Bowlero Corp. (NYSE: BOWL) (“Bowlero” or the “Company”), one of
the world’s premier operators of location-based entertainment,
today provided financial results for the second quarter of the 2024
Fiscal Year, which ended on December 31, 2023.
Quarter Highlights:
- Revenue increased 11.8% to $305.7 million versus the prior year
and increased 65.4% versus 2QFY20 (quarter ended December 29,
2019)
- Revenue excluding Service Fee Revenue increased 13.4% to $304.0
million versus the prior year and was up 64.5% versus 2QFY20
- Total Bowling Center Revenue increased 14.5% versus the prior
year and was up 69.5% versus 2QFY20
- Same Store Revenue increased 0.2% versus the prior year and
grew 27.8% versus 2QFY20
- Net loss of $63.5 million versus prior year income of $1.4
million and income of $6.4 million in 2QFY20, which includes $64.1
million of expense from the non-cash impact of the earnouts for the
current period
- Adjusted EBITDA of $103.1 million versus prior year of $97.0
million and $52.9 million in 2QFY20
- Added 3 locations during the quarter, 2 from acquisitions and 1
new build-out, bringing year-to-date new centers to 21
- Total locations in operation as of February 5, 2024 is 350
“Second quarter fiscal year 2024 saw double-digit total growth,
amplifying our ability to grow the business despite difficult
comparatives as we come out of the record-breaking COVID rebound.
Our acquisition of Lucky Strike represents a major milestone for
the Company as we focus on higher revenue properties and continue
to grow our location count. That deal brought together flagship
properties with our best-in-class operators and event sales
platform, driving results higher than expectations. We are
expanding the well-known Lucky Strike brand by opening our first
Lucky Strike new build in Moorpark, California, and the new Lucky
Strike Miami will soon follow.,” said Thomas Shannon, Founder and
Chief Executive Officer of Bowlero.
Mr. Shannon continued, “In the quarter, our event business was
up over thirty percent and continues to drive the strength of our
overall business. Same-store revenue was positive in the quarter,
driven by the reset of mid-week promotions, improved pricing
dynamics on the weekend, and strong execution from our events team.
Acquisitions and new builds contributed $41 million of revenue in
the quarter and the Lucky Strike acquisition is ahead of our
profitability targets. We are taking a cautious approach to the
third quarter due to meaningful weather headwinds in the first
three weeks of January but expect to make up that softness in the
rest of the third quarter and fourth quarter and continue to expect
double-digit revenue growth in fiscal year 2024.”
Bobby Lavan, Chief Financial Officer, added, “In the quarter, we
received $409 million net proceeds from our sale-leaseback
transaction with Vici. We used proceeds to pay down our revolver
balance in full, fund acquisitions including Lucky Strike, and
accelerate our capital investment plan. We ended the quarter with
$190 million of cash and $412 million of total liquidity.”
Share Repurchases
During the quarter, the Company repurchased approximately 7.5
million shares of Class A common stock for approximately $80
million. In the first quarter of fiscal year 2024, the company
repurchased approximately 12.1 million shares for approximately
$131 million, bringing total repurchases in the first half of
fiscal year 2024 to approximately 19.6 million. Since 2021, the
Company has spent approximately $432 million retiring all
SPAC-related warrants, repurchasing 31.0 million shares of common
stock, and 4.9 million as-converted preferred shares, reducing
common stock outstanding by about 20%.
On February 2, 2024, the Board of Directors authorized a time
extension and an increase to the share repurchase program,
replenishing the authorized repurchase amount to $200 million and
removing the program expiration date. The timing of the repurchases
and the actual amount repurchased will depend on a variety of
factors, including the market price of the Company’s shares,
general market and economic conditions, and other factors.
Dividend
The Board of Directors of the Company has approved the
initiation of a quarterly dividend program. The Board of Directors
declared an initial quarterly cash dividend of $0.055 per share of
common stock for the third quarter of fiscal 2024. The dividend
will be payable on March 8, 2024, to stockholders of record on
February 23, 2024. The Company intends to pay a cash dividend on a
quarterly basis going forward, subject to market conditions and
approval by the Company’s Board of Directors.
Fiscal Year 2024 and Third Quarter 2024 Guidance
The Company reiterated financial guidance for fiscal year 2024.
The Company expects Revenue to be up 10% to 15% in fiscal year
2024, excluding the $21 million of Service Fee Revenue1 from prior
year revenue, equating to $1.14 billion to $1.19 billion. Adjusted
EBITDA margin is expected to be 32% to 34%, which equates to
Adjusted EBITDA of $365 million to $405 million. The Company
expects the third quarter of fiscal year 2024 to have Revenue
Excluding Service Fee Revenue of $335 million to $350 million and
Adjusted EBITDA of $128 million to $143 million.
The Company is updating its investment guidance based on
expanding growth opportunities in fiscal year 2025. The Company
expects to reinvest heavily in the business in fiscal year 2024,
with more than $190 million allocated to acquisitions (up from $160
million), $40 million to new builds, and $80 million to conversions
and growth (up from $75 million). Maintenance capital expenditures
are expected to be $45 million.
Investor Webcast Information
Listeners may access an investor webcast hosted by Bowlero. The
webcast and results presentation will be accessible at 10:00 AM ET
on February 5, 2024, in the Events & Presentations section of
the Bowlero Investor Relations website at
https://ir.bowlerocorp.com/overview/default.aspx.
About Bowlero Corp.
Bowlero Corporation is one of the world’s premier operators of
location-based entertainment. With approximately 350 locations
across North America, the Company serves more than 40 million guest
visits annually through a family of brands that include Lucky
Strike, Bowlero and AMF. In 2019, Bowlero acquired the Professional
Bowlers Association, the major league of bowling and a growing
media property that boasts millions of fans around the globe. For
more information on Bowlero, please visit BowleroCorp.com.
Forward Looking Statements
Some of the statements contained in this press release are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that involve risk,
assumptions and uncertainties, such as statements of our plans,
objectives, expectations, intentions and forecasts. These
forward-looking statements are generally identified by the use of
forward-looking terminology, including the terms "anticipate,"
"believe," “confident,” “continue,” "could," "estimate," "expect,"
"intend," “likely,” "may," "plan," “possible,” "potential,"
"predict," "project," "should," "target," "will," "would" and, in
each case, their negative or other various or comparable
terminology. These forward-looking statements reflect our views
with respect to future events as of the date of this release and
are based on our management’s current expectations, estimates,
forecasts, projections, assumptions, beliefs and information.
Although management believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to have been correct.
All such forward-looking statements are subject to risks and
uncertainties, many of which are outside of our control, and could
cause future events or results to be materially different from
those stated or implied in this document. It is not possible to
predict or identify all such risks. These risks include, but are
not limited to: our ability to design and execute our business
strategy; changes in consumer preferences and buying patterns; our
ability to compete in our markets; the occurrence of unfavorable
publicity; risks associated with long-term non-cancellable leases
for our centers; our ability to retain key managers; risks
associated with our substantial indebtedness and limitations on
future sources of liquidity; our ability to carry out our expansion
plans; our ability to successfully defend litigation brought
against us; our ability to adequately obtain, maintain, protect and
enforce our intellectual property and proprietary rights and claims
of intellectual property and proprietary right infringement,
misappropriation or other violation by competitors and third
parties; failure to hire and retain qualified employees and
personnel; the cost and availability of commodities and other
products we need to operate our business; cybersecurity breaches,
cyber-attacks and other interruptions to our and our third-party
service providers’ technological and physical infrastructures;
catastrophic events, including war, terrorism and other conflicts;
public health emergencies and pandemics, such as the COVID-19
pandemic, or natural catastrophes and accidents; changes in the
regulatory atmosphere and related private sector initiatives;
fluctuations in our operating results; economic conditions,
including the impact of increasing interest rates, inflation and
recession; and other factors described under the section titled
“Risk Factors” in the Company's Annual Report on Form 10-K filed
with the U.S. Securities and Exchange Commission (the “SEC”) by the
Company on September 11, 2023, as well as other filings that the
Company will make, or has made, with the SEC, such as Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. These factors
should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included
in this press release and in other filings. We expressly disclaim
any obligation to publicly update or review any forward-looking
statements, whether as a result of new information, future
developments or otherwise, except as required by applicable
law.
Non-GAAP Financial Measures
To provide investors with information in addition to our results
as determined under Generally Accepted Accounting Principles
(“GAAP”), we disclose Revenue Excluding Service Fee Revenue, Total
Bowling Center Revenue, Same Store Revenue and Adjusted EBITDA as
“non-GAAP measures”, which management believes provide useful
information to investors because each measure assists both
investors and management in analyzing and benchmarking the
performance and value of our business. Accordingly, management
believes that these measurements are useful for comparing general
operating performance from period to period, and management relies
on these measures for planning and forecasting of future periods.
Additionally, these measures allow management to compare our
results with those of other companies that have different financing
and capital structures. These measures are not financial measures
calculated in accordance with GAAP and should not be considered as
a substitute for revenue, net income, or any other operating
performance or liquidity measure calculated in accordance with
GAAP, and may not be comparable to a similarly titled measure
reported by other companies. Our third quarter and fiscal year 2024
guidance measures (other than revenue) are provided on a non-GAAP
basis without a reconciliation to the most directly comparable GAAP
measure because the Company is unable to predict with a reasonable
degree of certainty certain items contained in the GAAP measures
without unreasonable efforts. For the same reasons, the Company is
unable to address the probable significance of the unavailable
information. Such items include, but are not limited to,
acquisition related expenses, stock-based compensation and other
items not reflective of the company's ongoing operations.
Revenue Excluding Service Fee Revenue represents Total Revenue
less Service Fee Revenue. Total Bowling Center Revenue represents
Total Revenue less Non-Center Related Revenue, Revenue from Closed
Centers (as defined below), and Service Fee Revenue, if applicable.
Same Store Revenue represents Total Revenue less Non-Center Related
Revenue, Revenue from Closed Centers, Service Fee Revenue, if
applicable, and Acquired Revenue. Adjusted EBITDA represents Net
Income (Loss) before Interest Expense, Income Taxes, Depreciation
and Amortization, Share-based Compensation, EBITDA from Closed
Centers, Foreign Currency Exchange Loss (Gain), Asset Disposition
Loss (Gain), Transactional and other advisory costs, changes in the
value of earnouts, and other.
The Company considers Revenue Excluding Service Fee Revenue as
an important financial measure because provides a financial measure
of revenue directly associated with consumer discretionary spending
and Total Bowling Center Revenue as an important financial measure
because it provides a financial measure of revenue directly
associated with bowling center operations. The Company also
considers Same Store Revenue as an important financial measure
because it provides comparable revenue for centers open for the
entire duration of both the current and comparable measurement
periods.
The Company considers Adjusted EBITDA as an important financial
measure because it provides a financial measure of the quality of
the Company’s earnings. Other companies may calculate Adjusted
EBITDA differently than we do, which might limit its usefulness as
a comparative measure. Adjusted EBITDA is used by management in
addition to and in conjunction with the results presented in
accordance with GAAP. We have presented Adjusted EBITDA solely as a
supplemental disclosure because we believe it allows for a more
complete analysis of results of operations and assists investors
and analysts in comparing our operating performance across
reporting periods on a consistent basis by excluding items that we
do not believe are indicative of our core operating performance.
Adjusted EBITDA has limitations as an analytical tool, and you
should not consider it in isolation or as a substitute for analysis
of our results as reported under GAAP. Some of these limitations
are that Adjusted EBITDA:
- do not reflect every expenditure, future requirements for
capital expenditures or contractual commitments;
- do not reflect changes in our working capital needs;
- do not reflect the interest expense, or the amounts necessary
to service interest or principal payments, on our outstanding
debt;
- do not reflect income tax (benefit) expense, and because the
payment of taxes is part of our operations, tax expense is a
necessary element of our costs and ability to operate;
- do not reflect non-cash equity compensation, which will remain
a key element of our overall equity based compensation package;
and
- do not reflect the impact of earnings or charges resulting from
matters we consider not to be indicative of our ongoing
operations.
GAAP Financial Information
Bowlero Corp. Condensed
Consolidated Balance Sheets (Amounts in thousands, except share and
per share amounts) (Unaudited)
December 31, 2023
July 2, 2023
Assets
Current assets:
Cash and cash equivalents
$
189,955
$
195,633
Accounts and notes receivable, net of
allowance for doubtful accounts
6,875
3,092
Inventories, net
14,166
11,470
Prepaid expenses and other current
assets
24,304
18,395
Assets held-for-sale
2,069
2,069
Total current assets
237,369
230,659
Property and equipment, net
806,096
697,850
Internal use software, net
22,538
17,914
Operating lease right of use assets,
net
546,188
449,085
Finance lease right of use assets, net
536,274
515,339
Intangible assets, net
98,784
90,986
Goodwill
826,619
753,538
Deferred income tax asset
84,767
73,807
Other assets
33,527
12,096
Total assets
$
3,192,162
$
2,841,274
Liabilities, Temporary Equity and
Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable and accrued expenses
$
142,670
$
121,226
Current maturities of long-term debt
9,248
9,338
Current obligations of operating lease
liabilities
31,718
23,866
Other current liabilities
11,497
14,281
Total current liabilities
195,133
168,711
Long-term debt, net
1,134,076
1,138,687
Long-term obligations of operating lease
liabilities
539,580
431,295
Long-term obligations of finance lease
liabilities
680,309
652,450
Long-term financing obligations
436,790
9,005
Earnout liability
135,479
112,041
Other long-term liabilities
27,239
25,375
Deferred income tax liabilities
4,200
4,160
Total liabilities
3,152,806
2,541,724
Commitments and Contingencies (Note
10)
December 31, 2023
July 2, 2023
Temporary Equity
Series A preferred stock
$
144,329
$
144,329
Stockholders’ (Deficit) Equity
Class A common stock
9
11
Class B common stock
6
6
Additional paid-in capital
508,065
506,112
Treasury stock, at cost
(349,025
)
(135,401
)
Accumulated deficit
(264,909
)
(219,659
)
Accumulated other comprehensive income
881
4,152
Total stockholders’ (deficit) equity
(104,973
)
155,221
Total liabilities, temporary equity and
stockholders’ (deficit) equity
$
3,192,162
$
2,841,274
Bowlero Corp. Condensed
Consolidated Statements of Operations (Amounts in thousands)
(Unaudited)
Three Months Ended
Six Months Ended
December 31,
2023
January 1, 2023
December 31,
2023
January 1, 2023
Revenues
$
305,671
$
273,385
$
533,076
$
503,645
Costs of revenues
215,090
179,706
398,011
344,908
Gross profit
90,581
93,679
135,065
158,737
Operating expenses:
Selling, general and administrative
expenses
37,512
34,452
75,277
66,946
Asset impairment
29
—
55
84
Loss (gain) on sale of assets
21
(1,823
)
(6
)
(1,978
)
Other operating expense
3,542
614
4,906
1,976
Total operating expense
41,104
33,243
80,232
67,028
Operating profit
49,477
60,436
54,833
91,709
Other expenses:
Interest expense, net
46,236
27,379
83,685
50,949
Change in fair value of earnout
liability
64,091
30,776
23,409
71,536
Other expense (income)
10
(678
)
63
(630
)
Total other expense
110,337
57,477
107,157
121,855
(Loss) income before income tax expense
(benefit)
(60,860
)
2,959
(52,324
)
(30,146
)
Income tax expense (benefit)
2,609
1,524
(7,074
)
1,953
Net (loss) income
$
(63,469
)
$
1,435
$
(45,250
)
$
(32,099
)
Bowlero Corp. Condensed
Consolidated Statements of Cash Flows (Amounts in thousands)
(Unaudited)
Three Months Ended
Six Months Ended
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Net cash provided by operating
activities
$
55,116
$
80,306
$
71,199
$
115,879
Net cash used in investing activities
(70,090
)
(100,513
)
(246,666
)
(163,005
)
Net cash provided by (used in) financing
activities
164,647
(41
)
169,738
5,126
Effect of exchange rate changes on
cash
194
(304
)
51
(427
)
Net increase (decrease) in cash and
cash equivalents
149,867
(20,552
)
(5,678
)
(42,427
)
Cash and cash equivalents at beginning of
period
40,088
110,361
195,633
132,236
Cash and cash equivalents at end of
period
$
189,955
$
89,809
$
189,955
$
89,809
Balance Sheet and Liquidity
As of December 31, 2023 and July 2, 2023,
our calculation of net debt was as follows:
(in thousands)
December 31, 2023
July 2, 2023
Cash and cash equivalents
$
189,955
$
195,633
Bank debt and loans
1,158,437
1,164,662
Net debt
$
968,482
$
969,029
As of December 31, 2023 and July 2, 2023,
our cash on hand and revolving borrowing capacity was as
follows:
(in thousands)
December 31, 2023
July 2, 2023
Cash and cash equivalents
$
189,955
$
195,633
Revolver Capacity
235,000
235,000
Revolver capacity committed to letters of
credit
(12,621
)
(10,386
)
Total cash on hand and revolving borrowing
capacity
$
412,334
$
420,247
GAAP to non-GAAP
Reconciliations
FY24 vs. FY20
FY24 vs. FY23
(in thousands)
December 29, 2019
December 31, 2023
January 1, 2023
December 31, 2023
Total Revenue - Reported
$
184,842
$
305,671
$
273,385
$
305,671
less: Service Fee Revenue
—
(1,633
)
(5,349
)
(1,633
)
Revenue excluding Service Fee Revenue
$
184,842
$
304,038
$
268,036
$
304,038
less: Non-Center Related (including Closed
Centers)
(7,300
)
(3,020
)
(5,148
)
(3,020
)
Total Bowling Center Revenue
$
177,542
$
301,018
$
262,888
$
301,018
less: Acquired Revenue
—
(74,035
)
(3,306
)
(40,840
)
Same Store Revenue
$
177,542
$
226,983
$
259,582
$
260,178
% Year-over-Year
Change
Total Revenue – Reported
65.4
%
11.8
%
Total Revenue excluding Service Fee
Revenue
64.5
%
13.4
%
Total Bowling Center Revenue
69.5
%
14.5
%
Same Store Revenue
27.8
%
0.2
%
Adjusted EBITDA
Reconciliation
Three Months Ended
(in thousands)
December 31, 2023
January 1, 2023
December 29, 2019
Consolidated
Revenue
$
305,671
$
273,385
$
184,842
Net (loss) income - GAAP
(63,469
)
1,435
6,448
Net (loss) income margin
(20.8
)%
0.5
%
3.5
%
Adjustments:
Interest expense
48,112
27,379
19,805
Income tax expense
2,609
1,524
153
Depreciation, amortization and impairment
charges
37,562
29,303
21,772
Share-based compensation
3,689
4,036
852
Closed center EBITDA (1)
2,157
768
1,885
Foreign currency exchange gain
(78
)
(182
)
(236
)
Asset disposition loss (gain)
21
(1,823
)
219
Transactional and other advisory costs
(2)
4,935
3,848
1,087
Changes in the value of earnouts (3)
64,091
30,776
—
Other, net (4)
3,497
(109
)
903
Adjusted EBITDA
$
103,126
$
96,955
$
52,888
Adjusted EBITDA Margin
33.7
%
35.5
%
28.6
%
(1)
The closed center adjustment is to remove EBITDA for closed
centers. Closed centers are those centers that are closed for a
variety of reasons, including permanent closure, newly acquired or
built centers prior to opening, centers closed for renovation or
rebranding and conversion. If a center is not open on the last day
of the reporting period, it will be considered closed for that
reporting period. If the center is closed on the first day of the
reporting period for permanent closure, the center will be
considered closed for that reporting period.
(2)
The adjustment for transaction costs and other advisory costs is
to remove charges incurred in connection with any transaction,
including mergers, acquisitions, refinancing, amendment or
modification to indebtedness, dispositions and costs in connection
with an initial public offering, in each case, regardless of
whether consummated. Certain prior year amounts have been
reclassified to conform to current year presentation.
(3)
The adjustment for changes in the value of earnouts is to remove
of the impact of the revaluation of the earnouts. Changes in the
fair value of the earnout liability is recognized in the statement
of operations. Decreases in the liability will have a favorable
impact on the statement of operations and increases in the
liability will have an unfavorable impact.
(4)
Other includes the following related to transactions that do not
represent ongoing or frequently recurring activities as part of the
Company’s operations: (i) non-routine expenses, net of recoveries
for matters outside the normal course of business, (ii) costs
incurred that have been expensed associated with obtaining an
equity method investment in a subsidiary of VICI, (iii) severance
expense, and (iv) other individually de minimis expenses. Certain
prior year amounts have been reclassified to conform to current
year presentation.
1 Service fee revenue is a mandatory gratuity passed through to
the employee, which is a non-contributor to earnings and is being
phased out across our centers.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240205403778/en/
Bowlero Corp. Investor Relations IR@BowleroCorp.com
Bowlero (NYSE:BOWL)
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Bowlero (NYSE:BOWL)
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