Dave & Buster’s Entertainment, Inc. (NASDAQ: PLAY), an esteemed operator of dining and entertainment venues, recently reported remarkable financial results for the first quarter ending April 30, 2023. The company posted record revenue, marking a significant increase from the corresponding quarter in 2022, and also recorded a surge in net income.
Dave & Buster’s: Q1 2023 Record Revenue and Net Income
Dave & Buster’s posted a record revenue of $597.3 million in Q1 2023, marking a 32.4% increase from the first quarter of 2022. Accounting for the contribution of Main Event in Q1 2022, the year-on-year growth stood at $21.8 million, or 3.8%. In addition to the significant revenue growth, the company also registered a record net income of $70.1 million or $1.45 per diluted share, an increase from the $67.0 million, or $1.35 per diluted share in Q1 2022.
Pro Forma Sales and EBITDA Growth
Despite a slight decrease in pro forma combined comparable store sales (including Main Event branded stores) by 4.1% compared with Q1 2022, there was an encouraging increase of 10.3% compared with Q1 2019. Record Adjusted EBITDA for the quarter stood at $182.1 million, a 29.8% rise from Q1 2022. Including the pro forma contribution from Main Event, the year-on-year Adjusted EBITDA growth was $7.9 million, or 4.6%.
Share Repurchases and Liquidity Position
The company repurchased 3.6 million shares in Q1 at a total cost of $125.5 million. Subsequent to the end of the quarter, Dave & Buster’s purchased an additional 2.1 million shares at a cost of $74.5 million. These transactions brought total repurchases in fiscal 2023 to 5.7 million shares worth $200.0 million, representing 11.8% of the outstanding shares as of the end of fiscal 2022. The company ended the quarter with a substantial liquidity of $581.7 million.
Dave & Buster’s Announces Expansion and Future Growth
In the quarter under review, Dave & Buster’s opened a new store in Puerto Rico, alongside three new Main Event stores in Little Rock, AR, Tucson, AZ, and Lexington, KY. It also signed two international franchise agreements for up to 15 stores in India and 5 stores in Australia. The company’s CEO, Chris Morris, expressed confidence in their strategies to unlock significant revenue growth and cost efficiency opportunities, which will drive value creation for all stakeholders.
Strong Balance Sheet and Capital Return
The company maintained a strong balance sheet, generating $92.4 million in operating cash flow during Q1. With a net total leverage ratio of 2.0x, the company is well within its credit agreement’s maximum permitted net total leverage ratio of 3.5x. Dave & Buster’s CFO, Michael Quartieri, emphasized their significant strides in optimizing their business model to drive revenue, achieve meaningful cost savings, and deploy capital in high ROI opportunities.
In conclusion, Dave & Buster’s Q1 2023 financial results are marked by significant revenue growth, solid net income, and strategic expansions. The company is poised for further growth and is committed to delivering enhanced value to its shareholders.
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