Lucky Strike Entertainment Corporation Q1 FY2026 earnings call

• Total revenue grew 12% and adjusted EBITDA up 15% in the quarter.
• Same-store sales close to flat, with retail up 1.4% and league up 2.1%; online booking funnel grew double digits.
• Offline events business down 11% in Q1 but trends turning, Oct was strongest month for offline and total events.
• CapEx for the quarter was $26 million, down from $42 million a year ago.
• In July, acquired land and buildings for 58 existing locations for $306 million.
• In September, closed $1.7 billion refinancing extending debt maturities to 2032 at 7% average weighted cost of capital.
• Acquired 2 water parks and 3 family entertainment centers, $90 million transaction expected to generate above-average returns.
• Welcomed Brandon Briggs as Chief Revenue Officer and Laura Cobos as Vice President of Field Training.

Total revenue in the quarter grew 12% and adjusted EBITDA was up 15%. Same-store sales were close to flat at negative 0.4%, with retail revenue up 1.4% and league revenue up 2.1%. Offline events business was down 11%, creating roughly a 160 basis point drag on total comps. In July, the company acquired the land and buildings for 58 of its existing locations for $306 million. In September, it closed a $1.7 billion refinancing. It also acquired 2 large and very profitable water parks and 3 high-performing family entertainment centers. The $90 million transaction is expected to generate returns above historical average, with most financial contribution coming next summer.

• Guided full year same-store sales to 1% to 5%.
• First quarter of 2026 is the lowest margin quarter; expect 600 to 800 basis points margin improvement as we go into higher winter quarters and coming back down to around current level by June quarter.

• Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed.
• Events business in California and Washington affected by Silicon Valley layoffs leading to reduced corporate events.

Q: Could you break down the drivers of 1Q's roughly flat comp as you look across your walk-in retail business relative to events?

A: Lev Ekster touched on retail and league being major drivers with healthy foot traffic and leads growth; Bobby Lavan talked about event business being down in Q1 but Oct was best month in over 1.5 years and online growing strong double digits to make up headwinds.

Q: Could you expand on the drivers of the 70 basis points of adjusted EBITDA margin expansion? And any puts and takes to consider on the progression of EBITDA margins over the balance of the year?

A: Robert Lavan said revenue drives most operating leverage on EBITDA margin; offset by incremental $2.5 million in marketing and $1 million higher insurance costs; first quarter of 2026 is lowest margin quarter, expect 600 to 800 basis points margin improvement into winter quarters and back to current level by June quarter.

Q: How should we think about the cadence for the rest of the year in terms of same-store sales?

A: Next few quarters are clean on apples-to-apples basis; inorganic growth in first and fourth quarter; same-store sales expected to be in 1%-5% range with second and third quarter being in that range and fourth quarter a little better.

Q: Maybe give us some updates on the progress on the Lucky Strike rebrand?

A: Lev Ekster said they're up to 74, set goal to be at 100 by end of calendar year and 200 by end of 2026; stronger F&B attachment at Lucky Strikes; 2 strong properties rebranded to Lucky Strike had strong results.

Q: Was there also a geographic component to the events business turning?

A: Robert Lavan said if not in California or Washington, business would have comped up low single digits; California and Washington affected by Silicon Valley layoffs, but they're leaning in and seeing the turn elsewhere.

Q: Wanted to start with maybe some clarification on walk-in retail trends that you've seen?

A: Robert Lavan said retail has been positive, mid-single digits in Oct; acquisitions are accretive, corporate events less important in third and fourth quarter.

Q: Wondering if you could just go out a little bit more about some of the performance of the water parks and sort of their first full season with you guys?

A: Robert Lavan said water parks have massive procurement F&B synergies, food sales up 10% at Raging Waves, bringing in alcohol; Lev Ekster said Boomers locations in Oct finished up good single digits, showing improvement potential for other assets after renovations.

Q: Most of my questions were answered, but just one on the debt refi, just how we should think of interest expense for the full year?

A: Robert Lavan said it's $1.7 billion times 7% plus $60 million for the capitalized leases.

Q: Just curious about the relationship between food and beverage revenue and Bowling revenue, and Lucky Strike locations compared to Bowlero locations?

A: Robert Lavan said last quarter, branded Lucky Strike locations had 50% higher F&B to Bowl revenues than Bowleros and AMS; if normalized, that's a $125 million to $150 million pickup; Lev Ekster talked about innovation in food program, league bowler menu performing well.

Q: Just curious if you could talk a little bit about the promotional activity outlook?

A: Robert Lavan said promotional environment slow down, being more tactical, will have Black Friday sale but not overdoing promotions in first few weeks of December.

Q: First one kind of follow-up on the F&B side. With the food up 10% in the quarter, you mentioned versus 1.4% for overall retail, how much of that was price versus general improvement in attachments across the various cohorts? And how much room do you think you have to raise F&B prices from this point forward? And remind us does the 1.5% comp guidance for this year, does that include any assumption of taking price on F&B?

A: Robert Lavan said in the quarter, no price on food and beverage, performance purely attachment; new products may naturally raise ticket averages but assumptions don't take price into consideration.

Q: How would you frame kind of the focus for the remainder of this year? I mean, obviously, I assume you'd be opportunistic if something does come up, given the environment in, but is this still a year of an M&A focus? Is it shifting a little bit more towards organic?

A: Robert Lavan said focus is on organic; will spend below $130 million CapEx guidance this year; acquisitions are being digested, focus on internally now, only do home run deals if available.