Bowlero Corp. (BOWL) Q3 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a positive outlook with strong revenue growth, strategic acquisitions, and a confident outlook on sustaining positive comps. Despite underperformance due to costs, management has outlined clear strategies for cost reduction and margin expansion. The acquisition of Raging Waves and increased share repurchase authorization are positive indicators. The Q&A section reveals management's confidence in sustaining growth and improving margins, despite some cost uncertainties. Given the market cap, the stock is likely to react positively, within the 2% to 8% range.
Key Financial Performance
Total Revenue $336.4 million (up 8.8% year-over-year from $309.1 million). Growth attributed to positive same-store sales in February and March following a challenging January.
Adjusted EBITDA $122.8 million (down from $127.6 million year-over-year). Decrease attributed to investments in traffic-driving initiatives and a $2 million loss from PBA programming.
Same-store comp -2.1% (compared to +0.2% in the previous quarter). January's performance was the full contributor to the negative comp.
Payroll Expenses $4 million increase year-over-year. This is an improvement from the previous quarter's $6 million increase, indicating a normalization of payroll costs after a significant rise in March 2023.
Non-comp centers EBITDA $11 million on approximately $35 million of revenue. This reflects the performance of centers not included in same-store sales.
Lucky Strike Contribution to EBITDA $6 million (up from $5 million year-over-year). This indicates strong performance from the Lucky Strike acquisition.
Growth CapEx $13 million spent in the quarter, with $9 million on new builds and $7 million on maintenance.
Acquisitions Spend $12 million spent on acquisitions during the quarter.
Liquidity $437 million at the end of the quarter, with $212 million in cash and nothing drawn on a revolver.
Net Debt $943 million, with a bank credit facility net leverage ratio of 2.4 times.
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Operating Highlights
New Premium Menu Launch: Bowlero has revamped its food and beverage offerings, launching a new premium menu at Lucky Strike Miami, which includes salads, gluten-free options, bao buns, and honey chicken sandwiches.
Summer Season Pass: Bowlero is introducing a new Summer Season Pass to drive traffic and improve customer satisfaction.
New Builds and Acquisitions: Bowlero opened Lucky Strike Miami and has four new builds planned in Denver, Beverly Hills, and Orange County, with a pipeline of approximately a dozen more locations.
Acquisition of Raging Waves: Bowlero acquired Raging Waves, the largest water park in Illinois, along with 53.5 acres of land, indicating a strategic expansion into the water park sector.
Event Revenue Growth: Event revenue increased by 27% year-over-year, and leagues were up 9% year-over-year, showcasing operational efficiency in event management.
Employee Investment: Bowlero increased same-store comp payroll by $4 million year-over-year, focusing on improving employee training and sales culture.
Focus on Food and Beverage Sales: Bowlero is prioritizing food and beverage sales through new menus, updated pricing, and in-kitchen training to enhance customer experience and increase revenue.
PBA Programming Investment: Bowlero has invested in PBA programming, resulting in a 16% increase in viewership, particularly among younger demographics, enhancing brand recognition.
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Risk or Challenges
Weather-related challenges: January was a challenging month due to blizzards and flooding across the country, impacting performance.
Regulatory issues: The company faced age discrimination charges, but the EEOC has closed these cases without bringing suit against Bowlero.
Competitive pressures: Bowlero's same-store sales growth was negative 2.1% for the quarter, indicating competitive pressures in the location-based entertainment space.
Economic factors: The company is adjusting its full-year guidance to the low end of the previously disclosed range due to investments made in the third quarter.
Supply chain challenges: Investments in traffic-driving initiatives have added costs, impacting adjusted EBITDA.
Employee-related costs: Payroll costs increased by $4 million year-over-year, indicating challenges in managing employee expenses.
Acquisition risks: The company is increasing its M&A spend to $220 million, which carries inherent risks associated with integration and performance.
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Guidance & Outlook
Total Revenue Growth: Bowlero reported total revenue growth of 8.8% in Q3 2024.
Same-Store Sales Growth: Same-store sales growth was positive in February and March following a challenging January.
Event Revenue Growth: Event revenue increased by 27% year-over-year in Q3 2024.
New Builds and Acquisitions: Bowlero opened Lucky Strike Miami and has four new builds planned in the next nine months.
Acquisition of Raging Waves: Acquired Raging Waves, the largest water park in Illinois, with significant upside potential.
Food and Beverage Initiatives: Revamping menus and improving training to enhance food and beverage sales.
Full Year Revenue Guidance: Full year guidance is adjusted to the low end of the previously disclosed range, implying double-digit revenue growth.
CapEx Guidance: Growth CapEx is $13 million, with $9 million for new builds and $7 million for maintenance.
M&A Spend Guidance: M&A spend increased to $220 million from $190 million.
New Builds CapEx Guidance: New builds CapEx adjusted to $45 million from $40 million.
Liquidity Position: Liquidity at the end of the quarter was $437 million, with $212 million in cash.
Net Debt: Net debt stands at $943 million with a net leverage ratio of 2.4 times.
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Shareholder Return Plan
Shareholder Return Plan: Bowlero plans to balance investing in growth while rewarding shareholders. They have increased their M&A spend to $220 million from $190 million, indicating a focus on shareholder value through strategic acquisitions.
Capital Expenditures: In the quarter, Bowlero spent $13 million on growth CapEx, $9 million on new builds, and $7 million on maintenance. They also updated their capital guidance for the year, adjusting new builds CapEx to $45 million from $40 million.
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Key Q&A
Q:What drove the underperformance relative to the third quarter guidance?
A:It was entirely cost-related. We were aware of revenue trends but not fully clear on payroll costs and investments in amusements and PBA. January was our highest profit month, and a significant drawdown created uncertainty on costs.
Q:Can you help us think about what you paid for the acquisition outside of the bowling space and its EBITDA?
A:We won't disclose the exact purchase price, but it was commensurate with our previous bowling acquisitions. The waterpark has a lot of potential for EBITDA growth.
Q:What trends have you seen with walk-in retail traffic as the third quarter progressed?
A:We had a positive comp in February and March, and preliminary numbers show over 6% same-store sales growth in April. We're winning market share despite a tough environment.
Q:What is your confidence in sustaining positive low- to mid-singles from here?
A:It's hard to predict due to the short cycle of the business, but I expect low to mid-single digit same-store sales comps to sustain through the year.
Q:Can you walk through the drivers in the fourth quarter of the EBITDA margin expansion?
A:We expect EBITDA to expand with positive comps. Above a 2% comp, dollars flow through at 75-90%. We've taken costs out and are seeing strong performance.
Q:What is the mix between corporate and non-corporate events?
A:We've seen a pickup in corporates, birthday parties, and online events, with strong performance across the board.
Q:What has been the customer response to recent pricing changes?
A:We've seen positive reactions to price reductions, particularly in shoe pricing, and plan to increase food prices soon.
Q:What should we expect in terms of seasonality in Q4?
A:SG&A spend will continue to decrease, and payroll costs will drop by about 15% sequentially due to seasonality.
Q:What is the status of your repurchase plan?
A:We still have over $180 million remaining and would aggressively buy back stock if we see value.
Q:How do you see the split between buy versus build on the bowling center side?
A:We're seeing more attractive new build opportunities now, but we will remain opportunistic in capital allocation.
Q:What are your thoughts on the Raging Waves acquisition and its potential returns?
A:The returns from the waterpark acquisition could be better than bowling centers, and we see significant potential for EBITDA growth.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific purchase price of the acquisition outside of the bowling space, stating it was commensurate with previous acquisitions without providing exact figures. Additionally, they did not clarify the exact EBITDA contribution from the waterpark acquisition.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Capital
EEOC
Flags
PBA
Season Pass
Summer Season
TAM
benefit
beverage sale
case
change
end range
follow
gameplay
investment traffic
leaseback market
menu pricing
news
notice
order
package
park
partner
pas
pre
prize
purchase price
redemption
repeat visit
sale leaseback
seller
side
step
stock
term cost
traffic center
training
transaction
unit volume
viewer
waterpark
waterparks
window
yesterday
BOWL Transcript
Bowlero Corp. (BOWL) Q1 2025 Earnings Call Transcript
Unknown11-5
The earnings call summary presents mixed signals. Financial performance shows revenue and EBITDA growth, but with only slight same-store comp growth. The market strategy highlights expansion and new initiatives, yet competitive pressures and operational risks are concerns. No share repurchase program is noted. The Q&A reveals mixed analyst sentiment, with some positive insights on event bookings and mobile ordering but unclear management responses on certain issues. Considering the market cap and these factors, the stock price is likely to remain stable, leading to a neutral prediction.
Bowlero Corp. (BOWL) Q4 2024 Earnings Call Transcript
Positive9-6
The earnings call summary reflects strong financial performance with a 20.2% revenue increase, improved EBITDA, and strategic growth plans. The Q&A section provides insights into positive same-store sales, effective M&A strategy, and increased food and beverage sales. Despite some uncertainties in management's responses, the overall sentiment is positive, supported by strategic expansions and optimistic guidance. The company's market cap suggests a moderate reaction, leading to a predicted stock price movement in the positive range (2% to 8%).
Bowlero Corp. (BOWL) Q3 2024 Earnings Call Transcript
Positive5-6
The earnings call presents a positive outlook with strong revenue growth, strategic acquisitions, and a confident outlook on sustaining positive comps. Despite underperformance due to costs, management has outlined clear strategies for cost reduction and margin expansion. The acquisition of Raging Waves and increased share repurchase authorization are positive indicators. The Q&A section reveals management's confidence in sustaining growth and improving margins, despite some cost uncertainties. Given the market cap, the stock is likely to react positively, within the 2% to 8% range.
Bowlero Corp. (BOWL) Q2 2024 Earnings Call Transcript
Positive2-5
Bowlero's earnings call highlights strong financial performance, driven by acquisitions like Lucky Strike and robust liquidity. The Q&A section reveals confidence in meeting guidance despite weather impacts and successful strategies to improve margins and processes. Additionally, Bowlero's shareholder return plan, including dividends and share buybacks, and positive reception of new initiatives such as dynamic pricing and technology investments, indicate a positive outlook. While increased payroll costs impacted gross margins, the overall sentiment remains optimistic, suggesting a likely stock price increase in the coming weeks.
BOWL Report
Frequently Asked Questions
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
