Lucky Strike Entertainment Corporation (LUCK) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows a positive sentiment due to the reinstatement of guidance, expected double-digit growth, and strategic acquisitions. Despite some weaknesses in California, the company is optimistic about future performance, particularly with water parks and FECs. Marketing investments are showing results, and the company is confident in its business trajectory. However, the lack of specific financial details in some responses and the filing of a shelf registration could be a concern. Overall, the strategic focus and positive guidance suggest a positive stock price movement.
Key Financial Performance
Revenue Total revenue for Q4 2025 was $301.2 million, a 6.1% increase from $283.9 million in the same period last year. This growth was driven by the integration of Boomers and two new water parks, which added $7 million in EBITDA.
Adjusted EBITDA Adjusted EBITDA for Q4 2025 was $88.7 million, up from $83.4 million in the same period last year. This increase was supported by improvements in payroll ($5 million) and reductions in repair and maintenance costs ($2 million), offsetting a $11 million headwind from same-store sales decline.
Same-Store Sales Same-store sales declined by 4.1% year-over-year, with California contributing $6 million to the decline. However, same-store sales improved sequentially each month in the quarter and into July.
Season Pass Revenue Season pass revenue grew to $13.4 million in Q4 2025, up from $8.5 million in the prior year, driven by a 37% increase in membership from 190,000 to 260,000 members.
Food Revenue Food revenue delivered positive 2.5% same-store comps, driven by new menu offerings and marketing initiatives.
Alcohol Revenue Alcohol revenue saw a 2.7% decline in same-store comps, though the decline is improving and better than the overall comp.
CapEx Capital expenditures (CapEx) for Q4 2025 were $24 million, down from $47 million in the same period last year, due to procurement efficiencies and a focus on high-return projects.
Real Estate Acquisition The company acquired the real estate underlying 58 locations for $306 million, which is expected to lower GAAP rent expense by $3 million and capitalized lease expense by $21 million in FY 2026.
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Operating Highlights
Season Pass Program: Membership grew to over 260,000 members, up from 190,000 last year. Sales exceeded $13.4 million compared to $8.5 million in the prior year.
Craft Lemonade: Sold 135,000 units in the first 2 months, generating nearly $800,000 in sales. On pace for a $5 million annualized run rate.
New Menu Items: Introduced trend-driven items like honey chicken bowl, strawberry poppy salad, and a trio of sliders with King's Hawaiian Buns.
Acquisition of Water Parks: Acquired Raging Waters Los Angeles and Wet 'n Wild Emerald Pointe, welcoming over 1.5 million annual guests.
Expansion of Locations: Acquired real estate for 58 locations for $306 million, enhancing flexibility and optimizing capital structure.
Cost Efficiencies: Reduced CapEx to $24 million from $47 million last year, focusing on high-return projects and procurement efficiencies.
Improved Payroll and Maintenance: Saved $5 million in payroll and $2 million in repair and maintenance costs.
Rebranding Initiative: Rebranding 55 Lucky Strike locations, aiming to reach 100 by year-end.
Leadership and Training: Strengthened leadership team, launched new training programs, and introduced a national field training team.
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Risk or Challenges
Decline in Same-Store Sales: Same-store sales declined by 4.1% in Q4 2025, with California contributing $6 million to the decline. This poses a challenge to maintaining consistent revenue growth.
Events Business Performance: The events business faced a high single-digit decline, which could impact overall revenue and profitability.
Alcohol Sales Decline: Alcohol sales experienced a 2.7% decline, which, while improving, still represents a challenge to the food and beverage segment.
Economic Uncertainty in California: California, accounting for 20% of total sales, showed significant weakness, contributing to the same-store sales decline. This could be tied to broader economic uncertainties in the region.
High Debt Levels: Net debt at the end of the quarter was $1.3 billion, with a leverage ratio of 2.9x, which could limit financial flexibility.
Supply Chain and Maintenance Costs: While improvements were made, repair and maintenance costs remain a focus area, as reductions were only $2 million in Q4.
Integration Risks from Acquisitions: The acquisition of multiple properties, including water parks and family entertainment centers, poses integration and operational risks.
Dependence on Seasonal Revenue: The company relies heavily on seasonal programs like summer passes, which may not provide consistent year-round revenue.
Marketing and Rebranding Costs: Increased marketing spend and rebranding initiatives could strain financial resources if not managed effectively.
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Guidance & Outlook
Revenue Growth: The company expects total revenue growth of 5% to 9% for fiscal year 2026, implying $1.26 billion to $1.31 billion in revenue.
Adjusted EBITDA: Guidance for adjusted EBITDA is set at $375 million to $415 million for fiscal year 2026.
Capital Expenditures: The company plans to focus on high ROI revenue-generating initiatives, with a reduced CapEx compared to previous years.
Marketing Investments: Increased marketing budget to align closer to industry benchmarks, aiming to capture additional market share.
Expansion Plans: The company plans to reach 100 Lucky Strike locations by year-end, up from the current 55 locations.
Product and Menu Innovations: Introduction of new menu items and beverages, including seasonal and trend-driven offerings, to drive food and beverage revenue growth.
Operational Enhancements: Focus on strengthening sales and hospitality culture through training programs, team-building initiatives, and enhanced guest service training.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What assumptions are embedded in the new 2026 EBITDA guidance, and why was guidance reinstated so quickly after being pulled?
A:The guidance includes positive organic growth in July, double-digit total growth, increased marketing investments, and the acquisition of assets that will initially be negative but turn positive by the June quarter of fiscal 2026. Guidance was reinstated due to improved performance and confidence in the business trajectory.
Q:How will the cadence of fiscal 2026 play out between quarters, considering new water parks and corporate events?
A:There will be double-digit growth in the September quarter, and the fourth quarter will be $10 million to $20 million higher than the second quarter.
Q:What is the outlook for the events business and the impact of California on performance?
A:The events business is improving, with offline events showing progress. California remains a weak spot but is expected to improve as comps get easier starting in September. Marketing efforts are being ramped up to target offline events and improve performance.
Q:How is the company approaching the water parks and family entertainment centers (FECs) compared to the bowling business?
A:The company is using a similar playbook as the bowling business, focusing on improving assets, enhancing food and beverage offerings, and investing in marketing. Water parks and FECs are seen as strong assets with significant consumer demand and potential for profitability.
Q:What is the expected portfolio composition in 5-10 years between bowling, water parks, and FECs?
A:The portfolio is expected to be 40% bowling, 40% water parks, and 20% FECs. Water parks are larger assets and can scale more quickly, contributing significantly to revenue.
Q:How much of the recent acceleration in comps is attributed to marketing investments, and what is the planned increase in marketing spend?
A:The summer season pass program showed significant results, with revenue increasing from $8.5 million to $13.4 million due to a $1 million marketing investment. Marketing spend is planned to increase to closer to industry benchmarks of 3% of revenue.
Q:Why was a shelf registration filed, and what are the plans for its use?
A:The shelf registration was filed as a housekeeping measure to enable access to the unsecured debt market. There are no immediate plans beyond potentially hitting the debt markets.
Q:What was the cadence of performance during the quarter, and are there any other areas of weakness besides California?
A:April was down 6%, May down 3%, June down 1%, and July was up over 1%. California remains the primary area of weakness, while New York is performing well and comping positive.
Q:What trends are being observed in food and beverage (F&B) sales, particularly alcohol?
A:Alcohol sales are softening, but innovation in non-alcoholic options, such as a craft lemonade program, has been successful. Food and beverage sales are outperforming overall comps, and there is significant upside potential in this area.
Q:What is the trajectory for location operating costs and marketing spend?
A:Location operating costs will align with historical trends after adjusting for a $21 million non-cash charge. Marketing spend will increase by $10 million to $15 million as part of efforts to build a world-class marketing team.
Q:Did Topgolf's campaign targeting bowling customers impact the business?
A:The campaign had minimal impact, and the company views its product as superior. Topgolf's campaign was perceived as desperate and ineffective.
Q:What is the guidance for same-store comps and the impact of the Lucky Strike transition?
A:Same-store comps are expected to be positive, ranging from 1% to 5%. The Lucky Strike transition is showing positive results, with rebranded locations comping up.
Q:What are the expectations for cost structure and CapEx in fiscal 2026?
A:SG&A expenses will remain consistent with Q4 levels. Non-acquisition CapEx is expected to be $130 million, focusing on high ROI initiatives. The cost structure will reflect the seasonal nature of FECs and water parks, with higher profitability in the summer months.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the financial lift from the Lucky Strike transition, the exact impact of marketing investments on EBITDA guidance, and the precise breakdown of cost structure changes due to the addition of FECs and water parks. Responses were often general and lacked numerical specificity.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
California Boomers
Capital
Inc Research
LLC Research
North
Research Division
acquisition
cash flow
category
chicken
combo platter
concept
contest
craft lemonade
entertainment center
estate
fall
family entertainment
flavor
front
hospitality
initiative
item
member
momentum
option
pas program
pitcher combo
pizza
program guest
quality
sale tracker
training video
value
LUCK Transcript
Lucky Strike Entertainment Corporation (LUCK) Q1 2026 Earnings Call Transcript
Positive11-4
The earnings call summary and Q&A indicate strong financial metrics, with revenue and EBITDA growth, successful product innovations, and strategic acquisitions. Despite some regional challenges, the overall sentiment is positive, with optimistic guidance and effective marketing strategies. The acquisition of entertainment properties and the focus on organic growth further bolster the outlook. The absence of negative factors like guidance refusal or secondary offerings supports a positive sentiment, though not strong enough for a 'Strong positive' rating.
Lucky Strike Entertainment Corporation (LUCK) Q4 2025 Earnings Call Transcript
Positive8-28
The earnings call shows a positive sentiment due to the reinstatement of guidance, expected double-digit growth, and strategic acquisitions. Despite some weaknesses in California, the company is optimistic about future performance, particularly with water parks and FECs. Marketing investments are showing results, and the company is confident in its business trajectory. However, the lack of specific financial details in some responses and the filing of a shelf registration could be a concern. Overall, the strategic focus and positive guidance suggest a positive stock price movement.
Lucky Strike Entertainment Corporation (NYSE:LUCK) Q2 2025 Earnings Call Transcript
Unknown2-6
The earnings call highlights several negative factors: a decline in revenue and adjusted EBITDA, reduced capital expenditures, and macroeconomic uncertainties affecting consumer behavior. The Q&A reveals concerns about same-store sales and management's unclear responses on key issues. Despite a positive EPS growth, the absence of a share repurchase program and lack of strong guidance further weigh on sentiment. Overall, the cautious outlook and potential risks suggest a negative stock price reaction.
LUCK Slides
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