Lucky Strike Entertainment Corp Q3 FY2025 earnings call

• Total revenue rose 0.7% for the quarter, with meaningful gains in retail, online, and league segments.
• Leagues business is up low single digits and on a multi-year growth trajectory, sticky, high frequency, loyal, and high margin.
• Corporate events hit by macro uncertainty but showing signs of rebound, with Boston, Miami, and New Jersey sales groups comping positive in April.
• Southern California impacted by January fires, but consumers turning to local, high-value entertainment; summer season passes up over 200% year-over-year.
• Acquired Shipwreck Island in Panama City Beach, Florida for $30 million in April; deployed $25 million in capital expenditures during the quarter.
• Q3 comparable food sales rose 1% with total food sales up 8% year-over-year; PBA viewership up 103% year-over-year for past Sunday telecast of playoff round.

In the third quarter of 2025, total revenue was $339.9 million, a modest 0.7% increase. The retail business remained steady. Leagues operations experienced low single-digit growth. The events business faced a high single-digit decline. Adjusted EBITDA was $117.3 million. Same-store sales declined by 5.6%. Geographically, California, accounting for 21% of total sales, contributed nearly 50% of the same-store sales decline, primarily due to broad-based softness in the Los Angeles market and double-digit declines in the Corporate Events segment.

• Anticipate brighter skies ahead as they lap past declines in the coming months.
• Summer season pass driving meaningful traffic to centers during seasonally softer period.
• New water parks (Big Kahunas in Destin, Florida and Shipwreck Island in Panama City Beach) and family entertainment centers expected to be meaningful EBITDA contributors.
• Corporate events expected to rebound as sales driving initiatives come online ahead of peak season in September.

• Layoffs and corporate austerity in the tech sector impacting off-line mostly corporate business on the West Coast as a transitory headwind.
• Lingering impact of January's devastating fires in Southern California on business there.
• Macro-economic uncertainty affecting corporate events, including impact of tariffs on construction costs and business sentiment.

Q: Could you elaborate on walk-in versus corporate trends over the course of the quarter and what's seen in April and early May?

A: Retail business is flat, leagues business up low single digits, off-line corporate business down double digits. Trends are getting better, with corporate events expected to rebound.

Q: Areas of expense flexibility near term and M&A opportunity?

A: Dropped comp payroll by 8+ million a quarter, R&M, supplies and services by ~3 million a quarter. Did a $30 million deal in April, expect active summer for M&A.

Q: What happened relative to last call in early February versus now?

A: Corporate business got dramatically worse in February and March, but expense control and proactive measures helped EBITDA not crater. Short-cycle nature makes guidance difficult, but summer season pass and new parks are positive.

Q: How has the rebranding initiative gone and performance of rebranded centers?

A: 15 rebrands done since start of year, cost-efficient, see increased foot traffic and consumer excitement. Food comp positive, tablets driving per check increase.

Q: Cutbacks in corporate events due to short-term or longer-term concerns?

A: Tech industry first to react to macro environment, not a long-term trend. Returning salespeople to office, seeing uptick in conversion rate.

Q: Contribution from water parks and family entertainment centers and seasonality?

A: Water parks contribute June-August, Boomers/FEC business 50+% June-September. Confident in strong growth in current and next quarters due to inorganic growth.

Q: Data points showing consumers turning to local entertainment?

A: Bowling and water park season pass sales up, Raging Waves season pass sales up over 100%, management proactive in marketing and sales.

Q: SG&A spend and expectations?

A: SG&A had noncash charge related to Brett retiring, expect SG&A to be down. Focus on growing revenue while maintaining SG&A flat, leveraging procurement and single brand for efficiencies.