Bowlero Corp
For the period ended Sep 29, 2024. Filed Nov 4, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 29, 2024 · Filed Nov 4, 2024
LUCK$3.80+1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-06.
0001628280-24-020461
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-29; filed 2024-11-04.
0001628280-24-044992
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 77 previous paragraphs and 65 current paragraphs.
38 unchanged; 15 reworded; 11 added; 11 removed; 13 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Bowlero’s results for the three months ended September 29, 2024 exhibited the expected total revenue growth and shift of focus to internal initiatives while also increasing liquidity in anticipation of what we believe will be an increased acquisition environment during the 2025 fiscal year to further diversify our location based entertainment offerings. To highlight the Company’s recent activity during the three months ended September 29, 2024:
Current report
•We reported total revenue growth of 14%, which was propelled by our successful Summer Pass promotion.
Current report
•We rolled out our enhanced food and beverage menus across our traditional locations all the way up to our premier locations.
Current report
•We increased our revolver commitment to $335,000 from $285,000.
Current report
•We continued progress on new build-outs with four in prime markets expected to open during the second quarter.
Current report
Location operating costs: Location operating costs primarily consist of rent, utilities, insurance, repairs & maintenance, property taxes, supplies, marketing, and other costs associated with Company locations. Location operating costs include both fixed and variable components and therefore do not directly correlate with revenue.
Current report
Location payroll and benefit costs: Location payroll and benefits costs consist of employee costs that directly support location operations. Location payroll and benefits costs increased $4,382, or 7%. The increase in location payroll and benefits reflects the additional staffing to support our added locations since late first quarter of fiscal 2024. Location payroll and benefits as a percent of revenues decreased from 28% during the first quarter of fiscal 2024 to 26% during the first quarter of fiscal 2025 due to efforts to optimize staffing levels at locations.
Current report
Location food & beverage costs: Location food & beverage costs increased $3,845, or 23%. The increase in location food & beverage costs is mainly attributable to increased sales volume. Location food & beverage costs as a percent of revenues increased from 7% during the first quarter of fiscal 2024 to 8% during the first quarter of fiscal 2025, due to the rollout of our new premium food and beverage options at our locations and an overall increase in food prices due to inflation.
Current report
Selling, general and administrative expenses (“SG&A”): SG&A expenses decreased $3,313 or 9%. The decrease is mainly attributable to a decrease in professional fees, which was partially offset by an increase in share-based compensation expense. The decrease in professional fees is mainly attributable to less acquisition activity as compared to the first quarter of fiscal 2024. The increase in share-based compensation expense is mainly attributable to less forfeiture activity as compared to the first quarter of fiscal 2024 coupled with other stock-based awards granted during the first quarter of fiscal 2025.
Current report
Depreciation and amortization: Depreciation and amortization increased $5,631 or 18%. The increase in depreciation and amortization reflects the added depreciable assets, finite-lived intangible assets, and finance leases through acquisitions and capital expenditures since the first quarter of fiscal 2024.
Current report
Financing activities utilized $17,806, reflecting cash spent for the repurchase of treasury stock through our share repurchase program, cash dividends paid to shareholders and payments on financing leases and debt.
Removed paragraphs (11)
Previous report
Bowlero’s results for the nine months ended March 31, 2024 exhibited the planned fiscal year 2024 reinvestment in the business through acquisitions, new builds, and conversions. To highlight the Company’s recent activity during the nine months ended March 31, 2024:
Previous report
•We completed six acquisitions in which we acquired 20 locations during the nine months ended March 31, 2024.
Previous report
•We completed and opened three new build-outs during the nine months ended March 31, 2024 and have a total of six signed agreements for build-outs in prime markets.
Previous report
•We entered into a transaction with VICI Properties Inc. (“VICI”) relating to the transfer of land and real estate assets of 38 locations for an aggregate value of $432,900 providing a source of liquidity to accelerate new builds, deploy capital into acquisitions and conversions, return value to shareholders, pay down debt, and for general corporate purposes.
Previous report
Selling, general and administrative expenses (“SG&A”): SG&A expenses increased $3,597 or 10%. The increase is mainly attributable to our investment in the field management and event sales teams to support the growing business, which was partially offset by reductions in corporate staff. The increase is also attributable to the increase in revenues as compared to the same period last fiscal year. This is illustrated by the relatively consistent percent of revenues as compared to the same period last fiscal year.
Previous report
Other expense: Other expenses include various cost related to transactions that do not represent ongoing or frequently recurring activities as part of the Company’s operations. Other expense decreased $5,983. The third quarter of fiscal 2023 included a refinancing of our Term Loan for which $5,342 in related costs were expensed. There has been no such transaction in fiscal 2024.
Previous report
Nine Months Ended March 31, 2024 Compared to the Nine Months Ended April 2, 2023
Previous report
Selling, general and administrative expenses (“SG&A”): SG&A expenses increased $11,928 or 12%. The increase is mainly attributable to our investment in the field management and event sales teams to support the growing business, which was partially offset by reductions in corporate staff and lower share-based compensation expense due to forfeitures. There have also been increases in professional fees attributable to the heightened acquisition activity and scale of acquisitions as compared to the same period of last fiscal year. In addition to acquisition activity, the increase in professional fees is driven by legal costs related to advisory items. The increase is also attributable to the increase in revenues as compared to the same period last fiscal year. This is illustrated by the consistent percent of revenues of 13% as compared to the same period last fiscal year.
Previous report
Other expense: Other expenses include various cost related to transactions that do not represent ongoing or frequently recurring activities as part of the Company’s operations. Other expense decreased $5,290. The third quarter of fiscal 2023 included a refinancing of our Term Loan for which $5,342 in related costs were expensed. There has been no such transaction in fiscal 2024.
Previous report
Nine Months Ended March 31, 2024 Compared To the Nine Months Ended April 2, 2023
Previous report
Financing activities generated $154,287, reflecting proceeds from our transaction with VICI of $408,510, partially offset by $219,412 for the repurchase of treasury stock through our share repurchase program.
Reworded paragraphs (15)
Previous wording
Bowlero Corp. is one of the world’s premier operators of location-based entertainment. The Company operates traditional bowling locations and more upscale entertainment concepts with lounge seating, arcades, enhanced food and beverage offerings, and more robust customer service for individuals and group events, as well as hosting and overseeing professional and non-professional bowling tournaments and related broadcasting.
Current wording
Bowlero Corp. is one of the world’s premier operators of location-based entertainment. The Company operates traditional bowling locations and more upscale entertainment concepts with lounge seating, arcades, enhanced food and beverage offerings, and more robust customer service for individuals and group events, as well as hosting and overseeing professional and non-professional bowling tournaments and related broadcasting. The Company also operates other forms of location-based entertainment, such as Octane Raceway and Raging Waves water park.
Previous wording
Analysis of Consolidated Statement of Operations. The following table displays certain items from our consolidated statements of operations for the quarters presented below:
Current wording
Analysis of Consolidated Statement of Operations. The following table displays certain items from our condensed consolidated statements of operations for the quarters presented below:
Previous wording
Revenues: For the quarter ended March 31, 2024, revenues totaled $337,670 and represented an increase of $21,945, or 7%, over the same period of last fiscal year. The increase in revenues is primarily attributable to revenue from newly acquired or leased locations and group event business, which was partially offset by a decrease in service fee revenue and a slight decrease in revenues on a same-store basis.
Current wording
Revenues: For the quarter ended September 29, 2024, revenues totaled $260,195 and represented an increase of $32,790, or 14%, over the same period of last fiscal year. The increase in revenues is primarily attributable to revenue from newly acquired or leased locations and a slight increase in revenues on a same-store basis, which was slightly offset by a decrease in service fee revenue.
Previous wording
(1) Revenues from 322 locations are included in the same-store comparable location base for the comparison in the above table. In our previously filed 10-Q for the three months ended April 2, 2023, revenues from 310 locations were included in the same-store revenue.
Current wording
(1) Revenues from 327 locations are included in the same-store comparable location base for the comparison in the above table. In our previously filed 10-Q for the three months ended October 1, 2023, revenues from 312 locations were included in the same-store revenue.
Previous wording
Same-store revenues includes revenue from locations that are open in periods presented (open in both the current period and the prior period being reported) and excludes revenues from locations that are not open in periods presented such as acquired new locations or locations closed for upgrades, renovations or other such reasons, as well as media revenues and service fee revenues. The decrease in same-store revenues during the quarter ended March 31, 2024 reflects, among other factors, adverse weather conditions in January that led to a reduction in foot traffic, a decrease in amusement revenues, and an overall reduction in walk-in or retail business relative to the consumer environment during the same period of last fiscal year, which was partially offset by increased league and group event business.
Current wording
Same-store revenues includes revenue from locations that are open in periods presented (open in both the current period and the prior period being reported) and excludes revenues from locations that are not open in periods presented such as acquired new locations or locations closed for upgrades, renovations or other such reasons, as well as media revenues and service fee revenues. The slight increase in same-store revenues during the quarter ended September 29, 2024 was primarily attributable to the strong consumer response to our Summer Pass offering, which also contributed to increased Food & beverage and Amusement & other revenue.
Previous wording
Cost of Revenues: Cost of revenues increased $36,590, or 19%. Increases in costs were in most areas and include labor, supplies, repairs & maintenance, depreciation, rent, property taxes, and utilities. The increase in costs was mainly attributable to location count growth from acquisitions and lease agreements since the third quarter of fiscal 2023, which contributed approximately $31,000 to cost of revenues. This was coupled with the increased sales volume and higher costs due to inflation. For instance, the increase in labor costs reflects the additional staffing and higher pay rates to support the growing business. Furthermore, the increase in depreciation reflects the added depreciable assets through acquisitions and capital expenditures and the increase in rent primarily reflects the added operating leases from the Lucky Strike acquisition. Additionally, amusement costs increased as a result of a higher volume of redemption merchandise payouts as part of our effort to improve customer satisfaction. Cost of revenues as a percent of revenues increased from 60% during the third quarter of fiscal 2023 to 67% during the third quarter of fiscal 2024, mainly due to the aforementioned costs increasing at a faster rate than revenues.
Current wording
Location operating costs increased $12,855, or 18%. Increases in costs were in most areas and include supplies, repairs & maintenance, rent, property taxes, and utilities. The increase in costs was mainly attributable to location count growth from acquisitions and lease agreements since late first quarter of fiscal 2024. For instance, the increase in rent primarily reflects the added operating leases from the Lucky Strike acquisition, which was a late first quarter of fiscal 2024 acquisition. Additionally, amusement costs increased as a result of a higher volume of redemption merchandise payouts as part of our effort to improve customer satisfaction. Location operating costs as a percent of revenues increased from 32% during the first quarter of fiscal 2024 to 33% during the first quarter of fiscal 2025, mainly due to the aforementioned costs increasing at a faster rate than revenues.
Previous wording
Interest expense, net: Interest expense primarily relates to interest on debt, finance leases, and financing obligations. Interest expense increased $17,773, or 61%, to $46,890. The higher interest expense is primarily the result of higher interest rates and our increased debt, financing obligations, and finance leases as compared to the same period last fiscal year.
Current wording
Interest expense, net: Interest expense primarily relates to interest on debt, finance leases, and financing obligations. Interest expense increased $11,221, or 30%, to $48,670. The higher interest expense is primarily the result of an added financing obligation since the first quarter of fiscal 2024.
Previous wording
Income Taxes: Income tax expense and deferred tax assets and liabilities reflect management’s assessment of the Company’s tax position. The effective tax rate of 27.7% for the quarter ended March 31, 2024 was primarily attributed to the change in fair value of the earnout liability, permanent differences, and items associated with the VICI Transaction, which are treated as discrete tax items.
Current wording
Income Taxes: Income tax expense and deferred tax assets and liabilities reflect management’s assessment of the Company’s tax position. The effective tax rate of 75% for the quarter ended September 29, 2024 was primarily attributed to the change in fair value of the earnout liability, permanent differences, and other discrete tax items.
Previous wording
The following table provides a reconciliation from net income (loss) to Adjusted EBITDA for each reporting period:
Current wording
The following table provides a reconciliation from net income to Adjusted EBITDA for each reporting period:
Previous wording
(2)The adjustment for transaction costs and other advisory costs is to remove charges incurred in connection with any transaction, including mergers, acquisitions, refinancing, amendment or modification to indebtedness, dispositions and costs in connection with an initial public offering, in each case, regardless of whether consummated. Certain prior year amounts have been reclassified to conform to current year presentation.
Current wording
(2)The adjustment for transaction costs and other advisory costs is to remove charges incurred in connection with any transaction, including mergers, acquisitions, refinancing, amendment or modification to indebtedness, dispositions and costs in connection with an initial public offering, in each case, regardless of whether consummated.
Previous wording
At March 31, 2024, we had approximately $212,429 of available cash and cash equivalents.
Current wording
At September 29, 2024, we had approximately $38,448 of available cash and cash equivalents.
Previous wording
The following compares the primary categories of the consolidated statements of cash flows for the period ended March 31, 2024 and April 2, 2023:
Current wording
The following compares the primary categories of the condensed consolidated statements of cash flows for the period ended September 29, 2024 and October 1, 2023:
Previous wording
During nine months ended March 31, 2024, net cash provided from operations totaled $148,098, as compared to $208,802 during the same period of the prior fiscal year. The decrease in cash provided by operating activities primarily reflects higher cost of revenues and an increase in interest expense.
Current wording
During three months ended September 29, 2024, net cash provided from operations totaled $29,413, as compared to $16,083 during the same period of the prior fiscal year. The increase in cash provided by operating activities primarily reflects higher revenues coupled with the timing of cash rent payments and lease incentive receipts partially offset by an increase in interest expense.
Previous wording
Investing activities utilized $285,960, reflecting our acquisitions and capital expenditures, as well as location conversions and related capital expenditures. The higher level of cash used in investing activities during the period mainly reflects the acquisition of Lucky Strike, which had a larger purchase price as compared to the locations acquired during the same period of the prior fiscal year. We expect to continue to invest in accretive acquisitions in future periods as well as location upgrades and conversions.
Current wording
Investing activities utilized $39,924, reflecting our capital expenditures, as well as location conversions and related capital expenditures. The higher level of cash used in investing activities during the prior period mainly reflects the heightened acquisition activity. We expect to continue to invest in accretive acquisitions in future periods as well as location upgrades and conversions.
Previous wording
For a description of recently issued Financial Accounting Standards that we adopted during the quarter ended March 31, 2024 and, that are applicable to us and likely to have material effect on our consolidated financial statements, but have not yet been adopted, see Note 1 -Description of Business and Significant Accounting Policies of the notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Current wording
See Note 1 -Description of Business and Significant Accounting Policies of the notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for information regarding new accounting pronouncements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Three Months Ended September 29, 2024 Compared To the Three Months Ended October 1, 2023
Rearranged previous paragraphs (13)
Previous report — wording carried elsewhere
Analysis of Consolidated Statement of Operations. The following table displays certain items from our consolidated statements of operations for the quarters presented below:
Previous report — wording carried elsewhere
(1) Percent calculated as a percentage of revenues and may not total due to rounding.
Previous report — wording carried elsewhere
*Represents a change equal to or in excess of 100% or one that is not meaningful.
Previous report — wording carried elsewhere
Revenues: For the nine months ended March 31, 2024, revenues totaled $870,746 and represented an increase of $51,376, or 6%, over the same period of last fiscal year. The increase in revenues is primarily attributable to revenue from newly acquired or leased locations and group event business, which was partially offset by a decrease in service fee revenue and a slight decrease in revenues on a same-store basis.
Previous report — wording carried elsewhere
The following table summarizes our revenues on a same-store-basis for the nine months ended March 31, 2024 as compared to the corresponding period last fiscal year:
Previous report — wording carried elsewhere
(1) Revenues from 311 locations are included in the same-store comparable location base for the comparison in the above table. In our previously filed 10-Q for the nine months ended April 2, 2023, revenues from 288 locations were included in the same-store revenue.
Previous report — wording carried elsewhere
(2) Service fee revenue is a mandatory gratuity passed through to the employee, which is a non-contributor to earnings and is being phased out across our locations.
Previous report — wording carried elsewhere
Same-store revenues includes revenue from locations that are open in periods presented (open in both the current period and the prior period being reported) and excludes revenues from locations that are not open in periods presented such as acquired new locations or locations closed for upgrades, renovations or other such reasons, as well as media revenues and service fee revenues. The decrease in same-store revenues during the nine months ended March 31, 2024 reflects, among other factors, adverse weather conditions in January that led to a reduction in foot traffic, a decrease in amusement revenues, and an overall reduction in walk-in or retail business relative to the consumer environment during the same period of last fiscal year, which was partially offset by increased league and group event business.
Previous report — wording carried elsewhere
Cost of Revenues: Cost of revenues increased $89,693, or 17%. Increases in costs were in most areas and include labor, supplies, repairs & maintenance, depreciation, rent, property taxes, and utilities. The increase in costs was mainly attributable to location count growth from acquisitions and lease agreements since the third quarter of fiscal 2023, which contributed approximately $88,000 to cost of revenues. This was coupled with the increased sales volume and higher costs due to inflation. For instance, the increase in labor costs reflects the additional staffing and higher pay rates to support the growing business. Furthermore, the increase in depreciation reflects the added depreciable assets through acquisitions and capital expenditures and the increase in rent primarily reflects the added operating leases from the Lucky Strike acquisition. Additionally, amusement costs increased as a result of a higher volume of redemption merchandise payouts as part of our effort to improve customer satisfaction. Cost of revenues as a percent of revenues increased from 65% during the third quarter of fiscal 2023 to 72% during the third quarter of fiscal 2024, mainly due to the aforementioned costs increasing at a faster rate than revenues.
Previous report — wording carried elsewhere
Other operating expense: Other operating expense increased $2,546 mainly due to the approximately $2,600 in costs associated with obtaining an equity method investment in a subsidiary of VICI.
Previous report — wording carried elsewhere
Interest expense, net: Interest expense primarily relates to interest on debt, finance leases, and financing obligations. Interest expense increased $50,509, or 63%, to $130,575. The higher interest expense is primarily the result of higher interest rates and our increased debt, financing obligations, and finance leases as compared to the same period last fiscal year.
Previous report — wording carried elsewhere
Change in fair value of earnouts: The impact on the statement of operations during nine months ended March 31, 2024, is due to the increase in the fair value of the earnouts, which mainly reflects the increase in the Company’s stock price during the period.
Previous report — wording carried elsewhere
Income Taxes: Income tax benefit and deferred tax assets and liabilities reflect management’s assessment of the Company’s tax position. The effective tax rate of (10.7)% for the nine months ended March 31, 2024 was primarily attributed to the change in fair value of the earnout liability, and permanent differences, and items associated with the VICI Transaction, which are treated as discrete tax items.