Bowlero Corp. (BOWL) 2024 Q4 Earnings Call Summary

Optimistic Highlights

• Strong Financial Performance

Achieved 20.2% total growth and 6.9% same-store comp in Q4 2024, with adjusted EBITDA up 29% year-over-year.

• Successful Acquisitions and Expansions

Acquired Raging Waves water park, which saw double-digit revenue growth and identified significant capital deployment opportunities.

• New Center Openings

Four new centers under construction in prime locations, expected to open between September and November 2024.

• Positive Customer Engagement

Successful launch of summer season passes, driving traffic and customer satisfaction during slower months.

• Food and Beverage Enhancements

Rolled out new retail F&B menus across all locations, improving customer experience and increasing guest spend.

Pessimistic Highlights

• Cost Management Challenges

Food costs are a headwind that the company will need to manage in the upcoming year.

• PBA Losses

PBA continued to operate at a worse-than-expected loss.

• Seasonal Revenue Fluctuations

Revenue is significantly lower during the summer months compared to the holiday and winter periods.

• Insurance and Software Write-offs

Incurred a $2 million insurance true-up and $4 million in abandoned software development costs.

• Weather Dependency

Raging Waves' performance is highly dependent on weather conditions, which can impact revenue.

Company Outlook

• Positive Growth Projections

Projecting $520 million of four-wall EBITDA and more than $400 million of consolidated EBITDA for fiscal year 2025.

• Focus on Capital Deployment

Majority of focus on deploying capital into bowling through new builds, acquisitions, and upgrading centers.

• Expansion Beyond Bowling

Exploring opportunities in the broader location-based entertainment industry, leveraging the Bowlero operating philosophy.

• Financial Guidance

Guiding to total growth of mid-single digits to 10% in fiscal 2025, with EBITDA margins expected to be 32% to 34%.

• CapEx Plans

Reducing capital expenditure plans for FY '25 to $154 million, focusing on growth, new builds, maintenance, and rebranding.

Q & A Highlights

• Q: Fiscal Year '25 Same-Store Sales Cadence (Steve Wieczynski, Stifel)

A: Expecting positive comps throughout the year, with stronger relative performance in the third quarter due to New Year's and weak January last year. (Bobby Lavan)

• Q: M&A Focus and Allocation (Steve Wieczynski, Stifel)

A: Will pursue attractive bowling deals and new builds, with a strong pipeline of larger new builds. Also exploring opportunities in location-based entertainment. (Thomas Shannon)

• Q: Traffic and Same-Store Sales Inflection (Matthew Boss, JPMorgan)

A: Bowling is a resilient, high-margin business. Investments in facilities and management team drive outperformance. (Thomas Shannon)

• Q: EBITDA Margin Drivers (Matthew Boss, JPMorgan)

A: Focused on cost management, procurement, and leveraging acquisitions to drive earnings growth. (Bobby Lavan)

• Q: First Quarter Comp Expectations (Randy Konik, Jefferies)

A: Expecting low to mid-single-digit comps, with no M&A included in the guidance. (Bobby Lavan)

• Q: Season Pass Impact on F&B Sales (Randy Konik, Jefferies)

A: Season pass holders drive significant F&B and amusement sales, with new Fall Season Pass launching. (Lev Ekster)

• Q: Expansion of Lucky Strike Brand (Jason Tilchen, Canaccord Genuity)

A: Opening a flagship property in Beverly Hills, with more details to come. (Bobby Lavan)

• Q: Same-Store Sales Breakdown (Jason Tilchen, Canaccord Genuity)

A: Not assuming any pricing increases this year. (Bobby Lavan)

• Q: SG&A and Raging Waves Impact (Jeremy Hamblin, Craig-Hallum)

A: SG&A included $4 million in write-offs and deal costs. Raging Waves did not contribute to SG&A. (Bobby Lavan)

• Q: Pricing Strategy and Consumer Expectations (Jeremy Hamblin, Craig-Hallum)

A: Focus on driving F&B sales and leveraging season passes, with no need to discount or promote Saturdays. (Bobby Lavan)

• Q: Gross Margin Direction (Eric Handler, ROTH Capital)

A: Gross margin up 200 basis points ex-D&A, with a focus on four-wall reporting going forward. (Bobby Lavan)

• Q: First Quarter Performance (Eric Handler, ROTH Capital)

A: Positive same-store comps through the first two periods of the fiscal year, with expanding operating margins. (Thomas Shannon)

• Q: Same-Store Revenue Growth Drivers (Michael Kupinski, NOBLE Capital Markets)

A: Overweighted to higher-end consumers, strong event business, and operational refinements driving growth. (Thomas Shannon)

• Q: Raging Waves Performance (Michael Kupinski, NOBLE Capital Markets)

A: Despite mild summer, achieved double-digit revenue growth through season pass sales and liquor license. (Thomas Shannon)

• Q: Same-Store Sales and Per-Person Spend (Eric Wold, B. Riley Securities)

A: Focus on event growth and online business driving higher per cap, with no need for price increases. (Bobby Lavan)

• Q: M&A and Free Cash Flow Expectations (Daniel Moore, CJS Securities)

A: Active M&A environment with increased revolver capacity, expecting working capital improvements. (Bobby Lavan)