Q1 2025 Bowlero Corp Earnings Call
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John: Thank you for standing by, my name is John and I'll be your conference operator for today. At this time, I would like to welcome everyone to the Volveral 1st quarter of 2021's 35 Earnings Conference School.
All lives have in place and we'd to prevent any background noise.
after the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, think to press star, follow the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Bobby Lavan, Chief Financial Officer, please go ahead.
Bobby Lavan: Good afternoon, everyone on the call. The Diwali Lavan Valera's Chief Financial Officer. Welcome to our conference call to discuss Valera's first quarter of 2025's Arne.
Today, we're here to press release announcing our financial results for the period ended, December 29, 2024.
The copy of the press release is available in the natural relations section of our website.
Joining me on the call today for Thomas Shannon, our founder and chief executive officer in Lev Ekster, our president.
I'd like to remind you that certain today's topic is called, you may make certain forward-looking statements about the companies for performance.
So as forward to the peace payments are not guaranteed the future performance and therefore lunch it not place undue reliance on them.
Overlooking statements are also subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed.
Bobby Lavan: For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statement, you should refer to the cautionary statements contained in our price release, as well as the risk factors contained in the company's filing to the Securities and Exchange Commission.
Bolero Corporation undertakes no obligation to revise or update any forward-looking statement to reflect events or circumstances that occur after today's call.
Bobby Lavan: 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 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 will now turn the call over to Tom.
Good afternoon. Thank you for joining us today. I am Thomas Shannon, founder and CEO of Bolero Corp.
Bobby Lavan: Total location revenue grew 17.5% year-over-year in the quarter.
Bobby Lavan: Our company's share of customer wallets continues to increase. Our locations get better every day through operational excellence and investments.
Bobby Lavan: After our superb quarter with 20 plus percent EBITDA growth and strong cash flow conversion, let me elaborate on our secret sauce.
Almost 28 years ago, I founded this company focusing on superior returns.
We underwrite all decisions for relative financial returns and steadily focus on the highest returns.
Bobby Lavan: Since inception, I have focused the team on what generates the most significant impact on the business.
From M&A decisions, to capital investments, to using data to drive labor pricing and supplier decisions, the team is held accountable for results in cash flow.
Bobby Lavan: As we grow, the results speak for themselves, and our ability to deploy capital and utilize data-driven processes is accelerating.
Bobby Lavan: The current macro environment has provided increasing opportunities to deploy capital beyond bowling.
Bobby Lavan: This spring, we acquired Raging Waves, the largest water park in Illinois, for $49 million, which included 52 acres of land.
Bobby Lavan: Through our early efforts, the business had double-digit revenue growth and will have $8 million at EBITDAR in its first year under our ownership. At six times EBITDAR, this deal is already a home run, and we have opportunities to expand the park and, if we choose so, monetize the land.
Bobby Lavan: Last month we acquired Boomers, an underappreciated business with six family entertainment locations and two water parks.
Within the first few weeks, we had begun shuttering unprofitable parts of the portfolio and introducing our labor model. We bought that business with $9 million of floor wall EBITDA and expect meaningful upside in the short term from operations and longer term once we deploy capital.
Bobby Lavan: Today we close on the acquisition of Spectrum Entertainment Complex in Grand Rapids, Michigan. This asset has revenue significantly above our center average and will be our sixth location in Michigan as we continue to drive scale.
The market for M&A is the most opportunistic we have ever seen, and we look forward to continuing to deploy capital accretively, bringing attractive locations with significant upside into our portfolio.
Bobby Lavan: In October, we opened two Lucky Strike locations in Denver.
Bobby Lavan: In the coming months, Lucky Strike Beverly Hills will open as the first bowling alley in Beverly Hills in nearly a century, and it will be followed by Lucky Strike Ladera Ranch in Orange County, California, which will have 42 lanes and a very attractive demographic.
Bobby Lavan: Our new build pipeline is very robust for the next few years.
Bobby Lavan: Our focus is a balance of internal optimization and high return capital deployment.
to discuss recent organic performance in our internal initiatives.
Speaker Change: Let me hand it over to the company's president, Lev Ekster.
Lev Ekster: Thanks, Tom.
Lev Ekster: Our food and beverage initiatives continue to bear fruit, with F&B sales up 18% year-over-year in the quarter, and our key KPI of retail F&B to bowling crossed 80 cents across the portfolio.
Speaker Change: Four new menu segments rolled out across all properties, from traditional all the way up to our new experiential craft menu. Most notable is that in our top 50 Bolero locations,
Speaker Change: which recently instituted the upgraded premium plus menu segment Trended close to one dollar and ten cents F&B per bowl this recent month The highest we have ever seen and up over 18 cents first prior year So we are obviously highly encouraged by that
Speaker Change: A brand new events menu launches in November, just in time for the start of the holiday season.
Speaker Change: We've also enabled mobile ordering across all properties to help with labor efficiencies and get satisfaction.
Speaker Change: I'd also like to provide an update on the PVA.
Speaker Change: Last season, we achieved record results with cumulative reach up 46% year-over-year and linear viewership numbers that even rivaled Major League Baseball levels, despite starting off the season by losing a headline sponsor.
Coupled with bringing on new sponsors and the utilization of our newly acquired Thunder Bowl lanes in Michigan, which features an arena, as a host center on the tour, we will ensure a successful season with thrilling televised experiences for our fans.
Bobby Lavan: I will now turn it over to Bobby Lavan.
Bobby Lavan: Thanks, Lev. In the first quarter of 2025, we generated total revenue, ex-service fee, of $260 million and an adjusted EBITDA of $62.9 million, compared to the last year of $226 million and an adjusted EBITDA of $52.1 million.
Speaker Change: Our total location revenue growth in the quarter was positive 17.5%, and same-store comp was positive 0.4%.
Speaker Change: Adjusted EBITDA was $62.9 million, up 21% year-over-year, with a margin of 24.2%, expanding 130 basis points.
Speaker Change: We have found a good balance of investing in payroll and managing costs, with our same sort comp payroll better by 1 million year over year.
Speaker Change: Food costs are ahead within the quarter, but a turn recently.
Speaker Change: The end of September was severely impacted by weather, including two hurricanes across the country.
Speaker Change: In our press release today, we updated our FY25 guidance.
Our confidence in the business continues, and we are increasing the bottom end of our revenue range by $10 million. Boomers, which we acquired on September 30th, will add revenue, but at a negative EBITDA until peak season, which starts in June.
Speaker Change: We spent $41 million in capital expenditures in the first quarter. Growth CapEx was $16 million. New Build CapEx was $17 million. Maintenance was $8 million.
Speaker Change: We continue to optimize capital spend and recently hired a Chief Procurement Officer to drive efficiencies.
Speaker Change: A liquidity at the end of the quarter was $355 million, with nothing drawn on a revolver and $38 million of cash.
Speaker Change: Net debt was $1.1 billion and the bank credit facility net leverage ratio was 2.6 times.
Speaker Change: Thank you for your time today, and we look forward to seeing you on the road in the coming months.
Speaker Change: Ladies and gentlemen, we will now begin our question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again.
Speaker Change: In order to accommodate everyone, we would like to ask you to please limit yourself to one question and one follow-up only. If you are called upon to ask your question and are listening via a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: Our first question comes from the line of Matthew Boss with J.P. Morgan. Please go ahead.
Matthew Boss: Great, thanks. So, Tom, maybe to start off, could you elaborate on the cadence of same-center comps in the first quarter and trends you've seen in October, maybe between walk-in and events?
Bobby Lavan: Hey Matt, it's Bobby. So, end of September, we got hit with two hurricanes.
Speaker Change: and that, you know, cost us about $2 million on the comp in the first quarter. You know, we'll see the equivalent of that into October.
Speaker Change: October the weather has not been great, but right now events is tracking plus 10% for P6, which is really where we make a bulk of our revenue in EBITDA for the quarter. So we're more focused on that right now.
Speaker Change: Yeah, I mean, we're going to have the greatest margin expansion in the third quarter, right? Because third quarter has sort of two benefits. One is New Year's has shifted from second quarter to third quarter, and that's a...
Speaker Change: 5 to $7 million swing in the comp between second quarter and third quarter, which is also going to have sort of the highest incrementals. You also remember last year, January really started off.
Speaker Change: rough with, you know, minus double digits for the first three weeks.
Speaker Change: So you'll see the greatest margin expansion in the third quarter, but you'll see margin expansion in the second quarter as well, other than boomers and raising waves will run through the income statement as negative EBITDA.
Speaker Change: Great. Best of luck.
Speaker Change: Your next question comes from the line of Stephen Vizinski with CETL. Please go ahead.
Stephen Vizinski: Hey, guys. Good afternoon. So, Bobby, just to kind of think about the rest of the fiscal year, you know, you obviously took up your top line here a little bit in terms of guidance, but, you know, as we do think about that low to mid-single-digit same-store sales comparison that you called out, I guess that was back in September when you gave your initial guidance for 25, does that same-store sales outlook still hold true? You know, if so, maybe how we should be thinking about the cadence of same-store sales over the next, you know, over the next three quarters or so.
Bobby Lavan: Yeah, I mean, we haven't changed anything as it relates to our expectation on the comp. You know, as we sort of went through last earnings call, 1Q and 2Q are going to be, you know,
Stephen Vizinski: Low comps versus 3q and 4q will be much stronger comps.
Stephen Vizinski: You have two major things happening in the third quarter. So you've got New Year's, which is a very big night for us.
Stephen Vizinski: does move from last year being in second quarter to this year being in third quarter. That's, I can't emphasize enough how important that is to sort of comp cadence. I mean, that's a $5 to $7 million move in comp, you know, on a $300 plus million sales base from 2Q to 3Q. On top of that, you're going to have, you know, this catch up that happened last year where, you know, the weather was atrocious in January and we had down, you know, double digit week on the comp.
Speaker Change: So you'll catch all that up in the third quarter versus this quarter, you know, the weather has been great in October, but really December events will continue to be strong, but we'll miss that retail element of New Year's in the second quarter, and that will push the third quarter.
Speaker Change: Okay, gotcha, makes sense. And then maybe one for Tom or, you know, even you Bobby, but, you know, you guys kind of talked about how the, you know, the acquisition environment just remains, seems extremely robust. And, you know, just maybe wondering from a high level perspective, I mean, how you guys are spending your time today in terms of looking at, you know, potential assets, meaning, you know, how much time is spent on your kind of core bowling assets versus, you know, some of the other assets that you've started to, you know, to take a look at?
Speaker Change: Thanks.
Speaker Change: Well, it's a division of labor. This is Tom speaking. You know, Lev spends a hundred percent of his time on our existing operations. Bobby spends most of his time on our existing operations, and I spend most of my time on M&A.
Speaker Change: Okay, fair enough. Thanks guys, appreciate it.
Speaker Change: Your next question comes from the line of Randy Koenig with Jeffries. Please go ahead.
Randy Koenig: Hey guys, how are you? I guess I want to ask about the, you mentioned the increased utilization of data.
Randy Koenig: and you talked about some of the things you're doing there. And I think you mentioned that you hired a chief procurement officer.
Randy Koenig: So it sounds like there's obviously, you know, you have a well-run organization and it sounds like you see some opportunities to continue to further make more efficiencies.
Speaker Change: or drive more efficiency through the portfolio.
Speaker Change: So can you guys basically unpack that a little bit more and give us some perspective on how you're utilizing data a little bit differently now versus maybe six, 12 months ago, and then your hopes for that chief procurement officer, what he or she will be focused on in terms of driving more efficiency through and cost reduction through the business. Thanks guys.
Speaker Change: Yeah, we're becoming a data driven organization. So at the end of the day, you know, we're holding, you know, we started off with
Speaker Change: three Power BI subscriptions, so Tom, Lev, and myself, you know, we're using Power BI. Let's just kind of look at daily sales. We just pushed out 350 Power BI subscriptions, so now we have GMs, we have every department leader.
Speaker Change: holding themselves accountable to day-to-day data.
Speaker Change: As it relates to the Chief Procurement Officer, managing inflation is kind of a core responsibility of the organization. Last year, chicken prices alone was a $6 million headwind.
Speaker Change: and having a Chief Procurement Officer whose sole focus is to not necessarily reduce costs, but to at least keep costs flat is core. Then Lev and I will focus on how do we drive efficiencies in the organization on payroll, on things like supplies, things like that. Ultimately, when we go back into a normal inflationary environment, we can use our scale to drive procurement synergies. I will say boomers.
Speaker Change: You know, we've owned a month. We already put sort of their purchasing organization into our purchasing organization, so there's just, you know, there's there's there's scale that comes in these acquisitions that, you know, we can underwrite even without even a revenue growth just because of cost savings on the acquisitions.
Speaker Change: Super helpful. And then I guess just to round out and lastly
Speaker Change: Maybe give us some perspective on fall pass, what's what's kind of different about it versus summer pass, any kind of metrics you want to kind of share with us in terms of that program, and then just backing out a little bit more and thinking a little bit more strategic and long term. How do you guys think about different past programs as we think through the, you know, going forward throughout the next few years, are you going to look to maybe do a little bit more of an annual pass just kind of give us some perspective.
Speaker Change: Just how should we think about the PASS program and the benefits it's driving towards your business in terms of increased utilization, etc?
Lev Ekster: Yeah, this is Lev. How are you?
Lev Ekster: Just to connect this question to your prior question on data.
Speaker Change: When we see revenue softness ahead, it gives us an opportunity to quickly deploy a pass. And seeing, you know, September-October gave us the push to launch the first ever fall season pass.
Speaker Change: much shorter cycle for, first of all, sales, but also utilization of the pass for our customers. So that's actually coming to an end in about two weeks.
Speaker Change: But we've been encouraged by the results, and we were super successful with the summer season pass, not just in the sales, but also the number of redemptions we saw by the consumer, and the MPS score, and how favorable it was perceived by the consumer. In terms of future passes,
Speaker Change: I think we're going to probably lean in more into that summer season pass launch a little earlier in the calendar year to have a larger window of sales.
Speaker Change: Bye.
Speaker Change: focused on the price and making sure we we get you know maximum revenue, but still give a really good value to our consumer.
Speaker Change: I think the Fall Pass is going to relaunch again.
Speaker Change: next year. Aside from that, I think the bigger opportunity is we have boomers now. We have the water parks now.
Speaker Change: Can we make it a bigger path to connect all of these businesses and give an even more Desirable product consumer and that's something we're focused on right now
Speaker Change: Super helpful. Thanks, guys.
Speaker Change: Thanks, Randy.
Speaker Change: Our next question comes from the line of Ian Zefino with Oppenheimer. Please go ahead.
Ian Zefino: Okay, great. Thank you very much.
Speaker Change: Question on price versus volume, you know, what are you kind of thinking going forward, ability to continue to push price or, you know, versus volumes and just kind of overall and what you really saw in the last quarter that kind of gives you confidence in going forward. Thanks.
Speaker Change: Yeah, we've been able to take price on food.
Speaker Change: [inaudible]
Speaker Change: So, that has been a positive surprise as we kind of lean into the core second and third quarter. You know, ultimately, that is a good opportunity for us, you know, where we can augment the price that's been taken on bowling the past few years and augment it with food.
Speaker Change: Okay, and then on...
Speaker Change: You know, capital allocation, I guess buybacks kind of slowed a little bit, but you know, you know, how are we thinking about
Speaker Change: buybacks versus acquisitions. And, you know, on the acquisition front, I guess you also mentioned scale as a component. Are you talking about maybe, you know, adding, you know, additional kind of like-minded concepts, meaning like
Speaker Change: The more water parks you build, the more scale you're going to get. Is that kind of like what you meant there? And is that a factor in kind of your M&A?
Speaker Change: Thank you.
Speaker Change: Yeah, I mean, we, you know, the acquisitions we closed on Spectrum today. Spectrum, you know, is a, you know, sizable entertainment bowling complex in Michigan. You know, we closed on Boomers September 30th, which came with, you know, five FECs and one water park. You know, we're going to continue deploying capital where we can get.
Speaker Change: We like this slow and steady approach, but there's a lot out there and we'll look at everything and that's how we kind of move forward.
Speaker Change: Okay, I'm going to jump back quickly.
Speaker Change: Yeah, I mean, on buybacks, you know, we'll continue to be dynamic with how we buyback our stock. You know, we're very price sensitive and, you know, we look at our relative performance and we'll continue, you know, using buybacks and dividends to return, you know, to drive shareholder returns.
Speaker Change: All right, great. Thank you very much.
Speaker Change: Thank you very much.
Speaker Change: Our next question comes from the line of Jeremy Hamblin with Craig Hallam. Please go ahead.
Jeremy Hamblin: Thanks and congrats on the strong results. I wanted to ask about mobile ordering and what you're seeing in terms of how that's impacting operations, how you're seeing customer respond to mobile ordering, you know, at your centers.
Speaker Change: I'm
Lev Ekster: Hi, Lev here. So, as of last month, we've rolled mobile ordering across the entire organization.
Speaker Change: and we're seeing the utilization pick up. I think that, coupled with the data-driven approach we have right now on labor and being staffed as efficiently as possible, I think mobile ordering is really helping that cause.
Speaker Change: and I think you're seeing that in the results of our efficiencies. We're taking a step beyond that, so we're currently piloting tablets.
Speaker Change: at a number of our locations right now. We think we'll have that rolled across the organization early 2025, and I think that's gonna improve efficiencies as well, but also customer satisfaction because we can take more orders faster, get them into the kitchen faster, get...
Speaker Change: fresh hot food to the lanes faster, get more turns.
Speaker Change: with the lanes as a result of that, but also getting more items to the consumer during their session. So, we have this holistic approach on expanding attachment of food and beverage.
Speaker Change: sales right now, and I think mobile ordering, tablets, the revamped menus that we've rolled across the organization.
Speaker Change: enhanced training for our associates for sales
Speaker Change: improving the hiring practices of our kitchen. All of this goes hand-in-hand and I think you're starting to see that in the results and you saw in our press release.
Speaker Change: Got it. And just to follow up on that part, I think you had said that there was 80 cents of spend per dollar bowl, spend on bowling. How did that compare to last year? And then also just understanding that in context of what you got in the quarter at Lucky Strike.
Speaker Change: versus the Bolero banner.
Speaker Change: I think the purchase of Lucky Strike and seeing what they were doing in food and beverage sales relative to bowling revenue really gave us
Speaker Change: The push to really put a strong effort behind our food and beverage program across all of our properties. That $0.80 compares to about $0.60 prior year, but what I think is most encouraging is
Speaker Change: at our top 50 Polaro locations that recently received our premium plus menu tier. So we have four menu tiers, traditional, premium, premium plus.
Speaker Change: and then this craft menu which we refer to internally as our luxury menu at our top properties. But the 50 top Bolero locations that got that premium plus menu in October, they are F&B to bold.
Speaker Change: The Luckys are much higher, if you just look at those on their own, those are over $2 at the Beautiful. So, we're at $0.80 in the organization, we're starting to see us get over a dollar at those top 50 boleros.
Speaker Change: We're going to continue to increase. I'd love to see us get closer to $1 from that $0.80 mark. Based on the year-over-year jump, I think it's very doable.
Speaker Change: Are those premium plus locations candidates to be re-bannered to LuckyStrike?
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: OK.
Speaker Change: Last one for me, I just wanted to clarify also you noted Bobby with Boomers that there would be drag on EBITDA until we get into the summer, the seasonal months. Can you just quantify what you expect that drag to be for the December quarter and then the March quarter?
Speaker Change: Yeah, Boomers plus Raging Waves is a few million dollars, Dragon Eaves in 2Q and 3Q.
Speaker Change: each quarter or each quarter each quarter
Speaker Change: Awesome. Thanks for taking the questions. Best wishes.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Jason Tilchen with Canaccord Genuity. Please go ahead.
Jason Tilchen: Thanks for taking my question. I'm wondering if you could share the the relative growth rates you saw between walk-in and groups during the quarter and just the higher level how you're feeling about the health of the consumer and expectations for consumer you know spending in the holiday season and also obviously the the corporate booking pipeline as well.
Kevin: Kevin to the holidays.
Speaker Change: Thank you.
Speaker Change: Yeah, so walk-in in the quarter was higher than events and mainly because of the season pass.
Speaker Change: So we were getting, you know, we disclosed it last quarter, but for every season pass holder, they visited eight times in the quarter. You know, recently we've seen more strength in walk-in versus event.
Speaker Change: But we expect that to kind of flip as we go into P6
Speaker Change: for December quarter.
Speaker Change: or December month.
Speaker Change: Thank you very much.
Speaker Change: Okay, great. That's helpful. And then just one follow-up. In terms of the Bloomers acquisition, wondering if you could share a little bit more about if there's anything in particular that attracted you guys to that asset outside of sort of the valuation of the deal and sort of how you're viewing other opportunities in family entertainment beyond just water parks.
Speaker Change: Yeah, I mean the valuation was extremely attractive, but it also, it's been sort of deprived of capital for at least five years.
Speaker Change: And so our ability to go put our events platform in, our procurement organization, our, you know,
Speaker Change: above market.
Speaker Change: and really, you know, look at these assets that are...
Speaker Change: Irreplaceable assets in flagship locations, and what kind of capital we put into them. Really, at the end of the day, the underwriting there was what we could do, not just what we were buying.
Speaker Change: Thank you very much.
Speaker Change: Our next question comes from the line of Eric Holt with B Rhyolene. Please go ahead.
Speaker Change: Thanks.
Eric Holt: Good afternoon. A couple questions, a couple follow-up questions to what Lavan asked. I guess on the food and beverage ratio, I guess one, that 18 cent increase for the top 50 locations, how much of that was price? And then, you know, what would be your goal over the next 12 months in terms of the total network getting above that, you know, moving above that 80 cent level?
Speaker Change: Yeah, so none of it was price because we didn't take price until really the past month on F&B. So it was it was purely, you know, good old elbow grease. You know, the ability to get
Speaker Change: The whole network up to a dollar.
Speaker Change: But two, we are rolling out tablets or server tablets that should be company-wide by
Speaker Change: January, February
Speaker Change: And the reason that those server tablets are so important is they prompt the server to upsell a double, you know, do you want fries with your burger, things like that.
Speaker Change: And so it really is, we're leaning into sort of technology and process to drive.
Speaker Change: I think this question alone, we could probably keep you on the line for an hour with this alone, but it really starts at the bottom, which is hiring.
Speaker Change: All of our managers now, we require food and beverage and hospitality experience on their resume.
Speaker Change: We have a brand new assessment for our kitchen manager and chef hires to get better talent there.
Speaker Change: We added some rules focused on food and beverage sales training, which we've never had before. So, like I mentioned at the top of the call, it's really a holistic effort. It's not just taking price with the same product. It's a revamped menu, all new items.
Speaker Change: new taco selection, craft pizzas, more trending items. So we're giving a better product to the consumer and we're getting better at selling it through our people and through technology. That's how we're getting it to a dollar.
Speaker Change: Got it. And then, last question.
Speaker Change: Maybe in this macro, can you talk about the average customer you're seeing? Obviously, you're working on getting, you know, higher approved beverages than demand is, but in terms of just the customer coming in the door, you know, any shift in terms of...
Speaker Change: general spending levels, number of games played, anything that can give you another kind of look into what that customer demographic looks like versus maybe what you would have had a year or so ago.
Speaker Change: Yeah, I think generally, you know, it's steady to go on the regular way customer, you know, we're seeing an uptake on the F&B, the only place that we're seeing a little softness would be on sort of corporate in front of this uncertainty of the election. But generally, you know, things are
Speaker Change: moving forward.
Speaker Change: Perfect, thank you.
Speaker Change: Questions, comments?
Speaker Change: From the line of Air Canada, Whipcroft Capital, please go ahead.
Speaker Change: Yes, thank you for the question.
Speaker Change: You've now left your one-year anniversary for Lucky Strike. Can you maybe talk about what's happened to the Lucky Strike assets over the last year and what maybe, what kind of returns you're getting and just some of your overall findings there?
Speaker Change: Yeah, so 11 of the 14 assets are outperforming. You know we're pretty excited about
Speaker Change: When we got in there, their California assets were falling down.
Speaker Change: And now, you know, we pick that up with sort of new initiatives we've invested in for putting our caves in revamp sort of the CapEx. So overall, like the returns there are exactly what we underwrote, which is, you know, we said we bought it for 90 million day one and had four wall of 17. You know, that that's up.
Speaker Change: significantly from then, you know, really targeting sort of getting them to 30 million of EBITDA in the first sort of two years of owning it.
Speaker Change: Great. And then secondly, can you talk about how your recent new build openings are doing and are they all profitable at this point?
Speaker Change: Well, every one of our centers is profitable. We don't have a single center in the fleet that is unprofitable.
Speaker Change: are you know every cohort of new builds is better and better than the last so you know Miami which opened about seven months ago is on pace to do 10 million in its first year far far ahead of where we underwrote that deal
Speaker Change: Let's see, what did we open after Miami?
Speaker Change: Yeah, so we just opened two in Denver. I mean, they just opened, but the early the early indication is very positive, but our new bills are consistently doing.
Speaker Change: 8 plus million on average versus a portfolio average of about 3.3 to 3.5. So the beauty of new builds is you get to cherry pick your location. We only go into A locations.
Speaker Change: So, this latest cohort, the two in Denver, which are one in Northfield, one in Southlands.
Speaker Change: Beverly Hills which will open
Speaker Change: soon.
Speaker Change: the first bowling alley in Beverly Hills really in anyone's memory maybe ever we haven't found a bowling alley in Beverly Hills before but I don't want to say never but it's been a really really long time if there was one and then in the Ladera Ranch in Orange County California which is likely to open this calendar year as well and then you know we have
Speaker Change: 15-plus in the pipeline behind that that are in various stages.
Speaker Change: Some are at least, some have signed LOIs, some are close to LOI, and those are all in exceptional locations as well. I think that one thing the company does very, very well is site selection. I think it's always done site selection well. We've only closed one.
Speaker Change: location that we chose, and that was in, in, I don't know, 2002, 2003, so
Speaker Change: Yeah, the latest ones that we built have been have been wildly outperformed expectations, vastly outperformed the fleet average, and there's no reason to think that the next cohort will do any worse.
Speaker Change: That's helpful, Tom. And just one last thing. You guys did a very good new income statement presentation to give a better view of where costs are trending. Are you going to be giving sort of like restated quarters for historicals for the last year or so?
Speaker Change: Yeah, it's filed with the 8K. It's filed with the 8K on the press release.
Speaker Change: Perfect, thank you.
Speaker Change: Our next question comes from the line of Michael Kopinski with Noble Capital Markets. Please go ahead.
Michael Kopinski: Thank you. Congratulations on your quarter. A couple of questions.
Michael Kopinski: You were optimistic about the revamped event catering menu, and I know we kind of danced around some of the commentary about the impact of that, but can you give us some color on how event bookings are pacing for the holidays, and maybe some color on the average event revenue at this point, what that's looking like?
Speaker Change: Yeah, I mean December right now is pacing, and December is sort of our Super Bowl, is pacing up 10% year-over-year for a combination of corporates and adult a la carte.
Speaker Change: So, you know, really we're getting both more events and higher dollar pickups.
Speaker Change: So ultimately we expect the average event to be up, but we're pretty happy about that plus 10% so far.
Speaker Change: That sounds terrific. And then in terms of raging waves, you indicated that additional space might be developed to expand the park to take advantage of the peaks and maybe even for events. And as you consider adding more water parks
Speaker Change: Are there opportunities to take advantage of off-season opportunities? And I was thinking maybe like, I don't know, ice skating, Christmas lights, or other events.
Speaker Change: or is the park just shuttered during the winter? I guess my question is, I was wondering, are there opportunities to shave off some of the drag in off season?
Speaker Change: Well, there are, and some...
Speaker Change: and I think some of them actually do it successfully. But the drag is mostly fixed. So it's a handful of full-time employees, and then it's things like insurance and property taxes and things of that nature. So the challenge is that,
Speaker Change: You're not carrying a lot of labor, so let's take raging waves in Chicago, right? Your season's over by Labor Day because typically it's cold, although this year it got warm again in October, but that's not typical.
Speaker Change: You know, you let everyone go, everyone goes back to school or wherever, and then to staff up again is really a challenge, so you have to be really confident you're going to do an outsized revenue number to do it. Now.
Speaker Change: The second water park that we bought as part of the boomers acquisition is in Destin and so unlike
Speaker Change: Raging Waves, which has a 85 to 90 day season, you know, Destin can have 120 to 140 day season, so...
Speaker Change: It gives you a lot more optionality, and it also makes you less dependent on, you know, having a cold summer or a rainy summer, as we actually did in Raging Waves. You know, that was a surprising thing. We were up almost 10 percent in revenue, but we lost a lot of days to rain. We lost the last weekend because it was cold.
Speaker Change: And, you know, despite that, we did really well. So.
Speaker Change: There are those opportunities, but I don't think those are the nail movers, and I wouldn't be so cognizant of the drag. You know, the EBITDA drag is relatively minor. It only looks big compared to when we're making money, because in season, these assets are...
Speaker Change: ridiculously profitable. We give a little bit of that back in the off-season but we're not giving back, you know, it's not big amounts.
Speaker Change: Gotcha. And in terms of acquisitions, would you then look, it really wouldn't matter where the parks were located in terms of location, weather patterns, and so forth, just because of that, right?
Speaker Change: Yeah, I mean, one of the advantages of raging waves is it's a weather hedge.
Speaker Change: We have 20 centers in Chicago, so the first weekend we were supposed to open, actually the park didn't open because it was raining, and our 20 centers in Chicago comped up an aggregate 100% year-over-year. So, you know, that's pretty good, right? We've looked at hedging weather by buying contracts, the insurance is sort of...
Speaker Change: proven to be prohibitively expensive thus far, but then we found we had this natural hedge, so
Speaker Change: Yeah, if you could have water parks where you have bowling centers, you've got that built in. And I think that's a good thing for us. It's not driving the decision, but we look on these things on a case by case basis. I mean, you would, you would be surprised. We are constantly surprised.
Speaker Change: at assets that are seemingly in the middle of nowhere, and I'm not talking about water parks specifically, just talking about all sorts of assets that do really, really well. So we cast a wide net, but as Bobby said earlier, we're driven by return.
Speaker Change: We have a very tight deal screen, as we always have, and thus far over almost 28 years, and we've generated wildly outsized returns. If you look at the investor presentation, you can see some of these returns, you know, 10x.
Speaker Change: invested capital in very short periods of time. So I don't think the market gives us credit for how good we are as investors.
Speaker Change: The market, I think, has some understanding of how good we are as operators.
Speaker Change: But we may be better investors than we are operators certainly when you combine the two
Speaker Change: It's very powerful and, you know, if you take the time to go through and you look at the returns we've had
Speaker Change: on AMF, Brunswick, Bull America, Lucky Strike, Raging Waves, et cetera. We generated really outsized returns in companies that most people gave up for dead.
Speaker Change: Totally agree with that. Thanks for the color. Appreciate it.
Speaker Change: Thank you for watching!