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Dave Busters Achieves Second-Quarter Revenue Growth Of 149 And Record Net Income
FOR IMMEDIATE RELEASE
Target for 2017 new store openings increases to 14 stores
DALLAS, Sept. 05, 2017 (GLOBE NEWSWIRE) -- Dave & Buster's Entertainment Inc., (NASDAQ:PLAY), ("Dave & Buster's" or "the Company"), an owner and operator of entertainment and dining venues, announced financial results for its second quarter 2017, which ended on July 30, 2017. Key highlights from the second quarter 2017, compared with the second quarter 2016 include:
» Total revenues increased 14.9% to $280.8 million from $244.3 million. » Opened four new stores compared to two new stores. » Comparable store sales increased 1.1%. » Net income of $30.4 million, or $0.71 per diluted share, vs. net income of $21.5 million, or $0.50 per diluted share. » Earnings per diluted share were $0.59 when excluding a favorable impact of $0.16 per diluted share from implementing FASB Accounting Standards Update 2016-09 ("ASU 2016-09") related to share-based payment transactions, and an unfavorable impact of $0.04 per diluted share related to a litigation settlement expense. » EBITDA increased 11.5% to $64 million from $57.4 million or 15.9% excluding the litigation settlement expense. » EBITDA margin decreased 70 basis points to 22.8% from 23.5% or increased 20 basis points to 23.7% excluding the litigation settlement expense. » Repurchased approximately 1 million shares for $67.2 million. » Recognized approximately $6.8 million reduction to our provision for income taxes as a result of the excess tax benefits generated by option exercises in accordance with ASU 2016-09, which was adopted in the first quarter. Implementation of the new standard also increased diluted shares outstanding by approximately 418,000 shares.
"Our thoughts and prayers go out to everyone affected by hurricane Harvey, including many Dave & Buster's employees who have been significantly impacted. We are working to help get them back on their feet as soon as possible. Our three stores in Houston reopened Friday after remaining closed for several days. In terms of the quarter, Dave & Buster's disciplined real estate strategy and differentiated product offering continue to pay off. We delivered another successful quarter of revenue growth driven by double-digit unit expansion and positive comparable store sales, a testament to the underlying strength of the brand. Our non-comp store base is performing well and we are very pleased with our recent store openings. Meanwhile, our comparable store sales growth has now exceeded the competitive casual dining benchmark for 21 consecutive quarters," said chief executive Steve King.
Chief financial officer Brian Jenkins: "Q2 represented another quarter of strong performance as revenue and EBITDA increased 14.9% and 11.5% respectively. In addition, excluding a litigation settlement, we grew EBITDA by nearly 16% and EBITDA margins by 20 basis points. Our recent debt refinancing improved our capital structure and financial flexibility, enabling us to invest in new store growth and return value to shareholders for years to come."
King concluded: "Through today, we have opened eight stores and have an additional nine stores under construction. We now expect to open fourteen new stores this year, representing 15% unit growth, an increase over our previous guidance of twelve new stores. We remain committed to driving 10% or more unit growth over the long-term and continue to foresee a 200+ store opportunity in the United States and Canada alone."
Share Repurchase Activity
We repurchased approximately 1 million shares of our common stock for $67.2 million during the second quarter of 2017 and cumulatively we have repurchased 2.1 million shares for $127.1 million. At the end of the second quarter, we still had nearly $73 million remaining under our current buyback authorization.
During the second quarter 2017, we recorded a $2.6 million litigation settlement expense within general and administrative expenses. This litigation settlement expense recognized in the current quarter resulted in approximately 90 basis points reduction in our reported operating income and EBITDA margins over the same period last year.
Review of Second Quarter 2017 Operating Results Compared to Second Quarter 2016
Total revenues increased 14.9% to $280.8 million from $244.3 million in the second quarter 2016. Across all stores, food and beverage revenues increased 10.2% to $118.7 million from $107.7 million and amusement and "other" revenues increased 18.6% to $162.1 million from $136.7 million. Food and beverage represented 42.3% of total revenues while amusements and other represented 57.7% of total revenues in the second first quarter 2017. In last year's second quarter, Food and beverage represented 44.1% of total revenues while amusements and other represented 55.9% of total revenues.
Comparable store sales increased 1.1% in the second quarter 2017, compared with a 1% increase in the same period last year. Our comparable store sales growth was driven by a 1.1% increase in walk-in sales and a 1.9% increase in special events sales. Non-comparable store revenues increased $34.1 million in the second quarter 2017 to $61.1 million.
Operating income increased to $39.2 million in the second quarter of 2017 from $36 million in last year's second quarter. As a percentage of total revenues, operating income decreased 80 basis points to 13.9% from 14.7%. Excluding the litigation settlement expense, operating income increased 10 basis points to 14.8%.
Net income increased to $30.4 million, or $0.71 per diluted share (42.8 million diluted share base). Net income, excluding the $0.16 per share favorable impact of ASU 2016-09 and the $0.04 per share unfavorable impact of the litigation settlement, was $0.59 per diluted share. This compared to net income of $21.5 million, or $0.50 per diluted share (43.3 million diluted share base), in the same period last year.
EBITDA increased 11.5% to $64 million in the second first quarter 2017 from $57.4 million in the same period last year. EBITDA increased 15.9% excluding the litigation settlement expense. As a percentage of total revenues, EBITDA decreased approximately 70 basis points to 22.8% from 23.5%, and excluding the litigation settlement, EBITDA increased 20 basis points to 23.7%.
Store operating income before depreciation and amortization increased 15.4% to $85.3 million in the second quarter 2017 from $74 million in last year's second quarter. As a percentage of total revenues, Store operating income before depreciation and amortization increased 10 basis points to 30.4% from 30.3%.
In fiscal 2017, we now intend to open fourteen new stores, compared with our previous guidance of twelve stores, including ten large and four small store formats. We currently have nine stores under construction. We opened four stores during the second quarter in New Orleans, Louisiana (a new state for us); Alpharetta, Georgia; Myrtle Beach, South Carolina; and McAllen, Texas. To date, five out of the eight stores opened this year were in new markets for our brand.
Total capital additions (net of tenant improvement allowances) during fiscal 2017 are now expected to be $182 million to $192 million, up $16 million from prior guidance, reflecting our increased target for 2017 new store openings as well as a strong 2018 pipeline.
We are updating our financial outlook on several key metrics for fiscal 2017, which includes 53 weeks and ends on February 4, 2018:
» Total revenues of $1.160 billion to $1.170 billion. » Comparable store sales increase of 1% to 2% (on a comparable 52-week basis) (vs. 2% to 3% previously). » 14 new stores (vs. 12 new stores previously). » Pre-opening expenses of approximately $21 million. » Net income of $109 million to $113 million (vs. $107 million to $111 million previously). » EBITDA of $270 million to $276 million (compared to $276 million to $282 million previously). » Primarily driven by higher pre-opening expenses and the litigation settlement » Diluted share count of 42.6 million to 42.8 million (vs. 43.2 million to 43.4 million previously) (including the year-to-date impact of ASU 2016-09). » Effective tax rate of 30.5% to 31% (compared to 34.5% to 35% previously). Effective tax rate and net income guidance for full year 2017 includes a $10.1 million reduction in our year-to-date provision for income taxes resulting from the implementation of ASU 2016-09. The requirements of this standard will likely further reduce our effective tax rate depending on future stock option exercises. Our guidance excludes any potential future impacts of ASU 2016-09 on our effective tax rate.
Click here to see the full press 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 100 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 34 states and Canada.
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