PLAY - Earnings call transcript Q1 2019 | Dave & Buster's Entertainment, Inc.

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Operator

Good afternoon, everyone. Welcome to the Dave & Buster’s Entertainment Incorporated First Quarter 2019 Earnings Results Conference Call. Today’s is being hosted by Brian Jenkins, Chief Executive Officer. I would like to remind everyone that this call is being recorded and will be available for replay beginning later today.

Now, I would like to turn the conference over to Arvind Bhatia, Senior Director of Investor Relations for opening remarks.

Arvind Bhatia

thank for and us. James you, you joining all Thank

and Chief are and After On call will is Jenkins of questions. today copyrighted. on & take Jenkins, happy comments Bowman, Executive to be Mr. being Officer. the call is This Financial Buster’s Brian Entertainment Officer your and we Chief Scott from behalf recorded Mr. Dave Bowman, Incorporated

the in would XXXX. our our on are of discussion historical cause and to actual factors maybe various the of under risks available like www.daveandbusters.com forward-looking I to and Act Securities should are statements item meaning Reform which begin at SEC, results, to Information to results and on items call Any considered could section. the we filings facts. to has Before the fact published not responses forward-looking Private are our Relations anticipated. and relating company’s that the Litigation remarks our certain which within on website your statements attention those Investor in All your such future the to such be our uncertainties, been based questions, with risk entirely which discussed the uncertainties from of differ subject events

our this accounting comparable include financial also that should earnings GAAP measures Investors In measures and which addition, under will are depreciation the non-GAAP of released are principles. which on our reconciliation in not remarks adjusted references accepted results EBITDA EBITDA, our generally before to to available is amortization, today review announcement store website. operating these and defined contained the afternoon, income

to the call Brian. Now, I will over turn

Brian Jenkins

our everyone you for you call Arvind. Good and thank Well, thank today. afternoon, joining

brands to Office. would discipline SVP and Scott has with I to CFO am begin, to make and of leadership DeProspero like Home and a role opportunity strong Financial recently Hibbett strategic extremely Supply long us board. joined on on I vision Depot and financial I Before His as Sports. success most like of a proven our our Development. Interim working Chief like record also and take Bowman who track Scott as welcome Business recently him Joe him team our congratulate the excited new addition his our serving thank as I Chain to for have him to would

overall With high revenue were new and That results X%, QX, by by than metrics. our these grew watermarks EBITDA respect we over by more to said nearly X% for EPS X% mixed. reaching

F&B this store While Easter sales new calendar year’s comparable as shift remained expectations were proved competitive store remains headwinds performance below strong, stood. challenging, underperformed and

and mentioned no for period As us be call, year spring time last the weather breaks timing and during to Easter of exception. the quarter QX volatile specific I a of tends and impact to due on the was the this

amusements in indication comps for prior sales improved You compared metrics nearly quarter, overall impact the X a sales resonating key may in up of unfavorable of half poll QX for in the decline the On note, an the scores comp guests. strategy slight guest were a on quarter. year, to positive our with is important and X% before up that shift our the weeks back our rollover the recall were in resulting first the proved comp Easter tracking about the the Easter the X% and of impact the net after quarter

drive the F&B working the we year, of As time. will this to awareness but improvements, are forward we take remainder of look to our expect

remarks. we our we guidance metrics on our the the will of year-to-date prepared competition landscape, year see Scott current key estimates recent Additionally, entry performance, our are we specific balance over of expect competitive as the into aggressive provide the to in markets. full Based and continue increased lowering on in read year his trends

have focus to our levels our we we cost pleased continue for sales, shareholder performance value. sales four brand are to to urgency are and reached improve will and on we strengthen EBITDA working new long-term drive high strategic with EPS, While to and the priorities

Our guests. our is and evolve we better amusements, including first to F&B. offering, delight marquee offering our amusements by continue to brand our In tiles and to priority bigger, differentiate our

our Looking is launch at our titles Remnant. guests International Galactic QX, title well subtle and release QX, of responds our this titles, new sustainability. that fan Black: favorite strong in us. technology full are of slates Trek: to best-in-class included of with performing proprietary proprietary two Contest gaming In times we release Star for VR Dark the get titles Combining new its completely Champions our Getaway, after allows multiple sign Marvel play, our to players’ continued dialogue customers to of World technology proving VR Men the brand ahead be to properties. and these iconic a VR through fourth deepen launched of Men titles our Furthering library with a in of to its in the Star Trek Expedition, year experience. addition Jurassic game the VR our Black: growing our their entices the is strength strong different endings, and connection to movie with play differences to performance game the commitment Both

With reduced items simplification we improved menu our and in focus of beginning have accessibility. smaller nights. our to compared on remains complexity quality quicker Turning the processes XX% kitchen today to busier on a of to ability year, last F&B, and deliver

to for are QX room speed in poll and indicating both simplification were to in payoff. period bar service scores the the up of year year dining compared same last this efforts guest beginning Our our

have we efficiency, With quality in to the remains commitment unchanged. our improving culinary strides, made

into perfecting XX% been we steaks creating craveable choice lived Overall, techniques plated and crafting guests. using textures mantra presentations premium Our standard for menu flavors craveability chicken, our re-crafted the final or our by our and elevating more to of is and than has execution re-branded. enhancing and

enhance primary QX. we trend scores quality of the the of That in to a food appear are visitation guest our time and to attachment our course rate. in we we games as and an offering over guests new XXXX, our awareness F&B saw Importantly, the said, earn it helped of driver be noticing uptick take expect food will some recognized our build that

will feature more We marketing in prominently future. in campaigns food look our the to

Now, we enhancements didn’t extend flavorful, our craveable & we if Dave Busters cocktails. menu be wouldn’t to

You take already know next cocktails we have juices added fresh handcrafted purees to level. our system-wide and to the

execute standardized taste consistent our have only recipes to also a easier techniques basis. on our not We core but and preparation cocktail better, to are drinks,

to offering expected evaluating and in ways initial to the are the enhancing slower casual of terms accessibility, as last mentioned has been in we we increase awareness. than I call, a In on test continue And Dallas store. store quick our response

priority Our second guest is strategic to experience. to enhance guest

experience. We focused more are service friendly, and available a delivering improving on memorable laser by

on in for of The app new & mobile we game games service new out labor curve to important are TAP activation working. a did our we Power period, half faster are efficiency guest in move scores scheduling of see more improvements is long results this QX. we the our new in scheduling best seen Kronos, a meaningful RFID guest up recently facilitating technology. system PLAY uptake and during our While track over XXXX. with we scores February evaluated for in new a service improvement overall our learning and our improving and back Card have rolled is Meanwhile, continue accurate unveil to and service we

app with to new digitally remain over being attract functionality, that must groups designed and business for will retain believe us drive our leading guest our Our to and our We and greater and engagement our time reduce new frequency to to consumer friction better ultimately and guests. relevant core connection spend. greater offer assets convenience brand our allow

Our is third to communicate value. effectively strategic offering priority and our

Champions Star quarter. new Trek promoted which Contest Marvel of we game and the launched During titles QX, our two during

Games publicly that on promotion have Unlimited We select We and Wings our TV on to also Unlimited national days cable on during with Madness. Thursdays ran successful featured March respect value. Video

addition, the $XX of with of purchase a In power videogame free card. we the $XX end March, the promotion at introduced new

evolving earlier, optimization. our social mix digital to increase As cable primary including to savvy to media marketing I and TV we search continues our channel, last must landscape, programmatic on while focus mentioned remain engine remains national a the media, year, digital compared

value our and brand Finally, that I geographically. fourth will of is and our expand biggest to shareholder driver long-term highlight

opened year, small. that have this of X in and the markets X are existing X in while X stores are stores large, including so terms opened of far remaining and are in We X have new size, markets we the

representing stores new As delivering the net through year year, store openings last call, high. full of new format growth on very this towards our will XX stores to are confidence target going under full markets, although construction, skew stores on XX unit X year. With our we smaller and large remains I new D&A mentioned in the the for XX%

commitments really well significant we providing for expansion executed new XX into visibility construction, under stores XXXX. Including currently sites store on have new us

continue annual opportunity or our stores We this of believe and opportunity large by and the nearly is store to our XXX to units pace to returns. double growing a long-term United current plan more States capture alone Canada in excellent base at XXX stage while XX% generating

and East On to we continued terminated deadlines partnership from our the due missed Middle recently partners. delays our international front, contractual

to to disappointed growth this a pursue us and turn vehicle are of good represents we with for international opportunities. long-term continue continue will While we events, believe we potential

and XXXX over call will guidance. to Scott I performance to discuss that, With financial the our turn

Scott Bowman

and Thank you, everyone. good afternoon Brian

First team be runway history success. drive excited to I that to such look and say with of of great all, and am a would forward joining a company I feel the for growth. company’s to great be helping to I like part the privileged future a very long

X.X% a contribution in quarter, to partly decrease first total stores. comparable the strong from Turning from offset comparable driven by our stores by XX increased our revenues X.X% highlights

mentioned, Easter intrusion same impact cannibalization Also, headwind competitive continued was by of greater As were compared the flattish. sales be to and this last comparable year. our the store the Sequentially, year’s unfavorably calendar a period impacted combination to Brian shift.

other revenues down X.X%. down of during the the comp prior quarter, up and Looking at X.X% from while overall categories, were basis sales sales, our represented walk-in increase X%. events amusements total Amusements grew sales XX.X% period. grew XX.X% was XXX mix points and and of Breaking year an F&B special by

on the The to initiatives positive the gap sales, X.X%. down food was time, relative X.X%, QX was Within Eat terms Wings sales amusements impact was improvement business promo XX $XX.X of than of an category was was by in by You while F&B pricing to million which it the in points and At QX in was amusement has higher up, in basis due All the revenue stronger higher taken Total Can due less and comp of in events percent and a This to mix QX, X.X%. quarter. favorable partially special F&B partially of between sales. amusement cost during widened a in offset in In F&B. was margins the as F&B was offset somewhat down amusements down X.X% same performance decline and bar although is F&B quarter the mix of amusement markets. F&B,

shift initiatives of You percent our margins cost Can of than beverage and year. as points X% and associated commodity year favorable despite benefited points sales XX compared All pricing Eat of pricing simulation of as amusement food unfavorable unfavorable games. continued inflation, and Cost with from our basis rebates. timing higher vendor and was last percent more reality the the a XX in as the virtual the Food Amusement and in cost promotion a last to games, to including was other offset sales compared by X% was impact basis impact pricing towards Wings beverage of

sales investment point basis payroll was de-leverage Our on XX.X%, cost unfavorable to a due of in operating stores. percent labor-related virtual the higher XX reality, and inflation, comp incremental impact to of as benefits wage year-over-year and a

legal year-over-year were the by in higher store points increases expenses expenses of driven up primarily largely prior in expense. stores by technology sports up higher offset Other growing X% reflecting were expenses programming. G&A costs, compensation non-comp occupancy store partially at operating year, from investments XXX base stock-based and our lower in and increased support million, basis $XX.X

a sales, was down per million share, points XXX percent reflecting was year. the of X.X% sales $X.XX over G&A basis of was prior Adjusted increased year. and was X.X%. versus and reduction up a XX.X% X.X% to prior the EBITDA points up EPS $XX.X As in quarter. $XX.X the XX basis million EBITDA was of

million right-of-use our lease lease flows quarter $XXX assets of in balance end million the at resulted the the cash of had $X.X the in to approximately debt standpoint, leverage and Shifting sheet, beginning approximately this of quarter on we in has billion quarter. a went X.X immaterial accounting lease in EBITDA. that change impact into net income $XXX of times The outstanding standard at effect resulting operating the From an recognition liabilities. and operating in P&L new

we quarter, average price million authorization. over our at million $XXX price of Since repurchased paid shares $XX under $X.XX and the common During inception, approximately million dividend of of stock our cash of remaining repurchased $XX. its X.X We during an on we approximately have third existing under shares share the have currently per quarterly slightly X.X average QX.

compared XXXX guidance, store on Comp of billion turning range X.X%. flat X.X% billion are guidance $X.XX sales expected to $X.XX versus are to previous X% Now, revising year be guidance negative up growth of prior expected prior to the as X.X%, $X.XXX range are of to we year. XX% positive be billion $X.X guidance of revenues to reflecting follows. in to billion of based a to trends, in Total our to year-to-date fiscal the the versus

on projecting unchanged. effective be of XX% are XX.X%, to was the million. $XXX range of million prior is based tax Guidance an $XXX to We versus of million rate $XXX income million which guidance in to net to $XXX

expected million million. million is in $XXX be to $XXX the of prior of $XXX $XXX guidance to range EBITDA Finally, million to versus

your for Dave Buster’s. interest you Thank & in

call will back over Brian. turn I the to Now,

Brian Jenkins

enhancing just thank shareholder focused firm brand the Well, fundamental I strategic is driving to commitment Scott. team by and long-term you These positioning our reiterating priorities priorities for our are value. four to on. to want close our

ability only exclusive games’ and are promote advertising, ability attract landlords proprietary best our through talent from set competition. us advantages and national the attractiveness offering to to few for the Our a that apart

open Dave entire want their to this shareholders our for team continued in always, D&B at James, for time, & and Q&A. work for interest support our line Buster’s. As the continued please I your and hard thank to

Operator

today Thank you. [Operator Andrew from with take will And Barish Instructions] we Jefferies. first our question

Andrew Barish

guys. Hey,

the the we up, here it’s coming is part guidance you you kind half into year? the virtual on and maybe movement the reason sales wanted that continue XQ of XQ, in of getting picture are bigger wondering kind question interest and seeing are for we the around lap Just comp the the overall a that lower launch of as the why trends of same-store guidance, reality traffic also it as the seeing second we is you on

Brian Jenkins

a that it to due obviously amusement due of uptick us. part recently. incremental and we questions I QX, just there. in that X%. for in part just And what here it’s featured And think price doing our terms forecast we of proprietary for Rod, in VR couple of represents is of seeing of And percent our title is are in to in here is that a positive that’s VR amusements itself introduced we some VR have spend when overall our business, comp were titles clearly, under the

of feature drive we bus So, introduce amusements on we have avenues that think That I don’t on we platform I proprietary said, are the can the that contents that think still here. that to – alone and primary can TV. whole one

have the because quarter of spring and – quarter spring the into we us, – and particular. the April we have start Easter gap. and month, the that for of awareness on trying that we how hard that particularly need So, working in of bev, and back Easter seaboard break that in fell to April, pull and ended very close focused breaks attachment the we been do actually Eastern business was back to food choppiness choppy up clearly build and may drive kind strong to drive and rate The

X the gives And we to change And of missed so achieve out out down kind setting rise to guidance that what of were point. fundamentally we QX. in

Andrew Barish

you quantify in shift you – can last at of you spring the that just And just are quarter? how in break Easter how the looked kind

Brian Jenkins

were year, full we X week big back weeks first of it into prior was kind were and breaks really into spring we said, lot X weeks we of the Easter, weeks. XX. Week X% pushed XX, As in the – heading up X the

As weather time and we and like of spring a have bps weeks, the spring that kind – we to look of during would headwind have. we the associated the sort Easter track look two that The break. time. we rainy you at combination at Obviously, break at XXX about of of

it’s the quarter. between So, two in the

Andrew Barish

you. thank Okay,

Brian Jenkins

Thank you.

Operator

Next we Long hear Jaffray. with from Piper Joshua

Joshua Long

questions. taking for my Thank Great. you

accomplish guests. connection I Just in you level calls you you of the as a curious believe your what could talked with we you on that your increased for times the over and coming – think rolled and high about And year, mobile year. up app few back opportunity think prior mentioned guests a have the there I half

to even So develop that be that gap able you gap think just increased how points might with touch more you and curious maybe bridge or going forward? frequency

Brian Jenkins

some guests details features back be reduce to be as to our platform app that the experience them general, culminate we Clearly, the closer the in with friction, will are Yes. which a improved functionality with focus of over the course provide communicate on launch with we app areas the get guests, that half to will in and and years. with the of improve will connect the new our year, but ability really the more

a said streamlining with have of So, recharge features. our connected we account will mobile I also and program first think guest this payment, easy some with be last party on focusing guests, I loyalty creating relationship our call true have data the and

flow deal the visit frequency as said enough of not others, think opportunity are right It said guests us, is The and party we over number team leverage on low have our big to very we the working. the for we know about initiative now. with brand. previously, app over is good we focused a data but will do that’s a marketing and and something a that highly and basis. some IT is and there you be our there So And time time features that the because are first on want is

Joshua Long

Great. to one but competition the still it’s I sequentially, quite the the flat that’s Thank weighing that is more messaging of imagine expect on particularly piece, venues when And impact. you providing if it still environment, could are you in that you quick other off details like on qualitative see system? year-over-year having sort or Can you areas that. basis a and for you less level seems impact that that impact on do then year-over-year overall or to seeing still one on year-over-year are your

Brian Jenkins

is some Well, that environment combined two form doing building and trying brands and something dining we space are I are tracking regularly out the competitive entertainment read there we over mean to is to dozen the best right that indications they track year now, to our we of headwind just this in think going their opening. about the are increase quarter. past that And stores over balance of

have competitive on one of about or either We is own our were open of our them. stores stores XX% comp

So most our and going recent indicated be least intelligence openings a units competitive is number us year-over-year. to at on it’s set headwind of a increasing for meaningful is the by

see some that’s abating we something time. So don’t for

what have we focus to I do what think on we best. do is

nucleus stores that We have a our healthy. are very in large

sustainability. haul significant brands the not Our towards small candidly, over are that the I will are them. independent convinced are competitive players. – we set of And Many them long-term, guest improving. long have am that about as for metrics the have advantages we And all think building

see space. I model strong is proven investment the lot a business we in have why We a think of which

of space. margins We this in AUVs, returns the have some best and

We scale. have

we to human as estate, sheet have well. and balance great We have a access real capital

here. invest flexibility my of I So are well confident the for the lot and am as long-term positioned brand very to view, position to that a thing leadership working sustain on we a in right the

Joshua Long

Great. Thank you.

Brian Jenkins

Thank you.

Operator

Andrew next has our Strelzik Capital with question. BMO

Unidentified Analyst

Thanks taking for actually This the question. for today. Dan guys. Hey, is on Andrew

expect has business improve you the maybe food beverage some the food timeline through understanding there it business just improve year two, think the you to and business a in initiatives? independently game the that evolution advertising shifting reasonable or been other guess last can lot do I to Firstly through and over of spend the of what’s or

Brian Jenkins

good Really question.

brand. we do have for pursuing – the F&B this of are we believe strategy We really long-term right the

of We the leadership are the And we have new made. passionate about is extremely have and team changes food. we proud

have have quality improving. substantial is significantly, made our improvements our simplified menus a and execution We

We attachment for results visit food I service going guests that guest are basis. And on other words, food we bev and performance. in that the we to improved. better rate that In awareness of improving seeing from want really have said and increasing are scores and value time awareness. I changes going quality to coming But think obviously low. that amusement, to quantitative call, it’s take frequency work qualitative the a that translate speed to all as are since on the of we made amusements some is And hard are in to primarily our drive scores,

store. be made We items we just play. repositioning going Dallas is as to offer have dining with guest also some what room by our our we game seen a of in promo, combined new craveable which new have are strong response we craveable our that launched the along in combo encouraged of And have

in wall, a store. uptick In done we that foot XX/XX store. screen. We in that particular call multi-projector, couple formally a have we created seen of in what tests have wide this food And we laser a comps fairly projector have store, significant basically a

that that��s year. a this explore balance So, an further area over going the to brand are we as of

Unidentified Analyst

was guess That’s guess curious increase? noticed qualitatively the traffic price any just amusement helpful. increase after measurable on anything am I or side, then And one on I how to impact guys Thanks. follow-up you VR just react in the there or noticeable I Great. pricing did the customers maybe the

Brian Jenkins

Yes.

And The of we going better not did a we amusement $X and As you it over has our begin little we additive traffic a but anytime in doing incrementally price, decline, you little take view think been many to base that about store which basically and price, looking some We what increase, one was the how is will testing. to about strategic done our are at half doing how price comps. to VR was we are we for took to multiple experiences. us and increase are price move mentioned, yet, others there have see increase our after package I in package that think but package multiple we we some VR the opportunities experiences the after the in space right move. right think think it

Unidentified Analyst

Great. That’s helpful. Thanks so much.

Brian Jenkins

You are welcome.

Operator

Next, we will hear from Jeff Farmer with Gordon Haskett.

Jeff Farmer

you. Thank

have and am You see been do with worked has value-oriented your guys aggressive what curious just more but offers, what the forward? worked, you moving I where hasn’t opportunity

Brian Jenkins

Good Jeff. question,

Unlimited off-peak part day first I around recently, Wednesday week offer in quarter. Thursdays the work the say and the was the of on on engine would offers Wing Video think terms which of our of the And promotional some primarily our Play in been most our we the effort value the strongest – the is have team. driving on focused continued marketing our of I

be ways look a in going the drive a discounting $XX chain. really a video, to So see That and across were on for traffic, particularly the value related we offer we going traction capacity cord peak on introduce about – quarter, was broad free how power promo video, times. national that. lot $XX and did didn’t a be our we first continue we are we things the to and lean going We free careful more to are hoping have for clearly we are to of into more thoughtful to off-peak,

the effort view. the an maybe service level in starts is needle value work that our know to experience this clearly first are particularly we We we drive terrifically to and need to traffic and going we and more that But off-peak try are and offering the the in so we continuing to are cases provide numerator value to with believe put broadly the around And daypart. the question we some moving that on in unlock.

Jeff Farmer

this pieces of terms guidance proved the shortfall April more sales relative and reduction, alluded being to what so the And be in that prove the what moving of a question, the was the you Okay. greatest was about beverage had follow-up lot surprised to just you same-store traffic in expected. What there, more gap you surprise greatest just so one April? to sort than expected to food you you to of did back in set a expectations just be to relative greater

Brian Jenkins

our – guidance expecting we were break quarter a that Easter Clearly, up prove We counting case. a stronger were be good one. We calendar flat. first than and were was to the in spring on didn’t

So – our in point choppy of part there guide QX the internal insignificant right to quarter at estimates not to an is top comps. for And the X the miss more first decline the then I of quarter. the am on end start our new sorry is second

So we have a lot of the year in front of us.

as place. where school we to of do to we the we positive this weeks, that left are have drive to to drive a can of sense out a urgency huge we and have team are this everything we have are big and to go And comps comps summer a positive quarter kids of so. a lot things the on weeks of team management a We doing working lot in

Jeff Farmer

Thank Right. you.

Operator

from Bartlett now Jake hear with We SunTrust. will

Jake Bartlett

Great. Thanks wanted for the understand I Easter. to taking comments question. Brian, better the around

You or just due impact that – maybe it worst shift trying competition how understand am factors, spring the other I to the about results? or a shift it results period what just Easter the calendar was just or whether period it calendar shift. to the was break impacted to during have the understand of trying the talked whether aspect impacted

Brian Jenkins

some did – and at lot. what again stuff, were exact what Easter that a of X an week a being up we into look the through is to Jake, science coming at shift There of calendar bit we we – but look

way, for do, up. week X, and to some XX good breaks XX, work Clearly, going the really and work of of against this were our weather the about earlier was time. speak. spring that colder look April our of we some later at some by at So so spring this a of bps we turned estimation And favorite it weeks we time with and week and shower to followed can our But that warmer weeks. those and is associated has can we to up. take the competition, end calendars go period upper calendar confidence was as it keep spring have Easter headwind spring lost timing a in us. hard We Easter later had combination lot XXX big and breaks to us, When better quarter shifting, break through weather, to XXXX of in break had and the out we weather can how the do it of because sometimes that a spring in lot competitive the where unfortunately and rainy the break for has

our thing didn’t us. the whole that’s fall So, just it for on for but the saying I way, headwind a quarter, it am was not

Jake Bartlett

those summer of was I in that year us through? terms Park, will you give had late you to gains confident can confidence that insight And gain couldn’t talk have right should as or that the about you that but you that successful big us are ground, really game any pretty Jurassic you which in will wanted provide to content big mentioned weeks but are lap some have Anything think you it. July. last to Halo, Got – how come up, starting weeks you about now up the summer coming are and a your coming you

Brian Jenkins

is are business to just we the Well, very an – looking platform impressive Men offer we at continue summer. clearly And I to with we of VR telegenic to our going over launched offers. drive the be Black, and course try will promotional our mean, which in title,

our craveable This We really include offer offering. just trying here to for consumption drive yesterday also just parts have of upgrade unlimited combo of both potential video $X. to offer launched to our will a particular

with is do said So this view content, both to we we will batches are combination drive year. of but trying my it with to as I need traffic two

Jake Bartlett

just shorter to have of problem in the might a term food between Got amusements whether less it. as shift I of of consumers, attributed beverage, that’s your families, just lastly of the wondering so am more adults And business a and how kind much then more and mix term? than differential maybe and your that the been longer

Brian Jenkins

Well, challenge have. not our I and going to bevs but on am words food we the mince

up significant very have successful and closed was significant are course is to need out to first, looking doing We why comps thing in have attachment gap lot. of around We summer our see narrow narrow to early But back offerings be at not drive of well. last to offerings That grow footfall. ways QX and want try but offering, particularly part do We careful to going some time. of wide are are in drive the QX. as It had to you a year that to in that, the stale. a of us trying as fairly that of We combination but best continue both amusements that did days. about for some rate at somewhat with we to the has trying many didn’t we over where to is do that to narrow have in both offer the things the gap Wings gap, in we look obviously been we drive Wing combination to

Jake Bartlett

you Thank it. much. Got very

Brian Jenkins

Yes.

Operator

will your Brian Mr. Vaccaro, line James. we is Vaccaro from Raymond open. Next, hear with

Brian Vaccaro

the button. comp a your that noticeable if curious still and back to non-mall you I good said soft, to mute circle competitive or intrusion performance is are or something concentrated curious and back difference seeing that what evening. in call seaboard is Eastern you out? Brian, you and soft Thank a else think locations wanted first mall the patch I you think I to there learning am was particularly versus just maybe your quarter you driving Sorry, quarter-to-date,

Brian Jenkins

guess stores long-haul, QX I outperformed mall X in and The there. perform on of under the first stores, they have two have kind questions in for mall our years. last did

and So stores QX. stores trail, inline they did our freestanding in

for year. what know prior – you in went May. I and extremely the Day Eastern on relative dry seaboard, In following yesterday, Brian was weather terms fact, some weekend Memorial we the The Eastern in to out us saw ships saw think was of seaboard week unfortunately I on

showed think your on I analysis. I have So, even

the up we Coast, East Day So on and down, weekend. Memorial particularly struggled around

Brian Vaccaro

willing remind you you malls of kind could just the what quantify comp would mall differential quarters the be that the several in between saw that of And and to see range Okay. us you last two your based on percentage is this you base quarter cohorts? gauge the the

Brian Jenkins

to our comp store XX%, and our not mall stores overall XX% base. stores going answer of but probably about our latter, overall XX% am are the I of about

Brian Vaccaro

amusement percentage by ask great. and Shifting you the make you could that, are wanted source outlook I your you cost have items costs walk and or just to through you That’s what to certain imported as of us what China any and might a planning percentage specifically helpful. how Okay, COGS about are impacted in tariffs impact of remind amusement changes to be and the tariffs of events, gears from result? China

Brian Jenkins

Yes, will I off start on that.

we seen some tariffs, far, at working category area have As with It’s – impact the we seen our the internally to. we redemption far. offset able what that and of have vendors, mostly to so mainly adjustments in look made we have so we what offset applies been also have

mitigate or what far mostly able seen offset. been so we And have have to

tariffs future knows could or goods. lingering or mean, be is billion of out kind so on there into not that $XXX tariff for I that remaining the could put still tariff XX% Now of there place, who

larger but imagine be some impact. be that could that, with tougher would mitigate as in. would a that obviously able amount goods much of you So to of coming We

when to updates more future shape, road the the can. now we right it of and but we possibility the timing but monitor is place magnitude in mitigate in in and we the we continue best tariffs will monitor will are possibility continue and good to give to down So, clear, the plans those pretty put

Brian Vaccaro

last level and in been bonuses when had there in corporate the store you. either any past could, declines I of explicitly guidance in your or thank soft, those updated you of on just the think rest assumptions been your And on one guidance labor either G&A? comps has have EBITDA I if bettered in Alright, then if G&A, curious

Brian Jenkins

the as top in the adjustment million on of there is end a lowered share, by correction, that have $X of about some EBITDA end in the we the that range. X mean implicit guide I and million reduction lower Well

So of that that’s inclusive guide.

Brian Vaccaro

Thank Alright. you.

Brian Jenkins

you. Thank

Operator

hear Tower will from we with Jon Next, Wells Fargo.

Jon Tower

Great. Thanks.

also Just business on the is it need your that pivoting are actual one talk equation, spend a your needs where could the bit brand and marketing marketing towards to the know the argue take where could you more you years to awareness perhaps side little the that passed, and but there be around time? be relative digital to over marketing I argue up mix that for about that Could spends. you could thoughts optimally of

Brian Jenkins

Well, corporate clearly And that it’s over debate already. the we a regularly, we been payroll an the of we store leveraged our have have something spend. we question area very are and and national years. a from discuss good as the the weeks It’s base marketing grown majority advertising standpoint,

but a primarily allocation, a years in that more what sort this kind activity. meaningful essentially no our marketing view, ago So is of let’s in and we move a from money and no to digital did measure and QX, is test allocation, few on spend of are spend, we doing a,

as to for looking but would to go the and we get are to point, have And now, traction targeted to with is and the both pivoting reason and spend. be the we marketing we real continuing view when that out evaluate are like in mix does both message allow a we to you area us results right in our more to We make It digitally. it invest, digital. where go as well team continue valid great

Scott Bowman

other with that I just will is Scott. this Jon, comment. hang on one to

about mobile when have we marketing. And strategy our is all of mobile things about around into kind a into the with that do that acquire tied app, customers, work mean I clearly through we thought how app do and talk digital put customers the we As that’s vehicle. connect we there of lot of one the we how

forth. the the be that store, great to provide and app customer inside able just so seen I them. that be mobile And it customers. It help reduce we be forth, will the mechanism relevant intake our more my and them way app will that’s what’s use have friction wealth future marketing very that’s also not segmented a from that us as data to to they look what’s use effective. And new to at but that And be to work of of type also targeted things so will that so the it for to most past informational customers promo, in just in and

just database. And we on will even more we that with are as customer and track that market I accelerate build think so the digital right that

Jon Tower

today? Can just marketing remind percentage you us sales what of is

Scott Bowman

slightly just sales. of It’s X% over

Jon Tower

And the stock unit it have the at. time a balance growth discount of willing level double-digit you terms the aren’t a that public traded looks thinking say in just pivoting been to lot you group, like the putting of at investors for where pay to that that over unit necessarily Okay. the bit peer in you up are then is versus shareholder little about payouts but given here, of growth

aren’t to pace why this these to unit it payouts? continue So pay sales growth for the interim slowing the public say grow and market units shareholder more if growth attacking same-store willing in aggressively in at perhaps versus investors enhancing

Brian Jenkins

we priorities growth. are attacking and on of I focus major Well, focused sales comp on That here we is the focused four the why strategic of that’s team think clearly our three are are for that.

not be say wouldn’t on to so we definitely are. And are we it focused so,

are now flow that high. free extremely generates the right that our of cash is this significant a business amount view returns stores on Our

in than it the to shareholders to the record accommodate that do plan looking flow there we to track And that can slow enough look over growth at inform down our what a think competitor value left go-forward more or certainly the take is we and all accommodate market. make historical market fit to someone in front else We I does you can on we then cash and radar our that extent view, have to we it allow to and and it our doesn’t continue sense and our us as team. to it as get of in If return things. view with the

there looking now. So keys handover many trying markets to really not names right build of are to some we sites that the these are out to

Jon Tower

Okay. you. Thank

Operator

[Operator Instructions] We will Stephen now Anderson Maxim Group. hear from with

Stephen Anderson

first guests, ultimately broadening mostly test had afternoon. point, have of the attraction? And to menu the questions you to good all, the trust you of thought maybe can somewhat so say guest testing locations, hasn’t really appeal maybe but have at I regarding higher taco given awareness this follow-up. there Two quick your more any of a Yes, deal be great

Brian Jenkins

taco But that. did considered do TV wall Dallas. wide and fact one was our tests that. we in truck. in we was We One have may two And

Our that. are guest casual. better research we focus fast were for group than to There has. meaningful it And number looking people works at expected that perform that a of

we are to what the with do what particular trucks, exploring So, with taco do offering. to the

utilization wide but wall impact in more dining and our performed flipside stores the and investment that need hear our well made space and the so And view in The looks to in the increase rooms, it’s is and so something… really energy far very is is you. be test we an I other do test my the to that lowest we

Stephen Anderson

in Has that to resulted increase F&B?

Brian Jenkins

And Texas it in Dallas well in top performing it’s comp Yes, pacing. the but one is of now so. has. general essentially our performing right stores is system

an to that stores we a expand look is So, and few area over time. this more to going are

Stephen Anderson

other that some the another by location, something test point. saw With is to to to continue are the doing operation basis? a at are haven’t which regard also case-by-case you this you store went machines rollout there on I of there VR I – seen I any Is actually, or that go two there, visit in

Brian Jenkins

Yes.

to XX them happens to handle in peak it’s two with there as have roughly capacity. put stores that able that of stores. did one Dallas we We elected launch well. I volumes We through machines. few higher machines be believe at others be and And VR And are to some to

Stephen Anderson

machine in are with Okay. the that line one labor locations the like some And mostly other they VR of terms considerations, in of in running operation?

Brian Jenkins

dedicated tend dedicated to each machine would they going a two have person little I are in be say peak. I am we – people to No, sorry, requires that require higher, because

that. we Sometimes more than run

bottom I don’t to overall it’s say little those that, would me, elected profit, would a run to in incremental I do front profitability So we less I efficiently, line think of they – from a because profit. – numbers we overall but have

Stephen Anderson

Thank Alright. you.

Operator

We have with Bartlett a follow up SunTrust. Jake from

Jake Bartlett

that to aggressive a you ask a I about buybacks that buybacks your bit Is balance are philosophy sheet – just level of up leverage little thanks. the leverage there here. wanted through more on maybe Great, and little a taking comfortable going taking forward? up with

Brian Jenkins

now We we where that is. are haven’t really given right is comfortable where with a targeted range fairly it X.X on with our leverage

near-term the kind as And so least so like continue the base but today, fairly that we are based fluctuate that where in that, is with base say look we things and business. we a lot on don’t we opportunities think to will is of comfortable but buyback how with are to at could where from the it somewhat near in away future, on business trend we things for really going flush just

Jake Bartlett

Okay, thanks.

Scott Bowman

board our of shares X.X million, repurchase stock active we most pretty is that’s which think you currently authorized active in obviously so the pretty of QX. we million active it have course program $XX with I Jake have over expansion as the And our our been multiple When with know been in but the is, any way share so that. repurchase you far an

little $XXX we whatever to right million up us now. available So have

Jake Bartlett

Great. I appreciate it.

Operator

like to Jenkins remarks. conference for conclude the to turn Brian That At closing time, session. would over I question-and-answer today’s will this

Brian Jenkins

this quarter We our Well, September. reviewing look thank your you time results second in to you for forward afternoon. with

a have evening. guys great You

Operator

conclude will call. you your today’s for Thank That participation. conference

Dave & Buster's Entertainment (PLAY) 12 Jun 192019 Q1 Earnings call transcript