Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) Q4 2019 Earnings Conference Call - Final Transcript

Apr 02, 2020 • 05:00 pm ET

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Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Brian A. Jenkins

Company, industry or the United -- US economy has previously experienced. I want to emphasize that as always at Dave & Buster's, we deeply value the health and safety of our team members, guests and each of the communities in which we operate. Our hearts go out to all of our team members and guests who are enduring so much through this crisis.

I'm going to ask Scott to very briefly review the highlights of our preliminary fourth quarter and full year 2019 results. After that I will cover the numerous steps we have taken to help mitigate the negative impacts of the ongoing COVID-19 pandemic on our business. Our prepared remarks will be comprehensive in terms of what we can share at this time. As a result, we will not be taking any questions today.

Now I will turn the call over to Scott.

Executive
Scott J. Bowman

Thank you, Brian. During the fourth quarter, total revenues increased 4.6% compared with the prior-year period driven by strong contribution from our 37 non-comparable stores, partially offset by a 4.7% decrease in our comparable stores. Breaking down comp sales, our walk-in sales declined 5.5% while special events sales were up slightly.

In terms of category comp sales, Amusement and Other decreased 4.1% while Food and Beverage decreased 5.5%. Within Food and Beverage, food decreased 5.9% and the bar business decreased 4.8%. Total cost of sales was $59.8 million in the quarter, a decrease of 53 basis points as a percent of sales. Food and Beverage cost was 14 basis points favorable as a percent of sales primarily driven by price increases and the positive mix impact. Cost of Amusements and Other was 71 basis points favorable as a percent of sales primarily driven by favorability in the cost of redemption items. Operating payroll and benefits expense as a percent of sales was 23.9% or 10 basis points higher year-over-year due to the unfavorable impact of approximately 4% wage inflation, deleverage on comp sales and the impact of noncomp stores. Other store operating expenses were 31.2% as a percent of sales, up 110 basis points year-over-year. Higher occupancy costs were driven by higher rent costs associated with lease renewal and marketing costs were higher as a percent of sales due to deleverage associated with lower comp sales.

G&A expenses were $20.4 million and were up 27% from the prior year, mainly due to consulting expenses partially offset by decline in stock-based compensation. As a percent of sales, G&A increased 112 [Phonetic] basis points. EBITDA increased 1% to $73 million and was 21% of sales while diluted EPS was $0.80 per share versus $0.75 per share in the prior year. EBITDA was negatively impacted during the quarter by charges totaling $4.5 million and outside advisory fees, which translated into a negative effect of $3.5 million on net income or $0.11 per diluted share. Additionally, in last year's fourth quarter EBITDA was negatively impacted by $1.2 million due to a sales and leaseback adjustment, partially offset by an