Dave Busters Q3 2015 Results Comparable Store Sales Rise 88

PRESS RELEASE

Key highlights from the third quarter 2015 compared to the third quarter 2014 include:

» Total revenues increased 17.9% to $192.8 million from $163.5 million.

»Comparable store sales increased 8.8% vs. an 8.7% increase in last year's third quarter.

» Opened one store and relocated one store in the third quarter 2015.

» Adjusted EBITDA*, a non-GAAP measure, increased 40.3% to $34.5 million from $24.6 million. As a percentage of total revenues, Adjusted EBITDA increased approximately 290 basis points to 17.9%.

» Net income of $4.6 million, or $0.11 per diluted share, compared to net loss of $4.6 million, or $(0.13) per share, in the third quarter 2014.

» Pro forma net income**, a non-GAAP measure, of $5.0 million, or $0.12 per diluted share, compared to pro forma net loss of $2.3 million, or $(0.06) per share, in the same period last year.

» Signed master development agreement for seven stores in the Middle East.

* 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.

** A reconciliation of Pro forma net income 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 slated to open eight to nine new stores this year, mostly in the large store format, and are projecting nine to ten store openings in 2016 across both store formats. Our long-term target for store growth remains roughly 10% and we foresee at least a 200-store opportunity in North America alone. We are also confident that our 'one of a kind' dining, entertainment, and sports viewing venues will resonate with guests outside of North America while adding yet another layer of growth to our business model. We are therefore forging ahead with international development through multi-store licensing and recently signed an agreement for seven stores in the Middle East over a seven-year period with an experienced retail and restaurant operator. We look forward to signing additional agreements across other geographies over time as well," King concluded.

Review of Third Quarter 2015 Operating Results

Total revenues increased 17.9% to $192.8 million from $163.5 million in the third quarter 2014. Across all stores, Food and Beverage revenues increased 14.9% to $89.8 million and Amusements and Other revenues increased 20.7% to $102.9 million. Food and Beverage represented 46.6% of total revenues while Amusements and Other represented 53.4% of total revenues in the third quarter 2015. In last year's third quarter, Food and Beverage represented 47.8% of total revenues while Amusements and Other represented 52.2% of total revenues.

Comparable store sales increased 8.8% in the third quarter 2015 compared to an 8.7% increase in the same period last year. Our comparable store sales growth was driven by a 9.4% increase in walk-in sales and a 3.9% increase in special events sales. Non-comparable store revenues increased by $16.8 million or 72.7% in the third quarter 2015 to $40.0 million.

Store-level EBITDA* increased 32.5% to $44.5 million in the third quarter 2015 from $33.6 million in last year's third quarter. As a percentage of total revenues, Store-level EBITDA increased approximately 250 basis points to 23.1%.

Adjusted EBITDA* increased 40.3% to $34.5 million in the third quarter 2015 from $24.6 million in the same period last year. As a percentage of total revenues, Adjusted EBITDA increased approximately 290 basis points to 17.9%.

Operating income increased to $9.5 million in the third quarter 2015 from $0.9 million in last year's third quarter. As a percentage of total revenues, operating income increased approximately 430 basis points to 4.9%.

Net income increased to $4.6 million, or $0.11 per diluted share (42.9 million diluted share base), in the third quarter 2015 compared to net loss of $4.6 million, or $(0.13) per share (34.9 million share base), in the same period last year. Pro forma net income, a non-GAAP measure, was $5.0 million, or $0.12 per diluted share, compared to pro forma net loss of $2.3 million, or $(0.06) per share in the same period last year.

Development

In 2015, we intend to open a total of eight to nine new stores and relocate one existing store. All but one of our new store openings will be in the large store format.

We opened a store in Edina, Minnesota and relocated a store in Buffalo, New York during the third quarter. Thus far in the fourth quarter, we have opened stores in Friendswood (Houston), Texas and Glendale (Phoenix), Arizona, and plan to open stores in Springfield (Greater DC), Virginia and San Antonio, Texas by year-end.

Total capital additions (net of tenant improvement allowances) are now expected between $144 million and $149 million for 2015. This new range reflects higher pre-spend for the 2016 store class than previously estimated.

In 2016, we intend to open a total of nine to ten new stores in both the large and small store formats.

Financial Outlook

We are raising our financial outlook for 2015, which ends on January 31, 2016:

Total revenues of $857 million to $861 million (vs. $844 million to $853 million previously).

Comparable store sales increase of 8.5% to 9% (vs. 6.5% to 7.5% previously).

Adjusted EBITDA* of $207 million to $209 million (vs. $199 million to $203 million previously).

Effective tax rate of approximately 34.5% to 35.5%.

Pro-forma net income of $59 million to $60.5 million (vs. $52.5 million to $55 million previously). Pro-forma net income excludes the net impact of charges related to secondary offerings and loss on debt retirement.

Diluted share count of 42.8 million to 42.9 million.

For 2016, we expect total revenues and Adjusted EBITDA growth to be above our long-term financial targets of approximately 10% growth and low double digit growth, respectively.

Click here to see Dave & Buster's Entertainment Inc.'s full release and condensed consolidated balance sheets.