Dave & Buster’s Reports Fourth Quarter 2021 and Full-Year Financial Results; Company Provides First Quarter FY 2022 Business Update and Outlook
Dallas, TX — Dave & Buster’s Entertainment, Inc. (PLAY), (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 and fiscal year ended January 30, 2022.
As of January 30, 2022, all of the Company’s 142 stores in the United States and Puerto Rico were open, including 1 new store opened during the quarter. The Company’s two Canadian stores were required by provincial mandate to temporarily close in early January. Both Canadian stores reopened in early Fiscal 2022.
Key Fourth Quarter 2021 Highlights
- Revenue decreased by 1.2% from the fourth quarter of 2019 to $343.1 million compared with $116.8 million in the fourth quarter of 2020 and $347.2 million in the fourth quarter of 2019
- Comparable store sales declined 2.6% compared with the same period in 2019 excluding 14 stores located in markets that had vaccine mandates during the quarter. Including all stores, comparable store sales decreased 6.8% compared with the same period in 2019
- Net income totaled $25.7 million, or $0.52 per diluted share, compared with net loss of $56.8 million, or $(1.19) per share in the fourth quarter of 2020 and net income of $25.0 million, or $0.80 per diluted share in the fourth quarter of 2019
- Adjusted EBITDA increased 12.7% from the fourth quarter of 2019 to $87.7 million, or 25.5% of revenue, compared with Adjusted EBITDA loss of $16.0 million in the fourth quarter of 2020 and Adjusted EBITDA of $77.8 million, or 22.4% of revenue in the fourth quarter of 2019
- During the fourth quarter, the Company redeemed $55 million of 7.625% senior secured notes at 103% of principal, saving approximately $4.2 million in annualized interest. The Company’s net debt leverage ratio was approximately 1.2x as of January 30, 2022
Key Fiscal Year 2021 Highlights
- Revenue decreased by 3.7% from fiscal year 2019 to $1.30 billion compared with $436.5 million in fiscal year 2020 and $1.35 billion in fiscal year 2019
- Overall comparable store sales decreased 10.6% compared with the same period in 2019
- Net income totaled $108.6 million, or $2.21 per diluted share, compared with net loss of $207.0 million, or $(4.75) per share in fiscal year 2020 and net income of $100.3 million, or $2.94 per diluted share in fiscal year 2019
- Adjusted EBITDA increased by 14.1% from fiscal year 2019 to $351.7 million, or 27.0% of revenue, compared with Adjusted EBITDA loss of $81.3 million in fiscal year 2020 and Adjusted EBITDA of $308.2 million, or 22.8% of revenue in fiscal year 2019
“We are pleased to report strong fourth quarter and fiscal year financial results,” said Kevin Sheehan, Dave & Buster’s Board Chair and Interim Chief Executive Officer. “Fiscal 2021 was a demanding year but our store management teams – and all of our team members rose to the challenge working tirelessly to return our stores to fully operational status. Despite continuing headwinds from COVID-19 (including vaccine requirements in certain markets) we saw strong sales across our stores in fiscal 2021. We also generated a double-digit Adjusted EBITDA increase in the year driven, in part, by our strong focus on process improvement and lean initiatives across our business. This Company has significant upside potential and with our continued focus on innovation, growth and value creation, we are driving toward unlocking that value. We are optimistic about the future and look forward to sharing our ongoing progress with everyone.”
Fourth Quarter 2021 Results
Total revenue of $343.1 million increased 193.7% from $116.8 million in the fourth quarter of 2020 and decreased 1.2% from $347.2 million in the fourth quarter of 2019. Comparable store sales decreased 6.8% compared with the fourth quarter of 2019 (the Company has chosen to continue reporting comparable store sales versus 2019 in order to provide a more meaningful comparison). Walk-in comparable store sales increased 2.1% while Special Event comparable store sales declined 58.0% compared with the same period in 2019. Non-comparable store revenue totaled $65.8 million compared with $27.3 million in the fourth quarter of 2020.
Operating income totaled $46.5 million, or 13.6% of revenue, compared with operating loss of $54.0 million, or (46.3)% of revenue in the fourth quarter of 2020 and operating income $37.6 million, or 10.8% of revenue in the fourth quarter of 2019.
Net income totaled $25.7 million, or $0.52 per diluted share, compared with net loss of $56.8 million, or $(1.19) per share in the fourth quarter of 2020 and net income of $25.0 million, or $0.80 per diluted share in the fourth quarter of 2019.
Adjusted EBITDA totaled a record $87.7 million, or 25.5% of revenue, compared with Adjusted EBITDA loss of $16.0 million, or (13.7)% of revenue in the fourth quarter of 2020 and Adjusted EBITDA of $77.8 million, or 22.4% of revenue in the fourth quarter of 2019.
Store operating income before depreciation and amortization totaled $101.1 million, or 29.5% of revenue, compared with store operating loss before depreciation and amortization of $6.0 million, or (5.2)% of revenue in the fourth quarter of 2020 and store operating income before depreciation and amortization of $96.3 million, or 27.7% of revenue in the fourth quarter of 2019.
Fiscal Year 2021 Results
Total revenue of $1.30 billion increased 198.7% from $436.5 million in fiscal year 2020 and decreased 3.7% from $1.35 billion in fiscal year 2019. Comparable store sales decreased 10.6% compared with fiscal year 2019 (the Company has chosen to continue reporting comparable store sales versus 2019 in order to provide a more meaningful comparison). Walk-in comparable store sales declined 3.6% while Special Event comparable store sales declined 71.6% compared to 2019. Non-comparable store revenue totaled $250.3 million compared with $83.2 million in fiscal year 2020.
Operating income totaled $187.2 million, or 14.4% of revenue, compared with operating loss of $252.6 million, or (57.9)% of revenue in fiscal year 2020 and operating income $148.1 million, or 10.9% of revenue in fiscal year 2019.
Net income totaled $108.6 million, or $2.21 per diluted share, compared with net loss of $207.0 million, or $(4.75) per share in fiscal year 2020 and net income of $100.3 million, or $2.94 per diluted share in fiscal year 2019.
Adjusted EBITDA totaled $351.7 million, or 27.0% of revenue, compared with Adjusted EBITDA loss of $81.3 million, or (18.6)% of revenue in fiscal year 2020 and Adjusted EBITDA of $308.2 million, or 22.8% of revenue in fiscal year 2019.
Store operating income before depreciation and amortization totaled $409.2 million, or 31.4% of revenue, compared with store operating loss before depreciation and amortization of $55.3 million, or (12.7)% of revenue in fiscal year 2020 and store operating income before depreciation and amortization of $369.0 million, or 27.2% of revenue in fiscal year 2019.
Balance Sheet, Liquidity and Cash Flow
The Company generated approximately $84.6 million in operating cash flow during the fourth quarter, ending the quarter with $25.9 million in cash and approximately $492.5 million of availability under its $500 million revolving credit facility, net $7.5 million in letters of credit.
Total long-term debt consisting of 7.625% senior secured notes maturing in 2025, totaled $440 million at January 30, 2022. As part of its ongoing capital allocation strategy, the Company redeemed $55 million of its senior secured notes during the fourth quarter utilizing a redemption option in the Company’s October 2020 indenture agreement, resulting in annualized interest savings of approximately $4.2 million.
The Company’s net debt leverage ratio was approximately 1.2x as of January 30, 2022.
First Quarter 2022 Business Update and Outlook
The Company’s business has strengthened through the first eight weeks of the first quarter, during which comparable store sales increased 5.4% compared with the same period in 2019. Walk-in comparable store sales increased 9.1% while Special Event comparable store sales declined 42.0% for the eight-week period compared with 2019.
Annual Report on Form 10-K Available
The Company’s Annual Report on Form 10-K, available at www.sec.gov and at the Company’s investor relations website, contains a thorough review of its financial results for the fourth quarter and fiscal year ended January 30, 2022.
Founded in 1982 and headquartered in Coppell, Texas, Dave & Buster’s Entertainment, Inc., is the owner and operator of 144 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 40 states, Puerto Rico, and Canada.
| DAVE & BUSTER’S ENTERTAINMENT, INC. | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (in thousands) | ||||||
| ASSETS | January 30, 2022 | January 31, 2021 | ||||
| (audited) | (audited) | |||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 25,910 | $ | 11,891 | ||
| Other current assets | 119,661 | 106,980 | ||||
| Total current assets | 145,571 | 118,871 | ||||
| Property and equipment, net | 778,597 | 815,027 | ||||
| Operating lease right of use assets | 1,037,197 | 1,037,569 | ||||
| Intangible and other assets, net | 384,425 | 381,357 | ||||
| Total assets | $ | 2,345,790 | $ | 2,352,824 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Total current liabilities | $ | 311,515 | $ | 271,636 | ||
| Operating lease liabilities | 1,277,539 | 1,267,791 | ||||
| Other long-term liabilities | 49,881 | 63,777 | ||||
| Long-term debt, net | 431,395 | 596,388 | ||||
| Stockholders’ equity | 275,460 | 153,232 | ||||
| Total liabilities and stockholders’ equity | $ | 2,345,790 | $ | 2,352,824 | ||
| DAVE & BUSTER’S ENTERTAINMENT, INC. | |||||||||||||||||||||
| Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||||
| (in thousands, except share and per share amounts) | |||||||||||||||||||||
| 13 Weeks Ended | 13 Weeks Ended | 13 Weeks Ended | |||||||||||||||||||
| January 30, 2022 | January 31, 2021 | February 2, 2020 | |||||||||||||||||||
| Food and beverage revenues | $ | 120,126 | 35.0 | % | $ | 40,233 | 34.4 | % | $ | 152,797 | 44.0 | % | |||||||||
| Amusement and other revenues | 222,976 | 65.0 | % | 76,588 | 65.6 | % | 194,361 | 56.0 | % | ||||||||||||
| Total revenues | 343,102 | 100.0 | % | 116,821 | 100.0 | % | 347,158 | 100.0 | % | ||||||||||||
| Cost of food and beverage (as a percentage of food and beverage revenues) | 32,757 | 27.3 | % | 12,540 | 31.2 | % | 39,124 | 25.6 | % | ||||||||||||
| Cost of amusement and other (as a percentage of amusement and other revenues) | 22,119 | 9.9 | % | 7,701 | 10.1 | % | 20,659 | 10.6 | % | ||||||||||||
| Total cost of products | 54,876 | 16.0 | % | 20,241 | 17.3 | % | 59,783 | 17.2 | % | ||||||||||||
| Operating payroll and benefits | 77,366 | 22.5 | % | 32,278 | 27.6 | % | 83,005 | 23.9 | % | ||||||||||||
| Other store operating expenses | 109,778 | 32.0 | % | 70,327 | 60.3 | % | 108,097 | 31.2 | % | ||||||||||||
| General and administrative expenses | 17,836 | 5.2 | % | 11,628 | 10.0 | % | 20,422 | 5.9 | % | ||||||||||||
| Depreciation and amortization expense | 33,974 | 9.9 | % | 33,893 | 29.0 | % | 35,234 | 10.1 | % | ||||||||||||
| Pre-opening costs | 2,723 | 0.8 | % | 2,495 | 2.1 | % | 3,001 | 0.9 | % | ||||||||||||
| Total operating costs | 296,553 | 86.4 | % | 170,862 | 146.3 | % | 309,542 | 89.2 | % | ||||||||||||
| Operating income (loss) | 46,549 | 13.6 | % | (54,041 | ) | -46.3 | % | 37,616 | 10.8 | % | |||||||||||
| Interest expense, net | 11,939 | 3.5 | % | 14,399 | 12.3 | % | 6,166 | 1.7 | % | ||||||||||||
| Loss on debt extinguishment / refinancing | 2,788 | 0.8 | % | – | 0.0 | % | – | 0.0 | % | ||||||||||||
| Income (loss) before provision (benefit) for income taxes | 31,822 | 9.3 | % | (68,440 | ) | -58.6 | % | 31,450 | 9.1 | % | |||||||||||
| Provision (benefit) for income taxes | 6,172 | 1.8 | % | (11,655 | ) | -10.0 | % | 6,468 | 1.9 | % | |||||||||||
| Net income (loss) | $ | 25,650 | 7.5 | % | $ | (56,785 | ) | -48.6 | % | $ | 24,982 | 7.2 | % | ||||||||
| Net income (loss) per share: | |||||||||||||||||||||
| Basic | $ | 0.53 | $ | (1.19 | ) | $ | 0.82 | ||||||||||||||
| Diluted | $ | 0.52 | $ | (1.19 | ) | $ | 0.80 | ||||||||||||||
| Weighted average shares used in per share calculations: | |||||||||||||||||||||
| Basic shares | 48,416,687 | 47,644,062 | 30,584,360 | ||||||||||||||||||
| Diluted shares | 49,268,800 | 47,644,062 | 31,158,919 | ||||||||||||||||||
| Other information: | |||||||||||||||||||||
| Company-owned stores at end of period | 144 | 140 | 136 | ||||||||||||||||||
| Store operating weeks in the period | 1,857 | 1,240 | 1,757 | ||||||||||||||||||
| Total revenue per store operating weeks in the period | $ | 185 | $ | 94 | $ | 198 | |||||||||||||||
| 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 | 13 Weeks Ended | |||||||||||||||||||
| January 30, 2022 | January 31, 2021 | February 2, 2020 | |||||||||||||||||||
| Net income (loss) | $ | 25,650 | 7.5 | % | $ | (56,785 | ) | -48.6 | % | $ | 24,982 | 7.2 | % | ||||||||
| Add back: Interest expense, net | 11,939 | 14,399 | 6,166 | ||||||||||||||||||
| Loss on debt extinguishment / refinancing | 2,788 | – | – | ||||||||||||||||||
| Provision (benefit) for income taxes | 6,172 | (11,655 | ) | 6,468 | |||||||||||||||||
| Depreciation and amortization expense | 33,974 | 33,893 | 35,234 | ||||||||||||||||||
| EBITDA | 80,523 | 23.5 | % | (20,148 | ) | -17.2 | % | 72,850 | 21.0 | % | |||||||||||
| Add back: Loss on asset disposal | 758 | 36 | 529 | ||||||||||||||||||
| Impairment of long-lived assets and lease termination costs | 912 | – | – | ||||||||||||||||||
| Share-based compensation | 2,536 | 1,641 | 1,378 | ||||||||||||||||||
| Pre-opening costs | 2,723 | 2,495 | 3,001 | ||||||||||||||||||
| Severance and other costs | 207 | (69 | ) | 8 | |||||||||||||||||
| Adjusted EBITDA | $ | 87,659 | 25.5 | % | $ | (16,045 | ) | -13.7 | % | $ | 77,766 | 22.4 | % | ||||||||
| 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 | 13 Weeks Ended | |||||||||||||||||||
| January 30, 2022 | January 31, 2021 | February 2, 2020 | |||||||||||||||||||
| Operating income (loss) | $ | 46,549 | 13.6 | % | $ | (54,041 | ) | -46.3 | % | $ | 37,616 | 10.8 | % | ||||||||
| Add back: General and administrative expenses | 17,836 | 11,628 | 20,422 | ||||||||||||||||||
| Depreciation and amortization expense | 33,974 | 33,893 | 35,234 | ||||||||||||||||||
| Pre-opening costs | 2,723 | 2,495 | 3,001 | ||||||||||||||||||
| Store operating income (loss) before depreciation and amortization | $ | 101,082 | 29.5 | % | $ | (6,025 | ) | -5.2 | % | $ | 96,273 | 27.7 | % | ||||||||
| DAVE & BUSTER’S ENTERTAINMENT, INC. | |||||||||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||||||||
| (in thousands, except share and per share amounts) | |||||||||||||||||||||
| 52 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||
| January 30, 2022 | January 31, 2021 | February 2, 2020 | |||||||||||||||||||
| Food and beverage revenues | $ | 436,637 | 33.5 | % | $ | 159,501 | 36.5 | % | $ | 563,576 | 41.6 | % | |||||||||
| Amusement and other revenues | 867,419 | 66.5 | % | 277,011 | 63.5 | % | 791,115 | 58.4 | % | ||||||||||||
| Total revenues | 1,304,056 | 100.0 | % | 436,512 | 100.0 | % | 1,354,691 | 100.0 | % | ||||||||||||
| Cost of food and beverage (as a percentage of food and beverage revenues) | 119,123 | 27.3 | % | 45,207 | 28.3 | % | 148,196 | 26.3 | % | ||||||||||||
| Cost of amusement and other (as a percentage of amusement and other revenues) | 85,848 | 9.9 | % | 29,698 | 10.7 | % | 85,115 | 10.8 | % | ||||||||||||
| Total cost of products | 204,971 | 15.7 | % | 74,905 | 17.2 | % | 233,311 | 17.2 | % | ||||||||||||
| Operating payroll and benefits | 287,263 | 22.0 | % | 117,475 | 26.9 | % | 322,970 | 23.8 | % | ||||||||||||
| Other store operating expenses | 402,661 | 30.9 | % | 299,464 | 68.6 | % | 429,431 | 31.8 | % | ||||||||||||
| General and administrative expenses | 75,501 | 5.8 | % | 47,215 | 10.8 | % | 69,469 | 5.1 | % | ||||||||||||
| Depreciation and amortization expense | 138,329 | 10.6 | % | 138,789 | 31.8 | % | 132,460 | 9.8 | % | ||||||||||||
| Pre-opening costs | 8,150 | 0.6 | % | 11,276 | 2.6 | % | 18,971 | 1.4 | % | ||||||||||||
| Total operating costs | 1,116,875 | 85.6 | % | 689,124 | 157.9 | % | 1,206,612 | 89.1 | % | ||||||||||||
| Operating income (loss) | 187,181 | 14.4 | % | (252,612 | ) | -57.9 | % | 148,079 | 10.9 | % | |||||||||||
| Interest expense, net | 53,910 | 4.2 | % | 36,890 | 8.4 | % | 20,937 | 1.5 | % | ||||||||||||
| Loss on debt extinguishment / refinancing | 5,617 | 0.4 | % | 904 | 0.2 | % | – | 0.0 | % | ||||||||||||
| Income (loss) before provision (benefit) for income taxes | 127,654 | 9.8 | % | (290,406 | ) | -66.5 | % | 127,142 | 9.4 | % | |||||||||||
| Provision (benefit) for income taxes | 19,014 | 1.5 | % | (83,432 | ) | -19.1 | % | 26,879 | 2.0 | % | |||||||||||
| Net income (loss) | $ | 108,640 | 8.3 | % | $ | (206,974 | ) | -47.4 | % | $ | 100,263 | 7.4 | % | ||||||||
| Net income (loss) per share: | |||||||||||||||||||||
| Basic | $ | 2.26 | $ | (4.75 | ) | $ | 3.00 | ||||||||||||||
| Diluted | $ | 2.21 | $ | (4.75 | ) | $ | 2.94 | ||||||||||||||
| Weighted average shares used in per share calculations: | |||||||||||||||||||||
| Basic shares | 48,142,090 | 43,549,887 | 33,450,217 | ||||||||||||||||||
| Diluted shares | 49,263,720 | 43,549,887 | 34,099,378 | ||||||||||||||||||
| Other information: | |||||||||||||||||||||
| Company-owned stores at end of period | 144 | 140 | 136 | ||||||||||||||||||
| Store operating weeks in the period | 7,161 | 3,922 | 6,769 | ||||||||||||||||||
| Total revenue per store operating weeks in the period | $ | 182 | $ | 111 | $ | 200 | |||||||||||||||
| The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown: | |||||||||||||||||||||
| 52 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||
| January 30, 2022 | January 31, 2021 | February 2, 2020 | |||||||||||||||||||
| Net income (loss) | $ | 108,640 | 8.3 | % | $ | (206,974 | ) | -47.4 | % | $ | 100,263 | 7.4 | % | ||||||||
| Add back: Interest expense, net | 53,910 | 36,890 | 20,937 | ||||||||||||||||||
| Loss on debt extinguishment / refinancing | 5,617 | 904 | – | ||||||||||||||||||
| Provision (benefit) for income taxes | 19,014 | (83,432 | ) | 26,879 | |||||||||||||||||
| Depreciation and amortization expense | 138,329 | 138,789 | 132,460 | ||||||||||||||||||
| EBITDA | 325,510 | 25.0 | % | (113,823 | ) | -26.1 | % | 280,539 | 20.7 | % | |||||||||||
| Add back: Loss on asset disposal | 1,392 | 577 | 1,813 | ||||||||||||||||||
| Impairment of long-lived assets and lease termination costs | 912 | 13,727 | – | ||||||||||||||||||
| Share-based compensation | 12,472 | 6,985 | 6,857 | ||||||||||||||||||
| Pre-opening costs | 8,150 | 11,276 | 18,971 | ||||||||||||||||||
| Other costs | 3,289 | (15 | ) | 42 | |||||||||||||||||
| Adjusted EBITDA | $ | 351,725 | 27.0 | % | $ | (81,273 | ) | -18.6 | % | $ | 308,222 | 22.8 | % | ||||||||
| 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 | 52 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||
| January 30, 2022 | January 31, 2021 | February 2, 2020 | |||||||||||||||||||
| Operating income (loss) | $ | 187,181 | 14.4 | % | $ | (252,612 | ) | -57.9 | % | $ | 148,079 | 10.9 | % | ||||||||
| Add back: General and administrative expenses | 75,501 | 47,215 | 69,469 | ||||||||||||||||||
| Depreciation and amortization expense | 138,329 | 138,789 | 132,460 | ||||||||||||||||||
| Pre-opening costs | 8,150 | 11,276 | 18,971 | ||||||||||||||||||
| Store operating income (loss) before depreciation and amortization | $ | 409,161 | 31.4 | % | $ | (55,332 | ) | -12.7 | % | $ | 3 | ||||||||||
