bowl-20231001

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 1, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-40142

___________________________________

BOWLERO CORP.

(Exact name of registrant as specified in its charter)

___________________________________


Delaware									98-1632024
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

7313 Bell Creek Road
Mechanicsville, Virginia									23111
(Address of Principal Executive Offices)									(Zip Code)

(804) 417-2000

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	BOWL	The New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had outstanding 92,768,345 shares of Class A common stock, 58,519,437 shares of Class B common stock, and 136,373 shares of Series A preferred stock as of November 1, 2023.

Table of Contents

Index to Notes

Table of Contents


		Page
Part I - Financial Information
Item 1.	Financial Statements	i
	Condensed Consolidated Balance Sheets (unaudited)	1
	Condensed Consolidated Statements of Operations (unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)	4
	Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (unaudited)	5
	Condensed Consolidated Statements of Cash Flows (unaudited)	6
	Index for Notes to Condensed Consolidated Financial Statements (unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4.	Controls and Procedures	27

Part II - Other Information
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6.	Exhibits and Financial Statement Schedules	28

Signatures		29

Table of Contents

Index to Notes

Bowlero Corp.

Condensed Consolidated Balance Sheets

October 1, 2023 and July 2, 2023

(Amounts in thousands)

(Unaudited)

Item 1. Condensed Financial Statements


	October 1, 2023		July 2, 2023
Assets
Current assets:
Cash and cash equivalents	$	40,088	$	195,633
Accounts and notes receivable, net of allowance for doubtful accounts	4,087		3,092
Inventories, net	13,183		11,470
Prepaid expenses and other current assets	19,393		18,395
Assets held-for-sale	2,069		2,069
Total current assets	78,820		230,659

Property and equipment, net	773,057		697,850
Internal use software, net	20,792		17,914
Operating lease right of use assets, net	550,113		449,085
Finance lease right of use assets, net	540,186		515,339
Intangible assets, net	100,087		90,986
Goodwill	825,522		753,538
Deferred income tax asset	86,237		73,807
Other assets	12,582		12,096
Total assets	$	2,987,396	$	2,841,274

Liabilities, Temporary Equity and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	141,164	$	121,226
Current maturities of long-term debt	9,595		9,338
Current obligations of operating lease liabilities	26,194		23,866
Other current liabilities	16,650		14,281
Total current liabilities	193,603		168,711

Long-term debt, net	1,276,371		1,138,687
Long-term obligations of operating lease liabilities	541,937		431,295
Long-term obligations of financing lease liabilities	678,720		652,450
Earnout liability	71,364		112,041
Other long-term liabilities	35,220		34,380
Deferred income tax liabilities	4,079		4,160
Total liabilities	2,801,294		2,541,724

Commitments and Contingencies (Note 10)

Temporary Equity
Series A preferred stock	144,329		144,329

Table of Contents

Index to Notes


	October 1, 2023		July 2, 2023
Stockholders’ Equity
Class A common stock	$	10	$	11
Class B common stock	6		6
Additional paid-in capital	507,935		506,112
Treasury stock, at cost	(268,063)		(135,401)
Accumulated deficit	(201,440)		(219,659)
Accumulated other comprehensive income	3,325		4,152
Total stockholders’ equity	41,773		155,221
Total liabilities, temporary equity and stockholders’ equity	$	2,987,396	$	2,841,274

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Index to Notes

Bowlero Corp.

Condensed Consolidated Statements of Operations

Three Months Ended October 1, 2023 and October 2, 2022

(Amounts in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended
	October 1, 2023		October 2, 2022
Revenues	$	227,405	$	230,260
Costs of revenues	182,921		165,202
Gross profit	44,484		65,058

Operating (income) expenses:
Selling, general and administrative expenses	37,765		32,494
Asset impairment	26		84
Gain on sale or disposal of assets	(27)		(155)
Other operating expense	1,364		1,362
Total operating expense	39,128		33,785

Operating profit	5,356		31,273

Other (income) expenses:
Interest expense, net	37,449		23,570
Change in fair value of earnout liability	(40,682)		40,760
Other expense	53		48
Total other (income) expense	(3,180)		64,378

Income (loss) before income tax (benefit) expense	8,536		(33,105)

Income tax (benefit) expense	(9,683)		429
Net income (loss)	18,219		(33,534)

Series A preferred stock dividends	(1,962)		(2,801)
Earnings allocated to Series A preferred stock	(1,049)		—
Net income (loss) attributable to common stockholders	$	15,208	$	(36,335)

Net income (loss) per share attributable to common stockholders
Basic	$	0.09	$	(0.22)
Diluted	$	0.09	$	(0.22)

Weighted-average shares used in computing net loss per share attributable to common stockholders
Basic	160,929,391		162,854,597
Diluted	168,903,508		162,854,597

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Index to Notes

Bowlero Corp.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended October 1, 2023 and October 2, 2022

(Amounts in thousands)

(Unaudited)


	Three Months Ended
	October 1, 2023		October 2, 2022
Net income (loss)	$	18,219	$	(33,534)
Other comprehensive loss, net of income tax:
Unrealized loss on derivatives	(340)		—
Foreign currency translation adjustment	(487)		(367)
Other comprehensive loss	(827)		(367)
Total comprehensive income (loss)	$	17,392	$	(33,901)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Index to Notes

Bowlero Corp.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity

Three Months Ended October 1, 2023 and October 2, 2022

(Amounts in thousands, except share amounts)

(Unaudited)


																	Accumulated
	Series A			Class A			Class B						Additional				other		Total
	preferred stock			common stock			common stock			Treasury stock			paid-in		Accumulated		comprehensive		stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		capital		deficit		income (loss)		equity
Balance, July 3, 2022	200,000	$	206,002	110,395,630	$	11	55,911,203	$	6	3,430,667	$	(34,557)	$	335,015	$	(312,851)	$	(1,306)	$	(13,682)
Net loss	—	—		—	—		—	—		—	—		—		(33,534)		—		(33,534)
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		(367)		(367)
Share-based compensation	—	—		50,317	—		—	—		—	—		3,279		—		—		3,279
Repurchase of Class A common stock into Treasury stock	—	—		(468,103)	—		—	—		468,103	(5,462)		—		—		—		(5,462)
Balance, October 2, 2022	200,000	$	206,002	109,977,844	$	11	55,911,203	$	6	3,898,770	$	(40,019)	$	338,294	$	(346,385)	$	(1,673)	$	(49,766)


Balance, July 2, 2023	136,373	$	144,329	107,666,301	$	11	60,819,437	$	6	11,312,302	$	(135,401)	$	506,112	$	(219,659)	$	4,152	$	155,221
Net income	—	—		—	—		—	—		—	—		—		18,219		—		18,219
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		(487)		(487)
Unrealized loss on derivatives	—	—		—	—		—	—		—	—		—		—		(340)		(340)
Conversion of Class B common stock into Class A common stock	—	—		2,300,000	—		(2,300,000)	—		—	—		—		—		—		—
Share-based compensation	—	—		15,489	—		—	—		—	—		1,823		—		—		1,823
Repurchase of Class A common stock into Treasury stock	—	—		(12,131,185)	(1)		—	—		12,131,185	(132,662)		—		—		—		(132,663)
Balance, October 1, 2023	136,373	$	144,329	97,850,605	$	10	58,519,437	$	6	23,443,487	$	(268,063)	$	507,935	$	(201,440)	$	3,325	$	41,773

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Index to Notes

Bowlero Corp.

Condensed Consolidated Statements of Cash Flows

Three Months Ended October 1, 2023 and October 2, 2022

(Amounts in thousands)

(Unaudited)


	Three Months Ended
	October 1, 2023		October 2, 2022
Operating activities
Net income (loss)	$	18,219	$	(33,534)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Asset impairment	26		84
Depreciation and amortization	31,352		26,267
Gain on sale or disposal of assets, net	(27)		(155)
Income from joint venture	(71)		(99)
Amortization of deferred financing costs	846		956
Amortization of deferred rent incentive	—		(567)
Non-cash interest expense on capital lease obligation	—		4,510
Non-cash interest expense on finance lease obligation	935		—
Non-cash operating lease expense	7,822		—
Non-cash portion of gain on lease modification	(499)		—
Amortization of deferred sale lease-back gain	—		(257)
Deferred income taxes	(9,697)		—
Share-based compensation	1,911		3,648
Distributions from joint venture	72		109
Change in fair value of earnout liability	(40,682)		40,760
Change in fair value of marketable securities	—		(89)
Changes in assets and liabilities, net of business acquisitions:
Accounts receivable and notes receivable, net	(995)		(205)
Inventories	(1,178)		(824)
Prepaids, other current assets and other assets	(1,913)		(915)
Accounts payable and accrued expenses	16,613		(3,947)
Other current liabilities	(163)		(1,125)
Other long-term liabilities	(6,488)		956
Net cash provided by operating activities	16,083		35,573

Investing activities
Purchases of property and equipment	(50,674)		(44,709)
Purchases of intangible assets	(112)		(17)
Proceeds from sale of intangibles	65		—
Purchase of marketable securities	—		(11,594)
Proceeds from sale of marketable securities	—		9,746
Acquisitions, net of cash acquired	(125,855)		(15,918)
Net cash used in investing activities	(176,576)		(62,492)

Table of Contents

Index to Notes


			Three Months Ended
			October 1, 2023

SEC Form 10-Q filed by Bowlero Corp.