Dave & Busters (NYSE:DAB)
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Dave & Buster's, Inc. (NYSE:DAB), a leading operator of
upscale restaurant/entertainment complexes, today announced results
for its second quarter ended July 31, 2005. In a preliminary release
Dave & Buster's announced a change in its recently acquired Jillian's
stores strategy. Now most of the Jillian's stores will be converted to
the Dave & Buster's brand.
Total revenue for the second quarter increased 23.4 percent, or
$21.0 million, to $110.8 million from $89.8 million in the prior
year's comparable quarter. Food and beverage revenue increased 28.4
percent and amusement and other revenue increased 17.8 percent.
Special event revenue on a comparable store basis was 13.5 percent of
total revenue compared to 13.4 percent last year. Pre-opening expenses
for the period were $0.8 million compared to $0.1 million last year.
Operating loss for the period of $(0.3) million includes a pre-tax
charge of $2.5 million for the previously announced closure of the
underperforming Jillian's location in Minneapolis. Excluding this
charge, operating income decreased 51.5 percent to $2.2 million
compared to $4.5 million last year. EBITDA decreased to $12.0 million,
or 5.3 percent, from $12.7 million last year. Net loss for the quarter
was $(1.3) million, or $(0.09) per basic share, compared to net income
in the same period last year of $2.2 million, or $0.16 per diluted
share. The estimated effect of the store closure charge is
approximately $(0.12) per basic share.
During the quarter, revenues from the 33 comparable stores, all of
which operate under the Dave & Buster's brand, increased 0.2% as
compared to the same period last year. The Dave & Buster's core brand
accounts for approximately 85% of consolidated revenues.
Total revenues for the 26-week period increased 22.6 percent to
$226.6 million from $184.8 million for the comparable period last
year. Food and beverage revenue increased 26.8 percent, and amusement
and other revenue increased 18.1 percent. Special event revenue on a
comparable store basis increased to 13.5 percent of total revenue from
13.1 percent in the prior year. Pre-opening expenses for the 26-week
period were $0.9 million compared to $0.1 million last year. Operating
income of $8.6 million includes the $2.5 million charge discussed
above. Excluding this charge, operating income was $11.1 million
compared to $11.4 million for the prior year. EBITDA increased to
$30.7 million, or 10.3 percent, from $27.8 million last year. Net
income was $3.3 million, or $0.24 per diluted share, compared to $5.8
million, or $0.40 per diluted share, in the prior year.
"We expect our first converted store to re-open as a Dave &
Buster's by early next month with three to four to follow prior to the
end of the year," said Buster Corley, the company's CEO. "We believe,
as we discussed on our last conference call, that the re-branding of
the Jillian's locations will enable us to improve the overall
operating results at a faster pace," continued Mr. Corley.
"Our new Dave & Buster's stores are on schedule to open in
Buffalo, New York on October 5 and Kansas City in November," said Dave
Corriveau, the company's President. "As we have previously announced,
we add the Jillian's at Discover Mills Mall in metro Atlanta later
this month," continued Mr. Corriveau.
The company re-confirms annual guidance of $.64 to $.70 per
diluted share. This revised estimate includes the approximate $3.0
million pretax charge associated with the store closure in
Minneapolis.
Non-GAAP Financial Measures
A reconciliation of EBITDA to net income, the most directly
comparable financial measure presented in accordance with GAAP, is set
forth in the attachment to this release.
The Company will hold a conference call to discuss second quarter
results on Thursday, September 8, 2005, at 11:30 a.m. Eastern Time
(10:30 a.m. Central Time). The call will be Webcast by CCBN and can be
accessed at Dave & Buster's Web site, www.daveandbusters.com.
Individual investors can listen to the call through CCBN's individual
investor center, www.companyboardroom.com. In addition, investors can
access the call by visiting any of the investor sites in the CCBN
Individual Investor Network. Institutional investors can access the
call via CCBN's password-protected event management site,
www.streetevents.com.
The Webcast will be archived on the company's Web site and
available for replay through September 23, 2005.
Celebrating over 22 years of operations, Dave & Buster's was
founded in 1982 and is one of the country's leading upscale,
restaurant/entertainment concepts with 43 locations throughout the
United States and in Canada. More information on the company,
including the latest investor presentation is available on the
company's Website, www.daveandbusters.com.
"Safe Harbor" Statements Under the Private Securities Litigation
Reform Act of 1995
Certain information contained in this press release includes
forward-looking statements. Forward-looking statements include
statements regarding our expectations, beliefs, intentions, plans,
projections, objectives, goals, strategies, future events or
performance and underlying assumptions and other statements which are
other than statements of historical facts. These statements may be
identified, without limitations, by the use of forward-looking
terminology such as "may," "will," "anticipates," "expects,"
"projects," "believes," "intends," "should," or comparable terms or
the negative thereof. All forward-looking statements included in this
press release are based on information available to us on the date
hereof. Such statements speak only as of the date hereof. These
statements involve risks and uncertainties that could cause actual
results to differ materially from those described in the statements.
These risks and uncertainties include, but are not limited to, the
following: our ability to open new high-volume
restaurant/entertainment complexes; our ability to raise and access
sufficient capital in the future; changes in consumer preferences,
general economic conditions or consumer discretionary spending; the
outbreak or continuation of war or other hostilities involving the
United States; potential fluctuation in our quarterly operating result
due to seasonality and other factors; the continued service of key
management personnel; our ability to attract, motivate and retain
qualified personnel; the impact of federal, state or local government
regulations relating to our personnel or the sale of food or alcoholic
beverages; the impact of litigation; the effect of competition in our
industry; additional costs associated with compliance with the
Sarbanes-Oxley Act and related regulations and requirements; and other
risk factors described from time to time in our reports filed with the
SEC.
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DAVE & BUSTER'S, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
July 31, 2005 January 30, 2005
ASSETS
Current assets:
Cash and cash equivalents $ 6,786 $ 7,624
Other current assets 43,942 34,581
------------ -------------
Total current assets 50,728 42,205
Property and equipment, net 335,074 331,478
Other assets and deferred charges 21,045 23,725
------------ -------------
Total assets $ 406,847 $ 397,408
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 56,376 $ 49,861
Other long-term liabilities 73,176 70,251
Long-term debt 74,823 80,351
Stockholders' equity:
Common stock 136 135
Paid-in capital 124,190 122,173
Restricted stock awards 1,815 1,454
Accumulated other comprehensive
income 67 225
Retained earnings 78,110 74,804
------------ -------------
204,318 198,791
Less: treasury stock 1,846 1,846
------------ -------------
Total stockholders' equity 202,472 196,945
------------ -------------
Total liabilities and stockholders'
equity $ 406,847 $ 397,408
============ =============
DAVE & BUSTER'S, INC.
Consolidated Statements of Income
(dollars in thousands, except per share amounts)
(unaudited)
13 Weeks Ended 13 Weeks Ended
July 31, 2005 August 1, 2004
(as restated)
Food and beverage revenues $ 60,378 54.5% $47,030 52.3%
Amusement and other revenues 50,451 45.5% 42,814 47.7%
-------- ------- ------- ------
Total revenues 110,829 100.0% 89,844 100.0%
Cost of products 21,196 19.1% 17,283 19.2%
Operating payroll and benefits 32,259 29.1% 25,545 28.4%
Other store operating expenses 37,365 33.7% 28,401 31.6%
General and administrative expenses 7,204 6.5% 5,800 6.5%
Depreciation and amortization 12,317 11.1% 8,175 9.1%
Preopening costs 804 0.8% 136 0.2%
-------- ------- ------- ------
Total operating expenses 111,145 100.3% 85,340 95.0%
Operating income (loss) (316) (0.3)% 4,504 5.0%
Interest expense, net 1,661 1.5% 1,102 1.2%
-------- ------- ------- ------
Income (loss) before provision
for income taxes (1,977) (1.8)% 3,402 3.8%
Provision (benefit) for income taxes (721) (0.7)% 1,200 1.3%
-------- ------- ------- ------
Net income (loss) $ (1,256) (1.1)% $ 2,202 2.5%
======== ======= ======= ======
Net income (loss) per share
Basic $ (0.09) $ 0.17
Diluted $ (0.09) $ 0.16
Weighted average shares outstanding
Basic weighted average shares
outstanding 13,559 13,319
Diluted weighted average shares
outstanding 13,559 16,486
Other information:
Company operated stores open 44 33
EBITDA, which is earnings before interest, taxes, depreciation
and amortization, is used by management, bankers and investors
to evaluate a company's ability to repay debt and for
compliance of certain debt covenants.
Total net income (loss) $ (1,256) $ 2,202
Add back: depreciation and
amortization 12,317 8,175
interest expense, net 1,661 1,102
provision for income taxes (721) 1,200
--------- -------
$ 12,001 $12,679
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DAVE & BUSTER'S, INC.
Consolidated Statements of Income
(dollars in thousands, except per share amounts)
(unaudited)
26 Weeks Ended 26 Weeks Ended
July 31, 2005 August 1, 2004
(as restated)
Food and beverage revenues $121,769 53.7% $ 96,051 52.0%
Amusement and other revenues 104,795 46.3% 88,759 48.0%
-------- ------- --------- -------
Total revenues 226,564 100.0% 184,810 100.0%
Cost of products 42,203 18.6% 35,004 18.9%
Operating payroll and benefits 64,984 28.7% 52,473 28.4%
Other store operating expenses 72,900 32.2% 57,269 31.0%
General and administrative expenses 14,896 6.6% 12,099 6.5%
Depreciation and amortization 22,058 9.7% 16,395 8.9%
Preopening costs 882 0.4% 136 0.1%
-------- ------- --------- -------
Total operating expenses 217,923 96.2% 173,376 93.8%
Operating income 8,641 3.8% 11,434 6.2%
Interest expense, net 3,434 1.5% 2,580 1.4%
-------- ------- --------- -------
Income before provision for
income taxes 5,207 2.3% 8,854 4.8%
Provision for income taxes 1,901 0.8% 3,052 1.7%
-------- ------- --------- -------
Net income $ 3,306 1.5% $ 5,802 3.1%
======== ======= ========= =======
Net income per share
Basic $ 0.25 $ 0.44
Diluted $ 0.24 $ 0.40
Weighted average shares outstanding
Basic weighted average shares
outstanding 13,515 13,262
Diluted weighted average
shares outstanding 16,626 16,376
Other information:
Company operated stores open 44 33
EBITDA, which is earnings before interest, taxes, depreciation
and amortization, is used by management, bankers and investors
to evaluate a company's ability to repay debt and for compliance
of certain debt covenants.
Total net income $ 3,306 $ 5,802
Add back: depreciation
and amortization 22,058 16,395
interest expense, net 3,434 2,580
provision for income
taxes 1,901 3,052
-------- ---------
$ 30,699 $ 27,829
======== =========
DAVE & BUSTER'S, INC.
Consolidates Statements of Cash Flow
(dollars in thousands)
(unaudited)
26 Weeks Ended 26 Weeks Ended
July 31, 2005 August 1, 2004
(as restated)
Cash flows from operating activities:
Income $ 3,306 $ 5,802
Adjustments to reconcile income
to net cash provided by operating
activities:
Depreciation and amortization 22,058 16,395
Deferred income tax benefit 81 (2,024)
Tax benefit related to stock
option exercises 619 493
Amortization of restricted
stock awards 361 219
Warrants related to
convertible debt 128 128
Other, net (227) (48)
Changes in operating assets
and liabilities
Inventories (43) (167)
Prepaid expenses (9,399) (1,582)
Other current assets 81 871
Other assets and deferred
charges 3,158 (1,066)
Accounts payable 5,823 507
Accrued liabilities 677 929
Income taxes payable (4,527) (2,007)
Deferred rent liability 815 (962)
Other liabilities 2,037 1,002
------------- --------------
Net cash provided by
operating activities 24,948 18,490
Cash flows from investing activities:
Capital expenditures (22,556) (16,580)
Proceeds from sales of property
and equipment 111 390
------------- --------------
Net cash used in investing
activities (22,445) (16,190)
------------- --------------
Cash flows from financing activities:
Borrowings under long-term debt 6,500 3,250
Repayments of long-term debt (11,240) (6,417)
Proceeds from exercises of stock
options 1,399 2,007
------------- --------------
Net cash provided by (used in)
financing activities (3,341) (1,160)
------------- --------------
Increase (decrease) in cash and cash
equivalents (838) 1,140
Beginning cash and cash equivalents 7,624 3,897
------------- --------------
Ending cash and cash equivalents $ 6,786 $ 5,037
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