Dave & Buster’s, Inc. Achieves Record-Setting Adjusted EBITDA & Margins for Fourth Quarter and Full Year

2014-05-01
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  • Dave & Buster’s Dave & Buster's, Inc. announced financial results for its fourth quarter of 2013 and full year 2013, which ended on February 2, 2014.

    Dave & Buster's, Inc. announced financial results for its fourth quarter of 2013 and full year 2013, which ended on February 2, 2014.

    The fourth quarter and full year ended February 2, 2014 included 13 and 52 weeks, respectively, compared to 14 and 53 weeks, respectively, for the fourth quarter and full year ended February 3, 2013. Accordingly, financial results for the fiscal 2013 periods are not directly comparable to those of the corresponding fiscal 2012 periods.

    Key highlights from the fourth quarter 2013 (13 weeks) compared to the fourth quarter 2012 (14 weeks) include:

    • Total revenues increased 3.5% to $171.4 million from $165.6 million.
    • Comparable store sales, adjusted to reflect the one-week calendar shift, increased 0.7%.
    • Adjusted EBITDA* increased 11.3% to $40.2 million from $36.1 million. As a percentage of total revenues, Adjusted EBITDA increased approximately 160 basis points to 23.4%.
    • Two stores were opened.

    Key highlights for the full year 2013 (52 weeks) compared to the full year 2012 (53 weeks) include:

    • Total revenues increased 4.5% to $635.6 million from $608.1 million.
    • Comparable store sales, adjusted to reflect the one-week calendar shift, increased 1.0%.
    • Adjusted EBITDA* increased 11.9% to $134.8 million from $120.5 million. As a percentage of total revenues, Adjusted EBITDA increased approximately 140 basis points to 21.2%.
    • Five stores were opened.

    * A reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure presented in accordance with GAAP, is set forth in the attachment to this release.

    “We delivered an exceptional quarter with record-setting results despite weather challenges impacting both revenues and adjusted EBITDA. On the strength of our special events business, comparable store sales increased 0.7% versus a 3.7% year-ago comparison and substantially exceeded the competitive industry benchmark while our improved sports viewing areas contributed to robust beverage sales. We also benefited from contributions from newer, non-comparable stores that are meeting the demand for a differentiated experience in their respective markets and generating exceptional returns. Together, these revenue gains resulted in substantial leverage and thereby provided us with a strong finish to what was unquestionably a banner year,” said Steve King, Chief Executive Officer of Dave & Buster’s, Inc.

    King continued, “We will also continue investing in our store footprint through remodels which will further solidify our reputation as the premier destination for casual dining and entertainment. And like our 2012 and 2013 store classes, the seven to eight openings planned for 2014 reflect our ability to ‘right size’ our footprint with stores ranging from 25,000 to 45,000 square feet to fit markets appropriately.”

    Review of Fourth Quarter 2013 Operating Results

    Total revenues increased 3.5% to $171.4 million during the 13-week fourth quarter of 2013 compared to $165.6 million in the 14-week fourth quarter of 2012. Revenues in the fourth quarter of 2012 attributed to the extra week totaled approximately $8.9 million. Additionally, the Company experienced exceptionally challenging weather during December and January which the Company estimates to have negatively impacted total revenues by over $2.0 million during the fourth quarter of 2013. Across all stores, Food and Beverage revenues increased 3.4% and Amusements and Other revenues increased 3.5%.

    Comparable store sales, adjusted to reflect the one-week calendar shift, increased 0.7%. The growth was driven by a 6.1% increase in comparable special events business sales which offset a 0.4% decrease in comparable walk-in sales due in part to the weather impact. Non-comparable store revenues increased $13.7 million on a comparable 13-week basis to $28.4 million during the fourth quarter of 2013.

    Adjusted EBITDA increased 11.3% to $40.2 million in the fourth quarter of 2013 from $36.1 million in last year’s fourth quarter. As a percentage of total revenues, Adjusted EBITDA increased approximately 160 basis points to 23.4%. Adjusting for the additional operating week in the prior year fourth quarter, Adjusted EBITDA is estimated to have increased 15.4%.

    Development

    The Company added a total of five stores in 2013 including stores in Cary, North Carolina and Livonia, Michigan during the fourth quarter.

    Total capital expenditures (net of tenant improvement allowances) for 2013 were $104.1 million and included development costs for 2013 and 2014 store openings, seven interior remodeling projects, several exterior remodeling projects, new games and maintenance capital.

    For 2014, the Company plans to add seven to eight new stores and has already opened stores in Westchester, CA and Vernon Hills, IL. Total capital expenditures (net of tenant improvement allowances) are expected in the $97 million to $107 million range and include development costs for store openings, several remodeling projects, new games and maintenance capital.

    About Dave & Buster’s, Inc.

    Founded in 1982 and headquartered in Dallas, Texas, Dave & Buster’s is the premier national owner and operator of 68 high-volume venues that offer interactive entertainment options for adults and families, such as skill/sports-oriented redemption games and technologically advanced video and simulation games, combined with a full menu of high quality food and beverages. Dave & Buster’s currently has stores in 26 states and Canada. 

           
    DAVE & BUSTER'S INC.
    Condensed Consolidated Balance Sheets
    (in thousands)
    (audited)
     
    ASSETS February 2, 2014 February 3, 2013
     
    Current assets:
     
    Cash and cash equivalents $ 38,080 $ 36,117
    Other current assets   52,396   55,701
     
    Total current assets 90,476 91,818
     
    Property and equipment, net 388,093 337,239
     
    Intangible and other assets, net   372,817   375,496
     
    Total assets $ 851,386 $ 804,553
     
     
    LIABILITIES AND STOCKHOLDER'S EQUITY
     
    Total current liabilities $ 113,044 $ 92,883
     
    Other long-term liabilities 121,757 107,115
     
    Long-term debt, less current liabilities, net unamortized discount 342,325 343,579
     
    Stockholder's equity   274,260   260,976
     
    Total liabilities and stockholder's equity $ 851,386 $ 804,553
     
                   
    DAVE & BUSTER'S, INC.
    Condensed Statements of Operations
    (in thousands)
    (unaudited)
     
    13 Weeks Ended 14 Weeks Ended
    February 2, 2014 February 3, 2013
     
    Food and beverage revenues $ 87,603 51.1 % $ 84,687 51.1 %
    Amusement and other revenues   83,768 48.9 %   80,899   48.9 %
    Total revenues 171,371 100.0 % 165,586 100.0 %
     
    Cost of products 33,771 19.7 % 32,554 19.7 %
    Store operating expenses 90,886 53.0 % 88,786 53.5 %
    General and administrative expenses 9,535 5.6 % 10,257 6.2 %
    Depreciation and amortization expense 17,004 9.9 % 17,884 10.8 %
    Pre-opening costs   1,865 1.1 %   1,262   0.8 %
    Total operating costs 153,061 89.3 % 150,743 91.0 %
     
    Operating income 18,310 10.7 % 14,843 9.0 %
    Interest expense, net   7,658 4.5 %   8,703   5.3 %
     
    Income before provision (benefit) for income taxes 10,652 6.2 % 6,140 3.7 %
    Provision (benefit) for income taxes   3,828 2.2 %   (1,807 ) -1.1 %
    Net income $ 6,824 4.0 % $ 7,947   4.8 %
     
     
    Other information:
     
    Company-owned and operated stores open at end of period (1) 66 61
     

    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 2, 2014 February 3, 2013
     
    Total net income $ 6,824 $ 7,947
    Add back: Interest expense, net 7,658 8,703
    Provision (benefit) for income taxes 3,828 (1,807 )
    Depreciation and amortization   17,004   17,884  
    EBITDA 35,314 32,727
    Add back: Loss on asset disposal 448 688
    Share-based compensation 299 233
    Currency transaction loss 438 -
    Pre-opening costs 1,865 1,262
    Reimbursement of affiliate expenses 170 (56 )
    Deferred amusement revenue and ticket
    redemption liability adjustments 1,565 1,188
    Transaction and other costs   79   51  
    Adjusted EBITDA (2) $ 40,178 $ 36,093  
     
                   
    DAVE & BUSTER'S, INC.
    Condensed Statements of Operations
    (in thousands)
    (audited)
     
    52 Weeks Ended 53 Weeks Ended
    February 2, 2014 February 3, 2013
     
    Food and beverage revenues $ 310,111 48.8 % $ 298,421 49.1 %
    Amusement and other revenues   325,468 51.2 %   309,646   50.9 %
    Total revenues 635,579 100.0 % 608,067 100.0 %
     
    Cost of products 125,014 19.7 % 119,117 19.6 %
    Store operating expenses 349,709 55.0 % 338,363 55.6 %
    General and administrative expenses 36,440 5.8 % 40,356 6.7 %
    Depreciation and amortization expense 66,337 10.4 % 63,457 10.4 %
    Pre-opening costs   7,040 1.1 %   3,060   0.5 %
    Total operating costs 584,540 92.0 % 564,353 92.8 %
     
    Operating income 51,039 8.0 % 43,714 7.2 %
    Interest expense, net   31,311 4.9 %   33,075   5.4 %
     
    Income before provision (benefit) for income taxes 19,728 3.1 % 10,639 1.8 %
    Provision (benefit) for income taxes   7,232 1.1 %   (7,358 ) -1.2 %
    Net income $ 12,496 2.0 % $ 17,997   3.0 %
     
    Other information:
     
    Company-owned and operated stores open at end of period (1) 66 61
     

    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 2, 2014 February 3, 2013
     
    Total net income $ 12,496 $ 17,997
    Add back: Interest expense, net 31,311 33,075
    Provision (benefit) for income taxes 7,232 (7,358 )
    Depreciation and amortization   66,337   63,457  
    EBITDA 117,376 107,171
    Add back: Loss on asset disposal 2,631 2,640
    Share-based compensation 1,207 1,099
    Currency transaction loss (gain) 622 (13 )
    Pre-opening costs 7,040 3,060
    Reimbursement of affiliate expenses 722 799
    Deferred amusement revenue and ticket
    redemption liability adjustments 4,936 2,470
    Transaction and other costs   256   3,252  
    Adjusted EBITDA (2) $ 134,790 $ 120,478  
     

    NOTES

    (1) The store count excludes one franchise location in Canada that ceased operations on May 31, 2013. One location in Dallas, Texas, which was permanently closed on December 17, 2012, was excluded from our store count for fiscal 2012.

    (2) EBITDA, a non-GAAP measure, is defined as net income (loss) before income tax provision (benefit), interest expense (net) and depreciation and amortization. Adjusted EBITDA, also a non-GAAP measure, is defined as EBITDA plus (gain) loss on asset disposal, share-based compensation expense, pre-opening costs, reimbursement of affiliate expenses, and other non-cash or non-recurring charges. The company believes that EBITDA and Adjusted EBITDA (collectively, “EBITDA – Based Measures”) provide useful information to debt holders regarding the Company’s operating performance and its capacity to incur and service debt and fund capital expenditures. The Company believes that the EBITDA – Based Measures are used by many investors, analysts and rating agencies as a measure of performance. In addition, Adjusted EBITDA is approximately equal to “Consolidated EBITDA” as defined in our senior secured credit facility and indentures relating to the Company’s senior notes. Neither of the EBITDA – Based Measures are defined by GAAP and neither should be considered in isolation or as an alternative to other financial data prepared in accordance with GAAP or as an indicator of the Company’s operating performance. EBITDA and Adjusted EBITDA as defined in this release may differ from similarly titled measures presented by other companies.



    Logos, product and company names mentioned are the property of their respective owners.

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