Q3 2025 Lucky Strike Entertainment Corp Earnings Call
To ask to resolve your question, press star one again. We ask the two please limit yourself to one question and one follow up. Thank you. I would now like to turn the call over to Bob 11. Please go ahead.
Good morning to everyone on the call. This is Bobby Lavin, Lucky Strikes, Chief Financial Officer.
Welcome to our conference call to discuss Lucky Strikes 3rd quarter 2025 learning. Today, be issued a press release announcing our financial results for the period ended March 30th, 2025. A copy of the press release is available in the Investor Relations section of our website.
Speaker Change: Joining me on the call today are Thomas Shannon, our Founder, and Chief Executive, and Lev Ekster, our President.
Speaker Change: I'd like to remind you that during today's conference call, we may make certain forward-looking statements about the company's performance, but forward-looking statements are not guarantees of future performance, and therefore one should not place undue reliance on them.
Speaker Change: Board-looking statements are also subject to the inherent risks and uncertainties that could cause actual results to differ materially from those expressed.
Speaker Change: Additional information concerning factors that could cause actual results to differ from those discussed in our forward booking payments. You should refer to cautionary statements containing our press release, as well as the risk factors contained in the company's filing to the SEC.
Speaker Change: Lucky Track Entertainment undertakes no obligation to revise or update any four-looking statements to reflect events or circumstances that occur after today's call.
Speaker Change: Also during today's call, the company may discuss certain non-GAAP financial measures as defined by FEC regulation G.
Speaker Change: The GAAP financial Measures, most directly comparable to each non-GAAP financial measure discussed and the reconciliation of those differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company's website. Now I'll turn the call over to Tom.
Tom: Good morning, I am Thomas Shannon, founder, chairman, and CEO of Lucky Strike Entertainment.
Tom: Last quarter, we spoke about the resilience that defines our team and our brands, how we navigate volatility with focus and versatility.
Tom: Our total revenue rose 0.7% for the quarter, a modest increase that masks meaningful gains in our retail, online and league segments.
Tom: While layoffs and corporate austerity, particularly in the tech sector, have impacted our offline, mostly corporate business on the west coast.
Tom: We see this as a transitory headwind. We felt this in summer, but brighter skies are ahead. As we lap those declines in the coming months, we expect the picture to shift.
Tom: Meanwhile, we are filling available lane capacity by growing our lease business, which is already up low single digits and continues a multi-year growth trajectory.
Tom: Deleek Businesses, Sticky, Hype Frequency, Loyal and Managed Correctly, High Margin.
Tom: Corporate events have been hit by macro uncertainty, but we're already seeing signs of rebound. Our Boston, Miami, and New Jersey sales groups all comped positive in April , and several more sales groups are close to flat.
Tom: and with sales-driving initiatives coming online ahead of our peak season in September , we're positioned for a strong comeback.
Tom: In Southern California, the lingering impact of January's devastating fires continues to weigh in our business there.
Tom: More broadly, layoffs and corporate caution have created headwinds since summer 2024.
Tom: But here's what's changing. Consumers are turning towards local high-value entertainment. As their travel softens, we're ideally positioned to meet demand for convenient and memorable out-of-home experiences.
Tom: In a clear indication of that, early sales of our summer season passes are already up 200 percent year-over-year.
Tom: That tells us where the consumer mindset is, and it's encouraging. For the first time, we're entering summer with large water parks in Destin and Panama City Beach, Florida. Our flagship 54 acre Raging Waves water park in Illinois.
Tom: Six boomers branded parks in California and Boca Raton, Florida, and our newest family entertainment center, Adventure Park in Visalia, California.
Tom: Whether it rains or shines, we are becoming more hedge to the climate.
Tom: Lucky Strike is on track to deliver positive growth this fiscal year, continuing our remarkable streak of consistent revenue gains over the last 12 years.
Tom: Alongside that growth, our team has adeptly adjusted our cost structure to increase operating leverage.
Tom: Despite some lumpiness, we've delivered 4% to 5% average annualized same-store sales growth since 2013.
Tom: Our new builds, our properties launched between September and December of 2024, are exceeding expectations, delivering nearly $8 million in revenue, and $4 million in EBITDA.
Tom: These results prove the power of our model and the strength of our team's execution.
Tom: As we invest in our water parks, family entertainment centers, and upgraded bowling experiences, we expect to not only maintain our industry leading performance, but to accelerate it.
Speaker Change: With that, I'll hand it over to Lucky Strikes President Lev Ekster to walk you through the exciting organic initiatives ahead.
Lev Ekster: Thank you, Tom. We launched the presale of our popular summer season pass in early March, and the response has been incredible. With one week of the presale remaining before redemption begins, we're already approaching 100,000 passes sold.
Lev Ekster: In a time of macro economic uncertainty, consumers are clearly gravitating toward high value offerings, and our summer season pass delivers just that. It is set to drive meaningful traffic to our centers during what is typically a seasonally software period.
Lev Ekster: When these guests arrive, they'll be met with a refresh to the beverage experience and a line up of exciting, limited time summer offerings which will continue to drive strong results.
Lev Ekster: In Q3, comparable food sales rose 1%, with total food sales up 8% year over year. With increased summer traffic, we are confident that this momentum will continue as our revamped food initiatives gain even more traction and attachment.
Lev Ekster: I also want to share an exciting update on the PBA.
Lev Ekster: which just achieved a 103% year-over-year increase in leadership for this past Sunday's telecast of its first round of playoff.
Lev Ekster: Last week, we announced a multi-year media rights agreement with our new broadcast partner, CW. Starting next season, CW will be featuring 10 PDA events on consecutive Sundays which our fans are thrilled about.
Lev Ekster: We will soon announce additional partners that will increase the distribution of our events across broadcast and streaming.
Lev Ekster: These media rights partnerships, combined with a growing roster of sponsors, was strengthened the PBA financial footing. We are now well-positioned to unlock its full potential in the years ahead.
Bobby Lavan: Now I will hand it over to Bobby to review the financial results.
Bobby Lavan: Thank you, Lev. In the third quarter of 2025, we delivered total revenue of $339.9 million in the majority of the DAB $117.3 million. This compares to $337.7 million in revenue and $122.8 million in the majority of the DAB $117.3 million in the majority of the DAB $117.3 million in the majority of the
Bobby Lavan: A total revenue grew modestly by 0.7 percent, same-store sales decline by 5.6 percent.
Bobby Lavan: Breaking down the performance by second, our retail business remains steady, our league operations experienced low single-digit growth, and our events business faced high single-digit decline.
Bobby Lavan: Adjusted EBITDA for the quarter came in a 117.3 million. The same sort of sales acting as a 19 million dollar headwind to the bottom line.
Bobby Lavan: Offsetting that were improvements in comp payroll, the tune of eight million, and reductions in repair and maintenance, supplies and services costs coming in around three million.
Bobby Lavan: Boomers and Raging Waves represent a two-million-track in the quarter. However, we anticipate this will reverse in the next two quarters as we move into the peak summer season. For context, Raging Waves generated 9 million EBITDA last summer, and we expect Boomers to perform similarly for this summer.
Bobby Lavan: Geographically, California, which accounts for 21% of her total sales, contributed nearly 50% of the same source sales decline. This was primarily due to broad-based soft gets in the Los Angeles market in double-digit declines in the corporate event segment.
Bobby Lavan: However, as we cycle past tougher comparison, we expect improved performance starting this summer.
Bobby Lavan: We also continue to invest in growth through acquisitions. In April , we acquired Shiprock Island and Panama City Beach Florida for 30 million. We are excited about the long-term potential this property adds to our portfolio. [inaudible]
Bobby Lavan: During the quarter, we deployed 25 million in capital expenditures, 14 million for growth initiatives, 1 million for new builds and 12 million for maintenance.
Bobby Lavan: Additionally, we invested $9 million to acquire incremental land at Raging Ways. Excluding this land purchase, CapEx year-a-date is down $40 million compared to last year.
Bobby Lavan: Our liquidity position makes wrong at 391 million, with 79 million cash and no borrowings on our revolver. Net debt stands at 1.2 billion, and our bank credit facility net leverage ratio is 2.9.
Bobby Lavan: We appreciate your continued support and look forward to welcoming you to one of our new or expanded venues this summer. Operator, please open the line for questions.
Thank you.
Speaker Change: At this time, I would like to remind everyone in order to ask a question, please press star and the number one on your telephone keypad. We ask that you please leave it yourself to one question and one follow up. We will pause for just a moment to comply with Q&A roster.
Speaker Change: Your first question, comment on the line of all the Matthew Boss?
with JP Morgan, please go ahead.
Great, thanks. Maybe Tom, could you elaborate on?
Speaker Change: What you're seeing from walk in versus corporate trends over the course of the quarter, maybe what you've seen in April and early May, and then if we just take a step back
Speaker Change: And we think about economic uncertainty today relative to historical. What behaviors are you seeing today that maybe is influenced by using times of the past, thinking about your business model and how maybe historically it remains more resilient?
Thank you for watching!
Lev Ekster: Okay, Matt. I'll answer the second part of the question. I'll give the first part to Bobbi. Yeah, we've seen the cycle before where
in the face of macro headwinds, like we're seeing now.
Lev Ekster: Company's pullback on entertainment. There was an article in the Wall Street Journal last weekend about how you can see the article in the article.
Lev Ekster: Not only are the layoffs pretty significant in Silicon Valley, but they've done things like eliminating most travel, eliminated corporate events, everything that's really discretionary related to employees.
Lev Ekster: I mean, we see this, we saw this in 08, we saw this in COVID, we saw this after 9-11. So,
Lev Ekster: It's entirely predictable. The good news is that it's relatively transitory and just like corporate America, I think has been shocked.
Lev Ekster: by, you know, the macro news of the last couple of months.
Lev Ekster: things can turn very quickly in the other direction too. So we are...
Lev Ekster: I don't want to say never to the corporate event business, but it's a significant part of our business. We do $300 million a year in events, not all of that is corporate. Some of it is birthday party, but we have a higher beta.
Bobby Lavan: When it comes to corporate events, then a lot of our competitors. So we outperform in good times, and we have our headwoods in challenging times, as Bobby said in his comments.
Bobby Lavan: More than half of our names for sales decline on a calm basis was because of California, which is 21% of our revenue, and that is almost entirely corporate.
Bobby Lavan: You know, I don't do this in any way as an enduring trend, but it is what we're dealing with now now.
Bobby Lavan: Kup's side is the other parts of the business have been surprisingly strong. So let me give it to Bobby to give you the specifics about performance of the league business and our retail walk in business. Thank you very much.
Bobby Lavan: Yeah, I had that. So the retail business is flat, the lead business is up low single digits.
Bobby Lavan: You know, it really is this offline corporate business, which is heavily concentrated between sort of November and March, you know, that business is down, you know, of good double digits.
Tom. [inaudible]
Bobby Lavan: When we think about sort of the trends, you know, we talked about the trends in January , where January was down, you know, three, you know, the fires in LA impact us. Remember, we're down 10%.
Bobby Lavan: Um, you know, I think that the industry as a whole was impacted by, you know, whether in February , you know, the macro is that sort of its peak of uncertainty. It's gone better soon.
You know, March.
Bobby Lavan: Scott Better, you know, March was similar to January , April is getting better.
Bobby Lavan: You know, I looked at sort of our numbers the past few days were positive . .
the past few days.
Bobby Lavan: You know, I'm very excited about as we get into sort of May June , where you know, the summer season pass is, you know, outperforming right now. It's looking about double of where it was last year.
Bobby Lavan: and we go into this period where corporate events goes from 20 plus percent of our business to single digits. I think that at the end of the day, the retail trends are...
Lev Ekster: Fine. You know, we want to continue to see like a list coming driven by food. The lead trends are great. You know, and we're leaning into leads like one thing that, you know, we'll, you know, Lev should just, you know, talk about is. [inaudible]
The events business does hold lanes across our 14,000 lanes.
Lev Ekster: And so, if you have an expectation that your events business is going to come in, you don't necessarily bring in the stickier, lower per calf lane leads. That's something that, you know, we're really kind of leaning into ultimately, you know, the trends, you know, this.
Lev Ekster: The trends are getting better, and at Tom said when corporate turns or when corporate relief starts to come, that's when the whole business will turn as well.
Speaker Change: Great, and then maybe just a follow-up, Bobbi, the areas of expense flexibility near terms that you have, and maybe relative to that, how you're prioritizing multi-year initiatives, and if you see potential for M&A opportunity that might arise out of all of this disruption. Thank you.
Yes, we've dropped Compay Roll.
The Bigger of...
Higher Revenue Periods are gonna have more... [inaudible]
Speaker Change: Negative and positive operating leverage, so you'll see the benefit of that in the June quarter of September quarter.
Speaker Change: You know, on M&A, you know, we did a $30 million deal in April . We got it.
Speaker Change: We firm sheet to close in 30 days. We bought a water park with land at near a six, seven times multiple. We think once we operate, it will be even lower. So prices are coming down.
Speaker Change: Activity is up, you know, everyone is very concerned, continue to be concerned about the macro, so I would expect to see a very active summer from us.
Great. Best of luck.
Thank you.
Speaker Change: Your next question comes from the line of Steve Wieczynski with Steven. Your line is now open.
Yeah, you guys, good morning.
Speaker Change: So Bobby or Tom, you know, really want to ask about, you know, what happened relative to, you know, we go back to your last call, which was early February versus, you know, where we kind of sit today. And I guess what I'm trying to get is, you know,
Speaker Change: I think you guys were expecting positive same-store sales in the third quarter versus the negative.
Speaker Change: Five and a half or six, whatever was reported. So just what we're trying to do here is try to figure out and bridge kind of what happened over the last call it eight weeks of the quarter. You know to have those same store sales move. [inaudible]
Speaker Change: So much against you guys, was it, obviously you called out corporate, I'm just trying to understand was it was it really all corporate or was it something else that kind of caught you guys off guard?
Thank you for watching!
Speaker Change: Yeah, I mean, we were, we were on that call. We were very, um,
Oshes.
Speaker Change: About revenue, I would tell you that the corporate business got dramatically worse in February and March.
You know that business, you know, California had the fires
Speaker Change: in LA, and ultimately the corporate business across California just kept getting worse. Now it's bottomed, and we get to sort of a easier comp starting in July , but ultimately that business was 20% of the business in the quarter.
Speaker Change: Okay, understood. And then in terms of the decision to remove.
Speaker Change: Guidance. You know, look, obviously we fully understand that decision given the uncertainty that's kind of out there in the marketplace, but you know as we kind of move, you know, I guess what I think is somewhat confusing here is
Speaker Change: with your fiscal end ending in June , which is about seven weeks away. Is it the decision to remove that? Is that basically coming from the uncertainty that caught you off guard?
Speaker Change: You know, in February in March, I'm not sure if I'm asking this question very well, but just trying to understand a little bit more about that decision and also, you know, the decision now to continue to buy back.
Speaker Change: Shares versus reducing debt in this uncertain environment, maybe a little bit of color, you know, around free cash at this point as well. Thank you very much.
Thank you for watching!
Well, this is Tom.
Phil, I think Bobby said.
Speaker Change: in the guidance that he was much more comfortable talk to getting guidance on on the expense side than on the revenue side and
We pulled out, for example, in the last month.
Speaker Change: We were down by 90,000 hours year-over-year on the same slow basis, so...
Speaker Change: We've been very, very aggressive on the expense side, and that's why despite being down, I think the number was 18 or 19 million on a
Speaker Change: So, there are things that are within our control largely, like expenses. There are things that are somewhat in our control, like, you know,
Speaker Change: Upselling when people walk in, increasing the per cap, weak business.
Speaker Change: We are being much more proactive on the sales side with corporate events, for example, we've mandated a return to the office for our sales force.
Speaker Change: It takes effect fully by June 30th, but probably half the sales people are already back.
Speaker Change: in the offices where they haven't been since 2020. We're doing walkthroughs and tastings and other things.
So we're being very proactive on every front.
Speaker Change: but there are certain things that are out of our control. So, if Silicon Valley.
The sides as they have...
Speaker Change: in past downturns that they're going to suspend all corporate activity and that's millions and millions of dollars of business that we had in a prior year, you can't make that up.
Speaker Change: Conversely, when their sentiment changes, you know, we get as much of it as we can, so...
We have a wealth. We're a very short cycle business.
Speaker Change: Davis. A lot of the retail buying decisions are made same day or a day or two before the corporate business may stretch out for two or three weeks but rarely does it stretch out much more. So I think it's difficult for a business like us to give meaningful guidance.
Speaker Change: because again, it's so short cycle, we have no insight into what's going to happen amongst them now.
Um. [inaudible]
I would say that the sentiment among management is that…
We're pretty pleased with the quarter.
based on how it could have gone.
When you look at all the sort of exogenous factors,
Speaker Change: That happened if we weren't as proactive as we were.
Speaker Change: I think EBITDA could have been down, meaningfully as you see with our competitors.
Speaker Change: So if you take our main competitor, sort of that people perceive as our main competitor in the space, we'll mention them by name, but when they have a revenue downturn, they're either top creators.
Speaker Change: But there are certain things that, you know, we just throw along for the ride on. So, if, again, the West Coast fires...
Speaker Change: and companies say we can't have parties in Southern California because it sends the long tone the people have lost their houses and the tech industry is laying off so they're not having parties, you know, very hard for us to guide meaningfully.
Speaker Change: Months out when we don't have any disability into that at all. Now.
Speaker Change: One thing we do have visibility into is things like our summer season past.
Speaker Change: Which last summer we did eight and a half million dollars. We are up 200% in the pre-fail, which is meaningful dollars. So that will be a meaningful impact on the business in a positive way.
We have additionally the impact of...
Speaker Change: Two water parks that will be open this summer that weren't open last year. Think of Hoonis in Destin, Florida, and Sheprek Island in Panama City Beach. These should be very meaningful, even to our contributors. We have seven family entertainment centers that are, again, outdoor.
good weather properties.
Speaker Change: six of them are in California, one is in Boca Raton, Florida. So.
Speaker Change: From our perspective, there's a lot of very positive things happening, and at some point, again we laugh.
Speaker Change: The corporate downturn that we started to see in the third and fourth calendar quarters of 2024. And so, you know,
Speaker Change: We remain very positive, but to give specific guidance, I think, is a fool there because it's just impossible to do, given the short cycle nature of our business.
When I think about... [inaudible]
The next seven eight weeks, you know, we have
Speaker Change: You know, round numbers, 200 million of revenue over the next eight weeks you heard gone on the previous question like the confidence whipping right now, you know down three down 10 down three getting better from there. So from our perspective, you can sort of drive a truck.
Speaker Change: through sort of the volatility right now. And it's very important for us.
Two.
Speaker Change: You know, be honest with our stakeholders about when we're confident on which direction the business is going, you know, in the short term in the long term, in the short term, the volatility is too high. I think that we are. Thank you very much.
Speaker Change: evaluating throughout the summer that the volatility come down, are there better KPIs that we can give?
Speaker Change: to Street, so they can focus on the performance of our business. But ultimately, I still have 200 million revenue to go over the next eight weeks.
Speaker Change: and that sort of that sort of variability is still very high. We are excited about Tom Set season past. We are very excited about well for it being less of the business this summer, but ultimately the volatility continues to be very high in office.
Thank you for watching!
Speaker Change: Okay, gotcha, that's really, that's great color. Thanks guys, appreciate it.
Speaker Change: Your next question comes from the line of Jason Tilchen with Canacard Genuity. Your line is now open.
Thank you for watching!
Jason Heltgen: Great, good morning and thanks for taking the question. I'm wondering if you could share a bit more on how the rebranding initiatives gone, the performance of those centers that have already seen that rebranding compared to ones that haven't, and sort of I think you mentioned in the prepared remarks.
Jason Heltgen: and in the press release, the desire to sort of give in the heightened macro backdrop to get a little bit more disciplined approach to capital investment, how that balances with the sort of previously announced plans sort of accelerate the pace of those rebranding over the coming months. [inaudible]
Lev Ekster: This is Lev. So since the start of the calendar year, we've performed 15 rebrands of the Larros to Lucky Strikes.
Lev Ekster: and we're still committed to doing the same numbers specifically because the cost of these rebrands is actually pretty modest.
Lev Ekster: There are some science changes but really it's what Lucky Strike is versus Bowlero and that's a much better menu, more hospitality, different playlists in the centers. It's just a different environment. You can establish that pretty cost-efficiently, which we've done.
Lev Ekster: When we do these rebrands, we see a resurgence and excitement from the consumer base in that market.
Lev Ekster: Almost open houses to reintroduce the community to this new concept, Lovey Shrike.
Lev Ekster: So we're going to continue to do these. I think the goal is still 75 by the end of the calendar year, but the cost and dollars is pretty modest. The benefit is noticeable. What's also important about these is it increases our volume of lucky strikes. [inaudible]
Lev Ekster: Then when we start thinking about our future marketing plans, we can really start investing more dollars into promoting this brand and a national scale because we're going to have the center of the county justify those costs.
Lev Ekster: Yeah, and so I think it's really important to focus in on, you know, the one, the point in less comments, you know, our comp was minus 5.6, our food comp was positive.
and our total food was up.
Lev Ekster: You know, high single digits. The consumers responding to the rebrand, consumers responding to the food initiative. So, you know, we are pulling back on non high returning capex. The rebrand of the Lucky Strikes are the highest return week.
Lev Ekster: Ian The Market, I know.
Speaker Change: That's really helpful. And this one quick follow up there, I think you mentioned sort of total food up high single digit and then food and Bev I think was up maybe 1% from the pair of marks that would imply sort of petite softness on the Bev side of things. Any additional color you can share in sort of the rollout of tablets and things like that and how those have had a benefit and impact on sales trends in centers.
Speaker Change: Yeah, I'll take this one. So look at that. I don't think it's uh...
Speaker Change: You can't make the argumentative in societal changes with alcohol consumption, but it's not gonna deter us, so we're expanding our zero proof cocktail program to over a hundred locations this summer.
We're working on a really exciting
Speaker Change: National Craft, Lemonade Launch this summer. We're going to connect that to our summer season and pass without premium pass holders. We're going to get discounts on that new product.
Speaker Change: But food is a really, really big tailwind for us right now. And on previous calls, I spoke about the innovation for our menu. We've accomplished that.
Speaker Change: But also, we're going to continue to innovate. So we have a new feature menu items coming for our premium menus, you know, really exciting items like our top chicken teaser wrap.
Chipotle, Connie Chicken Balls
Speaker Change: Strawberry Poppy Salads, these are not menu items you would historically expect to see in a bowling alley and
Speaker Change: We're no longer a bowling alley, right? We're a location based entertainment business and Lucky Shrike allows us to introduce the type of menu to the consumer and their responding. That's why you see food outperforming. We're going to put the same level of focus on. [inaudible]
Alpahal,
Speaker Change: Zero Proof, Lemonade Program, so we're going to do what we can control, and that's to innovate, launch better products, we'll allow these better menus, and I think the results are going to continue to follow.
Speaker Change: The tablets are driving a increase on per check, 7%. So it's it's it's it's working. And you know, we're leading into, you know, food, you know, all the way for the corporate business to come back. [inaudible]
Great, thank you very much.
Eric Hunter: Your next question comes from the line of Eric Handler of Roth Capital. Please go ahead.
Speaker Change: Good morning, thank you for your question. Um, I just wanted to make sure that you narrowed it down. Eric, is that you or is that us?
operator
Hello.
operator
I'm sorry, you're... [inaudible]
Michael Kopinski: Next comment from the line of Michael Kupinski of Noble Capital Markets. Please go ahead.
Michael Kopinski: Thank you. Thanks for taking my question. Quick one. I'm kind of trying to understand the cutbacks and corporate events. Is it due to short-term concerns or are there more?
Michael Kopinski: Rod, longer-term economic concerns, Pacific Utilica, and Valley. For instance, a number of companies that I follow also have indicated at business in particularly corporate business scenes.
Michael Kopinski: to be floating around the tariff issues, and they saw weakness around liberation day, but then they saw some improvements come back as some of those concerns subsided. And I was just wondering in terms of your corporate events business and you're seeing some improvements. I was just wondering. [inaudible]
Speaker Change: Do you have any thoughts if it is really related to more of the the tear of issues and how businesses are trying to react to that the prospects and the economic fallout around that?
Michael Kupinski
Advertisers, you know.
Thank you for watching!
Speaker Change: There are, look, it's different by market. So in April , for example, we were, we have about 25 sales groups around the country.
A handful of those groups actually comps positive.
Speaker Change: A number of them were flat, and the ones in the west coast were down significantly.
Eric, the difference on a cop basis. [inaudible]
Speaker Change: between the East Coast and the West Coast in the last period was 20 percentage points year
Thank you for watching!
The tech industry tends to be...
Speaker Change: The first to sort of react to negative news in the macro environment, and other people tend to be less
Speaker Change: less impacted by it. I don't think this is a long-term trend.
Speaker Change: I think this strikes me very much as it did in no way, where people really pulled back very quickly.
Speaker Change: and you know, there are other industries that will fill in the gap. So, as I mentioned before, we're returning all of our event salespeople to the office. We've been effectively naked in terms of not having people in office since...
Speaker Change: The pandemic. It didn't really matter because corporate activity was so robust that it worked from home actually worked. But
when the environment changes. [inaudible]
Speaker Change: We realized that most of our customers had zero contact with our salespeople or in many cases with our venues before they were booking an event. So they were essentially looking online at pictures.
Speaker Change: of us and pictures of our competitors and had no way of really being able to understand the qualitative differences between the two our locations are overwhelmingly best in class. [inaudible]
Speaker Change: And our food is excellent. And so what we're doing now is whenever we get an inquiry, we are encouraging people to come in and see the property and to eat the food.
Speaker Change: and that is working. We're seeing an uptick in conversion rate among people who are doing that, a meaningful uptick, I should say. And so we're very proactively leaning into how to address this.
Speaker Change: and so it will try its very nature to become less important for a while.
Speaker Change: By the time we get back to the fourth calendar quarter of this year, I think a lot of the noise in the market will have abated.
Please see the complete disclaimer at https://sites.google.com
You know?
Speaker Change: The impact of the tariffs is really meaningful. I'll give you an example for us.
So we had a number of leases we were negotiating.
Speaker Change: that were predicated on a construction cost of a certain amount that we knew we had paid in recent months to build new centers.
Speaker Change: and we anticipated that the cost of construction could go up by 20% or 30% as a function of higher
Speaker Change: Material Costs, but also less labor availability, and thus much more expensive labor related to construction.
Speaker Change: We canceled, we stopped moving forward on eight of those leases.
which represents about $100 million of capital spent. [inaudible]
Speaker Change: I think that we are one of many, many, many companies who are viewing the world in the same way, that the impact of the tariffs is hard to predict, but overwhelmingly the impact is negative. Whether it's
Speaker Change: Revenue uncertainty given the macro backdrop and increase in cost that you can't necessarily predict or budget for and so.
Speaker Change: I think the impact of tariffs right now on corporate sentiment is very, very pronounced.
Speaker Change: and the earnings you've seen recently were by companies that weren't really affected.
Speaker Change: by that because they had orders that were fulfilled in the last quarter that weren't impacted by the tariffs, but I guarantee you that the activity for most people right now is dramatically slower as a result of the tariffs. Now, that's sent them.
Speaker Change: The issue could go away just as quickly as it came, right? And the sentiment could change just as quickly as it went negative. But I'm not in the betting game, so I don't know when that will happen.
But none of these negative exogenous shocks [inaudible]
Speaker Change: Last for very long, the economy always reverse back to the mean, sentiment always reverse back to the mean and so whether that's two months or four months or six months, I don't view this as a as a permanent impairment of our business.
Thank you for watching!
Speaker Change: Great. Thank you for that color. I greatly appreciate it. That's all I have.
Michael Kupinski, Randal Kupinski,
Speaker Change: The next question comes from the line of Mike Swartz with tourist securities. Please go ahead.
Mike Swartz: Hey guys, good morning. Maybe just wanted to touch on some of the water parks and family entertainment centers.
Mike Swartz: As this is a growing part of the portfolio, I know it's still small in the context of 300 plus locations, can you give us a sense or maybe frame for us the annual contribution from these businesses now and maybe how to think about the seasonality in totality. Thank you very much.
Yeah, so is it.
Mike Swartz: On the water park side, we're really going to see revenue pretty much from June to August , we have a little bit of revenue April May, really it's June to August . Right now we have...
Mike Swartz: Three water parks that will contribute 30 plus million of revenue between June and August . Then you have the boomers slash FEC business. And that's another.
30 million of revenue. That is...
You know, throughout the year, but it.
Mike Swartz: You know, 50 plus percent of it happens between June and September when school is out.
Mike Swartz: So, you know, from my perspective, we're highly confident in strong growth, this quarter, strong growth, next quarter because we just have these businesses flowing in.
Mike Swartz: and so we'll continue to do that. And again, the comp on the bowling side is one thing, but the inorganic growth that we get on these businesses. You know, in boomers, we bought for...
Mike Swartz: 26.5 million, you know, it's going to do, you know, 10 plus million of Ubisoft going to, you know, higher than that.
Mike Swartz: So the flow through on that business is very similar to the rest of our businesses. That's overall we can get good in 30s, if not low 40s, EBITDA margin.
Thank you for watching!
Speaker Change: Okay, that's helpful. Thomas, I think you made the comment of consumers during periods of uncertainty, consumers turned the local entertainment to a greater degree and I think you kind of mentioned the success of the season pass this year. Are there any other data points that kind of give you the confidence that we are starting to see that happen? Yeah, I think so.
Speaker Change: Well, it's not just the bowling summer season last, we're also seeing in the water, product season, past sales.
Speaker Change: So Raging Waves, which is our flagship 54 acre park in that Illinois is up more than 100% in season past hills, good at this point so.
I think the combination of...
Speaker Change: People wanting to stay local, but I think we've really done a very good job now of marketing these and getting the pricing right. So there's a lot going on behind the scenes here. Management has been extremely proactive on every front.
Speaker Change: You know, we are building a world class marketing function. We've been hiring and training the new core cohort of salespeople. We've been rationalizing.
Speaker Change: The activities of the sales people to focus on things that they hadn't focused on previously, and you're starting to see it in these indicators.
and again, I think. [inaudible]
Speaker Change: The data Bobby provided about how much were impacted by a very small part of the country in the first quarter should be indicative that
The consumer is, is...
Pretty healthy and is spending money on these activities.
Speaker Change: and we'd probably be pumping positive now. That would not be a good thing, by the way, because being exposed to the corporate party business is a very, very net positive part of our business, very profitable one, but a more volatile one.
So, what we're seeing? [inaudible]
in terms of walk-in, the retail business is effectively flat. Now...
Speaker Change: One thing that I think it's important to understand is that the company on average has increased three same-store sales about 5% since 2013.
Speaker Change: Even now, we're up 25% on a same-store basis versus 2019. So when you see a negative cop,
Speaker Change: It's a negative comp after enormous growth. Our average unit volume went from 2.1 million to about 3.3 million in the last five years.
Speaker Change: and so there's a little bit coming off as a sort of a natural function, I would say, or a pause in the growth, but the trendline remains intact.
Speaker Change: So from our perspective, having been doing this for 28 years, there are ebbs and flows in the natural business cycle.
But there are a lot of positive share. [inaudible]
Speaker Change: Cosms being that we've taken a lot of costs out of the business that we lived with for a long time that we realized we didn't need to live with.
Capital Efficiency. Being that $40 million in R&M is significant.
Speaker Change: Hearing back our capital expenditures on new builds to only those deals that are really in the center of the bull's eye from a revenue, expected revenue and cost perspective.
Bobby Lavan: and then doing really attractive M&A, as Bobby mentioned, boomers for 26 and a half million, you know, ultimately we see that business producing more than 15 million of EBITDA, and we're buying assets on a forward basis.
Bobby Lavan: including Lian at around five times the baton. So, you know, we feel really good about where things are. Someone asked earlier why we were buying back stock if the intention, you know, if maybe we should be focused on delivering the reality of this set.
Our attention will shift from stock buybacks to delivery.
Bobby Lavan: If anything, I wish we had more flow, frankly, we probably bought back too much stock, but that's something that can be dealt with, but yes, I think over time our goal...
Bobby Lavan: The goal of the board is to start to de-lever the business and we'll probably do that by growing either down against a constant level of debt.
Speaker Change: Your last question comes to the line of Jeremy Hamblin with Greg Hallam Capital Group. Your line is now open.
Thank you for watching!
Jeremy Hamblin: Great, thanks for taking the questions this morning. I wanted to focus section SGNA spend. And so, as you saw,
Speaker Change: The very modest growth here in the March quarter. You saw a pretty significant uptick in the total S-G-N-A cost.
Speaker Change: I wanted to just get an understanding. I know you've talked about in the past some flexibility to really dial down your spend if the market conditions warranted. [inaudible]
Speaker Change: and obviously uncertainty, I think, is probably going to be around, you know, not just for a couple of months, but probably for an extended period of time.
Speaker Change: How should we be thinking about your S-GNA spend here given that you've got to change in the dynamic?
Speaker Change: Where you now have water parks, you have boomers, you know, businesses that you have to operate and spend money on during the summer months. But how should we be thinking about, you know, your SGNA cost structure here? I don't know, I don't know.
Speaker Change: You know, year-over-year in the June quarter, and then as we look ahead into, you know, the back half of calendar 26.
Speaker Change: Yeah, so let me just address one complicated technical dynamic that happened in the quarter. SGNA had a $5 million charge, non-cash charge related to bread retiring from the company.
Speaker Change: So, we had to take a charge related to that. It was non-cash. I expect that to tune in to be down. And, you know, it was down last quarter. It would have been down exit.
Speaker Change: Charge that is more of an accounting dynamic than operational. We have taken a act.
Speaker Change: to SNA Cross. Our priority is to grow revenue local, maintaining SNA flat down.
Speaker Change: So that's sort of the formula of the business, and that's how you should look at it.
Thanks for watching!
Speaker Change: Okay, and then just following up on that. So as we look. Okay, um.
as we look to, again, kind of into fiscal 26. [inaudible]
Speaker Change: You know, as you focus on kind of higher return, you know, remodels and so forth in the Lucky Strike brand.
Speaker Change: You know, what type of cost now are you expecting with that? And again, I know you mentioned that there's a little bit of increase in costs around tariffs. But, you know, how should we be thinking about that? And then, you know, whether or not the
Speaker Change: and kind of the employee market remains robust or whether or not there are some kind of comments out there in the pure-poly restaurant sector that the employee supply is a little bit tighter than it had been.
For more information, please visit www.FEMA.gov
Speaker Change: Yeah, the way I would look at my cross structure is I've 400 million payroll. Payroll is, you know, always gonna have a little bit of cost of living adjustment in it, right? Some sort of inflationary factor. You know, we have another 600 million of non payroll related expenses. We're gonna bring those down.
Speaker Change: Even in a tariff environment, you know, there's still a lot of...
This opportunity to sort of bring cost down drive efficiencies.
You know, we're building a procurement organization.
Speaker Change: We're partnering with our vendors for scale. We're no longer buying things like couches, one at a time, now we're buying a thousand at a time. That's sort of the core reason for the Lucky Strike rebrand is really focused on having a single brand we can get behind and that drives efficiency across your cost structure.
Dr. Kupinski.
Great. Thanks for the color, best wishes.
Thank you.
Speaker Change: That will conclude our question and answer session, and I will now turn to call back
Speaker Change: Thanks everyone, you know, we'll be on the road for the next few months and look forward to seeing you. Thank you.
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.