Q4 2023 RCI Hospitality Holdings Inc Earnings Call

Good afternoon to everyone out there. We will be starting this space shortly as we wait for a few more people to join. How does that happen?

Good afternoon to everyone out there.

We'll be starting this space shortly as we wait for a few more people to join.

How does that.

Speaker Change: Got it.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Alright, let's kick this off.

Greetings and welcome to RCI Hospitality Holdings 4th quarter and year end fiscal 2023 earnings call. You can find the company's presentation on RCI's website. Click company and investor information under the RCI logo. That will take you to the company investor info page, scroll down and you'll find all the necessary links.

Speaker Change: Greetings and welcome to RCI Hospitality holdings fourth quarter and year end fiscal 2023 earnings call.

Speaker Change: You can find the company's presentation on <unk> website.

Speaker Change: Click company and Investor information under the RCI logo that will take you to the company Investor Info page scroll down and you'll find all the necessary links.

Please turn to slide two of our presentation. I'm Mark Moran, CEO of Equity Animal. I'll be the host of our call today. I'm here in New York with Eric Langan, President and CEO of RCI Hospitality. CFO Bradley Shea is coming to us from Houston.

Speaker Change: Please turn to slide two of our presentation.

Speaker Change: Mark Moran CEO of equity animal, albeit a host of our call today I'm here in New York with Eric Langan, President and CEO of RCI hospitality.

Speaker Change: F O Bradley J is coming to us from Houston.

Bradley J: Please turn to slide three.

If you aren't doing so already, it is easy to participate in the call on Twitter spaces. Go to at rickceo and select a space titled Rick RCI Hospitality Holdings Inc. 4Q23Earning Call. To ask a question, you'll need to join the Twitter space with a mobile device. To listen only, you can join the Twitter space on a personal computer.

Bradley J: If you weren't doing sell already is easy to participate in the call on Twitter spaces go to at Ricks C E O and selective space titled Rick RCI Hospitality Holdings, Inc. For Q23 earnings call to ask a question you will need to join the Twitter space with a mobile device.

Bradley J: To listen only you can join to Twitter space on a personal computer.

RCI is also making this call available for listen only through traditional landline and webcast. At this time, all participants are in a listen only mode. A question and answer session will follow. This conference call is being recorded.

Bradley J: RCI is also making this call available for listen only through traditional landline and webcast. At this time all protest participants are in a listen only mode.

Bradley J: A question and answer session will follow this conference call is being recorded.

Please turn to slide four. I want to remind everybody of our Safe Harbor statement. You may hear or see forward-looking statements that involve risks and uncertainty.

Bradley J: Please turn to slide four I want to remind everybody of our safe Harbor statement, you may hear or see forward looking statements that involve risks and uncertainties actual results may differ materially from those currently anticipated we disclaim any obligation to update information disclosed in this call as a result of.

Actual results may differ materially from those currently in this.

We disclaim any obligation to update information disclosure in this call as a result of developments that occur after

Bradley J: Developments that occur afterwards.

Please turn to slide five. I also direct you to the explanation of Rick's non- GAAP financial measure.

Bradley J: Please turn to slide five.

I also direct you to the explanation of Ricks non-GAAP financial measures finally, I'd like to invite everyone listening in the New York City area to join Eric can meet Tonight at seven o'clock to meet management at Rick's Cabaret, New York, one of Rci's top generating clubs Rick's is located at 50 West 33rd Street.

Finally, I'd like to invite everyone listening in the New York City area to join Eric and me tonight at 7 o'clock to meet management at Rick's Cabaret, New York. One of RCI's top generating clubs. Rick's is located at 50 West 33rd Street between Fifth Ave and Broadway, a little in from Harold Square. If you have an RSVP'd, ask for us at the door. Now I'm pleased to introduce Eric Langan, President and CEO of RCI Hospitality. Eric, take it away.

Bradley J: Between fifth Avenue Broadway, a little and from Herald square.

Bradley J: If you have an RSVP ask for us at the door now I'm pleased to introduce Eric Langan, President and CEO of RCI hospitality, Eric take it away.

Bradley J: Yeah.

Eric Langan: Thank you for joining us today.

Eric Langan: Please turn to slide six.

I think our fourth quarter result are generally in line with what everyone was expecting. We generated revenue of $75.3 million, 5.4% higher than a year ago quarter, mainly because of acquisition.

Eric Langan: I think our fourth quarter results were generally in line with what everyone was expecting we generated revenue of $75 $3 million five 4% higher than a year ago quarter.

Eric Langan: Mainly because of acquisitions.

This has increased more than offset the decline in same source sales for 10.5%. However, margins were negatively impacted as a percentage of sales.

Eric Langan: This is increase more than offset the decline in same store sales of 10, 5%. However margins were negatively impacted as a percentage of sales.

Because of the same source sales decline, refolds were also affected by higher, nice.

Eric Langan: The same store sales decline results were also affected by higher noncash impairments.

As a result, we earned 23 cents per share. But on a non-gap basis, we were solidly profitable earning a $1.11 per share. We are operating in a unique...

Eric Langan: As a result, we earned 23 cents per share, but on a non-GAAP basis, we were solidly profitable, earning $1 11 per share.

Eric Langan: We are.

Eric Langan: Trading in a unique and complex macroeconomic environment.

In addition, last year's second half saw the highest operating leverage we've had in the past five years. Physical 22, free cash flow also benefited from a $2.2 million tax refund in the third quarter.

Eric Langan: In addition, last year's second half saw the highest operating leverage we've had in the past five years fiscal 'twenty to 'twenty two free cash flow also benefited from a $2.2 million tax refund in the third quarter.

I am proud of our efforts. I'm proud of the efforts of our talented and dedicated teams as well as the strength and resiliency of our business model. In fiscal 2023, our performance same store sales were up 9% compared to pre-COVID's fiscal 2009.

Eric Langan: I am proud of our efforts I'm proud of the efforts of our talented and dedicated teams as well as the strength and resiliency of our business model in fiscal 2023, our performance same store sales were up 9% compared to pre Covid fiscal 2019 with.

with nightclubs up 8.3% and bombshells up 12.6%

Eric Langan: With nightclubs up eight 3% and bombshells up 12, 6%.

We also saw the second highest levels of free cash flow and adjusted EBITDA in the company's history clipped only by the unique dynamics of fiscal 2022.

Eric Langan: We also saw the second highest levels of free cash flow and adjusted EBITDA in the Companys history eclipsed only by the unique dynamics of fiscal 2022.

Eric Langan: Please turn to slide seven.

We are pleased report that during and subsequent to the quarter, we have made significant progress for our key growth initial.

Eric Langan: We are pleased to report that during and subsequent to the quarter. We have made significant process progress towards our key growth initiatives.

They should begin to produce results in this fiscal year and next. We also implemented some changes to improve operations. Our CAPR allocation strategy continued to provide strong long-term results.

Eric Langan: These should begin to produce results in this fiscal year and next we also implemented some changes to improve operations. Our capital allocation strategy continued to provide strong long term results.

Since its adoption beginning year-end fiscal 2015, free cash flow has increased on a compound annual basis of 17.2%. Subsequent to the fourth quarter, we continue to buy back more shares. We believe we have significant cash resources available to implement our strategies and plans.

Eric Langan: Since its adoption beginning year end fiscal 2015 free cash flow has increased on a compound annual basis of 17, 8% subsidy.

Eric Langan: Subsequent to the fourth quarter, we continued to buy back more shares. We believe we have significant cash resources to be able to implement our strategies and plans.

Eric Langan: Please turn to slide eight.

I'd like to take a moment to go into the more detail on the progress of our three major initiatives, growth initiatives. First, we continue to be excited about our two Central City Colorado casinos. Rift Cabaret's Stake House of Casino and our bombshell sports casinos.

Eric Langan: I'd like to take a moment to go into the more for more detail on the progress of our three major initiatives growth initiatives first we continue to be excited about our two central city, Colorado casinos.

Eric Langan: Rick's cabaret steakhouse in casino and our Bombshells sports casino.

We are awaiting the conclusion of the state's gaming licensing process. At the very beginning of this effort, we estimated it would take 12 to 18 months based on past Colorado history. We are still in line with that timetable. All indications.

Eric Langan: We are awaiting the conclusion of the state's gaming licensing process at the very beginning of this effort. We estimated it would take 12 to 18 months based on past, Colorado history.

Eric Langan: We are still in line with that timetable.

Eric Langan: All indications indicate the process is proceeding.

No other applicant has received the gaming license ahead of us. We are also waiting liquor licenses for both of the casinos and a building permit for the bombshells casinos.

Eric Langan: No. Other African has received a gaming license ahead of US. We are also awaiting liquor licenses for both of the casinos and a building permit for the Bombshells casino.

Eric Langan: We begin.

We have begun to form our organization. We have retained a director of casino operations. He has a deep and long-term experience in the Colorado Marks.

Eric Langan: To form the Oregon, we have begun to form our organization.

Eric Langan: We have retained a director of casino operations. He has a deep and long term experience in the Colorado market.

During the first quarter, we received a building permit for our Rix Cabaret Stake House of Casino. Interior of demolition has been completed and construction has begun. Based on all this, we continue to anticipate opening both casinos in fiscal 2024. Using simple math, we believe this represents a significant pre-cash low up.

Eric Langan: During the first quarter, we received the building permit for our Ricks cabaret Steakhouse at casino materials demolition has been completed and construction has begun.

Based on all this we continue to anticipate opening both casinos in fiscal 2024.

Eric Langan: Simple math, we believe this represents a significant free cash flow opportunity.

Our plans for a total of 400 slot machines and 9 to 12 table games as well as sports betting.

Eric Langan: Our plans for a total of 400 slot machines in nine to 12 table games as well as sports betting.

Looking at the slots, they have been averaging 133 adjusted gross proceeds per day in central city and $307 per day in nearby Black.

Eric Langan: Looking at the slot they have been averaging 133, adjusted gross proceeds per day in central city, and $307 per day, and thereby Blackhawk Blackhawk.

Black Hawk is higher mainly because they run on a 24-7 basis, which we plan to do also.

Eric Langan: Blackhawk is higher mainly because they run on a 24 seven basis, which we plan to do also.

We have assembled additional properties on Main Street for further casino development as well. from

Eric Langan: We have assembled additional properties on main street.

Further casino development as well.

Eric Langan: Okay.

Eric Langan: Okay.

Eric Langan: Excuse me sorry about that please turn to slide eight.

Eric Langan: Okay.

Eric Langan: Okay.

That sounds all right I'm, sorry slide nine.

Eric Langan: I've got a little confused here.

Baby Doll's Chica Locust acquisition continues to perform well.

Eric Langan: That baby Dolls, Chico locus acquisition continues to perform well sale.

Sales have improved every quarter since the March acquisition. And we finish remodeling the fifth location in June , which is contributing to that growth. Labor and direct operating expenses as a percentage of revenue have come down. And we are analyzing more ways to improve those margins.

Eric Langan: Sales have improved every quarter since the March acquisition.

And we finished remodeling a fifth location in June which is contributing to that growth later.

Eric Langan: Labor indirect operating expenses as a percentage of revenue have come down and we are analyzing more ways to improve those margins.

We are planning to open three more clubs in fiscal 24 to use existing club assets that we own. They will both be branded baby dolls, helping us turn that.

Eric Langan: We are planning to open three more clubs in fiscal 'twenty for two years existing club assets that we own they will both be branded baby dolls, helping us turn that.

Turn that into a major Texas chain. The third is the replacement club that we told you about in Lubbock, Texas. Construction is underway. As we previously reported, we named Dean Reardon and Sean Kevlin as director and assistant director of nightclub operations.

Eric Langan: Turn that into a major Texas chain.

Eric Langan: Third is the replacement club that we told you about in Lubbock, Texas construction is underway as we previously reported we named Dean Riordan, and Sean Kaplan as director and assistant director of nightclub operations for.

for RCI Management Services. This should enable Ed Anikar, President and Director of RCI Management Services, to focus more time on acquisitions and development of new clubs.

Eric Langan: RCI management services, they should enable at Ana card, President and director of RCI Management services focus more time on acquisition and development of new clubs.

We are moving full steam ahead with regard to acquisitions, but we will not overpay for the sake of buying more clubs. We continue to be actively engaged in ongoing discussions with numerous club owners.

Ana Card: We are moving full steam ahead with regard to acquisitions, but we will not overpay for the sake of buying more clubs. We continue to be actively engaged in ongoing discussions with numerous club owners.

Ana Card: Okay.

Off script a little bit here, 2023 was a very challenging year for us, but I've talked to many smaller operators and they didn't have the reserves that we've had. They've had additional.

Ana Card: [noise] off script, a little bit in 2023 was a very challenging year for us, but I've talked to many smaller operators and they didn't have the reserves that we've had they've had additional.

slowdowns compared to what we are experiencing. And I'm expecting that many acquisitions over the next 12 to 18 months are gonna come to our, in front of us and be on very favorable terms.

Ana Card: Slowdowns compared to what we are experiencing and I'm expecting that many acquisitions.

Ana Card: Over the next 12 to 18 months are going to kind of come to are in front of us and MBA on very favorable terms.

So I'm very excited about that. Now, if you'll please turn to slide 10 to review our bombshell development program.

Ana Card: So I'm very excited about that.

Ana Card: Turn to slide 10 to review, our Bombshells development program.

In September , we announced a major expansion of the food offerings at our food hall in Greenwood Village, a suburb of Denver.

In September we announced the major expansion of the food offerings at our food Hall in Greenwood village, a suburb of Denver too.

to add to our existing successful bombshell kitchen there. We have later relaunched that location as Cherry Creek Food Hall. And November , we open the first bombshell's post-COVID. This is located in Stafford, Texas, the suburb of Houston.

Ana Card: To add to our existing successful bombshells kitchen. There. We have later relaunched that location is Cherry Creek Food Hall in November we opened our first bombshells post COVID-19.

Ana Card: Located in Stafford, Texas, a suburb of Houston.

It is off to a great start regarding other new bombshells. Construction is continuing on and the locations and remodeling should begin soon for our downtown Denver site. All 3 are expected to open a fiscal 24 and other developments. We hired a new assistant director of operations with more than 20 years of multi unit restaurant experience.

Ana Card: It is off to a great start regarding other new bombshells construction is continuing on rollout and the Lubbock locations and remodeling should begin soon for our downtown Denver site. All three are expected to open in fiscal 'twenty four and other developments, we hired a new assistant director of operations with more than 20 years of multi unit restaurant.

Ana Card: <unk>.

Ana Card: For bombshells.

I'm currently exploring with private equity groups, sale partial sales of the concept, partnerships or mergers. Basically all strategic operations.

Ana Card: I'm currently.

Ana Card: Exploring with.

Ana Card: With private equity groups.

Ana Card: Sale partial sales of.

Ana Card: The concept partnerships our mergers.

Ana Card: Basically all strategic operating are all strategic opportunities out there that we can use to maximize the value of this asset.

all strategic opportunities out there that we can use to maximize the value of this asset.

Ana Card: And.

and it's basically accelerate our growth. I think that the concept to be highly successful, we need to get into that 80 to 100 units that we believe we can do. And I'd like to see us do that with capital outside of the company's capital, because I think we just have too many acquisition opportunities coming up, the expansion of the casinos. And I'd like to keep our capital more focused on those operations rather than expanding bombshells.

Ana Card: And it's basically accelerate our growth I think that the concept to be highly successful we need to get into that 80 to 100 units that we believe we can do and I'd like to see us do that with capital outside of the company's capital because I think we just have too many acquisition opportunities coming up the expansion of the casinos.

Ana Card: And I'd like to keep our capital more focused on those operations rather than expanding bombshells.

Ana Card: It's just hard to tell.

Ana Card: Turning to slide 11.

Acting upon our confidence and our cap location strategy, our strong free cash flow profile, and our valuation, we continue to take advantage of our low stock price in the first quarter of fiscal 24. To buy back more.

Ana Card: Acting upon our confidence in our capital allocation strategy, our strong free cash flow profile and our valuation we continue to take advantage of our low stock price in the first quarter of fiscal 'twenty four to buy back more shares as of December eight we had repurchased 37954 common shares.

As of December 8th, we had repurchased 37,954 common shares for approximately $2.1 million for an average price of about $54.59 per share in Q1 2014.

Ana Card: <unk> $2 $1 million or an average price of about 50 459 per share in Q1 'twenty. Four we currently have $14 $6 million in remaining stock purchase authorization and while we continue to prioritize high cash on cash returns and developing our new casinos clubs and restaurants. We also continue to Opportunistically and <unk>.

We currently have $14.6 million in remaining stock purchase authorization. And while we continue to prioritize high cash on cash returns in developing our new casinos, clubs and restaurants, we also continue to opportunistically and aggressively buy back shares when they trade materially below our value, our view of fair value.

Ana Card: <unk> buy back shares when they trade materially below our value our view of fair value.

Here's Bradley to detail more of our results, and I'll be happy to take Q&A at the end of this session.

Speaker Change: Now here's Bradley to detail more of our result, and I'll be happy to take Q&A at the end of this session.

Speaker Change: Yeah.

Speaker Change: Okay.

Thanks Eric, please turn on slide 12 to review our nightclub segment. Fourth quarter revenues increase $4.3 million year over year. This is primarily due to $9.2 million from the new acquisitions, more than offsetting the $5.1 million in same-source sales decline.

Bradley J: Thanks, Eric Please turn to slide 12 to review our nightclub segment fourth quarter revenues increased $4 $3 million year over year.

Bradley J: This was primarily due to $9 $2 million from the new acquisitions.

Bradley J: Offsetting the $5 $1 million and same store sales decline.

by revenue type, alcoholic beverages increase 17.2%, food, 15.9%, and other 8.1%.

Bradley J: By revenue type of alcoholic beverages increased 17, 2%.

Bradley J: Food 15, 9% and other eight 1%.

service revenue declined 2%. The different growth rates reflected higher alcohol and food in the sales mix from the newly acquired heartbreakers, baby dolls and Chica's locals club this year. They also reflected lower-stating store sales and the summer slump and service revenue.

Bradley J: Service revenue declined 2% the different growth rates reflected higher alcohol in food in the sales mix from our newly acquired Heartbreakers Baby Dolls, and Chico's locals clubs this year.

Bradley J: They also reflect the lower same store sales and the summer slump in service revenues.

Service Revenue was 42% of nightclub sales this quarter versus 46% a year ago.

Bradley J: Service revenue was 42% of nightclub sales this quarter versus 46% a year ago.

If the sales mix had been the same, we would have $2.4 million in the service revenue, most of which have been benefited free cash.

Bradley J: If the sales mix had been the same we would had $2 $4 million and the service revenue most of which have been benefited free cash flow.

Post acquisition of Heartbreakers, Babydolls, and Chica's Locos, our quarterly sales have shown a steady improvement, coinciding with a notable decrease in labor costs and a corresponding decline in direct operating expenses as a percentage of revenue.

Bradley J: Most acquisition of Heartbreakers Baby Dolls, and Chico's locals are quarterly T cells have shown a steady improvement coinciding with a notable decrease in labor costs and a corresponding decline in direct operating expenses as a percentage of revenue.

Fourth quarter results included a $8.4 million, more in items typically excluded from non-gap calculations, mainly non-cash impairment.

Bradley J: Fourth quarter results included an $8 $4 million more in items typically excluded from non-GAAP calculations.

Bradley J: Mainly noncash impairments.

As a result, gap operating income was $12.1 million or 19.8% of revenues, but non gap operating income and margin was significantly higher at $21.6 million and 35.4%.

Bradley J: As a result, GAAP operating income was $12 $1 million or 19, 8% of revenues, but non-GAAP operating income and margin was significantly higher at $21 $6 million and 35, 4% of revenues.

Even with the macroeconomic challenges we've been facing, our strategies have enabled nightclub non-gap opportunities.

Bradley J: Even with even with the macroeconomic challenges we've been facing our strategies have enabled nightclub non-GAAP operating income to remain at the $22 million to $24 million range per quarter since the second quarter of 'twenty two.

to remain at the 22 to $24 million range per quarter since the second quarter of 22.

Bradley J: Please turn to slide 13 to review our Bombshells segment.

Fourth quarter revenue is declined $452,000. Lower same store sales were partially offset by the $1.6 million and newly acquired location.

Bradley J: Fourth quarter revenues declined $452000.

Lower same store sales were partially offset by the $1 $6 million and newly acquired locations, namely.

namely bombshell san Antonio and the renamed cherry creek food hall with its bombshell's kitchen.

Bradley J: Namely Bombshells, San Antonio and the renamed Cherry Creek Food Hall, with its bombshells kitchen.

Gap operating income was a profit of $1.2 million, or 8.2% of revenues, and non-gap was a profit of $1.4 million, or 10.4%. $1.4%.

Bradley J: GAAP operating income was a profit of $1 $2 million or eight 2% of revenues and non-GAAP was a profit of $1 $4 million or 10, 4%.

Bradley J: Please turn to slide 14.

In our segment, revenues were approximately level at $727,000. Operating income was a loss of $793,000 compared to a year ago profit of $216,000.

Bradley J: And our segment revenues were approximately level at $727000.

Bradley J: Operating income was a loss of $793000 compared to a year ago profit of 216000 hours.

This Delta was largely a result of $908,000 increase in items typically excluded from non-gap calculations. Again, mainly impairment.

Bradley J: This delta was largely a result of $908000 increase and items typically excluded for non-GAAP calculations again, mainly impairments.

Corporate expenses were $6.8 million, nearly level with last year. On a non-gap basis, they were 1.5 million.

Bradley J: Corporate expenses were $6 $8 million nearly level with last year.

Bradley J: On a non-GAAP basis, they were $1 $7 million higher.

This was like that about $500,000 more in salaries than we just in the fiscal 23 fourth quarter and the benefit of a $1 million legal insurance payment in the year before the quarter.

This reflected about $500000 more in salaries and wages.

Bradley J: In the fiscal 'twenty, three fourth quarter, and the benefit of about $1 million legal insurance payment in the year ago fourth quarter.

I also want to note, effective tax rate for the year was 19% compared to 23.4%. This fiscal 23 effective tax rate reflected higher federal tax credits that more than offset the higher portion of income subject to state income taxes.

Bradley J: I also want to note our effective tax rate for the year was 19% compared to 23, 4%.

Bradley J: This fiscal 'twenty three effective tax rate reflected higher federal tax credits that more than offset the higher portion of income subject to state income taxes.

Bradley J: Please turn to slide 15.

Here you can see three big spikes in the operating margin. We had in the third quarter of fiscal 21 and the third and fourth quarter of fiscal 22 as we came out of the COVID area.

Bradley J: Here you can see three big spikes in the operating margin we had in the third quarter of fiscal 'twenty, one and the third and fourth quarter of fiscal 'twenty two as we came out of the Covid era.

Bradley J: Please turn to slide 16.

We have a couple slides coming up that will discuss free cash flow on adjusted EBITDA, which are non-GAP. In advance of that, we wanted to present you with the closest GAP equivalent on this slide, which are operating and net income. Please turn to slide 17.

Bradley J: We have a couple of slides coming up that will discuss free cash flow and adjusted EBITDA, which are non-GAAP and events that we wanted to present you with the closest GAAP equivalent on the slide which are operating and net income.

Bradley J: Please turn to slide 17 to look at some of our other key metrics.

We ended the year with cash and cash equivalence of 21 million dollars.

Bradley J: We ended the year with cash and cash equivalents of $21 million.

During the fourth quarter, we used $2.1 million to buy back shares. We also ended the year with $9.8 million in accounts receivable. This increased 16% from a year ago quarter because September 30th fell on a Saturday. This resulted in a carrying credit cards in our accounts receivable from Thursday to Saturday's sales at the end of the quarter.

Bradley J: During the fourth quarter, we used to put $1 million to buy back shares.

Bradley J: We also ended the year with $9 $8 million in accounts receivable.

This increased 16% from a year ago quarter, because September 30th fell on a Saturday. This resulted in a carrying credit cards and our accounts receivable from Thursday through Saturday sales at the end of the quarter.

Forne's quarter free cash flow was $11.1 million or 15% of revenue.

Bradley J: Fourth quarter free cash flow was $11 $1 million or 15% of revenues.

Adjusted EBITDA was 20.2 million dollars or 27% of it.

Bradley J: Adjusted EBITDA was $20 $2 million or 27% of revenues.

Our more recent free cash flow and adjusted EBDA conversion rates reflect a lower percentage of service revenues.

Bradley J: Our more recent free cash flow and adjusted EBITDA conversion rates reflect a lower percentage of service revenues.

Bradley J: Please turn to slide 18 to review some of our debt metrics.

Out that at September 30th, Declined $4 million from June 30th due to scheduled paydown.

Bradley J: Our debt at September 30th declined $4 million from June 30, due to scheduled pay downs.

weighted average interest rate was 6.64% in line with what we have been paying. Total occupancy cost in stuff a little bit on a sequential quarter basis at 8.1%. But still in our company.

Bradley J: Weighted average interest rate was 664% in line with what we had been paying.

Bradley J: Total occupancy costs inched up a little bit on a sequential quarter basis at eight 1%.

Bradley J: But still in our comfort range of 6% to 9%.

The increase in the third quarter of fiscal 22 primarily relates to new club acquisition.

Bradley J: The increase since the third quarter of fiscal 'twenty, two primarily relates to new club acquisition debt.

that to the trelline 12 month adjusted EBIDA stayed relatively flat at 2.8 times. September 30th versus June 30th.

Bradley J: Debt to the trailing 12 month adjusted EBITDA stayed relatively flat at two eight times September 30th versus June 30th.

This metric continues to be in line in a comfort level of less than three times.

Bradley J: This metric continues to be in line and our comfort level of less than three times.

We adjusted our September 30th that maturity tables to reflect the previously announced October modification of our debt, the 12% unscored debt to be specific.

Bradley J: We adjusted our September 30th debt maturity tables to reflect the previously announced October modification of our debt the 12% unsecured debt to be specific.

As you can see, our returities can see you to remain reasonable and manate.

Bradley J: As you can see our maturities continue to remain reasonable and manageable. In addition to our cash position and our October rescheduling of our 12% unsecured debt. We have an estimated $30 million of unencumbered real estate that we believe we can leverage that we like.

in addition to our cash position and our October , we scheduling of our 12% on secured debt. We have an estimated 30 million dollars of unencumbered real estate that we believe we can leverage what we like. Please turn to slide 19 for our debt.

Bradley J: Please turn to slide 19 for our debt Pie chart.

Bradley J: Our debt composition is similar to the third quarter.

And that's it. So let me turn the presentation over back to Eric.

Bradley J: And that's it so let me turn the presentation over back to Eric.

Bradley J: Yeah.

Thanks, Patrick Please turn to slide 20.

Everything we do is centered around our capital cases, strategy.

Everything we do is centered around our capital allocation strategy.

We employ three different approaches, subject to whether there's compelling rationale to do otherwise. Mergers and aquids.

Bradley J: We employ three different approaches subject to whether there is compelling rationale to do otherwise.

Bradley J: Mergers and acquisitions.

Organic growth and buying back shares on our yield on free cash flow per share is more than 10%.

buying back shares on our guild on free cash flow for share is more than 10%.

All of this is done with the ultimate goal of driving shareholder value by increasing free cashflow per share at least 10 to 15% on a compounded annual basis.

All of this is done with the ultimate goal of driving shareholder value by increasing free cash flow per share at least 10% to 15% on a compounded annual basis.

Bradley J: If you turn to slide 21.

Bradley J: Yeah.

We stuck to our CAPAOC case strategy since the, we have stuck, we have stuck to our CAPAOC case strategy since the end of fiscal 2015. It has worked very well. We have generated compound annual growth rates of 10.2% for total revenues, 12.1% for adjusted EBITDA, and 17.2% for free cash flow. At the same time, we have reduced our fully diluted share account by 1.3% on a compounded annual basis, and that includes shares used for acquisition.

Bradley J: We stuck to our capital allocation strategy. Since we have struck we have stuck to our capitalized strategy. Since the end of fiscal 2015 and has worked very well.

Bradley J: We have generated compound annual growth rate of 10, 2% of our total revenues 12, 1% for adjusted EBITDA and 17, 2% of free cash flow at.

Bradley J: At the same time, we have reduced our fully diluted share count by one 3% on a compounded annual basis and that includes shares used for acquisitions.

I'd also like to mention we ended fiscal 23 with more than $200 million in retained earnings for the first time. The first...

Bradley J: I'd also like I mentioned, we ended fiscal 'twenty three with more than $200 million in retained earnings for the first time.

Bradley J: The first Ricks cabaret opened 40 years ago I believe we will be here for the next 40 years. The future is bright for RCI. There continues to be a very strong demand for what we do and.

I believe we will be here for the next 40 years. The future is bright for our CI. So it continues to be a very strong demand for what we do.

We believe the actions we are taking are setting us up for many years of financial success to come. Every piece of the puzzle has its place. We just need to stick to our plan. I'd like to have special thanks to our loyal and dedicated teams for all their hard work and effort and all the shareholders who believe and make our success possible. We can't do this without you. Now here's Mark.

Bradley J: And we believe the actions we are taking are setting us up for her many years of financial success to come every piece of the puzzle has its place we just need to stick to our plan I'd like to have special thanks to our loyal and dedicated teams for all their hard work and effort and all the shareholders, who believe and make our success possible. We can't do this without you.

Mark Moran: Now here's mark.

Thank you, Eric and Bradley. If you would like to ask a question, please raise your hand in the Twitter space. When you finish, please mute your microphone to eliminate any background noise. We have a limited number of speaker space.

Mark Moran: Thank you, Eric and Bradley if you would like to ask a question. Please raise your hand in the Twitter space. When you finish. Please mute your microphone to eliminate any background noise, we have a limited number of speakers spaces.

After your question, we may move you to the back of the audience to free up space.

Mark Moran: After your question, we May move you to the back of the audience to free up space to start things off we'd like to take questions from Rick's analysts and then some of its largest shareholders.

To start things off, we'd like to take questions from Rick's analysts and then some of its larger shareholders.

Our three analysts are Scott Buck of HC Wainwright, Anthony of Sidoti and Rob of Granite Research. Scott, you're up first. Take it away.

Mark Moran: Our three analysts are Scott Buck of H C Wainwright, Anthony <unk> of Sidoti and Rob a grant research Scott Europe first take it away.

Yeah, good afternoon guys. Thanks for taking my questions. Eric, could you give us a little bit more color on what kind of traffic and spending trends you're seeing in the clubs today? Curious that some of that some of the softer trends in the fourth quarter have kind of dragged here into the first quarter.

Scott Buck: Yeah. Good afternoon, guys. Thanks for taking my questions, Eric could you give us a little bit more color on what kind of traffic and spending trends you're seeing in the clubs today curious if some of that are some of the softer trends in the fourth quarter of kind of drag here into the first quarter.

Eric Langan: Well I mean, we've seen.

Some of the drag, especially in the blue power still.

Eric Langan: Some of the drag, especially in the blue collar still.

The costs are becoming easier, not perfect for us yet, but easier people.

Eric Langan: And the end of this into this first quarter the comps are becoming easier.

Eric Langan: Not.

Eric Langan: Not perfect for us yet but easier.

It's tough to say when I'm a trend finder. You know, it's what I do. I look at numbers. I see the trends. I watch the financials and it's the craziest thing I've ever seen. I've called this a psychological recession and asked, you know,

Eric Langan: It's tough to say when I'm a trend finder.

Eric Langan: So what I do I look at numbers I see the trends my wife's financials and it's it's the craziest thing I've ever seen I've called this a psychological recession.

Eric Langan: And as we.

We all know that means people are a little crazy about spending. I think the consumer, especially in the last 16 and 90 days, is loosening up a little bit, but I think it's still a little, there's cautious spending. People are unsure. You know, we're seeing a lot of tech layoffs now, so I think some of the higher end...

Eric Langan: And we all know that means.

Eric Langan: People are a little crazy about spending.

Eric Langan: The consumer, especially in the last.

Eric Langan: 60 to 90 days is loosening up a little bit, but I think it's still a little cautious spending people are unsure.

Eric Langan: We're seeing a lot of tech write offs now so I think some of the higher end.

You know, higher in spend is they're still spending, but they're a little more cautious. They want to guarantee that they're getting a good time for it. Our top clubs are doing better in clubs where markets where we're number two or number three in the market or where we own all the clubs. The number one clubs are doing very, very well with the other clubs are are still off a little bit. I think that's kind of predicted that, but you know, as far as trend, I don't see trend. I think the longest trend up or down I've seen.

Eric Langan: Spent hiring spend as they're still spending, but they're a little more cautious they want to guarantee that theyre getting a good time for our top clubs are doing.

Eric Langan: Better.

Clubs were in markets, where we're number two or number three in the market or where we own all the clubs. The number one clubs are doing very very well with the other clubs are still off a little bit.

Eric Langan: I think that's kind of predicting that but as far as trend I don't see trends I think the longest trend up or down I have seen.

in the last seven months is about a three-week trend. And then it's crazy again for a few weeks, and then we may trend for two weeks up, two weeks down, a week up, a week down.

Eric Langan: And in the last seven months is about a three week trend.

Eric Langan: And then it's crazy again for a few weeks and then it's we may trend for two weeks up two weeks down the week up week down.

Eric Langan: It's it's really unusual compared to what I've seen in the past however overall.

really unusual compared to what I've seen in the past. However, overall,

We're seeing enough strength that I'm very optimistic going forward. I think that I think the lows are kind of past the low sales weeks for our kind of past us and holiday parties seem to be picking up a little bit this week. So seeing some good numbers this week, I was in Miami Friday, Saturday and Sunday because we got stuck down there because of storm we couldn't get into New York Sunday.

Eric Langan: We're seeing enough strength that I am very optimistic going forward I think that.

Eric Langan: I think the lows are kind of past the low sales weeks are kind of past us.

Eric Langan: Our holiday parties seem to be picking up a little bit. This week. So seeing some good numbers. This week I was in Miami.

Eric Langan: Friday Saturday and Sunday, because we got stuck down there because of the storm, we couldn't get into New York Sunday.

And, I mean, the clubs were incredible, especially Toothies in Miami was packed. We were setting up by the VIP booth area.

Eric Langan: And I mean, the clubs were incredible, especially cookies in Miami was packed that.

Eric Langan: We were setting up by the VIP Booth area.

Speaker Change: Uh huh.

to the counter to the rooms in the back. And I mean, there was a line all night long.

Speaker Change: To the to the counter to the to the rooms in the Bakken I mean, there was lying all night long.

Friday and Saturday night. So that was very promising. Tutsi's having a really big week this week. And then of course we had the home game with Miami Monday night.

Speaker Change: Friday and Saturday night so.

Speaker Change: That was very promising a tootsie just having a really big week. This week and then of course, we had the home game with Miami Monday Night.

which was good for business. Football's really picking up for us right now. Basketball's starting to heat up a little bit. So, very excited about how we're going forward with everything we have on our plate.

Speaker Change: Which was which was good for business football's football's really picking up for US right now basketball starting to heat up a little bit so very excited about how we're going forward.

Speaker Change: With everything we have on our plate.

the three new clubs, the three new bombshells.

Speaker Change: No.

Speaker Change: The new three three new clubs the three new bombshells.

I think 24 is going to be a fantastic year for us. Even if anything stay a little slug.

Speaker Change: I think 24 is going to be a fantastic year for us.

Speaker Change: Even if things stay a little a little sluggish there.

Great, I appreciate that color. And then I'm curious on bombshells. How far along are you with some of these strategic conversations? And can you give us any kind of sense of timing on when something could potentially be announced?

Speaker Change: Great I appreciate that color and then I'm curious on bombshells, how far along are you with some of these strategic conversations and can you give us any kind of.

Speaker Change: A sense of timing on when something could potentially be announced.

Speaker Change: No.

Speaker Change: I'll just be honest I mean, we're talking with several several people right now.

I mean, we're talking with several people right now. We've floated it out there about 60 days ago to a couple of groups. We've got some requests for data that we're putting together on, you know, with different groups for different ideas, whether it's a strategic partnership, whether it's

Speaker Change: We floated out there about 60 days ago to up to a couple of groups. We've got some request for data that we're putting together.

Speaker Change: On on with different groups for different ideas, whether it's a strategic partnership whether it's.

a partial, a partial bite that would give us, you know, capital to do the expansions with or or all, you know, a straight out sale of the assets. We're basically exploring all those things. We're going to weigh it all out.

Speaker Change: Partial a partial buy that would give us capital to do the expansions with our all in a straight out sale of the asset.

We are basically exploring all of those things, we're going to weigh it all out.

and see what we think fits best for our long-term goals. For...

Speaker Change: And see what we think fits best for our long term goals.

Speaker Change: For RCI and.

And, you know, as far as timing.

Speaker Change: As far as timing.

Some of the requests, I mean, we've been working on the case, so Bradley has a little bit. I would say we'll probably January , we'll start getting that data put together and out to some of the groups that we're talking with. I'm sure after this, we're gonna have more groups that talk to us and we're gonna have more ideas and more opportunities to explore. And we're just gonna find the, what we believe is the best for the company to use those assets.

Speaker Change: Some of the requests I mean, we've been working on the K. So Bradley had a little bit I would say, we're probably January will start getting that data put together and out to out to some of the groups that we're that we're talking with.

I'm sure. After this we're going to have more groups that talk to us and we're going to have more ideas and more.

Speaker Change: <unk> to explore and we're just going to find the what we believe is the.

The best for the company to use those assets.

to build a, you know, additional cash flow for the company.

Speaker Change: To build up to build the.

Speaker Change: Additional cash flow for the company.

And at the same time, make us so that we can grow the concept without using too much of our own capital. Because like I said, I think that the acquisition side of the business is starting to heat up a little bit. There's some opportunities to work with the crew we're talking with right now. And I really think we want to keep our cash to finish building these casinos out and make these acquisitions.

Speaker Change: Sure.

Speaker Change: And at the same time, making sure that we can grow the concept without.

Using too much of our own capital because like I said I think that the acquisition side of the business is starting to heat up a little bit there are some opportunities to work with groups. We're talking with right now and I really think we want to keep our cash to finish building these casinos out.

Speaker Change: And make these acquisitions.

Great, I appreciate that. And then one last one from me. I'm curious, how should we think about OptX for next year as you start to layer in some of those new revenue from some of these growth initiatives? Do you have significant spend you need to add or should we really start to see some significant operating leverage in the business? Have you been talking about CAPEX, or are you talking about maintenance CAPEX? I'm sorry. I'm talking about adding, you know, back off its head, support heads, that sort of thing. Oh, I don't think we're going to add much of anything. Bit...

Speaker Change: Great Great I appreciate that and then one last one for me I'm curious how should we thinking about opex for next year as you start to layer in some of the new revenue from some of these growth initiatives.

Speaker Change: Do you have significant spend you need to add or should we really start to see some significant operating leverage in the business and we were talking about capex spend or are you talking about maintenance Capex I'm sorry.

Speaker Change: Talking about adding had you know back office head support had that sort of thing Oh, I don't think we're going to add much of anything.

Kind of.

Our payroll is kind of, you see it was kind of flat. I mean, we had some additional payroll, but mainly that was from the acquisition. As far as adding additional staffing in the office, I don't see a lot of expense growth in that part of the business. I think the overall growth will be much faster than the growth in that department. Super appreciate the adding color.

Speaker Change: Our our payroll is kind of you say it was kind of flat I mean, we had some additional payroll, but mainly that was from the acquisition.

Speaker Change: As far as adding additional staffing in the office.

Speaker Change: I don't I don't see a lot of expense growth in that in that part of the business I think overall growth will be much faster than the growth in that in that department.

Speaker Change: Super I appreciate that any color guys. Thank you for the time.

Speaker Change: Okay.

Thank you very much for your questions, Scott. Next up, we have Anthony of Sedotti. Anthony, take it away. Yes, good afternoon and thank you for taking.

Speaker Change: Thank you very much for your question Scott next up we have Anthony <unk> Sidoti Anthony take it away.

Anthony: Yes, good afternoon, and thank you for taking the questions.

So first, just to follow up on the previous question in regards to the weakness, I guess in the blue collar clubs, this is not the first time that we've heard this before. I think Eric, you had mentioned this probably about a year ago, so just curious, is it the same group of blue collar clubs that you're seeing kind of weakness as you saw previously and kind of maybe get as a frame of reference, so like what percentage of your clubs would you consider blue collar?

Anthony: So firstly just a follow up on the previous question there in regards to the weakness I guess in the Blue collar clubs. This.

Anthony: This is not the first time that we've heard this before.

Speaker Change: Eric You had mentioned this probably about a year ago. So I'm. Just curious is it the same group of Blue collar clubs that youre seeing kind of weakness as you saw previously and kind of maybe get us.

Eric Langan: Frame of reference so like what percentage of your clubs would you consider blue collar.

I'd have to actually, I mean, with 70 locations, I'd have to actually look through it. I'd call it the pickup truck crowd, the working crowd. I think gas prices are coming down for them, but bills are still expensive, energy's still expensive, so they're dealing with some of those things still as far as their costs.

Eric Langan: Yeah.

Speaker Change: I'd have to actually everything was 70 locations I'd have to actually lived through it I call. It the pick up truck route the working they're working crowd Ah I think gas prices are coming down for him, but he bills are still expensive.

Speaker Change: Energy still expensive so.

Speaker Change: They are dealing with with some of those things are still.

Speaker Change: As far as their costs are.

I think there's just a little uncertainty here and there in the marketplace right now that's causing some of the hesitation of spend. But, you know, as I see the bombshells and we watch the overall sales for the company,

Speaker Change: Just on a little uncertainty here and there.

Speaker Change: In the marketplace right now.

Speaker Change: I think some of the hesitation of spend but are you.

Speaker Change: You know I am.

Speaker Change: As I see the bombshells and we watched the the overall sales for the company.

increasing a little bit from November to December and so forth. I think that and even in some of the other quarters from September to October , we're a very optimistic that we've seen the bottom of it. It's just I don't know when

Speaker Change: Increasing a little bit.

Speaker Change: From November to December and so forth I think that and even in some of the other quarters from September to October.

Speaker Change: I'm very optimistic that and we've seen the bottom of it it's just I don't know when.

you know, people are going to get, I don't think they'll ever be 2022. Loose with their money again, but I think we're going to see a little bit of an increase. I think we'll go back to our standard, you know, three to five percent growth rates for existing clubs over the long period and definitely normalizing labor at overtime costs. So we're going to be able to bring some of our costs hopefully more in line and get our margins back to where they need to be.

Speaker Change: People are going to get a I don't think I'll ever be 2022.

Speaker Change: Loose with their money again, but I think we're going to see a little bit of an increase I think we'll go back to our standard you know, 3% to 5% growth rate for existing clubs over the long period and indefinitely normalizing labor.

Speaker Change: Overtime costs, so we're going to be able to bring some of our cost hopefully more in line.

Speaker Change: And get our margins back to where they need to be.

Understood. Okay. And then just curious, are you seeing any notable geographic differences in your same store sales for both the quarter that you just reported and the current quarter? Anything to call out or is it just consistent across the board?

Speaker Change: Understood. Okay, and then just curious are you seeing any notable geographic differences in your same store sales.

For both the quarter that you just reported in the current quarter.

Speaker Change: To call out or is it just the consistent across the board.

It's inconsistent everywhere. It's a real problem. I mean, one month, New York runs huge numbers in the next month or off a bit. Miami's been pretty consistent. We're down in Miami market with four clubs there. But I mean,

Speaker Change: It's inconsistent everywhere there is a real problem I mean, one month, New York runs huge numbers in the next month, but I'll bet.

Miami has been pretty consistent we're down in Miami, the Miami market for clubs there.

Speaker Change: I mean if.

If you look at what we did in that market, the previous year in 2022 was just...

Speaker Change: If you look at what we did in that market.

Speaker Change: Previous year in 2022 was just.

Numbers we couldn't even train that like.

Speaker Change: You know numbers, we couldnt, even dream that Mike.

Take Piffy, for example, a 39 plus million for the year. In 2026, I think we did 26 and change.

Speaker Change: It will take to fees for example, 39 plus million for the year.

Speaker Change: In 2026, I think you did 26 and change so even if we drop down to $33 million were still up a considerable amount from 2019.

So even if we drop down to $33 million, we're still up a considerable amount from 2019. Thank you for being a couple, welcome to another class! I'm happy to believe there is someone online equipped with a VCsOLZ.

Speaker Change: But not doing those numbers from 2022, but I can tell you. This week is an incredible week. It took these you know crypto bitcoin.

Bitcoin is killing it. We actually processed I think 170,000 in Bitcoin in two days.

Speaker Change: Bitcoin is killing it we actually processed a I think a 170000, Inc, and bitcoin in two days on a Wednesday, and Thursday, which really boosted.

on a Wednesday and Thursday, which really boosted the numbers for the Wednesday and Thursday of this week.

Speaker Change: The numbers for the Wednesday, and Thursday of this week.

We're getting other requests on whether we're taking Bitcoin and New York, which we're working on doing, probably in Chicago.

Speaker Change: We're getting other quest requests on whether we're taking bitcoin in New York, which we're working on doing probably in Chicago.

So it thickens, stays as strong as it is, I think that's gonna be a nice little boost for us.

Speaker Change: Bitcoin stays as strong as it is I think that's going to be a nice little boost for us.

Speaker Change:

Speaker Change: Thank.

I'm optimistic that this summer is going to be much better for us than this past one, because I think everybody went on vacation in June last year, especially Europe , Caribbean.

Speaker Change: I'm optimistic that this summer is going to be much better.

Speaker Change: For us than than this past one because I think everybody went on vacation in June.

Speaker Change: Last year, especially Europe.

Speaker Change: Caribbean.

South America, Mexico type deal and everyone was out of the country, our VIPs and our spend suffered from that. I think this year that people are going to spread their vacations out over the entire summer. Everybody's not going to go, you know, the first couple weeks of June and stay gone for three or four weeks.

Speaker Change: South America, Mexico type deal every one was out of the country our vips.

And our and our spend suffered from that I think this year that people are going to spread their vacations out over the entire summer everybody is not going to go now the first couple of weeks of June and stay gone for three or four weeks.

You know, I talked to a lot of people, they've come back and they're like, oh, it's horrible, they complain about the expenses, the crowdedness, the lines, when they wanted to go see exhibits or museums or tourist spots.

Speaker Change: I talked a lot of people and they've come back and they're like Oh, it's horrible they complain about the expenses the crowdedness of lines when they wanted to go see it.

Speaker Change: Zibet for museums or or.

Speaker Change: Tourist spots.

price gouging because there were just so many people there. And so I think this year, this summer's gonna be a much more realistic and kind of a normal summer. I think we're kind of returning back to that 2019 pre-COVID stuff. You know, 23 was, if 21 and 22 was like the, you know, the rush of it and the party of it, 23 has been the hangover. And now the hangover is ending. And I think people are gonna return to more.

Speaker Change: Price gouging, because there were just so many people there and so I think this year. This summer is going to be much more realistic.

Speaker Change: And kind of a normal summer I think were kind of returning back to that 2019 pre COVID-19.

Speaker Change: <unk>.

Speaker Change: And we've now 23 was at 21 and 'twenty. Two was there was like the the rush of it and the party are at 23 has been a hangover.

Speaker Change: And now the hangovers ending and I think people are going to return to tomorrow.

normalized behavior going forward. At least I'm certainly hoping that's the case. I think what we're seeing right now in this quarter, as I think it's kind of starting in this quarter and I expect that to continue through the next seven, eight months. And then I'll have an idea of a trend. It's just very hard to trend right now because I just have not been consistent. We'll have really big weeks, really off weeks, mediocre weeks.

Speaker Change: Normalized behavior.

Speaker Change: Going forward at least I'm certainly, hoping that's the case.

Speaker Change: I think what we're seeing right now in this quarter.

Speaker Change: I think it's kind of starting in this quarter and I expect that to continue through.

Speaker Change: The next seven to eight months.

Speaker Change: And then I have an idea of a trend. It's just very hard to trends right now because that just has not been consistent we will have a few really big weeks really off weeks.

Speaker Change: Mediocre weeks.

Speaker Change: And there's just no.

No real consistency to it in the last five and months. So, you know, kind of like a hangover, right? You know, right. Or get up and get sick right now. Or am I going to go out and party again tonight? Are my, you know, I think that's what we're seeing.

Speaker Change: No real consistency to it in the last seven months.

Speaker Change: Kind of like a hangover right.

Speaker Change: Right I get up get sick right now or am I going to go out and party again Tonight.

Speaker Change: I think thats what were seeing.

Got it. Okay. And then you also talked about implementing changes to improve operations. Can you give us some examples as to what you've done so far and what more should you expect going forward?

Speaker Change: Got it Okay and then.

Speaker Change: You also talked about implementing changes to improve operations can you give us some examples as to what you've done so far and what more should you expect going forward.

Sure, well, we promoted Dean Reardon and Sean Kaplan.

Speaker Change: Sure well, we promoted Dean Riordan and Sean Kevlin.

opened up Ed's time a little bit more, put in a little more oversight management basically through our regional management system, bringing up some, you know, up and coming guys.

Speaker Change: Opened up adds time, a little bit more.

Speaker Change: And a little more oversight management basically through our regional management system.

Speaker Change: Bringing up some some.

Speaker Change: Up and coming guys.

With the bomb shells, we hired a assistant director of operations with a lot, you know, 20 plus years of multi-restaurant experience. We're seeing, we're starting to see some of those results.

Speaker Change: With the Bombshells, we hired a assistant director of operations with a lot of you know.

Speaker Change: 20, plus years of multi restaurant experience.

Speaker Change: We're seeing we're starting to see some of those results are.

in certain markets, I'm noticing, and I'm very optimistic that they're going to find the secret sauce again, and basically as things normalize, and we've made some management changes. You know, I think during the...

Speaker Change: In certain markets I'm, noticing and I'm very optimistic.

Optimistic that.

Speaker Change: They're going to they're going to find the secret sauce again.

Speaker Change: And basically as things normalize and we've made some management changes.

Speaker Change: I think <unk>.

Speaker Change: During the.

Exuberance of 21 and 22 are some of our staff members got used to make an easy money and Not having to work as hard and now that we're having to really step the game up

Speaker Change:

Speaker Change: Exuberance of 21 and 'twenty two are some of our staff members got you.

Speaker Change: You used to make an easy money and not having to work as hard and now that we're having to really step the game up some of them.

I had gotten lazy, I think we've had to make some changes there, kind of wake some people up and say, you know, kind of like a remote worker who has to go back to the office. Our guys have been in the office every day because the restaurant or the club of their office, but they've had it pretty easy.

Speaker Change: It had gotten lazy I think we've had to make some changes there kind of wakes some people up and say you know kind of like a remote worker, who has to go back to the office our guys have been in the office every day.

Speaker Change: The restaurant, a clever their office, but they've had it pretty easy.

because there's lines, there's people spending lots of money. And now, we've got to return back to basics, get back to customer service, shake hands and touch and tables. I mean, that's...

Speaker Change: Cause you know nurse lines Theres people spending lots of money and now.

Speaker Change: We've got a return back to basics get back to customer service shaken hands on touch on tables, I mean, thats asked the name of our game I mean, there's a reason we're called RCI hospitality holdings, because we are a hospitality company.

That's the name of our game. I mean, there's a reason we're called RCI Hospitality Holdings because we are a hospitality company. And a lot of our team is getting that. It's really stepping up. There's some great, great.

Speaker Change: A lot of our team is getting that it's really stepping up.

Speaker Change: There's some great great.

people in our company and I think we've had to just kind of rebuild that I know bottom 10% right. I would 90% of problems are from 10% people so we're fixing those and correcting that and I think you're going to see that in our numbers and in our in our culture our ability to continue to attract top talent.

Speaker Change: People in our company and I think we've had to just kind of rebuild that Oh, no bottom 10% right.

Speaker Change: Yeah.

Speaker Change: 90%, 80% of your problems or from 10% of your people. So we're fixing those and correcting that and.

Speaker Change: I think youre going to see that.

Speaker Change: And our numbers and in our in our culture.

Speaker Change: Our ability to continue to attract.

Speaker Change: Top talent.

as we move forward or through the next, through the next seven, eight months.

Speaker Change: As we as we move forward through the next.

Speaker Change: The next seven to eight months.

Gotcha, and I think you also mentioned that labor costs have come down as well. So it's getting easier. Yeah, it's like, yeah, kitchen, kitchen staff is getting easier. Over time is down. I mean, that's another problem. We're working somewhere at best people of the heart.

Gotcha and I think you also mentioned that labor costs have come down as well so it's getting easier yes, okay, yes kitchen kitchen staff is getting easier overtime is down I mean.

Speaker Change: That's another problem, we work in some of our best people to harvest.

because they've had to fill in for people. So they, their work life balance got a little out of whack. So we've got to get that back. So get that back synced up. And I think I just get everything, just get everything on a more normalized.

Speaker Change: Because they've had to fill in for people. So they are there.

Speaker Change: Their work life balance got a little out of whack. So we've got to get that back and I will get that back up.

Speaker Change: Does that just get everything get everything on a more normalized.

playing field, you know, the parties over, the hangovers over, and now we're just normalizing and getting back to our standard gross cycle and getting back to the basics of our business.

Speaker Change: Plainfield, you know that there are parties over the hangover is over and now we're just normalizing and getting back to our to our standard growth cycle and getting back to the basics of our business.

Okay, would you say that as things kind of normalize, do you think you can get the back to the historical types of operating margins, maybe not the peak levels that you had like last year, but do you think that as it's kind of normalize, you can get bounce back to that high 20s, I guess.

Speaker Change: Okay. So would you say that as things kind of normalize do you think you can get back to the historical type of operating margins, maybe maybe not the peak levels that you had like last year, but do you think that as things kind of normalize you can you can get bounce back to that high.

Speaker Change: Twenties I guess.

I think we can definitely get into the 20s on pre-cash flow conversion. I think our EBITO will be closer to 30%. And we may be a point or two low for a little bit, but yes, I definitely think that we will get back to that more normalized, you know, 20% pre-cash flow, 30%.

I mean, I think we can probably get into the twenty's on free cash flow conversion I think our EBITDA will be closer to 30% and we may be a point or two low for a little bit, but yes, I definitely think that we will get back to that more normalized 20% free cash flow of 30%.

Adjust it even a margins. That's definitely the plan. Got it. Okay. Well, it sounds like a good plan Well, thank you very much best of luck and happy holidays to all

Speaker Change: Adjusted EBITDA margins and that's definitely the plant.

Speaker Change: Got it okay, well it sounds like a good plan and well thank you very much.

Speaker Change: Best of luck and happy holidays to all Yep. Thank you.

Speaker Change: Yeah.

Thank you very much, Anthony. Next up, we have Rob McGuire of Granite Research, Rob, the floor is yours. Well, thank you for-

Speaker Change: Thank you very much Anthony next up we have Rob Maguire of granite research, Rob the floor is yours.

Rob Maguire: Well, thank you for taking my questions today.

Starting on the nightclubs, can you elaborate on the baby doll rotations? You talk about two new locations already using the asset to own? Are these the club expansions? And can you give us more color?

Rob Maguire: Just starting on the nightclubs can you elaborate on that.

Rob Maguire: It also shows you talked about some new locations already using the answer to your own or are these the club expansions can you give us some more color.

Yeah, basically we're going to convert, we now have worked with the

Speaker Change: Yes, basically we're going to convert.

We now have worked with the.

city of tie near Avaline Texas to get our liquor license approved up there. So we're going to be converting the old Jaguars into a baby dolls. And then of course the original baby dolls west has been been on our plans. We've got the building permits working right now. And that's the property that we purchased off of Mark IV.

Speaker Change: The city of tie in their Abilene, Texas to get our liquor license approved up there. So we're going to be converting the old Jaguars into a baby doll and then of course the original baby Dolls West has been made on our plans.

Speaker Change: Got the building permits working right now.

Speaker Change: That's the property that we purchased off of.

Speaker Change: Mark four in northwest Fort worth.

So that one's kind of been on the plate for a while. And of course, the Lubbock location, where we had lost our club to taking by the Texas Department of Transportation to expand the freeway there. And bus, you know, five acres to build a location and another spot, that location is getting pretty close to being completed.

Speaker Change: So that one has kind of been on the on the plate for awhile and of course, the Lubbock location, where we have lost our club too.

Speaker Change: Taking by the Texas Department of transportation to expand the freeway, there and bus five acres to build.

Speaker Change: To build a location or another spot that location is getting pretty close to being completed.

I think we're waiting for the well permit and a couple of other things to put the well water in and whatnot and We'll get that location open here in 2024

Speaker Change: I think we're waiting for the well permit and a couple of other things to put the well water in and whatnot and.

Speaker Change: We'll get that location open here.

Speaker Change: Here in 2024.

So those are the three, those are three clubs that we've been working on.

Speaker Change: So those are the three.

Speaker Change: Three clubs that we have.

Speaker Change: Been working on.

I appreciate that, Eric. And maybe I missed this or I'm curious. You have plans to expand your Tika's location. Is that still an effect or is that a 2024 thing? Or it could possibly be 2024. Right now we were.

Speaker Change: I appreciate that Eric.

Eric Langan: Maybe I missed this or I'm curious you have plans to expand your chico's spoke to the Chickasaw locations.

Eric Langan: Is that still in effect or is that a 2024 thing or.

Eric Langan: It could possibly be 2024 right now.

Eric Langan: I said we.

Promoted from people to kind of be up more time for Ed.

Eric Langan: Promoted some people to kind of free up more time for Ed.

Eric Langan: Al.

so we could focus on these things a little bit more. We've got the three projects going.

Eric Langan: So he can focus on these things a little bit more <unk> got the three projects going.

We're not sure in the Dallas market right now what we're going to do with that cheapest, the extra property there at Cheekas there. In Houston, originally we were talking about, maybe doing a second type location there, but I think now we're actually talking about whether we're not going to expand the existing club. It's just doing so well. I was there, when

Eric Langan: We're not sure in the Dallas market right now, what we're going to do with that Chico's the extra property their cheek is there in.

Eric Langan: In Houston.

Eric Langan: Originally we were talking about may.

Eric Langan: Maybe doing a second type location, there, but I think now where we're actually talking about whether or not we're going to expand the existing club. It's just doing so well.

Eric Langan: I was I was there a Wednesday night. It was it was incredible probably about 120 entertainers there on a Wednesday night.

incredible, probably about 120 entertainers there on a Wednesday night. And so the VIP room's a little small there, so we're talking about maybe expanding that VIP room, or maybe putting in additional, building a whole new VIP room and expanding the 15 VIP room into more club space. So we're in discussions there. I know when Ed has some free time after the first of the year, we're going to get together and visit that site and kind of

Eric Langan: And so the VIP rooms, a little small there so we're talking about maybe expanding that VIP room.

Eric Langan: Or maybe putting in additional.

Eric Langan: Taking a building a whole new VIP room, and expanding the existing VIP room into more club space. So we're in discussions there are I know one that had some free time. After after the first of the year, we're going to get together and visit that site and kind of.

Hopefully make some decisions on exactly what we need to do there. We're also, you know, there's also talking, well, it's going so well that we really want to mess with it. So, you know, what do we want to do there? So I think we'll figure that out.

Eric Langan: Hopefully make some decisions on exactly what we need to do there. We're also you know there is also talk of well, it's going so well do we really want to mess with it so.

Eric Langan: What do we wanted to do that so I think we'll figure that out.

shortly in the next, in the next probably 30, 45 days. And maybe by the February call, we'll have a better idea of what we're gonna do with those properties.

Eric Langan: Shortly in the next in the next probably 30 to 45 days and maybe.

Eric Langan: Maybe by the February call, we'll have a better idea of what we're going to see with those properties.

Thank you. And then shifting to central city.

Eric Langan: Thank you and then shifting to central city.

theoretically if you were to get a license tomorrow how long would it take you to ramp and staff those facilities for point where you could open them

Speaker Change: Yeah radically if you were to get a license tomorrow, how long would it take you to ramp the staff those facilities to a point, where you could open up.

Six weeks. It's not just a stab, we also have to do tests.

Speaker Change: Six weeks.

Speaker Change: It's not just the staff, we also have to do testing.

Everything has to be fine. So once you get your license, then you put it on all your machines, everything gets done, and everything has to be tested.

Everything has to be signed and so once you get your license then you put in all your machines everything gets done and everything has to be tested right.

So it's a pretty in-depth process, but it takes approximately six weeks. It's what we're told. And our guide that we've had.

Speaker Change: It's a it's a pretty it's pretty in depth process, but it takes approximately six weeks.

Speaker Change: What were told and and our Guy that we've hired as our director of Casino operations.

as our director of casino operations, and casino management is definitely very...

Speaker Change: Casino management is definitely a very.

experience in that he's opened up several in the Colorado market. So he's very familiar with it. He knows exactly what we need to do. We have our full plan, our standard procedure, not operating procedure stuff all put together. And we'll be ready to go. However, if we got the license today, we still would not be open probably till April , because the construction will take at least until the end of March, early April .

Speaker Change: Experiencing that he has opened up several and the Colorado market. So he is very familiar with it he knows exactly what we need to do we have our full gland or standard procedure operating procedure stuff all put together and we will be we will be ready to go.

Speaker Change: However, if we got the license today, we still would not be open probably until April.

Speaker Change: Because the construction will take at least until the until the end of March early April.

Okay, got it. And then with regards to your third property in central city, I realized you've got a lot in place with the two casinos get to apply for a license for that third property though, or can you kind of give us a timeline on that one. We have applied for the gaming license to have it to have it licenses gain, you know, as a licensed casino. We have purchased.

Speaker Change: Okay got it and then with regards to your third.

Our property in Central City.

Speaker Change: I realize you've got a lot of it and play with the two casinos.

Speaker Change: Fly for a license for that third property, though or can you probably give us a timeline on that one sure. We have applied for the gaming license to have that to have it licenses as a license casino.

We have purchased.

Speaker Change: Additional property that's contingent.

I mean, continuous with that property. So I think we now have somewhere, I don't know the exact square footer job problem ahead. Somewhere between 30 and 40,000 square feet a week, depending on where we put the holes in the walls to connect the buildings and whatnot. So it's actually a very, become a very large...

Speaker Change: Continuous with that property. So I think we now have somewhere I don't know the exact square footage off top my head somewhere between 30, and 40000 square feet. If we depending on where we put the holes in the walls to connect the buildings and whatnot. So.

Speaker Change: It's actually a very become a very large a large.

large property. There are existing tenants there right now. We're gonna keep those tenants in place. Keep those storefronts open so that mainstream continues to stay busy. We're gonna get the existing casinos open first.

Speaker Change: A large property there are existing tenants there right now.

Speaker Change: We're going to keep those tenants in place keep those storefronts open so that main street continues to stay busy we're.

Speaker Change: We're going to get the existing casinos open first.

and then decide what we want to do with that property. But we also allows us because that's the last vacant those are basically the last vacant spaces on main street.

Speaker Change: And then decide what we want to do with that property, but we also it allows us because thats. The last vacant those are basically the last vacant spaces on main street.

to basically control that entire corridor there between our other two casinos and anyone else coming in and competing. So we know all of our existing competition that we could possibly have and we would be able to control if we go into the third party, unless somebody else built a casino there, we would remain the landlord and we could put some clauses in the lease that would protect our existing operation.

Speaker Change: To basically control that entire corridor there.

Speaker Change: Between our other two casinos and anyone else coming in and competing so we know all of our existing competition that we could possibly have and we would be able to control. If we go on with a third party unless somebody else build the casino there we remain the landlord and we could put some clauses in the lease that would protect our existing operations.

This is interesting and then my last question is just with regards to Central City are there other operators? I mean, as you just mentioned, that sort of it remains free, but are there other plans by third parties to develop their own casinos or increased foot traffic to Central City? We certainly hope so. There's three properties you can build mega casinos on our resort type casinos. We call it with hotels, with hotels, 400, 600 room hotels, 1,200, 1,800.

Speaker Change: Interesting and then my last question is just with regards to central city or are there other operators I mean as you just mentioned that's sort of it for main street, but are there other plans by third.

Speaker Change: Arty to develop their own casinos or increased foot traffic the central city, we certainly hope so there's three properties you could build mega casinos on our resort tightened <unk> as we call it with.

With hotels.

Speaker Change: 406 hundred room hotels 1200 1800.

parking, parking spots and their garages.

Speaker Change: Parking garage parking spots in their garages.

with anywhere from 60 to 100,000 square foot casino space, which we would definitely welcome because it would bring a lot of...

Speaker Change: With anywhere from 60 to 100000 square foot casino space.

Speaker Change: Which we would definitely welcome credit would bring a lot of a lot of new traffic to central city.

lot of new traffic to Central City. I know there's several casino operators and developers that have been looking at those sites and I'm certainly hopeful that at some point,

Speaker Change: I know, there's several casino operators and developers.

Speaker Change: That had been looking at those sites.

Speaker Change: Certainly hopeful.

Speaker Change: That at some point.

Those properties will be sold and will get some of those properties built.

Speaker Change: Those properties will be sold and we will get some of those properties built.

I think it'll be fantastic for that area. I think right now, Black Hawk Central City's 13th.

Speaker Change: And so I think it would be fantastic for that area I think right now our Blackhawk central cities 13th.

in gaming in the country and I would love to see that area move up into the top 10. I think those type of casinos will bring it to that point. You know Denver is the number one feeder market to Las Vegas. So there's a lot of people who are flying to Denver and then fly to Las Vegas. If we get gifts get them to drive the four, five minutes, stay in Denver and drive the 45 minutes up and make it a mountain vacation where they can go. In the summer go whitewater wrapping, fishing, hikes.

Speaker Change: And gaming in the country and I would love to see see that area move up into the top 10, and I think those type of casinos.

Speaker Change: What will bring it to that point.

Speaker Change: Denver is the number one feeder market to Las Vegas. So there's a lot of people are flying to Denver, and then fly to Las Vegas, If we can just get them to drive before.

Speaker Change: Five minutes stay in Denver, and drive the 45 minutes up AR and.

Speaker Change: And make it a mountain vacation where they can go.

Speaker Change: In the summer go whitewater rafting fishing hiking.

the winter go skiing. There's six major ski resorts within an hour and 10 minutes. Five of them are within one hour.

Speaker Change: And the winter go skiing.

Speaker Change: There's six major ski resorts within an hour and 10 minutes five of them are within one hour.

I just think it's a fantastic opportunity for future development. And for us with the main press.

Speaker Change: I just think it's a fantastic.

Speaker Change: Opportunity for.

Speaker Change: For future development.

Speaker Change: And for us with the the main presence on main street there.

Speaker Change: Thank you so much.

Speaker Change: Thank you Rob.

Thank you very much Rob. Before we open this up to Q&A from our audience, I'd like to encourage everyone to share and retweet this space and to please raise your hand with any questions.

Speaker Change: Thank you very much Rob before we open this up to Q&A from our audience I'd like to encourage everyone to share and re tweet this space and.

Speaker Change: Please raise your hand with any questions.

Speaker Change: First up we have Adam Wyden.

Adam, take it away. Hey, can you guys all hear me?

Adam Wyden: Adam take it away.

Adam Wyden: Can you guys all hear me.

Adam Wyden: Yes.

So just sort of going back on sort of your hangover analogy and margins, you know, generally speaking after a crazy night out, you know, you're spending all this money and then, you know, you gotta figure out what you're doing and you're on your hangover. I mean, for me, I like coconut water, but like, you know, if you think about that as an analogy,

So just sort of going back on sort of your your hangover analogy and margins you know generally speaking after crazy night out you're spending all this money and then you know.

Adam Wyden: You've got a you've got to figure out what you're doing in your on your hangover I mean for me I like coconut water, but like if you think about that as an analogy you know labor is super tight yet a lot of overtime now inflation is coming down labor weaker I mean can you talk through sort of some of the initiatives you're doing to sort of tighten up more.

you know, labor is super tight, you know, a lot of overtime, now inflation's coming down, labor is weaker. I mean, can you talk through sort of some of the initiatives you're doing to sort of tighten up margins, where it comes her down, you expect them to come up, you know, modestly over time, but like there's sort of some belt tightening and recalibration.

Adam Wyden: Margins were like comps are down and you expect them to come up modestly over time, but like there's sort of some belt tightening and recalibration.

I mean, can you talk about that and talk about margin because at least the way we think about it like

Adam Wyden: Can you talk about that and talk about margin because at least the way we think about it like <unk>.

You know, bombshells has sort of been the source of revenue decline, but it's the lower margin product. And now you've got more night clubs and the casinos coming online. I mean, I would think that...

Adam Wyden: Bombshells has sort of been the source of revenue decline, but it's the lower margin product and now you've got more nightclubs and the casinos coming online I mean, I would think that if youre casinos do what what do you think youre going to do margins should actually increase over time relative to the average. So I'm just trying to think about how you're thinking about rational rationalization of costs and sort of margin trajectory in.

If your concenos do what you think you're gonna do, you know, margin should actually increase over time relative to the average. So I'm just trying to think about how...

thinking about rationalization of cost and sort of margin trajectory in the context of adding high margin casino revenue, fixing what you've already had. I mean, I would think that we would sort of seen the low point in the margin and then, you know, perhaps even see margins go back, you know, higher than historical average, just based on the aggregate mix. I mean, can you talk a little bit about that? An abstract question.

Adam Wyden: The context of adding high margin casino revenue fixing what you've already had I mean, I would think that we would sort of seen the low point in the large and then perhaps even see margins go back go higher than historical average just based on the aggregate mix I mean can you talk a little bit about that and I'm sorry question.

Yeah, I mean, obviously the martyrs

Speaker Change: Yes, I mean, obviously the Barton, it's going depend on what changes.

Speaker Change: And future acquisitions.

with when and as we open up these concepts. When I refer to margins returning back to 20, I think we're 15% free cash flow margin for this quarter. I think for the year we were 18%.

Speaker Change: When and as we open up these new concepts.

Speaker Change: When I refer to margins returning back to 20, I think we're 15% free cash flow margin for this quarter I think for the year, we were 18%.

So, you know, not horrible. And a single quarter isn't a, isn't a brawminer for, for, for, for 12 month period because of seasonality. And, and this is kind of a, a strange, I mean, this, I think I'm hoping 2024, so last year that we have this strange seasonality. And I, I'm hoping that, like I said, I think by June , by the June quarter, we should return to a much more,

Speaker Change: No not horrible in a single quarter isn't a.

Speaker Change: It isn't a barometer for further toward a 12 month period because of the seasonality.

Speaker Change: And this is kind of a.

Speaker Change: Strange I mean, this I think I'm, hoping 'twenty 'twenty four is the last year that we have this strange seasonality and I am hoping that like I said I think by June.

Speaker Change: By the June quarter.

Speaker Change: We should return to a much more normalized.

seasonality of mix I think. But it's really going to figure out the rest of this month here. Get this quarter out. Talk to you guys in February . We'll be partially through this second quarter. So we'll have a pretty good idea of how January and February are going. I suspect that

Speaker Change: Ah seasonality and mix I think.

Speaker Change: But it's really.

Speaker Change: You kind of figure out the rest of this month here get this quarter out talk to you guys in February.

Speaker Change: We will be partially through the second quarter. So we'll have a pretty good idea of how January and February are going.

Speaker Change: I suspect that Jamie.

of January , we're gonna be pretty decent based on what I'm seeing right now, what I'm hearing out there talking with the customers and guests. I've been on a guest today, stay 13.

Speaker Change: January February are going to be pretty decent based on on what I'm seeing right now and what I'm hearing out there talking with the customers and guests I've been on today's.

Speaker Change: Today's date <unk>.

13-day run now from Houston, Colorado, Miami, now in New York. And so I've spent a lot of times in the club.

Speaker Change: 14.

Speaker Change: 13 day run now [laughter] from Houston to Colorado to Miami.

Speaker Change: Now in New York.

And so I spent a lot of times in the clubs I spent a lot of time talking to our teams I spent a lot of time talking to gas price and a lot of time with talking to the entertainers and.

our teams, I spend a lot of time talking to guests, I spend a lot of time talking to entertainers. And the consensus is that, you know, we've seen the worst of it. Customers seem to be getting more optimistic.

Speaker Change: The consensus is that.

Speaker Change: We've seen the worst of it our customers seem to be getting more optimistic.

And our staff is definitely more optimistic on what they're seeing right now versus what they were seeing in the late part of the summer.

Speaker Change: And.

Speaker Change: Our staff is definitely more optimistic on.

Speaker Change: On what we're seeing right now versus what they were seeing are in.

Speaker Change: Part of the summer.

So that's very promising. So we've made some changes of personnel, we've made changes.

Speaker Change: No.

Speaker Change: That's very promising.

Speaker Change: So we've made some changes.

Speaker Change: Personnel, we've made changes in.

You know, certain things we've raised some prices here and there. We've adjusted some things. We've changed our specials. Our specials are...

Speaker Change: Certain things we've raised some prices here and there we've adjusted some things we've changed our specials.

Speaker Change: IR specials or.

I'm starting to become more of a day of the week type deal, which is typical, typical what we see and have to do in a recession to keep our Mondays and Wednesdays college. So those things are happening right now.

Speaker Change: Starting to become more of a day of the week type deal, which is typical typical what we see and have to do in a recession to keep our Mondays and Wednesdays solid.

Speaker Change: So those things are happening right now.

And I think we'll just keep, you know, keep pushing through and do what we do. But as far as, you know, depending on the mix of what we buy,

Speaker Change: And I think we'll just keep keep pushing through and do what we do but as far as depending on the mix of what we buy on future I guess, we could change our projections on what we think the margins would be.

We could change our projection on what we think the margins would be, whether it's going to be 18%, 20%, 22% or higher. Right, and also this year, I don't know if you mentioned this on the call.

Speaker Change: Whether it's going to be 18%, 20%, 22% or higher.

And also this year I don't know if you mentioned this on the call, but my sense is at least you know when I look at this was a big year you acquired a lot of land.

My sense is at least, you know, and I look at, this was a big year you acquired a lot of land.

You know, I mean, and you know, when you use your cast of basic plant seeds, you can't use that cast to sort of de-leverage, right, or buy back or what have you. And so it sounds like you're carrying probably more debt or at least this year, you've carried more debt than you would otherwise carry because

Speaker Change: I mean, yeah.

Speaker Change: When you use your cash to basic plant seeds, you can't use that cash to sort of deleverage rate or buyback or what have you and so it sounds like youre carrying probably more debt or at least this year you've carried more debt than you would otherwise carry because you bought all of this land.

You bought all this land, you know, you're developing, you've sort of got, you know, both from an OPEX and at least from a leverage perspective, sort of higher OPEX and higher, you know, interest expense running through the P&O without that corresponding revenue. And so, you know, I would think that like from a pre-cashable margin perspective, as you add that revenue, you know, on from an income perspective.

Speaker Change: You're developing you've sort of got you know both from an opex and at least from a leverage perspective sort of higher opex and higher interest expense flowing through the P&L without the corresponding revenue and so I would think that like from a free cash flow margin perspective, as you add that revenue on.

Speaker Change: From an income perspective, you know I would think that you know your free cash flow margin would go up right because both on Opex and the interest expense line. Your basic carrying non income producing assets without the corresponding revenue or EBITDA or whatever so I would think that that would also help your free cash flow relative to 'twenty.

You know, I would think that, you know, your free cash flow margin would go up, right? Because both on an op-ax and interest expense line, you're basically carrying non-incomproducing assets without the corresponding revenue or EBITDA or whatever. So I would think that, you know, that would also help your free cash flow, you know, relative to 24 relative to 23, right? Because you, you know, basically, I mean, like, Bob Shill, staff, for example, like that's just open, right? But you've been carrying it, there's been op-ax against that, right? And that's...

Speaker Change: 24 relative to 'twenty three right because you.

Speaker Change: Basically I mean like Bob a showstopper for example, like that just opened right, but you've been carrying it theres been opex against that right and that's.

a bombshell that could do 8, 9, 10 million dollars, at least for the first year. There's been money against that that wasn't income-producing. They sort of have this kind of income versus expense mismatch. That should be reversing in 24.

Speaker Change: Obama show that could do you know eight $910 million at least for the first year and there has been money against that that sort of wasn't sort of income producing so theres sort of have this sort of income versus expense sort of mismatch I mean that that should be sort of reversing in 'twenty four right.

Well, I can cut it quick simple for you. I would estimate 20, 20, 3, that those carrying costs are somewhere between four and six million dollars.

Speaker Change: Well I can kind of a quick simple for you I would estimate twenty-twenty agree that those carrying costs are somewhere between four and $6 million.

2024 hopefully if we open things up we we can cut that down to less than half of that and add

Speaker Change: In 2024, hopefully as we open things up.

Speaker Change: We can cut that down to less than half of that and add additional.

So yes, at that point those margins will, that's why I said I'm pretty comfortable. Overall saying, you know, we'll get those margins back to that 18%, you know, 18% is very similar to 2023, maybe back to 20% 24. And it's depending on when we open. You know, the biggest problem with the casinos, we just don't know when we're gonna open. We could open April , we could open June , we could open in September . We just don't have any way to...

Speaker Change: Revenue so yes at that point those margins will that's why I said I'm pretty comfortable overall thing, we'll get those margins back to that 18 19.

Speaker Change: 18% is very similar to 2023 may be back to 20% and 24.

Speaker Change: And just depending on when we opened up the biggest probably casinos. We just don't know when we're going to open when we could open April we could open June we could open in September wheat.

Speaker Change: We just don't have any.

Speaker Change: Way too.

Judge when the state of Christ Rottles could you open processing the applications they could they have a patient license and breathe

Speaker Change: Judge when the state of Colorado could you open processing the applications. They could they haven't issued a license in three years. So certainly they want to get those license issued I would I would I would think but could.

Certainly they want to get those license issues. I would I would I would think but could you if you if you have the things the locations open in April both the bombshells you know sort of

Speaker Change: Could you if you if you have the things the locations opened in April both the bombshells.

fourth bar, can you open them up as sort of restaurant liquor venues while you're waiting for the casino and basically get those things going? I mean, I don't know how the the strip club licenses work, but I mean, if for whatever reason, you know, it was sort of taking longer I mean, you'll have the buildings built. I mean, you could use them as an entertainment venues ahead of the casino or is that even a possibility to just open them in April and then wait until the gaming stuff or is that sort of not that that wouldn't be like the appropriate. I would guess I'd wait till June to

Speaker Change: Sports Bar can you open them up as sort of restaurant liquor venues, while youre waiting for the casino and basically get those things going I mean, I don't know how this the strip club licenses work, but I mean, if for whatever reason you know it was sort of taking longer I mean, you'll have the buildings built I mean, you could use them as the entertainment venues out of the casino or is that even a possibility to open them in April and then wait until the game.

Speaker Change: And stuff or is that is that sort of not that that wouldn't be like they are appropriate.

Speaker Change: I would guess I'd wait till June two.

Speaker Change: To do that.

April May will make those decisions like open operate without gaming.

Speaker Change: April may will make those decisions like the Oakland operate without gaming.

or not. And I guess that'll just depend on what kind of feedback we're getting from gaming. Whether we're on the gaming agenda, whether our licenses are approved. But yeah, at some point, I'm gonna open up and start generating revenue and stop the bleed, right? I mean, at some point it becomes senseless to just sit there with their built out property with our liquor licenses in place, with all of our other operations ready to go.

Speaker Change: Or not.

Speaker Change: And I guess that will just depend on what kind of feedback we're getting from gaming.

Speaker Change: Whether on the gaming agenda, whether our licenses are approved but.

Speaker Change: But yes at some point I am going to open up and start generating revenue.

Speaker Change: And and and stop the bleed right I mean at some point it becomes centralist to just sit there with a built out.

Speaker Change: Property with our liquor licenses in place with all of our other operations ready to go.

and just wait for the gaming, especially because I think the club side of it will do very, very well in that market. So...

Speaker Change: And just wait for the gaming.

Speaker Change: Especially because I think the club side of it will be very very well.

Speaker Change: And that market so.

That's definitely an option for us. This, it's just too early to gauge if that's going to be.

Speaker Change: Uh huh.

Speaker Change: That's definitely an option for us.

Speaker Change: Just it's just too early to gauge.

Speaker Change: If that is going to make sense or not.

But definitely want to get something going in the summer because it's very difficult. If we open after the season end, the prime season ends and we get into the skiing season with the winter and the unpredictable weather and the roads and drive through the mountains in the winter time, it's harder to get people to move up there in the winter. So I would rather definitely open in the summer. So that's something we'll take in a place that probably by the may call will have something most definite on.

But.

Speaker Change: Definitely want to get something going on in the summer because.

Speaker Change: It is very difficult we opened after the season and the prime season ends and we get into the ski season.

With the winter and the unpredictable weather and the roads.

Speaker Change: A drive through the mountains in the wintertime.

Speaker Change: It's harder to get people to move up there in the winter.

Speaker Change: So I would rather definitely opened in the summer. So that's something we'll take into place that.

Speaker Change: Probably by the May call, we'll have something most definitely.

on that regards. But the construction should be done, God willing, through April . So like, you know, there is a shop that if the gaming commission moves quickly that you could have these things opened by April and May, like, because your construction is moving, right? I mean, you're, you know, that part you can control. I think April makes optimistic. I think June , July is...

Speaker Change: In that regards.

Speaker Change: I'll take that question, but the construction of it should be done God willing through April. So like there is a shot that if the gaming Commission moves quickly that you could have these things open by April or May right. Because youre construction is moving right. I mean, you're you know that you've got part you can control I think April may is optimistic I think June July is.

Speaker Change: More realistic and I think.

Speaker Change: You know August September is probably being pessimistic.

You know, that's kind of my thought, but I do think we get open in 2024. I mean, you got to remember we've offered the first license, the November of 2022. So it's been over, I'm going on with 13 and a half months or 13 months. And about 13.

Speaker Change: Right.

Speaker Change: Yeah, that's kind of my thought process I do think we get opened in 2024.

Speaker Change: I mean, you got to remember we offer the first license.

Speaker Change: November of 2022.

Speaker Change: So it's been over.

Speaker Change: Going on with 13 five months, our 13 months.

Speaker Change: Now about 13 months right now.

So, you know, when you get to, when you get the May, I mean, you're talking 18 months.

Speaker Change: So.

Speaker Change: When you get to.

Speaker Change: I mean, you hit the May I mean, you are talking 18 months I.

I would hope that we have a definite idea of where we are and when we're gonna get those licenses approved by May at the late.

Speaker Change: I would hope that that we have a definite idea of where are we where we are in when we're going to get those licenses and approved.

Right. And the city's behind you because they're, they've got revenue bonds and all the rest of me. And they want you there. They want the money. So it's not like, you know, it's not like anyone's working against you that everybody's on board. If everybody's working against us, we don't know who they are. We haven't heard anything like that. It's been very positive. We're, you know, I go to every city council meeting. I've missed three. Travis hasn't missed any. Travis was the only one in the room the other day, at the end of the year when there was given their speech, he was the only one in the room other than I think the city clerk.

Speaker Change: By May at the latest right and the city's behind you because they're they're they're they've got revenue bonds and all the rest I mean, they want you there they want the money. So sounds like you know, it's not like anyone's working against you that everybody is onboard with anybody working against US We don't know who they are and we haven't heard anything like that it's been very positive where I go to every city Council meeting a mystery.

Speaker Change: Uh huh.

Speaker Change: Travis hasn't missed any drivers was the only one in the room. The other day at the end of the year when I was giving a speech. He was the only one of the room other than I think the city clerk.

that had perfect attendance. For the year. So we've had somebody at every meeting. We are there. We're very active in that town. We're making other investments in that town. I've made some personal investments in that town. My son has moved up there. He's made some investments in that town. We're very committed to central city and the success of not just our venues, but what the city itself.

Speaker Change: That had perfect attendance.

Good for that part of the year. So we've had somebody at every meeting we are there we're very active in that town.

Speaker Change: We're making other investments in that town Ive made some personal investments in that house. My son has moved up there. He has made some investments in that town.

Speaker Change: We're we're we're we're very.

Speaker Change: Ari committed to to central city, and the success of our not just our venues, but the city itself.

And yes, the city needs a tax revenue. The meetings are online, you can watch this.

Speaker Change: And yes, the city means the tax revenue.

Speaker Change: The meetings are online you can watch there.

Last meeting was a budget meeting. You can see the city's budget's about negative $850,000 for 2024.

Speaker Change: Our last meeting with a budget and you can see the city's budget about.

Speaker Change: Negative $850000 for 2024.

And so us getting open early is going to be a very, very important to the city, as well as the three other Latinos that have applied for license in that city. We need this good, this good. So.

Speaker Change: And so us getting open early is going to be a very very important to the city as.

Speaker Change: As well as the three other casinos that have applied for licenses in that city, we need.

Speaker Change: This is the.

The Department of Gaming has stated that a lot of the processes, licenses, get these licenses issued and get central city up and operating so that 60% of the storefront make.

Speaker Change: The department of game, even state of Colorado processes licenses get these licenses issued and and get to the central city up and operating.

Speaker Change: So that 60% of the storefronts arent baking.

Good. Last question. You know, at Noble, I mean, I'm just going back and looking at my notes at Noble last summer.

Speaker Change: The last question at Noble I mean, I'm, just going back and looking at my notes a noble last summer.

I guess it's not last summer, it's almost, I guess it'd be two summers ago. I think it was July 22. You talked about your RCI capital allocation plan for the next three years. And the joke is, man plans got laps, right? So obviously we have not allocated $200 million this year. And the goal I think was to allocate $200 million a year and add sort of...

Speaker Change: This is not last summer is almost I guess it'd be two summers ago, whether it was July of 'twenty. Two you talked about sort of your your RCI capital allocation plan for the next three years and you know the joke is you know man plans God laughs right. You know so obviously, we have not allocated $200 million. This year and the goal I think was to allocate 200 million.

Speaker Change: A year and a sort of 30 of EBITDA 30, 35, 40 sort of over three years you.

30 of EBITDA, 30, 35, 40, sort of over three years. You know, I guess the question is.

Speaker Change: You know I guess the question is you know your competitors are sort of wounded. You know there's the three I guess, that's the <unk> or the three DS death divorce and I forget what the other one is but.

You know, your competitors are sort of wounded.

You know, there's, you know, the three, I guess it's the two D's or the three D's, you know, death divorce and I forget what the other one is, but, you know, Owners of small businesses have to sell regardless of what's going on, you know, can you talk about sort of, you know, it's been 12 months into an ounce in acquisition.

Speaker Change: What are the small business is off to sell regardless of what's going on you know can you talk about sort of it's been 12 months since you announced that acquisition.

You know, can you talk about sort of getting the, you know, how that M&A pipeline looks and, you know, how you can get back to sort of a normal cadence of, you know, even about 30 of you, but, you know, 20 a year because we haven't really added any in a year. And I would think that now, where are we added in March?

Speaker Change: Can you talk about sort of getting me, how that M&A pipeline looks and how.

Speaker Change: You can get back to sort of a normal cadence. So even apparel 30 of EBITDA you know 20, a year because we haven't really added any in a year and I would think that now we added in March I ought to be fair, we closed a major acquisition to $66 million acquisition.

We closed our major acquisition, 606, that's not going to our acquisition in March. We always say when we close the big one, we're going to wait six months before we do anything else. We've only been back on the market looking for about 60 days. We had a long list of people that had called us. We're calling those people back. Some people have unrealistic.

In March.

Speaker Change: We always say when we closed the big one we're going to wait six months before we do anything else. We've only been back on the market looking for about 60 days.

Speaker Change: We had a long list of people that had called us where cognos people back.

Speaker Change: Some people have unrealistic.

valuation in their head right now because they think they're going to sell us at five times 2022 numbers when we all know that 2022 was, you know, excuse me.

Speaker Change: <unk> and their head right now because they think theyre going to sell us at five times.

Speaker Change: 2022 numbers when we all know that 2020.

Speaker Change: Excuse me.

Speaker Change: An incredible year.

You know, we bought the first clubs that are about 4.2 to 4.3 times.

Speaker Change: We bought.

Speaker Change: The birch clubs at about four points for two to four three times.

There are numbers. We've increased those numbers, so it's going to be coming in at around four times for us. And we're looking at four times right now. If you want to...

Speaker Change: Their numbers, we've increased those numbers, so it's going to be coming in at around four times for us and we're looking at four times right now if you want to.

Come in, you want us to look at your 2022 numbers. We'll look at it, but we're going to pay you about four times on those because the reality of it is...

Speaker Change: Come in and you wanted to look at your 2022 numbers will look at them, but we're going to pay you about four times on those because the reality of it is.

No matter how good we are, there's gonna be about a 20% decline from those numbers. That's what we're seeing overall. I mean, I can talk to operators who are down 35% 40% in certain markets.

Speaker Change: No matter how good we are theres going to be about a 20% decline from those numbers and that's what we're seeing overall I mean, I can talk to operators are down 35% to 40% in certain markets.

And we're talking to them and they're like, well, you know, I want five times, you know, I saw pay you five times your current numbers Well, I want five times my 22 numbers and I said, well, that's not gonna happen And you know, you're right you're down 35% right now. How am I supposed to buy you based on those numbers even if I you know, I can probably bring you know

Speaker Change: And and I were talking to them and they're like well you know I want five times so.

Speaker Change: I'll pay five times your current numbers.

Speaker Change: I don't want I want five times by 'twenty, two numbers and I said, well, that's not going to happen and then you're right you're down 35% right now how am I supposed to buy based on those numbers, even if I know I can probably bring you know get you down less in 'twenty around around 'twenty, but I'll pay you four times, if you want to do that or up eight five times currently and so that's kind of where we're at right now.

get you down less than 20 or around 20, but I'll pay you four times if you wanna do that or I'll pay you five times current.

So that's kind of where we're at right now. We're getting some compositive feedback right now with a couple of different.

Speaker Change: We're getting some some positive feedback right now with a couple of different <unk>.

Hopkins, we're looking at and you know, obviously Christmas is coming up. So I wouldn't expect anything the next few weeks, but but I wouldn't be surprised if we have some some stuff announced in the next you know, couple months.

Speaker Change: Opportunities that we're looking at and.

Speaker Change: Obviously Christmas is coming up so I wouldn't expect anything in the next few weeks, but but I wouldn't be surprised if we have some some stuff announced in the next couple of months.

And I think once it starts, it's going to be pretty consistent. Because once the next guys files to us, we've re-vispavished the purchase multiple. Then I think other guys are just going to fall in line. And we're going to end up with a few more locations.

Speaker Change: And I think once it starts it's going to be pretty consistent.

Speaker Change: Because.

Once the next guy trials to us only.

Speaker Change: We've established.

Speaker Change: The purchase multiple than I think other guys are just going to fall in line and we're going to end up with a few more locations.

or like so we're looking at several things right

Speaker Change: Or like I say, we're looking at.

Speaker Change: Several things right now.

But we're gonna pick. I mean, we're, we're, we're, yes, I can go close to acquisitions all day long if I want to overpay.

Speaker Change: And what we're gonna pick I mean were yes, I could go close acquisitions, Alibaba I want to overpay for them, but I don't want to overpay, it's not in the vessels the company the fifth grade math has to work.

But I don't want to overpay. It's not, and the best is the company. The fifth grade math has to work.

If the cap allocation strategy, when we do the math, if it doesn't work, then we don't move forward. We just wait.

Speaker Change: The capital allocation strategy, when we do the math of it doesn't work then we don't move forward, we just wait.

Unfortunately, sometimes that means we wait a little longer than we'd like to But at the end of the day, I don't know what they're gonna sell to if they don't

Speaker Change: Unfortunately, sometimes that means we wait a little longer than we'd like to.

But at the end of the day, I don't know where theyre going to sell two if they don't sell to us.

And it was that changes then we may have to get more

Speaker Change: If that changes then we may have to get more aggressive or if the market changes.

Speaker Change: Can we get more aggressive so can we how can we doubled what we do can we double click on that last statement that you had there so like.

You have all these unrealistic sellers, right? But if you think about it, and we've talked about this, but I think it's important for other people to hear this, which is that you own a building, right? Or you own a building, you have a strip club, and it does 10 million in sales, and I don't know, four million in EBITDA or something like that. And let's say you can pass through a rent to 600,000 or something, and you can even sell it at a six cap or something. That building could be sold for 10 million dollars, but then you lose the cash flow of the strip club, right? And so, you can, you know, the idea is, you can sell your building for 10 million bucks, but that's the equivalent of two and a half times EBITDA for...

Speaker Change: You have all these unrealistic sellers right, but like if you think about it and we've talked about this but like you know I think it's important for other people to hear this which is that like you own a building right or you own a building of a strip club and it does $10 million in sales and you know I don't know $4 million of EBITDA or something like that and let's say you can you can pass through a rent.

Speaker Change: 600000 or something.

You can even sell it at a at a six cap or something you know that that building you know that building could be sold for $10 million, but then you lose the cash flow of the strip club right and so.

Okay.

Speaker Change: The idea is you can sell you can sell your building for 10 million Bucks, but that's the equivalent of two and a half times EBITDA for for for for the strip club right. It's like Okay. Like you know you can sell your strip club for two and a half times because that's what the buildings, where it's like I don't really know what the alternative is right because you're the only person that's willing to a buy the real estate and also.

for the strip club, right? It's like, okay, like, you know, you can sell your strip club for two and a half times because that's what the buildings worth. It's like,

Speaker Change: <unk> operate the club and so like when I think about the options right for a seller right. Yeah, you can try and sell it to your manager, but as your manager you can even take the seller finance from the manager is he going to be able to raise the equity like who's buying you know strip clubs with five or $6 billion. I mean look interest rates are coming down, but there's still something right.

Speaker Change: It's like you know I don't really see a scenario, where someone else's buying stripped them for five or $6 million and pay in and say hey, Here's a strip club I'm going to pay you $25 million five times EBITDA right.

$25 million, you know, five times EBITDA, right? You know, that's...

That's $15 million more than you would if you were just selling the real estate. So like, I don't for me. And that's, and that's why we keep running the deal.

Speaker Change: That's $15 million more than you would if you were just selling the real estate so like idle for me.

Speaker Change: And that's why we keep winning the deal.

That's why we're buying these gloves. We're picking up some incredible real estate in the transactions. Future development of that real estate has value. I mean, we just kind of praise those. So we're in the process right now putting together a cash out loan. We want to see how much cash we can get. So we had all the properties that we purchased that we paid cash for. We're getting them all apprised right now. We can pull 20 plus million and cash out. Since we're looking at some pretty serious acquisitions, we want to have everything ready to go in early.

That's why we're buying these gloves. We're picking up some incredible real estate in the transaction.

Speaker Change: That's why we're buying these clubs, we're picking up some incredible real estate in the transactions.

You know future development that real estate has value. I mean, we just.

Speaker Change: Future development of that real estate.

Speaker Change: Values are.

Speaker Change: I mean, we just did.

We just got appraisals, so we're in the process right now putting together a cash out loan. We want to see how much cash we can get. So we had all the properties that we purchased and we paid cash for. We're getting them all.

Speaker Change: We just got appraisals.

Speaker Change: In the process right now putting together.

Speaker Change: Our cash out long, we want to see how much cash we can absolutely. We had all the properties that we purchased and we paid cash for or getting them all.

right now. So we figure we can pull 20 plus million and cash out. Since we're looking at some pretty serious acquisitions, we want to have everything ready to go in early January so we can make moves fast.

Speaker Change: Right now so we figure we can pull $20 million in cash out.

Speaker Change: Since we're looking at some pretty serious acquisitions, we want to have everything ready to go in early January.

Speaker Change: We can make moves fast.

And like, you know, the playmates property, I think we paid $4 million for it. The appraisal just came back at seven and change. We paid seven million for the scarlet's ability. Just came back at seven point eight. We're waiting for the casino Uh, deals come in, but basically all the appraisals so far that we've gotten in are much

Speaker Change: And like the Playmates property I think we paid $4 million worth of appraisal just came back at seven and change.

Speaker Change: We paid 7 million for the Scarless billings came back at seven eight are waiting for the casino.

Deals come in but basically all the appraisal so far that we've gotten in our much.

higher than what we paid for the properties as we bought those properties in 20 and 21 and even in early 22. So I'm very optimistic.

Speaker Change: Higher than what we paid for the properties.

Speaker Change: As we bought those properties in 2020, one and even in early 'twenty two so.

Speaker Change: I am very optimistic that our.

We need a $41.8 million total of praise value to pull the cash we want to pull out and move the New York property out of an existing loan and pull it back in because it's a praise was so bad in 2020 when we had COVID. It's about a $15 to $18 million property and the praise came back at $6.9 I think.

Speaker Change: We need a $41 $8 million total appraised value to all of the cash we want to pull out and move to New York property out of an existing loan and pull it back in because its appraisal was so bad and and.

Speaker Change: 2020, when we had COVID-19.

Speaker Change: So about a $15 million to $18 million property in the appraisal came back at $6 nine I think.

So we only owe about five million. We're only able to pull five million cash out of that building. I think when the new praise comes in, we're gonna be able to pull about 11. Or should we...

Speaker Change: So we only all about $5 million, we arent able to put 5 million cash out of the building I think when the new appraisal comes in we're going to get a hold of about 11.

Speaker Change: Excuse me about 11 out of it.

So we'll pick up an extra six million by refinancing that New York property and pulling it into the new loan. So we're weighing all these things right now. So we'll have.

Speaker Change: So we'll pick up an extra 6 million by refinancing that New York property.

Speaker Change: Pulling it into the new loan so we're weighing all of these things right now so we will have.

Options available to us, right? Everything's about options for us right now There's so much out there. We're sorting through it. We're gonna kind of you know look at different things and find the right Right, so the right pieces like I

Options available to us right everything's about options for us right now.

Speaker Change: There's so much out there we're sorting through it we're going to kind of.

Speaker Change: Look at different things and find the right price the right pieces.

Speaker Change: It's a puzzle all we have to do is keep doing what we're doing keep stuff and keep on our capital allocation strategy put our capital to work.

Keep doing what we're doing, keep on our calculations, fragile, put our cap on to work.

the cash on cash returns and continue to just, you know, wash, rinse, repeat. It's actually really...

Speaker Change: The cash on cash returns and continue just.

Speaker Change: Wash rinse repeat it.

Speaker Change: It's actually really simple.

I've listened to the listeners' shareholders and everybody's appearing, you guys need to do more club acquisitions and build less bombshells and so I said, okay, but I believe in the bombshells, chancef, and I don't want to give it away and I won't give it.

Speaker Change: I've listened to establish new shareholders and everybody I'm hearing.

Speaker Change: You guys need to do more club acquisitions, and Bill glass Bombshells, and so I said, okay, but I I believe and the bombshells concept and I don't want to give it away and I won't give it away.

just to get rid of it, but I will explore strategic opportunities to grow it at a much faster pace than we if ourselves can grow it.

Just to get rid of it but I will explore strategic opportunities to grow it at a much faster pace than we ourselves can grow at I've been talking with some pretty smart people out there that the beauty of the restaurant business is there some really smart people out there.

I've been talking with some pretty smart people out there. The beauty of the restaurant business.

There's some really smart people out there in that space. And they understand, we talk to them about the value. They see, they put through our stuff, they put through our march.

Speaker Change: In that space and they understand we've talked to them about the value.

Speaker Change: They've seen they they put through our stomach, but through our margins what we've done how we've done it and.

what we've done, how we've done it. And we're getting some pretty positive feedback on it. And I really think that we're going to figure it out.

Speaker Change: You get some pretty positive feedback on it and I really think that we're going to figure it out it may take six months. It may take three I don't know, but we're going to figure out how to accelerate the growth of bombshells with capital from other people I'm sure we'll have to share part of it but we will reap a big part of it.

It may take six months, it may take three. I don't know, but we're gonna figure out how to accelerate the growth of bombshells.

with capital from other people. Sure, we'll have to share part of it, but we will reap a big part of it for our shareholders and very little risk to ourselves. And if that...

Speaker Change: For our shareholders and very little risk to ourselves and if that.

That's like infinite cash run cash returns if it's other people's cash and we're making money off of it. So those are, I know you think I don't listen sometimes Adam, but I do listen. It just takes me time to digest. It takes me time to figure out.

Speaker Change: That's like infinite cash on cash returns if it's other people's cash and work and we're making money off of it.

So those are those are you know.

Speaker Change: I know I know you think I don't listen sometimes at them, but I do listen it just takes me time to Digest. It takes me time to figure out you know.

you know, what the best method to do these things are. And, but we're getting there. I'm always learning, and I'm always listening. I'm learning.

Speaker Change: What the best method to do these things are and ER, but we're getting there I'm always learning and I'm always listening so.

Speaker Change: Okay.

Speaker Change: There you go.

Fantastic. Thank you so much for your questions, Adam. I'd like to encourage anyone with questions in the audience to please raise your hand and we'll bring you to the front. Next up, we have Orchid Wealth. Please take it away.

Speaker Change: Okay fantastic. Thank you so much for your questions Adam I'd like to encourage anyone with questions in the audience to please raise your hand, and we'll bring you to the fronts.

Speaker Change: Next up we have Oregon wealth, please take it away.

Hey, work your well if I think you're on mute. Are you muted still, Jason?

Oregon wealth: Hey, Orchard wealth I think you're on mute.

Orchard wealth: You mean, just still Jason.

Orchard wealth: Okay.

Speaker Change: Got it now.

There you go, sir. I got you. Perfect. Hey, how much more money you guys think it will take to get Colorado up and going?

Speaker Change: Yeah, I mean, yeah.

Speaker Change: Yes, Sir I gotcha.

Speaker Change: Hey, how much more money you guys think it will take to get Colorado up and go.

Speaker Change: Wow.

But you know, when we open. Yeah, but I mean, just, you know, what are you saying to yourself right now? I got this much in. How much more do I need? I think we're going to put between now and April . We're going to put another six million or so in. Could be eight and on what we do on machines and a few other things. All in all, we're going to spend.

Speaker Change: Going.

Speaker Change: When we opened yeah, but let me just what do you what do you think to yourself right now I've got this much in how much more do I need to say about I think we're gonna put between now and April we're going to put another $6 million or so and could be eight and on what.

Speaker Change: What we do on machines and a few other things all in all we're going to spend probably.

14, I think we're ever to my 2022 million, I think is our is our budget.

Speaker Change: 14, I think wherever to by 2000 22 million I think is our is our budget.

Speaker Change: But that's including buying all the machines.

because of our new manager.

Speaker Change: Because of our our new manager.

or off-sky that we brought in. He's got some great relationships with some of these vendors and companies. And so we're starting to get some pretty good deals or maybe 12 months famous cash. We only have to pay monthly for 12 months after. And it does start until we open the casinos, but the machines are already making money for us where we have to start paying for them.

Speaker Change: Our ops Guy that we that we brought in and he has got some great relationships with some of these vendors and companies and so we're starting to get some pretty good deals or maybe 12 months famous cash and we only have to pay monthly for 12 months after and it does start to us. So we open the casino slot machines are already making money for us where we have to start paying for them.

We've got some some pretty neat You know terms and deals that we didn't have available to us before we hired him as a new operator You know, they don't trust new operators as much so these casino companies are much stronger about it, but

Speaker Change: We've got some pretty neat.

Speaker Change: Terms and deals that we didn't have available to us before we hired him.

Speaker Change: As a new operator, they don't trust new operators as much ladies casino companies are much stronger about it but.

Speaker Change: They do.

Speaker Change: Are they do they don't know him he's a very great very good operator in that market. He is very well known in that market.

They do, they do know him. He's a very great, very good operator in that market. And he's very well known in that market. And so we're getting some nice offers from some of these companies. And I'm very optimistic that, you know, like I said, about six, the answer question quick, I'm a quick six, eight million, spending now in April , May is my guess.

Speaker Change: So we're getting some.

Speaker Change: Some nice offers from from some of these companies.

Speaker Change: I'm very optimistic that like I said about fix the answer your question quick several quick six 8 million turning now in April May and is my guess.

Okay. And then just to clarify, when you guys get your license, it applies to all three properties. You don't have to resubmit for each one. We've already submitted for all.

Speaker Change: Okay, and then just to clarify when you guys get your license it applies to all three properties you don't have to resubmit for each one.

Speaker Change: <unk> already submitted for all three.

But investigation has, so all three life have the same operators, have the same company, all the capitals coming from the same stores.

Speaker Change: But I investigation has it.

Speaker Change: <unk> have the same operators.

Speaker Change: At the same company all the capital is coming from the same source.

I believe that if they approve one day, approve all three.

Speaker Change: I believe that if approved one day approve all three right.

But I'm not the Colorado Department of Gaming, so I can't be 100% sure of that. But that is my understanding.

Speaker Change: I'm not the Colorado Department of gaming, So I can't be 100 per share percent sure of that.

Speaker Change: Alright, but that is my understanding.

that once were approved, there may be some formalities. The lights will be approved, but the actual, what's called the go live.

Speaker Change: That once we're approved there may be some formalities.

Speaker Change: <unk> will be approved but the actual what's called the go live.

and individual. So each, each just you know, has to all their set up all their tests.

Individuals' so each each casino has to all their set up all their testing.

All of their operating procedures that have to walk through and do all the inspections.

All of our operating procedures, they have to work through and do all the inspections.

You have to pass all that, then you get to go live. Those will all be independent for sure. But I think the actual approval for the three to actually start those processes should be all at the same time. You have to pass all that, then you get to go live.

Speaker Change: To pass all that then you get to go live those will all be independent for sure, but I think the actual approval for the three to actually.

Speaker Change: I'll start those processes should should be all at the same time.

Speaker Change: Yes.

If I'm if I'm understanding it correctly.

And then when you get your license, you already have people that are looking for the online partnership agreements that you guys were talking about. We do, we have been talking.

Speaker Change: Okay and then when you get your license you already have people that are looking for the online partnership agreements that you guys were talking about.

Speaker Change: We do know we have been talking with different groups.

I think we'll, you know, obviously everything's gonna be contingent on the license being issued because

Speaker Change: I think well, obviously everything is going to be contingent on the license to be an issue because.

We have to have a license as you've been in and take them, then they have to do their application, which takes another 30 days for that. So, okay. But it's not like they get their application, it's gonna be another, you know.

Speaker Change: We have to have license you then it takes them then they have to do their application, which takes another 30 days for that so.

Okay, but it's not like they get their application is going to be another.

six months. It should not be. But just state it's up to the Department of Gaming. It's not up to me. Right. Okay. The gaming people haven't come back to you and wanted anything else. They completed all their interviews and stuff and you haven't heard anything from them. Right. So it's just sitting on a desk somewhere.

Speaker Change: Six months.

Speaker Change: It should not be.

Speaker Change: Okay.

Speaker Change: It's up to the department of game and it's not up to me right.

Speaker Change: Okay.

Speaker Change: The gaming people haven't come back to you and wanted anything else they've completed all their interviews and stuff and you haven't heard anything from them right. So it's just sitting on a desk somewhere.

I'm sorry. I said somebody. I said, I'm going to be very sad. Oh, I said is the

Speaker Change: I'm sorry.

Speaker Change: Said somebody I said, how long would be per cycle.

Speaker Change: Third is the.

They haven't come back to you for anything else. They've done your interviews. You've given them all your full. Oh, they've come back with us multiple times. We've been on multiple data dumps, which is good.

Speaker Change: Well they havent come back to you for anything else they've done your interviews you've given them all year.

Speaker Change: Yes, I'm back with us multiple times a week.

Speaker Change: Multiple data dumps.

Speaker Change: Which is good that means we know the process is moving forward.

From what I understand, early January starts what they call on site inspection.

Speaker Change: From what I understand early January starts out what they call onsite inspections, so they will be going and visiting some of our current locations. We have no clue, which one we have no clue when they'll go but we believe that will start in early January.

So there will be going and visiting some of our current locations. We have no clue which one. We have no clue when they'll go. But we believe that will start in January .

I know what the budget is. So I know it's money to have to spend because we had to provide it.

Speaker Change: And I know what the budget is.

Speaker Change: I know how much money they have to spend because we had to provide it.

Make it a few pages. No ponds. You pay them to investigate you.

Speaker Change: Thank you for your personal funds you.

Speaker Change: You pay them to investigate you yes.

Yes. Well, okay. No, that's not the worst. And they can ask for additional funds, which I do expect them to do. But there's limits on that. I don't know what the whole rules are. I have to go back and look at them. But basically, I think that once they do the side inspections, I think it'll be relatively quickly. Because before they get to that point, I think everything else in the investigation is done.

Speaker Change: Yes.

Speaker Change: No that's a word and they can ask for additional funds, which I do expect them to do.

Speaker Change: But theres limits on that I don't know what the whole all rules are I have to go back and look at them, but oh.

Speaker Change: Basically I think that once they do the site inspections I think it'll be relatively quickly because before they get to that point I think everything else in the investigation has done so.

So unless they find something they want to look into, while doing this fight inspections, I don't suspect that there'll be any other real issues. Okay, and then my last question for now is just, when you do an online partnership, these guys give you cash up, or under some type of agreement of revenue share, how does that typically work?

Speaker Change: Unless they find something they want to look into while doing the site inspections I don't suspect that.

Speaker Change: That there'll be any other real issues. Okay. And then my last question for now is just when you do an online partnership these guys give your cash upfront or some form of agreement of a revenue share how does that typically work.

Ah, both. They give us cash upfront. They give us guaranteed minimums and they give us a percentage and if the guaranteed minimum is more than the percentage, then we take the guaranteed minimum and if it's the percentage is more, we're going to take the percentage.

Speaker Change: They give us cash upfront they give us guaranteed minimums and a.

Speaker Change: Give us a percentage and if the guaranteed minimum is more than a percentage and then we take the guaranteed minimum and if it's the percentage is more we're going to take the percentage.

So in a weird way like this online partnership that you may or whoever you pair with for these places, could theoretically almost pay for the entire investment over a 10-year period from the revenue share.

Speaker Change: So in a weird way like this online partnership that you may or whoever you pair with for these places could theoretically almost pay for the entire investment over a 10 year period from a revenue share.

Typically, yes. Okay. So for all the intensive purposes, this is just like the question is, how quickly are you gonna get your money back? You're gonna get it back in 10 years with an online partner or from the revenue from the machines and everything else, you can get it back in two. Okay, good to be yeah. I mean, that's, it depends on how much it's attached, we actually use to and how much we're able to pull out. Because once the casino's open and operating, you can get it back in 10 years. Okay. Okay.

Speaker Change: Typically yes, okay.

Speaker Change: Okay.

Speaker Change: So for all intensive purposes. This is just like the question is how quickly you're going to get your money back youre going to get it back in 10 years with an online partner or from the revenue revenue from the machines and everything else you can get it back into <unk>.

Speaker Change: Okay.

Speaker Change: Yeah, I mean, that's and it depends on how much cash we actually used to and how much we're able to pull out.

Speaker Change: Once the casinos open and operating.

Speaker Change: Borrow against it right I mean, that's.

There's a lot of lenders out there that loan to casino companies unlike strip Unlike strip clubs you can borrow against the actual business model and the business cash flow You can borrow get your machines you can borrow I mean it's totally different everybody wants to give you money when you're in the kiss

Speaker Change: There is a lot of lenders out there that loan to casino companies. Unlike strip. Unlike strip clubs you can borrow against the actual business model and the business cash flow, making bargain machines you can borrow.

It's a totally different areas everybody wanted to give you money when youre in the casino business.

Well, you know, they don't build all the big buildings because everybody's winning. Yeah, all right. Good. All right. Thanks guys. Thanks. I think anybody else would like to ask a question. Please raise your hand and they'll get you in the queue here. Thanks.

Speaker Change: Now they don't build out alright building, because everybody's winning yeah, alright, good alright, thanks, guys.

Speaker Change: If anybody else would like to ask a question. Please raise your hand and.

Speaker Change: They'll get you in the queue here.

Speaker Change: Thank you.

Adam, you're back up and if there's anyone else out there in the audience with questions, please raise your hand and we will bring you to the front. Adam, take it away.

Speaker Change: Adam you're back up and if theres anyone else out there in the audience with questions. Please raise your hand.

Speaker Change: And we will bring it to the front Adam take it away.

Speaker Change: Hey, Adam you're on mute.

Mr. Wyden, you are on mute if you'd like to unmute yourself.

Speaker Change: Mr White and you're on mute, if you'd like to on mute yourself.

Speaker Change: Yeah.

We are going to bring up payments advisor now. Payments advisor, please take it away with your payments question.

Speaker Change: We're going to bring up payments advisor now payments advisor. Please take it away with your payments question.

Payments you can unmute and feel free to Hello Chat

Payments advisor: Payments, you on mute and feel free to chat.

Okay, thanks guys. Thanks for taking, you know, thanks for letting me on appreciate.

Payments advisor: Okay. Thanks, guys. Thanks for taking thanks for letting me on I. Appreciate I appreciate the the earnings call and you know the whole breakdown.

appreciate the earnings call and the hope breakdown.

I just wanted to, essentially, I think I posted on there hoping that I could have a chance to, especially just offer my services to RCI. I really love what you guys do. I've been watching you guys from a distance for the last couple of months. Everything you're building out.

Payments advisor: I just wanted to essentially I think ive posted on there, hoping that I could have a chance to essentially just offer my services to RCI I really love what you guys do I've been watching you guys from a distance for the last couple of months everything Youre building out I was just kind of want to find a way to pay you guys.

I just kind of want to find a way to pay you guys. Essentially, you know, we're a hotel payments processor. We can basically eliminate all your processing costs.

Payments advisor: Essentially you know we're a wholesale payments processor, we can basically eliminate all your processing costs.

and just reduce it to essentially 0% over interchange and pay you one cent per transaction. You got to apply it towards debt paydown, expansion, share buyback. Just wondering, I mean,

Payments advisor: And just to reduce it to essentially zero percent over interchange and pay you one cents per transaction you guys can apply it towards debt paydown expansion share buybacks.

Speaker Change: Just wondering I mean, I'm not the person to handle that.

I would tell you to email Travis at rcih.com Perfect. We...

Speaker Change: I would tell you the E mail Travis at RCI, H H Dot com perfect.

Speaker Change: We are.

Speaker Change: Basically run or a competitive bidding process.

Speaker Change: Once a year.

Speaker Change: Don't know when he does credit cards, but I know he does it.

Speaker Change: At least once a year so we send this out.

Speaker Change: We'd be happy to take a look at it and see if it makes sense. Okay. Thanks, Eric thoughts Travis Potts, RCI H H Dot com.

Speaker Change: Yes. So if you can't find it you can just go to our website at RCI Hh Dot com and click on the board members and his I think his contact email stuff's all perfect. Thank you Eric.

Speaker Change: Yes. Thank you.

Speaker Change: Yeah.

Thank you so much to Eric and Bradley as well as everyone who asked a question this afternoon.

Speaker Change: Thank you so much to Erik and Bradley as well as everyone who asked a question. This afternoon.

For those who join late, you can meet me as well as management tonight at 7 o'clock at Rick's Cabaret, New York, one of RCI's top revenue generating clubs. Rick is located at 50 less 33rd Street between Fifth Avenue and Broadway, a little in from Harold Square.

Speaker Change: For those who joined late you can meet me as well as management Tonight at seven o'clock at Rick's Cabaret, New York one of Rci's top revenue generating clubs. Rick is located at 50 West 30, <unk> Street between fifth Avenue, and Broadway, a little and from Herald Square.

If you have an RSVT, ask for Eric or me at the door. On behalf of Eric, Bradley, the company, and our subsidiaries, thank you and have a good night. As always, please visit one of our clubs or restaurants and have a phenomenal time.

Speaker Change: Do you have an RSVP ask for Eric or me at the door on behalf of Eric Bradley The company and our subsidiaries. Thank you and have a good night as always please visit one of our clubs or restaurants and have a phenomenal time.