Bowlero (US:BOWL)2025-05-08 14:00Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $339.9 million, a modest increase of 0.7% compared to $337.7 million in the previous year [15] - Adjusted EBITDA decreased to $117.3 million from $122.8 million, reflecting a decline in same store sales by 5.6% [15][19] - Same store sales acted as a $19 million headwind to the bottom line, despite improvements in payroll and cost reductions [15][16] Business Line Data and Key Metrics Changes - Retail business remained steady, while league operations experienced low single-digit growth [15] - Events business faced high single-digit decline, primarily due to corporate event cancellations [15] - Comparable food sales rose by 1%, with total food sales up 8% year over year, indicating a positive response to revamped food initiatives [13][15] Market Data and Key Metrics Changes - California, accounting for 21% of total sales, contributed nearly 50% of the same store sales decline, primarily due to softness in the Los Angeles market [16] - Early sales of summer season passes were up over 200% year over year, indicating a shift in consumer preferences towards local entertainment [9][49] Company Strategy and Development Direction - The company is focused on adjusting its cost structure to increase operating leverage while investing in growth through acquisitions and new builds [10][18] - A recent acquisition of Shipwreck Island for $30 million is expected to enhance the company's portfolio and long-term potential [18] - The company plans to continue its rebranding initiatives, with 15 rebrands completed and a goal of 75 by the end of the year, which are expected to drive foot traffic and revenue [58][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a rebound in corporate events as macroeconomic conditions improve, expecting a turnaround by the third calendar quarter [25][50] - The company is proactively addressing challenges in the corporate events segment by returning salespeople to the office and enhancing customer engagement [76] - Management remains confident in the growth potential of water parks and family entertainment centers, anticipating significant revenue contributions during peak summer months [84][85] Other Important Information - The company has maintained a strong liquidity position with $391 million in total liquidity and no borrowings on its revolver [19] - Capital expenditures year to date are down $40 million compared to last year, reflecting a disciplined approach to spending [18][19] Q&A Session Summary Question: Could you elaborate on walk-in versus corporate trends? - Management noted that corporate events have been significantly impacted by macroeconomic conditions, with a notable decline in California, but they expect a rebound as conditions improve [24][25] Question: What are the areas of expense flexibility near term? - The company has reduced payroll and maintenance costs, with expectations for further benefits in upcoming quarters [32] Question: What caused the negative same store sales in Q3? - The corporate business deteriorated significantly in February and March, primarily due to external factors such as the California fires and broader economic uncertainty [40][41] Question: How is the company addressing SG&A costs? - Management indicated that SG&A costs were impacted by a non-cash charge but expect overall costs to decrease as they focus on efficiency [97][98] Question: What is the outlook for corporate events and tariffs? - Management believes the current downturn in corporate events is temporary and linked to broader economic concerns, including tariffs, but expects a return to normalcy in the near future [75][80]