Bowlero Corp. [BOWL] Filings

10-Q 1 bowl-20230402.htm 10-Q bowl-20230402

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 April 2, 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 112,676,464 shares of Class A common stock, 60,819,437 shares of Class B common stock, and 136,373 shares of Series A preferred stock as of May 10, 2023.

Table of Contents

Index to Notes

Table of Contents


		Page
Part I - Financial Information
Item 1.	Financial Statements	1
	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 (Deficit ) (unaudited)	5
	Condensed Consolidated Statements of Cash Flows (unaudited)	7
	Index for Notes to Condensed Consolidated Financial Statements (unaudited)	9
	Notes to Condensed Consolidated Financial Statements (unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	36

Part II - Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits and Financial Statement Schedules	38

Signatures		39

Table of Contents

Index to Notes

Bowlero Corp.

Condensed Consolidated Balance Sheets

April 2, 2023 and July 3, 2022

(Amounts in thousands)

(Unaudited)

Item 1. Condensed Financial Statements


	April 2, 2023		July 3, 2022
Assets
Current assets:
Cash and cash equivalents	$	150,670	$	132,236
Restricted cash	10,374		—
Accounts and notes receivable, net of allowance for doubtful accounts of $592 and $504, respectively	6,157		5,227
Inventories, net	11,848		10,310
Prepaid expenses and other current assets	19,649		12,732
Assets held-for-sale	2,069		8,789
Total current assets	200,767		169,294

Property and equipment, net	663,937		534,721
Internal use software, net	16,434		11,423
Property and equipment under capital leases, net	252,379		262,703
Intangible assets, net	91,982		92,593
Goodwill	750,230		742,669
Other assets	38,409		41,022
Total assets	$	2,014,138	$	1,854,425

Liabilities, Temporary Equity and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	46,601	$	38,217
Accrued expenses	83,774		62,854
Current maturities of long-term debt	5,569		4,966
Other current liabilities	10,946		13,123
Total current liabilities	146,890		119,160

Long-term debt, net	897,404		865,090
Long-term obligations under capital leases	393,890		397,603
Earnout liability	185,361		210,952
Other long-term liabilities	80,004		54,418
Deferred income tax liabilities	15,771		14,882
Total liabilities	1,719,320		1,662,105

Commitments and Contingencies (Note 10)

Temporary Equity
Series A preferred stock	206,376		206,002

Table of Contents

Index to Notes


	April 2, 2023		July 3, 2022
Stockholders’ Equity (Deficit)
Class A common stock	$	11	$	11
Class B common stock	6		6
Additional paid-in capital	519,093		335,015
Treasury stock, at cost	(53,530)		(34,557)
Accumulated deficit	(377,023)		(312,851)
Accumulated other comprehensive loss	(115)		(1,306)
Total stockholders’ equity (deficit)	88,442		(13,682)
Total liabilities, temporary equity and stockholders’ equity (deficit)	$	2,014,138	$	1,854,425

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Index to Notes

Bowlero Corp.

Condensed Consolidated Statements of Operations

For the Periods Ended April 2, 2023 and March 27, 2022

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

(Unaudited)


	Three Months Ended				Nine Months Ended
	April 2, 2023		March 27, 2022		April 2, 2023		March 27, 2022
Revenues	$	315,725	$	257,820	$	819,370	$	643,988
Costs of revenues	189,304		156,491		534,212		424,742
Gross profit	126,421		101,329		285,158		219,246

Operating (income) expenses:
Selling, general and administrative expenses	35,891		30,315		102,837		145,013
Asset impairment	489		—		573		—
Gain on sale of assets	(192)		(1,601)		(2,170)		(1,755)
Other operating expense	649		1,899		2,625		5,708
Total operating expense	36,837		30,613		103,865		148,966

Operating profit	89,584		70,716		181,293		70,280

Other expenses:
Interest expense, net	29,117		22,293		80,066		69,101
Change in fair value of earnout liability	87,222		45,778		158,758		23,236
Change in fair value of warrant liability	—		20,678		—		20,748
Other expense	5,986		161		5,356		161
Total other expense	122,325		88,910		244,180		113,246

Loss before income tax (benefit) expense	(32,741)		(18,194)		(62,887)		(42,966)

Income tax (benefit) expense	(668)		(207)		1,285		(6,089)
Net loss	(32,073)		(17,987)		(64,172)		(36,877)

Series A preferred stock dividends	(4,401)		(2,818)		(10,004)		(7,290)
Net loss attributable to common stockholders	$	(36,474)	$	(20,805)	$	(74,176)	$	(44,167)

Net loss per share attributable to Class A and B common stockholders
Basic & Diluted	$	(0.22)	$	(0.13)	$	(0.45)	$	(0.29)

Weighted-average shares used in computing net loss per share attributable to common stockholders
Basic & Diluted	165,698,500		162,590,921		163,676,194		152,731,385

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Index to Notes

Bowlero Corp.

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Periods Ended April 2, 2023 and March 27, 2022

(Amounts in thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	April 2, 2023		March 27, 2022		April 2, 2023		March 27, 2022
Net loss	$	(32,073)	$	(17,987)	$	(64,172)	$	(36,877)
Other comprehensive income (loss), net of income tax:
Unrealized gain on derivatives	—		97		—		55
Reclassification to earnings	—		2,205		—		6,610
Foreign currency translation adjustment	1,477		214		1,191		(158)
Other comprehensive income	1,477		2,516		1,191		6,507
Total comprehensive loss	$	(30,596)	$	(15,471)	$	(62,981)	$	(30,370)

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 (Deficit)

For the Periods Ended April 2, 2023 and March 27, 2022

(Amounts in thousands, except share amounts)

(Unaudited)


	Redeemable Class A common stock			Series A preferred stock			Class A common Stock			Class B common Stock			Treasury stock			Additional Paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total stockholders’ deficit
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance, June 27, 2021	2,069,000	$	464,827	106,378	$	141,162	3,842,428	$	1	—	$	—	—	$	—	$	—	$	(266,463)	$	(9,404)	$	(275,866)
Retroactive application of recapitalization	49,328,025	—		2,536,209	—		91,608,875	9		—	—		—	—		—		(9)		—		—
Balance, June 27, 2021 (retroactively stated for application of recapitalization)	51,397,025	$	464,827	2,642,587	$	141,162	95,451,303	$	10	—	$	—	—	$	—	$	—	$	(266,472)	$	(9,404)	$	(275,866)
Net income	—	—		—	—		—	—		—	—		—	—		—		15,564		—		15,564
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—	—		—		—		(164)		(164)
Unrealized loss on derivatives	—	—		—	—		—	—		—	—		—	—		—		—		(32)		(32)
Reclassification to earnings	—	—		—	—		—	—		—	—		—	—		—		—		2,202		2,202
Accrued dividends on pre-merger Series A preferred stock	—	—		—	2,251		—	—		—	—		—	—		(2,251)		—		—		(2,251)
Change in fair value of redeemable Class A common stock of Old Bowlero	—	14,995		—	—		—	—		—	—		—	—		(14,995)		—		—		(14,995)
Share-based compensation	—	—		—	—		—	—		—	—		—	—		801		—		—		801
Reclass of negative APIC to accumulated deficit	—	—		—	—		—	—		—	—		—	—		16,445		(16,445)		—		—
Balance, September 26, 2021	51,397,025	$	479,822	2,642,587	$	143,413	95,451,303	$	10	—	$	—	—	$	—	$	—	$	(267,353)	$	(7,398)	$	(274,741)
Net loss	—	—		—	—		—	—		—	—					—		(34,454)		—		(34,454)
Foreign currency translation adjustment	—	—		—	—		—	—		—	—					—		—		(208)		(208)
Unrealized loss on derivatives	—	—		—	—		—	—		—	—					—		—		(10)		(10)
Reclassification to earnings	—	—		—	—		—	—		—	—					—		—		2,203		2,203
Accrued dividends on pre-merger Series A preferred stock	—	—		—	1,885		—	—		—	—					(1,885)		—		—		(1,885)
Change in fair value of redeemable Class A common stock of Old Bowlero	—	23,869		—	—		—	—		—	—					(23,869)		—		—		(23,869)
Merger induced stock based compensation	—	—		—	—		2,529,360	—		5,839,993	1					42,555		—		—		42,556
Issuance of common stock and preferred stock in connection with Merger Capitalization, net of Bowlero equity issuance costs and fair value of liability-classified warrants and earnout				95,000	95,000		42,185,233	4		1,074,185						120,805		—		—		120,809
Settlement of pre-merger Series A preferred stock	—	—		(2,642,587)	(145,298)		—	—		—	—					—		—		—		—
Conversion of Class A common stock of Old Bowlero to Series A preferred stock	—	—		105,000	105,000		(10,499,900)	(1)		—	—					(104,999)		—		—		(105,000)
Consideration to existing shareholders of Old Bowlero	—	—		—	—		(22,599,800)	(2)		—	—					(225,998)		—		—		(226,000)
Consideration paid to Old Bowlero optionholders	—	—		—	—		—	—		—	—					(15,467)		—		—		(15,467)
Exchange of redeemable Class A common stock of Old Bowlero for Class B common stock	(51,397,025)	(503,691)		—	—		—	—		51,397,025	5					503,686		—		—		503,691
Balance, December 26, 2021	—	$	—	200,000	$	200,000	107,066,196	$	11	58,311,203	$	6	—	$	—	$	294,828	$	(301,807)	$	(5,413)	$	(12,375)

Table of Contents

Index to Notes


	Redeemable Class A common stock			Series A preferred stock			Class A common Stock			Class B common Stock			Treasury stock			Additional Paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total stockholders’ deficit
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 26, 2021	—	$	—	200,000	$	200,000	107,066,196	$	11	58,311,203	$	6	—	$	—	$	294,828	$	(301,807)	$	(5,413)	$	(12,375)
Net loss	—	—		—	—		—	—		—	—		—	—		—		(17,987)		—		(17,987)
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—	—		—		—		214		214
Unrealized gain on derivatives	—	—		—	—		—	—		—	—		—	—		—		—		97		97
Reclassification to earnings	—	—		—	—		—	—		—	—		—	—		—		—		2,205		2,205
Accrual of paid-in-kind dividends on Series A preferred stock	—	—		—	489		—	—		—	—		—	—		(489)		—		—		(489)
Repurchase of Class A common stock into Treasury stock	—	—		—	—		(109,754)	—		—	—		109,754	(1,026)		—		—		—		(1,026)
Stock based compensation	—	—		—	—		69,086	—		—	—		—	—		2,451		—		—		2,451
Balance, March 27, 2022	—	$	—	200,000	$	200,489	107,025,528	$	11	58,311,203	$	6	109,754	$	(1,026)	$	296,790	$	(319,794)	$	(2,897)	$	(26,910)


	Series A preferred stock			Class A common Stock			Class B common Stock			Treasury stock			Additional Paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total stockholders’ equity (deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
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)
Net income	—	—		—	—		—	—		—	—		—		1,435		—		1,435
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		81		81
Share-based compensation	—	—		377,927	—		—	—		—	—		3,632		—		—		3,632
Accrual of paid-in-kind dividends on Series A preferred stock	—	5,665		—	—		—	—		—	—		(5,665)		—		—		(5,665)
Repurchase of Class A common stock into Treasury stock	—	—		(629,677)	—		—	—		629,677	(7,949)		—		—		—		(7,949)
Balance, January 1, 2023	200,000	$	211,667	109,726,094	$	11	55,911,203	$	6	4,528,447	$	(47,968)	$	336,261	$	(344,950)	$	(1,592)	$	(58,232)
Net loss	—	—		—	—		—	—		—	—		—		(32,073)		—		(32,073)
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		1,477		1,477
Share-based compensation	—	—		46,553	—		—	—		—	—		3,709		—		—		3,709
Settlement of Earnout Shares	—	—		4,670,495	—		4,908,234	—		—	—		180,656		—		—		180,656
Settlement of Series A preferred stock	(5,000)	(5,291)		—	—		—	—		—	—		(1,533)		—		—		(1,533)
Repurchase of Class A common stock into Treasury stock	—	—		(370,612)	—		—	—		370,612	(5,562)		—		—		—		(5,562)
Balance, April 2, 2023	195,000	$	206,376	114,072,530	$	11	60,819,437	$	6	4,899,059	$	(53,530)	$	519,093	$	(377,023)	$	(115)	$	88,442

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Index to Notes

Bowlero Corp.

Condensed Consolidated Statements of Cash Flows

Nine Months Ended April 2, 2023 and March 27, 2022

(Amounts in thousands)

(Unaudited)


	Nine Months Ended
	April 2, 2023		March 27, 2022
Operating activities
Net loss	$	(64,172)	$	(36,877)
Adjustments to reconcile net loss to net cash provided by operating activities:
Asset impairment	573		—
Depreciation and amortization	85,014		78,487
Gain on sale of assets, net	(2,170)		(1,755)
Income from joint venture	(329)		(285)
Loss on refinance of debt	—		953
Loss on repurchase of warrants	—		161
Amortization of deferred financing costs	2,585		2,769
Amortization of deferred rent incentive	(452)		(281)
Non-cash interest expense on capital lease obligation	4,850		4,514
Amortization of deferred sale lease-back gain	(767)		(770)
Deferred income taxes	397		(6,587)
Share-based compensation	11,891		46,376
Distributions from joint venture	323		265
Change in fair value of earnout liability	158,758		23,236
Change in fair value of warrant liability	—		20,748
Change in fair value of marketable securities	(852)		—
Changes in assets and liabilities, net of business acquisitions:
Accounts receivable and notes receivable, net	(934)		23
Inventories	(1,410)		(1,708)
Prepaids, other current assets and other assets	(5,987)		(5,723)
Accounts payable and accrued expenses	20,100		10,777
Other current liabilities	(1,166)		4,265
Other long-term liabilities	2,550		4,273
Net cash provided by operating activities	208,802		142,861

Investing activities
Purchases of property and equipment	(112,044)		(135,548)
Purchases of intangible assets	(22)		(2,602)
Proceeds from sale of property and equipment	6,518		6,160
Proceeds from sale of intangibles	200		—
Purchase of marketable securities	(44,855)		—
Proceeds from sale of marketable securities	45,707		—
Acquisitions, net of cash acquired	(83,453)		(46,754)
Net cash used in investing activities	(187,949)		(178,744)

Table of Contents

Index to Notes

Bowlero Corp. [BOWL] Filings
10-Q	[2023-05-17]
10-Q	[2023-02-15]
10-Q	[2022-11-16]
10-K	[2022-09-15]
10-Q	[2022-05-11]
10-Q	[2022-02-09]
S-1	[2022-01-14]
10-Q	[2021-11-15]
10-Q	[2021-08-17]
10-Q	[2021-06-01]
S-1	[2021-01-21]