Lucky Strike Entertainment Corp (LUCK) 2026 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be a conference operator today. At this time, I would like to welcome everyone to the Lucky Strike Entertainment Q2 2026 earnings conference call. (Operator Instructions)

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

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

Today, we issued a press release announcing our financial results for the period ending December 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 Ekster, 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 risks and uncertainties which 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 those factors contained in the company's filings with the SEC.

Lucky Strike Entertainment undertakes no obligation to revise or update any 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, the reconciliation of the differences between each non-GAAP financial measure in a comparable GAAP financial measure can be found on the company's website.

I'll now turn the call over to Tom.

Thanks, everyone, for joining today's call. We finished the December quarter with a positive same-store sales comp of plus 0.3% and total revenue growth of plus 2.3%. The result was driven by continued strength in both our retail and league businesses. While we made steady progress turning around our events business, which ended nearly flat for the quarter, it's best showing in years.

Retail and lease performed well throughout the quarter and provided a stable foundation for the comp. Events, which had been the primary drag on same-store sales over the past several quarters, inflected meaningfully in January. The changes we've made to the events organization, pricing, and funnel are beginning to show results.

January started off with strong double-digit results. We saw one week of headwinds from the biggest snowstorm in this country has seen in a while and then a return back to momentum of strength, retail leagues, and events.

During the quarter, we made deliberate investments in payroll, marketing, and elevated activity levels to drive traffic and return the business to positive same-store sales growth. A number of these investments delivered attractive returns and helped establish positive momentum, particularly in retail, leagues, and the early stages of the event's turnaround.

However, not all of the spending generated the ROI we expected with incremental labor in particular, weighing on profitability. As a result, while we remain focused on driving organic growth, we are shifting toward a more balanced approach that places equal emphasis on same-store sales growth and EBITDA expansion. Going forward, investments will be more targeted, more measured, and held to a higher return threshold.

In January, we also closed on the acquisition of Raging Waters, the largest water park in California, which will contribute meaningful EBITDA in the June and September quarters. When combined with Wet n' Wild Emerald Point in North Carolina and three new family entertainment centers we've acquired, we expect a significant seasonal lift to earnings as we move through the summer months, reflecting the continued diversification of our portfolio.

On the brand front, we opened Lucky Strike Aliso Viejo in Orange County, California in December, and early results have been encouraging. We now operate approximately 100 Lucky Strike locations and remain on track to sunset the Bowlero brand by the end of this calendar year.

Conversions to Lucky Strike have delivered strong lifts and simplifying the portfolio to two cohesive brands, Lucky Strike and AMF, will drive efficiencies, particularly in marketing spend. At the same time, we play a role at a refreshed AMF look later this year that leans into the brands more than 100-year history.

This evolution strengthens our value-oriented offering while clearly differentiating it from Lucky Strike, positioning the portfolio for profitable growth and improved returns.

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

(Operator Instructions) Steve Wieczynski, Stifel.

Hey, guys, good afternoon. So Bobby, this is probably for you. I guess, as we kind of think about the results we've seen here, I'm surprised you guys didn't elect to kind of lower the EBITDA guidance to the full year, at least, maybe bring the high end of that range down based on the EBITDA generation through the first six months, you got to need to see a pretty significant uptick in the second half of the year to kind of get inside of that range at this point.

So I guess my question is, what makes you guys feel confident in getting into that range? And look, I understand your commentary just made about how strong the start of the year has been.

Yeah, so I do. If you think about from a numbers perspective, the past two years, we've had this $300 million business being really a drag on our results. It's a drag on our financial results but also, events is sort of tip of the spear as a lead gen for the business. That business has turned, as Tom said in commentary, we said in press release, that business had organic growth in January/February. When you compound that with retail being up mid-single digits, league being up mid-single digits, we're still within the paradigms of our guidance.

When we talked last quarter, we were very focused on people not getting super excited about the December quarter because we still had this corporate events business, which was front-end loaded in December. As expected, corporate events are down. But then you got into the third and fourth week of December, and our consumer events and our retail were on fire. And the first three weeks of January, the business was up double digit.

So our confidence in business is very high, we invested to get there. And now, we need to pull back some of those investments. But we're definitely still within confines of our guidance we gave out in August.

Okay, that makes sense. And then maybe if I could add one more real quick. I want to ask how we should think then about kind of how the flow through would look for the rest of year. Obviously, you guys were investing, it seems like pretty heavily in the corporate events business and turning that around through December. So maybe a better way to ask that is, how much of a drag was that on margins in the second quarter? Hopefully that makes sense.

Yeah. So there are two -- or there are three buckets, I would say of direct drags. So center payroll on comp basis was up $6 million year over year, right? Two, we talked about it, we flagged very heavily the marketing investment, marketing investment on a year-over-year basis was up $4 million, and the marketing team investment on a year-over-year basis was up to $1 million.

So ultimately, finding the right balance on those numbers and organic growth is what we think we've gotten to in January. We're very happy with the January results, but we're going to ultimately optimize those numbers to make sure that we're getting the appropriate flow through.

And from our expectations, you should see margin growth in a material way in the fourth quarter as all the water parks and the Boomers go from being a few million a quarter of drag to significant EBITDA.

Okay, that's helpful. Thanks guys. I really appreciate it.

Matthew Boss, JPMorgan.

Great, thanks. So could you elaborate on progress with your initiatives that you've made to date to rebuild the events business, or specifically drivers you think underlying this recent inflection in the events business relative to the headwinds that you faced on that side of the house and in the first half of the year?

Yeah, we chased price for two years. So if you called us and you wanted a discount, we would give it to you.

Now, discounts are an important part of any sort of location-based entertainment company. If you call in the summer or Monday afternoon, a discount is warranted. But if you call for a Thursday at Times Square in December, we shouldn't give you a discount because demand is greater than the supply.

In September, we built out dynamic pricing reporting systems. And when we looked at where we were tracking in September, we were tracking for our events business to be down double digits, and we brought it all the way back. And that was really less through volume and more through dynamic pricing. And that is something that has dramatically changed over the past few years.

The volume, it's hard on the corporate side. That's business that we need to build functions to kind of build our marketing function to get our name out there more. But also our marketing, which has really helped the kids birthday parties and consumer parties. So pricing has been paramount and also the partnership with marketing is really a key change for the business.

And maybe to that point, Bobby, could you elaborate on which investments you made in the second quarter that you saw translate directly to an improved traffic or same center comps?

And then, just how best to think about the continued investments as we think about the third or the fourth quarter is, I think you mentioned balancing margin in the back half of the year, and particularly it sounds like the fourth quarter.

So I'm going to hand it over to Lev.

Hey, Matt. So you saw we made a significant increase to our marketing budget and that was an investment in building our brand and increasing the brand awareness. We feel like it was, for the most part, a pretty worthy investment. In fact, we saw our media impressions in the quarter increased 200%. Q2 of prior year, we had 340 million impressions. Q2 of this year, we exceeded over 1 billion impressions. And that also converted. We saw online revenue increased 28% year over year, and booking conversions improved to 2x.

The rebrands of Lucky Strike, of which we did 30 in Q2, are also bearing fruit, and we anticipate being done with all of those rebrands this calendar year, which would put us right around 280, 218 Lucky Strike locations. But when you consider the efficiency of going from three brands to two, it really helps our national awareness.

I also want to mention that the marketing investment increased our share of voice. So our search impressions climbed significantly. In fact, it was a 520% increase. But we also saw efficiency with our CPMs decreasing by 38%.

So from a high-level marketing increase, largely as an investment in brand building. And we saw the benefits of that in January, and I think that's going to continue as we scale the rebrands of Lucky Strikes.

Great. Best of luck.

Thank you.

Jason Tilchen, Canaccord Genuity.

Good afternoon. Thanks for taking my question. I was wondering if you could talk about the food and beverage sales that you saw during the quarter. It was a little below what we were expecting. And I'm just curious sort of how attach rates trended and what are some of the benefits you're starting to see from sort of the increased emphasis on training and some of the tablet implementation that you guys are rolling out. Thanks.

So our retail comp was just shy of 2% at 1.7%, but our retail food was at 10.9%. That continues to outperform. And while alcohol was a bit of a drag with retail alcohol down right around 4.7%, we saw that our retail non-alcoholic comp grew more than the drag, so that increased 26.2% or $2 million.

So in terms of food and beverage, it's pretty dynamic. We're seeing obviously as a society the decrease in alcohol consumption. But we continue to invest in our zero-proof program. So we launched, as you remember, Craft Lemonades earlier in the year. That has a run rate of over $5 million. And with the success of Craft Lemonades, later this quarter, we plan to introduce dirty soda programming to our traditional properties and boba drinks to our experiential properties, and we anticipate similar results.

We're also, for the first time ever, going to introduce a zero-proof program to our AMF properties, our traditional locations. They've never had a mocktail program. So we're just changing with the times, investing more in zero proof, and it's working.

What also is working is our tablets. So we introduced server tablets. Today, we sit at 125 locations with server tablets, and we're seeing the average check size increased about 7% with increased gratuities for the associates using the server tablets.

By March, we're going to have server tablets in 160 of our locations, and we're going to continue to evaluate as we scale that.

But ultimately, as Tom mentioned, we increased service labor in Q2. And some of it worked, and we saw retail comp growth. Some of it was inefficient, and we had to evaluate that. We've actually recently trimmed some of our least profitable operating hours as a result of that. And we're looking at in and out times of our associates to make sure that they're very productive.

But that investment in labor, increased service labor for our guests, and our increased hospitality training is working because we've now seen for 14 straight months, our MPS score comp from prior year. In fact, it hit our highest point of 78.7% in October.

So from a hospitality perspective, from a retail growth perspective, the service is working. We just want to optimize it.

Ian Zaffino, Oppenheimer.

Thank you very much. I know you guys mentioned some of the investment that you're making and helping the return that you're expecting. Can you give us maybe kind of particulars of what was unexpected, I you mentioned labor, but anything else and then how are you actually accounting for some of the line items as you get to the return that you want to get to? Thanks.

I mean, investments are focused on center payroll, marketing, infrastructure at the water parks, Boomers, and then what I would call the other bucket or the incremental activity bucket.

The center payroll, as Lev spoke at, we look center by center, we look at the amount of payroll we added, and we identify where that payroll delivered a return or didn't deliver a return. Returns are in this world, ultimately, average labor is going to cost you $25 to $30 an hour. And if you're not getting the revenue to justify that, you shouldn't be investing in labor. We're an incremental margin business. The incremental revenue has to be greater than the incremental cost.

From a marketing perspective, right now, we're injecting capital into a system that's generally been starved of marketing. We're watching impressions very strategically. We are testing market by market. And so, in the first market we leaned into was in New York, New York City. We increased marketing spend. We rebranded Times Square, Chelsea Piers, Lucky Strikes, and both of those centers comp double digits in the second quarter.

At the same time, we have a state like Colorado where we have a hodgepodge of Bowleros, Lucky Strikes, and AMF, so it's harder to test that marketing spend. And that's why the rebrand is so important to get done this year.

As it relates to the water parks and the [FCCs], these businesses have been starved of management labor. We think that there's massive opportunities on awareness on investing capital into these locations. And we saw that with the robust performance at Boomers.

Destin Water Park that we bought 1.5 years ago, that water park was up 20% year over year last summer. So we continue to lean into that team, but that team does drive a multimillion-dollar drag in the off seasons. But then you get that even dot and more back.

And then the one that we found had the least returns was just kind of incremental activity. We had more programs. More programs mean that you're spending money faster. You're ultimately dealing with marketing materials, collateral, the center the uniforms that you're not being as efficient. Now, those are the things that we're going to plan better, pull back on, and really focus on service labor and marketing that drives the top line.

Eric Handler, Roth Capital.

Good afternoon. Thanks for the question. So we're now about, let's call it 3.5 months away from Memorial Day when a lot of the regional water parks will be opening. As you sort of -- when customers show up, I'm not sort of like on a like-for-like basis, where are they going to notice the biggest changes in operations?

Hi, this is Tom Shannon. We've been investing in all of these assets really from shortly after we acquired them. And one of the reasons that Big Kahuna investing was up 20% is it got a comprehensive facelift. It was done very efficiently. It was done largely within park labor.

But there was a lot of rocks literally in the park where you had things like bridges that were dilapidated, fences that were not appealing, or maybe even structurally sound. And the team in the off season went through the entire park.

They rebuilt seven bridges. They probably replaced half of the fencing. They painted literally everything, gel-coated the slides, replaced malfunctioning pumps, lighting, et cetera, and the park looked effectively new and the customers responded.

We've done the same on the Boomers. So the preliminary numbers I have on the Boomers, the legacy Boomers that we've owned for more than a year, they're up in revenue 25% over the last two weeks. And that's six large locations from Boca Raton, Irvine, Livermore, Modesto, et cetera.

They all benefited from meaningful capital investment and some very efficient capital investment. I think you're going to see that in all of the parks, with the exception of probably Raging Waters, which we literally just closed on, We'll do our best to upgrade aspects of that. But when the guests comes, they're going to see something they haven't seen in a long time. And that is a really refreshed, really appealing, and upscale water park or family entertainment center.

Where we've made the investments, we've seen the return. I think we've seen a better return than we would have reasonably expected or even hoped for.

Eric Wold, Texas Capital Securities.

Thank you. Good afternoon. I just have a question kind of following up on the very first question out of the gate around the guidance range, Bobby. I guess, January done, so five-ish months left in the fiscal year. Maybe talk about the biggest variables between kind of the $50 million high-end, low-end range of revenue and $40 million on EBITDA, the biggest variable that would take it in your mind from the high end, the low end, or vice versa. And then which of those are most in your control, like marketing maintenance, things like that versus something that maybe is a little less out of your control?

Yeah. So if you go for six months, the comp is flat, right? The comp is unbelievably easy for the next six months or five months, I guess, on the event side, right?

Additionally, leaning more into summer season past, last year, we did $13 million. We think we can beat that significantly this year. And most important is going to be how profitable the Boomers Emerald Point, which is the biggest water park in North Carolina; Raging Waters, which is the biggest water park in California; Raging Waves, biggest water park in Illinois. All of these are, we've invested in, we've done what we did to the legacy Boomers.

And you remember, we bought the legacy Boomers for $27 million, and those properties are doing [$15 million] of EBITDA at this point. We think we can get to exactly there but close on the water parks and so how profitable the water parks comp with the capital invested is really the main driver in the fourth quarter.

In third quarter, we started January strong. And so, we started January strong. If it wasn't for this [nopocalypse] that happened. We would have been up double digits on a comp basis in January. We're still up. We had a great month. We'll see a ton of operating levers that month.

And the thing that Tom put in his quotes in his press release is we're committing to taking down the inefficient spend. And so the difference between the top and the bottom is going to be performance in the water parks, maintaining good organic growth, but also us getting costs under control.

Michael Kupinski, Noble Capital.

Thank you for taking my questions. I -- obviously, you're anticipating that the water parks are going to contribute meaningfully into the fourth quarter, so I plan to get a little granular here and start for the questions.

In terms of Raging Waves, you indicated that it came with a lot of land, and I know that you had anticipated that you had planned to build out some event space there and maybe do some expansion. I was wondering if you had already done that.

And then part of the growth that we saw last year, I think you said that you introduced alcohol and that you saw a little revenue lift from that. I was wondering if you're Raging Waters in California, if that was part of the acquisition plan, if that already had alcohol, they had that there or is that a part of introduction that you can see a little lift from that as well?

And then I guess in terms of other investments into the water parks, are there other expansion plans that you have either done or contemplated for those?

Hey, this is Tom Shannon. Thanks for the question.

With regard to Raging Waves, we did add some covered event spaces with open sides. And those were open for the last season. We also got a beer license in the middle of 2024, and we had that last year. That contributed a couple hundred thousand dollars in alcohol sales. We're increasing food and beverage availability throughout the park for this year.

We've sort of reconfigured the flow as you walk in and where we've placed certain food and beverage outlets, optimized that. So I think you'll see continued lift.

We purchased 66 acres adjacent to that park. We haven't done anything with it, and we don't have any plans at present. We were going to embark on a pretty meaningful expansion of the park with the addition of an action river, family pool, and an adult pool with swim up bar that would have increased the impact capacity by somewhere between 1,500 and 2,000 people.

Unfortunately, we weren't able to get through the permitting process in time to start construction this year, so that'll be deferred to next winter for a 2027 summer opening.

With regard to Raging Waters, it does not have a liquor license. We will be applying for a liquor license. That will not happen for this summer. Hopefully, we'll have that for the following summer. And given the volume of that park, that should be a meaningful number.

I don't recall if there was anything else you asked that I haven't covered. Please let me know.

Outside of alcohol in terms of the prospects for growth there. Like, is there other land that you're getting, other expansion plans in the future?

Well, I mean, we have expansion opportunities within the confines of all of the parks. None of them are built out to their capacity. So over time, the answer is yes.

But I think that you have a lot of very low-investment, high-return opportunities. For example, in Big Kahuna in Destin, you could do a lot of rides and make the park sort of more dynamic and exciting. But the gating factor there is really there's not enough deck space and lounging space, which is relatively inexpensive. And so we focused on those sorts of things.

We have ambitious expansions planned, as I mentioned, in Raging Waves. Also in Shipwreck Island in Panama City, we're doing number of upgrades over the next two years at Wet n' Wild Emerald Point, which is a very large high-volume park. We're adding a meaningful kiddie/family area. There'll be upgrades to the cabanas there, which sell out nearly every weekend. We're adding something like 40 or 50 cabanas that will be in place for this coming season. So there's a lot of that sort of stuff relatively inexpensive, very high ROI, has a big impact on the guest experience.

But we also have things planned like a large power complex, slide tower complex at Shipwreck Island in Panama City that we hope to have in place for the 27th season. The expansion I mentioned at Raging Waves for the 27th season, and also some things that we'd like to do at Raging Waters.

But for the most part, these parks are in pretty good shape. It really comes down to being able to increase revenue through simply having more availability of food and beverage, more cabanas to sell, and then optimizing pricing and packages, which I think we've done a pretty good job on for this upcoming season.

Thanks for the color.

My pleasure.

Gregory Miller, Truist Securities.

Thanks. Good afternoon, all. I'm hoping you can provide some help in terms of getting a better understanding of how we should be thinking about say the next 50 or so Lucky Strike conversions relative to the first 100. How similar or different are these stores from a demographics perspective, locations, the types of stores in part, in terms of how we should be thinking about the ramp of these rebranded locations over the course of the rest of the year? Thank you.

Sure, this is Tom Shannon. There's no difference. It's not like we started at the top in terms of revenue and went down. A lot of what got converted was a function of how quickly they moved through a permitting process.

As you know, we deal with a lot of permitting issues in a lot of municipalities. Some are very easy and efficient to deal with, some are not. And so, the pace at which these things happen is somewhat dictated by an external audience, which is municipal governments. So there is really no difference between the next 50 and the first 100.

What is going to happen, and this is really important to note, is that we are going to build out critical mass in most, if not all markets, with the new Lucky Strike brand. So I think Bobby mentioned that we have markets like Denver where you still have three brands and you may have you know four or five Lucky Strikes out of 20 centers. It's not enough to do any meaningful marketing. You just can't amortize the spend over enough centers.

But when you get to all at 15 Lucky Strikes in the market, you're able to do that, and you're also able to do that on the national basis. So I think the returns will accelerate, and Lucky Strike will become a very, very powerful brand once we have 200 locations, which we expect by the end of calendar '26, and we're able to put real marketing muscle behind it in a way that's never occurred before. You're going to start to see a lot of -- a lot more relevance and unaided awareness of Lucky Strike and then following that AMF.

Just sort of to flush out the point, AMF as a brand has probably had no meaningful marketing spend in three or four decades. It doesn't mean anything at all. And the same is largely true of Lucky Strike.

When Lucky Strike first launched back in, I believe, 2003, it had a lot of excitement around the brand. It was on entourage, was really considered a cool brand. And then it really sort of fell by the wayside, and no real money was spent on the brand. And so we're going from an environment of little to no investment over a very long period of time to one now where we have -- or soon we'll have critical mass in two brands that we're be investing serious marketing effort behind. And I think the upside in both of those is tremendous.

Thank you, Tom.

Jeremy Hamblin, Craig-Hallum.

Hey, this is Will on for Jeremy. Thanks for taking my questions. Just first, wondering if you could break down the comp cadence by month through the second quarter, and then if you're able to quantify the weather impact you saw from the snowstorms?

Yeah. So was the easiest cadences, plus one, plus one, minus one. A little bit better in October, November, and December, but that's the easiest way you should look at it.

The hit from the snow in January was about $5 million in revenue. So it really took down Saturday afternoon to Saturday night about -- we lost at least $2.5 million on Sunday and we lost about $500,000 on Monday, Tuesday. So we were looking at double-digit comp for January until that -- we're still pretty happy with the comp, but we get through. And then snow in December cost us about $2 million.

Okay, that's helpful. And then just curious on the EBITDA drag from the water park business in the quarter. And then I know focus has been on organic growth this year, but is there anything in the acquisition pipeline that we should consider for the back half?

We've done $95 million of acquisitions this year. We're always looking at things, but right now ,we're focused on having a monster summer season in our Boomers and water parks.

Got it. Appreciate the color.

There are no further questions at this time. And with that, ladies and gentlemen, concludes today's conference call. We thank you for participating. You may now disconnect your lines.