PLAY
$53.81
Dave & Buster's Ente
($.25)
(.46%)
Earnings Details
4th Quarter January 2019
Tuesday, April 02, 2019 4:05:00 PM
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Summary

Dave & Buster's Ente Beats

Dave & Buster's Ente (PLAY) reported 4th Quarter January 2019 earnings of $0.75 per share on revenue of $331.8 million. The consensus earnings estimate was $0.63 per share on revenue of $325.6 million. The Earnings Whisper number was $0.67 per share. Revenue grew 8.8% on a year-over-year basis.

The company said it expects fiscal year revenue of $1.37 billion to $1.40 billion. The current consensus estimate is revenue of $1.38 billion for the year ending January 31, 2020.

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
$0.75
Earnings Whisper
$0.67
Consensus Estimate
$0.63
Reported Revenue
$331.8 Mil
Revenue Estimate
$325.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Dave & Buster’s Achieves Q4 Comparable Store Sales Increase of 2.9%

Delivers Double-Digit Unit and Revenue Growth in 2018
Announces Additional $200 Million Share Repurchase Authorization

DALLAS, April 02, 2019 (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 2018, which ended on February 3, 2019.

Key highlights from the fourth quarter 2018 (13 weeks) compared to the fourth quarter 2017 (14 weeks) include:

  • Total revenues increased 8.8% to $331.8 million from $304.9 million, or 15.7% on a comparable 13-week basis*
  • Opened three new stores compared to five new stores
  • Comparable store sales increased 2.9% (comparable 13-week basis)
  • Net income of $29.4 million, or $0.75 per diluted share, vs. net income of $35.6 million, or $0.85 per diluted share. Net income for the fourth quarter of 2017 exclusive of the beneficial impact of certain tax adjustments related to tax reform** and an additional week in the quarter* was $27.3 million, or $0.66 per diluted share
  • EBITDA increased 1.9% to $72.1 million from $70.8 million, or 5.6% on a comparable 13-week basis
  • Adjusted EBITDA decreased 2.8% to $80.2 million from $82.5 million, but increased 1.2% on a comparable 13-week basis
  • Launched Dragonfrost, our proprietary virtual reality title, in December 
  • Repurchased 1.3 million shares for $63.0 million and paid a quarterly cash dividend of $0.15 per share

Key highlights from the full year 2018 (52 weeks) compared to the full year 2017 (53 weeks) include:

  • Total revenues increased 11.0% to $1.265 billion from $1.140 billion, or 12.9% on a comparable 52-week basis***
  • Opened 15 new stores compared to 14 new stores
  • Comparable store sales decreased 1.6% (comparable 52-week basis)
  • Net income of $117.2 million, or $2.93 per diluted share, vs. net income of $120.9 million, or $2.84 per diluted share. Net income for fiscal year 2017 exclusive of the beneficial impact of certain tax adjustments related to tax reform** and an additional week in the year*** was $111.5 million, or $2.62 per diluted share.
  • EBITDA increased 4.0% to $279.3 million from $268.5 million, or 5.5% on a comparable 52-week basis
  • Adjusted EBITDA increased 2.8% to $311.1 million from $302.7 million, or 4.3% on a comparable 52-week basis
  • Launched our industry-leading virtual reality platform
  • Repurchased 3.1 million shares for $149.1 million and paid a quarterly cash dividend of $0.15 per share each in the third and fourth quarters of 2018

“We are pleased to finish the year on a strong note. On a comparable week basis, we drove double-digit revenue growth in Q4 as comparable store sales increased 2.9% and new store performance remained strong. 2018 was another year of record sales and EBITDA, and looking ahead to 2019, we are well positioned to deliver new revenue and EBITDA highs, and reinforce our leadership position in the combined entertainment and dining space,” said Brian Jenkins, Chief Executive Officer.

“We remain focused on driving shareholder value by continuing to invest in new store growth, executing on our share repurchase program, and paying a quarterly cash dividend. We are excited our Board has authorized to expand our share repurchase program by another $200 million,” said Joe DeProspero, Interim Chief Financial Officer.

Review of Fourth Quarter 2018 Operating Results (13 weeks) Compared to Fourth Quarter 2017 (14 weeks)

Total revenues increased 8.8% to $331.8 million from $304.9 million in the fourth quarter 2017, or 15.7% on a comparable 13-week basis. This growth was driven by a 10.7% increase in Amusements and Other revenue and a 6.5% increase in Food and Beverage revenue. The mix of Amusement and Other as a percentage of total revenue increased 100 basis points to 55.5% in the fourth quarter of 2018 from 54.5% in last year’s fourth quarter.

Comparable store sales increased 2.9% in the fourth quarter 2018, compared to a decrease of 5.9% in the comparable period last year. Our comparable store sales increase was driven by a 3.7% increase in walk-in sales and a 1.4% decrease in special events sales. Comparable store sales increased 4.4% in Amusements & Other and 1.1% in Food & Beverage. Non-comparable store revenues increased $38.4 million, or 71.9%, in the fourth quarter 2018 to $91.9 million, also on a comparable 13-week basis.

Operating income decreased 3.4% to $41.0 million in the fourth quarter of 2018 from $42.5 million in the fourth quarter of 2017 or decreased 2.4% on a comparable 13-week basis. As a percentage of total revenues, operating income decreased 150 basis points to 12.4% from 13.9% or decreased 220 basis points on a comparable 13-week basis.

Net income was $29.4 million, or $0.75 per diluted share (39.1 million diluted share base) in the fourth quarter of 2018 compared to $35.6 million, or $0.85 per diluted share (41.7 million diluted share base) in the fourth quarter of 2017. Net income for the fourth quarter of 2017 was $27.3 million, or $0.66 per diluted share exclusive of the beneficial impact of certain tax adjustments related to tax reform* and an additional week in the quarter**.

EBITDA increased 1.9% to $72.1 million in the fourth quarter of 2018 from $70.8 million in the fourth quarter of 2017. As a percentage of total revenues, EBITDA decreased 150 basis points to 21.7% from 23.2%. On a comparable 13-week basis, EBITDA increased 5.6% and as a percentage of total revenue decreased 210 basis points.

Adjusted EBITDA decreased 2.8% to $80.2 million in the fourth quarter of 2018 from $82.5 million in the fourth quarter of 2017. As a percentage of total revenues, Adjusted EBITDA decreased 280 basis points to 24.2% from 27.0%. On a comparable 13-week basis, Adjusted EBITDA increased 1.2% and as a percentage of total revenue decreased 340 basis points.

Store operating income before depreciation and amortization decreased slightly to $94.2 million in the fourth quarter 2018 from $94.3 million in last year's fourth quarter. As a percentage of total revenues, store operating income before depreciation and amortization decreased 250 basis points to 28.4% from 30.9%. On a comparable 13-week basis, store operating income before depreciation and amortization increased 4.5% but was down 310 basis points as a percentage of total revenue.

Development

We opened three stores during the fourth quarter in Milford, Connecticut; Birmingham, Alabama; and Corpus Christi, Texas, our second 17K format store, for a total of 15 new stores in fiscal 2018. Total capital additions, net of tenant improvement allowances and other landlord payments, during the year were $158.9 million.

In fiscal 2019, we expect to open 15 to 16 new locations and recently closed our store in Gwinnett (Duluth), Georgia at the end of its lease term, representing net unit growth of approximately 12%, consistent with our target of 10% or more annual unit growth. We have opened five new stores so far in Louisville, Kentucky; North Hills (Pittsburgh), Pennsylvania; Thousand Oaks, California; Daytona Beach, Florida; and Fairfax, Virginia. We plan to open two more stores in Ft. Myers, Florida and Sevierville, Tennessee for a total of seven new stores in the first quarter. Currently, there are 9 stores under construction.

Capital Allocation Initiatives

During the fourth quarter of 2018, we repurchased approximately 1.3 million shares for $63.0 million, with an additional 925,000 shares for $44.7 million through March 26, 2019 during the first quarter. As of the same date, cumulatively, we had repurchased 7.2 million shares for $374.6 million under our $400 million share repurchase authorization. During the fourth quarter of 2018, we paid a quarterly cash dividend of $0.15 per share. In the first quarter of 2019, we declared a quarterly cash dividend of $0.15 per share payable on April 10, 2019 to shareholders of record on March 26, 2019.

On April 2, 2019, the Company’s Board of Directors authorized the repurchase of an additional $200 million of the company’s stock under the existing share repurchase program through the end of fiscal 2020. All other terms of the share repurchase program remain in effect.

Financial Outlook

We are providing our initial outlook for fiscal 2019, which ends on February 2, 2020:

  • Total revenues of $1.370 billion to $1.400 billion
  • Comparable store sales of Flat to +1.5%
  • 15 to 16 new stores
  • Net income of $105 million to $117 million
  • Effective tax rate of 22.0% to 22.5% and diluted share count of approximately 37 million shares
  • EBITDA of $285 million to $300 million
  • Total capital additions (net of tenant improvement allowances and other landlord payments) of $190 million to $200 million

*Fiscal fourth quarter 2018 included 13 weeks compared to 14 weeks for fiscal fourth quarter 2017. In fiscal fourth quarter 2018, the unfavorable impact of one less week was approximately $18.3 million on revenue, $0.5 million on operating income, $0.3 million on net income, $0.01 on EPS, $2.5 million on EBITDA, $3.3 million on Adjusted EBITDA and $4.1 million on Store Operating Income before Depreciation and Amortization.

**Under the Tax Cuts and Jobs Act 2017, we recorded a provisional tax benefit of $8.0 million in the fourth quarter of 2017 related to the re-measurement of certain deferred tax assets and liabilities, based on a reasonable estimate of the impact of the reduction in the corporate tax rate on our net federal deferred tax liabilities as of December 22, 2017. No changes to provisional estimates were made in fiscal year 2018.

*** Fiscal year 2018 included 52 weeks compared to 53 weeks for fiscal year 2017. In fiscal year 2018, the unfavorable impact of one less week was approximately $19.5 million on revenue, $2.1 million on operating income, $1.4 million on net income, $0.03 on EPS, $3.9 million on EBITDA, $4.3 million on Adjusted EBITDA and $5.3 million on Store Operating Income before Depreciation and Amortization.

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 (323) 794-2423 or toll-free (888) 204-4368. 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 2702270.

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 125 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 39 states, Puerto Rico, 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 February 3, 2019 February 4, 2018
  (audited) (audited)
Current assets:    
     
Cash and cash equivalents$21,585 $18,795
Other current assets 69,508  76,112
     
Total current assets 91,093  94,907
     
Property and equipment, net 805,337  726,455
     
Intangible and other assets, net 376,757  375,668
     
Total assets$1,273,187 $1,197,030
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Total current liabilities$244,390 $207,825
     
Other long-term liabilities 262,491  216,310
     
Long-term debt, net 378,469  351,249
     
Stockholders' equity 387,837  421,646
     
Total liabilities and stockholders' equity$1,273,187 $1,197,030
     


 
DAVE & BUSTER'S ENTERTAINMENT, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
         
  13 Weeks Ended 14 Weeks Ended
  February 3, 2019 February 4, 2018
         
Food and beverage revenues$147,665 44.5% $138,626  45.5%
Amusement and other revenues 184,119 55.5%  166,287  54.5%
Total revenues 331,784 100.0%  304,913  100.0%
         
Cost of food and beverage (as a percentage of food and beverage revenues)  38,018 25.7%  36,038  26.0%
Cost of amusement and other (as a percentage of amusement and other revenues)  20,816 11.3%  18,591  11.2%
Total cost of products  58,834 17.7%  54,629  17.9%
Operating payroll and benefits 78,985 23.8%  69,114  22.7%
Other store operating expenses 99,723 30.1%  86,883  28.5%
General and administrative expenses 16,060 4.8%  14,393  4.7%
Depreciation and amortization expense 31,146 9.4%  28,319  9.3%
Pre-opening costs 6,042 1.8%  9,120  3.0%
Total operating costs 290,790 87.6%  262,458  86.1%
         
Operating income 40,994 12.4%  42,455  13.9%
         
Interest expense, net  3,707 1.1%  2,592  0.8%
Loss on debt retirement  - 0.0%  -  0.0%
         
Income before provision for income taxes 37,287 11.3%  39,863  13.1%
Provision for income taxes 7,851 2.4%  4,223  1.4%
Net income $29,436 8.9% $35,640  11.7%
         
Net income per share:        
Basic$0.77   $0.88   
Diluted$0.75   $0.85   
Weighted average shares used in per share calculations:        
Basic shares 38,245,612    40,568,751   
Diluted shares 39,065,459    41,699,060   
         
         
Other information:        
Company-owned and operated stores open at end of period 121    106   
 
         
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:
         
  13 Weeks Ended 14 Weeks Ended
  February 3, 2019 February 4, 2018
         
Net income $29,436 8.9% $35,640  11.7%
Add back: Interest expense, net  3,707    2,592   
Loss on debt retirement -    -   
Provision for income taxes 7,851    4,223   
Depreciation and amortization expense  31,146    28,319   
EBITDA 72,140 21.7%  70,774  23.2%
Add back: Loss on asset disposal 308    658   
Share-based compensation  1,651    1,910   
Pre-opening costs  6,042    9,120   
Other costs  9    (4)  
Adjusted EBITDA $80,150 24.2% $82,458  27.0%
         
         
         
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 14 Weeks Ended
  February 3, 2019 February 4, 2018
         
Operating income $40,994 12.4% $42,455  13.9%
Add back: General and administrative expenses 16,060    14,393   
Depreciation and amortization expense  31,146    28,319   
Pre-opening costs 6,042    9,120   
Store operating income before depreciation and amortization$94,242 28.4% $94,287  30.9%
         


 
DAVE & BUSTER'S ENTERTAINMENT, INC.
Consolidated Statements of Operations (Audited)
(in thousands, except share and per share amounts)
         
  52 Weeks Ended 53 Weeks Ended
  February 3, 2019 February 4, 2018
         
Food and beverage revenues$536,469 42.4% $494,816  43.4%
Amusement and other revenues 728,832 57.6%  644,975  56.6%
Total revenues 1,265,301 100.0%  1,139,791  100.0%
         
Cost of food and beverage (as a percentage of food and beverage revenues)  139,199 25.9%  127,600  25.8%
Cost of amusement and other (as a percentage of amusement and other revenues)  81,064 11.1%  69,072  10.7%
Total cost of products  220,263 17.4%  196,672  17.3%
Operating payroll and benefits 296,924 23.5%  256,724  22.5%
Other store operating expenses 384,155 30.4%  334,546  29.4%
General and administrative expenses 61,521 4.9%  59,565  5.2%
Depreciation and amortization expense 118,275 9.3%  102,766  9.0%
Pre-opening costs 23,163 1.8%  23,746  2.1%
Total operating costs 1,104,301 87.3%  974,019  85.5%
         
Operating income 161,000 12.7%  165,772  14.5%
         
Interest expense, net 13,113 1.0%  8,665  0.7%
Loss on debt retirement  - 0.0%  718  0.1%
         
Income before provision for income taxes  147,887 11.7%  156,389  13.7%
Provision for income taxes 30,666 2.4%  35,440  3.1%
Net income $117,221 9.3% $120,949  10.6%
         
Net income per share:        
Basic$3.00   $2.93   
Diluted$2.93   $2.84   
Weighted average shares used in per share calculations:        
Basic shares 39,047,106    41,276,314   
Diluted shares 39,975,122    42,583,009   
         
         
Other information:        
Company-owned and operated stores open at end of period 121    106   
 
         
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:
         
  52 Weeks Ended 53 Weeks Ended
  February 3, 2019 February 4, 2018
         
Net income $117,221 9.3% $120,949  10.6%
Add back: Interest expense, net 13,113    8,665   
Loss on debt retirement -    718   
Provision for income taxes  30,666    35,440   
Depreciation and amortization expense  118,275    102,766   
EBITDA 279,275 22.1%  268,538  23.6%
Add back: Loss on asset disposal 1,121    1,863   
Share-based compensation  7,422    8,916   
Pre-opening costs  23,163    23,746   
Other costs  136    (333)  
Adjusted EBITDA $311,117 24.6% $302,730  26.6%
         
         
         
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 53 Weeks Ended
  February 3, 2019 February 4, 2018
         
Operating income$161,000 12.7% $165,772  14.5%
Add back: General and administrative expenses 61,521    59,565   
Depreciation and amortization expense  118,275    102,766   
Pre-opening costs 23,163    23,746   
Store operating income before depreciation and amortization $363,959 28.8% $351,849  30.9%
         

For Investor Relations Inquiries:

Arvind Bhatia, CFA
Dave & Buster’s Entertainment, Inc.
214.904.2202
arvind.bhatia@daveandbusters.com

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Source: Dave & Buster's Entertainment, Inc.