PLAY - Dave & Buster's Reports Third Quarter 2023 Financial Results Repurchases $100 Million of Shares and Executes Sale Leaseback of Four Properties for $86 Million | Benzinga
DALLAS, Dec. 05, 2023 (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 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 & Treasurer
Dave & 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) |