Categories: Wire Stories

Dave & Buster�s Reports Third Quarter 2022 Financial Results

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
         

Alex

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