Bowlero Corp.

Greetings and welcome to the Bolero fourth quarter and full year 2023 conference call. It is now my pleasure to hand the call over to Bobby Lavin of Bolero. Please go ahead.

Good morning to everyone on this call. This is Bobby Lavin, Bolero's Chief Financial Officer. Welcome to our conference call to discuss our fourth quarter 2023 earnings. This morning, we issued a press release announcing our financial results for the period ending July 2nd, The copy of the press release is available in the investor relations section of our website at ir.bolero.com. Joining me on the call today are Tom Shannon, our founder, chief executive, and president, and Jeff Kleiner, Bolero's chief operating officer. I would like to remind you that during today's conference call, we may make certain forward-looking statements about the company's performance. Such forward-looking statements are not guarantees of future performance, and therefore one should not place undue reliance on them. Forward-looking statements are also subject to inherent risks and uncertainties that can cause actual results to differ materially from those expressed. For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release, as well as the risk factors contained in the company's filing with the SEC. Bolero Corporation undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after today's call. Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measures are the most directly comparable to each non-GAAP financial measure discussed, and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company's website. I'll now turn the call over to Tom.

Good morning, and thank you for joining us today. I'm Thomas Shannon, founder, CEO, and president of Bolero Corp. Bolero started with one bowling center in New York City in 1997. This past year, we crossed $1 billion of revenue for the first time, a milestone for the company. With the acquisition of Lucky Strike in September, we will have approximately 350 bowling centers and add an iconic brand to our portfolio. With the Lucky Strike acquisition, we will add a center in Hawaii to our portfolio, which will be the 36th state in which we operate. Our path to growth has never been clearer. We continue to redefine family and location-based entertainment across the country. Bolero's combination of open bowling events and league play make us not only the premier global bowling company, but also a leader in the entertainment industry. We continue to identify attractive locations for new builds and we have seven leases currently signed and four of those already under construction in marquee markets for new Bolero locations. Our newest center in the Westfield Valley Fair Mall in San Jose, California, opened this past weekend. And at the end of August, we acquired the co-located Mavericks and Octane properties in a premier location in Scottsdale, Arizona. for $33.5 million. We have three more acquisitions expected to close in the next month, including Lucky Strike, totaling more than $130 million of purchase price and adding approximately $100 million of annualized revenues. Two of the acquisitions come with real estate, augmenting our asset portfolio and potential sale-leaseback funding sources. Our fiscal year same store sales comp was plus 12.7% year over year, plus 12.7%. As mentioned in the Q&A portion of the last earnings call, we saw a slowdown in the fourth quarter of fiscal year 23 with same store sales for that quarter, negative 2.7%. Nevertheless, total revenue for the quarter increased 2.4% year over year. We view ourselves as perpetual optimizers of the business, and we reacted swiftly to early signs of a softening retail consumer to innovate on our offerings. The high incremental margins in our business make it a priority for us to encourage guests to bowl, for example, a third game or stay longer in our centers buying food or playing in our arcades. The past few years of high post-COVID demand made most of our center associates order takers and service providers with no requirement to sell. To address this, in June, we launched a bundled offering called The Special, which allows guests to prepay the third game at a discounted price and receive a complimentary $5 arcade card to encourage ancillary spending. We are seeing a 60 plus percent take rate with this offering over hundreds of thousands of transactions and continue to A-B test new combinations. Over the past three weeks, we rolled out a pizza and pitcher special that is nearing a million dollars in sales in a very short period of time. These programs are providing consumers extra value while improving ticket size. Early results show average number of games bowled is up 5%. We added these specials and pulled back on deeply discounted promotional nights. However, over the past few months, we have realized we pulled back too hard on midweek and late-night promotions. The cult following on All You Can Bowl, Night Strike, $2 Tuesdays was greater than expected. So we've seen results Monday, Tuesday, and late Friday be off double digits in the slow days of summer and are reinstating those programs almost immediately. I am confident experimentation will result in happier customers who become more loyal customers and who will return more often. Consumer discretionary spend may be dropping. but consumers still want to go out and we provide better value to more expensive alternatives. The brightest star in our business the past few years has been events. Event sales were up 43% in fiscal year 23 over fiscal year 22. Up 43% year over year and up 53% in fiscal year 23 over fiscal year 19. In fiscal year 23, we booked $218 million of bowling events, and there is still room to go with a growing team of more than 200 sales associates. Right now, I'm in Las Vegas with our event sales team gearing up for a robust holiday season. We're having our national sales conference here. Last year, in the week prior to Christmas, we booked more than $10 million of event sales in a single week. In a world where companies are cutting costs, we provide solutions for businesses to invest in bringing their people together in a very affordable way. Our event business was up 7% year-over-year in the fourth quarter and has accelerated recently from that level. We believe there is significant upside in this category. Bolero is getting more analytical and insightful every day. We have established a flywheel in our business that will enable us to compound top-line growth over the long term fueled by self-funded investments. Our high free cash flow generation offers us a sustainable source of capital that we use to reinvest in our business at highly attractive return levels, including acquisitions, existing center conversions, and building new centers. With a focus on enhancing the customer experience, our centers will continue to grow at the unit level, resulting in additional cash flow and ultimately more momentum in the flywheel. Given this dynamic, we have made the deliberate decision to double down on investment in our business in fiscal year 2024, positioning us for strong growth in fiscal year 2025 and beyond. I would now like to turn the call over to Bobby Lavin to review our financial results for the quarter and year and offer financial guidance for the upcoming fiscal year. Bobby?