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Dave & Buster's Entertainment Inc. 2016 Q1 Financial Results: Net Income Grows 59.5%, Adjusted EBITDA Is Up 28.4%

by Dave & Buster's Press Release
Posted On: 6/13/2016

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TAGS: Dave & Buster's Entertainment Inc., NASDAQ:PLAY, Dave & Buster's first quarter 2016, Dave & Buster's share repurchase, Steve King

PRESS RELEASE

Source: Dave & Buster's Entertainment Inc. | Released June 7, 2016

Board of Directors Authorizes $100 Million Share Repurchase Program

DALLAS, June 07, 2016 (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 first quarter 2016, which ended on May 1, 2016. The Company also raised its financial outlook for fiscal 2016 and announced that its Board of Directors has authorized a $100 million share repurchase program.

Key highlights from the first quarter 2016 compared to the first quarter 2015 include:

» Total revenues increased 17.7% to $262.0 million from $222.7 million.

» Comparable store sales increased 3.6% compared to a 9.9% increase.

» Opened three stores compared to two stores.

» Net income increased 59.5% to $31.2 million, or $0.72 per diluted share, compared to net income of $19.5 million, or $0.46 per diluted share.

» Adjusted EBITDA*, a non-GAAP measure, increased 28.4% to $79.5 million from $61.9 million. As a percentage of total revenues, Adjusted EBITDA increased approximately 250 basis points to 30.3%.

* A reconciliation of 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 are off to a great start in fiscal 2016 with results that surpassed our expectations and are pleased to already be raising our annual outlook. Our unique entertainment, dining, and sports viewing venues are demonstrating their broad-based appeal despite challenges affecting many of our casual dining peers and we are committed to keeping our brand fresh through a continuous stream of 'new news' to further differentiate ourselves," said Steve King, Chief Executive Officer.

"During the first quarter, our 18 non-comparable stores contributed an incremental $31.1 million to our top-line, and together with a 3.6% increase in comparable store sales, resulted in an acceleration of total revenue growth by 17.7% to $262 million. This was the largest number of non-comparable stores for any first quarter in Dave & Buster's history and reflects the growing impact of new store development on our overall financial performance. Our comparable store sales have now exceeded the competitive casual dining benchmark for 16 straight quarters and reached 13.5% on a two-year stacked basis. The continued shift in revenues to our higher-margin amusement category coupled with operating leverage enabled us to grow Adjusted EBITDA and Margins by 28.4% and 250 basis points, respectively. In doing so, we set new first quarter records for these metrics," King continued.

Review of First Quarter 2016 Operating Results

Total revenues increased 17.7% to $262.0 million in the first quarter 2016 from $222.7 million in the first quarter 2015. Food and Beverage revenues increased 13.1% to $117.1 million and Amusement and Other revenues increased 21.6% to $144.9 million. Food and Beverage represented 44.7% of total revenues while Amusements and Other represented 55.3% of total revenues in the first quarter 2016. In last year's first quarter, Food and Beverage represented 46.5% of total revenues while Amusements and Other represented 53.5% of total revenues.

Comparable store sales increased 3.6% in the first quarter 2016 compared to a 9.9% increase in the same period last year. Our comparable store sales growth was driven by a 4.0% increase in walk-in sales partially offset by a 0.7% decrease in special events sales. Non-comparable store revenues increased by $31.1 million or 181.6% in the first quarter 2016 to $48.2 million.

Operating income increased to $51.2 million in the first quarter 2016 from $35.7 million in last year's first quarter. As a percentage of total revenues, operating income increased approximately 340 basis points to 19.5%.

Net income increased to $31.2 million, or $0.72 per diluted share (43.1 million diluted share base), in the first quarter 2016 compared to net income of $19.5 million, or $0.46 per diluted share (42.4 million diluted share base), in the same period last year.

Store EBITDA* increased 25.7% to $87.9 million in the first quarter 2016 from $69.9 million in last year's first quarter. As a percentage of total revenues, Store EBITDA increased approximately 220 basis points to 33.6%.

Adjusted EBITDA* increased 28.4% to $79.5 million in the first quarter 2016 from $61.9 million in the same period last year. As a percentage of total revenues, Adjusted EBITDA increased approximately 250 basis points to 30.3%.

Development

We opened stores in Rochester, New York; El Paso, Texas; and Capitol Heights, Maryland during the first quarter 2016. In the second quarter, we plan to open two stores in Florence, Kentucky and Little Rock, Arkansas, both representing new states for the brand.

In fiscal 2016, we intend to open a total of nine to ten new stores spanning the small and large store formats and currently have six stores under construction. Total capital additions (net of tenant improvement allowances and other landlord payments) are expected in the $123 million to $133 million range and include development costs for store openings, six remodeling and related projects, new games and maintenance capital.

Financial Outlook

We are raising our financial outlook for fiscal 2016, which ends on January 29, 2017, to the following:

» Total revenues of $983 million to $995 million (from $967 million to $987 million).

» Comparable store sales increase of 3.25% to 4.25% (from 2% to 4%).

» Adjusted EBITDA* of $254 million to $260 million (from $243 million to $251 million).

» Effective tax rate of approximately 36.5% to 37.5% (unchanged).

» Net income of $80 million to $85 million (from $74 million to $80 million).

» Diluted share count of 43.1 million to 43.2 million (from 43.3 million to 43.5 million).

Share Repurchase Program

Effective immediately, the Board of Directors approved the terms of a share repurchase program, under which Dave & Buster's is authorized to repurchase up to $100 million of its common shares through the end of fiscal 2018. The Company may repurchase shares on the open market, through privately negotiated transactions, and through trading plans designed to comply with Rule 10b5-1 of the Securities and Exchange Act of 1934. Purchases will be made at times and prices considered appropriate by management, subject to any applicable blackout periods. This authority will primarily be used to offset dilution caused by the issuance and exercise of stock options and other equity compensation. The share repurchase program may also be modified, suspended, or discontinued at any time.

"The new share repurchase program is a clear demonstration of our confidence in the Dave & Buster's brand and the financial flexibility afforded by our performance track record and capital structure. We are fortunate to be able to execute our development plan, deploy capital for other corporate purposes such as remodeling, new games and maintenance while simultaneously returning value to shareholders," King concluded.

A live and archived webcast of the conference call will be available at www.daveandbusters.com under the Investor Relations section. Click here to see this full release and condensed consolidated balance sheets.

ABOUT: Founded in 1982 and headquartered in Dallas, TX, Dave & Buster's Entertainment Inc., is the owner and operator of 84 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 "Fun American New Gourmet" entrées and appetizers, a full 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 30 states and Canada.


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