diluted share, compared with net income
of $98.0 million, or $1.99 per diluted share in the same period in
2022. Adjusted net income totaled $115.0 million, or $2.55 per
diluted share, compared with adjusted net income of $117.2 million,
or $2.38 per diluted share in the same period in 2022.
- Adjusted EBITDA of
$403.9 million, or 25.1% of revenue, increased 18.1% compared to
the same period in 2022, and increased 3.8% compared to pro forma
Adjusted EBITDA in the same period in 2022.
Other Highlights
- The Company ended
the third quarter with $554.2 million of liquidity, which included
$64.0 million in cash and $490.2 million available under its
$500 million revolving credit facility.
- The Company opened
two new Dave & Buster's stores and one new Main Event store in
the third quarter.
- The Company
repurchased 2.8 million shares at a total cost of $100.0
million in the third quarter. Total share repurchases to date in
fiscal 2023 are 8.5 million shares totaling $300.0 million and
representing 17.5% of the Company's outstanding shares as of the
end of fiscal 2022. The Company has $100.0 million remaining on its
share repurchase authorization.
- The Company
entered into a sale leaseback transaction with an institutional
real estate investor for the real estate of four Dave &
Buster's stores generating $85.8 million in proceeds.
"During the quarter, we continued to make
significant progress against our key growth initiatives. On the
organic growth front, we have seen meaningful success in the tests
we have implemented in our marketing, food and beverage, pricing,
special events and remodel initiatives which we look forward to
rolling out across the broader portfolio over the coming weeks and
months and which we expect will lead to substantial improvement in
revenue and profitability. We also continued to open new stores at
highly attractive returns on our investment and have continued to
opportunistically return capital to shareholders in a highly
accretive manner,” said Chris Morris, Dave & Buster's Chief
Executive Officer. “I am proud of our dedicated team’s ability to
continue to deliver strong operating performance and generate
significant free cash flow in the face of a complex macroeconomic
backdrop and difficult prior year comparisons driven by robust
post-COVID demand. We remain as confident as ever in the $1 billion
AEBITDA target we indicated during investor day and remain laser
focused on delivering that result in the coming years."
Third Quarter
2023 Results
Total revenue was $466.9 million, a decrease of
3.0% from $481.2 million in the third quarter of 2022.
Pro forma combined comparable store sales
(including Main Event branded stores) decreased 7.8% compared with
the third quarter of 2022 and increased 8.1% compared with the
third quarter of 2019.
Operating income totaled $18.6 million, or 3.9%
of revenue, compared with operating income of $30.1 million, or
6.3% of revenue in the third quarter of 2022.
Net loss totaled $5.2 million, or $(0.12) per
diluted share, compared with net income of $1.9 million, or $0.04
per diluted share in the third quarter of 2022.
Adjusted EBITDA totaled $81.6 million, or 17.5%
of revenue, compared with Adjusted EBITDA of $86.1 million, or
17.9% of revenue in the third quarter of 2022.
Store operating income before depreciation and
amortization totaled $102.9 million, or 22.0% of revenue, compared
with store operating income before depreciation and amortization of
$115.2 million, or 23.9% of revenue in the third quarter of
2022.
Year-to-date
2023
Results1
Total revenue was $1.61 billion, an increase of
14.7% from $1.40 billion in the same period of 2022, and increased
0.3% compared to pro forma revenue from the same period in
2022.
Pro forma combined comparable store sales
(including Main Event branded stores) decreased 5.9% compared with
the same period in 2022 and increased 8.1% compared with the same
period in 2019.
Operating income totaled $217.1 million, or
13.5% of revenue, an increase of 17.2% compared with operating
income of $185.3 million, or 13.2% of revenue in the same period of
2022, and increased 4.9% compared to pro forma operating income
from the same period in 2022.
Net income totaled $90.8 million, or $2.01 per
diluted share, compared with net income of $98.0 million, or $1.99
per diluted share in the same period of 2022.
Adjusted EBITDA totaled $403.9 million, or 25.1%
of revenue of revenue, increased 18.1% compared to the same period
in 2022, and increased 3.8% compared to pro forma Adjusted EBITDA
in the same period in 2022.
_________________________________________________
1 Pro forma results for the
thirty-nine weeks ended October 30, 2022 can be found in the March
2023 Supplemental Pro-Forma Financials posted on our investor
relations website
Store operating income before depreciation and
amortization totaled $471.7 million, or 29.4% of revenue, compared
with store operating income before depreciation and amortization of
$415.2 million, or 29.6% of revenue, in the same period of
2022.
Balance Sheet, Liquidity, Cash Flow and
Share Repurchases
The Company generated $70.8 million in operating
cash flow during the third quarter, ending the quarter with $64.0
million in cash and $490.2 million of availability under its
$500 million revolving credit facility, net of $9.8 million in
outstanding letters of credit. The Company ended the quarter with a
Net Total Leverage Ratio of 2.3x as defined under its Credit
Agreement as the ratio of the aggregate principal amount of any
Consolidated Debt less Unrestricted Cash and unrestricted Permitted
Investments to Credit Adjusted EBITDA. The Company's maximum
permitted Net Total Leverage Ratio is 3.5x.
The Company repurchased 2.8 million shares at a
total cost of $100 million in the third quarter, bringing the total
repurchases to date in fiscal 2023 to 8.5 million shares totaling
$300 million and representing 17.5% of outstanding shares. The
Company has $100 million remaining on its share repurchase
authorization at the end of the third quarter of 2023.
"We took advantage of our strong balance sheet,
liquidity, and credit profile in the quarter to continue to invest
in the business, opened three new stores in the quarter with six
more planned in the fourth quarter, advanced our remodel plans,
entered into a sale leaseback for four D&B properties, and
returned capital to shareholders via $100 million of share
repurchases,” said Michael Quartieri, Dave & Buster's Chief
Financial Officer. "Combined with the share repurchases in the
first half, we have repurchased 17.5% of our shares outstanding in
fiscal 2023 and with $100 million remaining on our Board
authorization, we continue to see share repurchases as an
attractive lever of shareholder return given our current market
valuation.”
Quarterly Report on Form 10-Q Available
The Company’s Quarterly Report on Form 10-Q,
which will be available at www.sec.gov and on the Company’s
investor relations website, contains a thorough review of its
financial results for the third quarter ended October 29,
2023.
Investor Conference Call and
Webcast
Management will host a conference call to report
these results on Tuesday, December 5, 2023, 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 1135148. 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 2619932. Additionally, a live and archived
webcast of the conference call will be available at
ir.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 217 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 159
Dave & Buster’s branded stores in 42 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 58 Main Event branded stores in 20 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. These forward-looking statements
involve risks and uncertainties, including: 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; our
overall level of indebtedness; general business and economic
conditions, including as a result of the coronavirus pandemic and
any new coronavirus variants; 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; 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,
Credit Adjusted EBITDA (calculated in accordance with the Company's
credit agreement), Credit Adjusted EBITDA margin, Store operating
income before depreciation and amortization, Store operating income
before depreciation and amortization margin, Adjusted Net income,
Adjusted net income per share - Diluted, and pro forma financials
including Main Event branded stores prior to the Company's
ownership, reconciliations of which can be found on our website
(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 &
TreasurerDave & Buster’s Entertainment,
Inc.Cory.Hatton@daveandbusters.com
|
DAVE & BUSTER'S ENTERTAINMENT, INC. |
Consolidated Statements of Operations |
(unaudited, in millions, except per share
amounts) |
|
|
|
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
October 29, 2023 |
|
October 30, 2022 |
|
October 29, 2023 |
|
October 30, 2022 |
Entertainment revenues |
$ |
302.0 |
|
|
64.7 |
% |
|
$ |
315.3 |
|
|
65.5 |
% |
|
$ |
1,055.9 |
|
65.7 |
% |
|
$ |
925.9 |
|
66.1 |
% |
Food and beverage
revenues |
|
164.9 |
|
|
35.3 |
% |
|
|
165.9 |
|
|
34.5 |
% |
|
|
550.4 |
|
34.3 |
% |
|
|
474.8 |
|
33.9 |
% |
Total revenues |
|
466.9 |
|
|
100.0 |
% |
|
|
481.2 |
|
|
100.0 |
% |
|
|
1,606.3 |
|
100.0 |
% |
|
|
1,400.7 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of entertainment (as a
percentage of entertainment revenues) |
|
29.5 |
|
|
9.8 |
% |
|
|
27.2 |
|
|
8.6 |
% |
|
|
98.2 |
|
9.3 |
% |
|
|
83.1 |
|
9.0 |
% |
Cost of food and beverage (as a
percentage of food and beverage revenues) |
|
43.3 |
|
|
26.3 |
% |
|
|
49.0 |
|
|
29.5 |
% |
|
|
148.5 |
|
27.0 |
% |
|
|
138.7 |
|
29.2 |
% |
Total cost of products |
|
72.8 |
|
|
15.6 |
% |
|
|
76.2 |
|
|
15.8 |
% |
|
|
246.7 |
|
15.4 |
% |
|
|
221.8 |
|
15.8 |
% |
Operating payroll and
benefits |
|
119.9 |
|
|
25.7 |
% |
|
|
126.0 |
|
|
26.2 |
% |
|
|
377.5 |
|
23.5 |
% |
|
|
333.0 |
|
23.8 |
% |
Other store operating
expenses |
|
171.3 |
|
|
36.7 |
% |
|
|
163.8 |
|
|
34.0 |
% |
|
|
510.4 |
|
31.8 |
% |
|
|
430.7 |
|
30.7 |
% |
General and administrative
expenses |
|
28.4 |
|
|
6.1 |
% |
|
|
32.8 |
|
|
6.8 |
% |
|
|
92.0 |
|
5.7 |
% |
|
|
98.8 |
|
7.1 |
% |
Depreciation and amortization
expense |
|
51.9 |
|
|
11.1 |
% |
|
|
48.4 |
|
|
10.1 |
% |
|
|
149.9 |
|
9.3 |
% |
|
|
120.3 |
|
8.6 |
% |
Pre-opening costs |
|
4.0 |
|
|
0.9 |
% |
|
|
3.9 |
|
|
0.8 |
% |
|
|
12.7 |
|
0.8 |
% |
|
|
10.8 |
|
0.8 |
% |
Total operating costs |
|
448.3 |
|
|
96.1 |
% |
|
|
451.1 |
|
|
93.7 |
% |
|
|
1,389.2 |
|
86.5 |
% |
|
|
1,215.4 |
|
86.8 |
% |
Operating income |
|
18.6 |
|
|
3.9 |
% |
|
|
30.1 |
|
|
6.3 |
% |
|
|
217.1 |
|
13.5 |
% |
|
|
185.3 |
|
13.2 |
% |
Interest expense, net |
|
28.9 |
|
|
6.2 |
% |
|
|
28.4 |
|
|
5.9 |
% |
|
|
92.5 |
|
5.8 |
% |
|
|
56.9 |
|
4.1 |
% |
Loss on debt refinancing |
|
— |
|
|
— |
% |
|
|
— |
|
|
— |
% |
|
|
11.2 |
|
0.7 |
% |
|
|
1.5 |
|
0.1 |
% |
Income (loss) before provision for income taxes |
|
(10.3 |
) |
|
-2.3 |
% |
|
|
1.7 |
|
|
0.4 |
% |
|
|
113.4 |
|
7.0 |
% |
|
|
126.9 |
|
9.0 |
% |
Provision for (benefit from)
income taxes |
|
(5.1 |
) |
|
-1.1 |
% |
|
|
(0.2 |
) |
|
— |
% |
|
|
22.6 |
|
1.4 |
% |
|
|
28.9 |
|
2.1 |
% |
Net income (loss) |
$ |
(5.2 |
) |
|
-1.2 |
% |
|
$ |
1.9 |
|
|
0.4 |
% |
|
$ |
90.8 |
|
5.6 |
% |
|
$ |
98.0 |
|
6.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.12 |
) |
|
|
|
$ |
0.04 |
|
|
|
|
$ |
2.05 |
|
|
|
$ |
2.02 |
|
|
Diluted |
$ |
(0.12 |
) |
|
|
|
$ |
0.04 |
|
|
|
|
$ |
2.01 |
|
|
|
$ |
1.99 |
|
|
Weighted average shares used
in per share calculations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares |
|
41.81 |
|
|
|
|
|
48.26 |
|
|
|
|
|
44.27 |
|
|
|
|
48.56 |
|
|
Diluted shares |
|
41.81 |
|
|
|
|
|
48.74 |
|
|
|
|
|
45.09 |
|
|
|
|
49.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned stores at end of period |
|
214 |
|
|
|
|
|
203 |
|
|
|
|
|
214 |
|
|
|
|
203 |
|
|
Store operating weeks in the period |
|
2,774 |
|
|
|
|
|
2,616 |
|
|
|
|
|
8,192 |
|
|
|
|
6,663 |
|
|
Total revenue per store operating weeks in the period (in
thousands) |
$ |
168 |
|
|
|
|
$ |
184 |
|
|
|
|
$ |
196 |
|
|
|
$ |
210 |
|
|
DAVE & BUSTER'S ENTERTAINMENT, INC. |
Other Operating Data |
(unaudited, in millions) |
|
Condensed
Consolidated Balance Sheet: |
|
|
October 29, 2023 |
|
January 29, 2023 |
ASSETS |
|
|
|
Cash and cash equivalents |
$64.0 |
|
$181.6 |
Other current assets |
|
93.0 |
|
|
112.1 |
Total current assets |
|
157.0 |
|
|
293.7 |
Property and equipment,
net |
|
1,242.6 |
|
|
1,180.2 |
Operating lease right of use
assets |
|
1,348.1 |
|
|
1,333.6 |
Intangible and other assets,
net |
|
950.1 |
|
|
953.5 |
Total assets |
$3,697.8 |
|
$3,761.0 |
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
Total current liabilities |
$419.3 |
|
$438.0 |
Operating lease
liabilities |
|
1,583.8 |
|
|
1,567.8 |
Other long-term
liabilities |
|
201.8 |
|
|
122.0 |
Long-term debt, net |
|
1,281.3 |
|
|
1,222.7 |
Stockholders' equity |
|
211.6 |
|
|
410.5 |
Total liabilities and stockholders' equity |
$3,697.8 |
|
$3,761.0 |
|
|
|
|
Summary Cash Flow Information:
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
October 29, 2023 |
|
October 30, 2022 |
|
October 29, 2023 |
|
October 30, 2022 |
Net cash provided by operating activities: |
$ |
70.8 |
|
|
$ |
67.9 |
|
|
$ |
267.0 |
|
|
$ |
301.0 |
|
Net cash used in investing activities: |
|
(73.8 |
) |
|
|
(59.7 |
) |
|
|
(207.2 |
) |
|
|
(981.9 |
) |
Net cash provided by (used in) financing activities: |
|
(15.6 |
) |
|
|
(0.4 |
) |
|
|
(177.4 |
) |
|
|
763.2 |
|
Increase (decrease) in cash and cash equivalents |
$ |
(18.6 |
) |
|
$ |
7.8 |
|
|
$ |
(117.6 |
) |
|
$ |
82.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DAVE & BUSTER'S ENTERTAINMENT,
INC.Non-GAAP Measures(unaudited,
in millions)
Adjusted EBITDA:
Adjusted EBITDA represents net income before
income taxes, depreciation and amortization expense and other
items, as calculated below. Adjusted EBITDA is a non-GAAP financial
measure commonly used in our industry and should not be construed
as an alternative to net income as an indicator of operating
performance or as an alternative to cash flow provided by operating
activities as a measure of liquidity (as determined in accordance
with GAAP). Adjusted EBITDA may not be comparable to similarly
titled measures reported by other companies. Adjusted EBITDA is
presented because we believe that it provides useful information to
investors and analysts regarding our operating performance. By
reporting Adjusted EBITDA, we provide a basis for comparison of our
business operations between current, past and future periods by
excluding items that we do not believe are indicative of our core
operating performance. A reconciliation of net income to Adjusted
EBITDA for fiscal periods in 2023 and 2022 is provided below:
|
Thirteen Weeks Ended |
|
Thirty-nine weeks ended |
|
October 29, 2023 |
|
October 30, 2022 |
|
October 29, 2023 |
|
October 30, 2022 |
Net income (loss) |
$(5.2 |
) |
|
-1.1% |
|
$1.9 |
|
|
0.4% |
|
$90.8 |
|
5.7% |
|
$98.0 |
|
7.0% |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
28.9 |
|
|
|
|
|
28.4 |
|
|
|
|
|
92.5 |
|
|
|
|
56.9 |
|
|
Loss on debt refinancing |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
11.2 |
|
|
|
|
1.5 |
|
|
Provision for (benefit from) income taxes |
|
(5.1 |
) |
|
|
|
|
(0.2 |
) |
|
|
|
|
22.6 |
|
|
|
|
28.9 |
|
|
Depreciation and amortization expense |
|
51.9 |
|
|
|
|
|
48.4 |
|
|
|
|
|
149.9 |
|
|
|
|
120.3 |
|
|
EBITDA |
|
70.5 |
|
|
15.1% |
|
|
78.5 |
|
|
16.3% |
|
|
367.0 |
|
22.8% |
|
|
305.6 |
|
21.8% |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on asset disposal |
|
0.9 |
|
|
|
|
|
0.2 |
|
|
|
|
|
1.6 |
|
|
|
|
0.6 |
|
|
Impairment of long-lived assets(1) |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
1.7 |
|
|
|
|
1.8 |
|
|
Share-based compensation(2) |
|
3.5 |
|
|
|
|
|
3.2 |
|
|
|
|
|
15.4 |
|
|
|
|
11.5 |
|
|
Transaction and integration costs(3) |
|
1.7 |
|
|
|
|
|
4.0 |
|
|
|
|
|
9.6 |
|
|
|
|
22.3 |
|
|
System implementation costs(4) |
|
3.0 |
|
|
|
|
|
— |
|
|
|
|
|
6.2 |
|
|
|
|
— |
|
|
Consulting costs(5) |
|
2.0 |
|
|
|
|
|
— |
|
|
|
|
|
2.0 |
|
|
|
|
— |
|
|
Other items, net |
|
— |
|
|
|
|
|
0.2 |
|
|
|
|
|
0.4 |
|
|
|
|
0.2 |
|
|
Adjusted EBITDA, a non-GAAP measure |
$81.6 |
|
|
17.5% |
|
$86.1 |
|
|
17.9% |
|
$403.9 |
|
25.1% |
|
$342.0 |
|
24.4% |
(1) |
Amount for the thirty-nine weeks ended October 29, 2023
included property and equipment that was removed from service and
recorded in other store operating expenses on the consolidated
comprehensive income statement. Amount for the thirty-nine weeks
ended October 30, 2022 related to Main Event’s corporate
headquarters lease, which was abandoned, and was included in
general and administrative expenses on the consolidated
comprehensive income statement. |
(2) |
Non-cash
share-based compensation expense, net of forfeitures, recorded in
general and administrative expenses on the consolidated
comprehensive income statement. |
(3) |
Transaction and integration costs related to the acquisition and
integration of Main Event recorded in general and administrative
expenses on the consolidated comprehensive income statement. |
(4) |
System
implementation costs represent expenses incurred related to the
development of new enterprise resource planning, human capital
management and inventory software for our stores and store support
teams. These charges are primarily recorded in general and
administrative expenses on the consolidated comprehensive income
statement. |
(5) |
Represents one-time, third-party consulting fees that are not part
of our ongoing operations and were incurred to execute two related,
discrete, and project-based strategic initiatives aimed at
transforming our marketing strategy, which are included in general
and administrative expenses on the consolidated comprehensive
income statement. The transformative nature, narrow scope, and
limited duration of these incremental consulting fees are not
reflective of the ordinary course expenses incurred to operate our
business. |
|
|
Store Operating Income Before
Depreciation and Amortization:
Store Operating Income Before Depreciation and
Amortization, a non-GAAP measure, represents operating income, plus
depreciation and amortization expense, general and administrative
expenses and pre-opening costs. We believe that Store Operating
Income Before Depreciation and Amortization is another useful
measure in evaluating our operating performance because it removes
the impact of general and administrative expenses, which are not
incurred at the store level, and the costs of opening new stores,
which are non-recurring at the store level, and thereby enables the
comparability of the operating performance of our stores for the
periods presented. We also believe that Store Operating Income
Before Depreciation and Amortization is a useful measure in
evaluating our operating performance within the entertainment and
dining industry because it permits the evaluation of store-level
productivity, efficiency, and performance, and we use Store
Operating Income Before Depreciation and Amortization as a means of
evaluating store financial performance compared with our
competitors. However, because this measure excludes significant
items such as general and administrative expenses and pre-opening
costs, as well as our interest expense, net, loss on debt
extinguishment/refinance and depreciation and amortization expense,
which are important in evaluating our consolidated financial
performance from period to period, the value of this measure is
limited as a measure of our consolidated financial performance.
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
October 29, 2023 |
|
October 30, 2022 |
|
October 29, 2023 |
|
October 30, 2022 |
Operating income |
$ |
18.6 |
|
4.0% |
|
$ |
30.1 |
|
6.3% |
|
$ |
217.1 |
|
13.5% |
|
$ |
185.3 |
|
13.2% |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
28.4 |
|
|
|
|
32.8 |
|
|
|
|
92.0 |
|
|
|
|
98.8 |
|
|
Depreciation and amortization expense |
|
51.9 |
|
|
|
|
48.4 |
|
|
|
|
149.9 |
|
|
|
|
120.3 |
|
|
Pre-opening costs |
|
4.0 |
|
|
|
|
3.9 |
|
|
|
|
12.7 |
|
|
|
|
10.8 |
|
|
Store operating income before
depreciation and amortization, a non-GAAP measure |
$ |
102.9 |
|
22.0% |
|
$ |
115.2 |
|
23.9% |
|
$ |
471.7 |
|
29.4% |
|
$ |
415.2 |
|
29.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Adjusted EBITDA:
Credit Adjusted EBITDA, a non-GAAP measure,
represents Adjusted EBITDA plus certain other items as defined in
our Credit Facility. Other adjustments include (i) entertainment
revenue deferrals, (ii) the cost of new projects, including store
pre-opening costs, (iii) business optimization expenses and other
restructuring costs, and (iv) other costs and adjustments as
permitted by the Debt Agreements. We believe the presentation of
Credit Adjusted EBITDA is appropriate as it provides additional
information to investors about the calculation of, and compliance
with, certain financial covenants in the Credit Facility. The
following table sets forth a reconciliation of Net income to Credit
Adjusted EBITDA for the periods shown:
|
Thirteen WeeksEndedOctober 29,
2023 |
|
Trailing FourQuarters EndedOctober 29, 2023 |
Net income (loss) |
$(5.2 |
) |
|
$129.9 |
Add back: |
|
|
|
Interest expense, net |
|
28.9 |
|
|
|
123.0 |
Loss on debt refinancing |
|
— |
|
|
|
11.2 |
Provision for (benefit from) income taxes |
|
(5.1 |
) |
|
|
30.2 |
Depreciation and amortization expense |
|
51.9 |
|
|
|
198.9 |
EBITDA |
|
70.5 |
|
|
|
493.2 |
Add back: |
|
|
|
Loss on asset disposal |
|
0.9 |
|
|
|
1.8 |
Impairment of long-lived assets(1) |
|
— |
|
|
|
1.7 |
Share-based compensation(2) |
|
3.5 |
|
|
|
23.9 |
Transaction and integration costs(3) |
|
1.7 |
|
|
|
12.5 |
System implementation costs(4) |
|
3.0 |
|
|
|
6.8 |
Consulting costs(5) |
|
2.0 |
|
|
|
2.0 |
Pre-opening costs(6) |
|
4.0 |
|
|
|
16.5 |
Entertainment revenue deferrals(7) |
|
0.8 |
|
|
|
10.1 |
Other items, net |
|
— |
|
|
|
0.4 |
Credit Adjusted EBITDA, a
non-GAAP measure |
$86.4 |
|
|
$568.9 |
(1) |
Amount for the
trailing four quarters ended October 29, 2023 includes
property and equipment that was removed from service and recorded
in other store operating expenses on the consolidated comprehensive
income statement. |
(2) |
Non-cash share-based compensation expense, net of forfeitures,
recorded in general and administrative expenses on the consolidated
comprehensive income statement. |
(3) |
Transaction and integration costs related to the acquisition
and integration of Main Event recorded in general and
administrative expenses on the consolidated comprehensive income
statement. |
(4) |
System implementation costs represent expenses incurred related
to the development of new enterprise resource planning, human
capital management and inventory software for our stores and store
support teams. These charges are primarily recorded in general and
administrative expenses on the consolidated comprehensive income
statement. |
(5) |
Represents one-time, third-party consulting fees that are not
part of our ongoing operations and were incurred to execute two
related, discrete, and project-based strategic initiatives aimed at
transforming our marketing strategy, which are included in general
and administrative expenses on the consolidated comprehensive
income statement. The transformative nature, narrow scope, and
limited duration of these incremental consulting fees are not
reflective of the ordinary course expenses incurred to operate our
business. |
(6) |
Represents costs incurred, primarily consisting of occupancy
and payroll related expenses, associated with the opening of new
stores. These costs are considered a "cost of new projects" as
defined in our Credit Facility. |
(7) |
Represents non-cash adjustments to our deferred entertainment
revenue liabilities. These costs are considered an "other non-cash
charge" as defined in our Credit Facility. |
|
|
The following table provides a calculation of
Net Total Leverage Ratio, as defined in our senior secured credit
facility, for the period shown:
|
As Of And For The Trailing Four Quarters
Ended October 29, 2023 |
Credit Adjusted EBITDA (a) |
$568.9 |
Total debt(1) |
$1,374.5 |
Less: Cash and cash
equivalents |
$(64.0) |
Add: Outstanding letters of
credit |
$9.8 |
Net debt (b) |
$1,320.3 |
Net Total Leverage Ratio (b /
a) |
2.3x |
(1) |
Amount represents the face amount of debt outstanding, net
unamortized debt issuance costs and debt discount, and the
outstanding lease financing payable of $84.2 million as a result of
a failed sale-leaseback. |
|
|
Adjusted Net Income:
Adjusted Net income, a non-GAAP measure,
represents net income before special items, as calculated below. We
believe excluding these special items from net income provides
investors with a clearer perspective of our ongoing operating
performance and a more relevant comparison to prior period results.
The following table presents a reconciliation of Net income to
Adjusted Net income and presents Adjusted Net income per diluted
share, for the periods shown:
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
October 29, 2023 |
|
October 30, 2022 |
|
October 29, 2023 |
|
October 30, 2022 |
|
$ |
|
EPS |
|
$ |
|
EPS |
|
$ |
|
EPS |
|
$ |
|
EPS |
Net income (loss) |
$(5.2 |
) |
|
$(0.12 |
) |
|
$1.9 |
|
|
$0.04 |
|
|
$90.8 |
|
|
$2.01 |
|
|
$98.0 |
|
|
$1.99 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt refinancing |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.2 |
|
|
|
0.25 |
|
|
|
1.5 |
|
|
|
0.03 |
|
Loss on asset disposal |
|
0.9 |
|
|
|
0.02 |
|
|
|
0.2 |
|
|
|
— |
|
|
|
1.6 |
|
|
|
0.04 |
|
|
|
0.6 |
|
|
|
0.01 |
|
Impairment of long-lived assets(1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.7 |
|
|
|
0.04 |
|
|
|
1.8 |
|
|
|
0.04 |
|
Transaction and integration costs(2) |
|
1.7 |
|
|
|
0.04 |
|
|
|
4.0 |
|
|
|
0.08 |
|
|
|
9.6 |
|
|
|
0.21 |
|
|
|
22.3 |
|
|
|
0.45 |
|
System implementation costs(3) |
|
3.0 |
|
|
|
0.07 |
|
|
|
— |
|
|
|
— |
|
|
|
6.2 |
|
|
|
0.14 |
|
|
|
— |
|
|
|
— |
|
Consulting costs(4) |
|
2.0 |
|
|
|
0.05 |
|
|
|
— |
|
|
|
— |
|
|
|
2.0 |
|
|
|
0.04 |
|
|
|
— |
|
|
|
— |
|
Other items, net |
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
|
|
0.4 |
|
|
|
0.01 |
|
|
|
0.2 |
|
|
|
— |
|
Tax impact of items above, net(5) |
|
(2.0 |
) |
|
|
(0.05 |
) |
|
|
(1.2 |
) |
|
|
(0.02 |
) |
|
|
(8.5 |
) |
|
|
(0.19 |
) |
|
|
(7.2 |
) |
|
|
(0.15 |
) |
Adjusted Net income, a
non-GAAP measure |
$0.4 |
|
|
$0.01 |
|
|
$5.1 |
|
|
$0.10 |
|
|
$115.0 |
|
|
$2.55 |
|
|
$117.2 |
|
|
$2.38 |
|
(1) |
Amount for the
thirty-nine weeks ended October 29, 2023 included property and
equipment that was removed from service and recorded in other store
operating expenses on the consolidated comprehensive income
statement. Amount for the thirty-nine weeks ended October 30,
2022 related to Main Event’s corporate headquarters lease, which
was abandoned, and was included in general and administrative
expenses on the consolidated comprehensive income statement. |
(2) |
Transaction and integration costs related to the acquisition
and integration of Main Event recorded in general and
administrative expenses on the consolidated comprehensive income
statement. |
(3) |
System implementation costs represent expenses incurred related
to the development of new enterprise resource planning, human
capital management and inventory software for our stores and store
support teams. These charges are primarily recorded in general and
administrative expenses on the consolidated comprehensive income
statement. |
(4) |
Represents one-time, third-party consulting fees that are not
part of our ongoing operations and were incurred to execute two
related, discrete, and project-based strategic initiatives aimed at
transforming our marketing strategy, which are included in general
and administrative expenses on the consolidated comprehensive
income statement. The transformative nature, narrow scope, and
limited duration of these incremental consulting fees are not
reflective of the ordinary course expenses incurred to operate our
business. |
(5) |
The income tax effect related to special items is based on the
statutory tax rate for the applicable period. |
DAVE & BUSTER'S ENTERTAINMENT, INC. |
Supplemental Data |
(in millions) |
|
Comparable Store Sales & Average Weekly Sales
Data(1) |
|
Fiscal Q3 2023 |
|
Fiscal Q2 2023 |
|
Fiscal Q1 2023 |
|
Fiscal Q4 2022 |
Total Comparable Store Sales % Change vs 2019 |
|
|
8.1 |
% |
|
|
5.8 |
% |
|
|
10.3 |
% |
|
|
14.1 |
% |
Total Comparable Store Sales %
Change vs prior year |
|
|
(7.8 |
)% |
|
|
(6.3 |
)% |
|
|
(4.1 |
)% |
|
|
19.0 |
% |
Total Stores at the end of the
period |
|
|
214 |
|
|
|
211 |
|
|
|
208 |
|
|
|
204 |
|
Total Store Operating
Weeks |
|
|
2,774 |
|
|
|
2,730 |
|
|
|
2,690 |
|
|
|
2,641 |
|
Total Store Average Weekly
Sales (in thousands) |
|
$ |
168 |
|
|
$ |
199 |
|
|
$ |
222 |
|
|
$ |
213 |
|
(1) |
For proforma
comparisons to prior year for Q1, Q2 and Q3 2023, there were 185
comparable stores. For other proforma comparisons to prior year and
to 2019, there were 153 comparable stores. |
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