Bowlero Corp. (BOWL) Q4 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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%).
Key Financial Performance
Total Revenue $283 million, up 20.2% year-over-year from $235 million, driven by positive same-store comps and increased customer traffic.
Adjusted EBITDA $83.4 million, up 29% year-over-year from $64.5 million, attributed to positive comps and operational leverage.
Same-store Comp Growth Positive 6.9%, reflecting strong performance across April, May, and June.
Capital Expenditures (CapEx) FY '24 $193 million, with a planned reduction to $154 million for FY '25, focusing on growth and maintenance.
Net Debt $1.1 billion, with a bank credit facility net leverage ratio of 2.6.
Liquidity $386 million at the end of the quarter, with nothing drawn on the revolver and $67 million of cash.
Raging Waves Contribution $3.5 million of revenue and $2 million of EBITDA in June, indicating strong performance despite a mild summer.
Event Sales $275 million in the last fiscal year, expected to exceed $300 million in the current fiscal year.
Food and Beverage Revenue Growth Food and beverage revenue was up greater than bowling revenue this summer, indicating successful menu upgrades and increased customer spend.
Insurance True-up $2 million insurance true-up included in the quarter's financials.
Non-comp Centers EBITDA Contribution $9 million of EBITDA on approximately $32 million of revenue from non-comp centers.
Season Pass Sales $8.5 million in sales, with 1.6 million redemptions, indicating strong customer engagement and satisfaction.
CapEx Allocation for FY '25 $154 million total, including $50 million for growth, $45 million for new builds, $44 million for maintenance, and $15 million for rebranding Bowlero Centers to Lucky Strike.
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Operating Highlights
New Food & Beverage Menus: All locations will feature a new menu by the end of the month, enhancing guest experience with better presentation and offerings.
Season Passes: Launched a Summer Season Pass, generating over $8.5 million in sales and 1.6 million redemptions, driving traffic during slower months.
Lucky Strike Brand Expansion: New logo introduced, with three new locations opening soon in Denver and Beverly Hills.
Acquisition of Raging Waves Water Park: Acquired in May 2024, contributing $3.5 million in revenue and $2 million in EBITDA in June, with significant growth opportunities identified.
New Center Openings: Four new centers under construction in prime locations, expected to open between September and November 2024.
Operational Efficiencies: Implemented tablet systems for servers to improve service efficiency and guest experience.
Cost Management: Maintained flat payroll costs year-over-year while managing food costs as a headwind.
Focus on Location-Based Entertainment: Expanding beyond bowling with acquisitions like Raging Waves, while maintaining a strong focus on bowling operations.
Capital Expenditure Plans: Reduced FY '25 CapEx to $154 million, focusing on growth and maintenance while balancing shareholder returns.
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Risk or Challenges
Competitive Pressures: Bowlero is facing competitive pressures from other entertainment businesses, which may impact pricing strategies and customer traffic. The company is focusing on enhancing customer experience and value propositions to maintain its market position.
Regulatory Issues: No specific regulatory issues were mentioned, but the company acknowledges inherent risks and uncertainties that could affect future performance.
Supply Chain Challenges: Food costs are identified as a headwind that Bowlero will manage in the upcoming year, indicating potential supply chain challenges.
Economic Factors: There are concerns in the market regarding consumer weakness, although Bowlero has not yet seen signs of this affecting their performance.
M&A Environment: The M&A environment remains active, and Bowlero is preparing for increased M&A activity, which could impact capital allocation and financial performance.
Seasonality Risks: Bowlero's performance is subject to seasonal fluctuations, with slower months in summer and potential impacts from weather conditions affecting attendance.
Labor Costs: The company is managing labor costs while maintaining service quality, which could be a challenge in the face of rising labor costs.
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Guidance & Outlook
Acquisitions and Capital Expenditures: Bowlero has spent over $2 billion on acquisitions and capital expenditures over the past 27 years, with a projection of $520 million of four-wall EBITDA and more than $400 million of consolidated EBITDA for fiscal year '25.
New Center Openings: Bowlero is currently constructing four new centers in Beverly Hills, California; Denver Ranch, California; North Field in Denver; and South Lands in Denver, expected to open between September and November 2024.
Expansion into Non-Bowling: In May 2024, Bowlero acquired Raging Waves, a large water park in Yorkville, Illinois, indicating a strategy to expand beyond bowling into broader location-based entertainment.
Season Pass Initiative: Bowlero launched a Summer Season Pass, generating over $8.5 million in sales, which significantly increased customer traffic and satisfaction.
Food and Beverage Strategy: Bowlero is focusing on enhancing food and beverage sales with new menus and improved service efficiency, aiming to increase customer spend.
Fiscal Year 2025 Revenue Growth: Bowlero expects total growth of mid-single digits to 10% in fiscal 2025, including low to mid-single-digit same-store sales comp.
EBITDA Margin Guidance: EBITDA margins are projected to be between 32% to 34% for fiscal year 2025.
Capital Expenditures for FY '25: Bowlero plans to reduce capital expenditures to $154 million for FY '25, with allocations for growth, new builds, maintenance, and rebranding.
M&A Outlook: Bowlero has increased its revolver capacity to $335 million in anticipation of an active M&A environment, indicating potential for further acquisitions.
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Shareholder Return Plan
Shareholder Return Plan: Bowlero plans to balance investing in growth and rewarding shareholders. They have increased their revolver capacity to $335 million in anticipation of an increased M&A environment, indicating a focus on strategic acquisitions that could enhance shareholder value.
Capital Expenditures: For FY '25, Bowlero plans a total CapEx spend of $154 million, which includes $50 million for growth, $45 million for new builds, and $15 million allocated for rebranding Bowlero Centers to Lucky Strike.
M&A Strategy: Bowlero is actively looking for M&A opportunities in the location-based entertainment sector, with a focus on deals that provide strong returns on investment. They have raised their revolver capacity to facilitate potential acquisitions.
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Key Q&A
Q:Bobby, as we think about fiscal year '25 and your expectation for low to mid-single-digit same-store sales comps, can you help us think about the cadence of how the quarters might look?
A:The only thing I would direct you to is New Year's does fall in the third quarter, and January last year was extremely weak from weather. So, I would expect stronger relative performance in the third quarter. But generally, we're expecting positive comps throughout the year.
Q:Tom, can you help us think about the M&A path? Will it be more allocated towards traditional bowling or do you think that mix starts to shift towards non-bowling amenities?
A:We won't do every attractive bowling deal we can do. We're about to open four new centers in marquee locations. The pipeline for new builds is very strong after that with about a dozen deals percolating. We're casting a wider net now, but it's really dependent upon the deals and the returns.
Q:Tom, could you speak on the inflection in traffic in same-store sales that you saw as the fourth quarter progressed?
A:Bowling is a very good enduring business. We've spent a lot of money to build really wonderful centers that are easily accessible and still a very good value. The fundamentals of bowling get overlooked. We're committed to it, and we have the best management team.
Q:Bobby, any puts and takes to consider as it relates to EBITDA margin this year embedded within the FY '25 outlook?
A:We're always going to be focused on costs. We have hired a procurement team. As the comp goes up and acquisitions roll through, that's where you'll see the earnings levers.
Q:Bobby, how should we think about the low to mid-single-digit comp as it relates to the first quarter?
A:It does not include M&A. It does include the new build. So, M&A could drive you to the higher end of the guidance.
Q:Lev, have you looked at what the lift was from food and beverage of season pass redemption people that visited on the pass versus those that visit not on the pass?
A:Food and beverage sales were up. The amount of visits we got out of it was pretty obvious. Overall, the consumer is quite clearly telling us that they're loving the pass.
Q:Bobby, can we talk about the gross margin? How do we think about the direction for gross margin in fiscal '25?
A:We're not going to be reporting gross margins starting in the first quarter. If you look ex D&A, gross margin was up 200 basis points.
Q:Can you talk about what you saw in July and August?
A:We are positive on a same-store basis through the first two periods of the fiscal year, and we're seeing expanding operating margins.
Q:Can you give a little bit more color on what you're seeing that is allowing same-store revenue growth in spite of macroeconomic trends?
A:We're very overweighted from a revenue standpoint towards the higher-end consumer. Our event business is strong, and we're focused on offering value to the value-oriented customer.
Q:Bobby, within the same-store sales guidance, how much is attendance and how much is per-person spend?
A:Event growth comes in at least a 20% higher per cap than retail walk-in. Our online business is up 30%, 40%.
Q:Bobby, is there a range of M&A you're targeting this year?
A:The range is wide because there's a lot out there to do. We're expecting that there's an opportunity out there.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer when asked about the specifics of the same-store sales cadence for the first quarter and how it might impact the second quarter. Additionally, there was a lack of clarity regarding the specific breakdown of same-store sales guidance between attendance and per-person spend.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AMF
Beverly Hills
COVID
Chicago
DA
Denver
FY
Food
Illinois
Pinstripes
ROTH Capital
SGA
Waves
acquisition center
acre
afternoon
area
beverage sale
business
capacity
capital expenditure
customer satisfaction
date
effect
efficiency
location entertainment
menu
money
party
premier
procurement
product
redemption
season pas
standard
success
thought
upside
wall
water park
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.
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