Lucky Strike Entertainment Corp Q1 FY2025 earnings call

• Total location revenue grew 17.5% year-over-year. • Acquired Raging Waves (largest water park in Illinois) for $49 million, with double-digit revenue growth and expected $8 million of EBITDAR in the first year. • Acquired Boomers, an underappreciated business with six family entertainment locations and two water parks, with opportunities for operational improvements. • Closed on acquisition of Spectrum Entertainment Complex in Grand Rapids, Michigan. • Food and beverage sales up 18% year-over-year, with retail F&B to bowling crossing $0.80. • Rolled out mobile ordering across all properties for labor efficiencies and guest satisfaction. • New build pipeline is robust, with upcoming Lucky Strike openings.

Total location revenue grew 17.5% year-over-year in the quarter. Total revenue ex-service fee was $260 million in the first quarter of 2025, with adjusted EBITDA of $62.9 million compared to $52.1 million in the prior year. Food and beverage sales increased 18% year-over-year, and retail F&B to bowling crossed $0.80 across the portfolio. The top 50 Bowlero locations with the upgraded premium plus menu segment had a F&B to bowling ratio of close to $1.10, up over $0.18 versus prior year.

• Updated FY 2025 guidance, increasing the bottom end of the revenue range by $10 million. • Boomers will add revenue but have negative EBITDA until peak season starting in June. • Spent $41 million in capital expenditures in the first quarter, with growth CapEx at $16 million, new build CapEx at $17 million, and maintenance at $8 million. • Liquidity at the end of the quarter was $355 million, net debt was $1.1 billion, and bank credit facility net leverage ratio was 2.6 times. • Third quarter expected to have greatest margin expansion due to New Year's shift and catch-up from prior year's weather issues.

• Weather events can impact results, such as the two hurricanes in September that affected the first quarter results. • Macro environment uncertainties could affect actual results differing from forward-looking statements. • Potential differences between expected and actual performance of acquisitions like Boomers and Raging Waves.

Q: Elaborate on the cadence of same-center comps in the first quarter and trends in October between walk-in and events?

A: End of September was hit by two hurricanes, costing about $2 million on comp. October weather not great, but event is tracking plus 10% for P6.

Q: Drivers of first quarter EBITDA margin expansion and cadence for margin expansion in second quarter relative to the back half?

A: Greatest margin expansion in third quarter due to New Year's shift and catch-up from prior year's rough January. Second quarter will also have margin expansion except for Boomers and Raging Waves with negative EBITDA.

Q: Same-store sales outlook still hold true and cadence of same-store sales over next three quarters?

A: Same-store sales outlook remains, with 1Q and 2Q low comps, 3Q and 4Q stronger due to New Year's shift and catch-up from prior year's weather.

Q: How much time spent on core bowling assets versus other assets in acquisition environment?

A: Division of labor, with Lev spending 100% on existing operations, Bobby most on existing operations, and Tom on M&A.

Q: Utilization of data and Chief Procurement Officer focus?

A: Becoming data-driven with 350 Power BI subscriptions for department leaders. Chief Procurement Officer focuses on managing inflation, with scale from acquisitions driving cost savings.

Q: Fall Pass vs Summer Pass and strategic long-term pass programs?

A: Launched Fall Season Pass with short cycle, encouraged by results. Summer Pass successful. Considering annual pass and connecting passes across businesses like Boomers and water parks.

Q: Price vs volume and capital allocation?

A: Able to take price on food, with focus on driving F&B to bowling ratio. Dynamic with buybacks, focusing on superior returns in acquisitions.

Q: Mobile ordering impact and F&B to bowling ratio comparison?

A: Mobile ordering rolled out, seeing utilization tick up. F&B to bowling ratio was $0.80 in current year vs $0.60 prior year, with top 50 Bowlero locations at $1.10. Premium plus locations candidates for re-bannering to Lucky Strike.

Q: Boomers EBITDA drag quantification?

A: Boomers plus Raging Waves is a few million dollars drag on EBITDA in 2Q and 3Q.

Q: F&B price increase and goal for network?

A: None of the $0.18 increase in top 50 locations was from price. Goal to get network to $1 F&B to bowling through technology (mobile ordering, server tablets) and process improvements (hiring, training).

Q: Customer spending shift and Lucky Strike returns?

A: Customer spending steady, with Lucky Strike assets outperforming. 11 of 14 assets outperforming, targeting $30 million EBITDA in first two years. New builds consistently profitable, with recent Denver locations performing well.

Q: Raging Waves expansion and off-season opportunities?

A: Raging Waves has potential for expansion, but drag is mostly fixed. Destin water park has longer season, providing more optionality. Acquisitions considered on return basis, with natural weather hedging from combined assets.

Q: Event catering menu impact and Raging Waves off-season?

A: December event catering pacing up 10% year-over-year. Raging Waves off-season drag mostly fixed, with limited labor and costs.