RCI Hospitality Holdings Inc. Q2 2023 Earnings Call
Speaker 1: Good afternoon.
Speaker 2: while we're waiting to kick this off, I'd like to encourage everyone to retweet and share this space.
Speaker 2: Greetings and welcome to RCI Hospitality Holdings, second quarter fiscal 2023 earnings call. You can find RCI's presentation on the company's website. Click company and investor information under the RCI logo. That will take you to the company and investor info page.
Speaker 2: Scroll down and you'll find all the necessary links.
Speaker 2: Please turn with me to slide two of our presentation.
Speaker 2: I'm Mark Moran, CEO of Equity Animal. I'll be the host of our call today.
Speaker 2: I'm here in New York City with Eric Langham, President and CEO of RCI Hospitality, and Bradley, the Human Calculator, Shay, the Chief Financial Officer.
Speaker 2: Please turn with me to slide three.
Speaker 2: If you aren't doing so already, it is easy to participate in the call on Twitter spaces. On Twitter, go to act, Rick CEO , and select a space titled Dollar Sign RICK, RCI Hospitality Holdings Inc. to Q23 Arnays Call.
Speaker 2: To ask a question, you will need to join the Twitter space with a mobile device.
Speaker 2: To listen only, you can join the Twitter space on a personal computer. RCI is also making this call available for listen only through traditional landline and webcast.
Speaker 2: At this time, all participants are in a listen-only mode. A question and answer session will follow. This conference is being recorded.
Speaker 2: Please turn with me to slide four.
Speaker 2: I want to remind everybody of our Safe Harbor Statement. You may hear or see forward-looking statements that involve risks and uncertainties.
Speaker 2: Actual results may differ materially from those currently anticipated. We display any obligation to update information disclosed in this call as a result of developments that occur afterwards.
Speaker 2: Now please turn with me to slide five. I'd also direct you to the explanation of Rick's non-GAAP .
Speaker 2: Measurements.
Speaker 2: Finally, I'd like to invite everyone listening in the New York City area to join Eric, Bradley and me tonight at 7 o'clock to meet management at Ricks Cabaret, New York, one of RCI's top revenue generating clubs.
Speaker 2: Rix is located at 50, West 33rd, between 5th Avenue and Broadway, a little in from Harold Square.
Speaker 2: If you have an RSVP, ask for me or Eric at the door. Now I'm pleased to introduce Eric Langen, president and CEO of RCI Hospitality. Eric, take it away.
Speaker 1: bye Mark
Speaker 3: Thanks everyone for joining us today. Please turn to page 6 for today's news.
Speaker 3: We move the head on a number of fronts in the second quarter.
Speaker 3: Revenue grew to $71.5 million. That's an increase of 12.3% year-over-year refuthing both same-store sales and acquisitions.
Speaker 3: Free cash flow was $14.8 million about 33%.
Speaker 3: Adjusted EBITDA was $21.7 million of 8.8%. We file clubs to look forward to optimizing their contributions. On a sequential quarter basis, our bombshell turnaround program has started to produce results.
Speaker 3: We also advanced many of our projects involving club acquisition, new club developments.
Speaker 3: The Rick's Cabaret Steakhouse and Casino in Colorado and New Bombshells locations.
Speaker 3: I'll be back to tell you more and answer questions later. Here's Bradley to review the financials. Thanks, Eric, and good afternoon, everybody. Looking at some of the other major numbers in the quarter, EPS was 83 cents. This would be like some non-recurring items.
Speaker 4: On a non-gap basis, CS was $1.30 up 9.2% year over year.
Speaker 4: On a non-cashable operating activities was $16.8 million of 44.8%.
Speaker 4: We had 9.3 million weighted average shares outstanding. That's down 2.4% year over year due to prior period repurchases.
Speaker 4: The 200,000 shares issued as part of the Baby Dolls' cheek acquisition had minor impact. That's because they were issued late in the quarter.
Speaker 4: So 200,000 shares issued as part of the Baby Dolls' cheek acquisition had minor impact. That's because they were issued late in the quarter. Now moving on to the income statement.
Speaker 4: Please turn to page 8 to review the nightclub segment.
Speaker 4: Revenue totaled $57 million of 18.4% year over year. That was driven by $6.9 million from acquisition and newly remodeled clubs and 3.7% same-store sales
Speaker 4: Operating margin was 31.6% and 39.3% non-gap.
Speaker 4: Gap off-waiting margin include a primary illegal settlement expense and an impairment.
Speaker 4: Compared to the first quarter from fiscal 2023, revenues increased by 23%, driven primarily by acquisition.
Speaker 4: while non-GAS operating margin declined 1 percentage point.
Speaker 4: That reflected the fact that we had two weeks of the Baby Dauce and Chico Locust acquisition, which did not allow enough time for our optimization. Please turn on page 9 to review the bombshell statement.
Speaker 4: That reflected the fact that we had two weeks of the baby dolls at Chico Locos acquisition, which did not allow enough time for optimal optimization. Please turn on page 9 to review the bombshell statement. I only have three things to say here.
Speaker 4: Number one, results improve sequentially. Revenue's increased 6.6 percent driven mainly by the acquisition of bombshell San Antonio and the Grange Food Hall with its new bombshell's kitchen. Non-gap operating margin expanded 1.6 percentage points.
Speaker 4: All this reflects initial progress from our turnaround program.
Speaker 4: publicly traded restaurant chains that have recently reported the results.
Speaker 4: And lastly, number three, the segment was profitable, generating $1.8 million gap and $2.2 million non-gassing.
Speaker 4: Please turn a page 10 with me to review our consolidated statement of operation.
Speaker 4: Note that all comps are the percentage of revenues.
Speaker 4: Cost of good salt decline year-to-year, reflecting increased service revenues.
Speaker 4: Satteries and wages were higher year over year and quarter over quarter. This was due to minimum wage increases in many states where we have clubs on January 1st. It also reflect the higher labor cost and newly acquired clubs.
Speaker 4: optimized and quarter over quarter reflected the absence of year-end audit expenses.
Speaker 4: The appreciation and amortization were hired over year and quarter to quarter.
Speaker 4: The second quarter of 2023 included a one-time accelerated amortization of range foods, dog leases. Other charges and gains reflected $3.1 million and legal settlement expense.
Speaker 4: The second quarter of 2023 included a one-time accelerated amortization of range foods, dog leases. Other charges and gains reflected $3.1 million in legal settlement expense and $662,000 of non-cash impairment.
Speaker 4: Operating margin was lower in over year and quarter-requarter, but on a non-gat basis was a plus-medley level with the year-go quarter and expanded 1% base split from the first quarter.
Speaker 4: Interest expense was higher year over year.
Speaker 4: was higher year over year, but quarter over quarter.
Speaker 4: Second for 2020 included initial costs of new debt and mid-month
Speaker 4: Please turn to page 11.
Speaker 4: Turn to page 11. Get the call and we'll count with me. Eight.
Speaker 4: Keep in mind that this was after paying $18.4 million for the cash portion of acquisitions.
Speaker 4: Free cash flow was 20.6% of revenues and adjusted EBITDA was 30.3%.
Speaker 4: Both increase sequentially are in line with our 20% and 30% target, respectively as a percentage of revenue.
Speaker 4: To wrap up our discussion of the income statement, please turn to page 12 for an update of our geographic focus.
Speaker 4: And the second quarter of 2023, our regional revenue breakdown was...
Speaker 4: Texas at 31%. Florida at 25%.
Speaker 4: New York, Colorado, and Illinois are 8, 7, and 3% respectively, and other 8th conduct for 13%.
Speaker 4: This demonstrates our geographic diversification.
Speaker 4: Our exposure to stroke states like Texas, Florida, Colorado.
Speaker 4: and how we develop our business classes in key areas. Turning toektif.
Speaker 4: of our business classes in key areas. Turning to review our debt metrics.
Speaker 4: Net of loan costs, that is $45.8 million as of March 31st. That's an increase of $35 million from December 31st.
Speaker 4: That increased primarily reflected financing for the five club baby dolls Chica Locals acquisition, primarily offset by scheduled paydowns of other debt.
Speaker 4: Our weighted average interest rate was 6.52%. This compares to 6.14% a year ago.
Speaker 4: and 6.6% five years ago.
Speaker 4: Excluding balloons, our Amartis Aces schedule is now in the $12 million to $15.7 million dollar annual range.
Speaker 4: which is very manageable with our higher level of cash flow, higher level of cash storage. Please turn the page 15 to review some of the other debt-related metrics. Just point 1 at March 31st. We'll lower our comfort level for around 3.
Speaker 4: Please note that this reflects our new debt related to Baby Dao's Chicas Locust acquisition, but only two weeks of contribution.
Speaker 4: Occupancy costs was 7.6% of revenues.
Speaker 4: to continue to be well within the 6-9% range.
Speaker 4: This continued to be well within the 6 to 9% range we've averaged when sales weren't dramatically impacted by COVID.
Speaker 4: Now please turn to page 16 to look at our March 31st debt pie chart. Our debt now consists of 54.9% secured by real estate, 30.4% seller financing secured by respective clubs and or the real estate which it applies to.
Speaker 4: 6.6% of unsecured death, 4.1% of dead care by other assets.
Speaker 4: And lastly, 4% that relate to new bank line of credit that was used in the baby dolls Chica local acquisition that was also secured. Now let me turn the call over back to Eric.
Speaker 1: Thank you, Bradley.
Speaker 3: For this quarter, we added a third section to our presentation. We call it our take and are using it to explain underlying thinking to where we are going. I want to remind everybody of our safe harbor statement. You may hear or see forward-looking statements that involve risks and uncertainties.
Speaker 3: Actress results made different materially from those currently anticipated.
Speaker 3: We just claim any obligation to apply to the nation disclosed in this call as a result of developments that occur afterwards.
Speaker 3: Please turn to slides 18.
Speaker 3: Everything we do is about our cap on occasion strategy, which is similar to those outlined in the book, The Outciders by William Thorndyte.
Speaker 3: First and foremost, the goal of our strategy is to drive shareholder value by increasing free cash flow per share by at least 10 to 15 percent on a compound annual basis. We have been implementing this strategy since the end of fiscal 2015 with three different actions, perfect to whether there is strategic rationale to do otherwise.
Speaker 3: One is mergers and acquisitions, specifically buying the right clubs and the right market.
Speaker 3: We like to buy solid cash lane clubs at 3-5 times adjusted EBITDA using seller financing and acquire the real estate at market value.
Speaker 3: Another strategy is growing organically, specifically expanding bombshells to develop critical math, market awareness, and sale franchises. Our goal in both M&A and organic growth is to generate annual cash on cash returns of at least 25 to 33%.
Speaker 3: The third action is buying back shares when skilled on flow per share is more than 10%.
Speaker 3: As a result of these efforts, we have exceeded our primary goal. Through the end of fiscal 2022, we have increased free cash flow by 22% on a compound annual basis while reducing shares by 1.5% on a compound annual basis.
Speaker 3: Please start a slide 19.
Speaker 3: So what is the current point between whether we should buy shares or invest in fine or opening new locations?
Speaker 3: to $83 per share, subject to whether we can make better investment.
Speaker 3: Please turn to slide 20.
Speaker 3: Let's take a look at our most recent club acquisition. We use $15 million in cash, $16 million in stock, and $35.5 million in debt to acquire a $5 baby doll and chicoloca's clubs and their real estate. We estimate the acquisition will generate $11 million in adjusted EBITDA in the first full year of capital closing.
Speaker 3: After that with remodeling and some expansions, we estimate it will generate 14 to $16 million on adjusted EBITDA.
Speaker 3: Let's assume conservatively we go from $11 million in year one to midpoint $13 in year two and $15 million in year three.
Speaker 3: That total $39 million would represented.
Speaker 3: It turned out more than 50% on the $15 million that we put down on this acquisition.
Speaker 3: If you turn to page 21, let's take a look at our planned Rix Cabaret Steakhouse and Casino in Central City, Colorado. We bought the building in real estate for only $2.4 million. We anticipate it will take us about $8 million to complete, which would include 200 slot machines.
Speaker 3: Including the casino, a similar RCI club between 8 and 109 Austin Revenue.
Speaker 3: bought machines at existing central city casino average $129 per day that's another $9.4 million an annual revenue
So the combined estimated revenue of $18.4 million had a 40% average club margin which generates $7.4 million operating profit.
That's the same conservatively that we only do $3.7 million in year one and in year two we build the $7.4 million. That's a total of $11.1 million. That would represent an average annual cash fund cash return of more than 50% on the $10.4 million invested.
Keep in mind this does not include any table games or sports betting revenue. Please turn to slide 22.
Keep in mind this does not include any table games or sports betting revenue. Please turn to slide 22. I'm sorry, slide 23.
We also believe we have the opportunity to add even more locations. For example, it took 28 years for the company to go from one location to 21 locations.
In the following seven years, we added 19 more. And in the next five and a half years, we added another six...
to total 56 clubs, which represent only a small portion of the market we want to consolidate.
As our company expands in size, we believe we can continue to potentially accelerate our rate of growth. This is due to a variety of factors, including increased economies of scale, enhanced market penetration, and increased economies of scale. This is due to a variety of factors, including increased economies of scale, enhanced market penetration, increased economies of scale.
spans in size, we believe we can continue to potentially accelerate our rate of growth. This is due to a variety of factors including increased economies of scale, enhanced market penetration, and greater access to resources.
With a larger company footprint, we may be better positioned to capitalize on opportunities, take advantage of the synergies, and achieve operational efficiencies that can both, that can help strive growth.
Therefore, we believe as we continue to grow as a company, we can potentially experience faster rates of growth and achieve greater levels of success. Turning to page slide number 23, sorry.
we believe as we continue to grow as a company, we can potentially experience faster rates of growth and achieve greater levels of success. Turning to page slide number 23, sorry. We believe we have the cash to do this.
Let's take a look at what happened in the second quarter. At December 31st.
We had $31.34.1 million. We made an acquisition $7.1 million in net new cash. We made an additional $7.1 million in net new cash and we used $18.4 million in cash. Primarily for the baby doll, Chica locus acquisition ending the quarter of the year. We made an investment $1.3 million in net new cash.
dollars in cash.
Now, let's look at what could happen in the next fiscal year. Using the range of $68 to $78 million in cash flow, that's $21.7 million in debt and securities, keeps us with a range of $46 to $56 million in projected cash available to use for future investments.
Turning to slide 24.
We also have shares we can use to finance acquisitions. Provided we continue to do it carefully, judiciously, and in an accretive manner. To that end, we believe we have demonstrated a strong track record. Since the implementation of our capital allocation strategy, we have acquired more than two million shares.
an average price of $19.55 per share.
We have issued 700,000 shares at an average price of $65.71 to provide $46 million of capital for acquisition.
From our viewpoint, we use shares that we bought at an average of $15.55 and sold them for $65.71 or a 236% cash on cash return.
To sum up, we have a long list of investment opportunities.
with the potential to generate significantly compelling returns when we combine with our strong, disciplined, and proven track record to make it happen.
Please turn to slide 25. Before we go into the Q&A, we'll be holding our 30th anniversary Gentlemen's Club Expo Convention, August 20-23 at the Paris Hotel in Las Vegas.
For more information, go to the website listed on the slide.
Thank you to our loyal and dedicated teams for all their hard work and effort. You can't do it without.
Now here's Mark to start the Q&A. Thank you, Eric, and Bradley.
Q&A. Thank you, Eric, and Bradley. Before we move on, I'd like to...
Thank you, Eric and Bradley.
Before we move on I'd like to congratulate you both on the one-year anniversary of our first Twitter Spaces, the first ever earnings call on Twitter Spaces.
If anyone would like to ask a question, please raise your hand in the Twitter space. When you finish your question, please mute your microphone to eliminate any background noise. We have a limited number of speaker spaces. And after your question, we may move you back to the audience to free up space. Before we start things off, I'd like to give a special shout out to Kellyn Curry.
and some of its largest shareholders first.
To begin, we'll have Scott Buck of HC Wainwright. Scott, please take it away. Happy New Year, thank you Mark. Eric, I'm curious, can you give us an update on where you are in terms of licensing for gaming for the Central City Colorado locations?
Typically, their time is going to take 12 months. We filed in the end of November of 2022. So we're hoping to hear something soon. And I...
Typically, you'll get some type of preliminary deal which allows us to then set up the casino. I'm hoping that we see that in August , September , could be as late as October . Gaming in Colorado, it's been a very slow process, not just for us, but for all new licensees. I believe there's seven or eight licenses that are now applied for.
in the state of Colorado. Some are much older due to various reasons on funding of the casino, things like that. I think as a publicly traded company, our funding will be super easy to explain it's cash from the bank account.
So I don't think we're going to have any issues when we reach that point. It's just getting to that point. I know that there's been some shuffling at higher levels in the Colorado Gaming Development or Department. So hopefully the new people are coming in are going to hopefully speed this process up a little bit.
We would like to definitely like to see our license issued by the end of the year. We'd like to do a grand opening on the New Year's Eve party. But I think worst case we could be looking at as late as March.
it's a very, until they contact you, there's not really much we can do. Just sit and wait. No, I understood, and thank you for that. And I'm just curious if you could give us some update on what you're seeing in the clubs, just given the current environment. I know in the past couple quarters, there had been some weakness in a few of the blue collar clubs, but thepen Craig
you were kind of more than making up for that and some of the higher end stuff. So any kind of update there on business will be great. Yeah, I mean, I think right now it's just inconsistencies. I don't see real trends forming up or down. I don't see
I think we're just seeing kind of more of the same week. We have a location that gets down a little bit. We make some adjustments, it goes up, and then we have another location that's down a little bit. We make some adjustments, and it goes up. So it's just a constant right now, it's like a shell game where we're just kind of moving parts around and moving pieces around and just overall shooting for a set number each week. And if we're hitting that number...
We're looking, like I said, we're looking for the weak spots and the strong spots and we focus on those and everybody else is just kind of in water right now. Overall though, revenues have been strong as you've seen in this quarter. I don't believe that we
We've acquired enough new stuff. I don't think we'll see any decline in revenues. The question now is can we continue to keep the growth rates at, you know, double digit growth rates?
We are looking at other club acquisitions right now that will help that. Hopefully by the time we get into the fourth quarter or definitely through 2024. And everything is really, we've been priming the pump here so to speak for 2020 and I think you'll see a lot of activities we move into 2024. Norma
Great, appreciate that. And then just the last one on the acquisition front. First congrats on the deal closed earlier this year. What are you seeing in terms of pricing? When you talk to folks any changes there or people, you know, kind of hold in pat.
Great, appreciate that. And then just the last one on the acquisition front. First congrats on the deal closed earlier this year. What are you seeing in terms of pricing when you talk to folks? Any changes there or people kind of holding that? I mean, it's always been three different.
I mean, we basically set the market. Other operators that are trying to expand don't have the capital or the cash typically that we are able to pull into a transaction. They definitely don't have the track record and public track record. I think we just stick to the plan right now. It's all about the adjusted EBITDA.
If we see trends that their numbers are trending down, then we'll, you know, we're on a portcast based on those trend numbers and make an offer according to that. Numbers are trending up and we'll, you know, we'll make an offer according to that. So we just kind of watch.
You know, where everyone's at and what we're seeing in our markets and their markets and it's been pretty, you know,
Pretty basic math these days for us and nothing's gonna really change much We appreciate the additional time guys. Thank you
Thank you very much, Scott. To further highlight your question on spend, I would like to add that my spend at Rick's establishment has stayed consistent. Next up, we will bring Anthony of Sidoti & Company. Good afternoon. Thank you for taking the questions. Just a follow-up, Eric.
You mentioned that you're making some adjustments to some of the clubs that I have to use your phrase intermittent softness that you've had. So just can you just talk about some of the adjustments that you've been making and just wondering are these generally the same clubs?
Sorry, I did not hear that. Okay.
Hey, Anthony, I'm not sure if that's you in the background, but could you repeat the question? That was not me in the background now, so I'll repeat the question. So yes, so Eric just wanted to follow up about the adjustments that you said you're making in some of the clubs that you've seen.
Basically what we'll do is increase social media, make sure that
that our ours is doing. If you put people into the clubs, we may run some bottle service specials on slower nights. We may basically just do whatever we need to do to create a better value for the customers.
and guess that are visiting the location and doing things to put more people through the door. Whether that's social media, whether that's on site promotion.
We had huge freeze out at the Nugget game last night. I'm sorry, the game I think was the day before, but you get the idea. It's more promotional. We become more promotional. We become more proactive on things.
And then, you know, like I said, we watch sure, if our main floor is not full, we try to fill it up. And...
VIP is empty, we'll try to run some specials of VIP. We may do more shot specials. We may do, like I said, more social media promotions and specials. So there's things to put people through the door. That's how we fix it.
I got to understand you. Thanks for that color. And then just in terms of the second quarter here, you also cited higher labor costs that the newly acquired clubs. Do you expect to bring those costs down as a percentage of revenue now that you've had a few weeks already under the belt?
Yeah, certainly. I mean, obviously, when we first take stuff over there a little heavy, we put some extra labor in there as well. So we've become a little heavy on labor. We sort through it and move people around. We.
If there's you know dead weight, we have to get rid of the dead weight to get the numbers where they need to be. Typically, you know, three months to six month process like Denver. Denver was took a lot longer. I think this location because it's in Texas will be much faster for us.
Got you. Okay. And then you know, it was good to see bombshells, margins up sequentially. Do you still expect a longer term you can get to your target range of 18 to 22% the segment margins for that piece of a business?
Absolutely. We didn't raise, we were viewing prices through most of March. We may re-raise most of the prices we needed to raise at the end of the March period. So you didn't see any of those price increases in that quarter. You'll see the prices increase, the effect of price increases in April , May and June . And the fights have been good. We had a couple of really big fights.
in April and the first week of May. We've got the MBA playoffs. It's been fantastic.
unbelievably close games that are bringing people out. James Harden playing in Philadelphia, there's still a lot of James Harden fans in Houston. So that's bringing people out the bombshells in Houston to watch the games. And he hasn't disappointed, it's been a great series. adorable shows on autopilot to take lowAL. And this week, virtual baseball at Foo Brothers,
And I think next series is going to be even better, which I think will bring more people out. And then we get to play off. And then I guess we're just relying on baseball for a while. And then we'll start back up. You know, same drill. We've the W.A.T.U. Eric. All right. Well, thank you. And best of luck. Thank you so much, Anthony. Next up, we have Liz.
as Black Hawk? In other words, is there some sort of zoning issue that prevents it from being as big as Black Hawk from a gaming perspective, number one? And then number two, what do you envision for Central City looking out over the next two or three, four years?
Sorry, I couldn't get my mic to.
Come on, you know, I know you were just up there. I wish I'd have been able to meet with you while you're up there. I just couldn't make the timing work for my with my schedule. You know, there's no reason central city can't build like Blackhawk other than in the historic district. It won't happen. But there is other gaming areas down the gulch and that whatnot where they can build some.
Some large hotels like the casino there in Central City. I think it's a 400 and some room hotel with about close to 700 gaming devices. And that whole area I think could be developed at some point in the future. I think the biggest changes is Blackhawk had a much more business friendly.
leadership in the city and basically grew their town faster. I think what's changed as well is the gaming loss changed in September of 21 which is now allowing Black Hawk or I mean now in Central City to grow. If you look there's I think seven or eight licenses applied for in the state of Colorado all that one is in Central City so Central City is the next growth.
then Black Hawk. So I think over time you're going to see and I really don't look at as too competing cities because the reality of it is they're 0.9 miles away from each
And does the strip and downtown Las Vegas really compete with each other? Or is it just they each have their customer base, their form, their they cater to the clientele. I think that Central City- I don't think let it lie.
I thought in that regard is that they'll share some customers of course, and sometimes they'll go to Blackhawk and sometimes you'll go to Central City. But I think the reality is most people on most visits will end up in both towns at one point or another because they're just so close. And as they grow, they'll be able to share their experiences with others.
together as that goal is developed and Black Hawk develops up, you know, towards Central City and they develop into each other, I'm just going to see my quenching area. And that's what I see over the next, you know, maybe three, five, ten years in that market up there.
That sounds great. Thank you. And I think they're only like a mile or two miles apart, right?
I'm sorry. You broke up. I. Yeah, they're only a mile or two miles. Oh, yeah, they're point nine miles. They're point nine miles. They're not even a mile apart. City center city center's point nine miles. Okay. Okay. Great. I did have one follow up question.
Hey, Lynn, we were having some technical difficulties on our end. Would you be able to repeat that question again for Eric?
Yes, I wanted to ask you about the initiatives that you have implemented at bombshells. They seem to be really resonating and I know part of it is pricing, but what other initiatives have you put into place at bombshells in the last two to three months?
Well, the pricing was at the end of the quarter, so none of the results is from pricing. A lot of it is just, you know, we always call it, or I always call it, getting back to the basics.
and taking the girls to promotion events, whether it's a basketball game or going hitting all the automotive car lots and inviting all the car dealers in and salesman in and stuff like that. Just getting out there, getting seen and getting our name out there so that people come into the business. And then, of course, once they're in the store.
providing the best customer service we can provide, making sure that managers are touching tables, and that they're making sure the guest experience is the best that it can be, so that not only do we have happy guests, but we get returning guests. Because that's how you build, and that's how you build the margins. Of course, upselling drinks and upselling appetizers and desserts all help with margins. And so it's just basically getting.
getting everybody doing the things they're supposed to be doing anyway that I just feel that when your margins slip it's typically because of those types of things that just kind of slip by a little bit or people let go a little bit. Maybe they didn't go to this game or they didn't go to that game because they were too busy or they thought they were too busy.
Just making people understand that we're never too busy. We must continue to promote. We must continue to bring people into the business.
Thank you so much and after going out to Colorado, I am just amazed at what you've accomplished and you really have a true home run and congratulations. That's all for me but I appreciate the time.
Thank you so much, Lynn, for those great questions. Next up, we're going to bring Rob McGuire of Granite Research. Rob, please take it away.
Congratulations on the quarter. Just have a couple of questions here. The first off on bomb shell. Can you get the bombshells margins back at each team percent if the Arlington on-ramp off-ramp is not yet reopened?
Congratulations on the quarter. Just have a couple of questions here. First off on bombshell, can you get the bombshell margins back to 18% if the Arlington on-ramp off-ramp is not yet reopened? I mean, I believe we can.
Okay, great. And the price increases when you do a fact this quarter, can you just give us an idea of how those have been going?
that earlier.
What you intend to do, just wear your caches today in general. I think $20.8 million will be ended in quarter with. And we haven't disclosed anything after that publicly. But it's increasing. Thank you.
to do, just where your cash is today in general. I think $22.8 million is what we ended the quarter with, and we haven't disposed of anything after that publicly, but it's increasing. There we go, thank you very much for being here.
And then if you could just look at the wages, they're a little higher in terms of wages as a percentage of overall revenues. Is that something we can expect going forward? Do you think that corrects back towards the mean with the price increases you've been putting in? I mean, I think we will continue to.
be in that 20, 25 percent range, I think is what we try to normally shoot for, you know, give or take a couple points. You know, I don't, I don't really worry about one quarter simply because you could have a bunch of overtime, you could have a lot of little things that affect one quarter. We start seeing a trend up on a longer term basis than the last.
that segment as you kind of look at the business over the last six to nine months.
I in the past, yes, it's been pretty, pretty based on the blue collar. It's hard to say with April because this April we had Easter. This year, but last year Easter was in March.
And so the only weakness was the week of Easter weekend and good Friday. And of course the Monday after Easter this was a little week. And so I don't know if the softness was just because of that one week period or if there's softness, there's no trends. Like I said earlier, I'm just not seeing any.
any trend in weakness or any trend in strength either way. And so we'll continue to watch. As long as we're doing our total weekly numbers, we'll monitor the best locations, we'll monitor the weakest locations, and we'll try to fix the weakest locations and try to make sure that our focus at the high locations continues and they continue to build and do the big numbers.
Great. Thank you so much for your time. Thank you so much, Rob. I appreciate it. And that softness around Easter was as a former altar boy, I attended church that weekend rather than go to Tootsie's.
Next up, we have Joe Gomes of Noble Capital Markets. Joe, please take it away. Congrats on the quarter and thanks for taking my questions.
Good job. How's it going? Good. So, you know, again, service revenue has continued to perform nicely. Just wondering, you know, in your mind, Eric, you know, is that something that you think can just continue? Or do you think that at some point in time they start to level out?
I mean, they're going to find a they're going to find a top at some point. But I think they're going to continue to be in these ranges. I think the highest peak of the business, we were doing 42% or 43% service revenue markers. So we're still below those peaks, but we do have more bombshells nowadays than we had back then. So.
I think there's just a...
an ongoing trend we'll just keep watching. And as certain markets do better with the higher service revenues like New York, we could see service revenues increase. But I mean, the reality is they're gonna fluctuate. I mean, for example, Miami this weekend was insane. And
Formula 1 racing, UFC, which was big UFC boxing at our fight. And then you had the big boxing event. So it was, there was a lot of things driving traffic. When there's that much traffic on the floor, of course, that drives VIP because customers, you know, want to be, you know, not bump into or get away. They went to private areas.
which drastically increases our service revenue. So it really, I think, just depends as we move forward how many events and those types of things. If we have a bunch of events in a quarter, you'll see higher service revenues. If all of a sudden there's not a bunch of events in a quarter, we could see a little bit lower service revenues.
But like I said, overall, I'm much more concerned with monitoring our total revenue and our total revenue numbers. We're meeting our internal goals for April and through May so far. So I'm very, very happy to see those numbers being beaten. I thought they were pretty optimistic numbers to begin with.
And the fact that the club goals, we set goals for the clubs and the fact that they're beating those numbers, I'm excited about. We are going against some major comps. Like I said, April last year had no Easter. And we really need hope on losing the championship because game changers
So we did have a very strong April last year. I think April was our strongest month of the year last year actually. And I want to try to figure out why I know it can't just be Easter. There must have been some major sporting events and some other things in that month as well. But we started out the first week of
May with a very, very strong week, except with F1 and the NBA games have been fantastic for us. Just a lot of positives. I mean, you've got Phoenix, you got Miami, you got New York, you got Denver. All teams that definitely help our revenues right now in the playoffs. So we can't lose in the Miami New York game cuz either one of those are great. I think we're leaning towards Denver. We have more clubs in Denver than we do in Phoenix. So I'd love to see Denver advance cuz I think that'll be more revenue for us. So we're watching those games close. And like I said with James Harden, a lot of Houston fans.
James Harden still and so I think that at the Sixers continue to advance that'll help our business as well. So we've got three of the four series a great cross.
Excellent. Now, I think at the end of the first quarter, you had talked about, I think, reopening the Galveston Heartbreakers and the Jaguars in San Antonio. Just wondering, how they were performing the past couple of months.
Sure, both of continuing to see improvements. Heartbreakers has had a couple of record weeks, so we're very excited that that location's continuing to get better and better for us. The real thing now is to get the baby dolls in Port Worth re-opened. We should open by mid-June, I think, at the latest.
We probably could have opened, but we earlier, but we decided we wanted to do things right. And so there was some electric squish use and heat and air-conditioning issues. There just wasn't enough power to the building. So we had to add additional power to the building, which added about four to six weeks to the...
to the process, but you know we just there's no sense in opening it in June or July or August having huge you know problems because we can't build it so that's all that's all being worked on right now we've also got our our Lubbock Jaguars location is under construction they've got to steal up there closing the building the parking lots board so that that location will come online soon
As well as the 10-ups location that we bought in Fort Worth, Texas, that will start construction probably in the next 90 days on that property. I have three more clubs coming up.
Great. And then one more for me, if I may. I know you had that $200 million goal of investment for each year of the next couple of years. I think at the end of the first quarter we were around 110. You're still confident you'll be able to get that other, let's call it, $90 million goal.
the remainder of this fiscal year.
I mean, we're certainly going to try, you know, but we've got to find the right deals. We've got a lot of construction going on. We're getting we're in the process of four bank loans right now for different, different various constructions and properties. So hopefully those will all come through. We're getting rates between six point eight, seven point two.
location. We basically paid all cash for construction there. So we've got multiple properties that we could turn around and cash out of at some point here in the next six months. If rates settle back down, the Fed stops and then when the rates come back down and we start seeing a 6% rate again, I would look for us to do a refi or cash out I should say of
probably around 20 to 25 million dollars which give us a you know nice chunk of cash going forward which will make it easier to You know hit that 200 million mark Right now I'm not seeing anything to state standing our way must making those investments other than you must find the right deals I'm not not doing deals to do deals I'm only doing one deals that they meet our requirements and we can get the cash on cash returns
that I see, you know, versus buying back our stock. Thank you so much, Joe, for those questions. Before we bring up our next questionnaire, I'd like to encourage everyone to retweet and share this space. If you have a question to ask, please raise your hand and we will bring you up as a speaker.
Next up, we have the deep value provocateur, Orchid Weld. The mic is all yours. Hey Orchid Weld, you're gonna have to unmute yourself to ask the question.
Got it. All right. Good quarter. My big thing that I wanted to get some clarity on is you guys obviously keep acquiring the real estate in these prime areas, Texas, Florida, and so for Colorado. Do you have any idea what the underlying property values that you've been buying have accumulated by? If I'm in where Tootsie's used to be.
How much in those respective counties is commercial property going up year after year, which you don't record on your balance sheet?
How much in those respective counties is commercial property going up year after year, which you don't record on your balance sheet as those properties move up?
Well, we're not allowed to take that up basis. We have to use cost basis accounting and our gap. But I would get, you know, in certain markets, I mean, we've turned down some pretty, you know, there's always people I try to buy your properties, right? I don't know if you guys, anybody on property knows, there's your palm rings off the look. I want to buy your house. I want to buy this. I want to. We get those calls on a regular basis. We've gotten some offers. Offers.
I mean, we bought Tootsie's property, can't remember what year it was, 2015 maybe for $15 million. I've got an unwritten verbal over the phone, would I take 24 million for it? Of course I laughed, I was like, well, if you add a zero, we can sit down and talk. We own the club. I next time when I'm home with my girlfriend, who know who my mom is, I'm not gonna be subtitling because she's the real president and the entire touch is gone.
Oh, we thought you could just move that tenant. So no, we are that tenant. So, I mean, I don't know. I think there's somewhere, I think we have about 250 million plus in real estate last time. I did everything. We have 100 on the sheet. I think what, 120 some million in real estate debt. So that's why it's 14. So.
All right, so I just keep looking at the fact that you're borrowing cloth on this real estate that you've had over the years. It seems to be growing at least equal to what you're paying out an interest on these properties.
Oh, probably easily. I mean, we're only, you got to remember our weighted interest rate now on our real estate is only 5.41%. I mean, our overall 6.5T, but our real estate debt is much cheaper.
a little over a point cheaper. So that's highly possible. And you gotta remember a lot of this real estate that we bought, we've done some pretty major improvements to the properties as well. So that never hurts with the value.
And then about what percentage of the entire business do you own real estate and what percentage is leased? Bradley and I just did this to have a day. 85 and 15 or 83 and 17 percent. About 15 to 17 percent leased. And that's because of the, the only reason we have so much lease now is because of the restaurants and the the Lowry acquisition. So I think it's pretty close to 85 and 15, I believe.
Now, we've gotten all the new locations that we're getting ready to open, that we're building in like Raleigh and Lubbock, Austin, Texas, Cora, Colorado, downtown Denver, Colorado. All those locations are owned. So as more locations open, the percentage of own properties are going to go up versus lease properties. We haven't added any lease properties recently. Not that we want. I mean, we find the right location and then just that the right, you know.
right term lease and the police's price is right. I mean, you know, we can lease it cheaper than we can buy it, then we may tend to lease. But it just really depends on how much capital we have to put into the location as well.
At the new casino location, when that goes in, you're going to have a steakhouse and you will have a club in there. Are there any other clubs in that area? I got at the new casino location, but I didn't get the rest. I'm sorry. At the new casino location, you're going to put in a steakhouse.
Okay, so the idea being is if somebody's on a vacation and I've got a bunch of guys and we'll head up there and we're looking for something you are the only game in town when it comes to that or hopefully
I'm about the only game in town for you to eat after 11 p.m. at night up there, other than 24-7 at Monarch. It's amazing to me because it's a gaming town. All you can do is gamble. You can fish. In the summer there's some things to do.
But in the winter, their numbers die down. You've got the opera, you've got a lot of art galleries and stuff in Central City. But for Blackhawk, other than the new distillery area that they're opening, I just don't know a lot. And the casinos, I mean, they barely have lounge acts. I saw some ads for this summer, they're bringing in some lounge acts. I was like, wow, finally a lounge.
a live band of some kind, you know, something.
It's literally there's no entertainment in that marketplace right now. That's what was so exciting to me. I was like, you know, we can take Central City and turn it into the free-mont street of Vegas with all the entertainment. And the strip is 0.9 miles away and has zero entertainment. So come 11 o'clock at night, midnight, you're on a table and you're not doing very good. You're not feeling it.
Like, I gotta get out of here. You got two choices. You drive back to Denver or you go to bed in your hotel room. Nothing else to do out there. I'm going to give you a third option. Well, hey, let's go see the girls at Rick's or you know, as we continue to look at properties out there and do other things, you know, we may build a nightclub out there of some kind. There's other things to...
create an entertainment zone for the thousands of people, especially Thursday, Friday, and Saturday that are out there that are gaming. And if you're winning, you wanna stop and go do something else. If you're losing, you wanna stop and do something else, right? So I just wanna give them those other options. But I think, and if you wanna game still, you still can. I'm still trying to play.
which I think will be a big part of our deal, is you may come to the casino to gamble and end up seeing an entertainer and ending up in VIP. You may come to see the entertainers, end up in VIP, and then decide, hey, let's go play blackjack for a while.
We only do three points some odd million. And it takes us that full year to learn and get to the point where the second year we earn the seven points a million. We're still at 50% cash on cash return on this investment.
So to me, it's just a super easy, I haven't seen anything that's excited me like this since 2004 when I bought Rick's Cabaret on 33rd Street. And that was a better company deal at that time. And we did 6.7 million in revenue the year before and we paid $7.6 million for a single club..,
and within four days of owning that I tore it down.
four days of owning it I tore it down. There's nothing left but three brick walls.
And then we spent $3.8 million rebuilding it, which was an unbelievable amount of money for us at that time. But that's what created the RCI.
that we've seen today. I think this property, for a very small investment of $10 million, I have a chance of taking this company to a whole different level than where it is today. When, on a different pivot, when you take over clubs, over the history of let's say the last five years or so, when you take over the business.
What's like the Rick's premium that you guys are able to squeeze out on average from what they were doing numbers wise To what you think like in you know a year year and a half of you being there you can get it up to Is it like 15 percent improvement? It's typically improvement Typically about 20% I think we're 17.4 on the trailing 12 months through December 31st. I don't know if Bradley ran it in March We did I didn't I didn't see the report, but I know through December 31st I think we were up or maybe that was through March 31st. We were 17 or 18 percent. So
Yeah, I think 20% is a pretty good number for us. We tend to increase revenues and the EBITDA by about 20%. So when you're purchasing the clubs for three to five times, it's three to five times their numbers, but then you come in and you're finding another 20% on top of that, which obviously lowers your acquisition costs, but you don't realize that until a few years later. Yeah, typically. I mean, typically that's what we're seeing. Sometimes we see it right away.
When we look at Tootsies, when we bought Tootsies in 2007, we bought $18.8 million in revenue and they were doing $8.8 million in EBITDA. We paid $25 million for it. In the first year, we did $23.8 million in revenue and $11.4 million in EBITDA.
So sometimes it's immediate, sometimes it takes like, Denver probably would have been pretty immediate had we not been coming out of COVID and there was employees to hire and we didn't lose so much of the management staff because they had just not really recovered from.
They only been open four weeks in Denver, and we bought it. Some of the other clubs have been open a little bit longer, but I mean, they were all in markets that all opened late from COVID. So there was a lot of issues we had to work through. So it took us almost six months to realize and see the game there. Thanks for your time, Eric.
One last question. When you showed us the universe of the 2,200 total clubs that are out there, give or take, what percentage of them are owners that have, let's say, four or more clubs? I don't mean individual owners, but when you go to the industry, I've gone to a couple of these events, I seem to run into people that these people own.
Sometimes there's a bunch of ones and twos. But it seems a lot of the participants at these club events are usually the guys that own multiple clubs. Yeah, at the expo, it's definitely a lot of monkey club owners and I think it's anywhere from two to 25 that these guys own. Of course, you've got a couple of big boys that don't own lots of clubs like us. It's a lot younger. And also there's I think the
You know, there's not very many of those. I think one, I think only one other club owner owns the same number, probably more clubs than we do. Most of them are smaller, between four and ten clubs, I would say is an average. And you've got a few, like I said, they're probably up to about 25 range. I think these guys can only do 16 range clubs with 19 strengths. I think maybe ImagingIG's just that, they're important in the club.
So there's plenty of people out there for us to purchase clubs from as we go through. There's a lot of one-offs that we can do throughout time. You know, the key is running them. So we just made a major acquisition, and I laugh. I say, you know, people are worried about bombshells. And one single location in the last acquisition does more annual, you know, EBITDA than
all the bombshells combined. So it's like, why don't we focus on the important stuff, which to me, which is the clubs, and everything else is just bonus.
bonus for us, you know, bonus ways for us to come up with the money, build additional pre-cash flow, and, you know, put money to work while we're waiting for the next club acquisition, because we have to put management teams in, we have to run them. So, you know, our director of operations for RCI Management Services is in.
Dallas right now, he's working on getting the new club open. He's putting the teams together, putting our POS systems in, getting our culture ingrained in the acquisition, in the clubs that we acquired. And that takes time. I mean, it's a three to six month process. So people say, well, can you go buy something else? I could probably go buy something else right now. I mean, it's a three to six month process.
But why stretch our management team? Let's, you know, our pace of how we've done is increased over time because our ability to manage them has increased over time. And as our ability to manage and absorb more acquisitions increases, we'll buy more, you know, we'll make more acquisitions. But in the meantime, it's nice to have a couple of other things to put our cash flow into and keep the...
keep the machine running. Great. Thanks. And thank you so much for those questions. Before we bring up our next person to ask a question, I'd like to give a shout out to DKNY. My man, if you come by the shareholder reception tonight, I will teach you how to purchase sunglasses that aren't from the women's section. We also have a dunk tank waiting for you as well as Bradley Shea, America's favorite CFO , to do an arm wrestle challenge. And if you lose, you will become a shareholder of RCI Hospitality Holdings.
Next up, we're going to bring Adam Wyden, the largest individual shareholder of RCI Hospitality Holding, Inc. up. Adam, please take it away. Can you hear me, everyone?
Next up, we're gonna bring Adam Wyden, the largest individual shareholder of RCI Hospitality, holding pink up. Adam, please take it away. Can you hear me, everyone? Hello?
Hello, how are we doing? Okay, perfect. So, sorry, I'm a little late. I had a call and I know these go on for a while, but so you'll have to you'll have to catch me up. But. On I'm just reading through the deck a 2nd time on the, on the stick out to casino, you guys talked about. You know, conservatively taking 2 years to get from 3, 7 to 7 4.
Have you guys sort of quantified? I know your slot revenue participation is less than half of Blackhawk, which is really conservative. So, I mean, if you could match Blackhawk, that's a lot more even though it's probably another four. But have you sort of talked a little bit about, like, what the table gains?
I know there's also supposed to be a steakhouse there. And you're talking about digital sports betting, but also potentially in-house sports betting. I mean, it'd be nice to sort of, you know, you sort of give it a bare bones estimate of what the revenue without contribution, but it might be helpful to sort of give the other layers. And obviously, it's a new business for you, so you're not going to guide to it. But it might be helpful to sort of outline the sort of other buckets and how big they could be. Well, you've outlined the buckets. I'm not making any guess on any of those other revenue sources.
at this time because I just don't know. I think the fake house is actually part of the club revenue. So the only thing you really have that we didn't include is table games, which we have no clue on at this point. We've got some preliminary numbers. You can go to the Colorado Department of Gaming's website. You can download every casino's numbers. You can download, combine casino's numbers. You can download it by city. So you guys can go look at all those things yourselves.
and put together models. I'm not sharing my models at this time. I think it's way too premature for that, for us.
And as far as the sports betting goes, I mean, we know that the online sports skins self, I say self are basically partner with an online sports betting group or partner with a casino and those range anywhere from about seven and a half million to $10 million. $10 million.
have been talking with groups, negotiating with groups. And I think that within 30 days after our license is issued, we will have a full-time partner. Probably the day the license is issued, we'll have the partner, and they'll be licensed within 30 days after that. And so that'll be immediate income as well, but I don't want to.
on where we're gonna be or what that revenue is gonna be at this time. I don't need to, I mean, I just showed you that if I make zero off of all those other things, I make 50% a year for two years. And that's anticipating that I am going to be so behind the learning curve that I'm only gonna do 50% of the revenue in the first year. So right now I've gottrans looks, I feel,
that we anticipate, well, it's not even that we anticipate, it's that the other operations do. Yeah, I don't. I think it's a conservative number. I don't need to go out on a limb. I don't need to say we're gonna make $20 million or $15 million or anything else to justify the investment. I wouldn't even be trying to justify the investment, but I have a lot of calls and a lot of people saying, why are you doing this? And I wanted to put out there why we're doing it. This is our cake. This is our math. By the way, we see it happening and.
You know, if we can make 50 percent cash on cash returns, I mean, there's not too many investments I'm not going to invest in.
when I have the certainty of an investment like this and the backup, you know, with table games and with online sports betting, and actual sports book on the premises as well. I mean, we didn't include any sports betting.
that I can make my 50% returns that easily. That was sort of my point that you beat the crap out of the numbers, but still a 50% cash on cash. So those are the best types of investments where everything goes to hell in a hand basket and you make 50%. I was just trying to.
you know, way out the other buckets for folks. So they understand that if you execute on this, like you've done on other things, there's a lot more outside, but that's helpful. What else? To have you, I mean, if you, you know, I'll give you a little color on spot, for example. Central City's $129 a day. tteokbokkierapent outkity a phrase speechless about one person wearing aƩtico, they were estranged with the clot of the issue. So oftentimes people are drunk of theworker's voice, and they might think of somebody else. Please give a little guidance be ahead to the conversation.
I think the Blackhawk average is about 200 and something a day. And if you take your top casinos over there, they're running over 400 and something a day. So if we can come in somewhere between 129 and 300 even, in the middle of that zone, you're talking about millions more dollars. So I think there's a lot of
you know, uniqueness to our project. Uh, and I believe that, uh, you know, with our properties in Denver, we will to market our properties around the country. Uh, we'll be able to market a lot of, uh, packages, uh, to not only our employees and entertainers and our guests of our existing
Clubs around the country, but they'll bring friends. This will become a very unique, very unique market, I think, for us. Got it. I don't know if anyone has asked about sort of M&A. I know you, you know, you've got your digesting virtue and you did lowery. Um.
Have you commented at all about sort of these little clubs that you sort of are renovating and repurposing and so the ramp up of those or any of the other sort of smaller M&A opportunities and what that looks like? Yeah, we talked about the three properties that we have in various stages of construction right now that will probably all be open in 2024. And we talked about, I forgot what slide number it is now, but we talked about the free cash flow generation on slide 23 that.
you know, how much cash will have. But, you know, we're still looking to invest, you know, 200 million a year. We're showing where this cash is going to come from. We talked about the bank loans, but we're still able to get on our real estate. How we have about 20, 25 million in cash out that we can do. If interest rates drop back to 6%, we're probably immediately cash those real estate out on new real estate loans. So I mean, all the places are in place. We just have to continue to do what we do. Right. And I noticed that you updated your buyback slide for different, different fiscal year 24 ranges and pre cash flow. Obviously, these are on the consensus numbers. I suspect not.
where you think you are, but sort of gives people a sort of a band of outcomes in terms of, you know, where the buyback is. And so, you know, looking forward to hopefully seeing some of that as well. But I'll hop back into the queue and if I have more questions, I'll always mind.
you think you are, but sort of gives people a sort of a band of outcomes in terms of, you know, where the buyback is. And so, you know, looking forward to hopefully seeing some of that as well. But I'll hop back into the queue and if I have more questions, I'll always man. Alright, I think that.
people are sort of a band of outcomes in terms of where the buyback is. And so looking forward to hopefully seeing some of that as well. But I'll hop back into the queue and if I have more questions I'll always man. All right, thank you Adam. Now let Mark.
Thank you Mark and congratulations to Eric, Bradley and the RCI team for a great quarter. As a frequent customer, I wanted to ask you guys the following question. What's the... How do you feel about your meet there?
Is it better now? Can you guys hear me? You can hear me? I can hear him. I wanted to ask the following question, which is...
If you follow at Dean Reardon.
or reared in Dean, whatever Dean's handle is on Twitter. That's our vice president of operations. He posts all the parties, how he takes the teams to lunches and dinners. And he posts the DJ meeting the other day where we had Big M and Maistar..
as a surprise speaker on the call. I mean, those are the things we do. We build our culture and our culture keeps everything else in line because people want to be a part of it.
Thank you. UCC reproductive
Seems like Twitter's having some difficulties, guys. Sorry, we're working on it here.
Hopefully you can hear me. I like everyone who I'm hearing.
can hear me. Do I like everyone who I'm hearing? Thank you.
And apologies for all of the technical difficulties we're having. We're going to blame Elon on this one. Now, I have a question that was submitted anonymously. And so I'd like to encourage anyone who has questions who is listening, who would like to ask them that you can go to the forum at the top of this space and type them in. They'll be related to me or you can DM me.
This question is, Eric, what is the go-to-market strategy for you guys to expand into sports betting in an already crowded sports book app market? What is the main product differentiation?
Well, the beauty for us is it's not our product. We're being paid a minimum fee to use our license in the state of Colorado. You gotta remember sports betting may be credited in certain markets and other markets it's not as crowded because you have to have a license in that state in order to stay bet in that state.
And currently in the state of Colorado, there are only 31 possibilities. And I believe maybe 21 or 24, I can't remember the number, but I'm sure you can find it on the Colorado Gaming Department's website. And how many of those licenses have actually
are using what they call a skin. They call it skinning it. So they skin it with their thing. So like when you bet on, say, bet on sports, Penn Gaming's deal, you're actually betting through the Ameristar Casino in Black Hawk, Colorado. You're on their license, everything's done to their license through the skin of Bet On Sports. So that kind of gives you an idea. There's still plenty of, uh.
Can you talk about all those gaming companies? Well, all those gaming companies aren't licensed in the state of Colorado, and anyone that aren't licensed should reach out to us because we have two skins at this point that should be available sometime around the first year. So, in fact, I'm going to go to a gaming convention tomorrow afternoon and market those skins as well. They're controlled if you go to a location and they see one of the skins, look at the
and also where DKNY, our favorite troll, will be participating in an arm wrestling battle with Bradley Shea and will become a shareholder tonight. Rick is located at 50 West 33rd Street between Fifth Avenue and Broadway, a little in from Herald Square. Also, the exact crime scene of where I spent $20 in ATM fees last night. I can give you that three times more. Okay. Okay.
one more thing, but on behalf of all of us at the company and our subsidiaries, thank you so much. Now, Eric, with the last word. Yeah, I just want to thank a shout out to Antonio Brown, who brought the camels and the goats to Houston to visit with me for a couple of days. And thank you, thank them personally for inviting me to their barbecue.
at their meet and greet. It was a great event. I had so much fun and I look forward to next year's meet and greet of the Camels in Denver where I plan to host you guys again and hopefully we can set up some other companies for you guys to visit while you're out there so you know you're not just learning about us.
Thanks again for inviting me and sharing your time with me. Hey Eric, one last thing is you said you hadn't been this excited since 2004 about the Central City Opportunity, but I was just as excited when I saw Marissa Gladen and Nancy Landon's video earlier today. So I very much look forward to meeting you ladies in Dallas or Miami. We met them in Miami. They were with us. I didn't meet them. I didn't have to have one. You didn't? I didn't. Yeah. Great. We had a great time. We party that's taught us to think about floor in the morning. So yeah, definitely enjoyed.
So I did visit with them and look forward to hosting them again next time I'm in Miami or if they make it to Dallas, I'll try to make it up there as well.
And with that, I thank everyone for your time today. Look forward to another great quarter as we move forward, and hope to talk to everyone again soon. Thanks.