PLAY
$51.98
Dave & Buster's Ente
$.11
.21%
Earnings Details
2nd Quarter July 2017
Tuesday, September 05, 2017 4:05:14 PM
Tweet Share Watch
Summary

Dave & Buster's Ente Beats

Dave & Buster's Ente (PLAY) reported 2nd Quarter July 2017 earnings of $0.71 per share on revenue of $280.8 million. The consensus earnings estimate was $0.55 per share. The Earnings Whisper number was $0.59 per share. Revenue grew 14.9% on a year-over-year basis.

The company said it continues to expect fiscal year revenue of $1.16 billion to $1.17 billion. The current consensus estimate is revenue of $1.18 billion for the year ending January 31, 2018.

Dave & Buster' Entertainment Inc is an owner and operator of high-volume venues that combine dining and entertainment in North America for both adults and families.

Results
Reported Earnings
$0.71
Earnings Whisper
$0.59
Consensus Estimate
$0.55
Reported Revenue
$280.8 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Dave & Buster’s Achieves Second Quarter Revenue Growth of 14.9% and Record Net Income

Dave & Buster’s Entertainment, Inc., (PLAY), ("Dave & Buster’s" or "the Company"), an owner and operator of entertainment and dining venues, today announced financial results for its second quarter 2017, which ended on July 30, 2017.

Key highlights from the second quarter 2017 compared to the second quarter 2016 include:

-- Total revenues increased 14.9% to $280.8 million from $244.3 million.

-- Opened four new stores compared to two new stores.

-- Comparable store sales increased 1.1%.

Net income of $30.4 million, or $0.71 per diluted share, vs. net income of $21.5 million, or $0.50 per diluted share.

Earnings per diluted share were $0.59 when excluding a favorable impact of $0.16 per diluted share from implementing FASB Accounting Standards Update 2016-09 ("ASU 2016-09") related to share-based payment transactions, and an unfavorable impact of $0.04 per diluted share related to a litigation settlement expense.

EBITDA increased 11.5% to $64.0 million from $57.4 million or 15.9% excluding the litigation settlement expense.

EBITDA margin decreased 70 basis points to 22.8% from 23.5% or increased 20 basis points to 23.7% excluding the litigation settlement expense.

-- Repurchased approximately 1.0 million shares for $67.2 million.

Recognized approximately $6.8 million reduction to our provision for income taxes as a result of the excess tax benefits generated by option exercises in accordance with ASU 2016-09, which was adopted in the first quarter. Implementation of the new standard also increased diluted shares outstanding by approximately 418,000 shares.

"Our thoughts and prayers go out to everyone affected by hurricane Harvey, including many Dave & Buster’s employees who have been significantly impacted. We are working to help get them back on their feet as soon as possible. Our three stores in Houston reopened Friday after remaining closed for several days. In terms of the quarter, Dave & Buster’s disciplined real estate strategy and differentiated product offering continue to pay off. We delivered another successful quarter of revenue growth driven by double-digit unit expansion and positive comparable store sales, a testament to the underlying strength of the brand. Our non-comp store base is performing well and we are very pleased with our recent store openings. Meanwhile, our comparable store sales growth has now exceeded the competitive casual dining benchmark for 21 consecutive quarters," said Steve King, Chief Executive Officer.

"Q2 represented another quarter of strong performance as revenue and EBITDA increased 14.9% and 11.5% respectively. In addition, excluding a litigation settlement, we grew EBITDA by nearly 16% and EBITDA margins by 20 basis points. Our recent debt refinancing improved our capital structure and financial flexibility, enabling us to invest in new store growth and return value to shareholders for years to come," added Brian Jenkins, Chief Financial Officer.

"Through today, we have opened eight stores and have an additional nine stores under construction. We now expect to open fourteen new stores this year, representing 15% unit growth, an increase over our previous guidance of twelve new stores. We remain committed to driving 10% or more unit growth over the long-term and continue to foresee a 200+ store opportunity in the United States and Canada alone," King concluded.

Share Repurchase Activity

We repurchased approximately 1.0 million shares of our common stock for $67.2 million during the second quarter of 2017 and cumulatively we have repurchased 2.1 million shares for $127.1 million. At the end of the second quarter, we still had nearly $73 million remaining under our current buyback authorization.

Litigation Expense

During the second quarter 2017, we recorded a $2.6 million litigation settlement expense within general and administrative expenses. This litigation settlement expense recognized in the current quarter resulted in approximately 90 basis points reduction in our reported operating income and EBITDA margins over the same period last year.

Review of Second Quarter 2017 Operating Results Compared to Second Quarter 2016

Total revenues increased 14.9% to $280.8 million from $244.3 million in the second quarter 2016. Across all stores, Food and Beverage revenues increased 10.2% to $118.7 million from $107.7 million and Amusement and Other revenues increased 18.6% to $162.1 million from $136.7 million. Food and Beverage represented 42.3% of total revenues while Amusements and Other represented 57.7% of total revenues in the second first quarter 2017. In last year’s second quarter, Food & Beverage represented 44.1% of total revenues while Amusements and Other represented 55.9% of total revenues.

Comparable store sales increased 1.1% in the second quarter 2017 compared to a 1.0% increase in the same period last year. Our comparable store sales growth was driven by a 1.1% increase in walk-in sales and a 1.9% increase in special events sales. Non-comparable store revenues increased $34.1 million in the second quarter 2017 to $61.1 million.

Operating income increased to $39.2 million in the second quarter of 2017 from $36.0 million in last year’s second quarter. As a percentage of total revenues, operating income decreased 80 basis points to 13.9% from 14.7%. Excluding the litigation settlement expense, operating income increased 10 basis points to 14.8%.

Net income increased to $30.4 million, or $0.71 per diluted share (42.8 million diluted share base). Net income, excluding the $0.16 per share favorable impact of ASU 2016-09 and the $0.04 per share unfavorable impact of the litigation settlement, was $0.59 per diluted share. This compared to net income of $21.5 million, or $0.50 per diluted share (43.3 million diluted share base), in the same period last year.

EBITDA increased 11.5% to $64.0 million in the second first quarter 2017 from $57.4 million in the same period last year. EBITDA increased 15.9% excluding the litigation settlement expense. As a percentage of total revenues, EBITDA decreased approximately 70 basis points to 22.8% from 23.5%, and excluding the litigation settlement, EBITDA increased 20 basis points to 23.7%.

Store operating income before depreciation and amortization increased 15.4% to $85.3 million in the second quarter 2017 from $74.0 million in last year’s second quarter. As a percentage of total revenues, Store operating income before depreciation and amortization increased 10 basis points to 30.4% from 30.3%.

Development

In fiscal 2017, we now intend to open fourteen new stores, compared to our previous guidance of twelve stores, including ten large and four small store formats. We currently have nine stores under construction. We opened four stores during the second quarter in New Orleans, Louisiana (a new state for us); Alpharetta, Georgia; Myrtle Beach, South Carolina; and McAllen, Texas. To date, five out of the eight stores opened this year were in new markets for our brand.

Total capital additions (net of tenant improvement allowances) during fiscal 2017 are now expected to be $182 million to $192 million, up $16 million from prior guidance, reflecting our increased target for 2017 new store openings as well as a strong 2018 pipeline.

Financial Outlook

We are updating our financial outlook on several key metrics for fiscal 2017, which includes 53 weeks and ends on February 4, 2018:

-- Total revenues of $1.160 billion to $1.170 billion

Comparable store sales increase of 1% to 2% (on a comparable 52-week basis) (vs. 2% to 3% previously)

-- 14 new stores (vs. 12 new stores previously)

-- Pre-opening expenses of approximately $21 million

-- Net income of $109 million to $113 million (vs. $107 million to $111 million previously)

EBITDA of $270 million to $276 million (compared to $276 million to $282 million previously) <ul type="disc"><p>-- Primarily driven by higher pre-opening expenses and the litigation settlement

-- Primarily driven by higher pre-opening expenses and the litigation settlement

Diluted share count of 42.6 million to 42.8 million (vs. 43.2 million to 43.4 million previously) (including the year-to-date impact of ASU 2016-09)

Effective tax rate of 30.5% to 31% (compared to 34.5% to 35.0% previously) <ul type="disc"><p>-- Effective tax rate and net income guidance for full year 2017 includes a $10.1 million reduction in our year-to-date provision for income taxes resulting from the implementation of ASU 2016-09. The requirements of this standard will likely further reduce our effective tax rate depending on future stock option exercises. Our guidance excludes any potential future impacts of ASU 2016-09 on our effective tax rate

Effective tax rate and net income guidance for full year 2017 includes a $10.1 million reduction in our year-to-date provision for income taxes resulting from the implementation of ASU 2016-09. The requirements of this standard will likely further reduce our effective tax rate depending on future stock option exercises. Our guidance excludes any potential future impacts of ASU 2016-09 on our effective tax rate

Conference Call Today

Management will hold a conference call to discuss these results today at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). The conference call can be accessed over the phone by dialing (719) 457-2615 or toll-free (877) 419-6590. 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 8776372.

Additionally, a live and archived webcast of the conference call will be available at www.daveandbusters.com under the Investor Relations section.

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 100 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 "Fun American New Gourmet" entrees and appetizers, a full 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 34 states and Canada.

Forward-Looking Statements

The statements contained in this release that are not historical facts are forward-looking statements. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by our level of indebtedness, general business and economic conditions, 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, 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
July 30, 2017
January 29, 2017
(unaudited)
(audited)
Current assets:
Cash and cash equivalents
$
20,596
$
20,083
Other current assets
66,109
55,521
Total current assets
86,705
75,604
Property and equipment, net
652,211
606,865
Intangible and other assets, net
371,343
370,264
Total assets
$
1,110,259
$
1,052,733
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities
$
195,022
$
177,797
Other long-term liabilities
198,917
178,856
Long-term debt, net
293,980
256,628
Stockholders’ equity
422,340
439,452
Total liabilities and stockholders’ equity $
1,110,259
$
1,052,733
DAVE & BUSTER’S ENTERTAINMENT, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
13 Weeks Ended
13 Weeks Ended
July 30, 2017
July 31, 2016
Food and beverage revenues
$
118,689
42.3
%
$
107,672
44.1
%
Amusement and other revenues
162,062
57.7
%
136,658
55.9
%
Total revenues
280,751
100.0
%
244,330
100.0
%
Cost of food and beverage (as a percentage of food and beverage revenues)
30,473
25.7
%
27,573
25.6
%
Cost of amusement and other (as a percentage of amusement and other revenues)
17,978
11.1
%
16,535
12.1
%
Total cost of products
48,451
17.3
%
44,108
18.1
%
Operating payroll and benefits
64,453
23.0
%
55,203
22.6
%
Other store operating expenses
82,529
29.3
%
71,069
29.0
%
General and administrative expenses
16,762
6.0
%
13,585
5.6
%
Depreciation and amortization expense
24,847
8.9
%
21,434
8.8
%
Pre-opening costs
4,546
1.6
%
2,932
1.2
%
Total operating costs
241,588
86.1
%
208,331
85.3
%
Operating income
39,163
13.9
%
35,999
14.7
%
Interest expense, net
2,063
0.7
%
1,885
0.7
%
Income before provision for income taxes
37,100
13.2
%
34,114
14.0
%
Provision for income taxes
6,744
2.4
%
12,602
5.2
%
Net income
$
30,356
10.8
%
$
21,512
8.8
%
Net income per share:
Basic
$
0.73
$
0.51
Diluted
$
0.71
$
0.50
Weighted average shares used in per share calculations:
Basic shares
41,460,651
41,870,680
Diluted shares
42,830,873
43,283,834
Other information:
Company-owned and operated stores open at end of period
100
86
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
July 30, 2017
July 31, 2016
Net income
$
30,356
10.8
%
$
21,512
8.8
%
Add back:
Interest expense, net
2,063
1,885
Provision for income taxes
6,744
12,602
Depreciation and amortization
24,847
21,434
EBITDA
64,010
22.8
%
57,433
23.5
%
Add back:
Loss on asset disposal
239
303
Share-based compensation
2,386
1,637
Pre-opening costs
4,546
2,932
Other costs
(607
)
52
Adjusted EBITDA
$
70,574
25.1
%
$
62,357
25.5
%
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
July 30, 2017
July 31, 2016
Operating income
$
39,163
13.9
%
$
35,999
14.7
%
Add back:
General and administrative expenses
16,762
13,585
Depreciation and amortization
24,847
21,434
Pre-opening costs
4,546
2,932
Store operating income before depreciation and amortization
$
85,318
30.4
%
$
73,950
30.3
%
DAVE & BUSTER’S ENTERTAINMENT, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
26 Weeks Ended
26 Weeks Ended
July 30, 2017
July 31, 2016
Food and beverage revenues
$
248,500
42.5
%
$
224,796
44.4
%
Amusement and other revenues
336,399
57.5
%
281,521
55.6
%
Total revenues
584,899
100.0
%
506,317
100.0
%
Cost of food and beverage (as a percentage of food and beverage revenues)
63,175
25.4
%
57,212
25.5
%
Cost of amusement and other (as a percentage of amusement and other revenues)
34,261
10.2
%
33,047
11.7
%
Total cost of products
97,436
16.7
%
90,259
17.8
%
Operating payroll and benefits
129,643
22.2
%
111,580
22.0
%
Other store operating expenses
164,897
28.2
%
142,599
28.2
%
General and administrative expenses
31,740
5.4
%
26,625
5.3
%
Depreciation and amortization expense
48,775
8.3
%
42,244
8.3
%
Pre-opening costs
9,017
1.5
%
5,837
1.2
%
Total operating costs
481,508
82.3
%
419,144
82.8
%
Operating income
103,391
17.7
%
87,173
17.2
%
Interest expense, net
3,917
0.7
%
3,995
0.8
%
Income before provision for income taxes
99,474
17.0
%
83,178
16.4
%
Provision for income taxes
26,322
4.5
%
30,505
6.0
%
Net income
$
73,152
12.5
%
$
52,673
10.4
%
Net income per share:
Basic
$
1.75
$
1.26
Diluted
$
1.69
$
1.22
Weighted average shares used in per share calculations:
Basic shares
41,744,101
41,765,280
Diluted shares
43,182,918
43,217,406
Other information:
Company-owned and operated stores open at end of period
100
86
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:
26 Weeks Ended
26 Weeks Ended
July 30, 2017
July 31, 2016
Net income
$
73,152
12.5
%
$
52,673
10.4
%
Add back:
Interest expense, net
3,917
3,995
Provision for income taxes
26,322
30,505
Depreciation and amortization
48,775
42,244
EBITDA
152,166
26.0
%
129,417
25.6
%
Add back:
Loss on asset disposal
884
473
Share-based compensation
4,449
2,997
Pre-opening costs
9,017
5,837
Other costs
(375
)
73
Adjusted EBITDA
$
166,141
28.4
%
$
138,797
27.4
%
The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown:
26 Weeks Ended
26 Weeks Ended
July 30, 2017
July 31, 2016
Operating income
$
103,391
17.7
%
$
87,173
17.2
%
Add back:
General and administrative expenses
31,740
26,625
Depreciation and amortization
48,775
42,244
Pre-opening costs
9,017
5,837
Store operating income before depreciation and amortization
$
192,923
33.0
%
$
161,879
32.0
%
For Investor Relations Inquiries:
Arvind Bhatia, CFA
Dave & Buster’s Entertainment, Inc.
214.904.2202
arvind_bhatia@daveandbusters.com

https://resource.globenewswire.com/Resource/Download/948e29e3-1cb6-4829-890b-e0b317bb1634?size=1

<img src="http://www.globenewswire.com/newsroom/ti?ndecode=MTUwIzY5NDM2ODc=" alt="" width="1" height="1"/>