Bowlero to initiate a dividend, with a yield above the S&P 500

By Tomi Kilgore

Professional Bowlers Association owner reported second-quarter revenue that rose above expectations, amid strength in the events business

Shares of Bowlero Corp. were on a roll Monday after the bowling-center operator and owner of the Professional Bowlers Association said it would start paying a dividend to shareholders and reported fiscal second-quarter revenue that rose above expectations.

The company said it will pay out a cash dividend of 5.5 cents a share on March 8 to shareholders of record on Feb. 23.

The stock (BOWL) jumped 15.3% in midday trading, which puts it on track for the second-biggest one-day gain since it went public on Dec. 16, 2021. The current record rally was 18.9% on May 12, 2022.

Based on current stock prices, the annual dividend rate of 22 cents a share implies a dividend yield of 1.65%, compared with the implied yield for the S&P 500 index SPX of 1.44%.

The company also reported revenue for the quarter to Dec. 31 that jumped 11.8% to $305.7 million, which beat the FactSet consensus of $300.4 million. Revenue was boosted by 30% growth in Bowlero's events business.

Acquisitions and new builds added $41 million to revenue. The quarter was the first full quarter following the completion of the Lucky Strike acquisition on Sept. 18, 2023.

Same-store revenue, or revenue from centers open at least a year, was positive in the quarter, Bowlero reported, helped by a reset of midweek promotions, improving pricing on weekends and strength in the events business.

Bowlero swung to a second-quarter net loss of $63.5 million from net income of $1.4 million in the same period a year ago. The net loss attributable to common stockholders widened to $65.4 million, or 44 cents a share, from $1.4 million, or a penny a share.

The net loss included a $64.1 million expense from the impact of the earnouts for the period. The company disclosed that there were 11.42 million unvested earnout shares outstanding as of Dec. 31.

Separately, the company said it repurchased $80 million worth of stock in the second quarter after buying back $131 million worth of shares in the first quarter. The company said it replenished the buyback program to $200 million and removed the program's expiration date.

Looking ahead, the company said it still expects fiscal 2024 revenue growth of 10% to 15%, while the current FactSet revenue consensus of $1.16 billion implies 9.1% growth.

Bowlero said it continues to expect to reinvest heavily in the business and has raised its allocation for acquisitions to $190 million from $160 million.

The stock has soared 36.7% over the past three months, while the S&P 500 has advanced 13.3%.

-Tomi Kilgore

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02-05-24 1204ET

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