Dave & Buster’s sees low leverage, record revenue, net income in Q1

By Devika Patel

Knoxville, Tenn., June 8 – Dave & Buster’s Inc. has a net debt leverage ratio of 0.7x as of May 1 and a strong balance sheet, saw record-high revenue last quarter, and its operating environment has normalized from the Covid-19 pandemic, according to its top officer.

On Wednesday, the company launched a new $850 million seven-year term loan to fund its planned purchase of Main Event Entertainment Inc., a Dallas-based family entertainment concept, for $835 million.

“Today, we are on a path of strong organic growth, improved margins and a strong balance sheet as reflected in our 0.7 net debt leverage ratio,” chairman and interim chief executive officer Kevin M. Sheehan said on the company’s first quarter ended May 1 earnings conference call on Tuesday.

“We set records for revenue, net income and adjusted EBITDA in the first quarter, reflecting both progress toward returning to a normalized operating environment and our success in driving top line growth,” he said.

Revenue increased 24.1% from the first quarter of 2019 to a record $451.1 million compared with $265.3 million in the first quarter of 2021 and $363.6 million in the first quarter of 2019.

The company ended the quarter with $139,081,000 in cash, compared to $25.91 million of cash as of Jan. 30, approximately $492.5 million of liquidity available under its $500 million revolving credit facility, net of $7.5 million in letters of credit.

Net long-term debt was $431,966,000 as of May 1, compared to $431,395,000 as of Jan. 30.

On Wednesday, the company launched an $850 million seven-year covenant-lite term loan B (B) with price talk of SOFR+10 basis points CSA plus 450 bps with a 0.5% floor and an original issue discount of 96 to 97.

The term loan has 101 soft call protection for six months.

Deutsche Bank Securities Inc., JPMorgan Chase Bank, BMO Capital Markets, Wells Fargo Securities LLC, Truist, Capital One and Fifth Third are the bookrunners on the deal. Deutsche Bank is the administrative agent.

Commitments are due at noon ET on June 22.

Proceeds will be used to help fund the acquisition of Main Event Entertainment from Ardent Leisure Group Ltd. and RedBird Capital Partners.

Other funds for the acquisition will come from cash on hand.

Closing is expected this year, subject to customary conditions, including approval by Ardent Leisure stockholders and regulatory review.

Dave & Buster’s is a Coppell, Tex.-based owner and operator of entertainment and dining venues.

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