Categories: Wire Stories

Dave & Buster�s Reports Third Quarter 2021 Financial Results

Board of Directors Authorizes $100 million Share Repurchase Program

DALLAS, Dec. 07, 2021 (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 quarterly revenue, net income, and Adjusted EBITDA for its third quarter of fiscal year 2021, which ended on�October 31, 2021.

As of October 31, all of the Company’s 143 stores were open, including 1 new store opened during the quarter.

Key Third Quarter 2021 Highlights

  • Revenue increased 6.2% from the third quarter of 2019 to $318.0 million, compared with $109.1 million in the third quarter of 2020 and $299.4 million in the third quarter of 2019.
  • Comparable store sales increased 1.1% compared with the same period in 2019 excluding 7 stores located in markets that had vaccine mandates during the quarter. Including all stores, comparable store sales decreased 0.4% compared with the same period in 2019.
  • Net income totaled $10.6 million, or $0.21 per diluted share, compared with net loss of $48.0 million, or $1.01 per share in the third quarter of 2020 and net income of $0.5 million, or $0.02 per diluted share in the third quarter of 2019.
  • Adjusted EBITDA increased 47.4% from the third quarter of 2019 to $68.2 million, or 21.5% of revenue, compared with Adjusted EBITDA loss of $16.0 million in the third quarter of 2020 and Adjusted EBITDA of $46.3 million, or 15.5% of revenue in the third quarter of 2019.
  • Ended the quarter with $27 million in cash and approximately $340 million of liquidity available under the Company’s $500 million revolving credit facility, net of a $150 million minimum liquidity covenant and $10 million in letters of credit.
  • During the third quarter, the Company redeemed $55 million of 7.625% senior secured notes at 103% of principal. Subsequently, in November 2021, the Company redeemed an additional $55 million of the 7.625% senior secured notes at 103%.

“We are pleased to report strong third quarter financial results,” said Kevin Sheehan, Dave & Buster’s Interim Chief Executive Officer. “Since assuming the role, I have been impressed with our team’s hard work and dedication to operating in this evolving environment. I am excited to be working with them as we look forward to more normalized operations across our stores. We have begun a new phase of innovation, growth and value creation with a focus on realizing the Company’s significant upside potential. I am excited about the future and look forward to sharing our progress with all of our stakeholders.”

Third Quarter 2021 Results

Total revenue of $318.0 million increased 191.6% from $109.1 in the third quarter of 2020 and increased 6.2% from $299.4 million in the third quarter of 2019. Comparable store sales increased 1.1% compared with the same period in 2019 excluding 7 stores located in markets that had vaccine mandates during the quarter. Including all stores, comparable store sales decreased 0.4% compared with the same period in 2019. Walk-in comparable store sales increased 6% while Special Event comparable store sales declined 64% compared with the same period in 2019. Non-comparable store revenue totaled $55.4 million compared with $20.1 million in the third quarter of 2020.

Operating income totaled $24.5 million, or 7.7% of revenue, compared with operating loss of $56.0 million, or (51.4)% of revenue in the third quarter of 2020 and operating income $6.5 million, or 2.2% of revenue in the third quarter of 2019.

Net income totaled $10.6 million, or $0.21 per diluted share, compared with net loss of $48.0 million, or $1.01 per share in the third quarter of 2020 and net income of $0.5 million, or $0.02 per diluted share in the third quarter of 2019.

Adjusted EBITDA increased 47.4% from the third quarter of 2019 to $68.2 million, or 21.5% of revenue, compared with Adjusted EBITDA loss of $16.0 million, or (14.6)% of revenue in the third quarter of 2020 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 $83.0 million, or 26.1% of revenue, compared with store operating loss before depreciation and amortization of $7.3 million, or (6.7)% of revenue in the third quarter of 2020 and $60.3 million, or 20.1% of revenue in the third quarter of 2019.

Balance Sheet, Liquidity and Cash Flow

The Company ended the quarter with $27.0 million in cash and approximately $340 million of availability under its $500 million revolving credit facility, net of a $150 million minimum liquidity covenant and $10 million in letters of credit.

Total long-term debt was $495 million at October 31, 2021, consisting of 7.625% senior secured notes maturing in 2025.   The Company redeemed $55 million, or 10%, of its senior secured notes during the third quarter utilizing a redemption option in the Company’s October 2020 indenture agreement, resulting in annualized interest savings of approximately $4.2 million and $1.7 million in expense to redeem the notes. Subsequent to the end of the third quarter, the Company redeemed an additional $55 million at 103% of principal, resulting in an incremental annualized interest savings of approximately $4.2 million and $1.7 million in expense.

Share Repurchase Authorization

The Company announced today that its Board of Directors has approved a share repurchase program authorizing the Company to repurchase up to $100,000,000 of its common stock through the end of fiscal 2022. The program may be suspended or discontinued at any time.

Fourth Quarter Business Update and Outlook

The Company’s business recovery has strengthened through the first five weeks of the fourth quarter, during which comparable store sales increased 3.5% compared with the same period in 2019.   Walk-in comparable store sales increased 14% while Special Event comparable store sales declined 59% for the five-week period compared with 2019. The Company notes that fourth quarter revenue will be negatively impacted by both a lagging Special Events business relative to 2019, which typically carries a much higher penetration in the fourth quarter due to holiday parties, and from a calendar shift in its key holiday periods that will negatively impact revenue by approximately $9.5 million as both the Christmas and New Year’s holidays fall on a Friday/Saturday compared with Tuesday/Wednesday in 2019.

Based on current trends, the Company currently expects the following:

  • Fourth quarter comparable store sales to be slightly positive compared with the fourth quarter of 2019. Walk-in comparable store sales are expected to remain strong, while Special Events comparable store sales will be a temporary headwind and will have a larger impact on total comparable store sales due to higher historical weightings in the fourth quarter.
  • Fourth quarter Adjusted EBITDA margin to increase by approximately 200 bps compared with the fourth quarter of 2019.
  • A total of four new store openings during fiscal year 2021 and the relocation of one existing location.
  • Fiscal 2021 capital additions (net of tenant allowances) of approximately $100 million, with approximately 43% dedicated to new stores and improvements to existing stores, 14% for games, and 43% for infrastructure upgrades and replacements.

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 at the Company’s investor relations website, contains a thorough review of its financial results for the 13 and 39 weeks ended October 31, 2021.

Investor Conference Call and Webcast

Management will hold a conference call to report these results the same day at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). The conference call can be accessed over the phone by dialing (720) 543-0206 or toll-free (800) 458-4121. A replay will be available after the call for one year beginning at 7:00 p.m. Central Time (8:00 p.m. Eastern Time) and can be accessed by dialing (412) 317-6671 or toll-free (844) 512-2921; the passcode is 8107981.
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 Dallas, Texas, Dave & Buster’s Entertainment, Inc., is the owner and operator of 143 venues in North America that combine entertainment and dining and offer customers the opportunity to “Eat Drink Play and Watch,” all in one location. Dave & Buster’s offers a full menu of entrées and appetizers, a complete selection of alcoholic and non-alcoholic beverages, and an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events. Dave & Buster’s currently has stores in 40 states, Puerto Rico, and Canada.

Forward-Looking Statements

The Company cautions that this release contains forward-looking statements, including, without limitation, statements relating to the impact on our business and operations of the global spread of the novel coronavirus outbreak. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by the uncertain and unprecedented impact of the coronavirus 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 duration of government-mandated and voluntary shutdowns and restrictions; the speed with which our stores safely can be reopened and the level of customer demand following reopening; the economic impact of the coronavirus and related disruptions on the communities we serve; our overall level of indebtedness; general business and economic conditions, including as a result of the coronavirus; 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 coronavirus; 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.

— Financial Tables Follow –

 
DAVE & BUSTER’S ENTERTAINMENT, INC.
Condensed Consolidated Balance Sheets
(in thousands)
 
         
ASSETS   October 31, 2021   January 31, 2021
    (unaudited)   (audited)
Current assets:        
         
Cash and cash equivalents   $ 27,005   $ 11,891
Other current assets     119,379     106,980
         
Total current assets     146,384     118,871
         
Property and equipment, net     779,518     815,027
         
Operating lease right of use assets     1,038,269     1,037,569
         
Intangible and other assets, net     386,545     381,357
         
Total assets   $ 2,350,716   $ 2,352,824
         
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Total current liabilities   $ 290,678   $ 271,636
         
Operating lease liabilities     1,270,929     1,267,791
         
Other long-term liabilities     57,873     63,777
         
Long-term debt, net     484,677     596,388
         
Stockholders’ equity     246,559     153,232
         
Total liabilities and stockholders’ equity   $ 2,350,716   $ 2,352,824
         

  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 31, 2021   November 1, 2020   November 3, 2019  
                             
  Food and beverage revenues $ 107,747     33.9 %   $ 38,346     35.2 %   $ 124,637     41.6 %  
  Amusement and other revenues   210,229     66.1 %     70,706     64.8 %     174,715     58.4 %  
  Total revenues     317,976     100.0 %     109,052     100.0 %     299,352     100.0 %  
                             
  Cost of food and beverage (as a percentage of food and beverage revenues     30,082     27.9 %     10,664     27.8 %     33,384     26.8 %  
  Cost of amusement and other (as a percentage of amusement and other revenues     22,531     10.7 %     7,244     10.2 %     18,796     10.8 %  
  Total cost of products     52,613     16.5 %     17,908     16.4 %     52,180     17.4 %  
  Operating payroll and benefits   78,995     24.8 %     27,704     25.4 %     76,165     25.4 %  
  Other store operating expenses   103,322     32.5 %     70,783     64.9 %     110,713     37.1 %  
  General and administrative expenses     22,104     7.0 %     11,746     10.8 %     16,210     5.4 %  
  Depreciation and amortization expense   34,381     10.8 %     34,384     31.5 %     33,340     11.1 %  
  Pre-opening costs   2,092     0.7 %     2,570     2.4 %     4,245     1.4 %  
  Total operating costs     293,507     92.3 %     165,095     151.4 %     292,853     97.8 %  
                             
  Operating income (loss)     24,469     7.7 %     (56,043 )   -51.4 %     6,499     2.2 %  
                             
  Interest expense, net   13,423     4.2 %     8,213     7.6 %     6,110     2.1 %  
  Loss on debt extinguishment / refinancing   2,829     0.9 %     904     0.8 %         0.0 %  
                             
  Income (loss) before provision (benefit) for income taxes   8,217     2.6 %     (65,160 )   -59.8 %     389     0.1 %  
  Provision (benefit) for income taxes   (2,368 )   -0.7 %     (17,117 )   -15.7 %     (93 )   -0.1 %  
  Net income (loss) $ 10,585     3.3 %   $ (48,043 )   -44.1 %   $ 482     0.2 %  
                             
  Net income (loss) per share:                          
  Basic $ 0.22         $ (1.01 )       $ 0.02        
  Diluted  $ 0.21         $ (1.01 )       $ 0.02        
  Weighted average shares used in per share calculations:                          
  Basic shares   48,277,358           47,613,741           30,980,878        
  Diluted shares   49,283,503           47,613,741           31,515,454        
                             
                             
  Other information:                          
  Company-owned stores at end of period   143           137           134        
  Store operating weeks in the period   1,854           1,221           1,722        
  Total revenue per store operating weeks in the period $ 172         $ 89         $ 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 31, 2021   November 1, 2020   November 3, 2019  
                             
  Net income (loss)   $ 10,585     3.3 %   $ (48,043 )   -44.1 %   $ 482     0.2 %  
  Add back: Interest expense, net   13,423           8,213           6,110        
  Loss on debt extinguishment / refinancing     2,829           904                  
  Provision (benefit) for income taxes     (2,368 )         (17,117 )         (93 )      
  Depreciation and amortization expense     34,381           34,384           33,340        
  EBITDA   58,850     18.5 %     (21,659 )   -19.9 %     39,839     13.3 %  
  Add back: Loss on asset disposal   377           124           458        
  Impairment of long-lived assets and lease termination costs                                
  Share-based compensation     3,778           2,999           1,747        
  Pre-opening costs     2,092           2,570           4,245        
  Severance and other costs     3,112           (5 )         1        
  Adjusted EBITDA $ 68,209     21.5 %   $ (15,971 )   -14.6 %   $ 46,290     15.5 %  
                             
                             
                             
  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 31, 2021   November 1, 2020   November 3, 2019  
                             
  Operating income (loss $ 24,469     7.7 %   $ (56,043 )   -51.4 %   $ 6,499     2.2 %  
  Add back: General and administrative expenses   22,104           11,746           16,210        
  Depreciation and amortization expense     34,381           34,384           33,340        
  Pre-opening costs     2,092           2,570           4,245        
  Store operating income (loss) before depreciation and amortization $ 83,046     26.1 %   $ (7,343 )   -6.7 %   $ 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 31, 2021   November 1, 2020   November 3, 2019  
                             
  Food and beverage revenues $ 316,511   32.9 %   $ 119,268     37.3 %   $ 410,779   40.8 %  
  Amusement and other revenues   644,443   67.1 %     200,423     62.7 %     596,754   59.2 %  
  Total revenues     960,954   100.0 %     319,691     100.0 %     1,007,533   100.0 %  
                             
  Cost of food and beverage (as a percentage of food and beverage revenues)     86,366   27.3 %     32,667     27.4 %     109,072   26.6 %  
  Cost of amusement and other (as a percentage of amusement and other revenues)     63,729   9.9 %     21,997     11.0 %     64,456   10.8 %  
  Total cost of products     150,095   15.6 %     54,664     17.1 %     173,528   17.2 %  
  Operating payroll and benefits   209,897   21.8 %     85,197     26.6 %     239,965   23.8 %  
  Other store operating expenses   292,883   30.5 %     229,137     71.8 %     321,334   31.9 %  
  General and administrative expenses     57,665   6.0 %     35,587     11.1 %     49,047   4.9 %  
  Depreciation and amortization expense   104,355   10.9 %     104,896     32.8 %     97,226   9.6 %  
  Pre-opening costs   5,427   0.6 %     8,781     2.7 %     15,970   1.6 %  
  Total operating costs     820,322   85.4 %     518,262     162.1 %     897,070   89.0 %  
                             
  Operating income (loss)     140,632   14.6 %     (198,571 )   -62.1 %     110,463   11.0 %  
                             
  Interest expense, net   41,971   4.3 %     22,491     7.0 %     14,771   1.5 %  
  Loss on debt extinguishment / refinancing   2,829   0.3 %     904     0.3 %       0.0 %  
                             
  Income (loss) before provision (benefit) for income taxes   95,832   10.0 %     (221,966 )   -69.4 %     95,692   9.5 %  
  Provision (benefit) for income taxes   12,842   1.4 %     (71,777 )   -22.4 %     20,411   2.0 %  
  Net income (loss) $ 82,990   8.6 %   $ (150,189 )   -47.0 %   $ 75,281   7.5 %  
                             
  Net income (loss) per share:                          
  Basic $ 1.73       $ (3.56 )       $ 2.19      
  Diluted $ 1.68       $ (3.56 )       $ 2.15      
  Weighted average shares used in per share calculations:                          
  Basic shares   48,050,558         42,185,163           34,405,503      
  Diluted shares   49,257,269         42,185,163           35,042,311      
                             
                             
  Other information:                          
  Company-owned stores at end of period   143         137           134      
  Store operating weeks in the period   5,304         2,682           5,012      
  Total revenue per store operating weeks in the period $ 181       $ 119         $ 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 31, 2021   November 1, 2020   November 3, 2019  
                             
  Net income (loss)   $ 82,990   8.6 %   $ (150,189 )   -47.0 %   $ 75,281   7.5 %  
  Add back: Interest expense, net   41,971         22,491           14,771      
  Loss on debt extinguishment / refinancing     2,829         904                
  Provision (benefit) for income taxes     12,842         (71,777 )         20,411      
  Depreciation and amortization expense     104,355         104,896           97,226      
  EBITDA   244,987   25.5 %     (93,675 )   -29.3 %     207,689   20.6 %  
  Add back: Loss on asset disposal   634         541           1,284      
  Impairment of long-lived assets and lease termination costs             13,727                
  Share-based compensation     9,936         5,344           5,479      
  Pre-opening costs     5,427         8,781           15,970      
  Other costs     3,082         54           34      
  Adjusted EBITDA $ 264,066   27.5 %   $ (65,228 )   -20.4 %   $ 230,456   22.9 %  
                             
                             
                             
  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 31, 2021   November 1, 2020   November 3, 2019  
                             
  Operating income (loss) $ 140,632   14.6 %   $ (198,571 )   -62.1 %   $ 110,463   11.0 %  
  Add back: General and administrative expenses   57,665         35,587           49,047      
  Depreciation and amortization expense     104,355         104,896           97,226      
  Pre-opening costs     5,427         8,781           15,970      
  Store operating income (loss) before depreciation and amortization $ 308,079   32.1 %   $ (49,307 )   -15.4 %   $ 272,706   27.1 %  
                             

For Investor Relations Inquiries:

Scott Bowman, CFO
Dave & Buster’s Entertainment, Inc.
972.813.1151
scott.bowman@daveandbusters.com 

Alex

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