Lucky Strike Entertainment Corp: Form 10-Q for the period ended Mar 29, 2026

This discussion should be read in conjunction with Lucky Strike Entertainment’s unaudited condensed consolidated financial statements and the related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended June 29, 2025 as filed with the Securities and Exchange Commission (“SEC”) on August 28, 2025. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 29, 2025. Actual results may differ materially from those contained in any forward-looking statements. All period references are to our fiscal periods unless otherwise indicated. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” the “Company,” “Lucky Strike Entertainment,” and “Lucky Strike” are intended to mean the business and operations of Lucky Strike Entertainment Corporation and its consolidated subsidiaries. All financial information in this section is presented in thousands, unless otherwise noted, except share and per share amounts.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial of Lucky Strike. These statements are based on the beliefs and assumptions of our management. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that it will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about our business strategy, financial projections, anticipated growth and market opportunities.

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

In addition, statements that we “believe,” and similar statements reflect only our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and these statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Factors that could cause our actual results to differ include those described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 29, 2025.

Overview

Lucky Strike Entertainment is one of the world’s premier operators of location-based entertainment. The Company operates traditional bowling locations under its AMF and Bowl America brands, as well as more upscale entertainment venues under its Lucky Strike and Bowlero brands, featuring lounge seating, arcades, enhanced food and beverage offerings, and elevated customer service for both individuals and group events. The Company also hosts and oversees professional and non-professional bowling tournaments and related broadcasting activities. In addition, the Company operates other forms of location-based entertainment, including family entertainment centers (“FECs”) and water parks, under brands including Octane Raceway, Raging Waves, Shipwreck Island, Big Kahuna’s, Wet ‘n Wild Emerald Pointe, Raging Waters Los Angeles, Castle Park, and Boomers Parks.

The Company remains focused on creating long-term shareholder value through continued organic growth, the conversion and upgrading of existing locations to more upscale entertainment experiences offering a broader range of offerings, the opening of new locations and strategic acquisitions.

Recent Developments

During the nine months ended March 29, 2026, Lucky Strike Entertainment continued to execute on its long-term growth strategy, delivering total revenue growth of 5% and further expanding its three core verticals: bowling, water parks, and FECs. The following summarizes the Company’s significant developments during the period:

• Property Acquisition from Carlyle: The Company acquired 58 existing properties that were previously subject to a master lease agreement with Carlyle for aggregate consideration of $306,000. The acquired portfolio spans 16 states and includes prime locations in California, Illinois, Georgia, Arizona, and Colorado. This transaction reduced annual rent obligations by eliminating the associated lease liabilities, while providing meaningful financial and operational flexibility in support of the Company's long-term growth strategy.
• Water Park and FEC Acquisitions: The Company completed the acquisitions of Wet ‘n Wild Emerald Pointe water park, Raging Waters Los Angeles water park, Castle Park, and two additional Boomers Parks locations, further expanding the Company’s water park and FEC portfolio.
• New Location Opening: The Company completed construction of and opened a newly built Lucky Strike entertainment location in Southern California during the period.
• Lucky Strike Rebrand Initiative: The Company continued to make meaningful progress on the Lucky Strike rebrand initiative with an additional 66 locations converted. As of March 29, 2026, we had 110 Lucky Strike locations.
• Debt Refinancing: The Company refinanced its existing term loan with a new $1,200,000 term loan, issued $500,000 aggregate principal amount of 7.25% Senior Secured Notes, and increased its revolving credit facility commitment to $425,000. Management believes this refinancing strengthens the Company's balance sheet and provides enhanced financial flexibility to support ongoing growth initiatives.

Trends

There are a number of factors that could materially affect our future profitability, including changing economic conditions with the resulting impact on our sales, profitability, and capital spending, changes in our debt levels and applicable interest rates, and increasing prices of labor and inventory, which includes food and beverage costs. For example, the Company continues to monitor the impacts of various macroeconomic trends, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, and the introduction of or changes in tariffs. The Company also monitors geopolitical developments, including the ongoing conflict involving Iran and related regional instability, which have contributed to volatility in global energy markets, supply chain disruptions, and broader macroeconomic uncertainty. Such changes in macroeconomic conditions may lead to increased costs for the business. Furthermore, these macroeconomic and geopolitical trends could adversely affect the Company’s customers, which could impact their willingness to visit the Company’s locations, which could harm the financial results. Additionally, sales and results of operations could be impacted by acquisitions and restructuring projects. Restructuring can include various projects, including closure of locations not performing well, cost reductions through staffing reductions, and optimizing and allocating resources to improve profitability.

Our operating results fluctuate seasonally. For our bowling locations, we typically generate our highest sales volumes during the third quarter of each fiscal year due to the timing of leagues, holidays and changing weather conditions. For our FEC and water park locations, we typically generate our highest sales volumes during the fourth and first quarters of our fiscal year due to more favorable weather conditions and the timing of operating seasons. School operating schedules, holidays and weather conditions may also affect our sales volumes in some operating regions differently than others. Because of the seasonal nature of our business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Presentation of Results of Operations

The Company reports on a fiscal year, with each quarter generally comprised of one 5-week period and two 4-week periods.

Results of Operations

Three Months Ended March 29, 2026 Compared to the Three Months Ended March 30, 2025

Analysis of Consolidated Statement of Operations. The following table displays certain items from our condensed consolidated statements of operations for the periods presented below:

(1) Percent calculated as a percentage of revenues and may not total due to rounding.

*Represents a change equal to or in excess of 100% or one that is not meaningful.

Revenues: For the quarter ended March 29, 2026, revenues totaled $342,231 and represented an increase of $2,349, or 1%, over the same period of last fiscal year. The increase is primarily attributable to newly acquired or opened locations.

The following table summarizes our revenues on a same-store-basis for the quarter ended March 29, 2026 as compared to the corresponding period last fiscal year:

(in thousands)

(1) Revenues from 360 locations are included in the same-store comparable location base for the comparison in the above table. In our previously filed Form 10-Q for the three months ended March 30, 2025, revenues from 348 locations were included in the same-store revenue.

(2) Service fee revenue is a mandatory gratuity passed through to the employee, which is a non-contributor to earnings and is being phased out across our locations.

Same-store revenues includes revenue from locations that are open in periods presented (open in both the current period and the prior period being reported) and excludes revenues from locations that are not open in periods presented such as acquired new locations or locations closed for upgrades, renovations or other such reasons, as well as media revenues and service fee revenues.

Same-store revenues remained relatively flat during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. Within the quarter, walk-in bowling entertainment revenues and food and non-alcoholic beverage revenues at same-store bowling entertainment locations remained strong, contributing approximately $7,400 of incremental same-store revenues during the period. This strength was partially offset by combined declines in same-store alcoholic beverage revenues and amusement and other revenues, resulting in overall same-store revenue stability for the quarter. Results were impacted by significant adverse weather during the quarter, including Winter Storm Fern in January 2026, which brought severe winter conditions across a significant portion of our markets, and separate adverse weather conditions across portions of our markets in February and March 2026. Management believes these weather events negatively impacted customer traffic at certain locations during those periods. Additionally, consumer confidence declined in March 2026, which management believes was driven in part by rising energy prices and broader macroeconomic uncertainty stemming from geopolitical tensions in the Middle East, including the ongoing conflict with Iran. These conditions contributed to increased volatility in fuel costs and adversely impacted consumer spending patterns during the period.

Location operating costs: Location operating costs primarily consist of rent, utilities, insurance, repairs & maintenance, property taxes, supplies, marketing, and other costs associated with Company locations. Location operating costs include both fixed and variable components and therefore do not directly correlate with revenue.

Location operating costs increased $7,156, or 8%, during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. Increases were broad-based across most cost categories, including amusement costs, marketing, property taxes, insurance, and utilities. The overall increase was primarily driven by location count growth and strategic operational initiatives, as further described below.

Water park and FEC locations contributed approximately $3,200 to the increase over the comparable period, and new bowling locations contributed approximately $590. In addition, marketing expense increased approximately $2,300 compared to the prior year period, reflecting management's initiative to increase marketing investment. Management believes the increased marketing spend supported retail entertainment revenue performance during the quarter, notwithstanding the adverse weather and consumer confidence headwinds discussed above. Marketing expense decreased approximately $1,300 compared to the immediately preceding quarter as we became more disciplined in deploying our marketing budget during the current quarter.

Location operating costs as a percent of revenues increased from 27% to 29% during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. The increase as a percentage of revenues is primarily attributable to the FEC and water park locations within our portfolio, which typically generate their highest sales volumes during the fourth and first quarters of our fiscal year due to favorable weather conditions and the timing of their operating seasons. As a result, location operating costs for these locations tend to increase at a higher rate than revenues during the second and third quarters of our fiscal year, consistent with the seasonal pattern observed in the current period.

Notwithstanding the year-over-year increase, location operating costs as a percent of revenues improved sequentially from 33% in the first quarter of fiscal 2026 to 32% in the second quarter of fiscal 2026 to 29% in the current quarter, reflecting the Company's ongoing efforts to optimize location-level cost efficiency.

Location payroll and benefit costs: Location payroll and benefit costs consist of employee costs that directly support location operations. Location payroll and benefit costs increased $5,178, or 7%, during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. The increase is primarily driven by location count growth, additional bonus incentives, and an overall increase in labor hours per location. Water park and FEC locations had a significant impact, contributing approximately $2,400 to the increase over the comparable period. The remaining increase reflects higher labor hours and bonus incentive costs across existing same-store locations during the period.

Location food & beverage costs: Location food & beverage costs as a percentage of food & beverage revenue remained flat at 23%. Location food & beverage costs decreased $801, or 3%. The decrease in location food & beverage costs is mainly attributable to decreased food & beverage revenue as compared to the same period of the prior fiscal year.

Selling, general and administrative expenses (“SG&A”): SG&A expenses decreased $5,676 or 14%, during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. The decrease was primarily driven by a $5,800 reduction in share-based compensation expense, reflecting a non-recurring charge of $4,809 in the prior year period associated with the settlement of equity awards in connection with the retirement of a long-time executive of the Company. The decreases were partially offset by an increase of $553 in severance expense incurred during the current quarter in connection with reductions to corporate headcount.

Depreciation and amortization: Depreciation and amortization decreased $8,180 or 20%, during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. The decrease primarily reflects the impact of a change in the estimated useful lives of certain fixed assets, which resulted in a reduction in depreciation expense of approximately $8,157 during the quarter.

Interest expense, net: Interest expense primarily relates to interest on debt, finance leases, and financing obligations. Interest expense increased $1,326, or 3%, during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. The increase is primarily attributable to higher debt levels relative to the third quarter of fiscal 2025, driven by two principal factors: (i) the issuance of the 7.25% Senior Secured Notes (the "Notes") late in the first quarter of fiscal 2026, and (ii) amounts outstanding on the Revolver during the quarter, where no such amounts were outstanding during the comparable prior year period. Interest on the Notes is payable semi-annually in arrears on April 15 and October 15 of each year. As of March 29, 2026, we had approximately $19,000 of accrued interest related to the Notes, of which approximately $9,200 was accrued during the third quarter of fiscal 2026. Interest expense on the Revolver increased approximately $1,000 as compared to the third quarter of fiscal 2025. These increases were partially offset by a $4,806 decrease in interest expense related to finance leases and a $4,300 decrease in interest expense related to term loan debt. The decrease in finance lease interest expense reflects the purchase of certain previously leased assets during the first quarter of fiscal 2026. The decrease in term loan debt interest expense reflects both lower outstanding principal balances and more favorable interest rates achieved in connection with the refinancing completed in the first quarter of fiscal 2026.

Change in fair value of earnouts: The impact on the statement of operations during the quarter ended March 29, 2026 is due to the decrease in the fair value of the earnouts. The decrease in the fair value of the earnouts is primarily driven by the decrease in the Company’s stock price and the limited remaining vesting period associated with the earnouts, which reduce the estimated probability of vesting.

Income tax expense: The income tax expense and deferred tax assets and liabilities reflect management’s assessment of the Company’s tax position. During the current year, the Company determined that its estimated AETR was not possible to reliably estimate due to the timing of results and the existence of a valuation allowance against interest limitation due to IRC Section 163(j). As a result, the Company utilized the discrete method. The effective tax rate of 26% for the quarter ended March 29, 2026 was primarily attributed to the change in fair value of the earnout liability, unrealizable Section 163(j) interest limitation, and permanent differences.

Nine Months Ended March 29, 2026 Compared to the Nine Months Ended March 30, 2025

Analysis of Consolidated Statement of Operations. The following table displays certain items from our condensed consolidated statements of operations for the periods presented below:

(1) Percent calculated as a percentage of revenues and may not total due to rounding.

*Represents a change equal to or in excess of 100% or one that is not meaningful.

Revenues: For the nine months ended March 29, 2026, revenues totaled $941,370 and represented an increase of $41,219, or 5%, over the same period of last fiscal year. The increase in revenues is primarily attributable to revenue from newly acquired or leased locations.

The following table summarizes our revenues on a same-store-basis for nine months ended March 29, 2026 as compared to the corresponding period last fiscal year:

Index to Notes

(in thousands)

(1) Revenues from 350 locations are included in the same-store comparable location base for the comparison in the above table. In our previously filed 10-Q for the nine months ended March 30, 2025, revenues from 327 locations were included in the same-store revenue.

(2) Service fee revenue is a mandatory gratuity passed through to the employee, which is a non-contributor to earnings and is being phased out across our locations.

Same-store revenues remained relatively flat during the nine months ended March 29, 2026 compared to the same period of the prior fiscal year, consistent with the relative flatness observed through the first half of fiscal 2026. Management believes the continued flatness in same-store revenues reflects the cumulative impact of the adverse weather conditions and consumer confidence headwinds experienced during the third quarter of fiscal 2026, as described above. Partially offsetting these headwinds, walk-in bowling entertainment revenue at same-store locations remained strong during the third quarter, contributing approximately $7,800 of incremental same-store revenues. This strength in walk-in business was partially offset by declines in our events business during the period.

Location operating costs: Location operating costs increased $35,727, or 14%, during the nine months ended March 29, 2026 compared to the same period of the prior fiscal year. Increases were broad-based across most cost categories, including amusement costs, marketing, rent, property taxes, insurance, and utilities. The overall increase was primarily driven by location count growth and strategic operational initiatives, as further described below.

Water park and FEC locations contributed approximately $13,600 to the increase over the comparable period, and new bowling locations contributed approximately $7,500. In addition, marketing expense increased approximately $9,500 compared to the prior year period, reflecting management's initiative to align marketing spend more closely with industry benchmarks. Management believes the increased marketing investment has contributed to growth in retail entertainment revenue during the period.

Location operating costs as a percent of revenues increased from 29% to 32% for the nine months ended March 29, 2026 compared to the same period of the prior fiscal year, consistent with the seasonal dynamics of our FEC and water park locations described above. As a result, location operating costs for these locations tend to increase at a higher rate than revenues during the second and third quarters of our fiscal year, consistent with the seasonal pattern observed in the current period. Notwithstanding this increase, location operating costs as a percent of revenues improved sequentially in each quarter of fiscal 2026 to date, as described above, reflecting the Company's ongoing efforts to optimize location-level cost efficiency.

Location payroll and benefit costs: Location payroll and benefit costs increased $19,992, or 9%, during the nine months ended March 29, 2026 compared to the same period of the prior fiscal year. The increase is primarily driven by location count growth, additional bonus incentives, and an overall increase in labor hours per location. Water park and FEC locations had a significant impact, contributing approximately $10,100 to the increase over the comparable period. The remaining increase reflects higher labor hours and bonus incentive costs across existing same-store locations during the period.

Location food & beverage costs: Location food & beverage costs as a percentage of food & beverage revenue remained flat at 22%. Location food & beverage costs increased $1,334, or 2%. The increase in location food & beverage costs is mainly attributable to increased food & beverage revenue as compared to the same period of the prior fiscal year.

Selling, general and administrative expenses (“SG&A”): SG&A expenses decreased $454 or less than 1% for the nine months ended March 29, 2026 compared to the same period of the prior fiscal year. The decrease is primarily attributable to a decline in share-based compensation expense of approximately $8,600, driven by a non-recurring settlement of equity awards in the prior year period related to the retirement of a long-tenured executive of the Company. Partially offsetting this decrease, SG&A labor increased approximately $7,200, reflecting strategic investments in our marketing, water park, and FEC teams. The increase in marketing headcount is directly aligned with our initiative to increase our overall marketing budget, as management believes a larger and more capable marketing team is necessary to effectively deploy the expanded investment. The water park and FEC teams consist primarily of year-round staff who support peak seasonal operations during the summer months.

Depreciation and amortization: Depreciation and amortization decreased $20,664 or 18% for the nine months ended March 29, 2026 compared to the same period of the prior fiscal year. The decrease primarily reflects the impact of a change in the estimated useful lives of certain fixed assets, which resulted in a reduction in depreciation expense of approximately $23,942 compared to the same period of the prior fiscal year. This decrease was partially offset by depreciation and amortization associated with capital expenditures and acquired assets since the third quarter of fiscal 2025.

Interest expense, net: Interest expense increased $7,374, or 5% for the nine months ended March 29, 2026 compared to the same period of the prior fiscal year. The higher interest expense is primarily attributable to increases in debt since the third quarter of fiscal 2025. Specifically, the Notes, which were issued late in the first quarter of fiscal 2026. We have approximately $19,000 of interest accrued related to the Notes as of March 29, 2026. In addition to the impact of the Notes, the increase is attributable to the amortization of approximately $3,300 of deferred financing costs associated with the Bridge Term Loan during the first quarter of fiscal 2026. The increases in interest expense were partially offset by a $14,245 decrease in interest expense for finance leases due to the purchase of previously leased assets.

Change in fair value of earnouts: The impact on the statement of operations during nine months ended March 29, 2026 is due to the decrease in the fair value of the earnouts. The decrease in the fair value of the earnouts is primarily driven by the decrease in the Company’s stock price and the limited remaining vesting period associated with the earnouts, which reduce the estimated probability of vesting.

Income tax expense (benefit): Income tax expense (benefit) and deferred tax assets and liabilities reflect management’s assessment of the Company’s tax position. During the nine months ended March 29, 2026, the Company determined that its estimated AETR was not possible to reliably estimate due to the timing of results and the existence of a valuation allowance against interest limitation due to IRC Section 163(j). As a result, the Company utilized the discrete method. The effective tax rate of (1,099)% for nine months ended March 29, 2026 was primarily attributed to state taxes incurred relating to the repurchase of the 58 properties under the Carlyle master lease agreement, the change in fair value of the earnout liability, permanent differences, and other discrete tax items.

Non-GAAP measure

Adjusted EBITDA is a non-GAAP financial measure that is not in accordance with, or an alternative to, measures prepared in accordance with GAAP. The Company believes certain financial measures which meet the definition of non-GAAP financial measures provide important supplemental information. The Company considers Adjusted EBITDA as an important financial measure because it provides a financial measure of the quality of the Company’s earnings. Other companies may calculate Adjusted EBITDA differently than we do, which might limit its usefulness as a comparative measure. Adjusted EBITDA is used by management in addition to and in conjunction with the results presented in accordance with GAAP. We have presented Adjusted EBITDA solely as a supplemental disclosure because we believe it allows for a more complete analysis of results of operations and assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as Interest Expense, Income Taxes, Depreciation and Amortization, Impairment Charges, Share-based Compensation, EBITDA from Closed Locations, Foreign Currency Exchange Loss (Gain), Asset Disposition Loss (Gain), Transactional and other advisory costs, Changes in the value of earnouts, and Other. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

Refer to notes below for additional details concerning the respective items for Adjusted EBITDA.

The following table provides a reconciliation from net income (loss) to Adjusted EBITDA for each reporting period:

Notes to Adjusted EBITDA:

(1) Includes the non-recurring settlement of equity awards related to the retirement of a long-time executive of the Company during the period ended March 30, 2025, which resulted in an additional $4,809 of share-based compensation expense.

(2) The closed location adjustment is to remove EBITDA for closed locations. Closed locations are those locations that are closed for a variety of reasons, including permanent closure, newly acquired or built locations prior to opening, locations closed for renovation or rebranding and conversion. If a location is not open on the last day of the reporting period, it will be considered closed for that reporting period. If the location is closed on the first day of the reporting period for permanent closure, the location will be considered closed for that reporting period.

(3) The adjustment for transaction costs and other advisory costs is to remove charges incurred in connection with any transaction, including mergers, acquisitions, refinancing, amendment or modification to indebtedness, and dispositions, in each case, regardless of whether consummated.

(4) The adjustment for changes in the value of earnouts is to remove of the impact of the revaluation of the earnouts. Changes in the fair value of the earnout liability is recognized in the statement of operations. Decreases in the liability will have a favorable impact on the statement of operations and increases in the liability will have an unfavorable impact.

(5) Other includes the following related to transactions that do not represent ongoing or frequently recurring activities as part of the Company’s operations: (i) non-routine expenses, net of recoveries for matters outside the normal course of business, (ii) severance expense, and (iii) other individually de minimis expenses.

Liquidity and Capital Resources

We manage our liquidity through assessing available cash-on-hand, our ability to generate cash and our ability to borrow or otherwise raise capital to fund operating, investing and financing activities.

A core tenet of our long-term strategy is to grow the size and scale of the Company in order to improve our operating profit margins through leveraging our fixed costs. As such, one of the Company’s known cash requirements is for capital expenditures related to the construction of new locations and upgrading and converting existing locations. We believe our financial position, generation of cash, available cash-on-hand, existing credit facility, and access to potentially obtain additional financing from sale-lease-back transactions or other sources will provide sufficient capital resources to fund our operational requirements, capital expenditures, and material short and long-term commitments for the foreseeable future. We also plan to use available cash-on-hand to fund our share repurchase program, which was implemented as a method to return value to our shareholders. However, there are a number of factors that may hinder our ability to access these capital resources, including but not limited to our degree of leverage, and potential borrowing restrictions imposed by our lenders. See “Risk Factors” included in our previously filed Annual Report on Form 10-K for the fiscal year ended June 29, 2025 for further information.

At March 29, 2026, we had approximately $58,654 of available cash and cash equivalents.

Nine Months Ended March 29, 2026 Compared to the Nine Months Ended March 30, 2025

The following compares the primary categories of the condensed consolidated statements of cash flows for the periods ended March 29, 2026 and March 30, 2025:

(in thousands)

*Represents a change equal to or in excess of 100% or one that is not meaningful.

Operating activities provided $115,853 as compared to providing $154,767 during the same period of the prior fiscal year. The decrease in cash provided by operating activities is due primarily to unfavorable changes in working capital coupled with lower net income.

Investing activities used $429,682 as compared to $166,412 during the same period of the prior fiscal year. The increase in cash used in investing activities mainly reflects the purchase of previously leased assets offset by a decrease in purchases of property and equipment.

Financing activities provided $312,308 as compared to using $23,925 during the same period of the prior fiscal year. The increase in cash provided by financing activities primarily reflects the proceeds from the Fifteenth Amendment to the First Lien Credit Agreement and the issuance of Senior Secured Notes. This was partially offset by the repayment of outstanding debt and payment of deferred financing costs.

Our contractual obligations primarily include, but are not limited to, debt service, self-insurance liabilities, and leasing arrangements. We believe our sources of liquidity, namely available cash on hand, history of generating positive operating cash flows, and access to capital markets will continue to be adequate to meet our contractual obligations, as well as fund working capital, planned capital expenditures, location acquisitions, and execute purchases under our share repurchase program.

Critical Accounting Estimates

Our critical accounting estimates are discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended June 29, 2025 under “Critical Accounting Estimates.” There have been no significant changes in our critical accounting estimates during the quarter ended March 29, 2026.

Recently Issued Accounting Standards

See Note 1 - Description of Business and Significant Accounting Policies of the notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for information regarding new accounting pronouncements.

Emerging Growth Company Accounting Election

We are currently an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We will lose our emerging growth company status on June 28, 2026, which is the last day of the fiscal year following the fifth anniversary of Isos’ IPO (March 5, 2026).

We are exposed to market risk from changes in, among other things, interest rates, credit risk, labor costs, health insurance claims and foreign currency exchange rates, which could impact its results of operations and financial condition. We attempt to address our exposure to these risks through our normal operating and financing activities.

Interest Rate Risk

Under our term and revolving credit facilities, we are exposed to a certain level of interest rate risk. Interest on the principal amount of our borrowings under our revolving credit facility loan accrues at the Adjusted Term Secured Overnight Financing Rate or the Alternate Base Rate, as further described in the credit agreement governing our term and revolving credit facilities. An increase or decrease of 1.0% in the effective interest rate would cause an increase or decrease to interest expense of approximately $12,650 over a twelve month period on our outstanding debt without considering the impact of hedging. The Company entered into two hedging transactions effective as of March 31, 2023 for an aggregate notional amount of our term loan of $800,000. The hedge transactions have a trade and hedge designation date of April 4, 2023. The hedge transactions, each for a notional amount of $400,000, provide for interest rate collars. The interest rate collars establish a floor on SOFR of 0.9429% and 0.9355%, respectively, and a cap on SOFR of 5.50%. The interest rate collars had a maturity date of March 31, 2026. Subsequent to the end of the quarter, the interest rate collars reached maturity and expired with a zero fair value, resulting in no income statement, OCI, or cash flow impact.

Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and temporary investments. We are exposed to credit losses in the event of non-performance by counter parties to our financial instruments. We place cash and temporary investments with various high-quality financial institutions. Although we do not obtain collateral or other security to secure these obligations, we periodically monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on safety and liquidity of principal and secondarily on maximizing yield on those funds.

Commodity Price Risk

We are exposed to market price fluctuation in food, beverage, supplies and other costs such as energy. Given the historical volatility of certain of our food product prices, including proteins, produce, dairy products, and cooking oil, these fluctuations can materially impact our food costs. While our purchasing commitments partially mitigate the risk of such fluctuations, there is no assurance that supply and demand factors such as disease or inclement weather will not cause the prices of the commodities used in our food operations to fluctuate. Additionally, the cost of purchased materials may be influenced by tariffs and other trade regulations which are outside of our control. To the extent that we do not pass along cost increases to our customers, our results of operations may be adversely affected.

Inflation

We experience inflation related to our purchase of certain products that we need to operate our business. This price volatility could potentially have a material impact on our financial condition and/or our results of operations. In order to mitigate price volatility, we monitor price fluctuations and may adjust our prices accordingly, however, our ability to recover higher costs through increased pricing may be limited by the competitive environment in which we operate.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is properly and timely reported and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of March 29, 2026.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting practices or processes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during our third quarter ended March 29, 2026.

There have been no material changes to our risk factors contained in Part I. Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended June 29, 2025.