Dave & Buster's(PLAY) - 2026 Q3 - Quarterly Report

Financial Performance - Third quarter revenue was $448.2 million, a slight decrease compared to the third quarter of 2024[82] - Net loss totaled $42.1 million, or $1.22 per diluted share, an increase of 28.7% from a net loss of $32.7 million, or $0.84 per diluted share in the third quarter of 2024[82] - Adjusted EBITDA was $59.4 million, a decrease of 13.0%, or $8.9 million, from the third quarter of 2024[82] - Total revenues for the third quarter of 2025 decreased by $4.8 million to $448.2 million compared to $453.0 million for the third quarter of 2024, primarily due to a $16.4 million decrease in comparable store sales[107] - Comparable store revenues were $389.6 million, down from $406.0 million, reflecting a reduction in walk-in business relative to the prior year[107] - Entertainment revenues accounted for 62.3% of total revenues in the third quarter of 2025, down from 65.0% in the same period of 2024[107] - Adjusted EBITDA for the third quarter of 2025 was $59.4 million, or 13.3% of total revenues, compared to $68.3 million, or 15.1%, in the same period of 2024[104] - The net loss for the third quarter of 2025 was $42.1 million, or 9.4% of total revenues, compared to a net loss of $32.7 million, or 7.2%, in the third quarter of 2024[104] Store Operations - For fiscal 2025, the comparable store base consists of 210 stores, including 153 Dave & Buster's and 57 Main Event stores[85] - Six new Dave & Buster's branded stores and three new Main Event locations were opened in the nine months ended November 4, 2025[86] - The company operates stores averaging 36,800 square feet for Dave & Buster's and 53,300 square feet for Main Event[84] - Company-owned stores increased to 241 at the end of the third quarter of 2025, up from 227 in the prior year[104] Revenue Trends - Seasonal factors historically lead to higher revenues in spring and year-end holidays, with lower revenues typically in the third quarter[99] - Comparable store sales decreased by 4.0% compared to the same period in 2024[82] - Total revenues for the nine months ended November 4, 2025, decreased by $25.0 million, or 1.6%, to $1,573.2 million compared to $1,598.2 million for the same period in 2024[124] - Comparable store revenues decreased by $81.5 million to $1,397.2 million, while noncomparable store revenues increased by $54.6 million to $149.3 million[124] - Entertainment revenues accounted for 64.2% of total revenues in the 2025 period, down from 66.1% in the 2024 period[124] Cost and Expenses - Total cost of products decreased to $63.5 million, representing 14.2% of total revenues, down from 15.0% in the prior year[108] - Operating payroll and benefits increased to $124.9 million, accounting for 27.9% of total revenues, compared to 26.7% in the third quarter of 2024[111] - General and administrative expenses rose to $32.9 million, representing 7.3% of total revenues, up from 5.4% in the prior year[113] - Total operating payroll and benefits increased to $398.6 million, representing 25.3% of total revenues, compared to 24.6% in 2024[128] - Other store operating expenses increased to $550.1 million, or 35.0% of total revenues, compared to 32.4% in 2024[129] - Cost of food and beverage products decreased to $140.7 million, with a percentage of 25.0% of food and beverage revenues, down from 26.9% in the 2024 period[127] - General and administrative expenses increased to $89.2 million in 2025 from $80.6 million in 2024, representing an increase of 8.0%[130] - Depreciation and amortization expense rose to $191.4 million in 2025, up from $174.2 million in 2024, primarily due to new store openings and remodels[131] - Pre-opening costs increased to $14.8 million in 2025 compared to $12.6 million in 2024, reflecting the timing of costs for new stores[132] Financial Position - Interest expense, net increased to $40.2 million in the third quarter of 2025, compared to $32.9 million in the prior year[116] - Interest expense, net increased to $115.7 million in 2025 from $99.9 million in 2024, primarily due to incremental interest from sale-leaseback transactions[134] - The effective tax rate for 2025 was 42.7%, significantly higher than 19.9% in 2024, influenced by a shift from pre-tax income to a pre-tax loss[136] - The Net Total Leverage Ratio as of November 4, 2025, was 3.3x, calculated using net debt of $1,593.1 million and Credit Adjusted EBITDA[150] Cash Flow and Capital Expenditures - Cash flow from operating activities decreased to $187.8 million for the 2025 period compared to $203.4 million for the 2024 period, primarily due to a decrease in net income and changes in working capital timing[155] - Total capital additions for the nine months ended November 4, 2025, were $268.3 million, down from $364.0 million for the same period in 2024, reflecting a decrease in new store and remodel expenditures[157] - Cash flow provided by financing activities was $136.8 million in the 2025 period, primarily from net debt proceeds and sale-leaseback transactions, partially offset by share repurchases[157] - Cash flow used in investing activities decreased to $317.9 million for the 2025 period from $359.9 million for the 2024 period, mainly due to reduced expenditures on new stores and remodels[155] - New store expenditures were $142.6 million for the nine months ended November 4, 2025, compared to $155.6 million for the same period in 2024[157] - The company reported maintenance capital expenditures of $30.8 million for the nine months ended November 4, 2025, down from $44.3 million in the prior year[157] Market Conditions - Economic conditions may impact supplier pricing and consumer spending, with potential for selective price increases to offset costs[100] - The company is exposed to commodity price fluctuations, which can materially impact food costs, and there is no assurance that these costs can be passed on to customers[161] - Severe inflation increases could adversely affect the company's business and financial condition, particularly if multiple cost factors rise simultaneously[163] - A hypothetical one percentage point interest rate change on the outstanding balance of the Credit Facility would impact annual results by approximately $15.9 million[162] Shareholder Actions - The company repurchased 1.04 million shares at an average price of $23.03 per share, with a remaining authorized limit of $104.1 million for future repurchases[151] - As of November 4, 2025, the company had cash and cash equivalents of $13.6 million, sufficient to meet operating requirements and capital allocation strategy for the next twelve months[153]