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 ended August 6, 2024.
Second Quarter 2024 Financial
Highlights
- Second quarter
revenue of $557.1 million increased 2.8% from the second
quarter of 2023.
- Comparable store
sales decreased 6.3% compared to the same calendar period in
2023.
- Net income totaled
$40.3 million, or $0.99 per diluted share, compared with net income
of $25.9 million, or $0.60 per diluted share in the second quarter
of 2023. Adjusted Net income totaled $45.7 million, or $1.12 per
diluted share, compared with Adjusted Net income of $40.9 million,
or $0.94 per diluted share in the second quarter of 2023.
- Adjusted EBITDA of
$151.6 million increased 8.1%, or $11.3 million, from the
second quarter of 2023.
Other Highlights
- The Company opened
two new Dave & Buster's stores in Port St. Lucie, FL and
Johnson City, NY in the second quarter. Subsequent to the end of
the quarter, the Company opened one new Dave & Buster's store
in Barboursville, WV and one new Main Event store in Grand Rapids,
MI.
- The Company
remodeled nine Dave & Buster's stores in the second
quarter.
- The Company closed
on its previously announced sale leaseback transaction for the real
estate of two Dave & Buster's stores with an institutional real
estate investor and generated $45.0 million in proceeds.
- During the second
quarter, the Company repurchased $47.4 million of shares, bringing
its total repurchases year to date to $60.0 million representing
1.2 million shares or 3.1% of the Company's outstanding
shares as of the end of fiscal 2023. The Company has
$140.0 million remaining on its share repurchase
authorization.
“We are pleased with the progress we are making on our strategic
initiatives and on the strong financial results achieved during the
quarter. During the quarter, we grew Revenue and Adjusted EBITDA,
expanded our Adjusted EBITDA margins and generated strong operating
cash flow which allowed us to invest in the business and return
cash to shareholders. We have also continued to make significant
progress toward our strategic goals. Our fully programmed remodels
continue to perform well and we are excited about the remodels that
have recently opened and will open throughout the remainder of
Fiscal 2024 and beyond,” said Chris Morris, Dave & Buster's
Chief Executive Officer. “Our new menu continues to be well
received by our guests, as indicated by our improving F&B
performance and guest satisfaction scores. We continue to refine
our menu and are excited about the next phase of our menu rollout
that just occurred in August. We have also continued to test our
games and F&B pricing levels which have benefited our top line
and margins and which we expect to bear more fruit going forward as
we optimize our pricing strategies. Additionally, we have seen
material improvement in our special events business with
substantial growth in same store sales in the quarter and year to
date and our forward bookings for fiscal 2024 are currently
significantly above the prior year. Further, we have continued to
open up new domestic stores which have consistently performed in
line with or above expectations. We have also managed our cost
structure well which has enabled us to expand our Adjusted EBITDA
margins while still delivering a high-quality experience to our
customers. While we are disappointed with our same store sales
performance during the quarter in this complex and challenging
environment, we are laser focused on our medium-term goals and
encouraged by the progress we are making on each of the
initiatives. We fully expect the impact of our initiatives to lead
to growth in same store sales, revenue, EBITDA and cash flow in the
coming quarters.”
Second Quarter
2024 Results
Total revenue was $557.1 million, an increase of
2.8% from $542.1 million in the second quarter of 2023.
Comparable store sales decreased 6.3% versus the
comparable 93 days of 2023. The comparable 93 days of 2023 (May 8,
2023 through August 8, 2023) used in this calculation differ from
the Company's fiscal second quarter of 2023 to properly align the
most comparable days of the calendar due to the calendar shift
resulting from fiscal 2023 consisting of 53 weeks, as well as the
two additional days in the Company's fiscal second quarter of 2024
resulting from the Company optimizing its fiscal periods to end on
a Tuesday rather than a Sunday to gain operational
efficiencies.
Operating income totaled $84.5 million, or 15.1%
of revenue, compared with operating income of $77.1 million, or
14.3% of revenue in the second quarter of 2023.
Net income totaled $40.3 million, or $0.99 per
diluted share, compared with net income of $25.9 million, or $0.60
per diluted share in the second quarter of 2023. Adjusted Net
income totaled $45.7 million, or $1.12 per diluted share, compared
with Adjusted Net income of $40.9 million, or $0.94 per diluted
share in the second quarter of 2023.
Adjusted EBITDA totaled $151.6 million, or 27.2%
of revenue, compared with Adjusted EBITDA of $140.3 million, or
25.9% of revenue in the second quarter of 2023.
Store operating income before depreciation and
amortization totaled $176.5 million, or 31.7% of revenue, compared
with store operating income before depreciation and amortization of
$162.4 million, or 30.0% of revenue in the second quarter of
2023.
Balance Sheet, Liquidity, Cash Flow and
Share Repurchases
The Company generated $101.8 million in
operating cash flow during the second quarter, ending the quarter
with $13.1 million in cash and $481.0 million of availability
under its $500.0 million revolving credit facility. The Company
ended the quarter with a Net Total Leverage Ratio of 2.3x as
defined under its credit agreement as the ratio of the aggregate
principal amount of any Consolidated Debt less Unrestricted Cash
and unrestricted Permitted Investments to Credit Adjusted EBITDA
(each as defined in the credit agreement). The Company's maximum
permitted Net Total Leverage Ratio is 3.5x.
Year to date, the Company has repurchased
1.2 million shares at a total cost of $60.0 million and
representing 3.1% of the Company's outstanding shares as of the end
of fiscal 2023. The Company has $140.0 million remaining on
its share repurchase authorization.
Quarterly Report on Form 10-Q Available
The Company’s Quarterly Report on Form 10-Q,
which will be available at www.sec.gov and on the Company’s
investor relations website, contains a thorough review of its
financial results for the second quarter ended August 6,
2024.
Investor Conference Call and
Webcast
Management will host a conference call to report
these results on Tuesday, September 10, 2024 at 4:00 p.m. Central
Time (5:00 p.m. Eastern Time). A live and archived webcast of the
conference call will be available at ir.daveandbusters.com.
Additionally, participants can access the conference call by
dialing toll-free (877) 883-0383. The international dial-in for
participants is (412) 902-6506. The participant entry number is
9052204. A replay will be available after the call for one year
beginning at 6:00 p.m. Central Time (7:00 p.m. Eastern Time) and
can be accessed by dialing toll-free (877) 344-7529 or by the
international toll number (412) 317-0088. The replay access code is
2368891.
About Dave & Buster’s Entertainment,
Inc.
Founded in 1982 and headquartered in Coppell,
Texas, Dave & Buster's Entertainment, Inc., is the owner and
operator of 226 venues in North America that offer premier
entertainment and dining experiences to guests through two distinct
brands: Dave & Buster’s and Main Event. The Company has 166
Dave & Buster’s branded stores in 43 states, Puerto Rico, and
Canada and offers guests the opportunity to "Eat Drink Play and
Watch," all in one location. Each store offers a full menu of
entrées 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. The Company also
operates 60 Main Event branded stores in 21 states across the
country, and offers state-of-the-art bowling, laser tag, hundreds
of arcade games and virtual reality, making it the perfect place
for families to connect and make memories. For more information
about each brand, visit daveandbusters.com and mainevent.com.
Forward-Looking Statements
The Company cautions that this release contains
forward-looking statements. These forward-looking statements can be
identified by the use of forward-looking terminology, including the
terms “believes,” “estimates,” “anticipates,” “expects,” “intends,”
“may,” “will” or “should” or, in each case, their negative or other
variations or comparable terminology. These forward-looking
statements include all matters that are not historical facts. They
appear in a number of places throughout this release and include
statements regarding our intentions, beliefs or current
expectations concerning, among other things, our results of
operations, financial condition, liquidity, prospects, growth,
strategies and the industry in which we operate.
By their nature, forward-looking statements
involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future.
Forward-looking statements are not a guarantee of future
performance and our actual results of operations, financial
condition and liquidity, and the development of the industry in
which we operate may differ materially from those made in or
suggested by the forward-looking statements contained in this
release as a result of various factors, including those set forth
in the section entitled “Risk Factors” in our Annual Report on Form
10-K filed with the SEC on April 2, 2024. In addition, even if our
results of operations, financial condition and liquidity, and the
development of the industry in which we operate are consistent with
the forward-looking statements contained in this release, such
results or developments may not be indicative of results or
developments in subsequent periods.
Non-GAAP Measures
To supplement its consolidated financial
statements, which are prepared and presented in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”), the Company uses the following non-GAAP financial
measures: EBITDA, Adjusted EBITDA, Credit Adjusted EBITDA
(calculated in accordance with the Company’s Credit Facility),
Store operating income before depreciation and amortization,
Adjusted Net income, and Adjusted net income per share - Diluted,
reconciliations of which can be found on the following pages
(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.
For Investor Relations
Inquiries:
Cory Hatton, VP Investor Relations &
TreasurerDave & Buster’s Entertainment,
Inc.Cory.Hatton@daveandbusters.com
| |
|
DAVE & BUSTER'S ENTERTAINMENT,
INC.Consolidated Statements of
Operations(unaudited, in millions, except per
share amounts) |
| |
|
|
|
|
| |
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
| |
|
August 6, 2024(1) |
|
July 30, 2023(1) |
|
August 6, 2024(1) |
|
July 30, 2023(1) |
|
Entertainment revenues |
|
$ |
375.7 |
|
67.4 |
% |
|
$ |
360.8 |
|
66.6 |
% |
|
$ |
761.4 |
|
66.5 |
% |
|
$ |
753.9 |
|
66.2 |
% |
| Food and beverage
revenues |
|
|
181.4 |
|
32.6 |
% |
|
|
181.3 |
|
33.4 |
% |
|
|
383.8 |
|
33.5 |
% |
|
|
385.5 |
|
33.8 |
% |
|
Total revenues |
|
|
557.1 |
|
100.0 |
% |
|
|
542.1 |
|
100.0 |
% |
|
|
1,145.2 |
|
100.0 |
% |
|
|
1,139.4 |
|
100.0 |
% |
| Cost of entertainment(2) |
|
|
32.9 |
|
8.8 |
% |
|
|
35.3 |
|
9.8 |
% |
|
|
66.1 |
|
8.7 |
% |
|
|
70.5 |
|
9.4 |
% |
| Cost of food and beverage(2) |
|
|
48.9 |
|
27.0 |
% |
|
|
51.8 |
|
28.6 |
% |
|
|
103.0 |
|
26.8 |
% |
|
|
110.9 |
|
28.8 |
% |
|
Total cost of products |
|
|
81.8 |
|
14.7 |
% |
|
|
87.1 |
|
16.1 |
% |
|
|
169.1 |
|
14.8 |
% |
|
|
181.4 |
|
15.9 |
% |
| Operating payroll and
benefits |
|
|
131.2 |
|
23.6 |
% |
|
|
127.0 |
|
23.4 |
% |
|
|
272.8 |
|
23.8 |
% |
|
|
257.6 |
|
22.6 |
% |
| Other store operating
expenses(2) |
|
|
167.6 |
|
30.1 |
% |
|
|
165.6 |
|
30.5 |
% |
|
|
343.7 |
|
30.0 |
% |
|
|
331.6 |
|
29.1 |
% |
| General and administrative
expenses |
|
|
30.4 |
|
5.5 |
% |
|
|
32.2 |
|
5.9 |
% |
|
|
61.9 |
|
5.4 |
% |
|
|
63.6 |
|
5.6 |
% |
| Depreciation and amortization
expense |
|
|
57.5 |
|
10.3 |
% |
|
|
49.1 |
|
9.1 |
% |
|
|
120.3 |
|
10.5 |
% |
|
|
98.0 |
|
8.6 |
% |
| Pre-opening costs |
|
|
4.1 |
|
0.7 |
% |
|
|
4.0 |
|
0.7 |
% |
|
|
7.4 |
|
0.6 |
% |
|
|
8.7 |
|
0.8 |
% |
|
Total operating costs |
|
|
472.6 |
|
84.9 |
% |
|
|
465.0 |
|
85.7 |
% |
|
|
975.2 |
|
85.1 |
% |
|
|
940.9 |
|
82.6 |
% |
|
Operating income |
|
|
84.5 |
|
15.1 |
% |
|
|
77.1 |
|
14.3 |
% |
|
|
170.0 |
|
14.9 |
% |
|
|
198.5 |
|
17.4 |
% |
| Interest expense, net |
|
|
33.9 |
|
6.1 |
% |
|
|
32.9 |
|
6.1 |
% |
|
|
67.0 |
|
5.9 |
% |
|
|
63.6 |
|
5.6 |
% |
| Loss on debt refinancing |
|
|
— |
|
— |
% |
|
|
11.2 |
|
2.1 |
% |
|
|
— |
|
— |
% |
|
|
11.2 |
|
1.0 |
% |
|
Income before provision for income taxes |
|
|
50.6 |
|
9.0 |
% |
|
|
33.0 |
|
6.1 |
% |
|
|
103.0 |
|
9.0 |
% |
|
|
123.7 |
|
10.8 |
% |
| Provision for income
taxes |
|
|
10.3 |
|
1.8 |
% |
|
|
7.1 |
|
1.3 |
% |
|
|
21.3 |
|
1.9 |
% |
|
|
27.7 |
|
2.4 |
% |
|
Net income |
|
$ |
40.3 |
|
7.2 |
% |
|
$ |
25.9 |
|
4.8 |
% |
|
$ |
81.7 |
|
7.1 |
% |
|
$ |
96.0 |
|
8.4 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.02 |
|
|
|
$ |
0.60 |
|
|
|
$ |
2.05 |
|
|
|
$ |
2.11 |
|
|
|
Diluted |
|
$ |
0.99 |
|
|
|
$ |
0.60 |
|
|
|
$ |
1.99 |
|
|
|
$ |
2.09 |
|
|
| Weighted average shares used
in per share calculations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares |
|
|
39.67 |
|
|
|
|
43.01 |
|
|
|
|
39.94 |
|
|
|
|
45.47 |
|
|
|
Diluted shares |
|
|
40.78 |
|
|
|
|
43.38 |
|
|
|
|
41.12 |
|
|
|
|
45.83 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned stores at end of period |
|
|
224 |
|
|
|
|
211 |
|
|
|
|
224 |
|
|
|
|
211 |
|
|
|
Store operating weeks in the period |
|
|
2,987 |
|
|
|
|
2,730 |
|
|
|
|
5,877 |
|
|
|
|
5,418 |
|
|
|
Total revenue per store operating weeks in the period (in
thousands) |
|
$ |
187 |
|
|
|
$ |
199 |
|
|
|
$ |
195 |
|
|
|
$ |
210 |
|
|
|
(1) |
|
All percentages are expressed as a percentage of total revenues for
the respective period presented, except cost of entertainment,
which is expressed as a percentage of entertainment revenues, and
cost of food and beverage, which is expressed as a percentage of
food and beverage revenues. |
|
(2) |
|
We reclassified $0.9 to cost of entertainment and $2.6 to cost of
food and beverage from other store operating expenses for the
thirteen weeks ended July 30, 2023 to be consistent with the
presentation for the thirteen weeks ended August 6, 2024. We
reclassified $1.8 to cost of entertainment and $5.7 to cost of food
and beverage from other store operating expenses for the twenty-six
weeks ended July 30, 2023 to be consistent with the
presentation for the twenty-six weeks ended August 6, 2024. We
determined that reclassifying these expenses, which are primarily
related to inventory items provided to customers during promotions
and events, results in a clearer presentation of the cost of goods
sold. |
|
|
|
|
| |
|
DAVE & BUSTER'S ENTERTAINMENT, INC.Other
Operating Data(unaudited, in millions) |
| |
| Condensed
Consolidated Balance Sheets: |
| |
|
|
|
| |
August 6, 2024 |
|
February 4, 2024 |
| ASSETS |
|
|
|
|
Cash and cash equivalents |
$ |
13.1 |
|
|
$ |
37.3 |
|
| Other current assets |
|
83.0 |
|
|
|
100.2 |
|
|
Total current assets |
|
96.1 |
|
|
|
137.5 |
|
| Property and equipment,
net |
|
1,425.2 |
|
|
|
1,332.7 |
|
| Operating lease right of use
assets |
|
1,348.7 |
|
|
|
1,323.3 |
|
| Intangible and other assets,
net |
|
963.9 |
|
|
|
960.9 |
|
|
Total assets |
$ |
3,833.9 |
|
|
$ |
3,754.4 |
|
| |
|
|
|
| LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
| Total current liabilities |
$ |
408.2 |
|
|
$ |
435.6 |
|
| Operating lease
liabilities |
|
1,589.5 |
|
|
|
1,558.5 |
|
| Other long-term
liabilities |
|
259.4 |
|
|
|
225.1 |
|
| Long-term debt, net |
|
1,292.4 |
|
|
|
1,284.0 |
|
| Stockholders' equity |
|
284.4 |
|
|
|
251.2 |
|
|
Total liabilities and stockholders' equity |
$ |
3,833.9 |
|
|
$ |
3,754.4 |
|
| Summary
Cash Flow Information: |
| |
|
|
|
|
| |
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
| |
|
August 6, 2024 |
|
July 30, 2023 |
|
August 6, 2024 |
|
July 30, 2023 |
|
Net cash provided by operating activities: |
|
$ |
101.8 |
|
|
$ |
103.8 |
|
|
$ |
210.6 |
|
|
$ |
196.2 |
|
|
Net cash used in investing activities: |
|
|
(115.9 |
) |
|
|
(82.6 |
) |
|
|
(228.7 |
) |
|
|
(133.4 |
) |
|
Net cash used in financing activities: |
|
|
(4.9 |
) |
|
|
(30.1 |
) |
|
|
(6.1 |
) |
|
|
(161.8 |
) |
|
Decrease in cash and cash equivalents |
|
$ |
(19.0 |
) |
|
$ |
(8.9 |
) |
|
$ |
(24.2 |
) |
|
$ |
(99.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
DAVE & BUSTER'S ENTERTAINMENT,
INC.Non-GAAP Measures(unaudited,
in millions) |
| |
Adjusted EBITDA:
Adjusted EBITDA represents net income before
income taxes, depreciation and amortization expense and other
items, as calculated below. Adjusted EBITDA is a non-GAAP financial
measure commonly used in our industry and should not be construed
as an alternative to net income as an indicator of operating
performance or as an alternative to cash flow provided by operating
activities as a measure of liquidity (as determined in accordance
with GAAP). Adjusted EBITDA may not be comparable to similarly
titled measures reported by other companies. Adjusted EBITDA is
presented because we believe that it provides useful information to
investors and analysts regarding our operating performance. By
reporting Adjusted EBITDA, we provide a basis for comparison of our
business operations between current, past and future periods by
excluding items that we do not believe are indicative of our core
operating performance. A reconciliation of net income to Adjusted
EBITDA is provided below for the periods presented:
| |
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
| |
August 6, 2024(5) |
|
July 30, 2023(5) |
|
August 6, 2024(5) |
|
July 30, 2023(5) |
|
Net income |
$ |
40.3 |
|
7.2 |
% |
|
$ |
25.9 |
|
4.8 |
% |
|
$ |
81.7 |
|
7.1 |
% |
|
$ |
96.0 |
|
8.4 |
% |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
33.9 |
|
|
|
|
32.9 |
|
|
|
|
67.0 |
|
|
|
|
63.6 |
|
|
|
Loss on debt refinancing |
|
— |
|
|
|
|
11.2 |
|
|
|
|
— |
|
|
|
|
11.2 |
|
|
|
Provision for income taxes |
|
10.3 |
|
|
|
|
7.1 |
|
|
|
|
21.3 |
|
|
|
|
27.7 |
|
|
|
Depreciation and amortization expense |
|
57.5 |
|
|
|
|
49.1 |
|
|
|
|
120.3 |
|
|
|
|
98.0 |
|
|
| EBITDA |
|
142.0 |
|
25.5 |
% |
|
|
126.2 |
|
23.3 |
% |
|
|
290.3 |
|
25.3 |
% |
|
|
296.5 |
|
26.0 |
% |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation(1) |
|
2.3 |
|
|
|
|
5.2 |
|
|
|
|
6.3 |
|
|
|
|
11.9 |
|
|
|
Transaction and integration costs(2) |
|
0.4 |
|
|
|
|
5.3 |
|
|
|
|
1.0 |
|
|
|
|
8.0 |
|
|
|
System implementation costs(3) |
|
2.7 |
|
|
|
|
1.7 |
|
|
|
|
6.6 |
|
|
|
|
3.2 |
|
|
|
Other costs, net(4) |
|
4.2 |
|
|
|
|
1.9 |
|
|
|
|
6.5 |
|
|
|
|
2.7 |
|
|
|
Adjusted EBITDA, a non-GAAP measure |
$ |
151.6 |
|
27.2 |
% |
|
$ |
140.3 |
|
25.9 |
% |
|
$ |
310.7 |
|
27.1 |
% |
|
$ |
322.3 |
|
28.3 |
% |
|
(1) |
|
Non-cash share-based compensation expense, net of forfeitures,
recorded in general and administrative expenses on the consolidated
comprehensive income statement. |
|
(2) |
|
Transaction and integration costs related to the acquisition and
integration of Main Event recorded in general and administrative
expenses on the consolidated comprehensive income statement. |
|
(3) |
|
System implementation costs represent expenses incurred related to
the development and launch of new enterprise resource planning,
human capital management and inventory software for our stores and
store support teams and staff augmentation for the implementation
team at the store support center. These charges are primarily
recorded in general and administrative expenses on the consolidated
comprehensive income statement. |
|
(4) |
|
Includes one-time, third-party consulting fees that are not part of
our ongoing operations, impairment expenses and (gain) loss on
property and equipment transactions. The third-party consulting
fees are not part of our ongoing operations, and were incurred to
execute two related, discrete, project-based strategic initiatives
focused on transforming our marketing strategy and one discrete,
project-based initiative to transform our supply chain operational
efficiency. They are included in general and administrative
expenses on the consolidated statement of comprehensive income. The
transformative nature, narrow scope, and limited duration of these
incremental consulting fees are not reflective of the ordinary
course expenses incurred to operate our business. |
|
(5) |
|
All percentages are expressed as a percentage of total revenues for
the respective period presented. |
|
|
|
|
Store Operating Income Before
Depreciation and Amortization:
Store Operating Income Before Depreciation and
Amortization, a non-GAAP measure, represents operating income, plus
depreciation and amortization expense, general and administrative
expenses and pre-opening costs. We believe that Store Operating
Income Before Depreciation and Amortization is another useful
measure in evaluating our operating performance because it removes
the impact of general and administrative expenses, which are not
incurred at the store level, and the costs of opening new stores,
which are non-recurring at the store level, and thereby enables the
comparability of the operating performance of our stores for the
periods presented. We also believe that Store Operating Income
Before Depreciation and Amortization is a useful measure in
evaluating our operating performance within the entertainment and
dining industry because it permits the evaluation of store-level
productivity, efficiency, and performance, and we use Store
Operating Income Before Depreciation and Amortization as a means of
evaluating store financial performance compared with our
competitors. However, because this measure excludes significant
items such as general and administrative expenses and pre-opening
costs, as well as our interest expense, net, loss on debt
extinguishment/refinance and depreciation and amortization expense,
which are important in evaluating our consolidated financial
performance from period to period, the value of this measure is
limited as a measure of our consolidated financial performance.
| |
|
|
|
| |
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
| |
August 6, 2024(1) |
|
July 30, 2023(1) |
|
August 6, 2024(1) |
|
July 30, 2023(1) |
|
Operating income |
$ |
84.5 |
|
15.2 |
% |
|
$ |
77.1 |
|
14.2 |
% |
|
$ |
170.0 |
|
14.8 |
% |
|
$ |
198.5 |
|
17.4 |
% |
| Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
30.4 |
|
|
|
|
32.2 |
|
|
|
|
61.9 |
|
|
|
|
63.6 |
|
|
|
Depreciation and amortization expense |
|
57.5 |
|
|
|
|
49.1 |
|
|
|
|
120.3 |
|
|
|
|
98.0 |
|
|
|
Pre-opening costs |
|
4.1 |
|
|
|
|
4.0 |
|
|
|
|
7.4 |
|
|
|
|
8.7 |
|
|
| Store operating income before
depreciation and amortization, a non-GAAP measure |
$ |
176.5 |
|
31.7 |
% |
|
$ |
162.4 |
|
30.0 |
% |
|
$ |
359.6 |
|
31.4 |
% |
|
$ |
368.8 |
|
32.4 |
% |
|
(1) |
|
All percentages are expressed as a percentage of total revenues for
the respective period presented. |
|
|
|
|
Credit Adjusted EBITDA:
Credit Adjusted EBITDA, a non-GAAP measure,
represents Adjusted EBITDA plus certain other items as defined in
our Credit Facility. Other adjustments include (i) entertainment
revenue deferrals, (ii) the cost of new projects, including store
pre-opening costs, (iii) business optimization expenses and other
restructuring costs, and (iv) other costs and adjustments as
permitted by the Debt Agreements. We believe the presentation of
Credit Adjusted EBITDA is appropriate as it provides additional
information to investors about the calculation of, and compliance
with, certain financial covenants in the Credit Facility. The
following table sets forth a reconciliation of Net income to Credit
Adjusted EBITDA for the periods shown:
| |
|
Trailing FourQuarters EndedAugust 6, 2024 |
|
Net income |
|
$ |
112.6 |
|
Add back: |
|
|
|
Interest expense, net |
|
|
130.8 |
|
Loss on debt refinancing |
|
|
4.9 |
|
Provision for income taxes |
|
|
29.8 |
|
Depreciation and amortization expense |
|
|
230.8 |
| EBITDA |
|
|
508.9 |
|
Add back: |
|
|
|
Share-based compensation(1) |
|
|
10.4 |
|
Transaction and integration costs(2) |
|
|
4.1 |
|
System implementation costs(3) |
|
|
12.8 |
|
Pre-opening costs(4) |
|
|
17.1 |
|
Entertainment revenue deferrals(5) |
|
|
— |
|
Other items, net(6) |
|
|
7.8 |
| Credit Adjusted EBITDA, a
non-GAAP measure |
|
$ |
561.1 |
|
(1) |
|
Non-cash share-based compensation expense, net of forfeitures,
recorded in general and administrative expenses on the consolidated
comprehensive income statement. |
|
(2) |
|
Transaction and integration costs related to the acquisition and
integration of Main Event recorded in general and administrative
expenses on the consolidated comprehensive income statement. |
|
(3) |
|
System implementation costs represent expenses incurred related to
the development and launch of new enterprise resource planning,
human capital management and inventory software for our stores and
store support teams. These charges are primarily recorded in
general and administrative expenses on the consolidated
comprehensive income statement. |
|
(4) |
|
Represents costs incurred, primarily consisting of occupancy and
payroll related expenses, associated with the opening of new
stores. These costs are considered a "cost of new projects" as
defined in our Credit Facility. |
|
(5) |
|
Represents non-cash adjustments to our deferred entertainment
revenue liabilities. These costs, which are included in
entertainment revenues and food and beverage revenues on the
consolidated comprehensive income statement, are considered an
"other non-cash charges reducing net income" as defined in our
Credit Facility. |
|
(6) |
|
Other items primarily consisted of $12.8 million of one-time,
third-party consulting fees and $0.9 million of severance costs,
partially offset by a $6.0 million gain on property and equipment
transactions. The third-party consulting fees are not part of our
ongoing operations, and were incurred to execute two related,
discrete, project-based strategic initiatives focused on
transforming our marketing strategy and one discrete, project-based
initiative to transform our supply chain operational efficiency.
They are included in general and administrative expenses on the
consolidated statement of comprehensive income. The transformative
nature, narrow scope, and limited duration of these incremental
consulting fees are not reflective of the ordinary course expenses
incurred to operate our business. |
|
|
|
|
The following table provides a calculation of
Net Total Leverage Ratio, as defined in our senior secured credit
facility, for the period shown:
| |
As of, and for theTrailing FourQuarters
Ended,August 6, 2024 |
|
Credit Adjusted EBITDA (a) |
$ |
561.1 |
|
| Total debt |
$ |
1,301.4 |
|
| Less: Cash and cash
equivalents |
$ |
(13.1 |
) |
| Add: Outstanding letters of
credit |
$ |
11.0 |
|
| Net debt (b) |
$ |
1,299.3 |
|
| Net Total Leverage Ratio (b /
a) |
2.3 |
x |
| |
|
|
Adjusted Net Income:
Adjusted Net income, a non-GAAP measure,
represents net income before special items, as calculated below. We
believe excluding these special items from net income provides
investors with a clearer perspective of our ongoing operating
performance and a more relevant comparison to prior period results.
The following table presents a reconciliation of Net income to
Adjusted Net income and presents Adjusted Net income per diluted
share, for the periods shown:
| |
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
| |
August 6, 2024 |
|
July 30, 2023 |
|
August 6, 2024 |
|
July 30, 2023 |
| |
$ |
|
EPS |
|
$ |
|
EPS |
|
$ |
|
EPS |
|
$ |
|
EPS |
|
Net income |
$ |
40.3 |
|
|
$ |
0.99 |
|
|
$ |
25.9 |
|
|
$ |
0.60 |
|
|
$ |
81.7 |
|
|
$ |
1.99 |
|
|
$ |
96.0 |
|
|
$ |
2.09 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt refinancing |
|
— |
|
|
|
— |
|
|
|
11.2 |
|
|
|
0.26 |
|
|
|
0.0 |
|
|
|
— |
|
|
|
11.2 |
|
|
|
0.24 |
|
|
Transaction and integration costs(1) |
|
0.4 |
|
|
|
0.01 |
|
|
|
5.3 |
|
|
|
0.12 |
|
|
|
1.0 |
|
|
|
0.02 |
|
|
|
8.0 |
|
|
|
0.17 |
|
|
System implementation costs(2) |
|
2.7 |
|
|
|
0.07 |
|
|
|
1.7 |
|
|
|
0.04 |
|
|
|
6.6 |
|
|
|
0.16 |
|
|
|
3.2 |
|
|
|
0.07 |
|
|
Other items, net(3) |
|
4.2 |
|
|
|
0.10 |
|
|
|
1.9 |
|
|
|
0.04 |
|
|
|
6.5 |
|
|
|
0.16 |
|
|
|
2.7 |
|
|
|
0.06 |
|
|
Tax impact of items above, net(4) |
|
(1.9 |
) |
|
|
(0.05 |
) |
|
|
(5.1 |
) |
|
|
(0.12 |
) |
|
|
(3.6 |
) |
|
|
(0.09 |
) |
|
|
(6.4 |
) |
|
|
(0.14 |
) |
| Adjusted Net income, a
non-GAAP measure |
$ |
45.7 |
|
|
$ |
1.12 |
|
|
$ |
40.9 |
|
|
$ |
0.94 |
|
|
$ |
92.2 |
|
|
$ |
2.24 |
|
|
$ |
114.7 |
|
|
$ |
2.50 |
|
|
(1) |
|
Transaction and integration costs related to the acquisition and
integration of Main Event recorded in general and administrative
expenses on the consolidated comprehensive income statement. |
|
(2) |
|
System implementation costs represent expenses incurred related to
the development and launch of new enterprise resource planning,
human capital management and inventory software for our stores and
store support teams. These charges are primarily recorded in
general and administrative expenses on the consolidated
comprehensive income statement. |
|
(3) |
|
Includes one-time, third-party consulting fees that are not part of
our ongoing operations, impairment expenses, and (gain) loss on
property and equipment transactions. |
|
(4) |
|
The income tax effect related to special items is based on the
statutory tax rate for the applicable period. |
|
|
|
|
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