Categories: Wire Stories

Dave & Buster�s Reports Fourth Quarter 2021 and Full-Year Financial Results; Company Provides First Quarter FY 2022 Business Update and Outlook

DALLAS, March 28, 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 fourth quarter and fiscal year ended January 30, 2022.

As of January 30, 2022, all of the Company�s 142 stores in the United States and Puerto Rico were open, including 1 new store opened during the quarter. The Company’s two Canadian stores were required by provincial mandate to temporarily close in early January. Both Canadian stores reopened in early Fiscal 2022.

Key Fourth Quarter 2021 Highlights

  • Revenue decreased by 1.2% from the fourth quarter of 2019 to $343.1 million compared with $116.8 million in the fourth quarter of 2020 and $347.2 million in the fourth quarter of 2019
  • Comparable store sales declined 2.6% compared with the same period in 2019 excluding 14 stores located in markets that had vaccine mandates during the quarter. Including all stores, comparable store sales decreased 6.8% compared with the same period in 2019
  • Net income totaled $25.7 million, or $0.52 per diluted share, compared with net loss of $56.8 million, or $(1.19) per share in the fourth quarter of 2020 and net income of $25.0 million, or $0.80 per diluted share in the fourth quarter of 2019
  • Adjusted EBITDA increased 12.7% from the fourth quarter of 2019 to $87.7 million, or 25.5% of revenue, compared with Adjusted EBITDA loss of $16.0 million in the fourth quarter of 2020 and Adjusted EBITDA of $77.8 million, or 22.4% of revenue in the fourth quarter of 2019
  • During the fourth quarter, the Company redeemed $55 million of 7.625% senior secured notes at 103% of principal, saving approximately $4.2 million in annualized interest. The Company’s net debt leverage ratio was approximately 1.2x as of January 30, 2022

Key Fiscal Year 2021 Highlights

  • Revenue decreased by 3.7% from fiscal year 2019 to $1.30 billion compared with $436.5 million in fiscal year 2020 and $1.35 billion in fiscal year 2019
  • Overall comparable store sales decreased 10.6% compared with the same period in 2019
  • Net income totaled $108.6 million, or $2.21 per diluted share, compared with net loss of $207.0 million, or $(4.75) per share in fiscal year 2020 and net income of $100.3 million, or $2.94 per diluted share in fiscal year 2019
  • Adjusted EBITDA increased by 14.1% from fiscal year 2019 to $351.7 million, or 27.0% of revenue, compared with Adjusted EBITDA loss of $81.3 million in fiscal year 2020 and Adjusted EBITDA of $308.2 million, or 22.8% of revenue in fiscal year 2019

“We are pleased to report strong fourth quarter and fiscal year financial results,” said Kevin Sheehan, Dave & Buster’s Board Chair and Interim Chief Executive Officer. “Fiscal 2021 was a demanding year but our store management teams – and all of our team members rose to the challenge working tirelessly to return our stores to fully operational status. Despite continuing headwinds from COVID-19 (including vaccine requirements in certain markets) we saw strong sales across our stores in fiscal 2021. We also generated a double-digit Adjusted EBITDA increase in the year driven, in part, by our strong focus on process improvement and lean initiatives across our business. This Company has significant upside potential and with our continued focus on innovation, growth and value creation, we are driving toward unlocking that value. We are optimistic about the future and look forward to sharing our ongoing progress with everyone.”

Fourth Quarter 2021 Results

Total revenue of $343.1 million increased 193.7% from $116.8 million in the fourth quarter of 2020 and decreased 1.2% from $347.2 million in the fourth quarter of 2019. Comparable store sales decreased 6.8% compared with the fourth quarter of 2019 (the Company has chosen to continue reporting comparable store sales versus 2019 in order to provide a more meaningful comparison). Walk-in comparable store sales increased 2.1% while Special Event comparable store sales declined 58.0% compared with the same period in 2019. Non-comparable store revenue totaled $65.8 million compared with $27.3 million in the fourth quarter of 2020.

Operating income totaled $46.5 million, or 13.6% of revenue, compared with operating loss of $54.0 million, or (46.3)% of revenue in the fourth quarter of 2020 and operating income $37.6 million, or 10.8% of revenue in the fourth quarter of 2019.

Net income totaled $25.7 million, or $0.52 per diluted share, compared with net loss of $56.8 million, or $(1.19) per share in the fourth quarter of 2020 and net income of $25.0 million, or $0.80 per diluted share in the fourth quarter of 2019.

Adjusted EBITDA totaled a record $87.7 million, or 25.5% of revenue, compared with Adjusted EBITDA loss of $16.0 million, or (13.7)% of revenue in the fourth quarter of 2020 and Adjusted EBITDA of $77.8 million, or 22.4% of revenue in the fourth quarter of 2019.

Store operating income before depreciation and amortization totaled $101.1 million, or 29.5% of revenue, compared with store operating loss before depreciation and amortization of $6.0 million, or (5.2)% of revenue in the fourth quarter of 2020 and store operating income before depreciation and amortization of $96.3 million, or 27.7% of revenue in the fourth quarter of 2019.

Fiscal Year 2021 Results

Total revenue of $1.30 billion increased 198.7% from $436.5 million in fiscal year 2020 and decreased 3.7% from $1.35 billion in fiscal year 2019. Comparable store sales decreased 10.6% compared with fiscal year 2019 (the Company has chosen to continue reporting comparable store sales versus 2019 in order to provide a more meaningful comparison). Walk-in comparable store sales declined 3.6% while Special Event comparable store sales declined 71.6% compared to 2019. Non-comparable store revenue totaled $250.3 million compared with $83.2 million in fiscal year 2020.

Operating income totaled $187.2 million, or 14.4% of revenue, compared with operating loss of $252.6 million, or (57.9)% of revenue in fiscal year 2020 and operating income $148.1 million, or 10.9% of revenue in fiscal year 2019.

Net income totaled $108.6 million, or $2.21 per diluted share, compared with net loss of $207.0 million, or $(4.75) per share in fiscal year 2020 and net income of $100.3 million, or $2.94 per diluted share in fiscal year 2019.

Adjusted EBITDA totaled $351.7 million, or 27.0% of revenue, compared with Adjusted EBITDA loss of $81.3 million, or (18.6)% of revenue in fiscal year 2020 and Adjusted EBITDA of $308.2 million, or 22.8% of revenue in fiscal year 2019.

Store operating income before depreciation and amortization totaled $409.2 million, or 31.4% of revenue, compared with store operating loss before depreciation and amortization of $55.3 million, or (12.7)% of revenue in fiscal year 2020 and store operating income before depreciation and amortization of $369.0 million, or 27.2% of revenue in fiscal year 2019.

Balance Sheet, Liquidity and Cash Flow

The Company generated approximately $84.6 million in operating cash flow during the fourth quarter, ending the quarter with $25.9 million in cash and approximately $492.5 million of availability under its $500 million revolving credit facility, net $7.5 million in letters of credit.

Total long-term debt consisting of 7.625% senior secured notes maturing in 2025, totaled $440 million at January 30, 2022. As part of its ongoing capital allocation strategy, the Company redeemed $55 million of its senior secured notes during the fourth quarter utilizing a redemption option in the Company’s October 2020 indenture agreement, resulting in annualized interest savings of approximately $4.2 million.

The Company’s net debt leverage ratio was approximately 1.2x as of January 30, 2022.

First Quarter 2022 Business Update and Outlook

The Company’s business has strengthened through the first eight weeks of the first quarter, during which comparable store sales increased 5.4% compared with the same period in 2019. Walk-in comparable store sales increased 9.1% while Special Event comparable store sales declined 42.0% for the eight-week period compared with 2019.

Annual Report on Form 10-K Available

The Company’s Annual Report on Form 10-K, available at www.sec.gov and at the Company’s investor relations website, contains a thorough review of its financial results for the fourth quarter and fiscal year ended January 30, 2022.

Investor Conference Call and Webcast

Management will hold a conference call to report these results on Tuesday, March 29, 2022 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). The conference call can be accessed over the phone by dialing (720) 543-0302 or toll-free (888) 224-1005. A replay will be available after the call for one year beginning at 10:30 a.m. Central Time (11:30 a.m. Eastern Time) and can be accessed by dialing (412) 317-6671 or toll-free (844) 512-2921; the passcode is 1540828. 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 144 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 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.

 
DAVE & BUSTER’S ENTERTAINMENT, INC.
Condensed Consolidated Balance Sheets
(in thousands)
 
         
ASSETS   January 30, 2022   January 31, 2021
    (audited)   (audited)
Current assets:        
         
Cash and cash equivalents   $ 25,910   $ 11,891
Other current assets     119,661     106,980
         
Total current assets     145,571     118,871
         
Property and equipment, net     778,597     815,027
         
Operating lease right of use assets     1,037,197     1,037,569
         
Intangible and other assets, net     384,425     381,357
         
Total assets   $ 2,345,790   $ 2,352,824
         
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Total current liabilities   $ 311,515   $ 271,636
         
Operating lease liabilities     1,277,539     1,267,791
         
Other long-term liabilities     49,881     63,777
         
Long-term debt, net     431,395     596,388
         
Stockholders’ equity     275,460     153,232
         
Total liabilities and stockholders’ equity   $ 2,345,790   $ 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  
      January 30, 2022   January 31, 2021   February 2, 2020  
                             
  Food and beverage revenues $ 120,126   35.0 %   $ 40,233     34.4 %   $ 152,797   44.0 %  
  Amusement and other revenues   222,976   65.0 %     76,588     65.6 %     194,361   56.0 %  
  Total revenues     343,102   100.0 %     116,821     100.0 %     347,158   100.0 %  
                             
  Cost of food and beverage (as a percentage of food and beverage revenues)     32,757   27.3 %     12,540     31.2 %     39,124   25.6 %  
  Cost of amusement and other (as a percentage of amusement and other revenues)     22,119   9.9 %     7,701     10.1 %     20,659   10.6 %  
  Total cost of products     54,876   16.0 %     20,241     17.3 %     59,783   17.2 %  
  Operating payroll and benefits   77,366   22.5 %     32,278     27.6 %     83,005   23.9 %  
  Other store operating expenses   109,778   32.0 %     70,327     60.3 %     108,097   31.2 %  
  General and administrative expenses     17,836   5.2 %     11,628     10.0 %     20,422   5.9 %  
  Depreciation and amortization expense   33,974   9.9 %     33,893     29.0 %     35,234   10.1 %  
  Pre-opening costs   2,723   0.8 %     2,495     2.1 %     3,001   0.9 %  
  Total operating costs     296,553   86.4 %     170,862     146.3 %     309,542   89.2 %  
                             
  Operating income (loss)     46,549   13.6 %     (54,041 )   -46.3 %     37,616   10.8 %  
                             
  Interest expense, net   11,939   3.5 %     14,399     12.3 %     6,166   1.7 %  
  Loss on debt extinguishment / refinancing   2,788   0.8 %         0.0 %       0.0 %  
                             
  Income (loss) before provision (benefit) for income taxes   31,822   9.3 %     (68,440 )   -58.6 %     31,450   9.1 %  
  Provision (benefit) for income taxes   6,172   1.8 %     (11,655 )   -10.0 %     6,468   1.9 %  
  Net income (loss) $ 25,650   7.5 %   $ (56,785 )   -48.6 %   $ 24,982   7.2 %  
                             
  Net income (loss) per share:                          
  Basic $ 0.53       $ (1.19 )       $ 0.82      
  Diluted $ 0.52       $ (1.19 )       $ 0.80      
  Weighted average shares used in per share calculations:                          
  Basic shares   48,416,687         47,644,062           30,584,360      
  Diluted shares   49,268,800         47,644,062           31,158,919      
                             
                             
  Other information:                          
  Company-owned stores at end of period   144         140           136      
  Store operating weeks in the period   1,857         1,240           1,757      
  Total revenue per store operating weeks in the period $ 185       $ 94         $ 198      
                             
  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  
      January 30, 2022   January 31, 2021   February 2, 2020  
                             
  Net income (loss)   $ 25,650   7.5 %   $ (56,785 )   -48.6 %   $ 24,982   7.2 %  
  Add back: Interest expense, net   11,939         14,399           6,166      
  Loss on debt extinguishment / refinancing     2,788                        
  Provision (benefit) for income taxes     6,172         (11,655 )         6,468      
  Depreciation and amortization expense     33,974         33,893           35,234      
  EBITDA   80,523   23.5 %     (20,148 )   -17.2 %     72,850   21.0 %  
  Add back: Loss on asset disposal   758         36           529      
  Impairment of long-lived assets and lease termination costs     912                        
  Share-based compensation     2,536         1,641           1,378      
  Pre-opening costs     2,723         2,495           3,001      
  Severance and other costs     207         (69 )         8      
  Adjusted EBITDA $ 87,659   25.5 %   $ (16,045 )   -13.7 %   $ 77,766   22.4 %  
                             
                             
                             
  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  
      January 30, 2022   January 31, 2021   February 2, 2020  
                             
  Operating income (loss) $ 46,549   13.6 %   $ (54,041 )   -46.3 %   $ 37,616   10.8 %  
  Add back: General and administrative expenses   17,836         11,628           20,422      
  Depreciation and amortization expense     33,974         33,893           35,234      
  Pre-opening costs     2,723         2,495           3,001      
  Store operating income (loss) before depreciation and amortization $ 101,082   29.5 %   $ (6,025 )   -5.2 %   $ 96,273   27.7 %  
                             

  DAVE & BUSTER’S ENTERTAINMENT, INC.  
  Consolidated Statements of Operations  
  (in thousands, except share and per share amounts)  
                             
      52 Weeks Ended   52 Weeks Ended   52 Weeks Ended  
      January 30, 2022   January 31, 2021   February 2, 2020  
                             
  Food and beverage revenues $ 436,637   33.5 %   $ 159,501     36.5 %   $ 563,576   41.6 %  
  Amusement and other revenues   867,419   66.5 %     277,011     63.5 %     791,115   58.4 %  
  Total revenues     1,304,056   100.0 %     436,512     100.0 %     1,354,691   100.0 %  
                             
  Cost of food and beverage (as a percentage of food and beverage revenues)     119,123   27.3 %     45,207     28.3 %     148,196   26.3 %  
  Cost of amusement and other (as a percentage of amusement and other revenues)     85,848   9.9 %     29,698     10.7 %     85,115   10.8 %  
  Total cost of products     204,971   15.7 %     74,905     17.2 %     233,311   17.2 %  
  Operating payroll and benefits   287,263   22.0 %     117,475     26.9 %     322,970   23.8 %  
  Other store operating expenses   402,661   30.9 %     299,464     68.6 %     429,431   31.8 %  
  General and administrative expenses     75,501   5.8 %     47,215     10.8 %     69,469   5.1 %  
  Depreciation and amortization expense   138,329   10.6 %     138,789     31.8 %     132,460   9.8 %  
  Pre-opening costs   8,150   0.6 %     11,276     2.6 %     18,971   1.4 %  
  Total operating costs     1,116,875   85.6 %     689,124     157.9 %     1,206,612   89.1 %  
                             
  Operating income (loss)     187,181   14.4 %     (252,612 )   -57.9 %     148,079   10.9 %  
                             
  Interest expense, net   53,910   4.2 %     36,890     8.4 %     20,937   1.5 %  
  Loss on debt extinguishment / refinancing   5,617   0.4 %     904     0.2 %       0.0 %  
                             
  Income (loss) before provision (benefit) for income taxes   127,654   9.8 %     (290,406 )   -66.5 %     127,142   9.4 %  
  Provision (benefit) for income taxes   19,014   1.5 %     (83,432 )   -19.1 %     26,879   2.0 %  
  Net income (loss) $ 108,640   8.3 %   $ (206,974 )   -47.4 %   $ 100,263   7.4 %  
                             
  Net income (loss) per share:                          
  Basic $ 2.26       $ (4.75 )       $ 3.00      
  Diluted $ 2.21       $ (4.75 )       $ 2.94      
  Weighted average shares used in per share calculations:                          
  Basic shares   48,142,090         43,549,887           33,450,217      
  Diluted shares   49,263,720         43,549,887           34,099,378      
                             
                             
  Other information:                          
  Company-owned stores at end of period   144         140           136      
  Store operating weeks in the period   7,161         3,922           6,769      
  Total revenue per store operating weeks in the period $ 182       $ 111         $ 200      
                             
  The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:          
                             
      52 Weeks Ended   52 Weeks Ended   52 Weeks Ended  
      January 30, 2022   January 31, 2021   February 2, 2020  
                             
  Net income (loss)   $ 108,640   8.3 %   $ (206,974 )   -47.4 %   $ 100,263   7.4 %  
  Add back: Interest expense, net   53,910         36,890           20,937      
  Loss on debt extinguishment / refinancing     5,617         904                
  Provision (benefit) for income taxes     19,014         (83,432 )         26,879      
  Depreciation and amortization expense     138,329         138,789           132,460      
  EBITDA   325,510   25.0 %     (113,823 )   -26.1 %     280,539   20.7 %  
  Add back: Loss on asset disposal   1,392         577           1,813      
  Impairment of long-lived assets and lease termination costs     912         13,727                
  Share-based compensation     12,472         6,985           6,857      
  Pre-opening costs     8,150         11,276           18,971      
  Other costs     3,289         (15 )         42      
  Adjusted EBITDA $ 351,725   27.0 %   $ (81,273 )   -18.6 %   $ 308,222   22.8 %  
                             
                             
                             
  The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown:          
                             
      52 Weeks Ended   52 Weeks Ended   52 Weeks Ended  
      January 30, 2022   January 31, 2021   February 2, 2020  
                             
  Operating income (loss) $ 187,181   14.4 %   $ (252,612 )   -57.9 %   $ 148,079   10.9 %  
  Add back: General and administrative expenses   75,501         47,215           69,469      
  Depreciation and amortization expense     138,329         138,789           132,460      
  Pre-opening costs     8,150         11,276           18,971      
  Store operating income (loss) before depreciation and amortization $ 409,161   31.4 %   $ (55,332 )   -12.7 %   $ 368,979   27.2 %  
                             

For Investor Relations Inquiries:

Michael Quartieri, CFO
Dave & Buster’s Entertainment, Inc.
972.813.1151
Michael.Quartieri@daveandbusters.com

Alex

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