Dave & Buster's, Inc. Announces Second Quarter 2013 Financial Results

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Dave & Buster's, Inc. Announces Second Quarter 2013 Financial Results

- Adjusted EBITDA Increases 19.3% to $31.9 million -

DALLAS--(BUSINESS WIRE)-- Dave & Buster's, Inc., a leading operator of high volume entertainment/dining complexes, today announced financial results for its second quarter of 2013 which ended on August 4, 2013.


Highlights from the second quarter 2013 compared to the second quarter 2012 include:

  • Total revenues increased 3.9% to $153.7 million from $147.9 million.
  • Adjusted EBITDA* increased 19.3% to $31.9 million from $26.7 million. As a percentage of total revenues, Adjusted EBITDA increased approximately 270 basis points to 20.8%.

* 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 set new second quarter records for Adjusted EBITDA and Adjusted EBITDA margin through sales leverage and effective cost management at established stores while the returns at recently opened stores remain at or above the high end of our projections," said Steve King, Chief Executive Officer of Dave & Buster's, Inc. "We outperformed the competitive industry benchmark for comparable store sales, and in doing so, demonstrated the attractiveness of our venues even as customers appear to have reallocated their discretionary spending."

King continued, "Based upon our updated timetable we are raising our development range to between five and six stores this year. Our large-format Virginia Beach store opened during the second quarter and subsequent to the end of the quarter, we opened two smaller format locations, in Syracuse, New York and in Albany, New York. We have also completed the remodeling of seven stores with contemporary designs and improved sports viewing areas and believe these enhancements will resonate during football season and throughout the year. Beginning in the third quarter, we began utilizing 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."

Review of Second Quarter 2013 Operating Results

Total revenues increased 3.9% to $153.7 million in the second quarter of 2013 compared to $147.9 million in the second quarter of 2012. Across all stores, Food and Beverage revenues increased 1.3% and Amusements and Other revenues increased 6.3%. Due to the 53rd week in fiscal 2012, there is a one-week calendar shift in the comparison of the fiscal second quarter of 2013 to the fiscal second quarter of 2012. The Company estimates that this calendar shift, which resulted in one more high-volume "summer week" during the second quarter of 2013, positively impacted total revenues by $2.9 million.

Comparable store sales, which has been adjusted to reflect the one-week calendar shift, decreased 0.9% in the second quarter of 2013. The result was driven by a 1.2% decline in comparable walk-in sales and a 2.0% increase in comparable special events business sales. Non-comparable store revenues increased $4.2 million to $14.5 million during the second quarter of 2013.

Adjusted EBITDA increased 19.3% to $31.9 million in the second quarter of 2013 from $26.7 million in last year's second quarter. As a percentage of total revenues, Adjusted EBITDA increased approximately 270 basis points to 20.8%. Adjusting for the one-week calendar shift in the quarter, Adjusted EBITDA is estimated to have increased by 12.3%.

Development

The Company now anticipates adding five to six new stores in 2013 compared to previous guidance of four to six new stores. One new store opened late in the second quarter in Virginia Beach, VA, and two stores opened in the third quarter in Syracuse and Albany, New York, respectively. The remaining two to three stores are scheduled to open in the fourth quarter.

Total capital expenditures are now estimated at $97 million to $103 million versus previous guidance of $95 million to $105 million and include new store development, seven completed remodeling projects, new games and maintenance capital.

Conference Call

Management will hold a conference call to discuss these results today at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The conference call can be accessed over the phone by dialing 1-888-378-0320 or for international callers by dialing 1-719-325-2463. A replay will be available after the call for one year beginning at 1:00 p.m. Central Time (2:00 p.m. Eastern Time) and can be accessed by dialing 1-877-870-5176 or for international callers by dialing 1-858-384-5517; the passcode is 9017707.

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, Inc.

Founded in 1982 and headquartered in Dallas, Texas, Dave & Buster's is the premier national owner and operator of 64 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. For additional information on Dave & Buster's, please visit www.daveandbusters.com.

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.

DAVE & BUSTER'S, INC.

Condensed Consolidated Balance Sheets

(in thousands)

 
ASSETSAugust 4, 2013 February 3, 2013
(unaudited)(audited)
Current assets:
 
Cash and cash equivalents$55,322$36,117
Other current assets 45,555 55,701
 
Total current assets$100,877$91,818
 
Property and equipment, net353,799337,239
 
Intangible and other assets, net 374,866 375,496
 
Total assets$829,542$804,553
 
 
LIABILITIES AND STOCKHOLDER'S EQUITY
 
Total current liabilities$105,489$92,883
 
Other long-term liabilities107,251107,115
 
Long-term debt, less current liabilities, net unamortized discount342,952343,579
 
Stockholder's equity 273,850 260,976
 
Total liabilities and stockholder's equity$829,542$804,553
DAVE & BUSTER'S, INC.
Condensed Statements of Operations
(in thousands)
(unaudited)
   
13 Weeks Ended13 Weeks Ended
August 4, 2013July 29, 2012
 
Food and beverage revenues$72,36147.1%$71,43148.3%
Amusement and other revenues 81,36252.9% 76,510 51.7%
Total revenues153,723100.0%147,941100.0%
 
Cost of products30,17219.6%29,38819.9%
Store operating expenses85,68755.7%85,75657.9%
General and administrative expenses8,1985.3%8,8406.0%
Depreciation and amortization16,74010.9%15,03210.1%
Pre-opening costs 1,9701.3% 559 0.4%
Total operating expenses142,76792.8%139,57594.3%
 
Operating income10,9567.2%8,3665.7%
Interest expense, net 7,7245.0% 8,051 5.5%
 
Income before provision (benefit) for income taxes3,2322.2%3150.2%
Provision (benefit) for income taxes 8460.6% (372)-0.3%
Net income$2,3861.6%$687 0.5%
 
 
Other information:
Company-owned and operated stores open at end of period (1)6259
 
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:
 
13 Weeks Ended13 Weeks Ended
August 4, 2013July 29, 2012
 
Total net income$2,386$687
Add back: Interest expense, net7,7248,051
Provision (benefit) for income taxes846(372)
Depreciation and amortization 16,740 15,032 
EBITDA27,69623,398
Add back: Loss on asset disposal4341,603
Share-based compensation345212
Currency transaction loss9751
Pre-opening costs1,970559
Reimbursement of affiliate expenses.169173
Deferred amusement revenue and ticket
redemption liability adjustments1,144637
Transaction and other costs 51 101 
Adjusted EBITDA (2)$31,906$26,734 
DAVE & BUSTER'S, INC.
Condensed Statements of Operations
(in thousands)
(unaudited)
   
26 Weeks Ended26 Weeks Ended
August 4, 2013July 29, 2012
 
Food and beverage revenues$153,27247.6%$150,57548.4%
Amusement and other revenues 168,60652.4% 160,84051.6%
Total revenues321,878100.0%311,415100.0%
 
Cost of products62,53619.4%60,34219.4%
Store operating expenses171,30753.2%171,24755.0%
General and administrative expenses17,9225.6%17,8575.7%
Depreciation and amortization33,65010.5%29,8279.6%
Pre-opening costs 2,8420.9% 7090.2%
Total operating expenses288,25789.6%279,98289.9%
 
Operating income33,62110.4%31,43310.1%
Interest expense, net 15,8664.9% 16,3935.3%
 
Income before provision for income taxes17,7555.5%15,0404.8%
Provision for income taxes 5,3401.7% 3,3691.1%
Net income$12,4153.8%$11,6713.7%
 
Other information:
Company-owned and operated stores open at end of period (1)6259
 
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:
 
26 Weeks Ended26 Weeks Ended
August 4, 2013July 29, 2012
 
Total net income$12,415$11,671
Add back: Interest expense, net15,86616,393
Provision for income taxes5,3403,369
Depreciation and amortization 33,650 29,827
EBITDA67,27161,260
Add back: Loss on asset disposal9381,939
Share-based compensation622504
Currency transaction loss1504
Pre-opening costs2,842709
Reimbursement of affiliate expenses.374374
Deferred amusement revenue and ticket
redemption liability adjustments2,4901,416
Transaction and other costs 151 202
Adjusted EBITDA (2)$74,838$66,408

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 pr

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