Bowlero Corp. (NYSE:BOWL) Q1 2025 Earnings Call Transcript

Bowlero Corp. (NYSE:BOWL) Q1 2025 Earnings Call Transcript November 4, 2024

Bowlero Corp. beats earnings expectations. Reported EPS is $0.13, expectations were $-0.17.

Operator: Thank you for standing by. My name is John, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Bowlero First Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Bobby Lavan, Chief Financial Officer. Please go ahead.

Bobby Lavan: Good afternoon to everyone on the call. This is Bobby Lavan, Bowlero’s Chief Financial Officer. Welcome to our conference call to discuss Bowlero’s first quarter 2025 earnings. Today, we issued a press release announcing our financial results for the period ended September 29, 2024. A copy of the press release is available in the Investor Relations section of our website. Joining me on the call today are Thomas Shannon, our Founder and Chief Executive Officer; and Lev Ekster, our President. I would like to remind you that during today’s conference call, we may make certain forward-looking statements about the company’s performance. Such forward-looking statements are not guarantees of future performance and therefore, one should not place undue reliance on them.

Forward-looking statements are also subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed. For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release as well as the risk factors contained in the company’s filings with the Securities and Exchange Commission. Bowlero Corporation undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after today’s call. Also during today’s call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G.

The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company’s website. I’ll now turn the call over to Tom.

Thomas Shannon: Good afternoon. Thank you for joining us today. I am Thomas Shannon, Founder and CEO of Bowlero Corp. Total location revenue grew 17.5% year-over-year in the quarter. Our company’s share of customer wallets continues to increase. Our locations get better every day through operational excellence and investments. After our superb quarter with 20 plus percent EBITDA growth and strong cash flow conversion, let me elaborate on our secret sauce. Almost 28 years ago I found this company focusing on superior returns. We underwrite all decisions for relative financial returns and steadily focus on the highest returns. Since inception, I have focused the team on what generates the most significant impact on the business.

From M&A decisions to capital investments to using data to drive labor pricing and supplier decisions, the team is held accountable for results in cash flow. As we grow, the results speak for themselves and our ability to deploy capital and utilize data driven processes is accelerating. The current macro environment has provided increasing opportunities to deploy capital beyond bowling. This spring we acquired Raging Waves, the largest water park in Illinois for $49 million, which included 52 acres of land. Through our early efforts the business had double digit revenue growth and will have $8 million of EBITDAR in its first year under our ownership. At six times EBITDAR, this deal is already a homerun and we have opportunities to expand the park and if we choose so monetize the land.

Last month we acquired Boomers, an underappreciated business with six family entertainment locations and two water parks. Within the first few weeks we had begun shuttering unprofitable parts of the portfolio and introducing our labor model. We bought that business with $9 million of four-wall EBITDA and expect meaningful upside in the short-term from operations and longer term once we deploy capital. Today we closed on the acquisition of Spectrum Entertainment Complex in Grand Rapids, Michigan. This asset has revenues significantly above our center average and will be our sixth location in Michigan as we continue to drive scale. The market for M&A is the most opportunistic we have ever seen and we look forward to continuing to deploy capital accretively bringing attractive locations with significant upside into our portfolio.

In October, we opened two Lucky Strike locations in Denver. In the coming months, Lucky Strike Beverly Hills will open as the first bowling alley in Beverly Hills in nearly a century and it will be followed by Lucky Strike Ladera Ranch in Orange County, California, which will have 42 lanes and a very attractive demographic. Our new build pipeline is very robust for the next few years. Our focus is a balance of internal optimization and high return capital deployment. To discuss recent organic performance in our internal initiatives, let me hand it over to the company’s President, Lev Ekster.

Lev Ekster: Thanks, Tom. Our food and beverage initiatives continue to bear fruit with F&B sales up 18% year-over-year in the quarter and our key KPI of retail F&B to bowling crossed $0.80 across the portfolio. Four new menu segments rolled out across all properties, from traditional all the way up to our new experiential craft menu. Most notable is that in our top 50 Bowlero locations, which recently instituted the upgraded premium plus menu segment trended close to $1.10 F&B per bowl this recent month, the highest we have ever seen and up over $0.18 versus prior year. So we are obviously highly encouraged by that. A brand new events menu launches in November, just in time for the start of the holiday season. We’ve also enabled mobile ordering across all properties to help with labor efficiencies and guest satisfaction.

.: I will now turn it over to Bobby Lavan.

Bobby Lavan: Thanks, Lev. In the first quarter of 2025, we generated total revenue ex-service fee of $260 million and an adjusted EBITDA of $62.9 million compared to the last year of $226 million and adjusted EBITDA of $52.1 million. Our total location revenue growth in the quarter was positive 17.5% and same-store comp was positive 0.4%. Adjusted EBITDA was $62.9 million, up 21% year-over-year with a margin of 24.2%, expanding 130 basis points. We have found a good balance of investing in payroll, managing costs, their same-store comp payroll better by $1 million year-over-year. Food costs are a headwind in the quarter, but have turned recently. The end of September was severely impacted by weather including two hurricanes across the country.

In our press release today we updated our FY 2025 guidance. Our confidence in the business continues and we are increasing the bottom end of our revenue range by $10 million. Boomers, which we acquired on September 30th, will add revenue, but as negative EBITDA until peak season, which starts in June. We spent $41 million in capital expenditures in the first quarter. Growth CapEx was $16 million, new build CapEx was $17 million, and maintenance was $8 million. We continue to optimize capital spend and recently hired a Chief Procurement Officer to drive efficiencies. Our liquidity at the end of the quarter was $355 million, nothing drawn on a revolver and $38 million of cash. Net debt was $1.1 billion and the bank credit facility net leverage ratio was 2.6 times.

Thank you for your time today and we look forward to seeing you on the road in the coming months.

Q&A Session

Operator: Ladies and gentlemen, we will now begin our question-and-answer session. [Operator Instructions] Our first question comes from the line of Matthew Boss with JPMorgan. Please go ahead.

Matthew Boss: Great, thanks. So Tom, maybe to start off, could you elaborate on the cadence of same-center comps in the first quarter and trends you’ve seen in October maybe between walk-in and events?

Bobby Lavan: Hi, Matt. It’s Bobby. So end of September, we got hit with two hurricanes and that cost us about $2 million on the comp in the first quarter. We’ll see the equivalent of that into October. October, the weather has not been great, but right now event is tracking plus 10% for P6, which is really where we make a bulk of our revenue and EBITDA for the quarter. So we’re more focused on that right now.

Matthew Boss: Great. And then maybe just a follow up on the EBITDA margin expansion. So maybe just drivers of first quarter and then any notable call outs in terms of cadence for margin expansion as we think about the second quarter relative to the back half?

Bobby Lavan: Yes, I mean we’re going to have the greatest margin expansion in the third quarter, right. This third quarter has sort of two benefits. One is New Year’s has shifted from second quarter to third quarter and that’s a $5 million to $7 million swing in the comp between second quarter and third quarter, which is also going to have sort of the highest incrementals. You also remember last year January really started off rough with minus double digits for the first three weeks. So you’ll see the greatest margin expansion in the third quarter, but you’ll see margin expansion in the second quarter as well other than Boomers and Raging Waves will run through the income statement as negative EBITDA.

Matthew Boss: Great. Best of luck.

Operator: Your next question comes from the line of Steven Wieczynski with Stifel. Please go ahead.

Steven Wieczynski: Hi, guys. Good afternoon. So Bobby, just to kind of think about the rest of the fiscal year, you obviously took up year-over-year top line here a little bit in terms of guidance. But as we do think about that low to mid single digit same-store sales comparison that you called out, I guess that was back in September when you gave your initial guidance for 2025. Does that same-store sales outlook still hold true? And if so, maybe how we should be thinking about the cadence of same-store sales over the next three quarters or so?

Bobby Lavan: Yes, I mean, we haven’t changed anything as it relates to our expectation on the comp. As we sort of went through last earnings call, 1Q and 2Q are going to be low comps versus 3Q and 4Q will be much stronger comps that you have two major things happening in the third quarter. So you’ve got New Year’s, which is a very big night for us does move from last year being in the second quarter, two this year being in the third quarter. That’s, I can’t emphasize enough how important that is to sort of comp cadence. I mean that’s a $5 million to $7 million move in comp on a $300 plus million sales base from 2Q to 3Q. On top of that, you’re going to have this catch up that happened last year where the weather was atrocious in January and we had down double digit weeks on the comp.

So you’ll catch all that up in the third quarter versus this quarter. The weather has been great in October, but really December events will continue to be strong, but we’ll miss that retail element of New Year’s in the second quarter and that will push the third quarter.

Steven Wieczynski: Okay, got you, makes sense. And then maybe one for Tom or even you, Bobby, but you guys kind of talked about how the acquisition environment just remains seems extremely robust. And just maybe wondering from a high level perspective, I mean, how you guys are spending your time today in terms of looking at potential assets, meaning how much time is spent on your kind of core bowling assets versus some of the other assets that you’ve started to take a look at? Thanks.

Thomas Shannon: Well, it’s a division of labor. This is Tom speaking. Lev spends 100% of his time on our existing operations, Bobby spends most of his time on our existing operations and I spend most of my Time on M&A.

Steven Wieczynski: Okay, fair enough. Thanks guys. Appreciate it.

Operator: Your next question comes from the line of Randy Konik with Jefferies. Please go ahead.

Randy Konik: Hi, guys. How are you? I guess I want to ask about the – you mentioned the increased utilization of data and you talked about some of the things you’re doing there. And I think you mentioned that you hired a Chief Procurement Officer. So, it sounds like there is obviously – you have a well-run organization and it sounds like you see some opportunities to continue to further make more efficiencies or drive more efficiencies through the portfolio. But can you guys basically unpack that a little bit more and give us some perspective on how you are utilizing data a little bit differently now versus maybe six, 12 months ago and then your hopes for that Chief Procurement Officer, what he or she will be focused on in terms of driving more efficiency and cost reduction through the business? Thanks guys.

Bobby Lavan: Yes, I mean, we’re becoming a data-driven organization. So, at the end of the day we’re holding – we started off with three Power BI subscriptions. So, Tom, Lev and myself, we’re using Power BI to just kind of look at daily sales. We just pushed out 350 Power BI subscriptions. So now we have GMs, we have every department leader holding themselves accountable to day to day data. As it relates to Chief Procurement Officer, there’s – managing inflation is kind of a core responsibility of the organization. Last year chicken prices alone was a $6 million headwind. And having a Chief Procurement Officer who sole focus is to not necessarily reduce costs, but to at least keep costs flat is sort of core. And then Lev and I will focus on how do we drive efficiencies in the organization, on payroll, on things like supplies, things like that.

And ultimately when we go back into a normal inflationary environment, we can use our scale to drive procurement synergies. I will say Boomers. We’ve owned a month. We already put sort of their purchasing organization into our purchasing organization. So, there is scale that comes in these acquisitions that we can underwrite EBITDA without even a revenue growth just because of cost savings on the acquisitions.

Randy Konik: Super helpful. And then I guess just to round out, and lastly maybe give us some perspective on Fall Pass, what’s kind of different about it versus Summer Pass. Any kind of metrics you want to kind of share with us in terms of that program? And then just backing out a little bit more and thinking a little bit more strategic and long term, how do you guys think about different pass programs as we think through the – going forward throughout the next few years? Are you going to look to maybe do a little bit more of an annual pass? Just how should we think about the pass program and the benefits it’s driving towards your business in terms of increased utilization, et cetera?

Lev Ekster: Yes, this is Lev. How are you? Just to connect this question to your prior question on data, when we see revenue softness ahead, it gives us an opportunity to quickly deploy a pass. And seeing September, October gave us the push to launch the first ever Fall Season Pass. Much shorter cycle for first of all, sales, but also utilization of the pass for our customers. So that’s actually coming to an end in about weeks. But we’ve been encouraged by the results and we were super successful with the Summer Season Pass, not just in the sales, but also the number of redemptions we saw by the consumer, and the NPS score, and how favorable it was perceived by the consumer. In terms of future passes, I think, we’re going to probably lean in more into that summer season pass launch a little earlier in the calendar year to have a larger window of sales.

But it’s really resonated with the consumer. I don’t know that we really need to change too much. We might want to focus on the price and making sure we get maximum revenue, but still give a really good value to our consumer. I think the fall pass is going to relaunch again next year. Aside from that, I think, the bigger opportunity is we have Boomers now, we have the water parks now. Can we make it a bigger pass to connect all of these businesses and give an even more desirable product to consumer. And that’s something we’re focused on right now.

Randy Konik: Super helpful. Thanks, guys.

Thomas Shannon: Thanks, Randy.

Operator: Our next question comes from the line of Ian Zaffino with Oppenheimer. Please go ahead.

Ian Zaffino: Great. Thank you very much. Question on price versus volume. What are you kind of thinking going forward, ability to continue to push price versus volumes and just kind of overall what you really saw in the last quarter, that kind of gives you confidence in going forward. Thanks.

Thomas Shannon: Yes we’ve been able to take price on food, so that has been a positive surprise as we kind of lean into the core second and third quarter. Ultimately that is a good opportunity for us where we can augment the price that’s been taken on bowling the past few years and augment it with food.

Ian Zaffino: Okay. And then on capital allocation, I guess buybacks kind of slowed a little bit, but – how are we thinking about buybacks versus acquisitions? And on the acquisition front, I guess you also mentioned scale as a component. Are you talking about maybe adding additional like-minded concepts, meaning like the more water parks you build, the more scale you’re going to get. Is that kind of like what you meant there? And is that a factor in kind of any or M&A? Thanks.

Thomas Shannon: Yes, I mean, the acquisitions we closed on Spectrum today. Spectrum, is a sizable entertainment bowling complex in Michigan. We closed on Boomers September 30, which came with five FECs and one water park. We’re going to continue deploying capital where we can get superior returns. We like this slow and steady approach. But there is a lot out there and we’ll look at everything and that’s how we kind of move forward.

Ian Zaffino: Okay. And then just on buybacks, quickly.

Thomas Shannon: Yes, I mean, on buybacks, we’ll continue to be dynamic with how we buyback our stock. We’re very price sensitive. And we look at our relative performance and we’ll continue using buybacks and dividends to return, you know, to drive shareholder returns.

Ian Zaffino: All right, great. Thank you very much.

Operator: Our next question comes from the line of Jeremy Hamblin with Craig-Hallum. Please go ahead.

Jeremy Hamblin: Thanks. And congrats on the strong results. I wanted to ask about mobile ordering and what you’re seeing in terms of how that’s impacting operations, how you’re seeing customer respond to mobile ordering, in extra centers.

Lev Ekster: Hi, Lev here. So, as of last month, we’ve rolled mobile ordering across the entire organization and we’re seeing the utilization tick up. I think that coupled with the data-driven approach we have right now on labor and being staffed as efficiently as possible, I think, mobile ordering is really helping that cause. And I think you’re seeing that in the results of our efficiencies. We’re taking a step beyond that. So, we’re currently piloting tablets at a number of our locations right now. We think we’ll have that rolled across the organization in early 2025. And I think that’s going to improve efficiencies as well, but also customer satisfaction, because we could take more orders faster, get them into the kitchen faster, get fresh, hot food to the lanes faster, get more turns with the lanes as a result of that, but also get more items to the consumer during their session.

So, we have this holistic approach on expanding attachment of food and beverage sales right now. And I think mobile ordering tablets, the revamp menus that we’ve rolled across the organization, enhanced training for our associates for sales, improving the hiring practices of our kitchen, all of this goes hand in hand. And I think you’re starting to see that in the results. And you saw in our press release, the F&B, the BOWL KPI, is growing significantly across the organization. All of this is correlated.

Jeremy Hamblin: Got it. And just to follow-up on that part, I think, you had said that there was $0.80 of spend per $1 bowl spend on bowling. How did that compare to last year? And then also just understanding that in context of what you got in the quarter at Lucky Strike versus the Bowlero banner.

Lev Ekster: Well, I think the purchase of Lucky Strike and seeing what they were doing with food and beverage sales relative to bowling revenue really gave little push to really put a strong effort behind our food and beverage program across all of our properties. That $0.80 compares to about $0.60 prior year. But what I think is most encouraging is at our top 50 Bowlero locations that recently received our premium plus menu tier, so we have four menu tiers, traditional premium, premium plus and then this craft menu, which we refer to internally as our luxury menu at our top properties. But the 50 top Bowlero locations that got their premium plus menu in October, their F&B to BOWL was around $1.10 or $0.18 more than prior year.

So, we’re starting to see with these revamped menus and this focus on food and beverage sales, we can really drive the needle on attachments. The Lucky’s are much higher. If you just look at those on their own, those are over $2 F&B to BOWL. So, we’re at $0.80 in the organization. We’re starting to see us get over a $1 at those top 50 Bowlero’s. And I think we’re going to continue to increase. I would love to see us get closer to a $1 from that $0.80 mark. And based on the year-over-year jump, I think, it’s very doable.

Jeremy Hamblin: Are those premium plus locations candidates to be re-bannered to Lucky Strike?

Lev Ekster: Yes.

Jeremy Hamblin: Okay. Last one for me. I just wanted to clarify also you noted, Bobby, with Boomers that there would be drag on EBITDA until we get into the seasonal months. Can you just quantify what you expect that drag to be for the December quarter and then the March quarter?

Bobby Lavan: Yes, Boomers plus Raging Waves is a few million dollars drag on EBITDA in 2Q and 3Q.

Jeremy Hamblin: Each quarter or…

Bobby Lavan: Each quarter.

Jeremy Hamblin: Awesome. Thanks for taking the questions. Best wishes.

Bobby Lavan: Thank you.

Operator: Our next question comes from the line of Jason Tilchen with Canaccord Genuity. Please go ahead.

Jason Tilchen: Great. Thanks for taking my question. I am wondering if you could share the relative growth rates you saw between walk-in and groups during the quarter and just the higher level, how you’re feeling about the health of the consumer and expectations for consumer spending in the holiday season and also obviously the corporate booking pipeline as we head into the holiday season. Thanks.

Thomas Shannon: Yes. So, walk-in in the quarter was higher than events and mainly because of the season pass. So, we were getting – we disclosed it last quarter but for every season pass holder they visited eight times in the quarter. Recently we’ve seen more strength in walk-in versus events, but we expect that to kind of flip as we go into P6, or December quarter, or December month.

Jason Tilchen: Okay, great, that’s helpful. And then just one follow-up. In terms of the Boomers acquisition, why don’t you share a little bit more thought if there was anything in particular that attracted you guys to that asset outside of the valuation of the deal and sort of how you are viewing other opportunities in family entertainment beyond just water parks.

Thomas Shannon: Yes, I mean the valuation was extremely attractive but it also – it’s been sort of deprived of capital for at least five years. And so, our ability to go put our events platform in our procurement organization, our above market ability on arcade and really look at these assets that are irreplaceable assets in flagship locations and what kind of capital we put into them. Really at the end of the day, the underwriting there was what we could do, not just what we were buying.

Jason Tilchen: Great. Thank you very much.

Operator: Our next question comes from the line of Eric Wold with B. Riley. Please go ahead.

Eric Wold: Thanks. Good afternoon. I have a couple questions, a couple follow-up questions, I guess on the – on the food and beverage ratio, I guess one, that $0.18 increase for the Top 50 locations, how much of that was price? And then what would be your goal over the next 12 months in terms of the total network getting above that – moving above that $0.18 level?

Thomas Shannon: Yes. So none of it was price because we didn’t take price until really the past month on F&B, so it was purely good old elbow grease. The ability to get the whole network up to a $1 is really going to be a multi-factor equation. So one, we just rolled out mobile ordering into all of our centers that, that helps. But two, we are rolling out tablets or server tablets that should be company-wide by January, February. And the reason that those server tablets are so important is they prompt the server to upsell a double “do you want fries with your burger” things like that. And so it really is, we’re leaning into sort of technology and process to drive that upside. I don’t know, Lavan, if you’d add, what’s – what’s the…

Lev Ekster: Yes. I think this question alone could probably – we could probably keep you on the line for an hour with this alone. But it really starts at the bottom, which is hiring all of our managers now we require food and beverage and hospitality experience on their resume. We have a brand new assessment for our kitchen manager and chef hires to get better talent there. We added some roles focused on food and beverage sales training, which we’ve never had before. So like I mentioned at the top of the call, it’s really a holistic effort. It’s not just taking price with the same product. It’s a revamped menu, all new items, new taco selection, craft pizzas, more trending items. So we’re giving a better product to the consumer and we’re getting better at selling it through our people and through technology. That’s how we’re getting it to a $1.

Eric Wold: Got it. And then last question. Maybe this macro kind of talk about the average customer you’re seeing, obviously you’re working on getting higher food and beverage in the new menus. But in terms of just the customer coming in the door, any shift in terms of general spending levels, number of games played, anything that can give you another kind of look into what that customer demographic looks like versus maybe what you would have had a year or so ago?

Thomas Shannon: Yes. I think generally it’s steady as you go on the regular way customer. We’re seeing an uptake on the F&B. The only place that we’re seeing a little softness would be on sort of corporate in front of this uncertainty of the election, but generally things are moving forward.

Eric Wold: Perfect. Thank you, guys.

Operator: Question comes from the line of Eric Handler with ROTH Capital. Please go ahead.

Eric Handler: Yes, thank you for the question. You’ve now lapped your one-year anniversary for Lucky Strike. Can you maybe talk about what’s happened to the Lucky Strike assets over the last year and what maybe – what kind of returns you’re getting and just some of your overall findings there?

Thomas Shannon: Yes. So 11 of the 14 assets are outperforming. We’re pretty excited about the – we – when we got in there their California assets were falling down. And now we picked that up with sort of new initiatives we’ve invested in for putting arcades in revamped sort of the CapEx. So overall like the returns there are exactly what we underwrote which is we said we bought it for $90 million day one, it had four wall of 17, that’s up significantly from then really targeting sort of getting them to $30 million of EBITDA in the first sort of two years of owning it.

Eric Handler: Great. And then secondly, can you talk about how your recent new build openings are doing and are they all profitable at this point?

Thomas Shannon: Well, every one of our centers is profitable. We don’t have a single center in the fleet that is unprofitable. Our every cohort of new builds is better and better than the last. So Miami, which opened about seven months ago is on pace to do $10 million in its first year, far – far ahead of where we underwrote that deal. Let’s see, what did we open after Miami?

Bobby Lavan: Southlands, Northfield.

Thomas Shannon: Yes, so we just opened two in Denver. I mean, they just opened but the early indication is very positive. But our new builds are consistently doing 8-plus million on average versus a portfolio average of about 3.3 to 3.5. So the beauty of new builds is you get to cherry pick your location. We only go into A locations, so this latest cohort, the two in Denver, which are one in Northfield, one in Southlands of Beverly Hills, which will open soon. The first bowling alley in Beverly Hills, really in anyone’s memory, maybe ever. We haven’t found a bowling alley in Beverly Hills before, but I don’t want to say never, but it’s been a really, really long time if there was one. And then in Ladera Ranch in Orange County, California, which is likely to open this calendar year as well.

And then we have 15-plus in the pipeline behind that. They’re in various stages. Some are at least, some have signed LOIs, some are close to LOI and those are all in exceptional locations as well. So I think that one thing the company does very, very well is site selection. I think it’s always done site selection well. We’ve only closed one location that we chose and that was in, I don’t know, 2002, 2003. So yes, the latest ones that we built have been – have been wildly outperformed expectations, vastly outperformed the fleet average and there’s no reason to think that the next cohort will do any worse.

Eric Handler: That’s helpful, Tom. And just one last thing, you guys did a very good new income statement presentation to give a better view of where costs are trending. Are you going to be giving sort of like restated quarters for historicals for the last year or so?

Thomas Shannon: Yes, it’s filed with the 8-K. It’s filed with the 8-K on the press release.

Eric Handler: Perfect. Thank you.

Operator: Our next question comes from the line of Michael Kupinski with NOBLE Capital Markets. Please go ahead.

Michael Kupinski: Thank you. Congratulations on your quarter. A couple of questions. You were optimistic about the revamped event catering menu and I know we kind of danced around some of the commentary about the impact of that. But can you give us some color on how event bookings are pacing for the holidays and maybe some color on the average event revenue at this point? What that – what that’s looking like?

Thomas Shannon: Yes, I mean, December right now is pacing – in December sort of the our super bowl is pacing up 10% year-over-year for a combination of corporates and adult à la carte. So really we’re getting both more events and higher dollar pickups. So ultimately we expect the average event to be up, but we’re pretty happy about that plus 10% so far.

Michael Kupinski: That sounds terrific. And then in terms of Raging Waves, you indicated that additional space might be developed to expand the park to take advantage of the peaks and maybe even for events. And as you consider adding more water parks; are there opportunities to take advantage of season opportunities? And I was thinking maybe like, I don’t know, ice skating, Christmas lights [ph] or other events or is the park just shuttered during the winter? I guess my question is, I was wondering, are there opportunities to shave off some of the drag in off season?

Thomas Shannon: Well, there are and some companies out there do those things and I think some of them actually do it successfully. But the drag is mostly fixed. So it’s a handful of full time employees and then it’s things like insurance and property taxes and things of that nature. So here the challenge is that you’re not carrying a lot of labor. So let’s take Raging Waves in Chicago, right? Your season’s over by Labor Day because typically it’s cold, although this year it got warm again in October but that’s not typical. So you let everyone go, everyone goes back to school or wherever and then to staff up again is really a challenge. So you have to be really confident you’re going to do an outsized revenue number to do it.

Now the second water park that we bought as part of the Boomers acquisition is in Destin. And so unlike Raging Waves which has a 85-day to 90-day season, Destin can have 120-day to 140-day season. So it gives you a lot more optionality and it also makes you less dependent on having a cold summer or a rainy summer as we actually did in Raging Waves. That was a surprising thing. We were up almost 10% in revenue, but we lost a lot of day’s terrain. We lost the last weekend because it was cold and despite that we did really well. So, there are those opportunities, but I don’t think those are the needle movers and I wouldn’t be so cognizant of the drag. The EBITDA drag is relatively minor. It only looks big compared to when we’re making money because in season these assets are ridiculously profitable.

We give a little bit of that back in the off season, but we’re not giving back, it’s not big amounts.

Michael Kupinski: Gotcha. And in terms of acquisitions, would you then look, it really wouldn’t matter where the parks were located in terms of location, weather patterns and so forth just because of that, right?

Thomas Shannon: Yes. I mean one of the advantages of Raging Waves is it’s a weather hedge. We have 20 centers in Chicago. So the first weekend we were supposed to open, actually the park didn’t open because it was raining. And our 20 centers in Chicago comped up in aggregate 100% year-over-year, so that that’s pretty good, right. We’ve looked at hedging weather by buying contracts. The insurance is sort of proven to be prohibitively expensive thus far. But then we found we had this natural hedge. So yes, if you could have water parks where you have bowling centers, you’ve got that built in, and I think that’s a good thing for us. It’s not driving the decision but we look on these things on a case-by-case basis. I mean you would be surprised we are constantly surprised at assets that are seemingly in the middle of nowhere and I’m not talking about water parks specifically, just talking about all sorts of assets that do really, really well.

So we cast a wide net, but as Bobby said earlier, we’re driven by return. We have a very tight deal screen as we always have, and thus far over almost 28 years and we’ve generated wildly outsized returns. If you look at the investor presentation, you can see some of these returns, 10x invested capital in very short periods of time. So I don’t think the market gives us credit for how good we are as investors. The market, I think has some understanding of how good we are as operators, but we may be better investors than we are operators. Certainly, when you combine the two, it’s very powerful, and if you take the time to go through and you look at the returns we’ve had on AMF, Brunswick, Bowl America, Lucky Strike, Raging Waves, et cetera, and we generated really outsized returns in companies that most people gave up for debt [ph].

Michael Kupinski: Totally agree with that. Thanks for the color. I appreciate it.

Operator: As there are no further questions at this time that concludes our Q&A session in today’s conference call. Thank you for your participation. You may now disconnect.