Dave & Buster’s shares surge 9% on earnings beat

DALLAS – Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) reported better-than-expected second quarter earnings, sending shares soaring over 9% in after-hours trading on Tuesday.

The entertainment and dining venue operator posted adjusted earnings per share of $1.12, handily beating analyst estimates of $0.91. Revenue came in at $557.1 million, up 2.8% YoY but slightly below the consensus forecast of $567.33 million.

Comparable store sales decreased 6.3% compared to the same period last year. However, the company expanded its adjusted EBITDA margin to 27.2% from 25.9% a year ago.

“We are pleased with the progress we are making on our strategic initiatives and on the strong financial results achieved during the quarter,” said Chris Morris, Dave & Buster’s Chief Executive Officer. “During the quarter, we grew Revenue and Adjusted EBITDA, expanded our Adjusted EBITDA margins and generated strong operating cash flow which allowed us to invest in the business and return cash to shareholders.”

The company opened two new Dave & Buster’s locations during the quarter and remodeled nine existing stores. It also repurchased $47.4 million worth of shares in Q2, bringing total buybacks year-to-date to $60 million.

While comparable store sales declined, Morris noted improvements in the company’s food and beverage performance as well as special events business. He expressed optimism about the impact of ongoing initiatives leading to growth in same store sales, revenue, EBITDA and cash flow in coming quarters.

Dave & Buster’s ended the quarter with $13.1 million in cash and $481 million available under its revolving credit facility. The company’s net leverage ratio stood at 2.3x as of the end of Q2.

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