Bowlero Corp. (BOWL) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Total Revenue $260 million, up 15% year-over-year from $226 million. The increase is attributed to operational excellence and investments leading to a growth in customer wallets.
Adjusted EBITDA $62.9 million, up 21% year-over-year from $52.1 million. The margin expanded to 24.2%, an increase of 130 basis points, driven by effective cost management and payroll optimization.
Same-store Comp Revenue Growth 0.4% year-over-year. The growth was impacted by weather events, including two hurricanes, which cost approximately $2 million.
Capital Expenditures $41 million in total, with $16 million for growth CapEx, $17 million for new builds, and $8 million for maintenance. The company is focused on optimizing capital spend.
Liquidity $355 million at the end of the quarter, with no amounts drawn on a revolver and $38 million in cash.
Net Debt $1.1 billion, with a bank credit facility net leverage ratio of 2.6 times.
Food and Beverage Sales Up 18% year-over-year, with a key KPI of retail F&B to bowling crossing $0.80 across the portfolio, indicating improved customer spending on food and beverage.
EBITDAR from Raging Waves Acquisition Expected to be $8 million in its first year under ownership, with double-digit revenue growth.
Boomers Acquisition EBITDA Expected to be negative until peak season starting in June, with an initial four-wall EBITDA of $9 million.
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Operating Highlights
New Menu Segments: Four new menu segments rolled out across all properties, including a new experiential craft menu.
Fall Season Pass: Launched the first-ever Fall Season Pass, which has shown encouraging results.
Lucky Strike Locations: Opened two Lucky Strike locations in Denver and plan to open Lucky Strike Beverly Hills, the first bowling alley in Beverly Hills in nearly a century.
Acquisition of Raging Waves: Acquired Raging Waves, the largest water park in Illinois for $49 million, with expected EBITDAR of $8 million in its first year.
Acquisition of Boomers: Acquired Boomers, which includes six family entertainment locations and two water parks, with expected meaningful upside.
Acquisition of Spectrum Entertainment Complex: Closed on the acquisition of Spectrum Entertainment Complex in Grand Rapids, Michigan, which will be the sixth location in Michigan.
Food and Beverage Sales Growth: Food and beverage sales increased by 18% year-over-year.
Mobile Ordering Implementation: Enabled mobile ordering across all properties to enhance labor efficiencies and guest satisfaction.
Chief Procurement Officer: Hired a Chief Procurement Officer to drive efficiencies and manage inflation.
Focus on M&A: The current macro environment presents increasing opportunities for M&A, with a focus on deploying capital accretively.
Data-Driven Organization: Transitioning to a data-driven organization with expanded use of Power BI for daily sales tracking.
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Risk or Challenges
Weather Impact: The company faced a $2 million loss in revenue due to two hurricanes impacting operations at the end of September, which is expected to affect October results as well.
Food Costs: Food costs presented a headwind in the quarter, although they have recently improved.
Acquisition Risks: The Boomers acquisition is expected to contribute negative EBITDA until peak season starts in June, indicating potential short-term financial strain.
Economic Uncertainty: There is some softness in corporate bookings due to uncertainty surrounding the upcoming election, which may impact overall consumer spending.
Supply Chain Challenges: Managing inflation and food costs is a core responsibility, with chicken prices alone causing a $6 million headwind last year.
M&A Environment: While the M&A market is currently seen as opportunistic, the company must navigate the risks associated with integrating new acquisitions and ensuring they meet performance expectations.
Seasonal Revenue Fluctuations: The company anticipates a drag on EBITDA from Boomers and Raging Waves during the off-peak months, which could impact overall financial performance.
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Guidance & Outlook
Acquisitions: Acquired Raging Waves for $49 million, expecting $8 million EBITDAR in the first year. Acquired Boomers with $9 million four-wall EBITDA, anticipating significant operational upside.
New Locations: Opened two Lucky Strike locations in Denver and planning to open Lucky Strike Beverly Hills and Lucky Strike Ladera Ranch.
Data-Driven Initiatives: Increased use of data analytics for operational efficiency, including hiring a Chief Procurement Officer to manage costs.
Food and Beverage Strategy: F&B sales increased 18% year-over-year, with new menu segments and mobile ordering to enhance customer experience.
Revenue Guidance: Increased FY 2025 revenue guidance by $10 million, now expecting total revenue of approximately $270 million.
EBITDA Guidance: Expecting Boomers and Raging Waves to contribute negatively to EBITDA until peak season in June.
Capital Expenditures: Spent $41 million in capital expenditures in Q1 2025, with $16 million for growth, $17 million for new builds, and $8 million for maintenance.
Debt and Liquidity: Net debt stands at $1.1 billion with a liquidity of $355 million.
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Shareholder Return Plan
Shareholder Return Plan: The company mentioned a dynamic approach to buybacks, indicating that they will continue to use buybacks and dividends to return value to shareholders. They are price sensitive regarding buybacks and will assess their relative performance.
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Key Q&A
Q:Could you elaborate on the cadence of same-center comps in the first quarter and trends you've seen in October maybe between walk-in and events?
A:End of September, we got hit with two hurricanes and that cost us about $2 million on the comp in the first quarter. We'll see the equivalent of that into October. October, the weather has not been great, but right now event is tracking plus 10% for P6.
Q:Can you discuss the drivers of first quarter EBITDA margin expansion and any notable call outs for the second quarter?
A:We're going to have the greatest margin expansion in the third quarter, with New Year's moving from the second quarter to the third quarter, which is a $5 million to $7 million swing in the comp.
Q:Does the same-store sales outlook still hold true? How should we think about the cadence of same-store sales over the next three quarters?
A:We haven't changed anything as it relates to our expectation on the comp. 1Q and 2Q are going to be low comps versus 3Q and 4Q which will be much stronger.
Q:Can you unpack how you are utilizing data differently now versus six, 12 months ago?
A:We’re becoming a data-driven organization. We started off with three Power BI subscriptions and now we have 350, allowing GMs and department leaders to hold themselves accountable to day-to-day data.
Q:What’s different about the Fall Pass versus Summer Pass?
A:The Fall Pass was launched in response to revenue softness, and we were encouraged by the results. We plan to lean into the summer season pass launch earlier next year.
Q:What are your thoughts on price versus volume going forward?
A:We’ve been able to take price on food, which has been a positive surprise, and we can augment that with food.
Q:Can you share the relative growth rates between walk-in and groups during the quarter?
A:Walk-in in the quarter was higher than events mainly because of the season pass.
Q:Can you provide more details on the Boomers acquisition?
A:The valuation was extremely attractive, and it had been deprived of capital for at least five years, allowing us to implement our events platform and procurement organization.
Q:Can you talk about the Lucky Strike assets over the last year?
A:11 of the 14 assets are outperforming, and we are targeting getting them to $30 million of EBITDA in the first two years.
Q:Are your recent new build openings profitable?
A:Every one of our centers is profitable, and our new builds are consistently doing 8-plus million on average.
Q:Can you provide color on event bookings for the holidays?
A:December is pacing up 10% year-over-year for a combination of corporates and adult à la carte.
Q:Are there opportunities to take advantage of seasonal opportunities with water parks?
A:The drag is mostly fixed, but we have a weather hedge with our centers in Chicago.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer when asked about the specific drag on EBITDA from Boomers and Raging Waves for the December and March quarters, only stating it would be a few million dollars without providing exact figures.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Beverly Hills
Boomers
Capital
Chief Procurement
Michigan
Pass
Power BI
Procurement Officer
Spectrum
ability
afternoon
alley Beverly
approach
beverage sale
bowling alley
buyback
cadence
cohort
core
craft
drag
efficiency
labor
location premium
margin expansion
mobile ordering
pas
portfolio
premium menu
program
scale
tablet
thing
utilization
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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