Lucky Strike Entertainment Corp Q2 FY2025 earnings call

Thomas Shannon's Highlights - Celebrated 28th anniversary, reflecting on company's history through events like 9/11, GFC, and COVID-19. Addressed macroeconomic uncertainty by optimizing payroll (double-digit reduction in payroll hours), tightening capital expenditures (down 33% YoY), and investing in new offerings for Boomers and water parks. Opened four new centers, with Beverly Hills and Ladera Ranch generating over $1 million in revenue within 30 days. Began rebranding centers to Lucky Strike. - ### Lev Ekster's Highlights - F&B revenue attachment to bowling revenue grew to $0.80 from $0.76 prior year. Net Promoter Score was 74, up from 72. Rolled out handheld tablets for servers, seeing efficiencies in payroll and benefits costs. Cut PBA EBITDA loss in half and expects improvement with new sponsors. Progressed with rebranding, with 4 centers changed to date and rollout ramping up.

In Q2 2025, Lucky Strike Entertainment generated total revenue of $300.1 million, with a -1.8% total revenue growth and -6.2% same-store comp. Retail business was flat, league business up small single digits, and events business down mid-single digits. Adjusted EBITDA was $98.8 million. New centers contributed $3 million of EBITDA, while Boomers and Raging Waves were a $2 million drag. The quarter had one less week of holiday events due to late Thanksgiving and New Year's pushing into the next quarter, which was a ~300 basis point headwind.

- Cautious view on guidance for the rest of the year due to macroeconomic uncertainty but expects to be within full-year guidance range for fiscal 2025. - Expect to maintain cost levels as revenue improves, driving operating leverage. - Investments in Boomers and Raging Waves expected to lift earnings in spring and summer. - Total revenue growth expected in the third quarter, particularly with new centers like Beverly Hills and Ladera Ranch, and acquisitions.

- Macroeconomic uncertainty, including consumer trade down, with alcohol sales detaching from food sales. - Election outcome and holiday timing impacts, such as late Thanksgiving shortening corporate events holiday schedule and New Year's Eve moving to next quarter. - Wildfire impact in LA, causing a $5 million EBITDA hit. - Tariff risks on amusements merch, with $1 million of risk on China-sourced goods.

Q: Elaborate on heightened macroeconomic uncertainty and retail vs corporate events.

A: Lev Ekster noted consumer trade down, flight to value, with food performing well but alcohol sales detaching. Thomas Shannon added election uncertainty affected last-minute corporate events.

Q: Breakdown same-center sales composition and initiatives for back half.

A: Thomas Shannon said traffic was comp, events down, retail flat, with price increases offset by alcohol detachment.

Q: What makes Lucky Strike different?

A: Lev Ekster mentioned rebranding, different hospitality, menus, interiors, and strong amusements.

Q: Update on corporate event operating structure plans.

A: Bobby Lavan said focus on food taking, bringing back events with upgraded F&B portfolio.

Q: Margin pickup in back half.

A: Bobby Lavan cited payroll cost savings, F&B provider change, and lift from Boomers and Raging Waves.

Q: Liquor sales and retooling.

A: Bobby Lavan said alcohol lagged food, but team working on promotions.

Q: Labor efficiencies and risk.

A: Bobby Lavan and Lev Ekster discussed optimizing payroll, using data, server tablets for efficiency, and tariff risks on amusements merch.

Q: Corporate event staff database and expectations.

A: Bobby Lavan said balance of corporate opportunity, optimizing from lower level, and using upgraded F&B menu.

Q: Same-store comp expectations.

A: Bobby Lavan said focused on total growth, confident in positive total growth and EBITDA up significantly.

Q: Lucky Strike conversions timing and cost.

A: Bobby Lavan said varies by location, includes permitting, signage, and marketing. Thomas Shannon added marketing spend.

Q: Mobile ordering rollout.

A: Bobby Lavan said piloted tablets at 30 locations, expect 100 by end of quarter, with efficiencies in coverage and food service.

Q: Buyback and cash flow.

A: Bobby Lavan said balance buyback with free cash flow, focus on M&A, rebrand, and buybacks, committed to deleveraging.