Dave & Buster's(PLAY)2024-04-03 01:51Financial Data and Key Metrics - Q4 2023 revenue was $599 million, with adjusted EBITDA of $152 million, representing a 25 3% adjusted EBITDA margin, a 380 basis point expansion compared to 2019 [104] - Net income for Q4 2023 was $36 million, or $0 88 per diluted share, while adjusted net income was $42 million, or $1 03 per diluted share [104] - Pro forma comparable store sales decreased 7% in Q4 2023 versus 2022, but were up 8% compared to Q4 2019 [114] - Adjusted EBITDA grew by $28 million in fiscal 2023, with adjusted EBITDA margins expanding by 80 basis points year-over-year on a pro forma basis [35] Business Line Performance - Food and beverage revenue per check is expected to increase by mid-single digits, with a material improvement in F&B COGS and a 3 to 5 point improvement in food satisfaction scores [1] - Special Events revenue is pacing to finish Q1 up mid-single digits versus 2019, with strong expectations for the May and June graduation season [122] - The new service model for Special Events is driving results, with the company preparing for the busy season and setting up for banquet events later in the year [5] Market Performance - International development is gaining momentum, with 33 stores in the pipeline across six countries, and up to four stores expected to open in the next 12 to 18 months [37] - The company recently entered into a franchise agreement to develop two stores in the Dominican Republic, further expanding its international presence [37] Strategic Direction and Industry Competition - Fiscal 2024 is expected to be a transformative year, with significant progress on organic growth initiatives, including an acceleration of the remodel program and continued store base growth [28] - The company is focused on improving food and beverage offerings, with a multi-phase roadmap to introduce a new menu and service model [45] - Strategic game pricing has been implemented, with regional differentiation showing encouraging results, particularly in stores with the highest price increases [42] Management Commentary on Operating Environment and Future Outlook - The company is navigating the business to meet consumer demand, with a focus on value and favorable mix shifts in food and beverage offerings [4] - Management is confident in the company's ability to achieve its $1 billion adjusted EBITDA target in the coming years, driven by organic growth initiatives and cost efficiency [28] - The company is better equipped than ever to be nimble in marketing and discounting, targeting the right guests with the right offers [6] Other Important Information - The company has a robust pipeline of new units, with 15 new stores planned for fiscal 2024 across both Dave & Buster's and Main Event brands [63] - The loyalty program grew by 500,000 users in Q4 2023, with loyalty guests visiting 50% more frequently and spending 15% more per visit compared to non-loyalty guests [41] - The company has increased its share repurchase authorization to $200 million, reflecting a focus on driving shareholder value [109] Q&A Session Summary Question: Consumer response to price increases and current environment [2] - The company is seeing an increase in check size driven by a favorable mix shift, not price increases, with guests selecting items they see value in [4] - The company is being careful about balancing price and value, with a focus on improving its ability to navigate pricing strategies [7] Question: Impact of weather on Q4 performance [79] - Severe weather in January led to 60-plus stores being partially or fully closed, significantly impacting Q4 comparable store sales [79] Question: Progress on strategic initiatives since Investor Day [80] - The company is on schedule with its strategic initiatives, having completed infrastructure work and testing, and is now implementing these initiatives [82] - Remodels, new units, international expansion, game pricing, and food and beverage offerings are all progressing as expected [83] Question: Impact of game pricing changes on dwell time and value proposition [86] - The company has not seen a material deterioration in dwell time or value proposition due to game pricing changes, but will continue to monitor and adjust as needed [93] Question: Consumer behavior trends and recent choppiness [94] - The company has seen some weakness in lower-income consumers but strength in high-end consumers, with overall spending patterns remaining stable [96] - Visitation has been choppy, but once guests are in the door, spending levels and dwell times remain consistent [106]