Q1 2024 Dave & Buster's Entertainment Inc Earnings Call

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Operator: You're listening to Dave & Buster's Live! Good day, and welcome to the Dave & Buster's First Quarter 2024 Earnings Conference. All participants will be in a listen-only mode.

Speaker Change: Good day and welcome to the Dave <unk> Busters first quarter 'twenty 'twenty four earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: If you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask... You may press star then 1 on a touchtone. To withdraw your question, please press star then 2.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two.

Operator: Please note, this event is being held. I would now like to turn the conference over to Cory Hatton, Vice President, Investor Relations, and Treasurer. Please go ahead. Thank you, operator, and welcome to everyone on the line. Leading today's call will be Chris Morris, our Chief Executive Officer, and Mike Quartieri, our Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster's Entertainment Inc. and is copyrighted.

Speaker Change: Please note this event is being recorded.

Speaker Change: I'd now like to turn the conference over to Cory Hatton, Vice President Investor Relations and Treasurer. Please go ahead.

Cory Hatton: Thank you operator, and welcome to everyone on the line.

Speaker Change: Leading today's call will be Chris Morris, our Chief Executive Officer, and Mike core Terry <unk>, our Chief Financial Officer.

Speaker Change: After our prepared remarks, we will be happy to take your questions.

Speaker Change: This call is being recorded on behalf of Dave and Busters Entertainment incorporated and is copyrighted.

Cory Hatton: Before we begin the discussion of our company's first quarter 2024 results, I'd like to call your attention to the fact that in our remarks and our responses to questions, certain items may be discussed that 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.

Speaker Change: Before we begin the discussion on our company's first quarter 2024 result.

Speaker Change: Like to call your attention to the fact that in our remarks and our responses to questions.

Speaker Change: Certain items may be discussed which are not entirely based on historical fact.

Speaker Change: 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.

Speaker Change: All such forward looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated.

Cory Hatton: Information on the various risk factors and uncertainties has 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.

Speaker Change: Information on the various risk factors and uncertainties has been published in our filings with the SEC, which are available on our website.

Cory Hatton: Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP measure contained in our earnings announcement released this afternoon. Also, the presentation we will be referencing today will be made available on the events and presentations page of our investor relations website shortly after the conclusion of this call. And with that, it is my pleasure to turn the call over to Chris. All right.

Speaker Change: In addition, our remarks today will include references to financial measures that are not defined under generally accepted accounting principles.

Speaker Change: You should review the reconciliation of these non-GAAP measures to the comparable GAAP measure are contained in our earnings announcement released this afternoon.

Speaker Change: Also the presentation, we will be referencing today will be made available on the events and presentations page of our Investor Relations website. Shortly after the conclusion of the call.

Speaker Change: And with that it is my pleasure to turn the call over to Chris.

Christopher D. Morris: Thank you, Cory. Good afternoon, everyone, and thank you for joining us on our call today. I will begin with some brief highlights from the quarter, turn it over to Mike to walk through our first quarter financials, and then we will spend the remainder of the call presenting a status update on our strategic growth initiatives as we approach the one-year anniversary of our Investor Day last June. In our first quarter of fiscal 2024, we generated revenue of $588 million and adjusted EBITDA of $159 million.

Christopher D. Morris: Alright. Thank you Corey good afternoon, everyone and thank you for joining our call today I will begin with some brief highlights from the quarter turn it over to Mike to walk through our first quarter financials, and then we will spend the remainder of the call presenting a status update on our strategic growth initiatives as we lapped the one year anniversary.

Christopher D. Morris: While these top-line results were well below the potential we see for this business, with the choppiness we alluded to in February, we are encouraged by more recent improving top and bottom line trends in May and early June as we have scaled some of our more successful organic growth initiatives. Additionally, during the quarter, we realized more than $10 million of incremental labor and marketing costs associated with the rollout of new initiatives and certain marketing tasks, which we do not expect to repeat going forward.

Christopher D. Morris: Three of our Investor Day last June.

Michael A. Quartieri: In our first quarter of fiscal 2024, we generated revenue of $588 million and adjusted EBITDA of $159 million.

Michael A. Quartieri: While these top line results were well below the potential we see for this business.

With the Choppiness, we alluded to you in February we are encouraged by more recent improving top and bottom line trends in May and early June as we have scaled some of our more successful organic growth initiatives.

Michael A. Quartieri: Additionally, during the quarter, we realized more than $10 million of incremental labor and marketing costs associated with the rollout of new initiatives and certain marketing test, which we do not expect to repeat going forward.

Christopher D. Morris: We continue to make material progress advancing our key organic growth initiatives. We've seen meaningful success growing our loyalty database through our new marketing engine, highlighting our enhanced food and beverage offering through compelling promotions, refining our gains pricing strategy, driving incremental special events, and clear outperformance in our remodel initiative, which we expect will lead to substantial improvements in revenue and profitability over the medium term. We also continue to open new stores at highly attractive returns on our investment and have continued to opportunistically return capital to shareholders via our share repurchase program in a highly accretive manner.

Michael A. Quartieri: We continue to make material progress advancing our key organic growth initiatives, we have seen a meaningful success growing our loyalty database through our new marketing engine, highlighting our enhanced food and beverage offerings through compelling promotions refining our gains pricing strategy driving incremental special events.

Michael A. Quartieri: And clear outperformance in our remodel initiative, which we expect will lead to substantial improvement in revenue and profitability over the medium term.

Michael A. Quartieri: We also continue to open new stores at highly attractive returns on our on our investment and that continued to Opportunistically return capital to shareholders via our share repurchase program and a highly accretive manner.

Christopher D. Morris: I'm proud of the hard work of our dedicated team as we continue to deliver strong operating performance and generate significant free cash flow in the face of a difficult prior year comparison and a complex macroeconomic environment. We remain laser-focused on delivering the $1 billion Adjusted EBITDA target in the coming years. I'd now like to turn the call over to Mike to walk you through our first quarter financial results in more detail before turning to the update on our strategic... Growth Initiative. Thanks, Chris.

Michael A. Quartieri: I'm proud of the hard work of our dedicated team as we continue to deliver strong operating performance and generate significant free cash flow in the face of a difficult prior year comparison, and a complex macroeconomic environment.

Michael A. Quartieri: We remain laser focused on delivering the 1 billion adjusted EBITDA target in the coming years.

Speaker Change: I'd now like to turn the call over to Mike to walk you through our first quarter financial results in more detail before turning to the update on our strategic.

Speaker Change: Growth initiatives.

Michael A. Quartieri: We generated first quarter revenue of $588 million and adjusted EBITDA of $159 million for an adjusted EBITDA margin of 27.1%, a 200 basis point margin expansion versus the same period last year. As Chris mentioned, adjusted EBITDA in the quarter decreased, in part, due to $11 million of incremental costs, which we do not expect to repeat, which include labor and marketing costs related to the rollout of our new menu, our new service model, and the deployment of several new systems, as well as an unsuccessful incremental marketing campaign test. Net income in the first quarter totaled $41 million, or $0.99 per diluted share.

Michael A. Quartieri: Thanks, Chris we generated first quarter revenue of $588 million and adjusted EBITDA of $159 million for them.

Michael A. Quartieri: A margin of 27, 1%.

Speaker Change: A 200 basis point margin expansion versus the <unk>.

Michael A. Quartieri: 2019 as.

Speaker Change: As Chris mentioned adjusted EBITDA in the quarter decreased in part due to $11 million of incremental costs, which we do not expect to repeat which includes labor and marketing costs related to the part of our new menu, our new service model and the deployment of several new systems.

Speaker Change: As well as an unsuccessful incremental marketing campaign test.

Speaker Change: Net income in the first quarter totaled $41 million or 99 per diluted share we reported $46 million of adjusted net income or $1.12 of adjusted earnings per diluted share.

Michael A. Quartieri: We reported $46 million of adjusted net income, or $1.12 of adjusted earnings per diluted share. Reconciliations of all non-GAAP financial measures can be found in today's press release. Comparable store sales decreased 5.6% on a same-week basis in the first quarter versus the prior year period.

Speaker Change: Reconciliations of all non-GAAP financial measures can be found in today's press release.

Comparable store sales decreased five 6% on a same week basis in the first quarter versus the prior year period.

Michael A. Quartieri: As Chris mentioned, we have seen an improving trend in this important top line metric through the first five weeks of this quarter. We generated $109 million of operating cash flow during the first quarter, contributing to an ending cash balance of $32 million for total liquidity of $516 million when combined with the $484 million available on our $500 million revolving credit facility net of outstanding letters of credit. We ended the year, or I should say the quarter, with a total net leverage ratio of 2.3 times, as defined under the credit agreement.

Speaker Change: As Chris mentioned, we have seen an improving trend in this important top line metrics through the first five weeks of this quarter.

Speaker Change: We generated $109 million of operating cash flow during the first quarter contributing to an ending cash balance of $32 million for total liquidity of $516 million when combined with the $484 million available on our $500 million revolving credit facility net of outstanding letters.

Speaker Change: A credit.

Speaker Change: We ended the year or should say the quarter with a total net leverage ratio of two three times as defined under the credit agreement.

Michael A. Quartieri: We entered into a sale-leaseback agreement for the sale of two additional Dave & Buster's stores that opened in 2023 and anticipate generating $45 million of gross proceeds from the sale in the second quarter. After this sale, we still have four owned and operating real estate assets and two additional wholly owned stores coming online in the second half of 2024. As a reminder, we expect to command a premium price in the market versus other comparable real estate given our superior economic... Unit Economic, strong credit, attractive brand attributes, and commitment to being a long-term tenant in the space.

Speaker Change: We entered into a sale leaseback agreement for the sale of two additional Dave and Busters stores that opened in 2023 and anticipate generating $45 million of gross proceeds from the sale in the second quarter.

Speaker Change: After this sale, we still have four owned and operating real estate assets.

Speaker Change: And two additional wholly owned stores coming online in the second half of 2024.

Speaker Change: As a reminder, we expect to command a premium price in the market versus other comparable real estate given our superior economics.

Speaker Change: Unit economics.

Speaker Change: Strong credit and attractive brand attribute and commitment to being a long term tenant in the space.

Michael A. Quartieri: Turning to capital spending, we invested a total of $113 million in capital additions during the first quarter, opening three new Dave & Buster's and one new Main Event. We've already opened one new Dave & Buster's during the second quarter of fiscal 24 in Port St. Lucie, Florida.

Speaker Change: Turning to capital spending we have invested a total of $113 million in capital additions during the first quarter opening three new Dave <unk> Busters, and one new main event.

Speaker Change: We've already opened one new Dave <unk> Busters during the second quarter of fiscal 'twenty four in Port St Lucie, Florida.

Michael A. Quartieri: We expect to open a total of 15 new stores across both brands during fiscal 24. We also have eight incremental remodels coming online in the second quarter to add to the nine existing remodels and anticipate having a total of 45 done by the end of fiscal 24. Thus far in fiscal 24, we have spent $50 million repurchasing nearly a million shares, and we have $150 million remaining on our board-approved share repurchase authorization.

We expect to open a total of 15 new stores across both brands during fiscal 'twenty four.

Speaker Change: We also have eight incremental remodels coming online in the second quarter to add to the nine existing remodels and anticipate having a total of 45 is done by the end of fiscal 'twenty four.

Thus far in fiscal 'twenty four we have spent $50 million repurchasing nearly 1 million shares.

Speaker Change: We have $150 million remaining on our board approved share repurchase authorization.

Christopher D. Morris: We see tremendous value in continuing to opportunistically repurchase our shares in an accretive manner with the excess free cash flow above and beyond what is needed to invest in our new units, accelerate our remodel program, and support our organic growth initiatives. Now, I'd like to turn the call back over to Chris to walk through the presentation and update on our key organic growth initiatives. All right, thanks, Mike.

Speaker Change: We see tremendous value in continuing to opportunistically repurchase our shares in an accretive manner was the excess free cash flow above and beyond what is needed to invest in our new units accelerate our remodel program and support our organic growth initiatives.

And now I'd like to turn the call back over to Chris to walk through the presentation and update on our key organic growth initiatives.

Christopher D. Morris: Alright, Thanks, Mike.

Christopher D. Morris: As I mentioned at the start of the call, tomorrow marks the one-year anniversary of our investor day, where we first unveiled our medium-term strategic plan. So we thought it was important to provide a more comprehensive status update of how we are tracking against this plan. We have made meaningful progress on all of our initiatives, which in their own right are meeting or exceeding expectations. We've also discovered new opportunities and initiatives, ranging from F&B realized checks to our optimized remodel strategy to additional incremental cost savings.

Christopher D. Morris: As I mentioned at the start of the call Tomorrow marks the one year anniversary of our Investor Day, where we first unveiled our medium term strategic plan. So we thought it was important to provide a more wholesome status update and how we are tracking against this plan.

We've made meaningful progress on all of our initiatives, which in their own right are meeting or exceeding expectations. We've also discovered new opportunities and initiatives ranging from F&B realized Jack sure optimize remodel strategy two additional incremental cost savings, we expect a substantive impact over the next.

Christopher D. Morris: We expect a substantive impact over the next several months from these initiatives scaling and rolling out from the successful tests we have run. Consequently, I remain confident in our target of over a billion dollars of adjusted EBIT. We have made significant strides advancing each of our six key organic growth initiatives. However, as you can see on the right-hand side of the slide, we are still in the early innings of most of these initiatives, with meaningful upside to come.

Christopher D. Morris: Several months from these initiatives scaling and rolling out from the successful test we have Brian.

Consequently, I remain confident in our target of over a $1 billion of adjusted EBITDA.

Christopher D. Morris: We have made significant strides advancing each of our six key organic growth initiatives. However, as you can see on the right hand side of the slide we are still in the early innings of most of these initiatives with meaningful upside to come.

Christopher D. Morris: Within marketing optimization, which remains our largest revenue-adjusted EBITDA opportunity, we began by getting the right team in place and hired a new top-notch CMO in December of 2023. Megan has been phenomenal..., has been phenomenal her first six months.

Christopher D. Morris: Within marketing optimization, which remains our largest revenue and adjusted EBITDA opportunity, we began by getting the right team in place and hired a new top notch CMO and December of 2023 Meg.

Christopher D. Morris: Megan has been a phenomenal.

Christopher D. Morris: It has been phenomenal her first six months she has embraced our culture and added a significant amount of data driven rigor to our marketing engine.

Christopher D. Morris: She has embraced our culture and added a significant amount of data-driven rigor to our marketing engine. Under her leadership, we have engaged a new creative agency, meaningfully grown our loyalty program metrics in terms of both members and spend, and substantially improved our customer engagement. Within our strategic game pricing initiative during Q1 2024, we successfully completed the first increase in chip prices in over 20 years with a significant overhaul of our game system. This was just the beginning of our process to optimize game prices, as we have run a number of tests at different price levels across the portfolio to try to determine the optimal level for each store.

Christopher D. Morris: Under her leadership, we've engaged a new creative agency meaningfully grown our loyalty program metrics in terms of both members and spend and substantially improved our customer engagement.

Christopher D. Morris: Within our strategic game pricing initiatives during Q1 'twenty four we successfully completed the first increase in chip prices in over 20 years with a significant overhaul of our game system. This was just the beginning of our process to optimize game prices as we have run a number of tests at a different price levels across the portfolio to try to deter.

Christopher D. Morris: The optimal level for each store.

Christopher D. Morris: While we have done this, we've experienced significant improvement in our amusement guest satisfaction scores, spend, and sales trends. In our improved F&B initiative, we successfully implemented a new service model, and throughout Q1 2024 and into Q2 2024, we have rolled out multiple phases of our new menu across the system. We've experienced improved F&B guest satisfaction scores, attachment, check size, overall sales trends, and gross margins as we have done this. Additionally, more recently, we have identified an additional revenue opportunity from optimizing our F&B pricing and menu mix, which we will describe in further detail later.

Christopher D. Morris: While we have done this we've experienced significant improvement in our amusement guest satisfaction scores spend and sales trends.

Christopher D. Morris: And our improved F&B initiatives, we successfully implemented a new service model and throughout Q1 2024 and into Q2 2024, we have rolled out multiple phases of our new menu across the system.

Christopher D. Morris: We have experienced improved F&B guest satisfaction scores attachment check size overall sales trends and gross margins as we have done this.

Christopher D. Morris: More recently, we have identified an additional revenue opportunity from optimizing our F&B pricing and menu mix, which we will describe in further detail later.

Christopher D. Morris: As you know, to date, we have opened 9 remodels, with 4 fully programmed remodels performing exceptionally well, up double digits in both sales and traffic relative to the prior year. Given the strong success, we've accelerated our remodel plans and optimized our strategy to lean in on the success of these fully programmed stores to bring as many to market as possible with a strict 20% return on investment. On special events, in order to provide more accountability at the local level, we strategically reinserted 20 sales managers into the stores in the back half of 2023 and ensured that their compensation was tied to top-line performance.

Christopher D. Morris: As you know to date, we have opened nine remodels with four fully program remodels performing exceptionally well up double digits in both sales and traffic relative to the prior year given.

Christopher D. Morris: Given the strong success, we have accelerated our remodel plans and have optimized our strategy to lean in on the success of these fully program stores to bring as many to market as possible with the strict 20% return on investment.

Christopher D. Morris: Special events in order to provide more accountability at the local level, we strategically reinserted 20 sales managers into the stores in the back half of 2023.

Christopher D. Morris: And ensured that their compensation was tied to top line performance, we have seen significant outperformance relative to the rest of the system that those stores relative to both prior year and 2019.

Christopher D. Morris: We have seen significant outperformance relative to the rest of the system at those stores relative to both the prior year and 2019. Based on that success, we've added over 30 additional sales managers in Fiscal 24 to date.

Christopher D. Morris: Based on that success, we've added over 30 additional sales managers in fiscal 2004 to date, we expect this to have a meaningful positive impact on the revenue trends in this segment, which are already approaching 2019 levels overall.

Christopher D. Morris: We expect this to have a meaningful, positive impact on revenue trends in this segment, which are already approaching 2019 levels overall. In our tech enablement initiative, the team has worked efficiently to upgrade our IT infrastructure across the portfolio, which includes, amongst other things, outfitting our stores with Wi-Fi and upgraded payment processors, which will improve the guest experience and drive operational efficiencies in our stores. To date, we have completed over 50% of the... We also rolled out server tablets across our whole system as part of the enhancements to our new service model.

Christopher D. Morris: In our tech enablement initiatives. The team has worked additionally to upgrade our it infrastructure across the portfolio, which includes amongst other items outfitting our stores with Wi Fi and upgraded payment processors, which will improve guest experience and drive operational efficiencies in our stores.

Christopher D. Morris: To date, we have completed over 50% of the assistant.

Christopher D. Morris: We also rolled out server tablets across our whole system as part of the enhancements to our new service model.

Christopher D. Morris: Turning to new units, we have opened 15 new stores domestically in the last 12 months and continue to produce sizable cash-on-cash returns consistent with our historical levels of 40% plus. Internationally, we signed up seven additional international franchise units committed to development, bringing our grand total to 38.

Christopher D. Morris: Turning to new units, we have opened 15, new stores domestically in the last 12 months and continue to produce sizeable cash on cash returns consistent with our historical levels of 40% plus.

Christopher D. Morris: Internationally, we signed up seven addition, additional international franchise units committed to development, bringing our Grand total to 38.

Christopher D. Morris: In terms of cost savings, we realized all of the $25 million in upsized targeted synergies from the main event merger and continue to go after additional opportunities as we make solid progress on the incremental $40 to $60 million outlined at Investor Day. In the coming months, we have a lot of plans for each of our initiatives. On marketing optimization, we will continue to optimize our media mix and messaging and leverage our scale and presence to drive traffic.

Christopher D. Morris: In terms of cost savings, we realized all of the $25 million and Upsized targeted synergies from the main event merger and continue to go after additional opportunities as we make solid progress on the incremental $40 million to $60 million outlined at Investor day.

Christopher D. Morris: In the coming months, we have a lot of plans on each of our initiatives on marketing optimization, we will continue to optimize our media mix and messaging.

Christopher D. Morris: And leverage our scale and presence to drive traffic.

Christopher D. Morris: We also have a number of partnerships that we expect will help improve traffic and sales trends. We are particularly excited about a number of these partnerships and the potential impact they will have during the summer movie season, as well as the upcoming fall and winter sports season. We believe there's still significant upside on game prices. Through overhauls to our game system, we now have the functionality to have differentiated pricing by region.

Christopher D. Morris: We also have a number of partnerships that we expect will help improve traffic and sales trends. We are particularly excited about a number of these partnerships and the potential impact they will have during the summer movie season, as well as the upcoming fall and winter sports seasons.

Christopher D. Morris: We believe there is still significant upside on gains pricing.

Christopher D. Morris: Through overhauls to our game system, we now have the functionality that have differentiated pricing by region.

Christopher D. Morris: We will use that new functionality to continue to optimize the price levels of our stores. We will also make sure that, going forward, we raise prices in line with inflation, something that we have not done historically. Additionally, we are excited by the prospect of optimizing existing and developing and implementing new yield management strategies, which should help drive check during peak periods and traffic during off-peak periods. We are launching the next evolution of our new menu in August, which is primarily focused on beverage innovation and our special event menu, and we will continue to refine and improve the operating model to drive attachment and guest satisfaction scores, which continue to be at historical highs. We will increase the pace of remodels and expect to have 35% of the fleet completed by the end of 2024, 68% completed by 2025, and 100% by 2026.

Christopher D. Morris: We will use that new functionality to continue to optimize the price levels of our stores.

We will also make sure that going forward, we will raise prices in line with inflation something that we have not done historically.

Christopher D. Morris: Additionally, we are excited by the prospect of optimizing existing and developing and implementing new yield management strategies, which should help drive shack during peak periods and traffic during off peak periods.

Christopher D. Morris: We are launching the next evolution of our new menu in August, which is primarily focusing on beverage innovation and our special event menu and we will continue to refine and improve the operating model to drive attachment and guest satisfaction scores, which continue to be at historical highs.

Christopher D. Morris: We will increase the pace of Remodels and expect to have 35% of the fleet completed by the end of 2024, 68% completed by 2025 and 100% by 2026.

Christopher D. Morris: Given the encouraging results with our pilots, we plan to continue to add special event managers to our stores and markets and expect to benefit from our improved special event menu, operating model, and event management capabilities. Additionally, we plan to complete the integration of our new IT infrastructure in the coming quarters and implement new POS systems to optimize workflow across our stores. We are on track to open 10 more stores in 2024, with 16 additional units hitting our fleet each year in 2025 and beyond. We expect to have several international stores open in the coming months, and we will continue to leverage the DMV brand to drive more international franchise agreements.

Christopher D. Morris: Given the encouraging results with our pilots we plan to continue to add special event managers jewelry stores and markets and expect to benefit from our improved special event menu operating model and event management capabilities.

Christopher D. Morris: We plan to complete the integration of our new it infrastructure in the coming quarters, and implement new <unk> systems to optimize workflow across our stores.

Christopher D. Morris: We are on track to open 10 more stores in 2024 with 16 additional units hitting our fleet each year and 2025 and beyond.

Christopher D. Morris: We expect to have several international stores opened in the coming months and we will continue to leverage the <unk> brand to drive more international franchise agreements.

Christopher D. Morris: We have historically executed on our cost savings initiatives and think there's still a lot of opportunity. It is an ongoing focus for us, and you can expect to see more progress on that front in the near future. As we have been focused on executing on our plan, we have identified three incremental opportunities to keep driving our performance. For F&B, as we will show you later, we have realized significantly less revenue compared to our peers and believe there's an opportunity for us to optimize our prices and menu mix in order to close this gap.

Christopher D. Morris: We have historically executed on our cost savings initiatives and think there's still a lot of opportunity.

Christopher D. Morris: It is an ongoing focus for us and you can expect to see more progress on that front in the near future.

Christopher D. Morris: As we have been focused on executing on our plan, we have identified three incremental opportunities to keep driving our performance.

On F&B as we will show you later, we have realized significantly less price compared to our peers and believe there is an opportunity for us to optimize our prices and menu mix in order to close this gap.

Christopher D. Morris: As we've discussed, our remodels continue to deliver impressive results, and we believe there's a strong opportunity to accelerate and improve the pace of these remodels. On cost savings, due to additional efforts, we believe we can take out another $10 to $20 million in addition to what we announced at Investor Day.

As we've discussed our Remodels continue to deliver impressive results and we believe there is a strong opportunity to accelerate and improve the pace of these remodels.

Christopher D. Morris: On cost savings due to additional efforts, we believe we can take out another $10 million to $20 million in.

Christopher D. Morris: And so what we announced at Investor Day.

Christopher D. Morris: As I mentioned earlier, our marketing optimization strategy is progressing, and our KPIs are clearly highlighting that. Hyper-targeted promotions and data-driven insights are helping us craft unique campaigns that have helped us drive website visitors up 49% and our social media engagement multifold. Loyalty members who, let me remind you, spend more and visit two and a half times versus non-members are up 23%, which we think is very meaningful in driving traffic spend.

Christopher D. Morris: As I mentioned earlier, our marketing optimization strategy is progressing and our kpis are clearly highlighting that.

Christopher D. Morris: Hyper targeted promotions and data driven insights are helping us craft unique campaigns that has helped us drive website visitors up 49%.

Christopher D. Morris: And our social media engagement multifold.

Christopher D. Morris: Loyalty members, who let me remind you spend more and visit two five times versus nonmembers are up 23%, which we think is very meaningful in driving spend and traffic.

Christopher D. Morris: We believe that these strong leading indicators that customers are thinking about when engaging with us more, coupled with our other initiatives, will ultimately lead to strong same-store sales growth. As we discussed, yield management is an important part of our strategy.

Christopher D. Morris: We believe that these strong leading indicators that customers are thinking about in engaging with us more coupled with our other initiatives will ultimately lead to strong same store sales growth.

Christopher D. Morris: As we discussed yield management is an important part of our strategy. One element of that is using targeted promotions to drive traffic during off peak periods.

Christopher D. Morris: One element of that is using targeted promotions to drive traffic during off-peak periods. During the quarter, we tested a number of promotional messages to help bring in incremental customers during the week. As you would expect, some of these tests worked well, and others did not, both of which provided us with significant learning.

Christopher D. Morris: During the quarter, we tested a number of promotional messages to.

Christopher D. Morris: To help bring in incremental customers during the week as you would expect some of these tests worked well and others did not both of which provided us with significant learnings.

Christopher D. Morris: One area we saw success was driving traffic and sales during the week, as you can see on the page. While same-store sales were up versus prior year during the week, we were most excited by the almost 11% improvement in sales trends. This shows that we have started to identify some levers that can meaningfully drive the business. We will continue to test and learn in order to find the optimal mix of promotional messages in our media. As you know, we believe that our amusement offering is significantly underpriced.

Christopher D. Morris: One area. We saw success was driving traffic and sales during the week as you can see on the page while same store sales were up versus prior year during the week.

Christopher D. Morris: We were most excited by the almost 11% improvement in sales trends.

Christopher D. Morris: It shows that we have started to identify some levers that can meaningfully drive the business.

Christopher D. Morris: We will continue to test and learn in order to find the optimal mix of promotional messages and our media.

Christopher D. Morris: As you know, we believe that our amusement offering a significantly underpriced.

Christopher D. Morris: We showed you last year that D&B hadn't increased its chip pricing for more than 20 years and that the prices of our games were meaningfully below the prices of our competitors. We have and continue to believe that there is scope for us to thoughtfully increase our game prices while still remaining an attractive value proposition to our guests. During the quarter, we experimented with a number of different price levels across the system.

Christopher D. Morris: We showed you last year that D&B hadn't increases chip pricing for more than 20 years and that the prices of our games were meaningfully below the prices of our competitors.

We have and continue to believe that there is scope for us to thoughtfully increase our game prices, while still remaining and attractive value proposition to our guests.

Christopher D. Morris: During the quarter, we experimented with a number of different price levels across the system.

Christopher D. Morris: While we saw an improvement in amusement sales trends universally, what got us most excited was that the stores in the highest price increase tiers actually saw the biggest improvement and had turned positive for amusement same-store sales. Notably, we've experienced significant year-over-year increases in customer satisfaction despite these changes to price levels, which means that they are not materially negatively impacting the customer experience. We are very encouraged by these results, and we will be moving a significant number of stores onto this pricing structure in the second quarter and beyond.

Christopher D. Morris: While we saw an improvement in amusement sales trends universally what got us most excited.

Christopher D. Morris: Was that the stores and the highest price increased tiers actually saw the biggest improvement and have turned positive and amusement same store sales.

Christopher D. Morris: Notably we've experienced significant year over year increases in customer satisfaction. Despite these changes to price levels, which means that they are not materially negatively impacting the customer experience.

Christopher D. Morris: We are very encouraged by these results and we will be moving a significant number of stores onto those pricing structure in the second quarter and beyond.

Christopher D. Morris: As we have previously discussed, we've been making a lot of improvements to our F&B offering in order to drive attachment, guest satisfaction, and ultimately sales. As you can see on this page, we have been making substantive progress in those areas. Our speed of service is up meaningfully, as are our attachment and guest satisfaction scores. We are encouraged by these results, and importantly, as we rolled out the new menu and service model, we saw improving F&B trends throughout the quarter and subsequent to the quarter.

As we have previously discussed we have been making a lot of improvements to our F&B offering in order to drive attachment guest satisfaction and ultimately sales.

Christopher D. Morris: As you can see on the page we have been making substantive progress in those areas are speed of service is up meaningfully.

Christopher D. Morris: As our attachment and guest satisfaction scores. We are encouraged by these results and importantly, as we rolled out the new menu and service model, we saw improving F&B trends throughout the quarter and subsequent to the quarter.

Christopher D. Morris: We will continue to drive these gas metrics and expect them to continue to drive top line improvement over time. As we mentioned earlier, we have also identified another significant opportunity within F&B, specifically around realized checks. The chart on this page lays out a number of publicly reported peers and their check growth relative to 2019.

Christopher D. Morris: We will continue to drive these guest metrics and expect them to continue to drive top line improvement over time.

As we mentioned earlier, we have also identified another significant opportunity within F&B, specifically around realized check the.

Christopher D. Morris: As you can see, on average, the peers increased check by about 22%, which is roughly in line with CPI growth over the same time period. And you can also see D&B has only realized approximately 6% check on its F&B relative to 2019. Upon investigation, we discovered that we took fewer price increases than our peers since COVID.

Christopher D. Morris: The chart on this page lays out a number of publicly reported peers and their check growth relative to 2019.

Christopher D. Morris: As you can see on average the peers increased check by about 22%, which is roughly in line with CPI growth over the same time period.

Christopher D. Morris: And you can also see D&B is only realized approximately 6% check on its F&B relative to 2019.

Christopher D. Morris: Upon investigation, we discovered that we took fewer price increases in our peers since COVID-19 and we also discovered that a menu change that was made in 2021 was well intentioned, but actually was constructed in a way that incentivize trade downs.

Christopher D. Morris: And we also discovered that a menu change that was made in 2021 was well-intentioned but was constructed in a way that incentivized trade-downs. We've been testing a few different ways that we can close the gap. Our initial tests have been encouraging. More to come on this topic as we learn and explore more, but we do believe that over time, we should be able to close a significant portion of this gap if we are remodeled and are consistently delivering significant sales and traffic growth consistently.

Christopher D. Morris: We've been testing a few different ways that we can close the gap or initial test have been encouraging.

Christopher D. Morris: More to come on this topic as we learn and explore more but we do believe that over time, we should be able to close a significant portion of this gap.

Our remodels.

Christopher D. Morris: Are delivering significant sales and traffic growth consistently and.

Christopher D. Morris: And we are highly encouraged by the results and excited by the opportunity to implement this across the board. In aggregate, we have seen success and increased year-over-year sales in the remodels we have opened to date. However, what has been most encouraging is that our fully programmed remodels have driven double-digit growth in sales. Even more encouraging is that these remodels are also up double-digits in traffic. Our plan is for almost all of the remodels going forward to be fully programmed, and we expect to have 35% of the system complete by 2024 and 100% done by 2026. As you can see, our strategy around in-store sales managers for special events is bearing fruit. And stores with an in-store sales manager have significantly outperformed the system.

Christopher D. Morris: And we are highly encouraged by the results and excited by the opportunity to implement this across the board in aggregate, we have seen success and increased year over year sales and the Remodels we've opened to date.

Christopher D. Morris: However, what has been most encouraging is that our fully program remodels have driven double digit growth in sales even more encouraging is that these remodels are also up double digits in traffic.

Christopher D. Morris: Our plan is for almost all of the Remodels going forward to be fully programmed and we expect to have 35% of the assistant complete by 2024 and 100% done by 2026.

Christopher D. Morris: As you can see our strategy around in store sales managers for special events is bearing fruit and stores with an in store sales manager have significantly outperformed the system. This is what we expected as we strongly believe that local accountability and the right incentive structure can lead to meaningfully improved results in this era.

Christopher D. Morris: This is what we expected, as we strongly believe that local accountability and the right incentive structure can lead to meaningfully improved results in this area. Given these strong, strong results, we've accelerated the placement of managers and will place three times more managers and stores in 2024 as compared to 2023. We believe having a sales manager will significantly impact the recovery of our event business to 2019 levels and beyond. Our new unit model continues to be highly compelling, with our 2022 and 2023 cohorts delivering 40% ROI consistently.

Christopher D. Morris: Yes.

Christopher D. Morris: Given the strong strong results, we've accelerated the placement of managers and we will place three times more.

Christopher D. Morris: Managers in stores in 2024 as compared to 2023, we.

Christopher D. Morris: We believe having a sales manager will significantly impact the recovery of our event business to 2019 levels and beyond.

Christopher D. Morris: Our new unit model continues to be highly compelling with our 2022 and 2023 cohorts delivering 40% Rois consistently.

Christopher D. Morris: We continue to believe in a long-term potential of 550 stores, which we estimate is an EBITDA opportunity of $150 to $225 million, with 550 stores in total. We continue to make progress on the international front. We've signed seven new franchise stores since Investor Day, with a total pipeline of 38 international locations. We expect to have the first international locations open within the coming months, which will be a huge milestone for the company.

Christopher D. Morris: We continue to believe in our long term potential of 550 stores, which we estimate is an EBITDA opportunity of $150 million to $225 million.

Christopher D. Morris: With long term potential of 550 stores in total.

Christopher D. Morris: We continue to make progress on the international front, we have signed seven new franchise stores since Investor day with a total pipeline of 38 international locations. We expect to have the first international locations opened within the coming months, which will be a huge milestone for the company.

Christopher D. Morris: As we highlighted at Investor Day, we believe we trade at a very low valuation, and there is significant upside to our share price as we continue to execute on our key initiatives. Given the strength of our business model, as well as the clear and actionable opportunities for growth we see in this business, we do not believe D&D's current trading multiple is warranted, and we believe our stock is materially undervalued. To that end, we continue to be laser-focused on executing on the most lucrative opportunities to deploy or return capital to shareholders. To date, we've repurchased $50 million of shares, and since 2023, we have repurchased almost 9.5 million shares, representing approximately 20% of outstanding shares.

Christopher D. Morris: As we highlighted at Investor Day, we believe we trade at a very low valuation and there is significant upside to our share price as we continue to execute on our key initiatives.

Christopher D. Morris: Given the strength of our business model as well as the clear and actionable opportunities for growth. We see in this business. We do not believe Dnb's current trading multiple is warranted and we believe our stock is materially undervalued.

Christopher D. Morris: To that end, we continue to be laser focused on executing on the most lucrative opportunities to deploy or return capital to shareholders.

To date, we've repurchased $50 million of shares and since 2023, we have repurchased almost $9 5 million shares representing approximately 20% of outstanding shares.

Operator: We will continue to weigh the most optimal uses of cash and monitor the share price and valuation levels to appropriately repurchase shares as the opportunity arises. In conclusion, we've made significant progress on each initiative outlined during 2023 Industry Day. But I also want to remind you that most of these initiatives are in their early innings. In fact, we have raised internal expectations on a number of initiatives, including F&B improvement, remodels, and cost savings, and we remain confident in our target of a billion dollars adjusted EBITDA.

Christopher D. Morris: We will continue to weigh most optimal uses of cash and monitor the share price and valuation levels to appropriately repurchase shares as the opportunity arises.

Christopher D. Morris: So in conclusion, we have made significant progress on each initiative outlined during the 2023 Investor day.

Christopher D. Morris: But also want to remind you that most of these initiatives are in their early innings.

Christopher D. Morris: In fact, we increased internal expectations on a number of initiatives, including F&B improvement Remodels and cost savings and we remain confident in our target of $1 billion dollar adjusted EBITDA.

Operator: Given what we know about our business and its potential, we see our stock as meaningfully undervalued, and we would expect to see meaningful equity value appreciation as we scale and roll out our initiative. So, with that, operator, please open up the line for questions. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone.

Christopher D. Morris: Given what we know about our business and its potential we see our stock as meaningfully undervalued and we would expect to see meaningful equity value appreciation as we scale and rollout of our initiatives.

Speaker Change: So with that operator, please open up the line for questions.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys if at anytime. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Operator: If you are using a speakerphone, please pick up your handset before pressing the button. If at any time your question has been addressed, and you would like to withdraw your question, use Express Star. Please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our... The first question comes from Jake Bartlett with Truist Securities. Please go ahead.

Speaker Change: Please limit yourself to one question and one follow up.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: Yeah.

Speaker Change: The first question comes from Jake Bartlett with <unk> Securities. Please go ahead.

Jake Rowland Bartlett: Great. Thanks for taking the question. You know, my question was about the traffic.

Jake Rowland Bartlett: Great. Thanks for taking the question my question was about the traffic.

Jake Rowland Bartlett: I assume that your pricing increase, your food and beverage, and your gain price initiatives should have driven check-in and price up. So, to me, it looks like traffic has decelerated. So, the question is, what is driving that deceleration?

So that your pricing increase your food and beverage and your gain price initiatives.

Speaker Change: Hum check up and price up so to me it looks like just on the traffic has decelerated. So the question is what is driving that deceleration.

Jake Rowland Bartlett: I imagine it's macro pressures, but I'd like to hear from you. It sounds like you're encouraged by your initiatives, yet it does look like traffic is decelerating at this point. So, any comment there would be... Yeah, sure, Jake.

Speaker Change: Mentioned, it's macro pressures, but I'd like to hear from you.

Speaker Change: Sounds like Youre initiatives Youre encouraged by your initiatives yet.

Speaker Change: Does look like traffic is decelerating at this point so any comment there would be helpful.

Yes sure Jake.

Christopher D. Morris: Well, the first thing I'll tell you is we don't, as you know, we don't disclose the breakdown between check and traffic, and that's something that we haven't done for a very long period of time, and that's just simply a function of, you know, traffic is just an estimate in the business. It's not an actual precise number, just given how our stores are constructed and how people use our stores. I mean, clearly, macro trends. It's a complex macro environment, and it's been challenging.

Jake Rowland Bartlett: Well the first thing I'll tell you is.

Speaker Change: Yes, we don't we don't as you know, we don't disclose the breakdown between check and traffic and Thats something that we havent done for a very long period of time and Thats just simply a function of.

Speaker Change: Traffic is just an estimate in the business, it's not an actual precise number just given how our stores are constructed and how people use our stores.

Speaker Change: But with that said.

Speaker Change: I mean, clearly the macro trends that it's a complex macro environment and its been challenging.

Christopher D. Morris: But, you know, as we said in our prepared remarks, we are encouraged by the fact that throughout the quarter, we've seen trends improve. And as our initiatives have started to take hold, and those initiatives are a combination of both price and traffic. As our initiatives have started to take hold, we have seen some improvement in the business. And, you know, that gives us a lot of confidence as we move forward, knowing that many of the initiatives are just now starting to take hold.

Speaker Change: But as we said in our prepared remarks, we do.

Speaker Change: We are encouraged by the fact that throughout the quarter, we are seeing trends improve and as our initiatives has started to take hold and those initiatives are a combination of both price and traffic.

Speaker Change: As our initiatives are starting to take hold.

Speaker Change: We have seen.

Speaker Change: Some improvement in the business and that gives us a lot of confidence as we move forward knowing that many of the initiatives are just now starting to take hold.

Christopher D. Morris: You know, I'd also point you to the remodels. We're very excited about what we're seeing in our fully programmed remodels. And the remodel is really the best representation of our strategic vision of the future because it's everything that we're doing all wrapped into one along with a brand new product offering and a new look and feel for our stores.

Speaker Change: I'd also point you to Remodels.

Speaker Change: We're very excited about what we're seeing on our fully program Remodels.

Speaker Change: And the Remodels is really the best representation of our strategic vision of the future because it's everything that we're doing all wrapped into one along with a brand new product offering and a new look and feel for our stores.

Christopher D. Morris: And as you heard us say, we're seeing very significant improvement in our fully programmed remodel stores. We're seeing double-digit sales lift and double-digit traffic growth in those stores. So, things are improving. It's a complex macro environment, and so that's creating a little bit of headwinds, but we're very encouraged by where things are going. Great.

Speaker Change: And as you heard us say.

Speaker Change: We're seeing very significant.

Speaker Change: <unk> and <unk> on our fully program remodel stores, we're seeing double digit sales lift and double digit traffic growth in those stores.

Speaker Change: Things are improving it's a complex macro environment and and so thats, creating a little bit of headwinds, but we're very encouraged by where things are going.

Jake Rowland Bartlett: And just as a follow-up, you mentioned the improvement in the last five weeks, I think particularly in the last several weeks. What do you think is driving that improvement? Do you think it's more something that you're doing?

Speaker Change: Got it great and then just as a follow up you mentioned the improvement in last five weeks I think you know, particularly in last several weeks.

Speaker Change: What do you think is driving that improvement do you think it's more it's something that you're doing you know maybe in your answer you can you can you can address kind of.

Jake Rowland Bartlett: Maybe in your answer, you can address how some of these initiatives are reaching scale. Maybe just explain exactly which initiatives are getting, other than having more remodels, but what are the other initiatives? How are they becoming more and more impactful as the year progresses here and maybe as the quarters progress? Yeah, sure.

Speaker Change: Some of these initiatives are reaching scale, maybe just explain exactly.

Speaker Change: Which initiatives are getting.

Speaker Change: Other than having more remodels, but all the other initiatives how are they becoming more and more impactful as the year progresses here and maybe as the quarters progressed in the second quarter.

Christopher D. Morris: So during the quarter, we rolled out our brand new menu. At the same time, we rolled out a brand new service model. Both of those are designed in a way to elevate the guest experience and are very much focused on setting our operators up for success, to drive more throughput in our stores, as well as to grow F&B attachments. So, still very, you know, early days, but, you know, all signs are looking very good.

Speaker Change: Yeah sure. So during the quarter, we rolled out our our brand new menu at the same time, we rolled out a brand new service model. Both of those are designed in a way too.

Speaker Change: Okay elevate the guest experience very much focused on setting our operators up for success to drive more throughput in our stores as well as to grow F&B attach.

Speaker Change: So still very early in but all signs are looking very good keep in mind that these are initiatives that we've tested and I think by now I think we've proven that we mean, what we say this is a management team that is very measured very deliberate and we test.

Christopher D. Morris: Keep in mind that these are initiatives that we tested, and I think, you know, by now, I think we've proven that we mean what we say. This is a management team that is very measured, very deliberate, and we test, you know. We test, we learn, we refine, and then we roll.

Speaker Change: We test we learn refine and then we roll and so.

Christopher D. Morris: And so, you know, the new menu and the new service model are working the way that they were designed and matching what we saw during the test. And so, we're encouraged by that, but we're still, you know, we're very much in the early innings, but we fully expect that those initiatives are going to continue to drive incremental sales. Our half-off food promotion, you know, we've had a number of initiatives that we've been fine-tuning on the marketing side of things to stimulate some demand off-peak Monday through Thursday. And so, we have all-you-can-eat wings on Mondays and Thursdays.

Speaker Change: The new menu and the new service model are working the way that they were designed and matching what we saw during the test and so.

Speaker Change: We're encouraged by that but it's still very much in the early innings, but we fully expect that those initiatives are going to continue to drive Inc.

Incremental sales.

Speaker Change: Our half off promotion you saw.

Speaker Change: We've had a number of initiatives that we've been fine tuning on the marketing side of things to stimulate some demand off peak Monday through Thursday.

And so we have all you can eat wings on Mondays and Thursdays, we have the long standing evergreen value of half price games on Wednesdays and then we wrap that with a half price food offer through <unk>.

Jake Rowland Bartlett: We have the long-standing, evergreen value of half-price games on Wednesdays, and then we wrap that with a half-price food offer through loyalty member engagement. And, you know, the combination of all of those, we're very pleased with what we're seeing midweek. And so, that helped as well. So we've just got, you know, we've got a number of different things, as I said, both on pricing and on traffic, that are all working at different levels, and as we move forward, you know, we'll continue just to pick up more and more momentum from here. Great, thank you.

Speaker Change: Team member engagement.

Speaker Change: And the combination of all of those.

Speaker Change: We're very pleased with what we're seeing mid week, and so that helped as well.

Speaker Change: So we've just got we've got a number of different things as I said, both on pricing and on traffic that are all working at different levels and as we move forward. We will continue just to pick up more and more more and more momentum from here.

Speaker Change: Great. Thank you.

Speaker Change: You bet. Thank you.

Speaker Change: Yeah.

Sharon Zackfia: You bet. Thank you. The next question comes from Sharon Zackfia with William Blair. Please go ahead.

Speaker Change: The next question comes from sure Sharon Zackfia with William Blair. Please go ahead.

Sharon Zackfia: Hi, good afternoon.

Sharon Zackfia: I had some questions around that. When we think about that and the ramp you're having, can you talk about downtime that you see or the inefficiencies while you're doing the remodel? And then how quickly the labor normalizes once the remodel is complete. There does seem to be some kind of labor optimization that has to occur when the new units, or I should say the revamped units, are kind of fully out there. I'm just curious about how we should think about that as you ramp up. So in terms of the construction period, I'd say it's about eight weeks where the units have some negative pressure.

Sharon Zackfia: Had some questions around the that kind of full remodels. When we think about that and then the ramp you're having can you talk about kind of the downtime that you see are the inefficiencies while youre doing the Remodels and then how quickly kind of the labor normalizes once the remodel is can.

Speaker Change: I've noticed there does seem to be some kind of labor optimization that has to occur when the when the new units or I should say the revamped units are are kind of fully out there and I'm just curious on how we should think about that as you ramp this up aggressively.

Speaker Change: So in terms of the construction period I'd say, it's about eight weeks, where the units have some.

Speaker Change: Negative pressure and we keep the units opened our teams we've got.

Christopher D. Morris: We keep the units open. Our teams, we've got a world-class construction development team that has been doing this for a very long period of time, and they are very skilled at going through a remodel and doing it the way where it's less intrusive on the guests, and so it allows us to stay open. But we do see somewhat of a negative impact on comps for about eight weeks.

Speaker Change: World Class construction development team they've been doing this for a very long period of time and they are very skilled at going through a remodel and do it in a way to where it's not it's less intrusive on the gas and so it allows us to stay open but we do see.

Speaker Change: Somewhat of a negative impact on comps for about eight weeks and as we start to do more and more remodels, we will start to quantify that to the extent that we feel it's necessary to understand our comp performance I do think it is important to note when we referred to.

Christopher D. Morris: And as we start to do more and more remodels, we will start to quantify that to the extent that we feel is necessary to understand our comp performance. I do think it's important to note that when we refer to the lift that we're seeing in sales, we are excluding the construction period. So the lift that we see in remodels is a pure lift.

Speaker Change: The lift that we're seeing in sales we are excluding that construction period. So the lift that we see in remodels as a pure left.

Christopher D. Morris: As it relates to labor optimization, now that we have the service model out there, the teams are getting, and they're very efficient now. We've been working on this for a very long period of time. And so we don't expect there to be any inefficiency from a labor standpoint post-remodel. So our expectation is, you know, we're at the optimal level day one. I'm just going to follow up, but I know you just have a handful right now.

Speaker Change: As it relates to the labor optimization, it's now that we have the service model out there. The teams are getting they're very efficient now we've been working on this for a very long period of time and so we we don't expect there to be any inefficiency from a labor standpoint post remodel so our expectation is.

Speaker Change: We're at the optimal level day one.

Speaker Change: Can I ask a follow up I know you you just have a handful right now.

Sharon Zackfia: I mean, how are you planning to kind of grow customer awareness of the... Revamped Offerings, as this rolls out more broadly? Yeah, no, that's an outstanding question. And, you know, another reason why we're so excited about this is that the results that we're seeing are all done, you know, just through that local awareness. As you can imagine, once we get to a certain amount of scale, we'll be able to bring more awareness at a national level about the new product offerings and the new experiences. And so we think that that's just going to be additional fuel to the fire.

Speaker Change: How are you planning to kind of grow customer awareness of the revamped offerings as this rolls out more broadly.

Speaker Change: Yes, that's an outstanding question and another reason why we're so excited about this is the results that we're seeing are all done just through that local awareness as you can imagine once we get to a certain amount of scale, we will be able to bring more awareness at a national level on the new product offerings in the new.

Speaker Change: <unk> and so we think that that's just going thats, just going to be additional fuel to the fire.

Christopher D. Morris: And so our team, each one of these remodels, we do local activation. We get the community involved before the opening to try to generate some excitement. We partner with micro-influencers to get the word out. We do some earned media, and then we have some paid media as well, all done in the general zip code of the store, so all done at the local level with BMO. Please go ahead.

Speaker Change: And so our teams each one of these remodels, we're doing local activation, we get the community involved.

Speaker Change: Before the opening to try to generate some excitement we partner with micro influencers to get the word out.

Speaker Change: We do some earned media and then we have some paid media as well.

All done and the ZIP code and the general ZIP code of the store so all done at the local level.

Speaker Change: Okay. Thank you.

Speaker Change: Okay.

Speaker Change: The next question comes from Andrew <unk> with BMO. Please go ahead.

BMO: Hey, good afternoon. Thanks for taking the questions. I guess my first one, and then I have a follow-up, but my first one... There's obviously a lot of initiatives that you guys are working on, and so I'm just trying to think about the sequencing, or you know how you guys are going to be layering those in, and so you can kind of help frame, what could be most impactful in fiscal 24 versus what will be more impactful in fiscal 25 and beyond. Um, sure. So I...

Speaker Change: Hey, good afternoon, thanks for taking the questions.

Andrew Strelzik: I guess my first one and then I have a follow up on my first one.

Andrew Strelzik: There's obviously a lot of initiatives that you guys are working on and so I'm just trying to think about.

The sequencing or how you guys are gonna be layering those in and so.

Andrew Strelzik: Can you kind of help frame.

Andrew Strelzik: What could be most impactful in fiscal 'twenty for versus what will be more kind of 'twenty five and beyond.

Andrew Strelzik: Sure.

Speaker Change: So I.

Christopher D. Morris: Without getting into a lot of specifics, I will tell you that the price initiatives that we've rolled out through our strategic game pricing are working very well, and, as you heard me say, have no noticeable impact at all on the guest satisfaction scores. In fact, we've seen guest satisfaction scores go up in the stores where we had the highest price increase. And so the reason that's so significant is that it does two things for us.

Without getting into.

Speaker Change: A lot of specifics I will tell you that the price initiatives that we've rolled out through our strategic game pricing are working very well and as you heard me say.

No no noticeable impact at all on the guest satisfaction scores in fact, we've seen guest satisfaction scores go up.

Speaker Change: And the stores, where we had the highest price increase.

So the reason that is so significant is that it does two things for US is one from a pricing standpoint as now we have the ability to cross to take price across the entire universe of product offerings up until this point, we were limited to only managing price through food and beverage and so now we have the ability.

Christopher D. Morris: One, from a pricing standpoint, is that now we have the ability to take price across the entire universe of product offerings. Up until this point, we were limited to only managing price through food and beverage. And so now we have the ability to drive price through the game offering, which is two-thirds of our business. So, that's number one.

To drive.

Speaker Change: Price through the game offering which is two thirds of our business.

Speaker Change: So.

That's number one.

Christopher D. Morris: Number two is, you know, towards the end of the year, we believe that if things move accordingly, that we're continuing to evolve the technology and we will have the ability at towards the end of 2024 to start to have more of a flexible pricing model to where we can continue to drive, you know, business between peak versus off-peak, and so that has us very excited. So I would say, you know, the pricing on strategic gains is, you know, very meaningful, but, you know, at the same time, the work that we've done through our food and beverage offering and the new service model should, you know, should not be underestimated because we believe and we're seeing in our guest experience metrics that we are making a very noticeable impact, And we strongly believe that the best way to grow this business is through elevating the experience that happens in the four walls of every one of our stores.

Speaker Change: Number two is towards the end of the year, we believe that if things move.

Accordingly that we're continuing.

Speaker Change: 10 years to evolve the technology and we will have the ability at towards the end of 2024 to start to have more of a flexible pricing model to where we can.

Speaker Change: Continue to drive.

Speaker Change: Business between peak versus off peak and so that has us very excited so I would say the pricing on strategic gains is.

Speaker Change: Very meaningful.

Speaker Change: But at the same time the work that we've done through our food and beverage offerings and the new service model.

Speaker Change: Should <unk>.

Speaker Change: Should not be underestimated because we believe and we're seeing in our guest experience metrics that we are making a very noticeable impact on the guest experience and we strongly believe that the best way to grow this business is through elevating the experience that happens in the four walls of every one of our stores and so I truly believe.

Christopher D. Morris: And so I truly believe that the combination of the food and beverage menu and the new service model will continue to gain momentum as we move forward. The teams are going to get, you know, more skilled.

Is that the combination of the food and beverage menu.

Speaker Change: And the new service model will continue to gain momentum.

Speaker Change: As we move forward. The teams are going to get more skilled we're going to continue to just take care of the guests at a higher at an elevated manner and we believe the guests will return back with the repeat business.

BMO: We're going to continue to, you know, just take care of the guests in a higher, you know, an elevated manner. And we believe the guests will return with repeat business. So, you know, the combination of those two, I feel very good about.

Speaker Change: So.

Speaker Change: The combination of those two I I feel very good about.

Christopher D. Morris: Okay, that's helpful, and then, My follow-up question is on visitation, I guess, between cohorts, specifically your loyalty customers where you're seeing, you know, nice growth in membership there and the non-loyalty customers. I think you said, if I got this right, that your loyalty members visit two and a half times as often as regular members. A year ago at Investor Day, you said that was, I think, one and a half times.

Speaker Change: Okay. That's helpful and then.

Speaker Change: My follow up is on <unk>.

BMO: And so you're seeing that gap widening. Just the traction that you're seeing with the loyalty members, or are you also seeing moderation in kind of your less frequent customers underneath that? I guess I'm just trying to think about the drivers there.

Speaker Change: The visitation I guess between cohorts, specifically your loyalty customers, where you're seeing nice growth in membership there and in the non loyalty customers I think.

Speaker Change: You said if I got this right that your loyalty members visit two and a half times as often as regular members of a year ago at your Investor Day, you said that was I think a one and a half times and so youre seeing that gap widen. So I guess is that a function of just the traction that youre seeing with the loyalty member.

Speaker Change: Or are you also seeing moderation in kind of your less frequent customers underneath that.

Speaker Change: I'm just trying to think about the drivers there and the applications. Thanks.

Christopher D. Morris: Yes. No, I mean, we're excited about that metric. I mean, you think about that, that's substantial going from one and a half times to two and a half times. And we've seen growth in our loyalty platform. So we've grown loyalty membership by 23%. And so I think it's just a reflection of us; it's a priority in the business. We have exceptionally talented people focused on, you know, the right metrics and going through a test and learn process to continue to engage with that with our loyalty members in a more effective way. And so, you're seeing it through those metrics.

Speaker Change: Yes, no I mean, we're excited about that metric I mean, do you think about that that's substantial going from one five times to two five times and we've seen a growth in our loyalty platform. So we've grown loyalty membership by 23%.

Speaker Change: And so I think it's just a reflection of us it's a priority in the business we have.

We have exceptionally talented people focused on the right metrics and going through a test and learn process and continue to engage with that with our loyalty members and in a more effective way.

Speaker Change: So and you're seeing it through those metrics and so we believe that that we're just going to get better and better as we move forward. So I think we're just being smarter about it.

BMO: And so we believe that we're just going to get better and better as we move forward. So I think we're just being smarter about it, and we've got the right people focused on it. Thank you very much.

Speaker Change: And we've got the right people focused on it.

Great. Thank you very much.

Speaker Change: Thank you.

Speaker Change: The next question comes from Dennis Geiger with UBS. Please go ahead.

Dennis Geiger: Thank you. The next question. This is Dennis Geiger with UBS. Please go ahead.

Dennis Geiger: Great, thanks, guys. Chris, I wanted to ask a little bit more about some of the customer behaviors that you saw in the quarter in light of some of the macro pressures that you commented on and that the industry is seeing. I know you don't bring up the traffic and the food versus the entertainment piece, but anything on spend? You talked a little bit about days of the week. Any kind of additional breakdown or maybe where you're seeing more pressure versus where you're seeing less pressure? If there's anything on that front that you want to touch on.

Dennis Geiger: Great. Thanks, guys, Chris I wanted to ask a little bit more on sort of some of the customer behaviors that you saw in the quarter in light of some of the macro pressures that you commented on them at the industry as being I know you don't break out the traffic in the food and Bev versus the entertainment piece, but anything on <unk>.

Speaker Change: <unk>, you talked a little bit about days of the week or any kind of additional breakdown or maybe where where youre seeing more pressure versus where you are seeing.

Speaker Change: Less pressure if there is anything on that if I could touch on.

Christopher D. Morris: I want to say on spend, one of the trends that we've noticed in the business that we discussed last quarter was among our lower income consumers. There was more weakness within lower income consumers versus moderately income and high income, and we saw some strengthening in the higher income last quarter. Those trends continued into Q1, and, um... One of the things that we've been very encouraged by is that as we continue to fine-tune our marketing approach and get smarter about targeting the right guest and delivering the right message to that guest. One of the things that we've been very encouraged by is that as we've started to focus on mid-week promotions, we've actually been able to recapture some of the low-income consumers.

Speaker Change: I wanted to.

Speaker Change: I wanted to say on spend what are the trends that we've noticed in the business that we discussed last quarter. It was.

Speaker Change: On our lower income consumers, where there is more weakness within lower income consumers versus Ma.

Speaker Change: Moderately income in high income and we saw some strengthening in the higher income last quarter those trends.

Speaker Change: Continued into Q1.

And.

Speaker Change: One of the things that.

Speaker Change: As we continue to fine tune, our marketing approach and get smarter about targeting the right guests and delivering the right message to that guest.

Speaker Change: One of the things that we've been very encouraged by is as we've started to focus on mid week promotions, we've actually been able to recapture some of the low income consumers and so we've been able to return them back to Dave and Busters and as they return back we've been able to convert them into our loyalty.

Christopher D. Morris: And so we've been able to return them to Dave & Buster's. And as they've returned, we've been able to convert them into our loyalty platform. And as they've converted, those individuals are engaging at a higher rate.

Speaker Change: Platform and.

Speaker Change: As they have converted.

Speaker Change: Those individuals' are engaging at a higher rate and so we think that's just a testament to the type of work that we're doing now and <unk>.

Christopher D. Morris: And so we think that's just a testament to the type of work that we're doing now and just being very surgical about how we approach our guests, first understanding where the deterioration is occurring and then being very smart about getting the right message to the right guests at the right time. We still have a long way to go to where we want to be, but that's... That's a data point that things are moving in the right direction. That's very helpful.

Speaker Change: Just being very surgical about how we approach our guests under his first understanding where the deterioration is occurring and then being very smart about getting the right message to the right guests at the right time, we still have a long ways to go to where we want to be but that's.

Speaker Change: <unk>.

Speaker Change: That's a data point that the things are moving in the right direction.

Dennis Geiger: And maybe just one more follow-up on the promotional side of things that you touch on there, which sounds encouraging. Just on the food promo, is there anything more to add on what you saw in the quarter relative to your expectations? What you attribute that to, and then what that means maybe on the go forward. You just mentioned the mid-week promos, which sound encouraging. Anything more on, you know, promos going forward at a high level on how you're thinking about that?

Speaker Change: That's very helpful and maybe just one more following up on the promotional side of things you can touch on there.

Speaker Change: Sounds encouraging just wonder on the food promo if there's anything more to add there on what you saw in the quarter.

Speaker Change: To your expectations.

Speaker Change: What do you attribute that to and what that means maybe on the on the go forward. You just mentioned kind of a mid teens promos, which we've shown encouraging anything more on promos going forward at a high level on how you're thinking about that thank you.

Christopher D. Morris: Well, you know, I think what you're going to continue to see from us is just going through the testing and learning process, fine-tuning the process, and then being very targeted in how we approach the business. I would say, based on the success that we've seen in the mid-week, that's something we're going to continue to focus on. We're still running half-off food right now, so that's not going to be an evergreen marketing approach whatsoever.

Speaker Change: Well I think what youre going to continue to see from us is.

Speaker Change: <unk>.

Yes, just been going through the testing of learning process would be fine tuning the process and then being very targeted in how we how we approach the business I would say based on the success that we've seen in the mid week.

Speaker Change: That's something we're going to continue to focus on we're still running half off food right now that's not going to be an evergreen.

Speaker Change: Marketing approach whatsoever, but for in the near term, we're going to continue to.

Dennis Geiger: But in the near term, we're going to continue to run with that. We think it still has some legs, but we like what we're seeing with all-you-can-eat wings.

Speaker Change: Run with that run with that and we think it still has some legs.

Christopher D. Morris: We like what we're seeing with the evergreen promotion of half-off games on Wednesday. And so we really like the approach that we're taking to driving off-peak demand. In terms of other promotions, that's something that we're going to just be very smart about what we do. We have some partnerships that I mentioned during the call that we're quite excited about, that we think are going to really give us some juice here in the summer months as well as in the fall. And so it's going to be a constant balance between having the right promotion, having the right partnerships, and having the right pricing strategy. I appreciate it. Thanks.

Speaker Change: But we like what we're seeing on all you can eat wings, we like what we're seeing on the evergreen promotion of half off games on Wednesday, and so we really like.

Speaker Change: The approach that we're taking to driving off peak demand in terms of other promotions.

Speaker Change: We're just that's something that we're going to just be very smart about what we're doing we have some partnerships that I mentioned during the call.

Speaker Change:

Speaker Change: That we're quite excited about that we think are going to.

Speaker Change: Give us some juice here in the summer months as well as in the fall and so it is going to be a constant balance between.

Speaker Change: <unk>.

Speaker Change: Having the right promotion, having the right partnerships and having the right pricing strategy.

Speaker Change: Okay.

Speaker Change: I appreciate it thanks guys.

Speaker Change: Yes.

Speaker Change: Thank you.

Dennis Geiger: Yep, thank you. Here's the next question. Brian Vaccaro with Raymond James, please go ahead. Hi, thanks and good evening.

Speaker Change: The next question comes from Brian Vaccaro with Raymond James. Please go ahead.

Brian Michael Vaccaro: You noted the improvement that you've seen the last several weeks after the first quarter came in below expectations. So I guess, in the spirit of level setting trends and reasonable expectations, could you provide some more color on the comps that you saw sort of moving through the first quarter and how the quarter to date is trending or what a reasonable expectation would be as it relates to the second quarter? Did we see comps get back to flat, if not positive? Just trying to level set.

Brian Michael Vaccaro: Hi, Thanks, and good evening, you noted the improvement that you've seen in the last several weeks. After the first quarter came in below expectations. So I guess in the spirit of level setting trends and reasonable expectation could you provide some more color on the comps that you saw sort of moving through the first quarter and how the core.

Speaker Change: Year to date is trending on what a reasonable expectation would be as it relates to the second quarter and could we see comps get back to flat if not positive just trying to level set.

Speaker Change: Expectations of it yes.

Michael A. Quartieri: Yeah, it's Mike here. When you think about what we were experiencing coming into the beginning of, I would say, the calendar year, January and February were tougher comps on a year-over-year basis. You had the weather that we saw in January, so the beginning of the calendar year started off slow for us and everybody else. As we got into January and February, we kept still seeing that lower income of 75,000 and below customers still being challenged. That's not news to anybody.

Michael A. Quartieri: It's Mike here when you think about what we were experiencing coming into the beginning of I'll say the calendar year.

Michael A. Quartieri: January and February were tougher comps on a year over year basis.

Michael A. Quartieri: Weather that we saw in January so the beginning of the calendar year started off slow as for as well for us and everybody else.

Michael A. Quartieri: As we got into January February we kept the LCN.

Michael A. Quartieri: That lower income that 75000 and below customers still be challenged.

Michael A. Quartieri: You've heard that on the news, you know, more so for the last, you know, at least four to, I'll call it three to four months that we've seen. So, sales in that period from January, February, and the end of March were choppy, as we said on the call. Spring break this year was a much shorter period. So, it did cause a little bit of what I call either mismatch or just a shorter break, which meant it was more condensed.

Michael A. Quartieri: Not news to anybody you've heard that on the news.

Michael A. Quartieri: More so for the last at least four to I'll call. It three to four months that we've seen.

Michael A. Quartieri: So sales in that period from January February and March were choppy as we said on the call.

Michael A. Quartieri: Spring break this year was a much shorter period. So it did cause a little bit of walk home, either mismatch or just a shorter period, which vendor was more condensed. So we didn't get real benefit of a prolonged spring break or more activities would have taken place.

Michael A. Quartieri: So, we didn't get a real benefit of a prolonged spring break where more activities would have taken place over that more prolonged period. But, as we've moved out of that and got into, call it, the end of April and end of May timeframe, we've seen considerable improvement in the traffic numbers. The promotions, like what we talked about, half-off food, have helped drive in customers. The largest increase from a cohort perspective came from that under $75,000 a year consumer.

Michael A. Quartieri: Over that more for long period, but as we've moved out of that and got into call. It. The end of April and May timeframe, we've seen considerable improvement in the traffic numbers the promotions of like what we talked about how fast food has helped drive in.

Michael A. Quartieri: The largest increase from a cohort perspective came in from that under $75000 a year consumer so that was an opportunity that would kind of continue to see.

Michael A. Quartieri: So, that was an opportunity that we kind of continue to see and keep that offer out there on a weekday basis. And so at this point in time, we're kind of seeing that low single-digit negative comp right now, but we do see that trend getting better as we get more into the summer months of this. All right, that's very helpful.

Michael A. Quartieri: And keeping that offer out there for a week day basis.

Michael A. Quartieri: And so at this point in time, we're kind of seeing that low single digit negative comp right now.

Michael A. Quartieri: But we do see that trend getting better as we get more into the summer months at this point.

Speaker Change: Alright, Thats very helpful. Thank you, Mike and on the marketing front could you just level set what was your AD spend in the first quarter and what level of spend the content play.

Brian Michael Vaccaro: Thank you, Mike. And on the marketing front, could you just level set, what was your ad spend in the first quarter, and what level of spend do you contemplate, all things you know today, kind of in 24 compared to the, I think it was 65 or 70 million you spent in 23. Thank you. Yeah, I would say that.

Speaker Change: As you know today kind of in 24 compared to that I think it was $65 or 70 million you spent in 'twenty three thank you.

Speaker Change: Okay.

Speaker Change: Yes, I would say this.

Michael A. Quartieri: Part of the, I'll call it, lean in or a little bit more heavy bending Q1, we have three larger events that we kind of got ourselves behind on, or at least put the muscle effort into. The biggest one being around spring break in the season, and I should say that the spring break pass, which is the test that we alluded to in our costs of just not being as successful as we were hoping for.

Speaker Change: Part of the I'll call it lean in or a little bit more heavier spend in Q1.

Speaker Change: We had three larger events that we kind of got ourselves behind on or at least put the muscle effort into.

Speaker Change: The biggest one being around the spring break.

Speaker Change: And the season and I should say the spring Bank pass, which.

Speaker Change: That's the test that we allude.

Speaker Change: Alluded to in our in our cost of just not being as successful as we were hoping for.

Michael A. Quartieri: But we do see, you know, the marketing spend as we get further into the year tend to be more normalized across Q2, Q3, and Q4. It just was a little bit more heavy in Q1 than we normally would have spent because of that, as well as helping the promotion of the Half Off Food offer, which was really more about driving awareness and bringing customers into the building to experience the new food and new service, or a new service model.

Speaker Change: But we do see the marketing spend as we get further into the year to be more normalized across Q2, three and four.

Speaker Change: It was a little bit more heavy in Q1 that we had normally would've spent.

Speaker Change: Of that as well as helping the promotion of the half off food offer which was really more about driving awareness and.

Speaker Change: Bringing customers into the building to experience, the new food and new service menu or the.

Speaker Change: A new service model.

Christopher D. Morris: And I can jump in and just add a little bit more color about, you know, some of our comments. Look, during the quarter, we had some things that worked, we had some things that didn't. Clearly, in Q1, the two areas that we weren't pleased with were our labor performance and the marketing spend. And so, you know, labor was very clearly related to, we rolled out the new food, we rolled out the new service model, and we had all these different systems that were being implemented at that point in time.

Speaker Change: Yes, I can jump in and just add a little bit more color about some of our comments on.

Dennis Geiger: So look during the quarter, we had some things that worked we had some things that Dennis clearly in Q1.

Dennis Geiger: The two areas that where we.

Speaker Change: Werent pleased with was our labor performance in the marketing spend and so.

Labor is very clearly it was related to we rolled out the new food, we rolled out the new service model.

Speaker Change: And we had all these different systems that were being implemented.

At that point in time and.

Christopher D. Morris: And we just kind of got out of line, you know, for a couple of periods. But the good news is on labor; we got it right back in line very quickly. The business is stabilized back to, you know, the numbers that we would expect. And they've been consistent throughout the month of May and heading into June.

Speaker Change: We just kind of got out of line for a couple of periods, but the good news is on labor, we got it right back in line very quickly the business has stabilized back to.

Speaker Change: The numbers that we would expect.

Speaker Change: And they've been consistent.

Speaker Change: Throughout the month of May and heading into June so that was a blip.

Christopher D. Morris: So that was a blip. We took care of it. You know, this is a team that's always going to communicate with you directly when things are working well and also directly when things aren't. On the marketing side, the spring break patch that Q alluded to was just, it was a mistake.

We took care of it. This is a team that's always going to communicate communicate with you directly when things are working well and also directly when things arent on the marketing side. The spring break past that Q alluded to was just there was a mistake.

Christopher D. Morris: And it was constructed before our new CMO got here. You know, I'll own it as the CEO of the company, but it didn't work. It was designed poorly. It had too high of a price point and too short of a period of time.

Speaker Change: It was constructed.

Speaker Change: Before our new CMO got here.

Speaker Change: One it is the CEO of the company, but it doesn't work. It was designed poorly it had two higher price point and had too short of a period of time.

Christopher D. Morris: And it was about a $6 million spend, and we got very little out of it. And so that's a mistake that we've learned from, and we're not going to repeat. And so when you look at, you know, our quarter, that's why we quantified that impact so you can have a better feel for how to think about the overall financial performance. There's over $10 million there that we do not expect to occur.

Speaker Change: And it was about a $6 million spend and we got very little out of it.

Speaker Change: And so that's a mistake that we've learned and we're not going to repeat and so when you look at our quarter.

Speaker Change: It's why we quantified that impact. So you can have a better feel for how to think about the overall financial performance.

Speaker Change: Over $10 million, there that we do not expect to occur.

Christopher D. Morris: And we are managing this business with those learnings in mind going forward. That's helpful, Culler. Thank you. I'll pass it along.

Speaker Change: And we are managing this business with those learnings in mind going forward.

Speaker Change: That's helpful color. Thank you I'll pass along.

Christopher D. Morris: All right, thank you. This concludes our question and answer session. I would like to turn the conference back over to Chris Morris for any closing remarks. All right. Thank you, operator. We continue to see a tremendous amount of upside in this business, and based on what we're seeing in terms of leading indicators of success, we are very optimistic that the financial inflection point we've been driving towards is quickly approaching. Thank you all for joining us. We look forward to speaking with you again soon. The conference is now concluded. Thank you for attending today's presentation.

Speaker Change: Alright, thank you.

Operator: This concludes our question and answer session.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Chris Morris for any closing remarks.

Christopher Morris: I would like to turn the conference back over to Chris Morris for closing remarks.

Christopher Morris: All right, thank you, operator. We continue to see a tremendous amount of us side in this business, and based on what we're seeing in terms of leading indicators of success, are very optimistic that the financial and selection point we've been driving towards is quickly approaching.

Alright. Thank you operator, we continue to see a tremendous amount of upside in this business and based on what we're seeing in terms of leading indicators of success are very optimistic that the financial inflection point, we have been driving towards is quickly approaching.

Christopher Morris: Thank you all for joining.

Speaker Change: Thank you all for joining and we look forward to speaking with you again soon.

Christopher D. Morris: We look forward to speaking with you again soon.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: You may now have this.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Thanks.

Speaker Change: Yes.

Speaker Change: Thanks.