Dave & Buster's Entertainment, Inc.

Good afternoon and welcome to Dave and Buster's second quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the start key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. I would now like to turn the conference over to Michael Corteri. Please go ahead.

Thank you, Andrea, and thank you all for joining us today. Joining me on today's call is Chris Morris, Chief Executive Officer. After our prepared comments, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster's Entertainment Incorporated and is copyrighted. Before we begin our discussion on the company's results, I'd like to call to your attention to the fact that in our remarks and our responses to questions, certain items may be discussed which are not entirely based on historical facts. Any of these items should be considered forward-looking statements relating to future events within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Information on various risk factors and uncertainties have been published in our filings with the SEC, which are available on our website. In addition, our remarks today will include references to financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings announcement released this afternoon, which is also available on our website. Also, pro forma financials, including main event for the prior fiscal year and the current six months ended July 31, 2022, is available on form 8K filed with the SEC and available on our website. Now, I'll turn the call over to Chris.

Okay. Thank you, Mike. Good morning, everyone, or good afternoon, rather. We are pleased to report solid financial results as well as strong operational progress during the quarter as we brought together the Dave & Buster's and main event organizations. As noted in our press release, we reported record quarter revenue and record second quarter adjusted EBITDA this period. We experienced strong guest visitation and spending across both brands this quarter. Our teams continue to deliver high levels of service to our guests while simultaneously beginning the process of integration into one company. I want to recognize the efforts of our combined team as we work to capture the synergies from our combination and adopt best practices across our brands. While we saw substantial headwinds during the quarter from wage and commodity inflation, we remain focused on driving revenue and strong cash flow while aggressively working to mitigate inflationary pressures with operational efficiencies and appropriate pricing actions. We have significant upside potential, and with our continued focus on innovation, growth, and value creation, we are determined to deliver on that potential. We are excited about the future of this new organization and look forward to sharing our progress in the coming quarters. Okay, now let me share with you my impressions from the first 60 days as CEO of the company, my thoughts on the current environment, and a few of our near-term strategic priorities. My primary focus so far has been centered on three near-term priorities. First, performing a deep dive into our store operations. Second, getting an in-depth understanding of our guests. And third, driving the integration of our combined companies to establish a winning culture. Tony Wehner, our Chief Operating Officer, and I just completed our field listening tour. We held meetings with over 300 team members, met with every general manager and sales manager within the Dave & Buster's brand, and visited over 30 stores. This tour enabled us to gain a hands-on understanding of our operations and to hear directly from our front lines about our challenges and, more importantly, our opportunities. I'm delighted to report that we have a passionate group of team members who are dedicated and eager to serve our guests and propel our leadership position in our category. We are working diligently to gain insights into our guests, supported by data and analytics to understand their desires and expectations to better align our product offerings and enhance our positioning in the market for both Dave & Buster's and main events. Our merger integration is off to a terrific start. We are ahead of schedule on our key timelines. We've already implemented over $11.5 million of annualized synergies to date and increased our target from $20 million to $25 million. We've combined our corporate offices under one roof, and the team is aligned and focused on delivering exceptional results. As our teams continue to come together and gel, we are capturing synergy opportunities, implementing best-in-class operative initiatives, and leveraging the scale of our combined operations. As we look further into the future, the senior leadership team will be taking the next few months to build our long-term strategic plan based on the output of our in-depth work. After our board approves our mid-range plan, we plan to host an investor and analyst day in Dallas likely in late Q1 next year, where you'll have a chance to meet the entire senior leadership team and hear more about our plans to grow this business. Now let me touch upon recent trends in near-term operating initiatives. Our second quarter results clearly demonstrate that guests continue to visit and spend at a higher level than previously seen in either 2021 and 2019. While the special events business has yet to fully recover to pre-COVID levels, we are seeing meaningful improvement in booking trends, and I'm optimistic that the comparisons will turn positive in the back half of this year. We are confident that guests will continue to visit our stores as we improve our offerings, increases the level of service, and refresh our physical footprint where needed. While we still expect to see higher levels of inflation over the next few quarters, we have worked and will continue to work on offsetting these additional cost pressures primarily in labor and commodities, as well as with synergies from the acquisition and other cost savings initiatives. In the near term, we are focused on a number of key initiatives. First, we are gearing up for a strong holiday banquet season in the fourth quarter. Our special event sales teams are focused and our operators are ready to execute. Second, today we launched our national Where Winners Watch football campaign featuring Kansas City Chiefs great Travis Kelsey. This national media campaign includes a national partnership with ESPN and includes spots airing on ESPN's Sunday NFL Countdown, NFL Live, College Game Day, College Football Games, SportsCenter, and more. The campaign also includes digital and social platforms like CTV, YouTube, TikTok, and Twitter, and is designed to drive awareness of Dave & Buster's as a great football viewing destination. We are also taking steps to strengthen our brand identities and on honing our customer communications and value propositions. An example of this would be our D&B Rewards Program, which continues to grow, now surpassing 4 million members since its launch in November 2021. Year-to-date loyalty accounts for higher visitations. Loyalty members visit two times per card. Non-loyalty members visit 1.3 per card. And they have a higher average guest check, 33% higher than non-members. Our loyalty members make up 5% of sales year to date, and we are just getting started. Equally exciting is that our guests love using the D&B rewards. As you can see, we have significant upside potential, and with our continued focus on innovation, growth, and value creation we can deliver on that potential. It should come as no surprise that I'm extremely excited about the future of this company. We are optimistic about the state of our business and look forward to sharing our ongoing progress in the coming quarters. At this time, Mike's going to cover our second quarter results. After that, I will return with some concluding comments. Mike?