Lucky Strike Entertainment (NYSE:BOWL) Q2 2026 Earnings call February 04, 2026 05:00 PM ET Company ParticipantsBobby Lavan - CFOLev Ekster - PresidentThomas Shannon - CEOConference Call ParticipantsEric Handler - AnalystEric Wold - AnalystGregory Miller - AnalystIan Zaffino - AnalystJason Tilchen - AnalystMatthew Boss - AnalystMichael Kupinski - AnalystSteven Wieczynski - AnalystNone - AnalystOperatorGood afternoon, ladies and gentlemen, and thank you for standing by. My name is Calvin, and I will be your c ...

Lucky Strike Entertainment (NYSE:BOWL) Q2 2026 Earnings call February 04, 2026 05:00 PM ET Company ParticipantsBobby Lavan - CFOLev Ekster - PresidentThomas Shannon - CEOConference Call ParticipantsEric Handler - AnalystEric Wold - AnalystGreg Miller - AnalystIan Zaffino - AnalystJason Tilchen - AnalystMatthew Boss - AnalystMichael Kupinski - AnalystSteven Wieczynski - AnalystNone - AnalystOperatorGood afternoon, ladies and gentlemen, and thank you for standing by. My name is Calvin, and I will be your conf ...

Lucky Strike Entertainment (NYSE:BOWL) Q2 2026 Earnings call February 04, 2026 05:00 PM ET Speaker2Good afternoon, ladies and gentlemen, and thank you for standing by. My name is Calvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lucky Strike Entertainment Q2 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to a ...

February 2026 INVESTOR PRESENTATION 1 DISCLAIMER Forward-looking statements Some of the statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risk, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions and forecasts. These forward- looking statements reflect our views with respect to fu ...

Financial Performance - Total revenue for the quarter ended December 28, 2025, was $306,861, representing an increase of $6,787, or 2%, compared to the same period last fiscal year [112]. - Operating income decreased to $33,327, down 29% from $46,873 in the same quarter last year [112]. - Net loss for the quarter was $12,656, compared to a net income of $28,307 in the same period last year [112]. - For the six months ended December 28, 2025, total revenues reached $599,139, reflecting an increase of $38,870, or 7%, compared to the same period last fiscal year [127]. - Adjusted EBITDA for the six months ended December 28, 2025, was $150,124,000, a decrease from $161,700,000 for the same period in 2024, reflecting a decline of approximately 7.8% [141]. - Net cash provided by operating activities decreased to $41,656,000 for the six months ended December 28, 2025, down 39% from $68,147,000 in the prior year [146]. Acquisitions and Investments - The company acquired 58 existing properties for $306,000, spanning 16 states, which is expected to reduce annual rent obligations and enhance financial flexibility [109]. - The company completed the acquisition of Wet 'n Wild Emerald Pointe water park and signed an agreement to acquire Raging Waters Los Angeles, California's largest water park [109]. - The company used $354,141,000 in investing activities during the six months ended December 28, 2025, compared to $133,214,000 in the same period of 2024, indicating a significant increase in cash outflow [148]. - The company plans to utilize available cash for capital expenditures related to new locations and upgrades, as well as for a share repurchase program to return value to shareholders [144]. Operating Costs - Location operating costs increased by $16,973, or 21%, primarily due to growth in location count and increased marketing expenses [117]. - Location operating costs as a percentage of revenues rose from 28% to 32%, attributed to higher costs in family entertainment centers and water parks [118]. - Location operating costs increased by $28,571, or 17%, primarily due to growth in location count and increased marketing expenses of approximately $6,600 [130]. - Selling, general and administrative expenses increased by $4,688, or 14%, mainly due to increased labor costs in marketing and operational teams [121]. - Selling, general and administrative expenses increased by $5,222, or 8%, mainly due to higher SG&A labor costs associated with investments in marketing and operational teams [134]. Payroll and Benefits - Location payroll and benefit costs increased by $7,006, or 10%, driven by location count growth and additional bonus incentives [119]. - Location payroll and benefit costs rose by $14,814, or 11%, driven by location count growth and additional bonus incentives [132]. Tax and Interest - The effective tax rate for the six months ended December 28, 2025, was (13)%, influenced by state taxes related to property repurchases and changes in fair value of earnout liabilities [139]. - Interest expense increased by $6,048, or 6%, primarily due to increased debt from the issuance of 7.25% Senior Secured Notes [136]. - An increase or decrease of 1.0% in the effective interest rate would result in a change of approximately $12,850 in interest expense over a twelve-month period on outstanding debt [156]. Market Risks - The company is exposed to market risks including fluctuations in commodity prices, which could materially impact food costs and overall financial performance [158]. Company Classification - The company is currently classified as an emerging growth company and has elected to delay adopting new accounting standards until it loses this status on June 28, 2026 [154].

Financial Performance - Total revenue increased by 2.3% to $306.9 million from $300.1 million in the previous year[6] - Same store revenue increased by 0.3% compared to the prior year[6] - Adjusted EBITDA was $77.5 million, down from $98.8 million in the prior year[6] - The company reported a net loss of $12.7 million, compared to a net income of $28.3 million in the previous year[6] - Total reported revenue for the three months ended December 28, 2025, was $306,861, up from $300,074 in the same period of 2024, reflecting a growth of 2.3%[21] - Adjusted EBITDA for the three months ended December 28, 2025, was $77,470, down from $98,757 in the same period of 2024, resulting in a decrease of 21.5%[22] - The company reported a net loss of $12,656 for the three months ended December 28, 2025, compared to a net income of $28,307 in the same period of 2024, resulting in a margin shift from 9.4% to -4.1%[22] Guidance and Projections - Fiscal year 2026 total revenue guidance is set between $1,260 million and $1,310 million, reflecting a growth of 5% to 9%[5] - Adjusted EBITDA guidance for fiscal year 2026 is projected between $375 million and $415 million[5] Cash Flow and Capital Management - Net cash provided by operating activities for the three months ended December 28, 2025, was $48,064, compared to $38,734 for the same period in 2024, representing a year-over-year increase of 24.0%[19] - Cash and cash equivalents at the end of the period on December 28, 2025, were $95,912, compared to $80,755 at the end of the same period in 2024, indicating a year-over-year increase of 18.5%[19] - The total cash on hand and revolving borrowing capacity as of December 28, 2025, was $411,790, an increase from $342,264 as of June 29, 2025[20] - The company had a revolver capacity of $425,000 as of December 28, 2025, up from $335,000 as of June 29, 2025[20] - The company has made disciplined capital allocations, reducing maintenance and growth capital expenditures over the past 18 months, strengthening free cash flow[3] Operational Highlights - As of February 4, 2026, the company operates a total of 369 locations, following the acquisition of one water park[6] - The company expects significant margin expansion in the summer as non-bowling entertainment assets enter their peak seasons[3] Dividend Information - The company declared a quarterly cash dividend of $0.06 per common share for the third quarter of fiscal year 2026[5] Debt and Interest Expense - The company's net debt as of December 28, 2025, was $1,701,226, an increase from $1,262,104 as of June 29, 2025[20] - The company’s interest expense for the three months ended December 28, 2025, was $51,334, compared to $48,795 in the same period of 2024, reflecting an increase of 3.5%[22]

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Financial Data and Key Metrics Changes - Total revenue for Q1 2026 grew by 12% compared to the previous year, while adjusted EBITDA increased by 15% [4] - Same-store sales were nearly flat at -0.4%, with retail revenue up 1.4% and league revenue up 2.1% [4] - Capital expenditures (CapEx) for the quarter were $26 million, down from $42 million a year ago, reflecting tighter capital allocation [5] Business Line Data and Key Metrics Changes - Retail foot traffic showed strength, finishing nearly 1.5% up, while league participation increased over 2% [10] - The offline events business, primarily corporate bookings, was down 11%, impacting total comps by approximately 160 basis points [4] - Food and beverage revenue increased by 10%, significantly outpacing overall retail growth of 1.4% [41] Market Data and Key Metrics Changes - The company experienced strong performance in markets outside California and Washington, where layoffs impacted corporate events [27] - The events business in New York, Texas, and Florida showed strong results, contrasting with the challenges faced in California [27] Company Strategy and Development Direction - The company is focused on improving free cash flow through disciplined cost management and capital efficiency [5] - A strategic real estate investment was made, acquiring land and buildings for 58 locations for $306 million, enhancing flexibility and reducing future rent exposure [5] - The company aims to expand its brand presence, with plans to reach 100 rebranded locations by the end of 2026 [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the events business, noting October was the strongest month of the year for both offline and total events [4] - The company anticipates same-store sales growth of 1-5% for the year, with expectations for stronger performance in the fourth quarter [16] - Management highlighted the importance of enhancing food and beverage offerings to drive customer engagement and revenue [41] Other Important Information - The company completed a $1.7 billion refinancing, extending debt maturities to 2032 at an average weighted cost of capital of 7% [5] - The acquisition of two water parks and three family entertainment centers is expected to generate returns above historical averages [6] Q&A Session Summary Question: What are the drivers of Q1's flat comp? - Management noted strength in retail and league categories, with league participation up over 2% and food and beverage revenue from league bowlers reaching all-time highs [10][11] Question: How should we think about same-store sales for the rest of the year? - Management guided for same-store sales to remain in the range of 1-5%, with stronger performance expected in the fourth quarter [16] Question: What is the status of the Lucky Strike rebrand? - The company is on track to reach 100 rebranded locations by the end of the year, with positive results from rebranded properties [24][25] Question: How is the events business performing geographically? - The events business is strong in New York, Texas, and Florida, but facing challenges in California due to layoffs [27] Question: What is the outlook for food and beverage revenue? - Food and beverage revenue increased by 10% without price increases, driven by improved attachments and product quality [41][47] Question: What is the focus for the remainder of the year regarding acquisitions? - The company is prioritizing organic growth and free cash flow, with a focus on internal improvements rather than new acquisitions unless they are exceptional opportunities [51]

Business Overview - Lucky Strike operates 369 locations as of November 2025, well-positioned in attractive North American markets and expanding into Family Entertainment Centers (FECs) through the acquisition of Boomers[24] - The company's diversified portfolio includes bowling (46%), food & beverage (35%), and amusement & other (19%) revenue streams in FY25, mitigating seasonality and consumer discretionary spending risks[26] Financial Performance - Total Revenue increased by 4% from $1,154,614 thousand in FY24 to $1,201,333 thousand in FY25[55] - Same Store Revenue decreased by 3.7% from $1,029,251 thousand in FY24 to $990,678 thousand in FY25[55] - Adjusted EBITDA increased from $361,497 thousand in FY24 to $367,687 thousand in FY25, with margins of 31.3% and 30.6% respectively[59] - Adjusted Location EBITDA margin was 36% in Q1 FY25, 42% in Q2 FY25, 44% in Q3 FY25, and 40% in Q4 FY25[57] Strategic Initiatives - The company sold 260,000 summer passes in 2025, with members visiting 9 times per pass, driving loyalty and year-round revenue[18] - Lucky Strike plans to rebrand nearly 100 locations by the end of the year and complete the rebrand by the end of 2026[33] Acquisitions and Value Creation - Lucky Strike acquired AMF for $310 million in 2013, with Lucky Strike contributing $20 million of equity, resulting in an estimated value creation of $1.3-$1.5 billion[20] - The company acquired Brunswick locations in 2014 for $260 million and immediately entered into a Sale-Leaseback Transaction reducing purchase price to $60 million[20, 21] - The company deployed $700 million of capital into acquisitions in the past three years[21]

Revenue and Income - Total revenue for the three months ended September 28, 2025, was $292,278, representing an increase of $32,083, or 12%, compared to the same period last fiscal year[110] - Operating income increased to $28,246, a significant rise of $15,300 compared to the previous year[110] - Adjusted EBITDA for the three months ended September 28, 2025, was $72,654, compared to $62,943 for the same period in 2024, reflecting an increase of approximately 15%[126] Expenses and Costs - Location operating costs increased by $11,598, or 13%, primarily due to acquisitions of water parks and family entertainment centers[115] - Location payroll and benefit costs rose by $7,808, or 12%, driven by acquisitions and higher wages[117] - SG&A expenses increased by $534, or 2%, while as a percentage of revenues decreased from 13% to 12%[119] - Depreciation and amortization decreased by $3,788, or 10%, due to changes in estimated useful lives of fixed assets[120] - Interest expense increased by $4,727, or 10%, primarily due to the amortization of $3,300 of deferred financing costs and increased debt since Q1 fiscal 2025[121] Cash Flow and Financing - Net cash used in operating activities was $(6,408) for the three months ended September 28, 2025, a decrease of $35,821 compared to $29,413 provided in the same period of the prior year[131] - Investing activities used $315,147 in cash, significantly higher than $39,924 in the same period of the prior year, primarily due to increased acquisition activity[133] - Financing activities provided $292,671, a substantial increase from $(17,806) used in the same period of the prior year, mainly due to proceeds from the Fifteenth Amendment to the First Lien Credit Agreement[134] Acquisitions and Agreements - The Company acquired 58 existing properties for $306,000, reducing annual rent obligations and enhancing financial flexibility[108] - The Company signed a definitive agreement to acquire Raging Waters Los Angeles, expected to be completed in fiscal 2026[108] Tax and Cash Position - The effective tax rate for the quarter ended September 28, 2025, was 48%, influenced by changes in the fair value of the earnout liability and unrealizable interest limitations[123] - At September 28, 2025, the company had approximately $31,032 in available cash and cash equivalents[129] - The company plans to use available cash-on-hand to fund its share repurchase program, aimed at returning value to shareholders[128] Market Risks - An increase or decrease of 1.0% in the effective interest rate would result in a change of approximately $12,000 in interest expense over a twelve-month period[141] - The company is exposed to market risks including interest rates, credit risk, and commodity price fluctuations, which could impact its financial condition[140] Same-Store Performance - Same-store revenues remained relatively flat, with walk-in business for bowling locations contributing approximately $3,200[113]