Q4 2026 Lucky Strike Entertainment Corp Earnings Call

August 27, 2026

Speaker #1: Hello, everyone. Thank you for joining us, and welcome to the Lucky Strike Entertainment Q4 2026 earnings conference call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Hello, everyone. Thank you for joining us, and welcome to the Lucky Strike Entertainment Q4 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. I will now hand the conference over to Bobby Lavan, Chief Financial Officer. Bobby, please go ahead.

Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, please press *1 again. I will now hand the conference over to Robert Lavan, Chief Financial Officer.

Speaker #1: Bobby, please go ahead.

Speaker #2: Good morning to everyone on the call. This is Bobby Lavin, Lucky Strike's President and Chief Financial Officer. Welcome to our conference call to discuss Lucky Strike's fourth quarter 2026 earnings.

Bobby Lavan: Good morning to everyone on the call. This is Bobby Lavan, Lucky Strike's President and Chief Financial Officer. Welcome to our conference call to discuss Lucky Strike's fourth quarter 2026 earnings. Today, we issued a press release announcing our financial results for the period ending 29 June 2026. A copy of the press release is available in the investor relations section of our website. Joining me on the call today is Tom Shannon, our Founder and Chief Executive. I would 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 inherent risks and uncertainties which could cause actual results to differ materially from those expressed.

Bobby Lavan: Good morning to everyone on the call. This is Bobby Lavan, Lucky Strike's President and Chief Financial Officer. Welcome to our conference call to discuss Lucky Strike's Q4 2026 earnings. Today, we issued a press release announcing our financial results for the period ending 29 June 2026. A copy of the press release is available in the investor relations section of our website. Joining me on the call today is Thomas Shannon, our Founder and Chief Executive. I would 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 inherent risks and uncertainties which could cause actual results to differ materially from those expressed.

Speaker #2: Today, we issued a press release announcing our financial results for the period ending June 29, 2026. A copy of the press release is available in the Investor Relations section of our website.

Speaker #2: Joining me on the call today is Thomas Shannon, our founder and Chief Executive. I would like to remind you that during today's conference call, we may make certain forward-looking statements about the company's performance.

Speaker #2: 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 inherent risks and uncertainties that could cause actual results to differ materially from those expressed.

Speaker #2: For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release, as well as the risk factors contained in the company's filings with the SEC.

Bobby Lavan: For additional information concerning factors could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release, as well as the risk factors contained in the company's filings with the SEC. Lucky Strike Entertainment undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after today's call. Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure is most directly comparable to each non-GAAP financial measure discussed in the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure may be found on the company's website. I will now turn the call over to Tom.

Speaker #2: Lucky Strike Entertainment undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after today's call. Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G.

Speaker #2: The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed in the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company's website.

Speaker #2: I will now turn the call over to Tom.

Speaker #3: Thanks, everyone, for joining today’s call. Despite a weak consumer at the lower end of the K and general macro uncertainty, we finished fiscal 2026 with same-store sales comp of -0.2%.

Tom Shannon: Thanks, everyone, for joining today's call. Despite a weak consumer at the lower end of the K and general macro uncertainty, we finished fiscal 2026 with a same-store sales comp of -0.2%, a 3.5 percentage point improvement over the prior year, and our best comp performance since fiscal 2023. Total revenue grew 4% to $1.245 billion, and adjusted EBITDA was $333 million, reflecting a year of deliberate investment in marketing in our water park platform and in the technology and leadership that position us for fiscal 2027. Had it not been for the World Cup and its record-breaking viewership and the conflict in the Middle East that drove consumer confidence to its lowest level in 70 years, our full-year comp would almost certainly have been positive. There are green shoots across the business, and they are broadening. Ex-California, the company comped up +0.9% for the year.

Thomas Shannon: Thanks, everyone, for joining today's call. Despite a weak consumer at the lower end of the K and general macro uncertainty, we finished fiscal 2026 with a same-store sales comp of -0.2%, a 3.5 percentage point improvement over the prior year, and our best comp performance since fiscal 2023. Total revenue grew 4% to $1.245 billion, and adjusted EBITDA was $333 million, reflecting a year of deliberate investment in marketing in our water park platform and in the technology and leadership that position us for fiscal 2027. Had it not been for the World Cup and its record-breaking viewership and the conflict in the Middle East that drove consumer confidence to its lowest level in 70 years, our full-year comp would almost certainly have been positive. There are green shoots across the business, and they are broadening. Ex-California, the company comped up +0.9% for the year.

Speaker #3: This represents a 3.5-point improvement over the prior year and our best comp performance since fiscal 2023. Total revenue grew 4% to $1.245 billion, and adjusted EBITDA was $333 million.

Speaker #3: Reflecting a year of deliberate investment in marketing, our waterpark platform, and in the technology and leadership that position us for fiscal 2027. Had it not been for the World Cup and its record-breaking viewership, and the conflict in the Middle East that drove consumer confidence to its lowest level in 70 years, our full-year comp would almost certainly have been positive.

Speaker #3: There are green shoots across the business, and they are broadening. Ex-California, the company comped up plus 0.9% for the year. Retail bowling and shoe revenue comped plus 2.9%.

Tom Shannon: Retail bowling and shoe revenue comped +2.9%. Leagues grew +3.6% and accelerated in each of the last four months. Food comped +8%, and events, one of our most important product lines, turned positive in May and June for the first time since 2024 and remained positive in July and August, its best stretch in years. The Q4 started well. April was roughly flat, May swung to +2%, and we entered June with strong momentum. That momentum was disrupted by an extraordinary stretch of at-home sports viewership. on 11 June, the most-watched World Cup in American television history kicked off on home soil for the first time in a generation. The 19 July World Cup Final drew roughly 66 million viewers across platforms, the largest American television audience since the Super Bowl.

Thomas Shannon: Retail bowling and shoe revenue comped +2.9%. Leagues grew +3.6% and accelerated in each of the last four months. Food comped +8%, and events, one of our most important product lines, turned positive in May and June for the first time since 2024 and remained positive in July and August, its best stretch in years. The Q4 started well. April was roughly flat, May swung to +2%, and we entered June with strong momentum. That momentum was disrupted by an extraordinary stretch of at-home sports viewership. on 11 June, the most-watched World Cup in American television history kicked off on home soil for the first time in a generation. The 19 July World Cup Final drew roughly 66 million viewers across platforms, the largest American television audience since the Super Bowl.

Speaker #3: Leagues grew by 3.6% and accelerated in each of the last four months. Food comped up 8%, and events—one of our most important product lines—turned positive in May and June for the first time since 2024. Events also remained positive in July and August, marking its best stretch in years.

Speaker #3: The fourth quarter started well. April was roughly flat, May swung to plus 2%, and we entered June with strong momentum. That momentum was disrupted by an extraordinary stretch of at-home sports viewership.

Speaker #3: On June 11, the most-watched World Cup in American television history kicked off on home soil for the first time in a generation. The July 19 World Cup final drew roughly 66 million viewers across platforms, the largest American television audience since the Super Bowl.

Speaker #3: Layered on top of that, the Knicks won their first NBA title in 53 years in the most-watched finals in 28 years, averaging more than 20 million viewers a night in our largest market, with 33 million people watching the final game.

Tom Shannon: Layered on top of that, the Knicks won their first NBA title in 53 years in the most-watched finals in 28 years, averaging more than 20 million viewers a night in our largest market, with 33 million people watching the final game. For five straight weeks, millions of consumers who would ordinarily be bowling on a Friday or Saturday night were watching sports from home. June comped -7% and pulled an otherwise positive quarter and year slightly into the negative. I want to be precise about what that was and what it was not. It was not a weakening consumer. As we have seen through every exogenous shock since I started this company, the consumer has a short memory and adjusts to new realities quickly, and that is exactly what happened here. Our trends inflected the week after the final, and August is rebounding.

Thomas Shannon: Layered on top of that, the Knicks won their first NBA title in 53 years in the most-watched finals in 28 years, averaging more than 20 million viewers a night in our largest market, with 33 million people watching the final game. For five straight weeks, millions of consumers who would ordinarily be bowling on a Friday or Saturday night were watching sports from home. June comped -7% and pulled an otherwise positive quarter and year slightly into the negative. I want to be precise about what that was and what it was not. It was not a weakening consumer. As we have seen through every exogenous shock since I started this company, the consumer has a short memory and adjusts to new realities quickly, and that is exactly what happened here. Our trends inflected the week after the final, and August is rebounding.

Speaker #3: For five straight weeks, millions of consumers who would ordinarily be bowling on a Friday or Saturday night were watching sports from home. June comped at -7% and pulled an otherwise positive quarter and year slightly into the negative.

Speaker #3: I want to be precise about what that was and what it was not. It was not a weakening consumer. As we have seen through every exogenous shock since I started this company, the consumer has a short memory and adjusts to new realities quickly.

Speaker #3: And that is exactly what happened here. Our trends inflected the week after the final, and August is rebounding. It was a one-time, five-week programming event on home soil, and it does not repeat next summer.

Tom Shannon: It was a one-time, five-week programming event on home soil, and it does not repeat next summer. California remains our weakest market, but it is trending better. We made meaningful upgrades to the operating team there, including replacing leadership, and we are overhauling our corporate sales organization in the state. As I outlined on our last call, the full earnings benefit of the cost actions we took beginning in mid-January would land in the Q4, and that is exactly what happened. The Q2's $6 million payroll overrun became a payroll tailwind in the Q4 and remained one in July. We made significant advancements this year in analytics, pricing, leagues, and capital efficiency. With AI, our data and insights into the business are accelerating and our ability to optimize key functions like labor management.

Thomas Shannon: It was a one-time, five-week programming event on home soil, and it does not repeat next summer. California remains our weakest market, but it is trending better. We made meaningful upgrades to the operating team there, including replacing leadership, and we are overhauling our corporate sales organization in the state. As I outlined on our last call, the full earnings benefit of the cost actions we took beginning in mid-January would land in the Q4, and that is exactly what happened. The Q2's $6 million payroll overrun became a payroll tailwind in the Q4 and remained one in July. We made significant advancements this year in analytics, pricing, leagues, and capital efficiency. With AI, our data and insights into the business are accelerating and our ability to optimize key functions like labor management.

Speaker #3: California remains our weakest market, but it is trending better. We made meaningful upgrades to the operating team there, including replacing leadership, and we are overhauling our corporate sales organization in the state.

Speaker #3: As I outlined on our last call, the full earnings benefit of the cost actions we took beginning in mid-January would land in the fourth quarter, and that is exactly what happened.

Speaker #3: The second quarter's $6 million payroll overrun became a payroll tailwind in the fourth quarter, and remained one in July. We made significant advancements this year in analytics, pricing, leagues, and capital efficiency.

Speaker #3: And with AI, our data and insights into the business are accelerating, as is our ability to optimize key functions like labor management. We reduced capital expenditures by 19%, to $114 million from $141 million last year and $194 million two years ago.

Tom Shannon: We reduced capital expenditures by 19% to $114 million from $141 million last year and $194 million two years ago. This is a reduction of $80 million in two years. On marketing, not all of our spending delivered the ROI we expected. We doubled working media and gained significant awareness, but the creative did not generate enough intent. Going forward, our investments will be more targeted, more measurable, and held to a higher return threshold. In fiscal 2027, every marketing dollar needs to generate a return. Otherwise, we will consider reducing marketing as a percentage of revenue. Water parks represented the largest operational change of our summer. A year ago, we directly managed two water parks. This summer, we directly managed five, including Raging Waters Los Angeles, which we closed on in January for $45 million.

Thomas Shannon: We reduced capital expenditures by 19% to $114 million from $141 million last year and $194 million two years ago. This is a reduction of $80 million in two years. On marketing, not all of our spending delivered the ROI we expected. We doubled working media and gained significant awareness, but the creative did not generate enough intent. Going forward, our investments will be more targeted, more measurable, and held to a higher return threshold. In fiscal 2027, every marketing dollar needs to generate a return. Otherwise, we will consider reducing marketing as a percentage of revenue. Water parks represented the largest operational change of our summer. A year ago, we directly managed two water parks. This summer, we directly managed five, including Raging Waters Los Angeles, which we closed on in January for $45 million.

Speaker #3: This is a reduction of $80 million in two years. On marketing, not all of our spending delivered the ROI we expected. We doubled working media and gained significant awareness, but the creative did not generate enough intent.

Speaker #3: Going forward, our investments will be more targeted, more measurable, and held to a higher return threshold. In fiscal 2027, every marketing dollar needs to generate a return.

Speaker #3: Otherwise, we will consider reducing marketing as a percentage of revenue. Waterparks represented the largest operational change of our summer. A year ago, we directly managed 2 waterparks.

Speaker #3: This summer, we directly managed five, including Raging Waters Los Angeles, which we closed on in January for $45 million. We are in five really good markets with very strong positions.

Tom Shannon: We are in five really good markets with very strong positions, the largest water parks in North Carolina, Illinois, and California, and two very good parks in the Florida Panhandle. That is a step change in operating complexity, and the organization rose to it. Strategically, the season was about striking the right balance between price, attendance, and labor. Across the water park portfolio, per capita spending is up double digits, and payroll is down mid-single digits as we staff to demand. Price and cost discipline held what weather took, and it is the same pattern the large regional park operators described in their calls this month. Attendance pressured by weather, per capita spending up, and the economics protected through revenue management. The weather impact was real and concentrated.

Thomas Shannon: We are in five really good markets with very strong positions, the largest water parks in North Carolina, Illinois, and California, and two very good parks in the Florida Panhandle. That is a step change in operating complexity, and the organization rose to it. Strategically, the season was about striking the right balance between price, attendance, and labor. Across the water park portfolio, per capita spending is up double digits, and payroll is down mid-single digits as we staff to demand. Price and cost discipline held what weather took, and it is the same pattern the large regional park operators described in their calls this month. Attendance pressured by weather, per capita spending up, and the economics protected through revenue management. The weather impact was real and concentrated.

Speaker #3: The largest waterparks in North Carolina, Illinois, and California, and two very good parks in the Florida Panhandle. That is a step change in operating complexity, and the organization rose to it.

Speaker #3: Strategically, the season was about striking the right balance between price, attendance, and labor. Across the waterpark portfolio, per capita spending is up double digits.

Speaker #3: And payroll is down mid-single digits as we staff to demand. Price and cost discipline held what weather took. And it is the same pattern the large regional park operators describe in their calls this month: attendance pressured by weather, per capita spending up, and the economics protected through revenue management.

Speaker #3: The weather impact was real and concentrated. Raging Waves, our 54-acre waterpark outside Chicago, saw attendance fall significantly against a June that ran cooler than normal, with rainfall well above normal.

Tom Shannon: Raging Waves, our 54-acre water park outside Chicago, saw attendance fall significantly against a June that ran cooler than normal, with rainfall well above normal. As I've said before, in this business, pricing has a lot less to do with demand than weather, and a water park cannot comp through a cold, wet summer month. We remain very bullish here. I've described the water parks as a coiled spring. On a trailing 12-month basis through July, the water parks produced $56 million of revenue and $22 million of EBITDA, up from $23 million of revenue and $11 million of EBITDA in fiscal 2025. Roughly 80% of summer water park earnings land in our September quarter, which is in fiscal 2027. The business is highly countercyclical and will only get better as we become more experienced operators in this business. The fixes for next season are simple.

Thomas Shannon: Raging Waves, our 54-acre water park outside Chicago, saw attendance fall significantly against a June that ran cooler than normal, with rainfall well above normal. As I've said before, in this business, pricing has a lot less to do with demand than weather, and a water park cannot comp through a cold, wet summer month. We remain very bullish here. I've described the water parks as a coiled spring. On a trailing 12-month basis through July, the water parks produced $56 million of revenue and $22 million of EBITDA, up from $23 million of revenue and $11 million of EBITDA in fiscal 2025. Roughly 80% of summer water park earnings land in our September quarter, which is in fiscal 2027. The business is highly countercyclical and will only get better as we become more experienced operators in this business. The fixes for next season are simple.

Speaker #3: As I have said before, in this business, pricing has a lot less to do with demand than weather. And a waterpark cannot comp through a cold, wet summer month.

Speaker #3: We remain very bullish here. I have described the waterparks as a coiled spring. On a trailing 12-month basis through July, the waterparks produced $56 million of revenue and $22 million of EBITDA, up from $23 million of revenue and $11 million of EBITDA in fiscal 2025.

Speaker #3: Roughly 80% of summer waterpark earnings land in our September quarter, which is in fiscal 2027. The business is highly countercyclical and will only get better as we become more experienced operators in this business.

Speaker #3: The fixes for next season are simple: sell season passes earlier to hedge out weather and further optimize price and admissions. We are very happy with our Boomers parks, which are counter-seasonal, high-margin, and EBITDA positive in every period, delivering $11 million of EBITDA this year—nearly double the prior year.

Tom Shannon: Sell season passes earlier to hedge out weather and further optimize price and admissions. We're very happy with our Boomers parks, which are counterseasonal, high margin, and EBITDA positive in every period, delivering $11 million of EBITDA this year, nearly double the prior year. Turning to guidance. For fiscal 2027, we expect adjusted EBITDA of $340 to $360 million. We run a short cycle business, and we do not give guidance blindly or optimistically, so we are deliberately guiding conservatively as we work through the year. Importantly, this range reflects prudence around the environment, not the trajectory of our plan. The consumer has already told us in August that they want what we sell, and the keys to this year will be events booking for December and a clean second half after more disturbances than we have ever seen historically. Thank you. With that, let's turn it over to Q&A.

Thomas Shannon: Sell season passes earlier to hedge out weather and further optimize price and admissions. We're very happy with our Boomers parks, which are counterseasonal, high margin, and EBITDA positive in every period, delivering $11 million of EBITDA this year, nearly double the prior year. Turning to guidance. For fiscal 2027, we expect adjusted EBITDA of $340 to $360 million. We run a short cycle business, and we do not give guidance blindly or optimistically, so we are deliberately guiding conservatively as we work through the year. Importantly, this range reflects prudence around the environment, not the trajectory of our plan. The consumer has already told us in August that they want what we sell, and the keys to this year will be events booking for December and a clean H2 after more disturbances than we have ever seen historically. Thank you. With that, let's turn it over to Q&A.

Speaker #3: Turning to guidance: For fiscal 2027, we expect adjusted EBITDA of $340 to $360 million. We run a short-cycle business, and we do not give guidance blindly or optimistically, so we are deliberately guiding conservatively as we work through the year.

Speaker #3: Importantly, this range reflects prudence around the environment, not the trajectory of our plan. The consumer has already told us in August that they want what we sell, and the keys to this year will be events booking for December and a clean second half after more disturbances than we have ever seen historically.

Speaker #3: Thank you. With that, let's turn it over to Q&A.

Speaker #1: We will now begin the question and answer session. Please limit your question please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press star 1 to raise your hand.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Steven Wieczynski from Stifel. Your line is open. Please go ahead.

Speaker #1: To withdraw your question, please press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: And if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Steven Wieczynski from Stifel.

Speaker #1: Your line is open. Please go ahead.

Speaker #2: Yeah, hey guys. Good morning. So, Tom or Bobby, I mean, if we think about your guidance for this year, if we kind of look at where the assumptions around margins are, I mean, you guys are kind of forecasting margins somewhere—I think it's a 20–27% number—versus a 30% long-term target.

Steven Wieczynski: Yeah. Hey, guys. Good morning. Tom or Bobby, if we think about your guidance for this year, if we look at where the assumptions around margins, you guys are forecasting margins somewhere, I think it's a 27% number versus the 30% long-term target you laid out in the presentation. As we think about fiscal year 2027, wondering what might be weighing a little bit there on that margin versus your long-term goal. I know you kind of called out maybe some marketing initiatives and some other things in there as well, but any kind of color around the margin target for this year versus the long-term target would be helpful. Thanks.

Speaker #2: You laid out in the presentation, so as we think about fiscal year '27, I'm wondering what might be weighing a little bit there on that margin versus your long-term goal.

Speaker #2: And I know you kind of called out maybe some marketing initiatives and some other things in there as well, but any kind of color around the margin target for this year versus the long-term target would be helpful.

Speaker #2: Thanks.

Speaker #3: Yes. So we've spent a lot of time on this topic, and we added a slide to our investor deck that will show you that $900 million of revenue in the portfolio runs at a 42% four-wall EBITDA margin.

Bobby Lavan: Yes. We spent a lot of time on this topic, and we added a slide to our investor deck that will show you that $900 million of revenue of the portfolio runs at a 42% four-wall EBITDA margin, and all that's the pre-2022 properties. Then there is $300 million that runs at 30%, and that's everything that we've invested in, built, or acquired, post-COVID. When you look at the math there, when we get that $300 million up, you get back to this 30%. I think the 32% is a little bit harder to achieve in a world where we've taken marketing from 1% to 2.5% to 3% of revenue. I mean, that's just an automatic reduction in margin. But we're still very confident in the long-term 30% to 32%.

Speaker #3: And all of that's the pre-2022 properties. And then there is $300 million that runs at 30%, and that's everything that we've invested in, built, or acquired post-COVID.

Speaker #3: And when you look at the math there, when we get that $300 million up, you get back to this 30%. I think the 32% is a little bit harder to achieve in a world where we've taken marketing from 1% to 2.5% to 3% of revenue.

Speaker #3: I mean, that's just an automatic reduction in margin. But we're still very confident in the long-term 30 to 32. We just want to be prudent with our guide this year as we invest in marketing, as we invest in systems, as we continue to ramp the waterparks, making sure that the organizational structure is there.

Bobby Lavan: We just want to be prudent with our guidance here as we invest in marketing, as we invest in systems, as we continue to ramp the water parks, making sure that the organizational structure is there. But ultimately, this continues to be an investment year. We're pretty happy with the trajectory we're on.

Speaker #3: But ultimately, this continues to be an investment year, but we're pretty happy with the trajectory we're on.

Speaker #2: Okay, gotcha. And then, Bobby, probably one for you as well—wondering maybe how we should think about cadence, same-store sales, cadence for the fiscal commentary. I think Tom’s commentary around July and August was positive.

Steven Wieczynski: Okay. Gotcha. Bobby, probably one for you as well. Wondering maybe how we should think about cadence, same-store sales cadence for fiscal year 2027. Your commentary, I think Tom's commentary around July and August were positive. That sounds good. It sounds like the first quarter should be positive just based on maybe how September ends up. But any color around the last three quarters of the year in terms of how you guys are maybe. I know it's tough to kind of forecast that, but what you guys are kind of thinking from a same-store sales perspective, and then maybe anything from a headwind or tailwind for the last three quarters of the year as well that we should be thinking about?

Steven Wieczynski: Okay. Gotcha. Bobby, probably one for you as well. Wondering maybe how we should think about cadence, same-store sales cadence for fiscal year 2027. Your commentary, I think Tom's commentary around July and August were positive. That sounds good. It sounds like the Q1 should be positive just based on maybe how September ends up. But any color around the last three quarters of the year in terms of how you guys are maybe. I know it's tough to kind of forecast that, but what you guys are kind of thinking from a same-store sales perspective, and then maybe anything from a headwind or tailwind for the last three quarters of the year as well that we should be thinking about?

Speaker #2: That sounds good. So it sounds like the first quarter should be positive, just based on maybe how September ends up. But any color around the last three quarters of the year in terms of how you guys are—maybe, I know it’s tough to kind of forecast that, but what you guys are kind of thinking from a same-store sales perspective?

Speaker #2: And then maybe anything from a headwind or tailwind for the last three quarters of the year as well that we should be thinking about?

Speaker #3: Yeah, so moving backwards, June was the worst month I've ever seen here. And so that is going to be a tailwind next year. We're not going to have the World Cup.

Bobby Lavan: Yeah. Moving backwards, June was the worst month I have ever seen here, so that is going to be a tailwind next year. We are not going to have the World Cup, and hopefully the weather in Chicago is better. June had some tailwinds. Last year, we had about $10 million of revenue hit from two different distinct snowstorms in the March quarter. The weather is the weather, but ultimately, those were very unique. The quarter that I am most focused on is our December quarter. We have completely restructured our events platform. Events, as we have talked about a lot, has been this $40 million top-line drawdown over the past three years, and that business has been positive for the past four months. Most importantly, going into the end of September last year, the December backlog was tracking down 30%. This year, it is tracking up 10%.

Speaker #3: And hopefully the weather in Chicago is better, so June has some tailwinds. Last year, we had about $10 million of revenue hit from two different, distinct snowstorms in the March quarter.

Speaker #3: And the weather is the weather, but ultimately, those were very unique. The quarter that I'm most focused on is our December quarter. We have completely restructured our events platform.

Speaker #3: Events, as we've talked about a lot, has been this $40 million top-line drawdown over the past three years. And that business has been positive for the past four months, but most importantly, going into the end of September last year, the December backlog was tracking down 30.

Speaker #3: This year it's tracking up 10. So we feel, and it's still early—and that's on a lower base of events—but we're pretty happy with where events is going.

Bobby Lavan: It is still early, and that is on a lower base of events, but we are pretty happy with where events is going. If the trajectory stays, the December quarter is going to be a proof of concept that we can execute on the initiatives we lay out.

Speaker #3: And if the trajectory stays, the December quarter is going to be a proof of concept that we can execute on the initiatives we lay out.

Speaker #2: Okay, gotcha. Thanks, guys. I appreciate it.

Steven Wieczynski: Okay. Got you. Thanks, guys. Appreciate it.

Speaker #1: Your next question comes from the line of Eric Handler from Roth Capital. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Eric Handler from Roth Capital. Your line is open. Please go ahead.

Speaker #4: Yes, good morning. Thanks for the question. I'm wondering if we could dig in a little deeper on events. A while back, you talked about how you were moving salespeople back into the facilities, and there were various initiatives to get the local community to come in and have tasting programs and everything.

Eric Handler: Yes. Good morning. Thanks for the question. Wondering if we could dig in a little deeper on events. A while back, you talked about how you were moving salespeople back into the facilities, and there were various initiatives to get the local community to come in and have tasting programs and everything. What has been going on there, and how are you seeing the results from that?

Speaker #4: What's been going on there, and how are you seeing the results from that?

Speaker #3: Yeah, so we are moving the business forward every day. On July 1, we announced a full restructure. We went to a hybrid model where we have a split of our inbound business between huge companies and localized companies.

Bobby Lavan: Yeah. We are moving the business forward every day. On 1 July, we announced a full restructure. We went to a hybrid model where we have a split of our inbound business between huge companies and localized companies. Then we have our call center, which used to be unique to individual centers, is now covering parties sub-12. It is a very rebalanced structure where the team can focus on outbound. It is still early, but we are seeing the fruits of the labor there where we are developing clients. We had a client this week who was going to have a party in New York, and their other offices grabbed on and had parties as well. It is sort of everybody in the company was doing the same thing and really building that outbound structure.

Speaker #3: And then we have our call center, which used to be unique to individual centers, and is now covering parties under 12. So it's a very rebalanced structure, where the team can focus on outbound, and it's still early, but we're seeing the fruits of the labor there, where we're developing clients.

Speaker #3: We had a client this week who was going to have a party in New York, and their other offices joined in and had parties as well.

Speaker #3: So it's sort of everybody in the company was doing the same thing, and we’re really building that outbound structure. And so again, this $40 million that we’ve lost over the past three years, I think, is very achievable to rebuild over the next three years.

Bobby Lavan: Again, this $40 million that we lost over the past three years, I think is very achievable to rebuild over the next few years.

Speaker #4: Great, that's helpful. And then, digging in a little bit more on SG&A, which was up a good amount year over year and sequentially, how much of that was due to promotion of the waterparks?

Eric Handler: Great. That is helpful. Then digging in a little bit more on SG&A was up a good amount year-over-year and sequentially. How much of that was due to promotion of the water parks? What were the initiatives that did not play out as expected, and what are some of the shifts that you are planning here?

Speaker #4: How much were—what were the initiatives that didn't play out as expected? And what are some of the shifts that you're planning here?

Speaker #3: Yeah, I mean, the biggest thing is we are releasing a new CRM in October, and so those investments have been very heavy in June and September.

Bobby Lavan: Yeah. I mean, the biggest thing is we are releasing a new CRM in October, and so those investments have been very heavy in the June and September, and they will be heavy in the September quarter. It is the largest IT initiative the company has ever had. So those just flow through SG&A. SG&A sequentially is flat to down.

Speaker #3: And they'll be heavy in the September quarter. It's the largest IT initiative the company's ever had, and so those just flow through SG&A. SG&A, sequentially, is flat to down.

Speaker #1: Thank you for your question. Your next question comes from the line of Randal Konik from Jefferies. Your line is open. Please go ahead.

Operator: Thank you for your question. Your next question comes from the line of Randal Konik from Jefferies. Your line is open. Please go ahead.

Speaker #4: Thanks a lot, and good morning, guys. I guess, Tom, in the presser and in your remarks on the quarter, you talked about end of year.

Randal Konik: Thanks a lot, and good morning, guys. I guess, Tom, in the presser and in your remarks on the quarter, you talked about, and in here, you talked about the capital expenditures coming down fairly dramatically from peak levels. I think there was a point made that those will continue to be kind of just restrained going forward. Can you kind of elaborate on that? Let us dig into that a little bit more and think about on a multi-year basis, how do you think through what you believe is appropriate levels of capital expenditure in the business? Then as you kind of look to generate and accelerate more free cash flow, how are you thinking about deploying that? Where are we with share repurchase activity and so on and so forth? That would be really helpful. Thank you.

Speaker #4: You talked about the capital expenditures coming down fairly dramatically from peak levels, and I think there was a point made that those will continue to be, I guess, restrained going forward.

Speaker #4: Can you kind of elaborate on that? Let's dig into that a little bit more and think about on a multi-year basis, how do you think through what you believe is appropriate levels of capital expenditure in the business?

Speaker #4: And then as you kind of look to generate and accelerate more free cash flow, how are you thinking about deploying that? Where are we with share repurchase activity and so on and so forth?

Speaker #4: That'd be really helpful. Thank you.

Speaker #3: Well, our CapEx budget for fiscal 2027 is $90 million, so it continues to trend meaningfully lower in that number. We are finishing the remaining Lucky Strike rebrands.

Tom Shannon: Well, our CapEx budget for fiscal 2027 is $90 million, so it continues to trend meaningfully lower. In that number, we are finishing the remaining Lucky Strike rebrands, and we are doing the AMF rebrands, most of which are already AMF, but not all. Some are transitioning from Bowlero brand or an independent brand to AMF. So by the end of this fiscal year, I think we will have finished the rebrandings, and we will only have two brands, which will make the marketing message much more focused and efficient, Lucky Strike and AMF. There has been, in the last two years, a significant amount of CapEx spent to sort of catch up deferred maintenance in the water parks and the Boomers that we acquired, and that was not a surprise. That was part of the investment thesis.

Thomas Shannon: Well, our CapEx budget for fiscal 2027 is $90 million, so it continues to trend meaningfully lower. In that number, we are finishing the remaining Lucky Strike rebrands, and we are doing the AMF rebrands, most of which are already AMF, but not all. Some are transitioning from Bowlero brand or an independent brand to AMF. So by the end of this fiscal year, I think we will have finished the rebrandings, and we will only have two brands, which will make the marketing message much more focused and efficient, Lucky Strike and AMF. There has been, in the last two years, a significant amount of CapEx spent to sort of catch up deferred maintenance in the water parks and the Boomers that we acquired, and that was not a surprise. That was part of the investment thesis.

Speaker #3: And we are doing the AMF rebrands, most of which are already AMF, but not all. Some are transitioning from the Bolero brand or an independent brand to AMF.

Speaker #3: So, by the end of this fiscal year, I think we will have finished the rebrandings, and we will only have two brands, which will make the marketing message much more focused and efficient.

Speaker #3: Lucky Strike and AMF. There's been, in the last two years, a significant amount of CapEx spent to sort of catch up on deferred maintenance in the waterparks and the Boomers that we acquired.

Speaker #3: And that wasn't a surprise. That was part of the investment thesis. We bought at these attractive prices, but there was a reason. They needed to be refreshed.

Tom Shannon: We bought these assets at very attractive prices, but there was a reason, and they needed to be refreshed. We are meaningfully through that cycle. We are also just much more efficient. We have really become very, very good at doing large CapEx projects like a roof replacement or parking lot replacement or HVAC upgrade for close to half or even less than we were paying historically by using national vendors with national contracts and all of that. I think ultimately, the CapEx, once we get through this rebranding cycle, will probably move into the $70 million to $80 million range. We peaked at, I think it was $194 million two years ago, down to $114 million in the last year and $90 million budgeted for this year. A pretty good trajectory.

Thomas Shannon: We bought these assets at very attractive prices, but there was a reason, and they needed to be refreshed. We are meaningfully through that cycle. We are also just much more efficient. We have really become very, very good at doing large CapEx projects like a roof replacement or parking lot replacement or HVAC upgrade for close to half or even less than we were paying historically by using national vendors with national contracts and all of that. I think ultimately, the CapEx, once we get through this rebranding cycle, will probably move into the $70 million to $80 million range. We peaked at, I think it was $194 million two years ago, down to $114 million in the last year and $90 million budgeted for this year. A pretty good trajectory.

Speaker #3: So we're meaningfully through that cycle. We're also just much more efficient. So we've really become very, very good at doing large CapEx projects like a roof replacement, a parking lot replacement, or an HVAC upgrade.

Speaker #3: For close to half, or even less than we were paying historically, by using national vendors with national contracts and all of that. So, I think ultimately, the CapEx, once we get through this rebranding cycle, will probably move into the $70 to $80 million range.

Speaker #3: Again, we peaked at, I think it was 194 two years ago, down to 114 in the last year, and 90 budgeted for this year.

Speaker #3: So a pretty good trajectory.

Speaker #4: Great. That's super helpful. I guess, Bobby, when you look at the guidance, I think it's slightly up on EBITDA at the midpoint.

Randal Konik: Great. That is super helpful. I guess for Bobby Lavan, when we look at the guidance, I think it is slightly up on EBITDA at the midpoint. When you think about, I guess it is higher, excuse me, I was looking at different guidance. When you look at the different holdbacks you talked about, let us say, this year in the World Cup, investment in marketing, the difficult weather impacting the water parks, the California business being subdued or down. Maybe could you kind of dimensionalize for us how impactful those items have been on the P&L, whether from a revenue perspective or an EBITDA perspective to get some perspective of how potentially conservative this fiscal year guide could be for 2027?

Speaker #4: When you think about it, I guess it’s higher. Excuse me, I was looking at different guidance. But when you look at the different holdbacks you talked about this year—like the World Cup investment and marketing, the difficult weather impacting the waterparks, and the California business being subdued or down—maybe could you kind of dimensionalize for us how impactful those items have been on the P&L, whether from a revenue perspective or an EBITDA perspective, so we can get some perspective on how potentially conservative this fiscal year guide could be for 2027?

Speaker #3: Yeah. So, weather in the third quarter was $10 million. The World Cup was at least $7 million, in June, if not $10 to $12 million.

Bobby Lavan: Yeah. Weather in Q3 was $10 million.

Randal Konik: Okay.

Bobby Lavan: The World Cup was at least $7 million in June, if not $10 million to $12 million. We were tracking in May very, I was super happy in May. May, we ended plus 2%, and the momentum out of that was great. Then June 3rd happened, and on June 3rd was the first night of the Knicks championship. We looked at the numbers the next day and we are like, "Wow, this does not bode well for the World Cup." It is at least $7 million, if not $12 million, because the World Cup did go until 19 July. You have frankly high single digit, low double digit comps the first few weeks of July. Then you had the water parks are about $3 million to $5 million of incremental weather. There is always some weather. All of those are there.

Speaker #3: We were tracking in May—really, I was super happy in May. In May, we ended up plus 2, and the momentum out of that was great.

Speaker #3: And then June 3rd happened. And on June 3rd was the first night of the Knicks’ championship. We looked at the numbers the next day and we were like, “Wow, this does not bode well for the World Cup.” So it’s at least 7, if not 12, because the World Cup did go until July 19th.

Speaker #3: So, you have, frankly, high single-digit to low double-digit comps the first few weeks of July. And then you had the waterparks, which are about $3 to $5 million of incremental weather impact.

Speaker #3: There's always some weather, so all of those are there. That's what gives us confidence in a 1% to 3% comp this year. But if things go our way, it could be better.

Bobby Lavan: That's what gives us confidence in a 1% to 3% comp this year. But if things go our way, it could be better. Weather is something that we've found is more volatile lately. We're trying to not say, "Okay, everything's going to be perfect." Those numbers are partially de-risked in the 1% to 3%, but not fully de-risked.

Speaker #3: But weather is something that we've found is more volatile lately, so we're trying not to say, "Okay, everything's going to be perfect." So those numbers are partially de-risked in the 1 to 3, but not fully de-risked.

Speaker #4: And maybe just finally, can you just give us a little bit more color on California in terms of just reminding us how big of a how big of a contribution it is to the business, how much difficult it's been over the last year or two, you talked about changing leadership.

Randal Konik: And maybe just finally, can you just give us a little bit more color on California in terms of just reminding us how big of a contribution it is to the business? How difficult it's been over the last year or 2? You talked about changing leadership. Sounds like things are getting sequentially better, i.e., less negative. Just kind of unpack that a little bit more, and do you think California can turn positive this next fiscal year? If so, what quarter would that be most likely to occur in? Thanks, guys.

Speaker #4: Sounds like things are getting sequentially better, i.e., less negative. So just kind of unpack that a little bit more. And do you think California in term positive, this next fiscal year, and if so, what quarter would that be most likely to occur in?

Speaker #4: Thanks, guys.

Speaker #3: Yeah. So California comp was minus 4 last year, versus the rest of the company, which was plus 1. So it's about 20% of the business.

Bobby Lavan: Yeah. California comp -4% last year versus the rest of the company was +1%. It's about 20% of the business. California's going to be driven by 2 things, retail, which we keep talking about marketing. Marketing continues to get better, but I'm not going to say that that's going to be a key driver this year. California goes the way events go. If events continues the momentum, I would expect California to turn, but we're not factoring that into our forecast this year.

Speaker #3: California is going to be driven by two things: retail, which we keep talking about, and marketing. Marketing continues to get better, but I'm not going to say that that's going to be a key driver this year.

Speaker #3: Marketing for California goes the way events go. So if events continue the momentum, I would expect California to turn. But we're not factoring that into our forecast this year.

Speaker #4: Super helpful. Thanks, guys.

Randal Konik: Super helpful. Thanks, guys.

Speaker #1: Your next question comes from the line of Eric Wold from Texas Capital Securities. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Eric Wold from Texas Capital Securities. Your line is open. Please go ahead.

Speaker #5: Thanks. Thanks, guys. So, two questions. I guess, first off, I know you mentioned, Bobby, a little bit on the parks in terms of trailing twelve months and the plan to kind of sell season passes earlier to maybe hedge out the weather a little bit.

Eric Wold: Thanks. Thank you, guys. So two questions, I guess. First off, I know you mentioned, Bobby, a little bit on the parks in terms of trailing 12 months and the plan to sell season passes earlier to maybe hedge out the weather a little bit. Can you just update us on the larger projects that are still at hand for the parks that you plan in the off-season to what we could see next year from capital improvements and new offerings that weren't there this year, what you could do?

Speaker #5: Can you just update us on kind of the larger projects that are still at hand for the parks that you plan and the off-seasons to kind of what we could see next year from kind of capital improvements and new offerings that weren't there this year, the way you think they could do?

Speaker #6: Hi, this is Tom Shannon. I'll take this one. So, we didn’t close on Raging Waters Los Angeles, which is our biggest park, until January.

Tom Shannon: Hi, this is Tom Shannon. I'll take this one. We didn't close on Raging Waters Los Angeles, which is our biggest park, until January, and we inherited a deficit, a significant deficit in season passes as a result. Those season passes were really sold in the fall as the seller got ready to transact. The transaction was delayed because it required approval by Los Angeles County, which is the landlord for the park. The water parks were suboptimal, right? But we just acquired them, and we just acquired the two biggest in the portfolio. So there's a lot of things that will be done better and certainly with more runway. One of which is having more of a runway to sell season passes, at least in our two biggest water parks.

Thomas Shannon: Hi, this is Tom Shannon. I'll take this one. We didn't close on Raging Waters Los Angeles, which is our biggest park, until January, and we inherited a deficit, a significant deficit in season passes as a result. Those season passes were really sold in the fall as the seller got ready to transact. The transaction was delayed because it required approval by Los Angeles County, which is the landlord for the park. The water parks were suboptimal, right? But we just acquired them, and we just acquired the two biggest in the portfolio. So there's a lot of things that will be done better and certainly with more runway. One of which is having more of a runway to sell season passes, at least in our two biggest water parks.

Speaker #6: And we inherited a deficit—a significant deficit—in season passes as a result. No season passes were really sold in the fall as the seller got ready to transact.

Speaker #6: The transaction was delayed because it required approval by LA County, which is the landlord for the park. And so the water parks were suboptimal, right?

Speaker #6: But we just acquired them. And we just acquired the two biggest in the portfolio. So there are a lot of things that will be done better, and certainly with more runway.

Speaker #6: One of which is having more of a runway to sell season passes, at least in our two biggest waterparks. But also, there were some decisions made last year to open the Panhandle parks later in the year and to keep them open later.

Tom Shannon: But also there were some decisions made last year to open the Panhandle Parks later in the year and to keep them open later, which is happening. Some of the revenue deficit in Q4 of fiscal 2026 is a result of not having the two parks in the Panhandle open earlier, but they are going to go later. Let me just give you an interesting data point. Big Kahuna's in Destin, Florida, has had a positive attendance comp in 25 out of the last 30 days, and Shipwreck Island in Panama City Beach has had a positive attendance comp in 19 out of the last 30 days. So it's a long summer season, and there were some pretty meaningful headwinds in the quarter that are not necessarily representative of, number one, the business as a whole, the waterpark business, but even of the summer.

Thomas Shannon: But also there were some decisions made last year to open the Panhandle Parks later in the year and to keep them open later, which is happening. Some of the revenue deficit in Q4 of fiscal 2026 is a result of not having the two parks in the Panhandle open earlier, but they are going to go later. Let me just give you an interesting data point. Big Kahuna's in Destin, Florida, has had a positive attendance comp in 25 out of the last 30 days, and Shipwreck Island in Panama City Beach has had a positive attendance comp in 19 out of the last 30 days. So it's a long summer season, and there were some pretty meaningful headwinds in the quarter that are not necessarily representative of, number one, the business as a whole, the waterpark business, but even of the summer.

Speaker #6: Which is happening. And so, some of the revenue deficit in Q4 of fiscal 2026 is a result of not having the two parks in the Panhandle open.

Speaker #6: Earlier, but they are going to go later. So let me just give you an interesting data point. Big Kahuna in Destin, Florida, has had a positive attendance comp in 25 out of the last 30 days.

Speaker #6: And Shipwreck Island in Panama City Beach has had a positive attendance comp in 19 out of the last 30 days. So, it's a long summer season.

Speaker #6: And there were some pretty meaningful headwinds in the quarter that are not necessarily representative of, number one, the business as a whole—the waterpark business—but even of the summer.

Speaker #6: Because there's a lot of this revenue that we can make up, and will—and probably have made up already in the first quarter of fiscal '27.

Tom Shannon: Because there's a lot of this revenue that we can make up and will and probably have made up already in Q1 of fiscal 2027. So it's hard to look at this business sort of on a snapshot basis. But I think that explains a little bit about what happened and a little bit about what's happened since the fiscal year ended. With regard to CapEx, there are some semi-large projects that we'd like to do. I say semi-large on order of $5 million each in Shipwreck Island and in Big Kahuna's. I doubt if either of those will be approved in time to do in fiscal 2027. So the CapEx in aggregate in the water parks will be pretty minimal, I would say, in all likelihood, this fiscal year.

Thomas Shannon: Because there's a lot of this revenue that we can make up and will and probably have made up already in Q1 of fiscal 2027. So it's hard to look at this business sort of on a snapshot basis. But I think that explains a little bit about what happened and a little bit about what's happened since the fiscal year ended. With regard to CapEx, there are some semi-large projects that we'd like to do. I say semi-large on order of $5 million each in Shipwreck Island and in Big Kahuna's. I doubt if either of those will be approved in time to do in fiscal 2027. So the CapEx in aggregate in the water parks will be pretty minimal, I would say, in all likelihood, this fiscal year.

Speaker #6: So, it's hard to look at this business on a snapshot basis, but I think that explains a little bit about what happened, and a little bit about what's happened since.

Speaker #6: The fiscal year ended. With regard to CapEx, there are some semi-large projects that we’d like to do. I say semi-large—on the order of $5 million each—in Shipwreck Island and in Big Kahuna.

Speaker #6: I doubt if either of those will be approved in time to do in fiscal '27. So the CapEx in aggregate in the waterparks will be pretty minimal, I would say, in all likelihood this fiscal year.

Speaker #6: And then, in the following year, we'd like to do these two large slide towers that would have a lot of presence from the street and drive traffic, also increase the nature of the parks and broaden the audience a little bit.

Tom Shannon: In the following year, we'd like to do these 2 large slide towers that would have a lot of presence from the street and drive traffic, also increase the nature of the parks, broaden the audience a little bit. So that $10 million, give or take, is likely to happen in fiscal 2028.

Thomas Shannon: In the following year, we'd like to do these 2 large slide towers that would have a lot of presence from the street and drive traffic, also increase the nature of the parks, broaden the audience a little bit. So that $10 million, give or take, is likely to happen in fiscal 2028.

Speaker #6: And so that $10 million, give or take, is likely to happen in fiscal '28.

Speaker #5: Got it. And then secondly, maybe update us on where you are with the labor efficiency moves. I know you talked a little bit about toward the end of the year, toward the savings.

Eric Wold: Got it. Secondly, maybe update us on where you are with the labor efficiency moves. I know you talked a little bit about towards the end of the year, kind of the savings. I would say maybe baseball analogy, but how far along are you? What's been saved so far? How much more do you think you can pull out of the bowling centers, and how far have you taken those initiatives at the water parks and FECs?

Speaker #5: I would say maybe a baseball analogy, but kind of, how far along are you and what's been saved so far? How much more do you think you can pull out of the bowling centers?

Speaker #5: And how far have you taken those initiatives at the waterparks and FBCs?

Speaker #3: Yeah. So let's separate waterparks and FECs and bowling. Because with waterparks and FECs, we're still figuring out what's the optimal labor model. On bowling, we're running down a million year over year.

Bobby Lavan: Yeah. So let's separate water parks and FECs and bowling, because water parks and FECs, we're still figuring out what the optimal labor model. On bowling, we're running down $1 million year-over-year right now, so $1 million of savings a month. Our model assumes that that flattens out and that there's actually an inflationary adjustment on payroll as we invest in people, invest in sort of bonuses deeper in the system that ultimately drive KPIs that drive revenue. But it's a tailwind today, but I would assume it is moderate to flat to some investments that drive revenue throughout the rest of the year.

Speaker #3: Right now, so a million of savings a month. Our model assumes that that flattens out, and that there's actually an inflationary adjustment on payroll as we invest in people—invest in sort of bonuses deeper in the system—that ultimately drive KPIs that drive revenue.

Speaker #3: But it's a tailwind today, but I would assume it moderates to flat, with some investments that drive revenue throughout the rest of the year.

Speaker #5: Got it. Thank you both.

Eric Wold: Got it. Thank you both.

Speaker #1: Your next question comes from the line of Jeremy Hamblin from Craig-Hallum Capital. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Jeremy Hamblin from Craig-Hallum Capital. Your line is open. Please go ahead.

Speaker #5: Thanks for taking the question. So, you guys are reducing your CapEx spend as you absorb some of these initiatives. In the parks, I wanted to just understand, in terms of thinking about the go-forward, you've done several acquisitions here over the last few years.

Jeremy Hamblin: Thanks for taking the question. You guys are reducing your CapEx spend as you absorb some of these initiatives in the parks. I wanted to just understand in terms of thinking about the go-forward, you have done several acquisitions here over the last few years. In terms of thinking about the go-forward strategy, there has been a lot to absorb, including the FECs which have probably a slightly different business model and certainly investment needs. Just thinking about, should we expect here over the next year or 2 as you absorb these, that there may be a kind of reduced acquisition strategy in total as you work on fine-tuning the operations for the water parks or as you get through finishing the Lucky Strike conversions?

Speaker #5: And in terms of thinking about the go-forward strategy, there's been a lot to absorb, including the FECs, which probably have a slightly different business model and certainly different investment needs.

Speaker #5: But just thinking about what we should expect here over the next year or two, as you absorb these, is it fair to assume there may be a kind of reduced acquisition strategy in total as you work on fine-tuning the operations for the waterparks, or as you get through finishing the Lucky Strike conversions?

Speaker #6: Yes, that is accurate to say. We're still in the M&A game, but only opportunistically. We're not actively looking for deals because there is so much opportunity to optimize the existing portfolio.

Tom Shannon: Yeah. That is accurate to say. We are still in the M&A game, but only opportunistically. We are not actively looking for deals because there is so much opportunity to optimize the existing portfolio. I want to be very clear that we view the waterpark and FEC acquisitions as extremely good even when the year is not ideal. We are still in these for probably 6.5 to 7x. They are counterseasonal, so we generated a lot of cash this summer that we would not have otherwise. There were nearly every Other than the last week of the month or first week of the month when rent is paid or interest is paid, every week was cash flow positive on an operating basis, which we have never seen before, because things slow down on the bowling side in the summer.

Thomas Shannon: Yeah. That is accurate to say. We are still in the M&A game, but only opportunistically. We are not actively looking for deals because there is so much opportunity to optimize the existing portfolio. I want to be very clear that we view the waterpark and FEC acquisitions as extremely good even when the year is not ideal. We are still in these for probably 6.5 to 7x. They are counterseasonal, so we generated a lot of cash this summer that we would not have otherwise. There were nearly every Other than the last week of the month or first week of the month when rent is paid or interest is paid, every week was cash flow positive on an operating basis, which we have never seen before, because things slow down on the bowling side in the summer.

Speaker #6: But I want to be very clear that we view the waterpark and FEC acquisitions as extremely good, even when the year is not ideal.

Speaker #6: There's still—we're still probably six and a half to seven X. They are counter-seasonal. So we generated a lot of cash this summer that we wouldn't have otherwise.

Speaker #6: There were nearly every week, other than the last week of the month or the first week of the month when rent is paid or interest is paid, where every week was cash flow positive on an operating basis, which we've never seen before.

Speaker #6: Because things slow down on the bowling side in the summer, but with the addition of these assets, we generated a lot of cash. And so we feel really, really good about them.

Tom Shannon: But with the addition of these assets, we generate a lot of cash. So we feel really, really good about them, but we are focused on two things, operational improvements, organic EBITDA growth, and effective delevering.

Thomas Shannon: But with the addition of these assets, we generate a lot of cash. So we feel really, really good about them, but we are focused on two things, operational improvements, organic EBITDA growth, and effective delevering.

Speaker #6: But we are focused on two things: operational improvements, organic EBITDA growth, and effective deleveraging.

Speaker #5: Got it. And then you, Tom, you noted that you're going to very carefully look at marketing investments that are being made, and look for high ROI on those investments.

Jeremy Hamblin: Got it. Tom, you noted that you are going to very carefully look at marketing investments that are being made and looking for high ROI on those investments. I think, Bobby, you said you have gone from 1% marketing budget to 2% or 2.5%. In terms of thinking about making those incremental investments, how are you viewing the channel of where you are spending on that? Do you feel like there is fine-tuning? Then how quickly do you get feedback on whether or not a particular marketing strategy has been effective or hitting the ROI that you are looking for?

Speaker #5: I think, Bobby, you said you've gone from a 1% marketing budget to 2% or 2.5%. In terms of thinking about making those incremental investments, how are you viewing the channel of where you're spending on that?

Speaker #5: Do you feel like there's fine-tuning? And then, how quickly do you get feedback on whether or not a particular marketing strategy has been effective or hitting the ROI that you're looking for?

Speaker #3: Yeah. So we raised spend from $17 million to $30 million. Our impressions went from about 75 million a quarter to 350 million a quarter.

Bobby Lavan: Yeah. So we raised spend from $17 million to $30 million. Our impressions went from about 75 million a quarter to 350 million a quarter. But our engagement rate is not good enough, so we are super focused on not taking a person who has intent to bowl and showing them our website more. We are focused on the people who do not necessarily have intent to bowl and getting them to want to bowl, and that is what we need to push this year. The feedback loop is instantaneous at this point. We have a lot of data that is just driving the engagement with our content. We continue to invest in content, so ultimately, we need to convert the people who do not have intent to intent, and that is where the growth will come from.

Speaker #3: But our engagement rate is not good enough. And so we're super focused on not taking the person who has intent to bowl and showing them our website more.

Speaker #3: We're focused on the people who don't necessarily have intent to bowl, and getting them to want to bowl. That is what we need to push this year.

Speaker #3: The feedback loop is instantaneous at this point. We have a lot of data that's just driving the engagement with our content. We continue to invest in content.

Speaker #3: And so, ultimately, we need to convert the people who don't have intent to intent, and that's where the growth will come from. We are seeing very significant growth in our lane reservations platform, which is the tip of the spear and the bottom of the funnel.

Bobby Lavan: We are seeing very significant growth in our lane reservations platform, which is the tip of the spear and the bottom of the funnel. We need to continue to bring people in there that have more intent, and that is how we are looking at it.

Speaker #3: And we need to continue to bring people in there that have more intent. And that's how we're looking at it.

Speaker #5: Got it. And then just a quick follow-up. In terms of your marketing spend, how much of that spend is on your events business? It seems like that's quite a bit more volatile in general.

Jeremy Hamblin: Got it. Then just a quick follow-up. In terms of your marketing spend, what portion of that spend is on your events business? It seems like that is quite a bit more volatile in general, but wondering what portion of your total marketing budget goes into the events portion of your business.

Speaker #5: But I'm wondering what portion of your total marketing budget goes into the events portion of your business.

Speaker #3: Great question. It is none right now, so it is an opportunity.

Bobby Lavan: Great question. It is none right now. It is an opportunity.

Speaker #5: Got it. Thanks so much. Best wishes.

Jeremy Hamblin: Got it. Thanks so much. Best wishes.

Speaker #1: Your next question comes from the line of Michael Kupinski from Noble Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Michael Kupinski from Noble Capital Markets. Please go ahead.

Speaker #7: Thank you for taking my questions. I just got a little color around the waterparks a little bit. I know that you said that you're looking for a higher cap per cap spending and improved labor efficiency.

Michael Kupinski: Thank you for taking my questions. Just get a little color around the water parks a little bit. I know that you said that you are looking for a higher per cap spending and improved labor efficiency. I was just wondering if you can maybe quantify the expected incremental revenue and EBITDA contribution from the water parks in fiscal 2027, particularly in September. If you could just add a little bit more color there.

Speaker #7: And I was just wondering if you can maybe quantify the expected incremental revenue and EBITDA contribution from the waterparks in fiscal '27, particularly in September, if you could just add a little bit more color there.

Speaker #3: Yeah. So TTM EBITDA in June was $14 million. Then it became $22 million at the end of July. August is still not over, so August could drive that TTM to $26 to $28 million.

Bobby Lavan: Yeah. TTM EBITDA in June was USD 14 million. Then it became USD 22 million at the end of July. August is still not over. August will drive that TTM to USD 26 million to USD 28 million, and then we will have an incremental few million dollars more from September. One of the issues that Tom discussed is we do staff some of the water parks with J-1, so these are international students who come in. Instead of them coming in in May, they came in for August and September, and so we are testing pushing the season out. So there is a little bit of volatility in how much earnings we get in August and September, and that will also be dependent on the weather.

Speaker #3: And then we'll have an incremental few million dollars more from September. One of the issues that Tom discussed is we do staff some of the waterparks with J-1s.

Speaker #3: So these are international students who come in. Instead of them coming in in May, they came in for August and September. And so we're testing, pushing the season out.

Speaker #3: So, there is a little bit of volatility in how much earnings we get in August and September, and that will also be dependent on the weather.

Speaker #7: Gotcha. And then you're mentioning the opportunity in events. How significant are events to the overall same-store revenue opportunity? And if you could just give us some sense of how bookings are going through the fall and into the holiday periods.

Michael Kupinski: Got you. Then you are mentioning about the opportunity on events. How significant is events to the overall same-store revenue opportunity? If you could just give us some sense of how bookings are going through the fall and into the holiday periods.

Speaker #3: Yeah. So, events have been the entire comp decline over the past three years. We quantified it at about $40 million that we had in '23 that we don't have today.

Bobby Lavan: Yeah. Events has been the entire comp decline over the past three years. We quantified it at about USD 40 million that we had in 2023 that we do not have today. Ultimately, on top of the quantum, there is an element of corporate events during the week is very tip of the spear to traffic. Ultimately, if you go to a company event, you walk in, you have the wow factor of the Lucky Strike, and you go, "I am bringing my kids this weekend." So we have lost some of that over the past three years. Ultimately, our events business is a tiny percentage of the global or national events business, and so we just want to go out and get that business. From our perspective, December is our Super Bowl. Events becomes 40% of revenue in December.

Speaker #3: Ultimately, on top of the quantum, there is an element of events—corporate events during the week—that is very tip of the spear to traffic.

Speaker #3: Ultimately, if you go to a company event, you walk in, you have the wow factor of the Lucky Strike. And you go, I'm bringing my kids this weekend.

Speaker #3: And so we've lost some of that over the past three years. And ultimately, our events business is a tiny percentage of the global or national events business.

Speaker #3: And so we just want to go out and get that business. From our perspective, December is our Super Bowl. Events become 40% of revenue.

Speaker #3: In December last year, we were down the first two weeks of December. And so that business right now is tracking up.

Bobby Lavan: Last year, we were down the first 2 weeks of December, so that business right now is tracking up.

Speaker #7: Gotcha. And if I could squeeze one more in—you have in the past discussed rationalizing the location portfolio as capital intensity comes down. I was just wondering, how many of your locations would you characterize as underperforming?

Michael Kupinski: Got you. If I could squeeze one more in. You had, in the past, discussed rationalizing the location portfolio as capital intensity comes down. I was just wondering, how many of your locations would you characterize as underperforming? Then should investors expect a meaningful number of closures, sales, or other portfolio actions in fiscal 2027?

Speaker #7: And then, should investors expect a meaningful number of closures, sales, or other portfolio actions in fiscal '27?

Speaker #6: Well, in one sense, you could say they all underperformed their potential. The number of centers that we have that are EBITDA-negative is, like, maybe two or three.

Tom Shannon: Well, in one sense, you could say they all underperform their potential. The number of centers that we have that are EBITDA negative is maybe 2 or 3. One of which is a legacy property we inherited when we bought Lucky Strike that we knew we were just going to exit at the end of the lease term, which is coming up in the next 15 months or so. I would estimate in this fiscal year, we will probably shed on order of 10 properties. Most or all of these are properties that we acquired in the last 5 years after we went public and we had a flurry of M&A activity, because there was a focus on unit count, which in retrospect was a mistake. It is a mistake that will not be repeated. We are just rationalizing the portfolio.

Thomas Shannon: Well, in one sense, you could say they all underperform their potential. The number of centers that we have that are EBITDA negative is maybe 2 or 3. One of which is a legacy property we inherited when we bought Lucky Strike that we knew we were just going to exit at the end of the lease term, which is coming up in the next 15 months or so. I would estimate in this fiscal year, we will probably shed on order of 10 properties. Most or all of these are properties that we acquired in the last 5 years after we went public and we had a flurry of M&A activity, because there was a focus on unit count, which in retrospect was a mistake. It is a mistake that will not be repeated. We are just rationalizing the portfolio.

Speaker #6: One of which is a legacy property. We inherited it from when we bought Lucky Strike, that we sort of knew we were just going to exit at the end of the lease term, which is coming up in the next 15 months or so.

Speaker #6: I would estimate, in this fiscal year, we'll probably shed on the order of 10 properties. And most or all of these are properties that we acquired in the last five years.

Speaker #6: After we went public, we had a flurry of M&A activity because there was a focus on unit count, which, in retrospect, was a mistake.

Speaker #6: And a mistake that won't be repeated. So we're just rationalizing the portfolio. There won't be anything that I would characterize as seismic. It's really just getting rid of centers in markets where they're peripheral and they're more of a hassle to manage than they're really additive to the portfolio.

Tom Shannon: There will not be anything that I would characterize as seismic. It is really just getting rid of centers in markets where they are peripheral and they are more of a hassle to manage than they are really additive to the portfolio.

Thomas Shannon: There will not be anything that I would characterize as seismic. It is really just getting rid of centers in markets where they are peripheral and they are more of a hassle to manage than they are really additive to the portfolio.

Speaker #3: Yeah, and we're very focused on leverage. So if we have properties that, on a four-wall basis, we can sell at an accretive leverage multiple—and when you break it down and say, what does it cost to send the field there?

Bobby Lavan: Yeah. We are very focused on leverage. If we have properties that on a four-wall basis we can sell at an accretive leverage multiple, when you blow it down and say, "What does it cost to send the field there? What is IT support? What is insurance support?" it is very accretive to our leverage position to sell some of these fringe assets. We have done a comprehensive review, looked at land values, go dark values, and ultimately there is an ability to use asset sales to de-lever the business.

Speaker #3: What does IT support? What does insurance support? It's very accretive to our leverage position to sort of sell some of these fringe assets, and we've done a comprehensive review—looked at land values, go-dark values.

Speaker #3: And ultimately, there is an ability to use asset sales to delever the business.

Speaker #7: Great. Thanks for taking my questions.

Michael Kupinski: Great. Thanks for taking my questions.

Speaker #1: Your next question comes from the line of Ian Zaffino from Oppenheimer. Please go ahead.

Operator: Your next question comes from the line of Ian Zeffino from Oppenheimer. Please go ahead.

Operator: Your next question comes from the line of Ian Zaffino from Oppenheimer. Please go ahead.

Speaker #8: Hi, Greg. Thank you very much. I just wanted to kind of key into the comment about the per caps. Waterparks—what, basically, is driving some of that, call it, pricing power?

Ian Zeffino: Hi, great. Thank you very much. I just wanted to key into the comment about the per caps water parks. What basically is driving some of that pricing power maybe there and then versus your other concepts, what has been the differentiating factor there? Thanks.

Ian Zaffino: Hi, great. Thank you very much. I just wanted to key into the comment about the per caps water parks. What basically is driving some of that pricing power maybe there and then versus your other concepts, what has been the differentiating factor there? Thanks.

Speaker #8: Maybe "there and then" versus your kind of other concepts. What's kind of being the differentiating factor there? Thanks.

Speaker #6: Well, the per caps in the waterpark were up this year on the order of 15%—15 to 20% as a range. So we decided after last year, which was a pretty good year, that there were a lot of pricing opportunities.

Tom Shannon: Well, the per caps in the water park were up this year on order of 15%, 15% to 20% as a range. We decided after last year, which was a pretty good year, that there were a lot of pricing opportunities. The season pass was simply too cheap last year in our view, and we took price. We introduced a super premium tier called Elite, and it surprisingly sold about 10% of them, of the season passes were the Elite. There was demand at the high end, certainly for that product, which was good. We de-emphasized the season pass this year, and we were successful in driving up per cap. It was partially responsible for decline in attendance, but our biggest water park in Los Angeles, it didn't reach 80 degrees there for the first month that it was open.

Thomas Shannon: Well, the per caps in the water park were up this year on order of 15%, 15% to 20% as a range. We decided after last year, which was a pretty good year, that there were a lot of pricing opportunities. The season pass was simply too cheap last year in our view, and we took price. We introduced a super premium tier called Elite, and it surprisingly sold about 10% of them, of the season passes were the Elite. There was demand at the high end, certainly for that product, which was good. We de-emphasized the season pass this year, and we were successful in driving up per cap. It was partially responsible for decline in attendance, but our biggest water park in Los Angeles, it didn't reach 80 degrees there for the first month that it was open.

Speaker #6: The season pass was simply too cheap last year in our view. And we took price; we introduced a super premium tier called Elite, and it surprisingly sold—about 10% of the season passes were the Elite.

Speaker #6: So there was demand at the high end, certainly, for that product, which was good. We de-emphasized the season pass this year, and we were successful in driving up per cap.

Speaker #6: It was partially responsible for the decline in attendance, but our biggest waterpark in Los Angeles didn't reach 80 degrees for the first month that it was open.

Speaker #6: And an air temp of 80 degrees is just not sufficient for a waterpark. The water temperature was frigid. So we lost, I don't know.

Tom Shannon: An air temp of 80 degrees is just not sufficient for a water park. The water temperature was frigid. We lost, I don't know, I haven't done the math, but probably 60% of attendance. We were down probably 60% in that month. Now it has rebounded, but one of the problems with having a slow start to the season is that is when it's most attractive for someone to buy a season pass, right? Because you get to amortize it over the rest of the summer. As you move through the summer, the season pass becomes relatively less attractive. We now view season pass in a completely different way than we did four months ago. Four months ago, we viewed it really as a matter of pricing strategy and mix. We now view it as weather insurance.

Thomas Shannon: An air temp of 80 degrees is just not sufficient for a water park. The water temperature was frigid. We lost, I don't know, I haven't done the math, but probably 60% of attendance. We were down probably 60% in that month. Now it has rebounded, but one of the problems with having a slow start to the season is that is when it's most attractive for someone to buy a season pass, right? Because you get to amortize it over the rest of the summer. As you move through the summer, the season pass becomes relatively less attractive. We now view season pass in a completely different way than we did four months ago. Four months ago, we viewed it really as a matter of pricing strategy and mix. We now view it as weather insurance.

Speaker #6: I haven't done the math, but probably 60% of attendance. We were down probably 60% in that month. Now, it has rebounded, but one of the problems with having a slow start to the season is that is when it's most attractive for someone to buy a season pass.

Speaker #6: Right? Because you get to amortize it over the rest of the summer. As you move through the summer, the season pass becomes relatively less attractive.

Speaker #6: We now view Season Pass in a completely different way than we did four months ago. Four months ago, we viewed it really as a matter of pricing strategy and mix.

Speaker #6: We now view it as weather insurance. And so, if it had been a good weather season for the waterparks, we would look really, really smart for holding on to this premium price model.

Tom Shannon: If it had been a good weather season for the water parks, we would look really, really smart for holding onto this premium price model. Problem is that you can't predict the weather, and if you have, in the case of Raging Waters Los Angeles, a slow start to the season, or at Raging Waves in Yorkville, Illinois, an abnormally cold, rainy summer, you need that built-in season pass revenue to reduce volatility. This coming year will strike more of a balance between volume and price. I think we'll get closer to optimal on that.

Thomas Shannon: If it had been a good weather season for the water parks, we would look really, really smart for holding onto this premium price model. Problem is that you can't predict the weather, and if you have, in the case of Raging Waters Los Angeles, a slow start to the season, or at Raging Waves in Yorkville, Illinois, an abnormally cold, rainy summer, you need that built-in season pass revenue to reduce volatility. This coming year will strike more of a balance between volume and price. I think we'll get closer to optimal on that.

Speaker #6: The problem is that you can't predict the weather. And if you have, in the case of Raging Waters Los Angeles, a slow start to the season, or at Raging Waves in Yorkville, Illinois, an abnormally cold, rainy summer, you need that built-in season pass revenue to reduce volatility.

Speaker #6: So, this coming year, we'll strike more of a balance between volume and price. And I think we'll get closer to optimal on that.

Speaker #8: Okay, thank you. And then just as a follow-up, Bobby, I know you said the trends were improving since your decline, but what are we kind of looking at now?

Ian Zeffino: Okay, thank you. Just as a follow-up, Bobby, I know you said the trends were improving since your decline, but what are we kind of looking at now? Are we back to that 2% we saw in May? Is there any type of acceleration or any type of notable trends that you're seeing, I should say, July and August? Thanks.

Ian Zaffino: Okay, thank you. Just as a follow-up, Bobby, I know you said the trends were improving since your decline, but what are we kind of looking at now? Are we back to that 2% we saw in May? Is there any type of acceleration or any type of notable trends that you're seeing, I should say, July and August? Thanks.

Speaker #8: Are we back to that 2% we saw in May? Is there any type of acceleration, or any notable trends that you're seeing?

Speaker #8: I should say July and August. Thanks.

Speaker #3: Yeah. So, I mean, in July, we're going to have to carry the first two weeks, first two and a half weeks, of a World Cup.

Bobby Lavan: Yeah. I mean, July we are going to have to carry the first 2 weeks, first 2 and a half weeks of a World Cup. July was down low single digits. August is flattening out, but it is not fully there. Events is strong, leagues is strong. The school shift and the Labor Day shift is a little weird. Ultimately, this weekend will be very important whether August flips positive or negative. Ultimately, we are more focused on the December quarter. But generally, we are expecting +1% to +3% throughout the year.

Speaker #3: So July, it was down low single digits. August is flattening out, but it's not fully there. Events is strong, leads is strong. The school shift and the Labor Day shift is a little weird.

Speaker #3: So ultimately, this weekend will be very important in determining whether August flips positive or negative. And so ultimately, we're more focused on the December quarter. But generally, we are expecting plus one to plus three throughout the year.

Speaker #8: Okay. Perfect. Thank you so much.

Ian Zeffino: Okay, perfect. Thank you so much.

Ian Zaffino: Okay, perfect. Thank you so much.

Speaker #1: Your next question comes from the line of David Hargreaves from Barclays Capital. Your line is open. Please go ahead.

Operator: Your next question comes from the line of David Hargreaves from Barclays Capital. Your line is open. Please go ahead.

Speaker #9: Hi, good morning. If we look at the 2027 guide, the $340 to $360 [million], can you give us an idea of how much the contribution from the waterparks and Boomers will be in that number?

David Hargreaves: Hi. Good morning. If we look at the 2027 guide of $340 million to $360 million, can you give us an idea of how much the contribution from the water parks and Boomers will be in that number?

Speaker #3: Yeah. Waterparks will be somewhere between 28 and 30, which really comes down to how September plays out, and how May and June next year play out.

Bobby Lavan: Yeah. Water parks will be somewhere between 28 and 33. That really comes down to how September plays out and how May and June next year play out. Boomers excludes Big Kahuna's, which came with Boomers. Boomers right now is $11 million of EBITDA, and with all the CapEx we put in there, that is anywhere between $10 million and $15 million the next 12 months.

Speaker #3: Boomers—which, by the way, excludes Big Kahuna, which came with Boomers—right now is $11 million of EBITDA. And with all the capex we put in there, that's anywhere between $10 and $15 million.

Speaker #3: The next 12 months.

Speaker #9: Got it. And then if we take the midpoint of the guidance, interest, I imagine tax payments will be negligible, and $90 million of capex.

David Hargreaves: Got it. If we take the midpoint of the guidance interest, I imagine tax payments will be negligible and $90 million of CapEx. I think free cash flow should probably be around $50 million. I am just wondering if that is a fair number to assume.

Speaker #9: I think free cash flow should probably be around $50 million. I'm just wondering if that's a fair number to assume.

Speaker #3: That is a fair number to assume. That does not include asset sales. We do.

Bobby Lavan: That is a fair number to assume. That does not include-

David Hargreaves: And then-

Bobby Lavan: any asset sales we do.

Speaker #9: So, about—okay. Okay. It doesn't include asset sales. About half of that, we could assume, maybe is debt repayment?

David Hargreaves: Okay. No. Okay. It does not include asset sales. About half of that we could assume maybe is debt repayment?

Speaker #3: The goal would be to pay down the revolver by June. So, yes.

Bobby Lavan: The goal would need to pay down the revolver by June. Yes.

Speaker #9: Excellent. Thank you so much.

David Hargreaves: Excellent. Thank you so much.

Speaker #1: Your next question comes from the line of Gregory Miller from Truist Securities. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Gregory Miller from Truist Securities. Your line is open. Please go ahead.

Speaker #10: Thanks. Good morning, gentlemen. I just have one question for me. I'd like to dive more into lead performance, if possible, and your engagement with lead players.

Gregory Miller: Thanks. Good morning, gentlemen. Just one question for me. I would like to dive more into league performance, if possible, and your engagement with league players. I saw a press release interquarter that spoke about the decision to invest in lane conditioning and oil patterns, and I am curious if that was driven by customer surveys and just how important that is to their satisfaction as league bowlers. Thanks.

Speaker #10: I saw a press release inter-quarter that spoke about the decision to invest in lane conditioning and oil patterns. And I'm curious if that was driven by customer surveys, and just how important that is to their satisfaction as league bowlers.

Speaker #10: Thanks.

Speaker #11: I think machine reliability and lane conditions are critically important to the lead bowlers, and we are super focused on that now. We've made some structural changes to be able to ensure better machine reliability.

Tom Shannon: I think machine reliability and lane conditions are critically important to the league bowlers, and we are super focused on that now. We have made some structural changes to be able to ensure better machine reliability. We have upgraded the quality of the oil in league-heavy houses, and we are keeping a very close eye on it through feedback that we get, both directly and through social media. It is a big initiative. It coincides with a, I would say, reinvigorated league business. The league business is outperforming all of our other business lines right now, and it is an important business unit. It is $110, $120 million before ancillary spend. And so, we view it as a significant growth vector for us going forward, but we have to deliver the product.

Thomas Shannon: I think machine reliability and lane conditions are critically important to the league bowlers, and we are super focused on that now. We have made some structural changes to be able to ensure better machine reliability. We have upgraded the quality of the oil in league-heavy houses, and we are keeping a very close eye on it through feedback that we get, both directly and through social media. It is a big initiative. It coincides with a, I would say, reinvigorated league business. The league business is outperforming all of our other business lines right now, and it is an important business unit. It is $110, $120 million before ancillary spend. And so, we view it as a significant growth vector for us going forward, but we have to deliver the product.

Speaker #11: We've upgraded the quality of the oil in lead-heavy houses, and we're keeping a very close eye on it through feedback that we get both directly and through social media.

Speaker #11: So, it's a big initiative. It coincides with a, I would say, reinvigorated lead business. The lead business is outperforming all of our other business lines right now.

Speaker #11: And it's an important business unit. It's $110 million, $120 million before ancillary spend. And so we view it as a significant growth vector for us going forward.

Speaker #11: But we have to deliver the product.

Speaker #10: Thanks.

Gregory Miller: Thanks.

Operator: There are no further questions at this time, and we have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.

Speaker #1: There are no further questions at this time, and we have reached the end of the Q&A session. This concludes today's call. Thank you for attending.