Bowlero Corp. Announces Outstanding Results for the Third Quarter of Fiscal Year 2022
Bowlero Corp. (NYSE: BOWL) reported a strong financial performance for Q3 2022, with revenue nearly reaching $258 million, marking a year-over-year growth of 129.8%. Compared to pre-pandemic levels, revenue grew 25.8%, while same-store sales increased 12.2%. Despite this, the company posted a net loss of $18 million due to significant non-cash expenses. Adjusted EBITDA rose to $108.4 million, reflecting a 295.7% increase year-over-year. Bowlero also announced the planned redemption of all outstanding warrants.
- Revenue increased to nearly $258 million, up 129.8% year-over-year.
- Same-store sales rose by 12.2% compared to pre-pandemic performance.
- Adjusted EBITDA reached $108.4 million, a 295.7% increase year-over-year.
- Total revenue growth of 25.8% compared to pre-pandemic performance.
- Net loss of $18 million mainly due to $66.6 million in non-cash expenses.
- Trailing twelve month (TTM) net loss of $50.3 million driven by substantial expenses related to de-SPAC transaction.
- Revenue totaled nearly
$258 million , growing$145.6 million or129.8% year over year,$52.8 million or25.8% relative to pre-pandemic performance, and$24.1 million or12.2% on a same-store basis vs. pre-pandemic.1 Revenue trends accelerated through the week ended April 24, 2022 (see chart below). - 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 of transactional expenses related to the business combination. Net Income for the quarter, adjusted for these items was$52.0 million vs. a net loss of$23.1 million in the prior year.2 - Adjusted EBITDA of
$108.4 million increased$81.0 million or295.7% vs. prior year's quarter, and grew$41.0 million or60.9% relative to pre-pandemic performance.2 - Trailing twelve month ("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 - TTM Adjusted EBITDA of
$276.3 million exceeded pre-pandemic performance by58.9% .2 - Repurchased 109,754 shares of Class A common stock and 2,690,272 warrants.
- Announced the redemption of all outstanding publicly traded and privately held warrants, which is planned to be completed on May 16, 2022.
RICHMOND, Va., May 11, 2022 (GLOBE NEWSWIRE) -- 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
“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 , up25.8% relative to pre-pandemic performance and129.8% 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 , up60.9% relative to pre-pandemic performance and295.7% vs. prior year.2 - TTM Adjusted EBITDA of
$276.3 million exceeded pre-pandemic performance by58.9% .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 | 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 months ended | Nine months ended | Twelve months ended | ||||||||
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 Relations
pr@bowlerocorp.com
For Investors:
ICR, Inc.
Ryan Lawrence
Ryan.Lawrence@icrinc.com
Ashley DeSimone
Ashely.desimone@icrinc.com
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