Good afternoon, everyone. Welcome to the Dave & Buster's Incorporated First Quarter 2018 Earnings Conference Call. Today's call is being hosted by Steve King, Chief Executive Officer. I'd 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, Investor Relations, for opening remarks. Please go ahead.

Thank you, Rebecca, and thank you all for joining us. On the call today are Steve King, Chief Executive Officer; and Brian Jenkins, Chief Financial Officer. After comments from Mr. King and Mr. Jenkins, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster's Entertainment Inc., and is copyrighted. Before we begin our discussion of the Company's results, I'd like to call your attention to the fact that in our remarks and our responses to your questions, certain items may be discussed which are not based entirely on historical facts. Any such items should be considered forward-looking statements and 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 the various risk factors and uncertainties has been published in our filings with the SEC, which are available on our website at www.daveandbusters.com under the Investor Relations section. In addition, our remarks today will include references to EBITDA, adjusted EBITDA and store operating income before depreciation and amortization, which are 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. Now, I will turn the call over to Steve.

Thank you, Arvind, and good evening, everyone. We appreciate your participation in our quarterly conference call. Today, I'll begin by providing an overview of our first quarter performance and speak about the organizational change we announced this afternoon. Brian will delve into the financials and update you on our 2018 guidance, and I'll complete my remarks by discussing our development efforts before we open it up to your questions. During the first quarter, we grew revenue by 9.2% driven by continued strength in our non-comp and new stores. On a comparable week basis, revenue increased by 9.7%. Of the 112 stores we operated during the first quarter, 26 stores or 23% of the total were non-comp or new stores. We opened 6 stores during the quarter which was our fastest pace so far, and I'm pleased to share that these openings include a few that have delivered some of the highest volume openings in our history. Their strong performance and contribution to our overall revenue growth continues to give us confidence in our model. Comparable store sales on a calendar basis declined 4.9% versus the year ago period, a slight improvement on the trends in the first quarter, although fairly not where we wanted to be. While EBITDA was down about 2% on a reported basis for the quarter, it was up about 2% on a comparable week basis excluding the 2017 used tax settlement. This is roughly in line with the midpoint of our full year guidance of flat EBITDA year-over-year. Now let me update you on our four strategic practices [ph] that are driving results in the intermediate to long-term which includes amusement, F&B, improving service, and reducing friction in the guest experience, as well as driving 10% or more unit growth annually. Let me also remind you…

Thank you, Steve, and good afternoon, everybody. I'd like to begin by thanking our incredibly talented team for their continued dedication as we evolve the brand and embark on our next basic growth. Before I discuss our Q1 financial results and our 2018 guidance, let me remind you that 2017 was a 53-week year and as a result, our fiscal year 2018 calendar shifted by one week and has one less week for the full year. Due to seasonality in our business, our quarterly results this year will not be direct to comparable to our results last year. More specifically, in Q1 of this year, we had one last high volume winter week compared to last year, and this shift had an unfavorable impact on revenue of $1.4 million, EBITDA of $1 million and adjusted EBITDA of $0.9 million. In order to provide a more meaningful fixture of our performance, I'll be quoting our comp sales on a same calendar week basis adjusting for this shift. Turning now to some of the highlights for the first quarter; total revenues increased 9.2% to $332.2 million versus $304.1 million as reported in Q1 of last year. On a comparable week basis revenue was up 9.7% driven by strong contributions from our 26 non-comparable stores. Including the 6 stores that opened during the quarter, non-comp store sales increased to $74.5 million, that's up from $30.3 million in the prior year on a comparable week basis. However, revenues from our 86 comparable stores feel 4.9% to $260.2 million, that's down from $273.7 million in the prior year, again on a comparable week basis. Looking at overall sales by category, amusement and other sales grew 10.4% while food and beverage sales collectively grew 7.7%. During the quarter, amusement and other represented 57.9% of total revenues…

Thank you, Brian. I'd like to review our recent and upcoming store-development activities and the long-term opportunity for our unit growth. As I mentioned in my opening remarks, we're very pleased with the response of our recent store openings. During the first quarter, we opened 6 new stores in Rogers, Arkansas; Memphis, Tennessee; and New Jersey, Anchorage, Alaska, [indiscernible], Madison, Wisconsin; and Rosemont, Illinois. Rogers was our first 17K format store and I'm pleased to announce that our next 17K format store will be in corporate -- specifically [ph] Texas, later this year. It might be worth to reminding everybody that the economics of the 17K store -- we anticipate steady-state AUVs of about $4 million to $4.5 million, store level EBITDA margins of around 25%, cash investment excluding TI of less than $5 million in cash-by-cash returns and the low 20 for this format. In the second quarter so far we've already opened 3 stores, including Salt Lake City, Utah; which is also a new state for us. Mass [ph], in New York which is on Long Islands; and just today, and towards California in the South Bay region of Los Angeles County. We plan to open two more stores during the quarter in North Ridge, California in the Fernando Valley and Scotts Island, New York. As Brian mentioned, with 9 stores opened so far and 5 stores under construction, we're well on-track to open the 14 to 15 stores that we've guided this year representing 13% to 14% unit growth. These stores will skew towards new markets for our brand. Including the stores under construction, we currently have a total of signed leases providing us significant visibility on new-store growth into 2019 and early 2020. We remain confident that we have a strong and dedicated team needed to execute on our new store opening plan. In terms of square footage, at the higher end of the range, we expect 11 large stores this year including 9 that are approximately 60,000 [ph] square feet, and 2 that are between 30,000 and 40,000 square feet, and the remaining 4 stores will be comprised of two of our small store format, and 2 of our 17K-format stores. Our target is to ultimately open 235 -- or 231 to 251 locations in United States and Canada, including 20 to 40 of the 17K square foot stores. We plan to capture market shares for unit growth on a consistent measured pace and by driving improvement in our comp stores sales. We can win by focusing on enhancing our operating, strengthening our execution inside the box, and ensuring that we're reaching our audiences effectively. As always, we appreciate your continued support and interest in Dave & Buster's. Operator, please open the lines for Q&A.

[Operator Instructions] From SunTrust, we'll hear from Jake Bartlett.

The first one is the cadence of the same-store sales throughout the quarter on a monthly basis. I believe what you communicated before was that same-store sales had decelerated into the holidays and hadn't materially improved. I'm just trying to get a sense as to -- it sounds like it started at a lower level and then improved, but if you could confirm that, that would be helpful.

That would be the way the math works on that and we did say both of those things that, you know, degenerated in December and January, and it continued on into the early part of the first quarter.

I'd also say Jake that the first quarter is a somewhat volatile quarter in that Easter calendar shift and spring breaks and all that stuff make that really hard to read. I mean Easter moved earlier which is into the quarter and shifted that -- so that will shift some of the sales earlier into the quarter than we had last year, but it does make it hard to read and that's why we really don't like to talk about the trend particularly with them to be won.

And then, if you could share what you've learned about the VR game and how it performed in test, maybe if you have a couple hours of some of the stores that have had it running today or over the weekend, any insight you could provide would be helpful. And your level of confidence that the virtual reality is going to be a material driver to traffic?

We're very optimistic and excited about the VR concept that we're introducing, particularly with the intellectual property around Jurassic World, it is such a great launch of platform that we plan to utilize with other titles overtime. So it does represent the biggest investments we've made as a company in amusement, single game; we're going to follow it up later in the year with another game that we think also resonates well with guests. We do have it rolling into stores right now, we'll be launching it really officially here, Thursday, I think the 14th. So we're excited about that but we're very optimistic about the game, the reaction from our guests have been positive, and we deal it as an attraction that can not only drive traffic, it's going to look -- it's going to present well on our TV spot but also drive some incremental spend while they are in the store because we're charging a separate price for it. Again, it's really early but we're excited about the product offering here, and we think we're going to be able to leverage it with more of a library as we go down the road.

And lastly, how confident are you that over the last six months some of the changes you've made to menu, to service levels, to the quality product in the food and beverage side; you know, is going to be effective or anything you could point in terms of metrics or how you measure customer satisfaction just to give us confidence that the consumers are going to come in because of VR and hopefully, become repeat users?

I mean, we clearly think that kind of driving comps [indisernible] is a priority for us, and we're really focused on four things in order to do that. Brain mentioned content is one and in that we believe it's a big part of driving traffic, but we have gone with an enhanced simplified menu, we have invested in what we're calling quality to count, we've done the burger, we're planning on doing some changes to our chicken and steak, with new leadership in the F&B area in terms of our R&D function, and then we're also planning the test -- quite casual, later in the year. I think -- and then improving service and reducing friction, there are some technology elements for that, I mean, we've deployed some additional kiosks, we're testing some RFID and different operating processes in terms of how we deploy people. It's early for a lot of those to say that they are going to be things that we roll to the entire system, but we have confidence that we will be able to figure this out and come up with models that both enhance our service and also contribute to comp store sales.

Moving on, we'll hear from Andy Barish with Jefferies.

Just trying to get a clarification, Brain, on your comments around the labor line and non-comp stores, I was just a little confused. It seems as if some -- you mentioned non-comp store labor was better year-over-year; is that a function of some new procedures on new restaurant opening and glide-path or did I miss-hear that?

Right, it wasn't that clear from my comments. You know, what I was trying to say there is that we talked about this gap between our mature stores in terms of the efficiency on the hourly labor line in particular relative to our new or immature stores. What I was trying to communicate there was that gap in efficiency narrowed quite a bit in Q1, so the drag of our new stores was less and that was helpful to us year-over-year.

And I assume that's come from some focus on that area in the last year or so?

I kind of say this every time, I know. We're opening new stores every day and quite a few, I guess 6 in the Q1, and I think 5 maybe in Q4 if I remember it right. So there is a lot of effort trying to dial the stores in, continue to deliver great experience but dial when -- and trying to get them closer to our mature store base and -- so, it's constant focus every day at the new stores to dial-in. So there is a team of people -- we have some great operators out there that are working hard at it. We have a tool -- labor management, workforce management tool that we've been using for a long time that we deployed to try to do that and it's called a Smart Way [ph] and we are in the midst of a rollout of a neutral that we think better, probably 20 stores into it I think or so right now but this is a tool that we think is a little more -- a lot more state-of-the-art, more nimble, more real-time. So in the midst of that -- and we're going to continue to focus on labors, obviously one of the biggest plans that we have.

[Operator Instructions] We'll hear from Sharon Zackfia with William Blair.

On the VR, are you launching the media simultaneously with the launch on Thursday?

We've been rolling VR into the stores over the last -- about 10 days or so and so we will have it in all the stores that are going to get it by Thursday and that's when we will be launching the television advertising to support it.

It's helpful to add. It has the attraction to run and test it before we launched on air, so that's actually by design. There are couple of stores, just to clarify a little bit here -- with some of the out -- remember, the estimates, what we called our original smalls [ph] back in the day 2008-2009 timeframe; that we'll not be receiving the attraction that's couple of stores [ph]. And then, we are going to have some of the stores that are a long distance away, let's call it why that it will be a little delay to getting that title that will be largely out and rolled out by the 14th so we can get this on air. So we're trying that [ph].

And then on the shift that you're talking about, doing overtime away from more traditional media towards digital; I know you said you were doing some tests -- do you have any early learning's on the effectiveness of digital with your business?

I think it's exactly test your way into smarter and better deployment. You just get better at it as you utilize it more, until I would say our early testing was -- I would say not outstanding and as we went through the quarter and as we come into this quarter, it's gotten better in terms of our ability to efficiently target and have a reasonable cost per acquisition. But I think this will take a while for us to learn our way into, and again, as I said earlier, I think linear is still going to be a big part of what we do here over the next several quarters and probably over the next couple of years, just to have that kind of broad voice against things like -- a VR attraction, it's really hard to get that out efficiently to broaden up audience using the digital format.

Do you have any thoughts on whether or not Fortnight is impacting your business negatively?

We've gotten that question a couple of times. We haven't been able to correlate anything specifically to it. [Indiscernible] it's a hugely popular game and one that lots of young adults, as well as teenagers are playing; so we have been keeping our eye on it but we can't really draw any specific correlation.

Moving on, we'll hear from Andrew Strelzik with BMO Capital Markets.

First, you mentioned in talking about the amusement cost of sales -- a product mix shift, I was just wondering exactly what you're referring to there and if that's something we should expect to continue?

We saw some shift in some of the license merchandise that we kind of featured in some of our -- in our reset and so we are little bit of shift away from some of our imported products towards some license product in the quarter. I don't know that we'll see -- I mean, I don't know that we'll see that continue totally because we're -- we intend to move the product around and we'll have another reset here in the near future. So I don't know if I'd count on it.

And among the initiatives on the food side that you had talked about previously, trying to emphasize the value that was already on the menu was among the things you had spoken about. I'm wondering if there were any signs if that has started to resonate.

A lot of that actually occurred in the early part of the second quarter and we're really not going to comment specific trends on the second quarter but we've tried to talk about recasting kind of our events like combo or a combination also on some of our drink offerings which we think are of great value and we necessarily get a lot of credit for. So we are going to enrolling what we've described earlier as $3, $4, $5 for happy hour across all our stores. Previously, we had a 50% off for happy hour and people really didn't understand what that meant and so now we're saying all rates are going to be to $3, $4, $5 for a happy hour. We tested a couple of ideas with respect to the eat and play combo; one specifically that we tried was kind of buy power card and then get 50% off on your meal. That thing resonates that well, that was probably the same issue as you have with 50% off cocktails where people really are more interested in price certainty. So if you've watching television lately, we ran a eat and play combo over -- of course for the last several weeks, all week long which was the difference compared to what we have done previously. So over the next to full week, there will be over kind of get a better week drew on, kind of what that really meant for us, pre-kiosk, net of control [ph].

From Piper Jaffray, Nicole Miller.

Just a numbers question; so in the follow-up, is the earnings guidance this year built up to $1.04 gap -- number that you have in the press release or is after dollar per share if we take the tax settlement into consideration? And then in the first quarter of the 6 openings, how many were large and how many were small? And so the second quarter of the 5 stores, how many large and how many are small?

I was going on that, totally. Sure, I understood what you're asking about the $1.04 and the gap here…

I'm just looking -- if you take out the tax settlement, right, those are $0.04 benefit, is that right, in the quarter?

Yes, exactly. The $0.04 -- it is about the Texas huge tax owner. [Crosstalk] The guidance includes that and our guidance also includes -- you may recall, last year in our second quarter we had a legal settlement of similar magnitude, so on a full year basis they kind of wash out and that happened in the second quarter as you go back the date. On a full year basis, they have two kind of large items, one good one in the first quarter and one negative one in the second, similar magnitude. You asked about store counts, we opened 6 stores in the quarter; as I mentioned, 4 of them were large, 1 was small and 1 was our first -- 17K in Rogers. So, that was the profile of how the stores went [ph]. Did you ask about second quarter? I'm sorry. I don't know that we've given that. I mean we're going to, I mentioned in the remarks, I mean, we're skewed earlier in the year, so we've opened 3 so far in the quarter and I think we've got 1 left to go -- 2 left to go.

At the end of the second quarter, we'll have 3 stores and off those 4 of them will be large stores and 1 will be a medium store.

And next, we'll hear from Steven Anderson with Maxim Group.

I want to talk about the 14 to 15 locations, those are going to be company-owned North America. Now in the past you've talked about your international development outside of North of America and looking to open your first one this year. Can you give any guidance as to which core you will be doing this?

First of all, just back to international more broadly, we still believe this is a long-term opportunity for us. Clearly, where most of our time right now is being focused on the domestic opportunity in the domestic priority; the Middle East is really the store we're talking about to open towards the end of this fiscal year. [Indiscernible] that we had hoped, they are making some progress that I'd say it would be very late in 2018.

And we'll go to Brian Vaccaro with Raymond James.

Circling back on the improved comp performance as the quarter progressed. I'm just curious to get your perspective on what drove that improvement? Are there a couple of sort of company-specific initiatives or offers that you started to see particularly traction on, and into the needle or would you say it's mainly the broader industry improvement that we saw in March and April compared to Jan-Feb?

I would go back to Brian's comments and make sure we don't describe too too much of to the cadence was in the quarter as that first quarter is highly volatile by virtue of all the calendar shifts and what's going on with Easter and the rest of it. I think it's early to say that kind of -- some of the underlying things that we are doing have made significant impact, overall, did we improve on a sequential basis from the fourth quarter; yes, we did. It was 100 basis points, so not tremendously significant but we believe that we're on the right track with 4 strategic priorities that we've been talking about. Again, it's about content, simplifying our F&B, working on service and the friction in our system, and then really on effectively communicating that new news, as well as value. Now we believe that's the right path for us and we believe that we will be able to improve as we get a little more time under our belt with those things.

And shifting to this new unit; pretty strong new unit performance that was evident in the quarter. I guess to what do you attribute to better than expected performance? Is there a common thread or something that stands out in the class of '18 so far as it compares to the class of '17 or '16?

Just to be clear, we say new and non-comp; I did reference that we really thought the results from the new stores were very strong in the first quarter but some of the non-comp stores -- one's that are opened towards the end of last year are very good for us as well. So I would say that among others, we did skew towards -- kind of -- some new markets for us and those new markets tend to do well for us, I think we've talked about that in the past. So for the 6 store in new markets during the course of first quarter, and that part what we attributed to, they didn't have a little bigger honeymoon than what we see in the existing markets.

Brain, you look back at the fourth quarter, you saw 35 fiscal leverage on a down 6 comp, roughly this quarter, it's up the other way, 50 basis points on a slightly better comp. Can you help pass out for the underlying dynamics, where the cost per week was a little favorable this quarter versus the last two quarters of solid gain?

I mean, as I mentioned, we're about 50 bips on favorable to the quarter on the overall labor line. Really the piece of that that we dial back on what's the management labor in the stores, so that's talking more fixed piece of the business. And that by far was them -- the most significant portion of that 50 bips and hourly, kind of held our own despite how the negative comp closed to 5% and having all these new stores, we actually felt pretty good about new way the hourly line would sell the deleveraging on our non-comps -- I'm sorry, our comp stores with that negative comp sales number or is the headwind for us there.

And I think you said on the last quarter call and prior to one of the big year-on-year benefit if you want to call it that was lower store bonuses. How about the store bonus line in Q1 '18 versus last year?

Not really significant within the quarter at the store level.

And then on the virtual reality, just a couple of specifics like that -- how will customers -- I know on the last call you were talking about maybe going within the hardship that were you settled on just in terms of how will customers pay for it? And then also if you could just say about this -- how many days and hours per week will it be offered initially in the average store? Thank you.

We are going to sell it as an attraction and we have created the capability within our systems to sell our VR chip, both at our key auction, obviously had a register. We will be able to sell a chip if a guest comes upto the attraction. So we have points still to buy actually, so they can do it there, they could have a server, give them a chip or sell them a chip, they could do it as a kiosk. So that's multiple points of purchase. I think the depth in the number of hours that we plan to operate will depend somewhat on the store, obviously we have the range of performance within our portfolio but we're going to be operating this at night and on weekends, primarily. It won't probably we operated all the time but if we do really really well and we're making marginal dollars, we'll evaluate that. We have a number of these stores that are going to get two of them. I think we've got about 15 high volume stores that will have two units. And so -- I think the operating hours will be somewhat dependent on how we see the demand unfold.

And at this time, I would like to turn the conference back over to Steve King for any additional or concluding remarks.

Well, this will be my last earnings call as CEO and I want to thank all of you for your support over the years. And actually with that, I'm going to turn it over to Brian to make some final remarks.

Okay, thanks, Steve. First, I want to thanks Steve and congratulate Steve for the 12 years of dedicated service at D&B. Under his great leadership we've transformed the brand, we've reached some height, we've been doubled our store count, increased revenues over $1 billion, quadrupled our EBITDA, very impressive performance, so I want to thank him for that. And on behalf of the entire D&B team and our board, shareholders I would like to thank you for job well done and wish him well in his retirement. On a more personal note, I also want to thank Steve for his minute shift, his guidance to me over the past decade, it has been an absolute privilege for me to partner with him and the rest of our team here and I look towards to his continued council as he serves as our Chairman going forward. As for me, I'm both honored and excited to take on the role of CEO of this great Company, I'm 100% committed to work with our special team to evolve the D&B brand and continue our rolling track record of growth. I sincerely appreciate the tireless effort of both, our store and corporate team members who work together and bring our brand to life each and every day in our stores for our guests. Over the past 20 years I've developed the passion for the entertainment business. I mean, it's been a decade with Six Flanks [ph] and now over 11 years here at D&B. Entertainment is in my DNA, I've always looked at our business through an entertainment lens and believe that our relatively low frequency continues to represent an opportunity for us consistent with the priorities we've communicated, I'm confident that are laser focused on involving our content and offering, improving our service and reducing friction, and effectively communicating our new news and value in product improved comp sales performance. We expect this in combination with building great new stores, will create growth and shareholder value for years to come. I look forward to the next chapter of our success that our team will achieve together. And finally, I appreciate the continued support of our shareholders and I want to thank you for your time tonight, and look forward to speaking to you again soon. Have a great evening.

Ladies and gentlemen, that does conclude today's presentation. We do thank everyone for your participation, and you may now disconnect.