Lucky Strike Entertainment Corp (LUCK) 2026 Q1 法說會逐字稿

Thank you for standing by. My name is Liz, and I'll be your conference operator today. (Operator Instructions)

Thank you. I would now like to turn the call over to Bobby Lavan, Chief Financial Officer. Please go ahead.

Good afternoon to everyone on the call. This is Bobby Lavan, Lucky Strike's Chief Financial Officer. Welcome to our conference call to discuss Lucky Strike's first-quarter of 2026 earnings.

Today we issued a press release announcing our financial results for the period ending September 28, 2025. A copy of the press release is available in the investor relations section of our website.

Joining me on the call today are Thomas Shannon, our Founder and Chief Executive; and Lev, are our President.

I'd 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 the inherent risk and uncertainties that could 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 filings with the SCC.

Lucky Strikes Entertainment 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 most directly comparable to each non-GAAP financial measure discussed in the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure will be found on the company's website.

I'll now turn the call over to Tom.

Thanks, everyone, for joining today's call. I am Thomas Shannon, Lucky Strike's Founder and CEO.

Starting with performance, total revenue in the quarter grew 12% and adjusted EBITDA was up 15%. Same store sales were close to flat at negative 0.1%, with retail revenue up 1.4% and league revenue up 2.1%, which shows healthy customer engagement across our core bowling and entertainment venues.

We continue to see encouraging momentum in our online booking funnel, which grew double-digits in the quarter. Our offline events business, which on a dollar weighted basis is mostly corporate event bookings, was down 11%, creating roughly a 160 basis points drag on total comps. That said, trends have clearly turned the corner. October was our strongest month of the year for both offline and total events, which gives us confidence heading into the holiday season.

Our primary focus remains on improving free cash flow through discipline, cost management, and capital efficiency. CapEx for the quarter came in at $26 million down from $42 million a year ago, reflecting tighter capital allocation and benefits for our procurement function.

In July, we made a strategic real estate investment, acquiring the land and buildings for 58 of our existing locations for $306 million. This enhances flexibility, lowers exposure to future rent increases, and sets us up for future accretive sale lease back or refinancing opportunities should we choose to pursue those. In September, we closed a $1.7 billion dollar refinancing that extends debt maturities to 2032. At an average weighted cost of capital of 7%.

We also expanded our roughly 370 location platform to the acquisition of two large and very profitable water parks, Raging Waters Los Angeles and Wet n Wild Emerald Point in Greensboro, North Carolina, along with three high performing family entertainment centers in Southern California, the 24-acre Castle Park in Riverside, California, Boomers Vista and Boomers, Palm Springs. Together these destinations welcome more than a million annual guests and broaden our leadership across water parks, amusement, and family entertainment.

The $90 million transaction is expected to generate returns above our historical average, with most of the financial contribution coming next summer.

We also continue to invest in our people. This quarter we welcomed Brandon Briggs as Chief Revenue Officer, bringing global experience from major cruise lines, and Laura Cobos as Vice President of field training following her three-decade career at Texas Roadhouse. Both are already having a measurable impact on our service and culture.

Our teams are energized, engaged, and executing with precision. We're selling with confidence, serving with heart, and continuing to raise the bar for hospitality and out of home entertainment. Keeping it short and sweet.

With that, let's turn it over to Q&A.

(Operator Instructions) Matthew Boss, JP Morgan.

It's Amanda Douglas on for Matt. So Tom, to start, could you break down the drivers of one queue's roughly flat comp as you look across your walk in retail business relative to events and specifically on events, could you elaborate on the clear signs of recovery that you cited heading into the holiday?

Hey, this is Lev speaking. So I just quickly touch on retail and le, which I think were major drivers, and we actually saw continued strength in both categories in this most recent period, and then I'll turn it over to Bobby to talk more specifically about events. But we saw obviously very healthy retail foot traffic. The numbers indicate that finishing, nearly 1.5% off, but I think even more encouraging is what we're seeing in terms of a response from our lead customer, which I would argue is maybe our most price conscious customer.

And yet we were up in leagues over 2%. I want to point out this most recent period of October we closed up over 5% of leagues, and that was driven by a combination of an increase in headcount of boulders for our fall flooring, but also we were. Seeing an increase in the average price per game, so we saw an increase in lineage revenue as well.

And fortunately with the increased headcount, we're also seeing that driver food and beverage attachment from the league bowler. In fact, we've had five consecutive weeks of all-time high food and beverage revenue coming from our elite bowlers, so we found that to be super encouraging and Bobby's been a lot closer with the event business.

I'll turn it over to him.

So the event business Which we talked about sort of the main sort of headwind the business had as in the corporate events business that business was down in the September quarter of mid-single-digits October we had. Sort of the best month we've had in more than a year and a half, so you know we've changed the way we're operating that business.

Additionally we're leaning into online more and online is growing strong double-digits to sort of make up for some of the, headwinds we're seeing mostly from a macro perspective on the corporate events side.

That's helpful. And Bobby, just to follow-up on the adjusted EBITDA margin expansion in in the first quarter, could you expand on the drivers of the 70 basis points of expansion and then just any puts and takes to consider on the progression of EBITDA margins over the balance of the year?

Yeah, so I mean, revenue is going to drive the most amount of operating leverage on the margin perspective that's offset by we did invest an incremental $2.5 million in marketing, and we have a million dollars of higher sort of insurance costs as we bring other businesses into the system from an event margin cadence. The first quarter of 2026 is the lowest margin quarter.

I'd say you should expect for 600-800 basis points margin improvement as we go into the higher winter quarters and coming back down to where we are now when we get into the June quarter.

Steve Wieczynski, Stifel.

So Bobby, wondering, maybe how we should think about the cadence for the rest of the year in terms of same store sales and then maybe if there's anything we should be thinking about in terms of, whether it's headwinds, whether it's tailwinds over the last three quarters of the year. So just, kind of we can kind of get our models in the right spot moving forward.

Yeah, so, the next few quarters are pretty clean on an apple-to-apple basis. You have for New Year's is falling in the third quarter that happened last year, we -- you have some of the growth, inorganic growth came in the first quarter of 206 is from the acquisition of a water park in North Carolina, of another water park in LA coming in in sort of the June quarter.

So you're going to have the strongest inorganic growth periods or quarters in the first and the fourth quarter from the same store sales perspective. We guided the year to 1% to 5% and that holds, you can kind of see how that should flow through, but ultimately, we expect for the same sort of sales to be in that range for the second and third quarter and then the fourth quarter being a little bit better.

Okay, gotcha. That's great. And then the second question is probably for for Levv, but maybe a little bit of color around attachment rates in terms of retail customers wondering, what you've seen recently in terms of whether it's FNB or amusement spend, any material changes, in their spending patterns once they're inside your properties?

I think we're more and more encouraged by our food attachment, and I think it was actually your question maybe a year ago in a similar call where we talked about us leaning into food and seeing just a lot of organic upside within our business, improving the food quality, the food selection, the innovation in our food program. I'm happy to report that in Q1.

Food is actually up to 10%, way outpace our overall retail, which is up 1.4%, and we're going to continue doing that and we have now an ecosystem focused about around food attachment, and I don't think we could even scratch the surface of what our opportunity here is. We're now focused on selling value to our customers right at the point of entry from the front desk.

We're offering a product called the Pizza and Pitcher combo. You get a large cheese pizza and either a pitcher of soda, beer, margarita right at the front desk. It's a huge win for us in the first five months of selling this product, we sold over $8.5 million worth of pizza and pitcher combos.

First of all, it's a great product that offers a lot of value to the consumer. I think it's helping drive our MPS score higher, which is up year over year, but also it gets the food out to ing faster when they order from the front desk, which means we get a chance to sell more food and beverage products during their experience with us.

We've introduced platters for larger groups. Three months ago we launched two platters. It's a combination of some of our more popular products, feeds a group of 8 to 10 individuals, 3 months' worth of selling platters, $1.3 million. We launched our raft lemonade program.

This goes on and on and on, and we're going to continue to launch innovative products, so we've seen great success with Kraft lemonade. We're now testing boba iced teas and dirty sodas, which are really popular industry-wide.

We're leaning into training, as you heard, we introduced a new VP of field training and Laura Cobos. We're going to empower our associates and our centers to become even better at sales, and fortunately for them, they have a better product to sell. So super encouraged. The numbers speak for themselves. We're not done.

You're going to continue to see innovation and value offered to our customers with better sales tactics. I think that combination is going to really power this business.

Randy Konik, Jefferies.

Yeah, thanks guys. Good evening. Maybe give us some updates on the progress on the Lucky Strike rebrand. You never mentioned in the press release. I think you're up to 74.

Maybe give us some perspective on how much more you have to go in the timing and framing up of that, how the economics are looking or the metrics are looking of the Lucky Strikes rebrands versus the balance in the chain, and just that'd be super helpful to get some more color there. Thanks.

Thanks for the question. This is Lev. So you're right, we're up to 74. We set a goal to be at 100 by the end of this calendar year. We're still on track for that. We anticipate being at 200 by the end of 2026. Again, really important that for us because as we've significantly increased our marketing spend and having the ability to focus our marketing spend across two brands, that being AMS and Lucky Strike versus trying to execute across three brands when you consider it Valero is going to give us a lot of, I think, more value for our dollars in marketing spend.

It allow us to do more national campaigns. Obviously the economics bode well for that when you talk about pushing marketing across 200 Lucky Strike locations. I think we're also seeing a lot stronger F&B attachment at the Lucky Strikes, and in terms of the value of these rebrands, two of our strongest properties in the portfolio, that being Times Square and Chelsea Piers, they have both been rebranded to Lucky Strike, and they have very strong results.

Times Square was up. In retail revenue 36% last period. So it's resonating and I don't think it's a mystery why when you visit these properties they're stunning. Obviously the menus are better, the level of hospitality, the experience is topnotch, and so the more of these we do, I think the stronger our results are going to become.

That's very helpful. Back on the event side of the of the business, I believe you talked about starting to turn. Was there also a geographic component? I think in the past California might have been weighing a little bit on on the events business as well. Just give us some perspective on just any geographic disparity in that area, in that part of the business, and where do we see that kind of trending going forward.

So if we were not in California or Washington, we would comp up low single-digits for the quarter, California and Washington continue to see significant amount of Silicon Valley layoffs, we are leaning in, we are accelerating sort of marketing spend, we're accelerating sort of a go out and get the business mentality on the event side, but some of it's just that you know we have to kind of deal with this storm and whether the storm on, massive layoffs, corporates are not going to have, celebratory parties we're leaning in.

We're ultimately seeing the turn, the events business in New York, strong events business in Texas, Florida, strong. Really is, California, we would the business would have better results and already very outstanding results.

Jason Tilchen, Cannacord Genuity.

Good evening and thanks for taking my questions. I wanted to start with, maybe some clarification on walk-in retail trends, that you've seen, obviously the comp how it trended through Q1 and then what you've seen, so far in October as well.

Yeah it's been positive. I mean we had in the summer we had season pass, in October we've seen mid single-digits on retail. So again, very powerful trends on the retail side. It really comes down to, we are winning on retail, we are winning on weed, winning on food, we're winning on alcohol, we're winning on amusements, the acquisitions we've done are extremely accretive to the business on an inorganic basis, we just have to get through.

The comps on the corporate events business, which, again, is an important part of the business this quarter, but it becomes much less important of a business when we go into the third and fourth quarter.

It's very helpful and you mentioned the inorganic piece. I wonder if you could just go down a little bit more about some of the performance of the water parks sort of the first full season with you guys and maybe what are some of the operational learnings after going through that full summer period.

Yeah, so we have two water parks that we owned through sort of the full, three water parks that we're going through the full season, raging waves, Biggauna Destin, and Shipwreck. It's a very interesting business because you make all of your revenue in 100 days. Our procurement FNB synergies are. massive. We are learning to have more of the hourly workers so it's a little bit of a different business model, but the thing that's been paramount is the consumer is responding to.

Premium value, right? And what do we, what is premium value? Like we, we're improving the food at raging waves and so food sales at raging waves were up 10% year over year. We. Brough in alcohol to raging waves, right? And that's obviously been a massive tailwind, but we're also delivering these guys value by having, bring a friend day during the week and things like that.

So ultimately, these businesses are great, we did market raising waves with our 20-plus property folding property. We have in Chicago that work and we're looking forward to next year where we're going to have a pass that you can use at raging waves and at our bowling centers in Chicago, a pass that you can use at Boomers, Boca Raton, and our bowling alleys in South Florida. And so ultimately that is, the next part of our business.

When you look at the Cadence of improvements at these water parks. I think the best comp for you would be to consider our boomers locations which fell into our comp in October and we finished that month up good single-digits. So we've had those obviously for a bit longer, which gave us an opportunity to improve the facilities, improve the game selections and redemption, improve the menu. To improve the staffing and the training of the staff and the results are there.

So as an example, we just hosted a family fest event. It's sort of our grand reopening for the boomers' locations once we complete renovations, we hosted it at a Boomer Irvine location on this past Sunday, 4,000 attendees. The community couldn't believe the quality of the product, and we expect similar results of our other assets once we have a little time to improve them and run them the lucky trek entertainment way.

Jeremy Hamblin, Craig-Hallum.

Hey, this is, [Will] on for Jeremy. Most of my questions were answered, but, just one on the debt refi, just how we should think of interest expense for the full year?

Yeah, I mean, it's 41.7 million times 7%-plus, $60 million for the capitalized leases.

Michael Kupinski, Noble Capital Markets.

Hi, it's [Jacob] for Michael Kapinski. My first question piggybacks off of a few other questions have already been asked, but just curious about the relationship between food and beverage revenue and bowling revenue and Lucky strike locations compared to Bolero locations and just curious how those how those ratios are trending qnd potential upside in food and beverage when all bolero locations have been converted to Lucky strike locations?

Really interesting question and this is, by the way -- and it's really hard to give you an answer because I don't think that when we went down this journey of enhancing our food program, I couldn't have imagined that we'd be at 10% 1 of this fiscal year, and we're not done yet. The innovation continues. We just finished the board meeting yesterday where we talked about the next wave of products that we're going to be introducing a bit of tasting. They're incredible and what's important is their restaurant quality. They're not quality for a bowling alley.

So I don't think we've scratched the surface of our food and beverage program. I think you're going to see a lot less of our guests eating and drinking before they come and certainly a lot less after they leave. When you pair a quality product, value offering, enhanced marketing of that product, enhanced training of our staff to sell that product. I think the sky is the limit, and that's just on the lucky strike lucky strike side.

I mentioned earlier our league bowler headcount is up, so going into this fall flooring, we were up nearly 3,000 bowlers for our traditional leagues. We're also introducing a league bowler menu with items exclusive to our league bowlers, and we're marketing that league bowler menu which we've never done before.

And now we're adequately staffing our centers for the nights that the leagues are in. There was this legacy mindset that league bowlers were not big on purchasing food and beverage, so historically the centers weren't staffed the same way for league nights as they were staffed for retail nights. Well, we've ripped up that notion and now we're staffing the same way.

And we're seeing a response to that. So I mentioned earlier in their call, and this is a real stat 5 consecutive weeks where we've Then an all-time high in food and beverage sales for the league bowler menu. I don't think we scratched the surface there as yet as well. So the lead bowlers are responding.

They're cost conscious, but when you give them value, they gravitate towards it. So this leboer menu is performing really well. The staff on the floor are selling, they're making more money, they're happier.

It's a win-win, and I think we're going to get it on both sides that are traditional centers with the league bowlers and that are more experiential lucky strikes.

I'll give you some stats last quarter. Locations that are branded Lucky Strike had 50% higher F&B to bowl revenues than the bow arrows and AMS. If we are able to normalize that that that's a $125 million to $150 million pick-up.

Gotcha. Okay, that's great. And then my next question, I'm just curious if you could talk a little bit about the promotional activity outlook. I'm just curious if there are any large promotional offerings planned over the winter months, know the summer passed, generated strong results. So just curious if there's anything like that planned over the winter?

Yeah, so we're seeing promotional environment slow down. I think it was, raised to the bottom last year with some of our competitors and they realized how much that's hurt their business so we're seeing the benefit of that pulling back. We continue to be very tactical, online you generally have to offer some sort of call to action promotion to drive purchase.

But we're being a little bit more tactical about that. We'll have a Black Friday sale. Maybe we won't have a sale the first few weeks of December where, our liens are 100% utilized for them.

Eric Wold, Texas Capital.

Good afternoon. I kind of want to follow-up again on the, two questions. One, first one kind of follow-up on the FNB side, with the speed of 10% in the quarter, I mentioned versus, 1.4% for overall retail, how much of that was price, versus general improvement and attachments across, the various cohorts and, how much room do you think you have to raise F&B prices from this point forward and remind us does, sorry, long question, but remind us the 1.5% comp guidance for this year, does that include any assumption of taking price on F&B?

So in the quarter we took no price on food and beverage, so that performance is purely attachment.

Now as we roll out new products, I wouldn't call it taking price, but if the price will match the quality of the product we roll out. So naturally some items will raise the ticket averages for us, but those assumptions take, do not take price into consideration at all. So any price that we take, we just supplement the assumptions.

(technical difficulty) Yeah, sorry, and the last question, kind of -- obviously, with the big start of the year, the major acquisition and then kind of being the real estate purchase as well, how would you frame kind of the focus for the remainder of this year? I mean, obviously, you, I assume you'd be opportunistic if something does come up, give me the run in, but is this still a year of an M&A focus? Is it shifting a bit more towards, organic given what you've done at the start of the year and then how much needs to be invested in those acquisitions that you did at the start of the year they kind of come on board?

Yeah, so great question. We, we'll spend $95 million on acquisitions right now. I, you never say never, we'll always be opportunistic right now we're seeing the highest returns internally, whether it's marketing spend, whether it's FNB, whether it's a lot of these specials and bundles we're selling at the front desk, we.

We are very focused on driving free cash flow right now so unless the deal is a home run, I don't think we would do it this year. Also, as you can see we reported, $26 million of CapEx, I think we'll come in below our guidances here for $130 million of CapEx as we really focus on internally your question about acquisitions, the acquisitions we've done in the CapEx that's needed. There's a few million that's needed in North Carolina.

There's a few million that's needed in LA. We have a commitment to spend a certain amount in LA every year. The rest of the acquisitions, we're digesting right now and we kind of want to see, what is the opportunity there. There is some op opportunity and amusement, but that's a few million here and there. So really right now the focus is organic.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You now disconnect.