GlobeNewswire Inc | Sep 10, 2020 04:05PM EDT

September 10, 2020

DALLAS, Sept. 10, 2020 (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 second quarter 2020, which ended on August 2, 2020.

The Companys second quarter 2020 financial results were severely impacted by the effects of the COVID-19 pandemic when compared against the results of the second quarter of 2019. As of March 20, 2020, all of the Companys stores were temporarily closed in compliance with state-by-state COVID-19 mitigation mandates. The Company reopened 1 store on April 30, had re-opened 26 stores by the end of May, 66 stores by the end of June, and ended the second quarter with 84 re-opened stores in 27 states. As of September 9, the Company had reopened 89 stores, all operating under reduced hours and capacity limitations as dictated by each locality, new seating and game configurations to promote social distancing, a temporarily condensed food and beverage menu, and extensive incremental cleaning and sanitation procedures to protect the health and safety of guests and team members.

Key Second Quarter 2020 Highlights (all comparisons to second quarter 2019)

-- Revenues totaled $50.8 million, a decrease of 85 percent compared with $344.6 million -- Comparable store sales decreased 87% (68 stores in the comp store base vs. 99 comp stores in the second quarter of 2019) -- Net loss totaled $58.6 million, or $1.24 per share (47.1 million shares), compared with net income of $32.4 million, or $0.90 per diluted share (36.0 million diluted shares) -- EBITDA loss totaled $46.0 million compared with EBITDA of $79.0 million -- Adjusted EBITDA loss totaled $38.5 million compared with adjusted EBITDA of $86.0 million -- Ended the quarter with $224 million in cash and equivalents, including $110.6 million in proceeds from an offering of 10.6 million common shares at a price of $10.44 per share completed in May -- Cash burn rate (excluding effects of the May 2020 equity offering) averaged $3.3 million per week

Brian Jenkins, Dave & Busters Chief Executive Officer, said, I am extremely pleased with the agility, resilience and commitment demonstrated by our team members. We have made steady progress re-opening our stores while rapidly implementing numerous initiatives that are accelerating our business recovery and positioning us for long-term success.

By continuing to refine our lean operating model, we believe we have lowered our near-term enterprise EBITDA breakeven sales index benchmark to approximately 50 percent to 55 percent of prior year sales, compared with the 60 percent sales index we initially estimated in June.

Jenkins concluded, We remain confident in our brand, our people, and our plan, and optimistic about our ability to emerge in an even stronger competitive position to deliver fun to our guests and value to our shareholders.

Second Quarter 2020 Results(All comparisons are between second quarter 2020 and second quarter 2019, unless otherwise noted)

Total revenues decreased 85.2% to $50.8 million from $344.6 million. Sales at the Companys 68 re-opened comparable stores decreased 87% for the entire quarter, beginning the quarter down 99 percent and gradually improving to finish down 78 percent during the week ended August 2, 2020. During the two-week period ended September 6, 2020, the Companys 68 comparable store sales were down 71% percent. Non-comparable store second-quarter revenue totaled $10.4 million compared with $36.5 million. Second quarter 2019 comparable store sales decreased 1.8%.

Operating loss totaled $81.1 million, or (159.6)% of revenues, compared with operating income of $46.2 million, or 13.4% of revenues.

Net loss totaled $58.6 million, or $1.24 per share (47.1 million share base) compared with net income of $32.4 million, or $0.90 per diluted share (36.0 million diluted share base).

EBITDA loss totaled $46.0 million, or (90.4)% of revenues, compared with EBITDA of $79.0 million, or 22.9% of revenues.

Adjusted EBITDA loss totaled $38.5 million, or (75.7)% of revenues, compared with adjusted EBITDA of $86.0 million, or 25.0% or revenues.

Store operating loss before depreciation and amortization totaled $34.3 million, or (67.5)% of revenues, compared with store operating income before depreciation and amortization of $99.7 million, or 28.9% of revenues.

Balance Sheet, Liquidity, Cash Flow and Capital Allocation

The Company used approximately $43.0 million of cash during the second quarter, excluding $110.6 million raised through an equity offering of 10.6 million common shares at a price of $10.44 per share completed in May, ending the period with approximately $224 million in cash and equivalents and approximately $746.6 million outstanding under its credit facility.

In light of the continuing unprecedented degree of uncertainty, the Company is not in a position to provide fiscal 2020 financial guidance at this time.

Quarterly Report on Form 10-Q Available

The Companys Quarterly Report on Form 10-Q, will be available at www.sec.govand atthe Companys investor relations website, contains a thorough review of its financial results for the second quarter ended August 2, 2020.

Investor Conference Call and Webcast

Management will hold a conference call 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 (720) 452-9217or toll-free (888) 394-8218. 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 9125231.

Additionally, a live and archived webcast of the conference call will be available under the Investor Relations section atwww.daveandbusters.com.

About Dave & Busters Entertainment, Inc.

Founded in 1982 and headquartered in Dallas, Texas, Dave & Buster's Entertainment, Inc., is the owner and operator of 136 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 entres 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.

Forward-Looking Statements

The Company cautions that this release contains forward-looking statements, including, without limitation, statements relating to the impact on our business and operations of the global spread of the novel coronavirus outbreak. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by the uncertain and unprecedented impact of the coronavirus on our business and operations and the related impact on our liquidity needs; our ability to continue as a going concern; our ability to obtain waivers, and thereafter continue to satisfy covenant requirements, under our revolving credit facility; our ability to access other funding sources; the duration of government-mandated and voluntary shutdowns; the speed with which our stores safely can be reopened and the level of customer demand following reopening; the economic impact of the coronavirus and related disruptions on the communities we serve; our overall level of indebtedness; general business and economic conditions, including as a result of the coronavirus; 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, including as a result of the coronavirus; 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.

(Financial Tables Follow)

DAVE & BUSTER'S ENTERTAINMENT, INC.Condensed Consolidated Balance Sheets(in thousands)

ASSETS August 2, 2020 February 2, 2020 (unaudited) (audited)Current assets: Cash and cash $ 224,305 $ equivalents 24,655Other current assets 68,679 54,322 Total current assets 292,984 78,977 Property and equipment, 872,010 900,637net Operatinglease right 1,062,266 1,011,568of use assets Intangible and other 392,707 378,957assets, net Total assets $ 2,619,967 $ 2,370,139 LIABILITIESAND STOCKHOLDERS'EQUITY Total current $ 313,814 $ 290,865liabilities Operatinglease 1,285,533 1,222,054liabilities Other long-term 38,603 54,881liabilities Long-term debt, net 731,646 632,689 Stockholders' equity 250,371 169,650 Totalliabilitiesand $ 2,619,967 $ 2,370,139stockholders'equity

DAVE & BUSTER'S ENTERTAINMENT, INC.Consolidated Statements of Operations (Unaudited)(in thousands, except share and per share amounts)

13 Weeks Ended 13 Weeks Ended August 2, 2020 August 4, 2019 Food and beverage revenues $ 17,002 33.4% $ 137,921 40.0%Amusement and other 33,831 66.6% 206,678 60.0%revenuesTotal revenues 50,833 100.0% 344,599 100.0% Cost of food and beverage(as a percentage of food 4,659 27.4% 36,934 26.8%and beverage revenues)Cost of amusement and other(as a percentage of 4,025 11.9% 22,689 11.0%amusement and otherrevenues)Total cost of products 8,684 17.1% 59,623 17.3%Operating payroll and 13,756 27.1% 80,927 23.5%benefitsOther store operating 62,682 123.2% 104,376 30.3%expensesGeneral and administrative 9,278 18.3% 15,991 4.6%expensesDepreciation and 35,160 69.2% 32,745 9.5%amortization expensePre-opening costs 2,388 4.7% 4,723 1.4%Total operating costs 131,948 259.6% 298,385 86.6% Operating income (loss) (81,115 ) -159.6% 46,214 13.4% Interest expense, net 8,163 16.0% 4,605 1.3% Income (loss) beforeprovision (benefit) for (89,278 ) -175.6% 41,609 12.1%income taxesProvision (benefit) for (30,676 ) -60.3% 9,253 2.7%income taxesNet income (loss) $ (58,602 ) -115.3% $ 32,356 9.4% Net income (loss) per share:Basic $ (1.24 ) $ 0.91 Diluted $ (1.24 ) $ 0.90 Weighted average sharesused in per share calculations:Basic shares 47,111,763 35,407,965 Diluted shares 47,111,763 36,015,710 Other information: Company-owned stores at end 137 130 of periodStore operating weeks in 628 1,674 the period

The following table sets forth a reconciliation of net income to EBITDA andAdjusted EBITDA for the periods shown: 13 Weeks Ended 13 Weeks Ended August 2, 2020 August 4, 2019 Net income (loss) $ (58,602 ) -115.3% $ 32,356 9.4%Add back: Interest 8,163 4,605 expense, netProvision (benefit) for (30,676 ) 9,253 income taxesDepreciation and 35,160 32,745 amortization expenseEBITDA (45,955 ) -90.4% 78,959 22.9%Add back: Loss on asset 264 406 disposalImpairment of long-lived 2,178 - assetsShare-based compensation 2,734 1,907 Pre-opening costs 2,388 4,723 Other costs (88 ) (13 ) Adjusted EBITDA $ (38,479 ) -75.7% $ 85,982 25.0% The following table sets forth a reconciliation of operating income to storeoperating income before depreciation and amortization for the periods shown: 13 Weeks Ended 13 Weeks Ended August 2, 2020 August 4, 2019 Operating income (loss) $ (81,115 ) -159.6% $ 46,214 13.4%Add back: General and 9,278 15,991 administrative expensesDepreciation and 35,160 32,745 amortization expensePre-opening costs 2,388 4,723 Store operating income(loss) before depreciation $ (34,289 ) -67.5% $ 99,673 28.9%and amortization

DAVE & BUSTER'S ENTERTAINMENT, INC.Consolidated Statements of Operations (Unaudited)(in thousands, except share and per share amounts)

26 Weeks Ended 26 Weeks Ended August 2, 2020 August 4, 2019 Food andbeverage $ 80,922 38.4% $ 286,142 40.4%revenuesAmusement and 129,717 61.6% 422,039 59.6%other revenuesTotal revenues 210,639 100.0% 708,181 100.0% Cost of foodand beverage(as apercentage of 22,003 27.2% 75,688 26.5%food andbeveragerevenues)Cost ofamusement andother (as apercentage of 14,753 11.4% 45,660 10.8%amusement andotherrevenues)Total cost of 36,756 17.4% 121,348 17.1%productsOperatingpayroll and 57,493 27.3% 163,800 23.1%benefitsOther storeoperating 158,354 75.3% 210,621 29.8%expensesGeneral andadministrative 23,841 11.3% 32,837 4.6%expensesDepreciationand 70,512 33.5% 63,886 9.0%amortizationexpensePre-opening 6,211 2.9% 11,725 1.7%costsTotaloperating 353,167 167.7% 604,217 85.3%costs Operating (142,528 ) -67.7% 103,964 14.7%income (loss) Interest 14,278 6.7% 8,661 1.2%expense, net Income (loss)beforeprovision (156,806 ) -74.4% 95,303 13.5%(benefit) forincome taxesProvision(benefit) for (54,660 ) -25.9% 20,504 2.9%income taxesNet income $ (102,146 ) -48.5% $ 74,799 10.6%(loss) Net income(loss) per share:Basic $ (2.59 ) $ 2.07 Diluted $ (2.59 ) $ 2.03 Weightedaverage sharesused in per sharecalculations:Basic shares 39,470,874 36,117,815 Diluted shares 39,470,874 36,803,001 Other information:Company-ownedstores open at 137 130 end of periodStoreoperating 1,461 3,290 weeks in theperiod The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown: 26 Weeks Ended 26 Weeks Ended August 2, 2020 August 4, 2019 Net income $ (102,146 ) -48.5% $ 74,799 10.6%(loss)Add back:Interest 14,278 8,661 expense, netProvision(benefit) for (54,660 ) 20,504 income taxesDepreciationand 70,512 63,886 amortizationexpenseEBITDA (72,016 ) -34.2% 167,850 23.7%Add back:Loss on asset 417 826 disposalImpairment of long-lived 13,727 - assetsShare-based 2,345 3,732 compensationPre-opening 6,211 11,725 costsOther costs 33 59Adjusted $ (49,257 ) -23.4% $ 184,166 26.0%EBITDA The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown: 26 Weeks Ended 26 Weeks Ended August 2, 2020 August 4, 2019 Operating $ (142,528 ) -67.7% $ 103,964 14.7%income (loss)Add back:General and 23,841 32,837 administrativeexpensesDepreciationand 70,512 63,886 amortizationexpensePre-opening 6,211 11,725 costsStoreoperatingincome (loss)before $ (41,964 ) -19.9% $ 212,412 30.0%depreciationandamortization

For Investor Relations Inquiries:

Scott Bowman, CFODave & Busters Entertainment, Inc.972.813.1151scott.bowman@daveandbusters.com