BOWL.WS Bowlero Corp

Bowlero Corp. (NYSE: BOWL) (“Bowlero” or the “Company”), the world’s largest owner and operator of bowling centers, today provided financial results for the 2022 fiscal year third quarter, which ended on March 27, 2022. Bowlero announced that it grew revenue in the quarter to nearly $258 million, driven by strong growth in both walk in retail and event revenue. Total revenue grew by 25.8% compared to pre-pandemic performance and by 129.8% on a year-over-year basis. Same-store sales rose by 12.2% relative to pre-pandemic.1  

“We are extremely pleased with our performance in the quarter. As our record quarterly generation of Revenue and Adjusted EBITDA demonstrate, Bowlero has never been stronger than it is today. We are more committed than ever to executing our growth strategy, and we are thrilled to continue to welcome our guests to a delightful experience,” said Tom Shannon, Founder and Chief Executive Officer.

Financial Summary

• Significant growth in Revenue during the quarter, totaling nearly $258 million, up 25.8% relative to pre-pandemic performance and 129.8% on a year-over-year basis; 12.2% on a same-store basis vs. pre-pandemic performance.1
• Net Loss for the quarter of $18.0 million was driven primarily by $66.6 million of non-cash expenses related to the increase in the value of earnouts and warrants, as well as $3.4 million in transactional expenses related to the business combination. Net Income, adjusted for these items was $52.0 million vs. a net loss of $23.1 million in the prior year.2
• Adjusted EBITDA for the quarter grew to $108.4 million, up 60.9% relative to pre-pandemic performance and 295.7% vs. prior year.2
• TTM Adjusted EBITDA of $276.3 million exceeded pre-pandemic performance by 58.9%.2
• TTM Net Loss of $50.3 million was driven primarily by expenses related to the successful de-SPAC transaction, which include $42.2 million in share based compensation and $32.5 million in transactional expenses, as well as $44.1 million of non-cash expenses related to the increase in the value of earnouts and warrants. TTM Net Income, adjusted for these items was $68.5 million.2
• Cash generated from Operations during the quarter was $83.6 million.

“We saw an acceleration of growth as the quarter progressed, driven by the waning impact of Omicron and COVID restrictions being eased,” said Brett Parker, President and CFO of Bowlero Corp. “In addition to continued strong growth in walk in retail revenue, we also saw growth in total event revenue for the first quarter since the onset of COVID. While growing revenue, we also expanded Adjusted EBITDA margin from the pre-COVID levels by 918 basis points. As a result, we posted our highest Revenue and Adjusted EBITDA generated in any quarter, as well as any nine month or TTM period in our history.”

Total Bowling Center Revenue Performance Trend3

Chart for Bowlero Corporation Revenue Performance Summary vs. Pre-COVID Performance:https://www.globenewswire.com/NewsRoom/AttachmentNg/3c14a746-9fd9-430a-ae09-5fc850a77e9b

* The revenue performance for the week ended 10/31/21 was negatively impacted by Halloween falling on the weekend.* The revenue performance for the week ended 12/26/21 was negatively impacted by Christmas Day falling on the weekend. * The revenue performance for the week ended 2/13/22 was negatively impacted by the shift in Super Bowl Sunday.      

____________1 Same-store sales are measured by comparing revenues for centers open for the entire duration of both the current and comparable measurement periods. The pre-pandemic comparable period for current quarter is the quarter ended March 31, 2019. 2 "GAAP" stands for Generally Accepted Accounting Principles in the U.S. Please see the sections of this document titled "GAAP Financial Information" and "GAAP to non-GAAP Reconciliations" for more information on the Company's GAAP and non-GAAP measures. Certain figures in the tables throughout this document may not foot due to rounding.3 Total Bowling Center Revenue excludes closed bowling center activity and media revenue, which is also a component of our bowling operations. For weeks between 9/5/21 and 12/26/21 and between 3/6/22 and 4/17/22, the percentages above are calculated by comparing each week to the comparable week in 2019. For weeks between 1/2/22 and 2/27/22, the percentages above are calculated by comparing each week to the comparable week in 2020. Data for all weeks following the close of the quarter ended on 3/27/22 are preliminary.

Investor Webcast Information Listeners may access an investor webcast hosted by Bowlero. The webcast and results presentation will be accessible at 5:30 PM ET on May 11, 2022 in the Events & Presentations section of the Bowlero Investor Relations website at https://ir.bowlerocorp.com/overview/default.aspx.

About Bowlero Corp.Bowlero Corp. is the worldwide leader in bowling entertainment. With more than 300 bowling centers across North America, Bowlero Corp. serves more than 26 million guests each year through a family of brands that includes Bowlero, Bowlmor Lanes, and AMF. Bowlero Corp. is also home to the Professional Bowlers Association, which it acquired in 2019 and which boasts thousands of members and millions of fans across the globe. For more information on Bowlero Corp., please visit BowleroCorp.com.

Forward Looking Statements

Some of the statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are generally identified by the use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other various or comparable terminology and include preliminary results. These forward-looking statements reflect our views with respect to future events as of the date of this release and are based on our management’s current expectations, estimates, forecasts, projections, assumptions, beliefs and information. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. All such forward-looking statements are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in this document. It is not possible to predict or identify all such risks. These risks include, but are not limited to: the impact of COVID-19 or other adverse public health developments on our business; our ability to grow and manage growth profitably, maintain relationships with customers, compete within our industry and retain our key employees; changes in consumer preferences and buying patterns; the possibility that we may be adversely affected by other economic, business, and/or competitive factors; the risk that the market for our entertainment offerings may not develop on the timeframe or in the manner that we currently anticipate; general economic conditions and uncertainties affecting markets in which we operate and economic volatility that could adversely impact our business, including the COVID-19 pandemic and other factors described under the section titled “Risk Factors” in the registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission (the “SEC”) by the Company, as well as other filings that the Company will make, or has made, with the SEC, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in other filings. We expressly disclaim any obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

GAAP Financial Information

Bowlero Corp.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share and per share amounts)
(UNAUDITED)
	March 27,2022				June 27,2021
Assets
Current assets:
Cash and cash equivalents	$	172,977			$	187,093
Accounts and notes receivable, net of allowance for doubtful accounts of $327 and $204, respectively		4,409				3,300
Inventories, net		10,056				8,310
Prepaid expenses and other current assets		11,668				8,056
Assets held-for-sale		14,506				686
Total current assets		213,616				207,445
Property and equipment, net		512,343				415,661
Internal use software, net		10,251				9,062
Property and equipment under capital leases, net		260,632				284,077
Intangible assets, net		93,192				96,057
Goodwill		738,787				726,156
Investment in joint venture		1,250				1,230
Other assets		41,491				42,550
Total assets	$	1,871,562			$	1,782,238
Liabilities, Temporary Equity and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	29,267			$	29,489
Accrued expenses		80,113				63,650
Current maturities of long-term debt		4,944				5,058
Other current liabilities		6,876				9,176
Total current liabilities		121,200				107,373
Long-term debt, net		868,370				870,528
Long-term obligations under capital leases		394,708				374,598
Earnout liability		204,416				—
Warrant liability		37,952				—
Other long-term liabilities		56,991				87,749
Deferred income tax liabilities		14,346				11,867
Total liabilities		1,697,983				1,452,115
Temporary Equity
Series A preferred stock - Old Bowlero		—				141,162
Series A preferred stock		200,489				—
Redeemable Class A common stock - Old Bowlero		—				464,827
Stockholders’ deficit:
Class A common stock		11				10
Class B common stock		6				—
Additional paid-in capital		296,790				—
Treasury stock, at cost		(1,026	)			—
Accumulated deficit		(319,794	)			(266,472	)
Accumulated other comprehensive loss		(2,897	)			(9,404	)
Total stockholders’ deficit		(26,910	)			(275,866	)
Total liabilities, temporary equity and stockholders’ deficit	$	1,871,562			$	1,782,238

Bowlero Corp.
Condensed Consolidated Statements of Operations
(Amounts in thousands)
(UNAUDITED)
	Three Months Ended												Nine Months Ended
	March 27,2022				March 28,2021				March 31,2019				March 27,2022				March 28,2021				March 31,2019
Revenues	$	257,820			$	112,212			$	205,023			$	643,988			$	236,131			$	516,681
Costs of revenues		156,491				94,113				139,679				424,742				253,654				384,280
Gross profit (loss)		101,329				18,099				65,344				219,246				(17,523	)			132,401
Operating (income) expenses:
Selling, general and administrative expenses		30,315				17,695				20,637				145,013				49,217				73,147
(Gain) loss on sale or disposal of assets		(1,601	)			64				2,045				(1,755	)			(77	)			681
Loss on extinguishment of debt		—				—				—				—				—				1,788
Income from joint venture		(127	)			(69	)			(67	)			(285	)			(126	)			(155	)
Management fee income		(307	)			(25	)			(254	)			(564	)			(132	)			(557	)
Other operating expense		2,333				1,119				374				6,557				721				400
Business interruption insurance recoveries		—				—				—				—				(20,188	)			—
Total operating expense, net		30,613				18,784				22,735				148,966				29,415				75,304
Operating profit (loss)		70,716				(685	)			42,609				70,280				(46,938	)			57,097
Other expenses:
Interest expense, net		22,293				22,303				15,468				69,101				65,729				46,164
Change in fair value of earnout shares		45,778				—				—				23,236				—				—
Change in fair value of warrant liability		20,678				—				—				20,748				—				—
Other expense		161				—				—				161				—				—
Total other expense, net		88,910				22,303				15,468				113,246				65,729				46,164
(Loss) income before income tax (benefit) expense		(18,194	)			(22,988	)			27,141				(42,966	)			(112,667	)			10,933
Income tax (benefit) expense		(207	)			103				(291	)			(6,089	)			333				7
Net (loss) income	$	(17,987	)		$	(23,091	)		$	27,432			$	(36,877	)		$	(113,000	)		$	10,926

Bowlero Corp.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(UNAUDITED)
	Three Months Ended								Nine Months Ended
	March 27, 2022				March 28, 2021				March 27, 2022				March 28, 2021
Net cash provided by operating activities	$	83,576			$	28,722			$	142,861			$	17,123
Net cash used in investing activities		(17,896	)			(9,486	)			(178,744	)			(28,188	)
Net cash (used in) provided by financing activities		(8,461	)			(2,025	)			21,752				36,858
Effect of exchange rate changes on cash		99				152				15				71
Net increase (decrease) in cash and cash equivalents		57,318				17,363				(14,116	)			25,864
Cash and cash equivalents at beginning of period		115,659				149,206				187,093				140,705
Cash and cash equivalents at end of period	$	172,977			$	166,569			$	172,977			$	166,569

GAAP to non-GAAP Reconciliations

		Adjusted EBITDA Reconciliation
		Three Months Ended										Nine Months Ended
(in thousands)		March 27, 2022			March 28, 2021			March 31, 2019				March 27, 2022			March 28, 2021			March 31, 2019
Consolidated
Revenues		$	257,820		$	112,212		$	205,023			$	643,988		$	236,131		$	516,681
Net (loss) income - GAAP		$	(17,987	)	$	(23,091	)	$	27,432			$	(36,877	)	$	(113,000	)	$	10,926
Adjustments:
Interest expense			22,293			22,303			15,468				69,101			65,729			46,164
Income tax expense (benefit)			(207	)		103			(291	)			(6,089	)		333			7
Depreciation and amortization			29,986			22,990			20,490				78,487			67,979			66,111
Share-based compensation			3,020			826			847				46,376			2,371			2,590
Closed center EBITDA (1)			611			806			588				1,429			2,289			2,161
Foreign currency exchange loss (gain)			(90	)		104			5				31			(89	)		7
Asset disposition loss (gain)			(1,601	)		64			2,045				(1,754	)		(77	)		681
Transactional and other advisory costs (2)			4,757			1,852			127				36,735			4,093			1,789
Charges attributed to new initiatives (3)			43			136			270				249			384			937
Extraordinary unusual non-recurring (gains) losses (4)			929			1,294			369				2,150			811			2,181
Changes in the value of earnouts and warrants (5)			66,617			—			—				44,145			—			—
Adjusted EBITDA		$	108,371		$	27,387		$	67,350			$	233,983		$	30,823		$	133,554
Adjusted EBITDA Margin			42.0	%		24.4	%		32.8	%			36.3	%		13.1	%		25.8	%
SG&A Expense			20,340			13,074			20,720				57,979			37,592			59,998
Media & Other Income			(4,396	)		(6	)		(2,110	)			(13,226	)		(1,295	)		(434	)
Center EBITDA		$	124,315		$	40,455		$	85,960			$	278,736		$	67,120		$	193,118
Rent Expense			9,285			13,420			18,599				39,264			40,204			46,992
Center EBITDAR		$	133,600		$	53,875		$	104,559			$	318,000		$	107,324		$	240,110

(1)	The closed center adjustment is to remove EBITDA for closed centers. Closed centers are those centers that are closed for a variety of reasons, including permanent closure, newly acquired or built centers prior to opening, centers closed for renovation or rebranding and conversion. Closed centers do not include centers closed in compliance with local, state and federal government restrictions due to COVID-19. If a center is not open on the last day of the reporting period, it will be considered closed for that reporting period.
(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. The large increases in this adjustment during the quarters ended December 26, 2021 and March 27, 2022 reflect the transactional costs associated with the Business Combination.
(3)	The adjustment for charges is to remove actual charges attributed to new initiatives include charges with the undertaking and/or implementation of new initiatives, business optimization activities, cost savings initiatives, cost rationalization programs, operating expense reductions and/or synergies and/or similar initiatives and/or programs including any restructuring charge (including any charges relating to any tax restructuring), any charge relating to the closure or consolidation of any office or facility, any systems implementation charge, any severance charge, any one time compensation charge, any charge relating to entry into a new market, any charge relating to any strategic initiative or contract and any lease run-off charge.
(4)	The adjustment for extraordinary unusual non-recurring gains or losses is to remove extraordinary gains and losses, which include any gain or charge from any extraordinary item as determined in good faith by the Company and/or any non-recurring or unusual item as determined in good faith by the Company and/or any charge associated with and/or payment of any legal settlement, fine, judgment or order.
(5)	The adjustment for changes in the value of earnouts and warrants is to remove the impact of the revaluation of the earnouts and warrants. As a result of the Business Combination, the Company recorded liabilities for earnouts and warrants. Changes in the fair value of the earnout and warrant liabilities are recognized in the statement of operations. Decreases in the liability will have a favorable impact on the income statement and increases in the liability will have an unfavorable impact.

Chart for Trailing Twelve Month Net loss - GAAP & Adjusted EBITDA (in thousands) is available at: https://www.globenewswire.com/NewsRoom/AttachmentNg/fe39d426-ecfd-45e4-8acf-72dd16480a92

Trailing twelve month Adjusted EBITDA Reconciliation
Net loss - GAAP and Adjusted EBITDA
(in thousands)	December 29, 2019			March 28, 2021			June 27, 2021			September 26, 2021			December 26, 2021			March 27, 2022
Consolidated
Revenues	$	693,929		$	247,257		$	395,234		$	526,281		$	657,483		$	803,091
Net loss - GAAP	$	(1,841	)	$	(197,748	)	$	(126,461	)	$	(70,125	)	$	(55,442	)	$	(50,338	)
Adjustments:
Interest expense		69,903			86,352			88,857			90,612			92,239			92,229
Income tax expense (benefit)		1,803			7,927			(1,035	)		(7,403	)		(7,147	)		(7,457	)
Depreciation and amortization		89,264			91,411			91,851			92,241			95,363			102,359
Share-based compensation		3,406			3,226			3,164			3,116			44,975			47,169
Closed center EBITDA (1)		(400	)		3,259			4,039			3,880			3,374			3,179
Foreign currency exchange loss (gain)		(225	)		(146	)		(188	)		(155	)		126			(68	)
Asset disposition loss (gain)		5,247			613			(46	)		(77	)		(58	)		(1,723	)
Transactional and other advisory costs (2)		3,041			5,573			10,737			12,056			40,474			43,379
Charges attributed to new initiatives (3)		1,020			500			531			540			489			396
Extraordinary unusual non-recurring losses (4)		2,680			360			1,670			65			3,374			3,009
Changes in the value of earnouts and warrants (5)		—			—			—			—			(22,472	)		44,145
Adjusted EBITDA	$	173,898		$	1,327		$	73,119		$	124,750		$	195,295		$	276,279
Adjusted EBITDA Margin		25.1	%		0.5	%		18.5	%		23.7	%		29.7	%		34.4	%

(1)	The closed center adjustment is to remove EBITDA for closed centers. Closed centers are those centers that are closed for a variety of reasons, including permanent closure, newly acquired or built centers prior to opening, centers closed for renovation or rebranding and conversion. Closed centers do not include centers closed in compliance with local, state and federal government restrictions due to COVID-19. If a center is not open on the last day of the reporting period, it will be considered closed for that reporting period.
(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. The large increases in this adjustment during the quarters ended December 26, 2021 and March 27, 2022 reflect the transactional costs associated with the Business Combination.
(3)	The adjustment for charges is to remove actual charges attributed to new initiatives include charges with the undertaking and/or implementation of new initiatives, business optimization activities, cost savings initiatives, cost rationalization programs, operating expense reductions and/or synergies and/or similar initiatives and/or programs including any restructuring charge (including any charges relating to any tax restructuring), any charge relating to the closure or consolidation of any office or facility, any systems implementation charge, any severance charge, any one time compensation charge, any charge relating to entry into a new market, any charge relating to any strategic initiative or contract and any lease run-off charge.
(4)	The adjustment for extraordinary unusual non-recurring gains or losses is to remove extraordinary gains and losses, which include any gain or charge from any extraordinary item as determined in good faith by the Company and/or any non-recurring or unusual item as determined in good faith by the Company and/or any charge associated with and/or payment of any legal settlement, fine, judgment or order.
(5)	The adjustment for changes in the value of earnouts and warrants is to remove the impact of the revaluation of the earnouts and warrants. As a result of the Business Combination, the Company recorded liabilities for earnouts and warrants. Changes in the fair value of the earnout and warrant liabilities are recognized in the statement of operations. Decreases in the liability will have a favorable impact on the income statement and increases in the liability will have an unfavorable impact.

 

NORMALIZED NET INCOME RECONCILIATION
March 27, 2022
(in thousands)	Three monthsended				Nine monthsended				Twelve monthsended
Net loss - GAAP	$	(17,987	)		$	(36,877	)		$	(50,338	)
Share-based compensation - de-SPAC		—				42,212				42,212
Change in fair value of earnouts and warrants		66,617				44,145				44,145
Transactional and other advisory costs		3,353				29,149				32,502
Normalized Net Income	$	51,983			$	78,629			$	68,521

Non-GAAP Financial Measures

To provide investors with information in addition to our results as determined under Generally Accepted Accounting Principles (“GAAP”), we disclose net income, normalized for extraordinary and non-recurring items, Adjusted EBITDA and trailing twelve month Adjusted EBITDA as “non-GAAP measures” which management believes provide useful information to investors because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period, and management relies on these measures for planning and forecasting of future periods. Additionally, these measures allow management to compare our results with those of other companies that have different financing and capital structures. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, net cash provided (used) by operating activities or any other operating performance or liquidity measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.

Net income normalized for extraordinary and non-recurring items represents Net income (loss) before share-based compensation issued in connection with the Company's de-SPAC transaction, transaction and other advisory costs related to the de-SPAC transaction and non-cash expenses or income related to Changes in the value of earnouts and warrants. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) represents Net income (loss) before Interest, Income Taxes, Depreciation and Amortization, Share-based Compensation, EBITDA from Closed Centers, Foreign Currency Exchange Loss (Gain), Asset Disposition Loss (Gain), Transactional and other advisory costs, Charges attributed to new initiatives, Extraordinary unusual non-recurring gains or losses and Changes in the value of earnouts and warrants. Trailing twelve month Adjusted EBITDA represents Adjusted EBITDA over the most recent twelve month period.

The Company considers net income normalized for extraordinary and non-recurring items as an important financial measure because it provides an indicator of performance that is not affected by fluctuations in certain costs or other items. However, this measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that it does not reflect every cash expenditure and is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

The Company considers Adjusted EBITDA as an important financial measure because it provides a financial measure of the quality of the Company’s earnings. Other companies may calculate Adjusted EBITDA differently than we do, which might limit its usefulness as a comparative measure. Adjusted EBITDA is used by management in addition to and in conjunction with the results presented in accordance with GAAP. Additionally, we believe trailing twelve month Adjusted EBITDA provides the current run-rate for trending purposes, rather than annualizing the respective quarters, as the Company’s business is seasonal, with the second and third fiscal quarters being higher than the first and last quarters.

We have presented Adjusted EBITDA solely as a supplemental disclosure because we believe it allows for a more complete analysis of results of operations and assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as Interest, Income Taxes, Depreciation and Amortization, Share-based Compensation, EBITDA from Closed Centers, Foreign Currency Exchange Loss (Gain), Asset Disposition Loss (Gain), Transactional and other advisory costs, Charges attributed to new initiatives, Extraordinary unusual non-recurring gains or losses and Changes in the value of earnouts and warrants.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA and trailing twelve month Adjusted EBITDA:

• do not reflect every expenditure, future requirements for capital expenditures or contractual commitments;
• do not reflect changes in our working capital needs;
• do not reflect the interest expense, or the amounts necessary to service interest or principal payments, on our outstanding debt;
• do not reflect income tax (benefit) expense, and because the payment of taxes is part of our operations, tax expense is a necessary element of our costs and ability to operate;
• do not reflect non-cash equity compensation, which will remain a key element of our overall equity based compensation package; and
• do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations.

Contacts:

For Media:Bowlero Corp. Public Relationspr@bowlerocorp.com  

For Investors:ICR, Inc.Ryan LawrenceRyan.Lawrence@icrinc.com

Ashley DeSimoneAshely.desimone@icrinc.com