Dave & Buster's Entertainment Inc (PLAY) 2014 Q4 法說會逐字稿

Good afternoon, everyone. Welcome to the Dave & Buster's Entertainment Incorporated fourth quarter and full year 2014 earnings results 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 Jay Tobin, Senior Vice President and General Counsel, for opening remarks.

Thank you, Cassandra, and thank you all for joining us for the Dave & Buster's Entertainment Incorporated quarterly conference call. On the call today are Steve King, Chief Executive Officer and Brian Jenkins, Chief Financial Officer. After comments from both Mr. King and Mr. Jenkins, we will open the call for your questions. This call is being recorded on behalf of the Company 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 adjusted EBITDA, store level EBITDA, and pro forma net income, 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, Jay, and good afternoon, everyone. We appreciate your participation in today's call and your continued interest in Dave & Buster's.

We wrapped up a record-setting and milestone year following our successful IPO with a truly outstanding fourth quarter that included revenues, adjusted EBITDA, and adjusted EBITDA margins that were all well ahead of the expectations we provided in early February. On the heels of our strong 2014 results which we believe demonstrate both the uniqueness of our business model and the value proposition we provide to our guests, we have great momentum heading into the New Year.

During the fourth quarter, our exceptionally strong 10.5% increase in comparable store sales materially outpaced Knapp-Track by approximately 740 basis points over the same period. We've now outperformed this industry benchmark for 11 consecutive quarters. In addition to our robust top line performance which consisted of a 20.8% increase in total revenues, we generated an even more impressive 28.1% increase in adjusted EBITDA and 140 basis point increase in adjusted EBITDA margin while our full year 22.1% adjusted EBITDA margin also built a new standard of excellence at Dave & Buster's.

Equally notable for the full year, over 98% of our comparable store sales generated higher sales volume than in 2013, demonstrating the benefits of our initiatives surrounding our Eat, Drink, Play and Watch positioning as well as our ability to effectively market and promote Dave & Buster's. Our robust comparable store sales growth together with the strong results we continue to see from our newer stores are indicative of the underlying consumer demand for our differentiated guest experience that conventional casual dining and entertainment options simply cannot provide.

Within our 10.5% comparable store sales gain for the quarter, walk in sales again generated outsized growth of 12.1%, which speaks to our brand strength and how well our concept is resonating with consumers. Our special events business also grew at a healthy 3.1% and remains a great means to foster more brand awareness and turn trial users into repeat customers.

We generated consistently strong performance throughout the week and the weekend across geographies as we continue to make Dave & Buster's the first choice for fun. Our efforts to communicate Dave & Buster's as a one stop destination and the only place where guests can eat, drink, play and watch all in one location continue to resonate well.

In the fourth quarter -- the fourth quarter began with our focus on sports through the NFL and college football seasons, highlighting our proposition for guests to watch the games and play the games. And as such, we continue to run D&B Sports on ESPN's Mike & Mike in the Morning show, which yielded great results.

Just to be clear while we're certainly encouraged by the traction D&B Sports is providing to our business, our success is not limited simply to accentuating the appeal of watching live sports in our stores. Rather, the totality of the Dave & Buster's experience and the ability to customize that experience so everyone who walks through our doors can feel like they're 25 again is really what sets us apart.

To that end, after promoting Dave & Buster's Sports, we then successfully transitioned our advertising to highlight three new exclusive games: Floppy Tickets, Kung Fu Panda and Fishbowl Frenzy. We again advertised on Nickelodeon around the Christmas break to appeal to a younger demographic and are pleased to have generated record sales during this holiday week.

In addition late in the quarter, we introduced a new limited edition exclusive Star Wars game which has been well received by our guests. We anticipate that we will continue to execute our strategy of launching new food, new beverage and new games in conjunction with one another in periods where we aren't featuring sports.

Food remains our slowest growing category, but it still rose over 5% in the quarter, an increase many brands would have loved to have had. We continue to introduce new and appealing products as evidenced by the fact that nearly a third of our food sales come from items that we introduced between 2012 and 2014.

During 2014, alcoholic beverage sales was the highest comp growth category on the strength of our continued introduction of visually striking and unique cocktails. We have some great ideas in the hopper for 2015 to sustain that momentum, but as I communicated in the past, the hero in much of our advertising will remain our new game introductions, and we have started purchasing games for what we believe will be another outstanding Summer of Games promotion beginning in late May.

I will discuss our recent and future developments during our concluding remarks, but before I turn it over to Brian to review the fourth quarter financials and discuss the full year outlook, I'd just like to say that our team couldn't be more excited and energized about what we believe 2015 will hold for our business. Brian?

Thank you, Steve and good morning or good afternoon. Sorry, everyone. Let me begin by just thanking our team for delivering a phenomenal fourth quarter and full year here at Dave & Buster's. Today we are also very pleased to be reporting Q4 performance that exceeded the preliminary estimates we provided in early February as we beat our sales, comp sales, adjusted EBITDA guidance in a meaningful way.

Through the quarter, total revenues increased 20.8% to $207.1 million, up from $171.4 million in the prior year and ahead of our expectations. Revenues from our 57 comparable stores increased an exceptional 10.5% to $163.6 million, up from $148.1 million, while revenues from our non-comparable stores increased 85% to $44.4 million, up from $24 million in the prior year. Recall that a store has not entered the comparables base until it's open at least 18 months as of the beginning of each fiscal year.

For the full year, total revenues were $746.8 million, an increase of 17.5% from the prior year gained by a 7.3% increase in comparable store sales and strong combined performance from the 13 stores opened during 2013 and 2014. With respect to category sales, total amusement and other sales grew 24.2% during the fourth quarter while the combination of food and beverage increased 17.6% as our total sales continued to shift to the more profitable side of our business -- that's mainly gaming and beverages.

Within our 10.5% comparable store sales increase for the quarter, amusement and other costs lead the way, up a robust 13.8%. Food cost sales increased to 5.7% while our bar business grew 10.6% for a combined food and beverage increase of 7.3%.

Total cost of sales was $41.2 million in the fourth quarter and as a percent of sales increased 20 basis points to 19.9% due to food cost pressures. Food and beverage costs were 80 basis points higher than last year as commodity inflation was only partially offset by menu pricing. We estimate that food commodity inflation averaged approximately 5.7% for the quarter, driven primarily by increases in beef and seafood, and we took specific food and beverage pricing of approximately 1.6% during the quarter to partial offset these pressures.

We preliminarily expect a bit higher commodity inflation in 2015 ranging from 4% to 5% versus approximately 4% for 2014 on an annualized basis. As you may recall, our general practice is to manage gross margins on an overall basis by leveraging Amusements, which has resulted in relatively stable historical margins.

We will work to take additional pricing where possible and as necessary in an effort to continue that track record. Amusements and other margins were relatively stable on a year-over-year basis for the quarter, improving by 10 basis points.

Total store operating expenses for the quarter were $104.7 million and as a percentage of revenue decreased 250 basis points year-over-year to 50.5% of sales as we successfully leveraged our operating labor, marketing, occupancy costs and other fixed expenses on the strong comparable store sales growth. Store level EBITDA was $61.2 million for the quarter, reflecting a growth of 31% compared to $46.7 million last year, an improvement of 230 basis points to 29.6% of sales.

G&A expenses were $13.1 million, an increase of $3.6 million compared to last year and as a percentage of revenues were 70 basis points higher at 6.3% versus 5.6%. This was primarily a function of higher incentive compensation expenses due to our strong financial performance.

Pre-opening costs totaled $1.6 million compared to $1.9 million in the prior year, reflecting the timing of new store openings. And when you put all these items together, our adjusted EBITDA grew 28.1% to $51.5 million, and margins rose roughly 140 basis points to 24.9%, representing another quarter of record-setting performance. This also marked our 18th consecutive quarter of growth in LTM adjusted EBITDA, and we exceeded the high end of our most recent February guidance by $2.1 million in the quarter.

On a full year basis, our adjusted EBITDA grew $30.3 million or 22% to $165.1 million, while our adjusted EBITDA margin improved 90 basis points to 22.1% of revenues, setting a new high watermark for our Company. Interest expense for the quarter fell to $5 million from $11.9 million in the prior year, driven by the lower interest rate under our recapitalized debt and reduced debt levels due to the debt repayment that followed our IPO. We generated net income of $14.7 million or $0.34 per share on a diluted share base of 43.3 million shares compared to net income of $4.9 million or $0.14 per share in the fourth quarter of last year on a diluted share base of 34 million shares.

For the full year, we recorded net income [up] $7.6 million or $0.21 per share on a diluted share base of 37.1 million shares versus net income [up] $2.2 million in the prior year or $0.06 per share on a diluted share base of 34 million shares. Note that these are GAAP financial results and reflect our capital and cost structure prior to our IPO. However, just as we did in the Q3 call, we have included in our press release a reconciliation of our GAAP results to our pro forma financial results.

The pro forma was also included adjustments to reflect our current post IPO capital and cost structure as of the beginning of FY13 as well as other certain non-recurring one-time adjustments. We do believe that our pro forma results provide the best baseline view of the business given our new structure.

On a pro forma basis for the fourth quarter, net income improved to $14.1 million or $0.33 per share compared to $7.7 million in 2013 or $0.18 per share. For the full year, on a pro forma basis, we reported net income of $32.8 million or $0.76 per share versus $16.9 million or $0.40 per share in the prior year.

Now, turning to our outlook, we are issuing the following annual guidance today for 2015, which ends on January 31 of 2016. That is total revenues ranging from $808 million to $822 million. Comparable store sales growth of 3% to 4% with stronger expected growth in the first half of the year given the comparison we face as we move throughout the year. Seven to eight new stores, which we anticipate will skew toward our large format stores and also the relocation of one existing store.

Adjusted EBITDA ranging from $182 million to $187.5 million, an effective tax rate of approximately 37% to 38%, net income in the range of $36.7 million to $40.4 million with a diluted share count we expect to be between 43.7 million and 43.9 million shares. And finally, net capital additions after tenant allowances of $116 million to $126 million, driven by new store openings, our store relocation, our planned remodel activities, along with some further investments in D&B Sports as well as expenditures associated with our e-ticket initiative. With that, I will turn the call back over to Steve to make some additional remarks.

Thank you, Brian. We completed 2014 with a total of eight new store openings. This included three stores open during the fourth quarter in Albuquerque, New Mexico; Clackamas, which is a suburb of Portland, Oregon; and Greenville, South Carolina.

All three are new markets and new states for Dave & Buster's. Collectively, our entire 2014 class is performing extremely well and ahead of our expectations.

In addition, we would also like to recognize a robust performance of the 16 non-comp store sales, which includes these recently opened stores I just referred to. In aggregate, this group of 16 generated approximately $128 million in revenue for the full year and made substantial contributions to adjusted EBITDA as well. We continue to target first year returns averaging 35% for each class, and our newly opened non-comp stores are collectively performing above that range.

For 2015 we're committed to opening seven to eight new stores with five of those stores already under construction. We estimate that we will open two stores in each of the first and second quarters with the balance spread across the third and fourth quarter. Within the seven to eight stores that we plan to open, we will be skewed towards as Brian mentioned our large store format in 2015.

We're under construction in Pelham, which is the Greater New York City area; [Beulis], which is outside of Dallas; Grand Rapids, Michigan; [Wugern] outside of Boston; and Edina, which is outside of Minneapolis, Minnesota. All of these stores with the exception of Grand Rapids meet our large store criteria of being over 30,000 square feet. We're also planning as Brian mentioned a relocation of our store in Buffalo, New York at the end of the year, and that's not part of that seven to eight new stores that we're guiding to.

In addition to the five stores under construction, we have a well developed real estate pipeline as an additional 16 signed leases that continues to build and provides us with great visibility over the next several years. And as we've done in our prior classes, we will tailor our store size to the surrounding population size and other criteria including daytime traffic, number of businesses, proximity to nationally recognized anchor tenants that have a regional draw. However over the next couple of years, we anticipate being more heavily weighted towards those larger stores.

In conclusion, following another record setting year at Dave & Buster's, we feel great about what we've achieved so far, are confident about where we're headed. And we're ready to take your questions. So operator, please open the lines.

(Operator Instructions)

We will go first to Nicole Miller of Piper Jaffrey.

Thanks, good evening. A couple, well two questions. First on the special events given that is really important to the fourth quarter period, could you talk about how that came out in terms of total sales? And then what did you see in corporate versus social for special events?

Yes, I will take the first one. I think in Steve's remarks, he mentioned that our comp performance was up about 3.1% in special events, so that clearly fueled a very strong comp growth for the quarter at over 12%. But we were very pleased with 3% growth -- over 3% growth in special events in what is our biggest special event quarter by far.

Special event party mix in the quarter it is about just shy of 16% of overall revenues in the fourth quarter. So it is the most significant mix of special events for the entire year. I don't have the second piece in terms of the corporate versus the social piece of that, Nicole. I would also add that we were rolling over a stronger comp in special events in the fourth quarter of last year than what we were in the walk in part of the business, so I think that had some effect as well.

That's very helpful, thank you. And then just last question, can you talk a little bit about the flow through? So this big box and utilization or capacity that you create from the comp gain and that comp momentum, how does that flow through to the bottom line?

Well, if you look at the margins for the quarter for us from an adjusted EBITDA standpoint, we were about 140 basis points better than the prior year, and that was comprised mainly of leveraging on what I will call our facility related cost, rent, and R&M and utility, that sort of thing as well as marketing. So we did a nice job leveraging at the store level on those comps and then labor as well.

So that was offset if you look at our numbers by an increase in G&A, and that's again primarily due to higher incentive comp for the quarter. We plan for about 50% flow through on a 1% comp increase, so that's really what we're shooting for, and we typically exceeded that.

Thanks, great job.

Thank you, Nicole.

We will go next to Andy Barish of Jefferies.

Hi guys. Just wondering on the pipeline, first of all, is the 16 in addition to the five stores that you have under construction currently?

Yes it is. 16 in addition to the five, so 21 unopened that are under contract in some form.

Okay, and then -- not that food commodities moved the needle all that much, but what's driving high rates of inflation this year versus 2014? I would have thought you would have seen breaks on things like seafood and dairy and other items like that.

So we are seeing some benefit in those areas that you just mentioned. The big culprit for us right now is beef followed by chicken, so we aren't seeing moderation in the price of that.

And I think it's a little bit of chicken is just because of beef gives them some cover to keep prices higher than you would think they might be given the input costs, which in some measure are driven by fuel prices and some of that should be dropping. But we're just not seeing it yet in the pricing, and I think there's been a lot of volatility in some of those prices over the last couple of weeks even.

And does the menu innovation work around the food side take that into account, or is it really that we've got to give the customer what they want and they happen to like beef and chicken items and we will just manage around that?

Yes, I mean we do have some ability to manage that, Andy. In the past when we -- like for example, last year, shrimp really spiked high. We did some things to try to moderate our usage on shrimp but to a certain extent, we are subject to that of what the guest is buying.

We have a very broad menu. Beef and chicken are popular. It's not like we are going to be able to take those off.

I think Brian referenced we manage that gross margin holistically. We were looking at the low [80]s number and trying to manage that as a totality as opposed to getting too focused on one of the components. And we do have some levers that others don't have if we need to in order to keep that in the right range.

And specifically as we talked about in the past, we can take price in the winner's circle that would give us better margins on the amusement side which then would take off some of the pressure that we might have that's facing us on the food cost side. So we continue to monitor that, and if need be, we are willing to exercise and throw that lever.

I would just add if you look at our full year numbers despite the cost pressure we've had on the commodity side, our overall gross margins are essentially flat. And again not to repeat what Steve said, but we have been very successful in managing the variability to 20 basis points year-over-year, no more variability than that over the long haul. Its been very flat and stable for a number of years. So while we will see pressures, we will continue to manage that way, and we think we have some levers to do so.

Thank you guys.

Thanks, Andy.

We will go next to Sharon Zackfia from William Blair.

This is actually Matt Curtis on for Sharon. I just have a follow-up on the commodity question. Do you guys have anything contracted right now?

We have about half of the basket contracted as we look on a related basis for the year.

Okay and then on price, you guys took price this quarter and I think you took price last quarter. So what's the cumulative price benefit that you're carrying right now?

Yes, just to be clear, the numbers I'm quoting are essentially a cumulative price, so when I quote 1.6% on the quarter, that is the cumulative price impact that we have this year versus last year same quarter.

Okay.

We will probably, we're looking to take a little more price in 2015 to counteract some of the things we've seen on the commodity side.

Okay and then just to make sure I'm understanding the adjusted EBITDA guidance, maybe you can tell us what you're anticipating in terms of pre-opening expenses and stock based compensation for 2015?

I will start with the latter of stock based comp. If you look at our press release, you're going to see us pro forma a stock based comp number of about $3.6 million, and that really is trying to give effect for the stock based comp that we would expect in 2015 as a public company with a long term incentive plan in place. So I think I would look towards that number that we've already guided to actually on the pro forma there.

Pre opening, I think we've talked a little bit about that in the past. We're targeting seven to eight stores skewed more towards large. We will typically spend about $1.4 million on a large and definitely around $1 million on a small.

Again if you do the math on that, you will get upwards over $10 million if we're skewing towards large. And I'd say keep in mind, Steve mentioned we plan to relocate a store in Buffalo, and while it won't have pre-opening costs as high as a normal new store, it will have some pre-opening costs associated with it. So we're not really guiding specifically, so you can do the math on that, but you're up over $10 million.

Okay that's helpful. And then finally, on your e-ticket initiative, I think you guys said last time you started to accelerate the rollout materially starting in February. So maybe you can just give us an update on how that's been progressing and maybe early takeaways?

Well it's progressing well. We are doing a couple of stores each week. It is an investment the Company is making in the neighborhood of $10 million in terms of capital investment to put in a piece of equipment that allows our guests to opt in to take their winnings, not electronically and put those tickets directly on the power card as opposed to taking away a paper ticket.

So we think it's a win across-the-board in that it is a go-green initiative, it eliminates for us in excess of $3 million in ticket costs annually if everybody opts in. And what we're finding is we're getting high, high opt in rates in the 80% range.

So we're excited about the rollout, and we're well into it. We anticipate we will be complete by the end of the second quarter is what we're planning on right now.

It also just as another side bar, today one of the last experiences someone has of a Dave & Buster's if they've been playing games is to redeem their tickets in the winner's circle for the prize, so what we are finding is obviously less lines for people waiting to get their tickets weighed. We think that's a plus from a guest experience and a capability for us.

So it's a win-win from a guest standpoint -- they can opt in. It's a win for us for cost and a win for the environment. So we're excited about that initiative right now.

And we anticipate it's in the second quarter right?

Sounds good, thank you.

Thanks.

We will go next to Brian Vaccaro of Raymond James.

Good afternoon guys. Just a couple quick ones for me. On the unit count, just wanted to confirm that the Farmingdale location did close early fiscal first quarter?

Yes, it did.

Okay, thank you, and then Brian, as we think about G&A somebody, asked about stock based comp, but how should we think about G&A? Obviously you mentioned incentive comp being up, but how should we think about G&A for the year in aggregate in 2015?

Well, we haven't guided specifically on that. We actually expanded our guidance here today above what we had initially planned, but I would say this. We're going to see some increase obviously year-over-year in stock based comp, using the $3.6 million as a target, and this year we've got $2.2 million.

So you're going to see upward pressure in G&A from that, so there will be some incremental public company costs going into next year. And then you're going to have some reduction due to bonus declines because we had such an incredible year this year of bonuses where incentive comps were ahead of par level, so that will cause G&A to go back down. But I think you guys have models out there in the $44 million to $45 million range if I remember right, and you probably aren't too far off.

Okay, and that $44 million to $45 million, you're saying that's before stock based comp I'm assuming?

Well, no, inclusive.

Inclusive of stock based comp, okay. And then just one more quick one if I could. Wanted to ask about -- obviously D&B Sports has been very successful in attracting new and existing guests.

But I was wondering what your internal data would suggest you're seeing in terms of converting maybe that new guest that's coming for D&B Sports occasion and is coming back during other occasions maybe with his family on the weekends or during the week, et cetera. Do you have a sense of that conversion rate yet?

I would say no, we don't really have a very strong sense of that conversion rate. We do have our rewards database that we can track some of that stuff in, but it's just not a large enough proportion of everybody coming through the doors every week in order to make it specifically value are projectable into the overall.

So I would say that intuitively I believe that they are doing more than just watching games because if you look at what the strongest category in the fourth quarter was, it was actually amusement. So to me that says we're attracting them in and actually crossing them over, and we do very specific things to try to drive them over and participate in the midway.

So I think we're being successful at that and I was proud of our success in the fourth quarter. But in terms of that person then coming back later during the week or on the weekend or whatever with their family in addition to that, pretty tough for us to get at that data.

Okay, thank you.

We will go next to Paul Westra of Stifel Nicolaus.

Hi guys, thanks for taking my call. This is Mike [Hofen] on for Paul. Just wanted to start out with a clarification on the guidance. I just wanted to confirm that net income, is that GAAP or is that pro forma basis?

That's a reported basis guidance, no pro forma.

Okay, thank you, and then just wanted to ask if there were any known medical claim headwinds or any other labor headwinds that we might be aware of thus far into the 2015?

We made some modifications to our benefit offerings in 2014 and did see some migration in the plans and actually had some escalation in medical benefit costs in 2014. So we think we have absorbed some of the healthcare cost increase, we expect a little bit of an increase year-over-year this year and obviously new stores will cause the number to move up some. But we're not overly concerned about the healthcare benefit increase for next year for 2015.

What we see is in the guidance that we're giving.

That's helpful, and I guess I just wanted to ask, it seems like the call was more or less focusing on larger format stores going into the future. It seems to me like maybe a reversal of the prior course where it seemed like we were looking at more for smaller formats in the future. Is there a change in thinking there, or is this any learning that we could take away from that?

I think that there's good results from both large and small stores, there continue to be good results from both large and small stores. It's a bit of a way the real estate has come our way in terms of our targeted opportunities, but I would also say that if there is a store that's on the cusp, we are erring on the side of building a larger store as opposed to a smaller store.

And I think that that's not necessarily inconsistent with what we've done or said in the past, but I think the combination of the way the sites have been coming to us has been a little bit more focused on large market, large opportunities. We still feel good about the small store, and it's not a reflection of some performance that's under expectation on the small stores because they continue to perform quite well.

I'd just add I think we have stated that our preference is to obviously go in a new market, large D&A, and that's a large store at the top of the food chain. And that would be followed probably by a large D&A where we're under penetrated like we have a bunch of those markets, Boston, San Francisco Bay Area, a number of markets where we are under penetrated. Those are going to be large stores also in terms of format sizing.

And then you're going to be looking at Greenfield smaller D&As where you will be putting the small in. So it's going to prior to leaning a little more towards large I think.

Okay, great color guys, thank you and congrats on the quarter.

Thank you. Appreciate it Brian.

We will go next to Matthew DiFrisco of Guggenheim Partners.

Thank you, my question is more on the new stores and what you're seeing on the marketplace as far as the investment cost and also what you have within your guidance on those expectations for the 2015 openings as a class of stores, the size, those volumes would be coming in at relative to prior years and if there's any factor or anything to consider as far as levels of cannibalization. In particular I was looking at the one closest to us in New York, I think it's coming in Pelham, and not too far away from a [Collough] city location in the Bronx. Just curious if you factor in in those situations a level of cannibalization?

Yes, just being clear, we don't have a store in Collough City, but we are going to Pelham, is that what you're saying?

Yes, but there's another store in another section of the Bronx not too far off from that.

We don't have any stores in the Bronx at this point, but just to clarify, the closest stores that we have to this store are Westbury in Long Island, in the Palisades Mall which is West Nyack, and literally in Times Square. So those are the three closest stores.

We've done quite a bit of cannibalization studies on those three and see that given the density there, we're expecting very minimal cannibalization if any at those locations. We do take that into account as we're looking at new stores.

To answer your question more broadly, what we've guided to is a stabilized run rate for new large store of $10 million, first year about $11.5 million. I don't see anything in this class that would be inconsistent with that part of guidance.

We're as we said -- we're probably going to be a little more skewed toward the large, and we are going to be skewed also towards existing markets compared to what we were for example, in the last year. So I don't know if that gets at all your questions.

No, it does give me good color. I apologize, I was meaning the West Nyack store, I apologize. But in respect to the investment cost, given they are in some existing markets, does that aside from the obvious of pre-opening being little less weighty, is there any advantage you have on the buildout of the cost structure of that maintaining them versus what might be beginning to be an inflationary environment on cost for other brands?

Yes, so far we're holding our own on the cost side and very well compared to what we've been forecasting in terms of our net development cost, which again for a large store on average we've been saying that's going to be about $8.25 million, $8.3 million. And I think we're going to be able to come in within that range.

We're also not seeing significant inflation on the rent side yet. Again, it may be the size we're after relative to some other spaces because I've heard the same thing about the quick casual folks having much more trouble finding the right size spots at the right prices of what they were anticipating and seeing some escalation or maybe some reduction of TI and some of that, but so far so good for us. All the stores that we have underwritten in this group of 21 that we were referencing, we think we're going to be able to bring in in the range of costs that we had guided to previously.

Excellent, and then just lastly, did anything -- I mean I know you have an emerging sports theme, was there anything that you could say on a year-over-year basis to start off the quarter that might have impaired given the timing of spring break during the March Madness and the finals week, or is that not as relevant for your brand?

Let me speak to the first quarter, because we knew this question would come up. And for us, it isn't about the singular event of March Madness or anything like that.

We still have a couple of weeks to go in the quarter and some of those weeks really have very significant spring break seasonality because of the Easter holiday falling earlier in 2015 by two weeks than it did. So we're still two weeks out from Easter last year.

That being said, we're not seeing any signs through the first nine weeks of any deceleration in our two year comp store sales momentum, which is approximately 11% in both Q3 and Q4. So as you may recall, we're going to roll over almost 5% in this from last year's -- 2014's first quarter. It was actually 4.7% which implies that 6% or better comp store sales growth during this year's fourth quarter based on what we see so far, first quarter excuse me. We were talking about the fourth before -- this is the first quarter.

That's great. Very helpful, thank you.

This concludes our question and answer session. At this time, I'd like to turn the call back over to Steve King, Chief Executive Officer, for any additional or closing remarks.

I did see one other person in the queue from a question?

We will go next to Sam Teeger of Commonwealth Bank.

Hi guys, congratulations on the fantastic results. I'm just wondering if you're able to provide any comments as to the performance of these stores in the state of Texas, how they have been, performing particularly Houston where there has been a couple of layoffs in the oil space?

So Sam, so far so good. We're seeing no impact, and again, we're primarily in Texas in the bigger markets and we're more so in Dallas, we're in also Austin, San Antonio, two stores in Houston. But we're just really not seeing very much impact at all to anything going on from an oil standpoint despite the layoffs and whatnot in Houston. So, so far so good is our outlook.

Great, thanks very much, and just one more question. Just wondering how the bowling has been performing in eight of your stores?

I'm sorry, I didn't understand that. The what?

You've got bowling in eight of your stores. Just wondering if you can provide any commentary as to how this has been performing and if it hasn't been performing too well, would you look to reallocate the space to some of your better performing areas?

We're not doing any more of them, that's all I'm saying. It's a low revenue per square foot, just like billiards were when we started repurposing that.

It's not a focus for the Company, and while we have a few of them that predated this management team, it's not something that we're looking to continue. But to repurpose them would be quite expensive, that's also right now not on our radar.

Sure, okay, thank you very much.

Okay, Sam.

There are no further questions.

Okay, so once again, we appreciate your continued interest in Dave & Buster's, look forward to speaking to you again when we release the results from our first quarter, which we anticipate being in early to mid June. Thank you.

This does conclude today's conference. We thank you for your participation. You may now disconnect.