RCI Hospitality Holdings Inc (RICK) 2023 Q4 法說會逐字稿

All right. Let's kick this off. Greetings and welcome to RCI Hospitality Holdings fourth-quarter and year-end fiscal 2023 earnings call. You can find the company's presentation on RCI's website. (Conference Instructions) Please turn to slide 2 of our presentation.

I'm Mark Moran, CEO of Equity Animal. I will be the host of our call today. I'm here in New York with Eric Langan, President and CEO of RCI Hospitality. CFO, Bradley Chhay, is coming to us from Houston. Please turn to slide 3.

If you weren't doing so already, it's easy to participate in the call on Twitter spaces. (Conference Instructions) This conference call is being recorded. Please turn to slide 4.

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 developments that occur afterwards. Please turn to slide 5.

I also direct you to the explanation of Rick's non-GAAP financial measures.

Finally, I'd like to invite everyone listening in the New York City area to join Eric and me tonight at 7:00 PM 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 and Broadway, a little in from Herald Square. If you haven't 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.

Thank you for joining us today. Please turn to slide 6. I think our fourth-quarter results were 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 acquisitions. Business 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-store sales decline, results were also affected by higher noncash impairments. As a result, we earned $0.23 per share. But on a non-GAAP basis, we were solidly profitable, earning a $1.11 per share.

We are up pretty in a unique and complex macro economic environment. In addition, last year's second half saw the highest operating leverage we've had in the past five years. Fiscal 2022 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 fiscal 2019, with Nightclubs up 8.3% and Bombshells up 12.6%. We also saw the second highest levels of free cash flow and adjusted EBITDA in the company's history, eclipsed only by the unique dynamics of fiscal 2022. Please turn to slide 7.

We are pleased to report that during and subsequent to the quarter, we have made significant process progress towards our key growth initiatives. These should begin to produce result 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 that 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 continued to buy back more shares. We believe we have significant cash resources to be able to implement our strategies and plans. Please turn to slide 8.

I'd like to take a moment to go into 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, Rick's Cabaret Steakhouse and 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 indicate the process is proceeding. No other applicant has received the gaming license ahead of us. We are also awaiting liquor licenses for both of the casinos and a building permit for the Bombshells Casino.

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 market. During the first quarter, we received the building permit for our Rick's Cabaret Steakhouse and Casino. Interior 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 free cash flow opportunity. Our plans are a total of 400 slot machines and 9 to 12 table games as well as sports betting.

Looking at the slot, they have been averaging $133 adjusted gross proceeds per day in Central City and $307 per day in nearby Blackhawk. Blackhawk is higher mainly because they run on a 24/7 basis, which we plan to do also. We have assembled additional properties on Main Street for further casino development as well. Please turn to slide 8 -- I'm sorry, slide 9.

Got a little confused here. The Baby Dolls-Chicas Locas acquisition continues to perform well. Sales have improved every quarter since the March acquisition and we finished 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. 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 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 Shaun Kevlin as Director and Assistant Director of Nightclub Operations for RCI Management Services. This should enable Ed Anakar, President and Director of RCI Management Services, to focus more time on acquisitions 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.

Off-script a little bit, 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 going to come in front of us and be on very favorable terms. So I'm very excited about that.

If you please 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 and Greenwood Village, a suburb of Denver, to add to our existing successful Bombshells kitchen there. We have later relaunched that location in Cherry Creek Food Hall.

In November, we opened the first Bombshells post-COVID. This is located in Stafford Texas, a suburb of Houston. It is off to a great. Regarding other new Bombshells, construction is continuing on Rowlett and the Lubbock location and remodeling should begin soon for our downtown Denver site. All three are expected to open in fiscal '24.

In other developments, we hired a new Assistant Director of Operations with more than 20 years of multi-unit restaurant experience. For Bombshells, I'm currently exploring with private equity groups, sale, partial sales of the concept, partnerships or mergers. Basically all strategic operating or all strategic opportunities out there that we can use to maximize the value of this asset and I think 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.

Turn to slide 11. Acting upon our confidence and our capital allocation strategy, our strong free cash flow profile and our valuation, we continued to take advantage of our low stock price from the first quarter of fiscal '24 to buy back more shares.

As of December 8, we had repurchased 37,954 common shares for approximately $2.1 million or an average price of about $54 or $59 per share in Q1 2014. 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 aggressively buy back shares when they trade materially below our view of fair value.

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

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

By revenue type, alcoholic beverages increased 17.2%; food, 15.9%; and other, 8.1%. 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 Chicos Locas clubs this year. They also reflect the lower same-store sales and the summer slump in service revenues.

Service revenue was 42% of Nightclubs sales this quarter versus 46% a year ago. If the sales mix had been the same, we had $2.4 million in service revenue, most of which have been benefited free cash flow. Post-acquisition of Heartbreakers, Baby Dolls, and Chicas Locas, 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.

Fourth quarter results included a $8.4 million more in items typically excluded from non-GAAP calculations, mainly noncash impairments. 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 revenue. Even with the macroeconomic challenges we've been facing, our strategies have enabled Nightclubs non-GAAP operating income to remain at a $22 million to $24 million range per quarter since the second quarter of '22. Please turn to slide 13 to review our Bombshells segment.

Fourth-quarter revenues declined $452,000. Lower same-store sales were partially offset by the $1.6 million and newly acquired locations, namely Bombshells, San Antonio; and the renamed Cherry Creek Food Hall with its Bombshells kitchen. GAAP operating income was a profit of $1.2 million or 8.2% of revenues, and non-GAAP was a profit of $1.4 million or 10.4%. 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. This delta was largely a result of $908,000 increase in items typically excluded from non-GAAP calculations, again, mainly impairments. Corporate expenses were $6.8 million, nearly level with last year.

On a non-GAAP basis, they were $1.7 million higher. This reflected about $500,000 more in salaries and wages in the fiscal '23 fourth quarter and the benefit of a $1 million legal insurance payment in the year-ago fourth quarter.

I also want to note our 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 higher portion of income subject to state income taxes.

Please turn to slide 15. Here you can see three big spikes in 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 era.

Please turn to slide 16. We have a couple of slides coming up that we'll discuss free cash flow and adjusted EBITDA, which are non-GAAP. In advance of that, we wanted to present you with the closest GAAP equivalents on this slide, which are operating and net income.

Please turn to slide 17 to look at some of our other key metrics. 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 30 fell on a Saturday. This resulted in our carrying credit cards in our accounts receivable from Thursday to Saturday sales at the end of the quarter.

Fourth-quarter free cash flow was 11.1 million or [15%] of revenues. Adjusted EBITDA was $20.2 million or 27% of revenue. Our more recent free cash flow and adjusted EBITDA conversion rate reflect a lower percentage of service.

Please turn to slide 18 to review some of our debt metrics. Our debt at September 30 declined $4 million from June 30 due to scheduled paydowns. Weighted average interest rate was 6.64%, in line with what we have been paying. Total occupancy costs inched up a little bit on a sequential quarter basis at 8.1%, but still in our comfort range of 6% to 9%.

The increase since the third quarter of fiscal '22 primarily relates to new club acquisition debt. Debt-to-trailing 12-month adjusted EBITDA stayed relatively flat at 2.8 times, September 30 versus June 30. This metric continues to be in line and our comfort level of less than three times. We adjusted our September 30 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 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 what we like.

Please turn to slide 19 for our debt pie chart. Our debt composition is similar to the third quarter, and that's it.

So let me turn the presentation over back to Eric.

Thanks, Bradley. Please turn to slide 20. 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 acquisitions, organic growth and buying back shares on our yield on free cash flow per share is more than 10%. 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.

We turn to slide 21. We have stuck to our capital allocation 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 count by 1.3% 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 Rick's 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 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 this 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.

Thank you, Eric and Bradley. (Conference Instructions)

We have a limited number of speaker spaces. 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 larger shareholders. Our three analysts are Scott Buck of H.C. Wainwright; Anthony of Sidoti; and Rob of Granite Research.

Scott, you're up first. Take it away.

Yes, 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 with some of that. Sort of softer trends in the fourth quarter kind of drag here into the first quarter as well.

I mean, we've seen some of the drag, especially in the blue-collar still into this first quarter. The comps are becoming easier, not perfect for us yet, but easier to build.

It's tough to say when -- I'm a trend finder. It's what I do. I look at numbers. I see the trend. I watch the financials. And it's the craziest thing I've ever seen. I've called this a psychological recession. And as we all know, that means people are crazy about spending.

I think the consumer, especially in the last 60 to 90 days, is loosening up a little bit. But I think it's still a little -- there's cautious spending. People are unsure. We're seeing a lot of tech layoffs now. So I think some of the higher-end spend -- higher-end 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, we're 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. I think that's kind of predicted that.

But now as far as trend, I don't see trends. I think the longest trend up or down, I've 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. It's really unusual compared to what I've seen in the past.

However, overall, we're seeing enough strength. I'm very optimistic. Going forward, I think the lows are kind of past. The low sales weeks are 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. And I mean, the clubs were incredible, especially Tootsie's in Miami was packed. We were setting up by the VIP booth area to the counter, to the rooms in the back. And I mean, there was lying all night long Friday and Saturday night. So that was very promising.

Tootsie's had 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 is really picking up for us. Right now, basketball starting to heat up a little bit. So very excited about how we're going forward. With everything we have on our plate, with casinos, the three new clubs, the three new Bombshells, I think '24 is going to be a fantastic year for us, even if things stay a little sluggish.

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 sense of timing on when something could potentially be announced?

Just being honest, I mean, we're talking with several people right now. We 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 with different groups for different ideas, whether it's a strategic partnership, whether it's partial buy that would give us capital to do the expansions with, or a straight-out sale of the assets. We're basically exploring all those things. We're going to weigh it all out and see what we think fits best for our long-term goals for RCI.

And as far as timing, some of the requests, I mean, we've been working on the case, so Bradley have 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 going to have more groups that talk to us, and we're going to have more ideas and more opportunities to explore. And we're just going to find what we believe is the best for the company to use those assets, to build additional cash flow for the company.

And at the same time, make 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's 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 and make these acquisitions.

Very great. I appreciate that. And then one last one for me. I'm curious, how should we think about OpEx 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?

You're talking about CapEx spend? Or are you talking about maintenance CapEx? I'm sorry.

I'm talking about adding back-office heads and support heads, that sort of thing.

I don't think we're going to add much of anything. We're kind of -- our payroll is -- 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 added color, guys. Thank you for the time.

Thanks.

Thank you very much for your questions, Scott.

Anthony, Sidoti. Anthony, take it away.

Yes. Good afternoon, and thank you for taking the questions. So firstly, just a follow-up on the previous question there 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 a frame of reference to like what percentage of your clubs would you consider blue-collar?

It's actually -- with 70 locations, I'd have to actually look through it. I call it the pickup truck crowd, the working crowd. I think gas prices coming down, but the bills are still expensive. Energy is still expensive. So they're dealing with some of those things still.

As far as their costs, 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 as I see the Bombshells and we watch 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, I'm very optimistic that we've seen the bottom of it.

It's just I don't know when people are going to get -- I don't think we'll ever beat 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, 3% to 5% growth rate for existing clubs over the long period and definitely normalizing labor. Overtime costs, if we're able to bring some of our costs hopefully more in line 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?

It's inconsistent every quarter. That's the real problem. I mean, one month New York runs huge numbers and the next month, they're off a bit. Miami has been pretty consistent. We're down in the Miami market with our four clubs there.

But I mean, if you look at what we did in that market the previous year in 2022 was just numbers we couldn't even dreamed. Take Tootsie's, for example, $39 million-plus for the year. In [2026], I think we did $26 million and change.

So even though we dropped down to $33 million, we're still up a considerable amount from 2019. But not doing this numbers from 2022. But I tell you, this week is an incredible week at Tootsie's. Crypto is -- Bitcoin is killing it. We actually processed, I think, $170,000 in Bitcoin in two days on a Wednesday and Thursday, which really boosted the numbers, for the Wednesday and Thursday of this week.

We're getting other requests on whether we're taking Bitcoin in New York, which we're working on doing. Probably in Chicago's. So if Bitcoin stays as strong as it is, I think that's going to be a nice little boost for us. I'm optimistic that the 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, 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 is not going to go the first couple of weeks of June and stay gone to three or four weeks. I talked a lot of people. They 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 the exhibits or museums or tourist spots. The 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 and a kind of a normal summer. I think we're kind of returning back to that 2019 pre-COVID stuff. Now '23 was -- if '21 and '22 was like 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 going to return to more 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, 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 have an idea of a trend. It's just very hard with trends right now. Because like I said, it just has not been consistent. We'll have a few really big weeks, really off weeks, mediocre weeks, and there's just no real consistency to it in the last seven months.

So kind of like a hangover, right? We get up and get sick right now or am I going to go out and party again tonight, you know, I think that's what we're 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?

While we promoted Dean Reardon and Shaun Kevlin, it opened up Ed's time a little bit more, put a little more oversight management basically through our regional management system, bringing up some up-and-coming guys.

With the Bombshells, we hired an Assistant Director of Operations with 20-plus years of multi-restaurant experience. We're starting to see some of those results 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, I think during the exuberance of '21 and '22, some of our staff members got used to make an easy money and not having to work as hard. And now that we have to really stepped the game up, some of them had gotten lazy. I think we've had to make some changes there, kind of wakes people up and say, you know -- kind of like a remote worker. We have to go back to the office.

Our guys have been in the office every day, the restaurant or the club are 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, shaking hands and touching tables.

I mean, 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 people in our company. And I think we've had to just kind of rebuild that bottom 10%, right?

90% or 80% of your problems are from 10% of your people. So we're fixing those and correcting that. And I think you're going to see that in our numbers and our culture and our ability to continue to attract top talent as we move forward through the next seven, eight months.

Got you. And I think you also mentioned that labor costs have come down as well. So --.

It's getting easier. Yes. Kitchen staff is getting easier. Overtime is down. I mean, that's another problem. We're working some of our best people the hardest because they've had to fill in for people. So their work-life balance got a little out of whack. So we've got to get that back, synced up, and just get everything on a more normalized playing field. The party is over; the hangover is over. And now we're just normalizing and getting back to our standard growth cycle and getting back to the basics of our business.

Okay. So would you say that as things normalize, do you think you can get back to the historical path of operating margins? Maybe not the peak levels that you had like last year. But do you think that as things kind of normalize, you can bounce back to that high 20s?

I think we can probably get into the 20s 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 and 30% adjusted EBITDA margins. That's definitely the plan.

Got it. Okay. Well, sounds like a good plan. Well, thank you very much and best of luck and happy holidays to all.

Yeah. Thank you.

Thank you very much, Anthony.

Rob McGuire, Granite Research. Rob, the floor is yours.

Well, thank you for taking my questions today. Just starting on the Nightclubs, can you elaborate on the Baby Dolls locations? You talked about two new locations already using assets you own. Are these the cause expansions? Can you give us more color?

Yeah. Basically, we're going to convert -- we now have worked with the City of Tye near Abilene, 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 on our plans. We've got the building permits working right now.

And that's the property that we purchased off of a [Smart Four] in North West, Fort Worth. And 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, 5 acres to build a location in 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. So those three clubs that we've been working on.

I appreciate that, Eric. And maybe I missed this or I'm curious, you have plans to expand Chicas Locas locations. Is that still in effect or is that a 2024 thing?

It could possibly be 2024. Right now, I said we've promoted some people to free up more time for Ed. So he could focus on these things a little bit more. We've got the three projects going. We're not sure in the Dallas market right now what we're going to do with that Chicas, with the extra property, Chicas 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 or not we're going to expand the existing club. It's just doing so well. I was there a Wednesday night. It was incredible, probably about 120 entertainers there on a Wednesday night.

The VIP room is a little small there. So we're talking about maybe expanding that VIP room. Or maybe putting in additional -- build a whole new VIP room and expanding the 15 VIP room into more club space. So we're in discussions there.

I know when we have some free time after the first of the year, we're going to get together and visit that site and hopefully make some decisions on exactly what we need to do there. We're also -- our (inaudible) is going so well, do we really want to mess with it? And so what do we want to do there? So I think we'll figure that out shortly in the next probably 30, 45 days. Maybe by the February call, we'll have a better idea of what we're going to do with those properties.

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 to staff those facilities to the point where you can open?

Six weeks. It's not just the staff. We also have to be testing -- everything has to be signed off. So once you get your license and you put in all your machines, everything gets done and everything has to be tested. It's a -- it's pretty in-depth process. But it takes approximately six weeks is what we're told.

And our guy that we've hired as our Director of Casino Operations and Casino Management is definitely a very experienced in that. He has 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, and 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.

Okay, got it. And then with regards to your third property in Central City, I realize you've got a lot of interplay with the two casinos. Do you have to apply for a license for that third property though, or can you kind of give us a timeline on that one?

Sure. We have applied for the gaming license to have licenses game as a licensed casino. We have purchased additional property that's contingent, or I mean 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 30,000 and 40,000 square feet depending on where we put the holes in the walls to connect to buildings and whatnot.

So it's actually a very -- become a very large property. There are existing tenants there right now. We're going to keep those tenants in place, keep those storefronts open. So that Main Street continues to stay busy. We're going to get the existing casinos open first and then decide what we want to do with that property.

But we also -- it allows us -- because that's 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 gone with a third party. Unless somebody else build a casino there, we would remain the landlord and we could put some clauses in the lease that would protect our existing operations.

Interesting. And then my last question is just with regards to Central City, are there other operators? I mean, as you just mentioned, that's sort of -- it remains free, but are there other plans by third parties to develop their own casinos or increase foot traffic in the Central City?

We certainly hope so. There's three properties we can build mega casinos on, resort type casinos, as we call it, with hotels. 400, 600 room hotels; 1,200, 1,800 parking spots and their garages with anywhere from 60,000 to 100,000 square foot casino space, which we would definitely welcome because it would bring a 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, those properties will be sold in and we'll get some of those properties built, which I think it would be fantastic for that area.

I think right now, Black Hawk Central City is 13th in gaming in the country. And I would love to see that area move up into the top 10. And I think those type of casinos will bring it to that point. Denver's the number-one feeder market to Las Vegas. So there's a lot of people that fly into Denver and then fly to Las Vegas. If we can just get them drop to Black Hawk for five minutes, stay in Denver, and drove the 45 minutes up and make it a mountain vacation where they can go in a summer, go Whitewater rafting fishing, hiking, in the winter, go skiing.

There's six major ski resorts within 1 hour and 10 minutes, five of them within 1 hour. I just think it's a fantastic opportunity for future development and for us with the main presence on Main Street.

Thank you so much.

Yeah. Thank you, Rob.

Thank you very much, Rob. (Conference Instructions)

First up, we have Adam Wyden. Adam, take it away.

Hey, can you guys all hear me?

Yes.

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

Now inflation is 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? When your comps are down, 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 Bombshells has sort of been the source of revenue decline, but it's the lower margin product. And now you've got more like clubs and casinos coming online. I mean, I would think that if your casinos do what you think you're 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 rationalization of costs 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 perhaps even see margins go back higher than historical average, just based on the aggregate mix. I mean, can you talk a little bit about that? And then I have a second question.

Yes, I mean, obviously, the margins will depend on what changes in future acquisitions when and as we open up these new 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%. So, you know, not horrible. And a single quarter isn't a barometer for further 12-month period because of seasonality. And this is kind of a strange. I mean, this -- I think I'm hoping 2024 is the last year that we have this strange seasonality. And I am hoping that, like I said, I think by June -- by the June quarter, we should return to a much more normalized seasonality of mix, I think.

But it's really -- we got to figure out the rest of this month here, get this quarter out. Talk to you guys in February. We'll be partially through the second quarter. So we'll have a pretty good idea of how January and February are going.

I suspect that January, February, we're going to 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 today's date 13, 13 day run now from Houston, to Colorado, to Miami, now in New York. And so I've spent a lot of times in the clubs. I spent a lot of time talking to our teams.

I've spent a lot of time talking to guests. I've spent a lot of time talking to entertainers. And the consensus is that we've seen the worst of it. 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.

So that's very promising. So we've made some changes with personnel. We've made changes in certain things. We've raised some prices here and there. We've adjusted something. We've changed our specials, the big IR specials are starting to become more of a day of the week type deal, which is typical of what we see and have to do in recession to keep our Mondays and Wednesdays solid.

So those things are happening right now. And I think we'll just keep pushing through to what we do. But as far as -- depending on the mix of what we buy, future guess, we could change our projection on what we think the margins would be, whether it's going to be 18%, 20%, 23%, or higher.

Great. And also this year. I don't know if you mentioned this on the call. But my sense is at least when I look at -- this was a big year, you acquired a lot of land. When you use your cash to basically plant seeds, you can't use that cash to sort of deleverage, right, or buyback or what have you.

And 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 you bought all this land 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 that corresponding revenue.

And so I would think that like from a free cash flow margin perspective, as you add that revenue from an income perspective, I would think that your free cash flow margin will go up, right, because both on an OpEx and interest expense line, you're basically carrying non-income-producing assets without the corresponding revenue or EBITDA, whatever.

So I would think that that would also help your free cash flow relative to -- in '24 relative to '23, right? Because you basically -- I mean, like Bombshell staffer, for example, like that just opened, right, but you've been carrying it. There's an OpEx against that, right? And that's -- a Bombshell that could do $8 million, $9 million, $10 million, at least for the first year. And there's been money against that, that sort of wasn't sort of income-producing.

So do you still have this sort of income versus expense sort of mismatch? Mean that should be sort of reversing in '24, right?

Well, I can kind of a quick simple for you. I would estimate 2023, that those carrying costs are somewhere between $4 million and $6 million. In 2024, hopefully as we open things up, we can cut that down to less than half of that and add additional revenue.

So yes, at that point, those margins will. That's why I said I'm pretty comfortable overall saying we'll get those margins back to that 18%. It's very similar to 2023, maybe back to 20% '24. And that's depending on when we open up.

The biggest problem to casinos, we just don't know when we're going to open. We could open April, we could open June, we could open in September. We just don't have any way to judge when the state of Colorado (multiple speakers) processing application. They haven't issued a license in three years.

Could you --

Surely they want to get those license issued, I would think. But --.

Could you -- if you have the things the locations opened in April, both the Bombshells sort of sports 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 does the strip club licenses work. But I mean, if for whatever reason it was sort of taking longer, I mean, you have the buildings built. I mean you can use them as an entertainment venues ahead of the casino. Is that even a possibility to open them in April and then wait until the gaming software? Is sort of not that wouldn't be like the appropriate averaging?

I would guess I'd wait till June to do that. I think April, May, we'll make those decisions to open and operate without gaming or not. And I guess that will just depend on what kind of feedback we're getting from game, whether on the gaming agenda, whether our licenses are approved.

But yes, at some point, I'm going to open up and start generating revenue and stop the bleed, right? I mean at some point, it becomes senseless to just sit there what they've built out property with our liquor licenses in place, with all of our other operations ready to go, and just wait for the gaming.

Because I think the club side of it will do very, very well in that market. So that's definitely an option for us. It's just too early to gauge if that's going to make sense or not, but I definitely want to get something going in the summer. Because it's very difficult. We open after the season end -- the prime season ends and we get into this game season with the winter and the unpredictable weather and the rows and a drive to the mountains in the wintertime, 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 into place. Probably by the May call, we'll have something more definite on that regards. Does that answer the question?

But the construction 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 your construction is moving, right? I mean, you've got part you can control.

I think April, May optimistic. I think June, July is more realistic. And I think August, September is probably being pessimistic. That's kind of my thought. But I do think we could open in 2024.

I mean, you got to remember we filed for the first license November of 2022. So it's been over -- I'm going on with 13.5 months or 13 months, we're about 13 months right now. So when you get to -- when you hit the May, I mean you're talking 18 months. I would hope that that we have a definite idea of where we are and when we're going to get those licenses approved by May at the latest.

Right. And the city is behind you because they've got revenue bonds and all the rest. I mean, they want you there. They want the money. So it's not like anyone's working against you; everybody's onboard.

If there's anybody working against us, we don't know who they are and we haven't heard anything like that. It has been very positive. 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 they were 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 make a 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 the city itself.

And yes, the city needs the tax revenue. The meetings are online. You can watch the -- the last meeting was a budget meeting and you can see the city's budget about negative $850,000 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 casinos that have applied for licenses in that city.

We need the Department of Gaming for the state of Colorado to process these licenses, get these licenses issued, and get Central City up and operating. 60% of the storefronts are vacant.

Last question, you know, at Noble -- I mean, I'm just going back and looking at my notes. Noble last summer -- isn't as is -- not last summer. I guess two summers ago, I think it was July '22, you talked about sort of your RCI capital allocation plan for the next three years. And you know, the joke is, you know, man plans, God laughs, 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 30 of EBITDA, 30, 35, 40 sort of over three years. I guess the question is your competitors are sort of wounded. You know, there's the three -- I guess it's the 2Ds or the 3Ds, death, divorce, and I forget what the other one is.

But owners of small businesses have to sell regardless of what's going on. Can you talk about sort of -- it's been 12 months since you announced that acquisition. Can you talk about sort of getting the -- how that M&A pipeline looks and how you can get back to sort of a normal cadence of even (inaudible) 30 on EBITDA, 20 a year because we haven't really added any in a year. And I would think that now --

Well, we added in March. To be fair, we closed a major acquisition, $66.5 million acquisition in March. We always say when close a 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 have called us. We're calling those people back. Somebody will have unrealistic valuation in their head right now because I think they're going to sell us at five times 2022 numbers when we all know that 2023 was an incredible year.

We bought the Burch clubs at about 4.2 to 4.3 times their numbers. We've increased those numbers. So it's going to be coming in at around 4 times for us. And we're looking at 4 times right now. If you want to come in and you want to look at your 2022 numbers, we'll look at it.

But we're not going to pay you about 4 times on those. Because the reality of it is no matter how good we are, there's going to be about a 20% decline from those numbers. That's what we're seeing overall. I mean, I've talked operators are down 35%, 40% in certain markets. And we're talking to them, and they're like well, you know, I want 5 times. You know, I saw you pay 5 times your current numbers.

Well, I don't. I want 5 times 2022 numbers. And I said, well, that's not going to happen. And you're right, you're down 35% right now. How am I supposed to buy you based on those numbers? Even if I -- I can probably bring -- get you down less than 20% or right around 20%, but I'll pay you 4 times if you want to do that or I will pay you 5 times current.

And so that's kind of where we're at right now. We're getting some positive feedback right now with a couple of different options that we're looking at. And obviously, Christmas is coming up. So I wouldn't expect anything the next few weeks, but I wouldn't be surprised if we have 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 guy trails to us and we've reestablished the purchase model, well, I think other guys are just going to fall in line and we're going to end up with a few more locations. So we're looking at several things right now and what we're going to pick.

I mean, we're -- yes, I can go close acquisitions all day long if I want to overpay for them, but I don't want to overpay. It's not in the best of the company. The fifth grade math has to work. If the capital allocation strategy when we do the math and it doesn't work, then we don't move forward. We just wait.

Unfortunately, sometimes I think we wait a little longer than we'd like to. But at the end of the day, I don't know where they're going to sell to if they don't sell to us. And if that changes, then we may have to get more aggressive or if the market changes (multiple speakers) more aggressive so --

Can we double-click on that last theme that you had there? So like I mean, you have all these unrealistic sellers, right? But like if you think about it and we've talked about this, and I think it's important for other people to hear this, which is that like you own a building, you own a strip club, and it does $10 million in sales, and I don't know, a $4 million of EBITDA or something like that.

And let's say you can pass to a rent of $600,000 or something. You can even sell it at a six cap or something, you know that, that building could be sold for $10 million, but then you lose the cash flow of a strip club, right? And so you can -- the idea is like you can sell your building for $10 million, but that's the equivalent of 2.5 times EBITDA for the strip club, right?

It's like, okay, you can sell your strip club for 2.5 times because that's what the building's worth. 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 operate the club.

And so like when I think about the options for a seller, yeah, you can try and sell it to your manager. But as your manager, you need to take the sale of finance from the manager. Is he going to go and be able to raise the equity? Like who's buying strip clubs at $5 million or $6 million?

I mean, look, you know, interest rates are coming down, but they're still something, right? I mean, it's like -- I don't really see a scenario where someone else is buying strip clubs for $5 million or $6 million in pay and say, hey, here's a strip club. I'm going to pay you $25 million, 5 times EBITDA, right? 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 why we keep winning the deal. That's why we're buying these clubs. We're picking up some incredible real estate in the transactions. Future development, that real estate has value. I mean, we just got appraisals. We're in the process right now of 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 appraised right now. So we figure we can pull $20 million-plus in 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.

And like the Playmates property, I think we paid $4 million for it. The appraisal just came back at $7 million and change. We paid $7 million for the Scarlett's building, just came back at $7.8 million. We're waiting for the casino deals come in.

But basically all the appraisals so far that we've gotten in are much higher than what we paid for the properties as bought those properties in '20 and '21 and even in early '22. So I'm very optimistic that -- we need a $41.8 million total appraised value to have to pull the cash we want to pull out and move the New York property out of an existing loan. Pull it back in because its (inaudible) was so bad. And in 2020, we had COVID.

It's about a $15 million to $18 million property and the appraisal came back at $6.9 million, I think. So we only own about $5 million. We're only able to pull $5 million cash out of the building. I think when the new appraisal comes in, we're going to get a total of about $11 million, about $11 million out of it. So we'll pick up an extra $6 million by refinancing that New York property and put it into the new loan.

So we're weighing all these things right now. So we'll have options available to us. Everything's about options for us right now. There's so much out there. We're sorting through it. We're going to look at different things and find the right price, which are the right pieces.

Like I said, it's a puzzle. All we have to do is keep doing what we're doing, keep on our capital allocation strategy, put our capital to work, get the cash on cash returns and continue to just middle wash, rinse, repeat. It's actually really simple.

I've listened to established shareholders and everybody -- I'm hearing, you guys need to do more club acquisitions and build less Bombshells. And I said okay, but I believe 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 have ourselves can grow it.

I've been talking with some pretty smart people out there. The beauty of the restaurant business is there some really smart people out there in that space, and they understand we've talked to them about the value. They see -- they looked through our stuff and looked to our margins, what we've done, how we've done it, and we'll 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 for our shareholders and at very little risk to ourselves.

And if that's like infinite cash-on-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, but I do listen. It just takes time to digest. It takes me time to figure out what the best method to do these things are and what we're getting there. I'm always learning and I'm always listening.

Fantastic. Thank you so much for your questions, Adam. (Conference Instructions)

Next up, we have [Orckit Wells]. Please take it away.

Orckit, I think you're on mute.

You got me now?

There you go. Yes, sir. I got you.

Perfect. How much more money you guys think it will take to get Colorado up and going?

Well, (multiple speakers) It's on when we open.

Yes. But I mean, just what are you saying to yourself right now? I got this much in, how much more do I need to --

I think we're going to put -- between now and April, we're going to put another $6 million or so in. Could be $8 million. What we do on machines and a few other things. All in all, we're going to spend of probably $14 million. I think we're about $22 million, I think, is our as our budget. But that's including buying all the machines.

Because of our new manager or ops guy that we brought in, he's got some great relationships with some of these vendors and companies. And we're starting to get some pretty good deals or maybe six or 12 months, same as cash. We only have to pay monthly for 12 months after and it does start to actually open the casino. Slot machines are already making money for us where we have start paying for them.

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

But they do know him. He's a very great guy. A very good operator in that market. He is 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 -- like I said about six -- to answer your question quickly, from a $6 million to $8 million turning now in April, May 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 three. (inaudible) hasn't (inaudible). All three licenses have the same operators, have the same company. All the capital is coming from the same source. I believe that if they approve one, they approve all three, but I'm not the Colorado Department of Gaming. So I can't be 100% sure of that.

But that is my understanding that once we're approved, there may be some formalities. The licenses will be approved, but the actual what's called the go live, individual. So each casino has to do all their setup, all their testing, all their operating procedures. They have to walk 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 if I'm understanding correctly.

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?

We do. We have been talking with different groups. I think obviously everything is going to be contingent on the license being issued. Because we have to have license issued, then it takes them -- then they have to do their application, which takes another 30 days for that.

Okay, but it's not like they get their application, it's going to be another six months?

It should not be.

Okay.

But the 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'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 if they haven't come back to you for anything else, they've done your interviews, you've given them all your file --

They've come back to us multiple times. We write multiple data dumps, which is good. That means we know the process is moving forward. From what I understand, early January starts out what they call on-site inspections, so they will be going and visiting some of our current locations. We have no clue which ones. We have no clue when they'll go, but we believe that will start in early January. And I know what the budget is. I know which money they have to spend because we had to provide it, make (inaudible) personal funds.

Got it. You pay them to investigate you?

Yes. And they can ask for additional funds, which I do expect them to do. But there's limits on that, note of how all rules I have to go back and look at it. But basically, I think that once they see the site inspections, I think it will be relatively quickly. Because before they get to that point, I think everything else in the investigation is done. So unless they find something they want to look into while doing the site inspections, I don't suspect that it will be one of the 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 upfront or some form of agreement of a revenue share, how does that typically work?

Bulk, they give us cash up front. They give us guaranteed minimums and they and give us a percentage. And if the guaranteed minimum is more than that percentage, then we take the guaranteed minimum. And if the percentage is more, we're going to take a 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?

Typically, yes.

Okay. So for all intents and purposes, this is just like the question is: how quickly you're going to get your money back. You're going to get it back in 10 years with an online partner or from revenue from the machines and everything else, you can get it back into.

Okay. Could be, yeah, I mean, that's independent how much cash we actually used to and how much we're able to pull out. Because once the casinos open and operating, we can then borrow against it. I mean that's -- there's a lot of lenders out there that loan to casino companies. Unlike strip clubs, you can borrow against the actual business model and the business cash flow, make a bargain on a machine, you can borrow. I mean, it's like a totally different --

Everybody wanted to give you money when you're in the casino business.

Well, you know, they don't sell all those big buildings because everybody is winning.

Yes. All right, good. Thanks, guys.

Thanks. (Conference Instructions) Thank you.

Adam, you're back up. (Conference Instructions)

Adam, take it away.

Adam, you're on mute. Mr. Wyden, you are on mute. If you'd like to unmute yourself.

We are 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 chat.

Okay. Thanks, guys. Thanks for taking -- thanks for letting me on appreciate the earnings call, and you know, the whole breakdown. I just wanted to essentially -- I think I posted on there hoping that I could have a chance to essentially just offer my services to our RCI.

I really love what you guys do. I have been watching you guys from a distance for the last couple of months, everything you're building out. I just kind of want to find a way to pay you guys 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 $0.01 per transaction. You guys can apply it towards debt paydown, expansion, share buybacks. I'm just wondering.

I mean, I'm not the person that handles that. I would tell you to email travis@rcihh.com.

Perfect.

We basically run our competitive bidding process once a year. I don't know when he does credit cards, but I know he does it at least once a year. So we send this out and he'll be happy to take a look at it and see if it makes sense.

Okay. Thanks, Eric. So it's travis@rcihh.com.

Yes. If you can't find it, you just go to our website, rcihh.com, and click on the Board members and his contact e-mail stuff is on there.

Perfect. Thank you, Eric.

Thank you.

Thank you so much to Eric and Bradley, as well as everyone who asked a question this afternoon. For those who joined late, you can meet me as well as management tonight at 7:00 PM at Rick's Cabaret New York, one of RCI's top revenue-generating clubs. Rick is located at 50 West 33rd Street between Fifth Avenue and Broadway, a little in from Herald Square. If you haven't RSVP, asked 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.