Amid a 13% Stock Slide, a Fund Scales Back Its Lucky Strike Exposure by $9 Million

Core Viewpoint - Alta Fundamental Advisers has significantly reduced its stake in Lucky Strike Entertainment Corporation, indicating potential concerns about the company's financial performance and market position [2][3]. Company Overview - Lucky Strike Entertainment operates in the North American leisure sector, managing bowling centers, amusement parks, and family entertainment venues under various brands [5][8]. - The company reported a total revenue of $1.23 billion and a net income loss of $46.91 million for the trailing twelve months [5]. Recent Financial Performance - In the third quarter, Lucky Strike's revenue increased by 12.3% year over year to $292.3 million, driven by growth in food, beverage, and amusement sectors [9]. - Despite revenue growth, the company reported a net loss of $13.8 million due to high interest expenses and expansion costs [9]. - Adjusted EBITDA rose to $72.7 million from $62.9 million a year prior, with management maintaining full-year guidance of up to $1.31 billion in revenue and $415 million in adjusted EBITDA [10]. Debt and Financial Structure - The company now carries approximately $1.7 billion in net debt, which has implications for its financial stability, especially as discretionary spending softens [10]. - The business model is becoming more leveraged, raising concerns about the impact of flat same-store sales on fixed costs [11]. Market Position and Stock Performance - As of the latest report, Lucky Strike's shares were priced at $9.02, reflecting a 13% decline over the past year, underperforming the S&P 500, which increased by 16% during the same period [4]. - The fund's holding in Lucky Strike now represents 4.78% of reportable assets, down from 10.2% in the previous quarter [4].