Why Is Bowling Center Operator Bowlero Stock Surging Today?

Bowlero Corp BOWL shares are trading higher after it reported second-quarter FY24 results.

Revenue rose 11.8% Y/Y to $305.7 million, beating the analyst consensus of $300.5 million.

Same-store revenue grew 0.2% Y/Y and increased 27.8% versus second-quarter FY20.

Gross profit for the quarter fell to $90.6 million from $93.7 million the prior year.

Adjusted EBITDA of $103.1 million increased from $97.0 million, with the margin contracting to 33.7% from 35.5% a year ago.

EPS loss of $(0.44) missed the consensus of $0.12.

The company held $190 million in cash and cash equivalents as of December 31, 2023. Operating cash flow for the quarter was $55.1 million.

As of February 5, 2024, the total centers in operation stood at 350.

Dividend: BOWL declared an initial quarterly cash dividend per share of $0.055 for the third quarter FY24, payable on March 8, 2024, to stockholders of record on February 23, 2024.

Buyback: During the quarter, the company repurchased 7.5 million shares, or approximately $80 million.

On February 2, 2024, the Board of Directors authorized a time extension and increased the share repurchase program, boosting the authorized repurchase amount to $200 million and removing the program expiration date. 

Outlook: Bowlero reiterated FY24 revenue excluding service fee revenue of $1.14 billion – $1.19 billion vs. consensus of $1.15 billion and adjusted EBITDA margin at 32% – 34%. 

The company plans to heavily reinvest in the business in FY24, with over $190 million allotted for acquisitions (up from the prior view of $160 million), $40 million for new builds, and $80 million for conversions (vs. $75 million prior).

The company expects third-quarter revenue, excluding service fee revenue, of $335 million to $350 million vs. street view of $350.93 million. 

Bobby Lavan, Chief Financial Officer, said, “In the quarter, we received $409 million net proceeds from our sale-leaseback transaction with Vici. We used proceeds to pay down our revolver balance in full, fund acquisitions including Lucky Strike, and accelerate our capital investment plan.”

Price Action: BOWL shares are up 16.7% at $13.46 on the last check Monday.