QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of Incorporation) |
(I.R.S. Employer ID) | |
( | ||
(Address of principal executive offices) (Zip Code) |
(Registrant’s telephone number) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
||||
Emerging Growth Company |
Page |
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PART I |
FINANCIAL INFORMATION |
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Item 1. |
3 |
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Item 2. |
19 |
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Item 3. |
32 |
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Item 4. |
32 |
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PART II |
OTHER INFORMATION |
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Item 1. |
33 |
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Item 1A. |
33 |
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Item 2. |
35 |
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Item 6. |
36 |
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37 |
Item 1. |
Financial Statements |
July 31, |
January 30, |
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2022 |
2022 |
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(unaudited) |
(audited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Inventories |
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Prepaid expenses |
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Income taxes receivable |
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Other current assets |
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Total current assets |
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Property and equipment (net of $ |
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Operating lease right of use assets |
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Deferred tax assets |
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Tradenames |
||||||||
Goodwill |
||||||||
Other assets and deferred charges |
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Total assets |
$ | $ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
||||||||
Current installments of long-term debt |
$ | $ | ||||||
Accounts payable |
||||||||
Accrued liabilities |
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Income taxes payable |
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Total current liabilities |
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Deferred income taxes |
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Operating lease liabilities |
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Other liabilities |
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Long-term debt, net |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock, par value $ |
||||||||
Preferred stock, |
||||||||
Paid-in capital |
||||||||
Treasury stock, |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Retained earnings |
||||||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
Thirteen Weeks |
Thirteen Weeks |
|||||||
Ended |
Ended |
|||||||
July 31, 2022 |
August 1, 2021 |
|||||||
Food and beverage revenues |
$ | $ | ||||||
Amusement and other revenues |
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|
|
|
|
|||||
Total revenues |
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Cost of food and beverage |
||||||||
Cost of amusement and other |
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|
|
|
|
|||||
Total cost of products |
||||||||
Operating payroll and benefits |
||||||||
Other store operating expenses |
||||||||
General and administrative expenses |
||||||||
Depreciation and amortization expense |
||||||||
Pre-opening costs |
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|
|
|
|
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Total operating costs |
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|
|
|
|
|||||
Operating income |
||||||||
Interest expense, net |
||||||||
Loss on debt refinancing |
— | |||||||
|
|
|
|
|||||
Income before provision for income taxes |
||||||||
Provision for income taxes |
||||||||
|
|
|
|
|||||
Net income |
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|
|
|
|
|||||
Unrealized foreign currency translation gain (loss) |
( |
) | ||||||
Unrealized gain on derivatives, net of tax |
||||||||
|
|
|
|
|||||
Total other comprehensive income |
||||||||
|
|
|
|
|||||
Total comprehensive income |
$ | $ | ||||||
|
|
|
|
|||||
Net income per share: |
||||||||
Basic |
$ | $ | ||||||
Diluted |
$ | $ | ||||||
Weighted average shares used in per share calculations: |
||||||||
Basic |
||||||||
Diluted |
Twenty-Six Weeks |
Twenty-Six Weeks |
|||||||
Ended |
Ended |
|||||||
July 31, 2022 |
August 1, 2021 |
|||||||
Food and beverage revenues |
$ | $ | ||||||
Amusement and other revenues |
||||||||
|
|
|
|
|||||
Total revenues |
||||||||
Cost of food and beverage |
||||||||
Cost of amusement and other |
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|
|
|
|
|||||
Total cost of products |
||||||||
Operating payroll and benefits |
||||||||
Other store operating expenses |
||||||||
General and administrative expenses |
||||||||
Depreciation and amortization expense |
||||||||
Pre-opening costs |
||||||||
|
|
|
|
|||||
Total operating costs |
||||||||
|
|
|
|
|||||
Operating income |
||||||||
Interest expense, net |
||||||||
Loss on debt refinancing |
||||||||
|
|
|
|
|||||
Income before provision for income taxes |
||||||||
Provision for income taxes |
||||||||
|
|
|
|
|||||
Net income |
||||||||
|
|
|
|
|||||
Unrealized foreign currency translation gain (loss) |
( |
) | ||||||
Unrealized gain on derivatives, net of tax |
||||||||
|
|
|
|
|||||
Total other comprehensive income |
||||||||
|
|
|
|
|||||
Total comprehensive income |
$ | $ | ||||||
|
|
|
|
|||||
Net income per share: |
||||||||
Basic |
$ | $ | ||||||
Diluted |
$ | $ | ||||||
Weighted average shares used in per share calculations: |
||||||||
Basic |
||||||||
Diluted |
Thirteen Weeks Ended July 31, 2022 |
||||||||||||||||||||||||||||||||
Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||||||||||
Shares |
Amt. |
Shares |
Amt. |
|||||||||||||||||||||||||||||
Balance May 1, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized foreign currency translation gain |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized gain on derivatives, net of tax |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock |
( |
) | — | — | — | — | ||||||||||||||||||||||||||
Repurchase of common stock |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance July 31, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended August 1, 2021 |
||||||||||||||||||||||||||||||||
Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||||||||||
Shares |
Amt. |
Shares |
Amt. |
|||||||||||||||||||||||||||||
Balance May 2, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized foreign currency translation loss |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Unrealized gain on derivatives, net of tax |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | ||||||||||||||||||||||||||||
Repurchase of common stock |
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance August 1, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-Six Weeks Ended July 31, 2022 |
||||||||||||||||||||||||||||||||
Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||||||||||
Shares |
Amt. |
Shares |
Amt. |
|||||||||||||||||||||||||||||
Balance January 30, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized foreign currency translation loss |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Unrealized gain on derivatives, net of tax |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | ||||||||||||||||||||||||||||
Repurchase of common stock |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance July 31, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-Six Weeks Ended August 1, 2021 |
||||||||||||||||||||||||||||||||
Common Stock |
Paid-In Capital |
Treasury Stock At Cost |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||||||||||
Shares |
Amt. |
Shares |
Amt. |
|||||||||||||||||||||||||||||
Balance January 31, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized foreign currency translation gain |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized gain on derivatives, net of tax |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | ||||||||||||||||||||||||||||
Repurchase of common stock |
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance August 1, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-Six Weeks Ended July 31, 2022 |
Twenty-Six Weeks Ended August 1, 2021 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization expense |
||||||||
Non-cash interest expense |
||||||||
Impairment of long-lived assets |
||||||||
Deferred taxes |
( |
) | ||||||
Loss on disposal of fixed assets |
||||||||
Loss on debt refinancing |
||||||||
Share-based compensation |
||||||||
Other, net |
||||||||
Changes in assets and liabilities , net of acquired assets and liabilities: |
||||||||
Inventories |
( |
) | ( |
) | ||||
Prepaid expenses |
( |
) | ||||||
Income tax receivable |
||||||||
Other current assets |
( |
) | ( |
) | ||||
Other assets and deferred charges |
( |
) | ||||||
Accounts payable |
( |
) | ( |
) | ||||
Accrued liabilities |
||||||||
Income taxes payable |
||||||||
Other liabilities |
( |
) | ( |
) | ||||
Net cash provided by operating activities |
||||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
( |
) | ( |
) | ||||
Proceeds from sales of property and equipment |
||||||||
Acquisition of a business, net of cash acquired |
( |
) | ||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from debt |
||||||||
Payments of debt |
( |
) | ( |
) | ||||
Debt issuance costs |
( |
) | ||||||
Proceeds from the exercise of stock options |
||||||||
Repurchases of common stock under share repurchase program |
( |
) | ||||||
Repurchases of common stock to satisfy employee withholding tax obligations |
( |
) | ( |
) | ||||
Net cash provided by (used in) financing activities |
( |
) | ||||||
Increase in cash and cash equivalents |
||||||||
Beginning cash and cash equivalents |
||||||||
Ending cash and cash equivalents |
$ | $ | ||||||
Supplemental disclosures of cash flow information: |
||||||||
Increase in fixed asset accounts payable |
$ | $ | ||||||
Cash paid (refund received) for income taxes, net |
$ | ( |
) | $ | ( |
) | ||
Cash paid for interest, net |
$ | $ |
Thirteen weeks ended |
Twenty-six weeks ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
July 31, 2022 |
August 1, 2021 |
|||||||||||||
Loss reclassified or amortized into interest expense |
$ | $ | $ | $ | ||||||||||||
Income tax effect |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
Thirteen weeks ended |
Twenty-six weeks ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
July 31, 2022 |
August 1, 2021 |
|||||||||||||
Basic weighted average shares outstanding |
||||||||||||||||
Weighted average dilutive impact of awards |
||||||||||||||||
Diluted weighted average shares outstanding |
Amount |
||||
Gross cash consideration |
$ |
|||
Contingent consideration (1) |
||||
Less: cash acquired |
( |
) | ||
Total consideration paid |
$ |
|||
Assets: |
||||
Current assets |
||||
Property and equipment |
||||
Operating lease right |
||||
Deferred tax assets |
||||
Tradenames |
||||
Other assets and deferred charges |
||||
Liabilities: |
||||
Accounts payable |
||||
Current portion of operating lease liabilities |
||||
Accrued liabilities |
||||
Operating lease liabilities |
||||
Other liabilities |
||||
Net assets acquired, excluding goodwill |
$ |
|||
Goodwill |
$ |
|||
(1) |
The Company has an obligation to pay, in cash, an aggregate amount equal to any “Transaction Tax Benefits,” with respect to any taxable year of the Company after the Closing Date ending on or before December 31, 2028, including the current taxable year. Transaction Tax Benefits is generally defined as any reduction in the Company’s liabilities for U.S. federal and state income taxes due to the use of net operating losses generated prior to the Closing Date. The contingent consideration could range from $ Transaction Tax Benefits are achieved) to a cap, as defined in the Merger Agreement of approximately $ |
Amount |
Useful Life(Yrs) |
|||||||
Favorable/unfavorable lease contracts, net |
$ | |||||||
Tradenames |
Indefinite |
|||||||
Total acquisition-related intangible assets |
$ |
|||||||
Thirteen Weeks Ended |
Twenty-six Weeks Ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
July 31, 2022 |
August 1, 2021 |
|||||||||||||
Revenues |
$ | $ | $ | $ | ||||||||||||
Net i ncome |
$ | $ | $ | $ |
Balance at January 31, 2021 |
$ | |||
Currency adjustment |
||||
Balance at January 30, 2022 |
||||
Currency adjustment |
||||
Acquisition of Main Event |
||||
Balance at July 31, 2022 |
$ | |||
July 31, 2022 |
January 30, 2022 |
|||||||||||||||||||||||
Gross Amount |
Accumulated Amortization |
Net Amount |
Gross Amount |
Accumulated Amortization |
Net Amount |
|||||||||||||||||||
Favorable/unfavorable lease contracts, net |
$ |
$ |
( |
) |
$ |
$ |
— |
$ |
— |
$ |
— |
|||||||||||||
Tradenames (indefinite lived) |
$ |
N/A |
N/A |
$ |
N/A |
N/A |
Remainder of 2022 |
$ |
|||
2023 |
$ |
|||
2024 |
$ |
|||
2025 |
$ |
|||
2026 |
$ |
July 31, 2022 |
January 30, 2022 |
|||||||
Deferred amusement revenue |
$ | $ | ||||||
Current portion of operating lease liabilities, net (1) |
||||||||
Compensation and benefits |
||||||||
Deferred gift card revenue |
||||||||
Property taxes |
||||||||
Current portion of deferred occupancy costs |
||||||||
Accrued interest |
||||||||
Sales and use taxes |
||||||||
Customer deposits |
||||||||
Utilities |
||||||||
Current portion of long-term insurance |
||||||||
Variable rent liabilities |
||||||||
Other |
||||||||
$ | $ | |||||||
( 1 ) |
The balance of leasehold incentive receivables of $ |
Thirteen Weeks Ended |
Twenty-Six Weeks Ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
July 31, 2022 |
August 1, 2021 |
|||||||||||||
Operating lease cost |
$ |
$ |
$ |
$ |
||||||||||||
Variable lease cost |
||||||||||||||||
Short-term lease cost |
||||||||||||||||
Amortization of favorable/unfavorable lease contracts, net |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
Remainder of 2022 |
$ |
|||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
Total future operating lease liability |
$ |
|||
Less: interest |
( |
) | ||
Present value of operating lease liabilities |
$ |
|||
July 31, 2022 |
January 30, 2022 |
|||||||
Senior secured notes |
$ | $ | ||||||
Term loan |
— | |||||||
Total debt outstanding |
||||||||
Current portion |
( |
) | — |
|||||
Original issue discount on term loan |
( |
) | — |
|||||
Debt issuance costs |
( |
) | ( |
) | ||||
Long-term debt |
$ | $ | ||||||
Thirteen Weeks Ended |
Twenty-six Weeks Ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
July 31, 2022 |
August 1, 2021 |
|||||||||||||
Stock options |
$ | $ | ||||||||||||||
Restricted stock units |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Share-based compensation expense |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
2014 Stock Incentive Plan |
2010 Stock Incentive Plan |
|||||||||||||||
Number |
Wtd. Avg. |
Number |
Wtd. Avg. |
|||||||||||||
of Options |
Exercise Price |
of Options |
Exercise Price |
|||||||||||||
Outstanding at January 30, 2022 |
$ | $ | ||||||||||||||
Granted |
— | — | ||||||||||||||
Exercised |
( |
) | ( |
) | ||||||||||||
Forfeited |
( |
) | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Outstanding at July 31, 2022 |
$ | $ | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Exercisable at July 31, 2022 |
$ | $ | ||||||||||||||
|
|
|
|
|
|
|
|
Wtd. Avg. |
||||||||
Shares |
Fair Value |
|||||||
Outstanding at January 30, 2022 |
$ | |||||||
Granted |
||||||||
Performance adjusted units |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
|
|
|
|
|||||
Outstanding at July 31, 2022 |
$ | |||||||
|
|
|
|
• | Revenues totaled $468,359 in the second quarter of 2022 compared with $344,599 in the second quarter of 2019. A total of 148 and 130 Dave & Buster’s stores were open and operating without restrictions at the end of the second quarter of 2022 and 2019, respectively. The newly acquired Main Event stores contributed revenues of $51,405 from the acquisition on June 29, 2022, through the end of the second quarter. Revenues totaled $377,638 in the second quarter of 2021, which ended with 142 Dave & Buster’s stores open and operating in limited capacity. |
• | Overall Dave & Buster’s comparable store sales increased 9.6% compared with the same period in 2019 and increased 5.7% compared with the same period in 2021, which ended with 113 comparable Dave & Buster’s stores open and operating in limited capacity. |
• | Net income totaled $29,088, or $0.59 per diluted share, compared with net income of $32,356, or $0.90 per diluted share in the same period of 2019. Net income in the second quarter of fiscal 2022 was impacted by incremental acquisition and integration costs related to the Main Event Acquisition. In the same period of 2021, we recorded net income of $52,770. |
• | Adjusted EBITDA totaled $119,550, or 25.5% of revenues, compared with Adjusted EBITDA of $85,982 or 25.0% of revenues in the second quarter of 2019. Adjusted EBITDA was $119,152 or 31.6% of revenues in the second quarter of 2021. |
• | Ended the quarter with $100,386 in cash and $491,395 of liquidity available under the Company’s revolving credit facility. |
Thirteen Weeks |
Thirteen Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
|||||||||||||||
Food and beverage revenues |
$ | 156,995 | 33.5 | % | $ | 123,006 | 32.6 | % | ||||||||
Amusement and other revenues |
311,364 | 66.5 | 254,632 | 67.4 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
468,359 | 100.0 | 377,638 | 100.0 | ||||||||||||
Cost of food and beverage (as a percentage of food and beverage revenues) |
46,461 | 29.6 | 33,127 | 26.9 | ||||||||||||
Cost of amusement and other (as a percentage of amusement and other revenues) |
29,075 | 9.3 | 24,584 | 9.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of products |
75,536 | 16.1 | 57,711 | 15.3 | ||||||||||||
Operating payroll and benefits |
113,674 | 24.3 | 80,623 | 21.3 | ||||||||||||
Other store operating expenses |
142,440 | 30.4 | 105,116 | 27.9 | ||||||||||||
General and administrative expenses |
37,710 | 8.1 | 18,470 | 4.9 | ||||||||||||
Depreciation and amortization expense |
38,614 | 8.2 | 34,875 | 9.2 | ||||||||||||
Pre-opening costs |
3,913 | 0.8 | 1,676 | 0.4 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating costs |
411,887 | 87.9 | 298,471 | 79.0 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income |
56,472 | 12.1 | 79,167 | 21.0 | ||||||||||||
Interest expense, net |
17,118 | 3.7 | 13,728 | 3.7 | ||||||||||||
Loss on debt refinancing |
1,479 | 0.3 | 0 | 0 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before provision for income taxes |
37,875 | 8.1 | 65,439 | 17.3 | ||||||||||||
Provision for income taxes |
8,787 | 1.9 | 12,669 | 3.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 29,088 | 6.2 | % | $ | 52,770 | 14.0 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Change in comparable store sales (1) |
5.7 | % | 690.8 | % | ||||||||||||
Comparable stores at end of period (1) |
113 | 114 | ||||||||||||||
Company-owned stores at end of period (1) |
200 | 142 |
(1) | Our comparable store count as of the end of the second quarter of fiscal 2022 excludes a store in Cary, North Carolina, which was closed and relocated during the fourth quarter of fiscal 2021. Company-owned stores as of July 31, 2022, include 52 Main Event stores, which were acquired on June 29, 2022. These stores are not considered comparable stores. |
Thirteen Weeks |
Thirteen Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
|||||||||||||||
Net income |
$ | 29,088 | 6.2 | % | $ | 52,770 | 14.0 | % | ||||||||
Interest expense, net |
17,118 | 13,728 | ||||||||||||||
Loss on debt refinancing |
1,479 | — | ||||||||||||||
Provision for income taxes |
8,787 | 12,669 | ||||||||||||||
Depreciation and amortization expense |
38,614 | 34,875 | ||||||||||||||
|
|
|
|
|||||||||||||
EBITDA |
95,086 | 20.3 | % | 114,042 | 30.2 | % | ||||||||||
Loss on asset disposal |
154 | 112 | ||||||||||||||
Impairment of long-lived assets |
1,841 | — | ||||||||||||||
Share-based compensation |
4,698 | 3,187 | ||||||||||||||
Pre-opening costs |
3,913 | 1,676 | ||||||||||||||
Other costs (1) |
13,858 | 135 | ||||||||||||||
|
|
|
|
|||||||||||||
Adjusted EBITDA |
$ | 119,550 | 25.5 | % | $ | 119,152 | 31.6 | % | ||||||||
|
|
|
|
(1) | Primarily represents $7,700 in costs related to the acquisition of Main Event. Refer to Note 2 of the Unaudited Consolidated Financial Statements for more information. |
Thirteen Weeks |
Thirteen Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
|||||||||||||||
Operating income |
$ | 56,472 | 12.1 | % | $ | 79,167 | 21.0 | % | ||||||||
General and administrative expenses |
37,710 | 18,470 | ||||||||||||||
Depreciation and amortization expense |
38,614 | 34,875 | ||||||||||||||
Pre-opening costs |
3,913 | 1,676 | ||||||||||||||
|
|
|
|
|||||||||||||
Store Operating Income Before Depreciation and Amortization |
$ | 136,709 | 29.2 | % | $ | 134,188 | 35.5 | % | ||||||||
|
|
|
|
Thirteen Weeks |
Thirteen Weeks |
|||||||
Ended |
Ended |
|||||||
July 31, 2022 |
August 1, 2021 |
|||||||
New store and operating initiatives |
$ | 37,016 | $ | 12,611 | ||||
Games |
17,826 | 9,443 | ||||||
Maintenance capital |
7,262 | 6,402 | ||||||
|
|
|
|
|||||
Total capital additions |
$ | 62,104 | $ | 28,456 | ||||
|
|
|
|
|||||
Payments from landlords |
$ | 7,215 | $ | 2,085 |
Thirteen Weeks Ended |
||||||||||||
July 31, 2022 |
August 1, 2021 |
Change |
||||||||||
Total revenues |
$ | 468,359 | $ | 377,638 | $ | 90,721 | ||||||
Total store operating weeks |
2,171 | 1,817 | 354 | |||||||||
Comparable store revenues |
$ | 333,967 | $ | 316,006 | $ | 17,961 | ||||||
Comparable store operating weeks |
1,469 | 1,445 | 24 | |||||||||
Noncomparable store revenues—Dave & Buster’s |
$ | 84,723 | 69,164 | $ | 15,559 | |||||||
Noncomparable store operating weeks—Dave & Buster’s |
442 | 372 | 70 | |||||||||
Noncomparable store revenues—Main Event |
51,405 | — | 51,405 | |||||||||
Noncomparable store operating weeks—Main Event |
260 | — | 260 | |||||||||
Other revenues and deferrals—Dave & Buster’s |
$ | (1,736 | ) | $ | (7,532 | ) | $ | 5,796 |
Thirteen Weeks Ended |
||||||||
July 31, 2022 |
August 1, 2021 |
|||||||
Food sales |
23.4 | % | 22.4 | % | ||||
Beverage sales |
10.1 | % | 10.2 | % | ||||
Amusement sales |
65.8 | % | 67.2 | % | ||||
Other |
0.7 | % | 0.2 | % |
Twenty-Six Weeks |
Twenty-Six Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
|||||||||||||||
Food and beverage revenues |
$ | 308,907 | 33.6 | % | $ | 208,764 | 32.5 | % | ||||||||
Amusement and other revenues |
610,553 | 66.4 | 434,214 | 67.5 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
919,460 | 100.0 | 642,978 | 100.0 | ||||||||||||
Cost of food and beverage (as a percentage of food and beverage revenues) |
89,716 | 29.0 | 56,284 | 27.0 | ||||||||||||
Cost of amusement and other (as a percentage of amusement and other revenues) |
55,841 | 9.1 | 41,198 | 9.5 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of products |
145,557 | 15.8 | 97,482 | 15.2 | ||||||||||||
Operating payroll and benefits |
207,035 | 22.5 | 130,902 | 20.4 | ||||||||||||
Other store operating expenses |
266,865 | 29.0 | 189,561 | 29.4 | ||||||||||||
General and administrative expenses |
66,007 | 7.2 | 35,561 | 5.5 | ||||||||||||
Depreciation and amortization expense |
71,902 | 7.8 | 69,974 | 10.9 | ||||||||||||
Pre-opening costs |
6,910 | 0.8 | 3,335 | 0.5 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating costs |
764,276 | 83.1 | 526,815 | 81.9 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income |
155,184 | 16.9 | 116,163 | 18.1 | ||||||||||||
Interest expense, net |
28,509 | 3.1 | 28,548 | 4.5 | ||||||||||||
Loss on debt refinancing |
1,479 | 0.2 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before provision for income taxes |
125,196 | 13.6 | 87,615 | 13.6 | ||||||||||||
Provision for income taxes |
29,124 | 3.2 | 15,210 | 2.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 96,072 | 10.4 | % | $ | 72,405 | 11.3 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Change in comparable store sales (1) |
32.2 | % | 199.1 | % | ||||||||||||
Comparable stores at end of period (1) |
113 | 114 | ||||||||||||||
Company-owned stores at end of period (1) |
200 | 142 |
(1) | Our comparable store count as of the end of the second quarter of fiscal 2022 excludes a store in Cary, North Carolina, which was closed and relocated during the fourth quarter of fiscal 2021. Company-owned stores as of July 31, 2022, includes 52 Main Event stores, which were acquired on June 29, 2022. These stores are not considered comparable stores. |
Twenty-Six Weeks |
Twenty-Six Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
|||||||||||||||
Net income |
$ | 96,072 | 10.4 | % | $ | 72,405 | 11.3 | % | ||||||||
Interest expense, net |
28,509 | 28,548 | ||||||||||||||
Loss on debt refinancing |
1,479 | |||||||||||||||
Provision for income taxes |
29,124 | 15,210 | ||||||||||||||
Depreciation and amortization expense |
71,902 | 69,974 | ||||||||||||||
|
|
|
|
|||||||||||||
EBITDA |
227,086 | 24.7 | % | 186,137 | 28.9 | % | ||||||||||
Loss on asset disposal |
370 | 257 | ||||||||||||||
Impairment of long-lived assets |
1,841 | — | ||||||||||||||
Share-based compensation |
8,253 | 6,158 | ||||||||||||||
Pre-opening costs |
6,910 | 3,335 | ||||||||||||||
Other costs (1) |
18,337 | (30 | ) | |||||||||||||
|
|
|
|
|||||||||||||
Adjusted EBITDA |
$ | 262,797 | 28.6 | % | $ | 195,857 | 30.5 | % | ||||||||
|
|
|
|
(1) | Primarily represents $12,200 in costs related to the acquisition of Main Event. Refer to Note 2 of the Unaudited Consolidated Financial Statements for more information. |
Twenty-Six Weeks |
Twenty-Six Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
July 31, 2022 |
August 1, 2021 |
|||||||||||||||
Operating income |
$ | 155,184 | 16.9 | % | $ | 116,163 | 18.1 | % | ||||||||
General and administrative expenses |
66,007 | 35,561 | ||||||||||||||
Depreciation and amortization expense |
71,902 | 69,974 | ||||||||||||||
Pre-opening costs |
6,910 | 3,335 | ||||||||||||||
|
|
|
|
|||||||||||||
Store Operating Income Before Depreciation and Amortization |
$ | 300,003 | 32.6 | % | $ | 225,033 | 35.0 | % | ||||||||
|
|
|
|
Twenty-Six Weeks |
Twenty-Six Weeks |
|||||||
Ended |
Ended |
|||||||
July 31, 2022 |
August 1, 2021 |
|||||||
New store and operating initiatives |
$ | 72,147 | $ | 19,756 | ||||
Games |
19,338 | 12,614 | ||||||
Maintenance capital |
13,573 | 8,290 | ||||||
|
|
|
|
|||||
Total capital additions |
$ | 105,058 | $ | 40,660 | ||||
|
|
|
|
|||||
Payments from landlords |
$ | 7,928 | $ | 2,085 |
Twenty-Six Weeks Ended |
||||||||||||
July 31, 2022 |
August 1, 2021 |
Change |
||||||||||
Total revenues |
$ | 919,460 | $ | 642,978 | $ | 276,482 | ||||||
Total store operating weeks |
4,047 | 3,450 | 597 | |||||||||
Comparable store revenues |
$ | 702,444 | $ | 531,412 | $ | 171,032 | ||||||
Comparable store operating weeks |
2,938 | 2,735 | 203 | |||||||||
Noncomparable store revenues—Dave & Buster’s |
$ | 173,873 | 127,662 | $ | 46,211 | |||||||
Noncomparable store operating weeks—Dave & Buster’s |
849 | 715 | 134 | |||||||||
Noncomparable store revenues—Main Event |
$ | 51,405 | — | $ | 51,405 | |||||||
Noncomparable store operating weeks—Main Event |
260 | — | 260 | |||||||||
Other revenues and deferrals—Dave & Buster’s |
$ | (8,262 | ) | $ | (16,096 | ) | $ | 7,834 |
Twenty-Six Weeks Ended |
||||||||
July 31, 2022 |
August 1, 2021 |
|||||||
Food sales |
22.9 | % | 22.3 | % | ||||
Beverage sales |
10.7 | % | 10.2 | % | ||||
Amusement sales |
65.8 | % | 67.3 | % | ||||
Other |
0.6 | % | 0.2 | % |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
Item 4. |
Controls and Procedures |
Item 1. |
Legal Proceedings |
Item 1A. |
Risk Factors |
• | incorrect assumptions regarding the future results of acquired operations or assets or expected cost reductions or other synergies expected to be realized from acquiring operations or assets; |
• | failure to integrate the operations or management of any acquired operations or assets successfully and timely; |
• | potential loss of key employees and customers of the acquired companies; |
• | potential lack of experience operating in a geographic market or product line of the acquired business; |
• | an increase in our expenses, particularly overhead expenses, and working capital requirements; |
• | the possible inability to achieve the intended objectives of the business combination; and |
• | the diversion of management’s attention from existing operations or other priorities. |
• | incur or guarantee additional indebtedness or issue certain disqualified or preferred stock; |
• | pay dividends or make other distributions on, or redeem or purchase any equity interests or make other restricted payments; |
• | make certain acquisitions or investments; |
• | create or incur liens; |
• | transfer or sell assets; |
• | incur restrictions on the payment of dividends or other distributions from our restricted subsidiaries; |
• | alter the business that we conduct; |
• | enter into transactions with affiliates; and |
• | consummate a merger or consolidation or sell, assign, transfer, lease or otherwise dispose of all or substantially all our assets. |
Item 2. |
Unregistered Sales of Equity Securities |
Period (1) |
Total Number of Shares Repurchased |
Average Price Paid per Share |
Total Number of Shares Repurchased as Part of Publicly Announced Plan (2) |
Approximate Dollar Value of Shares That May Yet Be Repurchased Under the Plan (3) |
||||||||||||
May 2 – May 29, 2022 |
— | $ | — | — | $ | 100,000 | ||||||||||
May 30 – July 3, 2022 |
— | $ | — | — | $ | 100,000 | ||||||||||
July 4 – July 31, 2022 |
764,988 | $ | 32.70 | 764,988 | $ | 74,985 |
(1) | Monthly information is presented by reference to our fiscal periods during the thirteen weeks ended July 31, 2022. |
(2) | Our Board of Directors approved a share repurchase program, under which 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 Exchange Act of 1934, as amended. The share repurchase program may be modified, suspended or discontinued at any time. |
(3) | Based on total share repurchase authorization in effect on July 31, 2022. |
Item 6. |
Exhibits |
* | Filed herein |
DAVE & BUSTER’S ENTERTAINMENT, INC., a Delaware corporation | ||||||
Date: September 7, 2022 | By: | /s/ Christopher Morris | ||||
Christopher Morris | ||||||
Chief Executive Officer | ||||||
Date: September 7, 2022 | By: | /s/ Michael A. Quartieri | ||||
Michael A. Quartieri | ||||||
Chief Financial Officer |