Release Date: September 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bowlero Corp (BOWL, Financial) reported a positive 6.9% same-store comp and nearly 20% revenue growth for the most recent quarter.
- The company has successfully integrated multiple acquisitions, including AMF, Brunswick Corporation, Bowl America, and Lucky Strike, enhancing its market presence.
- Bowlero Corp (BOWL) achieved an adjusted EBITDA of $83.4 million, up 29% year-over-year.
- The company is expanding its footprint with new centers in prime locations such as Beverly Hills and Denver, expected to open between September and November.
- The acquisition of Raging Waves water park has shown promising results, with double-digit revenue growth and significant capital deployment opportunities identified.
Negative Points
- Food costs are a headwind that Bowlero Corp (BOWL) will need to manage through in the upcoming year.
- The PBA segment continued to operate at a worse-than-expected loss.
- The company had a $2 million insurance true-up in the quarter, impacting financial results.
- Despite positive same-store comps, the week of July 4 was a slow start to the year due to the holiday falling on a Thursday.
- Bowlero Corp (BOWL) is not assuming any pricing increases for fiscal year 2025, which may limit revenue growth potential.
Q & A Highlights
Q: As we think about fiscal year '25 and your expectation for low to mid-single-digit same-store sales comps, is there a way to help us think about maybe the cadence of how the quarters might look or any headwinds or tailwinds that could impact those?
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. - Robert Lavan, Chief Financial Officer
Q: It seems like you've been pleased with the acquisitions outside of the bowling arena. Is there any way to help us think about as you go down that M&A path, will it be more allocated towards traditional bowling, or do you think that mix will shift more towards non-bowling amenities?
A: We will do every attractive bowling deal we can, whether it's a new build or acquisition. We're about to open four new centers in marquee locations. The pipeline for new builds is very strong with about a dozen deals percolating. We're also pleased with the results from Raging Waves and will continue to look at opportunities within location-based entertainment. - Thomas Shannon, CEO
Q: Could you elaborate on the inflection in traffic and same-store sales that you saw as the fourth quarter progressed and what you've seen so far in the first quarter?
A: Bowling is a very good enduring business. We've built best-in-class centers that are easily accessible and offer great value. Our data-driven, results-oriented culture also contributes to our wide outperformance versus peers. - Thomas Shannon, CEO
Q: Any puts and takes to consider as it relates to EBITDA margin this year embedded within the FY25 outlook?
A: We are always focused on costs. We have hired a procurement team and as the comp goes up and acquisitions roll through, we continue to manage costs at the centers, which will drive earnings leverage. - Robert Lavan, CFO
Q: Any thoughts on how we should be thinking about the low to mid-single-digit comp as it relates to the first quarter? Does the annual guide include any M&A?
A: The guidance does not include M&A but does include new builds. M&A could drive us to the higher end of the guidance. From a cadence perspective, we expect to stay in the low to mid-single digits throughout the year. - Robert Lavan, CFO
Q: Have you looked at the lift from food and beverage of Season Pass redemption people versus those that visit not on the pass?
A: The attachment across our amusements business was significant thanks to the pass. Food and beverage sales were up, and the consumer is clearly loving the pass and the product we deliver. - Lev Ekster, President
Q: Can you share more about the strategy to expand the Lucky Strike brand?
A: We are opening a flagship property in Beverly Hills in the next few months and will provide more details about leaning into the brand then. - Robert Lavan, CFO
Q: Can you talk about the gross margin direction for fiscal '25?
A: We will not be reporting gross margins starting in the first quarter. Excluding depreciation and amortization, gross margin was up 200 basis points. - Robert Lavan, CFO
Q: Can you give more color on what you're seeing that is allowing same-store revenue growth despite macroeconomic trends?
A: We are overweighted towards higher-end consumers and have strong event sales. Our operational refinements and high-quality product contribute to our success. - Thomas Shannon, CEO
Q: How do you plan to offset any input or labor cost inflation without taking price?
A: We have other levers to play, including rebuilding procurement and systems to manage costs effectively. - Robert Lavan, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
