Dave & Buster’s, Inc. Third Quarter 2013 Total Revenues Up 8.6%
Comparable store sales, adjusted to reflect the one-week calendar shift, increased 2.4%.
Dave & Buster's, Inc., a leading operator of high volume entertainment/dining complexes, today announced financial results for its third quarter of 2013, which ended on November 3, 2013.
Highlights from the third quarter 2013 compared to the third quarter 2012 include:
- Total revenues increased 8.6% to $142.3 million from $131.1 million.
- Comparable store sales, adjusted to reflect the one-week calendar shift, increased 2.4%.
- Adjusted EBITDA* increased 10% to $19.8 million from $18.0 million. As a percentage of total revenues, Adjusted EBITDA increased approximately 20 basis points to 13.9%.
* 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 achieved another record-setting quarter despite a calendar shift negatively impacting total revenues by $3.4 million and Adjusted EBITDA by $2.1 million. Our investment in national cable television to promote ourselves as the premier destination for great food, beverages, and gaming, as well as for the social experience that comes with watching live sports, proved successful in generating strong comparable store sales that continued to outpace the competitive industry benchmark. Our marketing efforts were further enhanced by improved sports viewing areas as well as other ambiance enhancements at many locations that are resonating with guests,” said Steve King, Chief Executive Officer of Dave & Buster’s, Inc.
King continued, “The 2012 and 2013 store classes have collectively proven to be effective contributors to our revenues and Adjusted EBITDA and are generating exceptional returns. Our most recent openings have gotten off to strong starts, and in doing so, demonstrate the underlying market demand for a differentiated entertainment and dining experience. We have now opened a total of five stores this year and we are guiding to between seven and eight new stores for 2014. The potential for the Dave and Buster’s brand is underpenetrated relative to our current footprint and we are addressing our development opportunity in an aggressive, yet disciplined manner.”
Review of Third Quarter 2013 Operating Results
Total revenues increased 8.6% to $142.3 million in the third quarter of 2013 compared to $131.1 million in the third quarter of 2012. Across all stores, Food and Beverage revenues increased 9.6% and Amusements and Other revenues increased 7.6%. Due to the 53rd week in fiscal 2012, there is a one-week calendar shift in the comparison of the fiscal third quarter of 2013 to the fiscal third quarter of 2012. The Company estimates that this calendar shift, which resulted in one more low-volume “fall week” during the third quarter of 2013, negatively impacted total revenues by $3.4 million.
Comparable store sales, adjusted to reflect the one-week calendar shift, increased 2.4%. The growth was driven by a 2.1% increase in comparable walk-in sales and a 4.6% increase in comparable special events business sales. Non-comparable store revenues increased $12.3 million to $21.8 million during the third quarter of 2013.
Adjusted EBITDA increased 10% to $19.8 million in the third quarter of 2013 from $18.0 million in last year’s third quarter. As a percentage of total revenues, Adjusted EBITDA increased approximately 20 basis points to 13.9%. Adjusting for the one-week calendar shift in the quarter, Adjusted EBITDA is estimated to have increased by 24.4%.
Development
The Company expects to add a total of five new stores in 2013 of which three were open as of the end of the third quarter. During the third quarter, two stores opened in Syracuse and Albany, New York, respectively. Subsequent to the end of the third quarter, the Company opened stores in Cary, North Carolina and in Livonia, Michigan.
Total capital expenditures for 2013 are now estimated at between $105 million and $110 million and include development costs for 2013 and 2014 store openings, seven interior remodeling projects and several exterior remodeling projects that have already been completed, along with new games and maintenance capital.
For 2014, the Company is providing preliminary development guidance of seven to eight new stores.
About Dave & Buster’s, Inc.
Founded in 1982 and headquartered in Dallas, Texas, Dave & Buster’s is the premier national owner and operator of 66 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) | |||||||
| ASSETS | November 3, 2013 | February 3, 2013 | |||||
| (unaudited) | (audited) | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 45,368 | $ | 36,117 | |||
| Other current assets | 47,892 | 55,701 | |||||
| Total current assets | $ | 93,260 | $ | 91,818 | |||
| Property and equipment, net | 368,507 | 337,239 | |||||
| Intangible and other assets, net | 373,740 | 375,496 | |||||
| Total assets | $ | 835,507 | $ | 804,553 | |||
| LIABILITIES AND STOCKHOLDER'S EQUITY | |||||||
| Total current liabilities | $ | 117,662 | $ | 92,883 | |||
| Other long-term liabilities | 107,826 | 107,115 | |||||
| Long-term debt, less current liabilities, net unamortized discount | 342,638 | 343,579 | |||||
| Stockholder's equity | 267,381 | 260,976 | |||||
Total liabilities and stockholder's equity | $ | 835,507 | $ | 804,553 | |||
| DAVE & BUSTER'S, INC. | ||||||||||||||||
| Condensed Statements of Operations | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| 13 Weeks Ended | 13 Weeks Ended | |||||||||||||||
| November 3, 2013 | October 28, 2012 | |||||||||||||||
| Food and beverage revenues | $ | 69,236 | 48.6 | % | $ | 63,159 | 48.2 | % | ||||||||
| Amusement and other revenues | 73,094 | 51.4 | % | 67,907 | 51.8 | % | ||||||||||
Total revenues | 142,330 | 100.0 | % | 131,066 | 100.0 | % | ||||||||||
| Cost of products | 28,707 | 20.2 | % | 26,221 | 20.0 | % | ||||||||||
| Store operating expenses | 87,516 | 61.5 | % | 78,330 | 59.7 | % | ||||||||||
| General and administrative expenses | 8,983 | 6.3 | % | 12,242 | 9.3 | % | ||||||||||
| Depreciation and amortization expense | 15,683 | 11.0 | % | 15,746 | 12.0 | % | ||||||||||
| Pre-opening costs | 2,333 | 1.6 | % | 1,089 | 0.8 | % | ||||||||||
| Total operating costs | 143,222 | 100.6 | % | 133,628 | 101.8 | % | ||||||||||
| Operating loss | (892 | ) | -0.6 | % | (2,562 | ) | -1.8 | % | ||||||||
| Interest expense, net | 7,787 | 5.5 | % | 7,979 | 6.1 | % | ||||||||||
| Loss before benefit for income taxes | (8,679 | ) | -6.1 | % | (10,541 | ) | -7.9 | % | ||||||||
| Benefit for income taxes | (1,936 | ) | -1.4 | % | (8,920 | ) | -6.8 | % | ||||||||
| Net loss | $ | (6,743 | ) | -4.7 | % | $ | (1,621 | ) | -1.1 | % | ||||||
| Other information: | ||||||||||||||||
| Company-owned and operated stores open at end of period (1) | 64 | 60 | ||||||||||||||
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 | ||||||||
| November 3, 2013 | October 28, 2012 | ||||||||
| Total net loss | $ | (6,743 | ) | $ | (1,621 | ) | |||
| Add back: Interest expense, net | 7,787 | 7,979 | |||||||
| Benefit for income taxes | (1,936 | ) | (8,920 | ) | |||||
| Depreciation and amortization | 15,683 | 15,746 | |||||||
| EBITDA | 14,791 | 13,184 | |||||||
| Add back: Loss on asset disposal | 1,245 | 13 | |||||||
| Share-based compensation | 286 | 362 | |||||||
| Currency transaction loss (gain) | 34 | (17 | ) | ||||||
| Pre-opening costs | 2,333 | 1,089 | |||||||
| Reimbursement of affiliate expenses. | 178 | 481 | |||||||
Deferred amusement revenue and ticket redemption liability adjustments | 881 | (134 | ) | ||||||
| Transaction and other costs | 26 | 2,999 | |||||||
| Adjusted EBITDA (2) | $ | 19,774 | $ | 17,977 | |||||
| DAVE & BUSTER'S, INC. | |||||||||||||||
| Condensed Statements of Operations | |||||||||||||||
| (in thousands) | |||||||||||||||
| (unaudited) | |||||||||||||||
| 39 Weeks Ended | 39 Weeks Ended | ||||||||||||||
| November 3, 2013 | October 28, 2012 | ||||||||||||||
| Food and beverage revenues | $ | 222,508 | 47.9 | % | $ | 213,734 | 48.3 | % | |||||||
| Amusement and other revenues | 241,700 | 52.1 | % | 228,747 | 51.7 | % | |||||||||
| Total revenues | 464,208 | 100.0 | % | 442,481 | 100.0 | % | |||||||||
| Cost of products | 91,243 | 19.7 | % | 86,563 | 19.6 | % | |||||||||
| Store operating expenses | 258,823 | 55.7 | % | 249,577 | 56.4 | % | |||||||||
| General and administrative expenses | 26,905 | 5.8 | % | 30,099 | 6.8 | % | |||||||||
| Depreciation and amortization expense | 49,333 | 10.6 | % | 45,573 | 10.3 | % | |||||||||
| Pre-opening costs | 5,175 | 1.1 | % | 1,798 | 0.4 | % | |||||||||
| Total operating costs | 431,479 | 92.9 | % | 413,610 | 93.5 | % | |||||||||
| Operating income | 32,729 | 7.1 | % | 28,871 | 6.5 | % | |||||||||
| Interest expense, net | 23,653 | 5.1 | % | 24,372 | 5.5 | % | |||||||||
| Income before provision (benefit) for income taxes | 9,076 | 2.0 | % | 4,499 | 1.0 | % | |||||||||
| Provision (benefit) for income taxes | 3,404 | 0.7 | % | (5,551 | ) | -1.3 | % | ||||||||
| Net income | $ | 5,672 | 1.3 | % | $ | 10,050 | 2.3 | % | |||||||
| Other information: | |||||||||||||||
| Company-owned and operated stores open at end of period (1) | 64 | 60 | |||||||||||||
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 | |||||||
| November 3, 2013 | October 28, 2012 | |||||||
| Total net income | $ | 5,672 | $ | 10,050 | ||||
| Add back: Interest expense, net | 23,653 | 24,372 | ||||||
| Provision (benefit) for income taxes. | 3,404 | (5,551 | ) | |||||
| Depreciation and amortization | 49,333 | 45,573 | ||||||
| EBITDA | 82,062 | 74,444 | ||||||
| Add back: Loss on asset disposal | 2,183 | 1,952 | ||||||
| Share-based compensation | 908 | 866 | ||||||
| Currency transaction loss (gain) | 184 | (13 | ) | |||||
| Pre-opening costs | 5,175 | 1,798 | ||||||
| Reimbursement of affiliate expenses. | 552 | 855 | ||||||
Deferred amusement revenue and ticket redemption liability adjustments | 3,371 | 1,282 | ||||||
| Transaction and other costs | 177 | 3,201 | ||||||
| Adjusted EBITDA (2) | $ | 94,612 | $ | 84,385 | ||||
NOTES
(1) The store count excludes one franchise location in Canada, that ceased operations on May 31, 2013. Our location in Dallas, Texas, which was permanently closed on December 17, 2012, was included in 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 is 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.
