Bowlero (BOWL) - 2024 Q1 - Quarterly Report

Financial Performance - For the quarter ended October 1, 2023, revenues totaled $227,405, representing a decrease of$ 2,855, or 1%, compared to the same period last fiscal year[175]. - Same-store revenues decreased by $15,522, or 6.9%, to$ 209,146 for the quarter ended October 1, 2023, compared to $224,668 for the same period last year[175]. - For the quarter ended October 1, 2023, the company reported a net income of$ 18,219, compared to a net loss of $33,534 for the same period in 2022[187]. - Adjusted EBITDA for the quarter was$ 52,134, down from $65,309 in the prior year, reflecting a decrease of approximately 20%[187]. - Net cash provided by operating activities decreased to$ 16,083 from $35,573, a decline of$ 19,490 year-over-year[190]. Costs and Expenses - Cost of revenues increased by $17,719, or 11%, primarily due to higher labor, supplies, and maintenance costs, resulting in cost of revenues as a percentage of revenues rising from 72% to almost 80%[177]. - Selling, general and administrative expenses (SG&A) rose by$ 5,271, or 16%, to $37,765, with SG&A as a percentage of revenues increasing from 14% to approximately 17%[178]. - Interest expense increased by$ 13,879, or 59%, to $37,449, primarily due to higher interest rates and increased debt obligations[179]. Investments and Acquisitions - The company made three acquisitions, acquiring 17 bowling entertainment centers during the quarter, with two additional centers expected to close in the second quarter of fiscal year 2024[169]. - The company utilized$ 176,576 in investing activities, significantly higher than $62,492 in the same period last year, primarily due to the acquisition of Lucky Strike[191]. - The company entered into a transaction with VICI Properties Inc. for the transfer of land and real estate assets of 38 bowling entertainment centers valued at$ 432,900[171]. - The company expects to continue investing in accretive acquisitions and center upgrades in future periods[191]. Operational Developments - One new build-out was completed and opened during the quarter, with seven signed agreements for future build-outs in prime markets[170]. - Renovations and remodels are currently underway at 14 bowling centers[171]. - The company anticipates continued organic growth and market expansion through acquisitions and upgrades of existing centers[166]. Cash and Financing - Financing activities generated $5,091, with proceeds from revolver draws of$ 140,000, partially offset by $130,140 for treasury stock repurchase[192]. - As of October 1, 2023, the company had approximately$ 40,088 in available cash and cash equivalents[188]. Tax and Interest Rate Impact - The effective tax rate for the quarter was (113.4)%, primarily due to income recognized for book purposes associated with changes in fair value of the earnout liability[181]. - An increase or decrease of 1.0% in the effective interest rate would impact interest expense by approximately $12,870 over a twelve-month period[200]. Market Risks - The company is exposed to market price fluctuations in food, beverage, supplies, and energy costs[202]. - Historical volatility in food product prices, including proteins, produce, dairy products, and cooking oil, can materially impact food costs[202]. - Purchasing commitments partially mitigate the risk of price fluctuations, but supply and demand factors can still cause price changes[202]. - External factors such as disease or inclement weather may influence commodity prices used in food operations[202]. - The cost of purchased materials may be affected by tariffs and trade regulations beyond the company's control[202]. - If the company does not pass along cost increases to customers, its operational results may be adversely affected[202].