GlobeNewswire Inc | Dec 7, 2021 04:15PM EST

December 07, 2021

DALLAS, Dec. 07, 2021 (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 quarterly revenue, net income, and Adjusted EBITDA for its third quarter of fiscal year 2021, which ended onOctober 31, 2021.

As ofOctober 31, all of the Companys 143 stores were open, including 1 new store opened during the quarter.

Key Third Quarter 2021 Highlights

-- Revenue increased 6.2% from the third quarter of 2019 to $318.0 million,compared with$109.1 millionin the third quarter of 2020 and$299.4 millionin the third quarter of 2019. -- Comparable store sales increased 1.1% compared with the same period in 2019 excluding 7 stores located in markets that had vaccine mandates during the quarter. Including all stores, comparable store sales decreased 0.4% compared with the same period in 2019. -- Net income totaled $10.6 million, or$0.21per diluted share, compared with net loss of$48.0 million, or$1.01per share in the third quarter of 2020 and net income of$0.5 million, or$0.02per diluted share in the third quarter of 2019. -- Adjusted EBITDA increased 47.4% from the third quarter of 2019 to $68.2 million, or 21.5% of revenue, compared with Adjusted EBITDA loss of$16.0 millionin the third quarter of 2020 and Adjusted EBITDA of$46.3 million, or 15.5% of revenue in the third quarter of 2019. -- Ended the quarter with$27 millionin cash and approximately$340 millionof liquidity available under the Companys$500 millionrevolving credit facility, net of a$150 millionminimum liquidity covenant and$10 millionin letters of credit. -- During the third quarter, the Company redeemed$55 millionof 7.625% senior secured notes at 103% of principal. Subsequently, in November 2021, the Company redeemed an additional $55 million of the 7.625% senior secured notes at 103%.

We are pleased to report strong third quarter financial results, said Kevin Sheehan, Dave & Busters Interim Chief Executive Officer. Since assuming the role, I have been impressed with our teams hard work and dedication to operating in this evolving environment. I am excited to be working with them as we look forward to more normalized operations across our stores. We have begun a new phase of innovation, growth and value creation with a focus on realizing the Companys significant upside potential. I am excited about the future and look forward to sharing our progress with all of our stakeholders.

Third Quarter 2021 Results

Total revenue of$318.0 millionincreased 191.6% from$109.1in the third quarter of 2020 and increased 6.2% from$299.4 millionin the third quarter of 2019. Comparable store sales increased 1.1% compared with the same period in 2019 excluding 7 stores located in markets that had vaccine mandates during the quarter. Including all stores, comparable store sales decreased 0.4% compared with the same period in 2019. Walk-in comparable store sales increased 6% while Special Event comparable store sales declined 64% compared with the same period in 2019. Non-comparable store revenue totaled$55.4 millioncompared with$20.1 millionin the third quarter of 2020.

Operating income totaled$24.5 million, or 7.7% of revenue, compared with operating loss of$56.0 million, or (51.4)% of revenue in the third quarter of 2020 and operating income$6.5 million, or 2.2% of revenue in the third quarter of 2019.

Net income totaled$10.6 million, or$0.21per diluted share, compared with net loss of$48.0 million, or$1.01per share in the third quarter of 2020 and net income of$0.5 million, or$0.02per diluted share in the third quarter of 2019.

Adjusted EBITDA increased 47.4% from the third quarter of 2019 to$68.2 million, or 21.5% of revenue, compared with Adjusted EBITDA loss of$16.0 million, or (14.6)% of revenue in the third quarter of 2020 and Adjusted EBITDA of$46.3 million, or 15.5% of revenue in the third quarter of 2019.

Store operating income before depreciation and amortization totaled$83.0 million, or 26.1% of revenue, compared with store operating loss before depreciation and amortization of$7.3 million, or (6.7)% of revenue in the third quarter of 2020 and$60.3 million, or 20.1% of revenue in the third quarter of 2019.

Balance Sheet, Liquidity and Cash Flow

The Company ended the quarter with$27.0 millionin cash and approximately$340 millionof availability under its$500 millionrevolving credit facility, net of a$150 millionminimum liquidity covenant and$10 millionin letters of credit.

Total long-term debt was $495 millionat October 31, 2021, consisting of 7.625% senior secured notes maturing in 2025. The Company redeemed $55 million, or 10%, of its senior secured notes during the third quarter utilizing a redemption option in the CompanysOctober 2020indenture agreement, resulting in annualized interest savings of approximately$4.2 million and $1.7 million in expense to redeem the notes. Subsequent to the end of the third quarter, the Company redeemed an additional $55 million at 103% of principal, resulting in an incremental annualized interest savings of approximately $4.2 million and $1.7 million in expense.

Share Repurchase Authorization

The Company announced today that its Board of Directors has approved a share repurchase program authorizing the Company to repurchase up to $100,000,000 of its common stock through the end of fiscal 2022. The program may be suspended or discontinued at any time.

Fourth Quarter Business Update and Outlook

The Companys business recovery has strengthened through the first five weeks of the fourth quarter, during which comparable store sales increased 3.5% compared with the same period in 2019. Walk-in comparable store sales increased 14% while Special Event comparable store sales declined 59% for the five-week period compared with 2019. The Company notes that fourth quarter revenue will be negatively impacted by both a lagging Special Events business relative to 2019, which typically carries a much higher penetration in the fourth quarter due to holiday parties, and from a calendar shift in its key holiday periods that will negatively impact revenue by approximately $9.5 million as both the Christmas and New Years holidays fall on a Friday/Saturday compared with Tuesday/Wednesday in 2019.

Based on current trends, the Company currently expects the following:

-- Fourth quarter comparable store sales to be slightly positive compared with the fourth quarter of 2019. Walk-in comparable store sales are expected to remain strong, while Special Events comparable store sales will be a temporary headwind and will have a larger impact on total comparable store sales due to higher historical weightings in the fourth quarter. -- Fourth quarter Adjusted EBITDA margin to increase by approximately 200 bps compared with the fourth quarter of 2019. -- A total of four new store openings during fiscal year 2021 and the relocation of one existing location. -- Fiscal 2021 capital additions (net of tenant allowances) of approximately$100 million, with approximately 43% dedicated to new stores and improvements to existing stores, 14% for games, and 43% for infrastructure upgrades and replacements.

Quarterly Report on Form 10-Q Available

The Companys Quarterly Report on Form 10-Q, which will be available atwww.sec.govand at the Companys investor relations website, contains a thorough review of its financial results for the 13 and 39 weeks endedOctober 31, 2021.

Investor Conference Call and Webcast

Management will hold a conference call to report these results the same day 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) 543-0206 or toll-free (800) 458-4121. 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 8107981.Additionally, a live and archived webcast of the conference call will be available under the Investor Relations section atwww.daveandbusters.com.

About Dave & BustersEntertainment, Inc.

Founded in 1982 and headquartered inDallas, Texas, Dave & BustersEntertainment, Inc., is the owner and operator of 143 venues inNorth Americathat combine entertainment and dining and offer customers the opportunity to Eat Drink Play and Watch, all in one location. Dave & Busters 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 & Busters currently has stores in 40 states,Puerto Rico, andCanada.

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 and restrictions; 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 Companys 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 & Busters 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 October 31, 2021 January 31, 2021 (unaudited) (audited)Current assets: Cash and cash equivalents $ 27,005 $ 11,891Other current assets 119,379 106,980 Total current assets 146,384 118,871 Property and equipment, net 779,518 815,027 Operating lease right of use assets 1,038,269 1,037,569 Intangible and other assets, net 386,545 381,357 Total assets $ 2,350,716 $ 2,352,824 LIABILITIES AND STOCKHOLDERS' EQUITY Total current liabilities $ 290,678 $ 271,636 Operating lease liabilities 1,270,929 1,267,791 Other long-term liabilities 57,873 63,777 Long-term debt, net 484,677 596,388 Stockholders' equity 246,559 153,232 Total liabilities and stockholders' $ 2,350,716 $ 2,352,824equity

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 October 31, 2021 November 1, 2020 November 3, 2019 Food and beverage $ 107,747 33.9 % $ 38,346 35.2 % $ 124,637 41.6 % revenues Amusement and 210,229 66.1 % 70,706 64.8 % 174,715 58.4 % other revenues Total revenues 317,976 100.0 % 109,052 100.0 % 299,352 100.0 % Cost of food and beverage (as a percentage of 30,082 27.9 % 10,664 27.8 % 33,384 26.8 % food and beverage revenues Cost of amusement and other (as a 22,531 10.7 % 7,244 10.2 % 18,796 10.8 % percentage of amusement and other revenues Total cost of 52,613 16.5 % 17,908 16.4 % 52,180 17.4 % products Operating payroll 78,995 24.8 % 27,704 25.4 % 76,165 25.4 % and benefits Other store operating 103,322 32.5 % 70,783 64.9 % 110,713 37.1 % expenses General and administrative 22,104 7.0 % 11,746 10.8 % 16,210 5.4 % expenses Depreciation and amortization 34,381 10.8 % 34,384 31.5 % 33,340 11.1 % expense Pre-opening costs 2,092 0.7 % 2,570 2.4 % 4,245 1.4 % Total operating 293,507 92.3 % 165,095 151.4 % 292,853 97.8 % costs Operating 24,469 7.7 % (56,043 ) -51.4 % 6,499 2.2 % income (loss) Interest expense, 13,423 4.2 % 8,213 7.6 % 6,110 2.1 % net Loss on debt extinguishment / 2,829 0.9 % 904 0.8 % - 0.0 % refinancing Income (loss) before provision 8,217 2.6 % (65,160 ) -59.8 % 389 0.1 % (benefit) for income taxes Provision (benefit) for (2,368 ) -0.7 % (17,117 ) -15.7 % (93 ) -0.1 % income taxes Net income (loss) $ 10,585 3.3 % $ (48,043 ) -44.1 % $ 482 0.2 % Net income (loss) per share: Basic $ 0.22 $ (1.01 ) $ 0.02 Diluted $ 0.21 $ (1.01 ) $ 0.02 Weighted average shares used in per share calculations: Basic shares 48,277,358 47,613,741 30,980,878 Diluted shares 49,283,503 47,613,741 31,515,454 Other information: Company-owned stores at end of 143 137 134 period Store operating weeks in the 1,854 1,221 1,722 period Total revenue per store operating $ 172 $ 89 $ 174 weeks in the period 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 October 31, 2021 November 1, 2020 November 3, 2019 Net income $ 10,585 3.3 % $ (48,043 ) -44.1 % $ 482 0.2 % (loss) Add back: Interest expense, 13,423 8,213 6,110 net Loss on debt extinguishment 2,829 904 - / refinancing Provision (benefit) for (2,368 ) (17,117 ) (93 ) income taxes Depreciation and 34,381 34,384 33,340 amortization expense EBITDA 58,850 18.5 % (21,659 ) -19.9 % 39,839 13.3 % Add back: Loss on 377 124 458 asset disposal Impairment of long-lived assets and - - - lease termination costs Share-based 3,778 2,999 1,747 compensation Pre-opening 2,092 2,570 4,245 costs Severance and 3,112 (5 ) 1 other costs Adjusted EBITDA $ 68,209 21.5 % $ (15,971 ) -14.6 % $ 46,290 15.5 % 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 October 31, 2021 November 1, 2020 November 3, 2019 Operating income $ 24,469 7.7 % $ (56,043 ) -51.4 % $ 6,499 2.2 % (loss Add back: General and 22,104 11,746 16,210 administrative expenses Depreciation and 34,381 34,384 33,340 amortization expense Pre-opening 2,092 2,570 4,245 costs Store operating income (loss) before $ 83,046 26.1 % $ (7,343 ) -6.7 % $ 60,294 20.1 % depreciation and amortization

DAVE & BUSTER'S ENTERTAINMENT, INC. Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share amounts) 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended October 31, 2021 November 1, 2020 November 3, 2019 Food and beverage $ 316,511 32.9 % $ 119,268 37.3 % $ 410,779 40.8 % revenues Amusement and 644,443 67.1 % 200,423 62.7 % 596,754 59.2 % other revenues Total revenues 960,954 100.0 % 319,691 100.0 % 1,007,533 100.0 % Cost of food and beverage (as a percentage of 86,366 27.3 % 32,667 27.4 % 109,072 26.6 % food and beverage revenues) Cost of amusement and other (as a percentage of 63,729 9.9 % 21,997 11.0 % 64,456 10.8 % amusement and other revenues) Total cost of 150,095 15.6 % 54,664 17.1 % 173,528 17.2 % products Operating payroll 209,897 21.8 % 85,197 26.6 % 239,965 23.8 % and benefits Other store operating 292,883 30.5 % 229,137 71.8 % 321,334 31.9 % expenses General and administrative 57,665 6.0 % 35,587 11.1 % 49,047 4.9 % expenses Depreciation and amortization 104,355 10.9 % 104,896 32.8 % 97,226 9.6 % expense Pre-opening costs 5,427 0.6 % 8,781 2.7 % 15,970 1.6 % Total operating 820,322 85.4 % 518,262 162.1 % 897,070 89.0 % costs Operating 140,632 14.6 % (198,571 ) -62.1 % 110,463 11.0 % income (loss) Interest expense, 41,971 4.3 % 22,491 7.0 % 14,771 1.5 % net Loss on debt extinguishment / 2,829 0.3 % 904 0.3 % - 0.0 % refinancing Income (loss) before provision 95,832 10.0 % (221,966 ) -69.4 % 95,692 9.5 % (benefit) for income taxes Provision (benefit) for 12,842 1.4 % (71,777 ) -22.4 % 20,411 2.0 % income taxes Net income (loss) $ 82,990 8.6 % $ (150,189 ) -47.0 % $ 75,281 7.5 % Net income (loss) per share: Basic $ 1.73 $ (3.56 ) $ 2.19 Diluted $ 1.68 $ (3.56 ) $ 2.15 Weighted average shares used in per share calculations: Basic shares 48,050,558 42,185,163 34,405,503 Diluted shares 49,257,269 42,185,163 35,042,311 Other information: Company-owned stores at end of 143 137 134 period Store operating weeks in the 5,304 2,682 5,012 period Total revenue per store operating $ 181 $ 119 $ 201 weeks in the period 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 39 Weeks Ended October 31, 2021 November 1, 2020 November 3, 2019 Net income $ 82,990 8.6 % $ (150,189 ) -47.0 % $ 75,281 7.5 % (loss) Add back: Interest expense, 41,971 22,491 14,771 net Loss on debt extinguishment 2,829 904 - / refinancing Provision (benefit) for 12,842 (71,777 ) 20,411 income taxes Depreciation and 104,355 104,896 97,226 amortization expense EBITDA 244,987 25.5 % (93,675 ) -29.3 % 207,689 20.6 % Add back: Loss on 634 541 1,284 asset disposal Impairment of long-lived assets and - 13,727 - lease termination costs Share-based 9,936 5,344 5,479 compensation Pre-opening 5,427 8,781 15,970 costs Other costs 3,082 54 34 Adjusted EBITDA $ 264,066 27.5 % $ (65,228 ) -20.4 % $ 230,456 22.9 % The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown: 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended October 31, 2021 November 1, 2020 November 3, 2019 Operating income $ 140,632 14.6 % $ (198,571 ) -62.1 % $ 110,463 11.0 % (loss) Add back: General and 57,665 35,587 49,047 administrative expenses Depreciation and 104,355 104,896 97,226 amortization expense Pre-opening 5,427 8,781 15,970 costs Store operating income (loss) before $ 308,079 32.1 % $ (49,307 ) -15.4 % $ 272,706 27.1 % depreciation and amortization

For Investor Relations Inquiries:

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