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 |
||||||
PART I |
FINANCIAL INFORMATION |
|||||
Item 1. |
3 |
|||||
Item 2. |
13 |
|||||
Item 3. |
22 |
|||||
Item 4. |
22 |
|||||
PART II |
OTHER INFORMATION |
|||||
Item 1. |
22 |
|||||
Item 1A. |
22 |
|||||
Item 2. |
24 |
|||||
Item 6. |
25 |
|||||
26 |
Item 1. |
Financial Statements |
May 1, |
January 30, |
|||||||
2022 |
2022 |
|||||||
(unaudited) |
(audited) |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Inventories |
||||||||
Prepaid expenses |
||||||||
Income taxes receivable |
||||||||
Other current assets |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
Property and equipment (net of $ |
||||||||
Operating lease right of use assets |
||||||||
Deferred tax assets |
||||||||
Tradenames |
||||||||
Goodwill |
||||||||
Other assets and deferred charges |
||||||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued liabilities |
||||||||
Income taxes payable |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
Deferred income taxes |
||||||||
Operating lease liabilities |
||||||||
Other liabilities |
||||||||
Long-term debt, net |
||||||||
Commitments and contingencies |
||||||||
Stockholders’ equity: |
||||||||
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 |
|||||||
May 1, 2022 |
May 2, 2021 |
|||||||
Food and beverage revenues |
$ | $ | ||||||
Amusement and other revenues |
||||||||
|
|
|
|
|||||
Total revenues |
||||||||
Cost of food and beverage |
||||||||
Cost of amusement and other |
||||||||
|
|
|
|
|||||
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 |
||||||||
|
|
|
|
|||||
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 May 1, 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 May 1, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended May 2, 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 May 2, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended May 1, 2022 |
Thirteen Weeks Ended May 2, 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 |
||||||||
Deferred taxes |
( |
) | ||||||
Loss on disposal of fixed assets |
||||||||
Share-based compensation |
||||||||
Other, net |
||||||||
Changes in 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 |
||||||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Proceeds from debt |
||||||||
Payments of debt |
( |
) | ( |
) | ||||
Proceeds from the exercise of stock options |
||||||||
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 |
||||||||
May 1, 2022 |
May 2, 2021 |
|||||||
Loss reclassified or amortized into interest expense |
$ | $ | ||||||
Income tax effect |
$ | ( |
) | $ | ( |
) |
Thirteen weeks ended |
||||||||
May 1, 2022 |
May 2, 2021 |
|||||||
Basic weighted average shares outstanding |
||||||||
Weighted average dilutive impact of awards |
||||||||
Diluted weighted average shares outstanding |
May 1, 2022 |
January 30, 2022 |
|||||||
Deferred amusement revenue |
$ | $ | ||||||
Current portion of operating lease liabilities, net (1) |
||||||||
Compensation and benefits |
||||||||
Current portion of deferred occupancy costs |
||||||||
Deferred gift card revenue |
||||||||
Property taxes |
||||||||
Current portion of long-term insurance |
||||||||
Customer deposits |
||||||||
Utilities |
||||||||
Sales and use taxes |
||||||||
Current portion of derivatives |
||||||||
Accrued interest |
||||||||
Other |
||||||||
Total s |
$ | |
$ | |
||||
(1) | The balance of leasehold incentive receivables of $ . |
May 1, 2022 |
January 30, 2022 |
|||||||
Senior secured notes |
$ | |
$ | |
||||
Total debt outstanding |
||||||||
Less debt issuance costs |
( |
) | ( |
) | ||||
Long-term debt, net |
$ | $ | ||||||
Thirteen Weeks Ended |
||||||||
May 1, 2022 |
May 2, 2021 |
|||||||
Operating lease cost |
$ | |
||||||
Variable lease cost |
||||||||
Short-term lease cost |
||||||||
Total |
$ | $ | ||||||
Thirteen Weeks Ended |
||||||||
May 1, 2022 |
May 2, 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 May 1, 2022 |
$ | $ | ||||||||||||||
Exercisable at May 1, 2022 |
$ | $ | ||||||||||||||
Wtd. Avg. |
||||||||
Shares |
Fair Value |
|||||||
Outstanding at January 30, 2022 |
$ | |
||||||
Granted |
||||||||
Performance adjusted units |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
Outstanding at May 1, 2022 |
$ | |||||||
• | Revenues totaled $451,101 in the first quarter of 2022 compared with $363,582 in the first quarter of 2019. A total of 145 and 127 stores were open and operating without restrictions at the end of the first quarter of 2022 and 2019, respectively. Revenues totaled $265,340 in the first quarter of 2021, which ended with 138 of 141 stores open and operating in limited capacity. |
• | Overall comparable store sales increased 10.9% compared with the same period in 2019 and increased 71.1% compared with the same period in 2021, which ended with 110 of 113 comparable stores open and operating in limited capacity. |
• | Net income totaled $66,984, or $1.35 per diluted share, compared with net income of $42,443, or $1.13 per diluted share in the same period of 2019. In the same period of 2021, we recorded net income of $19,635. |
• | Adjusted EBITDA totaled $143,247, or 31.8% of revenues, compared with Adjusted EBITDA of $98,184 or 27.0% of revenues in the first quarter of 2019. The increase over fiscal 2019 in Adjusted EBITDA, as a percent of revenues, is largely driven by the higher mix of amusements, less discounting, lower hourly labor costs associated with labor efficiencies, and leveraging of certain fixed costs, including occupancy. Adjusted EBITDA was $76,705 or 28.9% of revenues in the first quarter of 2021. |
• | Ended the quarter with $139,081 in cash and approximately $492,500 of liquidity available under the Company’s revolving credit facility. The Company’s total leverage ratio, as defined in the existing credit facility, was approximately 0.7x as of May 1, 2022. |
Thirteen Weeks |
Thirteen Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
May 1, 2022 |
May 2, 2021 |
|||||||||||||||
Food and beverage revenues |
$ | 151,912 | 33.7 | % | $ | 85,758 | 32.3 | % | ||||||||
Amusement and other revenues |
299,189 | 66.3 | 179,582 | 67.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
451,101 | 100.0 | 265,340 | 100.0 | ||||||||||||
Cost of food and beverage (as a percentage of food and beverage revenues) |
43,255 | 28.5 | 23,157 | 27.0 | ||||||||||||
Cost of amusement and other (as a percentage of amusement and other revenues) |
26,766 | 8.9 | 16,614 | 9.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of products |
70,021 | 15.5 | 39,771 | 15.0 | ||||||||||||
Operating payroll and benefits |
93,361 | 20.7 | 50,279 | 18.9 | ||||||||||||
Other store operating expenses |
124,425 | 27.5 | 84,445 | 31.9 | ||||||||||||
General and administrative expenses |
28,297 | 6.3 | 17,091 | 6.4 | ||||||||||||
Depreciation and amortization expense |
33,288 | 7.4 | 35,099 | 13.2 | ||||||||||||
Pre-opening costs |
2,997 | 0.7 | 1,659 | 0.6 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating costs |
352,389 | 78.1 | 228,344 | 86.0 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income |
98,712 | 21.9 | 36,996 | 14.0 | ||||||||||||
Interest expense, net |
11,391 | 2.5 | 14,820 | 5.6 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before provision for income taxes |
87,321 | 19.4 | 22,176 | 8.4 | ||||||||||||
Provision for income taxes |
20,337 | 4.6 | 2,541 | 1.0 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 66,984 | 14.8 | % | $ | 19,635 | 7.4 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Change in comparable store sales (1) |
71.1 | % | 56.5 | % | ||||||||||||
Company-owned stores at end of period (1) |
145 | 141 | ||||||||||||||
Comparable stores at end of period (1) |
113 | 114 |
(1) |
As of the end of the first quarter of fiscal 2022, all our 145 stores were open and operating without any health restrictions. As of the end of the first quarter of fiscal 2021, 138 of our 141 stores were open and operating in limited capacity. Our comparable store count as of the end of the first quarter of fiscal 2022 excludes a store in Cary, North Carolina, which was closed and relocated during the fourth quarter of fiscal 2021. |
Thirteen Weeks |
Thirteen Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
May 1, 2022 |
May 2, 2021 |
|||||||||||||||
Net income |
$ | 66,984 | 14.8 | % | $ | 19,635 | 7.4 | % | ||||||||
Interest expense, net |
11,391 | 14,820 | ||||||||||||||
Provision for income taxes |
20,337 | 2,541 | ||||||||||||||
Depreciation and amortization expense |
33,288 | 35,099 | ||||||||||||||
|
|
|
|
|||||||||||||
EBITDA |
132,000 | 29.3 | % | 72,095 | 27.2 | % | ||||||||||
Loss on asset disposal |
216 | 145 | ||||||||||||||
Share-based compensation |
3,555 | 2,971 | ||||||||||||||
Pre-opening costs |
2,997 | 1,659 | ||||||||||||||
Other costs (1) |
4,479 | (165 | ) | |||||||||||||
|
|
|
|
|||||||||||||
Adjusted EBITDA |
$ | 143,247 | 31.8 | % | $ | 76,705 | 28.9 | % | ||||||||
|
|
|
|
(1) |
Primarily represents costs related to the pending acquisition of Main Event. Refer to Note 8 of the unaudited financial statements for more information. |
Thirteen Weeks |
Thirteen Weeks |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
May 1, 2022 |
May 2, 2021 |
|||||||||||||||
Operating income |
$ | 98,712 | 21.9 | % | $ | 36,996 | 14.0 | % | ||||||||
General and administrative expenses |
28,297 | 17,091 | ||||||||||||||
Depreciation and amortization expense |
33,288 | 35,099 | ||||||||||||||
Pre-opening costs |
2,997 | 1,659 | ||||||||||||||
|
|
|
|
|||||||||||||
Store Operating Income Before Depreciation and Amortization |
$ | 163,294 | 36.2 | % | $ | 90,845 | 34.2 | % | ||||||||
|
|
|
|
Thirteen Weeks |
Thirteen Weeks |
|||||||
Ended |
Ended |
|||||||
May 1, 2022 |
May 2, 2021 |
|||||||
New store and operating initiatives |
$ | 35,131 | $ | 7,145 | ||||
Games |
1,512 | 3,171 | ||||||
Maintenance capital |
6,311 | 1,888 | ||||||
|
|
|
|
|||||
Total capital additions |
$ | 42,954 | $ | 12,204 | ||||
|
|
|
|
|||||
Payments from landlords |
$ | 713 | $ | — |
Thirteen Weeks Ended |
||||||||||||
May 1, 2022 |
May 2, 2021 |
Change |
||||||||||
Total revenues |
$ | 451,101 | $ | 265,340 | $ | 185,761 | ||||||
Total store operating weeks |
1,876 | 1,633 | 243 | |||||||||
Comparable store revenues |
$ | 368,477 | $ | 215,406 | $ | 153,071 | ||||||
Comparable store operating weeks |
1,469 | 1,290 | 179 | |||||||||
Noncomparable store revenues |
$ | 89,150 | 58,498 | $ | 30,652 | |||||||
Noncomparable store operating weeks |
407 | 343 | 64 | |||||||||
Other revenues and deferrals |
$ | (6,526 | ) | $ | (8,564 | ) | $ | 2,038 |
Thirteen Weeks Ended |
||||||||
May 1, 2022 |
May 2, 2021 |
|||||||
Food sales |
22.5 | % | 22.2 | % | ||||
Beverage sales |
11.2 | % | 10.1 | % | ||||
Amusement sales |
65.9 | % | 67.5 | % | ||||
Other |
0.4 | % | 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. |
Item 2. |
Unregistered Sales of Equity Securities |
Item 6. |
Exhibits |
* | Filed herein |
DAVE & BUSTER’S ENTERTAINMENT, INC., a Delaware corporation | ||||||
Date: June 7, 2022 | By: | /s/ Kevin M. Sheehan | ||||
Kevin M. Sheehan | ||||||
Interim Chief Executive Officer | ||||||
Date: June 7, 2022 | By: | /s/ Michael A. Quartieri | ||||
Michael A. Quartieri | ||||||
Chief Financial Officer |