Dave & Buster's(PLAY) - 2025 Q2 - Quarterly Results

Financial and Operational Highlights Q2 2024 revenue grew 2.8% to $557.1M, Adjusted EBITDA increased 8.1% to $151.6M, despite comparable sales decline Q2 2024 Key Financial Highlights (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $557.1M | $542.1M (implied) | +2.8% | | Comparable Store Sales | -6.3% | N/A | -6.3% | | Net Income | $40.3M | $25.9M | +55.6% | | Diluted EPS | $0.99 | $0.60 | +65.0% | | Adjusted Net Income | $45.7M | $40.9M | +11.7% | | Adjusted Diluted EPS | $1.12 | $0.94 | +19.1% | | Adjusted EBITDA | $151.6M | $140.3M | +8.1% | - Operational highlights for the quarter include: - New Stores: Opened two new Dave & Buster's locations. Subsequent to the quarter, opened one Dave & Buster's and one Main Event store[2] - Remodels: Remodeled nine Dave & Buster's stores[2] - Real Estate: Generated $45.0 million in proceeds from a sale-leaseback transaction for two properties[2] - Share Repurchases: Repurchased $47.4 million of shares in Q2, totaling $60.0 million year-to-date. $140.0 million remains authorized for repurchase[2] CEO's Commentary and Strategic Initiatives CEO highlights strategic progress in remodels, menu, pricing, and special events, despite comparable sales challenges - The company is making significant progress on its strategic goals despite a challenging environment[3] - Key strategic initiatives showing positive results include: - Store Remodels: Fully programmed remodels are performing well[3] - Menu Enhancements: The new menu is well-received, improving F&B performance and guest satisfaction[3] - Pricing Strategy: Testing of games and F&B pricing levels has benefited the top line and margins[3] - Special Events: The special events business has seen substantial growth in same-store sales, with forward bookings significantly above the prior year[3] - New Stores: New domestic stores are performing in line with or above expectations[3] Detailed Financial Performance Q2 2024 total revenue rose 2.8% to $557.1M, operating income improved, and Adjusted EBITDA grew to $151.6M Q2 2024 Performance vs. Q2 2023 | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Total Revenue | $557.1M | $542.1M | | Comparable Store Sales | -6.3% | N/A | | Operating Income | $84.5M | $77.1M | | Operating Margin | 15.1% | 14.3% | | Adjusted EBITDA | $151.6M | $140.3M | | Adjusted EBITDA Margin | 27.2% | 25.9% | Balance Sheet, Liquidity, and Cash Flow Q2 operating cash flow was $101.8M, Net Total Leverage Ratio 2.3x, with $60.0M in year-to-date share repurchases Liquidity and Leverage as of August 6, 2024 | Metric | Value | | :--- | :--- | | Q2 Operating Cash Flow | $101.8M | | Cash and Cash Equivalents | $13.1M | | Revolving Credit Facility Availability | $481.0M | | Net Total Leverage Ratio | 2.3x | - Year-to-date, the company has repurchased 1.2 million shares for $60.0 million, with $140.0 million remaining on its share repurchase authorization[6] Consolidated Financial Statements Consolidated statements of operations, balance sheets, and cash flow detail the company's financial position and performance Consolidated Statements of Operations Q2 2024 total revenues reached $557.1M, with net income significantly increasing to $40.3M ($0.99 diluted EPS) Q2 2024 Statement of Operations Highlights (in millions) | Line Item | Thirteen Weeks Ended Aug 6, 2024 | Thirteen Weeks Ended Jul 30, 2023 | | :--- | :--- | :--- | | Total Revenues | $557.1 | $542.1 | | Total Operating Costs | $472.6 | $465.0 | | Operating Income | $84.5 | $77.1 | | Net Income | $40.3 | $25.9 | | Diluted EPS | $0.99 | $0.60 | Condensed Consolidated Balance Sheets As of Aug 6, 2024, total assets were $3.83B, liabilities $3.55B, and stockholders' equity $284.4M, with cash decreasing Balance Sheet Summary (in millions) | Account | August 6, 2024 | February 4, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $13.1 | $37.3 | | Total current assets | $96.1 | $137.5 | | Total assets | $3,833.9 | $3,754.4 | | Total current liabilities | $408.2 | $435.6 | | Long-term debt, net | $1,292.4 | $1,284.0 | | Stockholders' equity | $284.4 | $251.2 | Summary Cash Flow Information Q2 2024 operating cash flow was $101.8M, investing activities used $115.9M, leading to a $19.0M cash decrease Cash Flow Summary for Thirteen Weeks Ended (in millions) | Activity | August 6, 2024 | July 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $101.8 | $103.8 | | Net cash used in investing activities | ($115.9) | ($82.6) | | Net cash used in financing activities | ($4.9) | ($30.1) | | Decrease in cash and cash equivalents | ($19.0) | ($8.9) | Non-GAAP Financial Measures and Reconciliations Company uses non-GAAP measures like Adjusted EBITDA for clearer operational performance insights and comparability - The company uses non-GAAP financial measures for financial and operational decision-making and to evaluate period-to-period comparisons, believing they provide useful information about operating results and enhance transparency[13] Adjusted EBITDA Reconciliation Q2 2024 Adjusted EBITDA increased to $151.6M from $140.3M, with margin expanding to 27.2%, reconciled from net income Reconciliation of Net Income to Adjusted EBITDA (in millions) | Line Item | Thirteen Weeks Ended Aug 6, 2024 | Thirteen Weeks Ended Jul 30, 2023 | | :--- | :--- | :--- | | Net income | $40.3 | $25.9 | | EBITDA | $142.0 | $126.2 | | Adjustments (Share-based comp, transaction costs, etc.) | $9.6 | $14.1 | | Adjusted EBITDA | $151.6 | $140.3 | Store Operating Income Before Depreciation and Amortization Q2 2024 store operating income before D&A was $176.5M (31.7% margin), up from $162.4M, derived from operating income Calculation of Store Operating Income Before D&A (in millions) | Line Item | Thirteen Weeks Ended Aug 6, 2024 | Thirteen Weeks Ended Jul 30, 2023 | | :--- | :--- | :--- | | Operating income | $84.5 | $77.1 | | Add back: G&A, D&A, Pre-opening costs | $92.0 | $85.3 | | Store operating income before D&A | $176.5 | $162.4 | Credit Adjusted EBITDA and Net Total Leverage Ratio Trailing four-quarter Credit Adjusted EBITDA was $561.1M, resulting in a Net Total Leverage Ratio of 2.3x Net Total Leverage Ratio Calculation | Metric | Value (in millions, except ratio) | | :--- | :--- | | Credit Adjusted EBITDA (a) | $561.1 | | Net debt (b) | $1,299.3 | | Net Total Leverage Ratio (b / a) | 2.3x | - Credit Adjusted EBITDA for the trailing four quarters was $561.1 million, calculated by adjusting EBITDA for items such as share-based compensation, transaction costs, system implementation costs, and pre-opening costs[26] Adjusted Net Income Reconciliation Q2 2024 Adjusted Net Income was $45.7M ($1.12 diluted EPS), adjusted from GAAP net income for special items Reconciliation of Net Income to Adjusted Net Income (in millions) | Line Item | Thirteen Weeks Ended Aug 6, 2024 | Thirteen Weeks Ended Jul 30, 2023 | | :--- | :--- | :--- | | Net income | $40.3 | $25.9 | | Add back: Special items (pre-tax) | $7.3 | $20.1 | | Less: Tax impact of items | ($1.9) | ($5.1) | | Adjusted Net income | $45.7 | $40.9 | | Adjusted EPS | $1.12 | $0.94 |