U.S. markets close in 2 hours 56 minutes
  • S&P 500

    4,294.27
    +14.12 (+0.33%)
     
  • Dow 30

    33,926.48
    +165.43 (+0.49%)
     
  • Nasdaq

    13,106.23
    +59.05 (+0.45%)
     
  • Russell 2000

    2,012.31
    -4.31 (-0.21%)
     
  • Crude Oil

    89.20
    -2.89 (-3.14%)
     
  • Gold

    1,797.20
    -18.30 (-1.01%)
     
  • Silver

    20.31
    -0.39 (-1.90%)
     
  • EUR/USD

    1.0180
    -0.0077 (-0.75%)
     
  • 10-Yr Bond

    2.7820
    -0.0670 (-2.35%)
     
  • GBP/USD

    1.2087
    -0.0052 (-0.43%)
     
  • USD/JPY

    133.1470
    -0.3330 (-0.25%)
     
  • BTC-USD

    24,262.64
    -41.18 (-0.17%)
     
  • CMC Crypto 200

    577.63
    -13.14 (-2.22%)
     
  • FTSE 100

    7,509.15
    +8.26 (+0.11%)
     
  • Nikkei 225

    28,871.78
    +324.80 (+1.14%)
     

Dave & Buster’s Reports Third Quarter 2021 Financial Results

  • Oops!
    Something went wrong.
    Please try again later.
·18 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

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